The Internal Revenue Service this week released its guidance for farmers looking for clarity on the future of the 45Z Clean Fuel Production Tax Credit, which is designed to help the biofuels industry transition into the aviation sector. The guidance, in conjunction with Tuesday’s updated Department of Energy GREET Model, will give safe harbor to previously recognized “on farm” practices in reducing the carbon intensity of qualifying fuels. In response to this development, Ohio corn grower and National Corn Growers Association President Jed Bower released the following statement: “We are very pleased to see these agencies reaffirm the positive actions from the administration earlier this year, which recognized the importance of existing regenerative practices. We have been encouraged by the strong cooperation and emphasis on how this tax credit will benefit the individual farmer throughout the implementation process.” “This guidance also codifies positive changes to the credit regarding indirect land use change. We look forward to working with the Treasury Department this fall as it looks to issue a final rule by November. NCGA would also like to see ‘book and claim’ acknowledged as a viable chain of custody methodology in the final rule.” Book and claim allows farmers to sell the environmental value of their low-carbon corn directly to biofuel producers digitally, eliminating the need to physically segregate and transport those crops to a specific facility.
The American Soybean Association welcomed actions this week from the U.S. Department of Energy and Internal Revenue Service that provide greater clarity and usability for the 45Z Clean Fuel Production Credit, an important tool for supporting domestic biofuel production and demand for U.S. soybeans. DOE updated the 45ZCF-GREET model to incorporate carbon intensity adjustments for certain regenerative agricultural practices, including practices used in soybean production. At the same time, IRS issued a notice that provides updated emissions rate information and allows qualifying agricultural practices to be reflected in calculating the credit. “ASA appreciates DOE, IRS, USDA and the administration for taking this important step to make the 45Z Clean Fuel Production Credit usable for biofuel producers,” said Dave Walton, ASA vice president and Iowa soybean farmer. “These actions provide greater economic certainty for the biofuels industry, which is a critical source of domestic demand for U.S. soybeans.” As implementation moves forward, ASA will continue advocating for a flexible book-and-claim system that allows all farmers to participate in and receive value from the low-carbon attributes of their soybeans without requiring physical segregation throughout the supply chain. We look forward to continuing to work with the administration as policies are developed to strengthen the U.S. biofuels market and the soybean farmers who help supply it.
National Sorghum Producers today welcomed long-awaited guidance from the Internal Revenue Service and updated modeling from the U.S. Department of Energy that clear the way for farmers and biofuel producers to put the Section 45Z Clean Fuel Production Credit to work. The updates allow qualifying farm practices to count toward the credit, provide needed transition relief for fuel produced in 2025 and 2026 and explicitly recognize distillers sorghum oil in clean fuel pathways, including biodiesel, renewable diesel and sustainable aviation fuel. Together with USDA’s feedstock guidelines and calculator, the actions give agriculture and the biofuels industry a workable framework. “After a long wait, and a lot of work, farmers and biofuel producers finally have a workable 45Z framework,” said NSP CEO Tim Lust. “This gives the market more certainty, strengthens domestic biofuel demand and creates new opportunities for American-grown sorghum and the farmers who produce it.” For sorghum, recognition of distillers sorghum oil opens additional opportunities for an important co-product. The transition relief also ensures growers are not excluded because nutrient plans could not be completed before federal guidance was available. “We thank the IRS for issuing this long-awaited guidance, USDA and DOE for completing the model updates and Sen. Roger Marshall for his consistent leadership in pushing for a workable result for agriculture,” said NSP Chair Amy France, a sorghum farmer from Scott City, Kansas. “This is the certainty our industry has been asking for, and it gives farmers and fuel producers the confidence to move forward.” NSP will continue working to ensure farmers can participate and share in the value created through stronger biofuel demand.
