Farmers and politicians want biofuel tax credits available only to feedstocks that are produced in the United States
SASKATOON — Canada’s canola sector has a powerful ally in the feedstock fight that has broken out in the U.S. biofuel industry.
Forty-one members of the U.S. House of Representatives recently sent a letter to the Treasury Department urging that the final guidance for the Section 45Z Clean Fuel Production Tax Credit restrict eligibility to renewable fuels made from domestically sourced feedstocks.
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“If drafted and implemented per congressional intent, 45Z will support American energy independence by incentivizing production of biofuels made with domestically produced feedstocks,” stated the letter.
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Similar letters have been submitted by a group of 16 U.S. senators and a collection of farm organizations.
The National Oilseed Processors Association (NOPA) noted in a recent news release that the United States imported 7.9 billion pounds of used cooking oil (UCO) and tallow between Jan. 1, 2023, and June 30, 2024.
That is the equivalent to the soybean oil crushed from more than 650 million bushels of soybeans.
“Making certain that 45Z is limited to domestic feedstocks will ensure that this important tax credit is implemented as intended in support of the American farmer, processor and the U.S. taxpayer,” NOPA president Kailee Tkacz Buller said in the release.
“Failing to do so will only incentivize continued use of foreign feedstocks to the detriment of those produced by American farmers and put the significant investments to expand U.S. crush capacity by 30 percent in doubt.”
Canada’s canola sector is concerned about the push to prevent biofuel made with foreign feedstocks from collecting the new tax credit.
And it appears to have a powerful ally in that cause.
U.S. secretary of agriculture Tom Vilsack recently commented about efforts to exclude foreign feedstocks during a presentation at Growth Energy’s 2024 Biofuels Summit.
“This is a tough issue because if you essentially create some kind of significant restriction in the efforts of trying to protect commodities and items that are grown and raised here, you essentially invite the entire world to do the same thing,” he said, according to a transcript of his remarks.
U.S. corn, soybeans, pork, poultry and other commodities could quickly become targets for retaliation.
“Other countries go, ‘wait a minute, they’re restricting this over here to protect their industry. OK, we’ll do the same,’ ” said Vilsack.
He told farmers they need to know what the reaction is going to be.
“Because if that reaction is, ‘we’re not going to buy your corn, we’re not going to buy your soybeans, we’re not going to buy your ethanol, we’re not going to buy your pork, we’re not going to buy your beef,’ are you OK with that?” he said.
“If you can’t sell that stuff overseas, what do you think is going to happen to the low prices we have today? Aren’t they going to be lower?”
Vilsack said China is a “classic example” of what he’s describing. The U.S. has been criticizing China “publicly and openly,” and that has consequences.
“Have you noticed how much China is no longer buying from us?” he said.
“They used to be our number one customer for a lot of our commodities. Now it’s Mexico and Canada.”
While the secretary of agriculture is clearly against preventing foreign feedstocks from accessing the 45Z tax credit, he did concede that the U.S. needs to be vigilant in ensuring imported feedstocks are indeed what they say they are.
Is it really used cooking oil or is it palm oil, which raises all sorts of environmental red flags.
“So that gets into inspections, and it gets into certifications, and it gets into the nuts and bolts of how things come and go,” he said.
