Iowa biodiesel producers urge US treasury to issue safe-harbor guidance for 45Z clean fuel production credit

Iowa biodiesel producers submitted a letter Sept. 20 urging the U.S. Department of the 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, according to the Iowa Renewable Fuels Association.

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 Sept. 20 letter submitted to the treasury department.

The letter comes after a meeting Sept. 19 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 Jan. 1, 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,” the letter stated. “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 preempt the disastrous implications of dramatically reducing biodiesel production by implementing a safe harbor until the 45Z clean fuel production credit rules are final.”

A copy of the letter can be found here.