US Sen. Marshall leads letter calling for domestic feedstocks only in 45Z biofuel tax credit

Sen. Marshall

U.S. Sen. Roger Marshall led a bipartisan letter calling for the U.S. Department of the Treasury to restrict the eligibility of the 45Z tax credit to renewable fuels made only from domestically sourced feedstocks like Kansas soybean oil and corn oil.

This tax credit will become effective Jan. 1 and has the unintended consequence of incentivizing foreign used cooking oil (UCO) over homegrown soybean and corn oil.

Even worse, the U.S. federal government fails to verify the legitimacy of UCO imports, and much of it is believed to be fraudulent, according to Marshall.

Since August 2023, UCO imports from China and other countries have averaged over a half-billion pounds per month.

As a result, there has been downward pressure on the price of American soybeans, corn and their derivatives.

This drop in soybean prices corresponds to a loss in production value to American farmers of at least $5.4 billion and even more when corn losses are calculated in. 

This letter was co-led with Sen. Sherrod Brown, D-Ohio, and also signed by Sens. Jerry Moran, R-Kansas; Eric Schmitt, R-Missouri; Mike Braun, R-Indiana; Todd Young, R-Indiana; Dick Durbin, D-Illinois; Tammy Duckworth, D-Illinois; Deb Fischer, R-Nebraska; Pete Ricketts, R-Nebraska; Tammy Baldwin, D-Wisconsin; Debbie Stabenow, D-Michigan; Joni Ernst, R-Iowa; Tina Smith, D-Minnesota; Gary Peters, D-Michigan; and Amy Klobuchar, D-Minnesota.

“In meetings with the airline industry, we have heard firsthand their interest in using sustainable aviation fuels (SAF), and ethanol-based SAF is the most efficient and available option,” said J.D. Hanna, president of the Kansas Corn Growers Association. “But our own government regulators won’t allow U.S. ethanol to be used, leaving the market open only to foreign ethanol. We are thankful for Sen. Marshall for leading this bipartisan letter that brings this issue to the forefront, and for Sen. Moran signing the letter as well.”

Kaleb Little, CEO of the Kansas Soybean Association, added, “The Kansas Soybean Association thanks Sen. Roger Marshall and Sen. Jerry Moran for continuing their strong support of U.S. agriculture. The biodiesel and renewable diesel industry has been a critical market driver for soybean profitability over the last decade-plus and it is being threatened without quick action. A diverse, domestic feedstock supply is a strength of the U.S. biodiesel industry, and we would hate to see that advantage go away because of a technical change in how we administer renewable fuel policy. Prioritizing domestic feedstock sources in the 45Z should be an easy decision.” 

Kailee Tkacz Buller, president and CEO of the National Oilseed Processors Association, said, “Without this fix, the 45Z credit will incentivize the continued use of foreign feedstocks over U.S. feedstocks produced by American farmers. NOPA members have made commitments to expand U.S. crush capacity by 30 percent with $6 billion in investments to process domestic row crops into biofuels in line with state and federal renewable fuel and tax provisions, however, current market conditions are beginning to call into question the viability of future investments. We firmly support free trade and open markets but cannot stand by and let foreign feedstocks benefit to the detriment of U.S. crushers, U.S. farmers and U.S. taxpayers alike.  Thank you to the leadership of this bipartisan group of senators for not only standing up for domestic fuels and domestic feedstocks, but the viability of this critically important domestic industry.” 

Suzanne Shirbroun, president of the Iowa Soybean Association, said, “Growing imports of foreign feedstock such as used cooking oil and animal fats to produce biofuels are a serious concern for U.S. soybean farmers. This new supply of feedstock directly impacts soybean-oil prices and is contributing to declining margins for farmers and fuel producers. If record imports continue, foreign feedstocks could displace the oil from nearly 990,000 soybean acres in Iowa and create significant market uncertainty for the rapidly expanding soybean-crush industry across Iowa and the greater Midwest. We urge the treasury department to ensure domestic feedstocks are prioritized in U.S. biofuels tax policy to increase domestic energy security and improve rural outcomes.” 

To read the letter the bipartisan group of senators sent to the treasury department, click here.