Par. 2. Sections 1.45Z-1 through 1.45Z-2 are added to read as follows:
(a) Amount of credit— (1) In general. For purposes of section 38, the section 45Z credit for any taxable year, with respect to a given transportation fuel, is an amount equal to the product of—
(i) The applicable amount for such fuel;
(ii) The total gallons or gallon equivalents of such fuel that were—
(A) Produced by the taxpayer at a qualified facility; and
(B) Sold by the taxpayer in a qualified sale during the taxable year; and
(iii) The emissions factor for such fuel.
(2) Determination of whether fuel is liquid or non-liquid; measurement. Whether a fuel is liquid or non-liquid is determined according to § 1.45Z-1(b)(20)(ii). The volume of a liquid fuel is measured on the basis of gallons adjusted to ambient pressure and temperature of 1 atmosphere and 60 degrees Fahrenheit. The gallon equivalent of a non-liquid fuel is calculated according to § 1.45Z-1(b)(20)(iii).
(3) Calculation rules— (i) Rounding. If the amount of any section 45Z credit, as calculated under paragraph (a)(1) of this section, is not a multiple of one cent, a taxpayer must round such amount to the nearest cent. A taxpayer must round up any amount ending in 0.5 cents or more and round down any amount ending in less than 0.5 cents.
(ii) Pro rata allocation required for sales of transportation fuel in common storage —(A) In general. If a taxpayer sells transportation fuel that is held in common storage with other fuels that have different emissions rates, the taxpayer is treated as selling a pro rata portion of each fuel produced after December 31, 2024, and held in such common storage. As described in § 1.45Z-1(b)(27), the blending of fuels while such fuels are held in common storage does not constitute production of a transportation fuel with a distinct emissions rate.
(B) Example. In 2025, X produces 1,000,000 gallons of ethanol at three different facilities: 200,000 gallons, or 20%, at Facility 1; 250,000 gallons, or 25%, at Facility 2; and 550,000 gallons, or 55%, at Facility 3. The ethanol produced at Facility 1 has an emissions factor of 0.5. The ethanol produced at Facility 2 has an emissions factor of 0.1. The ethanol produced at Facility 3 is not a transportation fuel and no section 45Z credit may be determined with respect to it. X places 1,000,000 gallons of ethanol in common storage tanks. In 2025, X sells 600,000 gallons of ethanol from the common storage tanks in qualified sales. Of the 600,000 gallons sold, 120,000 gallons (20%) are allocated to Facility 1, 150,000 gallons (25%) are allocated to Facility 2, and 330,000 gallons (55%) are allocated to Facility 3. X otherwise satisfies the requirements of the section 45Z credit, and Facility 1 and 2 satisfy the prevailing wage and apprenticeship (PWA) requirements. Therefore, X's section 45Z credit amount is calculated as follows: ($1.06 × 120,000 × 0.5) + ($1.06 × 150,000 × 0.1) = ($127,200 × 0.5) + ($159,000 × 0.1) = $63,600 + $15,900 = $79,500. The result does not change if ethanol produced before January 1, 2025, was also in the common storage tanks.
(4) Applicable amount —(i) In general. The applicable amount is either the base amount for transportation fuel produced at a qualified facility that does not satisfy the PWA requirements, or the alternative amount for transportation fuel produced at a qualified facility that satisfies the PWA requirements. The applicable amount is subject to inflation adjustment for calendar years beginning after 2024, as described in paragraph (a)(4)(iv) of this section.
(ii) Base amount. The base amount is either—
(A) For transportation fuel produced on or before December 31, 2025, 20 cents for transportation fuel which is not sustainable aviation fuel (non-SAF transportation fuel) and 35 cents for SAF transportation fuel; or
(B) For transportation fuel produced after December 31, 2025, 20 cents.
(iii) Alternative amount. The alternative amount is either—
(A) For transportation fuel produced on or before December 31, 2025, $1.00 for non-SAF transportation fuel and $1.75 for SAF transportation fuel; or
(B) For transportation fuel produced after December 31, 2025, $1.00.
