by Alex Nieves, Debra Kahn, Camille von Kaenel (Politico Pro Climatewire) State lawmakers are targeting California's climate and pollution regulations in the name of gas prices. -- President Donald Trump is threatening California's marquee carbon-trading program. But it's in-state Democrats who are taking aim at the state's other emissions market for transportation fuels.
Credit prices in California's low-carbon fuels market dropped $4 per ton Tuesday (June 24, 2025) morning on the recognition of a credible threat in SB 237, a bill introduced overnight that would cap prices instead of letting them rise as planned in service of encouraging refiners to sell more biofuels, electricity and other non-fossil fuels.
This isn't some potshot from marginalized Republicans — it's a bill from seven Democratic senators during the thick of the state's legislative session, blessed by Senate President Pro Tem Mike McGuire.
"This critical legislation will reduce costs for drivers across the Golden State while continuing to move our climate and energy goals full steam ahead," McGuire said in a statement.
And it's not all moderate Democrats, either — besides Sens. Tim Grayson, Anna Caballero and Melissa Hurtado, Sen. Jesse Arreguín, a former Berkeley mayor, is signed on, as is Sen. Jerry McNerney, a freshman and eight-term U.S. House member who was known for being Congress’ “science guy." READ MORE
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Excerpt from SB237 Summary: Existing law authorizes the State Air Resources Board (state board) to adopt and implement motor vehicle fuel specifications for the control of air contaminants and sources of air pollution. Existing law requires the state board to establish, by regulation, maximum standards for the volatility of gasoline, as provided. Pursuant to these authorizations, the state board has adopted the California Reformulated Gasoline regulations establishing California-specific gasoline specifications for various regions of the state at specified time periods.
This bill would require the State Energy Resources Conservation and Development Commission (Energy Commission), in conjunction with the state board, to conduct outreach to the western states to explore the development of a gasoline specification that could be used in a western region, including California, as an alternative to the California-specific specification established by the state board regulations to stabilize the petroleum market and petroleum prices in the western region. The bill would require the commission, by July 1, 2026, to report to the Governor and the Legislature on alternative specifications for gasoline and an assessment of the costs and benefits of each alternative specification included in the report, as provided. The bill would require the state board, on or before January 1, 2027, to adopt and enforce amendments to the state board’s regulations on gasoline specifications to transition to those alternative specifications recommended in the report.
This bill would further require that any regulation adopted by the state board or the Energy Commission that affects retail transportation fuel prices be subject to a standardized regulatory impact analysis. The bill would require the Department of Finance and the Legislative Analyst’s Office to review the analysis and submit to the Joint Legislative Budget Committee an independent assessment of its accuracy.
This bill would also require, upon the request of a refinery or refiner, the commission to establish a “one stop shop” process for the coordinated and concurrent issuance of applicable air quality, water quality, and hazardous waste permits, approvals, or authorizations. The bill would authorize the commission to charge and collect a reasonable fee from a refinery or refiner for the direct costs of a one stop shop permit to recover the reasonable costs incurred in carrying out the requirements of the process.
Existing law establishes the state board as the state agency with primary jurisdiction over the regulation of vehicular air pollution. Existing law generally designates air pollution control districts and air quality management districts with the primary responsibility for the control of air pollution from all sources other than vehicular sources. Existing law subjects violators of specified air pollution laws or any rule, regulation, permit, or order of a district or of the state board to specified civil penalties.
This bill would require, for a civil penalty imposed by the state board pursuant to the laws imposing those penalties, 1/2 of the amount of the penalty to be allocated directly to the applicable air pollution control district or air quality management district for community investment and improvement within the community in which the violation occurred, and 1/2 of the amount of the penalty to be allocated for the purposes of investing in refinery worker safety, assistance, and support.
Existing regulations implement a low carbon fuel standard to reduce the full fuel-cycle carbon intensity of the transportation fuel pool used in California. The regulations apply to any transportation fuel, as defined, that is sold, supplied, or offered for sale in California.
