Biodiesel stakeholders applaud Senate finance committee improvements to 45Z, call for short-term transition

Biodiesel stakeholders praised members of the Senate finance committee June 25 for their work to make improvements to the clean fuel production credit (section 45Z).  

The coalition includes:

• Sustainable Advanced Biofuel Refiners.

• NATSO, representing travel centers and truck stops.

• American Trucking Associations.

• Illinois Soybean Growers.

• National Energy & Fuels Institute.

• SIGMA: America’s Leading Fuel Marketers.

• National Association of Convenience Stores.  

“Equalizing the value of the credit between over-the-road biomass-based diesel and sustainable aviation fuel (SAF) was an important policy improvement,” the organizations stated. “Creating SAF parity would be an important step to leveling the playing field and mitigating the ongoing problem of SAF displacing gallons of over-the-road biomass-based diesel rather than gallons of petroleum. Another important policy improvement from the House version was the extension of transferability of the credit to all seven years of the program. Without transferability, most biomass-based diesel producers would not have access to the credit at all.”  

The groups also noted that biobased diesel producers are glad to see that the removal of indirect land-use change (ILUC) stayed in the Senate version.  

“After 20 years of predictions of ILUC from biofuels, the modeled ILUC results were never observed and certainly not scientifically agreed upon,” the groups stated. “We applaud these policy improvements and call for them to remain in the final version that Congress passes. We especially want to thank Senate Finance Committee Chairman Mike Crapo, R-Idaho, and biomass-based diesel champion Sen. Charles Grassley, R-Iowa, and other members of the finance committee for their hard work. While these improvements make 45Z a much more workable policy from the original law passed in the 2022 Inflation Reduction Act, the amendments do not take effect until 2026. The expiration of the blenders tax credit in January and the lack of implementing regulations for 45Z have put the biomass-based diesel industry in great peril. The industry is all but shut down for all of 2025 and will continue to be for at least the rest of the year unless there is some transitional short-term policy measure to turn the plants back on and provide a bridge to 45Z in 2026. We have called for a streamlined version of the blenders tax credit for the rest of 2025 to be that bridge. Without such a bridge, most biomass-based diesel producers will not survive to 2026. At a time of dangerous conflict in the Persian Gulf, America needs all of the domestic energy it can get.”