- U.S. Treasury released interim guidance for clean fuel tax credits, but key details remain unclear, frustrating biofuels groups.
- Biofuel advocates hope more explicit rules will allow corn-based ethanol to expand in sustainable aviation fuel production.
- With President-elect Trump set to take office, the future of the Inflation Reduction Act and its clean fuel tax credits remains uncertain.
On Friday, January 10, the U.S. government released short-term guidance for companies to secure clean fuel tax credits under the Inflation Reduction Act. However, the guidance left several key details unresolved, frustrating biofuels groups.
Biofuel advocates who want more clarity hope the final rules will allow corn-based ethanol to expand its role in sustainable aviation fuel (SAF) production. SAF presents a crucial opportunity to reduce the aviation sector’s impact on climate change, with air travel contributing 2.5% of global greenhouse gas emissions.
The U.S. Treasury outlined how companies can meet emissions reduction standards to qualify for the tax credit. Treasury officials said they would release a crucial climate model in the coming days, which will shape the program.
Deputy Treasury Secretary Wally Adeyemo expressed optimism, stating that the guidance will help the U.S. lead in renewable fuel innovation while reducing transportation costs. “Decarbonising transportation and lowering costs is a win-win for America,” Adeyemo said.
However, biofuel groups voiced disappointment, with many leaders arguing that the guidance lacks essential information. Growth Energy CEO Emily Skor criticised the lack of comprehensive rules for producers and their farm partners.
“This guidance remains incomplete,” Skor said. “It fails to provide the necessary details for biofuel producers and farmers to lead in clean fuel production.”
Earlier reports from Reuters indicated that the administration planned to release the program’s climate model next week. However, the model will not include climate-smart agriculture practices like no-till farming, a method the ethanol industry hoped to use to meet emissions requirements.
Skor also acknowledged Agriculture Secretary Tom Vilsack’s efforts but reiterated that the guidance does not address all concerns. “We appreciate Secretary Vilsack’s support, but today’s announcement leaves gaps,” she said. “It lacks a model for decarbonisation technologies and fails to recognise climate-smart agriculture practices.”
The Biden administration continues to push for 3 billion gallons of SAF production by 2030 to reduce aviation emissions.
With President-elect Donald Trump taking office soon, the future of the Inflation Reduction Act remains uncertain. Trump vowed to repeal the act to extend his tax cuts, but he will need support from Congress to succeed.
Biofuels industry groups now look to the next administration for detailed guidance on how the clean fuel tax credit program will work. They seek clarity on which technologies and farming practices will qualify, especially concerning decarbonisation strategies.
The biofuels sector awaits the upcoming release of the climate model, hoping it will address the gaps left by Friday’s announcement. Industry leaders aim to work with the new administration to finalise the program and expand opportunities for clean fuel production.