Charlie Riedel/AP Photo, file
Ethanol-Higher Blend
Storm clouds build above a corn field near Platte City, Mo., Aug. 27, 2024.
Welcome to “Trump’s Beautiful Disaster,” a pop-up newsletter about the Republican tax and spending bill, one of the most consequential pieces of legislation in a generation. Sign up for the newsletter to get it in your in-box.
By now most observers are aware that Donald Trump’s Big Beautiful Bill Act will gut most of President Biden’s climate program. The vast subsidies for solar, wind, batteries, and electric vehicle production and deployment in the Inflation Reduction Act will be rapidly phased out; as a result, American manufacturing will take a severe hit, and China will be left to dominate the industries of the 21st century.
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However, a few scraps of the program remain in BBB, and one would even be greatly expanded: the biofuels credit. Republicans would just make it much worse, to the point that the effect on the climate will likely be negative.
The biofuel credit, called 45Z, was built on the foundation of the Renewable Fuels Standard, created by the Energy Policy Act of 2005. The original idea was to cut down on greenhouse gas emissions by requiring the use of various biofuels for transportation and heating (and, not coincidentally, hand out gobs of cash to farm states like Iowa, a place which is kind of critical in presidential elections). Since these are created from plants that pull carbon out of the atmosphere, rather than digging up oil from the ground, it was thought this would cut emissions.
Though the RFS, as implemented by the Environmental Protection Agency, had various standards for different kinds of biofuels (such as cellulosic and advanced varieties), mainly it led to an explosion of farming corn and soybeans to be rendered into ethanol, which increased by about 500 percent between 2005 and today. As the World Resources Institute details, about 30 million acres of farmland—roughly the size of New York state—is now used just for corn ethanol, while about 40 percent of U.S. soybeans go to make biodiesel. Despite that gigantic footprint, corn ethanol only accounts for about 4 percent of American transportation fuels, and soybean biodiesel less than 1 percent.
Unfortunately, the original RFS did not account for land use changes in its formula for greenhouse gas emissions. Later studies confirmed that this more than cancels out any climate benefit. Corn ethanol is likely at least 24 percent more emissions-intensive than regular gasoline, according to one study.
Joe Biden’s version of 45Z, which was part of the Inflation Reduction Act, differed in various ways from RFS (though it did not replace it, alas), most importantly requiring land use effects to be included in the emissions calculation and directing more subsidies towards sustainable aviation fuels, which could get up to $1.75 per gallon. We already have a far superior way to decarbonize the vast majority of land transport in the form of EVs, but fewer options for air transportation as yet. That is where real work needs to be done, and where biofuels have real promise.
As Ethanol Producer Magazine explains, Senate Republicans would extend the credit for four more years, cut its value for imported feedstock, and remove the land use emissions requirement. It would also remove the additional subsidy for SAFs, so all fuels would be capped at a $1 maximum credit. Taken together, it would make 45Z dramatically more expensive—increasing from $8.4 billion to $57.1 billion according to the Joint Committee on Taxation—while removing the vast majority of the climate benefit.
As Rachel Starr and Jonathan Lewis argue at Clean Air Task Force, the nascent SAF industry would be dealt a major setback, while established corn and soybean producers who do not need them will collect most of the subsidies. “After decades of state and federal assistance, these fuels do not need lavish tax credits. It’s a multi-billion-dollar giveaway to an existing, mature industry, plain and simple,” they write.
An acre of solar panels can produce about 200 times more energy than an acre of corn used for ethanol.
Meanwhile, Republicans would simultaneously delete the clean hydrogen credit (called 45V), all but destroying that infant industry. As Julian Spector explains at Canary Media, the green hydrogen sector has been struggling to get off the ground, buffeted by a slow IRS rollout of the credits, unexpected costs, and data center competition for power. But green hydrogen is critical to long-term decarbonization, as it’s a good feedstock for SAFs as well as the most plausible replacement for all kinds of hard-to-decarbonize industrial processes. But rather than help this industry get over the hump to commercial scale, Republicans would kill it dead.
It’s even more maddening given the changes to wind and particularly solar subsidies. The rooftop solar industry would be gored under this bill, with installations falling by an estimated 60-plus percent next year compared to 2024. An acre of solar panels can produce about 200 times more energy than an acre of corn used for ethanol—and indeed, can be made compatible with farms. Instead, thanks to Republicans, the data center boom is showing up as steeply rising electricity prices rather than more power production.
In his book The Age of Extremes, the historian Eric Hobsbawm observed that one of the core reasons for the Soviet collapse was their steadily more archaic economy, monomaniacally obsessed with heavy industry to the detriment of innovative technology. “The Soviets, crude and inflexible, might by titanic efforts have managed to build the best economy of the 1890s vintage anywhere in the world,” he wrote, “but what did it help the USSR that by the middle 1980s it produced 80 per cent more steel, twice as much pig-iron and five times as many tractors than the USA, when it had failed to adapt to an economy that depended on silicon and software?”
That is more or less what Donald Trump and the Republican Party are doing to America right now. The core technologies and industries of the future are going to be built on abundant clean power, but they will cede that field entirely to China and Europe, while doubling down on outdated, filth-spewing carbon energy—plowing up half the Midwest so we can keep driving V8 pickup trucks, the American equivalent of the Soviet Yugo.
