The family of seventh-generation farmer Mitchell Hora has been engaged in good agricultural practices in Iowa for decades, including no-till since 1978, cover crops since 2013 and more.

“Everything I’m talking about I’m passionate about because I’m in the trenches too,” Hora told a group of growers at the New York Corn & Soybean Association’s summer crop tour.

His company, Continuum Ag, helps farms lower their carbon intensity score and obtain verification for their efforts. A farmer’s carbon intensity score, or carbon footprint, includes everything in the production and delivery of a certain crop.

A CI score of 0 equates to carbon neutrality. The higher the score, the worse impact a farm’s practices are having on the environment. It is estimated that the national average CI score for corn is 29.1g GHG/MJ, measured with units specifically for ethanol production.

On his family farm, Hora has helped reduce the CI score to -4.1.

What’s driving interest in CI scores? New government rules, including a provision in the Inflation Reduction Act, give biofuel producers significant tax credits in return for making improvements to capture and process carbon dioxide. The impact to farmers is that they may have to reduce their CI scores to have their corn accepted at an ethanol plant.

As the global financial sector wants to become carbon neutral, purchasing carbon credits could be a way to do this. Hora said farmers can benefit by improving their CI score and selling carbon credits to companies.

“I’m most bullish on this continuing because the guys with the money are trying to make this happen,” he said.

What can improve your CI score?

Hora said this starts with a farm’s basic operations, including maintaining soil health, and remaining consistent with gathering and using farm-generated data.

The 2020-21 Iowa select carbon footprint baseline showed that, on average, 29% of a farm’s carbon footprint is stored manure, with the No. 1 category being feed, 58%; followed by fuel, 5%; electricity, 4%; and feed transportation, 4%.

Hora recommends farmers reduce inputs and tillage, and use diverse crops, cover crops and manure in their systems — along with documenting all these steps — to lower the CI score.

“Huge companies are trying to reach their goals to decarbonize,” Hora said. “A huge chunk of the footprint for farms is the feed and the fuel.”

TALKING CI SCORES: Mitchell Hora, founder of Continuum Ag in Washington, Iowa, recommends farmers reduce inputs and tillage, and use diverse crops, cover crops and manure in their systems — along with documenting all these steps — to lower the CI score. (Photo by Deborah Jeanne Sergeant)

The Department of Energy’s greenhouse gases, regulated emissions and energy use in technologies (GREET) model “is the gold standard for calculating carbon credits,” Hora said. “Companies can’t cut back all their emissions but are looking to offset that by buying carbon credits within the supply chain. Especially for biofuels, the biggest part of their footprint is the supply chain. That’s where we come in.” 

By voluntarily improving their carbon footprint and getting a CI score for it, a farm can sell carbon credits to other companies. In fact, Hora said one-quarter of carbon credits are generated from agriculture, even though fewer than 3% of farmers are participating in carbon credit sales.

Since 93% of farmers know about carbon credits, Hora said he would like to see more participation in these programs, especially within the supply chain. Companies such as Continuum Ag help farmers obtain a CI score, which calculates the carbon footprint per bushel produced.

Carbon credits are then sold as a metric attached to grain, such as g CO₂e/bu. Involvement requires no registry, and the Department of Energy and IRS set the rules.

“The issue is they’re continually changing the calculator,” Hora said.

Cashing in on the 45Z tax credit

Section 45Z of the Inflation Reduction Act provides a tax credit for the domestic production of clean transportation fuels. The program was set up by the IRS, but its rules have not yet been established. The slated start date is Jan. 1.

Hora thinks the new 45Z rules will follow GREET guidelines.

“We know it’s going to take data and rigorous scrutiny,” he said. “There are plenty of groups in D.C. who don’t like ag and biofuel. We need to be ready in five months to rock and roll.”

Although he doubts the rules will be ready by January, Hora said the program will likely offer retroactive tax benefits, meaning it will pay for farmers for keeping accurate records based on GREET so they can more readily participate in 45Z, despite “government red tape.”

The 45Z tax credit will be $0.02 per CI score point below 50. That may seem like a trifling amount of money. But consider this: In 2023, Hora’s farm grew 212 bushels of corn per acre. With its -4.1 CI score, the farm received $1.92 per bushel value, amounting to $406 per acre.

“We’re trying to get data so when the IRS sets the rules, we can see if this is going to work,” he said. “Even if you’re selling to poultry plants, this is where the puck is going. You can at least start the conversation.”

Hora views the 45Z rules as allowing farmers who are already doing these environmentally sound practices to “finally get the credit for what they’re already doing on the farm working with Mother Nature.”

Sergeant writes from central New York.