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John Dobberstein:

The number of incentive programs sitting in the market to reward sustainable agricultural practices is increasing, but figuring out the hows and whys of all the programs can be a daunting task. Nevertheless, federal incentives to lower greenhouse gas emissions could result in a windfall for no-tillers raising low-carbon corn. In this edition of the No-Till Farmer Podcast, brought to you by Yetter Farm Equipment, Bardwell, Kentucky, no-tiller, Joel Reddick, will help you discern which programs are right, what questions to ask, and which practices can actually move the needle when it comes to maximizing tax credits and how not to leave money on the table. Reddick has worked extensively on biofuel tax credits and regenerative agronomy.

Joel Reddick:

I do want to start with saying I don't work for any of the companies mentioned. I do not participate in any of the programs that I'm mentioning. I'm coming to you from a farmer's perspective with the truth as I see it, as best I can find it. So what I hope to do here today is to help you navigate the wild west of programs and government positions and opportunities as best as you can moving forward.

But to define the terms and let you know a little more specifically about what we're talking about today. A tax credit, what I'm calling it for these purposes, is money given to you by subtracting from the taxes that you owe. So if you make $100,000 in taxable income, and the government gives you a $10,000 tax credit, you only have to pay $90,000.

Renewable energy. It is unlimited in quantity and readily available. Common examples could be solar-powered from panels, wind, geothermal, hydro. These are all examples of renewable energy, but they can also come from plant-based sources such as corn that we use in ethanol quite a bit. Oil seeds such as soybeans, canola, there's lots of other emerging. New seed carinata. There's lots of other potential crops that can fall into that oil seed category. And then just plant material. And then we'll talk briefly about methane digesters and potential there.

We'll transition to talk about players in the carbon space, carbon credits, carbon intensity. There's lots of different things happening with carbon, lots of interesting things. The players in the game that I'm going to refer to today are Bunge Chevron, ADM, Continuum Ag, and Bayer. There are many more. Land O'Lake's Truterra is another bigger one.

There's others that I don't have time to mention and don't have the knowledge to speak about. But these I felt comfortable presenting about and giving you their story, outlining their programs, and using these as examples to show you the framework that they're operating in, because there's lots of companies that have similar business models and similar programs available.

But I just want you to know the types of programs and to be able to make the best decision you can based on that information. So we'll talk about Bunge Chevron first. Bunge Chevron is doing some very cool things in my backyard actually. I've got canola growing right now that's going to be sold to Bunge to produce renewable fuels.

So Bunge and Chevron merged in 2022 with Chevron buying Bunge to enter the agricultural sector. And whenever big oil gets into big ag, I think we as farmers should pay attention because that's a major change in marketing opportunities for us. Chevron oil is the 15th largest company in the world looking at revenue annually. So when they make a major decision to purchase Bunge, I couldn't find what they spent to buy Bunge, but I'm assuming it's not a small number. They're investing heavily in our industry. And one of the ways that they're doing that is to produce sustainable aviation fuel.

And this chart just shows the growth that they are projecting for their numbers internally in renewable fuels, and how they think they can increase that by several billion dollars from nothing in 2020 to just over $10 billion in 2028, which is only three years from now. That's a very short time span for exponential growth.

What Chevron Bunge is doing in our area is growing this lovely yellow flower in the spring with canola. And they're entering the canola space in a big way. And that is purely because of sustainable aviation fuel and the airline industry signaling heavily that they want to become less dependent on petroleum-based fuel sources and want to become more dependent on renewable sources from agriculture production. This can be not exclusively canola, it can be other oil seeds such as soybeans.

So in our area in western Kentucky, just south of Paducah, if you know where that is, we can grow canola in the wintertime and then double-crop soybeans after that. And we're also located right up the river from their facility down in New Orleans. So they can load barges and handle very high volume of products and ship them straight down the river to their newly still under construction facility and just west of New Orleans a couple of miles.

