On May 27, 2026, the U.S. Treasury Department is holding a public hearing on the rules for one of the most important federal programs in the renewable fuel world: the 45Z Clean Fuel Production Credit. The decisions that come out of that process will shape what used cooking oil in the U.S. is worth for the rest of the decade.
What 45Z Actually Is — In Plain English
The federal government wants more clean fuel made in the United States. To make that happen, it pays the companies that turn waste oils, fats, and crops into biodiesel, renewable diesel, and clean jet fuel a tax credit for every gallon they produce. That tax credit is called 45Z.
A few simple facts:
It pays U.S. fuel producers up to $1.00 per gallon of clean fuel they make
For clean jet fuel (called sustainable aviation fuel, or SAF), it pays up to $1.75 per gallon
The cleaner the fuel, the bigger the credit
Used cooking oil makes some of the cleanest fuel of anything — because it's a waste product, not a crop. No land cleared, no seeds planted, no fertilizer used. From an emissions standpoint, UCO starts at the back door of a restaurant.
That's why UCO earns producers some of the biggest 45Z credits of any feedstock.
You don't claim this credit yourself as a collector or hauler. The producer claims it. But the credit is the engine deciding what producers can afford to pay for UCO in the first place. When the credit goes up, your gallons are worth more. When the rules around the credit change, your buyers' world changes — and that flows downstream to you.
The Timeline: How We Got Here
January 1, 2025 — 45Z officially takes effect. The IRS releases its first round of guidance, but it leaves a lot of operational questions open: how exactly emissions get calculated, how feedstock origin gets verified, and what counts as a qualifying sale.
Mid-2025 — Congress passes the One Big Beautiful Bill Act (OBBBA), which changes 45Z in two important ways:
Extends the credit through December 31, 2029, giving producers a longer runway.
Restricts the credit to fuels produced by American-controlled companies using feedstocks from the U.S., Mexico, or Canada.
That second change cut imported UCO out of the program. Demand pulled back to domestic supply, which made U.S.-collected UCO more strategically valuable overnight.
February 2026 — Treasury and the IRS release proposed regulations filling in the operational details left open by earlier guidance. Those rules cover emissions modeling, feedstock traceability, registration and certification, and anti-fraud measures.
May 27, 2026 — Public hearing on those proposed regulations (now telephonic-only). Industry groups, producers, and traders will weigh in.
Sometime after — Treasury issues final regulations. No firm date has been set.
Why the May 27 Hearing Matters
The hearing focuses on three areas that directly affect every UCO collector in the country:
Emissions rates. How the carbon footprint of each gallon gets calculated. The lower the number, the bigger the credit. UCO depends on this math working in its favor.
Registration and certification. Who has to register, what kind of records they need to keep, and what proof they have to provide. This is where feedstock traceability rules get locked in.
Verification. How producers prove their UCO is genuine domestic UCO and not something mislabeled or imported.
Until final rules are published, producers are claiming 45Z under the proposed regulations they have to apply consistently and in full. That conditional standing is one reason many producers are still waiting to fully monetize their 2025 credits — and why cash flow has been tight across the production side of the industry.
The shorter version: the credit is already in effect, but the rulebook is still being written. May 27 is one of the last big public moments in that process.
What This Means for Collectors
The rules coming out of this process will set the standard for what kind of documentation, traceability, and chain-of-custody records producers expect from their suppliers. Operators with clean records, clear sourcing, accurate route data, and restaurant-level tracking will be the easiest to buy from once final regulations drop.
You don't need to be at the hearing. But you should know it's happening, what's being decided, and why every gallon coming off your route is tied — directly or indirectly — to what comes out of that room.
