Illustration: Sarah Grillo/Axios
Republicans seeking to roll back the Biden climate legacy are actually looking to preserve one IRA incentive: the 45Z clean transportation fuels tax credit.
Why it matters: A powerful and diverse coalition that includes airlines, farmers, labor unions and biofuel blenders already has secured backing for the credit from some GOP lawmakers.
- Expanding an IRA credit would be a novelty as the party searches for trillions to pay for an extension of the Trump tax cuts.
Context: The credit, which took effect this year, provides a per-gallon tax break for producing transportation fuels — including ethanol-made sustainable aviation fuel — that emit fewer greenhouse gases.
- Short-term 45Z guidance released in the Biden administration's final days left questions up to President Trump and Republicans.
Between the lines: The industry's argument — outlined in a letter to Congress last month — is that 45Z's three-year lifespan can't stimulate enough investment for projects that take longer to permit and build.
- "It's going to be part of the reconciliation debate — that conversation's already beginning," said Geoff Cooper, president and CEO of the Renewable Fuels Association.
- An airline industry source who spoke on condition of anonymity added: "We're getting positive responses from Republican audiences. We're talking, certainly, to the tax-writing committees. We're talking to leadership."
- The source said an extension to 10 years is the priority, followed by an increase in the credit value.
What they're saying: "45Z can be a very productive provision, and so I'm interested in that," Adrian Smith of Nebraska, a top Republican on Ways and Means, told Axios.
- He said strengthening 45Z could be achieved in reconciliation: "I think 45Z can deliver positive results."
- Sustainable aviation fuel is "a huge economic opportunity" and "an area that we should continue to support," Rep. Julie Fedorchak of North Dakota agreed.
Zoom in: A Ways and Means hearing in January featured Republican testimony in support of the tax credit.
- Iowa's Mariannette Miller-Meeks, chair of the House Conservative Climate Caucus, backed 45Z as a credit that reflects "our state's priorities," she told reporters after the hearing.
Yes, but: Even with such support, a tax-credit extension goes against where Republicans ultimately want to be.
- "We're going to have a rigorous debate here going forward.… There are going to be a lot of priorities," Smith said.
