Policy Integrity submitted comments to the Department of Treasury and Internal Revenue Service on their proposed rule implementing the Section 45Y Clean Electricity Production Credit and Section 48E Clean Electricity Investment Credit. The comments focus on the treatment of waste methane fuels under these credits, emphasizing the need for accurate emissions accounting and preventing unintended consequences.
Our key recommendations include:
- To be accurate, counterfactuals that determine the lifecycle GHG emissions for Waste Methane Fuel must be specific, because two fuels may share the same superficial label but have very different emissions implications.
- Counterfactuals must assume that, in the absence of Sections 45Y and 48E, businesses would have followed applicable laws, like prohibitions on venting.
- Because counterfactuals must account for significant indirect emissions related to the full fuel lifecycle, Treasury must model ripple effects through the complete energy market and across other industries with computable general equilibrium modeling.
- Treasury should establish an approach to excluding Waste Methane Fuels that would have been produced even without the Section 45Y and 48E subsidies.
- Treasury should adopt stringent policies to avoid the production of additional waste.
- Treasury should bolster its discussion of pipelines that carry Waste Methane Fuels mixed with fossil natural gas to ensure the final rule complies with the facility-focused language of Sections 45Y and 48E.
- Treasury should strengthen its Section 48E test for showing a facility is anticipated to have a GHG emissions rate of zero or less.