Clean Fuels urges USDA and Treasury to further update the GREET model to include additional climate smart agriculture practices specific to oilseed crops and quickly finalize rules for the 2025-2027 tax incentives (§45Z Clean Fuel Production Credit), which will support U.S. biodiesel, renewable diesel, and SAF producers.

“Clean Fuels and its members appreciate the significant work of USDA and other federal agencies to account for the role that U.S. farmers will play in decarbonizing the nation’s aviation fuel,” said Kurt Kovarik, Vice President of Federal Affairs for Clean Fuels. “U.S. farmers and SAF producers will continue to work with the agencies to rapidly expand SAF production over the next few years.”

Clean Fuels continues to assess the changes to the GREET model unveiled today, including updated indirect emission penalties for U.S. oilseed crops like soy and canola. Clean Fuels believes there is more work to be done to enable credit for climate smart agriculture practices that U.S. farmers are deploying.

“Biodiesel, renewable diesel, and SAF producers are already negotiating feedstock and fuel offtake contracts for 2025, so we look forward to working with Treasury and USDA to quickly turn attention to guidance for the Clean Fuel Production Credit that begins on January 1 next year.” Kovarik added. “We believe there are additional climate smart agriculture practices and industry data that can be incorporated in the GREET model to support the continued sustainable growth of the entire clean fuel industry.”

Contact: Paul Winters, 202-737-8803, pwinters@cleanfuels.org

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WASHINGTON, DC – Today, Clean Fuels Alliance America welcomed guidance from the U.S. Department of the Treasury and Internal Revenue Service (IRS) on the new §40B Sustainable Aviation Fuel (SAF) Credit established by the Inflation Reduction Act (IRA). The guidance enables companies currently producing SAF under the Renewable Fuel Standard (RFS) to access the base value of the tax incentive. However, it defers allowing producers to use the Argonne National Laboratory’s Greenhouse gases, Regulated Emissions, and Energy use in Transportation (GREET) model to calculate additional credit. The U.S. Department of Energy is expected next year to issue a modified GREET model for use in association with the credit.

“We appreciate President Biden recognizing that American farmers and clean fuel producers will be providing essentially all of the sustainable aviation fuel available over the next 20 years to meet the administration’s Grand Challenge,” said Kurt Kovarik, Vice President of Federal Affairs for Clean Fuels. “Enabling U.S. taxpayers to access a lifecycle model developed by U.S. national labs is clearly the best way to provide assurance to fuel producers and meet the demand for low-carbon fuels from airlines and passengers.”

Kovarik continued, “We look forward to continuing our productive working relationship with Argonne National Labs, providing real-world data on fuel production and feedstocks, and ensuring the GREET model remains up to date. We will be watching closely for any updates to the model to ensure they accurately reflect the carbon reductions that clean fuels are already achieving.”

Contact: Paul Winters, pwinters@cleanfuels.org, 202-737-8803

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Scientists across the world agree that to avoid the most catastrophic impacts of climate change, we must peak annual global greenhouse gas emissions before 2025 and reduce them by 43% by 2030. We also know that until net-zero emissions can be achieved, every ton of CO2 emitted to our atmosphere adds to the global warming potential, contributing to the severe weather events we’ve experienced in recent years. If a company delays reducing its annual emissions by just one ton of carbon for five years, it will need to reduce annual emissions by over 13 tons to make up for lost time.

The fundamental science underlying this time value of carbon concept is well understood. That’s one reason major transportation sector players, including commercial airlines and air freight and logistics companies, have publicly committed to reducing their annual emissions or even to achieving net-zero corporate emissions. The clean fuels industry stands ready to support these corporate commitments.

However, carbon accounting methods are still being developed for companies to inventory the impacts of carbon reduction measures like fuel switching, and track their progress to their net-zero goals. The Greenhouse Gas Protocol began revising its Corporate Standard in 2022, but recently pushed back the release of its Land Sector and Removals Guidance to mid-2024. The Science-Based Targets Initiative correspondingly changed the finalization of its Forest, Land and Agriculture Guidance.

These standards and guidance documents are part of a larger package of corporate greenhouse gas quantification principles companies are meant to rely on to prove to stakeholders they are on track to decarbonize and mitigate climate risks. But some draft versions and proposed changes are untenable for the corporate world, especially in consideration of our urgent need to increasingly remove carbon from the atmosphere.

Clean fuel producers, including producers of sustainable aviation fuel, know their fuels are less carbon intensive than their petroleum-derived counterparts, helping to avoid that extra ton of carbon. But, quantifying that carbon intensity, and capturing all the carbon in the results, depends on the programmatic framework, whether it is California’s Low Carbon Fuel Standard, the International Civil Aviation Organization’s Carbon Offsetting and Reduction Scheme for International Aviation, or something else.

SAF producers aim to provide their customers with the right data on the well-to-wheels emissions of their fuels. But SAF producer knowledge is framed around their product, while their customers’ ledgers are focused on their actions and account for the element of time.

