Generous Tax Subsidies for Sustainable Aviation Fuels in the U.S.? Yes, But Details Matter.

If aviation were a country, it would be among the top 10 greenhouse gas emitters.

One of the Inflation Reduction Act’s key provisions is a powerful tax credit to spark the development and adoption of clean, low-carbon aviation fuels. Climate pollution from aircraft is often overlooked, but if aviation were a country, it would be among the top 10 greenhouse gas emitters.

The Biden administration is about to make a crucial decision on which fuels should be eligible for the tax credits. Getting this right is critical to whether this government subsidy will be money well spent.

Sustainable aviation fuel can come from agricultural crops, waste, or electrochemical processes that form e-fuels, a combination of carbon dioxide captured from industry or directly from the air and hydrogen extracted from water. The degree to which any of these alternatives is better for the climate than fossil fuels has everything to do with how the raw materials are sourced and converted into SAF. There are many instances where the alternatives — whether derived from animal fat, cooking oil or hydrogen — aren’t better than the conventional oil-based fuel they’re intended to replace. So we must ensure that any alternative fuel meets rigorous environmental standards to protect our ecosystems and communities.

The bottom line? Not all SAF is created equal, and therefore not all SAF deserves the generous subsidy that the IRA tax credit offers. When it comes to SAF, the details matter, and the Biden administration has an obligation to ask the tough questions of any company coming forward to claim this tax credit. After all, it is the American taxpayer who is ultimately footing the bill, and we have a right to expect that only the best fuels that provide real benefits to climate, health and the environment will qualify for this extraordinary benefit.

The good news is that there are plenty of examples of alternative aviation fuels that can meet a high bar. What’s also true is that the Biden administration doesn’t have to start from scratch in developing the regulatory definitions and criteria necessary to assure us that the IRA SAF tax credit will be available only to the very best fuels and producers. Supply chain standards established by the International Civil Aviation Organization — the global organization that sets international safety and environmental standards for civil aviation — address many of the issues the Biden administration will have to tackle in its regulations. Biden tax officials can also look to Europe, where regulators there have wrestled with similar concerns in developing their own SAF-related policies.

Many U.S. alternative fuel companies — several of which are owned by traditional oil companies — argue that high standards will make it harder from them to bring their SAF to market. In short, industry wants the U.S. taxpayer to pay a rich premium for a lowest common denominator product.

Congress understood that industry might try to get away with doing the bare minimum to claim the SAF tax credit, which is why the IRA legislation directs the Biden administration to adopt the ICAO standards or something substantially similar when drawing up the rules to define what fuels will qualify for the credit.

Meanwhile, some in Congress are pushing to weaken the standards through legislation, changing the carefully crafted provisions that were included in the IRA. This would undermine the benefits of SAF before we even get started. These amendments should be defeated.

I am optimistic the Biden administration will do the right thing and seek science-based policies that support economic growth. Initial guidance from the U.S. Department of Treasury includes crucial safeguards with regard to sustainability certification, an important step in the right direction.

Done right, the IRA tax subsidy for SAF will make a major contribution to reducing greenhouse gas pollution and creating a competitive advantage for U.S. alternative fuel suppliers as the world increasingly looks for alternatives to oil-based aviation fuels in response to the climate crisis and energy security concerns. The measure enacted by Congress is generous. It is now up the Biden administration, and its allies in Congress, to make sure we get the full measure of what we’re paying for.

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Seth Godin Believes We Can Still Tackle Climate Change

Seth Godin on rapid innovation, the environmental crisis, and AI’s impact on work & marketing. Dive into a world reshaped by change.

“Change happens slowly, then all at once,” according to Seth Godin, renowned author, entrepreneur, and marketer. Last year, he launched The Carbon Almanac, a quantified collection of facts, anecdotes, and trends marking the current state of climate change across the globe. Now he is back with Songs of Significance, a book that offers a blueprint for how we can adjust to this world of rapid innovation. In it, Godin reflects on the environmental crisis, the race to the bottom in industrial capitalism, and how artificial intelligence is reshaping work and marketing.

 

Photo by Jill Greenberg

With the discerning eye of a philosopher and the practicality of a world-class marketer, Godin explores how technologies like AI are reshaping our work and daily lives. If you want to see Godin in person, come see him speak at Techonomy Climate NYC: Solutions That Scale on September 20th at City Winery, Pier 57.

Dan Costa: We are approaching the one-year anniversary of The Carbon Almanac’s release. What has the response been like?

