AFB seeks to Protect Domestic Biofuels Feedstock Market

by Mark Magnuson (KXEL) The American Farm Bureau says that it wants a better tax deal for U.S. biofuel feedstocks and does not intend to keep out alternative or competing fuels from foreign producers. AFB and other farm groups recently called for the pending 45Z tax credit to be restricted to domestic feedstocks instead of imported feedstocks like Chinese cooking oil and Brazilian ethanol.

American Farm Bureau’s Joe Gilson says that AFB intends to boost the case for domestic producers and the volumes of biofuel needed for aviation. AFB is not trying to introduce a new trade conflict.

AFB, the National Farmers Union, the National Corn Growers Association, and the American Soybean Association recently urged the White House and Treasury Department to restrict the tax credit to domestic producers.

Gilson says disputes with China or Brazil over its renewed ethanol tariffs are not the groups’ aim.

With that said the U.S. ethanol industry is eyeing retaliation after Brazil reinstated an 18 percent tariff on imported ethanol and the U.S. industry appealed to Brazil’s president for relief.

Surging Chinese cooking oil imports to the U.S. have also attracted attention, with U.S. lawmakers and the oilseed industry raising objections to the oils qualifying for tax credits. READ MORE; includes AUDIO

Excerpt from Bloomberg/Yahoo!: A surge of Chinese used cooking oil flowing into the US to make biofuels is prompting a call for Treasury Secretary Janet Yellen to ensure that only domestic ingredients can benefit from a tax credit taking effect next year.

The push by a bipartisan group of senators, including Democrat Sherrod Brown of Ohio and Republican Roger Marshall of Kansas, underscores the mounting pressure on the Biden administration to halt the flood of foreign used cooking oil that lawmakers say threatens American farmers and the intention of President Joe Biden’s landmark climate law.

“Allowing US tax credits to fund the importation and use of foreign feedstocks to produce biofuels would put US agriculture at the back of the line, while foreign agricultural producers are subsidized by US taxpayers,” said a July 30 letter to Yellen signed by more than a dozen senators.

The senators are calling on Yellen to issue final guidelines for the Clean Fuel Production Credit, known as 45Z, under the Inflation Reduction Act before Jan. 1, when the tax incentive is set to take force. “As Treasury works to craft 45Z guidance, we urge you to restrict the eligibility to renewable fuels made from feedstocks sourced domestically,” the letter states.

US crop processors say the flood of foreign biofuel ingredients, including sugarcane ethanol used to make green jet fuel, are undercutting American farm products, and some groups have pushed for higher levies on used cooking oil imports from China.

The lawmakers contend guidance for the current SAF tax credit known as 40B, which expires at the end of this year, is flawed because no domestically produced ethanol can meet its requirements.

The letter comes on the heels of a group of US House Republican lawmakers pressing the Environmental Protection Agency to confront the imports of possibly fraudulent UCO. They are highlighting the use of third-party certification to help block fake supplies from entering the US.

There has been widespread speculation used cooking oil from Asia is mixed with fresh vegetable oils, potentially distorting commodity values, undermining US biofuel laws and leading to deforestation. READ MORE

Excerpt from DTN Progressive Farmer: Members of Congress and several agriculture interest groups are pressing the Biden administration to release guidance on the 45Z Clean Fuel Production tax credit by the end of the year, in particular looking for federal support for domestic feedstocks to produce biofuels including sustainable aviation fuel.

Last week 39 bipartisan members of the U.S. House of Representatives asked U.S. Treasury Secretary Janet Yellen to release that guidance by Jan. 1, 2025.

"Finalizing this rule in a timely manner and prioritizing domestic feedstocks will provide farmers, renewable fuel producers, end-users, and other biofuels stakeholders with the certainty and clarity they need to make planting, business and investment decisions," the letter said.

"While the use of foreign feedstocks can play an important role in producing domestically manufactured ethanol, biodiesel, renewable diesel, and sustainable aviation fuel, Treasury must be clear that 45Z only applies to biofuels produced from domestic feedstocks by domestic fuel producers."

The lawmakers told Yellen that state low-carbon fuel standards and the federal 40B Sustainable Aviation Fuel tax credit are "driving demand for foreign 'waste' feedstocks" instead of domestically produced corn, soybeans and canola.

"These programs are built on carbon intensity modeling that does not account for the full lifecycle of these 'waste' feedstocks," the letter said.

"As a result, imports of used cooking oil from China have increased from around 45 kilo metric ton in 2022 to more than 600 KMT in 2023. Imports of tallow have increased 400% over the last five years and there is also significant concern around future imports of Brazilian safrinha corn crops, which reached record levels of production in 2023. This market dynamic is unsustainable. Treasury must ensure that the 45Z tax credit is only applicable to fuels produced domestically with domestic feedstocks, so American farmers, processors, businesses, investors, and end users can benefit from the 45Z tax credit and the long-anticipated promise of new biofuels markets."

At the end of July, a group of 16 U.S. senators sent a similar letter to Yellen asking for the same feedstock restrictions for 45Z.

Kailee Tkacz Buller, president and CEO of the National Oilseed Processors Association, said in a statement that such a feedstock restriction was critical to U.S. farmers. READ MORE

Excerpt from Agri-Pulse: Banning the use of foreign biofuel feedstocks such as used cooking oil for a new tax credit could result in retaliation against U.S. farm exports, Agriculture Secretary Tom Vilsack said Tuesday (September 10, 2024). READ MORE