The American Coalition for Ethanol (ACE) submitted comments to the U.S. Department of the Treasury and the Internal Revenue Service regarding proposed rules on the 45Z Clean Fuel Production Credit, emphasizing the need for timely implementation and further clarity to support ethanol producers and farmers.
In written comments, ACE CEO Brian Jennings underscored the significant financial pressure facing rural America and that enabling farmers and producers to benefit from low-carbon practices is critical to unlocking the full value of the 45Z credit.
“Since farming practices represent about half of ethanol’s carbon intensity, clean fuel producers must have the opportunity to monetize low-carbon farming practices such as reduced tillage or precision fertilizer use to fully unlock the value of 45Z.”
ACE noted that if these practices are fully recognized, the economic impact could be substantial.
“If Treasury allows low-carbon farming practices to qualify towards emissions rates it could mean billions of dollars annually for clean fuel producers and farmers, providing a market-based opportunity to dramatically increase rural and farm income.”
Jennings expressed support for elements of the proposed rule, including the use of modeling tools such as the U.S. Department of Agriculture’s (USDA’s) Feedstock Carbon Intensity Calculator (FD-CIC) and Department of Energy’s (DOE’s) 45ZCF-GREET model, while stressing the importance of keeping them current with the latest science and real-world data supported through activities such as the USDA Regional Conservation Partnership Program (RCPP) activity being led by ACE and specifically designed to address information gaps regarding the low-carbon benefits of farming practices to help improve the accuracy of modeling tools.
“We have strongly recommended updates to FD-CIC values for low-carbon farming practices by incorporating the best available science and results from real-world activities, so we are encouraged Treasury expects to make these updates as part of future iterations of the 45ZCF-GREET.”
ACE also urged coordination with the USDA and the DOE to finalize the tools.
“We implore Treasury and the IRS to act swiftly to finalize clear guidance and work closely with USDA and DOE to develop and finalize the tools necessary to achieve full monetization of farming practices.”
ACE’s comments also urge Treasury to rely on existing USDA protocols within the Farm Service Agency (FSA), Natural Resources Conservation Service (NRCS) and Risk Management Agency (RMA) to verify low-carbon farming practices.
“If these existing USDA protocols are sufficient for verifying the distribution of billions of taxpayer dollars for crop insurance, commodity, and conservation programs, they are equally sufficient for verifying the same conservation practices for the 45Z credit. The Treasury Department should rely on existing USDA assets in the reporting and verification for the 45Z tax credit.”
ACE consultant Jonathon Lehman will testify at the May 28 hearing.