LINCOLN, Neb. (DTN) -- The U.S. ethanol industry is used to being stuck in federal policy limbo and the leader of a top ethanol industry group said on Thursday that the looming November election poses a particular set of challenges.
Case in point: the biofuels industry continues to wait for IRS guidance on the 45Z clean fuel production tax credit set in the Inflation Reduction Act. The tax credit is considered to be a key to the launching of a sustainable aviation fuel industry.
Renewable Fuels Association President and CEO Geoff Cooper said during a media briefing this week that the Biden administration is putting biofuels companies in a tough spot.
"We are now, you know, 100 days away virtually from the 45Z tax credit taking effect," Cooper said.
"We still have no rules. Not even proposed rules from the Treasury, no initial guidance on exactly how this tax credit is going to work. So, our members remain kind of waiting on the edge of their seat for some guidance and clarity around how this credit is going to work in practice."
The biofuels industry is waiting for answers on what carbon-intensity modeling will look like, how climate-smart ag practices will be integrated into carbon-intensity scoring and many other questions.
Cooper said the RFA has been working with the USDA and U.S. Department of the Treasury to make sure the 45Z credit also will benefit farmers who are involved in the feedstock-supply chain for SAF.
Biofuels groups pointed out in public comments to the Treasury that guidance on the 40B SAF tax credit was too restrictive in setting which climate-smart ag practices used by farmers would qualify. That guidance required farmers to use three specific practices simultaneously -- no-till, cover crops and efficient nitrogen fertilizer.
"What we've been suggesting, really since the sustainable aviation fuel tax credit 40B was finalized, is that farmers need to have a broader palette of ag practices available to choose from and they need to be unbundled," Cooper said.
"The reaction from farmers was that that's a non-starter. Nobody's going to be able to do that or very few folks will be able to do that. So, we've been advocating for a much broader suite of climate-smart ag practices, including not just no-till but other types of conservation tillage practice."
Based on what the RFA has been hearing from USDA, Cooper said, "we do think there are going to be more options available to farmers to choose from.
"And we are also confident that they are going to be unbundled and if a farmer is doing just one practice out of a menu of five or seven, they'll be able to document that and hopefully claim credit for that," he said.
Cooper said the Trump campaign has said it may take back unspent Inflation Reduction Act funds and rescind programs. He said the industry has been "speaking with the campaign" about the value of IRA programs including tax credits for SAF.
"Frankly I think we've been pleased to see more and more voices from the Republican party who see value in some of these IRA programs, namely 45Z, 45Q the 45V hydrogen credit," Cooper said.
"You know they support sustainable aviation fuel. We just saw the Senate launch an SAF caucus last week that is bipartisan. So, I think we're hearing more and more Republican voices step up to the plate in terms of highlighting the importance of some of these programs."
A new administration expects to come in and scrutinize current federal spending.
"So, frankly that's another reason that we want the Treasury to get rules out sooner than later," Cooper said.
RFS VOLUMES
Cooper said the U.S. Environmental Protection Agency will not be setting 2026 Renewable Fuel Standard volumes on time.
According to statute, EPA was required to publish a proposed rule by the end of October for volumes in 2026 and beyond.
"EPA has already made clear that they won't make that deadline," Cooper said.
"We don't think we'll see a proposal until well after the election. Probably won't see a final rule until about this time next year, so we're gearing up for a busy year on the RFS in 2025."
Cooper said the RFA's request for RFS volumes was "fairly simple. We're going to be asking EPA to continue growing the volume obligations in each category of the Renewable Fuel Standard."
He added, "In 2026 and beyond, we're going to be asking them to revise their lifecycle greenhouse gas analysis, make sure that pathways for carbon capture and sequestration are included and other new technologies and practices are included in a revised carbon-footprint analysis."
ELECTRIC VEHICLE MANDATE
Agriculture and biofuels groups, along with a number of states and other industries have sued the EPA over its tailpipe emissions rule that they say mandates the use of electric vehicles to meet those standards.
While the EPA and other EV supporters have said it's not a mandate, Cooper said it's clear.
"I think it really is semantics and a difference without distinction," he said.
"You know you can call it whatever you want, but if it looks like a duck and walks like a duck, you know it's a duck. The only way automakers can comply with these standards long-term is to dramatically increase the production of electric vehicles and dramatically reduce their production of internal-combustion engine vehicles. EPA could say it's not a mandate, it's not a requirement, but there is no other way to meet the standards."
According to the rule, by 2032, 68% of new light-duty vehicles will need to be electrified for automakers to meet the standards.
Cooper said such a tailpipe rule should be in place to also expand renewable fuel production.
"On one hand you've got a Renewable Fuel Standard that requires increased annually increasing volumes of renewable fuels," he said, "and on the other hand, you've got a tailpipe standard rule that is chasing the vehicles that can use those fuels out of the marketplace.
"So, you know it is a concern. It's something that we have been repeatedly pointing out to this administration. Yes, we see SAF as an enormous opportunity, but it's a longer-term opportunity. SAF is not going to materialize quickly enough to really soak up the excess supply of corn and other agricultural commodities that we see coming this fall and into next year."
NEED FOR E15 ACTION
Cooper said Congress will need to act to secure permanent year-round E15 sales across the country.
The EPA has approved a series of waivers to allow E15 sales during the summer months.
"We're obviously grateful to EPA and the Biden administration for taking that action," Cooper said.
"But as you've heard us say before, emergency waivers are not a long-term solution. We need long-term certainty and clarity and predictability for the marketplace. We think EPA has done about all it can do within its authority. They have issued these emergency waivers the past three years to get us through the summertime, but we still need Congress to step up and pass a simple legislative fix that would permanently resolve this issue on a nationwide basis once and for all."
In addition, Cooper said the industry is frustrated with the state of California, which is the only state that doesn't allow E15 sales.
"They continue to drag their feet on E15 approval," he said.
Todd Neeley can be reached at todd.neeley@dtn.com
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