Motor Fuels Tax Minute, Episode 37: 45Z Update

In this week’s episode of Motor Fuels Tax Minute, our hosts give an update on 45Z clean fuel production credits.

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Detailed Description of Weaver’s Motor Fuels Tax Minute, Episode 37

00:00:00

Emilda: Welcome to Weaver’s Motor Fuels Tax Minute, the vlog where we talk all things motor fuel. This week Leanne will provide an update on 45Z clean fuel production credits.

00:00:12

Leanne: Thanks, Emilda. Well, we’re within about a year of this credit coming into effect and we continue to get lots and lots of questions as to how it is going to operate in practice. And unfortunately, we still don’t have a lot of answers. We’re still waiting for guidance from the IRS regulation’s information on registration, but what we do know is that it’s not going to be as straightforward as it seems.

The prevailing wage and apprenticeship requirement, which will get you from that base credit of $0.20 up to $1.00 for transportation fuels or $0.35 up to $1.75 for sustainable aviation fuel, is not going to be an easy one to meet. So, when people are forecasting, if you’re forecasting on that $1.00 or that $1.75, maybe try to be just a little bit more conservative because without having confirmed that you’ll meet that PW&A, it simply may not be there for you.

We’re also hearing that ethanol and RNG may not be transportation fuels. I know that’s going to be upsetting to those industries, but it’s something to be aware of. The agriculture secretary has said ethanol is in, but the IRS isn’t necessarily agreeing, so we will need to see how that all plays out in the regulations. And on the RNG, that’s that book and claim concept that we can use for the EPA. I’m not going to delve too deeply into that other than to say that the IRS isn’t likely to follow book and claim. They want to see the transportation fuel produced and sold. If that RNG is compressed to CNG and sold for use as a fuel, then maybe you have a credit. If you’ve got RNG and you sell that and somebody compresses it down the line, you maybe didn’t produce a transportation fuel if RNG is not in that definition.

A lot of questions still unanswered, but it’s not going to be a simple one. If you do have questions, please let us know. We’re here to answer them.

00:02:13

Kelly: That was a great update. Thank you, Leanne. As we always hear, this is a business of pennies. That’s where the profits are made, so getting or not getting these credits is a huge ordeal. We will definitely keep everyone updated as long as we hear from the IRS.

Well, that’s it for this week’s Motor Fuels Tax Minute. Thank you for joining us and we would love for any of our viewers to send us in some topics that they might be interested in us covering. If you do, you’ll get some Weaver swag, so let us know. Thank you.