“American Farmers Stuck in Neutral” described industry groups’ reaction to the Biden administration’s initial Section 45Z guidance, released January 10, 2025. It did not describe the program’s rules as they stand today: Congress changed and extended the credit in 2025, and the IRS issued further guidance in 2026. The central concern at the time was that producers and farm partners lacked enough detail to plan around the credit.
What did the January 2025 45Z guidance leave unclear?
Section 45Z is a federal income-tax credit for qualifying clean transportation fuel produced in the United States. The January 10, 2025 guidance was an initial implementation step, but renewable-fuel and agricultural organizations said it did not answer enough practical questions about how producers could qualify and calculate the credit.
- Feedstock treatment: stakeholders sought clearer rules on how different feedstocks would affect eligibility and emissions calculations.
- Farm practices: they wanted details on whether and how climate-smart agricultural practices could be reflected in a fuel’s emissions profile.
- Decarbonization technology: questions remained about which technologies and changes at fuel facilities could count toward lower emissions.
- Calculation inputs: industry groups sought greater clarity on the models and assumptions used to determine emissions rates.
- Planning certainty: the unresolved details, they argued, made it harder to assess investments and arrange fuel and feedstock supply relationships.
These were stakeholder criticisms of the January notice, not a government finding that farmers could not benefit from 45Z or a measurement of the credit’s effect on farm income. The IRS and Treasury materials establish program requirements; the organizations’ statements describe their own assessment of the guidance’s adequacy.
How did renewable-fuel and farm groups react?
Several organizations described the notice as incomplete or too late. Their comments were made in response to the January 2025 guidance and should not be read as reactions to the later IRS actions.
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- Renewable Fuels Association president and CEO Geoff Cooper said, “While we are pleased to see Treasury has finally released its long overdue guidance on 45Z, today’s package falls short of expectations and remains incomplete.”
- Growth Energy CEO Emily Skor said, “This long-overdue guidance is far from complete — it still lacks the critical details that are needed to help ensure that American biofuel producers and their farm partners can lead the world in clean fuel production.”
- Iowa Renewable Fuels Association executive director Monte Shaw called it “a story of too little, too late.”
- National Sorghum Producers chair Amy France, a sorghum farmer from Scott City, Kansas, said the short-term guidance “falls short of delivering the clarity and comprehensive framework needed to fully realize the potential of the 45Z Clean Fuel Production tax credit.”
The response was not uniformly negative. The American Soybean Association welcomed elements of the guidance while calling for further development. That difference in emphasis matters: groups could value the release of guidance while still arguing that it left key implementation questions open.
What is Section 45Z, and who claims the credit?
45Z is a producer-facing tax credit, not a direct payment to a farmer simply for growing a feedstock or adopting a particular practice. A qualifying fuel producer calculates the credit using an applicable amount per gallon or gallon equivalent and an emissions factor. Farm feedstocks and practices can matter because they may affect the emissions calculation, but that does not by itself make the farm the credit claimant.
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Under the IRS’s current program description, qualifying fuel must be produced domestically and sold within the statutory period, which now runs through December 31, 2029. The producer must be registered when the fuel is produced. The IRS identifies Form 637 for registration and Form 7218 for claiming the credit. For fuel produced after December 31, 2025, the IRS describes an additional feedstock-origin requirement: feedstocks must originate in the United States, Mexico, or Canada.
Those requirements address different stages of eligibility. Registration must be in place at production; the fuel must meet the applicable production and sale conditions; and the producer must support the emissions-based calculation and claim. A farm practice that may improve an emissions score is not a substitute for the producer’s eligibility, registration, documentation, or filing requirements.
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What changed after the January 2025 notice?
The implementation context changed substantially after the original criticism. Congress amended and extended the credit in 2025. In February 2026, the IRS released proposed regulations addressing eligibility, emissions rates, certification, and registration under the amended law. Proposed regulations provide a detailed framework for comment and rulemaking; they should not be described as final regulations.
On September 8, 2026, the IRS made Notice 2026-53 effective. It provides a 2026 emissions-rate table and guidance on manure-derived fuels and qualifying regenerative agricultural practices. It also provides transition relief for certain nutrient-budget requirements covering 2025 and 2026. The IRS says USDA finalized technical guidelines on June 29, 2026.
For qualifying agricultural practices, the 2026 materials allow the practices to be included in emissions calculations through USDA technical guidelines and a 45Z-specific Feedstock Carbon Intensity Calculator, subject to substantiation. In practical terms, a producer cannot rely only on a general claim that a practice is regenerative or climate-smart: the applicable technical approach and supporting records matter.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What should a farmer or fuel producer take from the story?
- Read the headline as dated news. “Stuck in Neutral” refers to organizations’ reaction to the January 2025 initial guidance, not a description of the current 2026 framework.
- Separate farm participation from credit ownership. Farm inputs and practices can affect a producer’s emissions calculation, but the credit is claimed by an eligible, registered fuel producer.
- Check the rules for the production year. The 2025 law, the February 2026 proposed regulations, and Notice 2026-53 all postdate the January notice; applicable details can depend on when fuel is produced.
- Document the practices and inputs that support the calculation. The 2026 approach makes substantiation and the relevant USDA technical guidance important to using farm practices in an emissions calculation.
The official IRS materials describe eligibility and calculation mechanics, but they do not establish a measured change in farmers’ incomes or biofuel output resulting from the credit. The January 2025 criticism is best understood as a dispute about the clarity and completeness of implementation guidance at that moment, followed by significant subsequent legislative and administrative developments.
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