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Senate Finance Committee and Biofuels

In a significant move for the biofuels industry, various stakeholders have lauded the Senate Finance Committee for its new tax reform package that promotes equal tax treatment of biofuels. Organizations such as NATSO, the American Trucking Associations (ATA), and the National Association of Convenience Stores (NACS) highlighted the importance of restoring tax parity among advanced biofuels, allowing them to compete more effectively in the market.

The Tax Reform Package

The Senate's proposed legislation aims to modify the Clean Fuel Production Tax Credit, also known as '45Z'. This modification, which is set to take effect on October 1, 2025, will create a level playing field for sustainable aviation fuel (SAF) and other advanced biofuels, such as biodiesel and renewable diesel. This adjustment is crucial for revitalizing the U.S. biofuel production sector, which has been facing a sharp decline since the tax credit's initial implementation in January.

David Fialkov, Executive Vice President of Government Affairs for NATSO and SIGMA, expressed his approval, stating, "We give the Senate a lot of credit for reconfiguring '45Z' to be truly technology neutral. SAF should be incentivized at the same rate as all other biofuels. An equal incentive will lead to increased biofuel production and consumption, benefitting all parties involved."

Impacts on Biodiesel Market

The NACS Deputy General Counsel, Matt Durand, emphasized that tax policy plays a pivotal role in the health of the biodiesel market. He pointed out that the market is currently struggling due to the existing tax policies that disadvantage biodiesel. "Unless we act to ensure biodiesel is no longer disadvantaged, the market may never recover," Durand cautioned. Thus, the proposed tax reform is vital for the recovery and stability of the biodiesel market.

Historically, the Inflation Reduction Act of 2022 gave a higher tax credit for sustainable aviation fuel production. This, combined with the impending expiration of the Biodiesel Blenders' Tax Credit at the close of 2024, has threatened the viability of America's advanced biofuel supply chains. By ensuring equal tax treatment for alternative biofuels, the Senate's proposal represents an essential step towards establishing certainty within the industry, which will, in turn, encourage increased biofuel production and consumption effectively.

The Competitive Landscape

The modification of the tax code is expected to make SAF more competitive against biodiesel and renewable diesel, which are generally less expensive. With the new legislation, SAF would gain access to the same tax credits as its biofuel counterparts, allowing producers to focus on the most efficient fuels available in today's market.

NATSO has been at the forefront of advocating for the interests of truck stops and travel plazas since 1960. The association represents a wide array of voices in the industry regarding legislative and regulatory matters, educational opportunities, and annual conventions. Meanwhile, SIGMA has historically represented the interests of innovative fuel marketers across the U.S. and Canada, supporting both branded and unbranded segments of the motor fuel supply chain.

The NACS, celebrating over six decades of service to the convenience store and fuel retail industry, has gathered representatives from over 200,000 stores globally. These organizations support the call for renewed focus on biofuels to mitigate the challenges posed by the rapidly evolving energy landscape.

Conclusion

With heightened awareness of environmental sustainability and energy independence, the Senate Finance Committee's tax reform initiative marks a transformative moment for the biofuels industry. By fostering equal tax treatment for advanced biofuels, the legislation aims not only to enhance market competitiveness but also to ensure a more sustainable future for energy production in the U.S., ultimately benefitting businesses and consumers alike.