Biofuel tax credit made simple
The USDA has announced interim guidelines for biofuel feedstocks, aiming to integrate climate-smart practices into agricultural systems. This initiative is part of the 45Z tax credit program, enabling farmers to measure and reduce greenhouse gas (GHG) emissions from biofuel production.
These rules, under the GREET model, encourage farmers to adopt sustainable practices to qualify for credits. The guidelines also introduce a carbon intensity calculator, helping measure the environmental benefits of climate-smart farming.
“America’s ethanol producers applaud USDA for publishing these important guidelines, and we sincerely thank Secretary Tom Vilsack for his extraordinary vision and leadership. The entire team at USDA deserves much credit for the enormous effort and technical work that went into this process. These new guidelines begin to open the door to new value-added opportunities for farmers and renewable fuel producers,” said RFA President Geoff Cooper “Today’s USDA guidelines finally create a much-needed structure for properly assessing, valuing, and integrating the carbon reduction benefits of certain farming practices into lifecycle analysis. We thank USDA for developing this initial framework that could ultimately allow farmers to actively participate in carbon markets, bringing new revenue streams and unprecedented value creation to rural communities.”
The Clean Fuels Alliance America highlighted the critical role of the new rules in ensuring policy certainty for biofuel producers. “We commend Secretary Vilsack and the office of chief economist for taking critical steps to support farmers and biofuel producers in achieving verifiable carbon reductions through climate-smart practices,” said ACE CEO Brian Jennings. “We’re pleased to see greater flexibility for farmers, including the stacking of practices and a departure from the all-or-none bundled approach previously required under 40B. ACE looks forward to continuing our collaboration with USDA and the Treasury Department as it finalizes the 45Z Clean Fuel Production tax credit under the incoming administration, ensuring these efforts are accurately recognized and rewarded."
USDA’s guidelines aim to boost industries like ethanol, biodiesel, and renewable diesel, while supporting rural economies. Public comments are open until DATE, allowing stakeholders to provide input.
For further details, visit regulations.gov.
Photo Credit: usda