Illinois corn farmers are very concerned by the announcement from the U.S. Department of Treasury (USDOT) limiting corn-based ethanol's contribution to the decarbonization of the aviation sector.
 

Yesterday’s 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 GHG emissions.

Today’s announcement significantly limits farmers' options for reaching emission targets through the end of the year. New guidance and a rulemaking process will occur for SAF tax credits effective January 1, 2025.
 

“The announcement is complicated and concerning to corn farmers across the country,” said IL Corn Growers Association President Dave Rylander. “As corn demand decreases with the Environmental Protection Agency’s recent emissions rule, our family farmers need other markets to sell grain. The administration’s announcement forces voluntary practices to become mandatory for farmers to access previously promised markets. We hope that more flexibility can be incorporated in the 45Z rulemaking that comes next, but with decreasing prices and a questionable profitability proposition, our industry is in jeopardy.”

A study published by the University of Nebraska-Lincoln in response to the EPA’s original proposal stated the ruling could result in a farm crisis like the 1980s.

Additionally, the United States Department of Agriculture (USDA) Economic Research Service forecasts farm net income in 2024 at $116.1 billion, a 37 percent drop from 2022.

“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.

The details of the announcement are so complicated and technical that some guidance is still needed. What is certain is that a one-size-fits-all approach to considering on-farm practices is unworkable. The University of Illinois’s State Climatologist reports growing seasons in Illinois vary from 215 days in southern Illinois to 180 days in northern Illinois. The difference in climate, soil, and season makes it difficult for Illinois farmers to subscribe to the same conservation regimen in all areas of the state, much less in all areas of the country.

The administration’s decision will limit SAF production, as the logistics of separating grain grown according to the prescribed practices is unfeasible for most storage sites and transportation models. This will limit corn production and use for SAF.

“The model's changes reconfirm our doubts that the administration truly wishes to decarbonize the transportation sector,” Rylander said. “The number of practices prescribed will significantly reduce corn-ethanol’s availability for SAF production and limit availability of clean jet fuel in the short term.”

IL Corn Growers Association looks forward to the opportunity to participate in the upcoming public comment period for 45Z rulemaking. This process provides Illinois agriculture with the much-needed opportunity to describe to agency officials how practices and farm management can be limiting and why flexibility for farmers is a must. Additionally, the data management segment of this new SAF industry is complicated and has never been done at this scale. ICGA feels an obligation to help protect farmer data and will eagerly prepare expert commentary for the public comment period.