Renewable Fuels Association President and CEO Geoff Cooper on Aug. 13 discussed several current issues impacting the U.S. ethanol sector, including a possible rail strike, ahead of an event held by the White House in celebration of the Inflation Reduction Act.

Cooper opened a call with reporters with a discussion of the many positive impacts expected to result from the IRA. “We’re very excited about this package,” he said. “We think it offers a lot of promise for the ethanol industry,” he added. Cooper called the package “transformative for the industry” and said the IRA is probably the biggest deal for biofuels since the Renewable Fuel Standard was expanded in 2007.

“We are most specifically interested in the SAF tax credit,” Cooper said. “We see a huge opportunity for ethanol in the SAF space in the future. There is already significant investment being made in our industry to transform some of the existing first-generation biorefineries to SAF facilities.” Cooper indicated he expects the lifecycle carbon intensity (CI) of ethanol to continue to drop and stressed the RFA believes ethanol could be a key ingredient for low-carbon or zero-carbon SAF in the future.

Cooper said the RFA had some serious concerns about the International Civil Aviation Organization modeling methodology used for SAF in the IRA, calling the ICAO methodology flawed and noting it uses outdated data. The final version of the IRA, however, included a provision that allows the use of other methodologies that are as stringent at the ICAO. “We would argue that the DOE’s GREET is certainly as stringent,” Cooper said, stressing that the GREET’s more accurate data should prove that ethanol-to-jet fuels meet the 50 percent greenhouse gas (GHG) reduction required to claim the SAF production tax credit.

Cooper also said the industry is very excited about the clean fuel production tax credit established by the IRA, noting the credit is the first performance-based, technology-neutral credit for renewable fuel implemented in the U.S. That credit relies on the GREET model to calculate GHG reduction levels of clean fuels.

In addition, he discussed the important impact of enhancements and improvements to the 45Q tax credit for carbon capture and storage (CCS) and the $500 million in biofuel infrastructure funding allocated by the IRA.

Also during the call, Cooper discussed the impacts of a possible rail strike that could occur later this week. Railroads and rail labor unions have until midnight Sept. 15 to reach an agreement to prevent a lockout or strike that could lead to a nationwide rail shutdown.

“It’s a dire situation, to be sure,” Cooper said, noting that 70 percent of U.S. ethanol is shipped via rail. “This is a very, very concerning issue for us. We’ve already been experiencing, in the ethanol industry, poor rail service. It’s been a precarious situation across that supply chain, really for quite some time coming out of the pandemic. So, now, the prospect of any stoppage or any further slowdown could really be calamitous for the industry. If we can’t move ethanol, plants have to shut down. It’s that simple.”

Cooper explained that once an ethanol plant fills up its onsite storage tanks, the only option is to shut down the plant. Ethanol currently accounts for 10-11 percent of U.S. gasoline volume. If ethanol producers can’t move their product to the terminals for blending, that is “absolutely going to have an impact on gas prices,” Cooper said.

“We are encouraged to hear that talks are progressing,” Cooper added, noting that U.S. Department of Labor and others are actively engaged and trying to resolve the dispute before the Friday deadline.