Airlines Launch Effort Backing Green Jet Fuel Tax Credit That Could Raise Food Prices For Americans

From THE DAILY CALLER

Daily Caller News Foundation

ROBERT SCHMAD
CONTRIBUTOR

A coalition of major airlines has formed a group supporting a tax credit pushed by President Joe Biden that experts say could jack up food prices.

More than 40 companies, including Boeing, American Airlines, JetBlue and United as well as ethanol trade groups, are pushing the federal government to “expand” existing tax credits for “sustainable aviation fuel” (SAF) and to pass legislation to increase the fuel’s availability, Axios reported. Corn-based ethanol is a common component in SAF and experts previously told the Daily Caller News Foundation that increasing the demand for corn by incentivizing its use in jet fuel could indirectly raise food costs for Americans. (RELATED: Biden Admin Unveils Green Jet Fuel Subsidy Rules In Win For Big Corn)

The Biden administration is reportedly planning to disclose how it will measure eligibility for the SAF tax credit, per recent reports. A bipartisan group of senators, many of whom represent states that produce large amounts of corn, sent a letter to Treasury Secretary Janet Yellen in June 2023 urging her department to adopt the U.S. Department of Energy’s Greenhouse Gases, Regulated Emissions, and Energy Use in Technologies (GREET) model for calculating SAF tax credits.

GREET, if adopted, would make it easier for ethanol to be deemed sufficiently eco-friendly to qualify for SAF tax credits.

The SAF credit, created by Biden’s Inflation Reduction Act, provides airliners with a tax credit worth $1.25 for each gallon of SAF contained within a qualifying mixture of jet fuel, according to the Internal Revenue Service. In order to qualify for the credit, the SAF must have a minimum reduction of “50% in lifecycle greenhouse gas emissions,” with additional credit available for fuels offering greater reductions.

If demand for ethanol increases as a result of the fuel qualifying for tax incentives, Americans could see their grocery bills go up, according to experts.

Increased ethanol in jet fuel will produce costs “borne by consumers, taxpayers and the environment,” Distinguished McKnight University Professor of Applied Economics and Law at the University of Minnesota C. Ford Runge, previously told the DCNF.

Ethanol production increases the cost of food by making corn more expensive and by increasing the cost of feed used to produce meat, dairy and eggs, according to an Iowa State University policy brief.

Airlines are pushing to expand the credits at a time when average Americans are struggling to keep up with surging food prices. Food spending as a proportion of income in the U.S. reached its highest point since 1991 in 2022, according to the U.S. Department of Agriculture.

Runge said that ethanol SAF tax credits are “not going to do much for global warming, but it will do quite a lot to benefit the renewable fuel industry and it will also indirectly benefit corn prices.”

It’s also unclear if SAFs will have any sizable impact on carbon emissions, Stanford University Civil and Environmental Engineering professor Mark Jacobson previously told the DCNF.

“SAFs are definitely not a climate solution at all, let alone an effective solution,” Jacobson said. “Ethanol production from corn increases CO2-equivalent emissions by 0 to 24% relative to gasoline and increases the price of corn (making it more expensive to eat).”

Increased corn cultivation spurned by increased ethanol production could also further deplete already strained aquifers in America’s heartland, according to a New York Times analysis.

The Treasury Department did not immediately respond to the DCNF’s request for comment.

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April 30, 2024 6:08 am

A subject I know nothing about- but, I’d be surprised that producing ethanol for jets would have much effect on the price of food- given the zillions of acres of corn out there. But …. also admitting my ignorance on the topic, that I suspect adding it to jet fuel will degrade the jet fuel- like it does to my chainsaws ’cause I’m too lazy to clean them out at the end of the year- which is why I now have a nice electric saw for my backyard and huge half acre woodlot.

Reply to  Joseph Zorzin
April 30, 2024 6:13 am

Whenever I’ve driven across America’s corn belt- I’m shocked to see corn from horizon to horizon for several hundred miles- growing on that very good soil- thinking, this must have once been a fantastic ecosystem with wildlife so abundant as to be unimaginable today.

Reply to  Joseph Zorzin
April 30, 2024 6:17 am

And… I like the corn cob jet! I used to be quite the nerd- always learning new computer tricks but I’m now too lazy in my geezer-hood to get into AI- but if I did, I’d probably rally enjoy the creative potential. I’m an art lover- but have zero skill to do art- with AI, at least it would be possible to come up with some fun stuff.

