Clean Fuels Welcomes Proposed 45Z Rules

WASHINGTON, DC – Today, Clean Fuels Alliance America welcomed Treasury’s proposed rules for the 45Z Clean Fuel Production Credit, issued through the IRS. While the credit has been available since January 2025, producers and farmers have struggled to capitalize on it with only minimal guidance. Today’s proposal responds to taxpayer comments on prior guidance and provides additional certainty for the industry as the formal rulemaking process moves forward.

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Kurt Kovarik, VP of Federal Affairs, Clean Fuels, stated, "We greatly appreciate Treasury for moving forward with formal rules for the 45Z Clean Fuel Production Credit. The agency responded to many taxpayer concerns and resolved some uncertainties from the guidance issued a year ago. We anticipate this proposal will provide additional market certainty for biodiesel and renewable diesel producers."

The proposed rules provide taxpayers with safe harbors, clarify questions on qualified sales, tolling arrangements, and qualifying fuels used in non-transportation applications raised after the January 2025 guidance. The proposal makes no changes to prevailing wage rules in place since June 2024. The proposal includes changes to the 45Z Credit passed by Congress in July 2025, including limits on feedstock eligibility. Additional changes to carbon intensity scores – such as consideration of regenerative agriculture practices – await publication of a new version of the 45ZCF-GREET model.

“The delay in rulemaking led to market uncertainty that took a heavy toll on our industry, undercutting fuel production and the value added to agriculture. Clean Fuels and its members look forward to working with IRS and Treasury to finalize rules that support renewed growth for biodiesel and renewable diesel producers. The biodiesel, renewable diesel, and SAF industry has proven its ability to meet America’s demand for secure, affordable transportation fuels and to generate jobs and rural economy prosperity.”

ABOUT CLEAN FUELS ALLIANCE AMERICA

Made from an increasingly diverse mix of resources such as recycled cooking oil, soybean oil, and animal fats, the clean fuels industry is a proven, integral part of America’s clean energy future. Clean Fuels Alliance America is the U.S. trade association representing the entire biodiesel, renewable diesel and sustainable aviation fuel supply chain, including producers, feedstock suppliers and fuel distributors. Clean Fuels receives funding from a broad mix of private companies and associations, including the United Soybean Board and state checkoff organizations.