Jeff Crissinger, VP of Agronomy sales / marketing
“Low CI grain . . . could return $70/A to the farmer.”
Carbon intensity scoring and its potential financial value has become a more engaging topic in recent months. What is carbon intensity, why is it important, and how might it benefit you? Here are a few things you need
to know.
Carbon Intensity Defined
A carbon intensity (CI) score measures the greenhouse gas emissions associated with producing, distributing, and consuming fuel. In the case of agronomy, we are looking at carbon intensity as it relates to growing corn for the ethanol industry. In our region, Valero, POET, and Green Plains are significant players in that industry.
How you produce your corn crop influences your carbon intensity score. Standard corn production carries a score of around 29.1. However, changes to crop production practices can further lower that score. In the mindset of carbon intensity, the lower the score the better, as it would be considered more friendly to the environment.
Increasing nutrient use efficiency, less tillage, utilization of cover crops, reductions in pounds of pesticides used, and decreases in diesel fuel consumption can all play a significant role in lowering the carbon intensity score of an operation. The good thing with the CI program is that, if you are already doing some of these environmentally friendly practices, you still get rewarded, unlike in carbon offset programs.
Sustainable Aviation Fuel
Sustainable aviation fuel (SAF) is a biofuel used to power an aircraft. It has similar properties to conventional jet fuel but has a smaller carbon footprint, which in turn lowers greenhouse gas emissions. This is important because aviation emissions make up 9-12% of the total U.S. transportation sector’s greenhouse gas emissions, prompting the Department of Energy, the Department of Transportation, and the USDA to put forth two
broad initiatives:
- To achieve a minimum of 50% reduction in greenhouse gas emissions using SAF compared to conventional jet fuel.
- To meet the goal of supplying enough SAF to supply 100% of total aviation fuel demand by 2050, which equates to 35 billion gallons.
Ethanol is at the top of the list when it comes to biofuels that can be utilized to manufacture sustainable aviation fuel, putting corn farmers in a great position.
How Will Corn Farmers Benefit?
Lowering carbon intensity in grain used for biofuels is a provision in the Inflation Reduction Act. In it, there is a Section 45Z tax credit that would provide biofuel producers (ethanol plants) with an added financial incentive to produce low emission fuels. This tax incentive is currently approved for three years, starting Jan. 1, 2025, and running through Dec. 31, 2027. While this is the initial timeframe for the tax incentive availability, many assume that it will get extended beyond the 2027 deadline.
In dollars and cents, this tax incentive will be quite lucrative, with the industry expecting about 5.4 cents per carbon intensity point below the standard score of 29.1. A 220 bu./A corn crop at a potential 0.0 carbon intensity score would equate to $1.57/bu. worth of value to the ethanol industry, or in this case, $345/A. The ethanol industry would share some of this benefit back to the grower in order to get access to their low CI grain, along with the production data that is needed to support the score.
It is still undetermined how much of the benefit would be shared down to the corn producer. However, if we use 20% as an example, that would be about 30¢/bu. in additional grain premium. Using the 220 bu./A corn example, that could be about $70/A back to the farmer. Again, how you farm will determine your CI score and the resulting premium you are eligible for.
There is a lot of development needed to bring this potential value to our marketplace, but the financial incentives for both the ethanol producer and the corn producer are significant enough to drive things forward. As a grower, it is important that you get started learning about how to implement some of these environmentally friendly concepts on your farm, even if it is only on a few acres to begin with. By doing so, you will be better prepared for what is coming and be able to take advantage of the financial rewards more quickly when they arrive.
Contact your NuWay-K&H Agronomy Account Manager to learn more about how we can help lower your CI score.
