The U.S. Department of Agriculture is advocating for relaxed tax credit requirements for crops used in the production of renewable fuels, as stated by Secretary Tom Vilsack.
Current guidelines for a subsidy aimed at promoting sustainable aviation fuel production, which can be derived from ingredients like corn-based ethanol and soybean oil, mandate that U.S. farmers implement practices such as planting cover crops in the off-season and practicing no-till farming. However, producers find these requirements challenging at times.
The biofuels industry is anticipating guidance from the Treasury Department on the 45Z clean fuel credit under President Joe Biden’s climate legislation, scheduled to begin in January.
The USDA is developing a proposal to offer farmers more flexibility by allowing them to choose from a range of activities under the new rules, as Vilsack mentioned at an ethanol conference in Nebraska. Another key objective is to ensure that crops eligible for the subsidies are not limited to corn and soybeans, which are predominant in the U.S. farm belt.
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Vilsack also cautioned against efforts to exclude U.S. biofuels made with foreign ingredients from benefiting from the 45Z tax credit, warning that it could negatively impact American trade.
He stated, “If every country adopts this approach, there will be no trade. Without trade, what would happen to the 20% to 30% of crops we currently export? How would that affect prices?”
