A bipartisan group of lawmakers are proposing to extend the new 45Z tax credit for low-carbon biofuels by seven more years but restrict the incentive to products derived from domestic feedstocks, such as vegetable oils and corn ethanol.
The 45Z credit, which was created by the Inflation Reduction Act, is set to take effect in January but expires at the end of 2027. The value of the credit, which isn’t limited to domestic feedstocks, will vary depending on the carbon intensity of the fuel.
Sens. Roger Marshall, R-Kan., and Sherrod Brown, D-Ohio, are co-sponsoring the Senate bill, which would authorize the credit through 2034 while limiting it to feedstocks produced in the United States. Democrats Amy Klobuchar of Minnesota and Tammy Baldwin of Wisconsin are co-sponsoring the bill along with Republican Deb Fischer of Nebraska.
Reps. Tracey Mann, R-Kan., and Marcy Kaptur, D-Ohio, are co-sponsoring a companion bill in the House.
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“It's very tough in farm country with high interest rates and low commodity prices, which is exactly why we can’t have a tax policy that will lower commodity prices even more. While we support free trade and open markets, we do not believe foreign feedstocks should be incentivized through the hard earned dollars of U.S. taxpayers to the detriment of American farmers,” Marshall said in a statement.
Brown said, “To continue to grow the biofuels industry and open new markets for Ohio farmers, we must stop taxpayer money from subsidizing a surge in Chinese cooking oil or any other foreign feedstock from infiltrating the American market. Our bipartisan bill ensures these investments benefit Ohio farmers and Ohio energy producers.”
Mann said tax incentives shouldn't "first benefit foreign producers. While the use of foreign feedstocks can play an important role in producing domestically manufactured ethanol, biodiesel, renewable diesel, and sustainable aviation fuel, we must not displace harvest in America."
Kaptur said the tax credit should be "structured in a way that benefits domestic producers and not one that advantages foreign-produced feedstocks from China or Brazil."
Agriculture Secretary Tom Vilsack has warned against restricting the tax credit to domestic feedstocks, saying that could provoke retaliation against U.S. ag exports.
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