Carbon Intensity 101
Understand what CI is, how it impacts agriculture and biofuels, and why it matters for your bottom line.
What is Carbon Intensity (CI)?
Definition:
Carbon Intensity measures the total greenhouse gas emissions required to produce a unit of fuel or feedstock. In simple terms, it shows how much carbon is created (or removed from the atmosphere) over the course of a commodity's lifecycle.
At its core, CI is a way to quantify and reward efficient performance and highlight producers who run conservation-focused operations.
Why it Matters:
A lower CI score = less lifecycle emissions and oftentimes a higher value in today's markets for the commodity its attached to.
Origin:
CI emerged as a way to quantify how "clean" a fuel is, starting with California's LCFS in 2011.
What makes up a biofuel CI score?
CI vs. Carbon Offsets
Carbon Intensity (An Inset)
A carbon inset is a quantified emissions (and reduction) that occurs within the same supply chain as the product or entity making the claim. The reduction is measured using operational data such as energy use, agronomic practices, input consumption, and calculated using standardized lifecycle or emissions accounting methods. Insets are directly attributed to the specific commodities produced, and the value remains with supply chain participants rather than external project developers.
Offsets (Traditional Carbon Markets)
A carbon offset is a tradable credit created by an external project that reduces, avoids, or removes greenhouse gas emissions outside the supply chain of the purchaser. The reduction is calculated against a projected baseline, issued through a registry, and verified through periodic project reporting rather than product-level operational data. Credits are not linked to specific commodities, require retirement to make a claim, and are evaluated for additionality, permanence, and leakage risks.
Carbon offsets
Carbon offsets (or carbon credits) ask buyers to pay for reductions that happened somewhere else, often in unrelated regions or industries. That distance, uncertainty, and lack of measurable connection has led to low confidence and very limited participation. Adoption in agriculture and fuel supply chains has remained below low, largely because offsets forced management changes, did not reward early adopters and rarely made significant enough improvements to margins to warrant attention.
Carbon Insets
Insets (such as Carbon Intensity) take a different approach than offsets. Emissions must occur inside the direct supply chain, whether on the farm, in the biofuel plant, or in the transport and handling of the product. The improvements are measurable, auditable, and tied directly to the bushels and gallons that enter the market. Because the results can be proven with real data, the value stays with the participants who make the changes rather than being purchased from unrelated projects.
What is 45Z?
U.S. IRA 45Z Clean Fuel Production Credit
The 45Z Clean Fuel Production Credit is a performance-based federal incentive created under the Inflation Reduction Act. Beginning in 2025, the value of the credit is tied directly to the carbon intensity of the fuel produced. Ethanol facilities that can document lower lifecycle emissions earn a higher credit, which encourages both agricultural and industrial practices that reduce greenhouse gas impacts across the supply chain.
Purpose and Structure of 45Z
The tax credit is available to "Clean Fuel Producers" from 2025 through 2027. During this period, each gallon of clean fuel is evaluated using a lifecycle carbon intensity score. The score is currently generated using the federal 45ZCF-GREET model, which incorporates key biofuel life cycle inputs. A lower carbon intensity score results in a higher credit value if specific requirements are met for the prevailing wage of contractors and specific rounding calculation criteria are met.
This structure represents a significant shift from earlier policy approaches because it ties financial outcomes to measurable environmental performance. It is intended to reward continuous improvement and encourage more precise data reporting throughout the agricultural and fuel production systems.
Implications for the Ethanol Sector
The 45Z credit has the potential to influence both short-term decisions and longer-term investment across the biofuels industry. A facility's ability to qualify for higher credits depends on its operational data, energy sources, carbon capture, and feedstock supplier profile. Many plants are reviewing energy efficiency projects, selective sourcing opportunities, and novel co-product production as part of their preparation.
For feedstock procurement, the program introduces attributes that are not visible in traditional grain markets. The ability to document field-level data and verify farming practices becomes part of the overall chain of custody for low carbon fuel production. This also means that data completeness and record quality are likely to become competitive considerations.
45Z Quick Hits
What 45Z Prioritizes
- Actual, documented carbon intensity performance
- Field-level crop production data rather than state or national averages
- Verified plant energy use and process conditions
- Consistency between reported volumes and operational records
Data Elements Commonly Required
- Undenatured ethanol production volumes
- Natural gas and electricity usage
- Information on coproduct handling
- Transportation distances for feedstock and inputs
- Fertilizer sources and application practices
- Tillage systems and residue management
- Farm fuel usage and other field operations
Factors That Influence the Final CI Score
- Energy efficiency inside the plant
- Source of electricity and natural gas
- Nitrogen management and fertilizer strategy
- Soil emissions from tillage and residue handling
- Manure application and associated accounting
- Transportation emissions for corn and plant inputs
Common Challenges for Producers
- Collecting uniform data from diverse suppliers
- Ensuring documentation meets verification standards
- Reconciling differences between plant records and modeling needs
- Integrating farm-level data into facility lifecycle modeling
- Maintaining consistency across multiple reporting years
Why Accurate Data Matters
- The value of the credit increases as carbon intensity decreases
- Errors or missing information can reduce credit value
- Audits can require multi-year documentation
- Small improvements in input accuracy can shift overall margins
Frequently Asked Questions
The 45Z credit applies to qualifying clean fuel that is produced and sold between January 1, 2025 and December 31, 2029. Fuels must be produced during this window and sold to an unrelated party for consumption in the United States to qualify.
