ALEXANDRIA, Va. — The Clean Fuel Production tax credit is being scrutinized by NATSO, SIGMA, the National Association of Convenience Stores (NACS), American Trucking Associations, (ATA) and the Truckload Carriers Association (TCA) and have expressed strong concern with the Department of Treasury’s preliminary proposed rule implementing the Clean Fuel Production tax credit, also known as the “Section 45Z” credit.
“Today’s piecemeal, preliminary proposal is a classic case of ‘too little, too late’ for a supply chain that needed clear, unambiguous direction months ago,” said David Fialkov, executive vice president of government affairs for NATSO and SIGMA. “It fails to provide the market with the certainty needed to mobilize new capital, and as a result we expect that potential investments in clean fuel will be sidelined.”
Critical Issues Not Addressed
According to the joint press release, the preliminary proposal falls short in addressing issues critical to stabilizing the biofuels market. The associations are urging Congress to extend the $1 per gallon biodiesel blenders’ tax credit as quickly as possible.
“This credit represents a decidedly anti-consumer shift in biofuel tax incentive schemes, Fialkov said. “Very few ethanol producers will be able to access the 45Z credit, eliminating any potential for this policy to lower retail gasoline prices. “Even worse, the new 45Z credit will result in a materially diminished incentive for renewable diesel fuels and biodiesel. It appears that the preliminary proposal would allow imported used cooking oil from China to claim the credit if it is making renewable jet fuel, but not renewable diesel. This is environmentally and economically unjustifiable. Diesel prices will go up and fuel emissions will go up. This policy needs to be fixed as soon as possible.”
Congress Urged to Take Action on Clean Fuel Production tax credit
“It is time for Congress to extend the longstanding $1 per gallon biodiesel blenders’ tax credit to help ensure market stability until the incoming Administration and Congress have the opportunity to address longer-term tax policy in 2025,” said LeeAnn Goheen, senior director of government affairs for NATSO and SIGMA. “For well over a year, the clean fuel supply chain repeatedly has implored the Administration to clearly define how the credit will function with ample time for scrutiny and feedback. By allowing this to languish until days before the next Administration takes office, Treasury has set a course for higher fuel prices, increased emissions, and lost agricultural jobs as the biodiesel industry effectively shuts down.”
“ATA supports federal policies that ensure the trucking industry has access to reliable supplies of affordably priced fuels. Trucking companies that use biodiesel and renewable diesel require certainty that these lower-carbon fuel options are cost-competitive and readily available at the pump. We are concerned that this new 45Z guidance fails to meet that needed guarantee,” said Henry Hanscom, senior vice president of legislative affairs at ATA.
Uncertainty in Preliminary Proposal
According to the release, despite a statutory requirement that Treasury issue final guidance no later than Jan. 1, the biofuels supply chain will continue to navigate a climate of uncertainty left in the wake of today’s preliminary proposal. The Department of Energy’s updated Argonne Greenhouse gases, Regulated Emissions, and Energy use in Technologies (GREET) model was not released in conjunction with the rule, and the industry is also awaiting a rulemaking on “climate smart agriculture” practices from the Agriculture Department.
“The biodiesel blenders’ tax credit directly lowers the cost of diesel fuel for truck drivers, which in turn reduces shipping costs and helps lower the prices consumers pay for goods transported by truck, said David Heller, senior vice president of safety and government affairs with the Truckload Carriers Association. “This 45Z credit will do none of those things.”
The release says that biodiesel and renewable diesel continue to be the most widely used low-carbon fuels in commercial trucking and remain the most viable option for reducing carbon emissions from the nation’s trucking, home heating oil, and rail industries in the near term. The biodiesel blenders’ tax credit has been instrumental in developing a strong renewable diesel industry in the United States, driving significant growth in production. The U.S. biodiesel and renewable diesel market expanded from approximately 100 million gallons in 2005 to around 4 billion gallons in 2023, all while contributing to lower transportation-related carbon emissions.
“This preliminary proposal offers little reassurance to the biofuels supply chain, which is already wary of this untested new credit,” said Doug Kantor, general counsel at the National Association of Convenience Stores. “Extending the Biodiesel Tax Credit is the most effective path Congress can take to keep fuel prices low in the coming year.”
Dana Guthrie is an award-winning journalist who has been featured in multiple newspapers, books and magazines across the globe. She is currently based in the Atlanta, Georgia, area.
