Latest News:

Tax Policy

For decades, Congress has made available a range of tax credits aimed at encouraging the production and blending of biofuels into the U.S. transportation fuel supply. Each $1 credit promoting the use of renewable fuel over fossil-based alternatives translates to a concrete reduction in CO2 emissions in the atmosphere, often averaging between 10 to 20 pounds per dollar. The Inflation Reduction Act restructured these tax credits while providing longer-term certainty, more closely tying the value of these incentives to carbon emissions reductions.
Tax credits are far more effective market drivers if they are certain and consistent. It wasn’t until 2019 that many tax credits were extended on a multi-year basis, and since then, investment in fuels covered by these credits have flourished. To support President Biden’s target of reducing U.S. carbon emissions by 50-52% by 2030, ABFA urges Congress to provide certainty for these credits through the end of the decade.
Among the changes created by the Inflation Reduction Act, the law created new tax credits that rely on modeling emissions reductions to determine credit values. ABFA supports producers’ ability to use the Greenhouse Gases, Regulated Emissions and Energy Use in Technologies (GREET) model developed by Argonne National Lab under these credits, including for sustainable aviation fuel (SAF).

Biodiesel Blenders and Renewable Diesel Credits:

Provides biodiesel producers and blenders with a $1.00 credit per gallon of biodiesel or renewable diesel delivered to the tank of a vehicle, used as on-road fuel in their trade or business, or used during a blending process in the U.S. Expires December 31, 2024.

Second Generation Biofuel Producer Credit:

Provides second generation producers with a credit of up to $1.01 per gallon blended or sold. Eligible for fuels derived from renewable lignocellulosic or hemicellulosic matter or algae, cyanobacteria, or lemna. Expires January 1, 2025.

Alternative Fuel Mixture Excise Credit:

Provides blenders with a credit of up to $0.50 per gallon of alternative fuel used to produce a mixture, including CNG, LNG, LPG, P-Series fuel, liquid fuel derived from coal through the Fischer-Tropsch process, and compressed or liquefied gas derived from biomass. Expired December 31, 2024.

Related News