The Renewable Natural Gas Incentive Act of 2023 is a proposed bill that would amend the Internal Revenue Code of 1986 to promote the increased use of renewable natural gas, reduce greenhouse gas emissions, and increase job creation and economic opportunity throughout the United States. While it hasn’t passed, and may never pass, it is interesting to see how legislators are paying more attention to RNG.
Overview of the Proposed Renewable Natural Gas Incentive Act of 2023
The Renewable Natural Gas Incentive Act of 2023 aims to introduce amendments to Section 6426 of the Internal Revenue Code of 1986. The primary amendment involves an enhanced credit for renewable natural gas. The bill defines renewable natural gas as compressed or liquefied gas derived from biomass produced by a registered producer. Under the proposed legislation, the renewable natural gas fuel credit would be set at $1.00 per gallon of renewable natural gas sold for use as a fuel in a motor vehicle or motorboat, sold for use in aviation, or used by the taxpayer.
The act also includes specific regulations. For instance, blended renewable natural gas will be considered renewable natural gas if the taxpayer had a contract with the registered producer before the sale of the blended gas, and the producer provides the required certification. Additionally, the act states that no credit shall be determined under this section with respect to any renewable natural gas produced outside the United States for use as a fuel outside the country.
Benefits of the Proposed Renewable Natural Gas Incentive Act for Businesses
The Renewable Natural Gas Incentive Act of 2023 offers several benefits for businesses, should it be enacted. First and foremost, it supports the reduction of greenhouse gas emissions and other harmful transportation-related emissions, thereby promoting sustainability and environmental protection. The act also encourages the increased utilization of renewable natural gas, a clean and renewable energy source that can assist businesses in reducing their carbon footprint.
Moreover, the proposed legislation can contribute to job creation and economic opportunities throughout the United States, as it incentivizes the production and usage of renewable natural gas. For businesses that incorporate renewable natural gas as a fuel in their operations, the act provides tax benefits in the form of a credit amounting to $1.00 per gallon.
Important Considerations for Taking Advantage of the Proposed Renewable Natural Gas Incentive Act
Given the potential benefits of the Renewable Natural Gas Incentive Act of 2023 for businesses, it is worth exploring how to take advantage of these benefits should the bill become law. Here are some key considerations:
Registration process for producers of renewable natural gas
To be eligible for the renewable natural gas fuel credit, producers of renewable natural gas would need to register under Section 4101(a) of the Internal Revenue Code of 1986. Producers would register with the IRS to claim the credit. The registration process is straightforward and can be completed online. Once registered, producers can proceed to produce renewable natural gas and sell it to businesses that can utilize it as a fuel in their operations.
Eligibility requirements for businesses to claim the tax credit
To claim the renewable natural gas fuel credit, should the bill pass, businesses must use renewable natural gas or gasoline gallon equivalents of a nonliquid renewable natural gas as a fuel in a motor vehicle, motorboat, or aviation. Additionally, the renewable natural gas must be sold by the taxpayer for use as a fuel in one of these applications or used by the taxpayer as a fuel in their own operations. It is important to note that the fuel must be connected to the United States and cannot be produced outside of the country.
Documentation and record-keeping requirements
To claim the proposed renewable natural gas fuel credit, businesses will need to keep records of the amount of renewable natural gas used as a fuel and the corresponding credit earned. These records should be kept for at least three years after the date the tax return was filed. It is recommended that businesses keep detailed records of their renewable natural gas usage and corresponding credits earned to ensure compliance with IRS regulations.
Staying Informed: Monitoring the Progress of the Renewable Natural Gas Incentive Act
While the Renewable Natural Gas Incentive Act of 2023 is currently a proposed bill and has not yet been passed, its potential impact on businesses and the environment is worth noting. The act aims to promote the use of renewable natural gas, reduce greenhouse gas emissions, and stimulate job creation and economic growth. Businesses interested in benefiting from the proposed legislation should stay informed about its progress and, if enacted, take the necessary steps to register as producers of renewable natural gas and comply with the eligibility requirements to claim the tax credit.
By embracing renewable natural gas as a fuel source, businesses can contribute to sustainability efforts, minimize their carbon footprint, and potentially reap the financial advantages provided by the proposed Renewable Natural Gas Incentive Act of 2023. Let us seize the opportunity to promote sustainability and foster economic growth by aligning our practices with the goals of this proposed legislation.
Get in touch with Avisen Legal for all your inquiries and collaboration opportunities. Contact us today to discover the opportunities that await you in the renewable natural gas industry.