Manchin, Schumer Cut Deal on Climate Spending, Including Farm Bill Funds

July 28, 2022

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by Philip Brasher (Agri-Pulse) Senate Majority Leader Chuck Schumer announced an agreement with Sen. Joe Manchin on a narrow reconciliation bill that would provide $369 billion in climate-related provisions, including more than $20 billion for farm bill conservation assistance and additional incentives for low-carbon biofuels and rural electric co-ops.

The 725-page bill they agreed to resurrects key parts of President Joe Biden's Build Back Better that were intended to spur the increased use of climate-smart farming practices, including cover crops.

The legislation would provide $19.9 billion for four conservation programs over four years, plus another $1 billion for conservation technical assistance and $300 million to USDA's Natural Resources Conservation Service to measure the impact of agricultural practices on greenhouse gas emissions.

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With each program, USDA would be required to prioritize projects that "mitigate or address climate change through the management of agricultural production."

The bill, dubbed the Inflation Reduction Act of 2022, also would create a new "clean fuels" tax credit for low-carbon biofuels while providing $500 million for biofuel infrastructure, plus new funding for the Rural Energy for America Program and rural electric co-ops. An additional $5 billion would be earmarked for forestry.

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The bill, called the Inflation Reduction Act, would raise $739 billion through new taxes or spending cuts, mostly by setting a minimum corporate income tax at 15% and allowing Medicare to negotiate prescription drug prices. At least $300 billion of the revenue would go toward reducing the deficit. In addition to the climate provisions, the bill also would extend Affordable Care Act subsidies.

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In a statement describing his agreement with Schumer, Manchin said of the energy and climate provisions, “I support a plan that will advance a realistic energy and climate policy that lowers prices today and strategically invests in the long game. As the superpower of the world, it is vital we not undermine our superpower status by removing dependable and affordable fossil fuel energy before new technologies are ready to reliably carry the load.” READ MORE

Focus turns to farm bill, CCC for climate funding as Biden plan withers (Agri-Pulse)

U.S. Senate Democratic deal would expand EV tax credits (Reuters)

How the Senate climate bill could slash emissions 40% (Politico Pro/Climatewire)

RFA: Inflation Reduction Act Will Benefit US Ethanol Industry (Renewable Fuels Association)

RFA Says Inflation Reduction Bill Will Help Ethanol (Energy.AgWired.com)

What’s in the Inflation Reduction Act — for renewable fuels? (Biofuels Digest)

SfL Commends Senate Efforts to Pass Historic Climate Legislation (Solutions from the Land)

Inflation Reduction Act welcomed by ethanol groups (Ethanol Producer Magazine)

ABFA Supports The Inflation Reduction Act Of 2022 (Advanced Biofuels Association)

Deal struck by Senate Democrats includes biodiesel tax credit, new SAF incentive (Biobased Diesel Daily)

Fuel-retailer groups say Inflation Reduction Act will ‘undercut, eliminate’ US biodiesel market (Biobased Diesel Daily)

Congressional Renewable Energy and Energy Efficiency Policy Forum (EXPO 2022): The Bipartisan Infrastructure Law and Transportation (Environmental and Energy Study Institute; includes VIDEO)

Revamped biofuel tax credit system proposed in revamped reconciliation bill (Agri-Pulse)

Senate reconciliation keeps farms, forests in climate formula: Budget bill includes more than $20 billion for programs including conservation, biofuels and wildfire prevention (Roll Call)

Senate Inflation Reduction Act packed with bioenergy incentives (Biodiesel Magazine)

Historic climate funding package clears Senate (Agri-Pulse)

US Senate passes major climate, sustainable aviation fuels legislation in dramatic weekend vote; bill moves the US House (Biofuels Digest)

Senate Includes Ag Climate Provisions Pushed by SfL in Inflation Reduction Act; House of Representatives is Urged to Follow Suit (Solutions from the Land)

RFA Welcomes Biofuel Provisions in Senate-Passed Reconciliation Bill (Renewable Fuels Association)

Former EPA Chiefs Tout Reconciliation As ‘Most Significant’ Climate Bill (Inside EPA)

U.S. fuel retailers rail against green aviation fuel tax credit (Reuters)

GOP Lawmakers Lobby Oil Industry to Denounce Tax-and-Climate Bill: Democrats’ plan includes measures lauded by some in the oil-and-gas industry, frustrating Republicans (Wall Street Journal)

Ethanol Report on Inflation Reduction Act (Energy.AgWired.com; includes AUDIO)

Senate Passes Inflation Reduction Act: Climate-Smart Ag, Renewable Energy Incentives Part of Senate Bill (DTN Progressive Farmer)

Inflation Reduction Act Is Transformational and Sets Stage for Future Climate Action (Environmental and Energy Study Institute)

