Will 45Z Move the Needle for Greener Fertilizer?

From new companies and long-time leaders, the fertilizer industry is developing lower-carbon options. The impact of those products may hinge on return on investment (ROI) at the farmgate, and inclusion in government programs.

Ideas Taking Flight

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. 

The agriculture and biofuel industries largely saw the pilot program as a positive step, with hopes for more flexibility and the inclusion of more practices in a program for the 45Z Clean Fuel Production Credit. The 45Z credit went into effect at the beginning of 2025. While it does not go directly to farmers, they theoretically stand to benefit if ethanol producers are willing to pay a premium for corn with a lower CI score to maximize their credit benefit. 

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

What Is an EENF? 

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.

“We have to make sure that people understand an ‘EEF’ is a thing; it’s a defined term that does not include the novel technology, and it certainly does not include where the puck is going here,” Abbott said. “All the technologies and solutions coming in the market in pipelines of companies, both big and small, will not be called EEFs. You’d have to go back in time. You’d have to be operating with 20- and 30-year-old technology.” 

“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. 

Biological products are the fastest-growing segment in agriculture, according to L.E.K. Consulting, a worldwide firm that provides research in market dynamics.

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. 

Landus, headquartered in Des Moines, Iowa, has teamed up with green ammonia producer Talus Renewables to build facilities around the state, the first of which was in the central Iowa community of Boone. In the future, the company foresees building production facilities across the Midwest, but no formal plans exist. 

Other green ammonia projects are underway in the U.S., including one in Louisiana from Chicago-area-based CF Industries.  

“We built a rapidly deployable modular green ammonia system for sub-Saharan Africa, where farmers in the developing world often don’t have access to a basic nitrogen fertilizer, which can double crop yields and reduce water consumption by 30% overnight,” said Hiro Iwanaga, CEO and co-founder of Talus Renewables. Iwanaga 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. This past summer, at the Farm Progress Show, Landus President & CEO Matt Carstens confidently declared: “I believe [green ammonia] will be. We have every indication, including today’s discussion with [then Secretary of Agriculture Tom] Vilsack’s team, that they get it.” 

Abbott was a little less sure: “Depends which side of the bed I wake up on.”

The Million-Dollar Question – Literally

It’s clear the SAF credit pilot program was intended to incentivize the industry toward greener farming practices. Yet, three Iowa corn farmers expressed doubts that an ethanol producer premium would be sufficient to spark widespread change. 

“Everybody’s going to want a piece of that pie, and farmers are going to end up with $20 an acre and that’s going to be it,” said Steve Kuiper, who farms in the south-central counties of Marion and Mahaska. “And I know that sounds kind of harsh, but that’s exactly what happens when you have these programs. Somehow [the government needs] to structure it so the actual work that farmers are doing is what they’re getting paid for.” 

Jason Orr, who farms in the northeastern county of Buchanan, said, “The problem that I see with it going straight to the processor is that once the processor gets enough people to do it, they’re going to pocket as much of that premium as they can. It’s going to be treated no more than a basis, or No. 2 yellow corn. Everybody in the country gets paid for No. 2 yellow corn…. We deliver No. 1 yellow corn, but we don’t get paid a premium for that … because the standard is No. 2.” 

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.”

It’s All About ROI

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.

So, What Is Fertilizer’s Future? 

“I think there’s an all-of-the-above approach,” The Fertilizer Institute’s Lynch said. His association supports including more innovations under a 45Z program alongside EENFs. 

“The U.S. fertilizer industry has invested approximately $2.4 billion annually in each of the past three years in things like capital upgrades in order to meet this pivot point, much of which is incentivized by those production tax credits under section 45,” Lynch said. “I wouldn’t say the industry is totally pivoting away from historical ways of doing things because there are buyers, for instance, in other countries, for whom things like the 45Z tax credit is not relevant.”