So they've renovated this facility in order to produce sustainable aviation fuel as well as renewable diesel. And the nuance between renewable diesel and biodiesel is from what I have learned, quite small, and it's more of a rebranding in my opinion. Again, I'm not a scientist, I don't work for them. But renewable diesel will be very similar to what we have heard of as biodiesel in the past, just with a little more attention to the carbon intensity and the environmental outcomes from that fuel input source.

But Bunge and Chevron are investing heavily in our area, because I'd say the vast majority of this room can get to New Orleans by barge fairly efficiently from Bunge's perspective. So if you haven't heard of any of these oil seeds, further north, it would be camelina because of its cold tolerance. Further south it could be canola, rapeseed. There's lots of other options.

And most of us, if not all of us, are growing soybeans. So this is very relevant to anybody growing any of those crops or even who could potentially grow those crops, because the airline industry is projecting ridiculous growth in their demand for plant-based fuels. And they're looking to people in this room because we can make renewable fuels greener than the majority of farmers. Just the subset of farmers that'll be present in at this conference will be the ones that they look to produce more environmentally friendly greener fuels, rather than just conventional produce fuels.

So there's huge amount of potential if we can capitalize on it. And that does depend on your location, where you are in this supply shed from Bunge's perspective down here in New Orleans, depends on what you can grow. They tried to grow canola down in the Delta before they came to us in Western Kentucky, West Tennessee, and it did not go well.

The winter seasonality wasn't right for the genetics of the canola, so they actually had to pull out of there and they tried it again with us further north. So it is trial and error. There will be problems along the way, but there's also huge potential with the aviation industry looking to pivot from petroleum to agricultural-based fuels.

Switching to ADM's regenerations program, and I know they've got people here this week, so if you have more questions, talk to them. Don't come to me. But just to give you an outline of their program. So what this program does, it's they've got a couple different options here. This is for Indiana, just to hone in on one state because they've got different programs in different states. So I just picked one because I thought a good percentage of the room would be from Indiana.

They've got the USDA's Climate-Smart Commodities payment. That's a grant from the USDA that is $25 an acre if you're a new adopter in '23 or '24. It's $15 an acre if you adopted these practices, which could be no-till cover crop or both in 2018 to 2022. So what they're doing in this scenario is paying you to adopt a new practice. If you are a practitioner before 2018, you are likely ineligible for this.

I guess you're kind of grandfathered in, and they can't document a change in soil carbon outcomes or any kind of change in practice because I guess there's a statute of limitations for this government program. So if you adopted practices before '18, you're not eligible for this. Which is unfortunate for a lot of us who have been doing that longer than 2018.

However, if you are a new adopter, if you pick up acres that you have adopted in this timeline, or now, you could be eligible for $25 an acre to change practices. They have an internal funded by ADM and their partners for a lower price of $10 an acre. It doesn't have any date restrictions. So you could have adopted previously. And I would assume, since they clarified on on the USDA program, they are not clarifying here, that your acres may be eligible.

So $10 an acre is modest in today's money, but it is not nothing. And it's just a little bit of paperwork to plant a cover crop within NRCS guidelines. The previous cover crop practice is allowed on the field, so that's good for people that are more legacy practitioners of no-till or cover crops or both.

They also have another interesting program for corn and for soybeans. And this is via the ISCC's Emissions Scoring System. The ISCC is a system that was developed in the European Union to grade and score environmental outcomes, emissions outcomes. ADM is obviously a global player in the commodities industry, so they can score your corn or soybeans based on your inputs. So that's going to be tillage practices, fertilizers, yield, cover crop use. A variety of metrics that impact what the ISCC measures as far as environmental outcomes.

And based on that score, they will pay you 2 cents to 8 cents per bushel if you're delivering to Attica, Indiana. So this is limited in its scope because it is one delivery point for corn and 2 to 8 cents per bushel is not nothing, but that can really add up. 200, 220, 240 bushels an acre. You can do the math on what that's worth for you, and the better your score is in that ISCC system, the higher your premium will be.

