EMA Weighs in on Biofuels Tax Policy

EMA Weighs in on Biofuels Tax Policy

EMA has officially submitted comments to the U.S. Treasury and IRS regarding the Inflation Reduction Act’s 45Z Clean Fuel Production Credit, emphasizing that a blenders credit remains the most effective mechanism to increase biofuel consumption––an energy priority of the administration. While EMA expressed support for the strategic expansion of the biofuels sector, it cautioned that the 45Z regime contains structural deficiencies that will likely hinder increased consumption.

EMA urged the Treasury to work with Congress to restore blending incentives to ensure that the financial benefits of federal subsidies are felt across the supply chain––and most importantly, at the pump––not just upstream at the agricultural level. The federation also highlighted several challenges with a producer-level tax regime, including compliance with biofuel blending mandates and diminished carbon reduction opportunities in the heating oil sector. Finally, EMA reiterated that any tax structure must be paired with infrastructure investment offsets to overcome the most significant barrier to biofuel market penetration.

The comment period closed on April 10, 2025. EMA will continue to monitor regulatory and legislative developments on the matter.

“EMA marketers play a decisive role in biofuel expansion, engaging daily with consumer demand and retail dynamics,” said EMA President Rob Underwood. “The new 45Z regime risks disrupting established blending economics that have successfully increased biofuel use across the country,” Underwood added.

“An overly complex––and in many respects vague––producer credit, with inherent limitations on cost-savings pass-through, is an unworkable framework for boosting biofuel consumption from both commercial and regulatory standpoints. Treasury should work with Congress to restore what has historically worked,” said EMA Associate Regulatory Counsel Jorge Roman.

See letter here.