Paul S
Reply to  Joseph Zorzin
April 30, 2024 7:34 am

The prairie potholes that provide habitat for the migrating ducks and geese are getting filled in so more corn can be planted. It’s a real shame and ranks up there with whale deaths and raptors being killed by wind turbines.

Reply to  Joseph Zorzin
April 30, 2024 6:40 am

Ethanol is not blended with jet fuel in this concept. It is used as a starting material for chemical conversion to a kerosene-like product which will be tested and qualified to be used as a substitute for jet fuel refined from petroleum. The resulting product is called “SAF” or “Sustainable Aviation Fuel.”
https://cen.acs.org/energy/biofuels/Gevo-convert-fuel-ethanol-ADM/99/i40

Reply to  David Dibbell
April 30, 2024 6:52 am

How much will it increase the cost to the airlines?

Reply to  Joseph Zorzin
April 30, 2024 7:23 am

As of last November, the prices were $6.69 for SAF vs. $2.85 for conventional jet fuel (per gallon.) I suppose they hope to drive down the cost with higher volume production.

https://www.reuters.com/sustainability/us-sustainable-aviation-fuel-production-target-faces-cost-margin-challenges-2023-11-01/

Reply to  David Dibbell
April 30, 2024 8:02 am

During the time I spent in naval aviation we often used 2000 pounds an hour for fuel (JP5/8) use in jet I flew in. Guesstimate that as 333 gal/hr. Depending on mix ratio and energy reduction corn fuel I think easily run $1000 dollars/hr more to operate.

I wonder if F-18 could still get extra speed in afterburner with cornfuel.

Reply to  David Dibbell
April 30, 2024 8:14 am

drive down the cost from a government funded project- that’s funny

Reply to  Joseph Zorzin
April 30, 2024 8:52 am

Good point!

Reply to  David Dibbell
April 30, 2024 12:38 pm

SAF would have quite an impact on the cost of airline ticket as fuel costs are in the range of 25-30% of an airline’s expense. Not happy news with high inflation.

Reply to  Ollie
April 30, 2024 12:43 pm

the rich won’t mind- barely notice

Reply to  Joseph Zorzin
April 30, 2024 7:27 am

Fuel costs about 4x as much to make via the biofuel route as is does to pump oil out of the ground and refine. Big gasoline taxes, and big incentives for ethanol skew the economics.

Citizen Smith
Reply to  DMacKenzie
April 30, 2024 1:16 pm

Don’t worry. Once oil is outlawed it will all make more sense.

leefor
Reply to  David Dibbell
April 30, 2024 8:01 pm

And the products of burning? CO2 and H20. More virtue signalling. 😉

Reply to  leefor
May 1, 2024 3:52 am

Indeed.

Reply to  David Dibbell
May 1, 2024 5:14 pm

A bit late to the party here but, thanks for beating me to it David. Ethanol is C2 (2 carbons) and is over 30% by weight oxygen. It would be a very horrible jet fuel, which is generally C8 or more (mostly around C14-ish) and is cycloalkanes, paraffinic linear and branched alkanes and some aromatics, all oxygen-free. The ethanol to jet process involves oligomerization, hydrodeoxygenation and hydrogenation processes.

Very lazily-written article.

rovingbroker
Reply to  Joseph Zorzin
April 30, 2024 6:58 am

U.S. Department of Energy Deputy Secretary David Turk joins U.S. Agriculture Secretary Vilsack, other government officials, and industry leaders for first-of-its kind SAF facility ribbon-cutting
January 24, 2024

The facility, which has been supported by DOE’s Bioenergy Technology Office (BETO) since 2016, will produce nine million gallons of SAF and one million gallons of renewable diesel in its first year of operations. In addition to the decarbonization benefits provided by SAF, the facility is expected to provide the local economy with an estimated $5 million in new wages and benefits, $70 million in annual economic activity, and an estimated 80 new jobs.

https://www.energy.gov/eere/bioenergy/articles/first-ethanol-alcohol-jet-sustainable-aviation-fuel-production-facility

There’s gold in them corn fields.

John XB
Reply to  Joseph Zorzin
April 30, 2024 8:09 am

The corn you see must mostly be destined for Human consumption. When some of it is diverted to provide fuel, that reduces the amount available for Human consumption, and that pushes up prices globally.