This bill would require the state board to amend the Low Carbon Fuel Standard program to reduce the maximum allowable credit price to be the average statewide credit price in effect on January 1, 2025, and would prohibit that amount from increasing annually more than the consumer price index.
Existing regulations also prohibit a person from selling, offering for sale, supplying, offering for supply, or transporting California gasoline that exceeds the applicable cap limit for Reid vapor pressure within each of specified air basins during various defined regulatory periods throughout the year.
This bill would suspend those regulations during the period of June 1, 2025, to October 31, 2030, inclusive. The bill would require the state board to evaluate its programs designed to reduce emissions of criteria air pollutants, including programs to replace high polluter motor vehicles, and to make any adjustments necessary to those programs to achieve the same amount of additional reductions in emissions of criteria air pollutants by October 31, 2030, as would have been achieved through the implementation of those regulations during that period.
Existing law grants the commission the exclusive power to certify all thermal powerplants and related facilities in the state.
Existing law authorizes the commission to administratively impose a civil penalty for providing any material false statement set forth in the application, presented in proceedings of the commission, or included in supplemental documentation provided by the applicant, or for any significant failure to comply with the terms or conditions of approval of the application. Existing law also requires the commission, in cooperation with the California Department of Tax and Fee Administration, to submit a report to the Legislature that includes a review of the price of gasoline in California and its impact on state revenues for the previous calendar year. Existing law authorizes the department to request from any person records required to be maintained or any other records in a person’s possession, custody, or control that the department deems necessary to facilitate the report and for other, related duties. Existing law authorizes the commission to impose a civil penalty after receiving notification from the department that a person has failed or refused to provide information or records in the time and manner as required.
This bill would require that, for civil penalties imposed by the commission for providing any material false statement or any significant failure to comply in connection with an application for a thermal powerplant, or for failing or refusing to provide information or records for purposes of facilitating the report to the Legislature relating to the price of gasoline, and other duties, as described above, moneys recovered from the collection of penalties, or the settlement of penalties, be used by the commission to fund resiliency programs in underserved communities located near the facilities subject to the penalties to support community safety and workforce safety. The bill would require that, with respect to all other civil penalties imposed by the commission pursuant to laws governing energy conservation, as specified, 1/2 of the amount of the penalty imposed would be allocated directly to applicable air pollution control district or air quality management district for community investment and improvement, as provided, and 1/2 of the amount would be allocated for purposes of investing in refinery workers safety, assistance, and support.
The bill would repeal the provisions of the bill on January 1, 2031.
Existing law generally makes any violation of a rule or regulation of the state board or an air district relating to nonvehicular air pollution control a misdemeanor.
To the extent that the bill would expand the definition of a crime, this bill would impose a state-mandated local program.
By expanding the duties of air districts, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for specified reasons. READ MORE
Excerpt from Politico Pro: SB 237 would cap California’s controversial transportation emissions trading program and potentially move the state off its unique gasoline blend. -- Senate Democrats introduced a bill Tuesday (June 24, 2025) that would significantly overhaul how California regulates transportation fuels amid concerns about high gas prices and closing refineries.
What happened: Sen. Tim Grayson, a moderate Bay Area Democrat, amended SB 237 — which previously dealt with property transfers — into a sweeping proposal that would cap the price of credits that fuel manufacturers can buy and sell through the state’s low-carbon fuel standard, and potentially transition California away from its unique gasoline blend and instead align gas specifications with other western states.
Sens. Melissa Hurtado, Jerry McNerney and Laura Richardson are signed on as joint authors.
What's in the bill: The bill would cap credit prices under the low-carbon fuel standard, one of the state's main tools for lowering emissions from the transportation sector under its economywide climate targets. It would cap prices at Jan. 1, 2025 levels — roughly $76 per ton — with increases pegged to inflation. READ MORE
Excerpt from CBS8: California drivers are bracing for a substantial increase in gas prices starting July 1, as multiple new taxes and regulations take effect. Experts are divided on just how high prices will climb, but some estimates suggest they could reach up to $6 per gallon.
