ACE Highlights Importance of Low-Carbon Farming Practices, Flexible Verification, and Timely Implementation in 45Z Testimony

The American Coalition for Ethanol (ACE) today urged the U.S. Department of Treasury and Internal Revenue Service to swiftly finalize practical and workable regulations implementing the Section 45Z Clean Fuel Production Credit, emphasizing the importance of fully recognizing low-carbon farming practices within the program.

During Treasury's public hearing on proposed 45Z regulations, ACE Chief Consultant and Policy Advisor Jonathon Lehman stressed that ethanol producers and farmers need clear rules that allow the industry to fully monetize carbon reductions achieved through conservation practices and innovation.

"ACE members sit at the intersection of American agriculture and American energy," Lehman testified. "45Z-strengthened in the One Big Beautiful Bill through transferability and extension through 2029-is a genuine market-based lifeline, but only if Treasury finalizes rules that allow full monetization of low-carbon farming practices."

ACE highlighted that farming practices account for roughly half of ethanol's carbon intensity profile and argued that conservation efforts such as no-till, reduced tillage, cover crops, and precision nutrient management must be incorporated effectively into the final rule.

"If Treasury allows these practices to qualify properly, billions of dollars annually will flow to ethanol producers and farmers," Lehman said.

ACE also encouraged continued improvement of the USDA Feedstock Carbon Intensity Calculator (FD-CIC) and for the tool to be integrated directly into the 45ZCF-GREET model.

"The rule should envision updates to the FD-CIC based on new information as it becomes available," Lehman testified. "ACE's continued work with land grant partners supports the modeling improvements needed to make 45Z carbon intensity calculations more accurate."

Lehman pointed to ACE's ongoing partnership work with USDA and DOE, including a project in South Dakota, generating field-level data validating the emissions benefits of conservation practices. ACE further urged Treasury to build verification requirements around existing USDA conservation programs rather than imposing costly new compliance systems.

ACE also called for flexibility regarding Energy Attribute Certificates (EACs), warning Treasury against applying restrictive 45V "three pillars" rules wholesale, and to clarify that EACs will be available for the entirety of the 45Z program. The organization additionally urged Treasury to include corn kernel fiber pathways in the next emissions rate table instead of requiring producers to navigate the lengthy Provisional Emissions Rate (PER) process.

In closing, Lehman emphasized the urgency of finalizing the rule and ensuring federal agencies coordinate effectively to support rural economies and low-carbon fuel growth.

"Farmers and rural communities cannot afford further delay," Lehman concluded.

ACE's testimony talking points can be accessed here.