Vilsack Urges Ethanol Producers To Seize The Opportunity Of SAF

Source: By Erin Voegele, Ethanol Producer Magazine • Posted: Wednesday, November 29, 2023

Agricultural Secretary Tom Vilsack on Sept. 12 called on ethanol producers to seize the opportunity offered by the emerging sustainable aviation fuel (SAF) market and stressed that climate-smart ag and carbon capture technologies need to play a role in ethanol-to-SAF production.

Vilsack discussed these topics along with issues related to ethanol-based SAF and pending guidance on the Inflation Reduction Act’s SAF tax credit during the Growth Energy Biofuels Summit in Washington, D.C. His presentation provided attendees with an overview of how the USDA and other federal agencies are working to ensure the U.S. Department of Energy’s GREET model is adopted for the purposes of calculating greenhouse gas (GHG) emissions reductions for the SAF tax credit. He also helped attendees understand how important the emerging SAF industry and climate smart agriculture are to famers and the economy of rural America.

Vilsack opened his keynote with a discussion of current state of the U.S. agriculture community. In the roughly 6.5 years since he left his post as ag secretary under the Obama administration, the U.S. has lost 16,700 farms, he said. Approximately 6.9 million fewer acres of land are now being farmed, he added. Last year was a record year for farm income, and this year is on track to be the third best year on record, according to Vilsack. “That’s the good news,” he said, but stressed there is also challenging news—specifically the huge disparity in farm income. Approximately 7.5 percent of total U.S. farms received 89 percent of that income last year. The remaining 92 percent of farms—roughly 2 million—shared in the remaining 11 percent. That disparity is not good for the overall ag economy or rural America. For the first time, the federal government is taking a very comprehensive effort to help small- and mid-sized operations stay in business, according to Vilsack. “The way we are doing this is by creating new revenue streams that either didn’t exist before, or improving the revenue streams that do exist,” he explained.

Historically farmers have had opportunities for only two revenue streams—they sold an organic crops at high value or commodity crops at low value, Vilsack explained. With the Inflation Reduction Act, The American Rescue Plan, infrastructure legislation and the Commodity Credit Corp., American farmers now have eight different ways to create revenue or reduce costs to improve their bottom lines, he said.

It starts with climate-smart agriculture, Vilsack said, noting the USDA has already funded 141 projects covering every major commodity, including the development of SAF. The agency is providing resources to partnerships across the country that include farm groups, environmental groups, major retailers, and food processing companies that are working together to encourage farmers to embrace climate-smart practices and measure, verify and quantify those practices. These projects will allow ag producers to monetize their ability to produce climate-smart ag products and sequester carbon in soil.

Vilsack also spoke about ethanol’s role in manufacturing biobased products, including SAF, and stressed that he knows the ability to qualify for the SAF tax credit is critically important to the industry’s ability to participate in the growing SAF market. Other federal agencies and President Biden are aware of that as well, he said, noting that he personally handed a memo to Treasury Secretary Janet Yellen addressing the issue.

According to Vilsack, the USDA is actively engaged at both the political and technical level regarding the adoption of GREET for the purposes of the SAF tax credit. The agency has also allocated $300,000 to $400,000 of its own funding to efforts focused on adjusting the GREET model to respond to concerns and criticisms that have been identified. Work on those modeling improvements will hopefully be complete before the end of the year, he said.

“I think its very clear that if a restricted approach to the tax credit is taken, and if GREET is not part of that, there will be limited options to satisfy the need for SAF,” Vilsack said.

While the USDA and other federal agencies work to ensure a broad array of feedstocks can qualify for the SAF tax credit, including ethanol, Vilsack said the ethanol industry needs to take its own actions. In particular, the industry needs to make the case that ethanol is a low-carbon fuel—and dealing with CO2 produced by ethanol plants needs to be a part of that. “You’ve got to do something with the CO2,” Vilsack said. “I’m not going to tell what you need to do about it, but you need to do something about it and farmers need to understand the significance of this.”

Vilsack said he often receives requests from the ag industry to stop talking about electric vehicles (EVs). “No, because we want to make sure that we continue to have manufacturing in this country because it employs a lot of people,” he said, stressing that EVs are not going to put ethanol producers out of business. “We’re going to have cars that use ethanol for a long, long time,” Vilsack added. Rather than focusing on EVs, Vilsack encouraged attendees to focus on—and fight for—the 36-billion-gallon opportunity that SAF offers. The airlines want and support SAF from a variety of feedstocks, including ethanol, and an ethanol-to-SAF industry can be a critical component of keeping small-and mid-sized farms in operation, thereby keeping small towns vibrant, he explained. It also represents a significant opportunity for American manufacturing.

“I want you all to understand this is a critical moment—a make or break moment—and if it’s not seized and not taken full advantage of, you may have a different conversation years from now,” Vilsack said. “Don’t miss this opportunity.

The World Trade Organization’s Dispute Settlement Body on Nov. 27 agreed to a request submitted by Indonesia to establish a dispute panel to review countervailing duties imposed by the European Union on imports of biodiesel from Indoenesia.