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January 11, 2024 - Written By Geswein Farm & Land - Kristen A. Schmitt

Why Carbon Intensity Scores are Important to Farmers

Carbon is one of the hottest buzz words when it comes to industry and farming. Whether we’re tallying our carbon footprints or issuing credits for carbon farming, the basic element that occurs in all living things continues to be at the forefront of sustainable practices. And, going into 2024, there’s a new carbon term that should be on every farmer’s radar: carbon intensity.

 

 

“Carbon intensity is essentially the carbon footprint per bushel,” says Mitchell Hora, a seventh-generation farmer whose family has farmed in Washington, Iowa for over 100 years. As a row crop farmer, Hora is aware of the necessity to keep his acreage as close to carbon neutral as he can for the future of agriculture as well as the future of his farming business, noting, “As grain farmers, our farm carbon footprint becomes part of the next person’s carbon footprint.”

Carbon intensity (CI) scores are standard units of measurement created by the U.S. Department of Energy and have been part of the fuel industry for decades. They are tallied based upon the fuel’s lifecycle emissions (greenhouse gases), not just by the emissions released when the fuel is being used.

 

 

“This is important for farmers because, today, grain accounts for more than 50% of the carbon intensity of those gallons of biofuel.” – Hora

 

A farmer’s CI score is determined from production through delivery of the crop to an ethanol plant. A CI score of zero is considered carbon neutral and the higher the score, the worse it is for the environment. The current estimated CI score for corn is 29.1 g GHG/MJ, measured with units specifically for ethanol production. Farmers who are able to offer corn with a CI score lower than this national average are going to be popular going into the 2024 market and beyond because of a new tax credit under the Inflation Reduction Act.

 

“45Z provides tax credits to biofuel manufacturers for lowering their carbon intensity,” says Hora. “And these tax credits start for fuel that’s produced in calendar year 2025.”

 

According to Continuum Ag, Hora’s agriculture consulting company, 45Z allows ethanol and other biofuel producers the ability to earn substantial tax credits simply for lowering the carbon intensity of their fuels, giving farmers with lower CI scores a way to gain an advantage in a competitive market simply by adopting sustainable agriculture practices. While the payoff isn’t overnight, knowing that this incentive is only on the cusp should propel farmers who are not already using sustainable agriculture practices to do so for monetary payoff in the future.

 

To reduce CI score, Hora suggests farmers add cover crops, reduce tillage, optimize fertilizer inputs for yield outputs, reduce fuel usage and pesticide use and use natural fertilizer instead of those made with fossil fuels. By implementing more sustainable practices or improving upon their efficiencies, the result will be a lower carbon intensity in grain production than the typical default national score.

 

 

“Farms like mine are actually carbon intensity negative because we use cover crops and no till and split applications as well as reduced fertilizer and inputs,” says Hora, “and we still get really good yields.”

 

How to determine CI score on your farm

Even if you’ve already adopted sustainable agriculture practices on your farm, you may not know where your bushels fall with regard to their CI score. Here’s where Continuum Ag can help you with their integrated scoring mechanism based upon the U.S Department of Energy’s Greenhouse Gases, Regulated Emissions and Energy Use in Transportation (GREET) model. Using Continuum Ag’s TopSoil tool, a farmer can fill out a questionnaire to unlock their CI score and receive a green model to use on their farm to help improve it.

 

“We have a tool where you can play with your sustainable agriculture practices,” says Hora. “Like what would happen if I added a cover crop? What would happen if I were to change my fertilizer? We give farmers that tool so that they can evaluate the best path towards optimizing their own carbon intensity score.”

 

Continuum Ag will also provide a verified CI score for your farm, which will be needed going forward for the 45Z tax credit. Obviously, there’s not an overnight fix to lowering a farm’s CI score; however, because these tax incentives are so new – and still pending final IRS approval – making changes now will only benefit farmers in the future by having a new monetary reason to adapt sustainable practices that continually improve not only the land, but also the farm’s bottom line.

 

“Step one is understand what your score is today,” says Hora. “Step two, understand how to improve your score. Step three, document and get your score verified. Do all of this so that you can complete step four and get paid.”

 

Other Resources Available:

A new tool to boost your fields and yields – Land Values

 

Contact Johnny Klemme

Advisor & Broker