45Z Guidance Opens New Biofuel Opportunities for Farmers

The Internal Revenue Service issued updated emissions-rate guidance on September 8, while the Department of Energy revised its 45ZCF-GREET model.

LUBBOCK, TEXAS (RFD NEWS) — New federal guidance for the Section 45Z Clean Fuel Production Credit gives farmers and biofuel producers a clearer framework for using qualifying agricultural practices in clean-fuel calculations.

The Internal Revenue Service issued updated emissions-rate guidance on September 8, while the Department of Energy revised its 45ZCF-GREET model. The changes recognize qualifying regenerative practices and provide transition relief for certain 2025 and 2026 fuel production.

For crop producers, participation could require additional recordkeeping. Agricultural consultant John Duff says 45Z places significant emphasis on field-level data, including yield, fertilizer use, tillage, cover crops, and documentation supporting those practices.

Sorghum and soybean groups welcomed the changes. The updated model also recognizes distillers sorghum oil alongside distillers corn oil in several clean-fuel pathways, potentially expanding demand for another agricultural coproduct.

Implementation now shifts toward how farmers and fuel producers document qualifying practices and share any added value. Duff says understanding who needs farm data and why is becoming nearly as important as collecting it.

Farm-Level Takeaway: 45Z could create new biofuel opportunities, but farmers may need stronger field records to capture that value.
Tony St. James, RFD News Markets Specialist

Tony St. James joined the RFD-TV talent team in August 2024, bringing a wealth of experience and a fresh perspective to RFD-TV and Rural Radio Channel 147 Sirius XM. In addition to his role as Market Specialist (collaborating with Scott “The Cow Guy” Shellady to provide radio and TV audiences with the latest updates on ag commodity markets), he hosts “Rural America Live” and serves as talent for trade shows.

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