US issues partial guidance on clean fuel subsidies, chafing ethanol makers

(Reuters) - The U.S. government on Friday released short-term guidance on how companies can secure clean fuel tax credits under the Inflation Reduction Act, but fell short of finalizing the program's key details.

Biofuels groups are eager for clarity on the tax credits for fuels that combat climate change, which they hope will ultimately provide a pathway for corn-based ethanol to expand its market as a feedstock for sustainable aviation fuel.

The U.S. Treasury Department issued the guidance, saying it provides new details on how to ensure fuels meet certain emissions-reductions criteria to access the subsidy, and adding that a crucial climate model upon which the program relies will be available in the coming days.

"This guidance will help put America on the cutting-edge of future innovation in aviation and renewable fuel while also lowering transportation costs for consumers," said Deputy Secretary of the Treasury Wally Adeyemo. 

"Decarbonizing transportation and lowering costs is a win-win for America."

Biofuels groups were less enthusiastic, saying the guidance left several final decisions to President-elect Donald Trump's administration.

"This long-overdue guidance is far from complete - it still lacks the critical details that are needed to help ensure that American biofuel producers and their farm partners can lead the world in clean fuel production," said Growth Energy CEO Emily Skor. 

Reuters reported earlier on Friday that the administration intends to release the program's climate model next week, but that it will not include adjustments for so-called climate smart agriculture practices - like no-till farming - which the ethanol industry hoped it could use to meet lifecycle emissions requirements.

"While we appreciate the work of (U.S. Agriculture) Secretary (Tom) Vilsack to champion our issues on behalf of rural America, today’s announcement falls short of providing the information that our industry and its farm partners need, including a model for an expanded number of eligible decarbonization technologies and guidance on climate smart agriculture (CSA) practices," Skor said.

"We look forward to working with the next Administration to fill in the gaps left by today’s announcement," she said.

Trump has vowed to repeal Biden's 2022 Inflation Reduction  Act, which launched the program, to pay for the extension of his  tax cuts, but doing so would require support from Congress. 



Biden’s administration set a target to generate 3 billion gallons of sustainable aviation fuels by 2030.

Air travel contributes around 2.5% of global greenhouse gas emissions, making it a big target in the fight against climate change.

Source: Investing.com