(iv) Inflation adjustment —(A) In general. For calendar years beginning after 2024, the applicable amount for any transportation fuel is adjusted by multiplying such amount by the inflation adjustment factor for the calendar year in which the qualified sale of the transportation fuel occurs. If any inflation adjusted amount is not a multiple of one cent, such amount will be rounded to the nearest multiple of one cent. See section 45Z(c)(1). A taxpayer must round up any amount ending in 0.5 cents or higher and round down any amount ending in less than 0.5 cents.
(B) Inflation adjustment factor. The term inflation adjustment factor means the inflation adjustment factor determined and published by the Secretary of the Treasury or the Secretary's delegate (Secretary) pursuant to section 45Y(c) of the Code, determined by substituting “calendar year 2022” for “calendar year 1992” in section 45Y(c)(3). See section 45Z(c)(2). Accordingly, the inflation adjustment factor is, with respect to a calendar year, a fraction whose numerator is the gross domestic product (GDP) implicit price deflator for the preceding calendar year and whose denominator is the GDP implicit price deflator for the calendar year 2022. The term GDP implicit price deflator means the most recent revision of the implicit price deflator for the GDP as computed and published by the Department of Commerce before March 15 of the calendar year. See section 45Y(c)(3).
(C) Publication of inflation adjustment factor. The Secretary will publish guidance in the Internal Revenue Bulletin ( see § 601.601 of this chapter) no more frequently than annually that will provide the inflation adjustment factor.
(b) Timing of credit— (1) In general. A taxpayer is eligible to claim the section 45Z credit only for the taxable year in which the qualified sale of a transportation fuel occurs, provided the taxpayer meets all other requirements to claim the credit.
(2) Credit not allowed for production before January 1, 2025. The section 45Z credit is not allowed for transportation fuel produced before January 1, 2025.
(3) Qualified sale timing— (i) Production. Production of a transportation fuel may take place in an earlier taxable year than the taxable year in which the qualified sale of such fuel occurs. However, a qualified sale cannot take place before the date the fuel is produced.
(ii) Sale to unrelated person. A qualified sale occurs at the time of the sale to the unrelated person. If a taxpayer is treated as selling transportation fuel to an unrelated person under § 1.45Z-1(b)(29)(iii) or (iv) (involving sales by related persons), the qualified sale occurs at the time the related person sells the fuel to an unrelated person.
(iii) Example of qualified sale timing for member of consolidated group. X, a fuel producer, and Y, an intermediary dealer, are members of an affiliated group of corporations filing a consolidated return. The affiliated group, including X and Y, uses the calendar year as its taxable year. In 2025, X produces transportation fuel and sells the fuel to Y. In 2026, Y resells the fuel to Z, an unrelated person. Z then sells the fuel at retail to a customer and places the fuel in the customer's fuel tank. For purposes of section 45Z, X is treated as selling the fuel to Z under § 1.45Z-1(b)(29)(iii) and has made a qualified sale. X's qualified sale to Z occurs in 2026 when Y sells the fuel to Z. Thus, X may only claim a section 45Z credit for that fuel for the 2026 taxable year (assuming all other requirements for the section 45Z credit are met).
(c) Emissions factor —(1) In general. Under section 45Z(b)(1)(A), the emissions factor of a transportation fuel is an amount equal to the quotient of—
(i) An amount equal to—
(A) 50 kilograms (kg) of equivalent carbon dioxide (CO 2 e) per 1,000,000 British thermal units (mmBTU); minus
(B) The emissions rate for such fuel; divided by—
(ii) 50 kg of CO 2 e per mmBTU.
(2) Rounding —(i) In general. If the emissions factor of a transportation fuel is not a multiple of 0.1, a taxpayer must round such amount to the nearest multiple of 0.1. A taxpayer must round up if the digit in the hundredths place is a 5 or higher, and round down if the digit in the hundredths place is less than 5.
(ii) Example. Y produces a transportation fuel with an emissions rate of 21.25 kg of CO 2 e per mmBTU. The emissions factor of Y's fuel is initially calculated as follows: (50−21.25) ÷ 50 = 0.575. 0.575 is not a multiple of 0.1, so Y must round the emissions factor to the nearest multiple of 0.1. Thus, the emissions factor of Y's fuel is 0.6. If instead the emissions rate of Y's fuel were 23 kg of CO 2 e per mmBTU, resulting in an initial calculation of the emissions factor as 0.54, Y must round the emissions factor down to 0.5.