It also encourages – via the inevitable subsidies – change of land use, so that land growing food crops are converted to growing crops for motor fuel. This reduces food production and increases prices.

atticman
Reply to  John XB
April 30, 2024 1:39 pm

That’ll hoist the price of taco shells!

strativarius
Reply to  Joseph Zorzin
April 30, 2024 9:27 am

Reduce available land – and supply – Jack up the price

don k
Reply to  Joseph Zorzin
May 1, 2024 5:16 am

I don’t know much about it either, but I do think the corn varieties used for transportation ethanol are different than those used for food, popping, livestock feed, and beverages. So maybe the effect on food would be minimal … maybe … or not.

I also seem to recall that the whole corn ethanol thing was a boondoggle dreamed up not by the greens or the Democrats, but by the GWB administration to benefit American farmers who were capable of growing more corn than anyone wanted to eat.

I do wonder if anyone has done the math. There are a lot of jet aircraft out there. More every year. And they burn a LOT of fuel. Is it remotely possible to grow enough corn/palm oil/whatever to keep the fleet in the air? I suspect not.

Reply to  don k
May 1, 2024 6:50 am

There might be enough corn for jets- but it’s a dumb idea- and a waste of the land. I believe most of the corn is feed for cattle ’cause we gringos love meat. 🙂

Reply to  Joseph Zorzin
May 1, 2024 5:28 pm

Yeah, don is correct, the ethanol bill was signed by George W., and yes, ~70% of the corn is the starch component which is irritable to bovine digestive systems, but the other 30% and the spent yeast is highly nutritious, is saved and becomes Dry Distiller’s Grains with solids (DDGS) which is the cattle food co-product.

There is an argument that, in fact, the product of the process is the DDGs and the co-product is the ethanol. It’s actually a reasonable argument IMO.

So, in total, those arguments or memes, that Mexicans were dropping dead because of a shortage of tortillas were somewhat exaggerated. I never actually knew who was propagating that propaganda.

Thanks for helping me sort out my dinner menu for this evening. I shall head out and buy a couple of ribeye steaks …….. bye

Reply to  don k
May 1, 2024 7:05 am

So maybe the effect on food would be minimal

Only if existing crop land is not repurposed for growing ethanol corn. Incentives to farmers (whether tax incentives or simply more profit per acre) would impact that.

Tom Halla
April 30, 2024 6:09 am

Ethanol as fuel is mostly rent seeking.

Reply to  Tom Halla
April 30, 2024 6:55 am

I never heard the term “rent seeking” until a decade ago- I now hear it a lot, mostly in climate discussions- so I presume lots of rent seekers in that world. I suppose with all the gazillions of dollars to be spent to save the planet, lots of room for rent seekers to tap into that biggest gold mine of all time. Of course, with a real gold mine, something is added to the world of some use- gold- but this gold mine is 100% scam.

Reply to  Tom Halla
April 30, 2024 11:20 am

It’s entirely rent seeking. Unfortunately, in order to keep ‘farm state’ Republican squishes from completely selling out to the Democrat Left (redundant, I know), it is necessary for us to keep bowing before Big Corn.

rovingbroker
April 30, 2024 6:52 am

Martha! Cancel the soybeans. We’re planting 100 percent corn this year. Call Bob and see if he’ll rent us a few hundred acres. And … go long $100,000 of August 2024 Corn futures.

Reply to  rovingbroker
April 30, 2024 11:22 am

Belay cancelling the soybeans – we need them for bio-diesel.

barryjo
Reply to  rovingbroker
April 30, 2024 4:19 pm

Would that explain the price of over $3000/acre for farmland?

April 30, 2024 7:07 am

Some day oil will begin to run out and become extremely expensive. What then? Corn? How ’bout that other “C” word? You know, Coal. South Africa has been making synfuel from coal for years: https://en.wikipedia.org/wiki/Sasol

Reply to  Steve Case
April 30, 2024 7:29 am

Exxon developed another method for converting coal to liquid fuels. This was during the time I worked for them ’78-’80 in Baytown TX, although I was not involved at the pilot plant that demonstrated it.
https://en.wikipedia.org/wiki/Exxon_donor_solvent_process#:~:text=Exxon%20donor%20solvent%20process%20(EDS,a%20substitute%20for%20petroleum%20products.

Mr Ed
Reply to  Steve Case
April 30, 2024 7:49 am

Fisher-Tropsch from wood was the process used by Germany in WWI and with coal in
WWII to run their war machine.

Volvo has built a portable unit that with a tank of LNG can be placed in a wooded
area with some logging equipment/chippers and produce diesel in situ. Wood chips
feed in on one end and diesel flows out the other end, a very high grade diesel.
Set up and run 24/7.

