Associations urge treasury department, IRS to publish comprehensive guidance for clean fuel production tax credit

NATSO, representing travel centers and truck stops, SIGMA: America's Leading Fuel Marketers, the National Association of Convenience Stores, American Trucking Associations and Truckload Carriers Association urged the U.S. Department of the Treasury and Internal Revenue Service to publish comprehensive guidance for the new 45Z clean fuel production credit that minimizes inflationary pressure on retail fuel prices.

In a joint letter to the treasury department and IRS, the trade associations said impending guidance will have “immediate, direct and traceable impacts” on the supply and price of gasoline and diesel.

Fuel purchasers must be able to determine the precise tax-credit value associated with each gallon of biofuel to ensure consumers access the value of the credit.

“If designed improperly, the implementing guidance could inject massive disruption and confusion into already-volatile motor-fuel and biofuels markets,” the trade associations wrote. “The consequence will undoubtedly be higher prices at the pump for consumers.”

The associations urged the treasury department to publish guidance that includes:

• Disclosure of precise credit values for fuel originating from different production facilities to ensure price transparency, enabling consumers to benefit from the credit in the form of lower prices at the pump.

• Additional stringency for the model that calculates the lifecycle emissions of aviation fuels to ensure that implementation of the clean fuel production tax credit is consistent with the Inflation Reduction Act.

• Strategies that ensure the 45Z credit does not shut off renewable diesel and biodiesel imports, which help to lower fuel prices and emissions.

• Policies that limit the migration of feedstock away from renewable diesel and biodiesel toward sustainable aviation fuel to ensure that feedstocks continue to gravitate toward the most environmentally compelling end use.

The new clean fuel production tax credit differentiates between what historically have been fungible commodities.

Today, every gallon of biodiesel and renewable diesel receives the same tax treatment.

If implemented improperly, the clean fuel production tax credit threatens to inject disruption across the fuel chain.

If upcoming guidance does not account for what today are routine commercial decisions when buying and blending biofuels, it will become increasingly difficult to avoid inflationary pressure on retail fuel prices.

Treasury’s implementing regulations for the 45Z credit must also include additional stringency requirements for the model that calculates the lifecycle emissions of aviation fuels relative to the model that calculates the emissions of nonaviation fuels.

NATSO, SIGMA, NACS, ATA and TCA said they look forward to working with the treasury department as it implements this new clean-fuel policy.