Late Tuesday afternoon the U.S. Department of the Treasury and Internal Revenue Service (IRS) finally released guidance on the Sustainable Aviation Fuel (SAF) Credit established by the Inflation Reduction Act (IRA).

The guidance released today will “catalyze innovation in the aviation industry and incentivize the production of cleaner and more sustainable aviation fuels,” said U.S. Treasury Secretary Janet Yellen during a House Ways and Means Committee hearing.

Tuesday’s announcement includes the new 40B SAF-GREET 2024 model that provides another methodology for SAF producers to determine the lifecycle GHG emissions rates of their production for the purposes of the SAF Credit. The modified GREET version incorporates new data, including updated modeling of key feedstocks and processes used in aviation fuel and indirect emissions, as well as integrates key greenhouse gas emission reduction strategies such as carbon capture and storage, renewable natural gas, and renewable electricity.

Importantly, the notice also incorporates a USDA pilot program to encourage the use of certain Climate Smart Agriculture (CSA) practices for SAF feedstocks to lower overall GHG emissions and increase adoption of farming practices associated with environmental benefits such as improved water quality and soil health.

For corn ethanol-to-jet, the pilot provides a greenhouse gas reduction credit if a “bundle” of certain CSA practices (no-till, cover crop, and enhanced efficiency fertilizer) are used. It similarly would allow a greenhouse gas reduction credit for soybean-to-jet if the soybean feedstock is produced using a “bundle” of applicable CSA practices (no-till and cover crop). This is a pilot program specific to the 40B credit, which is in effect for 2023 and 2024.

To credit CSA practices in the Clean Fuel Production Credit (45Z), which becomes available in 2025, the agencies will do further work on modeling, data, and assumptions, as well as verification. A new 45Z-GREET will be developed for use with the 45Z tax credit.

Ethanol stakeholders are pleased with the announcement, but say it is only a first step in resolving the path forward. “Today’s guidance and modified GREET model help position ethanol-based SAF for takeoff, but more work is needed to fully clear the runway and get this opportunity off the ground,” said Renewable Fuels Association President and CEO Geoff Cooper.