CORSIA Modeling Requirement Adheres to Congressional Intent
NATSO, representing America's travel centers and truck stops, SIGMA; America’s Leading Fuel Marketers, and a diverse coalition representing fuel retailers, distributors, and consumers of advanced renewable fuels, urged the Internal Revenue Service (IRS) and Department of Treasury to uphold Congressional intent and subject sustainable aviation fuel (SAF) to more stringent lifecycle greenhouse gas emissions modeling requirements under the 40B and 45Z tax credits enacted under the Inflation Reduction Act (IRA).
The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) modeling requirements for SAF are a fundamental underpinning of the statutory framework that Congress created for biofuels within the IRA. The IRA stipulates that the value of a SAF tax credit depends upon the reduction of SAF lifecycle greenhouse gas emissions. Because renewable diesel and SAF utilize the same limited feedstocks, and renewable diesel is more efficient and environmentally compelling than SAF, Congress stipulated that SAF should only get a higher tax credit if it can meet higher environmental standards.
“Our organizations have repeatedly raised concerns that a higher tax credit amount for sustainable aviation fuel relative to other biofuels will siphon feedstocks away from over-the-road and rail use cases without any environmental justification for doing so,” the organizations wrote in a letter to the IRS and the Department of Treasury. “Supply will diminish, and diesel prices will rise along with the price of all consumer goods that move by truck. Both the economy and the environment would be worse off.”
Inviting industry to disregard CORSIA would represent an affirmative decision by the Biden Administration to increase diesel emissions and increase fuel prices. Without tax parity between SAF and other biofuels, SAF producers will threaten to siphon feedstocks away from those biofuels used in over-the-road transportation, potentially eliminating America's biodiesel and renewable diesel market.
NATSO and SIGMA were joined in signing the letter by the American Trucking Associations, Association of American Railroads, National Motor Freight Traffic Association, National Tank Truck Carriers, Truckload Carriers Association, and the National Association of Convenience Stores (NACS).
Several of the world's leading environmental groups and non-governmental organizations also have urged the IRS to require that SAF be subjected to the CORSIA modeling requirements, including the International Council on Clean Transportation, the World Wildlife Fund, and the Environmental Defense Fund.
The Environmental Defense Fund recently reaffirmed this position, stating that “not all SAF deserves the generous subsidy that the IRA tax credit offers.” "Congress understood that industry might try to get away with doing the bare minimum to claim the SAF tax credit, which is why the IRA legislation directs the Biden administration to adopt the ICAO standards or something substantially similar when drawing up the rules to define what fuels will qualify for the credit," EDF said.
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