President Jim Collura applauds the changes to the 45Z credit rule, and pushes for renewal of the Biodiesel Blenders Tax Credit.
On Thursday, May 28, 2026, NEFI testified at a public hearing held by the U.S. Department of the Treasury and the Internal Revenue Service on the proposed rule implementing the federal Clean Fuel Production Credit. The credit, often called the “Section 45Z” tax credit or simply “45Z credit” after its place in the Internal Revenue Code, will play an important role in the economics of renewable and alternative fuels in the coming years.
The testimony, delivered by NEFI President and CEO Jim Collura, builds on four years of advocacy to ensure that the tax credit benefits the heating oil industry and its consumers, and helps ensure a viable market for renewable liquid heating fuels for years to come.
The testimony highlights two important changes in the proposed rule:
- Suitable for use. The proposed rule confirms that a fuel qualifies for the tax credit if it is “suitable for use in a highway vehicle or aircraft,” even if it is not actually used in one. This was a critical win NEFI secured for our industry that ensures biodiesel and renewable diesel used in heating applications can qualify for the credit.
- Qualified sale. The proposed rule confirms that intermediate sales count, meaning fuel sold to a marketer or distributor who then resells it in their trade or business is eligible. This was another important win that reflects how the Northeast fuels markets operate and protects the role of the marketers, traders, and distributors our members rely on.
Unlike the biodiesel blenders tax credit it replaced, which paid a fixed dollar amount per gallon, 45Z is a production tax credit structured around the lifecycle greenhouse gas emissions intensity of the fuel. The lower the emissions footprint, the higher the credit value. This emissions-based approach adds significant complexity to how producers calculate their credits and makes the accuracy of the underlying emissions model critically important to the credit’s value for the liquid fuels industry.
In its testimony, NEFI pressed Treasury and the IRS to retain these provisions in the final rule. It also called on the agencies to work with the U.S. Department of Energy to release a revised emissions scoring method, known as the 45ZCF-GREET model, as soon as possible, and to update it regularly so new feedstocks and pathways can be added as they come to market. That includes the cellulosic biofuels emerging in the Northeast, such as Biofine’s Ethyl Levulinate, which is produced from sustainably harvested wood products, agricultural residues, and municipal solid waste.
NEFI commended President Trump, Secretary Bessent, and the administration for their strong support of American-made biofuels and underscored that the industry’s priorities in this rulemaking align with the administration’s broader goals of American energy dominance, energy security, and delivering cleaner and more affordable energy to American families.
NEFI also continues to press Congress for reinstatement of the Section 40A biodiesel blenders tax credit, which many in our industry continue to view as the more effective vehicle for supporting renewable fuel use in our sector. This two-track approach gives our industry the best opportunity to secure durable federal policy support for the cleaner, more affordable, and more reliable energy solutions our members deliver every day.
You can read Collura’s full testimony on the following pages.
NEFI’s work is made possible by generous contributions to the NEFI Advocacy Fund. Please donate today at www.nefi.com/donate.
Testimony of James Collura
National Energy & Fuels Institute (NEFI) Public Hearing on Proposed Regulations:
Section 45Z Clean Fuel Production Credit (REG-121244-23)
May 28, 2026
[1. Introduction]
[a. Background on NEFI]
Good afternoon. I am Jim Collura, President and CEO of the National Energy and Fuels Institute, or NEFI. Thank you to the U.S. Department of the Treasury and the Internal Revenue Service for the opportunity to testify today.
NEFI is a direct-to-member national trade association that serves as a lead voice for America’s wholesale and retail heating oil distributors. Heating oil retailers - often called “fuel dealers” - are mostly small, multigenerational family businesses that deliver safe and reliable home comfort services to nearly five million households across the country. Each winter, these businesses deliver upwards of five billion gallons of fuel, much of it now blended with biodiesel or renewable diesel.
We commend President Trump and the entire administration for the strong, unprecedented support for American-made biofuels. These policies are strengthening American farmers and rural economies and supporting small business heating fuel dealers on Main Street. They are empowering our members as they seek to deliver cleaner and more affordable home energy solutions to their consumers and support the administration’s broader pursuit of American energy dominance.
[b. Background on the heating oil market]
Heating oil is a distillate fuel used in residential and commercial boilers, furnaces, and water heaters. As with highway diesel fuel, biodiesel and renewable diesel can be blended with or used in place of heating oil, which can tolerate very high blends with nominal modifications to existing systems. In fact, ASTM now recognizes blends of up to 50-percent under the specification for heating oil, D396. Our fuels are delivering meaningful reductions in emissions without forcing families to spend tens of thousands of dollars on whole-home electric conversions or having to switch to other fuels or technologies they don’t want or can’t afford.
In 2007, Congress recognized the contributions of our industry and allowed heating oil to participate in the Renewable Fuel Standard or RFS. Today, major manufacturers offer oil burners that accept all blends, including one hundred percent biodiesel or renewable diesel. This is a genuine American success story, built on private investment, market-based solutions, and the entrepreneurial spirit of family-owned businesses.
