Biofuel producers ‘stuck in neutral’ without finalized tax credit guidance

Ag/Outdoor, News

January 13th, 2025 by Ric Hanson

(Des Moines, Iowa) – As the Biden administration enters its final days in the White House, biofuel industry leaders hoped for finalized rules on a tax credit for sustainable aviation fuel, but what they got was a “notice of intent to propose regulations” from the U.S. Department of the Treasury.  The Iowa Capital Dispatch reports Iowa Renewable Fuels Association Director Monte Shaw says the notice leaves producers “stuck in neutral” as the guidelines could and likely will be changed once the Trump administration takes office.  According to Shaw, “What’s in it is somewhat meaningless, because in 10 days, what the Biden administration intended to do doesn’t matter anymore. The Trump administration will come in and take a fresh look at this, and that’s true of any change in administration at any time in our country’s history.”

According to the U-S Department of Treasury, the guidance issued Friday provided clarity on eligibility for the credit and how lifecycle greenhouse gas emissions will be determined. Deputy Secretary of the Treasury Wally Adeyemo said “This guidance will help put America on the cutting-edge of future innovation in aviation and renewable fuel while also lowering transportation costs for consumers.” A press release from the Treasury said the department intends to release its Greenhouse gases, Regulated Emissions, and Energy use in Technologies, or GREET, model for determining 45z emissions rates “in the coming days.”

The tax credit was announced in 2023 as part of the Inflation Reduction Act and was set to give a per-gallon tax credit on fuel produced with in a set range of lifetime emissions guidelines.  Monte Shaw said since September, IRFA and other industry groups have been calling on the Treasury to issue a safe harbor rule that would use existing carbon models to estimate the value of credits while the department finalizes its guidelines. Shaw says “We have biodiesel plants that are sitting idle today, that are not running, because they don’t know what the value of the credit is. Feedstock suppliers don’t know how to price the feedstock, biodiesel producers don’t know what to pay for them.”

Southwest Iowa Renewable Energy, LLC in Council Bluffs. (Photo courtesy of David Kosling, USDA AudioVisual Production Specialist)

Shaw said he presumes the incoming administration will want to put “more than a few fingerprints” on the intended regulations that were issued by the Treasury. To him, that means Iowa biofuels plants cannot claim the credits “with any certainty or lack of risk” under the unfinalized rules.  Shaw says “Iowa biofuels plants, collectively, made hundreds of millions of dollars of investments based on this 45z program that’s supposed to be here for ‘25, ‘26 and ‘27 and right now they can’t access it.” He said IRFA will work with the Trump administration and hopes to get rules for the credit, or a safe harbor, in place as soon as possible.