In the ever-dynamic carbon markets the half-life of innovation is brief. Both the ability to raise capital for initial deployment and to generate credits to sustain operations depend on the legitimacy of the climate-related claims being made by a company. With hundreds of new entrants into the voluntary carbon markets this year in response to climate change and a new generation of buyers, we need to find every efficiency in moving projects forward at a rapid clip.
This webinar intends to provide an overview of the process and terminology involved with credit generation for project developers who find themselves without an easy, well-trodden path to follow. One of these terms is CDR, or Carbon Dioxide Removal. We present the stages in developing a high-integrity monitoring, reporting, and verification plan in the modern marketplace.
If you have questions about any of the topics raised in this presentation, feel free to reach out to our experts, listed below:
The USEPA’s recently proposed Set Rule will open the door for certain types of Electric Vehicle (EV) charging to earn revenue under the Renewable Fuel Standard (RFS). This proposed change, which is expected to get full approval this summer, would enable biofuel producers, electricity generators from biofuel and EV manufacturers (OEMs) to profit from electrification. Continue reading “The Dawn of eRINs: Major Elements of the Rule”
The USEPA’s recently proposed Set Rule will open the door for certain types of Electric Vehicle (EV) charging to earn revenue under the Renewable Fuel Standard (RFS). This proposed change, which is expected to get full approval this summer, would enable biofuel producers, electricity generators from biofuel and EV manufacturers (OEMs) to profit from electrification. Continue reading “The Dawn of eRINs: What Happens Now?”
We answer questions from our most recent webinar that covered the Inflation Reduction Act
The United States Inflation Reduction Act of 2022 (IRA) was signed into law August of last year, and industry is actively seeking ways to benefit from this landmark legislation. The U.S. Treasury is working feverishly on developing and releasing the nuts and bolts of the Act, while fielding questions from eager applicants. EcoEngineers has been monitoring the passing of the IRA, and we are engaged with the Treasury on the implementation. We gave a 10,000-foot view of this monumental law that some have said could place the U.S. in the lead of the race toward global clean energy in our webinar originally presented on March 15, 2023. Climate Risk Director Roxby Hartley, Ph.D., and Regulatory Engagement Director Lisa Hanke kicked off the event with background information and generalities surrounding the legislation. Then, they handed it off to our low-carbon fuels subject-matter experts to explain how the Act would affect their industry:
EcoEngineers had a record number of registrations and attendees on this webinar, and our experts wanted to make sure a majority of the questions asked during the event were answered. Keep in mind without proper due diligence and knowledge gathering required to answer on specific projects, we are speaking mostly in industry generalities. There is also a lot to be learned about this groundbreaking legislation, and we plan to update you when more information becomes available. Watch the full webinar here.
Stackability
Are 45Z and 45Q stackable?
Guillermo Aguirre: No, the definition of a “Qualified Facility” under the 45Z excludes facilities that are allowed to claim carbon oxide sequestration credits under 45Q.
Has it been clarified if 45Q credits can be claimed if Producer Tax Credits are also claimed? For example, if renewables diesel is produced and CO2 from the process is sequestered, can the Producer Tax Credit and 45Q sequestration credits both be claimed?
GA: No. Under § 45Z(d)(4), a qualified facility is that used for the production of transportation fuels and does not include any facility for which the credit for carbon oxide sequestration under Section 45Q was allowed.
Ethanol/Biodiesel
Do you have any insight as to how the apprenticeship requirements are expected to be interpreted for “legacy” biofuel facilities under 45Z (i.e., for past construction activities)?
McCord Pankonen: Under § 45(b)(8)(A)(ii), for purposes of § 45(b)(8)(A)(i), the applicable percentage is: (i) in the case of a qualified facility the construction of which begins before January 1, 2023, 10 percent, (ii) in the case of a qualified facility the construction of which begins after December 31, 2022, and before January 1, 2024, 12.5 percent, and (iii) in the case of a qualified facility the construction of which begins after December 31, 2023, 15 percent.
What do domestic production requirements mean for D4 RIN energy credit modeling un the U.S. Renewable Fuel Standard?
MP: Participants in any RIN program are able to participate in the IRA tax incentives. This should not require any changes to D4 RIN modeling.
Regarding utilization: Would it be possible to capture CO2, optimize to CO then use the CO to make carbon neutral transportation fuels and qualify for the $60/tonne tax credit over 12 years?
MP: The term “utilization” is a question that remains to be clarified in terms of the IRA. It is anticipated that the definition of “utilization” will determine if tax incentives are applicable to novel process technologies implemented by biofuel producers. More to come on this topic from the US IRS.
