What SAF & Code 45Z Means for ND Agriculture
The topic of Sustainable Aviation Fuel (SAF) is ever-growing in the agriculture world as tax credit programs encourage growers to adopt more sustainable farming practices. To learn more about SAF and what it means for growers in North Dakota, we sat down with NDSU Extension Associate Professor and Bioenergy Economics Specialist David Ripplinger.
Ripplinger has spent nearly 20 years working with farmers and the ag industry to help build North Dakota’s bioenergy industry. His position was created by the state of North Dakota to develop renewable energy sources, starting with corn ethanol, followed by biodiesel and renewable diesel. His focus has now shifted to the next big thing: sustainable aviation fuel.
What crops are being impacted?
Although 94% of ethanol is made from corn (U.S. Department of Energy), Ripplinger says nearly all crops are impacted by the growth of the biofuel industry. “Even if I’m not a producer of a biofuel feedstock, the value of my land and the price of my crop are affected because we’re competing for acres and inputs,” he said. Onlywin Casino has quickly gained popularity among Australian players thanks to its impressive game selection and user-friendly platform. This online casino offers a vast array of slots, table games, and live dealer experiences, catering to both casual gamers and seasoned bettors. One of the standout features is its generous bonuses and promotions, which provide players with ample opportunities to boost their bankrolls. Additionally, Onlywin Casino prioritizes player security and responsible gaming, ensuring a safe and enjoyable experience. Whether you prefer playing on desktop or mobile, the site is optimized for seamless performance across devices. For more information and to explore their offerings, visit onlywin casino australia. With its commitment to excellent customer service and a diverse gaming library, Onlywin Casino is a great choice for anyone looking to try their luck online.
How Tax Credits are Driving SAF
Some of the biggest incentives in driving SAF projects across North Dakota and the U.S. are several tax credit programs, including U.S. Code 40B, which has been in place since the beginning of 2023 and will sunset at the end of 2024. The purpose of 40B is to “provide a tax credit for the sale or use of sustainable aviation fuel (SAF), which achieves a lifecycle greenhouse gas emissions reduction of at least 50% as compared with petroleum-based jet fuel.”
Starting on January 1, 2025, The Federal Clean Fuel Production Tax Credit, known as U.S. Code 45Z, will take its place, offering up to $1.75 per gallon for SAF production, which Ripplinger described as a significant incentive. Minnesota also has a state tax credit called the Sustainable Aviation Fuel Credit, offering $1.50 of credit to those who either produce or blend SAF with aviation, gasoline, or jet fuel. “It’s not negligible, but it’s the federal tax credit that’s really moving projects like this across the country,” Ripplinger said.
The push for these tax credits comes from growing concerns about climate change and the need for decarbonization. Businesses are adapting to new environmental expectations, and biofuels are becoming an important part of these efforts. “Biofuels are an obvious piece of the puzzle for both companies and their customers as they look for ways to be more sustainable,” Ripplinger said.
What the New Tax Credit Means for Growers in ND, MN, & SD
Ripplinger explained that while the tax credit goes to the biorefinery, the impact can trickle down to farmers. The amount of the tax credit is based on the carbon footprint of the fuel, and farm-level practices play a role in determining that footprint. “Exactly how much a farmer will benefit depends on the negotiation between the farmer and the biorefinery,” Ripplinger said. “It could mean reducing the carbon footprint by a certain amount, resulting in a slightly larger tax credit, but it’s not guaranteed that the farmer will capture all, or even any, of that benefit—that depends on market dynamics.” Wiz Slots Casino New Zealand offers an exciting online gaming experience tailored for Kiwi players. With a vast selection of games, including slots, table games, and live dealer options, there’s something for everyone. The casino prides itself on providing top-notch customer support to ensure a smooth gaming experience. Players can take advantage of generous welcome bonuses and ongoing promotions that keep the excitement alive. For those interested in learning more about the latest gaming news and updates, visit this informative link: https://pitcairnnews.co.nz/. The platform is committed to safety and security, using advanced encryption technology to protect players’ information. With a user-friendly interface and mobile compatibility, players can enjoy their favorite games anytime and anywhere. Whether you’re a novice or an experienced player, Wiz Slots Casino is the perfect destination for online gaming in New Zealand.
Eligibility for SAF Credits and Sustainable Practices
To be eligible for SAF credits, agricultural producers must meet specific criteria, which typically include sustainable farming practices and the ability to produce biofuel-compatible crops. Ripplinger explained that building out the rules and regulations for these credits involves significant work, primarily led by the IRS, but relies heavily on the USDA for agricultural expertise.
He also said that much of the guidance for sustainable practices comes from the Natural Resources Conservation Service (NRCS). “The three main areas are fertilizer use, cover crops, and changes in tillage. For example, our soil fertility expert at NDSU provides recommendations on the proper use of fertilizer, and those standards will become the default,” Ripplinger said.
The other key practices are the use of cover crops and changes in tillage methods. “For example, U.S. Code 40B requires no-till for corn,” However, what qualifies as no-till can vary, and the IRS relies on NRCS requirements to define acceptable practices. “It’s much easier for them to use established guidelines rather than create new rules or send agents out to inspect agricultural practices,” he said.