As of Q4 2025, the US treasury has failed to deliver final guidance for the 45Z clean fuel production credit. Initial, preliminary guidance was released in January of 2025 and clean fuel producers are using that preliminary language to file for the credit in 2025. The industry still awaits final answers from the Treasury on the specific mechanics to recognize feedstocks within a CI scoring formula, and until guidance delivers those answers, clean fuel producers cannot include or pass through low-CI feedstock value from their supplier network.
The clean fuel producer claims the credit. For ethanol, that means the ethanol plant, not the farmer, grain merchandiser, or blender. Others in the supply chain may provide required data, but the producer is the filer of record.
Yes (assuming that final guidance recognizes feedstocks as a part of the CI scoring formula for ethanol) if they want to claim a CI score lower than the default value. Farm-level data is needed to calculate feedstock CI using approved methods so that the producer can document and verify reductions attributable to agricultural practices and supply chain traceability.
Documentation must be complete, auditable, and tied to the CI inputs used. This includes records for feedstock emissions factors, transportation distances, practice verification, process energy, fuel sourcing, co-product allocation, and any adjustments that affect CI. Assumptions must be traceable and supported.
If data is missing, unverifiable, or incomplete, the producer cannot apply a customized CI value related to that portion of the calculation. The verifier will default to standard or conservative values, which can raise the CI and reduce or eliminate eligibility for the credit.
45Z requires the use of a 45ZCF-GREET and USDA FD-CIC model specified by the U.S. Treasury and DOE. Only the approved version may be used, and CI results must follow the exact structure, inputs, emission factors, boundaries, and accounting rules defined within that model.
Not at the moment (without final Treasury guidance). Practices like reduced tillage, optimized nitrogen usage, manure management, and cover crops can reduce CI in theory, but they are rewarded only when documented and modeled according to the approved GREET methodology and the current USDA FD-CIC is not formally linked into the 45Z credit generation process.
No. 45Z does not allow LCFS scores, state averages, or previous regulatory values. All CI values must come from the Treasury-approved GREET model and must reflect actual data used in the eligible fuel production pathway.
Key CI Markets and Programs
California LCFS (Low Carbon Fuel Standard)
- The model for many CI programs
- Rewards fuels below a set CI benchmark
- Requires detailed lifecycle modeling (CA-GREET)
Canada CFR (Clean Fuel Regulations)
- Similar structure, emphasizes feedstock traceability.
- Corn ethanol producers must capture field-level data and farmer attestations.
U.S. IRA 45Z Clean Fuel Production Credit:
- Effective 2025–2029
- Producers earn tax credits based on CI scores (using 45ZCF-GREET).
- Potentially adds $1.00/gal depending on improvements and successful compliance with program requirements.
European Union RED II
(Low Carbon Fuel Standard)
- Governs renewable fuel in the EU.
- Requires strict sustainability criteria and third-party verification.
What makes a CI score?
Fuel Emissions
Dynamic Fuel CI is the portion of a Carbon Intensity score that measures all emissions generated inside the biofuel production process itself. It accounts for the energy used to run the plant, the efficiency of fermentation and distillation, the type and carbon profile of electricity and thermal fuels, process improvements, co-product handling, and upstream transportation tied directly to fuel manufacturing.
Feedstock Emissions
Feedstock scoring is the agricultural half of a GREET CI score and measures the emissions tied to the production and transport of the crop that becomes the fuel. This portion captures fertilizer and nutrient use, application methods, tillage practices, manure management, cover crops, seed and chemical inputs, fuel used in field operations, yield efficiency, residue handling, and the distance grain travels to the plant.
 Cover CropSORT: A-Z |  TillageSORT: A-Z |  Grain StorageSORT: A-Z |  Last YearSORT: A-Z |  Confirm FieldCONFIRMED |
|---|---|---|---|---|
| No DEFAULT | No Till | Co-Mingled | Corn | |
| No DEFAULT | No Till | Co-Mingled | Corn | |
| No DEFAULT | No Till | Co-Mingled | Corn | |
| No DEFAULT | No Till | Co-Mingled | Corn |
