The Big Beautiful Bill: Biofuels Win Big as Clean Energy Fractures

Senate passage sets the stage for House vote, reshaping renewable incentives along partisan and regional lines

In Washington DC, the US Senate’s hard-fought budget bill delivered an emphatic victory this week for America’s biofuels industry—while exposing a growing fault line in U.S. clean energy policy.

On Tuesday morning, after more than 24 hours of amendments, negotiations, and tie-breaking votes, the U.S. Senate passed what Republicans are calling the “One Big Beautiful Bill Act.” The legislation now advances to the House of Representatives, where it is likely to pass, reshaping federal support for renewable fuels, solar, wind, electric vehicles, and the social safety net.

For biofuels, the bill could not have come at a more pivotal moment. With production slowed by policy uncertainty, and the sector waiting for clarity on tax credits and market signals, industry groups say the legislation provides the most significant boost in years. Among other provisions, it extends the 45Z Clean Fuel Production Tax Credit through 2029, revives the Small Agri-Biodiesel Producer Credit at 20 cents per gallon, and maintains the transferability rules that make the credits usable for producers without large tax liabilities.

“This policy comes at a critical time for American agriculture,” said Joshua Shields, senior vice president at POET, the world’s largest biofuels producer. “An extended window for 45Z gives us greater certainty to invest in new technologies and practices that are pivotal to strengthening markets for farmers and ensuring American biofuels energy dominance.”

Grant Kimberley, executive director of the Iowa Biodiesel Board, echoed that optimism. “These improvements to the biomass-based diesel tax incentive come at a pivotal moment for the industry, which has seen months of uncertainty, stalled production and investment hesitation,” Kimberley said. He credited Iowa Senators Chuck Grassley and Joni Ernst for championing the provisions. “This gives us much-needed certainty for the near future.”

Biofuels in, Solar Out

But while renewable fuels secured new guarantees, other clean energy sectors saw incentives scaled back or ended outright. The same bill that extended biofuel support will phase out tax credits for solar, wind, and many energy-efficiency upgrades starting in 2027. House Democrats and clean energy advocates described the cuts as a setback for decarbonization efforts.

Representative John Garamendi (D-CA) called it “the largest transfer of wealth from working Americans in U.S. history,” arguing that the bill “kills medical services for 16 million people” and “slashes clean energy tax credits” to fund sweeping tax reductions that disproportionately benefit wealthier households. “Not only is Trump slashing the social safety net, he’s going after our power grid too,” Garamendi said in a statement, warning of higher energy costs and potential blackouts as solar and wind incentives expire.

Even within the Republican caucus, there was unease. Senator Lisa Murkowski (R-AK) held out until the final hours to secure slower phaseouts of clean energy credits for her state, ultimately joining the majority to pass the package.

This divergence in support underscores an emerging split in U.S. renewable energy politics: Biofuels, rooted in farm states and rural economies, retain deep bipartisan appeal—particularly among Republicans eager to deliver for agriculture and domestic fuel producers. By contrast, solar, wind, and electric vehicles are often associated with urban corridors, technology companies, and policies championed by Democrats in states like California and New York.

A Narrow Path to Passage

The Senate vote itself reflected the intensity of the debate. With a 51–50 margin and Vice President JD Vance breaking the tie, Republicans had to negotiate through a series of internal disagreements and procedural hurdles. Senators Rand Paul (R-KY), Thom Tillis (R-NC), and Susan Collins (R-ME) joined all Democrats in voting no, citing concerns over the legislation’s fiscal impact and Medicaid cuts.

Senate Majority Leader John Thune (R-SD), managing his first major legislative effort as Republican leader, called the bill “a promise kept” to working families. “No tax on tips, no tax on overtime, lower taxes for seniors, for Social Security recipients,” Thune said. “These are all targeted at working Americans, working families.”

In addition to the energy provisions, the bill makes permanent the 2017 Trump tax cuts and introduces new tax relief, including an increased child tax credit. Supporters say these measures will stave off what they describe as the largest tax increase in U.S. history, which would have taken effect in 2026 when the original tax cuts were scheduled to expire.

Critics, however, point to estimates that the legislation will increase deficits by over $3 trillion over the next decade. Among them was entrepreneur Elon Musk, who tweeted that lawmakers supporting the bill should “hang their head in shame” for advancing what he called the biggest debt increase in American history.

Winners and Losers, technologies, geographies, sectors

Beyond tax policy, the bill’s supporters highlighted record funding for border security, law enforcement, and national defense. As Judiciary Committee chair, Senator Grassley oversaw provisions directing hundreds of billions of dollars to immigration enforcement, fulfilling what Republican leaders called a mandate from the 2024 election.

At the same time, the bill imposes new work requirements and eligibility checks for Medicaid and nutrition assistance programs. Nonpartisan analysts estimate nearly 16 million Americans could lose health coverage as a result. Democrats described the cuts as unprecedented, with Garamendi warning that a typical 60-year-old California couple could see their insurance costs rise by over $22,000 per year.

For renewable fuels producers, however, the legislation represents a measure of stability after years of policy volatility. The Advanced Biofuels Association offered qualified support, praising the biofuels provisions but warning that restrictions on foreign feedstocks could raise costs. “We are disappointed that the Senate’s proposal would restrict the use of foreign feedstocks under 45Z,” said Michael McAdams, the association’s president, who also urged the EPA to avoid further market disruptions through rulemaking.

The legislation’s focus on domestic supply chains also has implications for feedstock sourcing. While many new projects producing renewable diesel and sustainable aviation fuel rely on imported waste oils—especially used cooking oil from China—the most abundant, affordable U.S. feedstocks are agricultural and forest residues. Proponents argue that prioritizing domestic materials strengthens energy security and rural economies, though some producers warn it could limit growth by narrowing the feedstock pool at a time of rising demand.

American Biogas Council executive director Patrick Serfass was upbeat. “Among the most important elements is an extension of the Clean Fuel Production Credit (45Z). In addition, the final Senate language appropriately preserves important protections for manure-based biogas projects, including clear guidance for GREET model updates. The bill also mirrors the House’s approach to ensure that only U.S. and North American feedstocks are eligible, which helps level the playing field for U.S. producers,” he said

A Clean Energy Cleavage

The final shape of the bill suggests a realignment of clean energy priorities along geographic and political lines. Biofuels, with their links to agriculture and domestic supply chains, emerged as a clear beneficiary. Solar, wind, and EV incentives, in contrast, were scaled back, reflecting skepticism among many Republicans about subsidies for technologies viewed as more aligned with coastal economies and multinational manufacturers.

As the legislation moves to the House, House Speaker Mike Johnson faces a compressed timeline to meet President Trump’s self-imposed July 4 deadline for passage. Any changes would require another Senate vote. While Republican leaders have expressed confidence, some moderates remain uneasy about Medicaid reductions and the budget impact.

The Bottom Line

If passed into law unchanged, the “One Big Beautiful Bill” will cement an era-defining shift in energy policy—one that rewards renewable fuels producers while curtailing support for solar, wind, and electric vehicles. For clean energy advocates, it is a reminder that political coalitions are not monolithic—and that federal energy policy is increasingly shaped by demographic, regional, and partisan divides.

The stakes for American families, the energy sector, and the broader economy are substantial. Whether the legislation will be remembered as beautiful or ugly may depend, as Hollywood cameramen have long observed, on where you choose to stand.