White House yet to release sustainable jet fuel tax credit rules; corn farmers eager to mix in ethanol

A month after industry officials expected its debut, a small formula for analyzing sustainable jet fuel's carbon footprint — one that could potentially reverberate across farm country — is still under wraps.

The Biden administration wants billions of gallons in airline fuel made from biofuels, such as corn ethanol. The 2022 Inflation Reduction Act created a tax credit for sustainable airline fuel, at $1.25 per gallon. But the law left federal authorities to determine the analysis for which fuel-stocks could capture those lucrative credits.

At the end of March, the industry is still waiting.

"We would really like for that similar methodology to be the Argonne [Laboratory] GREET model," said Brian Werner, executive director of the Minnesota Biofuels Association, referring to a model developed by the national laboratory in Illinois that has been embraced by ethanol proponents. "The delay here has been caused by questions about indirect land use change and how you incorporate climate-smart agriculture in the model."

The wait-and-see game has also raised anxiety in rural Minnesota, where corn farmers and ethanol plants have looked to sustainable aviation fuel (SAF).

Often championed by Gov. Tim Walz or U.S. Department of Agriculture Secretary Tom Vilsack on his visits to the corn belt, SAF is believed to be the next evolution in the local fuels movement that has poured money into Minnesota's rural economy over the last decades.

"SAF is really exciting because the customer is coming to us and looking for the cleaner burning fuel," said Richard Syverson, a corn farmer and ethanol plant owner from western Minnesota. "We don't have to convince them of our merits. We just have to make sure we qualify for the tax credit."

But it's not so certain anymore just what type of corn will or won't count under the new tax credit.

Last December, the Treasury Department announced that the Internal Revenue Service would initially employ a life-cycle analysis comparable to the GREET method, a decision cheered by a group of airline companies, including Delta.

But environmental groups, such as the Sierra Club, have criticized the GREET model for not fully accounting for land use.

"[USDA's models are] more marketing than science," said Jason Hill, a professor and biofuels expert at the University of Minnesota. The model, some scientists say, has undercounted how much land has been plowed under for row crops.

Doug Berven, vice president of corporate affairs at Sioux Falls-based Poet, the nation's largest ethanol company, dismisses criticism of indirect land-use analyses.

"This completely ignores the fact that we're oversupplied [with corn] dramatically," Berven said.

With environmental and farm groups squared off, the White House convened a working group to adopt the tax credit's underlying model, promising to release the new analysis by March 1. But that date has come and gone.

In mid-February, Reuters suggested the soon-to-be-released model would ramp up requirements for corn ethanol's eligibility, putting pressure on farmers to reduce tillage and plant cover crops. For some farmers, this is concerning.

Syverson, a former president of Minnesota Corn Growers Association, is experimenting this winter with a cover crop of rye in his fields. But he expressed reservation about widespread regenerative practices, such as cover crops.

"We're a long ways north," he said. "In Minnesota, we run our crops right up to the freezing temperatures, and we don't have any time after the main crop is off where it's actually beneficial [to plant a cover crop]."

According to the U.S. Department of Agriculture's 2022 census, released last month, only 3% of Minnesota's croplands see a winter cover.

Whatever the ultimate decision, industry officials and members of Congress are asking for a decision soon.

Last month, Minnesota's two senators — Amy Klobuchar and Tina Smith — as well as congressional members Angie Craig and Brad Finstad signed a letter to the Biden Administration asking that they "act quickly" in developing the tax credit model.

The White House did not respond to the Star Tribune's request for comment.

Greg Stanley contributed to this reporting.