Is Your Clean Fuel Creditworthy: 5 Key Considerations for 45Z Production Credits

Producers attempting to determine the qualification, benefits and potential amount of the 45Z Clean Fuel Production Credits should consider the following five key points:

1. Are Your Feedstocks Optimized?

Did you know certain biodiesel/renewable diesel feedstocks have better Carbon Intensity (CI) Scores than expected or reflected in the GREET-R&D model? Get to know and understand your fuel’s CI Scores. Evaluate all options to enhance your inputs for optimal performance now.

2. Have You Assessed Your Energy Inputs?

Some facilities utilize energy inputs that are not currently accounted for in the 45ZCF-GREET model. How you provided your feedback on energy inputs to the Treasury/IRS and DOE? The deadline to comment on such energy inputs is fast approaching on April 10, 2025. Ensure you submit your comments on inputs to avoid missing any potential updates to your pathway.

3. Have You Verified Your Units?

The Carbon Intensity Output in the 45ZCF-GREET model is in grams CO2e/megajoule (g CO2e/MJ). However, the 45Z Clean Fuel Production Credit emission rate must be in kg/MMBtu for determining the emission factor and final amounts. Remember to convert units. Failure to do so may result in an inaccurately high 45Z dollar value due to a lower CI score from the GREET model output.

Additionally, ensure you round the emission factor to the nearest tenth, as this will impact your final calculations.

4. What Do You Know About the Prevailing Wage & Apprenticeship Credits (PW&A)?

To qualify for the 45Z 5x multiplier, PW&A must be met in constructing the qualifying facility and prevailing wage for repair and alterations once placed in service. Are you paying prevailing wages? Are you meeting the apprenticeship requirements (three separate requirements)? What documentation are you collecting and requiring that your contractors and subcontractors provide to you? Proper documentation is crucial for compliance and enhancing the marketability of your credits.

5. When Was Your Facility Placed in Service?

Depending on when your qualifying facility was placed in service, apprenticeship requirements for the 45Z 5x multiplier may not apply. If the qualifying facility producing the clean fuel was placed in service before January 1, 2025, then prevailing wage applies to alteration and repairs over the life of the credit, but is the work a repair, alteration or construction?

Weaver can provide clarity and peace of mind when it comes to 45Z Clean Fuel Production Credits and related topics. Contact us today with any questions. We’re here to help.

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