While trade and industry groups focus specifically on the possible effects to ethanol, other biofuels including sustainable aviation fuel (SAF) could also be affected.
A large number of conventional fuel and biofuel industry groups wrote a public letter on June 6 urging the US Senate to amend a provision regarding the CFPC in the budget reconciliation bill, also called the “Big Beautiful Bill.”
“We’ve outlined the full problem to Senate offices and leaders and what we’d like to see as a clarification,” a spokesperson for the Clean Fuels Alliance America (CFAA) told Fastmarkets on June 12.
“The House [of Representatives] left these fixes out of their version of the reconciliation bill, because there was not enough public advocacy and pressure,” the CFAA spokesperson said.
The ‘qualifying sales’ problem
The CFPC was created by section 45Z of the 2022 Inflation Reduction Act. In section 45Z, the credit is limited to “qualifying sales,” under which three scenarios are listed. One is where a producer sells the transportation fuel to a fuel blender, and the second option is for direct sale to the end user of the transportation fuel.
The third option is the one that includes the limiting language that concerns the industry groups. This option is for a qualifying sale “to an unrelated person who sells such fuel at retail to another person and places such fuel in the fuel tank of another person.”
The language of the third option “raises questions over whether fuel that is produced and sold to a reseller would qualify for the credit,” the June 6 letter says.
“The concern is that it says ‘at retail’ and specifies that the person must be one who ‘puts such fuel in the fuel tank of another person,’” a spokesperson from the Renewable Fuels Association (RFA) told Fastmarkets on June 12.
Ethanol sales
“Ethanol producers sell fuel to the wholesale/terminal market,” the RFA spokesperson added. “They do not ‘place the fuel in the fuel tank’ of the retail buyer.”
The RFA acknowledged in its comments to the Internal Revenue Service (IRS) regarding the Notice 2025-10 guidance on 45Z that the intention of the wording was likely to prevent a “double counting” situation. One example of this would be where an ethanol producer could claim a 45Z credit then sell the ethanol to a biofuels producer who would use it as a feedstock for another fuel such as SAF or renewable diesel that could also claim a 45Z credit.
“The overwhelming majority of fuel ethanol produced and used in the United States today is sold to marketers and distributors who then transfer the ethanol to fuel blenders and retailers downstream,” the RFA wrote in the same comments.
“It is common for the title to a given quantity of ethanol to change hands multiple times before the ethanol is ultimately blended with gasoline and consumed,” and the impact of the 45Z wording would “severely limit the amount of transportation fuel eligible for the 45Z credit,” the RFA told the IRS.
Fuel marketers and ‘full SAF monetization’
The provision under question could also affect biofuels further down the chain. Sources have told Fastmarkets that it is becoming ever more common practice in the US for SAF to be sold in large offtake agreements to fuel marketers.
Fuel marketers have cropped up as significant participants in the SAF market, where producers initially tried to secure long-term offtake agreements directly with airlines, sources told Fastmarkets.
This scenario proved difficult, as airlines are prone to back out of the agreements due to financial necessity during industry downturns, leaving producers vulnerable and making long-term financing agreements more precarious and difficult to procure.
Fuel marketers are often part of much larger, vertically integrated conventional fuel companies that can better withstand jet fuel market uncertainty, as it is a relatively small part of their overall business, sources said. They also tend to have global logistics and agreements already in place for conventional fuels, easing transportation concerns.
The marketers strip off carbon credits from SAF to be sold separately in credit registries, then sell the SAF globally to fuel suppliers, airports, airlines and other parties. In this case, the marketers are rarely directly selling the fuel “at retail” or for it to go directly “into a tank.”
Fuel marketers also sometimes buy and strip the renewable identification numbers (RINs) to cover their own obligations (or to resell them) under the Renewable Fuel Standard (RFS) when SAF is sold domestically.
First of all, this greatly simplifies the buying process between producers and end-user airports or airlines, none of which may be set up to deal with the complicated RINs market.
Second – and more importantly – when fuel marketers are set up to fully use or strip the carbon and RFS credits, this allows for SAF credits to be “fully monetized,” which provides more financial support to producers and the entire SAF financial ecosystem, sources said.
If fuel marketers are accidentally excluded from the language of the CFPC, it could significantly complicate domestic and global SAF trade for US-produced fuel.
July 4 deadline
The “Big Beautiful Bill” was passed by the House of Representatives on May 22 and currently resides with the Senate, whose members have been signaling to media about possible changes to the legislation and what they could include. Congress faces a July 4 deadline imposed by President Donald Trump to pass the bill and send it to him for signature