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Corn and Soy Biofuels Get Green Light for Sustainable Aviation Fuel Tax Credits: WSJ

The Biden administration has expanded the eligibility for sustainable aviation fuel (SAF) tax credits to include corn- and soy-based biofuels, as reported by the Wall Street Journal. The new guidelines released by the Treasury Department last week aim at incentivizing the production and use of SAF, which is crucial for reducing greenhouse gas emissions in the aviation industry.

Under the new guidelines, Producers of SAF are eligible for a tax credit of $1.25 to $1.75 per gallon. SAF that achieves a GHG emissions reduction of 50% is eligible for the $1.25 credit per gallon amount, and SAF that achieves a GHG emissions reduction of more than 50% is eligible for an additional $0.01 per gallon for each percentage point the reduction exceeds 50%, up to $0.50 per gallon.

The decision to include corn and soy biofuels in the SAF tax credit program has sparked debate. Proponents argue that it will boost domestic SAF production and provide a new revenue stream for biofuel producers, particularly as the demand for ethanol in gasoline blends is expected to decline with the rise of electric vehicles.

However, environmental groups have raised concerns about the potential environmental impact of increased corn and soy production, including deforestation and the conversion of land for fuel crops.

"Powering planes with crop-based biofuels is anything but sustainable," said Dan Lashof, director of World Resources Institute, U.S., in a statement.

The Wall Street Journal noted that the new guidelines also introduce a pilot program that grants emissions-reduction credits to producers who source feedstock from qualifying farms. However, some experts remain skeptical.

"The key issue moving forward is on climate-smart ag: Right now, what they’ve found with the pilot program inspires very little confidence," said Nik Pavlenko of International Council on Clean Transportation to Wall Street Journal. "Any legitimate path forward for it will have to rely on a much more rigorous scheme that involves monitoring, reporting, and verification, and actual measurement of CO2 changes."