The lack of guidance for a new clean-fuel tax credit is causing biofuels producers, including Cargill and Bunge, to put off some purchases of soyoil for early next year, Bloomberg reported, citing people familiar with the matter. That’s damping demand for soybeans.
By mid-October, most fuel retailers had procured only about 10% of their biodiesel feedstocks for the first quarter of next year, said David Fialkov, executive vice president of government affairs for NATSO, a trade group for truck stops and transportation energy centers. That compares with more than 80% by that time over the past decade.
The industry is waiting for the Treasury Department to issue guidance for the 45Z clean fuel production credit that will begin in January. Thorny issues dividing the industry include whether the tax incentive will be available for low-carbon fuels made from foreign-sourced biofuel ingredients, like animal fat waste and used cooking oil that compete with soybeans and other U.S.-grown crops. Another big uncertainty is the outcome of U.S. presidential and congressional elections on Nov. 5, and how that could impact the domestic biofuels policy.
