The 45Z tax credit, intended to encourage the development of sustainable aviation fuel and other low-carbon fuels, would be available until 2034 and limited to domestic feedstocks under companion bills filed in the House and Senate on Tuesday. Farm groups said the legislation would allow time for domestic production to rise while discouraging a flood of imported oil, grease, and tallow.
“American tax dollars should support American farmers — not imported feedstocks,” said cosponsor Sen. Sherrod Brown, Ohio Democrat. Kansas Sen. Roger Marshall, the Republican cosponsor, said, “This legislation puts farmers first to ensure they are the primary beneficiaries of renewable fuel tax incentives and provides business a decade of certainty.”
At present, the 45Z tax credits would be available for three years, starting with 2025. The Treasury Department has yet to issue regulations for the credits. Only a trickle of sustainable aviation fuel (SAF) is produced now but the Biden administration says SAF could become a bigger market for renewable fuels than corn ethanol.
The National Corn Growers Association, the American Soybean Association, and the National Sorghum Producers said they supported the bills. The National Oilseed Processors Association said 7.9 billion pounds of used cooking oil and tallow were imported in the first six months of this year, 29 percent more than all imports of those products in two decades, apparently because of fuel credits available in California. If imports qualify for 45Z credits, biofuel producers will have an added incentive to use them rather than U.S.-produced feedstocks, said the trade group.
“This important bill sends a strong signal that extending the 45Z credit is going to be a top bipartisan item in this Congress and the next,” said Emily Skor, chief executive of biofuels trade group Growth Energy. The current session of Congress expires at the end of the year.
Reps. Tracey Mann, Kansas Republican, and Marcy Kaptur, Ohio Democrat, were the lead sponsors of the House version of the bill.