Treasury and the IRS published proposed regulations for the Section 45Z Clean Fuel Production Credit on February 4, 2026, implementing changes made by the One, Big, Beautiful Bill Act (OBBBA). The proposed rule eliminates SAF’s $0.35 per gallon base credit rate. The comment deadline is April 6, 2026, three days away. A public hearing follows on May 28, 2026 at 10:00 AM ET in Washington, DC.
SAF’s higher base rate was one of the few policy mechanisms designed to close the price gap between sustainable aviation fuel and conventional jet fuel. Its removal means SAF producers now compete for the same $0.20 per gallon base credit as every other clean transportation fuel (or $1.00 per gallon if prevailing wage and apprenticeship requirements are met). More than 50 organizations rallied on Capitol Hill in late March 2026 urging Congress to restore the differential, a signal of how central the special rate was to project economics across the SAF supply chain.
SAF’s special $0.35 per gallon base credit rate has been eliminated under the proposed 45Z regulations. SAF now earns the same $0.20 per gallon base credit as every other clean transportation fuel.
The proposed regulations implement several other OBBBA changes. Feedstocks must be grown or produced in the US, Mexico, or Canada, and prohibited foreign entity restrictions have been added. For emissions accounting, indirect land use change (ILUC) has been removed from calculations for fuel produced after December 31, 2025, which benefits crop-based pathways like corn ethanol-to-jet and soy renewable diesel that were previously penalized under the GREET model. Negative emissions rates are prohibited for most fuels, with one exception: fuels derived from animal manure feedstocks can still earn credits above $1.00 per gallon. The credit covers clean transportation fuel produced and sold from January 1, 2025 through December 31, 2029.
Two additional provisions affect producer planning. Emissions rates will be determined by the 45ZCF-GREET model at the time of production rather than the time of facility construction, creating uncertainty for producers who designed facilities around a specific emissions profile. Qualified sales have been expanded to include sales to distributors and wholesalers who resell, and related-party sales where an unrelated-party sale follows.
The April 6 deadline is the first formal opportunity for producers, airlines, and feedstock suppliers to put their positions on record. Comments are submitted at regulations.gov, docket REG-121244-23. The May 28 public hearing in Washington is the last input window before Treasury finalizes the rule. Attendance requests for the hearing are due by May 26, 2026 at 5:00 PM ET.
Source: Federal Register — Section 45Z Clean Fuel Production Credit
