Since the passage of the Inflation Reduction Act (2022), several reports have surfaced examining the merits of the 45Z tax credit nested in the legislation. Among other things, 45Z presents a breakthrough opportunity for bottom-up economic revitalization in rural communities by promoting regenerative agricultural practices and biofuel production. In this article, I will review just some of these merits in the context of how 45Z could potentially represent one of the greatest boons rewarded to farmers in years. From new jobs to reversing the brain drain, this program may be vital to thwarting the hyper-centralization that has so long characterized America’s demographic trends.

Job Creation and Economic Growth

To give some perspective, the sum of investments in the World Resources Institute’s hypothesized new climate economy could create some 118,000 jobs and add $9.8 billion to struggling rural economies each year. If this sounds like a lofty, unimaginable, or even threatening plan to you, you may be surprised to learn that 45Z’s estimated impact alone will nearly double these numbers at the national level — adding 192,000 jobs and $21.2 billion in three years. Most of these positions would be based in ethanol manufacturing and its fruits, but construction projects and their workers, hired agricultural labor and contractors, and environmental scientists specializing in agriculture are also counted. On a high level, it is easy to see these figures and be impressed, but what does it mean for an average farmer?

Increased Revenue for Farmers

Though 45Z is paid directly to ethanol plants instead of the farmers themselves, the premiums paid through favorable agreements can still be substantial. In an interview with Cedar Rapids-based newspaper The Gazette, Mitchell Hora of Continuum Ag claimed, “The average farmer in our network has a CI score of 8, garnering a potential value of over $200 an acre.” Factoring in the additional paid programs for 45Z-recommended sustainable practices, the profits become more than worth the trouble.

But even if you doubt that your property matches (or will match) his anecdote, most farmers’ crops are below the purported average CI Score of 29 without doing anything differently, so it is worth having one’s score certified regardless. The lower the CI Score, the higher the payout.

“…garnering a potential value of over $200 an acre.”

Federal and State Tax Revenues

From an administrative standpoint, economic activity generated by the 45Z tax credit benefits local, state, and federal governments through increased tax revenues. It is estimated that the new climate economy could add $685 million in total tax revenues annually in economically disadvantaged rural counties. This influx of funds will support public services and infrastructure improvements, literally and metaphorically paving the way for future resettlement.​ These services (especially hospitals) are often the broadest youth employers, so their upkeep becomes key to rural revitalization.

Long-Term Economic Stability and Sovereignty

Investing in initiatives like 45Z not only provides immediate economic benefits but also contributes to long-term stability and sovereignty. As the demand for clean energy and biofuels climbs, rural communities that adapt will be better positioned to thrive in a low-carbon economy. Gone will be the days of energy dependence on delicate, elaborate international supply lines; in its place will arise regional producers that use local fruits to provide all the energy Rural America needs. How much more on a national level when we no longer need to import oil and its byproducts? This, then, is real sovereignty.

Whether we know it or not, the energy transition is here. What 45Z ensures is that rural areas are not left behind, and, as one considers that autonomy and adaptation in the face of dramatic change is how rural communities have survived and thrived to the present, it becomes clear that this is a blessing.

Brain Drain

The final merit I will present is more philosophical in nature. Books like Hollowing Out the Middle: The Rural Brain Drain and What It Means for America commonly discuss brain drain as one of the primary causes of rural depopulation. Young, educated graduates tend to go where the money is, and small towns are frequently neglected in the public money that brings jobs and binds together communities necessary for their talents.

An initiative like 45Z may present a significant and enduring enough stimulus to entice well-educated conservation and agricultural professionals to stay in the communities they work in. Their children — who then see that you can make money without owning vast tracts of land — may consequently have more reason to stay. This principle is expressed best by Hobart Harmon:

“[Part of the debate centers on] [r]eforming the American high school as an engine of individual, state and national economic prosperity. Assuring high and common curriculum standards across America… seems essential. Yet, missing in the debate may be the more personal reasons of why many rural residents chose to live in the countryside, as a trade off to more lofty ideals that have come to define life achievement and success in an urban-minded society” – Hobart L. Harmon

For more information and updates on 45Z and its benefits, visit 45z.org.