A new study has found that the earlier biodiesel tax credit in the United States passed on significantly greater benefits to consumers compared to the current system, prompting industry groups to push for its reinstatement.
The report, commissioned by NATSO, SIGMA and the National Association of Convenience Stores, and prepared by GlobalData, examined how the value of biofuel tax credits is passed through the supply chain, Renewable Energy Magazine reported.
Titled “Tax Credit Impact on U.S. Biofuels,” the study found that nearly 70 per cent of the value from the earlier Section 40A Biodiesel Blenders’ Tax Credit was passed on to fuel blenders and consumers. In contrast, the current Section 45Z Clean Fuel Production Credit allows a much smaller share—between 20 per cent and 40 per cent—to reach them, with producers retaining a larger portion.
The Section 40A credit, which expired at the end of 2024, provided a fixed incentive of $1 per gallon for blending biodiesel. It was replaced in 2025 by the Section 45Z credit, which is linked to emissions and claimed by producers through tax filings.
According to the study, the simpler structure of the earlier credit made it easier for fuel retailers to pass savings on to customers, resulting in lower prices at the pump. The current system, however, limits the ability of retailers to access those savings.
Max McBrayer, President and CEO of NATSO, said the findings show that the earlier policy was among the most consumer-focused, as most of its value translated into lower fuel prices.
Echoing this view, Matt Durand of the National Association of Convenience Stores said reducing costs at the blending stage leads directly to savings for consumers.
Industry groups, which together represent about 90 per cent of fuel sold at retail in the United States, have urged lawmakers to reinstate the biodiesel tax credit. They said doing so would help stabilise diesel prices, support demand for renewable fuels, and ease pressure from market volatility and global uncertainties.