Do you think the IRA will make underground sequestration Class 6 application easier to be approved?
MP: Nothing immediate. However, if Class 6 applications increase and to ensure tax incentives can be realized, this could drive change.
Hydrogen
Can you please expand on the prevailing wage and apprenticeship requirement? For green hydrogen, do the electrolyzers cell stacks need to be manufactured in the U.S.?
Tanya Peacock: For the prevailing wage and apprenticeship requirement, IRS issued its guidance on Nov. 30, 2022. Under 45V – Clean Hydrogen Production Tax Credit, there is no requirement for the electrolyzers to be manufactured in the U.S. Rulemaking by the IRS is ongoing.
Is it more profitable to convert to hydrogen from an existing RNG facility?
What carbon intensity (CI) calculation methodology on hydrogen production will be used for 45V?
TP: A well-to-gate life-cycle analysis using the Argonne GREET model. We are still waiting for additional guidance from the IRS on upstream boundaries and the use of renewable energy credits or RECs.
Proposed changes to the California Low Carbon Fuel Standard (LCFS) imply that hydrogen produced from fossil natural gas with 96+% capture/sequestration will not qualify for LCFS credits. Isn’t that counterproductive, as California also seems to favor CO2 sequestration?
TP: It will depend on the CI score and meeting the requirements for CCS.
Sustainable Aviation Fuel (SAF)
Do we expect some HVO production to be displaced by HEFA/SAF before 2025?
Kristine Klavers: It depends on the economics of each facility, reflecting both feedstock availability and local, federal and for SAF even global financial incentives.
Regarding the Sustainable Aviation Fuel tax credit, it appears it has to be domestically produced to get the credit. Do imports qualify for SAF tax credit?
Lisa Hanke: Under § 40B(c), a qualified mixture means a mixture of sustainable aviation fuel and kerosene, but only if— (1) such mixture is produced by the 7 taxpayer in the United States (defined in § 7701(a)(9) of the Code to mean the states and the District of Columbia).
Will neat SAF imported into the US and blended in the US facility benefit from the 45Z?
KK: Unlikely, as the qualified production facility has to be in the U.S.
Are there any comments or information on the credits that are going to be available for SAF production and what will be the accepted GHG calculation methodologies. Argonne GREET, Corsia approved (RSB and ISCC)?
RH: Up to $1.75, depending on CI score and meeting labor conditions. No guidance from the IRS as yet, but we think it will be the Argonne GREET model as it has to apply to all fuels – we do not know what the audit trail will be.
Renewable Natural Gas (RNG)
When will the production tax credit come accessible for existing RNG projects?
GA: The implementation guidelines are still under development however companies can work with Eco to ensure their clean fuel will meet the LCA requirements through a preliminary CI calculation.
For Dairy Manure to RNG Projects, can the Project receive both the 30% ITC and the 45Z PTC (3 years)?
GA: Under USC § 48(a)(5)(B) “No credit shall be allowed under section 45 for any taxable year with respect to any qualified investment credit facility.”
Can you confirm landfill gas to RNG projects are eligible to either Production Tax Credit or Investment Tax Credit (PTC or ITC)? IRA mentions a methane concentration of 52% that brings confusion, as landfill gas contains usually less than 52% methane.
GA: At this point we are waiting for the implementation guidelines. The 52% minimum requirement applies for the ITC, under USC § 48(c)(7)(B) Inclusion of cleaning and conditioning property The term “qualified biogas property” includes any property which is part of such system which cleans or conditions such gas.” which may be interpreted as the upgrading system to obtain RNG. We expect the boundaries and clear definition of the “system” to be provided in the guidelines. For the PTC, the eligibility factor is the emissions rate that need to not greater than 50kg of CO2e per MMBtu under the Argonne GREET.
How does 45Z apply to RNG?
GA: Implementation guidelines still under development. What IRA includes is a base credit of $0.20/gallon equivalent with an alternative amount of $1/gallon equivalent if the facility satisfies the prevailing wage and apprenticeship requirements. Emissions rate can’t be higher than 50kg of CO2e per MMBtu under the Argonne GREET. It applies to fuel produced after December 31, 2024 and before December 31, 2027.
What are the teams’ views on 45Z and manure-based RNG? Do you think the version of the GREET model will include avoided methane giving access to greater than $1 per GGE assuming the project meets the prevailing wage and apprenticeship requirements?
GA: We need to wait for the guidelines; it’s unknown at this time.
Other Topics
Canada is close to releasing their own set of incentives in response to the IRA. Any expectations for what this could look like?
