Ethanol Blog

LINCOLN, Neb. (DTN) -- Members of Congress and several agriculture interest groups are pressing the Biden administration to release guidance on the 45Z Clean Fuel Production tax credit by the end of the year, in particular looking for federal support for domestic feedstocks to produce biofuels including sustainable aviation fuel.

Last week 39 bipartisan members of the U.S. House of Representatives asked U.S. Treasury Secretary Janet Yellen to release that guidance by Jan. 1, 2025.

"Finalizing this rule in a timely manner and prioritizing domestic feedstocks will provide farmers, renewable fuel producers, end-users, and other biofuels stakeholders with the certainty and clarity they need to make planting, business and investment decisions," the letter said.

"While the use of foreign feedstocks can play an important role in producing domestically manufactured ethanol, biodiesel, renewable diesel, and sustainable aviation fuel, Treasury must be clear that 45Z only applies to biofuels produced from domestic feedstocks by domestic fuel producers."

The lawmakers told Yellen that state low-carbon fuel standards and the federal 40B Sustainable Aviation Fuel tax credit are "driving demand for foreign 'waste' feedstocks" instead of domestically produced corn, soybeans and canola.

"These programs are built on carbon intensity modeling that does not account for the full lifecycle of these 'waste' feedstocks," the letter said.

"As a result, imports of used cooking oil from China have increased from around 45 kilo metric ton in 2022 to more than 600 KMT in 2023. Imports of tallow have increased 400% over the last five years and there is also significant concern around future imports of Brazilian safrinha corn crops, which reached record levels of production in 2023. This market dynamic is unsustainable. Treasury must ensure that the 45Z tax credit is only applicable to fuels produced domestically with domestic feedstocks, so American farmers, processors, businesses, investors, and end users can benefit from the 45Z tax credit and the long-anticipated promise of new biofuels markets."

At the end of July, a group of 16 U.S. senators sent a similar letter to Yellen asking for the same feedstock restrictions for 45Z.

Kailee Tkacz Buller, president and CEO of the National Oilseed Processors Association, said in a statement that such a feedstock restriction was critical to U.S. farmers.

"Making certain that 45Z is limited to domestic feedstocks will ensure that this important tax credit is implemented as intended in support of the American farmer, processor and the U.S. taxpayer," Buller said.

"Failing to do so will only incentivize continued use of foreign feedstocks to the detriment of those produced by American farmers and put the significant investments to expand U.S. crush capacity by 30% in doubt."

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

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