Continuum Ag CEO on How the New 45Z Tax Credit Changes Will Impact Farmers

In a virtual press conference, Mitchell Hora, CEO of Iowa-based soil health data intelligence company Continuum Ag, spoke to farmers for over an hour about the impact of the recently passed Big Beautiful Bill on 45Z for farmers, biofuel producers, and ag companies. The bill extended the availability of the 45Z tax credit through 2029.

Walking through some of the most important changes and unknowns still to be finalized after the bill’s passage, Hora thanked the Iowa Congressional delegation for “fighting for us” throughout the reconciliation process and focused his remarks on what farmers and producers can do in the coming years to make the most of these tax credits.

Sustainable Aviation Fuel Loses Out

Hora called Sustainable Aviation Fuel (SAF) a “major loser” of the reconciliation bill’s passage, as a previous tax credit of $1.75 per gallon of SAF under the 45Z rule was cut to $1 per gallon, in line with ethanol, biodiesel, and renewable diesel.

“That is really going to hinder the ability to take your ethanol and turn it into SAF,” Hora said. “Under the current version of 45Z, the alcohol-to-jet pathway [is] not going to happen. Not at any type of real pace.”

Hora said that while ethanol is not being locked out as a feedstock, “the way that the rules are written doesn’t provide the financial incentive to produce SAF using ethanol.” 

He added that this could change in the future if the failed amendment introduced by Sen. Joni Ernst (R-IA) is added to future legislation and adopted in some format. Ernst has introduced legislation seeking to protect SAF multiple times. 

In a press release following the passage of the reconciliation bill, Iowa Renewable Fuels Association Executive Director Monte Shaw said the bill “will not boost the ethanol-to-SAF market the way we hoped. We will continue to look for ways to restore that.”

The release called the move “unexpected” and claims that SAF has the potential to be a “100-billion-gallon-a-year market” by 2050.

Renewable energy law firm Frost, Brown, and Todd detailed the decision made by Congress on SAF here.

“The enhanced rates for sustainable aviation fuel are eliminated for fuel sold after December 31, 2025. In a move to standardize emissions accounting, the proposal bars the use of negative lifecycle emissions rates for most fuels starting in 2026, except in the case of animal-manure-based fuels,” the article reads.

Unknowns Remain, But Be Flexible

While there were important answers given by the reconciliation bill for 45Z, Hora said there are still questions that need answers for producers and companies alike. 

One of the big questions remaining is whether the Internal Revenue Service (IRS) will decide to have credits tracked with the book and claim, or mass balance methods.

The book and claim method allows farmers to sell their crop where they wish, and sell their low-carbon credit certificates as a new environmental asset to any buyer, regardless of location.

Mass balance, on the other hand, is a method in which low-carbon crops must be delivered to a biofuel producer. This means the bushels and low-carbon credit certificates stay linked.

Hora said that book and claim could be better for producers, but urged them to “prepare for mass balance” moving forward and to be adaptable into the future. 

Knowing CI Scores is Key

One of the key elements of getting the most out of 45Z for farmers will be gathering and using data from their fields, Hora said. He said farmer data will be key to unlocking value and will be “what’s going to ensure that there’s an equitable share of the financial value.”

One of the crucial data pieces ethanol producers will need to know is the Carbon Intensity (CI) score of their farmers’ fields, Hora said. The closer a CI score is to zero, the better it is for the 45Z credit and for the potential financial share to the farmer.

“Once you get a CI score all the way down to zero now, now you’re maxed out,” Hora said. “… Nobody’s going to hit a CI score of zero. Nobody’s going to hit a CI score of zero anytime soon, even by 2029.”