Comment from Biochar Policy Project of the National Center for Appropriate Technology

Additional Comments regarding IRS Notice of proposed rulemaking on Section 45Z Clean Fuel Production Credit, REG-121244-23 We are writing to add one point to our earlier comment objecting to the Definition of a Qualified Facility in 1.45Z-1(b)(18), which provides that a qualified facility for producing SAF must be limited to a single production line that includes all components that function interdependently to produce the fuel. We wrote that said requirement would be profoundly damaging to small businesses and impede the development of pyrolysis pathways that produce phenolic oil and sugar as biointermediates for production of SAF. Please consider the precedent set by EPA, which addressed this issue in its regulations for the Renewable Fuel Standard in 2021 by adopting Title 40, Part 80, Subpart M, 80.1476(g)(1). It provides that a producer of a biointermediate may transfer that biointermediate to one renewable fuel producer. That originally included biocrude (oil) and several other biointermediates. It was expanded in 2022 to include cellulosic sugar. EPA had earlier adopted rules that required renewable fuels to be produced in a single facility. But EPA wrote in 2021 that it was adopting the change “because we believe that the use of biointermediates to produce renewable fuels will be a reasonable and positive development for future growth in production, particularly of cellulosic and advanced biofuels.” We urge you to consider the EPA approach and rationale. We would prefer a rule allowing one biointermediate producer to transfer two biointermediates, each to only one sustainable aviation fuel producer. That would allow pyrolysis facilities producing both biocrude and sugar, to transfer the former to refinery for production of SAF and the cellulosic sugar to a facility producing SAF through an ethanol pathway. But having the ability to transfer one biointermediates, as EPA allows, would be a step forward. The autothermal fast pyrolysis process developed at Iowa State University by Dr. Robert Brown offers a relatively low-cost pathway to production of low carbon sustainable aviation fuel from cellulosic feedstocks. As we discussed in our earlier comment, the proposed rule would allow that process to qualify for the 45Z tax credit only in the case of a very large, highly capitalized producer with its own oil refinery and a network of small pyrolysis facility providing it with biocrude. That would impede the development of the pyrolysis pathway to sustainable aviation fuel. New industries are not generally created at scale. Technologies must first be commercially proven and improved at a scale that limits the cost of failures. Only once commercially proven can a new SAF pathway reach the scale that would be required to support an oil refinery. Please consider either the EPA approach or allowing one biointermediate producer to transfer two biointermediates, each to only one sustainable aviation fuel producer. Thank you for considering our views. Robert Brown, Anson Marston Distinguished Professor in Engineering and Gary and Donna Hoover Chair in Mechanical Engineering at Iowa State University, Chuck Hassebrook, Director of the Biochar Policy Project of the National Center for Appropriate Technology and Dr. David Laird, Co-founder and President of N-Sense, and Professor-Emeritus of Agronomy at Iowa State University.