Good points, and many things are indeed not straightforward.
The Treasury eventually published its so-called 45Z-GREET calculator, which can be used to determine how much 45Z support each facility can apply for. It can be found here: https://www.energy.gov/eere/greet Although the guidance is preliminary, the idea seems to have been that based on the calculator, one can already file a tax return and apply for 45Z support.
This is likely true for corporate income tax, but the former BTC credit could be used as an excise tax credit instead of a corporate tax credit, in which case it was applied for and paid quarterly. In practice, all companies chose this option. The BTC was also refundable, meaning that if a taxpayer incurred a loss, the Treasury would pay the portion exceeding tax liabilities in cash to companies if necessary.
The 45Z credit is not refundable, nor can it be used as an excise tax credit to be received quarterly. However, companies practically convert future 45Z tax receivables into cash with the help of financing companies, meaning they essentially sell them below nominal value to American banks, which then deduct them from their own taxes. This, of course, lowers the value of the credit that the biofuel producer receives, but they get the money immediately.
Whether BTC or 45Z is in effect should, in theory, not affect biofuel producers’ margins at all. These are production subsidies that do not impact the demand for biofuels, which is determined by federal volume obligations. In practice, through these tax subsidies, taxpayers merely subsidize the prices of RIN certificates, because if there were no tax subsidies, RIN prices would rise until producers once again had the same economic incentives (and the same margins) to produce the volume of biofuels required by the volume obligation. However, a situation where 45Z should be in effect, but perhaps isn’t, is difficult because no one knows what to do, and the market cannot react.
Due to its greater monetary value and perhaps simplicity, many parties naturally want the BTC back and are likely actively lobbying the Trump administration in that direction. Of course, many would also like to include conditions that it will only be granted for local production or for biofuels made from local raw materials in the future. But these credits are in themselves minor adjustments, and what would be truly more essential is what the Trump administration’s environmental agency does with those volume obligations. The entire collapse of margins began due to their low number relative to the biofuel capacity completed in the United States, and no real improvement can occur if they are not increased. Here is also an image of the problem: producers in the United States have enthusiastically built biofuel production capacity a good 60% more than the demand stemming from volume obligations:
