A bill to incentivize production of low-carbon biofuels by ensuring that the environmental benefits of these fuels are measured accurately when assessing tax credits has been reintroduced by Sens. John Thune (R-SD) and Amy Klobuchar (D-MN).
The so-called Adopt Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation (GREET) Act would require the U.S. Environmental Protection Agency (EPA) to update its greenhouse gas modeling for all renewable fuels under the Renewable Fuel Standard. The version reintroduced last month is based on legislation introduced in the Senate in 2020 and 2021 and the House in 2021.
The legislation would specifically require use of the Argonne National Laboratory’s GREET methodology for assessing the reduction in greenhouse gas emissions achieved by sustainable aviation fuels (SAF) and other biofuels over their entire life cycle, from the farm to use in the vehicle.
This assessment matters because the provisions of the Inflation Reduction Act (IRA) encourage development of biofuels technology with scaled tax credits that increase based on EPA estimates of the amount of emission reductions achieved by a biofuel. The ultimate goal of this legislation is to promote biotechnology solutions that help fight climate change by reducing GHG emissions.
Why the Argonne methodology is better
The EPA is still using a model established in 2010 that only recognizes ethanol as being about 20% cleaner than fossil fuels. However, the Department of Energy (DOE) relies on the more-accurate Argonne model, which shows ethanol reduces greenhouse gas emissions by around 50% compared to fossil fuels.
“Argonne National Laboratory is recognized globally as one of the leading experts in this type of (life-cycle analysis) research,” according to the DOE. “Argonne’s analysis found that carbon emissions from U.S. corn ethanol have fallen 20% between 2005 and 2019 due to increased corn yields per acre, decreased fertilizer use, and improved ethanol production processes.”
The EPA needs to join DOE in embracing the better methodology according to John Torres, Director of Federal Government Relations for Agriculture & Environment at the Biotechnology Innovation Organization (BIO).
“Older lifecycle models fail to recognize, and therefore fail to credit, technological advances in farming and biofuels, leading to woeful omissions in recognizing how modern-day practices are leading the way in lowering GHG emissions by 44%-52% compared to standard petroleum-based gasoline. The U.S. Department of Energy recognizes this.” Torres said. “It is unfathomable that two federal agencies disagree on using the latest science and discoveries to properly evaluate the progress that domestic biofuels have made in reducing GHG emissions.”
BIO supports the GREET Act
BIO has been promoting the GREET Act, and the use of the Argonne methodology, as a member of the SAF Blender Tax Credit coalition, a group of more than 80 companies and organizations seeking to ensure that cleaner fuels produced through biotechnology are properly incentivized, especially given new provisions in the IRA.
The IRA’s Section 40B establishes a Sustainable Aviation Fuel Blender’s Tax Credit (SAF BTC), which provides a refundable credit of $1.25-$1.75 per gallon in 2023 and 2024 for SAF with at least a 50% lifecycle GHG emission reduction that is blended with conventional jet fuel. The IRA’s 45Z Clean Fuel Production Credit also provides an enhanced value for production of SAF, up to $1.75 (and higher for carbon-negative fuels), based on specific carbon emission savings.
In a February 17 letter to U.S. Treasury Secretary Janet Yellen promoting the use of the Argonne GREET model to measure emission reduction, the SAF Blender Tax Credit coalition called for employing the most advanced technology to identify how biofuels can assist in climate mitigation.
“Treasury must implement science-based lifecycle methodologies that incentivize all methods and approaches for reducing GHG emissions from the SAF supply chain, are transparent, and incorporate well-accepted scientific research on lifecycle emissions. These methodologies should provide for granular carbon intensity calculation and recognize farm-level reductions from biofuel feedstocks, when applicable,” according to the letter.