Biofuel groups urge Treasury to issue guidance on 45Z tax credit
U.S. Treasury Secretary Janet Yellen
May 15, 2024
BY Erin Voegele
A group of 25 trade organizations, including the Advanced Biofuels Business Council, American Biogas Council, Clean Fuels Alliance America, Coalition for Renewable Natural Gas, Growth Energy, Renewable Fuels Association, and SAF Coalition, on May 15 sent a letter to Treasury Secretary Janet Yellen urging the agency to release guidance for the 45Z clean fuels production tax credit and any necessary updated GREET models.
The 45Z clean fuels production tax credit was created by the Inflation Reduction Act and is scheduled to take effect next year. The technology-neutral tax credit aims to support the decarbonization of the highway transportation, maritime, rail, aviation and home heating sectors.
“The clean fuels marketplace is a complicated ecosystem that is tied in many cases to agricultural inputs and feedstock production, sales of fuel and futures, allocations to third-party marketers and other factors that require many months of advance understanding of the new tax structure,” the trade groups wrote in the letter. “With the Sec. 45Z credit set to take effect January 1, 2025, our member companies and organizations may face significant headwinds and business risk if this guidance is not published promptly. Any extended delays in publication of guidance for the Sec. 45Z credit may disrupt project timelines, impede capital flows, and threaten existing production and demand for low carbon renewable fuels.”
The Treasury Department and Internal Revenue Service on April 30 released guidance and an updated GREET model (40BSAF-GREET) for the sustainable aviation fuel (SAF) tax credit, which was also created by the IRA. As part of that guidance, the IRA said a new 45Z-GREET model would be developed to calculate greenhouse gas (GHG) reductions for the purposes of the 45Z clean fuels production tax credit. That model is expected to incorporate GHG reductions resulting from climate smart agriculture (CSM).
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Clean Fuels Alliance America issued a statement stressing the need for policy certainty regarding the 45Z tax credit. “U.S. biodiesel and renewable diesel producers are facing uncertainty as the transition from the biodiesel and renewable diesel blender credit to the producer credit,” said Kurt Kovarik, vice president of federal affairs for Clean Fuels. “They are facing difficulties already as they try to negotiate feedstock and fuel offtake contracts for next year. The need for policy certainty is urgent.”
The letter is also signed by Airlines for America, Alternative Fuels & Chemicals Coalition, American Short Line and Regional Railroads Association, American Soybean Association, Associated Equipment Distributors, Association of American Railroads, Association of Equipment Manufacturers, Cargo Airline Association, General Aviation Manufacturers Association, Methanol Institute, National Air Transportation Association, National Business Aviation Association, National Corn Growers Association, National Oilseed Processors Association, North American Renderers Association, U.S. Canola Association, Vertical Aviation International, and Waste Gas Capture Initiative. A full copy of the letter is available on the Clean Fuels Alliance America website.
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