The U.S. Department of the Treasury has issued long-awaited guidance on the Sustainable Aviation Fuel Credit (40B) established by the Inflation Reduction Act (IRA), and the news is positive for U.S. soybean farmers.

“America’s soybean farmers are always innovating in an effort to expand our markets and provide even more benefits to consumers,” said Josh Gackle, American Soybean Association president and North Dakota soybean farmer. “We are very pleased with this guidance and the opportunities it could bring for soy. Biofuels continue to be not only a viable market but a growing market when it comes to U.S. roadways and workforce fleets. There is legislation on the table right now that would expand biofuels’ great functionality and environmental benefits to ocean-going vessels. And now, with this guidance supporting soy and other plant-based feedstocks going into sustainable aviation fuel, the sky truly is the limit for soy.”

ASA and others in the biofuels industry have pushed for use of the Argonne National Laboratory (ANL)-GREET model, updated annually, to determine eligibility for the SAF Credit. However, the Environmental Protection Agency determined ANL-GREET was insufficient on its own to satisfy the parameters set forth by the Clean Air Act to determine lifecycle GHG emissions. Instead, EPA will work with other agencies to develop a new GREET methodology to be released March 1, 2024, that incorporates all aspects of a feedstock, including Climate-Smart Agriculture Practices.

Importantly, EPA did determine that the methodology it uses for the Renewable Fuel Standard Program (RFS) does satisfy these requirements. Given that, Treasury has determined SAF that currently qualifies as biomass-based diesel (D4) or advanced biofuel (D5) under the RFS will be considered as having a 50% GHG reduction for the purposes of this credit. This action is positive for soy-based SAF, which will be eligible for the SAF Credit at the $1.25/gallon rate.

The tax credit will be retroactive to Jan. 1, 2023, and will run through Dec. 31, 2024, before shifting to the Clean Fuel Production Credit (45Z), also established under the IRA.

For roughly two years, the Minnesota Soybean Growers Association (MSGA) has been active promoting the use of soybean oil in SAF. During a trade mission to Australia in November 2023, MSGA President Bob Worth and Executive Director Joe Smentek visited with officials from Delta and Greater MSP to advocate for biofuels.

“It’s been very important for Minnesota farmers that we’re at the table to make sure soybean oil is a big part of SAF,” Worth said. “It’s something that’s going to be a big win for soybean and corn farmers. It’s going to be a big win for all of us.”