ALEXANDRIA, Va. — NATSO, representing truck stops and travel centers, and SIGMA: America’s Leading Fuel Marketers are urging the U.S. Treasury Department to finalize a rule on the ‘Section 45Z’ Clean Fuel Production Tax Credit that requires transparency on biofuel transactions, helping to lower diesel prices and support American consumers.
“Treasury can materially enhance the capacity of the ’45Z Credit’ to serve as a relief mechanism for high fuel prices,” the groups said in testimony before the department. “Fuel retailers operate in one of the most transparent, competitive and low-margin segments of the American economy. When value enters the fuel supply chain, we deliver it to consumers. At a moment when American consumers are absorbing record diesel prices and the persistent volatility of global energy markets, Treasury possesses both the authority and the responsibility to ensure that this taxpayer investment benefits taxpayers at the pump.”
Increased Transparency
NATSO and SIGMA are asking the department to require producers claiming the ’45Z Credit’ to disclose a precise per-gallon credit value to the purchasers of the fuel. This requirement would equip wholesalers, terminal operators, blenders and retailers with necessary information to negotiate fuel prices that reflect an appropriate share of the credit’s value and pass those savings on to consumers.
Increased transparency also would enable American farmers and feedstock producers to capture a fair portion of the value in commodity pricing.
Tax Credit Impact on U.S. Biofuels
A recent report titled, “Tax Credit Impact on U.S. Biofuels,” conducted by leading energy research and analytics firm GlobalData found that that as little as 20 percent of the ‘Section 45Z’ tax credit value flows through the supply chain to blenders and consumers. When the $1 per gallon Biodiesel Tax Credit was in place, between 50 percent and 70 percent of the credit value passed through the supply chain to the benefit of consumers and farmers.
According to NATSO and SIGMA, until Congress reinstates the Biodiesel Blenders’ Tax Credit, the Treasury should use the tools at its disposal to support American consumers navigating fuel prices at near record highs.
“NATSO and SIGMA are committed to working with the U.S. Treasury Department as it finalizes regulations that can help both farmers and consumers,” the groups said. “When fuel retailers pay less to buy and blend biofuel, they can pass savings on to customers in the form of lower fuel prices. For two decades, the simple structure of the $1 per-gallon Biodiesel Blenders’ Tax Credit provided transparency that allowed fuel retailers to access consistent, measurable savings and extend those benefits to consumers.”
Determining the Value of Fuel Credits
According to NATSO and SIGMA, under the complex ’45Z’ producer tax credit, fuel retailers are unable to determine the value of any credit attached to a specific volume of fuel. The value of the ’45Z Credit’ depends upon the source energy, feedstocks used to produce the biofuel, and facility operations. Without the ability to determine the tax credit value attached to a gallon of biofuel, fuel retailers can no longer access savings to pass on to consumers.
“NATSO and SIGMA commended Congress and the Administration for restoring technology neutrality to ’45Z’ through the One Big Beautiful Bill Act and urged Treasury to carry that principle through to implementation,” the groups said. “NATSO and SIGMA will continue working with Treasury throughout the rulemaking process to ensure the final ’45Z’ rule delivers meaningful relief to American consumers at the pump.”
Dana Guthrie is an award-winning journalist who has been featured in multiple newspapers, books and magazines across the globe. She is currently based in the Atlanta, Georgia, area.
