Sustainable aviation fuel and clean fuel production tax credits hold potential benefits for farmers while aiming to reduce America’s carbon emissions. However, certain provisions may hinder many U.S. farmers from accessing these benefits.
Four agricultural groups—the American Farm Bureau Federation, American Soybean Association, National Corn Growers Association, and National Farmers Union—have addressed their concerns in a letter to Treasury Secretary Janet Yellen and U.S. Office of Management and Budget Director Shalanda Young. They are urging that the Clean Fuel Production Credit (45Z) be made accessible to U.S. farmers.
The letter states: “As farmers, we are growing the feedstocks necessary for clean fuel production, such as corn, soybeans and other biomass. The 45Z tax credit has the potential to be a game-changer for our industry, offering a valuable incentive for the production and use of biofuels that will lower carbon emissions. However, without clear domestic feedstock requirements, the benefits of this policy are at risk of being diverted from American farmers.”
Presently, there is no stipulation that feedstocks must be domestically grown. This allows foreign feedstock producers to benefit from the clean fuel production credit, which could undermine support for U.S. agriculture and rural communities.
Furthermore, the sustainable aviation fuel guidance's bundling of climate-smart agriculture practices with complex reporting requirements might prevent numerous farmers from qualifying for the SAF credit. The groups write: “The implementation of no-till farming, cover cropping and enhanced efficiency fertilizers requires significant upfront investments in both time and resources. Without a greater incentive, many farmers may simply be unable to implement these bundled practices based on economic limitations alone.” They add: “Moreover, even if geography allows farmers to comply with the CSA (climate-smart agriculture) requirements, the cumbersome reporting requirements will dissuade even the most sophisticated farming businesses from participating.”
The organizations are requesting that a domestic feedstock requirement be established for the clean fuel production tax credit and that eligibility criteria for the sustainable aviation fuel credit be expanded while addressing excessive paperwork burdens.
Read the full letter here.
To read an American Farm Bureau Federation Market Intel on the tax credits, click here.
