by Cindy Zimmerman (Energy.AgWired.com) Industry stakeholders submitted comments this week to the U.S. Department of the Treasury and the Internal Revenue Service regarding proposed rules on the 45Z Clean Fuel Production Credit.
The proposed regulations, released on February 3, provide guidance on the determination of clean fuel production credits, emissions rates, and certification and registration requirements. The proposal would extend the credit to Dec. 31, 2029, limit feedstocks to those grown or produced in North America, and eliminate the special rate for sustainable aviation fuel, among other stipulations.
Renewable Fuels Association President and CEO Geoff Cooper says the proposal makes “meaningful progress” in developing rules implementing tax credit, but the top priority for Treasury should be releasing an updated 45ZCF-GREET model as soon as possible.
“The technology-neutral structure of 45Z is a crucial feature, allowing clean fuel producers to pursue the most economically efficient and practical pathways for reducing emissions and boosting domestic energy production,” wrote Cooper in RFA’s comments to Treasury. “However, as currently drafted, certain aspects of the proposal introduce inconsistencies and implementation challenges that may limit participation, create unintended market impacts, and reduce the near-term effectiveness of the program.”
In addition to updating 45ZCF-GREET model, RFA says agencies should work with USDA to finalize and integrate workable, equitable, and science-based technical guidelines for regenerative agriculture feedstocks and an updated Feedstock Carbon Intensity Calculator (FD-CIC). Treasury should adopt a more flexible Provisional Emissions Rate process that allows for efficient characterization of new technologies and incremental emissions-reducing improvements at existing clean fuel facilities, as well as clarifying certain rules, such as the interaction of “undenatured fuel ethanol” and “denatured fuel ethanol” for 45Z credit generation, and that only transportation and industrial fuels are eligible for the credit.
In comments from the American Coalition for Ethanol (ACE), CEO Brian Jennings stressed the significant financial pressure facing rural America and that enabling farmers and producers to benefit from low-carbon practices is critical to unlocking the full value of the 45Z credit.
“Since farming practices represent about half of ethanol’s carbon intensity, clean fuel producers must have the opportunity to monetize low-carbon farming practices such as reduced tillage or precision fertilizer use to fully unlock the value of 45Z,” said Jennings. “If Treasury allows low-carbon farming practices to qualify towards emissions rates it could mean billions of dollars annually for clean fuel producers and farmers, providing a market-based opportunity to dramatically increase rural and farm income.”
ACE also noted the importance of keeping 45ZCF-GREET model and FD-CIC updated with the latest science and real-world data supported through activities such as the USDA Regional Conservation Partnership Program (RCPP) activity being led by ACE and specifically designed to address information gaps regarding the low-carbon benefits of farming practices to help improve the accuracy of modeling tools.
“We have strongly recommended updates to FD-CIC values for low-carbon farming practices by incorporating the best available science and results from real-world activities, so we are encouraged Treasury expects to make these updates as part of future iterations of the 45ZCF-GREET.”
In their comments to Treasury, fuel retailer organizations NATSO, NACS and SIGMA, which represent 90 percent of fuel sold at retail, continue to urge Congress to reinstate the Biodiesel Blenders’ Tax Credit to help stabilize fuel supplies and help lower prices for consumers, claiming that the 45Z tax credit is not helpful.
