The US Senate bill will reduce the tax credit for biofuels produced from foreign feedstocks

The U.S. Senate Republicans proposed a tax plan on Monday that would extend a credit for clean fuels through 2031 but reduce 20% of its value for biofuels produced from feedstocks outside the United States.

Oil and biofuel producers that can prove lower carbon intensity in their fuels could benefit from the tax credit established by former president Joe Biden’s Inflation Reduction Act, but which was not finalized under his administration.

The House tax bill and spending bill, passed in May, also extended the 45z tax credit through 2031. However, it banned most foreign feedstocks to be eligible for credits.

The House and Senate bills both exclude emissions from the tilling of land for feedstocks such as corn and soybeans from the calculation of the credit value of a biofuel.

This change will make it easier to qualify corn-based ethanol for credits.

(source: Reuters)