While our international competitors race ahead in biomanufacturing, America’s $210 billion bioeconomy remains at risk. The U.S. has the tools to outcompete China, unleash a manufacturing boom, and achieve energy security—all within its reach today.
But regulatory delays and uncertain tax policy at the federal level are thwarting the ability of innovators to scale these critical American-made industries. In the case of sustainable aviation fuel, these failures are particularly magnified given the ongoing unpredictability surrounding a federal tax credit called Section 45Z.
Bioindustrials represent a revolution in American manufacturing, including fuel production. Unlike traditional manufacturing, bioindustrials leverage microorganisms, like yeast, to harness the power of domestic feedstocks, like corn and soy. These inputs undergo precision fermentation in state-of-the-art bioreactors before being transformed into a range of high-end products, including biofuels that can power our homes, cars, and even U.S. Air Force jets.
For American farmers and ranchers, these biobased markets offer a critical lifeline at a time when they face an unprecedented number of challenges. Agricultural feedstocks not only unlock additional revenue streams for growers but also provide an energy source that’s uniquely rooted in U.S. agriculture. This could mean American energy dominance achieved through a robust biobased economy right here at home.
To put that in perspective, the U.S. stands to unlock $400 billion in the next five years through food, agriculture, and manufacturing biotechnologies alone. Unfortunately, much of the progress achieved thus far and the future ahead are at serious risk today—unless Congress takes action to help build the infrastructure needed to deploy these technologies at scale.
As it stands, American biomanufacturing capacity is falling behind our competitors. One challenge facing pioneers at home is the cost and time it takes to scale current technologies. Commercial-scale facilities can take two to five years to build and cost up to $2 billion. For many early-stage companies, this represents a significant barrier on top of the costs needed to navigate a complicated and frequently duplicative oversight system and lengthy and costly review processes.
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Overcoming these challenges is possible—especially with targeted tax incentives that can help ramp up production capacity. One such incentive is the 45Z tax credit, designed to spur the ramp up of American-made clean transportation fuel production. Unfortunately, the incentive is stuck in limbo as part of Congress’s larger tax policy overhaul.
While there is bicameral support for 45Z’s extension until 2031, several limitations remain in current budget reconciliation proposals. Many of these restrictions, such as capping the dollar value of some fuels or phasing out the transferability of the credit early, will do more harm than good.
In fact, adding burden in a sector where cost barriers to scale are already high would likely drive smaller companies and startups out of business. That would mean the death of the very engine of American innovation and bioindustrial growth, and with it, the nation’s global leadership in this growing sector.
The best way forward is the one that keeps America leading on bioindustrials both today and in the future. Before the bill is finalized, Congress must ensure that the 45Z tax credit is not only maintained for its full tax rate in the long term but also that it remains accessible and usable to a wide array of feedstocks. This would guarantee that the tax credit delivers clear, direct benefits to U.S. farmers and rural economies while providing the bioindustrial sector with the necessary certainty to ensure its future is proudly made in America.
Congress has a unique opportunity to step in and bolster American manufacturing and energy security – but it can and must act today.
Tamra Spielvogel is an expert in bioindustrial innovation, agricultural biotech, and regulatory strategy.