The "Farmer First Fuel Incentives Act" restricts clean fuel production credits to fuels derived from feedstocks grown in the U.S., modifies emissions rate calculations, extends the clean fuel production credit through 2034, and adjusts emissions factor rounding.
Tracey Mann
Representative
KS-1
The "Farmer First Fuel Incentives Act" modifies the clean fuel production credit to only include fuel derived from feedstocks grown in the United States. It also excludes indirect land use emissions from lifecycle greenhouse gas emission calculations, extends the clean fuel production credit through 2034, and refines emissions factor calculations for greater precision.
Fuel Tax Credits Go Domestic: Bill Mandates US Feedstocks, Extends Credits to 2034
This bill, called the "Farmer First Fuel Incentives Act," makes some significant tweaks to the clean fuel production tax credit. Starting after December 31, 2024, to qualify for the credit, transportation fuel must be made from feedstocks grown or produced right here in the United States, effectively cutting off eligibility for fuels derived from foreign sources (Sec. 2). The main goal seems to be boosting demand for American-grown materials used in making cleaner fuels.
Redrawing the Emissions Lines
The legislation also changes how the environmental impact of these fuels is measured for tax credit purposes. A key change, effective for tax years after December 31, 2025, is excluding emissions from "indirect land use changes" when calculating a fuel's lifecycle greenhouse gas emissions (Sec. 3). Think of it like this: if growing corn for ethanol in the US leads to forests being cleared elsewhere to grow soybeans, those indirect emissions won't count against the ethanol's carbon score under this bill. This could make some domestic biofuels look cleaner on paper, but it raises questions about accurately capturing the full environmental footprint. The bill requires the Treasury Secretary to work with the EPA and USDA on the methods for this. Additionally, there's a minor tweak to how the emissions factor is calculated, rounding it to two decimal places instead of one, starting after December 31, 2024 (Sec. 5).
Longer Runway for Clean Fuel
For producers, a major piece of news is the extension of the clean fuel production credit itself. Instead of expiring at the end of 2027, the bill pushes the sunset date out an extra seven years to December 31, 2034 (Sec. 4). This gives companies investing in clean fuel production a much longer window of certainty regarding this tax incentive. While the domestic feedstock requirement might limit sourcing options or potentially increase costs if foreign feedstocks were cheaper, the extended credit timeline offers significant long-term financial stability for the industry, particularly benefiting US farmers and biofuel producers.