Ethanol Blog

LINCOLN, Neb. (DTN) -- The U.S. House of Representatives passed the "One, Big, Beautiful Bill" ahead of the Fourth of July holiday, as agriculture and biofuels groups celebrated key provisions bolstering the 45Z Clean Fuels Production tax credit on Friday.

The bill expected to be signed by President Donald Trump on Friday, extends the 45Z by two years through the end of 2029, restricts 45Z eligibility to fuels made from feedstocks grown in the U.S., Canada and Mexico, retains full transferability throughout the term of the credit, and harmonizes indirect land use change emissions with actual data and evidence, resulting in no ILUC penalty for corn ethanol.

"From the very beginning of the budget reconciliation process, our goal was to advocate for the inclusion of tax policies that provide certainty, growth opportunities, and market stability for U.S. ethanol producers," said Geoff Cooper, president and CEO of the Renewable Fuels Association.

"The One, Big, Beautiful Bill Act passed today accomplishes that objective. The extension and modifications to the 45Z clean fuel production credit, reinstatement of the research and development immediate expensing provisions, and improvement of the 45Q carbon sequestration and utilization credit will provide a growth-oriented tax policy climate that ethanol producers can count on, improving the role that renewable fuels can play in helping reach our nation's energy independence goals."

American Coalition for Ethanol CEO Brian Jennings said the survival of 45Z was something unexpected when Trump took office.

"We're grateful to our Congressional champions for their steadfast leadership to support and strengthen the 45Z credit, which is remarkable considering the fact most other IRA (Inflation Reduction Act)-era tax credits were limited or phased-out in the final package," Jennings said in a statement.

"While there were other improvements, we had hoped to achieve in the final 45Z language, restoring transferability of the credit, removing indirect land use change penalties, and restricting feedstock eligibility to USMCA countries will strengthen the credit from its original version."

Jennings said although ACE had preferred a 45Z extension through 2031 as well as language to allow farmers to profit from low-carbon farming practices.

"Nevertheless, ACE remains committed to working with federal agencies to implement the credit in ways that reward on-farm conservation practices and accelerate the use of homegrown, low-carbon biofuels," he said.

Monte Shaw, executive director of the Iowa Renewable Fuels Association, said the renewable fuels community "worked hard" on the legislation.

"IRFA members are excited by the extension of 45Z through 2029," he said. "Countries around the world and many of our states are demanding ultra-low carbon fuels. The Big Beautiful Bill helps pave the way for the investments to produce those fuels -- and to produce them from North America feedstocks. IRFA thanks Iowa's Senators and House members who worked so tirelessly to ensure 45Z was included and improved during this process."

The bill also includes provisions that are expected to boost biomass-based diesel.

"Led by Sen. Chuck Grassley, the final bill includes a restoration of the small biodiesel producer tax credit for 2025 and 2026," Shaw said.

"We are hopeful this provision, along with the robust RFS blending levels proposed by President Trump's EPA, will be enough to get our biodiesel plants running again."

The bill also lowered the incentive for producing sustainable aviation fuel from $1.75 to $1 and made technical changes that biofuels groups said could make it difficult for a SAF producer using ethanol as their feedstock to claim the credit.

American Soybean Association President and Kentucky farmer Caleb Ragland, said in a statement the bill comes at a time when agriculture needs a boost.

"At a time of great uncertainty for the agriculture economy, the support of Congress to enhance key programs and vital domestic markets for our farmers is critical," he said.

National Oilseed Producers Association president and CEO Devin Mogler said the bill also disqualifies imports of used cooking oil from the 45Z credit.

"We applaud Congressional leaders for their work to improve this tax provision to ensure it is effective for U.S. farmers, oilseed processors and biofuel producers," he said.

"Coupled with strong RVOs, this new tax policy positions the industry for continued growth by prioritizing feedstocks grown and produced here in the U.S."

Read more on DTN:

"Farm Bill Wins, Tax Cuts: What to Know," https://www.dtnpf.com/…

Todd Neeley can be reached at todd.neeley@dtn.com

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