Sources say that the US will release a model of clean fuel tax credit that restricts ethanol producers' access to credit.

Three sources with knowledge of the issue said that the U.S. will release a model climate for clean fuel tax credit by the end of next week. This model will drastically reduce the ability for ethanol producers access subsidies to produce sustainable aviation fuel.

The climate model has been updated since the last time it was updated. This means that the exclusion of climate-smart agriculture practices, on which the biofuel industry hoped to rely, is a major reversal. Treasury will likely issue a notice of proposed rulemaking for the 45Z program later Friday. The plan's future decisions will be left to the administration of President-elect Donald Trump.

Two sources stated that the updated climate model will also limit the pathways of credits for imported used cooking oil. SAF can be produced using both used cooking oil or ethanol. It is a non-petroleum fuel that has a lower carbon footprint than conventional jet fuel.

Joe Biden plans to produce 3 billion gallons of sustainable SAF before 2030. The global emissions of greenhouse gases from air travel are around 2.5%, which makes it an important target in the fight to combat climate change.

Last year, the Biden administration updated the climate model called the GREET, for a temporary tax credit in the Clean Fuel Program that expired on January 1.

SAF production is profitable for companies who have subsidies, but expensive without them.

Planting cover crops, not tilling soil and using high-efficiency fertilizers are all examples of climate-friendly farming practices.

Investment plans in the industry will also likely be delayed, as the Biden administration has left further decisions up to Trump's administration.

CBOT soyoil contracts rose more than 6% Friday, after a report on recent developments in the area of short-term credit guidance and the climate model. Jack Scoville is vice president of Price Futures Group. He said, "Whatever Biden has in mind I think we will factor it in today." (Reporting from Stephanie Kelly in New York, Jarrett Renshaw at Philadelphia and Julie Ingwersen at Chicago Additional reporting by Matthew Lewis.

(source: Reuters)