There’s no denying that in today’s increasingly uncertain farm economy, biofuels are a bright spot. However, policy delays, misinformation, and speculation are clouding the outlook for the sector.
Our members at the National Oilseed Processors Association (NOPA) are buying and crushing more soybeans than ever before. In fact, we just recorded the largest October soybean crush in history. Biofuel use has been and remains a tremendous growth opportunity.
The U.S. oilseed crushing industry has invested $6 billion to expand our capacity to process domestic row crops for domestic animal feed, food oil, and biofuel feedstocks by 30%. Domestic feedstocks are on track to support the production of an additional 1.4 billion gallons of biofuels by 2030.
Now, for an uncomfortable truth. Biofuels can only live up to their potential to be a win-win for farmers, crushers, and American energy independence if policy doesn’t get in the way.
Today, our $6 billion investment –– and farmer livelihoods –– are hanging in the balance while we await short-term tax credit guidance and long-term policy decisions that will dictate if American-grown biofuel feedstocks will continue to be undercut by imports from China and other markets.
The first moving target is the 45Z Clean Fuel Production Tax Credit, approved as part of the Inflation Reduction Act and currently under review at the U.S. Treasury Department. The 45Z credit is supposed to kick in on Jan. 1, but we have yet to see even a proposed rule from the Biden administration.
While we know the timing is difficult in the lame-duck session, NOPA also needs Congress to act between now and the end of the year to extend the existing $1 per gallon 40A Blenders Tax Credit (BTC) to help the agricultural supply chain adequately plan and contract for 2025.
While the BTC is needed in the short term, getting the policy right in the long term will be pivotal. We have already seen firsthand the unintended consequences of renewable fuel policies that incentivize foreign imports due to inaccurate and outdated environmental modeling used to calculate carbon intensity (CI) scores. The 40B Sustainable Aviation Fuel Tax Credit and California’s Low Carbon Fuel Standard are both driving demand for imported waste feedstocks like used cooking oil and tallow for biofuel use rather than U.S.-grown and produced soybean oil.
According to USDA Foreign Agricultural Service/U.S. Census Bureau data, imported feedstock volumes continue to skyrocket. Between January 2022 and September 2024, the United States imported more than 12.2 billion pounds of UCO and tallow for biofuel use, more than double the 5.3 billion pounds that were imported over the previous 20 years combined. Through September 2024, the United States has imported 5.4 billion pounds of UCO and tallow, already far surpassing record import levels from 2023.
If imports continue to ramp up at this pace, the equivalent of hundreds of millions of bushels of U.S.-grown soybeans risk displacement at a time when the U.S. farm economy is already under strain. This simply cannot be the intent of a U.S. tax credit that is meant to benefit a domestic market.
That’s why our members have joined with a growing coalition, including the American Farm Bureau Federation, National Farmers Union, American Soybean Association, and the National Corn Growers Association, to call on both Congress and the Biden administration to support a domestic feedstock preference for 45Z. So far, our feedback has been well-received, but we have no assurances about solutions.
NOPA members are poised to meet and exceed demand for food, feed, and fuel well into the next decade and remain committed to working with the incoming Congress and Trump administration to find long-term solutions that can fully unleash the energy independence that American farmers can help provide.
As tax reform kicks off in 2025, we urge support for an America First biofuels tax credit that benefits, rather than undermines, U.S. farmers, oilseed crushers, and taxpayers. However, we need action now to ensure that biofuels can live up to their potential to advance the farm economy.
With less than two months left to ensure that American farmers, processors, and fuel end-users are not left behind by tax policy, we call on Congress to enact a short-term solution that does not hinder trade within the industry while we await clarity about the future. The clock is ticking.
Kailee Tkacz Buller is president and CEO of the National Oilseed Processors Association (NOPA).