Almost 500 stakeholders submitted comments to the Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) on the new Notice of Proposed Rulemaking (NPRM) for the Section 45Z Clean Fuel Production Credit. The comment period closed April 6, 2026, but, according to the website, as of this writing, late comments are still being allowed. The comment letters, which are publicly available, both commend regulatory clarifications included in the proposal and recommend further changes.
Generally, the comment period marks the penultimate opportunity to submit feedback prior to the issuance of a Final Rule, preceding a public hearing if one is requested. The closure of the comment period signals a critical step in the regulatory process for the new Section 45Z tax credit.
In their comments, leaders from across the clean fuels sector—including ethanol, biodiesel, renewable natural gas (RNG), sustainable aviation fuels (SAF), and maritime fuels—provided perspectives on behalf of their respective industries, making requests that span the technical spectrum of fuel production. Despite the diversity of represented interests, several concerns were repeated across submissions. A closer look at these issues reveals the priorities of the clean fuels industry and possible changes that could be reflected in the Final Rule.
What is the Clean Fuel Production Tax Credit?
Initially enacted into law as part of the Biden Administration’s Inflation Reduction Act of 2022 (IRA), the Section 45Z Clean Fuel Production Credit is a technology-neutral, performance-based clean-fuel production tax credit that rewards fuel producers whose fuels have lower carbon emissions. The credit was drafted to replace a suite of clean and alternative-fuels credits set to expire at the end of 2024 upon which many businesses already depended. However, unlike previous credits that could be claimed by taxpayers at different stages of the supply chain (e.g., blenders), 45Z can only be claimed by fuel producers.
Under the IRA version of the credit, taxpayers could claim up to $0.20 per gallon for non-aviation fuel and $0.35 per gallon for sustainable aviation fuel (SAF), scaling to $1.00 and $1.75 respectively if wage and apprenticeship requirements were met. President Trump’s One Big Beautiful Bill Act of 2025 (OBBBA) subsequently extended and amended the credit, which now expires at the end of 2029. The OBBBA eliminated the additional credit amount for SAF and, beginning in 2026, requires feedstocks to be sourced from the United States, Canada, or Mexico, reinforcing both the credit’s technology-neutral design and its focus on ensuring that federal incentives directly benefit the American farmer.
While the Clean Fuel Production Credit became effective for fuel produced and sold on or after January 1, 2025, many taxpayers have been unable to take appropriate steps to claim the credit without clear and unambiguous guidance. It was not until January 2025 that Treasury issued preliminary guidance on Section 45Z with the release of Notices 2025-10 and 2025-11, two sub-regulatory (i.e., less authoritative than regulations) documents that outlined draft eligibility requirements and emissions criteria. However, many stakeholders in the fuels industry found that
ambiguities in the Notices raised as many questions as they answered. The Biden Administration’s guidance was also superseded by OBBBA’s changes to the credit, complicating taxpayers’ efforts to rely on the Notices and predict their eligibility with any certainty.
In February 2026, Treasury finally published the long-awaited NPRM for the 45Z Clean Fuel Production Credit. The proposed rules provide crucial details specifying how taxpayers can claim the credit, outlining eligibility requirements, emissions rate calculations, exceptions and exclusions, and certification processes. The NPRM, which carries more legal authority than the prior sub-regulatory guidance provided by the Notices, also clarifies specific questions raised by the 2025 Notices and the OBBBA’s legislative modifications.
As required by the Administrative Procedures Act (APA), the NPRM provided a 60-day comment period, which ended on April 6, 2026. By that date, stakeholders needed to submit their comments on the proposed rule as well as any requests to testify at the May 28 public hearing. In the wake of the April 6 deadline, IRS officials have been working on an agenda for the public hearing, identifying the entities that have requested to speak and their respective witnesses.
Why comment?