Section 45Z, if properly implemented, will support this success story. Consumer choice depends on supply, and a steady supply of renewable fuels depends on regulatory certainty. The proposed rule provides much-needed guidance that will support existing producers, encourage new investment, and reward continued innovation.
That innovation includes promising cellulosic biofuel technologies emerging in the Northeast, technologies that could turn sustainably harvested wood products, agricultural residues, and municipal solid waste into liquid heating fuel. These are exactly the kinds of homegrown solutions that bolster energy security, support rural economies, and give American agriculture another market for its products.
[c. Importance of availability of renewable fuel for the heating oil market to provide cost-effective fuels to consumers]
Today, our fuels move through well-established commercial supply chains and infrastructure. The same renewable fuels used in highway vehicles are blended into heating oil and delivered by our members to homes and businesses across the country, particularly the Northeast and Mid-Atlantic, where 90% of homes that utilize heating oil for primary heat are located. This shared supply chain is what makes cleaner-burning heating fuel affordable for working families. It is also what allows our small, family-owned dealers to compete and to invest in their communities.
How Section 45Z is implemented matters because regulatory uncertainty and overly restrictive rules can constrain supply and raise costs, which ultimately reach the consumer at the burner tip. A diverse supply of fuels, drawn from a wide range of American feedstocks, supports American energy dominance and helps insulate consumers from price volatility. It also supports American farmers, foresters, and waste-to-energy operators who supply the raw materials.
The heating oil market is particularly valuable to these producers because it provides steady, off-season demand during the winter months, when transportation fuel demand is at its lowest. This counter-seasonal balance helps biofuel producers and their feedstock suppliers run more efficiently year-round, supporting American jobs and rural economic stability.
NEFI’s members are not asking for special treatment in this rulemaking. We are asking that the rule be implemented in a way that does not inadvertently restrict the availability of renewable fuels in markets like heating oil that have invested for decades in their use.
[2. Support for key elements of the proposed rule that would facilitate making cost-effective fuels available for heating oil markets]
I would now like to highlight several specific elements where the proposed rule, as drafted, would help preserve access to renewable fuels for the heating oil market.
[a. Definition of Suitable for Use]
First, Section 45Z defines transportation fuel as a fuel that is “suitable for use as a fuel in a highway vehicle or aircraft” and meets a specific emissions rate. NEFI supports the proposed rule’s definition of suitable for use, which confirms that, to be considered suitable for use, a fuel need NOT
ACTUALLY BE USED in a highway vehicle or aircraft.
Both the plain language of the statute and the legislative history support this reading. During Senate floor debate, the Chairman of the Finance Committee who authored the 45Z tax credit specifically confirmed that residential and commercial heating are proper uses of clean fuels eligible for the credit. Congress understood, and the proposed rule recognizes, that the same clean fuels move through the same supply chains serving both transportation and heating markets. Limiting eligibility to actual vehicle use would have been administratively unworkable and contrary to the goal of expanding domestic clean fuel production. A narrower reading would add administrative complexity without added environmental benefits.
To be suitable for use, strict adherence to every parameter of an ASTM specification should not be required. Testing each batch against every parameter of a specification is costly and, in practice, unnecessary. The supply chain already ensures fuel quality through commercial contracts and longstanding industry practice. The final rule should allow that system to continue and avoid layering on regulatory burdens that would increase the cost of fuel reaching the consumer.
[b. Definition of Qualified Sale]
Second, NEFI supports the proposed rule’s definition of “qualified sale.” The statute treats as a qualified sale any sale to an unrelated person for use in a trade or business. Consistent with the recognition that the fuel need not actually be used in a vehicle, the proposed rule confirms that this includes fuel sold to an unrelated person who subsequently resells it in their trade or business. In other words, intermediate sales can qualify.
This is an important and welcome clarification. It reflects how the fuels market actually operates. Third-party marketers are essential to cost-effective distribution of renewable fuels, especially in the Northeast, where domestic production capacity is limited and most fuel arrives through a network of marketers, traders, and distributors before reaching the end user.
This provision also helps smaller producers, who often rely on marketers to aggregate their output and reach customers efficiently. Preserving this market structure means more renewable fuel reaches more consumers at a lower cost. NEFI urges the agencies to retain this language in the final rule.
[3. Importance of regular updates to the GREET model to support innovations in fuel and a diverse fuel market]
Finally, NEFI urges the agencies to work with the U.S. Department of Energy to release a revised 45ZCF-GREET model as soon as possible, and to commit to updating it on a regular basis to add new feedstocks and pathways as they emerge.
NEFI also supports efforts of clean fuel producers to seek additional flexibility in calculating their emissions rates. That includes removing overly restrictive requirements on alternative energy inputs and on carbon capture and sequestration, and recognizing book-and-claim accounting, which Congress clearly anticipated. The final model should also incorporate the lifecycle work being done by the U.S. Department of Agriculture and ensure elimination of indirect land use emissions for crop-based feedstocks.
[4. Closing]
Thank you for the opportunity to provide this testimony today. NEFI appreciates the work that has gone into this rulemaking and stands ready to assist the agency and the broader administration as it seeks to ensure American families have access to cleaner and more affordable and reliable home energy solutions.
That concludes my remarks.
