The Section 45Z Clean Fuel Production Credit (CRS Report for Congress)
| Release Date |
Sept. 27, 2023 |
| Report Number |
IF12502 |
| Report Type |
In Focus |
| Authors |
Nicholas E. Buffie |
| Source Agency |
Congressional Research Service |
Summary:
P.L. 117-169, commonly known as the Inflation Reduction
Act (IRA), created the clean fuel production credit (CFPC)
for qualifying transportation fuel produced after 2024 and
sold on or before December 31, 2027. Some also refer to
the CPFC as the 45Z credit after its applicable Internal
Revenue Code (IRC) section.
The CFPC, in effect, consolidates and replaces several fuelrelated credits currently scheduled to expire at the end of
2024, including credits for the production of biodiesel, agribiodiesel, renewable diesel, second-generation biofuel,
sustainable aviation fuel, alternative fuels, and alternative
fuels mixtures. In contrast to these expiring provisions,
which subsidize specific types of low-GHG emission fuels,
the CFPC is technology neutral and is intended to subsidize
the production of any transportation fuel with zero or low
greenhouse gas (GHG) emissions.
This In Focus provides an overview of the eligibility
requirements, credit amounts, and budgetary cost of the
CFPC. Guidance on implementing the CFPC is required no
later than January 1, 2025, and the Department of the
Treasury and Internal Revenue Service (IRS) issued a
request for comment on November 3, 2022. The IRS
requested that comments be submitted by December 3,
2022. However, the agency clarified that it would consider
comments submitted beyond that date “if such
consideration will not delay the issuance of guidance.”