The first factor contributing to the price hike is an increase in the state's excise tax, which will rise by 1.6 cents per gallon. However, this is just the beginning of the cost increases.
A more significant impact is expected from the Low Carbon Fuel Standard program, approved by the state's air resources board in November. This program aims to reduce California's greenhouse gas emissions, but will result in stricter regulations on gas producers.
State Senate Minority Leader Brian Jones expressed his disappointment with the new program, stating, "All of that is increased cost that is eventually passed on to the consumer, and estimates now are up to 65 cents a gallon per gallon of gasoline."
The Automobile Club of Southern California anticipates a significant jump in gas prices. AAA spokesperson Gianella Ghiglino explained, "We still don't know exactly what that number is; however, we can estimate it'll be from $600 to $1,000 annually with the gas tax and low carbon fuel standard increases as well." READ MORE; includes VIDEO
by Jim Lane (Biofuels Digest) ... Renewable fuels aren’t perfect. They’re not glamorous. But they’re here. Domestic. Deployable. Real. And in a moment of where resilience counts, they may be the only thing standing between us and a fuel system too brittle to bend.
Because what we need now aren’t just fuels that are clean or cheap. We need fuels that are scalable, fleet-compliant, affordable and available.
And that means we need more than just price and supply curves. Because in all the fierce debate around EVs, ethanol, and gasoline, one truth quietly endures: Our energy system doesn’t run on fuel alone. It runs on belief.
To understand why renewable fuels like ethanol remain marginalized—despite strong economic and environmental performance—we have to look deeper than market signals or policy briefs. We need a diagnostic lens that sees what the numbers can’t: how symbols persist, how systems resist, and why belief keeps outrunning reality.
Today, let’s use that lens to examine the so-called “pure plays” at the ends of the fuel spectrum—straight gasoline and electric vehicles. Why does gasoline still resonate with those who crave “freedom from mandates and high prices”? Why do EVs appeal to those who want “freedom from emissions and high consequence”? Why does an optimal middle path—renewable fuels—struggle to connect, symbolically, with the public?
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Gasoline: The Illusion of Choice
To see GTESI in action, we don’t need to look to the future. We can start at the pump. Three options, three nozzles, three flavors of belief:
- E0, the “pure” gasoline with no ethanol.
- E10, the standard blend most drivers use.
- And Premium, the top-shelf fuel with a high price and a slick name.
According to national price averages:
- E10 clocks in around $3.02 per gallon.
- Premium sells for $4.05.
- And E0—ethanol-free “freedom gas”—sits at $3.76.
But something strange happens when you follow the math. That last 10% of “pure gasoline” in E0? It costs nearly three times more per unit than the other 90%. Supplying octane with aromatics is vastly more expensive than, say, using E30 to produce an affordable premium fuel.
It’s a profound price signal distortion—a case where belief, not performance, sets the value. Not because it’s cleaner. Not because it’s more efficient. But because it feels like freedom. Like tradition. Like control.
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Renewable Fuels: The Overlooked Contender
If gasoline runs on identity and EVs rise on status, renewable fuels like ethanol suffer from something harder to overcome: invisibility.
E85, E30, E15—blends like these often offer better emissions profiles, better costs per mile, and better thermodynamic efficiency than their more glamorous rivals. But try to find E30 at a typical fuel station. Try to see it advertised. Try to hear a story about it that doesn’t begin with “subsidy.”
That’s the problem. Not performance. Not price. Perception.
In GTESI terms, ethanol blends often score high on Entropy Export Delta (EED)—they burn cleaner, run cheaper, and are made close to home. But they score low on Information Persistence Rate (IPR), because no one’s telling their story. There’s no Tesla mystique. No Super Bowl ad. Just the quiet hum of Midwestern yield. Meanwhile, the system they’re trying to enter is locked.
Let’s take one example: E30. It can deliver the same octane as premium gasoline—91—but for about $0.76 less per gallon, if priced fairly. Yet premium sells everywhere, and E30 is nearly impossible to find. Why?
