JULY/AUGUST NEWSLETTER - A VIEW FROM OUR CEO

CI Scores and Independence as a Nation

So what is all of the hoopla about CI Scores in agriculture and why should I care? This is a question that I hear often. I’ll be the first to tell you that I don’t have all the answers. What I do know, is that if it could affect my soils and my bottom line, I probably should develop some understanding. Both as the leader of AgriVision Equipment and PrairieLand Partners, and as a NE Kansas farmer, I am watching this space closely, knowing that we could all use a little boost to the bottom line in the coming years. I hear discussions that our government could use CI scores against us in the future, and it is a real concern. Is the government involved in ethanol and biodiesel? Yes, we would not have the grain demand that we do today, without the government blending mandates. Has ethanol and biodiesel been good for the Midwest farmer? Yes. Could CI scores be good for Midwest farmers? Yes….as long as the information is used properly....my advice is pay attention to who you vote for at the upcoming elections! 

So let’s get down to business. Is carbon good or bad? That depends. In our soil, it is awesome. Carbon is the main component of soil organic matter and helps give soil its water holding capacity, it’s structure, and it’s fertility. In the air, as CO2, more carbon can be a bad thing.  A Carbon Intensity (CI) Score is the carbon footprint, or the total amount of greenhouse gases (including C02 and methane) that are generated by our actions or practices. In farming, a CI score is assigned to a bushel of grain, biofuel, or other product. The score is linked to the unit of production and is used for quantifying the total carbon footprint of a farm or company. A CI score of 0 equates to carbon neutrality, and theoretically the higher the score, the more carbon is released. For our discussion, I will focus on corn. Today the estimated national average CI score for corn is 29.1kg CO2E/mmBtu, measured with units specifically for ethanol production.

So why should I care? In August 2022 the Inflation Reduction Act opened an opportunity for ethanol and biofuel producers to earn substantial tax credits for lowering the carbon intensity of their fuels. Section 45Z of this bill now assigns a direct value to a CI Score. Our opportunity is that it allows farmers to potentially monetize farm data by attaching its value to a farm’s production. Section 45Z’s tax credit for an ethanol plant is estimated at $0.054 per CI point below the estimated industry average CI score of 29.1. Other experts estimate this at 2 cents per gallon per point reduction. There is a maximum credit of $1 per gallon for non-aviation fuel, and $1.75 per gallon of aviation fuel.

How long does the 45Z tax credit last? It is currently funded for three years, applying to fuels sold from 2025-2027. The short length of the current commitment could cause some producers to stay away. The bright spot is that if you are already using reduced or no-till, cover crops, and the John Deere Operations Center to track your operation, you may have most of the information that you need to capitalize on this opportunity. We are currently working with John Deere and other 3rd parties to consider tools to assist you in completing the certification that is needed. If you are evaluating your opportunities to capitalize on your CI score and would like to discuss further, please reach out to one of our Regional Precision Ag team members, and we will be happy to engage.

As I wrap up this article on the 3rd of July, I would like to share my sincere appreciation for those that have gone before us, especially those that gave up their lives, to allow us the freedom to live in this great nation, the United States of America. In their quest for independence, our founding fathers created a nation where political liberty and personal freedoms ALONG WITH RESPONSIBILITY were paramount. While the Fourth of July will remain a day of celebration, it should also serve as a reminder of the never-ending effort required to preserve the freedoms that define our nation. Independence was not a static achievement. Its maintenance is a continuous process of safeguarding liberty against encroaching sinful illegitimate power, whether that is via other nations or our own elected government. 

As we enjoy this year’s festivities, may we also commit to the responsibilities and principles of independence and ensure they remain at the heart of the American experience. God Bless!