The Clean Fuel Production Tax Credit (45Z), Part 2: Carbon Intensity

June 19, 2026

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Zhangliang Chen and Jonathan Coppess (University of Illinois/farmdoc daily) As discussed previously, the Clean Fuel Production Tax Credit, or Section 45Z, is a tax credit for biofuel producers, not a direct payment or benefit to farmers (farmdoc daily, May 27, 2026). The policy matters to corn and soybean growers because the value of the tax credit depends on the carbon intensity of the final biofuel product. That creates a strong incentive for biofuel producers to lower carbon intensity as much as possible, and one important way to do that is by sourcing grain with a lower feedstock carbon intensity score. In this sense, 45Z may create a new kind of market signal for agriculture: corn or soybeans with lower documented carbon intensity could be viewed by biofuel producers as a higher-value input than grain with a higher carbon footprint. This basic market logic is the reason farmers should pay attention to how feedstock carbon intensity is defined and measured. In this article, we discuss some common issues regarding what a feedstock carbon intensity score means and how it may be calculated.

This article addresses three questions. First, what does it actually mean for a corn or soybean crop to have a carbon intensity score? In general, that score can be understood as a measure of the greenhouse gas emissions associated with producing the crop, expressed relative to the amount of crop produced. Second, which farm practices may count toward lowering that score under the current 45Z policy? To answer that question, we look closely at the USDA’s Feedstock Carbon Intensity Calculator (USDA, FD-CIC), which is the spreadsheet-based tool developed to estimate feedstock carbon intensity for 45Z specifically. Third, how much can the recognized carbon intensity benefit from the same practice differ across Illinois counties? To make that question concrete for farmers, we use a set of Illinois county maps showing the carbon intensity reductions currently recognized by the FD-CIC under different conservation practices.

What Does CI Score Mean?

Under USDA’s technical guidelines (ICF International 2025, USDA OCE 2025), carbon intensity (CI) for biofuel feedstock crops is defined as “a measure of GHG performance reflecting the estimated quantity of GHG emissions associated with one unit of production,” and for feedstock crops it is expressed as grams of carbon dioxide equivalent per bushel produced. In practical terms, that means a crop CI score is an estimate of the greenhouse gas emissions associated with producing one bushel of the crop.

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Which Practices Lower CI Scores?

In principle, any management change that lowers emissions per acre or raises yield could lower a crop’s CI score. Under the current 45Z-related USDA framework, however, only a limited set of practices are actually recognized in the Feedstock Carbon Intensity Calculator (FD-CIC): no till, reduced till, cover crops, nitrification inhibitors, split in-season fertilizer application (corn and sorghum only), and spring-only fertilizer application (corn only). From the producer’s perspective, these present important limitations: not every conservation or management practice that may reduce emissions or increase yields will count for 45Z purposes. What matters here is not simply whether a practice is “good” but whether it is one of the practices currently included in the USDA’s FD-CIC framework.

Figure 2 shows how the USDA FD-CIC is currently set up to estimate field-level crop CI for 45Z. Interested readers can download the USDA FD-CIC spreadsheet tool and user manual from USDA’s website (https://www.usda.gov/usda-fdcic) to explore how the calculator works and to test their own crop, county, and practice combinations.

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A final note of caution is important. USDA describes the current FD-CIC as a beta version released for testing, peer review, and public feedback and states that users should treat its values as preliminary until final action is taken. That means farmers should not assume that the current numbers, practice definitions, or supporting documentation expectations are fully settled. At the same time, existing USDA guidance already points clearly toward recordkeeping: producers using FD-CIC are expected to maintain documentation of tool inputs and outputs, and the broader technical guidelines describe practice-specific records that may be needed to verify implementation.

How Much Does Location Matter?

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CI reduction due to a recognized practice is not the same everywhere. A practice that produces a relatively large, recognized reduction in one county may generate a more modest reduction in another. That does not mean a producer should choose practices based only on the map, since agronomic fit, cost, and management feasibility still matter. But it does suggest that, under the current FD-CIC framework, location can affect the size of the recognized CI benefit and therefore may also affect the size of the potential 45Z-related marketing opportunity.