(d) Emissions rate —(1) In general. The emissions rate for a transportation fuel is such fuel's lifecycle greenhouse gas (GHG) emissions expressed as kg of CO 2 e per mmBTU, either as established in the applicable emissions rate table published by the Secretary (pursuant to section 45Z(b)(1)(B) and paragraph (e) of this section), or, in the case of any transportation fuel for which an emissions rate has not been established in the applicable emissions rate table, a provisional emissions rate (PER) determined by the Secretary with respect to such fuel (pursuant to section 45Z(b)(1)(D) and paragraph (f) of this section).
(2) Negative emissions rates —(i) In general. The emissions rate of a transportation fuel produced after December 31, 2025, may not be less than zero (with a resulting emissions factor greater than one), unless such fuel is produced from a primary feedstock that is an animal manure. This limitation also applies to any transportation fuel (as defined in § 1.45Z-1(b)(34)) used as a production input.
(ii) Examples. The following examples illustrate the rules regarding negative emissions rates.
(A) Example 1. Prohibition of negative emissions rate except for transportation fuel produced from animal manure. In 2026, X produces renewable natural gas (RNG) by anaerobic digestion and biogas upgrading of an animal manure, and Y produces RNG by anaerobic digestion and biogas upgrading of landfill gas. The emissions rates of X's and Y's fuels are both, without further adjustment, −10 kg of CO 2 e per mmBTU. X's fuel is produced from animal manure, so no adjustment of the emissions rate is necessary and the emissions factor for X's fuel is 1.2. However, because Y's fuel is not produced from animal manure, the emissions rate for Y's fuel must be adjusted up to 0, so the emissions factor for Y's fuel is 1.0.
(B) Example 2. Prohibition of negative emissions rate for transportation fuel used as production input. In 2026, Z produces ethanol by fermentation of U.S. corn starch. As part of the ethanol production process, Z buys alternative natural gas and uses it as process fuel. The alternative natural gas meets the definition of a transportation fuel under § 1.45Z-1(b)(34) and has an emissions rate of −100 kg of CO 2 e per mmBTU. However, the alternative natural gas is not derived from animal manure and serves only as a process fuel, not the primary feedstock ( see § 1.45Z-1(b)(34)(iii), § 1.45Z-1(b)(35), and paragraph (e) of this section), for Z's ethanol. For purposes of accounting for the alternative natural gas when calculating the emissions rate for Z's ethanol, Z must adjust the emissions rate of the alternative natural gas up to 0 kg of CO 2 e per mmBTU.
(3) Indirect land use change excluded. For transportation fuel produced after December 31, 2025, the emissions rate of a fuel does not include any emissions attributed to indirect land use change. See section 45Z(b)(1)(B)(iv).
(e) Emissions rate table —(1) In general. As required by section 45Z(b)(1)(B)(i), the Secretary will annually publish a table that establishes the emissions rate for similar types and categories of transportation fuels (as defined in § 1.45Z-1(b)(35)) based on the lifecycle GHG emissions for such fuels expressed as kg of CO 2 e per mmBTU ( emissions rate table ), which a taxpayer must use for purposes of the section 45Z credit. The emissions rate table for each calendar year will be published in the Internal Revenue Bulletin ( see § 601.601 of this chapter). A taxpayer must use the applicable emissions rate table as specified in paragraph (e)(2) of this section.
(2) Applicable emissions rate table —(i) In general. For taxable years beginning after December 31, 2024, the applicable emissions rate table for a taxpayer is the emissions rate table that is in effect on the first day of the taxpayer's taxable year of production. For production after December 31, 2024, in taxable years beginning before January 1, 2025, the applicable emissions rate table is the emissions rate table effective for 2025.
(ii) Use of applicable emissions rate table. A taxpayer that produces a fuel for which the applicable emissions rate table establishes an emissions rate must use the corresponding allowed methodologies, as specified in paragraph (e)(3) of this section, provided in such table to determine the emissions rate for all such fuel produced during the taxpayer's taxable year.
