DOE Cuts ILUC, Foreign Feedstocks in GREET Model Update
The U.S. Department of Energy (DOE) published an update to its 45ZCF-GREET model on Friday, which will be utilized to measure the carbon intensity (CI) of fuels under the 45Z Clean Fuel Production Credit.
The agency said that Friday’s update to the credit-specific version of Argonne National Laboratory’s Greenhouse Gas and Regulated Emissions and Energy Use in Technologies (GREET) model includes several changes that reflect alterations to the 45Z credit from last summer’s One Big Beautiful Bill (OBBB) Act.
Namely, the update nixes all measurements of indirect land use change (ILUC) and denies eligibility for all feedstocks produced outside of the U.S., Canada, or Mexico.
The refreshed model will now also prevent participants in the program from receiving negative CI scores, among other changes.
Originally passed as part of the Inflation Reduction Act (IRA) of 2022, the 45Z credit offers producers 20cts to $1/gal for CI reductions below a baseline of 50kg of CO2/MMBtu beginning Jan. 1, 2025. Legislators extended the credit to 2029 under the OBBB, while also getting rid of a higher credit tier originally offered under the program to producers of sustainable aviation fuel.
The credit was designed as a unified successor to several blender’s tax credits that have expired in recent years, but implementation of the wide-ranging scheme has lagged far behind congressional intent for the program and prevented significant market participation thus far.
Recent efforts from the agencies tasked with administering the program have spelled a potential end to the program’s languid path to full administration; however, the Department of the Treasury hosted a long-awaited hearing in late May on its proposed guidance for the credit.
Initially proposed back in February, the agency is expected to finalize its standards sometime this summer or fall.
And while many producers will be able to utilize the latest update of the 45ZCF-GREET model in their tax calculations for this year, producers still await the release of an update to the USDA’s Feedstock Carbon Intensity Calculator (FD-CIC) – which will be folded into the most recent version of the DOE’s model once it is issued later this summer.
The updated model was applauded on Friday afternoon by proponents for the renewable fuels industry, as Geoff Cooper, president and CEO at the Renewable Fuels Association (RFA), said the update is “critically important to ethanol producers as they make operational and investment decisions.”
“We have already begun reviewing the new model and will be actively engaging with our members across the supply chain to discuss the implications of these important modeling changes,” Cooper said.