ACE is devoting considerable time, effort and resources to help ethanol producers and the farmers supplying them capitalize on new clean fuel tax credits and policies. Our work is already beginning to yield results.
Earlier this year, the Treasury department released guidance for the 40B sustainable aviation fuel (SAF) tax credit. To be clear, the all-or-none climate-smart agriculture approach is of no practical benefit for corn ethanol-to-jet. But, the SAF tax credit guidance represents the first explicit recognition by government agencies that farming practices reduce greenhouse gas (GHG) emissions from ethanol. As such, it provides a roadmap for ACE to work with Treasury and USDA so we can improve how corn farming GHG credits are measured and applied for the new 45Z clean fuel production credit, set to begin in 2025. What’s more, the 40B guidance ensures carbon capture and sequestration (CCS) can qualify ethanol for SAF and includes an exhaustive real-world analysis of land use changes and indirect effects.
Against this backdrop, during our multiple meetings with Treasury and USDA on implementation of 45Z, ACE has pursued the following priorities:
- Allow individual climate-smart ag practices and stacking of farming practices, such as reduced-till and 4R nutrient management, but do not require the all-or-none approach used for the SAF credit or prohibit certain practices from qualifying
- Since GREET accounts for corn farming GHG emissions, and Congress requires Treasury to use the GREET model, rely on it to determine the GHG credits for ag practices. Do not arbitrarily cap credit values
- Maintain a scientifically defensible real-world approach to induced land use change, with a recognition corn ethanol indirect effects and land use change under 45Z must be lower than what Treasury released for alcohol-ethanol-to-jet under 40B
- Maintain tracking of bushels through book and claim, mass balance and farmer contracts, not segregation of bushels or identity preservation
- Take advantage of existing USDA verification of crop yield, bushels, tillage practices, fertilizer use and cover crops instead of saddling farmers and ethanol companies with new burdensome rules
- Update credit values for ag practices based on future iterations of the GREET model and leverage ACE’s Regional Conservation Partnership Program (RCPP) project to address the need for more empirical data on the GHG benefits of ag practices. Our USDA project is working with hundreds of farmers and 14 ethanol companies in nearly 200 counties and will provide updated data regarding the GHG benefits of various tillage, nutrient management and cover crop practices.
ACE is focused on making sure corn ethanol is the gold standard low carbon fuel source and our members can recoup valuable return on investments for their efforts to reduce GHG emissions.