The Internal Revenue Service released 45Z Clean Fuels Production tax credit guidance that opens the door for farmers, ethanol producers and livestock operations tracking their carbon scores to benefit from the credit.
In particular, the guidance gives special treatment to manure-based fuels, rewards regenerative agriculture and limits the use of foreign feedstocks in fuels that generate the credit. In addition, the U.S. Department of Energy released an updated Greenhouse gases, Regulated Emissions, and Energy use in Technologies (GREET) model this week.
The IRS is giving special relief for 2025 and 2026 crops that were planted prior to the agency guidance, noting in the guidance, “for fuel produced in 2025 and 2026, the requirements (under the law) regarding the pre-application development of a nutrient budget are deemed satisfied for purposes of 45Z.”