The structures that control blending, branding, and distribution don’t just happen to favor petroleum. They were engineered to serve it.
And the profit margins that arise—captured by refiners and middlemen—lock the public into a symbolic fuel caste system, not through performance, but through narrative monopolization.
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What We Value—and What We Miss
When we step back, a pattern emerges. Whether it’s gasoline, EVs, or renewable fuels, the public doesn’t always reward what works. It rewards what feels right.
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Here’s the real irony: the best-performing fuels from a thermodynamic and environmental standpoint—like E30—are often the least supported. Not because they don’t work, but because they don’t shine in the symbolic theater.
What we’ve built is a system optimized for signal, not substance. And that’s a dangerous way to manage energy, climate, or adaptation.
If we want to change that, we’ll need more than better fuels. We’ll need better stories, better structures, and a deeper understanding of what makes persistence possible.
If the Strait of Hormuz remains the O.K. Corral, then we need to ask a deeper question: In a moment of global stress, who shows up? And if renewable fuels are already here—already scalable, already persistent—why aren’t we treating them as our strategic swing barrel? That’s where we’ll turn next.
In Part II, “The Swing Producer,” tomorrow in the Digest, we’ll examine how renewable fuels operate as the liquidity lever of our energy system—quiet first responders in a world where volatility tests what truly persists. READ MORE
High Noon at the Strait of Hormuz, Part 2: Biofuels, the swing producer, the market stabilizer
by Jim Lane (Biofuels Digest) ... America still lacks a rapid-response system for fuel price shocks. We have no domestic hedge. No swing capacity. No reserve refining strategy that favors U.S. producers over foreign suppliers. And every time global tensions flare, we’re left to watch the price of oil twitch and the energy system brace for impact—hoping this one doesn’t break it.
The solution isn’t more oil. It’s more control. More molecules, yes—but more importantly, more capacity to deploy those molecules when they’re needed most.
That’s where renewable fuels come in.
Not as a climate virtue signal. Not as a partisan talking point. But as a strategic reserve system with flexible production. One that can stabilize markets during crisis, scale up when prices spike, and act as a domestic hedge against global volatility.
We don’t need another SPR that competes with consumers by buying barrels off the market.
We need a refining reserve that works with U.S. producers—and for U.S. consumers.
Because in a world where the geopolitical clock can move faster than the market can react, resilience isn’t just about stockpiles. It’s about readiness.
I. The Problem: Fuel That Saves Can’t Sell
The U.S. energy system faces a structural vulnerability: fuels with proven environmental and performance advantages remain sidelined by systemic friction. Even as gas prices spike or war risks mount, domestic advanced biofuel facilities sit idle. The reason isn’t technical failure or market rejection. It’s misalignment.
Advanced biofuels offer high-octane performance, domestic production, and superior emissions profiles. But they face persistent exclusion because the system is optimized for incumbents. The General Theory of Evolutionary Systems & Information (GTESI) reveals why:
- Low IPR (Informational Persistence Rate): The public and policymakers lack an accurate, persistent narrative about what these fuels actually do.
- High SCD friction (Structural Coherence Delta): Infrastructure, from pipelines to pumps, is engineered for fossil fuels, blocking biofuels from market access.
- High TRFI (Thermodynamic Reinvestment-Forced Incoherence): Policy and consumer habits reinforce the status quo, resisting even high-performance alternatives.
- Untapped EED (Entropy Export Delta): The full climate, economic, and security value of these fuels remains unrealized because they are kept out of meaningful deployment.
These systemic barriers have created a perverse outcome: the fuels that could reduce emissions, stabilize supply, and lower prices are unable to scale or sell. Volatility persists. Investment stalls. And the energy system remains brittle. More about GTESI here.
II. Historical Blueprint: Swing Producers and Stability
We’ve solved this kind of volatility before—not by flooding markets, but by strategically managing capacity. Between 1880 and 1973, global oil prices were astonishingly stable. That stability wasn’t a market miracle. It was engineered.
