Speakers at ACE conference share program details
By Susanne Retka Schill
Early lessons in how the Clean Fuel Production Credit, 45Z, works were shared in Minneapolis at the American Coalition for Ethanol’s annual conference in mid-August. Attendees also got a close look at the newly released USDA Feedstock Carbon Intensity Calculator (FD-CIC).
Kate Zook, acting director, USDA Office of Energy and Environmental Policy, presented an overview of the feedstock calculator. Developed by USDA with input from the U.S. Treasury IRS, Department of Energy and Environmental Protection Agency, the official title of the rule is Technical Guidelines for the Production of Regenerative Agricultural Biofuel Feedstocks.
Zook highlighted the biggest changes from the interim rule released more than a year ago that reflect comments from farmers and the industry, as well as experience from the pilot rule tested for compliance with 40B, the sustainable aviation fuel tax credit. “We came up with this terrible pilot,” she said, “where you had to bundle practices—no-till, cover crops and enhanced fertilizer efficiency.” Alongside abandoning the bundling of practices, Zook listed other important changes from the interim rule:
Calculating Corn CI
Farmers can experiment with the new feedstock CI calculator by downloading the Excel file, Zook said, or by using the web-based version USDA released on September 11, which is available at https://www.usda.gov/USDA-fd-cic/WebTool.
To calculate their corn’s carbon intensity, growers input the crop and how many management units to model, a management unit being a single field or group of fields using the same practices. The model also asks for the state and county. “That information is drawing on thousands of modeling runs that include your site-specific soil, your daily weather for the past 30 years—all the information informing your specific region’s ability to produce grain with a certain carbon intensity,” she explained.
The calculator asks the farmer for actual yield as well as their expected yield. “The reason we do that is because in a really bad year, like 2012, you can do everything right in terms of managing your nitrogen and get a terrible yield. It’s going to look like your carbon intensity is terrible. Expected yield comes from crop insurance, and if farmers don’t have crop insurance, they can use their average county yield.” Then, the farmer will add the total synthetic nitrogen applied in pounds per acre.
Once those required fields are completed, the CI calculator asks about management practices. Cover crops are entered from a drop-down list. To qualify for no-till or reduced till classification, the grower must use USDA’s T-DISC tool, available as either a downloadable Excel spreadsheet or a web-based version at https://www.usda.gov/T-DISC/WebTool. In T-DISC, the farmer enters each tillage pass, with drop-downs to enter the equipment used. Other entries cover the use of a nitrification inhibitor or applied manure.
The FD-CIC calculates the carbon intensity in grams CO2e per bushel and shows how that field compares with the national average currently used in the GREET model. “It’s a great way to think about how you can reduce carbon intensity,” she said. When used to score grain being sold, a screenshot or printout of the FD-CIC report is combined with signed statements. “That biofuel feedstock report is then sold, along with the grain, to the first point of aggregation.”
USDA’s rule covers feedstock CI accounting from the field to the biofuel producer. The first point of aggregation, be it an elevator or the ethanol plant, must be audited every year. A third party verifies the aggregator’s records for mass balance and feedstock reports submitted by farmers. In addition, a sampling of the farms supplying CI-rated corn for that year must be audited. An elevator can commingle the grain and ship to the next point in the supply chain—a plant or another grain handler—along with the biofuel feedstock and verification reports. That point will also be subject to mass balance and paperwork verification requirements.
Zook added that while the system was designed to cover the needs of 45Z, they intend it to be policy agnostic. “It is meant to be taken up by any policy that wants to create a window for decreased feedstock carbon intensity. That could be a state, CORSIA [Carbon Offsetting and Reduction Scheme for International Aviation], or somebody else.” The speaker following Zook, Kari Buttenhoff, noted that USDA’s requirements for verifying the feedstock supply chain closely follow the overall ISCC process by using mass balance, traceability, chain of custody and verification. The ISCC is the International Sustainability and Carbon Certification system widely used globally.
