Early Action Required for the 45Z Credit
The IRS released Notice 2024-49 on May 31, directing fuel producers to act promptly on registration if they intend to claim the Clean Fuel Production Credit for fuel produced starting January 1, 2025. Producers must obtain a signed IRS registration letter dated on or before January 1, 2025 to be eligible for the Section 45Z credit. Given typical IRS processing windows, applications filed late in 2024 risk missing the cutoff.
About the Section 45Z Credit
The Clean Fuel Production Credit was enacted as part of the Inflation Reduction Act and applies to clean transportation fuel produced at a qualified facility during the 2025 through 2027 period.
The credit amount equals the applicable per-gallon (or per-gallon-equivalent) rate multiplied by the emissions factor for the specific fuel type — a structure that directly ties the credit value to the carbon intensity of the fuel produced.
Eligible transportation fuel falls into two categories:
- Sustainable aviation fuel (SAF)
- Non-SAF transportation fuel
Registration Procedures
Notice 2024-49 specifies the distinct registration procedures for SAF and non-SAF producers. The mechanics differ between categories, and producers must follow the correct pathway to secure credit eligibility. Compliance with the full registration and eligibility framework is a precondition for claiming any credit amount.
Implications
For clean fuel producers and their tax advisors, the operational message is direct: register now if production in 2025 is planned. Delays in application processing represent the most avoidable risk to credit eligibility, and the cost of missing the January 1, 2025 registration deadline is the loss of credit value for the entire 2025 production year.