ACE Announces Project to Unlock Ethanol’s Access to New Markets and Tax Credits

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February 17, 2024

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(American Coalition for Ethanol) USDA Investing $25 Million in ACE-led Project to Incentivize, Model, and Monetize Climate-Smart Ag Practices in a 10-State Region -- The United States Department of Agriculture’s (USDA) Natural Resource Conservation Service (NRCS) recently approved a $25 million investment in the American Coalition for Ethanol (ACE)-led Regional Conservation Partnership Program (RCPP) expansion that builds on the successful South Dakota-based project announced in 2021 to unlock corn ethanol access to clean fuel markets and new tax incentives, such as the 45Z clean fuel production credit, based on the adoption of climate-smart agricultural practices which reduce greenhouse gas (GHG) emissions.

The new RCPP funding will help farmers adopt reduced tillage, nutrient management and cover crops on nearly 100,000 acres across 167 counties surrounding 13 ethanol facilities partnering with ACE to implement the project in the 10-state region of Illinois, Indiana, Iowa, Kansas, Minnesota, Missouri, Nebraska, Ohio, South Dakota and Wisconsin. The sites were strategically chosen to provide the project’s scientific team with statistically significant data regarding the GHG effect of conservation practices in different soil types and climates.

“We are enormously grateful for USDA’s vote of confidence in the work ACE is doing to ensure corn ethanol has a strong future as a meaningful part of the climate solution,” said Brian Jennings, ACE CEO. “This project will accomplish three important objectives. First, we will incentivize farmers in 10 states to adopt conservation practices. Three-fourths of the funding will go toward farmer adoption of practices. Second, our scientific team will monitor, measure and verify how the conservation practices reduce GHG emissions from corn farming. The data they collect will be used by the U.S. Department of Energy to pressure test existing models such as GREET to address real and perceived ‘information gaps’ which currently prevent farmers and ethanol producers from adequately monetizing climate-smart ag practices. Third, in the long term, we will empower ethanol producers and farmers with modeling and calculator tools to earn higher tax credits and premium prices in clean or low carbon fuel markets based on climate-smart ag practices. It is our goal to establish an alternative to burdensome and costly quantification and verification protocols that would discourage farmers and ethanol producers from reaping maximum benefits from these practices in the future.”

“The existing project in South Dakota has successfully expanded adoption of important conservation practices that benefit soil health, improve productivity and reduce GHG emissions,” South Dakota NRCS State Conservationist Tony Sunseri said. “Expanding the project will result in more conservation on the ground while furthering the scientific underpinnings of the climate benefits that result from deploying these climate-smart practices. We are excited to continue our partnership on this expanded effort.”

“We are also grateful for the 13 ethanol plants and team of technical experts, led by South Dakota State University (SDSU), who have been actively engaged as we developed this expansion project and are eager to help us get started,” Jennings added. “Given the progress we have already made on our existing South Dakota RCPP project, with more than 15,000 acres under contract for climate-smart ag practices, we are in a good place to hit the ground running to expand the project to 10 other states.”

“SDSU has been working in the field of soil carbon for over 30 years and is excited, in collaboration with our partners, to extend the project across the 10-state region,” said Dr. David Clay, SDSU’s Distinguished Professor of Soil Science and South Dakota Corn Endowed Chair in Precision Farming. “This project represents a win-win for farmers and the environment. Farmers benefit from higher yields and greater profits, and the environment wins by improved soil health and the removal of greenhouse gases from the atmosphere. We’ve experienced firsthand the outpouring of interest in this project as we work one-on-one with farmers in South Dakota. This RCPP expansion project will meaningfully scale the adoption of climate-smart farming practices throughout the biofuel producing regions of the U.S. and provide us with the scientific data necessary for full clean fuel market access.”

The economic potential of capitalizing on climate-smart farming practices to produce corn ethanol for clean fuel markets or new tax incentives is significant. Through the 13 partner ethanol facilities, there’s the potential to remove over 2,679,843 metric tons of CO2 per year, or the equivalent of taking 596,346 cars off the road annually. Across the 10-state project area, this could amount to over $500 million per year in estimated maximum value from clean fuel markets — a $266 per acre benefit for farmers based on the three-year average carbon price in the California Low Carbon Fuel Standard (LCFS). This potential economic value is similar to what the carbon benefits could be worth under a properly implemented 45Z tax credit.

To learn more about this project and the expansion, visit ethanol.org/usda-rcpp. READ MORE