The Biden Administration has released interim guidance on the 45Z tax credit for renewable biofuel production, just days before transitioning power to President-elect Donald Trump. The guidance, originating from the Inflation Reduction Act (IRA), aims to incentivize sustainable aviation fuels (SAFs) with significantly lower greenhouse gas emissions compared to traditional petroleum-based jet fuel. However, it has been met with widespread criticism from various sectors of the agriculture and biofuel industries for its lack of clarity and completeness. The Department of the Treasury and IRS have opened a public comment period until April 10, 2025.

Industry Disappointment Over Lack of Clarity

Despite the release of the long-awaited guidance, many industry leaders expressed dissatisfaction due to the absence of critical details. Key stakeholders argue that the guidance fails to provide the necessary certainty or flexibility required for clean fuel producers, farmers, and consumers to fully benefit from the 45Z program. The incomplete nature of the document leaves significant questions unanswered, particularly regarding feedstocks and farming practices.

For instance, Geoff Cooper, President and CEO of the Renewable Fuels Association (RFA), stated that while the guidance is a step in the right direction, much work remains. He emphasized that the current form of the guidance lacks the assurance needed for producers to invest confidently in clean fuel technologies. Cooper highlighted the need for efficient farming practices, recognition of additional feedstocks, and flexible supply chain management tools to make the program actionable and bankable.

Potential Impact on Future Policy and Investment

The incomplete guidance has raised concerns about its ability to drive investment, innovation, and job creation in the clean fuels sector. Industry leaders are wary that without robust policy support, the U.S. may miss out on leading the global market for low-carbon energy. Emily Skor, CEO of Growth Energy, noted that the lack of detailed information on decarbonization technologies and climate-smart agriculture practices hinders the industry's ability to capitalize on this economic opportunity.

Several organizations, including Clean Fuels Alliance America and the American Coalition for Ethanol (ACE), have pledged to work with the incoming Trump administration to refine the guidance and ensure it provides the necessary certainty for all stakeholders. They emphasize the importance of incorporating the latest scientific data and real-world activities to improve the accuracy of emission calculations. Monte Shaw from the Iowa Renewable Fuels Association (IRFA) described the announcement as "too little, too late," stressing the urgent need for finalized rules to restore normalcy in the biodiesel supply chain.