45z Clean Fuel Credit

February 27, 2026 | AgFocus-Ag Focus

In agriculture, change rarely happens overnight – but when it comes, it can move markets quickly. Programs like 45Z are another example of how policy decisions in Washington can eventually influence what happens here at home. Our role isn’t to take a side; it’s to help you understand what may be coming and how it could impact your operation.

45z Clean Fuel Credit: What it Could Mean for Local Agriculture

The federal 45Z Clean Fuel Production Credit is beginning to move from discussion to implementation, and it has the potential to influence ethanol plant profitability and, indirectly, local grain markets.

Recent industry analysis suggests that a typical Midwest dry-mill ethanol plant historically operating near 12 cents per gallon in margin could see an additional 10–11 cents per gallon in credits under 45Z — even without carbon capture investments. Plants utilizing carbon capture and storage may see higher values. 

While the credit is paid directly to fuel producers, the ripple effects could reach the farm gate in two primary ways:

• Local Basis Strength: Plants running harder to maximize credits may increase demand for
  bushels, potentially tightening local markets.
• Carbon Intensity (CI) Opportunities: Ethanol plants are evaluating how lower-carbon production
  practices at the farm level may enhance their overall CI score, which could create
  new partnership or premium conversations.

At our 2024 Agribusiness Conference, Continuum Ag discussed how carbon intensity measurement is becoming a growing part of grain marketing discussions. As implementation details continue to develop, conversations between farmers and local ethanol plants are likely to increase.
As always, we encourage producers to stay informed, evaluate how market changes may affect cash flow and working capital, and have proactive conversations as these programs evolve.