US to release guidance on SAF subsidies this week
In January there was a lot of celebration from US ethanol producers. After 18 months of waiting, they were told that using ethanol as a sustainable aviation fuel (SAF) feedstock would be supported. More specifically, the US government said it would favour the GREET model over CORSIA in calculating emissions from ethanol used in SAF production.
When it made this announcement, the government said the GREET model is not fit for use and that it would release a new update on March 1st 2024.
But the deadline was missed. Our sources tell us that the update will now be released next week on April 15th. It looks certain that corn-based ethanol will not automatically qualify for subsidies.
Under the proposed changes, corn-based ethanol destined for SAF production will need to be produced through use of sustainable practices in tilling, use of cover crops or fertilizer application. Corn ethanol not produced using these three techniques will not qualify for subsidies.
This is not what producers were expecting.
Although, the policy is yet to be officially announced, there are a host of challenges that have been already identified.
Speaking to SAF Investor on the condition of anonymity, one of the ethanol-to-SAF producers in the US said: “the policy is not what the industry expected. It not only limits options for ethanol producers and users but also creates a lot of potential challenges.
“To begin with, grains are stored together. There is no way to ascertain which corn kernels were produced using sustainable practices and which weren’t. To keep supply chains for sustainable corn, starting from tilling until it reaches a SAF plant, separate would not be possible and doesn’t make any economic sense either.”
Moreover, he added that the proposed number of sustainable practices will significantly reduce corn (ethanol) available for SAF production limiting the availability of clean jet fuel in the short term.
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