Biofuel Groups Ask Congress to Extend Expiring Tax Credit
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Soybean farmers in seven states are asking Congress to extend current biodiesel and renewable diesel tax credits due to a lack of clarity on a set of new rules ready to take effect in January.
Clean Fuels Alliance America, which represents biodiesel, renewable diesel and sustainable aviation fuel interests, and 10 national and state associations sent a request to four top federal lawmakers seeking a one-year delay on sunsetting a biodiesel and renewable diesel tax incentive that will expire Dec. 31. New rules established by the U.S. Treasury Department are due to take effect Jan. 1.
“More than two years after enactment, and with fewer than 60 days remaining until the changeover to this new regime, the [Biden] administration has not yet issued the crucial tax guidance that our members and industry stakeholders need to understand basic facts like the amount of the tax credit that they will receive for the fuel that they produce,” the Nov. 14 letter stated.
RELATED: Soybean Demand Drops as US Biofuel Tax Credit Stalls
The letter noted that the new tax code, as per the Inflation Reduction Act, will move to a technology-neutral clean fuel production tax credit instead of today’s technology-specific fuel tax incentives.
Included among recipients were Senate Majority Leader Chuck Schumer (D-N.Y.) and Minority Leader Mitch McConnell (R-Ky.) along with House Majority Leader Mike Johnson (R-La.) and House Minority Leader Hakeem Jeffries (D-N.Y.). The letter was signed by the American Soybean Association, Clean Fuels Alliance America, National Oilseed Processors Association, Iowa Biodiesel Board and state soybean farmer organizations from Illinois, Indiana, Iowa, Missouri, Nebraska, North Dakota and Wisconsin.
Clean-Fuels-40A-Extender-Letter-Nov2024-1
The group appealed to the House and Senate leaders to extend the current regulation for a year and noted that House legislation to do precisely that — H.R. 9060, the Biodiesel Tax Credit Extension Act of 2024 — was already proposed by a group of bipartisan lawmakers.
That legislation is being sponsored by Rep. Mike Carey (R-Ohio). It has 24 co-sponsors — 11 Democrats and 13 Republicans — from Alabama, Arizona, California, Connecticut, Illinois, Iowa, Minnesota, Nebraska, New Hampshire, New Jersey, New York, Pennsylvania, South Dakota, Texas, Utah and Wisconsin. However, it has languished in the House Committee on Ways and Means since it was introduced July 18.
RELATED: Fuel Groups Warn of Price Hikes Without Tax Credit Certainty
“Incorporating a narrow, short-term bill like H.R. 9060 into end-of-year legislation represents an opportunity for Congress to do the right thing by American clean fuel producers and the sector’s supply chain whose businesses are currently in a state of disarray due to the lack of government guidance,” the letter stated.
Winters
Paul Winters, Clean Fuels Alliance director of public affairs and federal communications, told Transport Topics that biofuel producers are in a tough spot because of a lack of clear federal guidance.
“The Treasury Department and IRS have not provided the table of [carbon intensity] scores necessary for companies to know the value of the credit. Under the law, Treasury is supposed to issue a table of CI scores that companies are supposed to use. Afterward, companies can petition for a better score based on individual carbon-saving measures for their facilities. But they can’t do that until Treasury acts,” Winters said.
The IRS and Treasury have articulated steps companies can follow to register for the neutral clean fuel production tax credit. However, Winters said companies need more.
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“The law is clear that companies can’t claim the credit until they receive the official registration letter from IRS. No one has received the letter. Moreover, some IRS agents are telling producers they can’t complete registration until they know their CI score — kind of a catch-22,” he said.
Kurt Kovarik, federal affairs vice president at Clean Fuels, said a one-year extension of the existing policy would provide adequate time for both Treasury and the biofuel industry to move to the new credit system.
Kovarik
“Farmers, fuel producers and marketers needed to know the value of the new credit months ago to successfully negotiate feedstock contracts and fuel offtake agreements for the start of 2025,” Kovarik said. “The industry is facing extreme uncertainty that threatens to undermine clean fuel production, jobs, economic opportunities for farmers, and near-term carbon reductions.”
The Iowa Soybean Association stated the current energy tax credit “has long generated economic return for U.S. soybean farmers and fuel producers while helping to diversify the nation’s energy supply and reduce emissions.”
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