In a notice of proposed rulemaking on the 45Z clean fuel production tax credit, the Trump administration says it’s considering documentation requirements for biofuel feedstocks from Canada and Mexico, including used cooking oil.
The Treasury Department is asking for public comment on ways to ensure the legality of imported raw materials for making renewable fuels, according to the proposal issued Tuesday.
The request comes after Congress last year changed 45Z so the incentive is only eligible for biofuels made with North American feedstocks, an issue that’s caused division within the broader industry.
The administration on Tuesday said it remains concerned about the ability to tell the difference between used cooking oil and palm oil, raising the risk of giving credits to fraudulent fuels. The move followed the U.S. market being flooded with old frying grease from China and other nations for making renewable diesel and similar transportation fuels.
The guidance comes as the ag and energy industries also are anxiously awaiting final biofuel-blending rules for this year and beyond under the federal Renewable Fuel Standard from the Environmental Protection Agency. Farm groups are urging policymakers to stick with higher volume targets for advanced biofuels like bio-based diesel, as well as a proposal to discourage use of foreign biofuel feedstocks, known as the "half-RIN" proposal.
“Treasury’s updated 45Z guidance is an important step forward, but it must be reinforced by finalizing the RFS as proposed," National Oilseed Processors Association CEO Devin Mogler said. "A strong RFS that includes import RIN reduction is critical to putting American farmers and rural manufacturing first and providing the certainty needed to continue to invest and grow so we can crush more soybeans right here in the U.S.,"
The overall, 170-page proposed 45Z rules will have a 60-day comment period. A public hearing is scheduled for May 28, 2026, at 10 a.m. Washington time.
The 45Z credit was originally part of the Inflation Reduction Act passed under President Joe Biden’s administration in 2022.
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