In testimony provided at a public hearing this morning, the Renewable Fuels Association urged the U.S. Department of Treasury to swiftly finalize “clear, stable, and practical regulations” implementing the Section 45Z Clean Fuel Production Credit. RFA also called on the Treasury to immediately release an updated 45ZCF-GREET model that integrates changes to the 45Z program mandated by last year’s One Big Beautiful Bill Act. RFA’s oral testimony builds on detailed written comments submitted to Treasury in April.
“We believe that, if implemented effectively, the 45Z tax credit can stimulate domestic energy production, strengthen U.S. energy security, bolster rural economies, and drive innovation in the renewable fuels and agriculture industries,” said RFA President and CEO Geoff Cooper. “The technology-neutral structure of 45Z is a crucial feature of the program, enabling producers to pursue the most efficient and economically practical pathways for reducing emissions and boosting production of homegrown fuels."
He noted, however, that, for the 45Z program to achieve its full potential, Treasury and IRS must finalize clear, stable, and practical regulations without delay: “Clean fuel producers need certainty and timeliness to support both immediate operational decisions and long-term investments. Further delays will limit participation and undermine the benefits intended by Congress.” This is especially important when it comes to finalizing and releasing a revised version of the 45ZCF-GREET model.
“With the fundamental changes to 45Z required by OBBBA, an updated 45ZCF-GREET model is urgently needed,” Cooper said. “We are nearly halfway through the 2026 tax year, and still clean fuel producers do not have access to the model required for determining emissions rates, which of course, ultimately drives determinations of 45Z credit values. Delays are creating tremendous uncertainty and investment risk.”
Among the specific points Cooper pointed out for refinement:
- In the 45ZCF-GREET model, RFA urges Treasury to include distinct pathways for ethanol made from cellulosic corn and sorghum kernel fiber. These fuels, which are excluded from the existing version of 45ZCF-GREET, offer extremely low emissions rates.
- Treasury should work with the Department of Energy to correct an unintended penalty in the emissions rate modeling framework for facilities that use combined heat and power, or CHP, systems. Many ethanol producers have invested in CHP systems to enhance energy efficiency and reduce emissions, and CHP is exactly the type of energy-saving technology the 45Z program was meant to encourage.
- RFA supports recognizing regenerative agriculture practices within the 45Z program but urges caution on Treasury’s approach for integrating these practices. Feedstock certification and recordkeeping requirements must be science-based, transparent, and practical, and should embrace a market-based, “book-and-claim” approach.
- The proposed rule’s addition of “undenatured ethanol” to the definition of low-GHG ethanol could create some unintended consequences and inconsistencies with longstanding EPA and Treasury regulations. The rules clearly prohibit generating the credit on a transportation fuel that is made from another transportation fuel for which the credit is allowable.
- RFA urges Treasury to provide additional guidance and safe harbors for PWA compliance. Current definitions and processes are creating confusion and substantial burden for clean fuel producers.
