White House completes 45Z review, signaling public release soon

The White House budget office has finished a regulatory review of proposed Treasury Department rules for the Clean Fuel Production Credit, known as 45Z, a U.S. government website shows.

Completion by the Office of Management and Budget indicates the administration could publicly release rules for the tax credit at any time. 

The 45Z incentive, which is aimed at encouraging greater production of U.S. renewable fuels made from soybeans, grains and other feedstocks, originated in the 2022 Inflation Reduction Act during former President Joe Biden's administration. The credit was overhauled last summer in the "One Big Beautiful Bill Act" tax law.

Years of uncertainty over how 45Z would work, in addition to lower-than-expected biofuel-blending rules under the Renewable Fuel Standard (RFS), dealt a heavy blow to some biofuel producers, especially soy-heavy biodiesel.

In Iowa, the biggest U.S. producer of biodiesel and second largest grower of soybeans, biodiesel output plummeted 31% last year from 2024, the Iowa Renewable Fuels Association (IRFA) said Monday. 

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“Lack of tax policy coupled with low RFS numbers sent producers into a tailspin." IRFA Executive Director Monte Shaw said in a statement. "We have plants trying to hang on by their fingertips waiting for clarity from D.C. Hopefully we can get final guidance on the 45Z tax credits soon and certainty on a robust RFS level for 2026 soon after.”

A potential boost for biodiesel stems from 45Z. The tax credit incentivizes use of domestic biofuel feedstocks, putting many biodiesel producers in the center of the country at a potential advantage by being closer to soybeans and similar biofuel feedstocks than rivals on the West and Gulf coasts. 

The credit will be available to producers making fuel with feedstocks sourced in North America, though full details of how 45Z will work haven't yet been released. The industry also is awaiting final RFS biofuel-blending rules for this year. 

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