Now that the Clean Fuels Production Credit has been in effect for ten days, the U.S. Treasury Department has finally dropped its proposed guidance for 45Z, which will now have a 90-day comment period.
The guidance includes both a notice of intent to propose regulations on the section 45Z credit and a notice providing the annual emissions rate table for section 45Z, which refers taxpayers to the appropriate methodologies for determining the lifecycle GHG emissions of their fuel. In conjunction with today’s guidance, the Department of Energy will release the 45ZCF-GREET model for use in determining emissions rates for 45Z in the coming days.
Renewable Fuels Association President and CEO Geoff Cooper says the guidance is still incomplete. “The guidance is a potential step in the right direction, but much work remains to be done before clean fuel producers, farmers, and consumers can fully benefit from the 45Z program.”
Cooper noted that important information from the emissions rate table remains unavailable in today’s guidance, making it impossible for producers to know whether their fuel is eligible for the credit or not. While that information, along with a new 45Z GREET model, is expected to be released soon, today’s guidance leaves biofuel producers in limbo. Today’s guidance also fails to integrate climate-smart agriculture (CSA) practices that can lower the carbon intensity of renewable fuels, and it does not allow producers to determine their own unique carbon intensity values (called a “provisional emissions rate”).
According to the guidance, Treasury “intends to propose rules for incorporating the emissions benefits from climate-smart agriculture (CSA) practices.”
These options would be available to taxpayers after Treasury and the IRS propose regulations for the section 45Z credit, including rules for CSA, and the 45ZCF-GREET model is updated to enable calculation of the lifecycle greenhouse gas emissions rates for CSA crops, taking into account one or more CSA practices.
Iowa Renewable Fuels Association Executive Director Monte Shaw was blunt in his assessment of the guidance. “Today’s announcement by the Treasury is a story of too little, too late. This is not a final rule. This is not a safe harbor. It isn’t even a proposed rule. Putting out a notice of ‘intent’ ten days before you leave office is nothing but punting the rule down the road.”