Klobuchar wants to extend tax credit for plant-based jet fuel, but environmentalists say the climate could suffer

U.S. Sen. Amy Klobuchar wants to help Midwest corn farmers tap into new lucrative tax credits aimed at making airplane fuel more climate friendly. But some environmentalists worry her proposal could make climate change worse.

The tax credit for sustainable aviation fuel (SAF), created by the 2022 Inflation Reduction Act, is available for any fuel manufacturer that can show their product is at least 50% less carbon intensive than today’s petroleum-based jet fuel. The credit has mobilized universities and major companies like Cargill to explore a bevy of alternative fuels, including hydrogen gas, ethanol and even recycled cooking oil.

That has presented Minnesota farmers with a unique business opportunity. The state is home to at least 19 ethanol producers, which cranked out 1.4 billion gallons of the corn-based fuel last year, according to the Minnesota Bio-Fuels Association.

In April, Klobuchar, a Democrat, and U.S. Sen. Roger Marshall (R-Kans.) introduced a bill that would extend the SAF credit for another 10 years, while also prohibiting biofuels and other fuel feedstock imported from overseas from qualifying for the subsidy.

The bill is consistent with the bipartisan support among Midwest politicians for ethanol, a crucial market for farmers. Already, roughly 40% of the nation’s corn is grown to make ethanol. The industry has notched major wins in recent decades, including a bill passed by Congress in 2007 that requires a minimum amount of ethanol to be blended into gasoline and other transportation fuels.

“Domestically produced biofuel strengthens our energy independence, supports our farmers and boosts rural economies,” Klobuchar said in a press release, announcing the proposal.

But the legislation also includes a provision that would remove a key component for how the federal government evaluates the environmental benefits and costs of those fuels. Some advocates say that the proposed change could subsidize jet fuels that don’t actually reduce carbon emissions.

“I’m deeply concerned” by the proposal, said Steve Morse, a former deputy commissioner for the Minnesota Department of Natural Resources and the executive director of Minnesota Environmental Partnership, a statewide coalition of environmental nonprofits. “It undercuts the integrity of the credit.”

Klobuchar declined an interview request from the Minnesota Star Tribune, but said in a statement that her “bipartisan bill with Senator Marshall protects the sustainable aviation fuel credit from being exploited by foreign feedstocks from deforested rainforests — while giving farmers the certainty they need to produce lower-carbon fuel.”

Reducing the carbon footprint of the airline industry is no easy task. The massive batteries that would be required to electrify commercial jets would simply be too heavy with current technologies. That has prompted a search for alternatives, including ethanol, that could contribute slightly less to climate change when produced in the right way.

The vast majority of ethanol doesn’t qualify for the SAF credit, in part because producing it requires a lot of land. Research shows that unlike prairies, forests and wetlands, which tend to absorb carbon dioxide, farmland actually releases greenhouse gases into the atmosphere due to fertilizer use and other agricultural practices.

When farmers decide to sell their corn for ethanol instead of for food or animal feed, it can result in the clearing of land for farms in the U.S. and other countries to fill that gap. The government describes that phenomenon as “indirect land use change,” and estimates that it accounts for roughly one-seventh of ethanol’s carbon footprint. Klobuchar’s bill would remove that consideration entirely when judging which fuels qualify for the SAF credit.

Trevor Russell, the water program director for Friends of the Mississippi River, an environmental advocacy group, supports the SAF credit. But Russell said Klobuchar’s provision to remove land use change considerations could “corrupt the science” and damage public support for the program. Agriculture is Minnesota’s second largest source of climate emissions, he added.

Brian Werner, the executive director of the Minnesota Bio-Fuels Association, said ethanol producers generally support Klobuchar’s legislation.

“Sustainable aviation fuel in Minnesota will not develop without some sort of economic incentive in the near term,” he said. “So her support for making sure that this tax credit is extended … is critically important in a political environment where House Republicans are looking for savings and cuts for every single green energy tax credit that was included in the inflation Reduction Act.”

Werner also said that some of the formulas used to calculate emissions related to land use changes can be overly burdensome for biofuel producers. The current model used by the federal government considers projections of farmland expansion in countries that export to the U.S.

If U.S. growers start using more corn to make ethanol, some economists say there will still be demand for corn to feed people and livestock. To meet that demand, they say, the U.S. will need to increase its domestic production or import more corn — and in both of those scenarios, it’s likely farmland will expand either at home or abroad.

The U.S. saw this happen 20 years ago after Congress revised the Renewable Fuel Standard, requiring more ethanol to be blended into gasoline as a way to reduce greenhouse gas emissions.

From 2008 to 2012, between 4 million and 7.8 million acres of grassland, wetlands, forests and pastures were converted to cropland, according to a report from Earthjustice and the Clean Air Task Force. Most of that occured in the western Corn Belt states of North Dakota, South Dakota, Minnesota, Iowa and Nebraska, the report said, resulting in a significant increase in greenhouse gas emissions.

Jason Hill, a professor at the University of Minnesota’s Department of Bioproducts and Biosystems Engineering, said he believes the federal government is already undercounting the emissions of biofuels like ethanol, even when including indirect land use change.

That’s because the federal government’s model assumes that only land that is already farmland will be used to produce more ethanol, he said, such as a farmer replacing his soy crops with corn. He also said the federal model misses the bigger economic picture, which is that as the U.S. produces more ethanol, its price will go down and encourage more driving or flying.

“What do people tend to do when the price of fuel is lower? They use more of it,” he said.