Exchivo has executed term sheets with both buyers and sellers across the Section 45Z market, reflecting growing institutional interest in clean fuel credits. At the same time, many participants have remained measured in advancing to funding and final execution, pending greater regulatory clarity.
The market now enters another phase of development, as congressional pressure begins to intensify and further shape the policy environment.
Weeks after Treasury released proposed regulations for Section 45Z, a coalition of House and Senate lawmakers is urging Treasury, DOE, and USDA to take action.
The focus is shifting to who captures the benefit. Lawmakers are pushing for explicit recognition of on-farm practices such as no-till, cover crops, and fertilizer optimization within emissions calculations. Without that inclusion, value remains concentrated at the production level rather than extending across the agricultural supply chain.
45Z is moving beyond rulemaking into active policy formation. Transferability is now viable, but key variables remain unsettled. Emissions methodology, value allocation, and market structure will ultimately shape pricing and liquidity.
The emissions framework remains in flux. There is increasing pressure to incorporate farm-level inputs more directly into the model. Any change here will directly affect carbon intensity scores and, in turn, credit value, introducing variability into a market that is seeking standardization.
A book-and-claim framework would allow environmental attributes to be monetized independently of physical delivery, supporting broader participation and liquidity. A stricter mass-balance approach would limit both.
The question now is how the market scales.
45Z is moving beyond rulemaking into active policy formation. Transferability is now viable, but key variables remain unsettled. Emissions methodology, value allocation, and market structure will ultimately shape pricing and liquidity.
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