Section 45Z Clean Fuel Production Credit
The Section 45Z Clean Fuel Production Credit was established under the Inflation Reduction Act (IRA) to incentivize the production of transportation fuel with lifecycle greenhouse gas emissions levels below certain defined threshold values by providing a per-gallon, or gallon-equivalent income tax credit to fuel producers that meet qualifying requirements for clean fuel production.
Our team can help you navigate these credits and ensure you capture the maximum benefits.
Section 45Z Qualifications
The Section 45Z Clean Fuel Production Credit, created under the Inflation Reduction Act, offers a per-gallon income tax credit to producers of transportation fuel with greenhouse gas emissions below defined thresholds. To qualify, producers must meet the following criteria:
- Produce a transportation fuel that has a lifecycle greenhouse gas emissions rate (emissions rate) of not greater than 50 kilograms (kg) of CO2e per mmBTU2 and that satisfies certain suitability and coprocessing requirements
- Produce the fuel in the United States at a qualified facility
- Be registered as a producer of clean fuel under § 4101 at the time of production; and
- Sell the fuel to an unrelated person in a qualifying manner during the taxable year
The Prevailing Wage & Apprenticeship Requirements
Under the IRA meeting the prevailing wage and apprenticeship requirements allow companies to achieve 5x the base credit.
If your company intends to transfer these credits, almost all brokers and underwriters require testing and documentation of how a company, its contractors, and its subcontractors have satisfied the PWA requirements.
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