Biden administration delays aviation fuel emissions model

By Jarrett Renshaw and Leah Douglas

(Reuters) - The Biden administration on Friday said its new climate modeling for sustainable aviation fuel feedstocks will be released in a matter of weeks, marking a delay that sources said was due to disagreements over the details.

The slow progress on the revised modeling has frustrated the biofuels industry by extending uncertainty over whether corn-based ethanol will be able to qualify for lucrative new subsidies for SAF production included in the Inflation Reduction Act.

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

The administration has been divided for months on how to implement the IRA's $1.25-per-gallon SAF tax credit, 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.

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.

"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 referred a request for comment to the Department of Energy, which did not immediately respond.

"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.

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