RFA pushes IRS on credits for carbon sequestration and clean fuel production

December 8, 2022 |

In Washington, as federal agencies continue to work on implementation of the Inflation Reduction Act, the Renewable Fuels Association on Saturday filed two sets of comments to the Internal Revenue Service, related to credits for carbon sequestration and clean fuel production. RFA also submitted comments last week to USDA on implementation of the IRA’s $500 million biofuels infrastructure grant program.

RFA’s comments stressed that, if implemented correctly, the Clean Fuel Production Credit (“45Z”) could lead to “transformative investments” in carbon reduction technologies in the ethanol sector. In the comments, RFA advocated 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, RFA stressed how carbon capture, utilization and sequestration, or CCUS, is an important tool for ethanol producers as they work toward their net-zero carbon emissions pledge. In the comments, RFA spotlighted a recent GAO report that emphasized ethanol’s promise. “At a time when decarbonization is essential for a climate-friendly future, the GAO report makes clear that policymakers should embrace ethanol as the best available near-term opportunity for transformative and sustainable CCUS.”  The comments also noted that the Treasury Department should allow flexibility between years and recognize that based on the sequence of technology investments, ethanol producers will also be considering the value of credits under the Clean Fuel Production Credit in tandem with CCUS credits.

These comments to the IRS follow other testimony and comments submitted in early November, where RFA laid out the ethanol industry’s priorities as the tax agency and the Treasury Department prepare to implement specific Inflation Reduction Act renewable energy programs.

Category: Policy

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