“The real-world implications on American energy supplies and the price that consumers pay at the pump should serve as the regulatory North Star of biofuel policy…“The ‘45Z’ Credit is not alleviating these affordability challenges for American consumers and businesses. It has not helped American consumers by lowering fuel prices and it has not helped American farmers by increasing sales of corn or soybeans used to produce renewable fuels.” READ MORE
Related articles
- 45Z Rule Still Hinges on USDA Tool -- Biofuel Groups Push 45Z Rule as Delayed USDA Emissions Tool Clouds Tax Credit Value (DTN Progressive Farmer)
- Fuel Retailers: "Price that consumers pay at the pump should serve as regulatory North Star of Biofuel Policy" (NATSO/PR Newswire)
- IRFA recommends changes to prevailing wage, emission calculation in 45Z tax credit (Iowa Renewable Fuels Association/Biobased Diesel Daily)
- RFA Applauds Regulatory Progress on 45Z, Seeks Additional Refinement and Immediate Release of New GREET Model (Renewable Fuels Association)
- Renewable Fuel Groups Call for Clarity, Certainty in 45Z Final Rule (OPIS)
Excerpt from DTN Progressive Farmer: The proposed IRS rule generated 448 public comments on the Regulations.gov website.
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The tax credit for non-aviation fuel is 20 cents a gallon. The tax credit for sustainable aviation fuel is 35 cents a gallon.
At the same time, biofuel producers could see the tax credit increase fivefold if they follow prevailing wage and apprenticeship requirements. Those issues are among those that should be adjusted in a final rule, the Iowa Renewable Fuels Association stated in its comments.
"Unfortunately, IRFA has received nearly universal reports that the administrative burden and cost to comply with PWA requirements are crippling the benefit of the program," IRFA stated.
Biofuel groups such as the American Coalition for Ethanol (ACE), Growth Energy and the Renewable Fuels Association (RFA) said the 45Z is critical to the ethanol industry, the rural economy and U.S. energy security.
"If effectively implemented, the 45Z tax credit has the potential to stimulate domestic energy production, strengthen U.S. energy security, bolster rural economies, and support increased investment and innovation in the renewable fuels and agriculture sectors," RFA stated.
ACE noted both ethanol producers and farmers have a lot at stake with the rule. "U.S. corn farmers continue to experience painfully high input costs and low market prices," ACE stated. "Most corn farmers are forecast to suffer their fourth consecutive year of net profit losses in 2026."
For all of that to happen, biofuel groups pressed Treasury and the IRS to move quickly to finalize the regulations around 45Z.
...
One change in the proposed rule praised by biofuel groups is updating the Greenhouse Gases, Regulated Emissions and Energy Use in Technologies (GREET) model to comply with changes made in the OBBBA last year. The law removed indirect land use as part of the calculation for emissions under the GREET model. RFA called for the Department of Energy (DOE) to more quickly release an updated GREET model for the 45Z.
The OBBBA also ensured feedstocks for the 45Z are limited to the U.S., Canada and Mexico, which will effectively shut down high volumes of imported used cooking oil from China and other countries. Those imports had disrupted the use of soybean oil and other domestic feedstocks by renewable diesel producers.
WAITING ON USDA'S FEEDSTOCK CALCULATOR
The proposed rule includes several layers and steps to recognize farm practices, which includes USDA finalizing its "Feedstock Carbon Intensity Calculator." Once USDA finalizes that, then DOE will adopt a 45Z version of the calculator within the GREET model, and then the IRS would publish additional guidance.
The IRS noted USDA's feedstock calculator is "undergoing testing, peer review and public comment," but USDA has not issued a notice on when that will happen.
Growth Energy pressed the IRS to "adopt reasonable interim measures to allow taxpayers to access emissions reductions from farm practices swiftly and without unnecessary administrative delays."
...
USDA has published final technical guidance to quantify, report and verify emission reductions from farm practices. Those technical guidelines were released in January 2025 in the final days of the Biden administration.
The focus of USDA's feedstock calculator is to demonstrate carbon sequestration and lower emissions from farm practices that support no-till or reduced tillage, increase cover crops and reduce fertilizer applications.
A spokesperson for USDA stated the rule is currently open for interagency review. "USDA will compile feedback and issue a final rule in the coming weeks."
RFA stated the group generally supports "regenerative feedstock cultivation practices," but the group also raised concerns that USDA's final feedstock calculator "could disadvantage clean fuel producers and farmers in certain regions based solely on their location and uncontrollable geographical factors."