The Inflation Reduction Act Would Unlock Significant Emissions Reductions and Open Doors for Future Climate Action (Environmental and Energy Study Institute)

Clean Fuels Thanks Senate for Extending Tax Incentives, Infrastructure Funding -- Policies will support continued growth of biodiesel, renewable diesel, and SAF (Clean Fuels Alliance America)

Senate passes bill with new SAF, clean fuel, hydrogen tax credits (Ethanol Producer Magazine)

Ethanol Blog: Groups Tout Inflation Reduction Act's Provisions for Expanding Biofuels (DTN Progressive Farmer)

Did Democrats Just Save Civilization? (New York Times)

Senate passes Inflation Reduction Act with biodiesel, SAF incentives intact (Biobased Diesel Daily)

NBAA Welcomes Senate Bill’s Provision Promoting Sustainable Aviation Fuel Development (National Business Aviation Association)

The Digest’s 2022 Multi-Slide Guide to Bioeconomy provisions in the Inflation Reduction Act (Biofuels Digest)

Sustainable Aviation Fuel Incentives Passed (AvWeb)

Will the IRA's Biofuel Provisions Ease Pump Prices? Sen. Ernst Isn't Convinced (AgWeb; includes AUDIO)

GOP's risky proposition: Rebuffing a fossil fuel-friendly climate bill (Politico Pro)

DMC Welcomes Inflation Reduction Act Inclusion of Advanced Manufacturing (DMC)

U.S. makes a 'thimbleful' of clean jet fuel. That's changing. -- New tax credits for sustainable aviation fuel are expected to boost production and increase demand for the renewables. (Politico Pro)

RFA Thanks House for Passing Reconciliation Bill with Biofuel Incentives (Renewable Fuels Association)

House Passes Inflation Reduction Act: Divided House Sends Climate, Health Care Bill to President Biden's Desk in Partisan Vote (DTN Progressive Farmer)

House passes Inflation Reduction Act (EthanolProducer Magazine)

The Inflation Reduction Act Includes a Bonanza for the Carbon Capture Industry (Time Magazine)

“The Roof is lifting” – the United States to inject $800 billion into climate, energy sectors as IRA 2022 passes to Biden for signing (Biofuels Digest)

DTN Ag Policy Blog: Ag, Biofuel Reaction to Inflation Reduction Act (DTN Progressive Farmer)

House passes spending bill ensuring extension of biodiesel tax credit, creation of new SAF incentive (Biobased Diesel Daily)

Hidden inside the Inflation Reduction Act: $20 billion to help fix our farms (Vox)

The Inflation Reduction Act could push climate change tech into the future -- If the Senate spending bill becomes law, it would send a jolt of energy and cash for experimental green energy solutions (Washington Post)

Inflation Reduction Act — or radical Green New Deal? (Washington Examiner)

What’s in the Inflation Reduction Act for climate? (Climate Now; Podcast)

Excerpt from Reuters: Republicans have harshly criticized Democrats for touting EVs as a solution to rising gasoline prices, saying they are not affordable. Democrats argue the tax credits are crucial to shifting Americans away from gasoline-powered vehicles.

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The bill will also include new tax credits and grants "to support the domestic production of biofuels, and to build the infrastructure needed for sustainable aviation fuel (SAF) and other biofuels." The SAF tax credit is worth at least $1.25 a gallon. READ MORE

Excerpt from Biobased Diesel Daily: NATSO, representing America’s truck stops and travel plazas, and SIGMA: America’s Leading Fuel Marketers, are strongly urging lawmakers to oppose the Inflation Reduction Act of 2022 unless it provides tax parity between the biodiesel tax credit (BTC) and newly proposed sustainable aviation fuel (SAF) tax credit.

Although the bill extends the $1 per gallon biodiesel and renewable diesel tax credit, it provides a higher tax credit of up to $1.75 per gallon for SAF.

A higher tax credit for SAF will undercut America’s fuel supply, according to the two groups.

“The cost of everyday household goods and home heating bills will soar as the availability of biodiesel and renewable diesel decreases,” NATSO and SIGMA state in a July 29 press release. “Aggregate greenhouse-gas emissions also will increase across the transportation sector.”

Speaking on behalf of NATSO and SIGMA, David Fialkov, NATSO executive vice president of government affairs, said, “This legislation purports to create a ‘technology neutral’ clean fuels tax scheme, which fuel retailers have long supported. Favorable treatment for SAF flies in the face of this approach. SAF is less beneficial for the environment than renewable diesel and is going to cost taxpayers more. Providing more favorable tax treatment for a technology that has fewer environmental benefits undermines the intellectual integrity of the climate provisions in this bill. If special treatment for SAF was motivated by unique environmental benefits, it could fit neatly within what is otherwise a tech-neutral construct that applies to every other fuel under the bill.”

