The Biden Administration Clarifies Clean Fuel Tax Credit Criteria Before 2025

The U.S. Treasury announces imminent guidelines for the 45Z tax credit, aimed at reducing carbon emissions and boosting investments in biofuels, despite inter-agency tensions.

Share:

The U.S. Department of the Treasury has confirmed it will issue the necessary guidelines for the 45Z clean fuel tax credit before January 2025. This program is part of the Inflation Reduction Act, a cornerstone of the Biden Administration’s energy policies.

A Financial Tool at the Core of Energy Strategy

The 45Z tax credit is designed to encourage domestic production of fuels with at least a 50% reduction in greenhouse gas emissions compared to conventional petroleum. Producers can claim up to $1 per gallon for non-aviation fuels, with additional incentives for further carbon intensity reductions. For sustainable aviation fuel (SAF), the credit can reach $1.75 per gallon.

The program has a dual objective: to support producers while strengthening the U.S. transition to more sustainable fuels. However, businesses and investors are awaiting technical details to better plan their investments and maximize their eligibility for the credit.

Delays Caused by Divergences

Inter-agency discussions on the 45Z tax credit have revealed disagreements on technical issues, particularly regarding the use of the GREET (Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation) model to evaluate eligible fuels. Some industry experts are concerned that these delays could hinder the program’s implementation and disrupt ongoing projects.

Tensions also revolve around the use of agricultural land for biofuel production, a divisive issue among policymakers. Some advocate for the inclusion of climate-smart agricultural practices as an eligibility criterion, while others believe overly stringent requirements could limit the program’s economic impact.

Economic and Industrial Impacts

The 45Z credit is seen as a major opportunity for biofuel producers and their industrial partners, who have invested in technologies to reduce the carbon intensity of their products. According to Emily Skor, CEO of Growth Energy, uncertainty surrounding the credit jeopardizes these investments and threatens the rural communities reliant on the revenue generated by this industry.

Additionally, the current uncertainty could impact fuel prices, a strategic issue for the transportation sector and energy markets. NATSO and SIGMA, representing fuel retailers and distributors, have called for the extension of existing credits, such as the biodiesel blending credit, to serve as a safety net until clear rules are established.

A Political and Financial Issue

As 2024 approaches, a critical year for the biofuel industry, delays in publishing the guidelines raise questions about the Biden Administration’s ability to deliver on its energy policy promises. Industry groups, while calling for clarity, also urge Congress to consider transitional measures to prevent a market slowdown.

For investors, the publication of eligibility criteria will be crucial to evaluating risks and opportunities in low-carbon fuels. Clarity on the 45Z credit is awaited as a strong signal to align industrial strategies with national energy goals.

Brazil, Mexico, Argentina, Colombia, Chile, and Peru significantly increase renewable electricity production, reaching nearly 70% of the regional electricity mix, according to a recent Wood Mackenzie study on Latin America's energy sector.
The Canadian government announces an investment of more than $40mn to fund 13 energy projects led by Indigenous communities across the country, aiming to improve energy efficiency and increase local renewable energy use.
The German Ministry of Economy plans to significantly expand aid aimed at reducing industrial electricity costs, increasing eligible companies from 350 to 2,200, at an estimated cost of €4bn ($4.7bn).
A major electricity blackout paralyzed large parts of the Czech Republic, interrupting transport and essential networks, raising immediate economic concerns, and highlighting the vulnerability of energy infrastructures to unforeseen technical incidents.
French greenhouse gas emissions are expected to rise by 0.2% in the first quarter of 2025, indicating a global slowdown in reductions forecast for the full year, according to Citepa, an independent organisation responsible for national monitoring.
The Republican budget bill passed by the U.S. Senate accelerates the phase-out of tax credits for renewable energies, favoring fossil fuels and raising economic concerns among solar and wind industry professionals.
Rapid growth in solar and wind capacities will lead to a significant rise in electricity curtailment in Brazil, as existing transmission infrastructure remains inadequate to handle this massive influx of energy, according to a recent study by consulting firm Wood Mackenzie.
In April 2025, fossil fuels represented 49.5% of South Korea's electricity mix, dropping below the symbolic threshold of 50% for the first time, primarily due to a historic decline in coal-generated electricity production.
The US Senate Finance Committee modifies the '45Z' tax credit to standardize the tax treatment of renewable fuels, thereby encouraging advanced biofuel production starting October 2025.
According to the 2025 report on global energy access, despite notable progress in renewable energy, insufficient targeted financing continues to hinder electricity and clean cooking access, particularly in sub-Saharan Africa.
While advanced economies maintain global energy leadership, China and the United States have significantly progressed in the security and sustainability of their energy systems, according to the World Economic Forum's annual report.
On the sidelines of the US–Africa summit in Luanda, Algiers and Luanda consolidate their energy collaboration to better exploit their oil, gas, and mining potential, targeting a common strategy in regional and international markets.
The UK's Climate Change Committee is urging the government to quickly reduce electricity costs to facilitate the adoption of heat pumps and electric vehicles, judged too slow to achieve the set climate targets.
The European Commission will extend until the end of 2030 an expanded state-aid framework, allowing capitals to fund low-carbon technologies and nuclear power to preserve competitiveness against China and the United States.
Japan's grid operator forecasts an energy shortfall of up to 89 GW by 2050 due to rising demand from semiconductor manufacturing, electric vehicles, and artificial intelligence technologies.
Energy-intensive European industries will be eligible for temporary state aid to mitigate high electricity prices, according to a new regulatory framework proposed by the European Commission under the "Clean Industrial Deal."
Mauritius seeks international investors to swiftly build a floating power plant of around 100 MW, aiming to secure the national energy supply by January 2026 and address current production shortfalls.
Madrid announces immediate energy storage measures while Lisbon secures its electrical grid, responding to the historic outage that affected the entire Iberian Peninsula in late April.
Indonesia has unveiled its new national energy plan, projecting an increase of 69.5 GW in electricity capacity over ten years, largely funded by independent producers, to address rapidly rising domestic demand.
French Minister Agnès Pannier-Runacher condemns the parliamentary moratorium on new renewable energy installations, warning of the potential loss of 150,000 industrial jobs and increased energy dependence on foreign countries.