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 Clean Fuel Production Credit applies to qualifying transportation fuel produced and sold between January 1, 2025 and December 31, 2029. To qualify, fuel must be produced during this period and sold to an unrelated party for use as a transportation fuel in the United States.
The regulatory framework for 45Z has advanced significantly during 2026. Treasury released proposed regulations in February 2026, while USDA finalized the FD-CIC model and Technical Guidelines in June 2026, providing detailed methodologies for quantifying agricultural feedstock carbon intensity. These releases have given the industry much greater confidence to launch commercial feedstock CI programs and prepare for 45Z compliance.
However, Treasury has not yet issued final 45Z regulations (expected November 2026). Several important implementation details remain outstanding, including final treatment of feedstock CI within the tax credit calculation, verification requirements, and certain compliance mechanics. While much of the technical framework is now established, the industry continues to await final regulatory certainty before long-term compliance approaches are fully settled.
The clean fuel producer claims the credit. For ethanol, that means the ethanol plant, not the farmer, grain merchandiser, or feedstock supplier. Agricultural producers and other supply chain participants provide data that supports the producer's CI calculation, but the ethanol producer remains responsible for claiming the credit and maintaining supporting documentation.
Yes. Under USDA's finalized FD-CIC methodology, farm-level (or Management Unit) information is required to calculate feedstock carbon intensity below the default value. This includes field boundaries, crop yields, nutrient management, conservation practices, and other information needed to calculate and verify agricultural emissions. Without farm-level data, producers generally must rely on default feedstock values.
Documentation must be complete, traceable, and capable of independent verification. Required records may include field boundaries, crop insurance or approved yield records, fertilizer applications, manure documentation, conservation practice verification, transportation records, process energy, feedstock traceability, and any additional information supporting the reported CI score. Every value used within the CI calculation should be supported by auditable documentation.
If required data cannot be verified or adequately documented, the associated CI reduction may not be recognized during verification. Depending on the missing information, the verifier may require default assumptions or determine that the feedstock does not qualify for the claimed reduction, resulting in a higher overall CI score.
45Z utilizes two complementary models. The 45ZCF-GREET model calculates the lifecycle carbon intensity of the transportation fuel, while USDA's FD-CIC model calculates the agricultural feedstock carbon intensity that may be incorporated into the overall fuel pathway. Both models must be applied using the methodologies and assumptions established by the applicable federal guidance.
Yes. USDA's finalized FD-CIC methodology recognizes numerous agricultural management practices that can influence feedstock carbon intensity, including nitrogen management, tillage systems, cover crops, manure utilization, and other approved conservation practices. These practices are recognized only when properly documented, supported by required records, and modeled according to USDA's published methodology. Final Treasury regulations will ultimately govern how these feedstock CI values are incorporated into 45Z credit calculations.
No. Carbon intensity values used for 45Z must be developed using the federally approved USDA FD-CIC methodologies. Existing LCFS scores, state averages, or previously generated regulatory CI values cannot be substituted for 45Z calculations. While County ARC values can be used for Actual and Expected yield, no other state averages can be used for user defined inputs. Feedstock CI must be calculated using USDA's FD-CIC methodology, while fuel CI must be calculated using the applicable 45ZCF-GREET model and supporting documentation.
The USDA FD-CIC model establishes a default feedstock carbon intensity of 6,031 gCO₂e/bu for corn. This value represents a generic bushel produced using national average assumptions rather than farm-specific management practices. Operations that provide verified field-level data through the FD-CIC methodology may achieve feedstock CI scores that are significantly lower (or, in some cases, higher) than the default depending on factors such as nitrogen use efficiency, tillage, cover crops, manure use, and yield.
The two values represent different parts of the same calculation.
gCO₂e/bu (grams per bushel) measures the carbon intensity of the agricultural feedstock itself. It reflects the emissions associated with producing one bushel of corn and is calculated using USDA's FD-CIC model.
kgCO₂e/MMBtu (kilograms per million BTU) measures the carbon intensity of the finished transportation fuel. This is the value ultimately used for 45Z tax credit calculations and incorporates feedstock emissions alongside transportation, ethanol production, energy use, coproducts, and other lifecycle emissions within the 45ZCF-GREET model.
In short, g/bu measures the corn, while kg/MMBtu measures the finished fuel. Your feedstock score is translated into the overall fuel CI used to determine 45Z eligibility and potential tax credit value.
There is no fixed dollar value for a feedstock carbon intensity score. A lower feedstock CI reduces the overall lifecycle carbon intensity of the fuel produced at an ethanol plant, which can increase the value of the plant's 45Z tax credit. The economic value of any individual bushel depends on several factors, including the plant's baseline fuel CI, process energy, transportation emissions, coproduct treatment, renewable electricity use, the number of verified low-CI bushels included in its feedstock supply, eligibility for prevailing wage and apprenticeship requirements, third party sale of the tax credit, and the market or commercial agreements between the ethanol producer and its grain suppliers. Refer to your local ethanol plant directly for details regarding the value of your low CI feedstock.
Commercial elevators, grain merchandisers, and agricultural cooperatives can play an important role in helping ethanol producers source, document, and aggregate low-carbon feedstock. By partnering with an ethanol plant or feedstock CI platform, they can onboard growers, collect farm-level documentation, maintain sustainability declarations, and independently verify a mass-balanced inventory of eligible feedstock that can be supplied into participating biofuel facilities.
The value of an elevator-led program ultimately depends on the quality of its grain supply. Elevators sourcing a large volume of verified low-CI corn from participating growers are generally positioned to deliver stronger mass-balanced feedstock CI scores. Conversely, if most inbound grain remains unverified and must be treated as default bushels, the resulting blended feedstock CI will trend closer to the federal default value, reducing much of the potential carbon intensity advantage. Successful programs therefore focus not only on maintaining compliant mass balance records and independent verification, but also on building a meaningful network of participating growers capable of supplying verified low-CI grain at commercial scale.
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 |
