By Jamie Martin
The 45Z tax credit, introduced under the Inflation Reduction Act, is primarily designed to stimulate the production of sustainable aviation fuel in the United States.
This credit, which is scheduled to apply from 2025 to 2027, extends beyond just aviation fuel, offering potential benefits for a broader range of renewable fuels. It seeks to improve the financial outcomes for farmers and ranchers while contributing to the reduction of carbon emissions nationwide.
Recent guidelines have highlighted several issues with the credit system. For example, the credit has been criticized for favoring imported feedstocks over domestic crops.
These imports include Chinese used cooking oil and Brazilian sugar ethanol, which paradoxically score better in certain environmental models. This scoring system has sparked concerns about the disadvantages faced by US crops, not due to sustainability issues but because of the modeling criteria used.
The American Farm Bureau Federation has expressed disappointment with the current guidelines, noting they were introduced late and did not sufficiently address the needs of US producers.
The focus, they argue, should be on building a robust infrastructure and supply chain within the US to support the production of sustainable fuels, rather than relying on imports.
Efforts are ongoing to refine these tax credits to ensure they fulfill their intended purpose. These include advocating for better standards and safe harbor provisions, which would offer more certainty and benefits to domestic producers.
The role of the USDA has been pivotal in supporting these initial steps, although much remains to be done to ensure that the tax credit fully benefits US agriculture as originally intended.
Photo Credit: american-farm-bureau-federation
Categories: National