Rockefeller and Standard Oil brought order to a chaotic market by centralizing refining and transportation, allowing for coordinated supply decisions. He didn’t seek high prices—he sought consistent ones. This coherence allowed long-term investment and public confidence.
The Texas Railroad Commission (TRC) followed suit. In the 1930s, it imposed prorationing quotas that maintained spare capacity and avoided gluts. This “swing producer” role proved crucial during the Suez Crisis and Six-Day War. The U.S. had capacity it could activate instantly. That era of stability ended when U.S. spare capacity ran dry in the 1970s.
OPEC tried to replicate this model, but internal divisions and global spot trading prevented true coordination. As McNally writes in Crude Volatility, today’s oil market is truly free—and therefore truly volatile, swinging between $30 and $100 per barrel with little warning.
Lesson learned: markets don’t stabilize themselves. But capacity—held in reserve, deployed strategically—can.
III. The Solution: A Biofuels Swing Producer – The Refining Reserve
We propose a modern analog: a Biofuels Swing Producer, built around a flexible “refining reserve.” This is not a stockpile. It’s a coordination mechanism.
The reserve would manage “warm standby” refining capacity for advanced biofuels: fermentation and upgrading systems that can rapidly scale up or down, depending on market conditions. This is domestic swing production for moments of crisis or distortion.
Key tools include:
- Guaranteed offtake contracts
- Adjustable blending mandates
- Targeted infrastructure upgrades (pumps, blenders, logistics)
- Regional distribution hubs to lower access costs
Instead of the federal government buying oil barrels, it enables U.S. producers to sell advanced fuels when they are most needed.
IV. Benefits by Stakeholder
For Industry:
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For Consumers:
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For the Nation:
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V. Elevating the Narrative: From Mandate to Mission
Public narratives still reduce biofuels to a farm subsidy or a political compromise. But this is outdated and dangerously narrow. Like Yosemite needed John Muir to bring everyday Americans up to the mountains, knowing that they would return as conservatinoists , biofuels need a new frame.
This reserve is not just an economic tool. It’s a narrative correction. A chance to demonstrate performance, security, and economic resilience—not as an abstract promise but as a visible presence at the pump.
It can stand for:
- Freedom from volatility
- Freedom from scarcity
- Freedom from illusion
And above all: the freedom to choose a fuel that performs.
VI. Conclusion: Resilience by Design
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Let’s build the system that gives us real choices when we need them. Let’s stop treating volatility as fate. And let’s stop locking out the fuels that could stabilize, empower, and defend the American economy when it matters most.
This is not about ideology. It’s about readiness. READ MORE
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by Leah Douglas (Reuters) U.S. Senate Republicans on Monday proposed a tax bill that would extend a clean fuel tax credit through 2031, but trim 20% of the value of the credit for biofuels made from feedstocks produced outside of the United States.
The tax credit, established by former President Joe Biden's Inflation Reduction Act but not finalized during his tenure, could prove lucrative for oil and biofuel producers who can demonstrate lower carbon intensity of their fuels.
The House tax and spending bill passed in May also extends the tax credit, known as 45Z, through 2031, but bans most foreign feedstocks from being eligible for credits.
Both the House and Senate bills would exclude emissions generated from the expansion of agricultural land due to the growth of feedstocks like corn and soy, called indirect land use change, from the calculation of a biofuel's credit value.
That change would make it easier for corn-based ethanol to qualify for the credits.
But the requirement to calculate those indirect emissions was a key environmental guard rail of the original tax credit, said Sarah Lutz, senior climate campaigner at environmental group Friends of the Earth.
"This reckless proposal means dirtier fuel and higher food prices," Lutz said.
Both bills also make transportation fuels derived from farm animal manure eligible for the tax credit, a boost to biogas producers who argue that capturing methane from manure and other waste can help cut transportation emissions. READ MORE
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Excerpt from DTN Progressive Farmer: The House bill, however, ends some tax-credit abuse from imported products such as used cooking oil from China. The House bill blocks most foreign feedstocks from qualifying for the credit. Only feedstocks produced or grown in the United States, Canada qualify for the tax credit under the House bill.
