GREET underestimates indirect land use change, undermining the climate benefits of section 40B

The Issue

GREET underestimates indirect land use change (ILUC) compared to the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).

The section 40B sustainable aviation fuel (SAF) tax credit requires that SAF lifecycle emissions include direct and significant indirect emissions, such as those from land use change, and should be calculated using either the most recent CORSIA or any “similar methodology.” The current version of the Department of Energy’s GREET model is not similar to CORSIA and significantly underestimates ILUC emissions, potentially allowing SAF with high lifecycle emissions to qualify for the tax credit and undermining Congress’ intent for section 40B. 

GREET uses a different, less rigorous ILUC module than CORSIA. GREET’s module has outdated assumptions around the type of land that is displaced when expanding the use of food crops for fuels, and it underestimates the impacts of expanding crop production on forest lands. Today’s global food markets can experience significant indirect land use impacts as demand from the aviation sector for crop-based fuel increases. CORSIA accounts for the global market by incorporating a range of ILUC values that result in a significantly higher default ILUC value than GREET.  

The SAF market includes a range of producers using a variety of processes and feedstocks. Using the GREET 2022 ILUC values distorts that market in favor of the lowest-cost producers (land-intensive conventional biofuels made from soy and corn) at the expense of waste-based fuels and synthetic SAF. It will also disincentivize ethanol producers from installing carbon capture. Instead of promoting climate-beneficial innovation, a tax credit that substantially disregards ILUC will effectively promote stagnation and waste taxpayer dollars. 

The Solution

Update GREET with more rigorous ILUC emissions determinations. 

If Treasury opts to use GREET, it must be updated to use a “similar methodology” for ILUC emissions determinations as in CORSIA, per the statute. As the example below demonstrates, the current version of GREET is not sufficiently similar.    

Scenario

An emissions-intensive SAF producer qualifies for GREET, but not CORSIA. 

A soy-based SAF producer seeking the section 40B SAF tax credit has direct emissions (i.e., process and tailpipe) of 40.3g CO₂e/MJ. Using the GREET 2022 ILUC value of 7g CO₂e/MJ, the lifecycle emissions totals 47.3g CO₂e/MJ, or roughly a 50% reduction relative to fossil jet fuel lifecycle emissions. Using CORSIA instead, the modeled ILUC emissions rate is roughly 24 g CO₂e/MJ, bringing the entire lifecycle emissions to 64.3g CO₂e/MJ, roughly a 30% reduction relative to fossil jet fuel. The producer would therefore not qualify for the SAF tax credit under CORSIA, but might qualify under GREET, illustrating that the methodologies between GREET 2022 and CORSIA are not similar and using GREET to assess SAF emissions would support high-emissions SAF production, contrary to congressional intent.