Biden Admin to Finalize 45Z Credit

This article was originally published at 1:23 p.m. CST on Tuesday, Dec. 3. It was updated with additional information at 3:22 p.m. CST on Tuesday, Dec. 3.

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LINCOLN, Neb. (DTN) -- The Biden administration is set to finalize guidance on the 45Z Clean Fuel Production tax credit before President Joe Biden leaves office come Jan. 20, 2025, a spokesperson for the U.S. Treasury Department told DTN on Tuesday.

Reuters and Bloomberg published competing stories on this issue Tuesday -- Reuters reported the guidelines would not be completed and Bloomberg reporting they would be finalized.

"Treasury anticipates issuing guidance before the end of the administration that will enable eligible producers to claim the 45Z credit for 2025," Treasury spokesperson Mike Martinez told DTN on Tuesday.

Biofuels companies, and in particular renewable diesel and biodiesel, have planned to not claim the blender's tax credit that expires at the end of December, because they planned to instead claim the 45Z credit.

The Biden administration delay has led to biodiesel producers cutting back production and/or shutting down plants.

Paul Winters, director of public affairs and federal communications at the Clean Fuels Alliance America, told DTN his group has done all it can to impart on the Biden administration the importance of having the 45Z guidance.

"We spent the entire year urging Treasury to issue guidance by September, because the biodiesel and renewable diesel industry is trying to navigate the change from the blender excise tax credit to the producer income tax credit," Winters told DTN.

"Our industry is already feeling the impact of the delays and uncertainty. It's not just a delay in the guidelines for calculating the credit. Many producers are reporting that Treasury has not completed the necessary registrations for them to be eligible for the credit."

Biofuels producers are eligible to claim the credit only as of the date of their registration letter.

"This isn't a revelation," Winters said.

"There are a number of stakeholders in 45Z that don't currently have a tax credit, so they can tolerate this delay and try to negotiate a better deal in the next Congress. We knew this would be more complicated for our industry than others."

Geoff Cooper, president and CEO of the Renewable Fuels Association, said his group is holding out hope the Biden administration will take some kind of action soon.

"While we agree that final regulations for 45Z seem highly unlikely before Jan. 20, we remain hopeful that the Biden administration will at least issue some sort of guidance or safe harbor before Jan. 1," he told DTN, "that gives renewable fuel producers the basic information they need to demonstrate eligibility for, and ultimately claim, the 45Z tax credit."

Growth Energy CEO Emily Skor said if the media report is true, farmers and biofuels producers would see their efforts thus far go to waste.

"We appreciate (agriculture) Secretary (Tom) Vilsack's efforts to include climate-smart agriculture practices in any forthcoming 45Z guidance," Skor said in a statement to DTN.

"If this report is true, however, it would be extremely disappointing for the Treasury Department to leave biofuel producers without clarity on this credit. Many producers and their farm partners have already responded to the enactment of these incentives by investing in technologies to reduce their carbon intensity. To leave the credit unfinished would jeopardize the economic benefits this credit could deliver to America's rural communities."

Sen. Charles Grassley, R-Iowa, said in a post on social platform X today that such a delay would hurt the biofuels industry.

"Delaying 45Z guidance will b disruptive to biofuels industry," he said on the post.

"The Biden admin's climate agenda has prioritized pet projects for coastal elites & left middle America behind at every turn That ends when Republicans take power next yr."

Read more on DTN:

"Federal Lawmakers Push IRS to Act on 45Z Clean Fuels Production Tax Credit," https://www.dtnpf.com/…

"Biofuels, Ag Groups Ask Congress for One-Year Extension of Biodiesel, Renewable Diesel Tax Credit," https://www.dtnpf.com/…

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

"Vilsack Touts Biofuels as Policy Choice," https://www.dtnpf.com/…

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

Follow him on social platform X @DTNeeley

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