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Still awaiting 45Z details... Biofuel producers await more information regarding tax credits and implementation rules for clean fuel production via the 45Z program. The clean fuel production credit took effect Jan. 1, replacing and consolidating expiring tax breaks for low-greenhouse-gas fuels. Final rules for the clean fuels credit haven’t been released and aren’t expected to be finalized before President Joe Biden leaves office. Companies face the prospect of generating credits without knowing their value due to the lack of guidance on emissions factor calculations. Some stakeholders want to know whether the credit applies only to domestic products. Others are concerned over what emerging practices should be considered for eligibility, who can collect compliance data, or if 45Z gets extended beyond its current 2027 expiration. Meanwhile, biofuel program stakeholders in the energy and ag sectors, along with farm-state lawmakers, do not want Republicans who are looking to reduce spending to help pay for tax cuts to alter tax incentives programs like 45Z.
New Treasury rule expands clean hydrogen tax credit opportunities for biogas producers... The U.S. Treasury Department’s new regulations for the Clean Hydrogen Production Tax Credit (45V) broaden eligibility for hydrogen producers utilizing biomethane or renewable natural gas (RNG). Key provisions include:
- Expanded sources: Inclusion of a wider range of biogas and fugitive methane sources, like digesters processing animal waste.
- Lifecycle emissions: Tax credit value depends on lifecycle greenhouse gas emissions, favoring cleaner production methods.
- Credit tiers: Four tiers, with up to $3.00 per kilogram for the lowest emissions.
Digesters capturing methane from manure may now contribute to clean hydrogen, but restrictions like a 52% methane content requirement and a 2024 construction beginning deadline pose hurdles. (Projects must begin construction prior to the end of calendar year 2024 to claim the credit.)
Mixed industry reactions highlight both optimism and concerns over potential limitations on RNG’s role in the clean hydrogen economy. The U.S. Chamber of Commerce stated that while the rule provides some additional flexibility, it “still will leave billions of dollars of announced projects in limbo.” The RNG Coalition cautioned that “certain provisions in the rule may significantly limit the potential of RNG to contribute to a globally competitive clean hydrogen economy.”
Trump says tariffs policy won’t be pared back... President-elect Donald Trump denied a Washington Post report that his aides are considering narrowing his tariff plan so that it would only apply to limited specific critical imports.
“The story in the Washington Post, quoting so-called anonymous sources, which don’t exist, incorrectly states that my tariff policy will be pared back. That is wrong,” Trump said in a Truth Social post.
As we reported in “First Thing Today,” the Washington Post reported that Trump’s aides were discussing applying tariffs to some goods from all countries, but targeting the list of items to those where there are national or economic security concerns, citing three people familiar with the discussions who it didn’t identify.
Economic impact of Trump’s policies: Growth, tariffs, and inflation risks... Trump’s economic policies could bring mixed outcomes, according to analysts. His plan to cut taxes and reduce regulations is projected to maintain GDP growth at around 3% this year, benefiting American businesses in the short term. However, proposed tariffs on key trading partners might dampen global growth in 2025, potentially triggering economic headwinds.
Additionally, the potential dismantling of the Inflation Reduction Act (Climate Act) poses significant risks, threatening billions in tax credits and sparking lobbying efforts, even from Big Oil executives and agribusiness executives, to preserve the law.
Inflation remains a wildcard. Experts warn that Trump’s policies might stoke inflationary pressures, unsettling the Federal Reserve and bond markets. Any sharp rise in 10-year Treasury yields could force the administration to scale back aggressive growth strategies. In response, the Fed has already revised its 2025 rate cut projections downward amid rising inflation concerns.
Brazil’s soybean, corn exports slowed in December, well under year-ago... Brazil exported 2.004 MMT of soybeans in December, down 549,000 MT (21.5%) from November and 1.825 MMT (47.7%) below last year. For the 2024 calendar year, Brazil exported 98.813 MMT of soybeans, down around 3 MMT from the previous year.
Brazilian corn exports totaled 4.266 MMT last month, down 460,000 MT (9.7%) from November and 1.798 MMT (29.7%) below last year. Brazil exported 38.390 MMT of corn during 2024.
Drought threatens Southern California agriculture amid extended dry spell... Southern California’s prolonged dry spell — nearly eight months with negligible rain — is straining agriculture and raising concerns about wildfire risks. With rainfall levels significantly below average and no major storms forecast for January, the region is slipping into moderate drought conditions, according to the U.S. Drought Monitor.
The lack of rainfall is affecting soil moisture levels, leaving plants and crops vulnerable. Agricultural regions like the Central Valley, a critical hub for the state’s food production, remain in “abnormally dry” conditions. This threatens crop yields and increases reliance on irrigation from water reserves, which, while bolstered by two wet years, may not sustain prolonged dryness.
Statewide, the disparity in precipitation levels is stark. Northern California has benefited from above-average rainfall, but Southern California’s agricultural output, particularly high-water-demand crops like almonds and citrus, faces significant challenges. Experts emphasize the importance of continued snowpack accumulation in the Sierra Nevada, which serves as a vital water source for irrigation.
Officials remain cautiously optimistic that late-season storms in February or March could mitigate the dry start, but without substantial rainfall, Southern California’s agricultural sector could face a tough year.
Newsom acts on food safety amid national policy shifts... California Governor Gavin Newsom issued an executive order targeting ultra-processed foods, positioning the state as a pioneer in food safety and public health. This move builds on California’s recent bans on specific additives and school snacks.
The announcement comes as Trump seeks Senate confirmation for Robert F. Kennedy Jr. as Secretary of Health and Human Services. Kennedy, known for his controversial stances, has pledged to overhaul the U.S. food system.
Newsom’s directive instructs state agencies to propose measures to curb ultra-processed foods’ health impacts, including warning labels and restrictions for government food benefit recipients.
Biden enacts historic ban on offshore drilling... In a landmark move during his final weeks in office, President Joe Biden announced a sweeping ban on future offshore oil and gas drilling along most of the U.S. coastline. The ban protects approximately 625 million acres of ocean, including the entire East Coast, the eastern Gulf of Mexico, the Pacific coast off Washington, Oregon and California, and portions of Alaska’s Northern Bering Sea.
Invoking authority under Section 12(a) of the Outer Continental Shelf Lands Act, Biden has ensured the ban’s permanence, aligning with his climate goals to conserve 30% of U.S. lands and waters by 2030.
Environmentalists celebrated the action as a major win, while the oil industry criticized it as counterproductive. This decision may create legal and political challenges for the incoming Trump administration, which aims to expand fossil fuel production.
Trudeau to resign, pending new leader being selected... As expected, Canadian Prime Minister Justin Trudeau announced his resignation after more than nine years of leading Canada, bowing to sagging approval numbers and a rebellion within his political party. He will remain as prime minister until a new leader is selected. Canada’s parliament has been suspended until March 24 while that process is underway. The winner of the Liberal leadership contest is set to become Canada’s 24th prime minister and will have to quickly prepare for an election, which the Conservative Party is favored to win, based on public opinion polls. A national vote is due by October, but it’s likely it will come sooner, as the three major opposition parties in parliament have said they will back a motion of non-confidence in the government. If they follow through on that threat, they would bring down the government, and an election campaign would begin.