Seth Godin: When we set out to build the Almanac, my 300 fellow volunteers understood that a book, all by itself, changes nothing. But it can become a foundation, a building block that people can use to inform conversations, establish standards, and demand action.

We coordinated our actions and helped the book become a bestseller in the U.S. and the Netherlands. It was translated into Italian, Korean, Czech, Chinese, Japanese, and Spanish. The accompanying photo essay has been downloaded hundreds of thousands of times and been seen in every country in the world, and our kids edition has reached students in countries worldwide.

In addition, we won a worldwide award for information design, and have been seen in government offices and libraries as well.

At the same time, it’s heartbreaking to see how easy it is for people to avoid the conversation altogether. When I sat at my local farmer’s market giving away copies on publication day (we set the world record for most authors signing a book worldwide), many of my neighbors politely declined to take one. It’s a heavy topic, and our instincts might get in the way of the better angels of our nature.

Your tagline for the Almanac was “It’s Not Too Late.” Do you still feel that way? How do you feel about the climate progress that has been made in the last year?

By any measure of cultural and technological change, this is the fastest shift of my lifetime, probably in history. I’m not sure if it’s fast enough, but the pace is stunning. We’re seeing a century of industrial dependence on oil being transformed in less than a decade.

Even the uninformed deniers, a small fraction of our populace, are quietly finding other things to focus on.

The world has already crossed a Rubicon. It will never be as it was, and the path forward is going to get untenable for many. But my hope is that the combination of cultural change, generational shift, and technology will open the door for systemic shifts.

But we’re not talking about it enough. Not clearly enough, not often enough.

This is the biggest test we’ve ever faced, but if we face it, I believe we can make a difference.

In your latest book, Songs of Significance, you describe industrial capitalism as a “race to the bottom” in terms of exploiting human productivity. Can you explain that?

Leverage is at the heart of what Worth has always talked about. How can we take our effort and multiply it into productivity and wealth?

More simply, leverage involves borrowing money to buy machines to maximize productivity, which makes enough money to pay back that money.

Unfortunately, this new regime has classified humans as machines—simply a resource. If we use a stopwatch and surveillance, we can figure out how to improve human output and decrease labor costs. And if we can do it just a little bit more than our competitors, we have a competitive advantage we can leverage into even more of a lead.

So some organizations view human work as replaceable, employees as disposable, side effects as irrelevant, and the only goal to be the cheapest. A race to the bottom.

The problem with a race to the bottom is that you might win.

The alternative is to be the sort of organization that races to the top instead. One that’s built on dignity, delight, and human innovation. The sort of generative institution that customers decide is worth choosing and sticking with. Not because it’s easier. It’s not. Because it’s worth doing.

Now that industrialism has led us all the way to the bottom, it’s not clear we can brutally cut any more corners…the obvious opportunity is to find a new kind of leverage, the leverage that humans and insight and innovation can bring.

What happens when technologies like AI get added to the mix? 

When they introduced the steam shovel, the ditch diggers were understandably upset. But many figured out how to use the new tech instead of being threatened by it.

AI is a very powerful tool, one that is replacing mediocre (average) output as fast as it can. And so the choice: Create work that AI can’t do or put AI to work for you. If an AI can be trained to do your job, it’s really unlikely you can win that competition.

The good news is that in the last fifty years, we invented more than 7 billion jobs, mostly as the result of innovations in technology. I’m optimistic that AI is going to make a positive difference in our work lives, but it will be a bumpy journey.

You are known for many things, but one of them is being a world-class marketer across multiple media and platforms. How do you see AI shaping the marketing landscape?

Mediocre marketing is something AI is already good at. Lousy copy, artless photography, programmatic spam. All of that is going to get far more common, intrusive, and annoying.

For a long time, industry has tried to make all humans into cogs in the machine. Not just workers, but consumers.

At first, AI will be just another brick in that wall. But we’re already seeing that when a person decides to see another, to actively engage, AI can’t possibly compete with that.

Both of these books, directly or indirectly, call for a significant adjustment in how we see ourselves and our culture. How optimistic are you that humans can make these kinds of changes?

I keep my canoe on the Hudson River, in a boathouse that was built in 1870. Try for a second to imagine the world those folks lived in. In “just 150 years,” we rewired the human condition—and we still have a lot of work to do.

The next twenty years are going to see even more changes than our grandparents experienced in their entire lifetimes. Some for the worse, many for the better.

Here comes the change. Are we willing to talk about it?


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