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ACEMay 17, 20248 min read

Expanding on Progress

ACE-led South Dakota project leveraging climate-smart ag to unlock new tax credits and markets broadens to a 10-state region.

The United States Department of Agriculture (USDA) announced a $7.5 million investment in an American Coalition for Ethanol (ACE)-led Regional Conservation Partnership Program (RCPP) project in South Dakota in September 2021. The project is ultimately designed to secure access to low carbon fuel standard (LCFS) markets and new tax credits based on farmer adoption of climate-smart agricultural (CSA) practices. Given the progress of the project over the past two years, USDA’s
Natural Resource Conservation Service (NRCS) approved a $25 million expansion of the project scope in January 2024.

Since USDA’s initial investment in 2021, ACE, together with RCPP partners South Dakota Corn Growers Association, Dakota Ethanol LLC, South Dakota State University, Cultivating Conservation and collaborator Sandia National Labs, have been using the funds for the South Dakota project to compensate farmers in seven counties surrounding the ethanol partner Dakota Ethanol’s plant for adopting practices such as reduced tillage of corn production which sequester carbon, reduce greenhouse gas (GHG) emissions and improve soil health.

The partnership pairs USDA technical assistance with significant partner financial and in-kind contributions to quantify the resulting soil health and GHG benefits, correlate them with existing models, and develop a non-proprietary verification system to help farmers and ethanol producers unlock access to clean fuel markets and new tax incentives, such as the 45Z clean fuel production credit and 40B sustainable aviation fuel (SAF) credit, based on the adoption of climate-smart agricultural practices which reduce GHG emissions. With the South Dakota RCPP project well underway, about two-thirds of financial assistance has already been committed to nearly 20,000 acres of practices in the seven counties.

The South Dakota-based RCPP project’s success helped motivate USDA to fund an expansion of the scope to help farmers adopt reduced tillage, nutrient management and cover crops on nearly 100,000 acres across 167 counties surrounding 13 ethanol facilities partnering with ACE in the 10-state region of Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Nebraska, Ohio, South Dakota and Wisconsin. The sites were strategically chosen to provide the project’s scientific team with statistically significant data regarding the GHG effect of conservation practices in different soil types and climates.


RCPP Expansion MapStates/Counties included in the 10-State RCPP Expansion Project

This project will accomplish three important objectives, ACE CEO Brian Jennings explains. First, ACE will incentivize farmers in 10 states to adopt conservation practices. Three-fourths of the funding will go toward farmer adoption of practices. Second, the scientific team will monitor, measure and verify how the conservation practices reduce GHG emissions from corn farming. The data they collect will be used by the U.S. Department of Energy to pressure test existing models such as GREET to address real and perceived “information gaps” which currently prevent farmers and ethanol producers from adequately monetizing climate-smart ag practices. Third, in the long term, the project
will empower ethanol producers and farmers with modeling and calculator tools to earn higher tax credits and premium prices in clean or low carbon fuel markets based on climate-smart ag practices. 

“It is our goal to establish an alternative to burdensome and costly quantification and verification protocols that would discourage farmers and ethanol producers from reaping maximum benefits from these practices in the future,” Jennings adds. “Given the progress we have
already made on our existing South Dakota RCPP project, with nearly 20,000 acres under contract for climate-smart ag practices, we are in a good place to hit the ground running on this expansion project across 10 states.”

Researchers at MIT and Harvard verify that average corn ethanol reduces GHGs by about 50% compared to gasoline and indicate corn ethanol’s carbon intensity will continue to get better thanks to innovations on the farm and in ethanol facilities. Expanding low-carbon ethanol usage is one of the best ways to make significant reductions in GHGs from transportation and aviation sectors. USDA estimates U.S. farmers currently store over 20 million tons of carbon per year and that they can store an additional 180 million metric tons per year representing 12-14% of U.S. carbon emissions through the adoption of conservation practices.


Screenshot 2024-05-17 151012Further, Argonne National Laboratory has found that specific crop rotation systems in the upper Great Plains would result in increased carbon sequestration and generate hundreds of dollars per acre in revenue if credited in state low carbon fuel markets.

“SDSU has been working in the field of soil carbon for over 30 years and is excited, in collaboration with our partners, to extend the project across the 10-state region,” says Dr. David Clay, SDSU’s Distinguished Professor of Soil Science and South Dakota Corn Endowed Chair in Precision Farming. “This project represents a win-win for farmers and the environment. Farmers benefit from higher yields and greater
profits, and the environment wins by improved soil health and the removal of greenhouse gases from the atmosphere.”

