Platts modifies IRA tax credit to calculate Renewable Diesel R100 price assessment

Platts, part of S&P Global Commodity Insights, has modified the federal tax credit for its renewable diesel (RD100) price assessment in Los Angeles and San Francisco, effective Jan. 1, 2025.

This change aligns with the transition under the Inflation Reduction Act. Effective Jan. 1, 2025, the blender's tax credit replaced by the Clean Fuel Production credit. Platts will monitor further guidance on the transition of the IRA tax credit.

The new federal tax credit provides a maximum of $1/gal for non-SAF fuels for producers meeting prevailing wage and registered apprenticeship requirements, requiring a maximum carbon intensity of 50 kgCO2/MMBTU. The credit amount is proportional to the level of emissions reduction achieved, up to the full credit.

Platts considers CARB's Renewable Diesel's CI of 37.01 gCO2e/MJ, from Substitute Pathways for Reporting Fuels with Unknown CI for 2024.

Platts calculates the credit multiplying the lifecycle greenhouse gas emissions reduction percentage by the maximum credit price, $1/gal.

Platts calculates lifecycle greenhouse gas emissions reduction percentage as a fraction, the numerator of which is the maximum CI (50 kgCO2/MMBTU) minus the RD CI of 37.01 gCO2e/MJ (or 39.05 kgCO2/MMBTU) and the denominator of which is the maximum CI. The credit is rounded to the nearest hundredth cent.

(50 - 39.05)/50 x 100 cents/gal = 21.90 cents/gal

Therefore, the total R100 IRA tax credit is 21.90 cents/gal.

Please submit any feedback, comments or questions about this proposal to mrts_biofuelsandfeedstocks@spglobal.com and pricegroup@spglobal.com.

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