Yield is 80ish gallons per ton @ 20T/acre. In my area there is several billion gallons of fuel potential just in beetle killed trees that the FS is in the process of burning…The 40K acre project near me has a rough yield of $190M in fuel.. Under federal law it requires the approval of the Wood Products
Assn and they have denied approval..but don’t get me started.

Reply to  Mr Ed
April 30, 2024 10:17 am

Link to the Volvo claim?

Mr Ed
Reply to  Steve Case
April 30, 2024 10:45 am

No links, I was sent some photos of one back in ’08 that was in
Vermont being used on some private timber ground. The
guy who sent it was involved with a boiler company that was
building sections of some 4 or 5 250kw biomass plants up in Canada being
built to clean up large amount of bugkill timber. The sender had personally
seen it in use and had taken the pics there another north of the border.
It was during the energy crisis at that time. I had purchased a wood-gas boiler
from a division of that company and they didn’t have any dealers in
this area and he was my contact. He had been to MT hunting a few times and we developed a connection of sorts. Their boilers are great. Wood-gas has
worked very well for me. It turns wood into ethylene & hydrogen then
burns it with a bright blue flame like a cutting torch on a downdraft.
That was when farmers in this area were raising vegetable oil
to use in their operations in large quantities and doing their own
processing ..

Reply to  Mr Ed
April 30, 2024 11:58 am

Further search finds this:

2017 Norway’s Statkraft to make biofuel from wood chips and other waste

https://www.reuters.com/article/idUSKBN19B2C4/

Mr Ed
Reply to  Steve Case
April 30, 2024 4:03 pm

Interesting read. I recall reading somewhere that the Scandinavian
countries wanted to become energy independent from opec and had invested in different technologies. The Fischer-Tropsch process is
where the biomass is placed into a large metal container then heated
oxygen free to something like 1000C then CH4 is injected into the
chamber which then the mix is removed into a heated pressurized
pipe like chamber with something like iron pellets for a catalyst and at a certain pressure/temperature the gas turns to liquid. The Volvo unit was supposed to be a continues process not a batch operation. I think
that diesel was produced via this before the diesel engine was invented..
There was a web page years ago about someone making a homebuilt
Fischer-Tropsch unit that worked well.

Reply to  Steve Case
April 30, 2024 8:13 am

sinfuel? 🙂

rovingbroker
April 30, 2024 7:09 am

Interesting … USDA Economic Research Services is forecasting lower corn and soybean yield gains because … global warming.

ERS Research Models Future Effects of Climate Change on Corn and Soybean Yields, Production, and Exports

Since 1970, U.S. corn and soybean yields have doubled, but damaging effects of extreme weather events such as droughts and floods have slowed yield gains and interrupted decades of rapidly rising agricultural productivity. Such extreme weather events are expected to become more common, according to the United Nations’ Intergovernmental Panel on Climate Change (IPCC).

Using 2016 as a base year, the model estimated an increase in U.S. corn yields but a decrease in soybean yields by the year of 2036.

https://www.ers.usda.gov/amber-waves/2024/march/ers-research-models-future-effects-of-climate-change-on-corn-and-soybean-yields-production-and-exports/

April 30, 2024 8:27 am

Off topic- but here in Wokeachusetts, I notice debates over zoning rules regarding industrial battery systems. One news article mentioned the large air conditioning system one proposed system will use. I find that extremely ironic. It’s for a 105 MW system to be built in a forest. I can only wonder how much electric power will be needed for the system. I presume it’s not just for hot summer days but probably all year? Oh, and a lot of forest land will be destroyed.

John Hultquist
April 30, 2024 8:41 am

If “sustainable aviation fuel” (SAF) is a good idea it should not need “other people’s money” (OPM) to have it replace current fuel. Think trucks replacing working horses in NYC.

strativarius
April 30, 2024 9:25 am

Hmm, corn for etoh, wind farms or solar farms?

None of it edible. A sure fire way to reduce agricultural output

Rahx360
April 30, 2024 9:27 am

Making ethanol out of food is one another stupid things humans do. It’s more damaging to the envirement than just using oil. In the EU they force 15% in gasoline for cars. Problem is that not enough ethanol is available. And I think it might be under discussion because it’s just worse to use farmland, food en energy to make it. Another case of green virtue signaling.

0perator
April 30, 2024 9:40 am

They are building a aviation ethanol plant in SD. It will draw 200MW while in operation.

