15 June 2021

GreenAir News

Reporting on aviation and the environment

New bills introduced in US Congress provide incentives for sustainable aviation fuel production

US Democrat Senator Sheldon Whitehouse has introduced a new bill, the Sustainable Aviation Fuel Act, that sets a goal of achieving a net 35% reduction in US aviation greenhouse gas emissions by 2035 and net zero emissions by 2050. The bill, S. 1608, would create a grant programme authorised at $1 billion over five years to expand the number of US facilities producing SAF and build out the necessary supporting infrastructure. It also requires the Environmental Protection Agency to establish an aviation-only low carbon fuel standard that regulates aviation fuel producers and importers. The bill also calls for a new blender’s tax credit that was included in proposed legislation introduced in the House of Representatives by Congresswoman Julia Brownley in February, although she is now co-leading a new House bill, the Sustainable Skies Act, which has just been introduced by Congressman Brad Schneider that would also create the tax credit. The Schneider bill has received support from the US airline industry, US NGOs and SAF producers. Meanwhile, the US Department of Energy has announced funding of $35 million towards research into optimising biofuel manufacturing to reduce carbon waste, with an award going to alcohol-to-jet technology company LanzaTech.

“Air travel connects the world in all kinds of important ways but comes with a high price for our climate,” said Whitehouse, a strong advocate for policies addressing climate change, environmental protection and a price on carbon, on the introduction of his bill, S. 1608. “The best solution is to transition away from fossil jet fuels and encourage the production of sustainable fuel alternatives that are just as safe for passengers and much safer for the planet.”

Whitehouse said in a press statement that although sustainable aviation fuel (SAF) was starting to be produced both in the US and internationally, it wasn’t at a scale fast enough to achieve long-term climate change goals.

“The same feedstocks used to produce SAF are also used to produce renewable diesel, which is primarily for ground transportation,” said the statement. “If not corrected, the lack of policy incentives to produce SAF rather than cheaper renewable diesel will have long-term consequences for the climate.”

Added Californian Senator Dianne Feinstein, who is co-sponsoring the legislation: “Air travel is a significant contributor to climate change and we need to take strong action to reduce its emissions. This bill complements California’s low carbon fuel standard so aviation fuel can be used closer to where it’s produced.”

As well as the $1 billion grant programme and the establishment of a Low Carbon Aviation Fuel Standard under the Clean Air Act in which parties will have to comply with a carbon intensity benchmark that declines each year, the Act would require the FAA to conduct additional research on ways to increase SAF utilisation in the aviation sector and require the Department of Defense to increase SAF utilisation to 10% from 2024, so long as it was cost competitive with fossil jet fuel and readily available.

It would also expand the existing energy investment tax credit to include SAF production facilities and related infrastructure. The credit would be a 30% credit through 2026 and then falling in stages to 12% from 2029 to 2035, at which point it would fully phase out.

The Act finds common ground with the Schneider proposed legislation in establishing a blender’s tax credit for SAF of between $1.50/gallon and $1.75/gallon, depending on the reduction of GHG emissions achieved by the SAF, although the Whitehouse bill would scrap SAF eligibility for the existing $1/gallon biodiesel tax credit in order to prevent ‘double dipping’.

Under the Schneider legislation, the £1.50/gal tax credit would apply to blenders that supply SAF with a demonstrated 50% or greater lifecycle estimate reduction in GHG emissions compared to standard jet fuel. In order to incentivise greater reductions in emissions, his legislation provides an additional credit of $0.01/gal for each percentage the fuel reduces emissions over 50%, so a SAF that reduces emissions by 70% would receive a credit of $1.70/gal. The tax credit would expire at the end of 2031.

To ensure environmental integrity, the legislation would exclude palm fatty acid distillates (PFAD) as an eligible feedstock “due to its detrimental environmental record” and would require eligible SAFs to conform with the full ICAO sustainability criteria, including accounting for both aggregate attributional core lifecycle emissions and the induced land use change.