Clean Fuels Alliance America has begun the process of reconciling these corporate standards and guidances, including the sustainability certification schemes for CORSIA-eligible fuels and important market-based mechanisms like book-and-claim that socialize SAF premiums while attributing environmental benefits to supply chain partners. Our hope is to guide this clean fuel-focused community to a more streamlined process of quantifying and accurately accounting for the high-quality carbon emissions benefits that SAF offers. As a trade association, we represent the entire supply chain from feedstock production to fuel production and distribution. We are particularly well-positioned to support our fuel producers as they work with their customers to mitigate climate change.

We are one pellet in a silver buckshot to decarbonize aviation as well as other transportation sectors, but we aim to do so in a scientifically robust and practically implementable fashion. And we hope you’ll join us in counting and tracking all the carbon to eke out every incremental benefit SAF has to offer.

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In the race to lower carbon emissions and combat climate change, one resource that is nearly depleted is time. Carbon added to the atmosphere today compounds the environmental challenges of tomorrow, and because of technological and infrastructure restraints, many industries that rely on heavy-duty (and often heavy-polluting) equipment are years or even decades away from electrification.

“To meet the ambitious carbon reduction goals that Americans are aiming for, we have to use all of the tools in our toolbox,” says Clean Fuels Alliance America CEO Donnell Rehagen. “Both clean fuels and electric vehicles have important roles to play in staving off the detrimental effects of climate change and make progress toward those goals.”

For many companies and municipalities, switching to biofuels has proven to be a simple and effective way to meet their carbon reduction goals.

“Carbon emissions are cumulative, and they persist in the atmosphere. Anytime we can reduce more carbon now, it has less opportunity to persist in our environment,” says Scott Fenwick, technical director for Clean Fuels Alliance America. “[Biofuels] have the ability to immediately impact carbon emissions today, versus waiting five or ten years for electric vehicles to become viable and affordable, and will do more in the long term to reduce these emissions.”

Electric vehicles have become more attainable for light-duty passenger vehicles, and this success has many people dreaming of an all-electric future. However, for some applications, significant technology development is still needed.

“You have folks who really want to leapfrog technology and go straight from fossil fuel equipment to electric equipment, but the technology to go all electric is not there yet,” says Veronica Bradley, director of environmental science at Clean Fuels Alliance America.

She remarked that there are many uses for clean fuels in equipment, like commercial aircraft, that don’t have an electric option today. For example, she said that with today’s technology, the battery for a 737 would take up the whole aircraft, leaving no room for passengers or cargo. Sustainable aviation fuel, which is now coming to the market, lowers emissions by changing what’s in the tank, instead of changing the entire airplane.

Moreover, large transport vehicles such as semi-trucks travel long distances hauling heavy loads on rigid deadlines in areas without reliable access to charging infrastructure.

“There are still a lot of cases where electrification is not viable yet,” Fenwick says. “Those are the sweet spots for biodiesel and renewable diesel to be able to offer a low-carbon option for those uses and markets.”

And the OEMs are responding. Jennifer Weaver, original equipment manufacturer (OEM) market development manager for Clean Fuels Alliance America, states that nearly all of them already support B20 biodiesel blends as well as renewable diesel, and they are working in tandem with Clean Fuels to drive innovation.

“We’re seeing OEMs have a significant interest in higher biodiesel blends, on the order of B30, B40, B50 all the way up to B100,” Weaver says. “These companies are getting pressure from their customers to do more to lower their carbon footprint and to meet environmental, social and governance (ESG) goals.”

Biodiesel has evolved over the last several decades, and a growing number of companies and municipalities are using it to meet their carbon goals. With assistance from the Clean Fuels team and a push from new federal regulations, OEMs are developing cleaner engines that support higher biodiesel blends and emit less carbon.

“We are in the process of working with all of those OEMs as they are developing their strategies of how they’re going to meet that new emissions level to make sure that biodiesel is included as part of the equation,” Weaver says. “They are increasingly acknowledging that using an already low-carbon fuel in their engines is going to make it even easier for them to get there. We work with them far in advance of their production time to make sure that’s all contemplated, tested and thoroughly vetted by the time those new models hit the production line.”

This symbiotic relationship between Clean Fuels and the OEMs has led to a premium product that has less impact on the environment.

“We’re really proud of what the industry has done,” says Steve Howell, senior technical advisor for Clean Fuels and an early champion for biodiesel. “We’re selling over 3 billion gallons today, and we wouldn’t be selling that amount of fuel if the standards weren’t working.”

Howell says diesel engines are cleaner than ever before, and this industry will continue to evolve.

“One of the key things that Clean Fuels Alliance America is doing is making sure that we’re doing that research for the future, and I think that’s a competitive advantage for biodiesel and the biodiesel industry,” Howell says. “We used to think of diesel technology as ‘old, dirty diesels’, but now they are clean.”

It’s not just OEMs supporting clean fuels—municipalities are too. Weaver noted that cities were some of the earliest adopters and strongest supporters. She says one of the most notable adopters is New York City, the largest city in the United States.

“New York City uses biodiesel blends in over 11,000 diesel municipal fleet vehicles,” Weaver says. “Everything from sanitation trucks and police vehicles to parks department equipment, light towers and generators. They even use Bioheat for the heating oil that powers their buildings.”

