Treasury, IRS Update Sec. 45Z Clean Fuel Credit Guidance
New agency guidance provides updated emissions rates and calculation models for producers of clean transportation fuels, including key changes for manure-derived fuels and regenerative agriculture.
The U.S. Treasury and IRS have issued Notice 2026-53, providing the 2026 emissions rate table for the Section 45Z clean fuel production tax credit. The Department of Energy also released an updated 45Z-CF GREET model incorporating the new guidance and recent legislative changes. Sophisticated counsel and their clients in the energy and agricultural sectors care because a fuel's emissions rate directly determines the value of the tax credit, impacting project finance and profitability. This guidance is particularly favorable for producers using animal manure or food scraps as feedstock, as it establishes distinct emissions rates and allows for farm-specific calculations. It also benefits ethanol producers using certain regenerative agricultural practices. Key changes include the formal exclusion of indirect land use change (ILUC) emissions and the addition of several new pathways for renewable natural gas. Fuel producers should now evaluate the updated model and substantiation rules to maximize their credits for fuels produced in 2025 and beyond.