The House Ways and Means Committee and House Committee on Energy and Commerce on May 12 released draft proposals for their respective portions of a reconciliation budget package, referred to by President Donald Trump as the “big, beautiful bill.” Provisions included in the draft legislative language include amendments to the 45Z clean fuel production credit and the rescission of funding for the Renewable Fuel Standard that was allocated by the Inflation Reduction Act.  

Language related to the 45Z credit is included in the proposal released by the House Ways and Means Committee. Provisions included in the draft bill would limit eligibility for the credit to fuels made using feedstocks produced or grown in the U.S., Mexico and Canada. The bill would also change how lifecycle greenhouse gas (GHG) emissions are calculated for purposes of the 45Z credit by excluding any emissions associated with indirect land use change. For transportation fuels derived from animal manure, bill language stipulates that a distinct emissions rate would be provided with respect to each of the specific feedstocks used to produce eligible fuel. This includes dairy manure, swine manure, poultry manure, and other such sources. 

In addition, the draft bill would extend the 45Z credit through the end of 2031. The credit is currently scheduled to expire on Dec. 31, 2027. The bill would also prohibit specified foreign entities and foreign-influenced entities from claiming the 45Z credit. 

The House Committee on Energy and Commerce’s draft bill aims to repeal Section 60108 of Inflation Reduction Act of 2022, which allocated funding to the U.S. EPA to support certain functions related to the RFS. Any unobligated funds would be rescinded.

Under Section 60108, the IRA allocated $5 million to the EPA to support the development and establishment of tests and protocols regarding the environment and public health effects of a fuel or fuel additive; perform internal and extramural data collection and analyses to regularly update applicable regulations, guidance, and procedures for determining lifecycle GHG emission of a fuel; and review, analyze and evaluate the impacts of all transportation fuels, including fuel lifecycle implications, on the general public and on low-income and disadvantaged communities. 

Section 60108 also allocated $10 million to the EPA to fund “new grants to industry and other related activities…to support investments in advanced biofuels.” 

Information released by the House Committee on Energy and Commerce specifies Section 60108 “of the IRA does not fund the EPA’s administration of the [RFS]. Rather, the funding is for data collection of [GHG] emissions and testing the environmental impact of biofuels.”  

The House Agriculture Committee is also expected to release draft language for its portion of the bill early this week. All three committees are scheduled to hold markup sessions on their respective portions of the legislation on May 13. During a markup session, committee members debate, amend and rewrite bill language. 

The Renewable Fuels Association and Growth Energy have spoken out in support of the 45Z provisions included in the House Ways and Means Committee’s proposed legislation. 

"As the budget reconciliation process moves along, we are encouraged to see the inclusion of important tax provisions in the House Ways and Means Committee text released today,” said Geoff Cooper, president and CEO of the RFA. “The draft language would extend the 45Z clean fuel production credit by four years, while also reinstating crucial tax benefits related to research and experimentation. These tax policies can help support expanded production of American energy, accelerate technology innovation, and boost rural economies by creating manufacturing jobs and opening new markets for America's farmers."

“Pro-growth tax policy can unlock billions of dollars in new investments towards U.S. energy dominance while supporting stronger markets for America’s farmers,” said Emily Skor, CEO of Growth Energy. “The 45Z tax credit is a critical piece of this puzzle, and we’re glad to see that lawmakers on the House Ways and Means Committee recognize its importance. By including it in the reconciliation bill, this proposal would give biofuels producers a longer runway to innovate and to make investments in creating new markets for farmers. We’re grateful to the Committee, and to our champions on Capitol Hill who have worked hard to ensure that rural priorities like 45Z are included in any final tax bill. As Congress completes its work on the President’s agenda, we urge our champions to remain focused on ensuring that U.S. farmers and biofuel producers have the certainty they need to invest in long-term growth.”