Fuels and Freight Groups Praise Senate for Equalizing Tax Treatment of Biofuels

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June 30, 2025

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(NATSO/PR Newswire) NATSO, representing truck stops and travel centers, American Trucking Associations (ATA), Association of American Railroads (AAR), National Association of Convenience Stores (NACS), National Energy & Fuels Institute, Sustainable Advanced Biofuel Refiners (SABR), and SIGMA: America's Leading Fuel Marketers, commended the Senate Finance Committee for its tax reform package that would establish equal tax treatment for all advanced biofuels.

The Senate's proposed tax and budget reconciliation legislation would modify the '45Z' Clean Fuel Production Tax Credit to restore tax parity between sustainable aviation fuel (SAF) and other advanced biofuels like biodiesel and renewable diesel effective Oct. 1, 2025. Modifying '45Z' to be technology-neutral marks a critical step in revitalizing U.S. biofuel production, which has dropped sharply since the credit took effect in January.

"We give the Senate a lot of credit for reconfiguring '45Z' to be truly technology neutral. SAF should be incentivized at the same rate as all other biofuels. An equal incentive – 'parity' – will result in more gallons of biofuel being produced and consumed, all at a lower cost for taxpayers," said David Fialkov, Executive Vice President of Government Affairs for NATSO and SIGMA. "Importantly, this provision reduces the overall cost of the '45Z' tax credit while also incentivizing more over the road fuel production – helping to lower prices for consumers. A win for everyone."

"A level playing field for sustainable aviation fuels versus over-the-road biofuels is critical to restoring the biodiesel market," said Matt Durand, NACS Deputy General Counsel. "Today, the biodiesel market is failing due to tax policy. Unless we act to ensure biodiesel is no longer disadvantaged, the market may never recover. NACS strongly supports the Section '45Z' parity proposal and urges the Senate to retain it."

The Democrats' Inflation Reduction Act of 2022 provided a higher tax credit of up to $1.75 for Sustainable Aviation Fuel production. The higher aviation fuel tax credit signed into law by President Biden, coupled with the expiration of the Biodiesel Blenders' Tax Credit at the end of 2024, has decimated America's advanced biofuel supply chains.

Equal tax treatment between alternative biofuels represents a significant step toward the much-needed certainty that will encourage biofuel production and consumption. SAF is more costly than biodiesel and renewable diesel and results in the production of less gallons of overall fuel. Under the Senate legislation, SAF would have access to the same credit as all other fuels and producers will be able to gravitate toward the most efficient fuels in the market.

NATSO is the trade association representing America's travel plaza and truck stop industry. Founded in 1960, NATSO represents the industry on legislative and regulatory matters; serves as the official source of information on the diverse travel plaza and truck stop industry; provides education to its members; conducts an annual convention and trade show; and supports efforts to generally improve the business climate in which its members operate. Contact: Tiffany Wlazlowski Neuman, Vice President, Public Affairs. 202-365-9459

SIGMA is the national trade association representing the most successful, progressive, and innovative fuel marketers and chain retailers in the United States and Canada. Founded in 1958 as the Society of Independent Gasoline Marketers of America (SIGMA), SIGMA has become a fixture in the motor fuel marketing industry. Representing a diverse membership of approximately 250 independent chain retailers and marketers of motor fuel, the association serves to further the interests of both the branded and unbranded segments of the industry while providing information and services to members. For more information visit SIGMA.org.

NACS For more than 60 years, NACS has been recognized as the premiere association for convenience and fuel retailers. NACS has more than 1,000 retail member companies that cumulatively represent more than 200,000 stores in 50-plus countries, including 90,000 stores in the United States alone. The U.S. convenience store industry, with more than 152,000 stores nationwide selling fuel, food and merchandise, conducts 160 million transactions daily and had sales of $837 billion in 2024. For more information, visit convenience.org. Follow NACS on LinkedIn, Twitter, Facebook and Instagram.

ATA is the largest national trade association for the trucking industry. Through a federation of 50 affiliated state trucking associations and industry-related conferences and councils, ATA is the voice of the industry America depends on most to move our nation's freight.

AAR Since 1934, AAR has been the leading voice for the U.S. freight rail industry, driving policy, research, and technology to enhance safety and efficiency. Freight rail is a cornerstone of the U.S. economy, powering industries, facilitating trade, and supporting some of America's safest and highest paid jobs—all while operating on a privately funded infrastructure that eases congestion on taxpayer-funded roads. From bulk commodities to intermodal freight, rail ensures the seamless movement of goods nationwide, serving as a vital link in global supply chains.