While Treasury is not obligated to adopt changes suggested in the comments, the APA requires that they review all properly submitted comments and respond to any “significant” issues raised. The comment period, therefore, represented a critical opportunity for stakeholders in the fuels industry to provide feedback on the proposed rules and provide practical information to government lawyers regarding how to implement the credit to most effectively reflect congressional intent.
With these considerations in mind, the following sections identify specific issues where many of the clean fuels-industry stakeholders expressed support for the NPRM language, as well as noting recurring concerns raised in their submitted comments.
Comments in Support of Proposed Language
Clarification of Qualified Sale
In their comments, many stakeholders commended the NPRM’s clarification of the definition of “qualified sale” and supported its inclusion in the Final Rule. To qualify for the 45Z credit, a taxpayer must meet fuel and production criteria and then sell the fuel to an unrelated person in a “qualified sale.” Notice 2025-10 required that the fuel be “sold for use as a fuel in a trade or business” in order to meet the definition of “qualified sale.” However, stakeholders selling fuel in their trade or business raised concerns that the “as a fuel” condition was unnecessarily restrictive and could exclude sales to distributors, third parties, and intermediaries—a common practice in the fuels industry—from the definition of “qualified sale.”
In response to these concerns, the NPRM removed this language from the definition, specifically responding to industry comments by clarifying that sales to related or unrelated intermediaries can meet the definition of “qualified sale.” With these types of sales now eligible, fuel producers who
sell their products through intermediaries engaged in the trade or business of buying and selling fuel should be able to claim the credit.
Stakeholders who expressed support for this language included: Airlines for America (A4A), the Alternative Fuels & Chemicals Coalition (AFCC), the American Petroleum Institute (API), the Clean Fuels Alliance America (CFAA), the Fuel Cell and Hydrogen Energy Association (FCHEA), Growth Energy, the Maritime Innovation Coalition (MIC), the Methanol Institute (MI), the Renewable Fuels Association (RFA), the Coalition for Renewable Natural Gas (RNG Coalition) and the SAF Coalition.
Suitable for Use
Clean fuels industry stakeholders also applauded the NPRM’s clarification that a transportation fuel need not actually be placed in the fuel tank of an aircraft or highway vehicle to be considered “suitable for use” in said vehicles. Now, for a fuel to be eligible for the 45Z credit, it must simply have practical applications as transportation fuel.
The clarification responded directly to concerns raised by stakeholders regarding language in the IRA. Intended to prevent producers from claiming production credits for low quality, unproven, volatile, or experimental fuels, the IRA language specified that the fuel must be “suitable for use as a fuel in a highway vehicle or aircraft.” However, stakeholders raised concerns that fuel producers cannot control whether customers use their products in highway vehicles or aircraft, especially as many fuels could be alternatively used in maritime vessels, heating, or as feedstocks for further fuel production. Stakeholders also argued that there are energy and environmental benefits to allowing production credits when fuel is used in said alternative circumstances. Consequently, the NPRM specified that while fuel must still meet industry quality standards (e.g., American Society for Testing and Materials (ASTM)) to be considered “suitable for use as a fuel in a highway vehicle or aircraft,” the fuel can be used in alternative contexts. The change promotes the adoption of lower-carbon fuels in non-aviation and highway industries, including maritime applications and ensures that producers of “suitable” fuels are not penalized for their product’s end-use.
The American Biogas Council (ABC), CFAA, RFA, the RNG Coalition, MI, and MIC all expressed strong support for this language.
Removal of Indirect Land Use Change (ILUC)
Similarly well-received, the NPRM implements a statutory modification included in the OBBBA, noting that emissions attributed to ILUC will be removed from the methodologies for calculating emissions rates of fuels produced in 2026 and after. ILUC emissions estimate the carbon impact of repurposing land for biofuel production, namely the conversion of forests and grasslands into agricultural land. Notably, ILUC emissions cannot be directly measured in real-time, making estimates inconsistent across models.
