A Republican lawmaker has quietly introduced a bill to repeal a key subsidy for low-carbon fuels, complicating a debate among lawmakers on what to do with clean energy incentives provided by the Inflation Reduction Act.
The bill, HR 549, introduced this month by US representative Beth Van Duyne (R-Texas) would repeal the 2022 climate law's "45Z" incentive for clean fuels, which offers increasingly generous subsidies to fuels as they produce fewer greenhouse gas emissions. While the credit is currently in effect, the legislation as written would apply retroactively, striking the credit from the tax code after 2024.
The proposal comes as Republicans prepare to pass major legislation this year through the Senate's reconciliation process, which bypasses the 100-member chamber's 60-vote requirement to advance most bills. Intent on extending tax breaks passed during President Donald Trump's first term but wary of adding to budget deficits, lawmakers are searching for ways to cut government spending.
While changes to at least some Inflation Reduction Act programs are expected, biofuels policy is seen as a less likely target for Republicans than other climate policies. And even members supportive of scrapping clean energy subsidies might be wary of repealing incentives retroactively. Still, the new bill suggests that a full repeal of 45Z could at least be part of legislative discussions this year.
The bill was referred on 16 January to the House Ways and Means Committee, of which Van Duyne is a member.
Other Republicans on the Ways and Means Committee have expressed openness to updating but not necessarily eliminating the credit, with six members opening a request for information last year on options such as limiting foreign feedstocks or encouraging more "climate-smart" farm practices. Industry groups generally supportive of 45Z might even welcome some legislative changes, particularly those frustrated by incomplete guidance on qualifying for the credit issued in the waning days of former president Joe Biden's term.
More information on lawmakers' plans could come soon, with House Republicans on Monday attending a policy retreat with Trump in Florida.
Whatever changes are proposed, Republicans' slim majorities leaves them with little room for dissent and could give farm-state lawmakers leverage to ensure some type of biofuel tax credit survives legislative negotiations.
