Tax Insight

Updated GREET model provides clearer picture for Section 45Z clean fuel credits

Insight
5 minute read
July 07, 2026

What happened?

In June 2026, the Department of Energy (DOE) released updated guidelines (DOE Guidelines) and the 45ZCF-GREET model (June 2026 model) for calculating lifecycle greenhouse gas (GHG) emissions for the Section 45Z clean fuel production credit. The update incorporates statutory changes from the One Big Beautiful Bill Act (OBBBA) that align with proposed regulations published by Treasury and the IRS earlier this year. It also features technical improvements, officially updating the backend of the model to link directly with R&D GREET 2025 Rev. 1 data. The update provides a single, synchronized baseline for regulatory compliance.

Why is it relevant?

The June 2026 model provides producers with more information for determining emissions rates—and therefore credit values—under Section 45Z. Several amendments to Section 45Z enacted by OBBBA fundamentally reshape the calculations contained in the model: feedstocks are restricted to North America after 2025, indirect land-use change (ILUC) no longer factors into emissions scores, and negative emissions rates generally reset to zero except for animal-manure pathways. These statutory changes directly affect which fuel pathways qualify, at what credit levels, and therefore, the economic viability of projects. For producers making investment decisions, planning supply chain logistics, and navigating compliance, understanding how these statutory changes translate into model mechanics is essential.

Actions to consider

Producers should consider running the June 2026 model against current and planned fuel pathways to assess impact on credit values. Those with fiscal years spanning 2025 and 2026 are directed to run the model separately for fuel produced before and after the transition, creating a bifurcated compliance requirement. Feedstock sourcing, documentation, and supply-chain arrangements also warrant review to comply with the post-2025 North American feedstock restriction and the substantiation, reporting, and compliance requirements outlined in the proposed regulations.