An Iowa ethanol producer and a company developing sustainable aviation fuel announced a joint agreement Thursday to track and verify carbon intensity scores toward marketing ethanol-based jet fuel through California's low carbon fuel standard.
Southwest Iowa Renewable Energy and Gevo Inc. received a $30 million USDA Climate-Smart Partnership grant to look at ways to create incentives for low-carbon corn. They are awaiting final approval by USDA on their project.
Kevin Hodges, Gevo grower program lead, said that while both companies are part of the USDA grant, they also see market opportunities that can increase revenue streams for corn farmers in SIRE's local area of southwest Iowa and southeast Nebraska.
"This JDA is an additional business opportunity that both companies realized agricultural benefits can be combined with biofuels to reduce carbon-intensity. This opportunity aligns with the administration’s current thinking with the passing of the Inflation Reduction Act," which offers incentives for sustainable aviation fuel, Hodges said.
The 2023 growing season will be the initial launch with scaled acres likely in 2024, Hodges said. Growers who deliver corn to SIRE, a 130-million-gallon-per-year ethanol plant located in Council Bluffs, can use Gevo’s newly created Verity Tracking platform within its Verity Carbon Solutions business.
The joint agreement will then enable farmers to get a rebate based on the climate-smart practices they can track and verify, said Kevin Ross, a SIRE board member and Minden, Iowa, corn farmer. The payments would be similar to the rebates farmers receive for seed or chemical purchases.
Ross, a former National Corn Growers Association president, told Agri-Pulse there are many ways farmers can reduce their carbon intensity score, including certain tillage practices, different application levels of chemicals, and targeted fertilizer use through split application.
"At the end of the day, it’s about efficiencies. It’s about producing more with less and how you can drop that number down,” Ross said of the carbon intensity score.
The ethanol sector, through the Argonne National Laboratory GREET model, already provides a way to measure a life-cycle analysis for corn. Gevo believes the GREET model is the best available standard measurement to accurately examine carbon intensity.
“We are excited about our partnership with SIRE to track carbon intensity reductions through the entire value chain, creating high quality carbon insets. Unlike carbon offsets where the carbon reduction value is transferred to a value chain that may not be related, the carbon inset approach here allows carbon intensity reduction to be quantified throughout the value chain from the bushel to the gallon to drive continuous improvement,” said Paul Bloom, Gevo’s chief carbon and innovation officer.
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Being part of an inset program like this one rather than selling carbon "offsets" allows growers to capture greater value and eliminate some of the middlemen throughout a carbon capture chain, Ross said. Making these inset programs easily useable and verifiable may also increase participation among farmer growers, he said.
Many producers are already tracking many of the practices and actions that will be loaded into Gevo’s Verity Tracking platform.
Gevo’s Bloom added, “For end customers who want to reduce their carbon footprint within the value chains in which they participate, this effort aims to provide measurable improvement and trust in verification of those efforts.”
If ethanol companies can verify they have a lower carbon ethanol, it brings a higher value whenever it is marketed, even if just a few additional pennies per gallon.
“From a company standpoint, we’re looking to be able to create value for the shareholder, and hopefully be able to continue to keep SIRE profitable and keep us on the cutting edge of these markets, whether that is sustainable aviation fuel or California’s low carbon ethanol, or wherever we’re going with LCFS credits,” Ross said.
The future market for sustainable aviation fuel could depend in part on whether feedstocks such as ethanol can qualify for tax credits authorized by the Inflation Reduction Act enacted last year. Federal agencies are divided over whether the GREET model should be used to assess the carbon score.
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