USA: proposed regulations for the 45Z clean fuel credit — key changes after the July 2025 act

The US Department of the Treasury and the Internal Revenue Service (IRS) presented on 3 February 2026 proposed implementing regulations for the 45Z tax credit for the production of clean transport fuels, published in the Federal Register on 4 February 2026 (91 FR 5160). The credit covers fuel produced in the US after 31 December 2024 and sold by 31 December 2029, and its amount depends on the emission intensity of the fuel. For biomethane producers it is an important complement to the RFS and state clean fuel programmes.

Changes compared with earlier guidance

The proposal builds on Notice 2025-10 (published on 10 January 2025), in which the IRS announced its intention to issue regulations and asked for comments on a working text. According to the IRS, the proposal covers the rules for determining the credit, emission rates, and certification and registration requirements.

Changes from the July 2025 act

According to the IRS announcement (IR-2026-20 of 3 February 2026), the 2025 act (the One Big Beautiful Bill) changed the 45Z credit in the following ways, among others: it extended it to 31 December 2029, limited feedstocks to those produced in the US, Mexico or Canada, added restrictions for prohibited foreign entities, abolished the special rate for SAF, excluded indirect land use change (ILUC) from emission rates and banned negative emission rates except for fuels from animal manure, for which feedstock-specific rates are required. For biomethane from manure the last change is particularly significant.

Registration

To claim the credit, producers must register with the IRS at the time of production using Form 637. This also applies to biomethane producers if they sell it as a transport fuel.

Consultation deadlines

According to the Federal Register (91 FR 5160), comments must be submitted by 6 April 2026, and a public hearing is scheduled for 28 May 2026 (10:00 Eastern time; it would be cancelled if no requests to speak were received). The results of these consultations and any final regulations should be checked on the IRS website and in the Federal Register — we have not confirmed whether the regulations had been finalised at the time this text was published.

Significance for biogas

The 45Z credit overlaps with other instruments: RINs from the RFS, LCFS credits and investment credits. In practice an investor in an RNG project analyses a "stack" of revenues, and changes in any one element can shift the decision to start the investment. For biogas installations using waste and manure, it matters how the regulations treat any credits for avoided methane.

What this means for Poland and Europe

The American direction – tax credits dependent on emission intensity – differs from the European one, based on obligations for fuel suppliers. In both systems, however, the methodology for calculating lifecycle emissions is decisive. For Polish biomethane producers the lesson is that changes in methodology (e.g. the removal of ILUC) can shift competitiveness between fuels from different feedstocks.