The U.S. Department of Treasury has made “meaningful progress” in developing rules implementing the Section 45Z Clean Fuel Production Credit, but several aspects of the regulations need additional clarity and refinement, according to comments submitted to Treasury by the Renewable Fuels Association.
According to RFA’s comments, the top priority for Treasury should be releasing an updated 45ZCF-GREET model as soon as possible. The model is used by ethanol producers to determine the lifecycle “emissions rate” of their fuel, which ultimately establishes the value of the 45Z tax credit.
“If effectively implemented, the 45Z tax credit has the potential to stimulate domestic energy production, strengthen U.S. energy security, bolster rural economies, and support increased investment and innovation in the renewable fuels and agriculture sectors,” wrote RFA President and CEO Geoff Cooper. “The technology-neutral structure of 45Z is a crucial feature, allowing clean fuel producers to pursue the most economically efficient and practical pathways for reducing emissions and boosting domestic energy production.”
“However, as currently drafted, certain aspects of the proposal introduce inconsistencies and implementation challenges that may limit participation, create unintended market impacts, and reduce the near-term effectiveness of the program,” he added.
Among the major points stressed in the comments:
- RFA strongly supports Treasury’s proposed integration of important changes to the 45Z credit program, as directed by last year’s One Big Beautiful Bill Act.
- Treasury and the Department of Energy should immediately release an updated 45ZCF-GREET model that reflects OBBBA-directed changes.
- The agencies should work with the Department of Agriculture to finalize and integrate workable, equitable, and science-based technical guidelines for regenerative agriculture feedstocks and an updated FD-CIC calculator.
- Treasury should adopt a more flexible Provisional Emissions Rate process that allows for efficient characterization of new technologies and incremental emissions-reducing improvements at existing clean fuel facilities.
- Energy Attribute Certificates must be retained as a practical, market-based tool for reducing emissions rates.
- The interaction of “undenatured fuel ethanol” and “denatured fuel ethanol” for 45Z credit generation must be clarified.
- Treasury should clarify that only transportation and industrial fuels are eligible for 45Z credit generation.
- Foreign feedstock restrictions should not result in undue tracking, certification, and reporting requirements for feedstocks and fuel pathways that do not rely on imports.
- Treasury should clarify several elements of Prevailing Wage and Apprenticeship requirements and provide safe harbors for good-faith efforts to comply.
“We believe the final 45Z regulations must recognize the realities of today’s biorefining and agriculture sectors and the complexities of our nation’s transportation fuels marketplace,” Cooper wrote. “At the same time, final regulations must embrace an intuitive and manageable approach to registration, reporting, recordkeeping, and emissions rate modeling that creates a dependable operating environment and empowers investment.”
