The American Biogas Council (ABC) applauded new guidance from the Internal Revenue Service (IRS) that provides a clearer path for renewable natural gas (RNG) producers to use the Section 45Z Clean Fuel Production Tax Credit. The guidance incorporates several provisions requested by ABC to encourage investment in new biogas systems that recycle organic waste into RNG for use as a clean transportation fuel.
Congress created the 45Z tax credit in 2022, but uncertainty over how the credit would apply to RNG and different organic waste feedstocks has contributed to delayed investment and project development. ABC has worked extensively with federal agencies and policymakers under two administrations to ensure the rules accurately recognize the benefits of producing RNG from manure, food waste and other organic materials.
ABC Executive Director Patrick Serfass released the following statement: “The wait is over. Since Congress created 45Z four years ago, the biogas industry has been waiting for the certainty needed to fully put this tax credit to work. Billions of dollars of potential investment have been sidelined in recent years while companies waited to understand how 45Z would apply to their projects. Today’s guidance provides a path to move that investment forward, build new biogas systems and turn more of the organic waste produced in our communities into domestic renewable fuel.
“The American Biogas Council and our members have worked with the federal government under two administrations to improve the implementation of 45Z for biogas and RNG, and we appreciate the Trump Administration, Treasury Department, Department of Energy, Department of Agriculture, and IRS for incorporating many of the changes our industry requested.
“Importantly, the new guidance recognizes that RNG produced from different feedstocks can have different carbon intensities, including specific pathways for RNG produced from dairy and swine manure, food waste, and other organic materials. It also allows certain projects to account for farm-specific manure management practices, helping the credit more accurately reflect how individual projects operate.
“We also appreciate the continued progress toward incorporating regenerative agricultural practices into carbon-intensity calculations, and the commitment to completing the guidance on beef and poultry manure feedstocks later this year.
“America produces enormous quantities of manure, food waste and other organic materials every day. Instead of wasting those resources, biogas systems can recycle them into domestic renewable energy while supporting farms, rural communities and American jobs. Today’s action gives our industry an important new tool to build more of those projects.”