Can corn ethanol really help decarbonize US air travel?

The Biden administration will allow ethanol producers to access tax credits for sustainable aviation fuel. Farmers and climate groups have mixed reactions.
By Maria Gallucci

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(Binh Nguyen/Canary Media/Education Images/Universal Images Group via Getty Images)

Last week, the U.S. Treasury Department released a set of highly anticipated and contentious tax-credit guidelines meant to spur production of sustainable aviation fuel, or SAF.

U.S. airlines burned over 12.4 billion gallons of jet fuel in 2023, nearly all of which were derived from fossil fuels. A mere 0.2 percent of that total was made from other sources — namely, processed animal fats and french-fry oil, the leading ingredients of SAF today in the United States and globally.

Air travel accounts for about 3 percent of all U.S. greenhouse gas emissions every year, and emissions are projected to soar in the future as more passengers take more trips. To address that, the Biden administration is pushing to dramatically expand supplies of lower-carbon alternative fuels, which can be used in existing jet engines and blended with standard jet fuel.

The White House has set a goal of increasing U.S. production of SAF to at least 3 billion gallons per year by 2030. That’s more than 100 times the amount of alternative jet fuels that airlines consumed last year.

To hit that target, U.S. fuel producers will have to gather significantly more fast-food grease and beef tallow for fuel processing. They’ll need to accelerate development of next-generation e-fuels,” such as synthetic kerosene, which is made from clean hydrogen and captured carbon. And, most likely, producers will turn to using ethanol — a biofuel that’s most commonly made from corn in the United States, though it also comes from sugarcane, soybeans, and crop residues.

Many industry observers agree that, in terms of volume, some ethanol is needed to reach the 3-billion-gallon goal, given the limited supply of other alternatives. Ethanol can be transformed into plane fuel through an alcohol-to-jet” process that uses grid electricity, fossil gas, and hydrogen. LanzaJets new Freedom Pines Fuels facility in Georgia is the first to deploy the process at commercial scale worldwide.

However, there’s far less consensus among experts when it comes to assessing the climate impacts of crop-based fuels — and whether they do, in fact, result in fewer carbon dioxide emissions than those made with fossil fuels. The answer largely depends on whom you ask, and on how you do the math.

Counting on climate smart” farming to drive down CO2 emissions

The new Treasury Department guidelines provide a pathway for ethanol producers to qualify for the federal tax credits, sending a broader signal to producers and their investors to start building more bio-refineries.

This interagency effort will help our climate goals take flight with cheaper, cleaner sustainable aviation fuel — ensuring America maintains an innovative edge on the global clean technology stage,” U.S. Secretary of Energy Jennifer Granholm said in an April 30 statement.

The LanzaJet Freedom Pines Fuels facility in Soperton, Georgia (LanzaJet)

Under the Inflation Reduction Act, the landmark U.S. climate law, SAF producers can receive $1.25 per gallon for fuels that are 50 percent lower in life-cycle emissions than standard jet fuel. The greater the emissions reduction, the more money companies can earn, up to $1.75 per gallon.

When Congress initially passed the law, in August 2022, it wasn’t immediately clear how ethanol would fit into this scheme, or which CO2-accounting methodology Treasury officials would use to calculate each fuel’s life-cycle emissions.

Depending on how and where ethanol is made, the biofuel can be just as polluting as — or worse than — the fossil jet fuel it’s meant to replace, studies show. Clearing forests or grasslands to grow crops, and using energy-intensive methods to make liquid fuels, can add emissions throughout the entire ethanol supply chain. There’s also a risk of diverting cropland away from food production.

But ethanol producers say it’s possible to produce low-carbon-intensity biofuels,” particularly when the corn or soy is grown using so-called climate-smart agriculture practices. The new tax-credit guidelines support this line of thinking. Producers can now subtract from their total life-cycle emissions if they source crops from farmers who use no-till techniques, plant cover crops, and apply enhanced efficiency” fertilizers.

It’s definitely a win for farmers that are pushing forward and trying to lower the carbon intensity of their agriculture,” Corey Stewart, a senior associate at the clean-energy think tank RMI, said of the new rules. It’s also a big win for the SAF industry, because they want to have the most climate-smart products possible and see real CO2 decreases.” (Canary Media is an independent affiliate of RMI.)

Treasury’s decision also drew applause from biofuel trade groups, major U.S. airlines such as United and American, and fuel producers like World Energy and Gevo. Reactions were more mixed among other groups representing farmers and ethanol producers. Their spokespeople welcomed the inclusion of biofuels in the tax-credit framework, but they bristled at the notion that farmers would be required to adopt one-size-fits-all practices.

