Uncertainty on the Future of the Clean Fuels Production Credit
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Jay Cruz
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Uncertainty on the Future of the Clean Fuels Production Credit

The future investments and development of the renewable fuels sector face some uncertainty. Earlier this year, the Department of the Treasury (Treasury) released guidance on the Clean Fuels Production Credit (Sec. 45Z), a tax credit that consolidates and replaces previous credits for biodiesel, renewable diesel, alternative fuels, and sustainable aviation fuel. The recently issued guidance marks an important step toward implementing the credit and supporting the future development of renewable fuels markets. However, since the notice serves as a precursor to proposed regulations, the credit remains subject to regulatory uncertainty, which may be compounded by the policies of the new administration. Read more. 

Since entering office, the Trump administration has not been a strong proponent of the advancement of sustainable energy production, issuing several executive orders that target the suspension of select renewable energy initiatives. Additionally, actions such as the “Regulatory Freeze Pending Review” may add delay to the progress of reviewing comments and issuing proposed regulations for the tax credit and other policies. On the other hand, several Republican members of Congress have expressed desires to maintain tax credits established or modified under the Inflation Reduction Act (IRA), including 45Z. These policy outcomes are critical, as they shape the future investment strategies of the energy industry. For example, BP recently announced cuts to investments in renewables while increasing spending in oil and gas production. Accordingly, monitoring the development of such incentives is key for the bulk liquid storage industry. Comments to Treasury’s proposal can be submitted through April 10, 2025, and ILTA will continue providing insights on policy updates impacting liquid fuel markets for members. 

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