Market News & Headlines >> Corn Market Awaits Sustainable Aviation Fuel Guidance

The Biden administration expects the Treasury to release guidance by the end of this week on whether to make it easier for sustainable aviation fuel made from corn-based ethanol to qualify for federal subsidies, multiple sources familiar with the administration's thinking told Reuters on Monday.

If Treasury allows ethanol-based sustainable aviation fuel to qualify for federal renewable fuel tax credits, ethanol demand – and corn-for-ethanol use – is expected to see a significant boost.

For months the administration has been divided over this issue, as it faces a strong lobbying push from stakeholders in the U.S. Farm Belt, a key political constituency ahead of next year's presidential election. Corn-based ethanol producers see sustainable aviation fuel (SAF) as one of the only routes to grow their industry amid rising sales of electric vehicles. They also argue the U.S. needs to use ready technology to quickly reduce carbon dioxide emissions.

Meanwhile, environmental groups say clearing land to grow crops for fuel is counterproductive to curbing global warming. It is unclear what the administration's guidance will say. The White House and Treasury Department declined to comment for this story.

Even if the Treasury Department releases its guidance this week, key details are not expected to become available until spring.