Temporary Guidance on Biodiesel Tax Credit Offers Short-term Relief but Leaves Key Questions Unanswered

(ANKENY, Iowa) – Today the U.S. Treasury and Internal Revenue Service issued long-awaited guidance on the §45Z Clean Fuel Production Credit, effective as of January 1. This guidance provides registered biofuel producers a pathway to calculate and claim the credit. While this guidance is a step forward, it leaves unanswered questions regarding carbon intensity models, climate smart agriculture, and the long-term treatment of foreign feedstocks, according to the Iowa Biodiesel Board and Iowa Soybean Association, who issued the following statement: 

Grant Kimberley, executive director of IBB, said: 
"We appreciate the U.S. Treasury and IRS’s attempt to provide temporary guidance on the §45Z Clean Fuel Production Credit. While this guidance may provide a pathway for producers to keep their doors open, significant uncertainties remain, particularly around carbon intensity scores, provisional emissions rates, and the treatment of domestic agricultural feedstocks. These uncertainties hinder our ability to fully leverage the credit’s potential to drive meaningful growth and investment in the biodiesel industry.

“The situation is still perilous for biodiesel producers, and it is imperative that solid guidance can be finalized with the next administration very quickly. We look forward to working with the new administration to strengthen and improve the guidance, ensuring it supports biodiesel production while prioritizing domestic, ag-based feedstocks like those grown here in Iowa.”

Brent Swart, ISA president and a soybean farmer from Spencer, said: 
“We look forward to working with the new administration to finalize the draft rule and the climate smart agricultural guidance. We are optimistic that this new guidance, coupled with the forthcoming climate-smart agriculture rulemaking, presents an opening to align biofuel incentives with the critical contributions made by Iowa’s farmers. While there’s much work to be done, soybean farmers also appreciate the Treasury’s early recognition that certain foreign feedstocks require additional scrutiny.”

Not paid for by the soybean checkoff.

For More Information:

Jenna Rose, IBB
Brock Johnston, ISA