Ethanol Blog
Biofuels, Ag Groups Ask Congress for One-Year Extension of Biodiesel, Renewable Diesel Tax Credit
LINCOLN, Neb. (DTN) -- Biofuels and agriculture interest groups asked for an emergency extension of the biodiesel and renewable diesel 40A blenders tax credit set to expire at year's end, as the Biden administration has yet to release tax guidance on the 45Z Clean Fuels Production Credit was expected to replace the blenders credit.
Clean Fuels Alliance America and 10 national and state associations that wrote a letter to leadership in the House and Senate on Thursday, said the tax credit renewal was needed to "provide certainty and stability" to stakeholders in the biodiesel and renewable diesel industries.
The U.S. Department of Treasury requested comment on the 45Z credit and issued guidance on registration requirements and the prevailing wage and apprenticeship requirements.
However, the treasury has yet to provide guidance "sufficient" to enable taxpayers and industry stakeholders to calculate the tax credit value for the fuels they produce, according to the letter.
The Clean Fuels Alliance America said in a news release that many producers have not received the registration letters necessary to claim the credit.
"Due to the significant uncertainty created by this lack of guidance, American clean fuel producers and their partners in agriculture and fuel marketing are facing tremendous confusion in the marketplace," the groups said in the letter.
"It is therefore critical that Congress provide a temporary, short-term extension of the existing 40A blenders credit to allow the necessary transition and a smooth integration of the new credit into business plans."
Kurt Kovarik, Clean Fuels Vice president of federal affairs, said in a statement that biofuels producers needed information on 45Z long before now.
"Farmers, fuel producers and marketers needed to know the value of the new credit months ago to successfully negotiate feedstock contracts and fuel offtake agreements for the start of 2025," Kovarik said.
"The industry is facing extreme uncertainty that threatens to undermine clean fuel production, jobs, economic opportunities for farmers and near-term carbon reductions. A one-year extension of the existing policy would provide time for treasury and the industry to navigate the transition to the new credit."
The groups signing the letter include Clean Fuels, American Soybean Association, National Oilseed Processors Association, Illinois Soybean Growers, Indiana Soybean Alliance, Iowa Biodiesel Board, Iowa Soybean Association, Missouri Soybean Association, Nebraska Soybean Association, North Dakota Soybean Growers Association and the Wisconsin Soybean Association.
Back in September, a group of Iowa biofuels producers asked Treasury Secretary Janet Yellen to provide at least temporary guidance on 45Z.
The biodiesel industry has been planning to transition from the blenders tax credit to 45Z. The blenders credit has well-established rules and the "entire supply chain -- from feedstocks to production to blending to retailing -- factored it into pricing," the groups said in a letter, https://www.dtnpf.com/….
In Thursday's letter to House and Senate leadership, the biofuels groups said lawmakers could pass the already-proposed Biodiesel Tax Credit Extension Act of 2024.
"Incorporating a narrow, short-term bill like H.R. 9060 into end-of-year legislation represents an opportunity for Congress to do the right thing by American clean fuel producers and the sector's supply chain whose businesses are currently in a state of disarray due to the lack of government guidance," the letter said.
Todd Neeley can be reached at todd.neeley@dtn.com
Follow him on social platform X @DTNeeley
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