Will the IRA’s Biofuel Provisions Ease Pump Prices? Sen. Ernst Isn’t Convinced

Source: By JENNA HOFFMAN, Ag Web • Posted: Thursday, August 11, 2022

“They’re going to raise taxes on every income bracket and it’s going to punish our small businesses and farmers in the long run," says Sen. Ernst.
“They’re going to raise taxes on every income bracket and it’s going to punish our small businesses and farmers in the long run,” says Sen. Ernst.
(Lindsey Pound)

The Inflation Reduction Act passed the Senate on Sunday with numerous provisions impacting agriculture, including biofuels production.

On biofuels, the IRA outlines:

1.    Funding for blender pump and biofuel infrastructure.
2.    A collective $3 billion for renewable energy projects in rural areas, including USDA’s Rural Energy for America Program.
3.    Rural electric cooperative direct pays that allow for renewable energy tax credits.
4.    Extension on the $1-a-gallon tax credit for biomass-based diesel through 2024.

Sen. Joni Ernst (R-IA) told AgriTalk Host Chip Flory on Wednesday that she, and Sen. Amy Klobuchar (D-MN), are “thankful” for the fuel opportunities in this bill. But she’s not convinced the IRA is the answer to America’s inflation issues at the pump.

“This reconciliation package is going to cost us billions of dollars. The overall cost of the package was over half a trillion dollars and that has to come from somewhere—we can’t just magically pull it out of the air,” she says. “They’re going to raise taxes on every income bracket and it’s going to punish our small businesses and farmers in the long run.”

Fuel Industry Responds

Geoff Cooper, Renewable Fuels Association (RFA) president, feels the IRA sheds light on the “importance” of renewable fuels and will bolster the economy rather than hinder it.

“The package of renewable fuel provisions in the legislation represents the most significant federal commitment to low-carbon biofuels since the Renewable Fuel Standard was expanded by Congress in 2007,” he says. “RFA will continue to urge the House to swiftly adopt these biofuel measures to ensure American families have greater access to lower-cost, domestically-produced renewable fuels that are good for the environment, the economy, and energy security.”

According to the press release, RFA backs numerous biofuel provisions in the RFA, including:
1.    $500 million in grants for higher-blend biofuels infrastructure
2.    Extensions of several current biofuel tax credits
3.    Creation of new tax credits for clean fuel production and sustainable aviation fuel
4.    Enhanced support for carbon capture, utilization and storage

Ernst, however, believes biofuels could have had its time on the Floor in other legislation long before the IRA was written into action.

Legislation on Legislation

Sens. Ernst and Chuck Grassley (R-IA) introduced the Next Generation Fuels Act — a bill previously introduced in the House — in July to “leverage higher octane fuels and improve engine efficiency and performance,” according to Ernst.

Included in the legislation are requirements for:
1.    Manufacturers to design vehicles with E20 blend capabilities in their non-flex fuel vehicles by 2026, and E30 blends by 2031.
2.    Fuel retailers to offer the respective higher-octane options as the non-flex fuel vehicles are made available to the public.

“What we see this bill doing is ramping up the use of homegrown ethanol,” she says. “We want to see more of these bipartisan moves, and we think this is a great solution for our farmers and biofuel producers.”

More on fuel:
New Legislation Could Put E30 on a Pump Near You
John Phipps: It’s Now Less About the Supply of Oil, And More About Refining Capacity in the U.S.
What’s Ag’s Stake in the Senate-Passed Inflation Reduction Act?