Ernst Fights to Add Value to Iowa Farmers’ Crops, Increase U.S. Production of Biofuels

WASHINGTON – U.S. Senator Joni Ernst (R-Iowa) led a bipartisan, bicameral group of 51 of her colleagues in urging the U.S. Department of the Treasury to issue timely guidance on the 45Z Clean Fuel Production Credit to give farmers, blenders, retailers, and fuel users certainty and the time needed to make additional clean fuel projects a reality.

The 45Z Clean Fuel Production Credit consolidates and replaces several fuel-related credits currently scheduled to expire at the end of the year. While 45Z was written to increase the domestic production of clean, homegrown biofuels, guidance is still needed from the Treasury on how farmers and renewable fuel producers can participate in this new market.

“The 45Z credit should be leveraged to provide a forward-looking, technology-neutral market signal to increase our country’s production capacity for low-carbon, domestic renewable fuels and for existing biofuel production to invest in decarbonization,” the lawmakers wrote. “Lack of regulatory certainty is already putting thriving businesses at risk as fuel producers are unable to make important business decisions regarding their fuel.”

“If properly implemented, this credit can fully mobilize the biofuel industry, growing our domestic manufacturing base, creating jobs, diversifying the U.S. energy portfolio, adding value to crops grown by American farmers, and offering consumers better, more affordable, and lower carbon options at the fuel pump and in the skies,” the lawmakers concluded.

The letter, which has bicameral and bipartisan support, requests that:

• Safe harbor guidance for biofuel producers is published by Sept. 1, 2024, and 45Z rulemaking be completed by Nov. 1, 2024,
• The 45Z credit is available only to domestic fuel producers and uses the science-based Greenhouse gases, Regulated Emissions and Energy use in Technologies (GREET) model without additional indirect effects or penalties,
• Eligible on-farm practices are expanded while any bundling mandates are removed, and
• A broader array of clean industrial technologies, feedstocks, and agricultural practices are eligible for the 45Z credit.

Read the full letter here, which was co-led by Senator Tammy Duckworth (D-Ill.), Senator John Thune (R-S.D.), Senator Amy Klobuchar (D-Minn.), Representative Brad Finstad (R-Minn.), Representative Eric Sorensen (D-Ill.), Representative Mariannette Miller-Meeks (R-Iowa), and Representative Nikki Budzinski (D-Ill.).

“While this production credit seeks to better position U.S. soybean farmers and homegrown biofuels as part of the nation’s clean energy vision, it is clear guidance must be established correctly to prioritize American biofuels and allow farmers to integrate technologies and climate-smart practices that are best suited for their unique operations,” said Brent Swart, farmer and Iowa Soybean Association President-Elect. “Farmers are eager to participate in growing the renewable fuels sector, and we look forward to working with federal leaders to ensure incentives are established with the American producer at the forefront.”

"Sustainable practices don’t just happen; they take time and resources to implement. That’s why I cannot emphasize enough that corn farmers need crucial timely guidance for 45Z incentives,” said Jolene Riessen, Iowa Corn Growers Association President. “We thank Senator Ernst for leading this conversation with the U.S. Department of the Treasury on the Section 45Z Clean Fuel Production Credit (CFPC). With her help, we can ensure that Iowa corn farmers can remain competitive and at the forefront of the renewable fuel industry.”

“Establishing final guidance on 45Z is crucial for renewable fuels production. It is especially urgent to implement safe harbor guidance to ensure transparency throughout the biodiesel supply chain as they transition from the current blenders tax credit to the new 45Z production tax credit,” said Monte Shaw, executive director of the Iowa Renewable Fuels Association.“Without safe harbor guidance, the country’s biodiesel production could very likely begin to shut down in the fourth quarter. IRFA members sincerely thank Sen. Ernst for leading this effort to expand opportunities for renewable fuels producers by pushing for timely implementation of the Clean Fuel Production Credit.”

“America’s biofuel producers and our farm partners stand ready to fast-track new investments in low-carbon fuels, but we need regulatory certainty to move forward,” said Growth Energy CEO Emily Skor. “We applaud Senator Ernst and all our rural champions in Congress for reminding the Treasury that swift implementation of 45Z based on the best available science is the key to unlocking exponential growth in rural America through the enhanced production of biofuels. We urge the administration to maximize the impact of the 45Z credit by signaling to the market that Treasury intends to follow Congress’ intent by recognizing and rewarding the full suite of carbon-smart practices happening at the plant and on the farm.” 

“With the coming transition to a producer credit, clean fuels producers urgently need policy certainty,” said Kurt Kovarik, Vice President of Federal Affairs for Clean Fuels Alliance America. “Our member companies will face significant headwinds and business risk if this guidance is not published promptly. U.S. biodiesel and renewable diesel producers are already facing difficulties in negotiating feedstock and fuel offtake contracts for next year. We greatly appreciate Congress prompting Treasury to act quickly.”

Background:

Throughout her time in Congress, Ernst has been a strong advocate for homegrown, Iowa biofuels, including by calling on the White House to make E15 available year-round and country-wide, adhere to the GREET model to provide domestic producers with a seat at the table, amend its harmful decision to set the Renewable Volume Obligation (RVO) levels well below industry production capacity, and raise Renewable Fuel Standard (RFS) volumes for biomass-based diesel and advanced biofuels.

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