MP: Canada recognizes that the IRA is extremely appealing and Canada must continue to create an equal appealing policy. Canada stated it has to do more over and above what they currently have in place to continue to build a clean energy economy. But nothing concrete on what it will look like. EcoEngineers anticipates it will be on par with the IRA but aligned with Canada’s goals for a clean economy. Here’s a video from Finance Minister Freeland addressing the IRA.
These credits are based on tax liability. How do you see a potential new credit market(s) forming for every type of entity to be able to capitalize on these credits.
RH: If it follows the BTC model, these credits will be paid directly in dollars to the facility. They are not carbon credits.
You said these new statutes are only in place for 3 years. Can you please expand on that? I was under the impression these were good through 2030-something.
Daniel Ciarcia: This varies by the specific benefit. 45Q (CCS) applies to products that are commenced up to 2033. But, 45Z (Clean Fuel Production Credit) and 45V, 48PTC, 48ITC (Production and Investment Tax Credits) are eligible for projects built between 2024-2027.
We hope you enjoyed both the webinar and the extra information provided in this follow up. For more information about EcoEngineers’ role in helping interested parties participate in the IRA, contact us at clientservices@ecoengineers-redesign.staging.clientqa.co..
EcoEngineers’ Carbon Literacy training is designed to bring together internal stakeholders, from the CEO, CFO and Chief Sustainability Officer to operations managers and frontline staff, to develop a shared vocabulary and speak the same language related to the energy transition.
Hundreds of attendees joined us for a sneak peek of this training and learned the basics of the new carbon world, and came away with ideas on how to educate your staff, investors, and stakeholders on these topics. The panelists also answered a number of questions at the end of the program.
We answer questions from our most recent webinar on credit stacking
Decarbonization has become a priority across every industry, and state and federal regulatory legislations cannot accommodate them all at once. This is where the voluntary carbon market shines. But what is the voluntary carbon market? Does your business qualify? And can your efforts be rewarded in both regulatory and voluntary markets? Experts at EcoEngineers answered these questions and more in our webinar on Dec. 20, 2022. Climate Risk Director Roxby Hartley, Ph.D., and Senior Carbon Consultant David LaGreca were the webinar experts. Together they have answered some of the more popular questions from the webinar below. Keep in mind without proper due diligence and knowledge gathering required to answer on specific projects, we are speaking mostly in industry generalities. Watch the full webinar here.
If carbon credits are sold (emissions have been reduced in the creation of such credits), can the project owner claim those reductions in addition to selling the credits?
DL: Short answer is no. There are claims that can be made, but not ones that directly apply the emissions reduction to the project owner.
How does one learn about the Voluntary Carbon Market?
DL: EcoEngineers has a whole suite of training and educational workshops including Carbon Literacy, Voluntary Markets 101, and more. Contact clientservices@ecoengineers-redesign.staging.clientqa.co. to learn more. Another good resource is carboncredits.com. News media can be somewhat unreliable due to politicking.
Are removal credits and offset credits worth the same?
DL: Not at this moment. Nature-based removals credits (soils, afforestation, blue carbon) are presently commanding a premium over nature-based offset credits (avoided deforestation, avoided emissions, renewable energy, etc). Biochar, direct air capture, and other novel removal technologies are presently being offered at 10-100 times traditional offset credits.
Can companies operating outside of the US take advantage of credit stacking, too?
DL: Yes, however, 45Q and some other incentives are specifically for US-based operations. Credit stacking is a specialized approach to project finance that must be tailored to the particular geography and policy structure where the activity is taking place.
Beyond California, Oregon, and Washington — and now all of Canada — what do you see as the next state(s) to implement an LCFS program, and when?
RH: New Mexico and New York are the current front runners.
What is the impact of eRINs on credit stacking? ?
DL: RECs generation will likely be impacted, and it may impact the additionality of voluntary carbon credit projects. The program will likely be parallel to RINs as far as how it effects credit stacking with LCFS, voluntary markets, and tax incentives.
How do direct air capture CO2 (DAC), biogenic CO2, and post-combustion credits?
DL: The measurement, review, and verify (MRV) process is different for each crediting approach. Under 45Q of the IRA, the maximum credit value is the same. For voluntary crediting schemes, the various registries treat each one differently (ACR vs VCS). The value of each credit is different as well, with DAC commanding the highest price today, with carbon capture next, and post-combustion being of lower relative value.
Has the EPA approved woody biomass RINs for sustainable aviation fuel (SAF)?
RH: No – but there are multiple projects interested in using lignocellulosic feedstocks for many different fuel.
