For months the administration has been divided over whether to recognize the Department of Energy's Greenhouse Gases, Regulated Emissions and Energy Use in Technologies (GREET) model, which as it stands would enable ethanol-based SAF to qualify for tax credits under the Inflation Reduction Act, President Joe Biden's signature climate law.

The news is a win for the ethanol industry, which has countered environmental groups seeking standards that elevate feedstocks like used cooking oil and animal fat.

The administration, however, is also expected to announce that it will update the GREET methodology by March 1, the sources said.

That leaves some uncertainty for corn-based ethanol producers, as the administration is expected to ultimately tighten requirements around SAF feedstocks.

Over the coming months, a fierce lobbying push is expected.

The Treasury Department declined to comment for this story.

White House adviser John Podesta said on Thursday the SAF guidance would be released very soon.

"We think in order to take advantage of the credit that emissions have to be 50% below what oil-based aviation fuel looks like," Podesta told reporters on Thursday.

(Reporting by Stephanie Kelly, Jarrett Renshaw, Leah Douglas and David Shepharson; Editing by Bill Berkrot)

By Stephanie Kelly and Jarrett Renshaw