Concluding Thoughts

Carbon intensity, at its core, is a way of estimating the amount of greenhouse gas emissions associated with producing a bushel of grain. For producers interested in 45Z, the practical takeaway from this article is threefold. First, a lower feedstock CI score could matter because it may make grain more attractive to biofuel producers seeking to reduce biofuel carbon intensity. Second, under the current 45Z-related FD-CIC framework, only a limited set of practices are recognized: no-till, reduced till, cover crops, nitrification inhibitors, split in-season fertilizer application, and spring-only fertilizer application. Other practices may still have agronomic or environmental benefits, but they are not currently counted in the tool for 45Z purposes. And for recognized practices, their official definitions, documentation requirements, and verification rules are still being finalized. Third, the recognized CI benefit from a practice can differ across counties, so location matters when estimating the potential value of low-CI grain. Together, these points help clarify what kinds of information will likely be needed before a low-CI grain market can function in a practical way.

The next article in this series will move from CI reduction measures to farm economics and decision support.

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References

Coppess, J., and Z. Chen. “The Clean Fuel Production Tax Credit (45Z); Introductory Discussion.” farmdoc daily (16):92, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, May 27, 2026. https://farmdocdaily.illinois.edu/2026/05/the-clean-fuel-production-tax-credit-45z-introductory-discussion.html.

Department of the Treasury, Internal Revenue Service. “Section 45Z Clean Fuel Production Credit.” Federal Register 91 FR 5160–5207, February 4, 2026. Proposed rule.

ICF International. Methodology for Determining the Feedstock Carbon Intensity of Climate Smart Agriculture Practice Adoption in USDA FD-CIC. White Paper. January 2025.

Lobell, D. B., S. Di Tommaso, Q. Zhou, Y. Ma, J. Specht, et al. “The Mixed Effects of Recent Cover Crop Adoption on US Cropland Productivity.” Nature Sustainability 8 (2025): 1004–1012. https://doi.org/10.1038/s41893-025-01599-5.

Qin, Z., K. Guan, W. Zhou, B. Peng, J. Tang, Z. Jin, R. Grant, T. Hu, M. B. Villamil, E. DeLucia, A. J. Margenot, U. Mishra, Z. Chen, and J. Coppess. “Assessing Long-Term Impacts of Cover Crops on Soil Organic Carbon in the Central US Midwestern Agroecosystems.” Global Change Biology 29(9) (2023): 2572–2590. https://doi.org/10.1111/gcb.16632.

U.S. Department of Agriculture, Office of the Chief Economist. Technical Guidelines for Climate-Smart Agriculture Crops Used as Biofuel Feedstocks. 7 CFR Part 2100, interim rule, effective January 17, 2025.

U.S. Department of Agriculture. USDA Feedstock Carbon Intensity Calculator. USDA website. https://www.usda.gov/usda-fdcic

U.S. Department of Agriculture. USDA FD-CIC User Manual. January 2025. https://www.usda.gov/sites/default/files/documents/USDA_FDCIC_UserManual_Jan2025.pdf

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Explainer: Getting to Know the USDA's Feedstock CI Calculator (ResourceWise)

Excerpt from ResourceWise:

At its core, the USDA Feedstock Carbon Intensity Calculator estimates the carbon intensity, or CI, of select crops used as biofuel feedstocks. The USDA defines CI for biofuel feedstock crops as the estimated greenhouse gas emissions per unit of production, expressed as grams of carbon dioxide equivalent per bushel.

The current version applies to four domestic feedstock crops:

Field Corn
Soybeans
Sorghum
Spring Canola

For those crops, the calculator reflects the impact of specified regenerative or low-carbon agricultural practices used during crop production. The USDA says the tool allows producers to evaluate several factors:

Nutrient Management
No-till
Reduced Till
Cover Crops
Nitrification Inhibitors
Manure Nitrogen

The real change comes in the specificity. Growers now have a published USDA methodology and calculator for reflecting certain field-level management choices in an officially recognized CI calculation.

