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Accounting for soil organic carbon for section 40B eligibility is neither aligned with statute or technologically feasible

April 5, 2024 Work Area: Zero-Carbon Fuels

The Issue

Accounting for soil organic carbon (SOC) in GREET is neither aligned with statute nor technologically feasible. 

The section 40B sustainable aviation fuel (SAF) tax credit states that the lifecycle emissions rate of SAF should be calculated using either the most recent Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) or any “similar methodology.” CORSIA and the current version of the Department of Energy’s GREET model do not align on crediting changes in organic carbon in cultivated soils: GREET allows for SOC to be factored into the lifecycle emissions while CORSIA does not. Moreover, there is high variability in the potential for carbon sequestration in soils and the risks of release into the air. These processes depend on many factors that are not yet well understood nor reliably verified. 

Die Lösung

Prohibit SOC from being included in GREET for section 40B eligibility. 

Uncertain and impermanent soil carbon sequestration should not be included in the calculation of a fuel’s eligibility for the section 40B SAF tax credit. Given CORSIA does not account for SOC, Treasury needs to prohibit SOC factors from being utilized in GREET for it to be considered “similar” to CORSIA. 

To allow accounting of soil carbon credits accurately and fiscally responsibly, Treasury would need to require and verify that tax credit seekers physically measure, monitor, and report the soil carbon levels, which will vary significantly by region and farming practices. Crediting (uncertain) changes in soil carbon would require Treasury to establish soil carbon baselines for each region, soil type, and several farm practices, against which the additionality and permanence of sequestered carbon can be measured and verified. Because the permanence of sequestered soil carbon is highly uncertain, Treasury would need to implement novel claw-back provisions to preserve the emissions reduction requirements of the tax credit. Given the technical hurdles of claw-back provisions, it is currently unrealistic to include SOC accounting in GREET. 


SOC is released from farmland, negating climate benefits of smart agricultural practices, but the SAF producer retains section 40B tax credits. 

A corn-based SAF producer seeks section 40B SAF tax credit. Using GREET, the SAF producer claims full emission-reduction credits associated with on-farm practices, like no-till farming, on every bushel of corn used to make SAF. After 10 years of claiming the tax credit, the farmer supplying corn to the producer must unexpectedly sell his farm. The new owner changes crops and practices, releasing much, if not most, of the sequestered organic soil carbon back into the atmosphere, undoing the climate benefits of the agricultural practices that earned the SAF producer, who used that feedstock, section 40B tax credits. There is no way to recuperate the tax credit earnings from the producer despite the impermanence of the SOC-related emissions reductions. 

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