(iii) Emissions rate established in emissions rate table— (A) In general. An emissions rate table establishes the emissions rate for a fuel if the emissions rate table includes both the type and category of fuel. An emissions rate table does not establish the emissions rate for a fuel if such table includes the type but not the category of fuel.
(B) Effect of additions to methodology. If an emissions rate table does not initially include a type or category of fuel but an allowed methodology is updated to add such type or category of fuel during the calendar year, then that type or category of fuel will be considered included in such emissions rate table.
(iv) Examples. The following examples illustrate the rules regarding the applicable emissions rate table.
(A) Example 1. General rule for identifying applicable emissions rate table. X, a calendar year taxpayer, is a fuel producer. In 2025, X produces biodiesel by transesterification of U.S. soybean oil. The emissions rate table for calendar year 2025 includes both biodiesel, the type of fuel X produces, and transesterification of U.S. soybean oil, the category of biodiesel X produces. Therefore, the emissions rate table for calendar year 2025 establishes the emissions rate for X's biodiesel and is the applicable emissions rate table for all of X's production of such biodiesel in 2025.
(B) Example 2. Type or category of fuel added to allowed methodology. Y, a calendar year taxpayer, is a fuel producer. In 2025, Y produces biodiesel by transesterification of Canadian soybean oil. The emissions rate table for calendar year 2025 includes the type of fuel Y produces, biodiesel. However, the 2025 emissions rate table for calendar year 2025 does not include transesterification of Canadian soybean oil, the category of biodiesel Y produces. The initial version of the 45ZCF-GREET model, an allowed methodology, released January 15, 2025, also includes the type but not the category of fuel Y produces. On June 1, 2025, the U.S. Department of Energy (DOE) publicly releases an updated version of the 45ZCF-GREET model that adds the transesterification of Canadian soybean oil for biodiesel. Because the update to the 45ZCF-GREET model adds the category of biodiesel Y produces during the calendar year, the emissions rate table for calendar year 2025 is considered to include the category of fuel Y produces. As such, the emissions rate table for calendar year 2025 establishes the emissions rate for Y's biodiesel and is the applicable emissions rate table for all of Y's production of such biodiesel in 2025.
(3) Allowed methodologies for emissions rate table —(i) In general. A taxpayer producing a fuel for which an emissions rate is established by the applicable emissions rate table must determine the fuel's emissions rate using the methodologies allowed under paragraphs (e)(3)(iv) and (v) of this section ( allowed methodologies or allowed methodology ), as directed by the applicable emissions rate table.
(ii) Use of most recent version of allowed methodology —(A) In general. A taxpayer must use the first version of an allowed methodology that is publicly available in the taxable year of production and that includes the type and category of such fuel ( most recent version of an allowed methodology ). If an allowed methodology is updated with respect to an included type or category of fuel and such updated methodology becomes publicly available after the first day of the taxable year of production but still within such taxable year, then the taxpayer may, at its discretion, treat such updated version as the most recent version of such methodology.
(B) Examples. The following examples illustrate the rules regarding allowed methodologies.
( 1 ) Example 1. Choice after methodology update. X, a calendar year taxpayer, is a fuel producer. In 2025, X produces biodiesel by transesterification of U.S. soybean oil. The 2025 emissions rate table is the applicable emissions rate table; it identifies the 45ZCF-GREET model as the only allowed methodology. The initial version of the 45ZCF-GREET model, released January 15, 2025, includes the type and category of the fuel X produces. On June 1, 2025, the DOE publicly releases a version of the 45ZCF-GREET model that updates the transesterification pathway. Under paragraph (e)(3)(ii)(A) of this section, X may use either the January 15, 2025, or the June 1, 2025, version of the 45ZCF-GREET model to calculate the emissions rate for all biodiesel produced using such pathway in 2025.