The Senate bill would allow refiners to continue using foreign feedstocks, but cuts the credit 20%.
"The provision imposes a 20% haircut on the value of the credit for fuel produced from feedstocks produced or grown outside the U.S., effective for transportation fuel produced after Dec. 31, 2025," the Finance Committee summary stated.
Under the language, blending domestic and foreign feedstocks would lead to a deduction based on the percentage of foreign feedstocks used.
Like the House bill, the Senate bill also limits federal agencies from attributing greenhouse gases to "indirect land use change."
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The Senate Finance Committee package also increases the statutory debt limit by $5 trillion as well. In theory, increasing the debt limit by $5 trillion should carry the Trump administration through fiscal year 2028 without having further debt-limit battles in Congress.
Senate Finance Committee section-by-section breakdown: https://www.finance.senate.gov/… READ MORE
Excerpt from Clean Air Task Force: The Senate should modify 45Z to ensure that it incentivizes only truly innovative clean fuels, such as synthetic or biogenic sustainable aviation fuel (SAF), which would simultaneously save money while promoting U.S. competitiveness.
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The Joint Committee on Taxation (JCT) estimates that the tax credits will cost an additional $45.4 billion through 2034 on top of the $8.4 billion JCT estimates under the current policy, bringing the total projected 45Z spending to $53.8 billion. Under the House bill, almost all of these funds will be claimed by producers of conventional biofuels (e.g. on-road fuels like ethanol, biodiesel, and renewable diesel). If 45Z were scaled back to focus more on aviation fuels and/or innovative clean fuels, it would drastically reduce costs and make room in the budget for other important tax credits, like 45V and 45Q, that are critical to the development of innovative low-carbon, energy-dense fuels that the transportation sector needs going forward. For example, the score of the House-passed 45Z ($45.4 billion) is five times larger than the score of the 45V clean hydrogen production tax credit ($9.2 billion), which the House essentially eliminated.
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Instead of lowering the bar on credit eligibility, the House Ways & Means committee could have incentivized biofuel producers to use non-conventional biomass resources that offer environmental benefits (like agricultural wastes and residues, winter crops, and herbaceous and woody perennials on marginal land), install non-conventional bioconversion technologies and carbon capture systems, recycle soil amendments from bioconversion facilities, or take other real steps to improve their fuels’ performance. Conventional biofuels also already benefit from regulatory support from other programs, like the Renewable Fuel Standard and California Low Carbon Fuel Standard. After decades of state and federal assistance, these fuels do not need lavish tax credits. It’s a multi-billion-dollar giveaway to an existing, mature industry, plain and simple.
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Under the proposed version of 45Z, early-stage SAF producers would have to compete with overly subsidized conventional biofuel producers for a limited supply of environmentally sustainable bio-feedstocks. Additionally, the restrictions on transferability would further undermine the value of 45Z for these early-stage companies, as they do not typically have the necessary tax liability to take advantage of tax credits. This will hinder any producers that are trying to bring innovative fuels to the market and stifle investment in technologies like carbon capture and storage that are often used in clean SAF production. If the government is going to pay producers to keep making the same basic fuel they have been making for decades, there is no incentive to invest in newer, better, cleaner fuels. These kinds of tax credits should reward innovation and bolster the competitiveness of U.S. industries; they should not double down on the status quo, but that’s exactly what 45Z does under the House reconciliation bill.
