By Sean Arians
In January, we will swear in a new president and members of Congress. With these changes will come new leadership and direction at some of the government’s top agencies. Among the issues top of mind at the National Corn Growers Association is protecting the sustainable aviation tax credit and making it accessible to farmers.
The tax credit, which was a product of the Inflation Reduction Act, passed in 2022, provides tax incentives for biofuel producers who wish to sell into the emerging aviation sector. This provides potential new demand for corn growers while also lowering the carbon footprint of the airline industry.
We have experienced many frustrations since the Biden administration tasked the U.S. Department of Treasury, the U.S. Department of Agriculture and EPA, among other agencies, with establishing the requirements for accessing the tax credit.
When they released the first version of the standard, these agencies established a carbon intensity score for farmers to meet, which is a reasonable development. However, the agencies would later issue guidelines specifying that growers must use a bundle of so-called climate-smart practices for their commodities to be eligible for the tax credit.
There is just one major problem with such an approach: Certain climate conditions preclude the use of some of these specified practices. For example, some climates are inhospitable to cover crop growth, one of the many bundling requirements for accessing the tax credit.
The Biden administration is taking stakeholder feedback as it reconsiders aspects of its original criteria and prepares to release updated guidance on phase two of this policy. Our team at NCGA is working collectively with policymakers, agencies, and supply chain partners to communicate to Biden administration officials the need to provide farmers with flexibility on these bundling practices. We also plan to make the case with the new administration and Congress that they should not revoke this tax credit.
While we continue this work with elected officials, farmers should understand two things about corn qualifying as an SAF feedstock, as it stands today: First, since we are waiting on the revised guidelines, there is technically no carbon intensity score that qualifies today for the tax credits unless you’re one of the few participating in the first wave of this program(40B). Secondly, there are many free programs available to farmers who wish to obtain their baseline scores, so there’s no need to pay for one. For example – Iowa State released a CI Calculator here: https://www.extension.iastate.edu/agdm/crops/html/a1-80.html
The sustainable aviation tax credit is illustrative of the requirements we will have to navigate as we cultivate new markets. Market development provides our organization the opportunity to engage in more research, direction, and partnership with agencies to ensure data is available and the full circle of impact is considered so farmers and agriculture don’t lose out.
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