That was a major focus of a recent Trust In Food™ event at FLOLO Farms in northeast Iowa, hosted by owners Brenda and Loran Steinlage. Farmers, farmer advocacy groups, ethanol leaders and agricultural companies discussed what lower-CI corn could mean for both growers and fuel producers.
Ethanol plants are scored on the carbon intensity, or CI, of the fuel they produce, and a significant share of that score can be tied to agricultural production. That matters under the federal 45Z Clean Fuel Production Credit, which provides a tax credit to producers of lower-emissions transportation fuels. The size of the credit is tied to the fuel’s emissions rate, so producing lower-CI ethanol can increase the value of the incentive.
That gives ethanol producers a clear reason to look for lower-CI grain. For farmers, the question is what they stand to gain from producing it.
“Agriculture makes up twenty-five to thirty percent of the carbon intensity score of an ethanol plant,” said Doug Berven, Vice President of Corporate Affairs for POET. “And so, if we can get lower CI grains, that helps our CI score.”
Low-CI corn can involve practices such as reduced tillage, cover crops and nutrient management. Jessica Monserrate, Head of Sustainability, North America at BASF, said the goal is to reduce emissions associated with production while maintaining or increasing yield.
“There are several reasons, some monetarily, and some just overall good farming practices to really help with that resiliency factor in soil,” Monserrate said.
She pointed to soil structure, soil organic carbon and water absorption as potential on-farm benefits. Some of the same practices that can lower a crop’s carbon intensity may also help a field capture more rainfall rather than losing it to runoff.
“It helps with water absorption and really kind of captures the rainfall that we’re getting instead of having a lot of that water just run off,” she said.
Loran Steinlage, owner and operator of FLOLO Farms, said growers should not assume that means overhauling an entire operation.
“We need to help other farmers learn that it’s not as hard to do as some people make it out to be,” Steinlage said.
On his own farm, he said changes in management have helped reduce nutrient loss and better manage water. He also emphasized adapting practices to individual farms rather than treating low-CI production like a single prescribed system.
Then there is the money.
Although farm-level practices can help lower the carbon intensity of ethanol, the 45Z tax credit goes to the fuel producer. That leaves an important question for growers: how much of the value created by lower-CI corn will make its way back to the farm?
Tim Recker, an Iowa farmer and former president of the Iowa Corn Growers Association, said that distinction matters.
“I would like to see my profit come from the ethanol plant, from the market, and not the government,” Recker explained.
Recker has used no-till, cover crops and nutrient management practices for more than 14 years. He said a meaningful premium tied to those practices could make a real difference for growers.
“Knowing that because I can certify that I’m doing those practices, that I can pick up another hundred dollars per acre, in today’s economic world, that would be huge,” he said.
But that premium is not guaranteed. Monserrate said one of the more important aspects of 45Z is that it recognizes the role farm-level decisions can play in lowering the carbon intensity of fuel. But the mechanism for getting some of that value back to farmers is still taking shape.
“What is important, though, is that we make sure that that benefit, the ‘green premium’ that many people like to speak to, actually flows to the farmer,” she said. “That isn’t as clear.”
Berven described the same issue from the ethanol side. POET and others in the industry have explored ways to pay farmers more for lower-CI grain, he said, but making that work requires more than one transaction between a farmer and an ethanol plant.
“You really have to have a market approach that goes from the farmer all the way to the end user of the product,” Berven said.
Farmers may be able to get agronomic benefits from some of these practices today. Ethanol producers can benefit from lower-carbon grain as they pursue new fuel markets. What is still being worked out is the piece in the middle: how much additional value lower-CI corn creates, and how much of that value gets back to the farmer who produced it.
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