Alongside the January 2025 Notices, the Department of Energy (DOE) released the first version of the lifecycle analysis model used to calculate the emissions rate (ER) of fuels under Section
45Z – the 45Z Clean Fuels Greenhouse gases, Regulated Emissions, and Energy use in Technologies (45ZCF-GREET) model. This initial version of the 45ZCF-GREET model accounted for ILUC emissions in its calculations.
A number of stakeholders, particularly those in America’s mature biofuels industry whose fuels rely on agricultural feedstocks, commended this change. Once a new 45ZCF-GREET model reflecting OBBBA amendments is published, this change will allow producers to receive lower ER scores and subsequently qualify for a higher credit. Among those expressing support for this change are AFCC, CFA, Growth Energy, RFA, and the SAF coalition.
Topics of Concern
45ZCF-GREET Model
While many stakeholders expressed support for the removal of ILUC from the 45ZCF-GREET model, submissions also cited a wide range of concerns regarding the scope, availability, clarity, and timing of the release of a new, modified model. It was expected to be released in concert with the 45Z NPRM, but funding issues have created unanticipated and indeterminate delays to the point that no changes to the model will be applicable to the 2025 tax year. The new model will only be applicable for tax year 2026 and on.
Missing Feedstocks
Leading industry stakeholders expressed concerns over the scope of the 45ZCF-GREET model, particularly the feedstocks and practices that are not included in the latest model. Growth Energy and RFA, both major biofuel trade associations, noted that ethanol feedstocks like wheat slurry, sorghum oil, proso millet, corn kernel fiber, and sorghum kernel fiber are not currently represented in the model. CFAA and RFA suggested that all feedstocks currently approved under the Renewable Fuel Standard (RFS), a long-standing federal program that supports biofuel production in the United States, be incorporated into a modified 45ZCF-GREET model.
Other commenters like ABC and the RNG Coalition requested more specificity in model pathways for the use of manure feedstocks and domestic waste feedstocks in the production of RNG. The American Fuel and Petrochemical Manufacturers (AFPM) noted that the only biogenic waste feedstocks, critical to the production of biodiesel and SAF, with specified pathways in the model are used cooking oil (UCO) and tallow, as opposed to all waste fats. AFPM recommended that all feedstocks approved under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) framework also be included in the model. FCHEA also noted the exclusion of “Power-to-Liquid” (PtL) pathways, a novel branch of sustainable fuel production that combines green hydrogen with captured carbon to create synthetic hydrocarbon fuel, from the 45ZCF-GREET model.
Integration of FD-CIC and Timing
Aside from feedstock concerns, stakeholders also noted the ongoing partnership between DOE and the United States Department of Agriculture (USDA) regarding the USDA’s new Feedstock
Carbon Intensity Calculator (USDA FD-CIC). This calculator, which quantifies the carbon intensity of agricultural feedstocks based on crop type and agricultural practices, is still undergoing testing. However, the NPRM notes that a 45Z-specific version of the calculator will likely be published in 2026 to be used in conjunction with 45ZCF-GREET to reward sustainable agriculture practices.
In their comments, A4A, the American Biofuel Association (ABFA), AFCC, CFAA, Growth Energy, and the SAF Coalition all acknowledged or expressed appreciation for the consideration of agricultural practices in the calculation of emission values. ABFA and the SAF Coalition sought the expansion of FD-CIC, advocating for the inclusion of Practice 328, a crop rotation practice, while CFAA provided a list of 32 practices that should be included.
That said, many stakeholders were also generally concerned that integrating FD-CIC could slow down the release of an updated 45ZCF-GREET model and prolong uncertainty as producers determine their eligibility for the tax credit. For example, RFA noted that many farmers have already planted crops for 2026. Should the model be published in late 2026 and determine that some agricultural practices lower emissions rates while others do not, some clean fuel producers may find themselves unable to benefit.
