Platts modifies Chicago, Houston biodiesel B100 tax-credit calculation

Platts, part of S&P Global Commodity Insights, has modified the federal tax credit for its biodiesel (B100) price assessment in Houston and Chicago, effective Feb. 24.

This change aligns with the transition under the Inflation Reduction Act wherein, effective Jan. 1, 2025, the blenders tax credit has been replaced by the clean fuel production credit (45Z).

Platts said it will monitor further guidance on the transition of the IRA tax credit.

The new federal tax credit provides a maximum of $1 per gallon for non-SAF fuels for producers meeting prevailing wage and registered apprenticeship requirements, requiring a maximum limit carbon intensity (CI) of 50kgCO2/MMBTU.

The credit amount will be proportional to the level of emissions reduction achieved, up to the maximum $1 full credit.

Platts said it considers California Air Resources Board’s biodiesel carbon intensity of 28.51 gCO2e/MJ, from substitute pathways for reporting fuels with unknown CI for 2024.

Platts explained that it calculates the lifecycle greenhouse-gas emissions-reduction percentage as a fraction, the numerator of which is the maximum CI (50 kgCO2/MMBTU) acceptable to be eligible for the credit minus the biodiesel CI of 28.51 gCO2e/MJ (or 30.08 kgCO2/MMBTU) and the denominator of which is the maximum CI.

The credit will be rounded to the nearest hundredth cent.

(50 – 30.08)/50 x 100 cents/gallon = 39.80 cents/gallon

Therefore, Platts said the total biodiesel tax credit it uses in B100 is 39.80 cents per gallon.

Platts noted feedback, comments or questions should be submitted to mrts_biofuelsandfeedstocks@spglobal.com and pricegroup@spglobal.com.

For written comments, Platts asked submitters to provide a clear indication if comments are not intended for publication by Platts for public viewing.

Platts said it will consider all comments received and will make comments not marked as confidential available upon request.