Will 45Z Move the Needle for Greener Fertilizer?

by Cassidy Walter (Successful Farming) ... Last spring, the U.S. Treasury Department released guidance for the 40B Sustainable Aviation Fuel (SAF) Tax Credit, which included the creation of the USDA Climate Smart Agriculture Pilot Program. The program enabled corn farmers practicing no-till, growing cover crops, and using enhanced efficiency nitrogen fertilizer (EENF) to boast a lower carbon intensity (CI) score for their corn.

If final 45Z regulations contain a similar program as 40B, greener fertilizer practices are likely to be a part of it.

For an acceptable definition for “enhanced efficiency fertilizer,” (EEF) as it pertains to the SAF credit, Treasury borrowed from the Association of American Plant Food Control Officials (AAPFCO). That organization says EEF products “allow increased nutrient availability” and reduce potential environmental nutrient losses, “e.g. gaseous losses, leaching or runoff when compared to an appropriate reference product.” While the EEF definition is not exclusive to nitrogen fertilizer, the SAF credit program was specific to enhanced efficiency nitrogen fertilizer, aka EENF.

In layman’s terms, EENFs are all about slowing down the loss of applied nitrogen, and they’ve been around for decades. Examples include nitrification inhibitors, urease inhibitors, and slow-release/controlled-release nitrogen fertilizers. Tom Lynch, senior vice president of government affairs at The Fertilizer Institute, a trade association, said EENFs are gaining greater acceptance from farmers after years of use by turf and specialty growers.

What Is Not an EENF?

Innovations in biologicals and green ammonia were not included in the SAF credit pilot program.

Biologicals

In fact, Chris Abbott, CEO of Pivot Bio, a manufacturer of microbial nitrogen, called EEFs the “old way of doing things.” Pivot Bio’s Proven 40 seed treatment is designed to provide corn plants with microbes that convert nitrogen from the air into a steady source of nitrogen that is not lost to the environment.

“Biologicals” is a blanket term that applies to biopesticides, beneficial microbes — sometimes referred to as biofertilizers — and biostimulants. Beneficial microbes and biostimulants are the most common products currently used in row crops.

Green Ammonia

Green ammonia is chemically identical to traditional ammonia, but it cracks air and water molecules to create the chemical, and it runs on clean energy such as solar panels.

Hiro Iwanaga, CEO and co-founder of Talus Renewables ... also contends green ammonia can reduce the CI of corn by 25%.

It is unclear if any potential 45Z regulations will include innovations such as green ammonia and Proven 40.

Adam Bierbaum, who grows corn and soybeans in the western county of Cass, said, “You have to look at each farm and look at their practices and what they’d have to change and [what] added expenses [would be] for them to reach that premium…. Each farm would have to decide how much their time’s worth and is it worth [it to] them to do the extra work for that premium.”

With or without a low-CI premium, the cost of using these new fertilizer products is an important consideration.

The 45V Clean Hydrogen Production Tax Credit makes it possible for Landus to offer green ammonia at a competitive market price (ammonia is 18% hydrogen). Landus has signed a 10-year agreement with Talus Renewables and is focused on providing a local and long-term source of fertilizer to help reduce supply uncertainty and pricing variability.

To that end, when the product is ready for market, Landus intends to offer farmers short-term and long-term contract options at competitive prices. However, due to the unpredictable way the price of ammonia is sure to fluctuate, they cannot guarantee green ammonia will always be the cheapest option.

Other biological products are intended to supplement, not replace nutrients, meaning they’re an extra cost for farmers rather than a savings. ROI becomes key. Graig Whitehead, director of biologicals and new technology at ADM Fertilizer, said for this reason, innovations in the fertilizer space should focus on yield.

“Anything over a 3–1 ROI, typically the farmer will try or will use [it], and as a general rule, anything under that number, they may test it multiple times just to be sure. But it’s often not going to take off as a mainstream-use product,” Whitehead said. READ MORE