A coalition of US House members is pushing the Senate to scrap planned changes to a tax credit that the biofuel industry sees as crucial for profitable production.
Republicans in both chambers have looked to use a fillibuster-proof budget bill to keep but modify the Inflation Reduction Act's "45Z" tax credit, which increases subsidies for fuels with lower emissions. But some farm-state House members are displeased with the Senate's approach, including less-punitive treatment of foreign feedstocks and substantial cuts to subsidies for sustainable aviation fuel (SAF).
"We respectfully urge you and your committee to revise the language around 45Z to reflect the House language," seven House Republicans, including three on the House tax-writing committee, wrote Wednesday in a letter to Senate Finance Committee chair Mike Crapo (R-Idaho).
Both the House and Senate bills would prevent tax officials from factoring in indirect emissions from land use changes, a win for crop-based fuels like corn ethanol, and would extend 45Z four more years through 2031. But the House bill, which passed the chamber narrowly last month, would also strip eligibility from fuels derived from feedstocks outside North America starting next year. The Senate Finance draft, on the other hand, cuts subsidies for fuels from foreign feedstocks by 20pc while still allowing them some credit.
The issue is highly contentious across the biofuel supply chain. Farm groups say that recently fast-rising imports of used cooking oil and tallow are hurting demand for domestic crops that can also be refined into renewable diesel. Refiners insist that flexibility around feedstocks is essential for scaling up biofuel output.
The House lawmakers say that the Senate language would "subsidize imported feedstocks", some of which come from countries that "actively discriminate against our domestic biofuels industry".
The House letter also asks the Senate to retain additional subsidies for SAF, which they say are critical given the fuel's typically higher cost of production. Under current law, road fuels are eligible for up to $1/USG and SAF up to $1.75/USG, plus inflation adjustments for all types of fuel — but the Senate Finance draft would eliminate that jet fuel premium.
Notably, the House lawmakers say they prefer the Senate's more lenient approach to tax credit "transferability", which allows smaller companies without enough tax liability to instead sell tax credits to other businesses.
President Donald Trump has pushed lawmakers to send him the budget bill before 4 July, but lawmakers still disagree on key details with just days before that self-imposed deadline. Along with fighting over energy policy, some conservatives are wary of the package's potential impact on the federal budget deficit and want more sweeping cuts to government spending.
The letter was signed by representatives Michelle Fischbach (R-Minnesota), Randy Feenstra (R-Iowa), Max Miller (R-Ohio), Zach Nunn (R-Iowa), Mariannette Miller-Meeks (R-Iowa), Brad Finstad (R-Minnesota) and Ashley Hinson (R-Iowa).
