Biden administration will not finalize clean fuel tax credit guidance

(Reuters) - Biden administration officials will not finalize highly anticipated guidelines on new clean fuel production tax credits aimed at the airline and biofuel industries before they leave in January, three sources told Reuters, casting doubt on the future of a key piece of the U.S. president’s climate agenda.

The tax credit, the engine behind President Joe Biden’s ambitious plan to generate 3 billion gallons in production of sustainable aviation fuels (SAF) by 2030, was due to become effective Jan. 1, but a lack of detailed guidance from the U.S. Treasury would render the program dormant. Air travel contributes around 2.5% of global greenhouse gas emissions, making it a big target in the fight against climate change.

Biofuel companies and their legislative backers were hoping to have a finalized program in place before Biden departs the White House on Jan. 20. They said they believed a complete program would provide some protection against President-elect Donald Trump's vow to repeal Biden's 2022 Inflation Reduction Act, which launched the program.

Ethanol producers in particular are hoping SAF will provide market growth, amid stagnant demand for the corn-based fuel as a gasoline additive.

The biofuel industry is now pushing lawmakers to extend existing blender tax credits that were set to expire at the end of the year to deal with the uncertainty, according to multiple interviews with industry executives.

The White House, which is overseeing a broad effort to finalize a list of unfinished climate rules, did not immediately respond to requests for comment.

The delay in establishing guidelines for SAF is due to political squabbles between agriculture lobbyists and environmentalists over how to ensure the program can achieve its climate targets, Reuters has previously reported.

The Department of Agriculture is expected to issue some guidance on what climate smart farming techniques may be used to access the credit, but other key items such as life cycle analysis, will remain unfinished and leave the industry without a blueprint to access the credits, the sources said.



(Reporting By Jarrett Renshaw, editing by Deepa Babington)