For soybeans, it is 5 cents to 7 cents. So a little better on average with soybeans, and they can be delivered anywhere that they have a river terminal or a high oleic end rotation. So there's a little more availability for ADM's program with soybeans, which is excellent. The farmer must complete this ISCC Self-Declaration to enroll in this. I did this actually for my canola with Bunge. So I've been through this ISCC process before, because Bunge is selling currently the canola in the European market. So they were able to leverage this opportunity as well for their canola growers if you were willing to do some paperwork.

So this is not just ADM, this ISCC is anybody trading in the European zone can probably participate in this. I'm not an expert on that, but just ask them if that's an option for companies that you're working with. No fields enrolled in ADM or Generations can be enrolled in any other privately funded carbon or sustainability incentive. So what that is, is it's an exclusivity clause.

So if you sign with them to receive this payment, you cannot participate in any other privately-funded program. I would take that to mean you probably can participate in a government-funded program. So you can use a government program and this private program simultaneously, but you cannot use a competitor private program for carbon or sustainability incentives.

So you're going to have to clarify with ADM if you're interested in this on exactly what that means, because there may be loopholes. But just be aware that most of these programs do have some exclusivity, and you can't pick and choose from 10 different programs and have everybody pay you for carbon 10 times. You can only do this once. So make sure to choose the best program for your farm for this year and for the years moving forward.

As you can see down here, this is how they're measuring ISCC emissions. That's pounds of CO₂ equivalent per bushel. The better you are on this metric, 14 lower is higher so that your emissions are lower in this scenario per bushel. So you receive 8 cents. If you're higher than 18, you only receive 2 cents a bushel.

With soybeans, it's a little different metric because it's a different crop. But some decent money to do some paperwork if you're doing practices that already encourage ISCC premiums. However, if you're changing practices, switching tillage systems, or adopting a cover crop, for 2 cents a bushel is not that attractive. But I think over time this ISCC will be faded out and there will be a domestic American version of this that will come, I think. So that we won't have to depend on the ISCC as our only opportunity. I think there'll be equivalent and hopefully better opportunities to be used in the States.

The ISCC scoring looks very similar to the GREET model that that is being developed here in the States and could be used as the scoring mechanism for our domestic products. And that's a good transition actually, because talking about Continuum Ag, what they are operating with is, is using that GREET model to help understand carbon intensity. So we're not looking at carbon credits, we're looking at carbon intensity and tax credits associated with that from the federal government.

So talking about ethanol primarily when I'm referring to Continuum, but sustainable aviation fuel will also be allowed in this system, but it won't be these exact numbers. It's a different crop. It's a different number system. But referring to ethanol with Continuum, traditional petroleum-based gasoline has a carbon score using the GREET model at about 98, and then ethanol is about half of that. So out the gate ethanol has a lower environmental impact as measured by this model.

What is different since 45Z has been adopted in 2022, is that the scope three emissions on the right side of this screen in blue are now able to be quantified in corn and soybeans. So from an ethanol manufacturer's perspective, prior to 2022's 45Z act, what we did on the farm, if our corn went to ethanol, is irrelevant from an environmental scoring perspective.

The only things that mattered were what they were doing at the plant, their direct emissions and their indirect emissions, such as how they produced their electricity to power the plant or logistics and things on the left side of the screen. Not on our supply side from the corn perspective. But after 45Z, after 2022's Inflation Reduction Act, what we do on the farm is now quantified and counted in that ethanol production process.

So therefore, we have the ability to change our management on the farm with tillage, with fertilizer efficiency, with cover crops, to change the environmental footprint of that ethanol gallon. Which is opening up a lot of interesting options for us as land managers, as producers of that corn, as that feed stock, as they call it. Corn is a feed stock for ethanol production. We can now influence the environmental outcomes of ethanol gallons.

