House passes Senate version of ‘big, beautiful bill,’ Trump to sign July 4

The U.S. House of Representatives passed the Senate’s version of the “big, beautiful bill” July 3 in a 218-to-214 vote.

The bill, which includes important modifications to the clean fuel production credit (section 45Z) as well reinstatement of and an increase in value for the small agri-biodiesel producer credit, is scheduled to be signed by President Donald Trump July 4.

The House originally passed the legislation in May.

The House’s version of the budget-reconciliation bill included several changes to 45Z, including a four-year extension through 2031, restricting eligibility to biofuels made from North American feedstocks, and eliminating indirect land-use change (ILUC) for modeling greenhouse-gas (GHG) emissions.

After passing the House, the Senate took up the measure in June and made additional modifications to 45Z.

The Senate approved the bill July 1 in a 51-to-50 vote, with Vice President J.D. Vance casting the tie breaker.

The Senate bill cut the extension of 45Z by two years, through 2029 instead of 2031 as the House version had.

While the Senate finance committee originally intended to allow biofuel made from foreign feedstock to be eligible for the credit at a reduced rate, the final version passed by Congress only allows biofuels made of feedstocks originating from North America to qualify.

The elimination of ILUC stands as well in the bill passed by both bodies.

A major change to 45Z in the legislation passed by Congress is the elimination of the premium provided to sustainable aviation fuel (SAF) versus other biofuels.

As passed in the Inflation Reduction Act of 2022, SAF was eligible for a maximum of $1.75 per gallon while on-road biofuels like biodiesel could only claim up to a maximum of $1 per gallon.  

For biodiesel producers, one very important part of the bill passed by Congress July 3 is an extension of the small agri-biodiesel producer credit, as well as increasing its value from 10 cents to 20 cents per gallon on the first 15 million gallons.

Many biodiesel producers have either closed, idled production or otherwise struggled all year since the expiration of the $1-per-gallon blenders tax credit (BTC) coupled with the lack of clarity on 45Z, not to mention the absence of regulations from the federal government to implement the incentive.

Although the modifications to 45Z are not set to go into effect until 2026, the extension of the small agri-biodiesel producer credit is immediate.

“As the country embarks on a yearlong celebration of the 250th anniversary of independence, this is an important win and absolute necessity for American-made energy and next-generation infrastructure, in addition to biodiesel producers, soybean farmers and rural communities in Iowa,” said Grant Kimberley, executive director of the Iowa Biodiesel Board. “The [45Z] incentive, including the small agri-biodiesel producer credit, provides much-needed certainty for producers and investors, while the clarification on eligibility included in this bill ensures this incentive continues supporting domestic biodiesel. This policy has proven effective time and again in spurring American-made energy and the new industrial revolution.”

The American Soybean Association also applauded passage of the “big, beautiful bill,” as the organization noted it includes several priorities such as securing key farm programs like crop insurance and the 45Z tax provision.

“At a time of great uncertainty for the agriculture economy, the support of Congress to enhance key programs and vital domestic markets for our farmers is critical,” said ASA President Caleb Ragland. “ASA thanks the House for maintaining several crucial farm programs and tax provisions that support U.S. soybean growers.”