Climate Smart Agriculture practices require differentiation

Climate Smart Agriculture practices should be differentiated based on the measurability of their impact on the carbon intensity of fuels 

In the final guidance for the 40B SAF tax credit, Treasury utilized the USDA Climate Smart Agriculture (CSA) pilot program to reward farming practices that can result in lower greenhouse gas (GHG) emissions and increased land-based carbon sequestration by assigning them a carbon intensity (CI) discount. The practices include no-till farming, planting cover crops, and applying enhanced efficiency fertilizer, and they can be applied to corn and soy for set CI discounts (10 g CO₂e/MJ for corn and 5 g CO₂e/MJ for soy). In the 40B guidance, Treasury required all three practices for the corn CI discount, and both no-till farming and cover crops for soy.  

To the extent Treasury continues to employ CSA under section 45Z, it should clarify how these carbon intensity discounts were derived, clarify whether they would be applied at the level of the biorefinery or the farm/field scale, and ensure robust traceability of practices across the supply chain. Additionally, Treasury should separate out these three CSA practices, as they have varying effects.   

No-till and cover crops function to reduce soil disturbance and respiration and enhance soil organic carbon (SOC) stocks, but the effects of no-till farming and cover crops typically take years (or even decades) to occur, making empirical measurements to verify changes difficult. As a result, Treasury should not credit emission fluctuations associated with no-till farming and planting cover crops (see the below exception related to harvesting cover crops/double cropping) when determining CI scores under section 45Z. By contrast, the impact on a biofuel’s CI of applying enhanced efficiency fertilizer practices can reduce emissions within a growing season and be potentially quantified and could thus remain creditable under 45Z. 

No-till farming and cover crops 

CATF supports incentives for CSA practices that reflect and account for the degree of scientific uncertainty associated with the practice.  No-till farming and planting cover crops can reduce the amount of carbon released from soil through disturbance and enhanced respiration. But the effects of practices like no-till and planting cover crops also have high spatiotemporal heterogeneity, are reversible, and require monitoring long-term soil carbon dynamics to verify effects. The beneficial effects of these practices on SOC stocks typically take many years to occur, making empirical measurements to verify changes in SOC stocks difficult, especially on timescales less than 5-10 years. It is therefore inappropriate for changes in SOC stocks to be the basis by which taxpayer-funded incentives are distributed particularly in the absence of systems to verify implementation of the practices, verify the effects of the practice on SOC, and maintain the permanence of the associated effects.  

For SOC changes from agricultural management practices to be considered in a carbon intensity calculation, Treasury would need:  

1. Scientific support and data, so that it can base any credit allocations on measured improvements in the SOC stocks of the feedstock-producing fields;  

2. Monitoring and verification protocols to demonstrate the baseline SOC stocks for individual farms; 

3. A more robust track and trace model for biofuel feedstocks that goes beyond the practices laid out in the final guidance for the 40B SAF tax credit; 

4. An established protocol for additionality;  

5. Regular and prolonged measurements of SOC stocks; and 

6. A mechanism for recouping the value of tax credits that were issued to producers for claimed SOC improvements that turned out to be temporary/non-permanent.  

Absent these requirements, crediting SOC changes might artificially lower a fuel producer’s carbon intensity score with no guarantee that measurable, permanent CO₂ reductions will occur. Rewarding CSA practices is worthwhile, but doing so under other statutory authority via an acreage- or crop production-based subsidy that supports practice would be more appropriate than via a carbon intensity-based tax credit that is intended to support demonstrated performance. USDA should work to improve empirical measurements and models for potential future use. 

Finally, the plain language of section 45Z does not allow Treasury to use offsets from SOC practices in calculating the LCA of sustainable aviation fuel. Section 45Z requires Treasury use either: (1) the most recent Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) or (2) “any similar methodology which satisfies the criteria under section 211(o)(1)(H) of the Clean Air Act” to calculate the LCA of SAF. Critically, CORSIA does not credit SOC improvements as part of its methodology for calculating total GHG emissions. CORSIA identifies permanence as a key sustainability principle in ascertaining GHG emissions reductions. The types of on-farm and remote operational practices required to reliably “monitor, mitigate and compensate any material incidence of non-permanence” in SOC levels are still under development or lack scientific consensus. CORSIA––like Treasury––is not currently able to determine that claimed SOC improvements through practices like no-till farming are permanent and has not included SOC credits in its methodology for calculating GHG emissions. Thus, Treasury may not allow offsets for SOC improvements in calculating the LCA of SAF, as doing so would not be “similar” to CORSIA’s methodology.

Harvesting cover crops 

A promising approach to sequestering carbon using cover crops is to harvest the cover crops, extract the carbon within the crops, and permanently sequester that carbon underground. This practice should be differentiated from planting cover crops as the source of carbon reduction because it can result in permanent emissions reductions and gross carbon dioxide removal when following best management practices. For the purpose of determining adjustments to CI scores, this practice could potentially be credited if there is robust measurement, verification, and reporting. If this practice is credited under 45Z, the carbon reductions associated with this practice should not be double counted in other regulations or offset markets.  

Enhanced efficiency nitrogen fertilizer 

Applying enhanced efficiency nitrogen fertilizer is a different type of practice from no-till farming and planting cover crops and should not be grouped with them for the purpose of determining adjustments to carbon intensity scores. Applying enhanced efficiency nitrogen fertilizer functions to reduce reactive nitrogen losses like nitrous oxide and increase nutrient availability rather than enhance SOC. The potential benefits would likely occur within a single biofuel crop growing season because most nitrous oxide emissions occur the same year as fertilizer applications. If Treasury identifies a method to base credits on the measurable impacts of enhanced efficiency fertilizers on the CI of fuels, it can be incorporated into CI calculations under 45Z.  

See CATF’s full comments on 45Z for more information.