In general, stakeholders urged that any necessary changes to the 45ZCF-GREET model be made quickly, emphasizing the importance of certainty for short-term decision-making and long-term investment.
Energy Attribute Certificates (EACs) and 45V Rules
Comment letters from ABC, ABFA, AFCC, API, AFPM, CFA, Growth Energy, RFA, and the RNG Coalition raised concerns regarding the NPRM’s treatment of EACs in the 45ZCF-GREET model. Because GREET accounts for emissions associated with electricity used in fuel production, producers may use EACs—certificates representing renewable electricity generation—to reduce the modeled carbon intensity of their fuels and, thereby, a fuel’s emissions value.
The NPRM notes that rules governing EAC use under 45Z will be “similar to” those governing EAC use under Section 45V, the Clean Hydrogen Production Tax Credit. The final Biden-era regulations for Section 45V set strict rules regarding which EACs producers must use with respect to criteria commonly referred to as the “three pillars”: incrementality, deliverability, and temporal matching. These rules were not specifically prescribed by Congress in the Section 45V statute and were heavily criticized as overly restrictive by industry stakeholders during the 45V rulemaking process.
Some stakeholders asserted that concerns about this approach given the disparity of energy intensity in fuel production depending on the type of clean fuel being produced. While 45V may be appropriate for hydrogen, it is not equally applicable to other types of clean fuel production. Consequently, several comment letters asserted that regulations under the “three pillars” are burdensome or even outright impractical for clean fuels manufacturers. If clean fuels producers cannot use EACs to reduce their emissions rate, they will receive less benefit from the tax credit
than anticipated, or in some cases may fail to qualify at all for the production tax credit. This could increase their production cost, in many cases imperiling financing for new facilities.
Provisional Emissions Rate (PER) Process
Related to concerns regarding the scope of the 45ZCF-GREET model, several comment letters also raised the urgent need for Treasury to fully implement the PER process. Under Section 45Z, if a pathway is not included in the 45ZCF-GREET model, clean fuel producers can petition the IRS and DOE to calculate a PER, determining the producer’s qualification for the credit.
Yet, despite the impending availability of this process, industry stakeholders noted the absence of any guidance on how to engage in the PER petition process. Growth Energy also expressed concern that the required coordination between DOE and the IRS would result in time-consuming delays that could prove prohibitive given the short lifespan of the tax credit. Additionally, AFCC, AFPM, CFAA, FCHEA, and Growth Energy contested the need for a Class 3 Front-End Engineering Design (FEED) Study to apply for a PER, noting that project investors will likely not fund a costly and time-intensive FEED Study without first knowing if the project is eligible for a tax credit. Growth Energy, along with RFA, also noted that the PER petition process is open only to new fuel production pathways and that existing pathways have no means by which to acquire new emissions values should technologies improve.
Concerns over the PER Process were echoed across submissions from A4A, ABFA, AFCC, AFPM, CFAA, FCHEA, Growth Energy, RFA, and the RNG Coalition. These comment letters urged expeditious release of PER guidance, including clear and rational timelines to ensure producers engaging in the process can proceed with certainty within a reasonable timeframe.
Double Crediting
To ensure that multiple entities in a supply chain do not claim the same credit on the same fuel or on a fuel produced from the same molecules, the NPRM implements an OBBBA-enacted change that amends the definition of transportation fuel to exclude fuel “produced from a fuel for which a credit under this section is allowable.” A very important distinction here lies in the definition of “allowed” versus “allowable” under the U.S. Tax Code. “Allowable” refers to the amount of a deduction or credit that a taxpayer was entitled to take on their tax return, regardless of whether it was claimed. “Allowed” means the amount that was actually claimed. So, even if an upstream entity produces an otherwise qualifying fuel intended as a feedstock for a further-processed fuel and declines to claim the 45Z credit, the ultimate fuel producer is still prohibited from claiming the credit. While commenters agreed with the intent of the change, several submissions pointed out that this change is incongruent with the principle of technology-neutrality, as some fuels are necessarily made from others.
