Agricultural Economics Department
Date of this Version
3-20-2024
Citation
Cornhusker Economics (March 20, 2024)
Adricultural Economics, University of Nebraska-Lincoln
Abstract
The long-run outlook for the corn ethanol industry is questionable, due to a transition to electric and hybrid vehicles. One source of hope for the long run is the potential demand for producing Sustainable Aviation Fuel (SAF). SAF is a key component in the United States Aviation Climate Action Plan, a path to net-zero greenhouse gas (GHG) emissions in the aviation industry by 2050. Demand for ethanol for SAF offers hope to the ethanol industry, but it depends a great deal on policy decisions that are being made now. Here we sketch out this story.
Based on the information available as of March 8, there appears to be a chance that in the long run, SAF could indeed turbocharge the corn ethanol industry. Current average estimates of the CI of ethanol-based SAF are too high for it to qualify for the IRA subsidy, but may still be sufficiently low to be qualified by CORSIA as SAF for the international airline industry. The new 40BSAF-GREET could considerably change its estimates of corn ethanol CI. But the default estimates of CI are not all that matters, given that the CI of a particular batch will be based on documentation of the producer’s supply chain, combined with LCA model analysis. We must wait “a few weeks”, as Secretary Vilsack suggested, for more clarity about the role of the new GREET model and how it will be interpreted by regulatory authorities.
Also covers: What is SAF? What is driving SAF? What is carbon intensity (CI)? How is CI determined? GREET and CORSIA.
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Agribusiness Commons, Agricultural Economics Commons, Agronomy and Crop Sciences Commons, Bioresource and Agricultural Engineering Commons, Oil, Gas, and Energy Commons