Iowa biodiesel producers are urging the U.S. Department of Treasury to act immediately in issuing safe harbor guidance for the 45Z Clean Fuel Production Credit.

“Simply put, without immediate safe harbor guidance, the entire biodiesel supply chain could grind to a halt, resulting in lost farm income, laid off workers, unrealized carbon reductions, higher prices for consumers, and greater energy imports,” producers said in the letter submitted to Treasury last week.

While the department is working to finalize the 45Z rules, most observers believe they will not be completed until well after January 1, 2025 when the tax credit is scheduled to take effect. The industry claims lack of safe harbor guidance is impacting the biodiesel supply chain today and without final rules or a safe harbor before January 1, the entire biodiesel supply chain is left in limbo as the current biodiesel blenders tax credit expires at the end of this year.

“Without knowing the value of the new credit, feedstock suppliers don’t know how to price their products. Biodiesel producers don’t know how much to pay for feedstock or how to price their biodiesel. And retailers don’t know how much to pay for biodiesel or how to set the price for consumers… We urge you to pre-empt the disastrous implications of dramatically reducing biodiesel production by implementing a safe harbor until the 45Z Clean Fuel Production Credit rules are final,” stated the letter.

The letter comes after a meeting last week between Midwest congressional staff and Treasury officials on the new production credit, including the possibility of safe harbor guidance where the department provided no timeline for finalizing the rule and did not commit to providing an interim safe harbor.