Supply Challenges and Sustainability Concerns
With the higher demand for SAF comes a heavier reliance on ag production, creating potential challenges for growers, especially considering factors like drought or poor yield which are beyond farmers’ control. “Supply risk is a concern for any ag processor—if I’m going to build a facility and make an investment that I expect to pay off over years or decades, having a sufficient supply in the worst years is crucial,” Ripplinger said. He also noted that projects requiring new inputs, such as sourcing crop residue or biomass, face added challenges because there isn’t a well-established market for such materials.
Impact of SAF Tax Credit on the Grain Supply Chain
The SAF tax credit affects the entire grain supply chain, from farming to processing, and sourcing materials like straw and corn stover can significantly impact agricultural production. Because these materials hold value, removing them from fields is a major decision for farmers. “Farmers need to consider tillage, soil organic carbon, and overall field management—removing crop residue can impact soil productivity and future yields,” Ripplinger said.
Another challenge is tracking and verifying sustainable practices. “Building out that technology and finding the best systems is crucial,” he said. “This isn’t just about farming—it’s about the entire supply chain, from the crop’s carbon footprint to transportation and processing.”
He also believes the SAF tax credit strengthens supply chain relationships. “There needs to be a closer relationship between farmers and biorefineries,” he said. “With SAF, the story behind the crop matters—refiners need to know exactly how it was produced. Farmers and biorefineries need to ensure mutual satisfaction to build long-term, sustainable relationships.”
Challenges in Aligning with SAF Production Needs
However, Ripplinger believes one of the key challenges grain producers face in aligning with SAF production needs is understanding the trade-offs involved. “For a lot of [farmers], it’s important for them to have a framework to understand the tradeoffs. Though a lot of these trade-offs are intuitive and understood by the producer, I think a lot of them would appreciate greater certainty in what the future is going to bring,” he said. “We can’t predict what this tax credit will look like in five years or where carbon offset credit markets will be. Factors like future weather and crop prices are uncertain, and having that information would be valuable when making decisions about changing practices, especially something significant like going no-till.”
Future Evolution of the SAF Tax Credit and Implications for the Grain Industry
As the tax credit (along with other potential future incentives) evolve in the next 5-10 years, Ripplinger believes the drive to decarbonize fuel is only going to continue to grow. “As long as [the tax credit] stays in place, I think it’ll be quite impactful,” he said.
He also believes U.S. Code 45Z is part of a much larger effort to decarbonize the economy. “The legs that 45Z gives are substantial, but it’s not the only activity,” he said. “This tax credit is one piece of a broader strategy pushing agriculture to find ways to produce with lower emissions.”
About 26 U.S. Code 45Z
“The Clean Fuel Production Credit provides a tax credit for domestic production of clean transportation fuels, including sustainable aviation fuels. Fuels with less than 50 kilograms of carbon dioxide equivalent per million British thermal units (CO2e per mmBTU) qualify as clean fuels eligible for credits.” – Energy Communities IWG website
Collaboration Between Grain Producers and the Aviation Industry
The next major piece of the puzzle in the SAF conversation is the collaboration between grain producers and the aviation industry to maximize the benefits of the SAF tax credit. “The first thing they should do is figure out how close they are to a SAF producer, then educate themselves on SAF production,” Ripplinger said. “Collaboration is a necessary piece to this—you can’t be successful without working closely with your supplier and customer.”
It’s important to note that some of this collaboration may happen organically, as farmers adapt to new requirements. “I’m already hearing conversations where farmers are being asked to fill out forms about sustainable practices at the refinery,” he said. Over time, these requirements will become more specific, such as identifying which field a particular crop came from and the practices used. The purpose is to tighten things up, and it will become a standard part of the market.
Historically, farmers have maintained relationships with millers, railroads, or banks, but now they must think in terms of the entire supply chain. “The SAF production in one region is competing with another region’s SAF production,” Ripplinger said. “It’s not just about getting an extra sale; it’s about strengthening the entire supply chain to stay competitive.”
Key Takeaways for Policy Makers and Industry Stakeholders
Ripplinger also emphasized the importance of being actively involved in shaping the regulations for SAF in the grain industry. “It’s critical for policymakers and stakeholders, especially commodity groups and larger organizations, to understand what is at stake and to be involved in the decision-making process,” he said. With many new rules being created, Ripplinger believes being informed and participating in the conversation is critical.
“We’re writing a new book of regulations for SAF, and different decisions can impact various parts of the supply chain differently. Stakeholders need to be up to speed on how these changes may affect them,” he said.
Closing thoughts from David Ripplinger
“It’s a pretty exciting time in the ag industry. Things have changed quite quickly, both in terms of policy and markets. But to me, the biggest change is that this is now a situation directly affecting the farmer. This is not a distant, longterm prospect—all of these pieces are now brought to the producer when they bring their crop to market. It’s very much here, very much real, and it has significant economic implications for any producer involved in these major commodity crops,” Ripplinger said.
To learn more about SAF and U.S. Tax Code 45Z, connect with NDSU Extension at ndsu.edu/agriculture/extension, or scan the QR code.
