RFA Leading the Charge on IRA Implementation

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November 09, 2022

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(Renewable Fuels Association) Testimony, Comments Provided to Treasury, IRS, USDA -- In separate comments and testimony to the U.S. Department of Treasury, Internal Revenue Service and the U.S. Department of Agriculture, the Renewable Fuels Association laid out the ethanol industry’s priorities as the agencies prepare to implement the Inflation Reduction Act’s renewable energy tax and grant programs.

“The energy provisions in the Inflation Reduction Act represent the most significant federal commitment to low-carbon biofuels since the Renewable Fuel Standard was expanded by Congress in 2007,” said RFA President and CEO Geoff Cooper. “The inclusion of low-carbon fuel tax credits and grant programs in the legislation marked a major victory for the renewable fuels industry. But now it’s time to ensure these provisions are implemented the right way. If implemented correctly, the IRA’s clean energy measures will stimulate unprecedented investment and decarbonization in the ethanol sector. But if the federal government gets implementation wrong, it will be an enormous missed opportunity for ethanol and other renewable fuels to play a leading role in the fight against climate change.”

In invited testimony offered today during a Department of Treasury roundtable discussion on clean fuel provisions, RFA General Counsel and Vice President of Government Affairs Ed Hubbard stressed the importance of getting lifecycle analysis right and providing flexibility for ethanol producers to submit their individual analyses of carbon intensity.

“As producers invest in technology and process improvements to lower their carbon intensity, the LCA modeling will need to offer flexibility and granularity so producers can benefit from their unique investments in a timely manner,” Hubbard said. “We believe that to accomplish the goals of the legislation, individual biorefineries will need the option to choose individually suited pathways, as opposed to generalized default values.”

In addition, RFA submitted two sets of comments late Friday to the Internal Revenue Service. In one, on the elective payment of applicable credits and the transfer of certain credits, RFA seeks to ensure ethanol producers have maximum flexibility under these provisions to elect direct payment if they are the applicable entity and have maximum flexibility to retain or transfer credits. “We interpret the intent of the inclusion of direct pay and transferable credits in the IRA as a strategy to establish new technologies and encourage accelerated growth,” Cooper wrote. “RFA believes that flexibility enables the policy to work.”

Secondly, RFA commented on various prevailing wage, apprenticeship, domestic content, and energy communities requirements under the Inflation Reduction Act. There are several interpretations relating to these areas that will have significant impacts on the outcomes of the legislation, Cooper wrote. Within these areas, the ethanol industry is ready to work with the IRS and other agencies to formulate reasonable timeframes and definitions for the implementation of the provisions in the act. He especially cited the prevailing wage and apprenticeship requirements in the Clean Fuel Production Credit under Section 45Z and the Carbon Capture, Utilization, and Storage credits under Section 45Q.

Separately, at a virtual listening session held last Thursday by the U.S. Department of Agriculture, RFA Director of Government Affairs Jared Mullendore stressed the importance of the $500 million in funding for the Higher Blends Infrastructure Incentive Program (HBIIP), noting that RFA has helped 39 companies in 21 states apply successfully for HBIIP funding resulting in the installation of over 1,500 dispensers and 150 underground storage tanks at over 200 locations. He called for a lengthier application window for the program in the future and higher funding limits per entity, so larger chains can better take advantage of the program. RFA also would like to see airport and aircraft refueling infrastructure included in HBIIP in addition to rail and marine infrastructure, Mullendore said.

RFA also called on USDA to assist industry with two policy priorities that will help make HBIIP more successful, engaging with EPA and the White House on opportunities to promote growth in FFV production and use and to support RVP parity so that E15 can be sold in conventional gasoline markets year-round.

