Wednesday is the anniversary of the signing of the Inflation Reduction Act (IRA). According to the latest analysis from BloombergNEF, President Biden’s signature climate bill could result in a 40 percent reduction in energy-related emissions in 2035 and 55 percent in 2050, compared to 2021.
Of course, the actual pace of any progress will be determined by many factors, including some key decisions yet to be made by the US Treasury Department.
Basically, the IRA is a financial package that shares a number of new incentives designed to encourage investment in everything from carbon capture to sustainable aviation fuel. Each tax credit and spending provision must be implemented with different rules and regulations. Whether and how clean energy innovators can contribute to the IRA’s goals will depend on whether investors can access new incentives or not. America’s biofuel sector, of which I am a part as CEO of Growth Energy, is no exception.
We are pleased to see Congress approve tax incentives for sustainable aviation fuel and clean fuel production while also expanding tax incentives for carbon capture – all areas where biofuel producers lead efforts to cut carbon emissions, reduce our dependence on foreign oil, save money for truck drivers and create new American jobs.
We also celebrate the leadership of Agriculture Secretary Tom Vilsack, who began disbursing $500 million in new funding for biofuel blending infrastructure this June. These grants will help our retail partners expand pump options, so more American drivers can save money and reduce their carbon emissions.
Going forward, we hope to see the Treasury match USDA’s pace with better implementation of tax incentives that will allow ethanol producers to accelerate the nation’s progress toward a net-zero environment.
The path is clear, but challenges remain. Despite widespread, bipartisan support, some groups are urging the Treasury to block American agriculture from accessing sustainable aviation fuel incentives by arming inaccurate and outdated speculation about US agriculture – meaning American farmers will be locked into a new market for green energy.
Their goal is to stop the Internal Revenue Service from measuring the carbon intensity of sustainable aviation fuel based on a widely accepted and continuously updated model established by the Department of Energy’s Argonne National Laboratory. The gold standard for climate science, it’s called the Greenhouse Gases, Regulated Emissions, and Energy Use in Technologies (GREET) model.
If successful, such efforts to sideline GREET would undermine any serious effort to increase sustainable aviation fuel. As Biden said, “Mark my words: in the next 20 years, farmers will provide 95 percent of all sustainable jet fuel.”
Worse, if the IRS refuses to adopt GREET, it could signal to climate-savvy agricultural investors that regulators can’t be counted on to follow the science when it comes to other credits, such as the credit for clean fuels set to take effect in 2025 That’s the kind of uncertainty that can kill green projects before they get off the drawing board.
Fortunately, Congress pointed the Treasury in the right direction. In fact, several provisions of the IRA specifically require the use of GREET to calculate the benefits of non-aeronautical transportation fuels and clean hydrogen. Lawmakers on both sides of the aisle are speaking out to ensure a consistent approach is in place for the SAF.
American biofuel producers are more than willing to do our part. And by following the best available science, the Treasury will ensure that the two years of the IRA represent a real change in America’s energy transition, as Biden envisions.
Emily Skor is the CEO of Growth Energy, the trade association for ethanol and biofuels.
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