Green jet fuel causes problems for Biden’s Cut Inflation Act

As the Senate passed the Cut Inflation Act Budget Reconciliation Bill, US fuel retailers warned that the inclusion of higher tax credits for sustainable aviation fuel ( SAF) would reduce the supply of biodiesel and renewable diesel, as all of these fuels compete for raw materials.

The bill, which must now be approved by the House, is part of the Biden administration’s efforts to lay the foundation for reducing greenhouse gas emissions in the United States, including emissions from the energy sector. aviation.

The bill extends the existing tax credit for biodiesel and renewable diesel, but also provides a higher tax credit for SAF production.

This higher greener aviation fuel tax credit would reduce the availability of renewable diesel and biodiesel, according to the US Fuel Retailer Associations. Reduced availability of renewable diesel would further increase the cost of everyday household goods that are transported by truck, warned NATSO, a national trade association representing owners and operators of travel plazas and truck stops, after the bill was unveiled. .

“American consumers will pay more for all goods transported by truck”

NATSO, in conjunction with SIGMA, a trade association representing fuel marketers and convenience store chain retailers in the United States and Canada, strongly encouraged lawmakers to oppose the Cut Inflation Act unless it provides tax parity between the biodiesel tax credit (BTC) and the proposed SAF tax credit.

“This legislation seeks to create a ‘technology-neutral’ clean fuel tax regime, which fuel retailers have long supported. Favorable treatment for SAF flies in the face of that approach,” David said. Fialkov, NATSO’s executive vice president of government affairs.

“SAF is less beneficial to the environment than renewable diesel and will cost taxpayers more. Offering more favorable tax treatment to a technology that has fewer environmental benefits undermines the intellectual integrity of the climate provisions in this bill. “, Fialkov added.

“The trucking industry delivers more than 80% of America’s goods and relies on biofuels, like renewable diesel and biodiesel, to keep emissions low. If Congress passes a higher tax incentive for the SAF, America’s biofuel supply will become limited and more expensive American consumers will pay more for all goods transported by truck,” NATSO and SIGMA said in late July.

SAF incentives are needed for low carbon aviation

As fuel retailers call for equal treatment of renewable diesel and SAF in new tax credit provisions, the National Business Aviation Association (NBAA) welcomed Senate approval of an SAF tax credit that would increase fuel production and availability. SAF is expected to help the industry achieve net zero CO2 emissions by 2050, according to the NBAA.

“The production tax credits in the bill would significantly reduce the cost of commercially available SAFs – made from sustainable raw materials such as used cooking oil, crop residues and municipal solid waste. – making air travel more sustainable for Americans without increasing costs for consumers”, RMI, an association promoting the clean energy transition, said in comments before the Senate passed the bill.

According PAwhich has an SAF business, Air bp, “SAF offers an impressive reduction of up to 80% in carbon emissions over the life cycle of the fuel compared to the traditional jet fuel it replaces, depending on the sustainable feedstock used , the production method and the supply chain at the airport.”

The International Air Transport Association (IATA) recently called on the governments Urgently put in place large-scale incentives to rapidly expand the use of SAFs as aviation pursues its commitment to net zero carbon emissions by 2050.

“Investments are in place to increase annual SAF production from the current 125 million liters to 5 billion by 2025. With effective government incentives, production could reach 30 billion liters by 2030, which would be a tipping point for the production and use of SAF,” IATA said in June.

Movement of raw material

But fuel traders and some environmental activists say higher incentives for SAF production compared to biodiesel tax credits would displace renewable diesel production and could also lead to loss of land and biodiversity due to the expected higher demand for lipid-based raw materials.

“This added incentive for SAF will undermine and eventually eliminate the US market for biodiesel and renewable diesel, as disproportionate pressure is placed on feedstocks,” NATSO and SIGMA say.

The International Council for Clean Transportation (ICCT), for example, in its ask for a ceiling on lipid-based feedstocks in California’s biomass-based diesel fuels (BBD), said a cap would avoid the global displacement of vegetable oils that would contribute to negative impacts on global human food markets and livestock, deforestation, expansion of cropland, increased greenhouse gas emissions, and loss of biodiversity.

“The increase in the world supply of vegetable oils, directly or indirectly, is necessarily at the expense of forests and other natural lands”, ICCT said in a report earlier this month, noting that a displacement of vegetable oils would contribute to soaring food prices and deforestation.

By Tsvetana Paraskova for Oilprice.com

More reading on Oilprice.com:

Leave a Comment

Your email address will not be published.