Biofuels Complicate House Debt Bill

WASHINGTON (DTN) -- Under pressure from Midwest Republicans, GOP leaders in the House of Representatives conceded to strip a few key biofuel tax credits from their debt-limit bill, setting up a potential vote on the bill as early as Wednesday -- if the votes are there.

In a House Rules Committee meeting that stretched past 2 a.m. EDT Wednesday, Republicans yielded to demands of Midwestern lawmakers to protect the $1 per-gallon Biodiesel and Renewable Diesel Tax Credit, as well as the Second-Generation Biofuels Tax Credit. Lawmakers also removed language from the bill that would have limited the 45(Q) tax credit for carbon sequestration.

The moves came after CQ Roll Call reported a meeting with House Speaker Kevin McCarthy, R-Calif., that included all four Iowa members along with Republican lawmakers from Minnesota, Wisconsin, Nebraska and South Dakota. Each had raised concerns about the GOP plan to include biofuel tax credits in the debt-ceiling bill.

McCarthy is pressing to see if he has the votes for the House to pass the bill. Republicans can only afford to lose four votes if each Democrat votes against the bill.

The bill would still repeal the newly created tax credit for Sustainable Aviation Fuels (SAF) as well as another biofuels tax credit that passed last year, the Clean Fuels Tax Credit. Both of those tax credits were part of the Inflation Reduction Act (IRA) that the debt-limit bill seeks to roll back.

The bill also counters the IRA by including the language of an energy bill House Republicans passed in March that would increase production of petroleum and natural gas.

Other tax credits remain part of the GOP rollback, including credits for wind, solar, electric vehicles and low-carbon hydrogen production. At least some Republican lawmakers had raised concerns about eliminating those tax credits due to announced investments in their districts or states.

As part of the Biden administration's campaign against the House bill, Agriculture Secretary Tom Vilsack released a statement Monday afternoon attacking the rollback of the biofuel and renewable-energy tax credits.

"Eliminating these credits would set back the effort underway to build a new industry that will produce low carbon aviation and marine fuel, costing rural American tens of thousands of good paying manufacturing jobs, eliminating a new income source for farmers and forest landowners that would provide the feedstock for these new fuels, and placing the American aviation industry at a serious competitive disadvantage," Vilsack stated. "It is hard to see the logic in this wrong-headed proposal that would walk back significant progress in clean energy, rural economic recovery, and job creation."

House Rules added language that would rescind all "unobligated balances" that departments have on hand from the IRA bill as well. That includes the lion's share of $37 billion that USDA received for conservation, rural development and forestry in the IRA bill.

In another move, the House leaders also agreed to accelerate changes in the Supplemental Nutrition Assistance Program that will increase the age limit from 49 to 55 for single, unemployed people to either find work or enroll in a job-training program. The House Rules Committee tweaked the plan Tuesday night to ensure that it would start in 2024.

All of this remains essentially a messaging bill to force President Joe Biden to negotiate spending cuts with House Republicans in return for raising the debt ceiling. The bill is not expected to get a vote in the U.S. Senate.

"The debt ceiling, we have to pass to get President Biden to the table because he's been just resisting doing that," Rep. Glenn "GT" Thompson, R-Pa., chairman of the House Agriculture Committee, told reporters on Tuesday.

Also see, "How the House Debt Ceiling Battle Spills into Plans for the Next Farm Bill,"

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Chris Clayton can be reached at Chris.Clayton@dtn.com

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