Alternative aviation fuel credit guidance issued by Biden administration bolsters ethanol industry

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The Biden administration on Friday handed a win to the ethanol industry in its new guidelines outlining qualifications for a tax credit for alternative aviation fuels. 

The Treasury Department unveiled its guidelines for the “Sustainable Aviation Fuels” tax credit — which bolsters non-fossil fuels like biofuels that are used to power planes.

Under the tax credit, fuels that reduce greenhouse gas emissions by at least 50 percent are eligible for a credit of $1.25 per gallon. 

That 50 percent reduction will be calculated using a federal model known as the GREET model, which the ethanol industry has expressed support for over other models. 

The ethanol industry has raised concerns about other models, saying that under a European model, fewer fuels would qualify. 

Administration officials said they planned to release an updated version of the GREET model next year. 

Agriculture Secretary Tom Vilsack said the decision to use this model “would provide a pathway for corn-based ethanol, soy-based diesels…[and] bio-based fuels to be able to qualify for significant tax credits.” 

On the other hand, environmentalists have called for more stringent restrictions on what can qualify for the credit, and have raised concerns about ethanol’s land use.

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