Bioheat® fuel is a clean, renewable and cost-effective alternative to liquid heating fuels. Converting a home’s heating system to electric heating can cost up to $20,000, which is cost prohibitive for many, and the electric systems can place a heavy burden on electric grids. Bioheat fuel, just like biodiesel and renewable diesel, offers an immediate solution to reduce greenhouse gas emissions for those that rely on liquid fuels.

Carbon buildup in our atmosphere is truly a global problem and meaningful reduction will require all of the tools in our toolkit, including electrification and the continued development of new green technologies. Clean fuels—including biodiesel, renewable diesel, sustainable aviation fuel and Bioheat—can slow the accumulation of carbon in our atmosphere and push back the detrimental effects of climate change today. Time may not be a renewable resource, but renewable fuels give companies and municipalities an option to cut the emissions of some of their heaviest polluting vehicles and equipment to make an immediate impact in their carbon footprints.

This article was funded by the United Soybean Board and state checkoff organizations.

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The Sustainable Aviation Fuel Grand Challenge is a coordinated effort among multiple federal agencies to scale up production of SAF by midcentury. Renewable fuels like SAF are critical to reducing greenhouse gas emissions in sectors where alternative low-carbon options won’t be available in the foreseeable future.

The goal is to produce 35 billion gallons per year by 2050, with an interim milestone of 3 billion gallons by 2030. In 2022, SAF production for the U.S. market reached 15 million gallons, with roughly half produced in the United States. Reaching the 2030 goal would require doubling production every single year.

There are multiple technology and feedstock combinations for producing SAF. Significantly, the existing production (and most production planned for the near future) utilizes the hydrotreated esters and fatty acids (HEFA) pathway—a process similar to renewable diesel production. And while SAF is currently limited to blends with petroleum jet fuel between 5% and 50%, industry participants are working within the ASTM process to certify the HEFA pathway for 100% use in commercial jets.

Several U.S. companies, including World Energy and Diamond Green Diesel, have announced projects that could bring more than 700 million gallons of HEFA SAF capacity online by 2025. Growth of SAF will be tied to growth of the overall biodiesel and renewable diesel industry, including the U.S. agricultural feedstock markets that are partnering with them.

Pioneering SAF efforts are receiving significant policy support, including new tax incentives established by Congress. And the U.S. EPA has approved new feedstocks such as canola and fuel production facilities to participate in the Renewable Fuel Standard program. But significant challenges remain in policy implementation. EPA’s proposed Renewable Fuel Standard volumes for 2023, 2024 and 2025 present one potential roadblock: The agency is proposing very little growth in the RFS advanced biofuel pool over the next three years, undercounting both existing and anticipated production.

Renewable jet fuel projects to date are all approved to generate biomass-based diesel (BBD) D4 RINs, since they displace kerosene distillates. But EPA is proposing an increase of just 190 million gallons in the BBD volumes through 2025. EPA estimates that SAF volumes in the RFS will remain flat at 3.1 million gallons annually over the three-year period, stating, “Feedstock limitations are likely to cause any growth in renewable jet fuel to come at the expense of biodiesel and renewable diesel.”

Despite EPA’s low assessment, feedstock supplies are increasing. In 2022, the clean fuels industry generated 3.6 billion gallons of biodiesel, renewable diesel and SAF qualifying for D4 RINs using existing feedstocks. That represented a 500-million-gallon increase of over 2021, and the industry is set to expand capacity at a similar pace over the next few years. The U.S. soy industry has invested more than $4.75 billion to increase oilseed processing capacity by 33%, or roughly 650 million bushels to provide feedstocks to fuel that growth.

Sustainably grown agricultural feedstocks like soybean and canola are crucial to meet the SAF Grand Challenge, and to expand biodiesel and renewable diesel for other markets—such as rail and shipping—where alternative low-carbon options are not available. Many of the new renewable diesel and SAF facilities plan to use a combination of surplus vegetable oils, recycled cooking oil and animal fats.

Another concern is the U.S. Treasury Department’s implementation of the SAF tax incentive, which is tied to the carbon reductions measured over the fuel’s lifecycle. Treasury has no prior experience in measuring lifecycle carbon emissions. Congress directed Treasury to utilize either the International Civil Aviation Organization’s CORSIA or a similar model, such as Argonne National Lab’s GREET, to score SAF emissions and calculate the appropriate incentive.

Treasury must consistently use the GREET model for SAF, biodiesel and renewable diesel. The most recent GREET modeling incorporates data provided by U.S. renewable diesel producers from actual facility operation. The CORSIA model is built on an old version of the GREET model and uses outdated assumptions about international land use change that unfairly penalize U.S.-grown crops. The GREET model, by comparison, uses up-to-date information supplied by the U.S. industry to model both direct emissions tied to production technology and indirect emissions from feedstocks.

Excluding U.S.-grown crop oils from the tax incentives or the RFS—or from state low-carbon fuel programs—would undermine the goals of the SAF Grand Challenge. It would also short-circuit the critical carbon reduction goals of other industries. Clean Fuels Alliance America is taking a leading role in ensuring that these policies facilitate, rather than derail, the industry’s progress.

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