Grassley Calls Treasury’s 45Z Timeline ‘Unacceptable,’ Urges Swift Action

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September 12, 2025

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by Erin Krueger (Ethanol Producer Magazine) Sen. Chuck Grassley on Sept. 10 called the U.S. Treasury Department’s planned May 2026 release of proposed 45Z clean fuel production credit regulations “unacceptable” and stressed the importance of timely 45Z guidance to two Treasury nominees during a Senate Finance Committee hearing.

The hearing was held to consider the nominations of Jonathan Greenstein to serve as deputy under secretary of the Treasury and Donald Korb to serve as chief counsel for the International Revenue Service and assistant general counsel in the Department of Treasury.

Grassley noted the One Big Beautiful Bill Act, signed by President Donald Trump on July 4, made several modifications to the existing 45Z credit that will take effect at the start of 2026. “Implementing this credit properly and quickly is important to the biofuels industry and its participants—and I want to emphasize especially farmers,” Grassley said.

He referenced the White House Office of Management and Budget’s Spring 2025 Unified Agenda of Regulatory and Deregulatory Actions, which was published on Sept. 4. According to that document, Treasury plans on issuing a notice of proposed rulemaking (NPRM) in May 2026 that will provide guidance and address public comments regarding the implementation of 45Z, including the calculation of emissions factors for transportation fuel, the determination of clean fuel production credits under 45Z, and registration as a producers of clean fuel under 45Z. The agenda does not provide an estimated timeline for release of a final rule.

Delaying release of 45Z regulations until May 2026 would be an unacceptably long time, Grassley stressed. He questioned Greenstein on his understanding of the 45Z timeline. In response, Greenstein said he “would have to respectfully refer [Grassley] to the folks in the Office of Tax Policy on that question.”

Grassley also noted that Treasury has so far failed to release full guidance for initial version of the 45Z credit, which is in place for 2025. As a result of delays in issuing guidance, Grassley said “the biofuels industry is operating with great uncertainty as to the value and availability of the credit for 2025.” If confirmed, he asked Korb if he would commit to providing stop-gap guidance clarifying the taxpayers’ eligibility to file and claim the credit this year.

“As chief council, I’ll work very closely with the Office of Tax Policy in the Treasury Department to make sure that timely guidance is provided on all issues, such as what you’ve suggested,” Korb said.

A full copy of the hearing is available on the Senate Finance Committee website. READ MORE

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Feedstock Flagging (Ethanol Producer Magazine)

Excerpt from Feedstock Flagging: The recently enhanced 45Z Clean Fuel Production Credit, which now extends through 2029, will provide four full years for the biofuels industry to follow through on investments and projects meant to grow capacity, says Paul Winters, director of public affairs and federal communications for Clean Fuels Alliance America, a trade group representing U.S. biodiesel, renewable diesel and sustainable aviation fuel (SAF) producers. The landmark extension, enhancement and clarification of 45Z should also provide a significant benefit to American farmers and domestic biofuel producers of all kinds thanks to one rather contentious adjustment.

Under the new version of the policy framework, 45Z credit eligibility is limited to fuels derived from feedstocks produced or grown in the U.S., Mexico or Canada (USMCA). Lawmakers had initially proposed to place no geographical limits on feedstock eligibility but would have reduced the value of the credit by 20% for non-USMCA inputs. That changed when the language on feedstock eligibility was updated prior to Senate passage of the One Big Beautiful Bill Act (OBBBA)—signed into law by President Donald Trump on July 4—which made non-USMCA fuels and feedstocks altogether ineligible.

Producers utilizing foreign inputs for domestic biofuel production were ostensibly disappointed with the foreign feedstock exclusion, as 45Z’s value was stripped from their business plans. They had no time to lament the loss, however, with another battle over RIN values already upon them.

In mid-June, shortly before OBBBA’s passage, the U.S. Environmental Protection Agency released its proposed Renewable Fuel Standard revisions—the so-called “Set 2” Rule—laying out two years of renewable volume obligations (RVOs), overhauling various elements of the program, addressing volumes lost through small refinery exemptions and, notably, differentiating between foreign and domestic fuels and feedstocks.

