Farmers using sustainable practices could soon see a return beyond the soil. The Clean Fuel Production Credit, known as 45Z, is a tax credit rewarding ethanol plants up to $1.00 per gallon for lowering the carbon intensity (CI) of the fuels they produce. Created by the Inflation Reduction Act (IRA) in 2022 and strengthened by the One Big Beautiful Bill Act (OBBBA) in 2025, it rewards cleaner fuel production and opens the door for farmers to benefit.

Although ethanol plants claim the credit, farming practices affect the fuel’s CI score, giving growers a potential way to earn for resource-saving practices they already use. Garrett Love, a sorghum farmer from Montezuma, Kan., calls the approach long overdue.

“We’ve been implementing conservation practices like no-till, cover crops, and precision nutrient management for years because they improve soil health and long-term profitability,” said Love, who also serves as NSP vice chairman. “What’s exciting about 45Z is that it connects those agronomic decisions to real market value in the low-carbon fuel space. It frames the conversation not just as stewardship, but as a strategy for farmers to enter the energy economy.”

With the program’s complexity, farmers might wonder how to make 45Z work for them. It starts by understanding what affects a fuel’s CI score and how on-farm decisions can improve it. 

Key farm practices include tillage systems, cover crops, timing of nutrient applications, and the use of nitrification inhibitors. In short, practices that improve nutrient use efficiency and reduce fuel use help lower CI under 45Z.

Suggested caption: Farm practices recognized in the USDA Feedstock Carbon Intensity Calculator (FD-CIC) influence the CI of fuel and ultimately determine how much value farmers could unlock under the Clean Fuel Production Credit.

Source: USDA

Geography also plays a role. The county in which the farm is located affects the baseline CI score due to differences in soil types, rainfall, and expected benefits of conservation practices. While growers can’t control where their farms are, they should be aware of how it influences the grain’s CI score and credit’s potential payoff.

“We’re focused on making a seemingly complicated program as accessible as possible for growers,” said Brandt Underwood, NSP director of measurement and verification. “That means helping producers implement the practices and making sure they can document those practices in ways that meet verification standards.”

Documentation is critical. To claim the 45Z credit, ethanol plants must verify the environmental performance of the grain they purchase, either directly or through a third party. This includes records on tillage frequency, nitrogen application timing, and several other key field-level practices.

“For some producers, this will mean adopting better recordkeeping tools or working more closely with agronomists and consultants,” said Underwood. “The last thing anyone wants is to burden farmers with paperwork. The goal is to help them capture value for the practices they’re already using, and we’re ready to support them however we can.”

Underwood, a former conservation agronomist with the Natural Resources Conservation Service (NRCS), emphasized that many sorghum farmers are already well-positioned to participate. For those needing to adopt new practices, NRCS programs can be stacked to help fund transitions.

Participating in 45Z requires clear communication with ethanol plants. Since many grain systems cannot yet track CI scores and documentation efficiently, farmers must understand each plant’s data needs to align records and practices with verification requirements and specific goals.

“45Z creates a unique opportunity for deeper alignment between farmers and ethanol plants,” said Love. “For it to work, we’ll need voluntary, incentive-based data sharing, transparency, and mutual trust around field-level practices and CI scores. If we get that right, it means a long-term competitive advantage for sorghum farmers and American agriculture.”