DOE updates 45ZCF-GREET model for clean fuel credit calculations
TL/DR –
The U.S. Department of Energy has released a revised 45ZCF-GREET model and manual, which will be used to compute emissions rates for the clean fuel production credit under section 45Z. This updated model reflects several policy changes from the “One Big Beautiful Bill Act”, such as the removal of Indirect Land Use Change contributions and ineligibility of feedstocks sourced from outside of the United States, Mexico, and Canada. Section 45Z, which incentivizes domestic production of sustainable aviation and non-SAF fuels, was enacted by the Inflation Reduction Act of 2022 and amended and extended by two years under the OBBBA.
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The U.S. Department of Energy Unveils Updated 45ZCF-GREET Model
The United States Department of Energy (DOE) today made public its updated 45ZCF-GREET model [ZIP file]. The model, set to be used for determining emission rates for the clean fuel production credit under section 45Z, comes with a detailed user manual.
New Policies Reflected in the 2026 Model
The 2026 model has undergone several alterations to align with policy changes introduced by the “One Big Beautiful Bill Act” (OBBBA). The modified model, which is detailed in the user manual, is to be utilized for fuels produced after December 31, 2025. The amendments to the model include:
- The elimination of Indirect Land Use Change (ILUC) contributions
- Exclusion of feedstocks sourced from countries outside the United States, Mexico, and Canada
- Disallowance of negative values claims for certain fuels
- Restriction on the use of negative carbon intensity (CI) for process fuels derived from non-manure sources used in transportation fuel production
- A prohibition on the use of the pathway for renewable natural gas (RNG) from [Generic] Animal Manures via Anaerobic Digestion, necessitating the establishment of specific species pathways
The Context Behind Section 45Z
The Inflation Reduction Act of 2022 (IRA) established Section 45Z with the intention of unifying and replacing certain IRA-preceding credits for alternative fuels, biodiesel, and renewable diesel. It was also created to encourage domestic production of both sustainable aviation fuel (SAF) and non-SAF fuels. The value of the credit is tied to the lifecycle greenhouse gas emissions rate of the fuel. The Treasury Department previously confirmed that the 45ZCF-GREET model released by the DOE is the appropriate model for gauging emissions rates.
Section 45Z credit was updated and stretched for an additional two years under the OBBBA. Consequently, the 45Z credit is applicable for fuels produced after December 31, 2024, and sold before December 31, 2029.
For further information, please reach out to a KPMG professional in Washington National Tax:
Taylor Cortright | tcortright@kpmg.com
Praveen Ayyagari | payyagari@kpmg.com
Julie Chapel | jchapel@kpmg.com
Rachel Smith | rachelsmith1@kpmg.com
Kelsey Latham | kcurcio@kpmg.com
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