Biodiesel Industry Welcomes Senate Finance Improvements to Clean Fuels Production Credit

Biodiesel Stakeholders Call for Transitional Measures Following Senate Finance Committee Enhancements

On June 25, 2025, a coalition of biodiesel stakeholders including the Sustainable Advanced Biofuel Refiners (SABR), NATSO, and the American Trucking Associations expressed their satisfaction with recent amendments made by the Senate Finance Committee to the Clean Fuels Production Credit, also known as Section 45Z. This legislative enhancement aims to create parity between biomass-based diesel and sustainable aviation fuel (SAF), which is crucial for leveling the playing field in the biofuel market. By equalizing the credits, this change addresses the ongoing issue where SAF displaces biomass-based diesel, thereby impacting the traditional diesel economy and overall fuel market balance.

Another critical improvement in the recent modifications is the transferability of the Clean Fuels Production Credit over the full seven years of the program. This amendment is particularly beneficial for biomass-based diesel producers as it opens access to much-needed financial support through credits, enabling them to remain competitive and sustain operations. Previously, many producers were constrained by the absence of transferable credits, which limited their access to vital funding.

Additionally, the Senate's decision to retain the removal of Indirect Land Use Change (ILUC) from the legislation marks a significant advancement for the industry. For over two decades, the potential impacts of ILUC have been forecasted, yet empirical evidence supporting such claims has not been realized. This removal is a positive step that will help enhance the credibility of biodiesel as a sustainable energy source.

Despite these advancements, stakeholders highlight the urgent need for transitional measures to support the biomass-based diesel industry, which is currently facing challenges due to the looming expiration of the blenders' tax credit slated for January 2026. The absence of immediate regulatory measures poses a severe threat, as many biodiesel plants are at risk of shutdown throughout 2025. This situation necessitates interim financial support to navigate the industry's transition until the full implementation of the updated Clean Fuels Production Credit in 2026.

Industry leaders are advocating for a streamlined version of the blenders' tax credit to be enacted for the remainder of 2025. This transitional support is viewed as essential to ensure the survival of numerous biodiesel producers who might struggle without it. In light of the geopolitical uncertainties, particularly in the Persian Gulf, the need for domestic energy independence has never been more critical. Biodiesel stakeholders emphasize the importance of acting swiftly to secure the future of the industry as it plays a vital role in America's energy strategy.

In conclusion, the improvements brought forth by the Senate Finance Committee are commendable steps toward supporting the biodiesel sector. However, immediate and effective transitional measures are necessary to bridge the gap created by regulatory delays and ensure that the industry can thrive in a rapidly changing energy landscape.