Bill Would Extend 45Z Tax Credit

Cindy Zimmerman

The 45Z clean fuel production tax credit would be extended by ten years under legislation introduced this week by Reps. Brad Schneider (D-IL), Dan Kildee (D-MI) and Julia Brownley (D-CA).

The tax credit, created under the Inflation Reduction Act, is slated to start in 2025 and expire in 2027, even though no rules have been developed for it yet. The Expanding Clean Fuel Production Act would extend the credit for transportation fuel with zero or low greenhouse gas emissions, including sustainable aviation fuel (SAF), through 2037.

“A ten-year extension would allow for sustained investment in production to accelerate the transition to cleaner fuels and to significantly cut greenhouse gas emissions from the aviation industry, in particular. We are already seeing the impact of the Inflation Reduction Act’s investments on U.S. production of sustainable fuels,” said Rep. Schneider who authored the tax credit for the production of SAF which was included in the Inflation Reduction Act in 2022 and aims to halve carbon emissions in the aviation sector.

The credit was inspired by a SAF credit included in the Sustainable Skies Act, which Rep. Schneider authored with Reps. Kildee and Brownley in 2021. The credit was ultimately enacted in the Inflation Reduction Act in 2022, will transition into the CFPC in 2025, and will expire in 2027. SAF producers are eligible for a tax credit of $1.25 to $1.75 per gallon.

Alison Graab, Executive Director of the SAF Coalition, said they look forward to working with Congress extending as well as strengthening the incentive. “Advancing sustainable aviation fuel demonstrates a clear commitment to the environmental and economic promises SAF holds, and incentives that are durable and attract investment are essential to unlocking that potential and driving the progress needed to sustain and grow the SAF industry.”

aviation biofuels, Ethanol, Ethanol News, Renewable Fuels Association, RFA, SAF, Sustainability

Ethanol Report on Supply and Demand

Cindy Zimmerman

Despite California’s best efforts to work against low carbon ethanol by not allowing sales of E15 and proposing unworkable new sustainability requirements for the future, supply and demand for U.S. ethanol continues strong.

In this edition of The Ethanol Report podcast, Renewable Fuels Association Chief Economist Scott Richman discusses concerning proposed regulations to California’s Low Carbon Fuel Standard, strong supply and demand numbers for 2024, and surging exports of both ethanol and the co-product Distiller’s dried grains with solubles (DDGS).

Ethanol Report 10-23-24 21:24

The Ethanol Report is a podcast about the latest news and information in the ethanol industry that has been sponsored by the Renewable Fuels Association since 2008.

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Audio, Ethanol, Ethanol News, Ethanol Report, Podcasting, Renewable Fuels Association, RFA

Supreme Court to Decide on EPA SRE Case Venue

Cindy Zimmerman

The Supreme Court will determine whether the D.C. Circuit Court of Appeals is the only proper court to litigate challenges to small refinery exemptions, a decision welcomed by biofuel advocates.

At issue is whether the venue for challenges by small oil refineries seeking exemptions from the requirements of the Clean Air Act’s Renewable Fuel Standard program lies exclusively in the U.S. Court of Appeals for the District of Columbia Circuit because the agency’s denial actions are “nationally applicable” or, alternatively, are “based on a determination of nationwide scope or effect.”

The Renewable Fuels Association and Growth Energy issued a statement saying, “The Fifth Circuit was clearly an improper venue to hear challenges on small refinery exemptions. Because the Fifth Circuit opinion set up a clear split with several other Circuit courts on the question of venue, this is precisely the sort of issue that the Supreme Court is meant to resolve. The Court has agreed, and we look forward to participating in the case and having this issue settled once and for all.”

“The refining community’s abuse of small refinery exemptions destroys demand for biofuels nationwide, which negatively impacts farmers and bioethanol producers regardless of where they operate. The economic and environmental impact of this abuse does not recognize state lines. The decision in this case should strengthen the RFS by giving biofuel producers and their farm partners the certainty they deserve.”

EPA, Ethanol, Ethanol News, Renewable Fuels Association, RFA

New Ethanol Infographics from Grains Council

Cindy Zimmerman

The U.S. Grains Council (USGC) has released a series of infographics to promote the benefits of biofuels, an explainer on various sustainability benchmarks for sustainable aviation fuel (SAF), and an update on global ethanol blending policies.

The Council seeks to show international policymakers and industry stakeholders that U.S. ethanol is an affordable, abundant, compatible and sustainable way for countries to meet their carbon reduction commitments. The Council’s infographic reflecting these qualities serves as a simple yet effective reminder to customers about why U.S. ethanol is the right choice.

