With the recent release of the IRA’s 40B SAF tax credit, the biofuel supply chain has received more than just a regulatory update; we’ve secured a blueprint for the next era of biofuel production, providing the key elements producers need to prepare for the much-anticipated 45Z credit. 

But now that we have that blueprint, what do we do with it? For stakeholders in the biofuel supply chain, leveraging the key takeaways and actionable insights woven through 40B guidance will be crucial for maximizing readiness related to the upcoming 45Z Clean Fuel Production Credit. And we believe that this leverage can be found in three critical arenas:

Know Your Fuel Numbers 
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As an ethanol producer, it’s critical to know where you stand with your Carbon Intensity (CI), what the Treasury “thinks” about your operations and their corresponding CI score changes that your current (and future) operations may bring. Knowing how your data translates into a scoring framework that the US Treasury has approved is THE  foundational insight which your “leverage” will be built upon. 

• Understanding Your Score: Perform thorough CI assessments of your production processes using the most recent GREET model AND modified 40B GREET. Establish your baseline and ensure that granular insights are delivered at a cadence which allows for actionable decision making. These fuel-score baselines will inform nearly all of your strategic CI decisions moving forward.
• Scenario Analysis: Either internally or through a trusted partner, perform scenario analysis projects to explore different strategies for reducing your CI score. These straightforward and relatively cost effective efforts will give you the key go/no-go metrics you need to make more informed decisions about which practices to implement and how the GREET model recognizes those efforts.
• Clear Communication: Effective communication is key. Ensure that you can clearly explain your CI score, the steps you are taking to reduce it, and the results you have achieved. This is important not only for internal stakeholders but also for policymakers and other third parties. As one executive stakeholder told us after 40B guidance was released, “How can you expect a Treasury rule maker in DC to recognize the innovations happening in your backyard if you don’t tell them?”

Advocate
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‍While the 40B guidance is a significant step forward, most indicators point towards the final guidance for 45Z not being released until Q4 2024 at the earliest. The period now and then is crucial for advocacy. By actively participating in industry discussions and working with organizations like Growth Energy, Renewable Fuels Association (RFA), American Coalition for Ethanol (ACE), plus your state and national corn growers associations, you can help shape the future guidance to address the weaknesses of 40B and maximize the competitive advantage of low CI fuel and feedstocks.

• Engage with Trade Associations: Trade associations play a vital role in advocacy. Organizations like Growth Energy, RFA, and ACE can represent your interests at the national level, providing a unified voice to influence policy decisions. Engaging with these associations and letting them know your local opportunities and challenges related to CI can help ensure that 45Z rulemaking recognizes the nuances of your operation and local geography.
• Local Advocacy: Working with your state and national corn growers associations and local elected officials is equally important. They can help raise awareness about the innovations happening in your backyard and the potential benefits of low CI fuel and feedstocks. As we all know, there is an incredible story to be told around low-carbon renewable energy production and by building strong relationships with these stakeholders, you’ll help that story reach its full audience.
• Continuous Feedback: Providing continuous feedback to policymakers is essential. Share your experiences, challenges, and successes in local corn-suppliers implementing climate smart agriculture (CSA) practices, fuel producers spinning up capital projects, and other creative CI reduction efforts in your local supply chain. This feedback will help policymakers understand the practical implications of their decisions.

Score Your Feedstock Carbon Intensity 
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Last but not least, the 40B guidance marks the first time farming practices are explicitly recognized for their role in reducing CI. This is a crucial development for corn farmers and ethanol producers. To prepare for 45Z, it’s essential to focus on strategies to commercialize recognition of local Climate Smart Agriculture (CSA) practices, without being bogged down in the short-sided nature of 40B’s limited CSA bundle.  

• Local feedstock scores: While being woefully limited, 40B’s template for feedstock “CI Scoring”, and the public messaging related to improvements and enhancements needed for 45Z, should give biofuel stakeholders the confidence they need to scale up feedstock CI scoring efforts. With relatively little creative license, a project can be built upon 40B’s scoring template that follows an expanded yet realistic suite of data capture and CI scoring strategies.
• Data Capture and Verification: 40B’s guidance confirmed that accurate data capture and verification of management practices will be a critical component of any Treasury-driven credit which gets all the way to the farm-gate. Producers (or third party partners) need to meticulously document their CSA practices. Thankfully, 40B gave the industry a robust array of data capture and verification requirements around tracking changes, improvements, and the resulting impact on a feedstock CI score which can be utilized in 45Z readiness efforts. 
• Education: Ensuring that your local network supporting the production and origination of low-CI grain understands the importance of CI scoring and how to communicate and implement it effectively is vital. Given the novel nature of feedstock CI scoring, we continue to find that there is no replacement for experience, and there’s nearly no limit to the ROI related to stakeholder education around the what/why/how of IRA tax credits and CI scoring.

Positioning for success under 45Z
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The 40B SAF tax credit guidance provides our clearest template to-date for preparing for the upcoming 45Z credit. By having a rock solid understanding of your fuel scores, raising your voice in tandem with industry leaders, and expanding on feedstock CI scoring efforts, producers can position themselves for success under 45Z. 
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With the final guidance for 45Z unlikely to arrive before Q4 2024, the steps you take over the next few months may very well determine how successful capture of 45Z credit is in your local geography in the 2025 credit year. So continue to leverage the insights, takeaways, and templates provided by the Treasury in their 40B guidance to inform and refine your 45Z readiness efforts. 
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And as always, incite.ag stands ready to guide your operation through the waters of 45Z Readiness. You won't find a better resource than the team at incite.ag to help you leverage the 40B template to unlock new low-carbon revenue opportunities. Give us a call today and let us help you turn your emissions into income.

Preston Brown
President & Founder of incite.ag preston@incite.ag