New Bill Proposes $1.00/Gallon Credit for Renewable Natural Gas Fuel Through 2035

This proposed legislation, the "Renewable Natural Gas Incentive Act of 2025," aims to boost the use of renewable natural gas (RNG) by creating a new federal tax credit. Specifically, it introduces a $1.00 credit for every gallon (or gasoline gallon equivalent for non-liquid forms) of RNG sold or used as fuel in vehicles, boats, or aircraft. The core idea is to make cleaner fuel options more financially attractive.

What Qualifies for the Green Buck?

To get the credit, the fuel has to meet specific criteria. First, it must be "renewable natural gas," defined here as gas derived from biomass sources like landfill waste or agricultural byproducts. Think capturing methane that would otherwise escape and turning it into usable fuel. The producer of this gas needs to be officially registered and certify that the fuel meets the standard. Even if RNG is blended with conventional natural gas, the renewable portion can still qualify for the credit, provided there's a clear contract tracking the amount and the producer provides the necessary certification. For non-liquid gas, the credit is based on a "gasoline gallon equivalent," set at 124,800 Btu.

The Fine Print: Production and Payouts

An important detail is the origin: the bill states this credit only applies to RNG produced and used within the United States. Fuel produced or used elsewhere doesn't qualify. The system is designed so that registered producers or businesses directly using RNG in their operations can receive payments equivalent to the credit amount. This incentive kicks in for fuel sold or used in calendar quarters after the bill becomes law and is set to last for about a decade, expiring after December 31, 2035. Essentially, it's a temporary boost intended to help establish RNG as a more common fuel source in the U.S. transportation sector.