So ways that we can do that and to look at the share of influence we have. The total ethanol emission score is about 53. Our percentage of that is 29 out of 53. So we can affect 29 points out of 53 via our management. We can reduce that score with reducing inputs, with cover crops, with manure usage, tillage, and increasing yields. So those are the five main ways that we can lower our carbon intensity scores and therefore lower the environmental footprint of that ethanol gallon.

And the 45Z tax credits start to kick in once that CI score is below 50. So it doesn't take a lot to start triggering these government tax credits. Now, how much the tax credit's worth, that's still up for debate. There isn't firm rules on what the extent of the tax credit will be, but we know right now that the tax credits are triggered, and it's not hard to trigger them with changes in any of those categories.

So what Continuum Ag has done is take the GREET model, which they believe to be the foremost model in carbon scoring for this program. It's one of the most up-to-date. I've spent quite a bit of time inside of it calculating scores. It's quite comprehensive in its scoring mechanism.

So what they've done is take that GREET model. It's a very complicated spreadsheet. It's actually the biggest spreadsheet I've ever handled on my computer. It's difficult to download it, it's so big. What they did is take a very complicated spreadsheet, put it on a website where it's much more user-friendly. So you can log in, fill out a profile, and get your score for your current production practices.

Remember 29 is where we started of our contribution to that ethanol score. So this example farm is already better than 29 just with their conventional management. They're doing reduced tillage here and they're using a cover crop, so they're already good with a seven-point reduction from the baseline, which is 29.

But as they change their management with this calculator tool, which is using the GREET model, but the interface that you're using the GREET model with is their website. It's much easier to understand and simpler to see changes. After they change their practices, they can reduce their score to 8.35, which is a significant reduction from 29. And 14 points from 22 where they started. And this is an approximated value using their best judgment on what that tax credit is going to be worth.

And at 22, they can make 35 cents a bushel taking that corn to ethanol to produce a gallon of ethanol. If they change their practices, it's around $1.12. That is the entire value generated from that. The ethanol plant will keep a sizable percentage of that. If it's 20% or 40 or 60 or 80, we don't know. There's no rules with the 45Z currently that dictate what percentage of that revenue must be shared with the farmer, and what can stay with the ethanol provider. And there's probably going to be third parties involved with that as well.

So that is $1.12 total. Farmer may only see, I would hope at least 30, 40%, because we're doing the work changing practices and taking risk and changing practices sometimes depending on how drastic they are to get that. But even if that is 20%, we're still looking at 25, 27 cents a bushel, which is nothing to sneeze at. Even if it's only 20, 25% of the total, it's still worth exploring and certainly worth knowing about from a farmer perspective. But thank you for that question. That's excellent. Anybody else questions on this one? Yes.

Speaker 3:

Is 45Z alive, dead, or on life support?

Joel Reddick:

It's alive. They just announced a few hours ago, I was on Facebook, and Mitchell Hora from Continuum shared that he is going to be on a panel that the USDA just announced. There's like 36 individuals from different industries and across the board to define these exact terms that we're talking about, to nail this down and get things that are unknown, known. So that is very encouraging.

I know Mitchell and those guys have been looking for that for the past year. And Mitchell does have a seat at that table where things are being decided. So that's very good from Continuum's perspective. And Mitchell is a farmer using these practices on his own farms. That's very good for all of us to have somebody in the room making decisions or helping make decisions. Who knows the reality on the farm, but I would say it's alive.

And that announcement this morning, just fortunate for them and for me presenting right now that I have a great answer to that question, and I think that's a huge shot in the arm that has been looked for because that has been strangely silent. The Biden administration is winding down, but this was unrolled in their term. But they haven't really defined it fully. So I think it's fair to call it half-baked. I think this committee that they announced today is a big step in helping get things figured out. But yes, that's a great question. Anybody else? I saw another hand somewhere. No? Good. Yes, yes, sir.

