There’s one Biden-era tax credit that conservative economists and clean energy advocates both adamantly oppose for wasting taxpayer dollars without achieving any emissions reductions.
It happens to be the only clean energy tax credit the Republican-controlled House extended in its reconciliation bill.
The clean fuel production credit provides a generous subsidy for energy made from corn, soybeans, food waste or other bio-based products. It is wildly popular with the agricultural and ethanol business communities, who see it as ensuring a new future revenue source for American farmers.
Economists and climate scientists broadly dismiss it as an expensive farm boondoggle.
Yet, the House reconciliation bill’s language extends the tax credit another four years, and it removes a key restriction: any consideration that increased biofuels production can lead to increased emissions from more land being cleared for farming across the globe. As clean energy lobbyists are fighting to salvage what little scraps they can find from Biden’s Inflation Reduction Act and climate policy legacy, the extension of the clean fuel production credit is a show of how much influence the ethanol and agriculture lobby have in Washington.
“We feel comfortable enough with the various proposals that could win the day,” said Matt Ziegler, the director of renewable fuels policy for the National Corn Growers Association, about whatever the Senate may do with the House language. “We’ve got folks in good spots on Finance, obviously the leader is very supportive of this industry. It’s just managing competing interests among friends.”
Unlike the rest of the industry representatives that benefited from other IRA tax credits, Ziegler is confident. He said he’s not seriously concerned about any proposed Senate changes to the House language and is more focused on how the Trump administration would implement it.
The House changes were the result of extensive lobbying. Since it launched in April 2024, the Sustainable Aviation Fuel Coalition has spent $350,000 on lobbying, according to Senate disclosure reports. The American Coalition for Ethanol, which usually spends between $30,000 and $120,000 on lobbying costs most quarters, spent $700,000 in the fourth quarter of 2024 alone, nearly three times its previous highest expense from 2016.
And the corn and soy industry associations spent about a million dollars combined in the last six months between them. Nearly all of the disclosure reports across the different interest groups identify the clean fuel tax credit as a focus of lobbying efforts.
“This is just influential coalitions, to whose knee many members of the House, particularly the House but also the Senate Agriculture Committee, are willing to bow,” said Vincent Smith, the director of agricultural policy studies at the American Enterprise Institute. “The goal of the farm lobby group is to sustain, and if anything, increase the demand for particularly soybeans and corn,” he said. “There’s no good public policy rationale for continuing the subsidy.”
Together, the changes to the credit in the House bill would cost an additional $45 billion over the next ten years, according to the Congressional Budget Office estimate — on top of the $17 billion in costs already estimated for the original version of the provision. For context, that $45 billion is about the same amount of money that removing the tax credit for clean manufacturing would save, and more than what would be saved from phasing out the clean electricity production tax credit.
Both economists and climate experts agree that the biofuels tax credit is actually just a new subsidy for corn and soy farmers cloaked in the guise of emissions reduction. Experts at the R Street Institute, Princeton University, AEI and the World Resources Institute — an unusual coalition — all expressed profound frustration that the House would pass a bill with such “bad policy,” a phrase they all used independently. Taxpayers for Common Sense, several environmental groups and a U.S. consumer advocacy group joined R Street on a letter in May protesting the House changes.
“It’s a classic case of, Washington is trying to thread the needle on this tax bill. This is one of the more popular subsidies that they have, and so that’s why it’s been extended compared to the other ones,” said Philip Rossetti, an environmental economics researcher at the center-right think tank R Street. “The actual emissions or economic justifications aren’t really there.”
“What’s driving this all is farm politics,” said Timothy Searchinger, an agricultural researcher at Princeton University. “It’s almost impossible to imagine designing an energy system less efficient than biofuels.”
The tax credit was originally designed to help create a new, more sustainable fuel for airplanes and diesel-powered engines, which are extremely hard to decarbonize.
But the argument that corn and soy-based biofuels can be zero-emissions has garnered significant criticism from experts like Dan Lashof at the World Resources Institute, who say that using farmland to grow fuels actually results in land use changes that increase emissions.
“This fundamentally undermines the environmental goals of what is supposed to be a clean fuel tax credit,” Lashof said. “Making fuel from crops uses an incredible amount of prime farmland in the United States. We are using about 30-million acres of land for corn ethanol already, and this tax credit is basically intended to expand that. The food that ends up going into making fuels gets taken out of what are basically global commodity markets, and it gets replaced with food grown somewhere else.”
This isn’t the first time these researchers, often at odds with one another in terms of policy goals and what it takes to achieve them, have found themselves all protesting the tax credit. The original version of this credit was created while Democrats were last in power and defended vigorously by the Biden White House, despite the same criticism from a broad coalition.
“Democrats opened the door to this stuff, and now the Republicans are just taking the worst policy and making it even worse,” Searchinger said. “The Biden administration let that happen.”
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Anna Kramer is a reporter at NOTUS.