The plan is likely to be bittersweet for the politically powerful U.S. ethanol industry that is eager to secure the subsidies but had hoped for a lower hurdle.

Air travel so far accounts for about 2% of U.S. carbon pollution and is one of the fastest growing sources.

Biden hopes creating a subsidized market for lower-emissions SAF can counter that threat, while also giving a boost to farm country, an important constituency in November’s presidential election.

“Sustainable aviation fuel is a key part of the Biden-Harris administration's efforts to transition the American economy to a clean energy future and rebuild the middle class from the bottom up to the middle out in rural America,” said U.S. Secretary of Agriculture Tom Vilsack.

SAF can be made from corn, soy or other agricultural products. But to access the SAF subsidies that make it economically viable to produce, refiners must demonstrate their fuel is at least 50% lower in emissions than petroleum jet fuel.

Ethanol-based SAF can meet that threshold, according to the guidance, only if corn farmers use a bundle of agriculture practices that include no-till, cover cropping and efficient fertilizer application that hold carbon in the soil.

Soy-based biodiesel will also qualify if the soy farms use a combination of no-till and cover cropping, according to the announcement.

Recognition of so-called climate smart agriculture practices in the subsidy program will be effective for fuels made in 2023 and 2024, after which it could be adjusted or expanded, officials said.

The SAF subsidies amount to $1.25 per gallon for fuels that hit the 50% emissions reduction threshold, and up to $1.75 per gallon for those that exceed it.

The plan was based on an update to the GREET climate model that covers lifecycle emissions of ethanol and other biofuels under a variety of circumstances and includes the climate impact of related land use changes.

The biofuel lobby had pushed hard to ensure the GREET update would make it easy for ethanol to qualify as an SAF feedstock.

Some environmental groups and researchers are concerned the SAF strategy will not deliver the promised climate gains, however, in part because of scientific uncertainty about the benefits of no-till or cover crop farm techniques and the sheer volumes of fuel that will be required.

"The bottom line is that to decarbonize aviation, U.S. airlines need a volume of alternative fuels that sustainable biomass alone cannot meet," said Mark Brownstein, Senior Vice President, Energy Transition, at the Environmental Defense Fund.

Bill Hohenstein, director of USDA's Office of Energy and Environmental Policy, said the administration is confident in the plan: “We do have robust data, analysis, information and modeling that all supports the conclusions that these practices do have greenhouse gas benefits," he said.