Ferrie: Some Practical Thoughts on How to Be Ready for ‘45Z’ Public Comments DEADLINE April 10, 2025

by Rhonda Brooks (AgWeb) Farmers will need to be able to show farm records, receipts, delivery tickets, and any as-applied maps. Geo-stamp photos will also be required to prove the use of no-till and cover crops. -- The Clean Fuel Production Credit, or 45Z, took effect Jan. 1, 2025, but farmers have more questions than answers at this point about how it will roll out and when.

At this juncture, one of the few actions farmers can take is to share their opinions as the Treasury Department and the IRS are taking public comments until April 10.

“It does seem a bit crazy that this is where we are on a bill that went into effect on Jan. 1,” Ken Ferrie, Farm Journal Field Agronomist and owner of Crop-Tech Consulting, Heyworth, Ill., told growers during a recent farmer-customer meeting.

Ferrie highlighted two updates for farmers to keep in mind, as they try to stay on top of the information pertaining to 45Z:

First, the IRS and Department of Energy released a new version of the GREET model specifically designed to calculate Carbon Intensity (CI) scores for the purpose of the Clean Fuel Production Credit (Section 45Z), called 45zCF-GREET. It stands for 45Z Clean Fuel GREET.

“This version is proposed to be the model that fuel producers use to calculate their CI scores,” Ferrie said. “One noticeable difference to this version is there’s no feedstock calculator for the farmers to use to score their grain.”

However, Ferrie noted that on Jan. 16, 2025, USDA released its version of a feedstock carbon intensity calculator for farmers’ use.

“Some components of it will make things a lot easier to get done. Some components of it, though, could be a challenge for certain growers,” Ferrie said.

“This is a big change from scoring it in the original GREET model,” Ferrie said. “In that model, using manure instead of commercial fertilizer dropped your scores hard because you’re recycling fertilizer.”

The USDA plan also addresses what it refers to as mass balance. “If you mix your grain with somebody else’s, the score is going to have to be refigured for that grain,” Ferrie explained. “Many people, of course, had hoped for the book and claim where you could separate the carbon asset or credit from the grain and sell them in different places. But with the mass balance approach, the grain must go to the end fuel production user. So, it’s got to go for fuel.”

Be aware that in the USDA proposal, all farmers would be audited by a third-party auditor.

To hear Ferrie’s complete insights and recommendations on 45Z, check out his Boots In The Field podcast. READ MORE/LISTEN

Excerpt from ADI Analytics: The U.S. SAF industry has faced significant uncertainty recently, with questions surrounding how government support, feedstock eligibility, and financial incentives might evolve during President Trump’s second administration. Our recent blog, “The Future of SAF Under Trump: Will Biofuels Thrive or Stall?” highlighted these concerns and emphasized the potential impacts on SAF investments and production strategies. The recent release of the 45Z Clean Fuel Production Credit (CFPC) guidance on January 10, 2025, offers some clarity but also kicks the can down the road on several issues and sets the stage for shifts in investment priorities and production approaches across the SAF industry.

In addition, some of the key elements of the recently released 45Z guidance include the follows:

1. Imported UCO is now ineligible for the credit through the GREET model. Excluding imported UCO will increase the reliance on more expensive domestic feedstock alternatives like UCO, soybean oil, and tallow. This shift could hinder the scalability of SAF production in the U.S. and reduce the competitiveness of U.S. SAF in the global market.

2. Coverage of fuels has expanded beyond motor and aviation to include marine fuels. The scope of expanding SAF coverage to include marine fuels will likely intensify competition for limited bio-feedstocks and drive up prices, leading SAF producers to struggle to secure affordable and sufficient supplies.

3. The new 45Z guidance requires “substantial processing” to qualify for the credit. This excludes blending fuel mixtures, intermediate sales (e.g., sale of ethanol to alcohol-to-jet facilities), compression of renewable natural gas (RNG) streams without processing to remove impurities, and imported finished fuels that need only “minimal processing.” The per-facility Inflation Reduction Act (IRA) credit limits under the new 45Z guidance may realign investment strategies, where refiners will carefully assess which credit—SAF (45Z), hydrogen (45V), or CCS (45Q)—offers the best return, which shapes future production priorities.

4. The provisional 45Z guidance reiterates anti-stacking with a limit of one IRA credit (45Z, 45V, 45Q, or 45Y) per facility.

5. Finally, the guidance requires producers to certify production processes using accredited verifiers, such as individuals or organizations from International Sustainability and Carbon Certification (ISCC), Roundtable on Sustainable Biomaterials (RSB), and International Civil Aviation Organization (ICAO).

Consequently, these updates will likely shift producers’ feedstock preferences, where they opt for feedstocks with the most favorable CI scores to maximize returns. However, regulatory uncertainties persist as the U.S. Department of the Treasury has yet to finalize the tracking and verification rules for imported UCO, which remains ineligible for 45Z credits until those rules are established. Besides, the lack of detailed guidance on CSA practices in the 45ZCF-GREET model could hinder broader SAF adoption. Meanwhile, the U.S. Department of Agriculture (USDA) released an interim rule for CSA in biofuel feedstocks, which Treasury may use in the final 45Z guidance, including a feedstock CI calculator.

Looking ahead, the future of the U.S. SAF industry will highly depend on the finalized 45Z guidance following a 90-day comment period. With pending decisions surrounding the post-2027 fate of 45Z credits and potential modifications to IRA incentives under the Trump Administration, long-term strategic planning and investment decisions remain complex and uncertain. READ MORE