With the completion of USDA’s feedstock CI calculator, Zook said, the next two steps are for it to be incorporated into the Department of Energy’s 45ZCF-GREET model, which was announced by DoE on September 8, and for Treasury to officially cite USDA’s rule and issue final guidance, scheduled to be completed in November.
45ZCF-GREET points
While USDA’s feedstock calculator is new, the ethanol industry has had a year to begin using the 45ZCF-GREET calculator. CPA Kari Buttenhoff, partner at Christianson CPAs & Consultants, stressed that while getting audited and certified is not a requirement for non-SAF fuels, it is being driven by the market. “If you’re monetizing and selling your credits, they’re going to want to see certification. It also provides substantiation safe harbor for the credit.” The 45Z certification statements get attached to tax returns and are compatible with LCFS verification work, she added.
“A lot of us participate in California or West Coast low carbon fuel standard programs,” Buttenhoff noted, sharing a table comparing the 45ZCF-GREET to the LCFS GREET. “You’ll notice a lot of the inputs are the same,” she said.
A big difference between the two models, she said, is that LCFS GREET does not allow electricity offsets with the use of energy attribute certificates (EACs) or renewable energy certificates (RECs), while 45Z does. She outlined rules to follow in claiming EACs to reduce CI. She also cautioned to pay close attention to the electricity region. “If any of you are on the edges of those regions on the maps, be careful. [The region] is not based on your physical plant location, it’s based on the balancing authority.” A balancing authority manages the electric grid in a geographic area and is comprised of either a utility, a Power Marketing Administration, or a group of utilities in a regional transmission organization.
There’s been some confusion about the treatment of coproducts, she added, because the LCFS asks for coproduct numbers, while 45Z does not. However, she said, “You are still getting a coproduct credit in the background. Your 45Z CI score takes into account the national average on distillers and corn oil. So, when you’re looking at facility boundaries and things that you may be able to carve out, whether for the model or for PWA [the prevailing wage and apprentice bonus], you can’t remove coproducts.”
Buttenhoff pointed to several 2026 updates to 45ZCF-GREET that improve ethanol CI scores, the biggest being Congress’ removal of indirect land use change in calculating feedstock carbon intensity. That one change improved ethanol plants’ CI score by approximately 5 points, she said. Another 0.3 points in the CI score was removed by the update to the base model. Other 2026 updates affected energy reporting rules.
PWA, Monetization Lessons
In all, twelve speakers at the ACE conference dealt with multiple aspects of 45Z. Reportedly about half of the industry’s plants are pursuing 45Z. And all of those are trying to figure out whether they can qualify for PWA—prevailing wage and apprenticeship rules that create a five-times multiplier in earned credits, said Nick Panko, vice president of CFO Services.
Building a process to collect the needed information for PWA claims such as payroll records and job descriptions is critical, according to Panko, because PWA covers not only employees but contractors and subcontractors. “One of the challenges is if you find something like an underpayment, you have to fix it,” he said, adding the penalties can be stiffer than paying back wages.
PWA rules treat routine maintenance differently than construction, alteration or repair, thus requiring a heightened focus on purchase and work orders to better track dates, the type of work done, the contractors involved and the dates—a weak spot at many plants, according to the panelists.
Mindset is important when implementing systems requiring a change in work habits, said Fred Gould, vice president, Beyond Agribusiness Solutions. “If we’re talking positively, it can shift things significantly.” He recommends explaining how the company will benefit and why the record keeping is needed. “Most people want to do good work. They want to do work that’s meaningful and that helps the company,” he said, adding that better information tracking for PWA requirements will have many side benefits. “When you have better processes, things are actually more efficient.”
Stephanie Thimmesch, ICM project controller, recommended plants tell their contractors early, even at the bidding stage, if they are hoping to meet PWA requirements. “It’s definitely easier if you can get more communication up front, get the requirements in place and have conversations with subcontractors to make sure they can comply.”
Indeed, multiple speakers in the several sessions dealing with different angles of 45Z recommended talking to consultants and partners at the very beginning of the planning process. One misconception, Thimmesch said, “is you can take lessons learned from the last project and apply to the next. A new customer at the next project or a new compliance consultant might view these regulations differently or might require things differently.”