Trump’s ‘tide of change’ jeopardises SAF incentives

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During his inauguration speech on January 20th, US President Donald Trump promised to deliver “a tide of change” in his second term. Immediately after leaving the Capitol Rotunda, he signed and released a torrent of 46 executive orders to create the momentum for this “tide”.

Of these orders, six had relevance to energy. One of these paused all payments under the Inflation Reduction Act – including the 45Z credits.

“As has been done with all recent changes in presidential administration, the new Trump administration has temporarily frozen all regulatory development, including the 45Z, pending a 60-day review in order to get their new appointees in place and up to speed on their agency’s activities,” said Dr. Adam Schubert of Stillwater Associates in his commentary on the announcement.

The 60-day period could easily turn into another year. It took the US Treasury Department nearly two-and-a-half years to release initial guidance on 45Z credits in the first place. And the released guidance, which was published 10 days before Trump’s inauguration, still misses various details.

The guidance on eligibility for credits adds to the list of climate smart agriculture (CSA) which growers can choose from. While imported feedstocks have effectively been banned, the guidance does allow for imports of Brazilian sugarcane ethanol for alcohol-to-jet pathway, tallow, and canola from Canada. Used cooking oil imports have been excluded from the list of eligible feedstocks.

While these details clarify the type of feedstocks eligible for credits, the Treasury Department still needs to finalise the rule-making process. Without this, the producers cannot know which pathways qualify, quantum of credit for fuel produced and process to apply for these credits. The guidance also doesn’t discuss CSA practices for cover crops including camelina. Montana Renewables, the largest SAF producer in the US, began producing SAF from camelina in 2024.

“Treasury will ultimately need to formally issue a proposed rule to implement 45Z, accept and consider public comment, and issue a final rule. This process could easily take a year,” adds Dr. Schubert.

“Until that happens, industry will continue in an uncomfortable state of being unable to confidently quantify the tax credit associated with their current fuel production. This uncertainty may force some producers, primarily smaller producers with weaker balance sheets, to shut down or restrict operations.”

While there was already a lot that needed to be done to enforce 45Z credits, Trump’s decision to freeze regulatory changes will add to the delays.

Biofuel organisations have for long proposed extending 40B SAF blenders tax credit which expired at the end of 2024. At the moment, this seems like the only way forward to give the confidence producers need.

Otherwise, the “tide” that Trump promises will lift all boats may drown SAF in US.

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