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45Z Guidance: What We’ve Learned

January brought with it the release of preliminary guidance on the 45Z Clean Fuel Production Tax Credit. While not in its final form, this long-awaited set of guidelines, rules, and models from the US Treasury, Department of Energy, and USDA provided the biofuel industry with its first set of tangible tools which can be leveraged to unlock the 45Z Credit.

The January 10th preliminary IRS guidelines to the January 15th USDA technical guidelines provided clarity on many of the key queries the industry was asking, yet numerous new questions were raised. Nearly every document and model released carried a proverbial “TBD” as the outgoing Biden administration punted final guidance delivery and implementation to the new Trump administration. The industry now has the updated modeling and framework it needs to generate 45Z CI Scores, but the stakes have been raised and challenges remain. Join us as we unpack those challenges and opportunities:


Release Highlights:

  • New 45ZCF-GREET Model & USDA FD-CIC:
    Refreshed and up-to-date modeling tools were released allowing fuel (GREET) and feedstock (FD-CIC) producers to “calculate” a 45Z CI score with far more confidence than the previous practice of estimating 45Z scores with outdated models.
  • Recognized Climate-Smart Agricultural Practices:
    Climate-smart, conservation management practices such as reduced tillage, advanced nitrogen management, and cover cropping are now formally included in a feedstock-upstream-of-fuel CI scoring framework.
  • Biofuel Plants Closer to “In the money”:
    Indirect Land Use Change (iLUC) scores have been reduced and made more dynamic, bringing more biofuel plants previously in a 50s CI range closer to sub 50 kg/mmbtu, increasing their likelihood of accessing the credit in 2025.
  • Intensive Documentation & Verification Requirements:
    As expected, with any substantial credit there must be a robust compliance protocol. Highly detailed, stringent requirements for data capture, documentation, independent verification, and certification accompany nearly every link the the CI scoring “supply chain”.
  • Public Comment Period:
    The 90-day window through April 10th offers stakeholders a chance to influence final rules and address gaps with the Treasury (60-Day comment period open to USDA).


Key Takeaways for
Biofuel Producers:

  • Improved Reduction Potential:
    With updated 45ZCF-GREET modeling, many ethanol plants are finding themselves closer to achieving a sub 50 CI threshold than previously estimated with GREET ‘22 or R&D GREET.
  • Emission’s Factors (EF) and Rates:
    Confirmed emissions rates, EF calculations, and rounding protocol(s) mean that a biofuel producer now must reach a CI of ~47.5 to have their emissions rate rounded into an “in the monthly” tier.
  • Provisional Emissions Rates (PER):
    This flexible pathway should allow a biofuel producer to recognize novel processes and technologies which reduce CI. Note that applications for PERs are not available to submit until after final treasury rulemaking is delivered.
  • Mass Balance Accounting:
    This accounting and traceability procedure for feedstocks was selected over a
    “book and claim” method which would have allowed for environmental attributes (feedstock CI scores) to be decoupled from physical commodities.
  • Uncertainty Abounds:
    Uncertainty around emissions rates and factors from the US Treasury may deter aggressive investment. As will the continued uncertainty regarding the timeline for delivery of final guidance and its impact on accessing the credit in the 2025 tax year.


Key Takeaways for
Feedstock Producers:

  • Expanded Crop Recognition:
    Corn, soy, and sorghum are all included in the new modeling with a weighted average for the total operation being utilized as a final score.
  • “New” feedstock CI Metric:
    Through the updated FD-CIC, feedstock CI values are now primarily measured in grams of CO2e per bushel (g/bu), tying them more directly to ethanol plant KPIs and making them a more dynamic value. Conversion to more common units such as grams of C02e/MJ or kg/mmbtu per acre are relatively straightforward but will require anee understanding that “final” scores can differ depending on the biofuel producer who processes it.
  • Field-Specific Data Requirements:
    Field location, tillage practices, nitrogen application, cover crop usage, and volume of production (yield) are central to CI calculations, with a significant emphasis being put on climate-smart farming practices versus production efficiencies.
  • SOC Metrics:
    Soil organic carbon metrics now apply to all counties, broadening regional inclusivity and incentivizing climate-smart practices.
  • Independent verification:
    Every farming operation supplying CI scores to a biofuel producer must also supply a suite of summary reports and is subject to an annual audit.
  • Livestock Producers left on the sidelines:
    All climate smart management related to livestock such as manure applications and rotational grazing was not included in the feedstock CI reduction framework.


Final Thoughts:


The preliminary 45Z guidance marks a significant step forward, offering biofuel and feedstock producers the tools needed to unlock new revenue opportunities, stimulate rural economies, and expand markets for domestically produced renewable energy. However, the journey ahead requires navigating several challenges. Compliance demands, the need for seamless data integration, and ongoing uncertainty surrounding final guidance timelines mean that collaboration and a unified voice across the biofuel value chain is more critical than ever.

Feedstock producers, equipped with updated modeling and verification systems, are positioned to deliver value. Yet, this confidence must be mirrored by biofuel producers, who need greater clarity around emissions factors, modeling, and ROI timelines to drive investment. Bridging these gaps will define the success of 45Z implementation.

As the public comment period progresses, stakeholders have a pivotal chance to shape the final framework. Advocacy for fair, efficient, and transparent rules will ensure the industry’s continued evolution. 

At incite.ag, we’re committed to supporting our partners through this evolving landscape with flexible customized solutions. If you touch the CI scoring supply chain for biofuels, we’re here to help you excel in this new 45Z era.


Preston Brown
Incite.ag President, Founder

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incite.ag guides producers across the agricultural supply chain to Turn Emissions into Income. Incite.ag’s CI scoring system unlocks novel revenue streams and empowers producers to take control of their unique CI Scores. Learn more by hitting the link below or reach out to the team directly at success@incite.ag or 815.373.0177.

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