Energy Evolution, Episode 8: IRS 45Z Clean Fuel Guidance

On this episode of Weaver: Beyond the Numbers, Energy Evolution, our hosts discuss the IRS 45Z Clean Fuel guidance.

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Detailed Description of Weaver’s Energy Evolution, Episode 8

00:00:00
Tony: Hi, everybody. Leanne Sobel and Tony Miller here for another installment of “Energy Evolution.” We’re here to discuss the most recent IRS 45Z Clean Fuel guidance that came out at the end of May. Leanne, I know we were hoping for proposed regulations on the 45Z tax credit, but instead, we did not get that. We got a guidance regarding registrations coming up. So please tell us more about it.

00:00:27
Leanne: Yeah, that’s right Tony. If I was a betting person, I clearly would have lost because I think three, maybe four episodes of “Energy Evolution,” I was out there saying Memorial Day weekend. And not only was it not Memorial Day weekend, it wasn’t proposed regulations, but it was a notice regarding registration for the 45Z credits.

If you are going to be producing clean transportation fuels or sustainable aviation fuel come January 1st, 2025, you need to get a CN and/or a CA Registration on Form 637. If you’re familiar with Form 637, it’s relatively straightforward. It’s much of the same requirements as in the past. You fill out the form. There’s some additional questions that were in the notice.

There’s a couple key things to point out. One of those is there is somewhat of a deadline for filing applications. It’s not a hard deadline forever, but if you want to be able to claim the credit for production effective January 1st, 2025, that registration application needs to be submitted to the IRS on or before July 15th of this year. So what they’re saying is, if you get it into us by July 15th, we will try to have it done by January 1st, they’re not promising. If you get it in after that date, it sounds like you’re going in a different pile and won’t be considered for January 1st. Unless there’s a lower number than what they’re anticipating, but I think I think there might be more than what they’re actually anticipating based on some conversations that you and I have had and that we’ve had with others in the industry. And so that is something to bear in mind.

The other thing that they wanted to reiterate is that you have to be registered in order to claim the credit, and you have to be registered at the time of production. It’s not one of these credits where you can get registered and then go back and claim for prior production. If you’re not registered until January 15th, then that production from January 1st to the 15th is lost as far as the credit goes. So that’s the key stuff in that notice.

And there were some other things, and I think you and I have talked about them, Tony, it was quite interesting. Some of the definitions as to what might be included as a transportation fuel. They didn’t fully commit to it, but it looks like maybe the RNG is in there.

00:02:49
Tony: Yeah, one of those main categories at the end, so it’s a possibility. That means all of those RNG producers need to get the registration in, right?

00:02:59
Leanne: Yeah. That’s the other thing they’ve said. If you think you qualify, because we’re not anticipating any more guidance before July 15th, get your registration in. So RNG, ethanol, that was another one that was in there, low GHG ethanol. Those were the two big ones that we weren’t sure about. If you’re doing ethanol or RNG, get your registration in. Don’t wait around for more guidance. It’s not going to come before the deadline. And if they are included, then you want to be able to get that credit for production effective January 1st.

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