HR2596-119

What This Bill Does

The Renewable Natural Gas Incentive Act adds a renewable natural gas fuel credit to Internal Revenue Code section 6426. The credit equals $1.00 multiplied by the number of gallons of renewable natural gas, or gasoline gallon equivalents for nonliquid renewable natural gas, sold or used as fuel in a motor vehicle, motorboat, or aviation. Renewable natural gas must be compressed or liquefied gas derived from biomass, produced by a person registered under section 4101(a), and supported by producer certification. Blended renewable natural gas can qualify if the taxpayer had a pre-sale contract with a registered producer specifying gallons and contract period, and the producer provides certification; qualifying blended gallons cannot exceed the certified contracted amount. The bill defines gasoline gallon equivalent as fuel with a Btu content of 124,800, denies credits for renewable natural gas produced outside the United States for use outside the United States, creates payment authority under section 6427(e), adds renewable natural gas producers to registration rules, sunsets the credit after December 31, 2035, and applies to fuel sold or used after December 31, 2025.

Who Benefits and How

Renewable natural gas producers benefit from a $1.00 per gallon or gasoline-gallon-equivalent federal fuel credit. Fleet operators using renewable natural gas benefit if the credit lowers fuel costs for motor vehicle, motorboat, or aviation use. Biomass fuel developers benefit because the credit rewards compressed or liquefied gas derived from biomass and certified by registered producers. Domestic renewable fuel markets benefit because foreign-produced renewable natural gas used outside the United States is excluded.

Who Bears the Burden and How

The Internal Revenue Service must administer new credit, payment, registration, blended-fuel contract, certification, and sunset rules. Renewable natural gas producers must register under section 4101(a) and provide certifications identifying products and gallon equivalents. Federal taxpayers bear the cost of credit payments through section 6426 and section 6427(e). Fossil natural gas suppliers may face stronger tax-subsidized competition from renewable natural gas.

Key Provisions

• Creates a $1.00 renewable natural gas fuel credit for qualifying sales or uses as motor vehicle, motorboat, or aviation fuel.
• Requires renewable natural gas to be biomass-derived, produced by a registered producer, and supported by certification.
• Provides blended renewable natural gas qualification rules based on pre-sale contracts and certified gallon amounts.
• Bars credits for foreign-produced renewable natural gas used outside the United States and sunsets the credit after 2035.