Compliance
Clean Fuel Production Credit: What Digital Nomads & Entrepreneurs in Greentech Should Know
Proposed IRS regulations on the Clean Fuel Production Credit may open new opportunities for clean energy producers and sustainability-minded entrepreneurs.
By NomadicTax Research Team • 5-8 min read • March 14, 2026
## What Is the Section 45Z Clean Fuel Production Credit?
Under section 45Z (IRS code) you can receive a **tax credit** for producing **clean transportation fuel domestically**—fuel that’s low in emissions—starting from **January 1, 2025**. This credit was created by the **Inflation Reduction Act of 2022** and modified by the **One Big Beautiful Bill** in 2025. ([irs.gov](https://www.irs.gov/irb/2026-09_IRB?utm_source=openai))
## Proposed Regulations: What’s on the Table (REG-121244-23)
In Fiscal Bulletin **2026-9**, the IRS released **proposed regulations** affecting how this credit is claimed: eligibility, filing claims, emissions rates, registration, and credit transfer/elective payment rules. Comments are due by **April 6, 2026**, and a public hearing is scheduled for **May 28, 2026**. ([irs.gov](https://www.irs.gov/irb/2026-09_IRB?utm_source=openai))
## Who Should Care & Why
- **Greentech entrepreneurs and clean fuel producers** can get subsidies via the credit, making projects more financially viable. Understanding eligibility criteria is crucial.
- **Environmental NGOs and impact investors** looking for carbon-reduction projects can use these incentives in deal structuring.
- **Digital nomads or remote business owners** working in design, R&D, or consulting for green projects might partner with producers or use shared credits.
## Key Items in the Proposed Regs + Actionable Steps
| Regulatory Area | Proposed Change or Clarification | What You Should Do |
|---|---|---|
| Emissions rates and eligibility | Clear rules for how emissions are calculated and thresholds required. | Ensure any fuel production facility is correctly measuring emissions and maintaining documentation; consult environmental engineers early. |
| Registration requirements | Producers must register under section 4101 at the time of production. | Start the registration process early; verify which federal registrations apply. |
| Credit transfer and elective payment rules | Clarified ownership and transferability of credits; defining “minimal processing” and facility ownership. | Structure company ownership mindful of these rules; seek legal or tax advice if credits are to be sold or transferred. |
| Foreign feedstock / prohibited foreign entities restrictions | Producers sourcing feedstock internationally must understand restrictions. | If your supply chain includes foreign sources, verify they meet permitted criteria; keep records of sourcing. |
## Example Scenario
Imagine a small biorefinery operated by a remote green-tech company located in rural US producing biodiesel from domestic feedstock. The owners plan to **sell the clean fuel credit**, use it to reduce tax liability, or transfer it under the elective pay regime. These proposed regulations will directly affect how easily they can register, what documentation is required, and whether their facility qualifies—even for “minimal processing” events like mixing with conventional fuels. Understanding the proposed rules beforehand could shape capital investment and project finance decisions.
## Action Items & Timing
1. **Review proposed regs (REG-121244-23)** now and consider submitting comments by **April 6, 2026**. ([irs.gov](https://www.irs.gov/irb/2026-09_IRB?utm_source=openai))
2. **Assess facility eligibility**: are you producing clean transportation fuel? Do you meet the defined emissions rates? Is your feedstock sourcing compliant?
3. **Documentation and record-keeping**: maintain emissions reports, ownership structure, production amounts, etc.
4. **Plan for elections** (credit transfers, elective payment) and understand their tax implications.
5. **Consult tax and legal professionals**—these credits intersect energy, environment, and tax law.
## Bottom Line
The proposed regulation changes to Section 45Z offer both opportunities and responsibilities: for those in clean fuel sectors, awareness and preparation can unlock credit benefits. With the rule-making in progress, now is the time to plan and align operations with emerging requirements.