Webinar: Benefits to Corporate Buyers of a 45Z Tax Credit Purchase
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Mickelson & Company recently hosted a webinar titled “Benefits to Corporate Buyers of a 45Z Tax Credit Purchase,” offering corporate tax leaders, finance executives, and advisors a timely overview of the Section 45Z Clean Fuel Production Tax Credit and its growing importance in corporate tax-planning strategies. As implementation of the Inflation Reduction Act (IRA) continues, transferable clean fuel tax credits are emerging as a reliable and strategic tool for reducing federal tax liabilities while supporting broader sustainability initiatives.
Led by Faith Larson, Vice President of Renewables & Legal Counsel at Mickelson & Company, this webinar featured guest speakers Dana Jackson, Tax Partner at RSM; Elisabeth Shellan, Senior Manager at Washington National Tax Office of RSM; and Anthony Reed, Partner at FGS Global. Faith, Dana, Elisabeth, and Anthony focused on how corporate buyers can evaluate, structure, and deploy Section 45Z credits in a manner that balances tax efficiency, risk mitigation, and long-term planning certainty.
Understanding the Section 45Z Clean Fuel Production Credit
Section 45Z, enacted under the IRA, establishes a technology-neutral tax credit for the domestic production and sale of low-carbon transportation fuels, beginning Jan. 1, 2025. The credit replaces and consolidates several legacy biofuel incentives and applies to fuels such as renewable diesel, biodiesel, ethanol, and sustainable aviation fuel (SAF).
Unlike prior regimes, the value of the 45Z credit is directly tied to the lifecycle greenhouse gas (GHG) emissions of the fuel produced. Credits increase as emissions intensity decreases, creating a performance-based framework that rewards cleaner fuel production. Additional enhancements may apply when prevailing wage and apprenticeship requirements are satisfied.
Crucially for corporate buyers, the statute allows these credits to be transferred, creating a developing marketplace where credits can be purchased and applied against federal income tax liabilities without the need for traditional tax equity investment structures.
Key Takeaways from the Webinar
Predictable and Strategic Tax Planning
A central theme of the discussion was the role of Section 45Z credits as a repeatable and predictable tax-planning mechanism. Corporate buyers can use transferred credits to offset federal tax liabilities on an annual basis, improving cash-flow forecasting and reducing effective tax rates.
The ability to structure transactions on a multi-year basis further enhances planning certainty, allowing buyers to align credit purchases with projected taxable income and long-term financial objectives.
Reduced Structural Complexity and Risk
Compared to traditional tax equity arrangements, Section 45Z credit transfers offer a more streamlined approach. Buyers are not required to enter into complex partnership structures, significantly reducing administrative burden and execution risk.
Webinar speakers emphasized that well-structured transactions, supported by robust diligence and appropriate tax opinions, can provide a high level of certainty regarding credit eligibility and usage. Additionally, the absence of recapture provisions for transferred credits further strengthens the risk profile for buyers when compared to other renewable energy tax incentives.
Importance of Diligence and Documentation
While Section 45Z credits present attractive opportunities, the webinar underscored the importance of thorough diligence. Corporate buyers must ensure that credits are properly generated, verified, and supported by sufficient documentation prior to purchase.
Key diligence considerations include:
Confirmation of fuel eligibility and emissions calculations
Verification of compliance with applicable prevailing wage and apprenticeship requirements
Review of contractual protections and representations
Support from independent tax opinions addressing credit validity
Mickelson & Company highlighted that disciplined diligence processes are essential to protecting buyers and ensuring that credits withstand IRS scrutiny.
Market Dynamics and Value Optimization
As the 45Z market continues to evolve, pricing and transaction terms are expected to reflect supply, demand, and regulatory clarity. The webinar explored how buyers can optimize value through thoughtful negotiation of pricing, timing, and payment mechanics, as well as by monitoring regulatory developments that influence credit valuation.
Participants also discussed how early engagement in the market may provide competitive advantages as the transferable credit ecosystem matures.
Strategic Implications for Corporate Buyers
For corporate tax and finance leaders, Section 45Z credits represent more than a compliance-driven incentive. When deployed strategically, they can serve as a core component of a broader tax efficiency and sustainability strategy. Potential benefits include:
Meaningful reductions in federal income tax liabilities
Improved predictability in tax planning and cash-flow management
Alignment with environmental and ESG objectives
Diversification of tax planning tools beyond traditional methods
Section 45Z tax credits are poised to become a significant and enduring feature of the corporate tax landscape. As regulatory guidance continues to develop and market participation expands, corporate buyers who approach these credits with informed strategy, careful diligence, and disciplined execution will be well positioned to capture both financial and strategic value.
Mickelson & Company continues to advise clients on navigating the complexities of transferable tax credits and structuring transactions that align with long-term business objectives.
About Our Presenters
Faith Larson manages renewable energy tax credits and provides legal counsel at Mickelson & Company. In 2023, Faith joined Mickelson & Company as Vice President of Renewables and Legal Counsel. Faith is an accomplished leader known for driving strategic growth. Before joining Mickelson & Company, Faith served much of her career as an executive in the transportation and agricultural industries, having worked as the Vice President of Corporate Development, Real Estate, and Procurement at CH Robinson Worldwide and as the CFO at GrainBridge.
Dana Jackson is a tax partner at RSM and has been with the firm for over 19 years. Dana is a leader in RSM’s Clean Energy Incentives practice. In her current role, she delivers advice and consultation regarding a wide variety of issues emerging from energy credits, the research and development (R&D) tax credit, and other related tax incentives, including those in the Inflation Reduction Act. She advises clients on credits from the investment in and production of renewable energy such as ethanol, biodiesel, sustainable aviation fuel (SAF), biogas, hydrogen, carbon capture, battery storage, waste-to-energy, combined heat and power cogeneration, and geothermal.
Elisabeth Shellan is a member of RSM’s Washington National Tax excise and energy tax practice. She has over 17 years of government and private sector experience. Elisabeth regularly consults with clients in the transportation, energy, industrial products, and consumer products industries. Elisabeth’s advisory services include tax consulting and assistance with Internal Revenue Service controversies. Elisabeth advises clients on clean energy tax incentives. She specializes in consulting with respect to clean fuels, including RNG. She also advises clients on other credits from renewable energy.
Anthony Reed is a partner at FGS Global and advises a diverse portfolio of clients in their public affairs efforts across the food, agriculture, energy, and sustainability policy landscape. Anthony’s work spans the FGS Global Energy & Sustainability and Food & Agriculture teams. Before coming to FGS, he spent 14 years at ADM, served at the U.S. EPA, and spent 11 years on Capitol Hill, mostly with former Speaker Dennis Hastert.
For more information, please contact our presenters:
Faith Larson: faith@mickco.com
Dana Jackson: dana.jackson@rsmus.com
Elisabeth Shellan: elisabeth.shellan@rsmus.com
Anthony Reed: anthony.reed@fgsglobal.com
Your organization should seek independent legal, tax, and accounting advice as part of this process. Mickelson & Company is not providing legal or accounting services.