45Z Webinar Recap: Can Fuel and Food Co-Finance the Regenerative Transition?

Read on for a recap of the session, or access the full recording here.

The largest regen ag program farmers have seen

Chris Malone opened with a primer on why the whole industry is paying attention.

"This will be the largest program that farmers have ever had around regenerative agriculture. It has a very high credit price. It's relatively easy to run. It covers about a third of U.S. corn and soybean acres that go into biofuels today. And it's funded by the government."

It took four years to get here. 45Z came out of the Inflation Reduction Act, but whether agriculture would be included stayed uncertain until February of this year. Treasury guidance in September cleared plants to start generating credits, and final IRS guidance is still expected. Meanwhile, the indirect land use change (ILUC) penalty that had weighed on crop-based fuels shrank each year and was eliminated starting in 2026.

"We went from a big number to no number, and that's why every biofuel plant in America is now working on 45Z."

The credit is worth up to $1.09 per gallon this year and pays out based on a fuel's carbon intensity (CI) score.

"Every 5 points you get, you get an additional 11 cents a gallon. So, on a 100 million gallon ethanol plant, this is an additional $11 million of tax credits."

For ethanol, the farm is the largest part of that score. USDA's feedstock calculator credits nitrogen use efficiency, approved inhibitors, reduced tillage, cover crops, and manure. Values vary by county, and the effect is even larger for soybeans.

"In soybeans, you can actually, with no-till and cover crop, go over 100%. So you can remove more than 100% of your soybean score."

Real money at the farm gate

Brad Justice then shared what growers are being offered this harvest.

"Up to 75 cents a bushel, 60 cents a bushel. These are live offers. This is what the farmers are seeing out there today... We will see significant payments in the $60, $80, even over $100 [per acre] for some of these stacked practices."

To participate, farmers deliver a biofuel feedstock report with a signed attestation and CI documentation from USDA's Feedstock Carbon Intensity Calculator (FD-CIC). One line in the attestation, a promise not to sell the same benefit to another program, is already prompting questions. Brad said it is narrower than it looks.

"It is specific to that crop. It does not want you to sell that carbon twice off of that corn. … What it doesn't do is stop you from putting a different [field] in a different program. It also doesn't stop you from being in different parts of the rotation."

Uptake has been slower than many expected. Farmers are tired of four years of confusion, the program landed in the middle of harvest, and nitrogen credits will require a nutrient management plan. But once some of these growing pains are sorted through, Brad still expects 45Z to grow quickly.

"With the value per bushel, with the size of this program, and with the government [covering] the cost of this program, expect it to scale rapidly."

A different kind of program than food companies run

Anastasia Volkova compared 45Z with the CPG regenerative programs most of the audience already runs. Food company programs have mostly focused on moving farmers from conventional to regenerative practices. 45Z looks only at the CI score, regardless of when a practice was adopted.

"45Z is a program that benefits those that have the practices to show … and quickly adopt them."

It also pays more, and it runs on one set of federal rules.

"We have generally seen that the food company payment equivalent is considerably lower than the payment that would be associated with a 45Z tax benefit if it was to be shared, at least [at] 50%, with a farmer."

"The difference is the food programs are not standardized, whilst this federal program is standardized, and farmers are looking and working off the same documents."

She expects the two to coexist on the same farms. A field might send corn to an ethanol plant one year and grow oats for a food company's regenerative sourcing program two years later, with each crop year accounted for separately.

"In terms of the accounting, everything is pretty clean and clear. One crop, one field, one year."

An opening for co-product buyers

45Z uses mass balance, so low-CI bushels are tracked through the normal supply chain with quarterly true-ups. What happens to the co-products depends on the process. In dry milling, ethanol carries the full footprint and distillers grains leave the plant without a CI score. Wet milling and soybean crushing split emissions by mass, with soybean meal carrying most of the soybean footprint.

Either way, feed and food buyers can work with upstream partners to calculate a Scope 3 number from the same field records.

"A lot of the heavy lifting of the data collection and engagement has been done. So, if you happen to have some of those supply chains in your enterprise, look back upstream, see who you can partner with."

That requires rights to use the data and a recalculation under GHG Protocol rules. Anastasia also raised a harder question for CPGs whose sourcing regions sit near ethanol plants.

"Maybe your early adopter farmers will now, in some way, be interested in exploring these 45Z programs. So, what is being done there in order to retain them in your program and consider permanence?"

From the Q&A

Can removals be claimed separately on 45Z acres? FD-CIC is a simplified, county-level model that nets soil carbon and nitrous oxide into one number. Anastasia's read: "It's not an emission factor for which there is some leftover removal somewhere that can be assigned somewhere else."

When are nutrient management plans required? The IRS gave a safe harbor for the 2025 and 2026 crops. After that, Chris said, the plan underpins the nitrogen score: "2027 will be the first year [in] which you need to do this. … It's basically what's your yield, what's your synthetic nitrogen, and that ratio helps you or hurts you."

Will farmers actually change practices? Brad expects nitrogen inhibitors to move first: "In certain counties, there's just open arbitrage. It's worth more to the ethanol refiner than the product costs to purchase."

Is 45Z data enough for Scope 3 claims? Anastasia gave a qualified yes: "Generally, yes. Is there additional data that goes into [Scope 3 claims done properly under LSRS]? There is, but this should strengthen the data collection in that process, not dilute it."

Will 45Z affect food prices? Brad pointed to fats and oils, where prices have already jumped as trade flows shifted. Chris noted the trade-off: "The oil comes up, but the meal would theoretically go down, right? It just depends where you're sitting. Are you looking for protein, or are you looking for fat?"

Understand 45Z in your supply chain

Regrow and Richards Lake are offering working sessions for any company that sources, processes, or buys biofuels feedstocks or their co-products. Each session maps a company's supply shed against ethanol plants and existing conservation programs and builds a strategy for collaboration.