If your RNG is used to make Hydrogen, can you earn carbon credits also?
DL: Most likely you could earn IRA tax incentives, but the methodology for offset credits using hydrogen requires particular feedstocks and monitoring. It is possible, on a case-by-case basis.
Do you know how long it takes for CARB to approve Sequestration Sites required to be counted for LCFS? Has this successfully been done?
RH: It took CARB about 2 1/2 years, but it has been done.
Decarbonization has become a priority across every industry, and state and federal regulatory legislations cannot accommodate them all at once. This is where the voluntary carbon market shines.
But what is the voluntary carbon market? Does your business qualify? And can your efforts be rewarded in both regulatory and voluntary markets? Experts at EcoEngineers answered these questions and more in our webinar on Dec. 20, 2022.
The panelists also answered a number of questions at the end of the program. Check back for our 10 Questions feature from the webinar panelists on our blog in the next couple of weeks!
Earlier in 2022, Carbon Consultant Sean Gassen presented at the International District Energy Association‘s conference in Toronto. His topic touched on the myriad of ways renewable natural gas, or RNG, can be used to lower the overall carbon footprint of a fuel, product, or process.
Sean GassenMark HeckmanLisa Hanke
Sean dives into the basics of biogas and how it can be used for heat, electricity, or upgraded to RNG. He discusses how scope emissions can be minimized by using the fuel, too. For more information about this presentation or the topics discussed here, contact Sean at sgassen@ecoengineers-redesign.staging.clientqa.co..
We answer questions from our most recent webinar on Canada’s fuel regulation
Canada announced its updated low-carbon fuel standard, the Clean Fuel Regulations (CFR), in July 2022 as an update to the legislation previously known as the Clean Fuel Standard. EcoEngineers experts gave a 10,000-foot view of the regulations in a webinar on Nov. 3, 2022. Regulatory Engagement Director Lisa Hanke and Ethanol Services Director Mark Heckman were panelists on the webinar. Together with Carbon Analyst Seyed Mousavi, who has done most of EcoEngineers’ internal research on the program’s carbon intensity calculator, they have answered some of the more popular questions from the webinar below. Keep in mind without proper due diligence and knowledge gathering required to answer on specific projects, we are speaking mostly in industry generalities. Watch the full webinar here.
What’s the average processing time for CI certification in the CFR?
Can CFR credits be stacked with U.S. Renewable Fuel Standard (RFS) RIN credits?
MH: Exporters have to retire RINs for compliance within one month of the export event (this was a recent change in 2014).
LH: They can, however, be stacked with British Columbia’s LCFS credits.
Are there projections for the value of Canada compliance credits?
LH: There are no credible projections. Reports state amounts ranging from $25-$75/ton, but these are speculative.
Is there a deadline for production facilities to get registered in order to create pre-credits?
SM: Primary supplier must register with the ECCC no later than 45 days after the day that they have produced in Canada or imported into Canada during a compliance period a total volume of 400 m3 or more of gasoline or diesel. But unfortunately the opportunity for early credit generation is closed.
Will there be temporary CI pathways available for application?
SM: Yes, when the facility has less than three months of operating data, there is an alternative method suggested by ECCC to estimate the CI without using openLCA.
Can A US entity, with no operations in Canada, send qualifying renewable fuels to Canada and generate and market credits under the CFR?
MH: Yes, get registered!
Can you speak to the similarity of CI scores between GREET and OpenLCA for different types of fuels (e.g., hydrogen, RNG)?
SM: The CI score from CA GREET and openLCA will not be exactly the same, but there are similarities between these two approaches.
LH: You can also contact EcoEngineers to discuss completing a preliminary CI using the OpenLCA Model.
Is there an excel file for something that mimics OpenLCA that calculates CI ? Or do you have to download the software to input and see how the CI looks (dairy cows, etc). Is the model complete and ready to use?
SM: There is no workbook to calculate the CI value directly, and openLCA software with Fuel LCA Model needs to be used. However, there is CFR Data Workbook that carries all the calculations, and help enter the data into the software in the right format.
LH: The model is ready to use and can be found at openlca.org.
At what point in a project’s development should the facility become registered and a CI score application made?
LH: I agree. This process should be started as soon as required data is available to ensure fuel shipments can generate credits.
Does CFR consider “avoided methane” from manure? BC LCFS doesn’t consider this, and the CI of manure is high in that program.
SM: Yes, under the CFR, the baseline avoided emissions from dairy manure management are considered in the final CI of the RNG project. A similar approach to CARB is applied to estimate avoided emissions..
