45Z, first introduced via the Inflation Reduction Act then enhanced under the One Big Beautiful Bill, has the opportunity to not only supercharge the American Soil Health Movement, but change global agriculture. 45Z is the Clean Fuel Production Tax Credit and incentivizes transportation biofuel producers (think ethanol, biodiesel, and sustainable aviation fuel) to decarbonize. The gist is: lower the fuel's carbon footprint (quantified as a Carbon Intensity (CI) Score) and earn an increasing tax credit for the reductions garnered.
According to the US Department of Energy, American ethanol produced from corn already has a CI Score about half that of traditional fossil gasoline. However, now biofuel producers are incentivized to decarbonize further by deploying carbon capture technology, integrating renewable energy systems, or using other means of decarbonization.
We continue to eagerly await final IRS guidance as to the specifics of the 45Z program, which went into effect on January 1 of this year and will carry on through 2029. The main component of the rules we are waiting for is in regards to the inclusion of "low carbon feedstocks" in the 45Z equation. According to the current models, emissions associated with producing feedstocks such as corn and soybeans contribute about 50% of the total carbon footprint of the fuels they are turned into. However, via the implementation of regenerative ag systems, such as reduced tillage, cover crops, and improved fertility management systems, farmers can drastically reduce the greenhouse gas impact of their cropping systems.
Continuum Ag has been helping farmers and biofuel producers get ready for the 45Z program. Via the TopSoil Tool, nearly 400M bushels of US crops have already had their CI Score calculated. It is with this data that farmers and the biofuel industry can be in a position to capitalize on the 45Z program, to bind together and maximize money brought to our rural communities.
I encourage you to dig deeper into the 45Z program and monitor additional updates closely! This has the opportunity to be an absolutely massive program to further enable farmers to adopt regenerative systems and shepherd God's creation.
Mitchell Hora is a 7th generation Iowa farmer and the founder and CEO of Continuum Ag.