These infographics, along others related to commodity uses, export data from marketing year 2023/2024 and more, are available for download on the Council’s website.

biofuels, Ethanol, Ethanol News, SAF, USGC

Ethanol Sets New Export Record

Cindy Zimmerman

Click to enlarge

The latest export data for marketing year 2023/2024 from USDA shows exports of U.S. ethanol set a record at 1,746,490,298 gallons sold internationally and a single-market record of 23.4 million metric tons (924 million bushels) shipped to Mexico. That helped sales of U.S. grains in all forms (GIAF) increased to more than $48 billion.

“We applaud U.S. farmers and producers for their outstanding efforts in increasing exports this marketing year, and especially to ethanol producers who continue their trajectory of outstanding growth to meet global market demands,” said Ryan LeGrand, U.S. Grains Council (USGC) president and CEO.

The new ethanol record does not include an estimated 140.5 million gallons of ethanol exported to Japan in the form of ethyl tert-butyl ether (ETBE), emphasizing the incredible accomplishments of the U.S. biofuels industry during the past year.

corn, Ethanol, Ethanol News, Exports, USGC

RFA Calls New California LCFS Updates Fundamentally Flawed

Cindy Zimmerman

The Renewable Fuels Association says proposed regulations updating California’s Low Carbon Fuel Standard are “fundamentally flawed” and could significantly restrict the future use of low-carbon ethanol in the state.

In comments submitted last week to the California Air Resources Board (CARB), RFA Chief Economist Scott Richman asserts that renewable fuel producers and California consumers will both suffer if CARB moves ahead with its proposal for new “sustainability” requirements and an arbitrary new method for assigning hypothetical land use change penalties.

CARB says the onerous new sustainability requirements are necessary to mitigate the “rapid expansion of biofuel production and biofuel feedstock demand.” However, the data clearly show that there is no “rapid expansion” in U.S. corn ethanol production and historical growth has been accommodated with existing cropland and higher productivity. Applying the sustainability criteria to U.S. corn ethanol makes no sense in light of the hard evidence documenting the efficiency and sustainability associated with the industry’s growth, according to RFA’s comments. Moreover, the proposed changes are unworkable for U.S. farmers and ethanol producers, RFA said. The proposal includes overreaching language that appears to extend beyond CARB’s authority, along with unrealistic requirements for commodity traceability.

“CARB should seriously reconsider such a broad and sweeping mandate that could result in an invalidation of LCFS credits due to an unrelated violation that occurs outside of both a fuel provider’s control and CARB’s jurisdiction,” wrote Richman.

RFA also argues that the development and assignment of land use change penalties should be based on scientific data and modeling and must be subject to an appropriate public rulemaking process.

“If CARB had its thumb on the scale against ethanol before, now they are trying to give themselves the authority to put their whole fist on the scale,” said RFA President and CEO Geoff Cooper. “This proposal is completely disconnected from reality and, if finalized, will very likely result in shortages of low-carbon fuels and higher fuel prices for California consumers.”

Carbon, Ethanol, Ethanol News, Renewable Fuels Association, RFA

USDA Celebrates $3 Billion for Climate-Smart Commodities

Cindy Zimmerman

Secretary of Agriculture Tom Vilsack traveled to Pennsylvania last week to celebrate investing over $3 billion in 135 projects under the Partnerships for Climate-Smart Commodities since its creation in September 2022.

Vilsack highlighted the initiative’s success to date, including:

– Enrollment of over 3.2 million acres of working land into climate-smart practices that reduce greenhouse gas emissions and sequester carbon.
– Sequestered over 400,000 metric tons of carbon using a variety of direct measurement tools on the ground and testing nearly 50 different greenhouse gas models to verify results.
– Projects that have also produced low-carbon biofuels, including sustainable aviation fuel.

Among the projects Vilsack highlighted is the Iowa Soybean Association’s Midwest Climate-Smart Community Program, which now has over 1800 farms enrolled in climate-smart production. The resulting corn, soy, sugar beats and wheat supply insetting markets where corporate entities aim to reduce their greenhouse gas footprint.

Listen to Vilsack’s remarks:
Vilsack in Hershey, PA (26:41)

Audio, biofuels, Farming, SAF, Sustainability, USDA

Gevo Gets DOE Loan Commitment for SAF Facility

Cindy Zimmerman

Net-zero hydrocarbon fuels developer Gevo announced last week it received a conditional commitment for a loan guarantee of up to $1.46 billion from the U.S. Department of Energy for its Net-Zero 1 project (“NZ1”) in South Dakota. With capitalized interest during construction, the DOE loan facility has a borrowing capacity of $1.63 billion.

