Schneider Proposes Legislation to Extend the 45Z Clean Fuel Production Credit Until 2037

On October 22, Rep. Brad Schneider (D-Ill.) introduced the Expanding Clean Fuel Production Act, aiming to prolong the 45Z clean fuel production credit for an additional decade, extending its validity through 2037. The bill is co-sponsored by Reps. Dan Kildee (D-Mich.) and Julia Brownley (D-Calif.).

Established under the Inflation Reduction Act of 2022, the 45Z tax credit incentivizes the production and sale of low-emission transformation fuels. The initial credit amounts to 20 cents per gallon for non-aviation fuels and 35 cents per gallon for sustainable aviation fuel (SAF). For facilities meeting prevailing wage and apprenticeship standards, the credit can rise to $1 per gallon for non-aviation fuels and $1.75 per gallon for SAF. Currently, the tax credit is set to be available for the years 2025, 2026, and 2027, but Schneider's legislation seeks to extend this timeline to 2037.

“I’m proud to introduce this legislation with Reps. Kildee and Brownley to extend the SAF credit, boost production of clean fuels, and position the U.S. as a global leader in sustainable fuel production and usage,” Schneider stated. He emphasized that a ten-year extension would facilitate sustained investment in clean fuel production, aiding the transition to cleaner energy and significantly reducing greenhouse gas emissions, particularly in the aviation sector. Schneider noted the positive impacts that the Inflation Reduction Act has already had on U.S. sustainable fuel production.

The bill has garnered support from various groups, including the Sustainable Aviation Fuel (SAF) Coalition and Growth Energy. Alison Graab, executive director of the SAF Coalition, praised Schneider and his colleagues for their efforts to prolong SAF incentives. She stated, “We look forward to working with them on both an extension and enhancing the incentive. Advancing sustainable aviation fuel showcases a commitment to the environmental and economic potential of SAF, and durable incentives are crucial for attracting investment and fostering growth in the SAF industry.”

Emily Skor, CEO of Growth Energy, highlighted that farmers and renewable fuel producers are currently making critical investment decisions for the future. She remarked, “With this bill, they would have greater confidence in their decisions, enabling investments that boost efficiency, reduce carbon intensity, create jobs, and bolster the rural economy.” Skor commended Reps. Schneider, Kildee, and Brownley for their leadership on this issue in the House and expressed eagerness to collaborate with them and other biofuel advocates to extend the 45Z tax credit and maximize its benefits for farmers and producers.

In recent months, at least two additional pieces of legislation have been introduced to extend the 45Z tax credit. The Farmer First Fuel Incentives Act was presented in both the U.S. Senate and House in September, proposing a seven-year extension of the credit until the end of 2034, while restricting it to fuels produced from domestically sourced feedstock.