The 45Z tax credit is not merely a financial incentive; it is a powerful tool for catalyzing significant sustainable change in agriculture. Through encouraging the widespread use of ecologically-minded farming practices and local renewable energy production, 45Z helps reduce greenhouse gas emissions, improve soil health, and enhance overall ecosystem resilience. In this article, I will assess the environmental impacts of the 45Z tax credit and its contribution to a new American agricultural paradigm.

Reducing Greenhouse Gas Emissions

One of the primary goals of 45Z is to reduce the greenhouse gas (GHG) emissions associated with agricultural and biofuel production activities. Historically, agriculture has been a significant emitter of climate change-driving gases, but it has the potential to be a deep carbon sink. It all depends on how individual farmers and their partners align their practices with the existing programs facilitating the energy transition. Here’s how 45Z helps:

• Lowering CI Scores: The 45Z tax credit endorses agricultural methods that reduce the Carbon Intensity (CI) Scores of biofuel feedstocks. No-till, cover cropping, and precision agriculture, among other techniques, can significantly lower CI Scores, leading to lower GHG emissions. On a national level, inspiring even 5-10% of farmers to adopt these practices would be momentous. There are no existing estimations about how much total CO2 45Z can be expected to save, but, as an example, 45Z is projected to more than double the number of ethanol plants practicing carbon capture (from 50 to 124; from 9.5 million tons to 23.8 million tons). This shift alone is equivalent to removing approximately two million cars from the road each year. Imagine how much more if all or even some of traditional agriculture went net-zero! That said, this depends on farmers.
• Renewable Fuels: Renewable fuels like ethanol and biodiesel produce fewer GHG emissions compared to traditional fossil fuels. The Argonne National Laboratory, for instance, found that corn ethanol has 44-52% lower GHG emissions than gasoline. This fact is not incumbent on farmers but rather on ethanol plants. 45Z is unique for fostering mutual interdependence between the two primary stages of biofuel production — the farmer (and his feedstock) and the ethanol plant (and their product).

Improving Soil Health

The 45Z tax credit promotes techniques that improve soil health. Soil health has been found to be critical for long-term productivity and consistent yields. Here’s how these practices benefit the soil:

• Increased Organic Matter: Practices like cover cropping and the use of organic amendments add organic matter to the soil. This, in turn, enhances soil structure, fertility, and water retention. The USDA highlights that healthy soils are more productive and resilient, supporting better crop yields and reducing the need for chemical fertilizers​.
• Reduced Erosion: No-till farming and cover cropping help prevent soil erosion by protecting the soil surface and maintaining root structures. This not only preserves soil health but also prevents sediment runoff into waterways, improving water quality in agricultural areas.

Advancing Biodiversity

45Z supports agricultural practices that advance biodiversity, contributing to healthier ecosystems. Here are some ways it makes a difference:

• Habitat Creation: Agroforestry and conservation practices create habitats for various species, protecting local biodiversity. For instance, integrating trees and shrubs into farming systems can provide shelter for wildlife.
• Pollinator Support: Reducing pesticide use and planting cover crops can create environments that support pollinators like bees and butterflies. As keystone species, pollinators are essential for crop production and maintaining biodiversity in agricultural landscapes.

Long-Term Environmental Benefits

In addition to the immediate environmental benefits, investing in 45Z’s recommended practices contributes to long-term sustainability:

• Climate Resilience: Healthier soils and diverse ecosystems are more resilient to climate change. By improving soil health and supporting biodiversity, the 45Z tax credit helps agricultural systems better withstand extreme weather events and changing climatic conditions.
• Sustainable Land Management: Encouraging sustainable land management practices ensures that agricultural lands remain productive and environmentally and economically viable for generations to come.

Conclusion

45Z is a game-changing initiative that delivers substantial environmental benefits. By reducing greenhouse gas emissions, improving soil health, and enhancing biodiversity, the tax credit supports a quick, achievable energy transition that does not leave farmers behind. These environmental gains not only contribute to a healthier planet but also ensure the long-term viability and productivity of farming systems. In other words, the program seeks to boost your yields, not diminish them. As we continue to face global ecological challenges, 45Z stands as a valuable tool in promoting transparent change and resilience in agriculture.

For more information on the myriad benefits of 45Z, stay tuned at 45z.org.