Energy Evolution, Episode 6

On this episode of Weaver: Beyond the Numbers, Energy Evolution, our hosts cover one of their favorite topics: how many credits can you claim?

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Detailed Description of Weaver’s Energy Evolution, Episode 6

00:00:00
Dawn: Hey, wonderful Energy Evolution audience! Leanne and I are here to address one of the fantastic topics that comes up on almost every one of our calls with clients. How many credits can I get? This is our absolute favorite. We know that the Inflation Reduction Act added in the ability of possibly stacking credits. The three most popular I think that we get are, ‘hey, I have some clean transportation fuel, but I have some fun things that have to get me to that CI scoring. I have some clean hydrogen, maybe, and I really love carbon capture equipment.’

So, Leanne, I’m going to kick it off to you. You get a ton of questions about 45Z. But maybe your CI score is not where you want it to be from feedstocks. How do you feel about carbon capture and 45Z playing together?

00:00:53
Leanne: Carbon capture and 45Z unfortunately are not going to play well together. It is a question that comes up a lot. Particularly for those more, I’ll call them traditional, feedstocks that we talked about in an earlier podcast, our corn and some of our soybean. But very particularly those with ethanol looking for ethanol feedstocks. Once carbon capture comes in there, the 45Z is out.

00:01:18
Dawn: Well, Leanne, I read 45Z. I don’t see any of that language in 45Z. Where are you getting this?

00:01:27
Leanne: It’s the interplay of where you get to your CI scores, the GHG reductions, the modeling. How you get from A to B.

00:01:36
Dawn: Okay.

00:01:37
Leanne: The actual statute itself is just a framework and it’s very, very vague. But in order to get your CI score down, you have to do certain things with greenhouse gas reduction. And the carbon capture doesn’t get you there.

00:01:50
Dawn: Perfect. And so, we get a lot of questions around, well, gosh, I’m going to have some clean hydrogen in this system. You know, how does that work? Because, again, I’ve read the language of 45Z. It doesn’t say I don’t get all these other credits. What the heck’s going on here?

00:02:09
Leanne: That’s right. 45Z is an interesting one,  so far it doesn’t include language which precludes stacking. Maybe they forgot about it. Maybe it was intentional. Maybe it’s just the last one on the list. And it’s been mentioned everywhere else because that is the key.

While 45Z itself does not preclude stacking, 45V for your clean hydrogen and 45Q for your carbon sequestration do preclude stacking with other credits. So, if you claim a 45Z, by the language of 45V, you cannot get that 45V hydrogen credit for the same facility. And by the language of 45Q, you can’t get a 45Q and a 45Z, so they can’t be read in a vacuum. And I understand that is complicated.

You want to hone right on in and focus on the credit that you want. And that 45Z credit doesn’t tell you can’t stack. So, it’s automatic. It’s logical. It’s not unreasonable to think, oh, if I can get my 45Z, if I can get my greenhouse gas emissions reduction the way that it needs to be done under the statute and under the regulations that have yet to come out. And if I can get that CI score low enough, and maybe I generate some clean hydrogen while doing that because the carbon capture is out, maybe I’ll get two credits. But it doesn’t work that way. And so, the question then becomes, what is the best one for my facility? And I think you have a bit of insight there, Dawn.

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