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Aon's 45Z Solution

Author Evette Edwards




The Aon 45Z Advantage helps market participants turn the emerging Section 45Z clean fuel tax credit into reliable, risk-managed value. By combining deep agricultural, energy and tax expertise with tailored insurance solutions, Aon supports both producers and corporate taxpayers as they navigate eligibility, calculation and transactional risks in 45Z credit transfers.

Use the sections below to explore how 45Z works, the key risks in these transactions, how tax insurance can protect credit value, and how Aon’s dedicated 45Z team can help you unlock the full opportunity.


The 45Z Advantage - Introduction (Aon pdf)
Insuring 45Z Tax Credit Transactions (Aon pdf)
Why 45Z Matters for Your Organization
The Risk Side of 45Z: What Buyers and Sellers Need to Know
Protecting 45Z Credit Value with Tax Insurance
Why Aon for 45Z Tax Insurance:
Is the 45Z Advantage Right for You?
Connect with the Aon Agriculture Resilience Center (AARC)

 


What Is Section 45Z?

    • Section 45Z provides a transferable federal tax credit for qualified clean transportation fuels produced and sold between January 1, 2025 and December 31, 2029. -The credit applies to domestic production and is performance-based, with value determined by the lifecycle GHG emissions of the fuel—the lower the carbon intensity, the higher the credit.

    • The credit is transferable, enabling producers that cannot fully utilize the credit themselves to sell it to other taxpayers. This supports a growing market for buying and selling 45Z tax credits.  

“45Z at a Glance"

    • Eligible period: Fuel produced and sold 2025–2029
    • Basis:  Lifecycle GHG emissions (kg CO₂e per mmBTU)
    • Threshold: Fuels must have lifecycle emissions ≤ 50 kg CO₂e per mmBTU to qualify 
    • Transferable: Yes—credits can be sold to other taxpayers


The 45Z Advantage - Introduction



Insuring 45Z Tax Credit Transactions




Why 45Z Matters for Your Organization

For Producers of Low-Carbon Fuels: 

    • Monetize 45Z credits even if you cannot use them directly
    • Access a growing market of corporate buyers seeking federal tax savings
    • Enhance project economics and attract investors and lenders in clean fuel projects

For Corporate Taxpayers & Investors

Build a multi-year tax savings engine by timing 45Z credit purchases around estimated payment dates to reduce federal tax liabilities: 

    • Diversify tax planning strategies with performance-based, environmentally linked credits
    • Align financial performance with decarbonization and energy-transition objectives


Impact Highlight:

Many U.S. ethanol plants are farmer-owned cooperatives, created to keep dollars in rural communities and provide stable markets for grain. Purchasing 45Z credits from these producers can send value back to Main Street and rural America, reinforcing the original biofuels mission.  


The Risk Side of 45Z: What Buyers and Sellers Need to Know

While 45Z presents material opportunity, both buyers and sellers must navigate technical and regulatory risk to ensure credit integrity and transaction success.

  1. Eligibility Risk
      • Credits must meet significant requirements, including:
          • Proper IRS registration
          • Emissions verification
          • Low-carbon / qualified feedstock sourcing
          • Qualified sale to an unrelated party for a qualifying business use
      • Failure in any of these areas can result in credits being challenged or disallowed.  
    2. Credit Calculation Risk
      • 45Z credits depend on accurate lifecycle GHG calculations.
      • If the IRS challenges the carbon intensity score or calculation approach, it can reduce the credit’s value or disallow the credit completely. 
    3. Transactional / Indemnity Risk & Foreign Ownership Rules
      • Beginning July 4, 2025, “specified foreign entities” with ownership or effective control over fuel production cannot earn 45Z credits; after July 4, 2027, certain “foreign-influenced entities” are also ineligible. 
      • Sellers may face future indemnity obligations if guidance changes, calculation methods shift, or the IRS later challenges value after a transfer is complete.
      • Buyers need confidence in those indemnities and in the long-term validity of the credits. 


    Protecting 45Z Credit Value with Tax Insurance

    As the 45Z market matures, tax insurance is a critical tool for de-risking transactions and building confidence between buyers and sellers. Aon’s tax insurance solutions can be structured to address the core eligibility, calculation, and transactional risks that may impact the value of 45Z credits.

    What Tax Insurance Can Cover:

    • That the transfer of the credit was completed in a legally compliant manner
    • That the 45Z credits qualified for the value stated in the transfer agreement
    • Losses related to:
      • Addditional tax
      • Contest costs
      • Interest and penalties
      • "Gross-up” to cover income tax on any claims payment received

    Policy periods of up to 10 years, matching long-tail tax audit risk

    Benefits for Market Participants:

    • For Sellers:
      • Enhances marketability and may support higher sale prices by providing greater certainty to buyers.
    • For Buyers:
      • Delivers downside protection and certainty of value when purchasing credits.


    Why Aon for 45Z Tax Insurance:

    • 15+ years securing tax insurance solutions, including in evolving energy credit sectors
    • Innovative execution and proprietary market access, including:
        • Aon’s Sidecar Facility with up to $205 million of discounted, pre-agreed excess capacity available for tax credit insurance
      • Embedded, experienced claims team:
      • 1200+ claims advocated in North America since 2013
      • Approximately $1.6B paid and over $2.2B of loss recognized after retention erosion

    The Aon 45Z Advantage

    The Section 45Z tax credit is becoming one of the most actively traded credits in the market, rewarding producers that achieve verified low-carbon performance and enabling corporate taxpayers to align tax planning with decarbonization goals. The Aon 45Z Advantage combines industry insight, risk capital, and analytics to help clients unlock value and mitigate risk across the entire transaction lifecycle.

    What We Do:

    • Support low-carbon fuel producers in monetizing 45Z credits
    • Help corporate taxpayers source and purchase credits to reduce federal tax liabilities
    • Advise investors and lenders in clean transportation fuel projects
    • Partner with legal and transaction advisors to manage transfer and documentation risk
    • Deliver tailored risk transfer solutions, including tax insurance, to protect 45Z value


    How We Work:

    • Align with your deal team to support structuring, timing, and execution
    • Use advanced data and analytics to assess risk and support competitive origination of qualifying feedstocks (via the Aon Agriculture Resilience Center)
    • Access best-in-class broking centers of excellence and a global network of risk capital providers

     

    Is the 45Z Advantage Right for You?

    • Low-carbon transportation fuel producers seeking to monetize 45Z credits
    • Corporate taxpayers seeking credits to offset federal tax liabilities for material savings
    • Investors and lenders in clean transportation fuel and bioenergy projects
    • Legal and transaction advisors managing transferability, documentation, and risk allocation
    • Agribusiness and feedstock suppliers engaging in low-carbon supply chains
       


    Connect with the Aon Agriculture Resilience Center (AARC)

    Aon’s Agriculture Resilience Center (AARC) brings together experts across agriculture, renewable energy, analytics, and commercial risk to help clients capture the 45Z opportunity while managing volatility in feedstocks, production, and policy.

    Key contact:

    Supporting team:

    About Aon


    Aon plc (NYSE: AON) exists to shape decisions for the better—to protect and enrich the lives of people around the world. Through actionable analytic insight, globally integrated Risk Capital and Human Capital expertise, and locally relevant solutions, Aon colleagues provide clients in over 120 countries with the clarity and confidence to make better risk and people decisions that help protect and grow their businesses. -