Canadian Biofuels Producers Feeling Heat From New Producer’s Tax Credit in US

A change in U.S. law to the blender’s tax credit for biodiesel and renewable diesel as part of the Inflation Reduction Act is seen as a boon for U.S. producers.

According to a Western Producer news story published on Thursday, however, the Biden administration’s move to provide the credit to U.S. producers only is expected to have what the publication says will be a “devastating” effect on Canadian biodiesel and renewable diesel producers, https://www.producer.com/….

The IRA switches the blender’s tax credit for the two renewable fuels to a producer’s credit effective on Dec. 31, 2024. U.S. producers alone will be eligible for tax credits of 20 cents to $1 per gallon, depending on the carbon intensity of the fuels produced.

As it stands now, according to Western Producer, U.S. biofuels producers will be able to send their products to Canada, making it difficult if not impossible for Canadian producers to compete.

Officials interviewed by the publication said since the U.S. law change takes effect at the end of 2024 there is time to perhaps create a similar Canadian subsidy program.

In addition, Western Producer reports, Federated Co-operatives Limited and AGT Food and Ingredients still plan to build a $2 billion canola crushing plant.

The Inflation Reduction Act included a number of provisions beneficial to biofuels.

Renewable energy programs through USDA overall received $13.3 billion. Rural electric cooperatives will receive $9.7 billion for loans to build out renewable energy infrastructure with specific language on “zero-emission systems” and carbon-capture programs.

Biofuels will see another $500 million to develop blender pumps and other infrastructure to increase the blends of biofuels above 10% blend levels for ethanol and 20% for biodiesel blends.