Auditing based on USDA's technical guidelines also "may be overly complex and may discourage" farmers and biofuel producers. RFA called for "simplified and straightforward protocols" to certify and audit farm practices.
Along with that, the slow process of finalizing regulations will once again carry into the start of another crop season. RFA noted spring planting is already underway, and farmers have already made cropping decisions for the year. Farmers and biofuel producers "lacked the information, modeling tools and clear protocols" to leverage regenerative feedstocks for the 45Z credit, RFA stated. "Crops being planted now will be used as feedstock for clean fuel production later this year and well into 2027."
Given those factors, RFA and Growth Energy both called for Treasury to consider using "safe harbor" provisions for biofuel producers making efforts to apply the rules and calculation tools.
ACE has been using a USDA Regional Conservation Partnership Program (RCPP) grant to specifically look at regenerative farm practices and how they are undervalued in different locations in existing models, including USDA's feedstock calculator.
ACE noted Treasury doesn't need to "reinvent the wheel" to deal with verification and recordkeeping for farm practices because USDA agencies already have the tools. ACE pointed to USDA rules for conservation compliance to qualify for government payments. ACE stated Treasury should leverage USDA's existing tools when finalizing 45Z rules.
Growth Energy noted there are other farm practices that reliably quantify emission reductions which could be included in the feedstock calculator, citing the IRS and USDA should look at "biostimulants, biofertilizers and biopesticides" that "enhance soil health, improve nutrient uptake, and increase crop yields."
"It is therefore critical that farmers have flexibility to apply those farm practices that work best for their unique operations, leading to greater incentive and participation."
At the same time, the Trump administration has emphasized a broader effort to end what the president frequently calls "Green New Scam ideologies" and projects. President Trump's new 2027 budget plan details ending "Green New Scam" programs 21 times across the federal government, including USDA and the Energy Department. READ MORE
Excerpt from NATSO/PR Newswire: NATSO, representing truck stops and travel centers, SIGMA: America's Leading Fuel Marketers, and the National Association of Convenience Stores (NACS), filed public comments with the Department of Treasury and the Internal Revenue Service on the proposed rule for the "Section 45Z" Clean Fuel Production Credit. The following statement can be attributed to NATSO, SIGMA and NACS.
"The real-world implications on American energy supplies and the price that consumers pay at the pump should serve as the regulatory North Star of biofuel policy. Gasoline prices are one of the most visible, tangible ways consumers experience inflation in the U.S. economy. Higher diesel costs also raise the price of food, medicine and everyday household goods transported by truck as motor carriers experience higher operating costs.
"The '45Z' Credit is not alleviating these affordability challenges for American consumers and businesses. It has not helped American consumers by lowering fuel prices and it has not helped American farmers by increasing sales of corn or soybeans used to produce renewable fuels. The truth is, '45Z' has failed to help American farmers and American consumers of fuel. Treasury can begin to address these failures by finalizing rules that require transparent disclosure of credit values throughout the fuel supply chain, enabling the economic benefit of the '45Z' Credit to flow to consumers at the pump rather than disappearing in the margins of fuel producers.
"Congress has a distinct opportunity to rectify the volatility and chaos within the biofuel markets and provide relief for Americans by quickly reinstating the Biodiesel Blenders' Tax Credit. The Biodiesel Tax Credit is a proven approach that can bolster soybean demand and help stabilize retail diesel prices. This would actually benefit American farmers and consumers."
About NATSO, SIGMA, and NACS
NATSO is the trade association representing America's travel center 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 center, truck stop and off-highway fuel retail industries; 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. For more information visit NATSO.com. Follow NATSO on Facebook; Instagram; LinkedIn; and X. 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 segment 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. READ MORE
Excerpt from Iowa Renewable Fuels Association: The Iowa Renewable Fuels Association submitted comments April 6 to the U.S. Department of the Treasury and the Internal Revenue Service regarding proposed rules for the 45Z clean fuel production tax credit.
