Tax Credit Offers New Opportunities
Mar 11, 2024
Landon Van Dyke
Conservation Agronomist
THE WAIT IS FINALLY OVER! Your reward for conservation practices by way of a grain premium is here. A new tax credit (45Z) allows ethanol plants to offer a premium to farmers for low carbon intensity (CI) grain. This program includes any grain sold starting January 1, 2025, and goes for three years. This means the crop we’re planting in just a couple of months will be eligible, so now is the time to begin preparations.
To qualify, the CI of your grain must be lower than the threshold (which is about 29 for most counties). While we don’t know for certain, it’s likely this will be on a field-by-field basis. This standard and other aspects are still to be determined by further guidance from federal agencies. The premium is also being worked out, but it is anticipated to be somewhere in the range of $0.01–$0.06/bushel/point of reduced CI. Using the middle point and a CI score of 15, the premium would be $0.49/ bushel. This falls in line with one recent study estimating an average premium of $0.40–$0.50/bushel.
DETERMINING YOUR CI SCORE
To determine your CI score, you will go through a verification process that records and documents emissions attributed to your grain production. The best way to prepare for this process is to get involved in the Truterra® program (which Key Cooperative can help you with). This program will get you ready for the information you are required to report.
The main factors in a CI score include:
While some of the details are still being ironed out, we understand the framework and what practices lead to a lower score, so we’re able to help you start right away. Call me at 641-780-9885 to get enrolled in the Truterra program, so we can begin the documentation steps and make sure you’re ready.
Conservation Agronomist
THE WAIT IS FINALLY OVER! Your reward for conservation practices by way of a grain premium is here. A new tax credit (45Z) allows ethanol plants to offer a premium to farmers for low carbon intensity (CI) grain. This program includes any grain sold starting January 1, 2025, and goes for three years. This means the crop we’re planting in just a couple of months will be eligible, so now is the time to begin preparations.
To qualify, the CI of your grain must be lower than the threshold (which is about 29 for most counties). While we don’t know for certain, it’s likely this will be on a field-by-field basis. This standard and other aspects are still to be determined by further guidance from federal agencies. The premium is also being worked out, but it is anticipated to be somewhere in the range of $0.01–$0.06/bushel/point of reduced CI. Using the middle point and a CI score of 15, the premium would be $0.49/ bushel. This falls in line with one recent study estimating an average premium of $0.40–$0.50/bushel.
DETERMINING YOUR CI SCORE
To determine your CI score, you will go through a verification process that records and documents emissions attributed to your grain production. The best way to prepare for this process is to get involved in the Truterra® program (which Key Cooperative can help you with). This program will get you ready for the information you are required to report.
The main factors in a CI score include:
- Tillage passes and depth
- Cover crop usage
- Fertilizer products and amounts
While some of the details are still being ironed out, we understand the framework and what practices lead to a lower score, so we’re able to help you start right away. Call me at 641-780-9885 to get enrolled in the Truterra program, so we can begin the documentation steps and make sure you’re ready.