Proposed rule adds incentives for ethanol but some questions remain

On the heels of last week's disappointment for the ethanol industry and U.S. corn farmers, the Treasury Department has proposed changes to an existing rule that could increase the flow of biofuels and put more money in the pockets of ethanol producers and farmers.

Geoff Cooper, President and CEO, The Renewable Fuels Association: We finally have a proposed rule that begins to provide those details and, and some of the clarification around exactly what ethanol producers need to do to claim this tax incentive.

The proposed changes for the Clean Fuel Production Tax Credit, known as 45Z, include what will be considered a qualified sale for each gallon of ethanol  and tax credits of $1 per gallon for ethanol not used for aviation and $1.75 per gallon for biofuels used as Sustainable Aviation Fuel. It also includes cutting the provision that had previously been used as part of the calculation for carbon emissions that came from biofuel feedstocks planted on land that had been converted to row crops. 

Geoff Cooper, President and CEO, The Renewable Fuels Association: This is really going to help them reinvest in their operations and, and add new equipment, add new technology, continue progressing toward lowering the carbon intensity of the fuel. And the reason that's important is because there are markets around the world, fuel markets around the world, and here in the United States that are requiring the use of lower carbon fuels.

In July, President Trump’s signature on the One Big Beautiful Bill, extended 45Z for two years and restricted feedstocks to the U.S., Canada and Mexico  It also retained previous inroads made during the Biden Administration allowing for CO2 recovered from biofuels production to receive credit for use in enhanced oil recovery.

However, questions remain on how greenhouse gas emissions and the energy needed to brew a gallon of ethanol will be calculated. 

Geoff Cooper, President and CEO, The Renewable Fuels Association: so in order to measure or quantify the carbon intensity of the biofuel, you have to use what's called the GREET model, which is essentially a carbon intensity calculator, that is published by the Department of Energy. And we don't have that new version of the GREET model available yet.

Comments on the proposed rule changes will be heard at a meeting scheduled for May 28th.

For Market to Market, I’m David Miller

contact: miller@iowapbs.org