By: Preston Brown, President/Founder, incite.ag
As the calendar inches closer to the IRA’s 45z January 1, 2025, start-date, let's imagine for a moment that the US Treasury’s full guidance has been released. With it, let’s also assume that on-farm corn carbon intensity (CI) scoring IS a recognized component of the solutions available to reduce ethanol CI scores and capture that $0.02/gal/CI point reduction tax credit.
Immediately, ethanol stakeholders will be asking, “are we prepared for 45Z?”
At the heart of answering this preparedness query lies an equally crucial question: “do we understand our key corn suppliers' CI scores?”
For most, a thorough and affirmative response will be difficult to find. After all, an average ethanol plant has millions of individual bushels to attribute scores to, each with its own unique set of production data points. The journey to understand those CI scores can seem complex and insurmountable, but fortunately there is a proven template for preparing your supplier network for CI scoring.
The first step to capturing those insights is recognizing that accurate scoring requires a collaborative effort between the plant and its suppliers. No off-the-shelf software, imagery service or grower-survey captures the essential production nuances which live in the mind of a farmer. Transparent, direct engagement with your corn suppliers to gather and evaluate data pertaining to their CI is essential. Because if your corn-suppliers don't understand the “why” behind this data capture and see their trusted grain-buyers as partners, not adversaries, a feedstock CI scoring effort will not succeed. If they don't see you as their partner to capture 45Z value, someone else is going to fill that role.
The responsibility doesn't end with collaboration, however. Your farmer-facing commercial teams must be well-versed in CI conversations. It's not just about understanding the numbers; it's about effectively communicating the significance of CI scoring to your suppliers. Equipping your team with the knowledge and comfort required to navigate these conversations fosters a collaborative environment, paving the way for successful implementation.
Beyond internal readiness, the importance of external partnerships cannot be overstated. Having a trusted third party in place is crucial for executing both pilot and commercial projects. Farmers are being asked to share tremendous quantities of complex data and the ethanol plant is being expected to become an expert in CI scoring, emissions tracking and sustainability assessment. These qualities land far outside the job description for either party, and trusted partnerships not only ensure accurate measurement takes place but also provides the essential industry-wide insights required for continuous improvement.
In a few short weeks, corn planters will begin to put the 2024 crop in the ground, a crop whose CI scores could likely be the difference in qualifying for 45Z or missing the 2025 for credit altogether. So, ask your team, “are we prepared for 45Z?” And if the answer is anything besides a resounding yes, it's time to get your key partners on the phone.