Speaker 4:

In your opinion at this time, does it look like that percentage that that farmer's going to get a little [inaudible 00:23:09] or whatever there is, going to be set in stone by players involved? Or do we have a little leeway, a little marketing there?

Joel Reddick:

Yes, so there's a big question mark there, first of all. My thoughts from working in this industry and observing, it's likely that the government will step in and give a minimum because the government's spending a lot of money, they're going to decide where it goes. They're not just going to give a blank check to ethanol plants and let them do what they want with it. I think that's bad for a farmer because the ethanol plant can do what they want and serve their interest first.

So I think if the government puts a floor in it, but the problem with the floor is they may just do the minimum and not incentivize lowering that score. That being said, I think the lower that number is in your production, the more bargaining power you have. Because the best scores that I've seen calculating with the GREET model are typically on hog farms in the high states where they're using very little inputs, if any. Maybe a little bit of nitrogen. If they're using cover crops in reduced tillage, they can get to negative 15, negative 20, negative 24.

Best single score I've ever seen is negative 27. And that's when this becomes $2, $3, $3.50 instead of $1. And even 20% of that is huge economically. When we're looking at our cost of production on corn and economic analysis, 80 cents could be the farmer's cut at a very low revenue share. That is the gold standards. The hog farms that can reduce inputs, use cover crops, that's about as good as it gets.

But this number can be negative 10, negative five, fairly easily and commonly across the country with judicious inputs and regenerative management. Eight is by no means as low as you can go. There's a lot of room better, lower, than eight in this scenario. I don't know how much is going to be shared that the lower you are, the more valuable you are to them, because your grain is dropping that gallon significantly more than anybody else's corn.

So if you roll in with a 22, you're not helping them all that much. So even if you are a smaller farmer, maybe only 50,000, 100,000 bushels, but if you've got a negative five, you're still swinging a big stick because there's not very many people that far negative. Even if you're not a lot of bushels, your bushels are valuable to them because they can help counteract a higher score. So it depends on how low you are, and it depends on government policies. So there's still a lot of questions there, but that's a good one. Thank you for that. Anybody else before we transition companies? Yes. Yes, sir.

Speaker 5:

Is that [inaudible 00:26:11]?

Joel Reddick:

That's another excellent question, and there's a lot of those that I don't know, because identity preservation is difficult in this supply chain because once you throw corn in a grain bin, it's all the same. Once you throw it on a truck, there's no way to know which field it came from. It's not like it's a different color. Or you can run a quick handheld test at the elevator and say, no, this isn't that field. Because it's based on the production practices.

And you can't look at a truckload of corn and say, that's a four and that one's a 16 because it all looks the same. So identity preservation from a real world logistics and perspective is nearly impossible because how do you tell the difference without watching the farmer harvest the corn, put it in that bin, take it until it's not realistic. Nobody can police that.

So enforcement with identity preservation is something that I think as a farmer is impossible. Because if every field had a grain bin, and you put that corn in that bin, and somebody could document you went to that bin that day and hauled it to the elevator that day. But that that's not realistic or scalable. So identity preservation would be good in that we know what we're claiming. But it's nearly impossible because grain is co-mingled and you can't tell what it is once it's mingled. Yeah. Yes, sir.

Speaker 6:

This is actually the sale of the data feed. So the actual corn material, some of the data from those acres, you only got X amount of bushels [inaudible 00:27:50]. I have four to five [inaudible 00:27:55] this data [inaudible 00:27:56] I give it. Probably the most [inaudible 00:27:58] the most data transfers [inaudible 00:27:59].

Joel Reddick:

Corn's corn.

Speaker 6:

And then the data [inaudible 00:28:08].

