The Overlooked Step To Max Out Your 45Z Credit

Renewable fuel producers are eager to claim the 45Z Clean Fuel Production Credit, but one powerful opportunity often flies under the radar—offsetting a facility’s electricity emissions through Energy Attribute Certificates (EACs).

As one of the most significant incentives for low-carbon fuel production in recent years, 45Z rewards producers that can demonstrate measurable reductions in their carbon intensity (CI). The difference of just a few CI points can translate into millions of dollars in additional credit value over the life of the program. This makes every emissions-reduction strategy worth exploring, especially those—like EACs—that can be implemented without major infrastructure changes.

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By strategically using EACs, producers can further lower their CI score and qualify for a higher tax credit value. If EACs are not part of your 45Z strategy, you may be leaving money on the table.

EAC eligibility criteria for 45Z are outlined in the U.S. Department of Energy (DOE) 45ZCF-GREET User Manual. While tailored for ethanol and other clean fuel producers, these rules draw heavily from the 45V Hydrogen Production Tax Credit framework.

What Are Energy Attribute Certificates?

An EAC is a contractual instrument that conveys information—or “attributes”—about one megawatt-hour of electricity, including the resource used to create it and the emissions associated with its generation. Owning and retiring an EAC gives the holder the right to claim the renewable attributes it represents.

Renewable Energy Certificates (RECs) are the most familiar type of EAC. Under 45Z, qualifying EACs allow renewable fuel producers to specify electricity purchases from solar, wind and hydroelectric sources, which are modeled as zero-emission in the DOE’s 45ZCF-GREET model. This allows renewable fuel producers to offset the emissions from grid electricity.

Three Key Requirements for EAC Eligibility

The DOE identifies three key guardrails—deliverability, temporal matching and incrementality—to ensure that a transportation fuel producer’s electricity use accurately reflects the emissions from the specific generators associated with the purchased and retired EACs. These qualifying EAC requirements are designed to reduce the risk of induced grid emissions pushing lifecycle GHG emissions rates above statutory thresholds. Much of the rationale for including these guardrails, again, is drawn from the 45V Credit for Hydrogen Production.

Incrementality standards require that the renewable generation source must be no more than 36 months older than the ethanol production facility. Temporal matching is required annually through 2029; hourly matching will be mandatory starting in 2030. Temporal matching must be measured in megawatts, so that the number of megawatt hours of electricity used to produce transportation fuel would be matched with an equal number of megawatt hours from qualifying EACs.

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Deliverability requirements state that the electricity must be generated in the same region as the production facility, as defined in the DOE’s National Transmission Needs Study. For example, an ethanol plant in the Midwest region must source EACs from that same region to meet deliverability requirements.

Two Options for Claiming Electricity Use

The first option available to ethanol producers is behind-the-meter (BTM) electricity, which is electricity generated and consumed on-site that can be claimed using qualifying EACs. These must be documented and retired in accordance with 45Z requirements. The amount entered in the model cannot exceed the facility’s total electricity consumption, even if the facility is a net exporter. All fuels used to generate BTM electricity must be accounted for in the facility’s energy balance.

The second option is grid power. Electricity purchased from the grid is modeled using regional emissions factors tied to the DOE’s Needs Study regions. It must be entered in the “Electricity: Grid Consumption” field of the 45ZCF-GREET model. Unless substantiated by qualifying EACs, grid power is assumed to have the average emissions profile of the region.

Some producers will use a combination of options one and two, in which case amounts must be carefully documented and entered into the GREET model.

Important Limitations

• No gas EACs – Book-and-claim instruments for renewable natural gas (RNG) are not currently allowed under 45Z. Treasury may allow them in the future, but additional guidance is needed.

• No double counting – The same EAC cannot be claimed under multiple programs. For example, an EAC used for 45Z cannot also be claimed under California’s LCFS.

EAC Registries and Verification

Only qualified EAC registries may be used to issue and retire EACs. These registries must provide a publicly accessible view of all currently registered electricity generators to prevent duplicative registration. Registries must also meet criteria such as issuing unique IDs for each EAC, preventing duplicate claims, identifying EAC owners and providing public transparency into registered electricity generators.

Qualified EAC registries act as third-party verifiers for issuance and management. Retirement of EACs must be verified through a statement issued by the registry. If a generator is registered in multiple systems, the attestation must verify that each EAC is only issued once.

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Why It Matters for Your CI —and Your Bottom Line

Electricity emissions can represent a significant share of your plant’s CI. Because 45Z credit value is directly tied to CI, reducing your electricity score can help your ethanol qualify for the credit, increase the per-gallon credit value and improve market positioning in low-carbon fuel markets.

For example, replacing average grid electricity with wind, solar or hydro-backed EACs could drop your CI a handful of points—adding up to meaningful value over millions of gallons.

Practical Takeaways for Ethanol Producers

• Start now – If you plan to use purchased EACs, secure contracts that meet incrementality, temporal matching and deliverability requirements. Early action may help lock in favorable pricing and availability, especially as more producers enter the market.

• Document everything – Proof of EAC retirement, facility age, generation date and geographic location will be required.

• Use only qualifying sources – Under 45Z, only EACs from wind, solar or hydroelectricity count toward reducing your CI score.

• Think strategically – EACs can improve your economics under 45Z.

In short, qualifying EACs are more than a compliance tool—they are a profit lever. With thoughtful procurement and documentation, ethanol producers can lower CI, qualify for 45Z and increase the credit value per gallon.

In a decarbonizing fuel landscape, EACs may be the tipping point for renewable fuel producers qualifying for the 45Z tax credit. Compliance will be essential, but for those that plan ahead, the payoff could be substantial.