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RFA Provides Input on IRA’s Clean Fuel Production and CCUS Credits, Biofuels Infrastructure Grants

December 5, 2022

Infrastructure, Regulatory, Taxes


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.


“Using Argonne GREET for SAF would ensure that the same, consistent methodology is used for both aviation and non-aviation fuels,” according to the comments. “Using two different models for the purposes of tax credit generation under 45Z (i.e., one model for SAF, and a separate model for non-aviation fuels) could create administrative challenges for both industry and regulators, and it could also create perverse incentives or disincentives for the production of certain low-carbon fuels in the marketplace.” RFA’s comments also advocate for timely publication of final rules, inclusion of upstream (i.e., farm-level) carbon reduction practices in carbon scoring, using existing schemes to inform certification, and ensuring flexibility in certain definitions and interaction of various tax credits.


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.


Higher Blends Infrastructure Investment Program


In addition, RFA provided written comments last week to the USDA related to IRA provisions regarding the Higher Blends Infrastructure Incentive (HBIIP) and Rural Energy for America (REAP) programs. As in testimony provided last month at a listening session,  RFA stressed the importance of the $500 million in funding for HBIIP and 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.