Insight Focus
The US ethanol industry has reacted enthusiastically to the new tax bill. The legislation extends 45Z credits and favours feedstocks grown in North America. Additionally, EPA approval of year-round E15 access expands fuel options in the Midwest.
Ethanol Industry Cheers New Tax Bill
The US ethanol industry reacted exuberantly to the passage on July 3 of a budget bill in Congress that extends incentives for crop-based biofuels while excluding foreign feedstocks from tax breaks.
The bill extends 45Z credits by two years, restricts the eligibility of these credits to fuels made from feedstocks grown in North America, retains full transferability throughout the term without large tax liabilities, and excludes indirect land use change (ILUC) in calculating lifecycle greenhouse gas emissions—resulting in no land use change penalty for corn ethanol.
“From the very beginning of the budget reconciliation process, our goal was to advocate for tax policies that provide certainty, growth opportunities and market stability for US ethanol producers,” said Geoff Cooper, president and CEO of the Renewable Fuels Association (RFA). Cooper highlighted that the extension and modifications to the 45Z clean fuel production credit, alongside the reinstatement of immediate expensing provisions for research and development, will create a favourable tax policy environment for ethanol producers.
45Z Extension Backs US Biofuels
Specifically, the budget bill extends the 45Z Clean Fuels tax credit by two years through the end of 2029, limits 45Z eligibility to fuels made from feedstocks grown in the US, Canada, and Mexico, retains full transferability throughout the term of the credit, and aligns ILUC emissions with actual data and evidence—resulting in no ILUC penalty for corn ethanol.
“President Trump wants to go big on American energy dominance, and this legislation delivers,” said Emily Skor, CEO of Growth Energy. “An extension of 45Z will unlock billions of dollars in new investments across rural America, supporting strong, stable markets for America’s farmers and positioning American biofuel producers to compete in global fuel markets.”
National Corn Growers Association (NCGA) President Kenneth Hartman, Jr. issued the following statement in response to the final legislative steps for the budget reconciliation bill: “As the One Big Beautiful Bill Act becomes law, the legislation contains several important and longstanding priorities for corn growers, including the extension of key tax provisions and investments in commodity and trade promotion programs.”
“Corn growers have been pushing for many of these improvements since at least 2023 and spent much of last year preparing to shape the federal tax provisions,” Hartman said. “We appreciate the members of Congress who worked to ensure our views, and these provisions were included in the final bill.”
POET Applauds Year-Round E15 Rule
In a related development, South Dakota-based POET, the world’s largest biofuels producer, applauded President Donald Trump and Environmental Protection Agency (EPA) Administrator Lee Zeldin for the agency’s decision to solidify year-round E15 access in eight Midwest states.
“President Trump deserves our thanks for once again keeping his commitment to America’s farmers by making year-round E15 a top priority, and Administrator Zeldin deserves credit for respecting states’ rights and preventing the federal government from blocking the path to E15 and lower gas prices this summer,” said Jeff Broin, POET founder and CEO. “It’s past time for Congress to pass the permanent E15 fix President Trump has long championed.”
Originally requested by the governors of Illinois, Iowa, Minnesota, Missouri, Nebraska, Ohio, South Dakota, and Wisconsin, this action provides regulatory certainty for fuel suppliers and ensures consumer access to E15 year-round in states that decide to move forward.
