Over the past few weeks, I’ve been reflecting on some major developments in the biofuel industry and determining our specific opportunities and role as farmers. There have been a lot of announcements coming from DC and it’s critical that we stay on top of it. These are my top 10 takeaways and they highlight the most important points that will impact agriculture moving forward. I’ve seen firsthand how these issues affect our operations, and I want to break them down for you.
45Z Isn’t Dead
For a while, there were doubts about the future of the 45Z tax credit. But it’s clear now—it’s not going anywhere. In fact, it’s become more important than ever in shaping the renewable energy landscape. As farmers, we need to pay close attention to any updates here because this could be a key source of funding to support biofuel production, and it’s still full of potential. The new Ag Secretary, Brooke Rollins, has explicitly said she wants to get 45Z done. The incoming Treasury Secretary, Scott Bassent, has alluded to the same.
IRS had the Endzone within reach but “Fumbled”
The IRS has made some progress in clarifying renewable fuel credits, but they’ve left a lot of room for confusion. There’s still work to be done to make the process more straightforward for farmers who are trying to claim these credits. I know it’s frustrating, but we can’t afford to be passive on this—we need to keep pushing for clear, concise guidance so that we can fully benefit from these opportunities.
45ZCF GREET Model is live but Missing its Feedstock Calculator
Farmers and our crops, such as corn and soybeans, contribute to more than 50% of the Carbon Intensity of biofuels. The Feedstock Calculator is the Department of Energy’s tool for quantifying the CI of biofuel feedstocks. The new 45ZCF GREET was launched but the Feedstock Calculator is yet to be released. This will be a critical tool required to allow for on-farm CI reductions and to integrate farmers as part of the decarbonization equation.
USDA Wants Mass Balance, A Bad Move for the Cause
I’m concerned about the USDA’s push for a mass balance system. While it might seem like a good idea in theory, the reality is it’s just not practical for farm-level production. Ag commodities are not currently being tracked in a manner that would be required for mass balance and most importantly, mass balance would hurt non-biofuel grain buyers. We are advocating for a Book and Claim process to be used. For example, today, my grain is sold to feed pigs. The pork producers don’t currently have a low CI Corn program set up. Due to mass balance, my corn and data have to remain in tandem and will be sold to an ethanol plant together. This hurts my local pork producer, who will have to look further out for corn and increase the price of trucking, or they will have to change bases to try to keep my corn in their supply chain. Book and Claim would decouple the grain from the data and would level the playing field, allowing all grain farmers an opportunity to participate, while minimizing cost and carbon emissions.
Feedstock Calculator Option 3?
By law, the 45Z credit is to be based on a CI Calculator developed by the DoE at Argonne National Lab. The IRS has said that the 45ZCF GREET Calculator will be used, but the current version is missing the feedstock calculator component. The USDA released its own feedstock calculator, but it only enables cover crop, reduced tillage, no-till, nitrification inhibitors, no fall nitrogen application, and split in-season nitrogen application to qualify as CI-reducing practices. This is far too overly simplified and poses blatant errors, including the dismissal of manure, fertilizer application rates, and yield from the equation. We are advocating for a “combo calculator” that uses the GREET Feedstock Calculator as the base but fixes the SOC calculations on a county-by-county basis, previously not working correctly in the old model.
Biofuel Feedstock Reports, We call them CI Certificates
Although the USDA’s Technical Guidelines for Climate-Smart Agriculture Crops Used as Biofuel Feedstocks Preliminary Rule has some issues and isn’t necessarily the rules for 45Z, the concept of a Biofuel Feedstock Report provides some great clarity. Continuum has been creating CI Certificates and including a farmer attestation as part of our CI Certification program. We will be offering Biofuel Feedstock Report creation via our TopSoil Tool very soon. These will be available as audited or non-audited but satisfy the recommendations of the USDA and can provide great transparency between the farmers and biofuel producers.
We Nailed it in Developing our MRV Protocol
For months we have been working on a CI Certification program using an accredited 3rd party auditor and developing our ISO audit system known as a MRV Protocol (Monitoring, Reporting, Verification). We were basing our protocol on research, recommendation, intuition, and a solid bet that the government would pretty much do the same that they’ve done before and keep the MRV protocol recommendations the same between programs (genius). The 40B tax credit recommended the ISO 14065 protocol be used and that is what we anticipated would be the case here, turns out we were right. This was part of the USDA’s recommendation, the IRS still has to write the final rules, but I can’t believe they would change much. Really exciting for our farmers who are in the final audit stages now! It looks like it could pay to be on the bleeding edge of this!
Biofuel Producers Should Lock in Grain Supply ASAP
If the USDA gets its way and Mass Balance is adopted for 45Z, the biofuel producers must source low CI feedstock and document the supply from farm to facility. This is going to take a lot of work and low CI feedstock is in short supply and not anywhere near the 5.4B bushel annual demand. I recommend producers work with their farmers and lock in their data and low CI crops now. Farmers are being pulled in many directions to sell their grain and sell their carbon footprint data. Carbon credit programs and CI can’t be stacked. Biofuel producers now have to compete to lock in this supply for the 2024 crop and 2025!
Farmers Need to Control/Understand Data
Data is becoming more critical than ever, but it’s also more overwhelming. Farmers and those helping farmers can access their free CI Score at topsoil.ag. Everyone should understand their CI Score and the data that will be required to undergo an audit. We can help with this and the short answer is, to document everything!
Public Comment
Finally, don’t underestimate the power of this network. The public comment period is a chance for us to voice our concerns and influence policy. We have a unique opportunity to shape the future of biofuel policies and ensure they’re aligned with the realities we face on the farm. It’s essential we make our voices heard in these discussions. We will be public with our requests and we will do our best to keep in alignment with other leading industry groups in this space.
As we navigate these challenges and opportunities, it’s clear that staying informed and involved is key to shaping the future of both agriculture and renewable energy. From tax credits and feedstock issues to data management and policy changes, there’s a lot on the line. But by keeping a close eye on these takeaways, we can be proactive, prepared, and ready to adapt to what’s next. I encourage you to stay engaged, ask questions, and continue pushing for the changes that will benefit us all in the long run. Together, we can ensure 45Z gets done well and makes a lasting, positive global change.