ALEXANDRIA, Va. — A new independent study commissioned by NATSO, SIGMA and the National Association of Convenience Stores (NACS) finds that the Section ’40A’ Biodiesel Blenders’ Tax Credit (BTC) delivers significantly more value across the entire biofuel supply chain than its replacement, the ‘Section 45Z’ Clean Fuel Production Credit.
The report, prepared by GlobalData, finds that nearly 70% of the Biodiesel Tax Credit value flowed through the supply chain to blenders and consumers, ranking it among the most consumer-friendly biofuel policies.
The report, “Tax Credit Impact on U.S. Biofuels,” analyzes the impact of biofuel tax credits and how their value is shared throughout the supply chain to the benefit of farmers and consumers.
Most Consumer-Oriented Tax Policy
“This study highlights that the Biodiesel Tax Credit remains one of the most consumer-oriented tax policies, with the vast majority of its value trickling down into lower prices at the pump,” said Max McBrayer, NATSO president, CEO. “This reaffirms our industry’s position that reinstating the Biodiesel Tax Credit represents a common-sense solution for ensuring stable fuel supply options while also helping to lower fuel prices at the pump.”
Conducted by GlobalData, the research examined the ’40A’ Biodiesel Benders’ Tax Credit that expired at the end of 2024, and the existing ‘Section 45Z’ Clean Fuel Production Credit to compare how these tax credits influence demand for biofuels and ultimately impact the market.
Greater Savings at the Pump
“The study’s findings confirm what fuel retailers see every day: reducing fuel costs at the point of blending means greater savings at the pump,” said Matt Durand, deputy general counsel for NACS. “The 40A credit is a transparent and market-tested way to help lower diesel prices, delivering real value for American families and small businesses.”
Using independent data, GlobalData found that as little as 20 percent of the ‘Section 45Z’ tax credit value flows through the supply chain to blenders and consumers.
When the Biodiesel Tax Credit was in place, between 50 percent and 70 percent of the credit value passed to blenders and consumers. By comparison, under the existing ‘Section 45Z’ Clean Fuel Production Tax Credit, just 20 percent to 40 percent of the credit value flows to blenders and consumers with producers retaining up to 80 percent of the value.
Urging Congress for Reinstatement
NATSO, SIGMA and NACS, which represent 90 percent of fuel sold at retail, are urging Congress to quickly reinstate the Biodiesel Tax Credit.
“The Biodiesel Blenders’ Tax Credit represents a significant opportunity to help stabilize diesel prices and strengthen demand for renewable fuels – enhancing supply options and alleviating fuel price pressures caused by today’s market volatility and geopolitical risks,” the groups said.
Section 45Z Clean Fuel Production Tax Credit
As surrogates for the consumer, when fuel retailers pay less to buy and blend biofuel, they are incentivized to pass those savings on to customers in the form of lower prices at the pump. The structure of the ’45Z’ credit makes it impossible for fuel retailers to access savings and extend those benefits to consumers.
The longstanding ’40A’ Biodiesel Blenders’ Tax Credit was replaced in 2025 by the ‘Section 45Z’ production credit. The simple $1 per gallon blender credit was eligible for all biomass-based diesel. The ‘Section 45Z’ credit, by comparison, is a complex income tax credit that varies based on greenhouse gas emissions and must be redeemed by producers against their annual tax filings.
Click here to read the full study findings.
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.
