President Joe Biden. Photo by White House staff.

Inflation Reduction Act of 2022: Impacts on agriculture

President Biden signed the Inflation Reduction Act of 2022 (H.R. 5376) into law in August with the stated goals of reducing health care costs for rural America, lowering energy costs, addressing climate change, and strengthening conservation programs for agriculture. This reconciliation package includes a subset of nearly $38 billion funding for agricultural conservation, credit, renewable energy and forestry through FY2031.

“This package, signed into law by President Biden…was passed by Congress through budget reconciliation, a method that carries extra restrictions affecting the content and funding timelines of certain provisions within the bill,” said Scott Gerit, American Soybean Association chief economist. “The Inflation Reduction Act, or reconciliation bill, addresses tax issues, prescription drug costs and energy and climate change, among other things.”

The American Soybean Association has supported several provisions, such as biofuels investments, that were included and earlier voiced opposition to specific proposals, including changes to stepped up basis and other farm tax provisions that were not included in the final proposal signed into law. 

The package’s biofuel provisions include a path forward for the biodiesel tax credit and funding for specific conservation programs, including:

• 2-year extension of the biodiesel tax credit through 2024 before it converts to a clean energy technology-neutral credit for the following 3 years. Previous reconciliation proposals included a 5-year biodiesel tax credit followed by a 5-year clean energy credit — this bill moves from the previously negotiated 10-year model to a 5-year credit, which is standard across all energy credits in the bill. Clean energy credits are domestic production credits, not blenders credits like the biodiesel tax credit.

• The sustainable aviation fuel (SAF) credit spans from $1.25 to $1.75 per gallon and is capped at $1.75 while prior versions were at $2.00. Modeling language on SAF stayed the same as the negotiated language in previous reconciliation bills—SAF credits will be based on ICAO or similar modeling methodology set forth by the Secretary of Commerce in consultation with USDA. ASA will be pushing for GREET modeling to be the “similar methodology” approved by the Secretary of Commerce. Coprocessing prohibition language on the SAF credit matches the biofuels industry ask and aligns with ASA’s policy resolutions and longstanding policy on coprocessing prohibitions for renewable fuel incentives.

• The bill invests an additional $500 million to improve the Higher Blends Infrastructure Incentive Program at USDA through 2031.

• The package includes $19.5 billion for agricultural conservation. It adds over $18 billion in additional funding for existing farm bill conservation programs, including the Environmental Quality Incentives Program ($8.45 billion), Regional Conservation Partnership Program ($4.95 billion), Conservation Stewardship Program ($3.25 billion), and Agricultural Conservation Easement Program ($1.40 billion).

• There is also funding for farm bill energy and rural development programs.

“We appreciate Chairwoman Debbie Stabenow and the other members of the Senate Agriculture Committee who worked to include provisions in the legislation that will support farmers as they provide solutions that address climate change,” said Brooke S. Appleton, vice president of public policy at the National Corn Growers Association. “From cleaner, low-carbon fuels, like ethanol and sustainable aviation fuel, to on-farm practices that improve soil health, corn growers are on the front lines of the fight to cut carbon emissions and improve our energy security.”

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One comment

  1. Ohio needs help with inflation out Ohio people are watching all these other stats help there people an this is not fair we can’t afford,plus the rising cost of all our bills Ohio governor needs to send direct payment an quit sitting on money that don’t belong to him an help us we want to see OHIO added to the list of States sending direct payments from money that was sent to Ohio to help us threw this rough time you know I got Covid an had to spend time in quarantine an lost a weeks pay how do I plan on feeding my kids an paying my raising bills an pay for gas to get to work an to get my kids to school no one care! But I had no choice I would of worked an spread Covid before I loose pay an not be able to feed my kids again! Pissed is putting it lightly

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