The NZ1 facility is being built in Lake Preston, South Dakota. It will use 100-percent U.S.-sourced feedstocks and is designed to produce approximately 60 million gallons of sustainable aviation fuel (“SAF”), approximately 1.3 billion pounds of protein and animal feed products, and approximately 30 million pounds of corn oil per year. The design capability of the NZ1 facility, when combined with the Gevo business system, is expected to yield SAF with a net-zero carbon footprint on a lifecycle basis, including through the burning of the fuel. Gevo net-zero SAF projects are expected to catalyze the accelerated adoption of climate smart agricultural practices, support rural jobs and economic development, and reinforce domestic energy security.

NZ1 is the first-ever large-scale alcohol-to-jet (“ATJ”) project to receive a DOE LPO conditional commitment. “This marks a watershed moment for the Net-Zero 1 project and a critical step forward in Gevo’s mission to transform the aviation industry by providing a scalable, sustainable, and economical renewable-carbon-based jet fuel—SAF,” said Gevo CEO Dr. Patrick Gruber. “This valuable commitment to help finance NZ1, if finalized, should also attract other capital investments to unlock SAF commercialization given the robust due diligence conducted by the agency.”

While this conditional commitment indicates DOE’s intent to finance the project, DOE and the company must satisfy certain technical, legal, environmental, commercial, and financial conditions before the Department can enter into definitive financing documents and fund the loan guarantee.

aviation biofuels, Ethanol, Ethanol News

Chevron REG Invests in Terviva to Scale New Biofuel Feedstock

Cindy Zimmerman

Agricultural innovation company Terviva has announced an investment from Chevron Renewable Energy Group to help scale production of pongamia for low carbon renewable fuel.

“Crude pongamia oil can be converted into biodiesel, renewable diesel, or sustainable aviation fuel (SAF). In working with Chevron Renewable Energy Group, we can increase the availability of feedstocks for production of these fuels while promoting our mission to revitalize agricultural land and communities. This relationship benefits stakeholders up and down the value chain, from farmers cultivating pongamia to fleets looking for lower carbon fuels,” said Naveen Sikka, founder, and CEO of Terviva.

Pongamia growing in Central Florida

Pongamia is a regenerative, permanent tree crop that stores carbon and produces a bean pod that can be used in turn to produce food, feed, and fuel. Terviva has been developing elite pongamia cultivars over 15 years of research trials spanning nearly 2,000 acres in Florida, Hawai’i and Australia. “Terviva’s pongamia trees produce three or more metric tons of beans per acre, which feature a high oil content,” said Sikka.

Terviva recently expanded its executive leadership team to include Simmarpal Singh as Chief Operating Officer, previously serving as CEO-India for COFCO International and prior to that for Louis Dreyfus India. Singh will focus on strengthening the upstream and midstream processes to expand the footprint of Terviva and pongamia across India, the U.S., Australia, and other parts of the world. “I think there is huge potential around pongamia,” said Singh. “I look forward to leveraging my deep experience in farming, origination, manufacturing, and international stakeholder management to work in a new commodity value chain that directly contributes toward improving our global climate.”

Learn more about Terviva and pongamia in this interview with CEO Naveen Sikka and COO Simmarpal Singh.
Interview with Terviva (19:04)

Audio, aviation biofuels, Biodiesel, biofuels, Feed, food and fuel, SAF

ACE Submits Comments on Climate-Smart Ag Practices

Cindy Zimmerman

The American Coalition for Ethanol (ACE) this week submitted virtual comments in response to the U.S. Department of Agriculture (USDA) request for information on the production of biofuel feedstocks using climate-smart agriculture (CSA) practices.

ACE CEO Brian Jennings emphasized the organization’s key priorities and encouraged USDA to continue engaging with Treasury and leverage ACE’s Regional Conservation Partnership Program (RCPP) projects to help inform more accurate and updated GHG credit values for CSA practices as the Treasury Department implements the 45Z Clean Fuel Production tax credit under the Inflation Reduction Act (IRA).

Jennings highlighted the following priorities:

Models and credit values for CSA practices should be routinely updated, incorporating data collected through ACE’s RCPP projects. Ultimately, our projects are designed to improve the accuracy of GREET and address perceived “information gaps” currently preventing farmers and ethanol producers from monetizing CSA practices in regulated markets.

45Z should allow individual CSA practices and stacking of agricultural practices. Do not require the all-or-none “bundled” approach from 40B or arbitrarily cap agriculture practice GHG credit values.

USDA has a long track record of stewarding federal taxpayer funds for commodity and conservation programs, ensuring that participating farmers meet necessary requirements to receive federal funds. If existing USDA protocols are sufficient for verifying the distribution of billions of taxpayer dollars for commodity and conservation programs, USDA protocols are equally sufficient for verifying the same practices for federal tax incentives such as 45Z. The Treasury Department should rely on existing USDA assets in the reporting and verification for the 45Z tax credit, and we encourage USDA to directly engage Treasury with respect to its expertise and experience in this area.

ACE, Ethanol, Ethanol News, SAF, Sustainability, USDA