Rep. Brad Schneider: “Implementing sustainable aviation fuels is the single most important step the aviation industry can take to combat climate change and I’m proud to take this legislation to the House”

“Air travel has changed the world and will be a growing part of our future. It is imperative for America to confront the existential challenge of climate change by making air travel cleaner,” said Schneider, an Illinois representative, in a press statement. “The Sustainable Skies Act will halve carbon emissions while also enabling more travel and commerce, a win-win for Americans today and our future generations.

“Implementing sustainable aviation fuels is the single most important step the aviation industry can take to combat climate change and I’m proud to take this legislation to the House with the support of both Illinois-based companies like United and LanzaJet, and climate change champions like the Environmental Defense Fund (EDF) and the World Wildlife Fund (WWF).”

United Airlines CEO Scott Kirby described the Act as a critical step on the path the decarbonise his airline and the broader airline industry, while Nicholas Calio, President of industry body Airlines for America, said the measure would go a long way towards improving the cost-competitiveness of SAF.

“The US airline industry has set a goal of making 2 billion gallons of environmentally-friendly SAF available for US carriers to use in 2030 and supportive measures like this will enable us to achieve that goal,” said Calio.

The Act has the support of two unions, the Air Lines Pilot Association (ALPA) and the Association of Flight Attendants-CWA.

“Flight attendants know first-hand the threat climate change poses to our safety and our jobs – increased turbulence, extreme weather events and more,” said Sara Nelson of the union that represents 50,000 flight attendants at 17 airlines. “We urge Congress to act urgently to support the production and use of SAF and reduce the aviation industry’s reliance on petroleum-based jet fuel, ensuring real reductions in aviation emissions. The time for investment is now.”

Added ALPA’s Capt Bob Fox: “From our flight deck window, airline pilots have a rare perspective on the earth. We see the droughts, forest fires and storms that are linked to climate change but our view is also shaped by practices and policies that already allow us to contribute to a cleaner environment. Airline pilots are eager to do even more to protect our planet and that’s why ALPA supports the Act.”

Paul Bledsoe, Energy Fellow and strategic advisor at the Progressive Policy Institute, said passing the Act “is the single most important near-term action Congress can take to reduce GHG emissions from aviation. Right now, SAF is not widely available, so durable tax incentives are needed to jumpstart much higher production and use, and to reduce long-term costs so the credit can be phased out after a decade. This crucial legislation should be included in infrastructure bills Congressional tax committees are writing and passed into law at the earliest opportunity.”

EDF’s SVP for Climate, Nat Keohane, told a media call hosted by Schneider that it was important sustainable fuels were genuinely sustainable and that the Act created the right incentives, and that it was performance based and excluded some of the most problematic pathways of the past.

“It is designed so that the incentive grows with the carbon benefit and we’re excited about the broader environmental safeguards, with a rigorous sustainability criteria that the US government helped to put in place at ICAO so that only those fuels with the highest integrity get the tax credit. This will ensure, for example, that biofuels from deforested land don’t qualify, which is a critical aspect. We are also pleased the bill provides for e-fuels, or power-to-liquid fuels, which will be a key part of the mix going forward,” he said.

With two similar pieces of legislation being introduced in Congress at the same time, EDF and WWF are supporting both.

“We supported the original bill introduced in the US House of Representatives by Congresswoman Brownley, and Senator Whitehouse introduced the companion bill in the Senate last week,” Kelley Kizzier, EDF’s VP Global Climate, explained to GreenAir. “We see these as complementary, a continuation of our partnership. Representative Brownley’s Sustainable Aviation Fuel Act reflects a comprehensive approach, including a blender’s tax credit provision and a national goal for decarbonising the aviation sector. The Sustainable Skies Act focuses on the blender’s tax credit and allows us to go deeper into this element of the broader decarbonisation agenda to introduce robust environmental safeguards.”

Brad Schallert, WWF’s Director of Carbon Market Governance and Aviation, said: “Aviation emissions are projected to triple by 2050 but there is a route for the aviation industry to support a climate-safe and more environmentally sound future for the planet. Powering planes with SAF is an indispensable step along this journey and Congress can help realise it by passing Senator Whitehouse’s Sustainable Aviation Fuel Act.”

