H.R. 2596: Renewable Natural Gas Incentive Act of 2025

This legislation, titled the Renewable Natural Gas Incentive Act of 2025, proposes amendments to the Internal Revenue Code of 1986 to enhance the adoption of renewable natural gas (RNG) as a fuel source. The main objectives of the bill include reducing greenhouse gas emissions and improving air quality, while also fostering job creation and economic growth across the United States. Here’s a breakdown of the key provisions:

Increased Credit for Renewable Natural Gas

The bill establishes a renewable natural gas fuel credit, which is worth $1.00 for each gallon of renewable natural gas sold for use in motor vehicles, motorboats, or aviation. The legislation defines renewable natural gas as compressed or liquefied gas derived from biomass and specifies that it must be produced by registered producers. The credit can also apply to blended renewable natural gas, which is a mixture of RNG and other gases, under certain conditions.

Certification Requirements

Producers of renewable natural gas must provide certification to taxpayers identifying the product and the amount of fuel acquired for qualifying uses. This ensures proper verification of the sources of renewable natural gas eligible for the fuel credit.

Limitations and Duration of Benefits

The renewable natural gas fuel credit is applicable until December 31, 2035. After this date, the provisions of the bill will no longer apply to sales or usage after that period.

Payment Structures

The bill outlines the process by which the government shall make payments to entities that sell or use renewable natural gas in their business operations. The amount paid will correspond to the renewable natural gas fuel credit for the fuel used.

Registration and Compliance Requirements

To qualify for the benefits outlined in the legislation, producers of renewable natural gas must register with the appropriate government bodies. The bill also includes provisions that maintain compliance and ensure that renewable natural gas is produced within the United States for domestic use.

Effective Date

The amendments and provisions proposed in this bill are set to take effect for fuel sold or used after December 31, 2025.

Relevant Companies

• FTK - Flotek Industries, Inc. may be affected as they are involved in the production and development of technologies for the oil and gas industry, including potential applications in renewable gas.
• AVAV - AeroVironment, Inc. focuses on sustainable energy solutions, which could include renewable natural gas innovations.
• NGL - NGL Energy Partners LP might see an impact due to their operations in the transportation and storage of liquid hydrocarbons, which can align with RNG practices.