Inside the Greenhouse is a monthly update on FCNL’s environmental advocacy and the climate crisis.
Administration Provides Clarification on Key Clean Fuel Tax Credit Rules
On February 3, the Trump administration released proposed rules to clarify major tax credit qualifications for U.S. fuel producers, aimed at encouraging cleaner transportation fuels.
The guidance focuses on the clean fuel production tax credit, known as 45Z, which rewards fuel producers based on how much they reduce greenhouse gas emissions. While the credit was originally created under the Inflation Reduction Act (P.L. 117-169), it has since gained bipartisan support and was extended through 2029 as part of a Republican-led tax package.
The Biden administration issued preliminary guidance late 2024, but many key details were unresolved. The new proposal aims to fill those gaps, including rules which would limit eligibility to fuels made from feedstocks grown in the United States, Canada, or Mexico. It further specifies that electricity generation does not count as an eligible fuel under the program.
News and Updates
Colorado River Drought Straining Water Negotiations
After one of the driest winters in decades, leaders from seven Western states are scrambling to meet a federal deadline to set new rules for managing the Colorado river, which supplies water to more than 40 million people across the Southwest and Mexico. The existing guidelines expire later this year. Negotiators have already missed one deadline and face a February 14 cutoff with no clear agreement in sight.
Arizona and Colorado are preparing for the possibility that negotiations collapse, and the fight moves to court. Recent talks in Washington, DC offered a glimmer of hope, but officials on both sides remain deeply divided over how much water each region should give up.
The weather is making the situation worse. Unlike the winter of 2022–2023, which delivered heavy snowfall that temporarily boosted reservoirs, this year’s snowpack is far below average across nearly the entire basin. Less snow means less runoff in the spring and summer, further shrinking already stressed reservoirs such as Lake Powell in Utah and Colorado, and Lake Mead in Nevada and Arizona.
Those reservoirs don’t just store water but also generate electricity for more than a million people. If water levels drop too low, federal managers could be forced to shut down hydropower production or reduce water deliveries to major cities and farms in Arizona, California, and Nevada.
Newly Announced Oil & Gas Lease Sales in the Gulf of Mexico
The Interior Department scheduled a new oil and gas lease sale in the Gulf of Mexico for March, advancing the Trump administration’s push to expand domestic fossil fuel production.
The Bureau of Ocean Energy Management announced that companies can submit bids on offshore tracts until the morning of March 10, allowing access to more than 80 million acres of the outer continental shelf in the Gulf. Notably, the auction is the second Gulf lease sale held under a sweeping Republican energy law signed last summer, which mandates dozens of offshore oil and gas sales through 2040. However, areas offered will exclude waters near Florida, certain environmentally protected zones, and sections of the Gulf already leased in December.
The expanded leasing schedule marks a sharp shift from the Biden administration’s more restrictive approach to fossil fuel development on federal lands and waters. Under current plans, Gulf lease sales are expected to occur twice a year for more than a decade, alongside additional offerings in Alaska.
What We’re Reading:
- US Proposes Critical Minerals Trade Bloc Aimed at Countering China | Reuters
- EV Charging Program Faces the Axe in Budget Bill | Inside Climate News
- Flawed Economic Models Mean Climate Crisis Could Crash Global Economy, Experts Warn | The Guardian
- EPA Repeals Legal Basis for Regulating Greenhouse Gases. What it Means for the US — and the World | World Resources Institute
