Feenstra: 'Replace EV Cuts With 45Z'

by Todd Neeley (DTN Progressive Farmer) Cuts to Electric-Vehicle Subsidies Could Pave Way For 45Z Budget Funding -- As rural America awaits the fate of the 45Z Clean Fuels Production Tax credit, one member of Congress told the ethanol industry during the National Ethanol Conference in Nashville, Tennessee, this week he is making the case to fund the credit as part of a coming congressional budget resolution.

That funding may come on the back of expected cuts to electric-vehicle subsidies in the Inflation Reduction Act (IRA).

Both the U.S. House of Representatives and U.S. Senate are working toward cutting up to $2 trillion in federal spending over ten years under direction of President Donald Trump.

Rep. Randy Feenstra, R-Iowa, told industry officials this week he's working to convince fellow lawmakers that 45Z is important to energy security and energy independence, as called for by the Trump administration.

The expected cut of subsidies for electric vehicles from the IRA, he said, could clear the way for 45Z.

Chances are slim that any EV subsidies will survive the current budget debate, Feenstra said, because the Republican majority isn't fond of EVs.

"There's just disdain for this in the Republican Party. That's part of the Inflation Reduction Act that we're going to cut, we're going to reduce. And then my feeling is 'all right, let's take those dollars and invest them in something that's productive and has a return on investment like 45Z.'"

The 45Z provides a tax credit to biofuels producers on a per-gallon basis based on the carbon intensity of fuels production. Fuels with lower carbon intensities will receive more in tax credits. Right now, the 45Z is set to expire at the end of 2027.

The 45Z is a potential economic driver for rural America because it provides incentive to farmers and biofuels producers to take carbon-cutting measures on the farm in order to be a feedstock provider to a sustainable aviation fuel industry.

Trump has been pushing the Senate to pass the House version of a budget bill that would include tax policy and is expected to include budget cuts.

"It starts with growing our own energy, right?," Feenstra said. "Well, that's where 45Z comes in."

Instead of continuing to pass supplemental funding bills to help the agriculture industry recover from natural disasters, he said 45Z would help provide a longer-term economic boost to rural America.

"We want to make sure that we have a place to go with our corn and soybeans and that's where we have a 45Z and what it will do to grow our economy."

In addition, Feenstra said there is a push by rural members of the House to not only include 45Z in the budget but to expand the credit from three years to 10.

Such an extension would provide more certainty to farmers, biofuels producers and others who invest in new technologies such as SAF.

"We're not talking about up to $20 billion or more cost to extending up to 10 years," he said.

Instead of incentivizing EVs, Feenstra said he'd like to see flexible-fuel vehicles brought to the forefront as automakers have shown interest in a technology that is easily accessible and relies on any liquid-fuel blend.

"You have the automakers going, wait a minute, maybe we start looking at flex vehicles. If you start taking away the credits all of a sudden these EVs don't look as sexy. And if they can't stand on their own it is a bit of a problem. And if you don't have (charging) stations on every corner it becomes another problem. So, you know, all we hear time and time again, let capitalism prevail. I say the same thing in the market -- let it prevail and I'll guarantee you people will buy flex vehicles."

On the E15 front, last week lawmakers in both chambers introduced legislation to make year-round E15 sales permanent across the country.

"So now we're back at the table again. March 15 (budget deadline) is less than a month away and we've got to pass a continuing resolution. So we're back at the table saying, 'all right, speaker' and I had dinner with him last week saying this is one thing that we got to include. And he just patted me on the back and said, 'Randy, I heard you in December and again now.'"