Biogas Braces for a Breakout

New 45Z rules arriving in 2025 spark a wave of biogas and RNG investment as firms await final guidance

20 Nov 2025

Federal incentives are injecting renewed momentum into the US biogas and renewable natural gas industry as developers prepare for the updated Section 45Z Clean Fuel Production Credit, due to take effect on January 1 2025. Companies that convert organic waste into low-carbon transport fuel are moving ahead with project plans even as full federal guidance is still pending.

The revised credit is expected to widen access to support for production from manure, food waste and wastewater. Industry groups say the change offers a clearer financial path for developers and signals Washington’s intent to speed up investment in waste-based fuels. Preliminary activity has increased, with new construction proposals under review and investors taking a closer look at the sector.

Much of the movement reflects preparation rather than a confirmed surge in output. Projects able to show measurable climate benefits stand to qualify for the new incentive, drawing interest from investors that previously focused on solar or wind. Companies including Clean Energy Fuels and Montauk Renewables are active in biogas and RNG and are positioning themselves for potential 45Z benefits once the rules are finalised.

Producers and feedstock suppliers are also adjusting their strategies. Farms, waste processors and regional energy groups are exploring partnerships and selective acquisitions to secure supply and gain scale. Analysts expect steady, modest deal activity as companies evaluate the regulatory changes.

Several uncertainties remain. The eventual value of the credit will depend on lifecycle emissions certification, feedstock eligibility and final guidance from federal agencies. Developers will need stronger emissions tracking and reporting systems, which could pose challenges for smaller operators. Officials are preparing additional clarification that may influence credit valuations and project economics.

Despite these open questions, sentiment across agriculture, waste management and transport is improving. Rising interest from these sectors suggests biogas and RNG are gaining a more central role in US clean fuel planning. If forthcoming rules sustain investment, the industry could become a significant contributor to the next phase of America’s low-carbon fuel strategy.