Iowa biodiesel producers to US Treasury: Without safe harbor now, biodiesel supply chain could grind to a halt
September 20, 2024
BY Iowa Renewable Fuels Association
Today, Iowa biodiesel producers submitted a letter urging the U.S. Department of Treasury to take immediate action in issuing safe harbor guidance for the 45Z Clean Fuel Production Credit. While the department is working to finalize the 45Z rules, most observers believe they will not be completed until well after Jan. 1, 2025. The lack of safe harbor guidance is impacting the biodiesel supply chain today.
“Simply put, without immediate safe harbor guidance, the entire biodiesel supply chain could grind to a halt, resulting in lost farm income, laid off workers, unrealized carbon reductions, higher prices for consumers, and greater energy imports,” producers said in the letter submitted to Treasury today.
The letter comes after a meeting yesterday between Midwest congressional staff and Treasury officials on the new production credit, including the possibility of safe harbor guidance. During the meeting Treasury provided no timeline for finalizing the rule and did not commit to providing an interim safe harbor. The longstanding biodiesel blenders tax credit expires at the end of this year. While the new 45Z production credit is supposed to begin on January 1, 2025, without final rules or a safe harbor, the entire biodiesel supply chain is left in limbo.
“Without knowing the value of the new credit, feedstock suppliers don’t know how to price their products. Biodiesel producers don’t know how much to pay for feedstock or how to price their biodiesel. And retailers don’t know how much to pay for biodiesel or how to set the price for consumers… We urge you to pre-empt the disastrous implications of dramatically reducing biodiesel production by implementing a safe harbor until the 45Z Clean Fuel Production Credit rules are final,” stated the letter.
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A copy of the letter can be found here.
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