Due to the efforts of US Senator Sherrod Brown (D-OH), the US Department of Treasury (DoT) is adjusting tax credit rules to promote American biogas manufacturing. The Senator wrote to the DoT in January of 2024, identifying errors in the Section 48 Investment Tax Credit.
The Department responded positively and has agreed to make these changes. The result will be better support for domestic manufacturing, American farmers, and American renewable energy efforts.
Section 48 Investment Tax Credit
The Inflation Reduction Act of 2022, which was signed into law by President Biden, included amongst its topics, a drive for domestic energy production and manufacturing. The act was a historic marker in America’s recognition of clean energy needs and retaining related job opportunities on our own soil. It also modified the clean energy Investment Tax Credit.
The Section 48 Investment Tax Credit (ITC) provides guidance on energy technologies and operations. It was originally set in place in 1962 and last updated in 1987. New proposals by the DoT aim to revise the credit, due to the Inflation Reduction Act of 2022, and include the newer energies of solar, wind, and more.
These changes were influenced by the Agricultural Environmental Stewardship Act (AESA), a bill authored by Senator Brown. The bill provides a 30% tax credit to farmers who invest in biogas technology and boosts the field by encouraging investments, which creates more jobs and improves farmers’ income.
Biogas
A naturally occurring substance, biogas is the result of the breakdown of organic material. It happens all on its own in places like landfills, manure management, and, most obviously, nature. Where do tax credits come into play, then?
By harnessing the process of biogas conversion and optimizing it with machinery and technology, usable materials can be created. In fact, it can be used in place of coal or natural gas, making it an important component in the march away from fossil fuel dependence.
Biogas systems require collection, storage, management, and conversion. There are over 2,200 biogas systems in operation in the United States, and many more are in production. The DoT’s recently proposed changes to the Section 48 ITC excluded cleaning and conditioning equipment from what could be covered under the tax credit.
Senator Brown’s Efforts
In a January 2024 letter to the DoT, Senator Brown called on the agency to correct flaws in their recent Section 48 ITC proposal. His intention was to request changes that would reflect the conversion of biogas into renewable gas, thus expanding the variety of projects that would be impacted by the tax credit.
In a statement by Senator Brown, “correcting these proposed rules will help convert these waste materials into renewable fuel that can be used to power farms, households, and businesses across the country. We need to do all we can to support American manufacturing innovation and American farmers while expanding energy options and reducing emissions.”
The DoT sent a response one week ago in agreement with the Senator’s recommended changes. But Senator Brown isn’t quitting there. He’s asking for more changes to the tax credit to further support the field of biogas conversion. When it comes to protecting and supporting American manufacturing, jobs, and innovations, the work is never done.