API, the RNG Coalition, and the SAF Coalition, for example, noted that hydrogen made from RNG or SAF made from ethanol would not qualify for credit under this exclusion. Similarly, FCHEA remarked that this language disqualifies e-SAF produced from hydrogen from the credit, disfavoring the “Power-to-Liquids” pathway. With regard to ethanol, RFA pointed out that this
prohibition would exclude the ability to claim the credit for denatured ethanol given is made from undenatured ethanol, both of which qualify as transportation fuels under 45Z.
Many stakeholders advocated for amending the NPRM to allow taxpayers flexibility to elect which producer (feedstock or ultimate) could claim the credit. However, other modifications to the language were offered to resolve the issue as well. A4A, ABFA, AFCC, API, RFA, and the SAF Coalition all cited this as a major concern.
Pro-Rata Allocation
A number of stakeholders raised concerns over the NPRM’s unanticipated inclusion of a pro-rata allocation requirement for clean transportation fuels held in commingled storage. Under the proposed language, “[i]f a taxpayer sells transportation fuel that is held in common storage with other fuels that have different emissions rates, the taxpayer is treated as selling a pro rata portion of each fuel produced after December 31, 2024, and held in such common storage.” Under this rule, when fuels with different CI values, fuels made by different producers, etc. are mixed in a shared vessel, the tax credit value is determined by the weighted average of the physical blend, and each contribution to the mix receives the same percentage allocation.
As AFCC, AFPM, API, CFAA, the RNG Coalition, and the SAF Coalition noted in their comments, this approach does not reflect how renewable fuels are produced, handled, and tracked in practice. AFPM explained the process well, noting that most renewable fuels are not sold where they are produced. Instead, they enter large distribution networks where they routinely mix with other products. Fuel is then sold from there from shared holdings. The pipelines connected to these terminals operate as batch, mixed liquid transport systems. The whole point of this arrangement is to support a flexible and interchangeable fuel distribution system, the operation of which naturally involves frequent additions and withdrawals of product. As a result, terminals cannot accurately allocate a pro rata share of fuel to any individual sale.
Pro rata allocation also disproportionately impacts some producers over others, based on factors such as what type of fuel is being produced and the relationship between the parties in the production process. Given that some types of clean fuel are more likely to be held in common storage than others, applying the pro rata requirement to claim the 45Z tax credit also undermines the credit’s goal of technology-neutrality.
Concerned stakeholders, including AFPM, API and the SAF Coalition, recommended that producers be permitted to rely on mass balance accounting, which is already widely accepted and recognized, rather than requiring producers to develop and maintain separate records from other fuel programs. Producers already commonly use mass balance accounting to allocate volumes and attributes. Mass balancing enables the supply chain to handle both conventional and low-carbon fuels interchangeably. The International Organization for Standardization (ISO) recognizes mass balance as one of five chain-of-custody models and provides standardized definitions and guidance for its use.1
Additionally, mass balance accounting is already an essential component of 45Z, as producers use it to demonstrate the CI of the fuels for which they claim credits, even when these fuels pass through complex renewable fuel facilities and mixed pipeline and terminal systems. It is also crucial to SAF production, as it is embedded within CORSIA. Finally, mass balance accounting is a key element of the 45ZCF-GREET model, used to account for various feedstocks used by a single facility.
UCO and Feedstock Traceability
Following initial enactment of the 45Z credit in the IRA, U.S. imports of Chinese UCO surged. The United States went from importing less than 200 million pounds in 2020 to over 3 billion pounds in 2023, with over 50 percent coming from China. Concerns over “suspicious” imports, with reports that some Chinese UCO was blended with virgin palm oil, combined with competitive concerns of American farmers, first led to tightened oversight and verification of imports, and then eventually to Treasury announcing in January 2025 that non-U.S. origin UCO would not qualify for the 45Z credit. The GREET model was similarly adjusted to reduce the incentive to use imported UCO by enforcing stricter traceability. The current NPRM loosened this restriction slightly by requiring UCO feedstocks to be sourced from North America (United States, Mexico, or Canada) to qualify for the 45Z tax credit.
