Agriculture is part of ACE’s DNA. That’s why USDA trusted us to lead a Regional Conservation Partnership Program (RCPP) project to help ethanol producers and farmers unlock new markets and profit opportunities through soil health practices, such as reductions in tillage, efficient fertilizer use and cover crops.
We’re gaining considerable ground thanks to our ethanol producer partners and USDA’s support.
Last year, select ethanol companies helped us engage nearly 1,000 farmers across 10 states who offered to enroll 500,000 acres of conservation practices in our RCPP. We expect farmers to begin adopting practices later this year. Once they have implemented the practices, land-grant scientists will collect soil samples and other field-level data about the resulting carbon benefits to pressure test models, such as GREET, which are used to calculate carbon credit values. Running the data through GREET and other models helps us target ‘information gaps’ which currently prevent farmers and ethanol producers from monetizing ag practices in regulated fuel markets.
The ACE RCPP also helped inspire USDA to publish technical guidelines this year to serve as a blueprint for how to monetize biofuel feedstocks.
USDA’s guidelines feature a new Feedstock Carbon Intensity Calculator (FD-CIC) which generates carbon credits for no-till, reduced-till, cover crops and nutrient management as stand-alone practices. It calculates even better credit values for combining some of these ag practices. In other words, USDA responded to our disappointment with the all-or-none bundled requirement and artificial cap on credit values in the expired SAF credit and discarded it.
Instead, USDA’s new guidelines represent the most significant acknowledgement to date by a government agency that practices most farmers already utilize reduce the carbon intensity of biofuels.
Going forward, if California or a Midwest state apply the USDA guidelines to a clean fuel program, it will increase demand and return value for farmers and ethanol producers. If Treasury incorporates the USDA guidelines into the 45Z Clean Fuel Production Credit, ethanol producers could have another pathway to be “in the money.”
The final 45Z regulation is yet to be determined, so there are no guarantees. But, the preliminary USDA feedstock calculations are meaningful. For example, the combination of no-till and a cover crop could subtract nearly 22 points from the carbon intensity of corn in eastern South Dakota and potentially return more than $200 per acre if fully monetized through 45Z.
While encouraging, ACE is convinced the practices farmers are already using should generate even greater credit values, and we expect the RCPP field-level measurements from nearly 200 counties across the Corn Belt will prove us right when run through the FD-CIC and GREET model.
We are gaining ground. Our work will empower ethanol producers and farmers to maximize opportunities to sell new and valuable products.