DAILY Bites
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The USDA released an interim rule offering technical guidelines for climate-smart crops used as biofuel feedstocks, addressing gaps in the Clean Fuels Production (45Z) tax credit.
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A beta carbon intensity calculator enables farmers to quantify the impact of sustainable practices like no-till planting and cover cropping, potentially reducing carbon intensity by up to 90%.
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Industry leaders praised the rule for its structure and flexibility, highlighting new revenue opportunities for farmers and enhanced carbon reduction benefits for biofuels.
DAILY Discussion
Just days after biofuel groups voiced concerns over the lack of specifics surrounding the Clean Fuels Production (45Z) tax credit, the U.S. Department of Agriculture introduced an interim rule aimed at providing clearer guidance for using climate-smart crops as biofuel feedstocks.
Officially titled “Technical Guidelines for Climate-Smart Agriculture Crops Used as Biofuel Feedstocks,” the rule offers a framework for quantifying the carbon benefits of sustainable farming practices, providing clarity for producers and biofuel manufacturers as they navigate the Clean Fuels Production tax credit.
This development comes shortly after biofuel groups expressed concern over the lack of details in the initial 45Z guidance.
Agriculture Secretary Tom Vilsack stressed that the new guidelines addresses these gaps, enabling farmers to calculate carbon intensity scores for individual practices, such as no-till planting, cover cropping, and nitrogen inhibitors. By allowing these practices to be evaluated separately, the rule provides flexibility and enables a more precise accounting of carbon reductions.
“America’s farmers play a critical role in building the clean energy economy,” said White House Senior Advisor for International Climate Policy John Podesta. “Today’s announcement from USDA reinforces the important role climate-smart agriculture plays in our rural economy, including in fueling clean transportation solutions, as well as the importance of providing pathways for unbundled, science-based accounting of the carbon benefits of climate-smart practices that help farmers earn more for what they grow.”
The USDA has also released a beta version of the carbon intensity calculator, which allows farmers to determine county-level CI scores for crops like corn, soybeans, and sorghum.
Preliminary data indicates that practices such as no-till planting, combined with cover cropping and nitrification inhibitors, can significantly lower carbon intensity — by up to 70 percent for corn in McLean County, Illinois, and 90 percent for sorghum in Gray County, Kansas.
Vilsack highlighted the broader potential of these guidelines, including their integration into the Greenhouse gases, Regulated Emissions, and Energy Use in Technologies model, which could facilitate access to the 45Z tax credit for biofuel facilities. This credit provides up to $1 per gallon for clean road fuels and $1.75 per gallon for Sustainable Aviation Fuel, contingent on a 50 percent reduction in emissions compared to petroleum-based fuels.
Industry leaders have praised the interim rule. Geoff Cooper of the Renewable Fuels Association and Emily Skor of Growth Energy commented on the economic opportunities for farmers and the biofuel industry, while Monte Shaw of the Iowa Renewable Fuels Association emphasized the flexibility and improvements from previous CSA programs.
“Today’s USDA guidelines finally create a much-needed structure for properly assessing, valuing, and integrating the carbon reduction benefits of certain farming practices into lifecycle analysis,” writes the RFA. “We thank USDA for developing this initial framework that could ultimately allow farmers to actively participate in carbon markets, bringing new revenue streams and unprecedented value creation to rural communities.”
Despite the initial criticism of the “skinny” 45Z guidance, Vilsack defended the administration’s approach, noting that the rule reflects input from agricultural stakeholders, including the inclusion of sorghum and the focus on individual practices.
While acknowledging the role of future administrations in finalizing and expanding these initiatives, he expressed optimism about their potential to create long-term opportunities for farmers and rural economies.
Vilsack also stressed that while planting decisions for 2025 may already be underway, the emerging SAF industry offers long-term prospects, ensuring that farmers will have ongoing opportunities to participate in these programs. This interim rule establishes a foundation for sustainable growth, aligning agricultural practices with clean energy goals to benefit farmers, biofuel producers, and the environment.
The USDA is requesting public comment on the interim rule to help inform future revisions or additions to the final rule. Interested parties are welcome to submit comments on any aspect of the rule. The interim rule was posted for public inspection on www.regulations.gov and will be published on January 17. Interested parties may submit comments during the 60-day public comment period.
