By Scout Nelson
Researchers at North Dakota State University (NDSU) are analyzing how proposed changes to the 45Z Clean Fuel Production Credit could affect the biofuel industry. The credit, originally introduced under the 2022 Inflation Reduction Act, is now being debated in Congress as part of the One Big Beautiful Bill (OBBB).
The study is led by Matthew Gammans of NDSU’s Center for Agricultural Policy and Trade Studies and Ming Wang from the Agricultural Risk Policy Center. Their work focuses on three main changes that lawmakers are considering for the tax credit program:
- Extending the credit beyond 2027, possibly until 2029 or 2031
- Limiting feedstock eligibility to those produced in North America
- Removing indirect land-use change (ILUC) from the carbon scoring process
The researchers say that extending the credit could make it easier for projects to get financing, but the proposed timelines may still be too short to attract long-term investment in new facilities.
The restriction on using only North American feedstocks is aimed at reducing fraud, especially related to imported used cooking oil that receives low carbon scores. The goal is to support domestic producers and improve transparency.
Eliminating ILUC from carbon calculations may increase the competitiveness of U.S.-grown biofuels. However, this change also brings concern. It could make climate policies weaker by ignoring the full impact of land-use changes on carbon emissions.
Photo Credit: north-dakota-state-university
Categories: North Dakota, Education, Government & Policy