By Ryan Hanrahan
Progressive Farmer’s Todd Neeley reported Tuesday afternoon that “the Biden administration is set to finalize guidance on the 45Z Clean Fuel Production tax credit before President Joe Biden leaves office come Jan. 20, 2025, a spokesperson for the U.S. Treasury Department told DTN on Tuesday.” Neeley noted on the social media platform X that “once guidance is released it could either be final guidance or just a proposal.”
“Reuters and Bloomberg published competing stories on this issue Tuesday — Reuters reported the guidelines would not be completed and Bloomberg reporting they would be finalized,” Neeley reported. “‘Treasury anticipates issuing guidance before the end of the administration that will enable eligible producers to claim the 45Z credit for 2025,’ Treasury spokesperson Mike Martinez told DTN on Tuesday.”
“Biofuels companies, and in particular renewable diesel and biodiesel, have planned to not claim the blender’s tax credit that expires at the end of December, because they planned to instead claim the 45Z credit,” Neeley reported. “The Biden administration delay has led to biodiesel producers cutting back production and/or shutting down plants.”
Biodiesel Production Slowdown Has Already Started
Agri-Pulse’s Rebekah Alvey reported that “some biodiesel production interests say the slowdown has begun. ‘We’ve started to see some scaling back of production already, and I anticipate that’s going to get worse, way worse by the time we get to the end of this calendar year,’ said Donnell Rehagen, CEO of Clean Fuels Alliance America.”
“Rehagen said the industry buys and produces fuel far in advance, but buyers don’t know how much the product is worth under 45Z. He said one producer had first two quarters of product sold by November of last year but this year was struggling to sell product for December,” Alvey reported. “‘It’s getting very, very daunting for us,’ Rehagen said. Without guidance soon, Rehagen said he expects production to pause, drying up demand for feedstocks such as soybean oil and animal fats.”
“Continued delays in the 45Z guidance could also hurt farmers who work with biofuel producers by supplying low-carbon feedstocks. Under the 40B credit, only specific climate-smart agriculture practices implemented together for certain crops qualify,” Alvey reported. “Groups have urged the administration to de-bundle these practices and include additional eligible crops and practices for 45Z. They argue this allows more farmers from all parts of the country to participate in these markets. However, without a rule in place on what qualifies as climate-smart agriculture, and how that fits in with 45Z, it could be too late for farmers to adjust 2025 growing season plans.”
Neeley reported that “Geoff Cooper, president and CEO of the Renewable Fuels Association, said his group is holding out hope the Biden administration will take some kind of action soon.”
“‘While we agree that final regulations for 45Z seem highly unlikely before Jan. 20, we remain hopeful that the Biden administration will at least issue some sort of guidance or safe harbor before Jan. 1,’ he told DTN, ‘that gives renewable fuel producers the basic information they need to demonstrate eligibility for, and ultimately claim, the 45Z tax credit,'” Neeley reported.
Tax Credit Could Be Axed by Trump Admin
Neeley reported in a different article Wednesday that “whether the Biden administration releases 45Z Clean Fuels Production tax credit guidance may be a moot point, an agricultural economist said during a webinar on Wednesday, because the Inflation Reduction Act and its various tax incentives may be on the chopping block by the incoming Trump administration.”
“During a FarmDoc biofuels webinar on Wednesday, University of Illinois Agricultural Economist Scott Irwin said not only would it be nearly ‘impossible’ for sustainable aviation fuel to develop, but carbon sequestration by farms and ethanol plants would be less important if the next Trump administration eliminates 45Z,” Neeley reported.
Source : illinois.edu/