U.S.: new bill proposes four-year extension of 45Z clean fuel tax credit

On May 12, 2025, U.S. Republican representatives introduced the federal budget reconciliation bill, which proposes a four-year extension of the 45Z Clean Fuel Production Tax Credit. Initially set to expire in 2027, the bill intends to extend the credit through 2031.

The proposed legislation includes several changes to clean energy subsidies under the Inflation Reduction Act (IRA). One key modification would prevent regulators from considering indirect land-use change (ILUC) emissions when measuring the carbon intensity of fuels. ILUC emissions quantify the environmental impacts of using agricultural land for fuel production instead of food.

By excluding ILUC emissions from carbon intensity calculations, the bill woul