Growth Energy to IRS: Maximize Benefits of 45Q Credit

Today, Growth Energy submitted comments in response to notices issued by the Internal Revenue Service (IRS) on implementation of tax credits under the Inflation Reduction Act of 2022 (IRA), namely the 45Z credit for clean fuel production (45Z) and the 45Q credit for carbon capture (45Q). In the comments, Growth Energy Senior Vice President of Regulatory Affairs Chris Bliley called on regulators to ensure that both credits reflect the best available science, grow American jobs, and harness the unique contributions of U.S. biofuels to drive reductions in greenhouse gas (GHG) emissions.

On the clean fuel production tax credit, Bliley reiterated the importance of providing certainty and flexibility for eligible entities. He also emphasized the importance of applying the lifecycle analysis (LCA) model developed and maintained by the Department of Energy’s Argonne National Laboratory ― known as the Greenhouse gases, Regulated Emissions, and Energy use in Transportation, or “GREET” model.

“In order to be eligible for Section 45Z credits, a transportation fuel must have a lifecycle emissions rate below 50 kilograms of carbon dioxide equivalent per million BTU (CO2e/mmBtu),” wrote Bliley. “Biofuels producers may use many different technologies to produce ethanol below this threshold, including technologies and agricultural practices that result in a biofuel with negative lifecycle GHG emissions. Thus, for the Section 45Z credit to function as Congress intended, the Treasury Department and the IRS will need to implement the law to take into account and thereby incentivize the varied approaches that biofuel producers can employ to produce low-carbon renewable fuels.”

This approach, he noted, would allow for an accurate determination of climate benefits, including those from cover crops, bio-based fertilizers, and other farm inputs.

“For example, a typical dry-mill corn starch ethanol plant may capture and sequester carbon dioxide process emissions and source its corn from farms using no till agricultural practices in order to reduce the carbon intensity of the fuel,” added Bliley. “The GREET model includes inputs to address these and other scenarios that should be included in an emissions rate table.”

On Section 45Q, Bliley noted that ”approximately 25% of the ethanol industry already captures carbon dioxide and a growing number of facilities plan to install the technology in the near future. An average-sized ethanol plant currently can capture 99,000 to 153,000 tons of CO2 per year, and there is strong potential to expand on these carbon emission reductions.”

To fully realize the climate benefits of Carbon Capture, Utilization, and Sequestration (CCUS), Bliley urged IRS to expedite approvals of new lifecycle assessments, implement effective payment mechanisms, and clarify eligibility requirements to provide certainty and predictability for partnerships between ethanol producers and geologic sequestration companies.

The full comment on 45Z can be found here, and the full comment on 45Q can be found here.


President Biden signed the Inflation Reduction Act into law on August 16, 2022. The IRA represents our nation’s most significant investment in clean energy and biofuels since the expansion of Renewable Fuel Standard (RFS) in 2007. Included in the IRA are several key priorities for the biofuels industry, including:

  • Section 45Q tax credit for carbon capture (Section 13104 of the IRA)
  • Section 45Z clean fuel production tax credit (CFPC) (Section 13704)
  • Section 40B sustainable aviation fuel (SAF) tax credit (Section 13203)
  • $500 million in biofuels infrastructure (Section 22003)

Growth Energy continues to engage with federal agencies, including the Treasury, on the implementation of the law.