USDA Invests in Effort to Secure Clean Fuel Market Access For Farmers and Ethanol Producers

Sioux Falls, SD — The U.S. Department of Agriculture (USDA) on Friday (Sept. 24) announced a $7.5 million investment in the American Coalition for Ethanol (ACE)-led Regional Conservation Partnership Program (RCPP) project to secure farmers premier access to low-carbon fuel standard (LCFS) markets based on their adoption of USDA climate-smart agricultural practices.

ACE, together with RCPP partners South Dakota Corn Growers Association, Dakota Ethanol, South Dakota State University, Cultivating Conservation, and collaborator Sandia National Labs, will use the USDA financial assistance to compensate farmers for adopting climate-smart practices that sequester carbon, reduce greenhouse gas (GHG) emissions, and improve soil health.

The partnership will pair USDA technical assistance with significant partner financial and in-kind contributions to quantify the resulting soil health and GHG benefits, correlate them with existing models, and develop a non-proprietary verification system.

This data will then be used to secure farmer access to clean fuel or LCFS markets for the first time based on the GHG benefits of USDA climate-smart practices.

“We share the Biden administration’s goal of reaching net-zero GHG emissions by 2050,” said Brian Jennings, ACE CEO.

“Ethanol can reach net-negative carbon intensity by crediting biofuel crops grown with climate-smart farming practices in clean fuel markets via carbon capture and sequestration (CCS) and continued carbon reduction improvements at individual ethanol facilities.

“USDA’s investment in our project to validate the benefits of climate-smart practices in further reducing corn ethanol’s carbon footprint is a vote of confidence in the role farmers can play in reaching net-zero emissions by 2050,” Jennings added.

“Further, this project will provide a prototype for how clean fuel policies can reward farmers for climate-smart practices that reduce the overall carbon intensity of corn ethanol.”

According to Michigan State University’s GHG calculator that uses USDA data to compare GHG reductions from different cropping systems, changes to be incentivized in the new RCPP from conventional tillage to no-till would sequester an additional 91,000 metric tons of GHG emissions per year in the project area.

This is comparable to removing 20,000 cars from the road.

If these reductions were credited in existing mandatory clean fuel markets, such as the California LCFS, farmers could generate over $10 million a year in new revenue.

“The South Dakota Corn Growers Association is proud to partner on this project,” said Scott Stahl, President of the South Dakota Corn Growers Association.

“The growth of the ethanol industry over the past 15 years has been critical to the economic health of South Dakota farmers and rural communities.

"While the Renewable Fuel Standard continues to play an important role, South Dakota Corn Growers has invested significant resources analyzing the economic benefits that farmers could reap through new clean fuel market access,” Stahl commented.

“For example, farmers within the RCPP project area could secure an additional 39 cents per bushel for their corn if GHG reductions were credited in the California LCFS marketplace for climate-smart practices.”

ACE and RCPP partner Dakota Ethanol have worked extensively with the U.S. Department of Energy’s Argonne National Laboratory and California regulators to help them better understand ethanol’s climate benefits.

“The market premium we receive by selling our ethanol into the California LCFS program is a significant driver for making several process improvements to reduce our natural gas and electricity usage,” said Scott Mundt, Dakota Ethanol CEO.

“In addition to the gains we can make within the facility, properly structured clean fuel policies can incentivize significant GHG contributions from the farmers who supply our corn.

"Compensating the 500 farmers in Dakota Ethanol’s grain shed to lower the carbon intensity of their corn production through adoption of climate-smart conservation practices would result in significant climate and economic benefits.”

South Dakota State University will collaborate with the Department of Energy’s Sandia National Laboratory to quantify the GHG contributions made by RCPP participating farmers.

Further, SDSU will work with the larger partnership to establish a non-proprietary verification system that will allow farmers and ethanol producers to fully benefit from LCFS markets.

“SDSU has been working in the field of soil carbon for more than 30 years and is excited to partner on this project,” said David Clay, SDSU’s Professor of Soil Science.

“SDSU has long been a leader in studying the environmental and economic benefits of changes in production practices.

"We strongly believe this RCPP will expand our work to meaningfully scale the adoption of climate-smart farming practices throughout the biofuel producing regions of the United States.”

Cultivating Conservation brings years of experience in leveraging USDA conservation programs to address critical environmental challenges to benefit farmers and natural resources and is partnering in the development and deployment of this project.

“This project is critical to gaining regulators’ acceptance of the climate benefits generated by farmers through climate-smart farming practices,” said Lisa Moore, Cultivating Conservation’s founding member.

“Equally important is the role this project will play in demonstrating to farmers the economic value of clean fuel policies.

"We greatly appreciate USDA’s leadership in helping us make this case to farmers.”

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