The U.S. Department of the Treasury and Internal Revenue Service (IRS) have released guidance on the Clean Fuels Production Credit, a tax credit aimed at reducing greenhouse gas emissions from the aviation industry.
Section 45Z provides a tax credit for producing transportation fuels with lifecycle emissions below certain levels. The credit is available in 2025 and applies to sustainable aviation fuel (SAF) and non-SAF transportation fuels.
The guidance clarifies who is eligible for the credit, what fuels are eligible, and how taxpayers can calculate lifecycle emissions. It also outlines plans to incorporate climate-smart agriculture practices into the program.
Key takeaways from the guidance include:
* Producers of clean transportation fuels will be eligible for the credit.
* Fuels that have practical or commercial fitness for use as a fuel in highway vehicles or aircraft are eligible.
* The Department of Energy has released the 45ZCF-GREET model for calculating emissions rates.
This guidance aims to lower transportation costs for consumers, support innovation in aviation and renewable fuels, and reduce emissions from the industry.
Source: https://home.treasury.gov/news/press-releases/jy2780