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The trucking industry delivers more than 80 percent of America’s goods and relies on biofuels, like renewable diesel and biodiesel, to keep emissions low. READ MORE

Excerpt from Renewable Fuels Association: “We were pleased to see that the Senate’s final passage of the Inflation Reduction Act preserved numerous provisions that recognize the important role renewable fuels like ethanol can play in bolstering our nation’s economy and accelerating decarbonization efforts,” said RFA President and CEO Geoff Cooper. “In fact, the package of renewable fuel provisions in the legislation represents the most significant federal commitment to low-carbon biofuels since the Renewable Fuel Standard was expanded by Congress in 2007. RFA will continue to urge the House to swiftly adopt these biofuel measures to ensure American families have greater access to lower-cost, domestically-produced renewable fuels that are good for the environment, the economy, and energy security.”

Among the provisions of the bill supported by RFA, Cooper said, are: $500 million in grants for higher-blend biofuels infrastructure; extensions of several current biofuel tax credits; creation of new tax credits for clean fuel production and sustainable aviation fuel; and enhanced support for carbon capture, utilization and storage. READ MORE

Excerpt from Ethanol Producer Magazine: One provision of the bill aims to create a new tax credit to support the sale and use of SAF. The credit for SAF that achieves a 50 percent greenhouse gas (GHG) reduction would be set at $1.25 per gallon. An additional 1 cent per gallon would be available for each percentage point by which the lifecycle GHG emissions reduction of the fuel exceeds 50 percent. The tax credit would be capped at $1.75 per gallon.

Also in support of SAF, the legislation aims to establish a competitive grant program in support of alternative aviation and fuels and low-emission aviation technology. In part, the program would provide grants to eligible entities to carry out projects located in the U.S. that produce, transport, blend or store SAF. Nearly $250 million in funding would be available to support SAF projects under the program.

A separate provision in the bill creates a new Clean Fuel Production Tax Credit. The technology-neutral tax credit aims to support the production of low-emissions transportation fuel and would apply to transportation fuel produced and sold in 2025, 2026 and 2027. To qualify, the fuel would have to achieve a GHG reduction of approximately 40 percent when compared to diesel.

In addition, the bill creates a new Section 45V production tax credit (PTC) for clean hydrogen produced at qualified facilities that begin construction before the end of 2032. The credit would apply to hydrogen produced after the end of 2022. Depending on the specific project, the credit could range from 12 cents per kilogram to $3 per kilogram, according to the bill text.

The bill also extends several existing bioenergy and biofuel tax credits. The $1 per gallon blends tax credit for biodiesel and renewable diesel would be extended through the end of 2024. It also aims to extend the 50-cent per gallon alternative fuels tax credit, the second-generation biofuel income tax credit, and the alternative fuel vehicle refueling property credit.

In addition, the legislation appropriates $500 million to support the development of biofuel infrastructure, including infrastructure improvements for blending, storing, supplying or distributing biofuels; installing, retrofitting or upgrading fuel dispensers to supply higher blends of biofuels; and for building and retrofitting home heating oil distribution centers to supply biofuels.

For renewable electricity, the bill extends the Section 45 production tax credit (PTC), which benefits qualified biogas, open-loop biomass and closed-loop biomass facilities, to qualified facilities that begin construction before Jan. 1, 2025. For home heating, the bill extends and modifies of the Section 25 tax credit, which, in part, supports the installation residential biomass-fired stove and boilers.

The bill supports carbon capture and storage (CCS) projects through an extension and modification of the Section 45Q tax credit. READ MORE

Excerpt from Biofuels Digest: What’s in the Inflation Reduction Act, really? For one, a bonanza of opportunity for renewable fuels — and especially, sustainable aviation fuels — plus renewable energy writ large. All sectors, ethanol, SAF< heavy-duty transport — have been applauding the ACt,l which has moved to the US House of Representatives for passage. A large team of experts at Holland & Knight collaborated on this definitive analysis of what’s in there, and how it works for industry, which sure beats reading the hundreds of pages of text, it’s concise, readable, on-point and must-know. READ MORE

Excerpt from DMC: The bill is good news for advanced biofuels and clean energy technologies. Biochemicals companies may also be eligible to receive support under the Advanced Industrial Facilities Deployment Program which has $5.8 billion committed for advanced manufacturing and decarbonization.

The Advanced Industrial Facilities Deployment Program will invest in projects aimed at reducing emissions from energy-intensive industries, including the chemicals sector. It will support companies to purchase, install or implement advanced industrial technology, as well as to retrofit, upgrade or operationalize improvements to install or implement advanced industrial technology.

While fuels and clean energy are the main focus of the bill, bio-based chemicals impact our daily lives and have enormous potential to contribute to decarbonizing the US economy.

At DMC, we welcome this leadership to increase climate resiliency across communities in the US. As a company with advanced manufacturing technology which is both clean and economically-viable, we will be following closely to see how the program is rolled out. READ MORE