Biofuel Groups Push IRS for New Model to Calculate Tax Credit

May 28, 2026

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by Erin Schilling (Bloomberg Tax) Biofuel and farm groups are asking the Treasury Department and IRS to update the model companies use to calculate whether they qualify for the clean fuel production tax credit.

Agency lawyers are listening to proposals by more than 70 groups for modifying the Section 45Z tax credit proposed rules released in February over a three-day hearing. The credit aims to encourage biofuels produced with low greenhouse gas emissions, a rare break created by Democrats and expanded in the GOP’s 2025 tax law. Treasury and IRS will finalize the rules after considering all the comments.

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Excerpt from Pivot Bio/Business Wire: Chris Abbott highlighted the crucial need for IRS and Treasury Department officials to recognize Biological Nitrogen Management as a qualifying on-farm practice

Chris Abbott, CEO of Pivot Bio, one of the world’s leading innovative agtech companies, today (May 27, 2027) provided comments during the IRS public hearing on proposed regulations under the Section 45Z clean fuel production tax credit.

Abbott emphasized that the current conflict in Iran and resulting disruption to the Strait of Hormuz have underscored how vulnerable U.S. farmers remain to foreign fertilizer supply chains and global market volatility.

“This is not a temporary disruption,” Abbott said. “Researchers at Purdue University and the University of Illinois have both concluded that even after the Strait of Hormuz reopens, it will take months to normalize the fertilizer supply chain and that the 2027 crop year may be even more severely affected than 2026. A survey of corn growers found that for every farmer worried about fertilizer for 2026, nearly two are more worried about 2027.

“The lesson of this crisis is not complicated: when American farmers depend on foreign supply chains for a critical input, they are vulnerable. And right now, they are paying the price,” Abbott continued.

Abbott pointed to biological nitrogen fertilizers, including Pivot Bio’s crop nutrition solutions for corn, cotton, sorghum and small cereal grains, as a commercially available domestic alternative that can help reduce growers’ reliance on imported synthetic fertilizer.

“Biological fertilizers are not a niche product or a future technology. They are a proven, commercially available, domestically produced alternative to imported synthetic nitrogen, and they are available right now, when farmers need them most.

“Section 45Z creates a meaningful incentive for the production of clean transportation fuels,” Abbott said. “The on-farm practices farmers use directly affect the carbon intensity of the feedstock, and therefore the value of the 45Z credit to the fuel producer. Biological Nitrogen Management, the use of nitrogen-fixing microbial products like those Pivot Bio produces, is one of those practices. These products reduce farmers' reliance on synthetic nitrogen, improve yields, and keep dollars in the domestic economy rather than sending them to foreign fertilizer producers.”

Abbott closed by emphasizing the importance of strengthening domestic agricultural innovation and recognizing on-farm practices that improve supply chain resilience. “When those supply chains break, as some have broken this spring, farmers have few alternatives, and the consequences ripple through the entire food system. We must use all the tools available to us now to prevent similar disruptions in the future.

“The answer to that vulnerability is domestic innovation. It is U.S. companies like Pivot Bio who are creating real and meaningful solutions through novel Biological Nutrient Management technologies, manufacturing domestically, shipping to farmers within 24 hours and lowering prices when the rest of the market is raising them. It is a regulatory framework that recognizes and rewards the on-farm practices that reduce dependence on foreign inputs and improve the resilience of American agriculture. Section 45Z is one piece of that framework.”

As policymakers finalize implementation of the 45Z clean fuel production credit, Abbott’s remarks reinforced Pivot Bio’s position that Biological Nitrogen Management should be recognized within the 45Z framework as a proven on-farm practice that supports both farm profitability and domestic supply chain resilience.

About Pivot Bio

Pivot Bio, one of the world’s leading agtech companies, delivers patented crop nutrition technologies that harness the power of nature to help farmers reliably and productively grow the food the world needs in the face of increasing volatility. Currently available in North America and soon in Brazil, the company’s products represent a breakthrough innovation and one of the agriculture industry’s most promising solutions. Pivot Bio has been recognized three times by TIME magazine on its annual list of Best Inventions, by Fast Company on its World Changing Ideas and World’s 50 Most Innovative Companies lists, by CNBC on its Disruptor 50 list, by Fortune on its Impact 20 list, and by MIT Technology Review as one of 15 climate tech companies to watch. For more information, visit PivotBio.com. READ MORE

Excerpt from Renewable Fuels Association: In testimony provided at a public hearing this morning (May 27, 2026), the Renewable Fuels Association urged the U.S. Department of Treasury to swiftly finalize “clear, stable, and practical regulations” implementing the Section 45Z Clean Fuel Production Credit. RFA also called on the Treasury to immediately release an updated 45ZCF-GREET model that integrates changes to the 45Z program mandated by last year’s One Big Beautiful Bill Act. RFA’s oral testimony builds on detailed written comments submitted to Treasury in April.

“We believe that, if implemented effectively, the 45Z tax credit can stimulate domestic energy production, strengthen U.S. energy security, bolster rural economies, and drive innovation in the renewable fuels and agriculture industries,” said RFA President and CEO Geoff Cooper. “The technology-neutral structure of 45Z is a crucial feature of the program, enabling producers to pursue the most efficient and economically practical pathways for reducing emissions and boosting production of homegrown fuels."

He noted, however, that, for the 45Z program to achieve its full potential, Treasury and IRS must finalize clear, stable, and practical regulations without delay: “Clean fuel producers need certainty and timeliness to support both immediate operational decisions and long-term investments. Further delays will limit participation and undermine the benefits intended by Congress.” This is especially important when it comes to finalizing and releasing a revised version of the 45ZCF-GREET model.

“With the fundamental changes to 45Z required by OBBBA, an updated 45ZCF-GREET model is urgently needed,” Cooper said. “We are nearly halfway through the 2026 tax year, and still clean fuel producers do not have access to the model required for determining emissions rates, which of course, ultimately drives determinations of 45Z credit values. Delays are creating tremendous uncertainty and investment risk.”

Among the specific points Cooper pointed out for refinement:

In the 45ZCF-GREET model, RFA urges Treasury to include distinct pathways for ethanol made from cellulosic corn and sorghum kernel fiber. These fuels, which are excluded from the existing version of 45ZCF-GREET, offer extremely low emissions rates.
Treasury should work with the Department of Energy to correct an unintended penalty in the emissions rate modeling framework for facilities that use combined heat and power, or CHP, systems. Many ethanol producers have invested in CHP systems to enhance energy efficiency and reduce emissions, and CHP is exactly the type of energy-saving technology the 45Z program was meant to encourage.
RFA supports recognizing regenerative agriculture practices within the 45Z program but urges caution on Treasury’s approach for integrating these practices. Feedstock certification and recordkeeping requirements must be science-based, transparent, and practical, and should embrace a market-based, “book-and-claim” approach.
The proposed rule’s addition of “undenatured ethanol” to the definition of low-GHG ethanol could create some unintended consequences and inconsistencies with longstanding EPA and Treasury regulations. The rules clearly prohibit generating the credit on a transportation fuel that is made from another transportation fuel for which the credit is allowable.
RFA urges Treasury to provide additional guidance and safe harbors for PWA compliance. Current definitions and processes are creating confusion and substantial burden for clean fuel producers. READ MORE