Senate finance committee’s 45Z allows discounted credit for foreign feedstock, removes SAF premium

Sen. Mike Crapo, R-Idaho, the chairman of the U.S. Senate finance committee, released legislative text June 16 for inclusion in Senate Republicans’ budget-reconciliation bill, which retains the section 45Z clean fuel production credit but makes significant modifications to both the current law and the version passed by the House of Representatives May 22.

“[The bill] powers the economy by permanently extending critical pro-growth provisions and introduces new incentives for domestic investment, providing certainty for American job creators to spur domestic economic activity and invest in their workers,” Crapo said. “The legislation also achieves significant savings by slashing Green New Deal spending and targeting waste, fraud and abuse in spending programs while preserving and protecting them for the most vulnerable. I look forward to continued coordination with our colleagues in the House and the administration to deliver President Trump’s bold economic agenda for the American people as quickly as possible.”

While the version of 45Z passed in the House of Representatives’ “One, Big, Beautiful Bill” disallows biofuels produced from feedstocks grown outside of North America from claiming the credit, the Senate finance committee’s bill text allows biofuels made of feedstock from outside the U.S.  to claim the credit but imposes a “20 percent haircut” on the value of the credit effective after Dec. 31, 2025. 

“Missouri soybean farmers were encouraged by last week’s EPA announcement supporting increased domestic biofuel volumes,” said Ryan Wilson, the Missouri Soybean Association’s policy chairman. “The move was a clear signal that American-grown fuels are critical to our energy future—and it delivered real momentum to rural economies and farmgate prices. That’s why the proposed language released by the Senate finance committee for the 45Z tax credit is deeply disappointing. Allowing foreign feedstocks, like imported used cooking oil from China, to qualify for U.S. tax incentives—up to 80 percent of the value of the tax credit—is out of step with the Trump administration’s agenda. The Senate finance committee’s approach shifts taxpayer dollars away from Missouri farmers and into the pockets of foreign suppliers. At a time when Missouri farm families are facing lower commodity prices, inflation and uncertainty, we should be strengthening our investment in American-grown fuels—not subsidizing foreign competition. These tax credits are designed to support rural jobs, domestic energy security and the farmers who grow the crop. Allowing foreign feedstocks to receive up to 80 percent undermines those goals.”

Like the House version, the Senate excludes indirect land-use changes for the purposes of lifecycle greenhouse-gas emissions calculations.

“We do appreciate that the Senate draft removes outdated indirect land-use change penalties—which have long been based on flawed assumptions and unfairly penalized U.S. soybean production—and the extension of the transferability provision,” Wilson added. “These are positive steps toward recognizing the sustainability of domestic agriculture.”  

Also like the House version, the Senate finance committee seeks to extend 45Z through 2031 from its current expiration date at the end of 2027.

In addition, the Senate finance committee intends to reign in the special maximum rate of the 45Z credit for sustainable aviation fuel (SAF) from $1.75 per gallon to $1 per gallon.

“By including provisions to bolster the U.S. biofuels industry, the Senate finance committee has laid a robust foundation to achieve our shared goal of American energy dominance,” said Michael McAdams, president of the Advanced Biofuels Association (ABFA). “The ABFA commends Chairman Crapo and committee members for their tailored approach to biofuels policy, exemplified by the extension of 45Z tax credits through 2031 and pathways that support the broad suite of feedstocks and fuels necessary to achieve our country’s domestic-energy ambitions. We recognize, however, that there are opportunities to improve upon the Senate finance committee’s strong starting position. We encourage Senate decisionmakers to continue engaging with biofuel-sector stakeholders and look forward to advancing the president’s energy agenda alongside our partners on Capitol Hill.”

To view the complete text of the Senate finance committee’s bill, click here. The 45Z modifications can be found beginning on page 330.

To read a section-by-section breakdown of the bill, click here. The section on 45Z is on page 34.

Once other Senate committees put forth their sections into a complete version of the budget-reconciliation bill, the full Senate will then vote on the measure.

If the Senate is able to pass its version of the “big, beautiful bill,” any differences between the House and Senate legislation must be reconciled before sending to President Trump for signing into law.