Fuel merchants in the United States are protesting the inclusion of a tax credit for sustainable aviation fuel (SAF) in Democrats’ $430 billion budget bill, claiming that SAF is more carbon intensive and inefficient than renewable diesel.

As part of a tax and climate measure that aims to reduce U.S. carbon emissions by nearly 40% by 2030 and reduce the federal budget deficit by $300 billion, lawmakers are granting a $1.25-$1.75 per gallon SAF credit, depending on the feedstock used.

Next week, the bill is expected to pass the Senate and be sent to the House with the SAF credit added. Democrats control the House, so credit approval is expected.

Fuel dealers are concerned that the credit will move vegetable oil and other renewable feedstocks to aviation, leaving less for renewable diesel manufacturers.

The National Association of Truckstop Operators (NATSO) and SIGMA, a gasoline marketers association, are pushing lawmakers to vote against the Inflation Reduction Act of 2022 unless it includes tax parity between the biodiesel tax credit (BTC) and the proposed SAF tax credit.

According to a 2021 study conducted by LMC International, an agricultural marketing consultancy, SAF production is less efficient at reducing carbon emissions than renewable diesel because it requires more feedstock per gallon of output.

“SAF cannot compete with other renewable fuels on an environmental basis,” said David Fialkov, executive vice president of government affairs at NATSO.

Other environmentalists have suggested that all biofuels that take lipid-based feedstocks from established markets, such as animal fats and waste cooking oils, pose serious sustainability difficulties.

“Increasing the global supply of vegetable oils, directly or indirectly, necessarily comes at the cost of forests and other natural lands,” experts at the International Council on Clean Transportation wrote in an August briefing.

In an effort to decarbonize air travel, airlines have assured investors that they will utilize more sustainable aviation fuel generated from vegetable oil and other low-carbon feedstocks. Because of poor economics, the fuel barely accounts for 0.5 percent of today’s jet fuel pool.

Aviation accounts for 3% of global carbon emissions and is regarded one of the most difficult areas to reduce emissions due to a lack of alternative technology.

However, the White House has pledged to reduce aviation emissions by 20% by 2030, with the objective of increasing SAF production to 3 billion gallons per year by 2030 and meeting 100% of aviation fuel demand of around 35 billion gallons per year by 2050.

Source: Reuters


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