IRFA noted that the proposed rule is a great first step, but key modifications are necessary to unlock 45Z’s full potential.
In its comments, IRFA highlighted that “Ongoing events in Iran have highlighted that the work to achieve American energy security is not done. While better off than only a few decades ago, rising prices at the pump are a clear signal that American consumers are still impacted by events half the world away. In order protect the American economy, we must enhance our energy security. Proper implementation of the 45Z clean fuel production tax credit can be a powerful tool in this fight.”
Key points from IRFA’s comments include:
-
Prevailing-wage and apprenticeship requirements must be streamlined and made workable in the real world: “Unfortunately, IRFA has received nearly universal reports that the administrative burden and cost to comply with prevailing-wage and apprenticeship requirements are crippling the benefit of the program.”
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Extend the end-of-quarter corrective action period and add safe harbor: “…the agency should establish a safe harbor from these fines for any plant that has a pending job category or wage determination before the Department of Labor that goes unanswered during the quarter.”
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Speed Department of Labor job-category and wage-rates determinations: “IRS should immediately work with the Department of Labor to determine county-specific wage rates for any county where a potentially qualifying facility is located.”
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Clearly, and with common sense, define what constitutes “repair” vs. “maintenance”: “Replacement of equipment due to normal wear or the end of its duty cycle should be considered maintenance and not subject to prevailing-wage and apprenticeship requirements.”
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Updated GREET model should be published as soon as possible: “Removal by Congress of unscientific indirect land-use changes (ILUC) penalties as part of the emissions-rate calculations was a big win for American farmers. However, this removal is effectively hollow until the updated model is published.”
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Harness farmers to the drive for American energy dominance: “IRS should work with the USDA to finalize regenerative-ag practices that will reduce the emissions rate for renewable fuels production facilities.”
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Fairly treat all renewable fuels production business models: “Final 45Z rules should recognize that various business models and marketing relationships are common and well-established … An entity producing at a facility via a tolling agreement should be eligible to claim 45Z.”
To read IRFA’s full comments, click here. READ MORE
Excerpt from Renewable Fuels Association: The U.S. Department of Treasury has made “meaningful progress” in developing rules implementing the Section 45Z Clean Fuel Production Credit, but several aspects of the regulations need additional clarity and refinement, according to comments submitted to Treasury by the Renewable Fuels Association.
According to RFA’s comments, the top priority for Treasury should be releasing an updated 45ZCF-GREET model as soon as possible. The model is used by ethanol producers to determine the lifecycle “emissions rate” of their fuel, which ultimately establishes the value of the 45Z tax credit.
“If effectively implemented, the 45Z tax credit has the potential to stimulate domestic energy production, strengthen U.S. energy security, bolster rural economies, and support increased investment and innovation in the renewable fuels and agriculture sectors,” wrote RFA President and CEO Geoff Cooper. “The technology-neutral structure of 45Z is a crucial feature, allowing clean fuel producers to pursue the most economically efficient and practical pathways for reducing emissions and boosting domestic energy production.”
“However, as currently drafted, certain aspects of the proposal introduce inconsistencies and implementation challenges that may limit participation, create unintended market impacts, and reduce the near-term effectiveness of the program,” he added.
Among the major points stressed in the comments:
- RFA strongly supports Treasury’s proposed integration of important changes to the 45Z credit program, as directed by last year’s One Big Beautiful Bill Act.
- Treasury and the Department of Energy should immediately release an updated 45ZCF-GREET model that reflects OBBBA-directed changes.
- The agencies should work with the Department of Agriculture to finalize and integrate workable, equitable, and science-based technical guidelines for regenerative agriculture feedstocks and an updated FD-CIC calculator.
- Treasury should adopt a more flexible Provisional Emissions Rate process that allows for efficient characterization of new technologies and incremental emissions-reducing improvements at existing clean fuel facilities.