( 2 ) Example 2. Addition of type or category of fuel to methodology without further updates. Y, a calendar year taxpayer, is a fuel producer. In 2025, Y produces biodiesel by transesterification of Canadian soybean oil. The initial version of the 45ZCF-GREET model, released January 15, 2025, includes the type, but not the category, of fuel Y produces. On June 1, 2025, the DOE publicly releases an updated version of the 45ZCF-GREET model that adds the transesterification of Canadian soybean oil for biodiesel. As such, the 2025 emissions rate table is considered to include Y's type and category of fuel; it identifies the 45ZCF-GREET model as the only allowed methodology. Under paragraph (e)(3)(ii)(A) of this section, because the June 1, 2025, version of the 45ZCF-GREET model is the first publicly available version that includes Y's type and category of fuel, Y must use the June 1, 2025, version of the 45ZCF-GREET model to calculate the emissions rate for all biodiesel it produced by transesterification of Canadian soybean oil in 2025.
( 3 ) Example 3. Choice of methodology after addition of type or category of fuel to methodology. Same facts as in paragraph (e)(3)(ii)(B)( 2) of this section ( Example 2 ), except that on September 1, 2025, the DOE publicly releases a version of the 45ZCF-GREET model that updates the transesterification of Canadian soybean oil pathway. Under paragraph (e)(3)(ii)(A) of this section, Y cannot use the January 15, 2025, version of the 45ZCF-GREET model, but may use either the June 1, 2025, or the September 1, 2025, version of the 45ZCF-GREET model to calculate the emissions rate for all biodiesel it produced using such pathway in 2025.
(iii) 45ZCF-GREET model as a successor model —(A) In general. For purposes of section 45Z(b)(1)(B)(ii), the 45ZCF-GREET model is a successor model.
(B) Certain emissions accounting rules— ( 1 ) In general. In the 45ZCF-GREET model, for purposes of accounting for emissions associated with hydrogen (as a production input), natural gas alternatives (as a production input or as the transportation fuel produced), electricity, and carbon capture and sequestration, rules similar to the rules under section 45V of the Code apply, unless otherwise specified by the 45ZCF-GREET model with respect to technical modeling issues that are subsequently identified by the DOE or technical differences arising from the application of the section 45V rules to the 45ZCF-GREET model.
( 2 ) Similar rule for use of energy attribute certificates (EACs); incrementality. With respect to the use of an EAC within the 45ZCF-GREET model, rules similar to § 1.45V-4(d) apply. When applying the incrementality rules in § 1.45V-4(d)(3)(i) for purposes of the 45ZCF-GREET model, a taxpayer's facility is considered placed in service in the first taxable year it produces a transportation fuel. Thus, the electricity-generating facility that produced the unit of electricity to which the EAC relates must have a commercial operations date (COD) that is no more than 36 months before the first day of the taxable year that the facility for which the EAC is retired first produced a transportation fuel, or, if the electricity represented by the EAC is produced by an electricity-generating facility that uses carbon capture and sequestration (CCS) technology, such technology has a placed in service date that is no more than 36 months before the first day of the taxable year that the facility for which the EAC is retired first produced a transportation fuel.
( 3 ) Example. Similar incrementality rules applied to existing fuel production facility. X owns and operates Facility, which has produced ethanol by fermentation of U.S. corn starch since 2002. On January 1, 2024, X finishes upgrading Facility, so that the ethanol produced at Facility has an emissions rate that is less than 50 kg of CO 2 e per mmBTU. For purposes of accounting for emissions associated with electricity, X purchases and retires EACs and uses those EACs when calculating the emissions rate of its ethanol. Although Facility has been operating since 2002, it only began producing a transportation fuel on January 1, 2024. For purposes of applying the incrementality rules to EACs used within the 45ZCF-GREET model, Facility is considered placed in service on January 1, 2024. Thus, an electricity generating facility that produced a unit of electricity to which the EACs relate must have a COD no earlier than January 1, 2021.
(iv) Methodology for non-SAF transportation fuel. If the applicable emissions rate table establishes the emissions rate for a non-SAF transportation fuel, then a taxpayer producing such fuel must determine the fuel's emissions rate using the 45ZCF-GREET model, as directed by the applicable emissions rate table.
