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Lawmakers want production tax credits for domestic raw materials

A bipartisan group of U.S. senators has called on Treasury Secretary Janet Yellen to limit eligibility for a new clean fuels tax credit to renewable fuels made from domestic feedstocks.

The 45Z tax credit included in the Inflation Reduction Act provides the opportunity to use U.S. biofuels as preferred feedstocks for the production of sustainable aviation fuels.

Eric Schmitt of Missouri expresses concern that the upcoming guidelines may not set realistic expectations, which could lead renewable fuel producers to take the path of least resistance and use foreign feedstocks instead of those produced domestically.

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

Casey Wasser, senior policy director for the Missouri Soybean Association, says a surge in imports of used cooking oil from China and tallow from Brazil has already begun to displace U.S.-made commodities like soybean oil.

“If our oil continues to decline in value, it will not only hurt Missouri farmers, but also all the people who work in the biodiesel and pressing plants, and it will hurt margins.”

Wasser also says the carbon assessment of various feedstocks for the production tax credit favors used cooking oil, corn oil and tallow, but not soybean oil. He says that’s another problem with the potential of the new sustainable aviation fuel market.

U.S. senators also called on the Treasury Department to issue proposed and final guidance on the 45z tax credit before the Jan. 1 deadline.

Schmitt was one of 16 U.S. senators who sent the letter to Yellen in late July.