S. 1422 — Farmer First Fuel Incentives Act

This section prohibits foreign feedstocks for the clean fuel production credit by requiring that eligible transportation fuel be derived from feedstocks produced or grown in the United States, effective for fuel sold after December 31, 2024. (As background, the clean fuel production credit provides a tax credit based on the lifecycle greenhouse gas emissions rate of qualified fuels sold to unrelated parties.)

This section revises the lifecycle greenhouse gas emissions rate determination for the clean fuel production credit (i.e., a per-gallon tax credit for producing and selling qualifying transportation fuels with low emissions) to exclude emissions attributed to indirect land use changes (ILUC). (Thus, certain biofuels may qualify for higher credits by disregarding ILUC emissions, such as those from land conversion elsewhere induced by production.) The exclusion, based on Treasury regulations developed in consultation with EPA and USDA, applies to emissions rates published for taxable years beginning after December 31, 2025.

This section revises the rounding of the emissions factor under the Clean Fuel Production Credit (i.e., IRC §45Z tax credit for producing low-emissions transportation fuel) to 0.01 (from 0.1) for fuel produced after December 31, 2024. (Thus, emissions rates are calculated with greater precision, potentially increasing credit amounts for fuels near prior rounding thresholds.)