Section 45Z 2026 Emissions Rate Table and Updated GREET Model Published

The U.S. Department of the Treasury and IRS issued Notice 2026-53 (the Notice) on September 8, 2026, establishing emissions rates applicable to the Section 45Z clean fuel production tax credit (PTC) for calendar year 2026 and clarifying the application of several amendments made to Section 45Z by the One Big Beautiful Bill Act (OBBB). This Holland & Knight alert summarizes the key provisions of the Notice and its implications for clean fuel producers.

In conjunction with the release of the Notice, the U.S. Department of Energy (DOE) released the updated version of the 45Z-CF GREET Model, which incorporates the changes to Section 45Z as provided for in OBBB and an updated user manual.

The DOE also released instructions for the emissions value request (EVR) application for taxpayers seeking an emissions value for an eligible fuel type, feedstock and production pathway not already covered by the applicable Treasury Department emissions rate table. Obtaining the EVR permits a taxpayer to submit a provisional emissions rate (PER) with its federal income tax return for which the taxpayer claims the Section 45Z PTC. For more information on the PER process, see Holland & Knight's previous alert, "What to Know About the Section 45Z PTC Proposed Regulations," February 25, 2026.

Background

The current version of Section 45Z allows a PTC for clean transportation fuel produced after December 31, 2024, and sold by December 31, 2029. To qualify, a taxpayer must produce a "transportation fuel" that, among other requirements, has an emissions rate of no more than 50 kilograms (kg) of carbon dioxide equivalent (CO₂e) per million British thermal units (mmBTU). Emissions rates below that amount qualify fuel for a proportionate amount of credits, subject to applicable limits imposed by OBBB. As such, the emissions rate is a key determinant in the amount of the PTC.

OBBB made several changes to Section 45Z that apply to transportation fuel produced after December 31, 2025, including several points relevant to the Notice:

• a provision for emissions rates specific to animal manure
• permission to exclude emissions attributed to indirect land use change (ILUC)
• a cap on emissions rates of zero for fuels other than those utilizing animal manure feedstocks
• a requirement that fuel produced after December 31, 2025, be exclusively derived from feedstock produced or grown in the U.S., Mexico and Canada

Changes to the Emissions Rate Calculation

The Notice incorporates changes to Section 45Z in OBBB, additional transportation fuel pathways and regenerative agricultural practices. In general, the combination of the Notice and the updated 45ZCF-GREET model may be most beneficial for producers of transportation fuel who use animal manure or food scraps, as well as ethanol producers who use regenerative agricultural practices.

Regenerative Agricultural Practices

The updated 45ZCF-GREET model includes a 2026 version of the Feedstock Carbon Intensity Calculator (FD-CIC). The Notice states that taxpayers may use the 2026 FD-CIC in conjunction with the updated 45ZCF-GREET module to calculate carbon intensity adjustments for feedstocks that are produced using certain low-carbon agricultural practices.

In addition, the Notice states that, for fuel produced in 2025, a taxpayer may use the 2026 version of 45ZCF FD-CIC, provided the taxpayer satisfies all requirements under the U.S. Department of Agriculture technical guidelines, including chain of custody and audit and verification standards. Further, the Treasury Department recognized that taxpayers need comfort regarding the emissions profiles of crops that have already been planted. Accordingly, for fuel produced in 2025 and 2026, the pre-application nutrient budget development requirements are deemed satisfied, but a taxpayer must substantiate the application of any nutrients (such as nitrogen, phosphorus and potassium) and measurable nutrient sources and removals that the taxpayer inputs into 45ZCF FD-CIC.

Distinct Emissions Rates for Animal Manure

Dairy manure and swine manure are included as primary feedstocks in the 2026 emissions rate table. The IRS expects to include poultry manure and beef manure in another 45ZCF-GREET model later this year.

In a major change that will benefit farmers, ranchers and dairymen, the Notice also permits a taxpayer to now use a farm-specific alternative fate that reflects prior manure management practices on the farm from which the manure was sourced. These practices may include storage in uncovered lagoons, deep pits, liquid/slurry, pasture/range/paddock, dry lot and solid storage. Certain conditions and substantiation requirements apply to the use of a farm-specific alternative fate.

Additional Renewable Natural Gas (RNG) Pathways

The Notice adds additional pathways for RNG, including for RNG derived from food scraps via anaerobic digestion and upgrading, corn stover via anaerobic digestion and upgrading, grain stillage via anaerobic digestion and upgrading, mixed high-moisture organic wastes via anaerobic digestion and upgrading, dairy manure via anaerobic digestion and upgrading, and swine manure via anaerobic digestion and upgrading. The Notice also retains the prior pathways for wastewater sludge, other animal manures and landfill gas.

ILUC Emissions Exclusion

Consistent with the changes to Section 45Z post-OBBB, emissions rates must exclude ILUC emissions. Therefore, a taxpayer using a version of the 45ZCF-GREET model that includes ILUC emissions (i.e., any pre-September 2026 model) must adjust the emissions rate calculated by the 45ZCF-GREET model for fuel produced after December 31, 2025, to exclude the relevant ILUC values. Sustainable aviation fuel producers using CORSIA Default or CORSIA Actual must similarly exclude the relevant ILUC values.

Used Cooking Oil (UCO)

Notwithstanding the requirement above regarding feedstocks grown or produced in the U.S., Mexico and Canada, taxpayers that produced fuel from imported UCO in 2025 may use the new 45ZCF-GREET pathway. In addition, pathways for UCO produced in Canada or Mexico were added to the June 2026 version of the 45ZCF-GREET model and apply effective January 1, 2025.

The Holland & Knight Energy Tax Team is available for questions regarding Section 45Z and emissions rate calculations. To receive additional analysis from the team, please subscribe to our alerts.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.