Notice 2026-53: What the New Section 45Z Guidance Means
On September 8, 2026, The U.S. Department of the Treasury and Internal Revenue Service (IRS) released additional guidance on the Section 45Z Clean Fuel Production Credit, providing greater clarity for determining emissions rates, and therefore credit values. In early 2025, the DOE launched a 45Z-specific version of GREET (45ZCF-GREET), which is designed to aid biofuel producers in calculating the value of their 45Z tax credits. Initial revisions were made in May 2025, followed by an update issued in June 2026. The latest version of the model, released this week, includes several revisions related to renewable natural gas (RNG) production and regenerative ag, along with other minor changes.
The guidance summarized below builds on the significant changes introduced through the updated June 2026 framework and provides important considerations for producers, agricultural feedstock suppliers, and tax credit buyers.
In tandem with the release of the guidance, the U.S. Department of Energy (DOE) released the updated version of the 45Z-CF GREET Model and updated user manual.
The DOE also released instructions for the emissions value request (EVR) application for taxpayers seeking an emissions value for a production pathway not already covered by the applicable Treasury Department emissions rate table.
Regenerative Agriculture Practices Safe Harbor
For fuel produced in 2025, a taxpayer may use the 2026 version of the Feedstock Carbon Intensity Calculator (FC-CIC) to determine emissions associated with low-carbon agricultural practices, provided the taxpayer satisfies all applicable USDA technical guideline requirements, including chain of custody standards and audit and verification standards.
For fuel produced in 2025 and 2026, the requirement to complete pre-application development of a nutrient budget is deemed satisfied, in recognition that the relevant feedstocks were likely planted before the final USDA guidelines were published. Taxpayers must still be able to substantiate the nutrient inputs and sources used in the 45ZCF FD-CIC calculation and must keep records sufficient to support their credit claim.
Distinct Emissions Rates for Animal Manure Feedstocks
Consistent with the OBBBA's directive, the notice establishes distinct emissions rates for specific animal manure feedstocks rather than treating all animal manure uniformly.
45Z identifies dairy, swine, and poultry manure as "listed manures," while leaving room for the Secretary to designate other feedstocks ("unlisted manures") as appropriate. An update to the 45ZCF-GREET model adding dairy manure and swine manure as distinct primary feedstocks is forthcoming, and as such, both are already included as primary feedstocks in the 2026 emissions rate table.
The Treasury Department and the IRS anticipate a further 2026 update to add poultry manure and beef manure as primary feedstocks, and producers of fuel from those feedstocks are encouraged to wait for that update rather than submit a PER petition in the interim.
The Treasury Department and the IRS also commented that some unlisted manures may lack sufficient technical data to support a distinct alternative fate, noting it may be a topic that is addressed in future guidance.
Alternative Fate
In a major change, the Notice permits a taxpayer to now use a farm-specific alternative fate reflective of prior manure management practices. A "farm" is defined as any animal feeding operation, with or without a nutrient management plan, or any other animal operation with a nutrient management plan. Qualifying prior manure management practices include storage in uncovered lagoons, deep pits, liquid/slurry systems, pasture/range/paddock, dry lot, and solid storage.
Taxpayers must be able to substantiate these farm-specific practices. Where they can't be substantiated, no avoided emissions are credited for that farm's share of the manure inputs.
Until further guidance is issued, no alternative fate is available for animal manure sourced from a farm that began operations after September 8, 2026.
Applying the OBBBA Amendments with a Prior Model Version
ILUC exclusion
For fuel produced after December 31, 2025, taxpayers using a version of the 45ZCF-GREET model that still includes ILUC emissions must subtract the published ILUC value from the Total Life Cycle Analysis (LCA) Results. Similarly, SAF producers using CORSIA Default or CORSIA Actual must exclude any relevant ILUC value.
Foreign feedstock limitation.
Pre-June 2026 versions of the GREET model included U.S. used cooking oil (UCO) as a primary feedstock but did not separately account for Canadian or Mexican UCO. The June 2026 update added Canadian and Mexican UCO as a distinct primary feedstock alongside U.S. UCO.
Transportation fuel produced after December 31, 2025, using UCO imported from outside the United States, Canada, or Mexico is not eligible for the credit at all.
For 2025 production only, taxpayers using such imported UCO must use the applicable pathway in a forthcoming version of the model. Taxpayers should maintain records sufficient to substantiate the feedstock's country of origin.
Negative emissions rates
Negative emissions rates are prohibited for fuel produced after December 31, 2025, except for fuel derived from animal manure. Taxpayers using a pre-June 2026 version of the 45ZCF-GREET model for any other transportation fuel produced in 2026 must adjust a negative result up to zero.
Effective Date
Notice 2026-53 is effective on and after September 8, 2026.
Contact Mickelson & Company Vice President Faith Larson at faith@mickco.com or one of our team members for questions or more information.