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Certainty in tax policy for biodiesel, renewable diesel, sustainable aviation fuel

A leader with Clean Fuels Alliance America says the industry continues to benefit from the extension of a biodiesel and renewable diesel tax incentive under the Inflation Reduction Act.

Kurt Kovarik, vice president of federal affairs, tells Brownfield it helps provide long-term certainty in tax policy.

“The Inflation Reduction Act included a straight two-year extension of the biodiesel blenders tax credit, so that provides certainty through 2023 and 2024,” he says.

He says it also creates a new Clean Fuel Production Credit, where the value of the credit is based on carbon reductions.  

“We’re working with Department of Treasury, Department of Transportation, Environmental Protection Agency, and Department of Energy in ensuring they get this right,” he says. “It’s a good concept in that you reward fuels based on their reduction to carbon emissions compared to baseline diesel fuel or sustainable aviation fuel.  But in that type of framework, the carbon modeling is important to get the science right. We want to make sure that the decisions on carbon scoring are based on sound science and not political science.”

The legislation increases the value of the existing sustainable aviation fuel tax incentive through 2024.

Brownfield interviewed Kovarik during the recent Clean Fuels Conference in Tampa.