$25 million program to give ethanol producers a boost into clean fuel markets

March 6, 2024

The U.S. Department of Agriculture’s (USDA) Natural Resource Conservation Service (NRCS) is investing $25 million to help farmers in corn ethanol-producing states gain access to clean fuel markets and tax incentives. The initiative will help states adopt climate-smart farming practices that reduce greenhouse gas (GHG) emissions.

Led by the American Coalition for Ethanol (ACE), the Regional Conservation Partnership Program (RCPP) will provide funding to help farmers reduce tillage and improve nutrient management. The 10-state project spans 100,000 acres of crops spread across 167 counties surrounding 13 ethanol facilities. The facilities will team up with ACE to harvest data on how conservation practices affect GHG production 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,” ACE CEO Brian Jennings said in a statement.

The project could potentially remove more than 2.7 metric tons of carbon dioxide annually, the equivalent of taking 596,346 cars off the road, coalition officials said.

The expansion will allow RCPP partners to make the most of USDA resources to reduce the farm carbon footprint. ACE indicated there is a renewed focus on dropping the carbon intensity of transportation fuels that account for nearly 30% of annual GHG emissions nationwide. Research by Harvard and MIT researchers recently verified that average corn ethanol reduces GHGs by about 50% compared to gasoline, according to the coalition’s overview of the program.

The initiative builds off a successful 2021 South Dakota-based project to give corn ethanol producers access to new markets by offering a 45Z Clean Fuel Production Credit. The credit is applicable for qualifying transportation fuel produced between 2024 and the end of 2027. Starting Jan. 1, 2025, the Treasury Department will offer tax credits for producing and selling low-emission fuels.

The South Dakota project involved compensating farmers for adopting climate-smart practices that sequester carbon, reduce GHG emissions and improve soil health. Project partners then quantified the resulting soil health and GFG benefits, correlated them with existing models and developed a non-proprietary verification system. The project allowed farmers to secure access to clean fuel markets based on GHG benefits of USDA climate-smart practices.

“This project represents a win-win for farmers and the environment. said Dr. David Clay, South Dakota State University’s (SDSU) Distinguished Professor of Soil Science. “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.”

SDSU is one of five members of the South Dakota RCPP that includes South Dakota Corn Utilization Council, Dakota Ethanol, Cultivating Conservation and the American Coalition for Ethanol.

The $25 million investment provides an opportunity to build off earlier successes and ensure corn ethanol plays a meaningful role in reducing the presence of GHG.

“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,” said ACE’s Jennings.

The RCPP expansion includes offering a suite of incentives to farmers adopt conservation practices in Indiana, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, Ohio, South Dakota and Wisconsin. Program eligibility extends to specific counties and is not statewide, with payment rates varying by conservation practices.

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Photo courtesy of the USDA

Paul Stinson

Paul Stinson has more than 15 years of journalism experience, including a decade covering the legislative and regulatory affairs of Texas, South Africa, and Germany for an affiliate of Bloomberg, L.P. His experience includes covering voting rights and the sectors of environment, energy, labor, healthcare, and taxes. Stinson joined the team in October as a reporter for SPI’s news publications, which include Government Contracting Pipeline, Texas Government Insider, and the newly-launched Government Market News. He is also a Fulbright Scholar to Germany, and an Arthur F. Burns Fellow. He holds a master’s in journalism from Indiana University.   

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