Montana Renewables Receives Approval of Excise Tax Registration

Rhea-AI Summary

Montana Renewables, a subsidiary of Calumet (NASDAQ: CLMT), has received approval for its Excise Tax Registration from the IRS, enabling the company to claim clean fuel Production Tax Credits (PTC) under IRC Section 45Z. The company is registered as both a producer of clean transportation fuel and sustainable aviation fuel (SAF).

The Section 45Z PTC, which replaces the previous Blenders Tax Credit, provides a transferrable federal income tax credit for clean fuels produced between January 1, 2025, and December 31, 2027. Montana Renewables, the largest SAF producer in North America (2024), operates in Great Falls, Montana, producing SAF, Renewable Diesel, Renewable Hydrogen, and Renewable Naphtha using sustainable feedstocks from Pacific Northwest farm operations.

Positive

• Approval to claim Production Tax Credits (PTC) for clean fuel production
• Status as largest SAF producer in North America (2024)
• Eligibility for transferrable federal income tax credits through 2027
• Diversified renewable fuel product portfolio

Negative

• None.

Insights

Financial Analyst

This tax registration approval marks a significant financial milestone for Montana Renewables and Calumet. The transition from Blenders Tax Credit to Production Tax Credits under Section 45Z represents a substantial financial opportunity, particularly for production after December 31, 2024. The PTCs are transferrable, providing flexibility in monetization strategies. As North America's largest SAF producer in 2024, this tax benefit could significantly boost Montana Renewables' bottom line and, by extension, Calumet's financial performance. The timing is strategic, aligning with the growing demand for sustainable aviation fuel and renewable diesel. Market dynamics and regulatory support suggest strong potential for revenue enhancement through these tax credits over the next three years.

Environmental Policy Expert

The approval signifies a important shift in renewable fuel incentives, reinforcing the federal government's commitment to sustainable transportation. The new PTC structure under Section 45Z demonstrates continued bipartisan support for domestic agricultural integration with renewable fuels, particularly benefiting crops like camelina. This policy transition could accelerate the adoption of sustainable aviation fuel and renewable diesel, critical for reducing transportation sector emissions. The registration as both a clean transportation fuel and SAF producer positions Montana Renewables advantageously within the evolving regulatory framework, potentially setting industry standards for agricultural feedstock utilization in renewable fuel production.

GREAT FALLS, Mont., Dec. 12, 2024 /PRNewswire/ -- Montana Renewables, LLC announced today that it has received approval of its Excise Tax Registration from the Internal Revenue Service. Registration is the first step toward allowing the business to claim clean fuel Production Tax Credits (PTC) for existing production under Internal Revenue Code Section 45Z. Montana Renewables, LLC, which operates a U.S. qualified production facility, is registered as both a producer of clean transportation fuel and sustainable aviation fuel (SAF). The Section 45Z PTC provides a transferrable federal income tax credit for clean fuels produced after December 31, 2024, and before January 1, 2028. The Section 45Z PTC replaces the previous Blenders Tax Credit. Montana Renewables is an unrestricted subsidiary of Calumet (NASDAQ: CLMT).

"This procedural change from the old Blenders Tax Credit to the new Producers Tax Credit extends a long history of bipartisan support for domestic agriculture and creates incentives for Montana cash crops including camelina" said Bruce Fleming, CEO. "While MRL is feedstock agnostic, on behalf of growers we express the hope that the upcoming PTC detailed regulations will prove superior to the BTC it replaces."

About Calumet
Calumet, Inc. (NASDAQ: CLMT) manufactures, formulates, and markets a diversified slate of specialty branded products and renewable fuels to customers across a broad range of consumer-facing and industrial markets. Calumet is headquartered in Indianapolis, Indiana and operates twelve facilities throughout North America.

About Montana Renewables
Montana Renewables (MRL) is a leading renewable fuel company located in Great Falls, Montana. We produce Sustainable Aviation Fuel (SAF), Renewable Diesel, Renewable Hydrogen, and Renewable Naphtha. As the largest SAF producer in North America (2024), we are dedicated to meeting the increasing demand for sustainable fuels and to supporting a greener future. As a Great Falls business leader, MRL offers high-paying jobs and career opportunities while supporting the local economy and contributing to the community's overall well-being.  Pacific Northwest farm and ranch operations ultimately provide MRL with sustainable, renewable, low-carbon feedstocks and agricultural byproducts including tallow, distillers corn oil, canola oil, used cooking oil and camelina oil. These are converted to renewable transportation fuels which have lower emissions compared to conventional fossil fuels. MRL is an unrestricted subsidiary of Calumet, Inc.

About SAF
Sustainable Aviation Fuel (SAF) is a combination of synthetic paraffinic kerosene (SPK) and conventional jet fuel which meets ASTM D7566 and ASTM D1655 specifications. Designed to reduce the aviation industry's carbon footprint, SAF is drop-in compatible with existing aviation fueling infrastructure and aircraft engine technology. 

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SOURCE Calumet, Inc.

FAQ

What does the IRS Excise Tax Registration approval mean for CLMT's Montana Renewables?

The approval allows Montana Renewables to claim clean fuel Production Tax Credits (PTC) under Section 45Z for clean fuels produced between 2025-2027, replacing the previous Blenders Tax Credit system.

How long will Montana Renewables be eligible for the Section 45Z Production Tax Credits?

The company will be eligible for PTCs on clean fuels produced after December 31, 2024, and before January 1, 2028.

What renewable products does Montana Renewables currently produce?

Montana Renewables produces Sustainable Aviation Fuel (SAF), Renewable Diesel, Renewable Hydrogen, and Renewable Naphtha.

What is Montana Renewables' market position in the SAF industry as of 2024?

Montana Renewables is currently the largest Sustainable Aviation Fuel (SAF) producer in North America (2024).

What feedstocks does Montana Renewables use for fuel production?

The company uses sustainable feedstocks including tallow, distillers corn oil, canola oil, used cooking oil, and camelina oil from Pacific Northwest farm and ranch operations.