Congress has instituted a variety of tax credits to incentivize the production and blending of biofuels into the U.S. transportation fuel supply. Every $1 credit incentivizing the use of renewable fuel over fossil-based fuel equates to a tangible emissions reduction of CO2 in the atmosphere – in many cases ranging from 10 to 20 pounds per dollar.
However, to the detriment of many of ABFA’s member companies, a lack of long-term certainty around these credits over the last decade has plagued these incentives’ ability to drive forward-thinking investment in the advanced biofuels industry. Businesses and lenders cannot plan around last-minute and, in many cases, retroactive extenders.
It wasn’t until 2019 that the credits were extended on a multi-year basis, and since then, investment has flourished. To ensure this trend continues, building a lower-carbon future for the U.S., ABFA supports the existing tax incentive framework beyond the current sunset of 2023. To support President Biden’s target of reducing US carbon emissions by 50-52% by 2030, ABFA encourages Congress to provide certainty for these credits through the end of the decade.
Furthermore, ABFA supports a technology-neutral approach to these credits in the future that would tie incentives to increasing carbon reduction. ABFA also supports an economy-wide carbon tax that would incentivize low-carbon advanced biofuels and a specific credit to incentivize sustainable aviation fuel (SAF).