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RFA Leading the Charge on IRA Implementation

November 7, 2022

Congress, Infrastructure, Regulatory, Taxes


Testimony, Comments Provided to Treasury, IRS, USDA


In separate comments and testimony to the U.S. Department of Treasury, Internal Revenue Service and the U.S. Department of Agriculture, the Renewable Fuels Association laid out the ethanol industry’s priorities as the agencies prepare to implement the Inflation Reduction Act’s renewable energy tax and grant programs.


“The energy provisions in the Inflation Reduction Act represent the most significant federal commitment to low-carbon biofuels since the Renewable Fuel Standard was expanded by Congress in 2007,” said RFA President and CEO Geoff Cooper. “The inclusion of low-carbon fuel tax credits and grant programs in the legislation marked a major victory for the renewable fuels industry. But now it’s time to ensure these provisions are implemented the right way. If implemented correctly, the IRA’s clean energy measures will stimulate unprecedented investment and decarbonization in the ethanol sector. But if the federal government gets implementation wrong, it will be an enormous missed opportunity for ethanol and other renewable fuels to play a leading role in the fight against climate change.”


In invited testimony offered today during a Department of Treasury roundtable discussion on clean fuel provisions, RFA General Counsel and Vice President of Government Affairs Ed Hubbard stressed the importance of getting lifecycle analysis right and providing flexibility for ethanol producers to submit their individual analyses of carbon intensity.


“As producers invest in technology and process improvements to lower their carbon intensity, the LCA modeling will need to offer flexibility and granularity so producers can benefit from their unique investments in a timely manner,” Hubbard said. “We believe that to accomplish the goals of the legislation, individual biorefineries will need the option to choose individually suited pathways, as opposed to generalized default values.”


In addition, RFA submitted two sets of comments late Friday to the Internal Revenue Service. In one, on the elective payment of applicable credits and the transfer of certain credits, RFA seeks to ensure ethanol producers have maximum flexibility under these provisions to elect direct payment if they are the applicable entity and have maximum flexibility to retain or transfer credits. “We interpret the intent of the inclusion of direct pay and transferable credits in the IRA as a strategy to establish new technologies and encourage accelerated growth,” Cooper wrote. “RFA believes that flexibility enables the policy to work.”


Secondly, RFA commented on various prevailing wage, apprenticeship, domestic content, and energy communities requirements under the Inflation Reduction Act. There are several interpretations relating to these areas that will have significant impacts on the outcomes of the legislation, Cooper wrote. Within these areas, the ethanol industry is ready to work with the IRS and other agencies to formulate reasonable timeframes and definitions for the implementation of the provisions in the act. He especially cited the prevailing wage and apprenticeship requirements in the Clean Fuel Production Credit under Section 45Z and the Carbon Capture, Utilization, and Storage credits under Section 45Q.


Separately, at a virtual listening session held last Thursday by the U.S. Department of Agriculture, RFA Director of Government Affairs Jared Mullendore stressed the importance of the $500 million in funding for the Higher Blends Infrastructure Incentive Program (HBIIP), noting that RFA has helped 39 companies in 21 states apply successfully for HBIIP funding resulting in the installation of over 1,500 dispensers and 150 underground storage tanks at over 200 locations. He called for a lengthier application window for the program in the future and higher funding limits per entity, so larger chains can better take advantage of the program. RFA also would like to see airport and aircraft refueling infrastructure included in HBIIP in addition to rail and marine infrastructure, Mullendore said.


RFA also called on USDA to assist industry with two policy priorities that will help make HBIIP more successful, engaging with EPA and the White House on opportunities to promote growth in FFV production and use and to support RVP parity so that E15 can be sold in conventional gasoline markets year-round.


Finally, Mullendore testified that RFA’s members have utilized REAP (Rural Energy for America Program) for a variety of projects and technologies and that they see it playing an important role in reaching our goal of net-zero ethanol, by accelerating investment in both new and established low-carbon technologies. RFA encouraged USDA to utilize REAP as a vehicle to invest in these technologies at farms and biorefineries.