The pieces of the Section 45Z Clean Fuel Production Credit are finally falling into place. Treasury’s proposed regulations arrived February 4, DOE released the updated 45ZCF-GREET model on June 12, and USDA published its final feedstock guidance on June 29 – the framework that allows farm-practice carbon intensity reductions to flow through to producer credit values. For ethanol, biodiesel, renewable diesel, and RNG producers, the window to act on 2025 and 2026 credits is open.
Background: What Is Section 45Z?
Section 45Z is a technology-neutral, emissions-based federal tax credit for domestic producers of clean transportation fuels. Enacted under the Inflation Reduction Act of 2022 and modified by the One Big Beautiful Bill Act (OBBBA) of 2025, the credit applies to qualifying transportation fuel produced after December 31, 2024 and sold before January 1, 2030, extended by two years from the original 2027 sunset.
Unlike its predecessors, 45Z is claimed by the producer, not the blender, and is based on the fuel’s lifecycle greenhouse gas emissions rate: the lower the carbon intensity (CI), the higher the credit, up to $1.00 per gallon or gallon-equivalent for non-SAF transportation fuel (the base rate is $0.20, increasing to $1.00 only where prevailing wage and apprenticeship requirements are met). It applies only to fuel produced at qualified domestic facilities from feedstocks sourced in the United States, Canada, or Mexico (for fuel produced after December 31, 2025).
Tax Credit Framework
February 4 – Proposed Regulations Published
Treasury and IRS published proposed regulations (REG-121244-23; 91 FR 5160) on February 4, 2026, the most comprehensive guidance since the credit took effect. The rule addresses eligibility, the 45ZCF-GREET emissions rate methodology, certification and registration, qualifying sale definitions (expanded to cover certain related-party intermediary sales), anti-stacking rules (a facility claiming 45Z cannot also claim 45V, 45Q, or 48(a)(15) in the same tax year), and elective payment and transferability. Nearly 500 stakeholders commented before the April 6 deadline; a telephonic public hearing was held May 27–29. Critically, taxpayers may rely on the proposed regulations until final rules are published, provided they follow them consistently and in their entirety.
June 12 – Updated 45ZCF-GREET Model Released
DOE released the June 2026 version of the 45ZCF-GREET model, which Treasury has adopted for determining 45Z emissions rates. The update incorporates the OBBBA changes for fuel produced after December 31, 2025, including removal of indirect land use change (ILUC) from CI calculations and ineligibility of feedstocks sourced outside the US, Mexico, and Canada, and provides calculations for fuel produced in both 2025 and 2026. Notable constraints in the 2026 model outputs include the inability to use negative CI for process fuels produced from non-manure sources, and the unavailability of a generic animal-manure RNG pathway pending species-specific pathways.
June 29 – USDA Final Feedstock Guidance Published
USDA published its final rule, Technical Guidelines for the Production of Regenerative Agricultural Biofuel Feedstocks (91 Fed. Reg. 39334; effective July 29, 2026). The rule establishes a voluntary framework for quantifying, reporting, and verifying the CI of biofuel feedstock crops, using the USDA Feedstock Carbon Intensity Calculator (USDA FD-CIC) for four crops: field corn, soybeans, sorghum, and spring canola. Recognized low-carbon practices include reduced tillage, no-till, cover crops, nutrient management, and manure application in place of nitrogen fertilizer. The guidance confirms a mass-balance approach for feedstock traceability – qualifying grain must physically move through the biofuel supply chain. Program details are on USDA’s Technical Guidelines page.
What’s Still Outstanding
Treasury’s final 45Z regulations remain the last major piece and are expected to be published in November. Producers should also watch how the IRS integrates USDA’s feedstock framework into the final rule, and – for RNG producers – the development of species-specific manure pathways in future GREET updates.
What This Means by Segment
- Ethanol, biodiesel, and RD producers using crop feedstocks: Farm-practice CI reductions can now be documented and rewarded – sustainable farm practices can lead to significant CI reduction for crop-based fuels, provided farm-level documentation is robust and available.
- Feedstock suppliers and aggregators: The mass-balance traceability requirement means feedstock contracting and data flows need to be structured now for the 2026–2027 growing seasons.
- RNG producers: Use the June 2026 model for current-year calculations; monitor species-specific manure pathway development.
- All producers: Registration must precede production to claim the credit – confirm registration status before year-end.
Action Checklist
- Run current-year CI calculations in the June 2026 45ZCF-GREET model – do not rely on prior versions for post-2025 fuel.
- Assess feedstock eligibility under the US/Canada/Mexico restriction for fuel produced after December 31, 2025.
- For crop-based fuels: evaluate the USDA FD-CIC opportunity and begin structuring farm-level documentation and mass-balance traceability.
- Confirm producer registration is in place – registration must precede production.
- Monitor Treasury’s final rule for changes from the proposed regulations you are relying on.
Trinity’s Clean Fuels Practice provides 45ZCF-GREET carbon-intensity modeling, feedstock documentation, and producer registration support. For help positioning your fuels for the credit, please email Alex Marcucci.
