USA: the July 2025 OBBBA and biogas support — 45Z to 2029, an exception for manure

The One Big Beautiful Bill Act (OBBBA), signed on 4 July 2025, reshaped American tax credits for energy and fuels. For biogas the most important elements are the changes to the 45Z credit (clean transport fuels) and a provision that protects manure-based fuels.

The 45Z credit

According to the summary by the law firm Sidley: - the credit is extended by two years, to the end of 2029; - for fuels produced after 31 December 2025 the feedstock must be produced or grown in the USA, Mexico or Canada; - the emissions rate (CI) may in principle not fall below zero, which limits the higher credits previously granted for negative scores; the exception is fuel from animal manure; - indirect land use change has been excluded from the calculations.

For farms with a covered slurry lagoon this means that an advantage is retained: the negative emissions intensity from avoided methane still counts in full. See the post on RNG as a transport fuel.

The 45Y and 48E credits for electricity

The Act ends 45Y and 48E for wind and photovoltaics if the installation is placed in service after 31 December 2027, unless construction begins within 12 months of the Act entering into force. For the remaining technologies a general phase-out from 2034 is indicated for facilities beginning construction. The sources discussed do not mention biogas, landfill gas or biomass, so their status needs to be checked in the legislation and Treasury guidance.

Foreign restrictions

For 45Y/48E, rules were introduced on entities legally or effectively linked to countries designated as threats (FEOC): for construction beginning in 2026 the threshold for the share not originating from such entities is 40%, rising to 60% for the years from 2030.

The 45V hydrogen credit ends for projects whose construction begins after 31 December 2027.

What this means for biogas plants

Extending 45Z to the end of 2029 gives RNG projects a planning horizon, and the exception for manure-based fuels preserves the advantage of installations that avoid methane emissions. The tightening of the feedstock origin requirement is meant to limit imports, which for farm-based biogas is usually neutral, because the substrate is local. The details of how credits are calculated depend on Treasury implementing rules, so before an investment decision you need to check the latest version of the rules.