Industry though is throwing its weight behind the Schneider bill. “The blender’s tax credit may be able to move forward to adoption more quickly than a SAF bill with many components, thus helping to support the scale-up of SAF production and bringing related GHG emissions savings, jobs, energy security and other benefits in the nearer term,” a source told GreenAir.

Others supporting the Schneider bill include Third Way, the Rocky Mountain Institute, the Biotechnology Innovation Organization and some US aviation trade associations. As well as Brownley, the bill is co-led by Congressman Dan Kildee, and Democrat Senator Sherrod Brown is expected to introduce a Senate companion bill shortly.

Rep. Julia Brownley: “There’s a lot more to be done but we’ve made extraordinary progress and the Biden administration is now supporting the blender’s tax credit and we look forward to the continued work and advocacy to move this bill forward”

“The United States can be a leader in the shift to cleaner, more sustainable fuels that will create good-paying jobs across the aviation sector,” said Brownley. “I’ve been pleased to work on the blender’s tax credit provision with Congressmen Schneider and Kildee, together with a broad coalition of stakeholders. The Sustainable Skies Act we are introducing is a consensus proposal that has the support of environmentalists, airlines, SAF producers and labour, and this clearly demonstrates that SAF policy can be both a win for the environment and a win for the economy. There’s a lot more to be done but we’ve made extraordinary progress and the Biden administration is now supporting the blender’s tax credit and we look forward to the continued work and advocacy to move this bill forward.”

Brownley told the media call she still supported components in her own bill that are now in the Whitehouse bill, such as on SAF production infrastructure and the Low Carbon Aviation Fuel Standard. “I am continuing to work on all of this – it’s just that parts of my bill are longer term but this [the Sustainable Skies bill] can be done now and really be an engine to move this industry forward.”

Jeremy Baines, President of SAF producer Neste US said the blender’s tax credit legislation was a practical solution that could be immediately deployed and accelerate the production and use of SAF. LanzaJet CEO Jimmy Samartzis said a long-term, performance-based blender’s tax credit would allow his company to be able to invest in and produce SAF at scale across the nation.

The Whitehouse bill requires the FAA’s Center of Excellence for Alternative Jet Fuels and the Environment to conduct additional research on ways to increase SAF fuel utilisation in the aviation sector and the impact of aviation emissions on the climate crisis. It also requires the Department of Energy (DOE), in consultation with the Department of Agriculture, to research the use of cover crops in the production of SAF.

Meanwhile, the DOE’s Advanced Research Projects Agency-Energy (ARPA-E) has announced a total of $35 million in funding awarded to 15 research projects towards advancing new technologies to decarbonise biorefining processes across the energy, transportation and agriculture sectors. It said biofuels, including ethanol, biodiesel and other products derived from organic material, are almost exclusively produced via a fermentation conversion process that create carbon as a by-product, with some processes wasting more than a third of this carbon as CO2. As a result, says DOE, there is a critical need to create new pathways for biofuel conversion that reduces carbon waste, prevents the loss of CO2 emissions and, in turn, maximises the amount of renewable fuel a conversion process yields.

“Biofuel is a powerful tool in the clean energy toolkit that has immense potential to power our ships and airlines with zero carbon emissions,” said Secretary of Energy Jennifer Granholm. “DOE is investing in research to reduce emissions and maximise the availability of efficient biofuel as we strive to reach President Biden’s net-zero carbon goals.”

Most of the recipients of the funding are universities and laboratories but an award of $4.1 million has been made to alcohol-to-jet fuel pioneer LanzaTech. The company, which will partner with the University of Michigan and Oak Ridge National Laboratory, says the funding will be used to enhance existing technology to enable the direct conversion of CO2 to ethanol at 100% efficiency. It will develop a gas fermentation process that leverages affordable, renewable hydrogen to directly capture and fix CO2 into fuels and chemicals while limiting emissions of CO2 into the atmosphere. The carbon optimised conversion technology developed under the project can be integrated within multiple CO2 sources, such as corn grain ethanol refining and direct air capture to create a new carbon economy, said LanzaTech.

Photo: United Airlines