45Z Credit Extension Eyed in Congress

LINCOLN, Neb. (DTN) -- Bipartisan federal legislation that restricts eligibility for the 45Z Clean Fuel Production tax credit to only renewable fuels that use domestic feedstocks has been introduced in both sides of Congress, in a push that seems to be gaining steam.

The "Farmer First Fuel Incentives Act" offered in both the U.S. House of Representatives and the U.S. Senate on Tuesday also would extend the 45Z tax credit to a full 10-year credit.

Biofuels producers and others continue to wait for the U.S. Department of the Treasury to release guidance on 45Z. At the end of last week, a group of biodiesel producers asked Treasury to release the guidance out of concern that industry could be forced to shut down without it.

Sens. Roger Marshall, R-Kan., and Sherrod Brown, D-Ohio, introduced the measure in the Senate, while Reps. Tracey Mann, R-Kan., and Marcy Kaptur, D-Ohio, introduced companion legislation on the House side.

"The 10-year credit will give the ethanol industry the time and financial incentive to build up the infrastructure needed for the U.S. to be less reliant on foreign fuel, open new markets for farmers and increase ethanol production across the Midwest," Marshall said in a news release Tuesday.

"However, we recently learned that 45Z has a glaring flaw that needs to be fixed for farmers wanting to sell feedstocks to the biodiesel and renewable diesel industry. If 45Z goes into effect as is, taxpayers will be massively subsidizing Chinese used cooking oil and would all but eliminate the use of homegrown soy or corn oil in renewable diesel."

AG GROUPS SUPPORT

The introduction of the bill received support from a variety of agriculture interest groups.

The National Corn Growers Association said in a statement on Tuesday it supports the measure.

Minnesota farmer and NCGA president Harold Wolle said corn farmers need market certainty in being part of a future sustainable aviation fuel industry.

"Corn growers are making every effort to help the airline industry lower its greenhouse gas emissions through the use of corn ethanol," Wolle said.

"We are deeply appreciative of these leaders for introducing legislation that establishes requirements for the tax credit that will level the playing field for America's corn growers."

Kaleb Little, CEO of the Kansas Soybean Association, said in a statement farmers have and can continue to be at the forefront of renewable energy production.

"U.S. soybean farmers have been at the forefront of our domestic clean-energy production through the booming biodiesel and renewable diesel industry over the last decade," he said.

"The Farmer First Fuel Incentives Act ensures our Kansas soybean growers maintain access to this vital market sector going forward and strengthens the clean fuel production credit for the future."

Kansas Corn Growers Association CEO Josh Roe said tax credits to support renewable energy should only benefit domestic producers.

"Companies have a right to import feedstocks from foreign countries, but those foreign producers should not receive tax credits funded by U.S. taxpayers," he said in a statement.

The National Oilseed Processors Association has put its support behind the legislation.

NOPA President and CEO Kailee Tkacz Buller said restricting the tax credits to just U.S. producers is important for investments in SAF and other technologies.

"We support free trade and open markets but do not believe foreign feedstocks should benefit on the backs of U.S. taxpayers to the detriment of U.S. farmers," Buller said.

"Without this fix, the 45Z credit will incentivize the use of foreign feedstocks over those grown by U.S. farmers. Our industry has made significant investments to expand U.S. crush capacity by 30% and this fix is pivotal to ensuring these investments are delivered."

Growth Energy CEO Emily Skor said the legislation being introduced in both sides of Congress "sends a strong signal" that extending 45Z will be a legislative priority.

"We applaud Sens. Brown, Marshall, and all our rural champions for working to give biofuel producers and our farm partners the long-term certainty we need to accelerate innovation in America's bioeconomy," she said.

"With a longer runway from Congress, and clear, flexible and timely guidance from the U.S. Department of the Treasury, we'll have the pieces in place to unlock billions of dollars in new clean energy investments across rural America."

Josh Gackle, a North Dakota soybean farmer and president of the American Soybean Association, said since 45Z is a key component of growing biofuels production, a longer-term credit that prioritizes domestic producers will be needed.

"Biofuel production paves a key path for our country to be a clean energy leader, and U.S. farmers who grow the crops going into those biofuels take pride in helping reduce greenhouse gas emissions while supporting the U.S. economy and energy independence," Gackle said.

Read more on DTN:

"Biodiesel Producers Expect Industry Shutdown Without 45Z Guidance From Treasury," https://www.dtnpf.com/….

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

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