For nearly two decades, renewable fuels have played a steady—if often underappreciated—role in reducing emissions from the transportation sector. Unlike many emerging technologies that require new vehicles or fueling infrastructure, renewable fuels are compatible with today’s engines, equipment, and distribution systems. This allows them to deliver immediate emissions reductions while continuing to support domestic manufacturing, agriculture, and fuel production.
As federal policymakers revisit major programs—including annual Renewable Fuel Standard (RFS) volumes and implementation of the Clean Fuel Production Credit under Section 45Z—the implications extend well beyond fuel producers. These decisions influence capital investment in rural communities, shape innovation in engine and equipment manufacturing, and determine how quickly fleets can deploy lower-carbon solutions that are already commercially available.
Across the renewable fuels value chain, a consistent theme has emerged: predictable policy enables near-term environmental progress while reinforcing long-term economic activity across multiple sectors. Clear, stable federal signals help manufacturers plan future product development, allow producers to invest in efficiency improvements, and give fleets confidence that lower-carbon fuels will remain accessible and cost-effective.
The RFS continues to serve as the foundation of federal renewable fuel policy. By establishing annual blending targets for biodiesel, renewable diesel, ethanol, and other advanced fuels, the program provides the certainty needed to support long-term investment. Recent proposed increases in biomass-based diesel volumes—reaching at least 5.25 billion gallons—reflect growing recognition that these fuels can deliver meaningful lifecycle greenhouse gas reductions compared to petroleum diesel. Their use has also been associated with lower emissions of particulate matter and other harmful pollutants, offering both climate and public health benefits, as highlighted in the Trinity Study published by Clean Fuels Alliance America.
The economic impacts are equally significant. Analysis from the U.S. Department of Agriculture shows that biofuel production contributes billions of dollars annually to the U.S. economy and supports hundreds of thousands of jobs across farming, fuel processing, transportation, and equipment manufacturing. These outcomes are closely tied to consistent federal and state policies that align with market demand and provide confidence for long-term planning.
Looking ahead, the Section 45Z Clean Fuel Production Credit represents a notable shift in federal policy design, transitioning from a long-standing blenders credit to a producers-focused incentive. Rather than requiring blending or favoring specific fuels, the 45Z credit is structured to reward verified reductions in lifecycle carbon intensity. This framework encourages continuous improvement—through lower-carbon feedstocks, more efficient production processes, and adoption of technologies such as renewable electricity, low-carbon hydrogen, or carbon capture. At the same time, the transition has introduced uncertainty and, in some cases, reduced the near-term value proposition for fuel marketers and end users.
This evolution reflects a broader move toward outcome-driven climate policy. Lifecycle modeling from Argonne National Laboratory indicates that biodiesel, renewable diesel, and sustainable aviation fuel can achieve greenhouse gas reductions of roughly 50 to 80 percent compared with conventional petroleum fuels, depending on feedstock and production pathway.
Implications for Michigan
For Michigan, these federal policy developments carry particular importance. The state has a strong agricultural base, established fuel distribution infrastructure, and a wide range of public and private fleets that rely on diesel equipment—from transit and school buses to construction, agriculture, and marine operations. Clear federal guidance on RFS volumes and 45Z implementation is essential to attract investment in regional fuel production, support farm-based feedstock markets, and expand access to lower-carbon fuels without requiring wholesale changes to vehicles or infrastructure.
Michigan policymakers have also shown growing interest in data-driven approaches to emissions reduction. States that have adopted Low Carbon Fuel Standards have demonstrated how transparent lifecycle accounting can accelerate emissions reductions while maintaining fuel reliability. States with incentives for biofuels have also been shown to accelerate adoption of clean fuels like biodiesel.
While Michigan has not adopted such a standard or incentive, federal programs like the RFS and 45Z can function as complementary tools, helping fleets and fuel suppliers reduce emissions using solutions already available today. State-level incentives and an LCFS program currently under consideration could further support both production and consumption of biobased fuels. The Michigan Soybean Association and other MiABC stakeholders are closely tracking these developments.
A Pivotal Moment for Policy Certainty
Although Congress established the statutory framework for these programs, successful implementation depends on timely and clear action by federal agencies. EPA’s annual RFS volume setting and Treasury’s guidance on 45Z will directly shape investment decisions across the fuels sector. Delays or ambiguity do more than create uncertainty—they slow deployment, complicate compliance strategies, and constrain economic opportunities for communities tied to agriculture and manufacturing.
Farmers, fuel producers, fleet operators, and equipment manufacturers all rely on clear, consistent policy signals to justify long-term investments. These stakeholders cannot plan, build, or innovate based on speculation alone.
It’s clear that renewable fuels are delivering measurable energy, environmental, and economic benefits today—not years or decades in the future. With clear federal guidance and thoughtful coordination with state priorities, they can continue to play a central role in reducing emissions now while supporting jobs, infrastructure, and energy security in Michigan and across the country.
Adapted from an article originally shared by the Engine Technology Forum. Image credit:
Notice: The Michigan Advanced Biofuels Coalition (MiABC) does not lobby or influence policy in any way. The policy interests of Michigan soybean farmers and biodiesel producers are supported by the Michigan Soybean Association and Clean Fuels Alliance America, respectively. All posts are shared for educational purposes only.