The Internal Revenue Service office in Terre Haute, Indiana, circa 2020. The IRS proposed Section 45Z rules could create a multibillion-dollar loophole by rewarding clean-fuel producers for paper certificates rather than real emissions reductions. (Shutterstock/Jonathan Weiss)

The Upcoming Legal Clean Energy Fraud

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The IRS’s proposed Section 45Z rules could create a multibillion-dollar loophole by rewarding clean-fuel producers for paper certificates rather than real emissions reductions.

You’d never know it from the lofty environmentalist rhetoric they often use, but many clean-energy companies exploit federal laws and regulations to an extent that traditional oil and gas companies could only dream of. If the Internal Revenue Service (IRS) adopts the regulations it recently proposed to administer the Section 45Z Clean Fuel Production Tax Credit, then “clean” fuel producers will have a lucrative new loophole to exploit.

In 2022, Congress passed the Inflation Reduction Act (IRA). Among hundreds of other provisions, the IRA sought to reduce greenhouse-gas emissions by inserting Section 45Z into the Internal Revenue Code to create a tax credit for producers of lower-emission transportation fuel. In 2025, the One Big Beautiful Bill Act extended the 45Z tax credit until the end of 2029, resulting in a total cost of $53.1 billion to the Treasury.

Section 45Z creates a tax........

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