Fuel retailers warn Congress of biodiesel industry shutdown without BTC extension, 45Z guidance

Congress must extend the longstanding biodiesel blenders tax credit (BTC), said fuel-retailer associations NATSO and SIGMA in response to published reports that the U.S. Department of the Treasury and Internal Revenue Service are unlikely to issue guidance governing implementation of the clean fuel production tax credit, also known as 45Z, by the end of the year.

The organizations said extending the biodiesel tax credit will serve as a bridge until the new Trump administration and 119th Congress can address longer-term tax policy in 2025. 

Without guidance, fuel producers will not be able to utilize the 45Z credit in the coming year. 

“This will result in higher fuel prices and emissions as the biodiesel industry effectively shuts down,” NATSO and SIGMA stated.

“Extending the $1-per-gallon biodiesel blenders tax credit will allow fuel retailers to continue to cut carbon emissions while also keeping fuel prices down,” the associations stated.

The biodiesel tax credit has been instrumental in developing a strong biodiesel and renewable diesel industry in the United States, driving significant growth in production.

The U.S. biodiesel and renewable diesel market has expanded from approximately 100 million gallons in 2005 to around 4 billion gallons in 2023, all while lowering transportation-related carbon emissions.

“For more than two decades, the biodiesel blenders tax credit has incentivized fuel retailers to invest in biodiesel and renewable diesel,” the groups said. “These fuels represent the most viable near-term option for reducing carbon emissions from the nation’s trucking, home-heating oil and rail industries.”

The BTC directly lowers the cost of diesel fuel for truck drivers, which in turn reduces shipping costs and helps lower the prices consumers pay for goods transported by truck, the organizations noted.

“The best way to reduce carbon emissions from transportation and lower fuel prices at the pump is to ensure that all biofuels have equal tax treatments and that fuels such as biodiesel and renewable diesel are less expensive than petroleum-based fuels,” NATSO and SIGMA stated. “Without the necessary guidance, the market will not invest in these fuels, and the 45Z tax credit will fail to function as Congress intended. We urge Congress to quickly pass this critical tax extension, and we look forward to working with policymakers in the coming year to find the best path forward so that future incentives in the renewable fuel industry protect consumers from rising trucking and fuel costs.”