“We’ve experienced firsthand the outpouring of interest in the RCPP project as we work one-on-one with farmers in South Dakota,” Clay adds. “This RCPP expansion project will meaningfully scale the adoption of climate-smart farming practices throughout the biofuel producing regions of the U.S. and provide us with the scientific data necessary for full clean fuel market access.”


Midwest SOCHigher yields and increased adoption of conservation practices have increased Soil Organic Carbon. Increases are driven by tillage reductions and yield increases. 

Since the passage of the Inflation Reduction Act (IRA), focus remains on implementation of lucrative tax credits under the legislation, and ACE is using this project to leverage USDA resources to secure access for farmers and ethanol companies to some of these new tax credits, specifically the 45Z clean fuel production credit and the 40B SAF credit. 

SAF is a renewable alternative to conventional, petroleum-based jet fuel that could be used in today’s aircraft and immediately improve the environmental impacts of air travel. The U.S. alone used 25 billion gallons of aviation fuel in 2023, and the Biden Administration has launched the ambitious SAF Grand Challenge to support 3 billion gallons of SAF by 2030 and 25 billion gallons by 2050.

Feedstocks used to produce SAF include oilseeds, fats, oils and greases, and other agricultural products. Corn ethanol is also a readily available feedstock for SAF. Ethanol-to-jet is a type of SAF that would serve as a new market in the future. An analysis from the Department of Energy found that “there is great potential to produce SAFs with potentially zero or negative GHG emissions through a combination of cleaner production technologies and sustainable farming practices.”

SAF with lifecycle GHG emissions at least 50% cleaner than conventional petroleum jet fuel qualifies for the 40B tax credit. The value of 40B is determined on a sliding scale, equal to $1.25 plus an additional $0.01 for each percentage point by which the lifecycle GHG emissions reduction exceeds 50%.

45Z is a new technology-neutral tax credit for transportation fuel (used in a highway vehicle or aircraft) produced and sold between 2025 and 2027. Credit values are based on the GHG emissions or carbon intensity (CI) of the fuel compared to a baseline CI of 50 kilograms
CO2 equivalent per mmBTU. The statute specifies use of the GREET model to determine GHG emissions (for nonaviation fuel). The value of 45Z is $0.02 cents per gallon for each CI point under 50 kg CO2 equivalent per mmBTU.

In April 2024, the U.S. Treasury Department released a highly anticipated update to the Department of Energy’s GREET model, providing guidance on how feedstocks like corn ethanol could qualify for SAF under 40B. The new 40B GREET model will recognize GHG reductions
from carbon capture and sequestration (CCS), renewable natural gas, and renewable power used to produce ethanol for qualifying SAF and include a “safe harbor” pilot program for corn ethanol produced with bundled climate-smart agriculture practices. Treasury also announced it will develop pathways for ethanol from CSA practices under the 45Z clean fuel production tax credit set to go into effect on January 1, 2025.

The update underscores the importance of ACE’s RCPP projects, and Jennings says ACE will proactively leverage the projects to fine-tune how climate-smart ag practices are scored and rewarded. 


Just as CI reductions at ethanol plants have required large investments and money designated toward labor and higher-level management, so does climate-smart agriculture, including precision farming and variable rate nitrogen fertilizer management.

“The Biden Administration is providing an important tailwind for corn ethanol produced with no-till, cover crops and enhanced efficiency fertilizers to qualify as a feedstock for SAF under 40B so long as all three of these climate-smart agriculture practices are adopted,” Jennings says. “This marks the first time a regulatory body has formally acknowledged the role CSA practices play in reducing corn ethanol’s GHG emissions, in this case enabling some ethanol-to-jet to qualify for the 40B credit.”

USDA Secretary Tom Vilsack referred to the GREET model update as an “important stepping stone,” as it acknowledges the important role farmers can play in lowering GHG emissions and begins to reward them through that contribution in the production of new fuels. “This is a great beginning as we develop new markets for sustainable aviation fuel that use home grown agricultural crops produced using climate-smart agricultural practices,” Vilsack said in a statement.

Ron Alverson, ACE board member, farmer, and founder and board member of Dakota Ethanol says that before there was emphasis on “low carbon,” producers were “just bottom-line guys.” “We just wanted to make the most money, and that’s not necessarily the best thing for our planet,” Alverson explains. “Now, with these new incentives to not only make the most money, but to help our planet out or to reduce emissions, the economic incentives have changed.”

In order to fully take advantage of these incentives, Alverson says, “the science has to be sorted out to a certain degree.” That’s where ACE’s RCPP projects come in to help quantify and verify practices in order to secure farmer access to clean fuel markets and new tax credits. “We can change the world with the right kind of incentives, and it is economically imperative that we make those changes.”