As global demand for low-carbon fuel increases, American bioethanol is uniquely positioned to lead the way. 45Z, a clean fuel production incentive, is critical to
this mission.
Enacted under Democrats in 2022 and extended by Republicans in 2025, the policy has seen bipartisan support, a reflection of its value to rural communities and the future of clean energy, with biofuels as the catalyst. That value is only growing as the shift to low-carbon fuel accelerates, reflected in changing energy policies, both at home and abroad. California, Oregon, and Washington State have all enacted Low Carbon Fuel Standards (LCFS). Key trading partners, including Canada, Japan, and the European Union (EU), have implemented similar initiatives. These developments signal that the demand for clean fuels will only continue to grow.
To keep pace with evolving markets, American biofuels and agriculture must evolve too. 45Z enables POET to invest in new technology that allows us and our farm partners to drive down the carbon intensity (CI) of bioethanol. With the policy extended through 2029, there’s a longer runway and more certainty for new and ongoing projects. But strong regulatory framework is also needed to deliver on the program’s full potential. Over the last year, federal agencies have issued updated guidance for biofuel producers and farmers looking to take advantage of the credit.
This process culminated in September, when the Internal Revenue Service (IRS) confirmed how producers can calculate the credit’s value under 45Z, alongside an updated 45ZCF-GREET Model from the Department of Energy (DOE). The announcement also set transition rules for the One Big Beautiful Bill Act’s changes to the program, including the exclusion of indirect land use change (ILUC) from emissions calculations. Most notably, the guidance ruled that regenerative agricultural practices — including no-till and cover crops — qualify under 45Z, as defined by the USDA’s technical guidelines in June. This inclusion is essential to ensuring farmers see the program’s full benefit. And for the growing number of farmers already adopting these practices, they will be further recognized for the innovation happening every day in their fields. While some small edits and clarifications are still needed to fully effectuate the vision, the progress has
been substantial.
45Z has already spurred significant investment across America, and this regulatory clarity will drive even more. These projects are reshaping rural communities — creating jobs, improving local economies, and boosting farm income. 45Z is creating a future in which our country doesn’t just participate in the world’s evolving energy landscape; it leads it.
