WASHINGTON, DC, US — US commodity and biofuels groups welcomed interim guidance on how biofuel producers can claim the new 45Z clean fuel production credit.

The US Treasury Department on Jan. 10 issued a notice of intent to propose regulations and a notice providing the annual emissions rate table, further explaining how emissions rates and carbon intensity will be calculated under the 45Z credit.

“Despite this step in the right direction, the job is unfinished because the preliminary guidance doesn’t provide the clarity our industry has been awaiting,” said Brian Jennings, chief executive officer of the American Coalition for Ethanol (ACE). “The guidance omits key details essential for biofuel producers to capitalize on 45Z, including how climate-smart agriculture practices will be incorporated. Our focus will be to engage the incoming Trump administration to make the final regulations for the 45Z credit beneficial for our members.”

The 45Z credit provides a per-gallon (or gallon-equivalent) tax credit for producers of clean transportation fuels based on the carbon intensity of production. It consolidates and replaces pre-Inflation Reduction Act (IRA) credits for biodiesel, renewable diesel, and alternative fuels, and an IRA credit for sustainable aviation fuel. 

The Treasury Department said in conjunction with the guidance, the Department of Energy will release the 45ZCF-GREET model for use in determining emissions rates for 45Z in the coming days.

ACE said it will continue advocating for flexibility that recognizes the unique contributions of facility-specific process technologies and climate-smart farming practices to achieve meaningful carbon reductions.

“We have strongly urged both Treasury and USDA to update 45Z guidance for ag practice credit values on a routine basis by incorporating the best available science and results from real-world activities, such as the two USDA-Natural Resource Conservation Service (NRCS) Regional Conservation Partnership Programs (RCPPs) currently being led by ACE,” Jennings said. “These projects are specifically designed to address the perceived need for more empirical data on the GHG benefits of ag practices and help improve the accuracy of the GREET model, and we look forward to the release of the 45ZCF-GREET model for use in determining emissions rates for 45Z in the coming days.”

The American Soybean Association (ASA) and the National Oilseed Processors Association (NOPA) said the notice addressed concerns they had with imported waste feedstocks. It ensures that imported used cooking oil remains ineligible for the 45Z credit through the GREET model until the Treasury can promulgate substantiation regulations for imports. 

NOPA said the dramatic rise in imports has posed a risk to American agriculture and restricting import eligibility, the 45Z credit will benefit farmers and processors.