It doesn’t have to be this way. The Senate can save money, support innovation, and bolster American competitiveness in an emerging global market by revising the 45Z tax credit so that it’s available only to companies that produce advanced aviation fuels. If that’s too bold, the Senate could at least increase the value of the credit that can be earned by advanced aviation fuel producers while significantly decreasing the value of the credit that incumbent fuel producers can earn. Either approach would both shrink the ballooning cost of 45Z and target public investment toward technologies that need it the most. READ MORE
Excerpt from Argus Media: The Senate draft proposes offering a maximum subsidy of $1/USG for all fuels based on their carbon intensities starting next year. The House made no changes to that part of the law, which currently offers road fuels up to $1/USG and sustainable aviation fuel (SAF) up to $1.75/USG, plus inflation adjustments for all types of fuel.
That change would reduce the incentive's upfront costs — potentially alleviating concerns among some conservative lawmakers that the bill would add to the budget deficit — but could reduce alternative fuel availability for airlines and upend many refiners' plans to convert more renewable diesel output to SAF.
"We have always supported tech-neutral biofuel incentives and at first blush the Senate draft seems to be moving toward making 45Z truly tech-neutral," said David Fialkov, executive vice president of government affairs at the National Association of Truck Stop Operators, which had opposed treating aviation fuels differently than road fuels.
The Senate proposal would also scrap a provision in the House bill that starting next year would restrict eligibility to fuels derived from North American feedstocks. Instead, the Senate committee has proposed cutting subsidies for fuels from foreign feedstocks by 20pc while still allowing them some credit. That change would provide more flexibility than the House bill to refineries that have scaled up biofuel production in recent years by relying on foreign inputs like used cooking oil and tallow. READ MORE
Excerpt from Advanced Biofuels Association: Michael McAdams, President of the Advanced Biofuels Association (ABFA), issued the following statement on the release of the Senate Finance Committee's budget reconciliation language:
"By including provisions to bolster the U.S. biofuels industry, the Senate Finance Committee has laid a robust foundation to achieve our shared goal of American energy dominance. The ABFA commends Chairman Crapo and committee members for their tailored approach to biofuels policy, exemplified by the extension of 45Z tax credits through 2031 and pathways that support the broad suite of feedstocks and fuels necessary to achieve our country's domestic energy ambitions.
"We recognize, however, that there are opportunities to improve upon the Senate Finance Committee's strong starting position. We encourage Senate decisionmakers to continue engaging with biofuel sector stakeholders and look forward to advancing the President's energy agenda alongside our partners on Capitol Hill." READ MORE
Excerpt from Brownfield Ag News: The CEO of the Renewable Fuels Association says the U.S. Senate is taking a different approach to Sustainable Aviation Fuel tax credits in its budget proposal compared to the U.S. House and neither are perfect.
“This thing is a long way from being done and there’s still a lot of differences to iron out.”
Geoff Cooper tells Brownfield the Senate Finance Committee’s budget proposal preserves the transferability for the 45Z tax credit over a seven-year period.
“The expiration of the transferability in the House bill was a real problem for us and we’re grateful the Senate Finance Committee heard our concerns.”
Both versions of the bill also extend the 45Z tax credit for four years. But Cooper says the Senate’s draft includes other provisions that would limit ethanol producers’ participation. And it doesn’t guarantee farmers will be credited for using smart climate ag practices to grow crops used for biofuels.
“That really remains up to regulators and the U.S. Treasury Department.”
Cooper says the Senate’s approach reduces the value of the credit for Sustainable Aviation Fuel.
“Under current law, SAF could qualify for as much as $1.75 per gallon and the Senate’s version would knock that down to a maximum of $1 per gallon.”
He says the U.S. Senate didn’t completely ban foreign feedstocks from being used to make biofuels, while the U.S. House version does.
Other ag organizations, including the Missouri Soybean Association, say they’re disappointed the U.S. Senate didn’t completely ban foreign feed stocks from qualifying for 45Z. Cooper says he’s optimistic there can be good compromises made as the bill goes through the reconciliation process
“We have no doubt it’s not going to be perfect right out of the gate, but what we’re hoping for is there’s a willingness in Congress and the administration to keep working on this and keep improving it. And keep doing everything we can to get it right.”
The U.S. Senate is expected to consider its version of the budget reconciliation package next week and has a goal to pass the bill before Independence Day.
