The US renewable fuels industry is increasingly mired by a lack of regulatory guidance surrounding a new, potentially lucrative tax credit.
Renewable diesel and biodiesel producers currently receiving a $1.00/gallon blending credit could see value drop to roughly $0.39/gallon for low carbon-intensity feedstocks and receive no credit value for soybean oil and canola oil, according to AEGIS analysis of current guidelines.
The looming election casts further uncertainty on the margin environment for 2025 as parts of the Inflation Reduction Act could be targeted for cuts.
The ambiguity has stalled investments in new and existing renewable fuels projects and threatens to set back the rapid development of sustainable aviation fuel (SAF) expected to take off next year.
Unsure of the ultimate credit value to be received next year, biofuel producers are cutting back purchases of renewable feedstocks like soybean oil.
The halt in buying comes as the US is poised to harvest a record soybean crop, threatening to roil returns for US farmers, spurring calls to include a domestic feedstock requirement to govern eligibility for credits.
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