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Illinois Farm Bureau tracks potential of future alternative fuel tax credits

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(The Center Square) – Illinois Farm Bureau’s environmental team continues to keep tabs on potential tax credits for conservation-minded farmers as the countdown for federal guidelines nears.

The IRS and U.S. Department of Energy must decide whether to reward farmers for their contributions to renewable energy, such as ethanol derived from crops like soy and corn.

A carbon intensity scoring model to measure the farmers’ success with environmental practices was explained to the team by Michael Wang of Argonne National Laboratory at a recent meeting in Bloomington.

David Isermann, a member of the IFB environmental team, said details are still up in the air regarding tax credits for farmers associated with their role in creating biofuel, but the federal government should decide in the next few months.

“We don’t know all the rules yet, but we do know this model is going to be used,” he said.

The tax credits are expected to start for biofuel manufacturers in 2025 and continue through 2027.

The model measures conservation practices related to biofuels from cradle to the grave. Since farmers are part of that life cycle, they hope to be compensated for their efforts, just as biofuel manufacturers will be, Isermann explained. Any tax credit revenue would help replace that being lost to decreased fuel demand, he added.

“Hopefully, it’s going to be tied to what the farmer is actually doing,” he said.

The push toward sustainable fuel for jets and other industries creates this potential subsidy for farmers.

“What they’re really aiming at is the production of what’s called sustainable aviation fuel,” Isermann said.

As farmers use conservation measures to grow ethanol and other biofuels, they are contributing to carbon-neutral goals, which according to Isermann, most airlines want to meet by 2030.

Isermann used an annual figure to underscore the magnitude of this operation, saying “we use about 5.4 billion bushels of corn in the production of ethanol.”

This initiative was set in motion by the Inflation Reduction Act of 2022, which Isermann said is meant to promote alternative energy among its goals.