The ‘One Big Beautiful Bill’: What It Means for Renewable Fuels

Published by PraxiChain

Bottom Line Up Front

President Trump signed The One Big Beautiful Bill into law on July 4, 2025, creating a mixed bag for renewable fuels. While other clean energy sectors face immediate cuts, renewable fuels get extended federal support through 2029—but with significant new restrictions starting in 2026.

What Changed for Renewable Fuels?

✅ The Good News

  • Extended Tax Credits: Section 45Z clean fuel production credits now run through 2029 (vs. 2028 previously)
  • Animal Manure Advantage: Manure-based biofuels can still use negative lifecycle emissions rates and get specific Treasury guidance
  • Competitive Edge: While solar and wind face immediate phase-outs, renewable fuels maintain federal support

⚠️ The Restrictions (Starting 2026)

    • “Buy North American”: Credits only available for feedstocks from the US, Mexico, or Canada
    • Foreign Feedstock Penalty: 20% credit reduction for any remaining foreign feedstocks
    • Sustainable Aviation Fuel Hit: Enhanced SAF rates eliminated after December 31, 2025
    • Foreign Entity Ban: Companies with ties to China, Russia, Iran, or North Korea lose eligibility

Key Deadlines to Know

Date

What Happens

Dec 31, 2025

Enhanced SAF rates end

Jan 1, 2026

Geographic restrictions begin; 20% foreign feedstock penalty starts

Dec 31, 2029

All Section 45Z credits expire

What This Means for Your Business

If You’re Using Foreign Feedstocks

  • Immediate action needed: Audit your supply chain by end of 2025
  • Cost impact: Plan for 20% credit reduction or switch to North American
    suppliers
  • Strategic shift: Build relationships with US, Mexican, and Canadian feedstock
    producers

If You Have Foreign Investment

  • Review ownership structures for Chinese, Russian, Iranian, or North Korean
    ties
  • Two-year grace period for Foreign Influenced Entities (until 2027)
  • Legal review recommended to ensure continued credit eligibility

If You’re in Sustainable Aviation Fuel

  • Price your 2025 contracts to capture enhanced rates before they expire
  • Reassess 2026+ economics with lower credit values

Market Context: Why This Matters

U.S. electricity demand is expected to spike 25% by 2035, driven largely by data centers and AI. Meanwhile, the legislation phases out federal support for solar and wind while boosting fossil fuels. This positions renewable fuels as a critical bridge technology.

The opportunity: As other renewable sectors face cuts, renewable fuels become more attractive for meeting clean energy mandates and corporate sustainability goals.

Action Items for Renewable Fuel Companies

Next 30 Days

  • [ ] Audit foreign feedstock exposure
  • [ ] Review ownership for foreign entity ties
  • [ ] Document North American supply relationships

By End of 2025

  • [ ] Finalize SAF contracts at enhanced rates
  • [ ] Establish USMCA supplier partnerships
  • [ ] Implement compliance tracking systems

2026-2029 Strategy

  • [ ] Invest in animal manure feedstock capabilities
  • [ ] Build post-credit business models
  • [ ] Explore export opportunities with domestic fuel

Sources & Additional Reading

The federal RFS program provides baseline support:

Need Help Navigating These Challenges?

PraxiChain specializes in helping energy companies adapt to regulatory transitions and optimize operations for new market conditions.

Contact our team for strategic guidance on implementing these regulatory changes in your renewable fuels business.