Airlines Back Biden’s SAF Tax Credit, Could Spike Food Prices

In a recent development, a group of major airlines, including Boeing, American Airlines, JetBlue, and United, has joined forces to support a tax credit proposed by President Joe Biden. This tax credit is aimed at promoting the use of sustainable aviation fuel (SAF), which is made with components like corn-based ethanol. By incentivizing the use of SAF, the demand for corn could increase, potentially leading to higher food prices for Americans, according to experts.

The Biden administration is planning to unveil the criteria for eligibility for the SAF tax credit. Some senators, particularly from corn-producing states, have urged the Treasury Department to adopt a specific model for calculating these tax credits. If implemented, this model could make it easier for ethanol to qualify for the tax incentives, further driving up corn demand.

Under Biden’s Inflation Reduction Act, the SAF credit offers airliners a tax credit of $1.25 per gallon of SAF in qualifying jet fuel mixtures, provided that the fuel reduces greenhouse gas emissions by at least 50%. The more significant the emissions reduction, the higher the tax credit available. However, experts caution that the indirect consequences of increased ethanol production, such as higher food costs and environmental impacts, need to be considered.

Critics argue that promoting ethanol SAF tax credits may not significantly help in combating global warming but rather benefit the renewable fuel industry and raise corn prices. Additionally, there are concerns about the actual impact of SAFs on carbon emissions and the potential strain on water resources due to increased corn cultivation.

As American households grapple with rising food prices, the push for expanding tax credits for SAFs raises questions about the trade-offs between promoting eco-friendly aviation fuels and potential adverse effects on food affordability and environmental sustainability.

Written by Staff Reports

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