New study demonstrates biodiesel tax credit’s benefits for consumers
- NATSO
- 3 hours ago
- 3 min read
A new independent study commissioned by NATSO, representing America’s travel centers and truck stops, SIGMA: America’s Leading Fuel Marketers, and the National Association of Convenience Stores finds that the section 40A biodiesel blenders tax credit (BTC) delivers significantly more value across the entire biofuel supply chain than its replacement, the section 45Z clean fuel production credit.
The report, prepared by GlobalData, a leading energy research and analytics firm, finds that nearly 70 percent of the BTC value flowed through the supply chain to blenders and consumers, ranking it among the most consumer-friendly biofuel policies.
The report, titled, “Tax Credit Impact on U.S. Biofuels,” analyzes the impact of biofuel tax credits and how their value is shared throughout the supply chain to the benefit of farmers and consumers.
“This study highlights that the BTC remains one of the most consumer-oriented tax policies, with the vast majority of its value trickling down into lower prices at the pump,” said NATSO President and CEO Max McBrayer. “This reaffirms our industry’s position that reinstating the BTC represents a common-sense solution for ensuring stable fuel supply options while also helping to lower fuel prices at the pump.”
Conducted by GlobalData, the research examined the BTC, which expired at the end of 2024, and the existing 45Z credit to compare how these tax credits influence demand for biofuels and ultimately impact the market.
“The study’s findings confirm what fuel retailers see every day—reducing fuel costs at the point of blending means greater savings at the pump,” said Matt Durand, deputy general counsel for NACS. “The 40A credit is a transparent and market-tested way to help lower diesel prices, delivering real value for American families and small businesses.”
Using independent data, GlobalData found that as little as 20 percent of the 45Z tax-credit value flows through the supply chain to blenders and consumers.
When the BTC was in place, between 50 percent and 70 percent of the credit value passed to blenders and consumers.
By comparison, under 45Z, just 20 percent to 40 percent of the credit value flows to blenders and consumers with producers retaining up to 80 percent of the value.
NATSO, SIGMA and NACS, which represent 90 percent of fuel sold at retail, urge Congress to quickly reinstate the BTC.
The BTC represents a significant opportunity to help stabilize diesel prices and strengthen demand for renewable fuels—enhancing supply options and alleviating fuel price pressures caused by today’s market volatility and geopolitical risks, the associations state.
As surrogates for the consumer, when fuel retailers pay less to buy and blend biofuel, they are incentivized to pass those savings on to customers in the form of lower prices at the pump.
The structure of the 45Z credit makes it impossible for fuel retailers to access savings and extend those benefits to consumers, according to the fuel-retailer trade groups.
The longstanding BTC was replaced in 2025 by the 45Z production credit.
The simple $1-per-gallon blender credit was eligible for all biomass-based diesel.
The 45Z credit, by comparison, is a complex income tax credit that varies based on greenhouse-gas emissions and must be redeemed by producers against their annual tax filings.
The executive summary of the new study can be downloaded here.
