The U.S. biofuels industry finds itself in a state of uncertainty as it awaits crucial guidance from the Treasury Department on a tax credit for sustainable aviation fuel (SAF) and other low-carbon biofuels. This delay in the 45Z program details is causing significant concern among producers and politicians alike.
Monte Shaw, executive director of the Iowa Renewable Fuels Association (IRFA), highlights the severity of the situation: “The reality is we need (the) Treasury to issue 45Z guidance immediately. Simply put, biodiesel production is in jeopardy as we speak.”
Shaw reports that fuel producers in Iowa are slowing production or even shutting down while waiting for this guidance. The lack of clear guidelines is not only affecting current production but also hindering future planning for SAF and other low-carbon projects.
The delay also impacts corn and soybean producers, who need to know the conditions under which to grow their crops to produce eligible feedstocks for low-carbon fuels. Shaw emphasizes: “Producers and the entire supply chain need rules in place in order to make crucial feedstock decisions now.”
Farmers supplying corn and soybeans for this program could potentially receive higher prices for commodities grown using sustainable practices that reduce the lifecycle greenhouse gas emissions of the fuel.
Sen. Chuck Grassley (R-Iowa) is concerned about the delay, stating on social media that it is “disruptive” to the biofuels industry. A spokesperson for Grassley added: “The burden remains on the Biden administration to provide urgently needed guidance on the 45Z tax credit. Farmers and industry stakeholders will suffer the consequences if the Biden administration fails to do so.”
Shaw said there will be “an inevitable delay” during the transition of power if the Biden administration is unable to provide guidance before Jan. 20, which is his biggest concern. “IRFA members were heartened when Speaker (Mike) Johnson (R-La.) noted that Republicans did not support the IRA overall, but that there were parts worth saving,” Shaw said. “IRFA members remember how the Iowa delegation united to protect 45Z and other biofuels provisions from earlier efforts at repeal, and there’s no reason to believe they wouldn’t be able to successfully defend the provisions in the future.”
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