IRA Act & Energy Credit Clarification Waiting on Election Cycle

As we round into 2025, and the election day preceding it, we thought it would be helpful to highlight energy related tax, credit, and funding items that either have an expiration looming December 31, 2024, are slated to kick on January 1, 2025... OR that have their passage or continuation hanging in the balance depending on how the election goes.  If you're in Massachusetts, there are a host of additional items on the horizon, by the way, the following are Federal Level items:

Set to Expire December 31st 2024: Biodiesel Blender Tax Credit.  This is the $1/gallon credit for the blending of biodiesel and renewable diesel currently in place across the US. If the credit expires, the concern is that pricing becomes difficult to decipher or predict under the proposed replacement measure for the blenders credit, and that is concerning for truckers, retailers, blenders, and biofuel adjacent industry sectors like soybean producers. Additionally, the credit has been instrumental in the growth of biodiesel and renewable diesel, and its associated jobs and industries. The argument is that the infrastructure and familiarity with current biofuels is integral to the continued growth of biofuels and thus continued declining emissions across the sector. The linked article above has more detail on the expiration and replacement of the credit. Members of Congress in partnership with some industry groups have taken up the credit to push for its extension, but so far nothing has been changed. (You can read the letter to Congress here:   Dear Colleague Letter Urging Biodiesel Tax Extension )

Set to Begin January 1, 2025:  The Clean Fuel Production Credit is slated to kick in on January 1st, and will be the replacement, essentially, for the Biodiesel Blender Tax Credit discussed above. The Clean Fuel Production Credit, also known as 45Z, is part of the Inflation Reduction Act, and the goal is to credit domestically produced renewable fuels. The major issues currently with the credit are that it 1) does not yet have defined values of credit levels for each fuel and 2) the credit will not be fungible like the current blender tax, i.e. it will not be 1:1 credit for all covered fuels, but will vary on type, which is likely to create rather complicated processes for determining longer range pricing impacts. 

Potentially Up in the Air:

The Inflation Reduction Act itself has come up frequently in Presidential Debates and stump speeches over the past several weeks of the campaign, which makes sense, it was the country's largest investment in clean energy and was passed on a straight party line vote. Candidate Trump has referenced "immediately terminating" the Inflation Reduction Act should he be elected. While the bill was wildly unpopular with the right ahead of and upon its passage, many in the legislature on both sides are now staunchly opposed to a full repeal, versus case-by-case analysis, since billions of dollars have been outlaid from both taxpayer funds and private investment since the bill passed in 2022, and many states have seen investments in projects tied to the bill that could be threatened or terminated should the IRA itself be scrapped. 

For the last few months, the funding being sent out for IRA related projects has seen a massive uptick, presumably the thought being that projects underway would be less likely to be terminated, and thus portions of the bill would essentially stay in effect regardless of any election related outcomes.

Essentially, we are all in a holding pattern on the items above, but we will keep you apprised of developments as they occur heading into the New Year and those oncoming deadlines. 

Stay Tuned!