As President Donald Trump prepares to take office in January, his administration will inherit a growing crisis in the biofuel industry. Unnecessary delays by the Biden administration in issuing critical tax credit guidance have left farmers and fuel producers in limbo, threatening a cornerstone of America’s domestic energy strategy. To stabilize the market, the Treasury and IRS must act now to provide clarity, and Congress should extend the current tax structure for at least an additional year. If these steps are not taken, Trump and the 119th Congress must prioritize resolving this issue to restore stability, deliver on promises of revitalized energy production, and secure America’s energy future.
Members of Congress from both sides of the aisle have introduced legislation to extend the existing tax structure, addressing these delays and safeguarding this industry. Biofuel credits—with their broad bipartisan backing—benefit from political support that enables reform rather than abandonment, for the benefit of American energy security. But support alone isn’t enough—the lack of timely action by federal agencies threatens to disrupt markets, punish farmers, and derail U.S. Leadership in innovative energy solutions.
The roots of this crisis date back to the 2022 Inflation Reduction Act (IRA), which introduced a new framework to grow low-carbon fuels like sustainable aviation fuel (SAF). This landmark legislation ended the old biofuels credits and introduced a performance-based, technology-neutral tax credit designed to bring advanced biofuels to commercial scale. This was a watershed moment for American energy policy, positioning the U.S. As a global leader in clean, homegrown fuels while advancing its commitment to energy independence. By fostering innovation and bolstering rural economies, tax credits for advanced biofuels laid the foundation for lasting benefits.
Yet two years later, the Treasury and IRS have failed to issue the guidance necessary to implement this framework. With the old credits for sustainable fuels set to expire at the end of 2024 – just weeks away – what was intended to be a smooth transition now looks like a looming cliff. Producers can’t plan for 2025 and beyond, freezing investments and jeopardizing production capacity. Without clear policy action, the industry’s potential to reduce America’s reliance on volatile global energy markets and empower rural communities remains untapped.
This uncertainty has cascading consequences. Biofuel markets are stalling, leaving farmers who produce critical feedstocks—such as corn, soybeans, and oilseed crops—without stable demand. Suppliers of non-food organic waste, like corn stover and manure, are also feeling the pinch. Farmers risk seeing feedstock prices plummet, while consumers face higher prices at the pump. Without immediate action, some fuel producers may be forced to shutter operations, with ripple effects across the economy and rural America.
The stakes extend beyond economics. Advanced biofuels are key to modernizing the transportation sector and ensuring energy security. These innovative fuels can be seamlessly integrated into existing infrastructure, without costly upgrades to vehicles or distribution networks. Regulatory inaction threatens to squander this readily available tool for advancing clean energy, setting back progress that could take years to recover.
This crisis is entirely avoidable, but policymakers must act now. First, the Treasury and IRS must issue long-overdue tax credit guidance, providing clarity and stability for farmers and fuel producers. Second, Congress must extend the current tax framework for at least another year to allow for a smoother transition under the IRA. These actions will protect American farmers, maintain progress in energy innovation, and prevent financial strain for consumers at the pump.
President Trump has the opportunity to ensure America’s energy future by addressing these challenges head-on. His administration and the 119th Congress can prioritize policies that stabilize the biofuel industry, restore certainty for producers, and chart a course toward long-term energy independence. By taking swift and decisive action, they not only can deliver on campaign promises but also strengthen rural economies, reduce reliance on volatile foreign markets, and position the U.S. As a leader in clean energy innovation.
The federal government must not allow this simmering crisis to boil over. With strong leadership and immediate intervention, farmers can grow essential crops, fuel producers can scale innovative technologies, and consumers can avoid higher fuel costs—all while securing a cleaner, stronger, and more independent energy future for America.
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