Hear Brownfield’s interview with Geoff Cooper. READ MORE; includes AUDIO
Excerpt from AgWeb: Mitch Hora, CEO of Continuum Ag says at first glance the Senate language on 45Z looks more favorable than the House.
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Senate Bill Similarities
Mitchell Hora, CEO of Continuum Ag says, “They kept the extension to 2031, they kept the reduction of the indirect land use change component, which helps all U .S. biofuels producers.”
Biggest Difference in Transferability of Credits to Get Revenues Down to Farmers
However, at first glance he thinks the Senate language looks more favorable than the House. The biggest difference is the Senate version doesn’t include the House language which terminates transferability after 2027.
Troy Bredenkamp. senior vice president of Government & Public Affairs for the Renewable Fuels Association says,
“So the Senate version includes transferability of the 45Z tax credit now through 2031. That’s certainly one of the big changes for us and one that’s very favorable.”
Hora adds, “It’s incredibly important, especially for some of those farmer owned ethanol plants are smaller producers, folks that transferring meaning re-seller broker out the finalized tax credits, being able to monetize it through those markets.”
And Hora further explains its part of getting revenue down to the farmer. “Likely how this will work is the farmer will get paid a premium for their data, whether directly associated with the crop or indirectly associated with the crop.”
Foreign Feed Stock Treatment
Another variance, the House bill prevented the credit from applying to fuels made with feed stocks outside the U.S., Canada or Mexico, such as Used Cooking Oil (UCO) from China. The Senate version provides a reduced credit.
Bredenkamp says, “This one took a little different approach. It only gives a foreign feed stock an 80% tax credit value. So that’s how they chose to differentiate.”
The American Soybean Association is opposing this provision, as president Caleb Ragland says they prefer to have foreign feed stock excluded from any U.S. biofuels tax credit.
Credit Value for SAF Cut
Also, the credit value for sustainable aviation fuel (SAF) would drop from $1.75 to $1.00, equalizing the value for all eligible fuel types.
Bredenkamp says this will :That will certainly have a cooling effect on SAF and without a doubt, really backing that from $1.75 back to $1.00 is going to have a real negative impact I think in terms of progress made on sustainable aviation fuel.”
Plus, The Senate version extends the 40B credit for SAF to fuels sold between Dec. 31, 2024, and the end of September. READ MORE; includes VIDEO
Excerpt from American Soybean Association: The American Soybean Association expressed disappointment in the Senate Finance Committee’s budget reconciliation text that made significant modifications to the House-passed Section 45Z Clean Fuel Production Credit language. The Senate Finance Committee text reverts on the progress made in the House to support U.S. farmer-driven domestic biofuels by removing a key provision to ringfence North American feedstocks and prevent foreign feedstocks from benefitting from U.S. taxpayer dollars.
“The Senate 45Z proposal turns its back on the Trump Administration’s farmer-first American energy dominance agenda, which was highlighted through EPA’s strong renewable volume obligations proposal that U.S. agriculture applauded,” said Caleb Ragland, American Soybean Association President and farmer from Magnolia, Kentucky. “RVOs and the 45Z tax credit should be seeking to achieve the same goals for U.S. farmers and domestic biofuel production, and instead the Senate budget reconciliation language seeks to provide U.S. taxpayer dollars to foreign feedstock competitors at the expense of soybean farmers.”
ASA applauded the inclusion of key 45Z revisions in the House-passed budget reconciliation that will support U.S. farmers and expand market opportunities domestically. For years, soybean farmers have watched used cooking oil and tallow imports take U.S. biofuel market share from soy because of policy incentives that did not promote a fully domestic value chain for biofuels. Both the House of Representatives and the EPA have sought to change course and promote farm-first energy policies, and ASA urges the Senate to follow suit as it continues to negotiate a budget reconciliation package. READ MORE
If Europe is serious about decarbonizing transport, we should be encouraging more biofuel use, not less. -- Dickon Posnett, President, European Biodiesel Board READ MORE