The U.S. Clean Fuels Coalition recently expressed strong support for the improvements to the Section 45Z clean fuel production tax credit included in the “Great Beautiful Act” passed by Congress, and thanked President Trump for his signature and support. The new legislation not only extends the 45Z tax credit through 2029 but also allows taxpayers to transfer credit amounts, providing unprecedented policy certainty for the biodiesel and renewable diesel industries, particularly for small producers.

Kovarik, Vice President of Federal Affairs at the Clean Fuel Association, expressed gratitude for Congress’ efforts to create conditions for industry recovery and growth, particularly thanking Iowa Senator Grassley for advocating for increased credit amounts for small agricultural biodiesel producers, helping them transition smoothly to the new Section 45Z system. Additionally, the bill extends the Section 40A small producer credit through 2026 and increases it to 20 cents per gallon. Facilities producing 60 million gallons annually can simultaneously qualify for both this credit and the 45Z credit, with the same transfer rules applying.

The new bill also requires the Treasury Department to expedite clarification of technical details, including “qualified sales” rules and other fuel sales arrangements, and to exclude indirect land-use change (ILUC) impacts from lifecycle emissions calculations starting in 2026, to more fairly assess the carbon reduction value of different feedstock pathways. Additionally, the credits will be limited to feedstocks grown in North America, strongly supporting the development of domestic agriculture in the United States.