Biofuel groups advocate for ways to improve 45Z credit
On December 13, 2024, ethanol groups, including the Renewable Fuels Association (RFA), Growth Energy, and the American Coalition for Ethanol (ACE), urged Congress to extend the 45Z clean fuel production tax credit and ensure it adopts a broad approach to climate-smart agriculture (CSA) practices. These groups emphasized that the 45Z credit could provide new market opportunities for farmers, reduce consumer fuel prices, and support U.S. energy security.
December 17, 2024
Ethanol groups urged congress to extend the 45Z clean fuel production tax credit and ensure the credit takes a broad approach to climate-smart agriculture (CSA) practices in comments filed with the U.S. House Ways and Means Committee on Dec. 13.
Several committee members on Nov. 18 issued a request for information (RFI) seeking stakeholder input on biofuel tax policy, including the 45Z credit, the 40B sustainable aviation fuel (SAF) tax credit and the $1 per gallon tax credit for biobased diesel.
The Renewable Fuels Association, Growth Energy and the American Coalition for Ethanol were among the groups that provided responses to the committee.
The RFA told the committee that the 45Z credit could create important new market opportunities for farmers, lower prices for consumers, enhanced energy security and reduced emissions with certain modifications and proper implementation.
“A successful tax credit program would result in greatly expanded production and use of U.S.-produced low-carbon biofuels; creation of new value-added markets for U.S. farm commodities; lower fuel prices for consumers; and reduced dependence on foreign energy sources,” wrote Geoff Cooper, president and CEO of the RFA. “Success can only be achieved if the tax credit program is durable, broadly scalable, and implemented in an efficient and straightforward manner for taxpayers.”
RFA called on the committee to consider extending the existing suite of biofuel tax credits—including the second-generation biofuel producer credit—while guidance is developed for 45Z and as potential modifications are debated in 2025. In addition, a more streamlined approach for registering for 45Z and securing IRS approval would help ensure biofuel producers are immediately ready when final rules are promulgated.
RFA also called on the committee to ensure that any modifications to 45Z take a broad approach to climate-smart agriculture practices and suggested changes in the 45Z program’s treatment of SAF.
In its comments, Growth Energy outlined why the organization and its members support 45Z and believe it to be critical to their continued success in a low-carbon economy.
“Our industry is supportive of 45Z because it provides our members the ability to make costly capital investments to meet carbon constraints established by U.S. subnational policy and foreign trading partners,” wrote Emily Skor, CEO of Growth Energy, in the letter. “While we do not actively promote and seek these low-carbon regimes, we have to work within these programs…energy products in general will be required to meet a lower carbon intensity (CI) over the next several decades, and most of these investments needed to reduce CI are difficult—if not impossible—to do without something like the 45Z tax incentive.”
Growth Energy advocated for long-term extension of the 45Z credit and outlined a variety of CSA agriculture practices that should be recognized when calculating the credit’s carbon intensity (CI) score, including manure application, precision fertilizer application, biobased fertilizer and green or low-carbon ammonia. “There is not a one-size-fits-all approach to CSA,” Growth Energy wrote in its comments. “Farmers should be encouraged to adopt as many CSA practices as possible, with the flexibility to choose the CSA practices that work best for the specific circumstances at their farms.”
ACE also called on lawmakers and federal officials to extend the 45Z credit, address guidance delays and take a broad approach to CSA. “The 45Z Clean Fuel Production Tax Credit has the potential to be transformative, incentivizing investments in cleaner technologies and sustainable practices that directly benefit America’s farmers, biofuel producers and the environment,” said Brian Jennings, ACE CEO. “ACE is committed to ensuring this policy delivers maximum value for our ethanol producer members and looks forward to remaining actively engaged in its implementation under the current administration and the next.”
Within its comments, ACE called for a long-term extension of the 45Z credit and urged Treasury and the USDA to allow individual and stacked agricultural practices to qualify toward emission rates for the credit, avoiding a restrictive bundling approach. ACE also stress the importance of routinely updating eligibility criteria to reflect advancements in agricultural technologies and practices.
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Source : Ethanol Producer Magzine
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