Lawmakers Propose 10 Year Extension for Biofuels Tax Credit

By Ryan Hanrahan

FERN’s Ag Insider reported Wednesday that “the 45Z tax credit, intended to encourage the development of sustainable aviation fuel and other low-carbon fuels, would be available until 2034 and limited to domestic feedstocks under companion bills filed in the House and Senate on Tuesday.”

“Farm groups said the legislation would allow time for domestic production to rise while discouraging a flood of imported oil, grease, and tallow,” FERN’s reported. “‘American tax dollars should support American farmers — not imported feedstocks,’ said cosponsor Sen. Sherrod Brown, Ohio Democrat. Kansas Sen. Roger Marshall, the Republican cosponsor, said, ‘This legislation puts farmers first to ensure they are the primary beneficiaries of renewable fuel tax incentives and provides business a decade of certainty.'”

“At present, the 45Z tax credits would be available for three years, starting with 2025,” FERN’s reported. “The Treasury Department has yet to issue regulations for the credits. Only a trickle of sustainable aviation fuel (SAF) is produced now but the Biden administration says SAF could become a bigger market for renewable fuels than corn ethanol.”

Ag Secretary Has Warned Against Limiting Credit To Domestic Feedstocks

Agri-Pulse’s Philip Brasher reported earlier in September that “banning the use of foreign biofuel feedstocks such as used cooking oil for a new tax credit could result in retaliation against U.S. farm exports, Agriculture Secretary Tom Vilsack said Tuesday.”

“The Treasury Department is under pressure from some lawmakers to limit eligibility for the new 45Z clean fuels tax incentive to fuels made from feedstocks sourced in the United States. The 45Z credit, which was created by the Inflation Reduction Act, takes effect in 2025,” Brasher reported.

“‘It’s a tough issue, because if you essentially create some kind of significant restriction in the effort of trying to protect commodities and items that are grown and raised here, you essentially invite the entire world to do the same thing,’ Vilsack told members of Growth Energy, an ethanol industry group,” according to Brasher’s reporting. “‘So, when we try to export corn, or we try to export soybeans, or we try to export pork, or we try to export poultry or beef or whatever, or ethanol, other countries go, ‘Wait a minute. They’re restricting this over here to protect their industry. Okay? We’ll do the same.'”

Ag Groups Voice Support for Proposed Bills

Progressive Farmer’s Todd Neeley reported Tuesday that “the National Corn Growers Association said in a statement on Tuesday it supports the measure. Minnesota farmer and NCGA president Harold Wolle said corn farmers need market certainty in being part of a future sustainable aviation fuel industry.”

“‘Corn growers are making every effort to help the airline industry lower its greenhouse gas emissions through the use of corn ethanol,’ Wolle said,” according to Neeley’s reporting. “‘We are deeply appreciative of these leaders for introducing legislation that establishes requirements for the tax credit that will level the playing field for America’s corn growers.'”

“The National Oilseed Processors Association has put its support behind the legislation,” Neeley reported. “NOPA President and CEO Kailee Tkacz Buller said restricting the tax credits to just U.S. producers is important for investments in SAF and other technologies.”

“‘We support free trade and open markets but do not believe foreign feedstocks should benefit on the backs of U.S. taxpayers to the detriment of U.S. farmers,’ Buller said,” according to Neeley’s reporting. “‘Without this fix, the 45Z credit will incentivize the use of foreign feedstocks over those grown by U.S. farmers. Our industry has made significant investments to expand U.S. crush capacity by 30% and this fix is pivotal to ensuring these investments are delivered.'”