The agency’s proposal introduces a new two-tier structure for RIN valuation, granting U.S. biofuels and feedstocks full credit while assigning only 50% RIN value to foreign equivalents.

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The EPA is framing the proposed change on feedstock RIN allocation percentages as having a correlation to national security and North American economic benefit.

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Others, including the Advanced Biofuels Association, have not only voiced their displeasure with the proposal, but produced research to back up their objections to the penalty on foreign feedstock.

Majority Approval
Reducing the RIN value associated with fuels and feedstock sourced outside the U.S. will support domestic oilseed processors, protect the investments they’ve made, and keep more of the value of U.S. crops here at home, Winters says.

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According to the EPA, the feedstock point of origin would depend on the feedstock type and where it is grown, produced, generated, extracted, collected or harvested.

Planted crops, cover crops and crop residues could use the location of the feedstock supplier—the entity providing the feedstock to the producer—as an acceptable point of origin. A grain elevator, for example, would suffice, the EPA says.

For oil derived from planted crops, a crushing facility supplying a biodiesel producer would work.

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In fact, ethanol trade groups advocated for harmonizing 45Z and RFS feedstock provisions, citing the benefits of limiting eligible feedstocks, under both policies, to those originating in USMCO. They also asked the EPA to exempt corn and sorghum from proposed RFS feedstock tracking requirements. As proposed, limiting the RIN value of foreign product is a domestic advantage that comes with some work. But the EPA believes point-of-origin tracking, for the most part, will be something most producers will already be doing, whether to tap 45Z tax credits or access low-carbon markets.

Reasonably Opposed
Michael McAdams, president of the ABFA, came out in July against the idea of reducing RIN values by 50% for foreign feedstocks. He says the drafted rule could threaten continued investments, limit consumer access to American-made fuels and artificially inflate prices. ABFA believes the foreign feedstock reduction would also make it harder for U.S. advanced biofuel producers, including those targeting SAF, to meet the projected volume obligations (RVOs) or continue on with their plans for production.

GlobalData Agri analyzed the issue on behalf of the ABFA, releasing a study titled “Lipid Feedstocks Outlook to 2030 and RVO Analysis.” The study concluded that, although the majority of growth in biomass-based diesel (BBD) supply can come from domestic feedstocks, imports will continue to be needed across the sector.

“The gulf in value created by the proposed RIN system will push up prices to consumers and limit growth in the BBD market,” the report said.

According to the ABFA, reducing credit values for foreign-based RINs would effectively create a $250 to $400 per-metric-ton premium for domestic feedstocks, which may sound good to suppliers and growers, but not biofuel producers or consumers.

While vocalizing industry concerns about reduced RIN values for foreign fuels and feedstocks, McAdams also expressed hope that the U.S. Department of the Treasury—which oversees 45Z—could still revise the foreign feedstock exclusion of the production tax credit before it is fully implemented.

Like McAdams, Winters is also eyeing Treasury’s handling of the policy, and the pace at which it gets the new version of 45Z going. “Producers are already trying to adapt to the new rule and put in place feedstock contracts for the start of 2026,” Winters says. “They need proposed and final rules from Treasury immediately so they can calculate the incentives relative to state and international markets for different feedstocks.”

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Many ethanol producers are not as focused on 45Z’s foreign feedstock exclusion as they are the policy’s forthcoming roll out. In addition to other favorable enhancements, the RFA was pleased that the new version makes the tax credit transferable for producers. In the previous version, it was not.

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Fastmarkets, a commodity info and tracking provider, called the ILUC removal a bright spot as well. “The updated policy makes crop-based oils financially viable, expanding the feedstock pool, reducing supply risk and strengthening domestic supply chains, ultimately encouraging scaled production and long-term investment,” the company said.

CI scores are calculated by using the GREET model, which accounts for the greenhouse gas emissions of each step in the biofuels supply and production chain. Previous versions applied an ILUC value into the calculations. The lower the CI score, the higher the tax credit. And under the new 45Z framework, biofuel producers can earn a tax credit of up to $1 per gallon.

For SAF producers, the new 45Z structure lessens the total tax credit value they can earn. Plus, SAF producers cannot receive overlapping tax credits, and there are no longer premiums for SAF. Previous versions of the 45Z framework would have provided an extra 75 cents per gallon. READ MORE