Canadian Biofuels Producers Feeling Heat From New Producer's Tax Credit in US
LINCOLN, Neb. (DTN) – A change in U.S. law to the blender's tax credit for biodiesel and renewable diesel as part of the Inflation Reduction Act is seen as a boon for U.S. producers.
According to a Western Producer news story published on Thursday, however, the Biden administration's move to provide the credit to U.S. producers only is expected to have what the publication says will be a "devastating" effect on Canadian biodiesel and renewable diesel producers, https://www.producer.com/….
The IRA switches the blender's tax credit for the two renewable fuels to a producer's credit effective on Dec. 31, 2024. U.S. producers alone will be eligible for tax credits of 20 cents to $1 per gallon, depending on the carbon intensity of the fuels produced.
As it stands now, according to Western Producer, U.S. biofuels producers will be able to send their products to Canada, making it difficult if not impossible for Canadian producers to compete.
Officials interviewed by the publication said since the U.S. law change takes effect at the end of 2024 there is time to perhaps create a similar Canadian subsidy program.
In fact, Western Producer said companies with plans to build new renewable diesel plants in Canada are continuing to implement those plans. That includes a $720 million plant planned by Imperial Oil Canada in Alberta.
In addition, Western Producer reports, Federated Co-operatives Limited and AGT Food and Ingredients still plan to build a $2 billion canola crushing plant.
The Inflation Reduction Act included a number of provisions beneficial to biofuels.
Renewable energy programs through USDA overall received $13.3 billion. Rural electric cooperatives will receive $9.7 billion for loans to build out renewable energy infrastructure with specific language on "zero-emission systems" and carbon-capture programs.
Biofuels will see another $500 million to develop blender pumps and other infrastructure to increase the blends of biofuels above 10% blend levels for ethanol and 20% for biodiesel blends.
The bill also extends the $1-per-gallon biodiesel and renewable diesel tax credit through 2024. The $1.01-per-gallon second-generation biofuel tax credit also is extended through 2024.
A major boost for airlines transitioning aviation fuels will come from a $1.25-a-gallon sustainable aviation fuel tax credit for 2023 and 2024. The SAF tax credit also gets bumped up for fuels that reduce emissions by more than 50%.
Todd Neeley can be reached at firstname.lastname@example.org
Follow him on Twitter @DTNeeley
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