U.S. program will require that feedstock be grown using three practices, which many farmers won’t be able to follow
REUTERS — Little to no ethanol will qualify for U.S. sustainable aviation fuel subsidies under a new pilot program by president Joe Biden’s administration, according to a Reuters review of government data and people familiar with the matter.
The pilot program toughened climate requirements at the last minute and could hurt the biofuel industry, which sees SAF as ethanol’s best chance at growth since electric cars began cutting into its market as a gasoline additive.
It could also hinder Biden’s goal of producing 30 billion gallons of SAF by 2030. He once promised that 95 per cent of SAF, a biofuel that can be made from vegetable oil, waste or grains, would come from farmers.
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At issue is a US$1.25 per gallon production tax credit embedded in the 2022 Inflation Reduction Act reserved for SAF that demonstrates a 50 per cent reduction in lifecycle greenhouse gas emissions compared to regular jet fuel.
Under the pilot program finalized April 30, ethanol producers seeking to claim that credit must verify their corn comes from farms using three climate-friendly farming practices in tandem: not tilling the soil, planting cover crops and using higher efficiency fertilizers.
U.S. agriculture secretary Tom Vilsack touted the program as “a great beginning as we develop new markets for sustainable aviation fuel that use home grown agricultural crops.”
However, a Reuters review of data from the U.S. Department of Agriculture suggests almost no U.S. corn farmers use all three practices at the same time. Officials at five farm and biofuel trade groups told Reuters few, if any, ethanol producers will be able to meet the standard.
“I have not had a single ethanol producer member contact me and say, ‘we’re going to meet the climate-smart agriculture requirements,’ “ said Brian Jennings, chief executive officer of the lobby group American Coalition for Ethanol.
The White House had been set to ditch the requirement that all three farming methods be used at the same time, but reversed course after Treasury Department officials said bundling the practices would boost compliance and increase environmental benefits, according to two sources familiar with the discussions.
Bundling the practices also helped balance rural and farm interests with environmental concerns, the sources said.
Environmental groups have long worried that biofuel can cause climate and environmental damage if more land is cleared to produce them.
The USDA does not collect data on how many farmers use all three required climate-friendly practices together, but data suggests the overlap is slim.
Nationally, continuous no-till is used on about 33 per cent of cropland acres, efficient fertilizer application on about 26 per cent and cover crops on about six per cent, according to a 2022 USDA report.
There is no breakdown by crop or for corn destined for ethanol production facilities.
“It’s a very small number of operations that would qualify,” said Matt Ziegler, policy director with the National Corn Growers Association.
The climate-smart requirements also present hurdles for farmers who grow soybeans, another potential SAF feedstock.
Josh Gackle, a North Dakota farmer and head of the U.S. Soybean Association, said the cover crop requirement is particularly problematic in his region, where long winters and short growing seasons make it harder for him to grow the off-season crop than his peers in Iowa or Nebraska.
“We just want to make sure that the rules across the growing regions are right so all places can participate,” Gackle said.