Joel Reddick:

That's probably most likely, I think. Because identity preservation with a commodity is impossible at scale too. This isn't just a small thing. This is corn across the country. So I think identity preservation is nearly impossible. And I think selling the carbon score independent from the bushel on paper electronically if you will, and selling your physical bushel independent of your score, is what's most likely.

And the other thing that that opens up, that means regardless of where you are on that map relative to a blue dot, your corn can be sold. Because if you don't have to deliver the physical bushel to an ethanol plant, if you can sell your corn to your local elevator, and not have to drive an extra 50 miles to get to an ethanol plant, and then call the ethanol plant and say, "Hey, I sold my physical bushels here, but they're not paying me for carbon, they're not paying me for anything else. Will you pay me for what this is worth to a government tax credit for ethanol?"

Then every single bushel in the country is eligible for participation in this program. Which would get much wider adoption of course, because if you don't have to deliver a physical bushel to ethanol, then every bushel is fair game to be scored and therefore eligible for a tax credit. So I think that's most likely my opinion, because I don't know how they're going to ever enforce identity preservation. But yeah. Great questions, you two. Thank you. Yes, another.

Speaker 7:

So if I'm a farmer, I have one bin in 10 different fields, each field going to have different CI score from different management practices, as a farmer, how do I sell a specific CI score? Is that average?

Joel Reddick:

It'll probably be a weighted average. It'll probably be a weighted average. So they'll average your entire corn crop. Or if you can segregate, in that example, you just had one bin, so it would be average. But if you could segregate corn on maybe some owned ground that you use cover crops, that you use no-till on in any given year, and you put that in one bin. But you have some rented ground in another county or your in-laws' place that's a separate grain facility, you could probably score that separate.

If there's a significant difference in the score, it might be worth it they way that the weighted average works out, to segregate it and sell one as lower and one as higher. Especially if you're already segregating it based on logistics or physical location. But it would likely be if you have one bin, and you're putting it all in one bin, then it's all going to be averaged together most likely. Yes.

Speaker 8:

I was involved with the ESMC General Mills project in wheat, and what they did was they support each individual field, or paid each individual. They didn't worry, they just figured all the wheat was going into their supply sheds and didn't try to track the individual wheats. They paid based on whatever that amount was for each individual wheat.

Joel Reddick:

Right. And that is a possibility. It's more complicated. It requires a little more work, but that is a possibility because it's going to be more accurate, just honing in on those differences from field to field. Because yield will vary field to field. We know that. The cover crop, the no-till, all the inputs may be the same, but the yield will be different. So every field will have a slightly different score every year.

So we don't know. And getting specific as possible, it depends on regulatory demands on these types of programs and how they're unfolded. We don't ultimately know if it's aggregated or if it's isolated. We don't know if it's identity-preserved or if it's traded independently from the physical bushel. But those are all excellent questions that I hope we get answers to in the very near future, because there's a lot of dollars at stake for us depending on all of those questions. I appreciate all of them. I do. Because that's really helping clarify the nuances of this program because it is complicated.

John Dobberstein:

We'll come back to the episode in a moment, but first I'd like to thank our podcast sponsor Yetter Farm Equipment. Yetter Farm Equipment has been providing farmers with solutions since 1930. Today, Yetter is your answer for finding the tools and equipment you need to face today's production agriculture demands. The Yetter lineup includes a wide range of planter attachments for different planning conditions, several equipment options for fertilizer placement, and products that meet harvest-time challenges. Yetter delivers a return on investment and equipment that meets your needs and maximizes inputs. Visit them at yetterco.com.

Joel Reddick:

ForGround by Bayer is another program that is practice-based. So it's paying you to change your practices. From what I understand, they've got some people upstairs that can further clarify. From what I understand, they're paying you to change practices such as adopting no-till, adopting cover crops. It's broadly available. That's one of the highlights of this program is it's 28 states, which will catch a whole lot of corn and soybean acres as well as 12 cash crops. It's not just corn and soybeans.

