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What is Carbon Intensity(CI)?
Carbon Intensity (CI) is a carbon footprint score assigned to a bushel of grain. The score is linked to the unit of production with lower carbon emissions resulting in a lower score. A CI score of 0 means that bushel is carbon neutral. Today, the estimated national average CI score for corn is 29.1g GHG/MJ of ethanol energy.
With the signing of the Inflation Reduction Act, there is now a direct dollar value assigned to a CI score below 29 in the form of tax credits to biofuel plants who buy the low CI grain, as part of their decarbonization efforts. The details still need to be approved by the IRS, but as of now the tax credit value to an ethanol plant is estimated to be as much as 5.4 cents per CI point below the industry standard of 29 CI points.
This means farmers can provide substantial new value to ethanol plants by providing them a low CI grain. For example, if an ethanol plant buys a grain with a 20 CI score, that grain could be worth up to 48.6 cents more per bushel in the form of a tax credit; (29-20)*5.4=48.6 cents.
We do not yet know exactly how this will play out for your farm, however, we do know that your data and your environmental footprint will need to be documented, improved upon, and reported into premium-driven supply chain efforts. Get started in TopSoil today by determining your baseline CI score and setting yourself up for success in these emerging markets.
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How Can Farmers
The first step is to know your current CI score. This will tell you what your current practices and data are worth so you do not settle for a lowball offer on either your grain or your data. Continuum Ag can calculate your score for $500/crop by clicking “Get Started” below, onboarding into TopSoil, and filling out a 10-minute survey on the Farm Profile tab.
Once you know your score there are certain practices that can drastically lower your score. The variables that matter most are 1) Yield- higher yields spread emissions over more bushels, lowering the average score, 2) Plant a cover crop, 3) Implement reduced or no till, 4) Reduce inputs (NPK, fuel, and chemical).
In general, the more you compound these practices, the lower your CI score will be. The lower the score, the more value provided to the ethanol industry, allowing you the ability to negotiate a higher price for your grain. Below are examples of tax credit value to the ethanol industry for each practice (Note, these values vary on location. To know your unique values you will first need to calculate your own CI score):
These values are all still theoretical until the IRS makes their final determination and market initiatives are launched.
25 lbs N reduction only = $0.11/bu 45z tax credit value to biofuel industry
No Till only = $0.18/bu 45z tax credit value to biofuel industry
Cover Crop only = $1.04/bu 45z tax credit value to biofuel industry
Cover Crop + No Till = $1.33/bu 45z tax credit value to biofuel industry
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There’s only 4 steps sitting between you and a better CI Score. Get started today on the process, and reap the benefits!