U.S. Treasury and IRS proposals tighten registration and carbon accounting for the 45Z clean fuel production credit, pushing producers towards GREET modelling, traceability and third-party checks, with microalgae pathways facing sharper scrutiny.
The U.S. Department of the Treasury’s proposed rules for the 45Z clean fuel production credit put verification at the centre, detailing how producers must register and document lifecycle emissions before claiming support.Â
Peng Li, Algae Dynamic Biotech Limited’s CEO, calls it
“Regulatory certainty that allows strategic planning for technology scale-up and market-entry timing.”
The credit offers up to $1 per gallon for qualifying low-carbon transportation fuels through an end-of-decade sunset. It applies to domestically produced clean transportation fuel manufactured after the end of the year before last. Legislative updates widen eligible feedstocks to Canada and Mexico and refine land-use intensity methodologies.
The proposal, released on 3 February, sets out registration, carbon-intensity documentation and certification requirements, starting with IRS Form 637 and facility-level transferability rules. It covers marine fuel qualification, uses the Department of Energy’s 45ZCF-GREET model for non-sustainable aviation fuel carbon-intensity calculations, integrates Climate Smart Agriculture for domestic corn, soybean and sorghum, and limits eligible feedstocks to production in the United States, Mexico and Canada.
Verification is the hinge. Sustainable aviation fuel, known as SAF, requires third-party certification from qualified independent certifiers to document traceability and lifecycle greenhouse-gas assessment, while verification remains voluntary for non-SAF fuels. Even where it is optional, transferable credits and buyer due diligence are increasingly pushing producers towards outside validation.
The U.S. Department of the Treasury is inviting feedback, with comments accepted through 6 April and a hearing scheduled for 28 May at 10:00 AM ET. Speaking requests are due 60 days after Federal Register publication, and attendees must register by 26 May. The Renewable Fuels Association, National Corn Growers Association and American Soybean Association signal support for clearer pathways, while fuel retailers argue complexity could weaken the programme’s effectiveness.
Algae Dynamic Biotech Limited is tracking how the proposed framework treats algae-based biofuels for heavy machinery and industrial operations, where cultivation energy inputs and downstream processing can drive lifecycle results under standardised modelling.
Form 637 assigns activity letters, including “CA” for SAF and “CN” for other qualifying clean transportation fuels, and it must be in place at production for a credit claim. Penalties reach $11,260 for an initial violation and $1,126 for each additional day of non-compliance, and re-registration is required when ownership changes exceed 50%.
The 45ZCF-GREET model is central for non-SAF lifecycle accounting, and recent updates accommodate additional feedstock categories and production routes, including corn wet-milling ethanol and coal mine methane-derived alternative natural gas. For credit eligibility, a fuel’s lifecycle greenhouse-gas emissions must fall below 50 kg CO₂e per mmBtu.
After the close of last year, the draft rules narrow qualifying feedstock origins to the United States, Canada or Mexico, raising the importance of traceability.Â
Microalgae developers are watching because cultivation energy inputs, nutrient sourcing and downstream processing efficiency can swing a pathway’s score, and Mr. Li describes
“A requirement for precise accounting of cultivation energy inputs, nutrient sourcing and downstream processing efficiency.”
Retail fuel groups NACS, NATSO and SIGMA, which say they represent about 90% of retail fuel sales, argue that the credit is too complicated and will not deliver lower pump prices. They point to federal figures showing biodiesel volumes at 960 million gallons through October in the latest dataset, down from more than 2 billion gallons across the preceding full-year cycle, and they advocate a return to the Biodiesel Tax Credit.
For producers and developers across the sector, the proposed verification regime is likely to shape market access as much as technology performance through the remainder of the rulemaking cycle. Its reach will depend on verification capacity and on industrial buyers’ willingness to rely on auditable carbon-intensity data. Algae Dynamic Biotech Limited continues monitoring the framework as a signal of how carbon-intensity scoring, traceability and certification expectations could evolve before the final rule is set.
About Algae Dynamic Biotech Limited
Algae Dynamic Biotech Limited is a Hong Kong-registered company specialising in algae-based renewable fuels for agricultural and industrial operations. The company follows a three-stage process: cultivation of selected algae, extraction and refinement using advanced methods, and application in heavy machinery. Its fuels are engineered for performance in demanding environments while reducing emissions through eco-certified, zero-waste processes. With global distribution capabilities, Algae Dynamic Biotech positions itself as a trusted partner in delivering measurable results, operational reliability, and sustainable progress worldwide.Â
Press contact: Ke Wang, media@algaebiofuel.com. Learn more at https://algaebiofuel.com.
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