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Biofuel industry cheers 45Z tax credit proposal, awaits final details

The U.S. Treasury Department has issued its proposed guidance on the 45Z tax credit and biofuel supporters say it’s a good step forward.

Troy Bredenkamp with the Renewable Fuels Association tells Brownfield the big questions are starting to get answers.

“It appears to resolve previous confusion on issues like qualified sales, that was a big issue for our (ethanol) folks.”

But he says there are still unanswered questions, including how the guidance will be integrated with the new GREET Model, a big calculator used to figure out how good a fuel is for the environment.

“Particularly when you talk about those on-farm practices and how they’ll be integrated at the end of the day. There’s a lot of good things happening at the feedstock level. The farmers incorporating those practices are going to want to be in the value chain.”

Kurt Kovarik with Clean Fuels Alliance America says the guidance could also provide certainty for idled biofuel plants.

“A producer could now go to their investors or the bank and say, listen, here’s the proposed rules of the road in terms of the credit for 45Z and what I intend to generate producing soy biodiesel, etc.”

The American Soybean Association and the National Oilseed Processors Association say the guidelines support domestic feedstocks like U.S. soybeans, which is positive, and it also removes the indirect land use change penalty on ag feedstocks. However, the U.S. EPA must also finalize renewable volume requirements to ensure federal biofuel policies support the farm economy.

Fuel retailers like National Association of Truckstop Operators, SIGMA Fuel Marketers and the National Association of Convenience Stores, aren’t pleased with the guidance issued, saying it won’t lower fuel prices, help farmers or improve demand for biofuels. Instead, they say the administration should pursue simpler solutions, like reinstating the Biodiesel Tax Credit.

Public comments are being taken on the Treasury Department’s guidance for 60 days, and a public hearing is scheduled for May 28.

Kovarik says he’s expecting final guidance to be issued by summer.

Hear Brownfield’s interview with Kovarik.

Hear Brownfield’s interview with Bredenkamp.