Biofuels Industry Provides Input on IRA for IRS

Cindy Zimmerman

Biofuel stakeholder organizations provided input this week to the Internal Revenue Service (IRS) on implementation of specific provisions of the Inflation Reduction Act (IRA) related to credits for carbon sequestration and clean fuel production.

In its comments to the IRS, the Renewable Fuels Association stressed that, if implemented correctly, the Clean Fuel Production Credit (45Z) could lead to “transformative investments” in carbon reduction technologies in the ethanol sector. RFA advocates for the use of the Department of Energy Argonne National Laboratory’s GREET model for lifecycle assessment related to the tax credit, including for sustainable aviation fuels.

In separate comments on Credit for Carbon Oxide Sequestration, RFA noted carbon capture, utilization and sequestration, or CCUS, “is an important tool for ethanol producers as they work toward their net-zero carbon emissions pledge.”

American Coalition for Ethanol (ACE) CEO Brian Jennings’ comments to the IRS noted that proper implementation of the new tax credit “will incentivize U.S. ethanol companies and farmers to invest in production processes and practices to reach these net-zero carbon intensity goals in a meaningful timeframe to address the current climate challenges.” ACE supports the use of the GREET model to make determinations about §45Z emission rates as directed in the IRA, but Jennings notes that certain emissions factors related to feedstock production (i.e., corn farming for corn-based ethanol) are not yet fully incorporated in the model and should be considered.

Clean Fuels Alliance America also advocated for use of the GREET model to measure the lifecycle greenhouse gas emissions of sustainable aviation fuel (SAF). Additionally, Clean Fuels asked that “Treasury allow producers to petition for provisional emissions reduction rates based on scores from California’s Low Carbon Fuel Standard.”

Clean Fuels also urged Treasury and IRS to “strictly adhere to the statutory prohibition on co-processed fuel, consistent with existing law under 40A for biomass-based diesel” and supports eligibility in the Clean Fuels Production Credit for use of biodiesel and renewable diesel in home heating oil.

ACE, Biodiesel, biofuels, Clean Fuels Alliance, Ethanol, Ethanol News, Renewable Fuels Association, RFA