April 30, 2024 10:00 am

Global warming will destroy the food chain! We have to do something!

I know! Let’s burn the food!

Nik
April 30, 2024 10:10 am

Don’t forget effects on availability and cost of water.

Sparta Nova 4
April 30, 2024 10:27 am

What is the specific energy of ethanol versus jet fuel?

And how does ethanol reduce CO2?

barryjo
Reply to  Sparta Nova 4
April 30, 2024 4:23 pm

Irrelevant. We are saving the planet!

Reply to  Sparta Nova 4
May 1, 2024 5:34 pm

See comments above. It’s not ethanol that goes into the jet fuel. The SAF that comes out of the process has really high energy density – the components are linear and branched alkanes, cycloalkanes.

April 30, 2024 11:36 am

So Joe Biden wants to cut taxes for his rich friends?

What did he do, join the republican party? Republicans only want to be elected so they can cut taxes for their rich friends, according to democrats.

Ed Zuiderwijk
April 30, 2024 11:59 am

The misguided policy of the Bush administration (the later one) to assign part of US crops to biofuel production drove up the food prices world wide. That in its turn was the last straw for the poor in northern Africa, which triggered the doomed ‘Arab Spring’ culminating in the Syrian civil war. That one dumped over 2 million refugees on western Europe, the aftershocks of which are still being felt every day.

Climate change policies, not ‘climate change’, causes refugees, lots of them.

KevinM
April 30, 2024 12:00 pm

Consumer complaint to Government: “I’ll buy an EV when EVs are more economical”
Government response to Consumer: “It will be illegal to buy a non-EV”

Airline Industry complaint to Government: “I’ll buy ethanol when ethanol is more economical”
Government response to Airline Industry: “Consumers will subsidize ethanol so that ethanol is more economical

April 30, 2024 2:52 pm

What did Obama pay per gallon for military jet “biofuel”?

Reply to  Gunga Din
May 1, 2024 10:10 am

I’ve seen a couple of different prices ($26, $59) from stories written in different years.
This is the most recent one I saw. $150/gal.
https://freebeacon.com/national-security/report-pentagon-paid-150-per-gallon-for-green-jet-fuel/

Bob
April 30, 2024 4:23 pm

Nothing could make this any more clear, we have a government problem not a climate problem. Everything the government sticks its nose into becomes worse not better. Get the government out of the energy business.

Edward Katz
April 30, 2024 6:09 pm

It could raise not only food prices but also air fares to boot since the airlines would probably be likely to add some sort of surcharge to cover their real or imagined increase in fuel bills.

Dr. Bob
May 1, 2024 2:35 pm

Alcohol-to-Jet Sustainable Aviation Fuel (ATJ SAF) is a fully hydrocarbon fuel meeting all FAA and ASTM requirements for blending with conventional jet fuel at up to 50% and satisfying all Type Certificates for aircraft licensed to use Jet A fuel (ASTM D1655). That being said, Ethanol used to produce ATJ SAF is a food crop used to produce fuels and is not highly efficient. 2.8 gal of Ethanol are produced per bushel of corn.
It takes 2 gal of ethanol to produce 1 gas of SAF as the energy content of EtOH is far lower than that of jet fuel. The Life Cycle GHG emissions, otherwise known as the Carbon Intensity, of ATJ SAF can be equal to or higher than that of conventional fossil jet fuel. Thus the benefits of ATJ SAF are at best just to displace fossil energy with bioenergy at high cost and not net reduction in GHG emissions.

ATJ can be produced at lower Carbon Intensity (CI) it we use no-till farming, reduce water, reduce or eliminate fertilizers, reduce or eliminate pesticides and herbicides, etc. These are changes to the GREET model that allow lower CI assigned to corn production. Ignore the indirect Land Use Change (iLUC) issues and you get marginally better CI for ATJ but at higher cost of production and more land committed to corn production. Not exactly a win for the environment, thus the objection by NGO’s to the corn lobby efforts to “Adopt GREET” as a “Science Driven” solution.

The ethanol lobby is concerned of slacking fuel demand due to EV’s and higher FE standards reducing demand for EtOH. Tough Luck! So they want to refocus on ATJ as an outlet for EtOH but the Renewable Fuels Standard has requirement to get various credits that EtOH to Jet could not meet. Thus lobby efforts at DOE and Congress to get the standards changed in thier favor so they can make more money off the sale of ATJ SAF. And the taxpayer foots the bill, naturally. Lots more details here, but not worth typing it all out as you probably don’t care all that much.

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