A new revision in the Inflation Reduction Act could encourage grain farmers to measure their on-farm carbon intensity (CI) score. The result is a game-changing system where carbon data is kept with the crop at the point of sale instead of being an asset of its own. The Sect 45Z tax credit provides biofuel producers incentive to produce low-emission fuel. The amount could total more than $400 per acre for farmers with low-carbon intensity grain scores.
However, the Internal Revenue Service (IRS) has yet to issue any regulation, possibly slowing the process without any clear answers on the value to farmers. On-farm grain will be assessed with a CI score within parameters as determined by the Department of Energy. The current CI standard for corn is 29.1. The Inflation Reduction Act sets a weighted average below 25. This means farmers could earn 5.4 cents per CI point below the industry standard.
Carbon deficit scores are possible for farmers with sound conservation practices, even if the farmer has been implementing a practice already – something that has previously kept them out of the carbon conversation.
Read more on the new way to profit from carbon sequestration here.
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