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Climate change and energy

Why new ethanol aviation fuel tax subsidies aren’t a clear climate win

Ethanol makers who use sustainably produced corn can now qualify for big federal tax credits, but critics are skeptical of the carbon benefits.

machine pours corn onto a large pile
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Eliminating carbon pollution from aviation is one of the most challenging parts of the climate puzzle, simply because large commercial airlines are too heavy and need too much power during takeoff for today’s batteries to do the job. 

But one way that companies and governments are striving to make some progress is through the use of various types of sustainable aviation fuels (SAFs), which are derived from non-petroleum sources and promise to be less polluting than standard jet fuel.

This week, the US announced a push to help its biggest commercial crop, corn, become a major feedstock for SAFs. 

Federal guidelines announced on April 30 provide a pathway for ethanol producers to earn SAF tax credits within the Inflation Reduction Act, President Biden’s signature climate law, when the fuel is produced from corn or soy grown on farms that adopt certain sustainable agricultural practices.

It’s a limited pilot program, since the subsidy itself expires at the end of this year. But it could set the template for programs in the future that may help ethanol producers generate more and more SAFs, as the nation strives to produce billions of gallons of those fuels per year by 2030. 

Consequently, the so-called Climate Smart Agricultural program has already sounded alarm bells among some observers, who fear that the federal government is both overestimating the emissions benefits of ethanol and assigning too much credit to the agricultural practices in question. Those include cover crops, no-till techniques that minimize soil disturbances, and use of “enhanced-efficiency fertilizers,” which are designed to increase uptake by plants and thus reduce runoff into the environment.

The IRA offers a tax credit of $1.25 per gallon for SAFs that are 50% lower in emissions than standard jet fuel, and as much as 50 cents per gallon more for sustainable fuels that are cleaner still. The new program can help corn- or soy-based ethanol meet that threshold when the source crops are produced using some or all of those agricultural practices.

Since the vast majority of US ethanol is produced from corn, let’s focus on the issues around that crop. To get technical, the program allows ethanol producers to subtract 10 grams of carbon dioxide per megajoule of energy, a measure of carbon intensity, from the life-cycle emissions of the fuel when it’s generated from corn produced with all three of the practices mentioned. That’s about an eighth to a tenth of the carbon intensity of gasoline.

Ethanol’s questionable climate footprint

Today, US-generated ethanol is mainly mixed with gasoline. But ethanol producers are eager to develop new markets for the product as electric vehicles make up a larger share of the cars and trucks on the road. Not surprisingly, then, industry trade groups applauded the announcement this week.

The first concern with the new program, however, is that the emissions benefits of corn-based ethanol have been hotly debated for decades.

Corn, like any plant that uses photosynthesis to produce food, sucks up carbon dioxide from the air. But using corn for fuel rather than food also creates pressure to clear more land for farming, a process that releases carbon dioxide from plants and soil. In addition, planting, fertilizing, and harvesting corn produce climate pollution as well, and the same is true of refining, distributing, and burning ethanol. 

For its analyses under the new program, the Treasury Department intends to use an updated version of the so-called GREET model to evaluate the life-cycle emissions of SAFs, which was developed by the Department of Energy’s Argonne National Lab. A 2021 study from the lab, relying on that model, concluded that US corn ethanol produced as much as 52% less greenhouse gas than gasoline. 

But some researchers and nonprofits have criticized the tool for accepting low estimates of the emissions impacts of land-use changes, among other issues. Other assessments of ethanol emissions have been far more damning.

A 2022 EPA analysis surveyed the findings from a variety of models that estimate the life-cycle emissions of corn-based ethanol and found that in seven out of 20 cases, they exceeded 80% of the climate pollution from gasoline and diesel.

Moreover, the three most recent estimates from those models found ethanol emissions surpassed even the higher-end estimates for gasoline or diesel, Alison Cullen, chair of the EPA’s science advisory board, noted in a 2023 letter to the administrator of the agency.

“Thus, corn starch ethanol may not meet the definition of a renewable fuel” under the federal law that mandates the use of biofuels in the market, she wrote. If so, it’s then well short of the 50% threshold required by the IRA, and some say it’s not clear that the farming practices laid out this week could close the gap.

Agricultural practices

Nikita Pavlenko, who leads the fuels team at the International Council on Clean Transportation, a nonprofit research group, asserted in an email that the climate-smart agricultural provisions “are extremely sloppy” and “are not substantiated.” 

He said the Department of Energy and Department of Agriculture especially “put their thumbs on the scale” on the question of land-use changes, using estimates of soy and corn emissions that were 33% to 55% lower than those produced for a program associated with the UN’s International Civil Aviation Organization.

He finds that ethanol sourced from farms using these agriculture practices will still come up short of the IRA’s 50% threshold, and that producers may have to take additional steps to curtail emissions, potentially including adding carbon capture and storage to ethanol facilities or running operations on renewables like wind or solar.

Freya Chay, a program lead at CarbonPlan, which evaluates the scientific integrity of carbon removal methods and other climate actions, says that these sorts of agricultural practices can provide important benefits, including improving soil health, reducing erosion, and lowering the cost of farming. But she and others have stressed that confidently determining when certain practices actually and durably increase carbon in soil is “exceedingly complex” and varies widely depending on soil type, local climate conditions, past practices, and other variables.

One recent study of no-till practices found that the carbon benefits quickly fade away over time and reach nearly zero in 14 years. If so, this technique would do little to help counter carbon emissions from fuel combustion, which can persist in the atmosphere for centuries or more.

“US policy has a long history of asking how to continue justifying investment in ethanol rather than taking a clear-eyed approach to evaluating whether or not ethanol helps us reach our climate goals,” Chay wrote in an email. “In this case, I think scrutiny is warranted around the choice to lean on agricultural practices with uncertain and variable benefits in a way that could unlock the next tranche of public funding for corn ethanol.”

There are many other paths for producing SAFs that are or could be less polluting than ethanol. For example, they can be made from animal fats, agriculture waste, forest trimmings, or non-food plants that grow on land unsuitable for commercial crops. Other companies are developing various types of synthetic fuels, including electrofuels produced by capturing carbon from plants or the air and then combining it with cleanly sourced hydrogen. 

But all these methods are much more expensive than extracting and refining fossil fuels, and most of the alternative fuels will still produce more emissions when they’re used than the amount that was pulled out of the atmosphere by the plants or processes in the first place. 

The best way to think of these fuels is arguably as a stopgap, a possible way to make some climate progress while smart people strive to develop and build fully emissions-free ways of quickly, safely, and reliably moving things and people around the globe.

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