Biden administration aviation fuel emissions model delayed

By Jarrett Renshaw and Leah Douglas

(Reuters) - The Biden administration will delay the planned Friday announcement of its revised climate emissions model for ethanol due to disagreements, two sources familiar with the matter said, extending uncertainty on whether the corn-based fuel will qualify for new sustainable aviation fuel (SAF) tax credits.

A White House spokesperson confirmed the delay and said the revised model would be finalized in the coming weeks.

The administration has been divided for months on how to implement a $1.25-per-gallon SAF tax credit included in the Inflation Reduction Act, which requires SAF producers to prove a 50% greenhouse gas emissions reduction over petroleum jet fuel.

The ethanol industry wants to become a major SAF supplier but has to show its climate benefit using an approved model.

The Biden administration in December said it would allow the industry to use its favored model - the Department of Energy's Greenhouse Gases, Regulated Emissions and Energy Use in Technologies (GREET) model - but only after revisions. Sources told Reuters at the time that new guidance would arrive on March 1.

But that has now been delayed, after a Thursday meeting at the White House involving key players from various agencies failed to resolve outstanding issues over the model revisions, according to the two sources familiar with the meeting.

"We are making progress on critical decisions for updating the model and issuing additional Treasury guidance, including the integration of key greenhouse gas emissions reduction strategies and climate-smart agriculture practices," the White House spokesperson said.

The Environmental Protection Agency did not respond to a request for comment.

"This delay is frustrating, but we’re optimistic that it’s happening for a productive reason," said Emily Skor, CEO of biofuel trade group Growth Energy.

"Ultimately, what’s most important is getting it right, and making sure that the resulting updates provide real opportunities for American farmers to contribute to the SAF market," she said.

The eventual revisions will likely stop short of allowing ethanol to automatically qualify as a feedstock for the SAF tax credit, forcing the industry to cobble together other practices like using solar power and sustainable farming to push them above the eligibility threshold, the sources said.

Environmental groups have argued a revised model should assign a higher penalty to ethanol for the carbon released when land is tilled for crops to provide a more accurate accounting of the fuel's emissions.

(Reporting by Leah Douglas and Jarrett Renshaw; additional reporting by Stephanie Kelly; writing by Leah Douglas, editing by Deepa Babington)