Awaiting biofuel tax credit rules - Corn farmers on edge

USAgNet - 04/01/2024

The Inflation Reduction Act introduced a promising $1.25 per gallon tax credit for sustainable airline fuel, aiming to boost biofuels like corn ethanol. The rules for qualifying fuels are still pending, causing uncertainty among corn farmers and ethanol producers.

The administration aims for billions of gallons of airline fuel to be bio-based, making these rules pivotal. The anticipated method, akin to the Argonne Laboratory's GREET model, is under scrutiny for how it accounts for land use changes and climate-smart agriculture practices.

This situation stirs anxiety in places like rural Minnesota, where the ethanol industry significantly contributes to the local economy. The industry's evolution towards sustainable aviation fuel (SAF) could further benefit corn farmers if their crops qualify under the new guidelines.

Yet, environmental criticisms of current models and the agricultural sector's concerns about stringent practices, such as cover cropping, highlight the complexities of creating a fair, effective tax credit system. With the administration's decision overdue, stakeholders, including Minnesota's congressional representatives, urge swift action to clarify these critical guidelines.

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