JANUARY 12, 2025:
The U.S. Treasury released a “notice of intent to propose regulations” regarding implementation of the Inflation Reduction Act’s Clean Fuel Production Credit (“45Z”). The notice begins a 90-day comment period that leaves major decisions on the future of the 45Z credit to the incoming Trump administration.
Renewable Fuels Association: “While we are pleased to see Treasury has finally released its long overdue guidance on 45Z, today’s package falls short of expectations and remains incomplete,” said Geoff Cooper, President and CEO of the Renewable Fuels Association. “The guidance is a potential step in the right direction, but much work remains to be done before clean fuel producers, farmers, and consumers can fully benefit from the 45Z program.”
“Unfortunately, today’s guidance does not provide the certainty or flexibility that ethanol producers were looking for, and many questions remain unanswered,” Cooper said. “We do not believe this guidance alone will spur the investment, innovation, and job creation in the clean fuels sector that Congress and the administration intended. It simply isn’t bankable, investible, or otherwise actionable for the vast majority of biofuel producers.
“For the 45Z program to truly drive innovation and value creation in the marketplace, the credit must allow for the inclusion of efficient farming practices, recognition of additional feedstocks and ethanol production technologies, flexible supply chain management tools, and the ability for individual producers to secure their own unique carbon intensity values. But most importantly, producers will not act on this or any subsequent guidance unless they have the assurance that the credit will be durable, stable, and reliably available in the future.”
American Soybean Association and National Oilseed Processors Association: The American Soybean Association and National Oilseed Processors Association appreciate the U.S. Treasury Department’s notice of intent to propose regulation on the Clean Fuel Production Credit (45Z), which provides interim guidance for taxpayers to claim credits while developing a roadmap to spur additional investment in the domestic biofuel industry.
“ASA thanks the Biden administration and Treasury for listening to our concerns and developing guidance that supports U.S. farmers while strengthening our domestic biofuels industry,” said ASA President Caleb Ragland, a soy farmer from Kentucky. “The guidance released today is an investment in U.S. farmers, who stand ready to feed and fuel the world—while also fueling the U.S. economy. We look forward to working with Congress and the incoming Trump administration to build on this progress and develop final guidance that supports rural America.”
With imported waste feedstocks for biofuel production surging in recent years, ASA and NOPA have been sounding the alarm for the need to ensure the validity of imports while empowering U.S. farmers with access to growing domestic markets for soybean oil. The notice published today by the Treasury Department addresses these concerns by ensuring imported used cooking oil remains ineligible for the 45Z credit through the GREET model until such time that Treasury can promulgate substantiation regulations for imports.
NOPA has likewise expressed appreciation to Treasury for providing necessary guidance for America’s crushers and farmers and bolstering American energy independence. The organization notes the dramatic rise in UCO imports has posed a risk to American agriculture, but by restricting import eligibility, the 45Z tax credit will benefit American farmers and processors as Congress intended. NOPA remains committed to working with the incoming Congress and Trump administration to bring full parity for soybean farmers and find long-term solutions to fully unleash the country’s energy independence, which American farmers are poised and able to provide.
Through September 2024, the United States has imported 5.4 billion pounds of UCO and tallow, already far surpassing record import levels from 2023.
Treasury’s intent to propose regulation on the Clean Fuel Production Credit provides taxpayers with the ability to claim credits while the rulemaking process is underway. Additional publications related to biofuel tax credits are anticipated from the U.S. Departments of Agriculture and Energy in the coming days.
American Carbon Alliance: CEO Tom Buis issued the following statement in response the release of the 45Z Clean Fuels Production tax credit guidance.
“The 45Z guidance falls short of expectations and is a missed opportunity to provide the clarity that rural America was hoping for. The 45Z program holds immense potential to drive new demand in the agriculture sector, expand market opportunities, strengthen rural economies, and provide much-needed stability for farm incomes. However, the lack of critical details released today undermines the certainty the agriculture industry needs to fully capitalize on this opportunity.
“We look forward to working with Trump Administration officials to finalize this important program, ensuring the U.S. demonstrates a true commitment to energy independence through renewable resources.”
National Farmers Union: “Today’s guidance on the 45Z tax credit is the right step forward in bolstering renewable fuel production and providing new market opportunities for family farmers and ranchers,” said National Farmers Union (NFU) president Rob Larew. “While this guidance reflects meaningful progress, much remains to be accomplished. We hope this process will be finalized quickly to ensure the tax credit delivers optimal benefits for farmers and rural communities.”
National Sorghum Producers Chair Amy France, a sorghum farmer from Scott City, Kansas, released the following statement regarding the issuance of the guidance on the 45Z Clean Fuel Production tax credit:
“While the release of this short-term guidance marks a step forward, it falls short of delivering the clarity and comprehensive framework needed to fully realize the potential of the 45Z Clean Fuel Production tax credit.
“NSP appreciates the inclusion of sorghum as a recognized feedstock in this program, reflecting its value as The Resource Conserving Crop™. However, critical gaps remain, particularly regarding the specifics of the Greenhouse gases, Regulated Emissions, and Energy Use in Technologies (GREET) model and USDA’s guidance on climate-smart agricultural practices.
“As we await their release in the coming weeks, it is clear that much remains to be seen before the full impact of this guidance can be understood. These details are essential to determine how helpful this program will ultimately be for producers at the farm level.
“Addressing these challenges will require sustained collaboration and leadership. We acknowledge the work of Secretary Tom Vilsack and USDA staff. We appreciate their efforts to tackle issues important to farmers and biofuel producers.
“NSP is committed to working with our partners and the incoming administration to address these gaps, refine this guidance, and deliver a final rule that meets the needs of farmers, rural communities, and the broader biofuels industry.”
MAY 16, 2024:
Twenty-five trade associations representing producers, feedstock providers, blenders, consumers, and retailers of low-carbon biofuels sent a letter to Treasury Secretary Janet Yellen. They’re asking the Treasury Department to finalize and publish guidance for the 45Z Clean Fuels Production Credit as soon as possible. The new credit is designed to incentivize domestic production of low-carbon fuels on a technology-neutral basis. The value of the credit is based on the life-cycle greenhouse gas emission score of each fuel.
“With the credit set to take effect on January 1, 2025, our member companies may face significant headwinds and business risks if this guidance isn’t published promptly,” the letter says. “Any extended delays in publishing the guidance may disrupt project timelines, impede capital flows, and threaten existing production and demand for low carbon renewable fuels.”
Kurt Kovarik, Vice President of Federal Affairs for Clean Fuels Alliance America, says the need for policy certainty is urgent.
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