SIOUX CENTER, Iowa — Siouxland Energy Cooperative, the ethanol plant in Sioux Center, this month entered an agreement with Washington, Iowa-based Continuum Ag, with the latter firm providing "carbon intensity certification" for grain the plant purchases from farmers.
Carbon intensity certification is a process whereby grain crops -- corn in the case of Siouxland Energy -- receive a certification indicating how much greenhouse gas was released in growing the crop.
Ethanol and biofuels produced with certified crops, assuming the crops were grown in a manner that curtailed the amount of greenhouse gas released into the atmosphere, can be eligible for tax incentives under the Inflation Reduction Act of 2022, which included a number of provisions intended to mitigate climate change. The fuel itself would take advantage of the 45Z Clean Fuel Production Tax Credits, which the U.S. Treasury Department will offer beginning Jan. 1 of next year.
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Continuum Ag's role in the process is to calculate and certify the amount of greenhouse gas that was generated during the production of a crop. To do this they work with farmers, examining their practices to ascertain the emissions attributable to the crop.
"Depending on how low your carbon footprint is, or your carbon intensity is, on the grain, you would be eligible for possible premiums," said Brad McDonald, chief operating officer of Continuum Ag.
On its website, Continuum Ag says the standard carbon intensity rating for corn is 29.1; grain rated below the standard 29.1 can result in tax credit eligibility for the ethanol -- the lower the number, the greater the tax credit. Farmers, in turn, get higher revenue per bushel for the certified lower-carbon crop.
"We're very focused on low CI ethanol that we sell," Tom Edwards, a commodity manager with Siouxland Energy, said by phone.
Farmers can go about lowering their carbon intensity in a variety of ways: Increasing yields (which is generally a goal regardless) can lower the carbon intensity rating by producing a bigger crop with the same amount of emissions; planting a cover crop can help, as can implementing reduced-till or no-till practices; reducing inputs like fuel and NPK, or nitrogen, phosphorus and potassium, results in a lesser carbon footprint; applying manure is also helpful, according to Continuum Ag.
"If I'm a farmer that plows -- that would result in a higher carbon intensity score in the model versus a farmer who no-tills, which would have a lower carbon intensity score," McDonald said.
Farming is one of the more greenhouse gas-intensive human activities. According to the Environmental Protection Agency, 10 percent of all U.S. greenhouse gas emissions were attributable to agriculture in 2021. (Carbon dioxide is not the sole greenhouse gas emitted by agriculture -- methane and nitrous oxide, which also warm the planet, are associated with agriculture practices. A significant share of overall agricultural greenhouse gas emissions are attributable to livestock, not row-crop farming. Still, row-crop farming does contribute to climate change.)
"It's likely that each bushel going to biofuels is going to have a carbon footprint, or a carbon intensity, associated with it," McDonald said.