NEFI Since 1942, NEFI has been a leading voice for wholesale and retail liquid heating fuel distributors. Members are small, family-owned and -operated businesses that deliver warmth and comfort to millions of American homes. These businesses distribute vital home heating fuels and related products and services to residential and commercial customers. They often develop close relationships with their local communities and are recognized leaders in energy efficiency, conservation, and safety.

SABR Sustainable Advanced Biofuel Refiners (SABR) is a coalition of stakeholders that have invested in building out America's first advanced biofuel — biodiesel. Biodiesel is the most cost-effective means to reduce greenhouse gas (GHG) emissions from medium- and heavy-duty vehicles, providing numerous economic, environmental, and energy security benefits. SABR includes stakeholders from every link in the value chain from feedstock growers to biodiesel producers, distributors, retailers, and consumers, as well as infrastructure and products and services suppliers. READ MORE

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SABR Coalition Welcomes Biodiesel Provisions in Senate Tax Bill (Sustainable Advanced Biofuel Refiners)

Excerpt from Sustainable Advanced Biofuel Refiners: The Sustainable Advanced Biofuel Refiners (SABR) Coalition, a national biodiesel trade association made up of over 70 organizational members throughout the biodiesel value chain, applauds the biofuel provisions added to the Senate budget-reconciliation legislation known as the “big, beautiful bill.” Introduced on June 28, the Senate version of the tax bill includes provisions for an immediate extension of the Section 40A Small Agri-Biodiesel Producer Tax Credit. The value of the credit increases from 10 cents to 20 cents per gallon on the first 15 million gallons. It also makes the credit transferable so that pass-through entities such as limited liability companies (LLCs) and S corporations can access the credit and monetize it. This is important transitional relief to biodiesel producers, many of which have shut down this year since the biodiesel blenders tax credit (BTC) expired on Dec. 31, 2024, while the industry awaits implementing regulations for its replacement, the Clean Fuel Production Credit (Section 45Z).

“Finding some transitional relief in 2025 has been SABR’s top priority,” said SABR CEO Joe Jobe.

The Senate bill also introduces several key improvements to Section 45Z, which will take effect in 2026. Some changes mirror those passed by the House of Representatives on May 22 while others differ significantly. The differences must be reconciled before the legislation can be sent to President Donald Trump for signing into law by the July 4 target date.

Like the House revisions, these improvements by the Senate include elimination of the failed theory of indirect land-use change (ILUC) that penalizes domestic agricultural feedstocks in modeling greenhouse gas (GHG) calculations.

A critical difference between the Senate’s modifications to 45Z and both existing law and changes passed by the House is that the Senate version seeks to put sustainable aviation fuel (SAF) and on-road biofuels such as biodiesel and renewable diesel on equal footing. Currently, SAF producers are eligible for up to $1.75 per gallon under Section 45Z, provided certain criteria are met, but biodiesel manufacturers can only receive up to a maximum of $1 per gallon.

While the House bill extends Section 45Z from its current sunset date of Dec. 31, 2027, to Dec. 31, 2031, the Senate version shortens this extension by two years and allows transferability of the credit through 2029.

Earlier modifications to Section 45Z from the Senate Finance Committee allowed feedstocks from outside the U.S. to claim the credit at a 20 percent discount to domestic inputs. Updated language in the full Senate bill, however, matches the House version and only allows feedstocks from North America to qualify for the incentive.

SABR reiterates that, because these changes do not take effect until 2026, it is important that Congress provides transitional relief now as a policy bridge to 2026.

“The amendments to the Section 45Z Clean Fuel Production Credit will make for dramatically better energy, agriculture and clean transportation policy,” Jobe said. “But those amendments take effect in 2026, and SABR has been educating members of Congress about the severe immediate harm to the biodiesel industry caused by the lack of policy clarity. SABR has been urging immediate extension of the Section 40A Small Agri-Biodiesel Producer Tax Credit and applauds its inclusion. While most biofuel advocates have been focused solely on ‘fixing’ 45Z beginning next year in the reconciliation bill, a top priority for SABR has been getting transitional relief for biodiesel producers this year. We thank Sen. Chuck Grassley and Finance Chair Mike Crapo for their work on this measure.”

About the SABR Coalition
Sustainable Advanced Biofuel Refiners (SABR) is a coalition of stakeholders that have invested in building out America’s first advanced biofuel—biodiesel. Biodiesel is the most cost-effective means to reduce greenhouse gas (GHG) emissions from medium- and heavy-duty vehicles, providing numerous economic, environmental and energy security benefits. It is produced from renewable resources such as soybean oil, used cooking oil and animal fats. SABR includes stakeholders from every link in the value chain from feedstock growers to biodiesel producers, distributors, retailers and consumers, as well as infrastructure, product and service providers. For more information, please visit www.sabrcoalition.org. READ MORE