NEFI champions Industry priorities at IRS hearing on biofuels tax credit

Written on: June 1, 2026 by ICM

On May 28, National Energy & Fuels Institute (NEFI) testified at a public hearing held by the U.S. Dept. of the Treasury and the Internal Revenue Service (IRS) on the proposed rule implementing the federal Clean Fuel Production Credit. The credit, often called the “Section 45Z” tax credit or simply “45Z credit” after its place in the Internal Revenue Code, will play an important role in the economics of renewable and alternative fuels in the coming years.

The testimony, delivered by NEFI President & CEO Jim Collura, builds on four years of advocacy to ensure that the tax credit benefits the heating oil industry and its consumers, and helps ensure a viable market for renewable liquid heating fuels for years to come.

The testimony highlights two important changes in the proposed rule:

• Suitable for use. The proposed rule confirms that a fuel qualifies for the tax credit if it is “suitable for use in a highway vehicle or aircraft,” even if it is not actually used in one. This was a critical win NEFI secured for our industry that ensures biodiesel and renewable diesel used in heating applications can qualify for the credit.
• Qualified sale. The proposed rule confirms that intermediate sales count, meaning fuel sold to a marketer or distributor who then resells it in their trade or business is eligible. This was another important win that reflects how the Northeast fuels markets operate and protects the role of the marketers, traders, and distributors our members rely on.

Unlike the biodiesel blenders tax credit it replaced, which paid a fixed dollar amount per gallon, 45Z is a production tax credit structured around the lifecycle greenhouse gas emissions intensity of the fuel. The lower the emissions footprint, the higher the credit value. This emissions-based approach adds significant complexity to how producers calculate their credits and makes the accuracy of the underlying emissions model critically important to the credit’s value for our industry.

In its testimony, NEFI pressed Treasury and the IRS to retain these provisions in the final rule. It also called on the agencies to work with the U.S. Department of Energy to release a revised emissions scoring method, known as the 45ZCF-GREET model, as soon as possible, and to update it regularly so new feedstocks and pathways can be added as they come to market. That includes the cellulosic biofuels emerging in the Northeast, such as Biofine’s Ethyl Levulinate, which is produced from sustainably harvested wood products, agricultural residues and municipal solid waste.

NEFI commended President Trump, Secretary Bessent and the administration for their strong support of U.S.-made biofuels and underscored that the industry’s priorities in this rulemaking align with the administration’s broader goals of U.S. energy dominance, energy security, and delivering cleaner and more affordable energy to U.S. families.

NEFI also continues to press Congress for reinstatement of the Section 40A biodiesel blenders tax credit, which many in Industry continue to view as the more effective vehicle for supporting renewable fuel use in our sector. This two-track approach gives our industry the best opportunity to secure durable federal policy support for the cleaner, more affordable, and more reliable energy solutions our members deliver every day.

You can read Collura’s full testimony here.