On January 26, 2026, the White House Office of Management and Budget (OMB) officially completed its review of the proposed Treasury Department rules for the Clean Fuel Production Credit, or 45Z, according to government records. This long-anticipated step signals that the final rules could be made public imminently-a critical development for biofuel producers, soybean growers, and rural economies hit hard by years of policy uncertainty.

The 45Z tax credit, created under the 2022 Inflation Reduction Act and later revised in the 2025 "One Big Beautiful Bill Act," is designed to stimulate domestic production of clean fuels from soybeans, grains, and other North American feedstocks. But since its inception, the credit has lacked detailed guidance, freezing investment and destabilizing key parts of the U.S. renewable fuels sector.

"We have plants trying to hang on by their fingertips waiting for clarity from D.C.," said Monte Shaw, executive director of the Iowa Renewable Fuels Association (IRFA). "Hopefully we can get final guidance on the 45Z tax credits soon and certainty on a robust RFS level for 2026 soon after."

Nowhere has the impact been more pronounced than in Iowa, the largest U.S. biodiesel producer and second-largest soybean state. In 2025 alone, biodiesel output in Iowa fell by 31% compared to 2024, according to IRFA. The group blames the drop on a combination of missing tax guidance for 45Z and weaker-than-expected Renewable Fuel Standard (RFS) blending targets set during the previous administration.

"Lack of tax policy coupled with low RFS numbers sent producers into a tailspin," Shaw said, summarizing the consequences of the regulatory vacuum on plant operations and feedstock demand.

The finalized 45Z credit is expected to favor domestic feedstock users, providing a strategic advantage to Midwestern biodiesel and renewable diesel producers who operate close to soybean-growing regions. Unlike the previous flat-rate blender's credit, 45Z rewards fuels based on lifecycle carbon intensity, aligning federal policy more closely with climate goals and agricultural sustainability.

The location-based structure may particularly benefit producers inland compared to those on the West or Gulf Coasts, who face longer and more expensive feedstock supply chains.

While the 45Z rule release is now imminent, biofuel producers are still in limbo awaiting final EPA blending volumes under the RFS for 2026. These Renewable Volume Obligations (RVOs) determine the required share of biofuels in the national fuel mix and are crucial for market planning and price discovery.

Together, the 45Z credit and the 2026 RFS volumes form the backbone of economic feasibility for biofuel production in the coming year. Without clarity on both fronts, investment decisions, feedstock contracting, and plant operations remain at risk.

For now, the White House's completion of its 45Z review offers a long-awaited signal that regulatory clarity may finally be arriving. Industry groups hope the forthcoming rules will provide the predictability and stability needed to restart stalled production, shore up soybean demand, and rebuild confidence across the biofuel sector.

As Congress and federal agencies continue to debate the future of clean energy incentives and farm bill conservation programs, the release of the 45Z rules marks a crucial pivot point for renewable fuel policy in 2026.