After a long wait, the IRS has finally announced regulatory guidance around the Clean Fuel Tax Credit (tax code 45Z), providing a huge boost to the wider biogas and RNG industry.
While the credit has been around in some form since 2025, many larger producers have been waiting until the guidance was in place due to uncertainty around its potential applications. With this announcement, guidance now ‘incorporates specific credit pathways for dairy and swine manure, food waste and other organic materials’.
It’s expected that the new guidance will encourage investment in a broad range of new biogas systems, especially those that recycle organic waste into RNG ready to be used as clean transportation fuel.
According to Patrick Serfass, executive director of the American Biogas Council:
“(45Z) provides enough certainty that biogas developers can incorporate its backing into future project plans for the first time.”
“America produces enormous quantities of manure, food waste and other organic materials every day. Instead of wasting those resources, biogas systems can recycle them into domestic renewable energy while supporting farms, rural communities and American jobs.
“Today’s action gives our industry an important new tool to build more of these projects.”
Following the announcement, it’s also expected that 45Z will help strengthen domestic biofuel production and lower fuel costs, creating a much stronger foundation for the industry as a whole.
The credit covers a broad range of fuels aside from renewable natural gas, including ethanol, biodiesel, hydrogen and sustainable aviation fuel.
According to Iain Watson, this move is only a positive for the industry, particularly in the short-term.
“We’re glad to see 45Z finally come to the forefront, particularly as many of our clients have been waiting for this news before progressing with the construction and operation of biogas and RNG facilities.
“This will not only strengthen the existing infrastructure in place but open up a wide number of different avenues for new players in the industry, allowing exciting projects to finally break ground.
“We believe that people are what make the biogas industry what it is, but this tax credit guidance will go a long way in facilitating the incredible growth that we’re currently seeing across the North American market.
“For professionals that are considering a move into clean energy, especially in the biogas and RNG markets, there’s never been a better time; whether you’re looking for short-term success or building a career in one of the most progressive sectors available.”