A no-till planter is used to plant soybeans into a terminated cover crop. (Jason Johnson, NRCS-Iowa)

Meanwhile, environmental groups sharply criticized the tax-credit guidelines. World Resources Institute and Environmental Defense Fund, among others, questioned Treasury’s methodology for analyzing total CO2 emissions, which they say undercounts the life-cycle impacts associated with crop-based fuels.

Opening the door to converting either corn ethanol or soybean oil to jet fuel actually makes it harder to solve the climate problem, not easier,” said Dan Lashof, the U.S. director of World Resources Institute (WRI).

A major sticking point is how Treasury calculates the benefits of climate-smart agricultural practices under its updated version of the GREET model. For example, corn ethanol producers can now subtract 10 grams of CO2 per megajoule of energy — a measure of carbon intensity — if they source corn produced using no-till, cover cropping, and efficient fertilizers.

But that uniform number can mask the fact that, in reality, the actual benefits of such practices vary widely depending on location, season, and myriad other factors. Measuring the true climate impact of, say, no-till methods can require frequent on-site sampling of soil cores — a step that’s often prohibitively expensive and logistically complex for many farmers.

We need a lot more information about how these practices work, and what their net impact on the carbon cycle is,” said Freya Chay, a program lead at CarbonPlan, a nonprofit that analyzes climate solutions. She pointed to a 2022 study that found CO2 reductions from no-till methods can diminish quickly, reaching zero in 14 years, though she noted other benefits of the practice, including reducing erosion and improving soil health.

The same questions we’ve had about the best use of land and whether corn-based ethanol makes sense, in terms of tracking toward our climate goals, still stand,” Chay said of the new tax-credit rules. We should still be asking really carefully whether or not this makes sense moving forward, and whether or not we should be devoting a new era of public funding to it.”

Despite the controversy stirred up by the new tax-credit guidance, the SAF incentives aren’t expected to drive an immediate surge in U.S. ethanol production for jet fuel.

That’s because Treasury’s guidance is specific to the 40B credit, which is only in effect for 2023 and 2024. Given that it typically takes fuel producers around three years to build a new biorefinery, the tax credit hardly moves the needle for SAF producers. Nevertheless, the decision signals to the broader industry that the Biden administration supports the use of crop-based fuels — a source of concern for environmental groups, and an encouraging sign for airlines and fuel producers.

What’s next for SAF after 2027 is still TBD

Once 40B expires, a new incentive called the Clean Fuel Production Credit (45Z) will take effect from 2025 to 2027. Federal officials said they’ll develop yet another CO2-accounting framework for the 45Z tax credit and will do further work” on modeling, data, and assumptions used to credit agricultural practices.

Hopefully there’s an opportunity for the administration to revisit the assumptions built into this [40B] model and adopt an approach that is more consistent with the best available science,” said WRI’s Lashof.

What happens after 2027 is still to be determined. U.S. policymakers historically have extended or reinstated tax credits for road-based biofuels, which suggests Congress might do the same for the SAF tax credit. Industry experts and fuel producers say they’re pushing for more clarity and certainty around such policies as the nation works to boost supplies.

Scaling up SAF production is going to require tens to hundreds of billions of investment dollars going to new production facilities, and moving that capital off the sidelines requires certainty,” said Gene Gebolys, CEO of World Energy. The Boston-based SAF producer uses waste fats and used cooking oils to make its fuels, though the company is considering next-generation feedstocks such as low-carbon-intensity alcohols and e-fuels made from hydrogen and captured carbon.

As public support begins to come into clearer focus, more capital can move more quickly to a cleaner aviation future,” he said by email.

Global SAF production capacity is expected to increase 10-fold by the end of the decade — and much of it will still come from animal fats and used cooking oil ("hydroprocessing" in this chart). Ethanol-based fuels ("alcohol-to-jet") accounts for a smaller share. (BloombergNEF)

While crop-based fuels might play a role in meeting near-term SAF goals, their long-term viability is even less certain, particularly if air travel continues to soar in the coming decades. A new report by the Clean Air Task Force examined the different pathways to decarbonizing the global aviation industry. Analysts assumed there’d be no further growth in biofuel supplies after 2030.

That’s when we started running into these land sustainability issues,” said Thomas Walker, the transportation technology manager at Clean Air Task Force and the report’s lead author. We’re not against ramping up biofuels,” he added. We just worry about over-ramping biofuels and pushing into land that we need for agriculture.”

Walker called for greater investment and policy support for solutions other than biofuels, such as e-fuels and hydrogen-fueled aircraft — technologies that are far earlier on the development curve but ultimately promise deeper reductions in aviation emissions.

We don’t think biofuels are going to be enough to tackle the problem at all,” he added.

Maria Gallucci is a senior reporter at Canary Media. She covers emerging clean energy technologies and efforts to electrify transportation and decarbonize heavy industry.