Energy Evolution, Episode 5

On this episode of Weaver: Beyond the Numbers, Energy Evolution, our hosts discuss new information on a blender’s credit, ethanol and sustainable aviation fuel (SAF).

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Detailed Description of Weaver’s Energy Evolution, Episode 5

00:00:00

Dawn: Good afternoon, everyone. We are back with Energy Evolution, Weaver’s podcast around green energy and all things Inflation Reduction Act credits. Today, Leanne and I are going to chat about some new information that came out from the government around a blenders credit and around ethanol and SAF. So, Leanne, kicking it over to you, tell us about what came out recently.

00:00:26
Leanne: Thanks, Dawn. Just in the past couple weeks, we got a new notice from the IRS. For those that want to go read it in its entirety, it’s Notice 2024-37. It addressed some safe harbors for using the 40BSAF-GREET model to calculate the emissions reduction percentage for the SAF credit certificates that are needed for that 40B blender’s credit for producing sustainable aviation fuel, or SAF, as we keep calling it. And it’s a safe harbor to reduce the emissions for things like domestic corn and soybean feedstocks. All those sorts of older feedstocks traditionally used for ethanol and biodiesel that, under the upcoming 45Z credit, we’re going to struggle to get in on that rule for having a CI score of 50 or under.

There’s also some language in there about needing to use the USDA Climate Smart Agriculture Pilot program. We have verifiers to verify each of the safe harbors and everything you need for your certificates. It’s a very long notice with a lot of language that doesn’t really appear to change the status quo all that much.

00:01:38
Dawn: Okay. So we’ve talked about multiple times on Energy Evolution, the big credit that folks want to know about: 45Z.

We’re still awaiting guidance. Is that my understanding?

00:01:51
Leanne: Yeah, we are. We talked in our last podcast about how we were thinking it would come in May. I did have a conversation with somebody in the IRS after that recording. And she reiterated, yeah, they anticipate at some point in May. So, if I’m a betting person, I’m still going for the Friday before Memorial Day. But nobody is committing with certainty. But the fuel policy division at the IRS does attend API’s Excise Tax Forum, which is held in June every year. And I think that they are anticipating a lot of questions about 45Z and would like to be able to provide some answers or, at a minimum, be able to say we do have regulations now that we’re reading through.

00:02:35
Dawn: Perfect. We have talked a lot about the facilities that can possibly produce this clean transportation fuel. Of course, the CI scoring is big with their feedstocks. We’ve gotten a lot of questions around, hey, we’re a facility that’s been up and running. We don’t need to do prevailing wage and apprenticeship. We don’t need to meet any of this. We just need to get a life cycle analysis and our CI score needs to be below 50, and miraculously, we go from $0.20 per gallon to a buck. What would you say to that?

00:03:08

Leanne: Yeah, I don’t think that’s right at all. The language of the statute has prevailing wage and apprenticeship in there. And I would anticipate that the regulations will, at a minimum, incorporate by reference, other regulations that have prevailing wage and apprenticeship, if not mimic the language. I know you’ve done a lot of work in that space. So, what is it that you’re seeing and what have you drawn out from the regulations that we already have that we can tell our listeners?

Click play above to hear the rest of the conversation.