- Energy Attribute Certificates must be retained as a practical, market-based tool for reducing emissions rates.
- The interaction of “undenatured fuel ethanol” and “denatured fuel ethanol” for 45Z credit generation must be clarified.
- Treasury should clarify that only transportation and industrial fuels are eligible for 45Z credit generation.
- Foreign feedstock restrictions should not result in undue tracking, certification, and reporting requirements for feedstocks and fuel pathways that do not rely on imports.
- Treasury should clarify several elements of Prevailing Wage and Apprenticeship requirements and provide safe harbors for good-faith efforts to comply.
“We believe the final 45Z regulations must recognize the realities of today’s biorefining and agriculture sectors and the complexities of our nation’s transportation fuels marketplace,” Cooper wrote. “At the same time, final regulations must embrace an intuitive and manageable approach to registration, reporting, recordkeeping, and emissions rate modeling that creates a dependable operating environment and empowers investment.”
Click here for the comments. READ MORE
Excerpt from OPIS: The comments, which were due Monday, come amid a years-long process to finally offer full implementation of the 45Z program after it was originally passed as part of the Inflation Reduction Act of 2022 and given a set date of Jan. 1, 2025.
“While the credit has technically been available since January 2025, producers and farmers have struggled to capitalize on it with only minimal guidance,” Kurt Kovarik, vice president of federal affairs for the Clean Fuels Alliance America (CFAA), said.
Despite delays in implementing the scheme thus far, legislators moved last summer to extend its window for implementation to 2029 as part of the One Big Beautiful Bill (OBBB) Act while also revising the credit value tiers offered to producers by nixing a separate, higher potential credit value that would have been offered to producers of sustainable aviation fuel (SAF).
...
Some groups offered differing opinions over the agency’s decision in the proposed rule to alter the language defining a transportation fuel to note that “to be considered suitable for use, a fuel need not actually be used as a fuel in a highway vehicle or aircraft.”
As currently written, the language would allow producers of fuels with several use-cases, such as renewable diesel, to still receive a credit if they sell fuel that is technically suitable for transportation or industrial use for other purposes.
Kovarik said the group appreciates the agency’s inclusion of maritime use as an example that is eligible for use.
Biofuel producers have increasingly set their sights on the maritime industry in recent years as a potential market for their fuels, with particular interest from producers of biodiesel. And while BBD can be blended at higher rates than competing fuels in marine engines, the sector has also seen growing interest from the renewable diesel and ethanol industries as well.
Given the somewhat open-ended language already in the proposed rule on transportation fuel, Kovarik said the agency should move even further to include forms of heating oil in the final rule.
“In that same vein, we ask that Treasury also include renewable heating fuels (e.g., Bioheat fuel) as an additional example of ‘transportation fuel’ that are ‘suitable for use as a fuel in a highway vehicle or aircraft,'” Kovarik said.
But Cooper said the decision to broaden the definition of “suitable for use” in the proposed rule errs from Congressional intent for the program to limit eligibility to solely fuels for transportation or industrial use.
Instead of taking a more open-ended approach to the provision, Cooper recommended that Treasury should instead clearly define all transportation and industrial fuel uses, including marine and heating oil, that would be eligible for a credit.
“Treasury could also make clear in the final regulations that all non-transportation and non-industrial fuel uses are ineligible,” Cooper said.
...
Jennings also called out the alleged reluctance from certain DOE officials to include a specific version of the USDA’s Feedstock Carbon Intensity Calculator (FD-CIC) in the next update to 45ZCF-GREET.
“This reluctance is unwarranted, would cost rural communities billions annually, and should not be allowed to stall the significant progress scientists at DOE and USDA have made to calculate the value of low-carbon farming practices,” Jennings said.
Cooper ultimately called on both the Treasury and USDA to bifurcate the process for offering both offerings, arguing that the Treasury should release 45ZCF-GREET now and offer the FD-CIC module that should be included in it at a later date. READ MORE
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