H.R. 2867 — Farmer First Fuel Incentives Act

This section requires that fuel eligible for the clean fuel production credit be derived from feedstocks produced or grown in the United States (i.e., prohibits foreign feedstocks), for transportation fuel sold after December 31, 2024. (As background, the clean fuel production credit provides a tax credit to producers for selling qualified transportation fuels with lifecycle greenhouse gas emissions at least 50% below a statutory baseline.)

This section requires the exclusion of indirect land use change emissions from lifecycle greenhouse gas emissions rates used to determine the Clean Fuel Production Credit (i.e., IRC § 45Z, which provides tax credits to producers of low-emission transportation fuels based on a fuel's emissions factor). (Thus, the Secretary of the Treasury must adjust such rates via regulations or methodologies developed in consultation with the EPA Administrator and Secretary of Agriculture.) The amendments apply to emissions rates published for taxable years beginning after December 31, 2025.

This section revises the rounding increment for the emissions factor under the clean fuel production credit from 0.1 to 0.01 for transportation fuel produced after December 31, 2024. (The credit provides payments to producers based on a fuel's lifecycle greenhouse gas emissions rate, with lower emissions yielding higher credit amounts of up to $1.00–$1.75 per gallon equivalent.)