Ethanol Industry Comments on IRS Carbon Credit Proposal

Comments on proposed Internal Revenue Service regulations regarding the credit for carbon oxide sequestration under section 45Q of the Internal Revenue Code closed this week and ethanol supporters have provided input.

The ethanol industry generally supports the Carbon Capture Coalition, which was convened by the Great Plains Institute (GPI) and formed to help realize carbon capture’s full potential as a national energy, economic, and environmental strategy.

Comments from the Renewable Fuels Association additionally noted concerns that the minimum 100,000-metric-ton threshold may be difficult for ethanol plants to attain during economic challenges like the current pandemic which has cut ethanol production dramatically this year. RFA cautions that even short-term events that the industry may go through can lead to carbon sequestration below this threshold for a given year.

RFA proposed two remedies for such situations:
To prevent or help avoid a situation where an arguably eligible ethanol facility could lose 45Q eligibility in a particular year, we would suggest implementing a carbon capture measurement process that would allow an industrial facility, like an ethanol plant, to either: (1) carry over excess carbon capture tonnage from the previous year (only for the purposes of determining whether the threshold is met), or (2) have the ability to rely on a three- or five-year trailing average to determine how much carbon oxide is being captured annually at the facility.

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