This bill, known as the Renewable Chemicals Act of 2026, aims to incentivize the domestic production of renewable chemicals and the development of related manufacturing facilities through new tax credits. It introduces a production credit under section 45BB, allowing taxpayers to claim 15 percent of the sales price of each pound of a qualifying renewable chemical, reduced by its non-biobased content. To qualify, a chemical must be produced in the U.S. from U.S. renewable biomass, be at least 95 percent biobased, not used for food, feed, fuel, or pharmaceuticals, and be a USDA Certified Biobased Product chemical intermediate.

Additionally, the bill establishes an investment credit under section 48F, providing 30 percent of the basis of eligible property for renewable chemical production facilities. These facilities must be primarily used to produce renewable chemicals, be placed in service after the bill's enactment, and the taxpayer must irrevocably elect this credit, foregoing the production credit for chemicals made at that facility. This ensures taxpayers choose between a production-based or investment-based incentive for a given facility.

Both the production and investment credits are subject to a national limitation and allocation program, to be administered by the Secretary of the Treasury in consultation with the Secretary of Agriculture. The total amount of credits allocated under this program cannot exceed $500 million, with a maximum of $25 million per taxpayer. The allocation process will consider factors such as job creation, reduction in dependence on fossil fuels, technological innovation, energy efficiency, reduction in greenhouse gases, advancement of sustainable chemistry, and commercial viability.

The Secretary is mandated to review allocated credits within six years of enactment and may reallocate unused credits. The authority to allocate new credits under both sections terminates five years after the bill's enactment. These credits are also made allowable against the alternative minimum tax, aiming to broaden their applicability and impact on the renewable chemicals industry.