There's a New Way to Cash in on Your CI Score on the Farm, Thanks to the Inflation Reduction Act

As a farmer, Kelly Garret is extremely carbon conscious. He grows 7,000 acres of no-till crops and switched from applying synthetic fertilizer to using regenerative wastewater as plant food.

“I believe in being collaborative with Mother Nature, not in competition. And this is a collaborative effort,” says Garrett, who farms in west-central Iowa, near Arion.

There’s no doubt Garrett is a forward thinker. He says he was the first farmer in the U.S. to sell carbon credits. Now, he thinks there’s a new opportunity coming for farmers to possibly cash in on.

“I believe in five years, almost every product that we buy, especially food-wise, will have a CI score affixed to it. I think as producers we need to educate ourselves and be at the forefront of that," says Garrett.

How Much Your CI Score is Worth Down to the Bushel

CI score stands for Carbon Intensity score. Garrett says now, with the 45Z tax credit that was passed in the Inflation Reduction Act and slated to go into effect Jan. 1, 2025, your CI score will soon be worth even more, especially if your corn goes to an ethanol plant. 

“It states that for every point an ethanol plant can get below 50, on their CI score, there's a two-cent-per-gallon tax credit,” says Garrett. “The ethanol plants don't have a lot of hope of getting below 50, not very far at least, without traceability of our corn.”

Garrett says, by his calculation, for every point below the current average of 29.1, it’s worth 2 cents a gallon, or 5.5 cents per bushel of corn.

“My [CI] score is a -6, because of the no-till, the cover crops and the regenerative things I do. So, my score is 35 points below the average. If you take 35 times 5.5, that's just over $1.92 per bushel,” Garrett says.

Regenerative Roots Solutions

Seeing how crucial farmers’ CI score will be to ethanol plants in the years ahead, Kelly saw a new opportunity for more than just himself. So, he teamed up with Peter Meyer, who worked in the energy space, Jarod Creed, who works with growers across the country and Mike Busing, who’s experienced in carbon markets, to create Regenerative Roots Solutions, a business designed to start educating all farmers.

“The four of us got together here in the last couple of months, and we're really trying to hone in on what the opportunities are for our network combined. This is specifically geared towards these CPG programs and 45Z tax credits coming down the pipeline,” says Creed.

Peter Meyer says a farmer’s CI score is based on the Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation (GREET) model. An essential update to the model is expected soon from the Environmental Protection Agency (EPA).

“The Greet Model here in the U.S. was originally geared toward ethanol for automobiles, and now we're talking about a whole different energy source with sustainable aviation fuel,” says Meyer.

The Ethanol Business Can't Survive Without Farmers 

With 45Z now in the picture, the new tax credits for ethanol plants will also hinge on CI scores from farmers.

“I'm advocating for this, what's very much a partnership with an ethanol plant,” says Kelly. “The tax credit is available to the ethanol plants, not to farmers. But the ethanol plant doesn't have a lot of hope of gaining much of this tax credit without traceability to us.”

Adds Meyer, “The ethanol business cannot survive without the farmer. And this has to be, as Kelly Garrett said earlier, a 50/50 partnership.” 

New Domestic Demand... and More Money for Farmers 

The team at Regenerative Roots Solutions admits it’s still a bit of the Wild West when it comes to carbon and how much your CI score is worth, but Creed says more clarity is coming.

“Ten to 15 years ago, there was a tremendous amount of angst when ethanol started to come into the marketplace. And then here, most recently, the renewable diesel space of expanding the soybean crush in the U.S. market. And ultimately, all we've done is continue to create more domestic demand for our products as we've become less competitive with the rest of the world. The market dynamics have changed,” says Creed.

The team’s goal is to provide transparency and information to growers. But today, the biggest challenge is just how much misinformation is out there.

“Well, there's an incredible amount of skepticism with farmers, starting with the carbon market as a whole, things like that government intervention,” says Kelley. “I think farmers are eternally skeptical, and a lot of times we've been sold a bill of goods, so you can't necessarily blame farmers. But then when it comes to a CI score, there are a lot of questions or skepticism about how it's calculated, whether the government is telling us how to raise our corn, and things like that.”

It's All About the Data 

Mike Busing has already taken a deep dive into the carbon market. Through his company, Windy Ridge Ag, he and his team handle the data collection for growers on current carbon programs that are available today.

“Over the last four years, we've brought a little over $10 million back to our grower base. It’s  pretty incredible, and that's what we hope to do with Regenerative Roots,” Busing says.

While those carbon contracts can be one-year contracts, Busing says 45Z has the potential to be a longer term, steady revenue stream for farmers.

“Data is going to be the key piece to everything,” Busing says. “We would all love to just have our growers walk in with a piece of paper that says, ‘My CI score is a 10, pay me for my grain.’ However, there will be a large data piece of this, it's going to have to go through third-party verification, things of that nature. So, everything is tracked, we know the data is good and the plants can acquire that tax credit."

The Future of CI Scores and 45Z

It's a new opportunity for farmers to possibly cash in on, one the team at Regenerative Roots Solutions doesn’t see as a fad.

“I think there is already a smorgasbord of different programs that the producer is participating in, whether that be carbon programs, whether that be CPG programs,” says Creed. “I think this is just the icing on the cake. And it’s all in an effort to continue to find additional demand opportunities for the crop domestically, with less dependency on the rest of the world.”

“We're advocating for the farmer to be educated about what practices he or she can employ to reduce their carbon intensity score to make it a little bit more palatable for the Greet model, and thus, end up with more money in their pockets at the end of the day,” Meyer explains.

As the team continues to explore how this partnership could work as 45Z comes into play, the best part for Garrett is he doesn’t have to change any production practices on his farm—or adopt something new—to qualify.

“Well, like most things in life, this is luck. These are things I was already doing, because I believe in this way of farming. I see it’s working,” says Garrett.  

Creed says one of the biggest pieces of misinformation attached to this new opportunity today, is the belief that in order to qualify, producers will have to make major changes. Creed says Garrett is proof that a farmer doesn’t necessarily have to change how they farm.

Meyer says his biggest piece of advice for farmers is to look into what your CI score is, and if needed, for ways to lower that score. However, he says there’s no value in verifying your CI score until the updated Greet model is unveiled.

Farm Journal’s Smart Farming Week is an annual week-long emphasis on innovation in agriculture. The goal is to encourage you to explore and prioritize the technology, tools and practices that will help you farm smarter. Innovation today ensures an efficient, productive and sustainable tomorrow.

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