Clean Fuels urges US treasury department to immediately issue 45Z guidance, safe harbors

Clean Fuels Alliance America sent a letter Aug. 28 to U.S. Treasury Secretary Janet Yellen, urging the agency to issue guidance, including safe harbors, to the 45Z clean fuel production credit by Sept. 1.

The new producer credit becomes available Jan. 1, 2025, as the existing blenders credit expires.

Clean Fuels’ letter emphasizes the difficulties that farmers, producers and fuel marketers are facing in making the transition without guidance on the rules.

“We appreciate that treasury understands the importance of having guidance for the section 45Z clean fuel production credit well in advance of Jan. 1, 2025, so farmers, producers and fuel customers have the certainty to continue to produce, sell and use low-carbon biomass-based diesel,” Clean Fuels’ letter stated. “U.S. biodiesel, renewable diesel and sustainable aviation fuel (SAF) producers are facing difficulties finalizing feedstock contracts, securing capital flows and meeting project deadlines without knowing the value of the credit. The need for policy certainty is urgent.”

Clean Fuels is requesting the treasury department issue safe-harbor provisions allowing taxpayers to rely on existing carbon lifecycle assessments—from the most recent R&D GREET model, or the federal Renewable Fuel Standard, or California’s Low Carbon Fuel Standard—to calculate the 45Z credit until a final rule is in effect.

Clean Fuels also asks for clarity on multiple issues, including climate-smart ag practices and clean fuels used in home heating.

“Farmers, fuel producers and marketers need to know the new tax-policy rules now to successfully navigate the transition at the start of the year,” said Kurt Kovarik, Clean Fuels’ vice president of federal affairs. “The industry must negotiate feedstock contracts and fuel offtake agreements at least a quarter year in advance. By September, the entire industry could come to a standstill without the ability to reliably calculate the tax-credit value. Ongoing delays could undermine production of biodiesel, renewable diesel and sustainable aviation fuel, sacrificing jobs, economic opportunities for farmers and near-term carbon reductions.”

Click here to read the full letter.