The Biden administration will not complete the guidelines for the new clean fuel production tax credits before the end of President Joe Biden’s term. This delay affects the airline and biofuel industries, which were anticipating the tax credit to stimulate sustainable aviation fuel (SAF) production. The lack of detailed guidance from the U.S. Treasury means the program, set to start on January 1, will be inactive.
The tax credit is a central element of President Biden’s plan to produce 3 billion gallons of SAF by 2030. The aviation sector, responsible for approximately 2.5% of global greenhouse gas emissions, is a significant focus in the efforts to combat climate change.
Biofuel companies and their supporters in Congress had hoped for a finalized program before President Biden’s departure from office on January 20. A complete program was seen as a defense against the incoming administration’s potential repeal of the 2022 Inflation Reduction Act, which initiated the tax credit program. producers, facing stagnant demand for ethanol as a gasoline additive, are particularly keen on SAF for market expansion.
With the future of the tax credit uncertain, the biofuel industry is urging lawmakers to extend existing blender tax credits set to expire at the end of the year. Interviews with industry executives reveal this is a strategy to manage the current uncertainty.
The delay in the SAF guidelines is reportedly due to disagreements between agricultural lobbyists and environmentalists over ensuring the program meets its climate goals. While the Department of Agriculture is expected to provide some guidance on climate-smart farming techniques to access the credit, critical components like life cycle analysis will remain unfinished. This leaves the industry without a clear path to utilize the credits.
Following the report of the delay, shares of Darling Ingredients (NYSE:), which has a renewable diesel venture with Valero Energy (NYSE:), experienced a decline of up to 6.6%. The White House has yet to respond to requests for comment on the matter.
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