New guidance from the US Internal Revenue Service (IRS) is expected to provide biogas producers with a clearer route to use the Section 45Z Clean Fuel Production Tax Credit, potentially supporting investment in projects that convert organic waste into renewable natural gas (RNG), Waste today reported.
The American Biogas Council (ABC) welcomed the guidance, saying it incorporates several provisions sought by the organisation to encourage investment in new biogas systems that process manure, food waste and other organic materials into RNG for use as a clean transportation fuel.
Congress introduced the 45Z tax credit in 2022, but uncertainty over how the incentive would apply to RNG and different organic waste feedstocks had contributed to delays in investment and project development, according to ABC.
ABC Executive Director Patrick Serfass said the biogas industry had been waiting for greater clarity on the tax credit since its creation. He said the new guidance could help unlock potential investment, support the development of new biogas systems and increase the conversion of organic waste into domestic renewable fuel.
The guidance recognises that RNG produced from different feedstocks can have different carbon intensities. It provides specific pathways for RNG produced from dairy and swine manure, food waste and other organic materials, according to ABC.
It also allows certain projects to account for farm specific manure management practices. ABC said this would help the credit more accurately reflect how individual projects operate.
Serfass said the US generates large quantities of manure, food waste and other organic materials that could be converted into renewable energy through biogas systems. He said such projects could also support farms, rural communities and jobs.
ABC said it had worked with federal agencies and policymakers under two administrations to develop rules that recognise the benefits of producing RNG from manure, food waste and other organic materials.
