US fuel retailers protest green aviation fuel tax credit

An ethanol plant with its giant corn silos next to a cornfield in Windsor, Colorado on July 7, 2006

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NEW YORK, Aug 8 (Reuters) – U.S. fuel retailers oppose the inclusion of a Sustainable Aviation Fuel (SAF) tax credit in the $430 billion spending bill Democrats, arguing that SAF is more carbon intensive and less efficient than renewable diesel.

Lawmakers are offering an SAF credit of $1.25 to $1.75 per gallon depending on the feedstock used, as part of a tax and climate bill that aims to reduce U.S. carbon emissions by about 40% by 2030 and reduce the federal budget deficit by $300 billion.

The bill is expected to pass the Senate and pass the House with the SAF appropriation included next week. Democrats control the House and approval with merit is expected.

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Fuel retailers fear the credit will shift vegetable oil and other renewable feedstocks to aviation, leaving less for fuel producers who make renewable diesel.

The National Association of Truck Stop Operators (NATSO) and SIGMA, an association of fuel distributors, are urging lawmakers to oppose the Cut Inflation Act of 2022 unless it includes a tax parity between the biodiesel tax credit (BTC) and the proposed SAF tax credit.

A 2021 study by LMC International, an agricultural marketing consultancy, found that SAF production is less efficient at reducing carbon emissions than renewable diesel because it takes more feedstock per gallon of production.

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

Other conservationists have argued that any biofuels that divert lipid-based feedstocks such as animal fats and used cooking oils from existing markets present significant sustainability concerns.

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

Airlines have told investors they will increasingly use sustainable aviation fuel made from vegetable oil and other low-carbon feedstocks in a bid to decarbonize air travel. Due to poor economic conditions, the fuel represents only 0.5% of the current jet fuel pool.

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

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

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Reporting by Laura Sanicola; Editing by David Gregorio

Our standards: The Thomson Reuters Trust Principles.

Laura Sanicola

Thomson Reuters

Oil and energy reports, including refineries, markets and renewable fuels. Previously worked at Euromoney Institutional Investor and CNN.