Comment letters from A4A, AFCC, AFPM, API, and CFAA discussed UCO feedstock tracing and suggested approaches for how Treasury and the IRS should determine UCO origin. As use of UCO as a feedstock in renewable fuel production has become more prevalent, the NPRM notes the difficulties in distinguishing virgin oils from UCO and tracing UCO to North American origin.
In resounding agreement, A4A, AFCC, AFPM, and CFAA requested that compliance with RFS protocols for UCO tracing be sufficient under Section 45Z. These comment letters pointed out that many fuel producers already comply with strict RFS feedstock tracing rules, and any duplication would be both burdensome and unnecessary. A4A and AFPM also noted that California’s LCFS program and other state-level programs set strict requirements for UCO tracing, so adopting any of these existing regulatory regimes would be the most efficient and effective way to ensure UCO meets 45Z requirements.
Consistent with these existing regimes, API also suggested defining UCO origin as the location where the oil was used, not where the cooking oil was produced. The majority of UCO collected in the United States comes from restaurants and food processing factories. Tracing the origin of UCO to the field level is more specific than what the statute requires and may not even be possible.
Prevailing Wage & Apprenticeship (PWA) Requirements
To qualify for the maximum credit value, clean fuels producers must in many cases meet PWA requirements. Under these requirements, all laborers and mechanics employed in the construction, alteration, or repair of the facility must be paid a prevailing wage as determined by the Department of Labor (DOL). Additionally, a certain percentage of total labor hours must be performed by qualified apprentices from a registered program.
However, CFAA, Growth Energy, RFA and the RNG Coalition argued that the final PWA rules are insufficiently detailed and, in some cases, unworkable in real life, that “alteration or repair” could be more clearly defined, and that DOL guidance may contradict other requirements in the NPRM. Many tax directors have also encountered issues distinguishing alterations and repairs from “maintenance” (for which the PWA requirements are not implicated). Growth Energy also noted that the PWA requirements should be more flexible, particularly impacting rural markets where available workforce is limited. This combined with the absence of industry-specific guidance as to the types of labor that qualify, complicates efforts to claim the maximum production credit and creates an administrative burden on fuels producers.
Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) Compliance
Comments from AFPM and the SAF Coalition expressed concerns over language in the NPRM that addresses CORSIA compliance in SAF production. While “highway” fuels producers must use 45ZCF-GREET to calculate emissions values, the NPRM allows SAF producers to calculate emissions values using frameworks designed by the International Civil Aviation Organization (ICAO) under CORSIA – the CORSIA Default or CORSIA Actual models. However, the NPRM specifies that these models are the most recent CORSIA methodologies that have been adopted by ICAO “with the agreement of the United States.” AFPM and the SAF Coalition both noted that there is no guidance on how to determine whether the United States has agreed to a given methodology, creating uncertainty as to whether SAF products using CORSIA models will remain eligible.
Conclusion
While there is no unanimity of complaint or solutions among the almost 500 stakeholders who commented on the 45Z NPRM, many of the key players agree that the NPRM represents a dramatic improvement over prior guidance and provides much-needed clarification. Despite these improvements, there are still significant outstanding questions and concerns regarding regulatory language.
The critical and recurring issues seen across the comment letters discussed here are likely to be the focus of May 28 public hearing and serve as a starting point for any changes implemented in the Final Rules.
Special thanks to Margaret Hecht and Ruby Gilmore for their contributions.
[1] ISO 22095:2020, Chain of Custody – General terminology and models (2020), available at https://www.iso.org/standard/72532.html.