If you're growing something else, it's probably available because there's a lot of commodities that will catch that list of 12 that do have historical practice payments. Where if you adopted something after August 1st, 2019, you can get paid up to $48 an acre for practices that were adopted in '19, '20, '21, '22, '23. So they will back pay you basically for what you did years ago. So that's another highlight of this program is that you can get paid for what you did historically.

It's a modest payment, so it's $6 an acre for growers that are changing to no-till/strip-till, or cover crops. So if you've changed to either one of those, you can get $6 an acre. And they have a nitrogen management plan that goes with that as well. So if you use a nitrogen reduction, they don't say what that is. I don't know if that's a percentage or 20 units, or I don't know what they call that. You'd have to talk to them. But you reduce nitrogen and use a nitrification inhibitor and they'll pay for the nitrogen inhibitor. But it is $4 an acre. So it's modest, but I do want to be comprehensive in what they're offering.

Another problem with theirs though is if you adopted before '19, it doesn't matter. They only back pay to 2019. So if you've been no-tilling for 30 years, they only care about years '19 and after. If I've been no-till for 30 years, can I still get $48 for these years that they list if I started before '19? That's the question you have to ask them to make sure that you're eligible, because you may be ineligible due to adopting practices too soon.

Which is kind of backwards in my opinion, because the farmers that were at the forefront of this should be rewarded more, not penalized. But that's how a lot of these programs work. So make sure to clarify with them if you're interested in this on your adoption date, if it's before '19, and make sure you can still get paid.

So FAQs, can I participate in all three programs above with different companies? No, you can only take credit for the practice or the carbon from that practice a single time. So you can't go to Continuum and have them do a carbon intensity score and pay you for the carbon intensity score with ethanol, and go to ADM's Regenerations and have them pay you for the carbon content. You can only do the carbon once. You can only do the practices once.

So there's government programs and there's private programs. You can oftentimes cross government and private money if it's for practices. But some are more restrictive than others. So you've got to be careful and read the fine print because some of them are very exclusive. And if you're working with them, that's the only person you can work with on practice or carbon based programs. But some you can participate in like an equip program for a practice and a carbon program for a different company.

What if you've been using these practices no-till cover crops for more than 10 years, for example. Some of them pay based on historical, some of them don't. Some of them won't allow you to participate if you've gone earlier than that. The carbon intensity only looks at the current year's practices, what went into that corn bushel.

So what happened before that corn bushel was produced is irrelevant. They don't care if you've been in no-till for 30 years. The only timeline that's relevant for corn '25 starts when you harvested presumably soybeans in the fall of '24. Because the clock for corn from carbon intensity perspective starts when the previous crop is harvested. So everything that happens after that, they call relevant to the carbon intensity score. Everything that happens before is not relevant. Which I don't necessarily agree with, but as I understand it, that's how it works.

How do you know which program is right for you? And the short answer is you don't. This is an evolving marketplace, and today's best opportunity may be a lesser opportunity when compared to tomorrow's. There's a lot of new programs and policies that are actively being developed by government and from private companies. I would advise rigorous investigation and patience in committing to a single program or to a company.

Just wanted to spend what time we've got left on a new opportunity for me locally. We don't have much time left, so I'm going to have to be fast. So anaerobic digestion is a process where you take, in this example, we're going to take byproducts from agriculture. So this is manure, this is residue from corn. This is wastewater from different facilities. And then it can be food waste as well. So any carbon-based waste product.

What has been happening in California, in Europe and in other places, not necessarily local to us, is you take these ingredients, shove them in a steel concrete trap for an extended period of time, and they can actually harvest the gases produced from this, and it's an alternative to natural gas based on what they can harvest. So you can make fuel out of that. You can make fuel to power vehicles, you can put it onto the gas grid, you can heat with it directly, or produce power directly. So there's lots of things you can do with natural gas, obviously.

