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Lawmakers want production tax credits for domestic feedstocks

A bipartisan group of U.S. Senators have asked Treasury Secretary Janet Yellen to restrict the eligibility of a new Clean Fuel Production Tax Credit to renewable fuels made from domestic feedstocks.

The 45Z tax credit included in the Inflation Reduction Act provides an opportunity for U.S. biofuels to be preferred feedstocks for Sustainable Aviation Fuel production.

Eric Schmitt from Missouri says he’s concerned the pending guidance might not set realistic expectations and that means renewable fuel producers might take the path of least resistance and use foreign feedstocks instead of domestically produced.

“It’s not as clean and it’s unfair. We hope to see a response soon and this is a bipartisan effort.”

Missouri Soybean Association’s Senior Policy Director Casey Wasser says an increase in imports of used cooking oil from China and tallow from Brazil have already started to displace American-made feedstocks, like soybean oil.

“If our oil continues to be devalued, it not only hurts the Missouri farmer, but it hurts all of the people who work at the biodiesel and crush plants, along with the margins.”

Wasser also says the carbon scoring of different feedstocks for the production tax credit favors used cooking oil, corn oil and tallow, but not soybean oil. He says that’s another concern with the potential for the new Sustainable Aviation Fuel market.

U.S. Senators also asked the Department of Treasury to issue a proposed and final guidance for the 45z tax credit ahead of the January 1 deadline.

Schmitt was one of 16 U.S. Senators who sent the letter to Yellen at the end of July.