A new bill introduced in the U.S. House of Representatives aims to tack 10 years onto the life of a biofuel tax credit in a move that industry advocates say provides economic certainty to farmers.
The clean fuel production credit (CFPC) for transportation fuel with zero or low greenhouse gas emissions — including sustainable aviation fuel (SAF) — currently expires at the end of 2027. The Expanding Clean Fuel Production Act, sponsored by Michigan Rep. Dan Kildee and two others, would extend the Section 45Z clean fuel production credit through 2037.
“This legislation will help us continue producing clean energy and fuels here in the United States, to help create good paying jobs, provide new markets to Michigan farmers, and reduce carbon emissions from airplanes and other vehicles,” Kildee said.
While the 45Z credit doesn’t go into effect until January 2025, some members of Congress are pushing for faster implementation considering the underwhelming 45B tax credits released earlier this year that included burdensome and unrealistic requirements for farmers growing crops used in biofuels. 45Z consolidates and replaces several fuel-related credits currently scheduled to expire at the end of the year and is seen as the only viable path forward for boosting SAF production.
“As the leading U.S. airline in SAF use and advocacy, we know that extending incentives for U.S. SAF producers by a full ten years is a necessary first step to grow the industry,” said Lauren Riley, chief sustainability officer for United Airlines.
According to biofuels trade association Growth Energy, if implemented properly CFPC would add $21.2 billion to the U.S. economy, generate nearly $13.4 billion in household income, support more than 192,000 jobs across all sectors of the national economy, and provide farmers with a 10% premium price on low carbon corn used at a bioethanol plant.
“Farmers and renewable fuel producers are making decisions today about how to invest their time and money in the years to come,” said Growth Energy CEO Emily Skor.
“With this bill they would be able to make those decisions with greater confidence, and make the kind of investments that increase efficiency, lower their carbon intensity, create jobs, and grow the rural economy.”
Beyond a 45Z extension bill, Growth Energy has called on the U.S. Treasury Department to quickly issue guidance for the 45Z tax credit, preferably in a rulemaking, that accurately rewards the full spectrum of tools available to reduce bioethanol emissions at the plant and on the farm, including carbon capture and storage, process heat and energy, and climate-smart agriculture.
AFBF President Zippy Duvall recently met with White House officials to urge fair treatment of U.S. farmers when it comes to tax credits for biofuels. Read more about the meeting here.
Originally shared by Michigan Farm News, October 23, 2024.
Disclaimer: The Michigan Advanced Biofuels Coalition (MiABC) does not lobby or influence policy in any way. The policy interests of Michigan soybean farmers and biodiesel producers are supported by the Michigan Soybean Association and Clean Fuels Alliance America, respectively.