ANKENY, IOWA (February 4, 2026) — In the wake of US Treasury publishing of proposed rules for the 45Z Clean Fuel Production Credit today, Grant Kimberley, executive director of the Iowa Biodiesel Board (IBB), issued the following statement:
“The publishing of the proposed rules for the clean fuel production credit is a positive step in restoring the health of the biodiesel industry. Although the credit has been available since January 2025, the minimal guidance made it virtually impossible for producers and farmers to capitalize on it. Today’s proposal responds to tax-payer comments on prior guidance and provides much-needed additional certainty for the industry as the formal rulemaking process moves forward.
“Our state’s biodiesel producers, particularly the independent, locally-owned biodiesel plants, have been fighting for survival. We anticipate that this guidance will provide some market certainty, helping to rebuild the road to prosperity for our biodiesel producers and farmers. Rural Iowa can and should continue to play a vital role in America's energy future.
“We thank Treasury, the Department of Energy, and USDA for their attention to this vital issue for the biofuel and agriculture sectors.”
The new proposal incorporates changes to the credit adopted by Congress and addresses key questions that came up after initial guidance was released in January 2025, including the following:
- Which fuel sales qualify for the tax credit;
- How companies who work together ("tolling arrangements") can claim the credit; and
- Whether fuels used for purposes other than transportation can qualify (Bioheat fuel).
The proposal clarifies that fuel made from feedstocks imported from outside North America is not eligible starting in 2026. It does not yet include updates for how carbon emissions from the farm are calculated, but eliminates Indirect Land Use Change estimates from carbon intensity scores.
Kimberley noted that while 45Z is a key piece of biofuel policy, the biodiesel and soybean markets anxiously await the Trump administration’s publishing of the Renewable Fuel Standard volume obligations rule, which remains the largest market driver.
Iowa is the nation’s leading biodiesel-producing state and soybean oil producer.
About the Iowa Biodiesel Board
The Iowa Biodiesel Board represents the biodiesel industry in Iowa, from the farmers who grow the feedstock, to production, through distribution to end-users. Founded by the Iowa Soybean Association, IBB operates an independent organization and board. The IBB works to promote the commercial and economic success of biodiesel in Iowa. For more, visit IowaBiodiesel.org.