But what different companies have figured out how to do is take inputs that are mostly byproducts. And in the case of hog manure or dairy manure, a lot of times they're a nuisance because there's so much volume to distribute that out on the land, it's a problem. A logistics problem. And then they have a fertilizer product that comes out of the back end.

So what's happening back home in our county is that a group out of England is leasing this farm from one of our neighbors and producing a natural gas anaerobic digestion facility. So what they're going to take is corn stalks, hog manure, chicken litter, a distiller's grain byproduct from a local distillery, and some wastewater from a local plant, and put it in seven giant tanks on 25 acres.

Underneath this farm, right about there, is a natural gas pipeline. So they're going to be importing agricultural products, putting them in a tank, harvesting natural gas from that anaerobic chemical reaction, pump it directly into a natural gas pipeline where it can be sold to any number of bidders. This pipeline runs from the Gulf of Mexico all the way up to Canada. So they can have off-takers anywhere up and down that pipeline that want to buy renewable natural gas.

So similar to the renewable ethanol, greener fuels conversation that we've had with sustainable aviation fuel and ethanol. Natural gas is renewable in this scenario because it's produced from agricultural products rather than petroleum-based products. So it's lowering the environmental impact because it's plant-based, animal-based, rather than petroleum-based. And this is one I don't know as much about, but I did want to throw it in because I thought it was extremely interesting.

This is going to take 30,000 acres of corn stalks, every gallon of hog manure produced in the county, 150,000 tons of chicken litter, 60,000 pounds a day from the distillery. That's how big this scale is. This would be the, it's not off the ground yet. They've leased this property. They've got contracts with farmers and industry support locally, but they haven't started construction.

So I'm waiting to see if and when they pull the trigger. This is a $70 million facility that we're talking about in my backyard. So I'm very interested, and I wanted y'all to know about it just because it's really cool, and it's using agricultural byproducts to produce renewable fuels in a totally new way that I had never heard of.

This is being done in California. There are plants that exist in California today that are producing natural gas from similar inputs. And in Europe and in other places in the world. But this one happens to be coming to my back door. We actually rent the farm right there. This is near Arlington, Kentucky. And they've leased this farm from one of our neighbors. They haven't started construction yet, so I'll believe it when I see it.

But there's enormous amounts of potential. They want to pay people locally for their corn stalk bales. They want to pay for the poultry litter, and they want to give you first dibs at the fertilizer product. There's a dry fertilizer product that comes out of the back end of this process that they want to sell back to farmers at a reduced rate.

I'm skeptical because the nutrient removal on corn stalks is tremendous, and they do not have a fertilizer analysis of this product yet. They cannot tell me what they're giving back to me, but I know what they're taking. So a healthy amount of skepticism because of that. Until I know what I'm getting back, I'm not interested, because there's a lot of money tied up in those corn stalks that we would be removing. Not to mention being vulnerable because of removing that soil residue and leaving our soils vulnerable as well.

But it's an interesting renewable fuel project that I thought I'd like to share with y'all. Could be one in y'all's back door one day. But this is in our location because of that natural gas pipeline, and there's just no logistics cost on the backside. They can ship it from a pipeline anywhere in the continent.

So that is all I've got for you. And I appreciate your time and attention. Again, I don't work for these guys, but I have done as much research as I can independently given you the truth as I see it. Talk to them if you want more specific information. But I hope I've prepared you to make the best decision possible moving forward and given you some cool things to pay attention to along the way.

John Dobberstein:

That's it for this episode of the No-Till Farmer Podcast. If you'd like to thank Joel Reddick for all of his important insights into renewable fuel tax credits and what these programs could offer to no-tillers. We also want to thank our sponsor, Yetter Farm Equipment, for helping to make this podcast possible. A transcript of this episode in our archive of previous podcasts are both available at notillfarmer.com/podcasts. For Joel Reddick and our entire staff here at No-Till Farmer, I'm John Dobberstein. Thanks for listening. Keep on no-tilling, and have a great day.