Clean Fuels files comments on new SAF, biodiesel, renewable diesel tax incentives

Clean Fuels Alliance America submitted a written response Dec. 2 to the U.S. Department of Treasury’s request for comments (Notice 2022-58) on Credits for Clean Hydrogen and Clean Fuel Production (IRC §45Z).

Clean Fuels urged the treasury department to utilize Argonne National Laboratory’s GREET model to measure the lifecycle greenhouse-gas (GHG) emissions of sustainable aviation fuel (SAF).

Clean Fuels also asked that the treasury department allow producers to petition for provisional emissions-reduction rates based on scores from California’s Low Carbon Fuel Standard.

“It is imperative that Treasury work with the U.S. Department of Energy and the U.S. Department of Agriculture to implement the carbon-based incentives using the best and most up-to-date agricultural and biofuel-process information in its emissions-rate methodology,” wrote Kurt Kovarik, Clean Fuels vice president of federal affairs, in the comments. “The International Civil Aviation Organization’s CORSIA model unfairly penalizes fuels produced from U.S. crop-based feedstocks and will prevent them from participating in the SAF market if that is the only model available to producers when the statute is implemented.”

Clean Fuels noted in its comments that the most recent update to the GREET model, published in October, estimates that the average gallon of biodiesel and renewable diesel reduces emissions by approximately 72 percent, considering the U.S. biodiesel feedstock mix published by the U.S. Energy Information Administration.

Clean Fuels additionally asked the treasury department to provide flexibility and incentivize continuous improvements that lead to lowered emissions by allowing SAF producers to petition for provisional emissions rates at any time.

Clean Fuels further urged the treasury department and IRS to strictly adhere to the statutory prohibition on coprocessed fuel, consistent with existing law under 40A for biomass-based diesel.

“Congress recognized that providing a tax benefit for coprocessed aviation fuels would be wasteful, inequitable, and pose a threat to existing biomass-based diesel production and a burgeoning stand-alone SAF industry,” Kovarik stated.

Lastly, Clean Fuels supports eligibility in the Clean Fuels Production Credit for use of biodiesel and renewable diesel in home heating oil, per the clarification offered by Sen. Ron Wyden, D-Oregon, chair of the Senate finance committee, in colloquy with Sen. Margaret Hassan, D-New Hampshire.

Clean Fuels’ comments are accessible here.