A Boon For Biogas: Treasury's Final Section 48 ITC Rules Resolve Key Concerns For Biogas And RNG Projects

On December 4, 2024, the Department of the Treasury finalized new rules governing the Section 48 Investment Tax Credit ("ITC"). The ITC applies to a broad range of clean energy projects, including biogas projects, which were added to the ITC by the Inflation Reduction Act ("IRA"). This post focuses on the ITC rules for biogas projects; it does not cover any other type of energy project under the ITC. It was unclear from Treasury's proposed rules, issued in November 2023, whether certain renewable natural gas ("RNG") projects would qualify. Among the concerns were (1) whether the equipment that upgrades biogas to RNG was eligible and (2) whether proposed ownership requirements would exclude certain RNG projects. The final rules largely resolve those issues, making it clearer for certain RNG projects to qualify for the ITC.