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USDA’s interim rule establishes guidelines for quantifying, reporting and verifying GHG emissions associated with production of biofuel feedstocks, but doesn’t address manure.
The U.S. Department of Agriculture announced Jan. 15 the publication of an interim rule on Technical Guidelines for Climate-Smart Agriculture Crops Used as Biofuel Feedstocks that establishes standards for quantifying, tracking, reporting and verifying the greenhouse gas (GHG) emissions associated with the production of biofuel feedstock commodity crops grown in the U.S.
These guidelines are designed to facilitate the recognition of climate-smart agriculture within clean transportation fuel programs, creating new market opportunities for biofuel feedstock producers while enhancing climate benefits.
The rule establishes a framework to connect climate-smart agriculture (CSA) practices applied in the production of feedstock crops with reductions in the carbon footprint of biofuels, as well as setting out voluntary guidelines that may inform the development of requirements for other programs that incentivize low-carbon biofuels, USDA stated.
Corn, soybeans and sorghum are the three feedstock crops covered in the rule. It also covers CSA practices that could reduce GHG emissions or sequester carbon, including reduced till, no till, cover cropping and nutrient management practices, such as the use of nitrification inhibitors.
Importantly, the interim rule allows for adoption of CSA practices both individually or in combination, USDA added. This means that participating farmers would have the flexibility to adopt the CSA practices that make sense for their operation while still being able to produce feedstocks with reduced carbon intensities under the rule.
The interim rule includes guidelines on the following:
Biofuel feedstock crops and entities in the biofuel supply chain;
Quantification of farm-level, crop-specific carbon intensity;
Chain-of-custody standards for entities in the biofuel supply chain, including traceability and recordkeeping standards;
Auditing and verification requirements, and
Climate-smart agriculture practice standards for the biofuel feedstock crops included under the rule.
Establishing quantification and verification standards for climate-smart practices helps ensure that the net GHG emission reductions from these practices are real, thereby improving credibility and confidence, which could facilitate market opportunities for U.S. farmers growing biofuel feedstocks, the agency reported.
USDA is also publishing a beta version of the USDA Feedstock Carbon Intensity Calculator (FD-CIC) to facilitate the quantification of farm-level crop-specific carbon intensity for corn, soybeans and sorghum. The USDA FD-CIC allows for the calculation of farm-scale carbon intensity in line with the standards in the interim rule.
The USDA FD-CIC tool's beta version allows producers to evaluate the following practices (as single or stacked): no till, reduced till, cover crops, nitrification inhibitors and fertilizer timing based on either split in-season application or spring-only application.
The agency said the public will have the opportunity to examine and download the calculator to experience how it would operate.
Mitch Hora, founder and chief executive officer of Continuum Ag, said the calculator is more of a “check the box” format, where producers can simply check yes or no for whether it’s a cover crop or not, no till or not, nitrification inhibitor, and so forth.
USDA said it will also be completing a peer-review process to finalize the methodology and resulting carbon intensities included in USDA FD-CIC, which will include opening a public comment period before establishing a final version. Until that time, users should consider values from USDA FD-CIC as preliminary.
The Internal Revenue Service (IRS) Section 45Z income tax credit for clean fuel production took effect on Jan. 1, 2025. It generally allows an income tax credit for the domestic production of clean transportation fuel, which is divided into the two broad categories of sustainable aviation fuel and non-aviation sustainable transportation fuel. The U.S. Department of Energy announced Jan.15 the release of the 45ZCF-GREET model to evaluate whether GHG emissions from feedstock-specific fuel production pathways meet the requirements of Section 45Z.
“The new 45Z Clean Fuel Production Credit establishes tax credit values based on the carbon intensity (CI) score and replaced the $1/gallon 40A Blender’s Tax Credit,” Jacqui Fatka, lead economist for farm supply and biofuels with the CoBank Knowledge Exchange Division, said. “Even with the higher values that can be claimed for climate-smart agricultural practices, crop-based feedstocks do not receive as high of a tax credit as feedstocks such as used cooking oil or tallow. This will make it difficult for some biodiesel facilities to manage potentially negative margins that previously were offset with the $1/gallon tax credit.”
She added that although imported used cooking oil can still qualify for California’s Low Carbon Fuels Standard, it won’t qualify for the 45Z tax credit, which may help lift demand for domestic soybean oil. Last year through September, the U.S. imported 5.4 billion lb. of used cooking oil and tallow, already far surpassing record import levels from 2023.
“Unlike the Inflation Reduction Act’s 40B for sustainable aviation fuel, the update in 45Z unbundles the climate-smart agricultural practices and allows farmers the ability to pick and choose those practices, which gives them the greatest ability to lower their overall CI score,” Fatka explained. “40B required no till or reduced till, cover crops and nitrogen stabilizer for any corn acres to qualify. The all-or-nothing approach utilized in 40B would have allowed only 15% of U.S. acres to qualify, according to an analysis from the American Soybean Association. The latest update from USDA allows farmers to adopt CSA practices individually or in combination.”
After USDA announced the interim rule, the National Corn Growers Association (NCGA) issued a statement saying, “Farmers have long awaited today’s release. The new rule removes the requirement to bundle climate-smart practices and instead allows corn to qualify as an eligible feedstock if individual practices are used to grow it. But farmers have also asked for more clarity on how they will benefit from the law."
While NCGA president and Illinois farmer Kenneth Hartman Jr. said the organization appreciates that an increasing number of corn bushels will qualify for the tax credit, “It is still unclear whether that is enough to enable farmer participation. Additional opportunities for improvement would include the use of a book and claim system and the expansion of practices that would qualify for the credit, both of which would allow for greater farmer participation.”
During a press conference on the interim rule, Hora with Continuum Ag pointed out, “What USDA missed on was manure.”
Spreading manure on fields instead of fertilizer can have some emission reduction benefits, according to Fatka of CoBank.
“Manure does not get any credit,” Hora added. “You do not get credit for the amount of manure utilized.” Producers still have to report it, but USDA does not give credit for manure use, which he said is “definitely a hit for animal ag.”
Hora said overall the rule is not good for animal agriculture and suggested that livestock producers should definitely submit comments in response.
Overall for agriculture in general, however, Hora said, "USDA is making it clear through this interim rule that it wants farmers to be part of the solution."
“The new guidelines are a win for farmers, biofuel producers, the public and the environment,” said Agriculture Secretary Tom Vilsack. “The action today marks an important milestone in the development of market-based conservation opportunities for agriculture. … From making E15 more widely available at gas station pumps and approving record biofuel levels to investing in infrastructure to help communities invest in biofuels, to accelerating a future for sustainable aviation fuels, this Administration created pathways for economic growth that will reverberate for generations to come.”
USDA is requesting public comment on any aspect of the interim rule to help inform future revisions or additions to the final rule. The interim rule will be posted for public inspection on Jan. 16 at www.regulations.gov and will be published on Jan. 17, which opens a 60-day public comment period during which interested parties may submit comments.
“This guidance opens the comment period for full regulation and final implementation, which will allow the Trump Administration and Congressional members to take comments gathered and make this their own,” Fatka said. “House Republicans from Midwest districts want to see a scapple applied to making changes to the Inflation Reduction Act rather than an ax, as some, including the incoming Trump Administration, have discussed.”
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