Agency: Department of the Treasury
Description:
Tax credit of $0.20-$1.00/gallon for production of fuels with carbon intensity reductions (less than 50 kilograms of CO2e per mmBTU); sustainable aviation fuel could receive credit of up to $1.75/gallon, with a minimum of $0.35/gallon.
Bill Section:
13704
US Code:
26 USC 45Z
New or Existing:
New
Potential Cost:
$3,000,000,000
Timeline:
Calendar years 2025-2027
Implementation Status/Rulemaking:
On November 3, 2022, the Internal Revenue Service issued Notice 2022-58 to request comments on the clean hydrogen production credit (45V credit) and the clean fuel production credit (45Z credit), with comments due December 3, 2022: Source
TCS Notes:
Model used to calculate GHG emissions, per IRA, is Argonne National Laboratory’s GREET model or a successor model. With the use of the GREET model, certain types of corn ethanol could once again receive federal tax credits despite the ethanol tax credit (known as VEETC) having expired in 2011. In June 2011, the U.S. Senate voted on a bipartisan basis to eliminate the $6 billion/year tax break. Sustainable aviation fuel carbon intensity calculated separately. Tax credit is duplicative of U.S. Renewable Fuel Standard (RFS) biofuels mandate. Cost estimate only for FY25-28 (of which $1.2 billion is in FY27).
Elective Payment and Transferability allowed in certain cases.
Other TCS Resources:
Bringing VEETC Back from the Dead