By Donna Funk, CPA, Pinion
Right now, you may be thinking: what more is there to say about 45Z when so much is still unknown? As of this writing, there is still no final guidance and no formal Climate-Smart Agriculture (CSA) rules for 2026 and beyond. Still, credit value is entering margin models, and 45Z is already influencing financial and operational decisions.
That puts producers in a familiar but high-stakes position: making important decisions under uncertainty. The basic framework is in place, so producers can estimate potential credit value and factor it into planning—but they need to do it with the understanding that the rules may shift.
Those who ignore what 45Z may become risk missing opportunities. But those who move forward without testing decisions across multiple outcomes risk creating problems of their own.
A Moving Target With Real Financial Implications
Here’s the bottom line: 45Z is real, but the version you’re planning around today may not be the version you end up living with.
A change in credit value, eligibility, carbon intensity scoring, or documentation requirements could have a real impact on your margins. That’s why it’s worth pressure-testing your models now instead of waiting until guidance is final.
Putting 45Z Dollars to Work—Carefully
Because 45Z-related dollars are showing up in planning, the question becomes how to use them while rules remain unsettled. For most producers, the smarter path is somewhere in the middle: put some dollars to work but keep flexibility to respond if the ground shifts.
That might mean investing in projects that improve efficiency or support lower carbon intensity, making distributions to members, rewarding employees without locking into long-term fixed costs, and holding some cash back in case 45Z assumptions need to be revisited. Use the dollars where they help your business now, but do not back yourself into a corner.
“You don’t want to build a long-term cost structure around dollars that may still move. The better approach is to use 45Z-related cash in ways that strengthen the business today, while keeping enough flexibility to adjust if the rules land differently than expected,” says Shane Bell, consultant for Pinion Wealth Management.
Keeping Reserves Productive Without Adding Exposure
Setting aside a portion of your 45Z-related cash can be a smart move. In some situations, lenders may even expect it. It gives you a buffer if assumptions tied to the credit change and repayment or reallocation becomes necessary. But in a tight-margin business, you also do not want meaningful dollars sitting idle, so look for options that keep reserves accessible while still earning something.
“The goal is to beat the bank without playing Vegas odds—to do better than leaving funds idle while keeping those reserves accessible and protected. We’re helping clients find that middle ground where their 45Z-related reserves are working for them, without taking on the kind of risk that could limit flexibility later,” states Bell.
CSA is Coming—Start With What You Can Control
The financial side of 45Z may be getting most of the attention, but don’t lose sight of CSA. Over time, that piece could have just as much—if not more—to do with how much value you actually capture.
There are reasonable expectations about where CSA may land under 45Z, but plenty remains unclear, including what data will be required, how mass balancing will work, and what verification will involve. Rather than waiting for every answer, start with what you can control.
Talk with your grain suppliers about the practices they are using and documenting today. Talk with your commercial grain sources about what they can help capture and where traceability may break down. Then look internally at how you will track, store, and validate that information. None of that requires final guidance, and all of it can make your life easier later.
“Right now, the biggest thing growers can do is get their data in order and be intentional about how they’re documenting practices. We don’t know exactly what 45Z and CSA verification will require yet, but operations that clean up records, track inputs, and stay organized will be in a much better position when the rules are finalized,” advises Quint Shambaugh, lead land advisor at Pinion.
I’d also encourage you to make sure someone owns this internally. Whether that sits with operations, accounting, your commercial team, or a cross-functional group, somebody needs to keep moving. If everyone owns it, no one owns it.
Make Decisions That Can Hold Up Across More Than One Outcome
Waiting for certainty is not a strategy, but neither is assuming today’s version of 45Z is exactly how this will all play out.
The producers in the best position are taking a disciplined approach now: making thoughtful decisions with the dollars already in play, keeping flexibility where it matters, and preparing for CSA before final rules force the issue.
CSA may play a major role in how 45Z is ultimately calculated, but the decisions you make now will shape how much value you are able to keep.
My advice is simple: make the kind of decisions that can hold up even if the final outcome looks different than you expected.
Author:
Donna Funk, CPA
Principal, Biofuels
Pinion
Donna.funk@pinionglobal.com
