As President Biden’s administration nears its conclusion, biofuel industry leaders anticipated clarity on tax credits for sustainable aviation fuel (SAF). Instead, the U.S. Department of the Treasury issued a “notice of intent to propose regulations,” leaving producers in a state of uncertainty.
Without finalized guidance, industry leaders fear the rules may change under the incoming Trump administration, further delaying critical decisions for producers and farmers alike.
A Frustrating Delay for the Industry
Monte Shaw, director of the Iowa Renewable Fuels Association (IRFA), expressed deep frustration with the situation. “We’re stuck in neutral,” he said, noting the uncertainty surrounding the Treasury’s guidance.
While the notice provided some clarity on eligibility and greenhouse gas emission determinations, Shaw dismissed its practical utility given the impending change in administration. “What the Biden administration intended to do doesn’t matter anymore,” he said. “The Trump administration will come in and take a fresh look.”
Shaw’s concerns are not theoretical. In Iowa, home to a significant portion of the nation’s biofuel production, some biodiesel plants have shut down operations. Without a clear understanding of the tax credit’s value, feedstock suppliers and producers are unable to price or pay for raw materials with confidence.
The Role of the Inflation Reduction Act
The SAF tax credit, introduced in 2023 under the Inflation Reduction Act, promised significant benefits for the biofuel industry. The credit, calculated per gallon, depends on the fuel’s lifecycle greenhouse gas emissions.
The Treasury’s press release on Friday touted the potential for innovation in aviation and renewable fuels, with Deputy Secretary Wally Adeyemo calling the guidance “a step toward lowering transportation costs for consumers.”
Yet for producers, the lack of finalized rules renders those promises hollow. “We have plants sitting idle because they don’t know what the credit is worth,” Shaw said.
SAF Tax Credit: Potential Economic Impact
The stakes are high for corn farmers and ethanol producers, particularly in Iowa. SAF has been heralded as a major opportunity to boost demand for agricultural commodities while contributing to the reduction of aviation-related emissions.
Shaw and other industry leaders have pushed for a “safe harbor” rule. Such a rule would allow producers to use existing carbon models to estimate credits while waiting for finalized regulations. However, as of now, no such provision exists, further stalling progress.
Challenges Faced by Producers:
- Uncertainty in Credit Value: Producers can’t calculate how much credit they’ll receive, making planning nearly impossible.
- Idle Plants: Some facilities remain shut down due to the inability to price feedstock or pay for materials.
- Future Regulatory Shifts: Incoming administration changes could lead to further delays as new officials revise proposed rules.
Looking Ahead
The Treasury’s pledge to release its Greenhouse gases, Regulated Emissions, and Energy use in Technologies (GREET) model “in the coming days” could provide additional insight into how emissions rates will be calculated under the SAF tax credit.
Still, Shaw remains skeptical. He expects the Trump administration to revisit—and possibly rewrite—the intended regulations. “More than a few fingerprints will be put on this,” he said.
For now, biofuel producers and farmers are left in limbo, awaiting decisions that will shape the future of SAF production in the United States. As the industry grapples with uncertainty, the clock is ticking on what many hoped would be a transformative policy for sustainable fuels.
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