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US government considering tax credits for soyabean oil used in aviation sector

November 22, 2021

1 mins read

US lawmakers are currently in the process of assessing potential tax credits for soyabean oil to be used in aviation fuel. This comes following the White House’s target to reduce aviation pollution by 20% by 2030, which was announced on September 9th 2021, with an aim to use more biofuel in aviation.

If successful, the move would be a win for US soyabean oil and the biofuel market in general, and would help to support US soyabean oil prices, which have had mixed price activity in recent months on robust soyabean supply expectations from Brazil (the leading producer and exporter of soyabeans). The weekly US soyabean oil price fell 5.6% m-o-m to USD 1,290/MT on 17th November 2021.

Biofuel groups are pushing for tax credits to be instated, as they feel the task of making aviation more sustainable will be impossible without the use of ethanol and soyabean oil. Meanwhile, environmental groups are pushing back against the proposal, suggesting that the significant volume of biofuel required would lead to mass deforestation in the US and internationally.

The tax credit move could help to offset a ruling by the US Supreme Court earlier in the year, that made it easier for small oil refineries to gain exemption from laws requiring the blending of higher levels of ethanol and other biofuels into existing products. This had weighed on biofuel demand and producers’ profits.

Topics: Oils & Oilseeds
Archit Singh
Archit Singh

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