The Inflation Reduction Act of 2022 will go in to effect January 1, 2025. This landmark legislation not only provides the first federal incentive for fuel carbon emission reduction but also provides tax credits for current and future low carbon fuels producers. It also provides tax refunds for carbon capture and sequestration projects, clean hydrogen production and much more. However, there are still many unknows about the structure of these incentives.
One example is that the program will use the Argonne GREET model to determine the carbon intensity (CI) values for the different tiers of tax refunds but it is not clear if the IRS will be allowing low carbon fuels producers to calculate their own CI or if different fuels will be assigned CIs based on individual facility’s production technology. Additionally, important factors that go in to this model, such as which factors will be used to determine land use change of biological fuels, have not been defined. With no current timeline on when this guidance will be provided, many producers and potential investors are looking for guidance on how to proceed.
At TRICORD, we have been monitoring the passing and progression of the IRA and have been keeping up with the latest news. We have experience calculating facility CI values using the Argonne GREET model, among others, and have helped renewable fuels producers to navigate this ever-changing landscape.
If you need support understating the IRA rules and opportunities, please reach out to our renewable fuels team leader Hannah Losey, P.E. at Hannah.Losey@tricordconsulting.com.