The U.S. Department of Agriculture (USDA) has recently requested information on how they could improve ...

The U.S. Department of Agriculture (USDA) has recently requested information on how they could improve the models assigning tax credits for producing feedstocks used for biofuels, likely in preparation for finalizing 45Z tax credits before their activation in 2025. Nebraska Farm Bureau (NEFB) submitted comments jointly with the University of Nebraska-Lincoln (UNL), and individually.

For background, there has been a growing interest within the government to find sustainable sources to displace fossil fuels. There is also a push to lower atmospheric greenhouse gases, which are often blamed for global warming trends. Based on these goals, the federal government has created multiple tax credits to incentivize renewable fuel production. As analyzed in our previous newswire, their attempt at 40B tax credits for sustainable aviation fuel (SAF) does not work well in Nebraska. Because of pushback, the USDA is hoping to improve the model used to assign the credits.

45Z tax credits focus on incentivizing low carbon intensity (CI) score feedstocks being used to produce renewable fuels. The practices used in Nebraska to produce agricultural commodities lead to a relatively lower CI score on average. Based on this, Nebraska farmers and ranchers would be good candidates for these credits if they were designed effectively.

NEFB has joined many other agricultural groups in helping sponsor UNL in the research and development of a more holistic model that can be adapted for individual regions. Though the research is still in progress, NEFB partnered with UNL to submit comments on the scientific findings they have found that would likely improve the models. In addition, NEFB submitted individual comments focusing more on policy reasons for changing the current models.

There seems to be incredible potential in this emerging field, and we hope USDA will adjust the model to make it usable for all producers within the United States, keeping our country on the frontline of producing these new renewable fuels.

You may find more information on the Federal Register page. As always, if you have any questions, please feel free to reach out to Kole Pederson, Director of Environmental & Regulatory Affairs, at [email protected].