By Jamie Martin
Leading fuel industry organizations have expressed concern over the Section 45Z Clean Fuel Production Credit, warning that it has harmed biofuel demand instead of strengthening it.
The groups explain that Section 45Z replaced Biodiesel Tax Credit with a production-based incentive that is difficult to use and understand. Despite years of review and public feedback, they say the policy still does not deliver real benefits to consumers or farmers.
"As Americans are navigating affordability challenges, now would be a great time to reinstate a tax policy that actually lowers the price consumers pay at the pump. Although the Treasury Department has done its best to make lemonade out of lemons, '45Z' simply will not lower fuel prices," said David Fialkov, Executive Vice President of Government Affairs for NATSO and SIGMA.
"To add insult to injury, today's proposed rule will not even improve demand for biofuels, nor will it generate meaningful support for American farmers by increasing demand for corn or soybeans,” said Fialkov.
"The transition away from the Biodiesel Tax Credit to the '45Z' production credit instituted a catastrophic decline in biofuels consumption that hurts the economy," said NACS Deputy General Counsel Matt Durand. "The Trump Administration inherited this unworkable mess. Congress can fix it by bringing back the Biodiesel Tax Credit, which has a proven track record of delivering lower prices to consumers while benefitting farmers and biofuel producers."
Fuel retailers argue that Section 45Z does not lower fuel prices and has failed to increase the use of biodiesel or higher ethanol blends. As a result, farmers who grow corn and soybeans are not seeing the expected rise in demand for their crops.
Recent data highlights the impact. Biodiesel consumption in 2025 dropped by more than half compared to the previous year. At the same time, renewable fuel credits tied to biodiesel and ethanol also declined, showing weaker use of biofuels across the country.
The industry believes this decline hurts the economy, reduces energy market stability, and weakens U.S. energy security. They say the earlier Biodiesel Tax Credit had a strong record of supporting renewable fuels while helping keep fuel prices affordable.
By contrast, Section 45Z is seen as too complex and disconnected from fuel retailers, making it harder for savings to reach consumers. Retailers say a simpler tax credit would allow them to pass cost reductions directly to drivers.
The groups are asking Congress and the Administration to replace Section 45Z with clear and effective biofuel policies. They say restoring the Biodiesel Tax Credit would quickly revive biodiesel use, support American farmers, and strengthen the fuel supply.
They remain ready to work with lawmakers on policies that benefit consumers, agriculture, and the nation’s energy future.
Photo Credit: istock-fangxianuo
Categories: National