How the FD-CIC Works

The FD-CIC is designed to calculate a field-level, crop-specific CI. In practical terms, that means a grower does not simply enter whole-farm averages and receive one blanket number. Instead, the calculator is meant to account for specific fields or management units, crop types, nutrient management, and qualifying low-carbon practices.

According to the final rule, producers must calculate a field-level CI for each field or management unit using nutrient management or a unique combination of nutrient management and low-carbon practices. The result represents the net greenhouse gas emissions from producing one bushel of that crop on that field or management unit.

Required inputs include:

Farm Location
Crop Type
Acres
Actual and Expected Yield
Total Synthetic Nitrogen Applied per Acre
Fraction of Synthetic Nitrogen Treated with Nitrification Inhibitors
Manure Amount and Type
Use of No-till or Reduced Till
Use of a Cover Crop or Grazed Cover Crop

For growers, the calculator gives farm practices a more formal role in feedstock CI accounting. Practices that were previously difficult to translate into recognized CI values now have a clearer pathway into carbon-intensity calculations for eligible crops.

Why It Matters for Biofuels and Carbon Markets

The calculator matters because feedstock emissions are a meaningful part of the carbon footprint for crop-based biofuels.

The USDA notes that feedstock crop production emissions account for more than 50% of direct emissions from producing corn ethanol and approximately half of direct emissions from producing soybean biodiesel. This excludes land-use change and other market-mediated effects.

The numbers show a potential market signal. If a grower can produce a lower-CI feedstock, and if a downstream program recognizes that CI value, there may be an opportunity for the value of those practices to flow back through the supply chain.

This is especially relevant for biofuel policy. The 45Z Clean Fuel Production Credit applies to clean transportation fuel produced domestically after December 31, 2024, and sold by December 31, 2029. The US Treasury and the IRS have also said they anticipate that a 45Z-specific version of the FD-CIC module will be included as an input to the DOE’s 45ZCF-GREET model for calculating CI adjustments under section 45Z.

That connection is not automatic, however. The Treasury and the IRS also anticipate additional requirements around agricultural practice implementation, recordkeeping, and verification. Additional guidance is expected alongside the publication of the 45Z-specific FD-CIC module.

What Is and Isn't Included

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One point worth clarifying: cover crops are included as a practice in the calculator, but broader feedstock eligibility remains limited.

The USDA received comments requesting more than thirty additional feedstocks, including crop residues, cellulosic crops, pennycress, and prairie biomass. The USDA also received requests to include intermediate oilseeds such as winter canola, carinata, pennycress, and camelina. However, the organization said more data and research are needed before adding intermediate crops.

The final rule also leaves room for future development. The USDA acknowledged comments supporting conservation crop rotation as a qualifying practice and said it may consider adding the practice in the future. Additional research and data are needed to quantify its potential CI benefits.

A Simple Example: Two Corn Fields, Two CI Outcomes

A useful way to understand the FD-CIC is to think about two corn fields on the same farm. Both fields produce field corn, and both may have similar acreage, location, and yield expectations. But they are managed differently.

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A Useful Tool, Not the Whole Market

The FD-CIC gives growers and biofuel supply chains a more standardized way to account for certain on-farm practices. That is a meaningful step for agricultural participation in low-carbon fuel markets.

But the tool should not be confused with a full lifecycle assessment or a carbon offset protocol. The USDA states that the FD-CIC does not include land-use change or other market-mediated effects. Additionally, values calculated by the tool may not represent values generated by, or applicable to, other program-specific methodologies.

For now, the calculator is best understood as a foundation. It provides eligible growers with a USDA-backed method for estimating field-level feedstock CI, biofuel producers with a clearer way to evaluate certain upstream agricultural practices, and policymakers with a framework that can evolve as more feedstocks, practices, and data become available. READ MORE