Finally, Mullendore testified that RFA’s members have utilized REAP (Rural Energy for America Program) for a variety of projects and technologies and that they see it playing an important role in reaching our goal of net-zero ethanol, by accelerating investment in both new and established low-carbon technologies. RFA encouraged USDA to utilize REAP as a vehicle to invest in these technologies at farms and biorefineries. READ MORE

Biofuel groups participate in Treasury roundtable on IRA (Ethanol Producer Magazine)

2023 NEC Preview: Implementing the Inflation Reduction Act (Renewable Fuels Association)

Excerpt from Ethanol Producer Magazine: Growth Energy CEO Emily Skor also participated in the roundtable. “We’re grateful to be able to participate in this roundtable, and glad to see Treasury recognize how important the biofuels industry will be to securing a clean energy future and ensuring that the IRA realizes its full potential,” she said. “Right now, the biofuels industry is already lowering carbon emissions, reducing our reliance on foreign oil, saving drivers money at the pump, and creating new American jobs. A smartly implemented IRA will allow ethanol producers to do even more and accelerate the nation’s progress toward a net-zero environment.”

In her testimony, Skor urged Treasury to rely on the best available science to calculate greenhouse gas emissions (GHG) through complete and thorough lifecycle analysis, particularly in relation to the clean fuel production tax credit and the tax credit for sustainable aviation fuel (SAF). She also said producers should be allowed to use Argonne National Laboratories’ GREET model to determine lifecycle GHG emissions for the SAF credit and called on the agency to provide flexibility to producers in how they elect to use the clean fuel production tax credit and SAF tax credit. READ MORE

Excerpt from Renewable Fuels Association: In addition to extending several current biofuel credits and incentives, the bill creates new tax credits for clean fuel production, sustainable aviation fuel (SAF), and expands the credit for carbon capture, utilization, and storage (CCUS).

These credits have the potential to significantly accelerate production, use, and innovation across the ethanol industry. However, as with any legislation of this magnitude, the devil is in the details. Determinations relating to lifecycle emissions modeling, eligible entities, transferability of credits, as well as prevailing wage and apprenticeship requirements will all impact the ethanol industry. The federal agencies charged with putting the IRA into action are hard at work writing these rules which will determine much of the success of the bill.

As tax credits are central to the biofuel provisions in the IRA, the Department of Treasury and Internal Revenue Service will guide much of the implementation process. However, consultation with other agencies like the U.S. Department of Agriculture (USDA), Department of Energy (DOE), and Environmental Protection Agency (EPA) will also be involved. RFA has already been extensively involved in both formal and informal comment and input processes including submission of written comments, participation in roundtables, and meeting with agency officials.

At the 2023 National Ethanol Conference, taking place February 28 through March 2 in Orlando, RFA is excited to bring together a panel of experts on the tax credits within the IRA and who are working daily on its implementation. First, Dana Jackson is the National Leader for the Federal Credits and Incentives practice for RSM US. Jackson consults on issues emerging from energy tax credits and including the IRA’s Clean Fuel Production Credit as well as SAF and CCUS credits. Next, Jorge Medina is the co-leader of Pillsbury Winthrop Shaw Pittman’s Renewable Energy practice. Medina regularly works on federal tax policy issues involving renewable energy including the IRA implementation process at Treasury and IRS.

With Medina’s legal knowledge of the IRA, Jackson’s accounting and consulting contributions, and policy awareness from RFA and others, the NEC session, “It’s Go Time! Implementing the Inflation Reduction Act” aims to provide a comprehensive update on the bill’s implementation, what we know, what is still being decided, and how the industry is likely to move forward. READ MORE

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Treasury Department IRS (Internal Revenue Service) Department of Agriculture (USDA) ethanol/bioethanol environmental policy Transportation Fuels Policy tax policy Legislation-Federal Regulations-Federal tax credits grants life cycle analysis (LCA) BioRefineries/Renewable Fuel Production HBIIP Higher Blends Infrastructure Incentive Program airports Marine/Maritime Bio and Renewable/Sustainable Fuel (SMF) railroad flex-fuel vehicles (FFV) EPA (Environmental Protection Agency) White House E85 Reid vapor pressure (RVP) 45Q Carbon Oxide Sequestration Tax Credit E15 Rural Energy for America Program (REAP) funding Sustainability GREET Greenhouse Gases Regulated Emissions and Energy Use in Transportation Model carbon capture and storage (CCS) carbon capture and utilization (CCU) carbon/CO2 sequestration

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