By Andi Anderson
The Clean Fuels Production Tax Credit, introduced under the 2022 Inflation Reduction Act, is facing an uncertain future as Congress debates ways to offset proposed tax-cut extensions.
This credit supports clean-fuel production by offering 20 cents per gallon for nonaviation fuels and 35 cents per gallon for aviation fuels that reduce emissions by at least 50% compared to petroleum.
Michigan is home to six key clean-fuel initiatives, including efforts to develop Sustainable Aviation Fuel, making the state a significant stakeholder in the debate.
Critics argue that the credit is expensive and may mostly benefit large companies while distorting fuel markets and possibly raising prices.
Estimates from the U.S. Treasury suggest that repealing the credit could save $12.8 billion over ten years, but experts like Alex Muresianu from the Tax Foundation caution that these figures might not fully reflect real revenue impacts.
The credit, which began on January 1, 2024, is scheduled to run through 2027, unless extended.
With political divisions in Congress, the future of this program remains unclear. Some lawmakers are pushing for full repeal as part of broader budget talks, while others warn that doing so could reduce investment in clean energy and hurt job growth.
Nan Swift, a resident fellow at R Street Institute, notes that the tax credit may be part of larger negotiations, but right now, there’s little clarity on how Congress will move forward.
As debates continue, Michigan’s clean-fuel sector watches closely. The outcome could significantly impact the state’s push toward cleaner energy and its position in the national green economy.
Photo Credit: gettyimages-shotbydave
Categories: Michigan, General