(v) Methodologies for SAF transportation fuel. If the applicable emissions rate table establishes the emissions rate for a SAF transportation fuel, then a taxpayer producing such fuel must determine the fuel's emissions rate using the most recent version of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) Default Life Cycle Emissions Values for CORSIA Eligible Fuels lifecycle approach (CORSIA Default) or the CORSIA Methodology for Calculating Actual Life Cycle Emissions Values lifecycle approach (CORSIA Actual) (as described in § 1.45Z-1(b)(10)(ii)), or the 45ZCF-GREET model, as directed by the applicable emissions rate table. A taxpayer may choose, for each type and category of SAF transportation fuel that it produces, which of these methodologies to use. For a given type and category of SAF transportation fuel, a taxpayer must use the same methodology to calculate lifecycle GHG emissions associated with all stages of SAF production, from feedstock production through distribution. See § 1.45Z-5, Procedures for certification of lifecycle greenhouse gas emissions rates, for information on how to certify compliance with these methodologies. For purposes of section 45Z(b)(1)(B)(iii)(II), the 45ZCF-GREET model is a similar methodology to CORSIA.
(vi) Additional instructions on methodologies. A taxpayer must use an allowed methodology in accordance with the applicable emissions rate table, accurately enter all information requested by such methodology, and follow all publicly available instructions for the use of such methodology.
(f) Provisional emissions rate (PER) —(1) In general. If a taxpayer produces an eligible fuel, as defined in § 1.45Z-1(b)(12), then the taxpayer may file a petition with the Secretary for a determination of the emissions rate ( provisional emissions rate (PER) ) for such eligible fuel ( PER petition ). See section 45Z(b)(1)(D). Before filing a PER petition, the taxpayer must first submit a request to the DOE for an emissions value (EV) for an eligible fuel ( emissions value request (EVR) ). The DOE will consider such taxpayer the emissions value applicant ( EV applicant ). The EV applicant must receive a calculated emissions value letter (CEVL) from the DOE for such fuel. Before submitting an EVR, an EV applicant must review the applicable emissions rate table and the most recent version of the allowed methodologies to ensure that the applicable emissions rate table has not already established the emissions rate for the EV applicant's type and category of fuel. After obtaining a CEVL, the taxpayer may then file a PER petition for the eligible fuel that is the subject of the CEVL. The EV applicant must submit an EVR to the DOE in accordance with the procedures described in paragraph (f)(3) of this section. The taxpayer must submit a PER petition in accordance with the procedures described in paragraph (f)(4) of this section. The DOE and the IRS, respectively, will deny any EVR or PER petition that does not follow the procedures in this paragraph (f).
(2) Threshold requirements. An EV applicant may submit an EVR, and subsequently a PER petition, only for an eligible fuel. The DOE and the IRS, respectively, will deny any EVR or PER petition for a type and category of fuel included in the applicable emissions rate table. Additionally, the DOE and the IRS, respectively, will deny any EVR or PER petition based on a facility rather than a type or category of fuel.
(3) Procedures for requesting emissions value from DOE— (i) In general. The DOE will publish specific guidance and procedures for an EV applicant to submit an EVR to the DOE. An EV applicant that submits an EVR must follow the procedures specified by the DOE to request and obtain such emissions value, including the DOE's Section 45Z EVR process instructions (Instructions). The DOE will evaluate an EVR using the same well-to-wheel system boundary that the 45ZCF-GREET model employs. As used in this paragraph (f)(3), the term well-to-wheel includes well-to-wake with respect to aviation fuel. Additionally, the DOE will treat background data parameters in the 45ZCF-GREET model (fixed data that a 45ZCF-GREET model user cannot change) as background data (fixed data that an EV applicant cannot change) in evaluating an EVR. For purposes of accounting for emissions associated with hydrogen (as a production input), natural gas alternatives (as a production input or as the transportation fuel produced), electricity, and carbon capture and sequestration, rules similar to the rules under section 45V apply, unless otherwise specified by the DOE with respect to subsequent technical modeling issues or technical differences arising from the application of the section 45V rules to an eligible fuel. The DOE may decline to review an EVR that is not responsive, including an EVR that is not for an eligible fuel or an EVR that is incomplete. An EV applicant seeking a new emissions value for a given type and category of fuel after the DOE has completed its analysis may reapply only if the EV applicant wishes to resubmit its EVR with new or revised technical information or clarifications related to the information previously submitted. An EVR is complete once the DOE either issues the EV applicant a CEVL or denies the EVR.
