Biofuel producers are no longer just estimating what the Section 45Z Clean Fuel Production Credit might be worth. They are selling it. In the first quarter of 2026, the tax-credit marketplace Reunion facilitated a $30 million transfer of 45Z credits from a Midwest ethanol producer to two publicly traded banks, structured as a coordinated "club" deal with shared legal counsel, third-party diligence, and a tax-credit insurance policy sized above the transaction value. It is one of several disclosed transfers this year (alongside deals from Green Plains, Gevo, and Alto Ingredients) that show a real secondary market has formed around 45Z credits, with banks, brokers, insurers, and verifiers now standing between the producer and the cash.
This is a different story than the one about 45Z showing up in quarterly earnings. We covered that separately: Green Plains, The Andersons, and Aemetis reporting tens of millions of dollars of 45Z value on their income statements. This piece is about the mechanism that turns an accrued credit into cash before a producer ever owes federal tax: the transfer market itself, and what a buyer has to underwrite to participate in it.
What Section 6418 actually allows
Section 45Z is a per-gallon federal tax credit for producing transportation fuel below a carbon-intensity threshold, calculated using a lifecycle emissions score. Carbon intensity, or CI, measures the greenhouse-gas emissions associated with producing a fuel from feedstock to tailpipe: the lower the number, the larger the credit per gallon.
Section 6418 of the tax code lets an eligible producer transfer certain federal clean-energy credits, including 45Z, to an unrelated taxpayer in exchange for cash. According to IRS guidance, the producer must complete electronic pre-filing registration, obtain a registration number for the credit property, and complete a transfer election statement with the buyer before either party can rely on the credit at filing.
What it does not do is eliminate the underlying eligibility question. Transferability changes who can use the credit and when the seller gets paid; it does not change what has to be true about the fuel, the facility, and the emissions math for the credit to be valid in the first place. If the IRS later determines a transferred credit was overstated or ineligible, the tax consequence generally follows the credit, not the transfer. That is exactly why buyers build extensive diligence and insurance into these deals rather than treating a transfer election as a clean pass-through of risk.
Four things a buyer is actually underwriting
A bank or corporate buyer purchasing 45Z credits is not simply buying a tax deduction. It is underwriting a production business, in miniature, across four layers:
- Production risk: will the facility actually produce the gallons the deal assumes, on the schedule assumed, for the whole period the credits cover.
- Eligibility risk: does the fuel and facility meet the statutory and regulatory definitions for 45Z in the first place.
- Carbon-intensity risk: is the claimed emissions score correct, current, and calculated on a model version the IRS will still recognize when the return is filed.
- Documentation risk: can the producer produce the source records, verification reports, and registration paperwork the IRS would ask for in an examination.
That last point is where farm-level and feedstock-level data enters a transaction that, on its face, is between an ethanol plant and a bank. A producer's claimed CI score depends on inputs from further up the supply chain: the carbon intensity of the corn, soybeans, sorghum, or canola it processes. USDA's Feedstock Carbon Intensity Calculator, or FD-CIC, now quantifies carbon intensity for those four crops based on grower-reported practices such as tillage and nutrient management. Treasury's proposed 45Z regulations anticipate that a 45Z-specific version of the FD-CIC module will feed into the DOE's 45ZCF-GREET model, which is what actually sets the emissions rate a producer's credit is based on. A weak link anywhere in that chain (an unverifiable practice claim, a stale model version, a missing source record) is a weak link in the asset a bank is buying. We go into that chain in more depth in our low-CI feedstocks guide.
The deals on the record so far
The Reunion-facilitated transaction is notable less for its size than for its structure. Rather than running two separate negotiations with two buyers, the parties consolidated diligence under one legal counsel and one accounting firm, split the $30 million between a lead bank ($20 million) and a follow-on bank ($10 million), and backed the deal with a tax-credit insurance policy sized at roughly 125% of the transaction volume: insurance against the IRS disallowing the credit itself, not against the producer defaulting.
Green Plains has taken a different approach, agreeing with commodities trader Freepoint Commodities to monetize anticipated 2025 45Z credits from ethanol production at three (later expanded to six) Nebraska facilities through a direct transfer mechanism, with third-party emissions verification and tax insurance built into the agreement rather than negotiated deal by deal. Gevo's most recent 10-Q discloses a more conventional outcome: upon filing its 2025 federal return, $52 million of Clean Fuel Production Credits were transferred to buyers, generating a $48.6 million sale of the credit asset. The gap between the two figures is the discount buyers required to take on the risk described above. Alto Ingredients sold all of its 2025 45Z credits from its Pekin and Columbia facilities to a single corporate buyer for roughly $8.9 million in cash, before broker fees, in a transaction separate from the 45Z income it has been reporting in earnings.
None of these disclosures tell us whether the underlying CI claims will hold up under IRS examination, and none of it is a judgment on Reunion, Green Plains, Gevo, or Alto Ingredients as counterparties. That is not a question this market's early deal volume can answer. What the pattern does show is that a market has formed with enough repeat transactions to standardize around club structures, insurance sizing, and verification requirements, rather than each deal being negotiated from scratch.
Why this matters beyond the biofuel industry
The traditional biofuel supply chain runs from farmer to grain handler to processor to fuel buyer. A financial layer is now forming alongside it: tax-credit buyers, brokers, insurers, and verifiers, whose only interest in the farm-level data is whether it will survive an audit years after the gallon was produced. That is a different kind of scrutiny than a sustainability claim gets. A financial buyer paying discounted cash today for a credit that depends on a farmer's reported tillage practice has a direct, dollar-denominated interest in whether that data was collected, calculated, and documented correctly.
For lenders, insurers, and producers evaluating a 45Z monetization deal, the question is not just "what is the credit worth." It is which CI methodology and model version produced the number, whether the underlying feedstock claims are backed by source records rather than self-attestation, and what recourse exists if any part of that chain doesn't hold up. See our market map for where verifiers, originators, and credit buyers sit relative to each other, and Tax Credit & Capital Markets ratings for how we track claims from this part of the value chain.