Growth Energy: New 40B Guidance an Important First Step

Growth Energy, the nation's leading biofuel trade association, reacted to new tax and carbon modeling guidelines released today by the Biden administration. The guidelines, which will be used to calculate the section 40B Sustainable Aviation Fuel (SAF) blender tax credits under the Inflation Reduction Act, are an important step forward for the bioeconomy, according to Growth Energy CEO Emily Skor, who made the following statement in response:

"This guidance crosses an important threshold in carbon modeling, recognizing for the first time that farming techniques can reduce the carbon intensity of crops, and, by extension, bioethanol production. It's also the first time Treasury has used the Argonne National Laboratory's GREET model in federal tax policy. These are promising big-picture developments and signal that agriculture is a key part of our nation's climate strategy.

"The new 40B GREET model is trending with scientific consensus when it comes to measuring indirect land use change (iLUC). Years' worth of peer-reviewed research has shown that this number has been decreasing when it comes to bioethanol production. We hope future guidance for the 45Z tax incentive follows this trend and continues to reflect the falling iLUC values for American biofuels.

"Still, the administration's restrictive all-or-nothing approach to recognizing the value of climate smart agriculture practices may ultimately limit innovation and make farmers, blenders, and producers less - not more - likely to invest in emissions-reducing technologies. America's potential SAF producers and their farm partners need flexibility to find the path that works best for them, but these rigid guidelines will leave carbon reductions on the table.

"The SAF market is just getting off the ground, and today's guidelines are only the beginning of an important journey for the bioeconomy. As the administration builds on the 40B GREET model, its guidance for the 45Z tax credit must be less prescriptive and more expansive-fully embracing the totality of innovations that, by its own admission, can demonstrably reduce carbon intensity. Only then will the incentive structure give a strong market signal to producers that they've been given the green light on SAF, and that all of their innovations on the farm and at the plant will be properly rewarded."