(ii) Required information for an EVR —(A) EVR for an eligible fuel that is not a category of hydrogen. An EV applicant submitting an EVR for an eligible fuel that is not a category of hydrogen must submit the following information to the DOE:
( 1 ) Specific sections of the Class 3 front-end engineering and design (FEED) study (or studies) as defined by the Association for the Advancement of Cost Engineering (AACE) International Recommended Practice No. 18R-97, or similar indication of project maturity such as project specification and cost estimation sufficient to inform a final investment decision, as determined by the DOE, that has been completed for each qualified facility at which the applicant produces the eligible fuel, as described further in the Instructions; and
( 2 ) A completed Section 45Z EVR Form, as described in the Instructions.
(B) EVR for an eligible fuel that is a category of hydrogen. An EV applicant submitting an EVR for an eligible fuel that is a category of hydrogen must first submit a section 45V Emissions Value Request Application under the process for a provisional emissions rate determination for the section 45V credit, as described in § 1.45V-4(c). An EV applicant submitting an EVR for an eligible fuel that is a category of hydrogen must submit to the DOE, in addition to the general requirements in paragraph (f)(3)(ii)(A) of this section, the letter obtained under the section 45V emissions value request process from the DOE stating the well-to-gate emissions value that the DOE determined with respect to the facility's hydrogen production pathway and the control number that the DOE assigned to the section 45V Emissions Value Request Application. If the EV applicant produces that category of hydrogen at multiple facilities, such applicant will need to provide this information for each facility. Once such an EV applicant goes through the section 45V emissions value request process and then submits their EVR for purposes of section 45Z, the DOE may issue a CEVL that includes an emissions value that fully accounts for the well-to-wheel emissions of that category of hydrogen.
(4) Procedures for requesting PER determination —(i) In general. To request a PER determination, a taxpayer must file a PER petition with the Form(s) 7218 included with the taxpayer's timely filed (including extensions) Federal income tax return or Federal information return for the first taxable year for which the taxpayer claims the section 45Z credit for the eligible fuel to which the PER petition relates.
(ii) Required information for a PER petition. A PER petition must include the CEVL received from the DOE with respect to the eligible fuel. If the taxpayer obtained more than one emissions value from the DOE, the taxpayer must include the CEVL for each eligible fuel for which it is claiming a section 45Z credit for a given taxable year with the relevant Form(s) 7218. The CEVL(s) included with the Form(s) 7218 constitutes the PER petition.
(5) Determination of a PER —(i) In general. Upon the taxpayer's filing of a PER petition pursuant to paragraph (f)(4) of this section, the PER petition will be deemed accepted by the IRS. The IRS's deemed acceptance of such PER petition is the Secretary's determination of the PER.
(ii) Reliance on emissions value. A taxpayer may rely upon an emissions value provided by the DOE in a CEVL for purposes of calculating and claiming the section 45Z credit, provided that all information, representations, or other data provided to the DOE in support of the emissions value request are accurate. If an applicable emissions rate table subsequently establishes an emissions rate for a fuel subject to a CEVL, a taxpayer must use the applicable emissions rate table and may no longer rely on the CEVL for the fuel.
(6) Not an examination of books and records. The Secretary's PER determination is not an examination or inspection of books of account for purposes of section 7605(b) of the Code and does not preclude or impede the IRS (under section 7605(b) or any administrative provisions adopted by the IRS) from later examining a return or inspecting books or records with respect to any taxable year for which the section 45Z credit is claimed. For example, any information, representations, or other data provided to the DOE in an EVR are still subject to examination. Further, a PER determination does not signify that the IRS has determined that any other requirements of the section 45Z credit have been satisfied for any taxable year.
(g) Emissions rates (including PER) relate back to January 1, 2025. The first emissions rate determined for a type and category of fuel, whether established in an applicable emissions rate table or through the PER process, relates back to January 1, 2025.
(h) Applicability date. This section applies to qualified sales occurring in taxable years ending on or after [date of publication of final regulations in the Federal Register ], except that paragraph (e) of this section applies to qualified sales occurring in taxable years ending on or after January 10, 2025.