BLOOMINGTON, Ill. — The 40B tax credit guidance and modified GREET model released April 30 by the U.S. Department of Treasury (USDT) lays the groundwork for U.S. ethanol producers and farmers to participate in the emerging market for sustainable aviation fuels (SAF). However, Illinois corn farmers are very concerned by the announcement from USDT limiting corn-based ethanol’s contribution to the decarbonization of the aviation sector.

According to the Illinois Corn Growers Association (ICGA), the announced update to the Department of Energy’s (DOE) Argonne GREET model now pushes farmers to implement a bundle of three additional on-farm conservation practices – cover cropping, minimized tillage, and nitrogen management – for their corn to qualify to make ethanol for the Sustainable Aviation Fuel market and access the tax credits available in the Inflation Reduction Act (IRA). The IRA credit requires a total 50 percent reduction in greenhouse gas (GHG) emissions.

USDT’s April 30 announcement significantly limits farmers’ options for reaching emission targets through the end of the year, according to ICGA President Dave Rylander, a central Illinois corn farmer.

“There were several hours of discussion yesterday afternoon just trying to unpack what the words in this document actually meant,” said Rylander, describing the activity within the ICGA offices following the April 30 USDT announcement. “At this point what we think it means and what it actually means may not be exactly aligned yet, due to the way they chose to phrase things. It’s really complicated.”

State Climatologist Trent Ford defines growing season lengths in Illinois as varying from 215 days in southern Illinois to 180 days in northern Illinois. Illinois Corn is concerned that the difference in climate, soil, and seasons makes it difficult for the state’s farmers to subscribe to the same conservation regimen in all areas of the state, as mandated by the updated GREET model. 

“Thankfully, the Treasury Department is going to work with some folks at USDA who are a little more knowledgeable about how crops are produced and the logistics of getting grain moved through the existing marketing and production systems. There is still a fair amount of work to do before I’m going to be able to tell you exactly what it is that we are going to have to do to qualify to have our corn used to make ethanol that then goes into SAF,” Rylander said.

If all of the requirements for ethanol-based SAF carbon storage were to be imposed on Illinois ethanol production plants today, the ICGA president continued, none of the state’s dozen-or-so ethanol plants would stand in compliance with the new GREET model standards. 

“Ethanol plants that do not have the ability to sequester their own carbon dioxide underground would have to use corn that is produced using no-till and grown on ground that had cover crops on it, (while) also using the rules in place for reducing the amount of commercial nitrogen that is used for growing corn,” Rylander said. “The only plant that would have qualified would be ADM’s plant in Decatur, where they have working wells and a track record of successfully storing Co2 underground. However, (the GREET model) does not accept corn from wet mills, and that’s what ADM’s mills in Decatur are.”

The administration’s decision will limit SAF production due to the logistics of separating grain grown according to the prescribed practices, which is unfeasible for most storage sites and transportation models, the ICGA stated in a May 1 news release.

Importantly, the final rules for production of SAF have yet to be determined. 

“The Treasury Department released this PDF, which is rather complicated, that is supposed to help others draft the rules. Fortunately, they have asked for some help from the USDA to do just that, but how long that will take to happen I certainly don’t know,” he said.

The ways USDA can help bring clarity to the document could include helping to develop clearer definitions of key terms such as “no-till” and others, and clarifying crop production cycle data used in the final version, Rylander explained.

He is also very concerned about the state’s ethanol providers being able and willing to provide the massive infrastructure investment required to sequester Co2 emissions underground. “To get Co2 pumped into the ground at 6,000 feet below the surface is not an inexpensive proposition,” said Rylander, adding that Co2 transmission pipelines could provide the means for ethanol producers to participate in the SAF boom without nearly the amount of investment.  

Since 40B expires at the end of this year, all the attention will now turn to implementing the 45Z credit to start next year. USDT’s modified GREET standards are intended to drive the new 45Z credit. 

“Illinois farmers are in a precarious position. We need the market, and are now pressed to risk the market based on an agency promise that farmer concerns will be seriously considered in the rulemaking process for 45Z. This would make anyone nervous,” said Rylander.