US biofuels producers remain concerned whether all types of fuel sales currently qualify for the 45Z clean fuel production tax credit, which requires refiners to sell the fuel to an unrelated company that has plans to either turn it into a fuel mixture, sell at retail or otherwise use it “in a trade or business.” Preliminary guidance issued during the Biden administration interpreted that final provision as meaning the buyer uses it “as a fuel themselves,” prompting a coalition of 13 fuel trade groups to write to legislative leaders this summer to requesting a fix.
“Getting 13 fuels trade association on one letter even to announce sun rises in the east shows you how ecumenical this issue is,” Bracewell’s Timothy Urban said at the recent the Argus North America Biofuels, LCFS and Carbon Markets conference.
“We did get language in the [tax and energy] bill allowing Treasury to redraft guidance in the upcoming 45Z guidance that will affect how they talk about related and unrelated party sales so if you know what you’re looking for then, you can find the language,” Urban said.
