Farm Groups Press Treasury for Fast 45Z Rules as Biofuel Industry Seeks Market Certainty

Soybean and corn industry witnesses told Treasury and IRS officials that delayed guidance on the Section 45Z Clean Fuel Production Credit is slowing investment decisions and creating uncertainty across rural America, renewable fuels markets and agricultural supply chains

Farm-state groups intensified pressure on the Trump administration Thursday to finalize long-awaited guidance for the Section 45Z Clean Fuel Production Credit, arguing the program could become one of the most significant long-term demand drivers for U.S. agriculture if implemented quickly and predictably.

During Treasury Department and Internal Revenue Service hearings on proposed 45Z regulations, representatives from the American Soybean Association (ASA) and National Corn Growers Association (NCGA) warned that uncertainty surrounding the credit is delaying investment decisions for farmers, ethanol producers, renewable diesel plants and lenders.

ASA Secretary Jordan Scott testified that soybean growers are looking for timely final guidance that supports domestic biofuel production and expands demand for American-grown feedstocks. Scott, a fifth-generation farmer from Valley Springs, South Dakota, said the clean fuel credit is particularly important as soybean farmers face tighter margins, elevated production costs and volatile commodity markets. “Federal tax credit certainty for the biofuel industry supports U.S. agriculture by bolstering market access and creating value-added opportunities for farmers,” Scott told Treasury and IRS officials. “Conversely, the lack of tax credit certainty affects the markets that U.S. soybean farmers depend on.”

Scott highlighted statutory changes to the program that removed indirect land use change penalties on agricultural feedstocks, a change soybean groups have long sought because they argued earlier carbon accounting models unfairly disadvantaged crop-based biofuels.

He also backed provisions limiting eligibility for the credit to feedstocks sourced within the United States, Canada and Mexico, an increasingly contentious issue as renewable fuel producers debate the role of imported used cooking oil and other foreign feedstocks.

Scott further urged Treasury and IRS officials to continue developing policies that allow farmers to directly benefit from climate-smart farming practices — including no-till and cover crops — through USDA’s Carbon Intensity Calculator framework.

Meanwhile, NCGA representative Matt Frostic told regulators that the ethanol industry remains a foundational demand driver for rural America and warned that prolonged regulatory uncertainty risks undermining investment throughout the agricultural economy. Frostic said farmers are operating in one of the most difficult financial environments in recent memory as input costs remain elevated, financing expenses rise and commodity prices soften. “That is why ethanol is so important,” Frostic testified. “The ethanol industry is an essential economic driver for American agriculture.”

He described the Section 45Z Clean Fuel Production Credit as potentially “one of the most important long-term demand drivers for agriculture in decades,” but argued that its success depends on regulators finalizing a clear and durable framework quickly.

Frostic outlined three priorities NCGA believes are necessary for the program to function effectively: final approval of USDA’s updated carbon intensity calculator, incorporation of USDA’s updated FD-CIC model into DOE’s 45Z-CF GREET model, and formal recognition of verified on-farm conservation practices within carbon intensity scoring systems.

He emphasized that farmers are already adopting practices such as no-till, strip-till and cover cropping that improve soil health and environmental outcomes, but said growers need confidence those investments will be recognized within the tax credit framework. “Without that clarity, participation will remain limited,” Frostic said. “Farmers simply cannot make large capital decisions based on assumptions or temporary guidance that may later change.”

Frostic also encouraged Treasury to explore a “book-and-claim” chain-of-custody system that would allow environmental attributes associated with conservation practices to be tracked without requiring physical segregation of grain throughout the supply chain. He argued that imposing rigid segregation requirements across the existing grain handling system could create major logistical complications and limit participation by small and medium-sized producers.

The hearings highlighted broader industry tensions surrounding implementation of 45Z following changes included in the One Big Beautiful Bill Act (OBBBA). Agricultural organizations have generally pushed for domestic feedstock prioritization and stronger incentives for U.S. farmers, while some renewable diesel and refining interests have warned that restrictive sourcing rules could tighten feedstock supplies and increase production costs.

Frostic argued that the decisions Treasury and IRS make now could extend well beyond ethanol and sustainable aviation fuel because future markets for bio-based chemicals, textiles and industrial products will likely rely on similar carbon accounting frameworks. “If implemented correctly, 45Z can help position American farmers to participate in a rapidly expanding bioeconomy while strengthening domestic manufacturing, expanding rural investment, and reinforcing American energy dominance,” Frostic testified.

Analysis

The testimony from soybean and corn groups shows how central the 45Z credit has become to the future economics of U.S. row-crop agriculture and renewable fuels.

For soybean producers, renewable diesel expansion has already transformed soybean oil demand and triggered a wave of crush plant investments across the Midwest.

Meanwhile, corn growers increasingly see ethanol and sustainable aviation fuel as critical long-term demand outlets capable of offsetting pressure from weaker exports, rising global competition and softer commodity prices.

The hearing also underscored a growing divide between agricultural interests and some renewable fuel producers over feedstock sourcing rules. Farm groups largely support restrictions favoring North American feedstocks because they view the program as a mechanism to strengthen domestic agriculture and rural economies. Some refiners and renewable diesel producers, however, argue broader feedstock flexibility is necessary to maintain supply availability and control production costs.

Equally important is the unresolved debate over carbon intensity scoring and farmer participation. Both ASA and NCGA are pushing Treasury to ensure farmers can directly monetize conservation practices through the 45Z framework. If regulators create a practical system that rewards no-till, cover crops and other climate-smart practices, the program could materially reshape farm management decisions and create new revenue streams tied to carbon performance.

Meanwhile, delays in final guidance risk slowing investment decisions throughout the renewable fuels supply chain. Ethanol plants, soybean processors, lenders and fuel producers are all waiting for regulatory certainty before committing additional capital to expansion projects, making Treasury’s final rulemaking one of the most consequential agricultural policy decisions currently facing the biofuels sector.