Biofuel industry leaders are happy to see the proposed extension of Clean Fuel Production Credits known as 45Z in the Budget Reconciliation Bill, but they say there’s room for improvement.
Brian Jennings with the American Coalition for Ethanol tells Brownfield the prevailing wage and apprenticeship requirements that were tied to most of the Biden era tax credits including 45Z are not feasible. “Potentially, include either an improvement to that prevailing wage and apprenticeship language or eliminating that requirement alltogether. That’s a conversation we’ll be having with the House and with the Senate.”
Geoff Cooper with the Renewable Fuels Association agrees and says he would also like to see the transferability of the credit go beyond 2027 to help smaller producers. He says the bill also doesn’t allow ethanol producers to benefit from conservation practices on the farm as part of the carbon intensity scoring. “And therefore, there’s really no way for ethanol producers to reward farmers for those practices through the existing structure of this tax credit.”
Cooper is hoping these issues can be addressed in the House Budget Committee or in the Senate before the bill is finalized.
Jennings says if the 45Z tax credits are available, ethanol companies are ready to innovate and take advantage of them, but he wonders if the value of the credit will be enough to get sustainable aviation fuel production off the ground because of the extra refinement needed.
The 45Z Clean Fuel Production Credit is one of the few tax policies House Republicans kept from the Biden-era Inflation Reduction Act. As written, the credit would extend to 2031.
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