Carbon Resources

The Minnesota Corn Growers Association (MCGA) is providing key information to members and interested stakeholders on programs that may create a potential revenue opportunity for farmers implementing practices that capture and store carbon in the soil.

Many programs and opportunities have emerged in recent years, as the increasing number of companies pledging to become carbon neutral seek to offset emissions that can’t be reduced through their own actions. Agricultural land is a target for such programs because conservation practices, such as cover crops and no-till farming, store more carbon in the soil and slow the loss of carbon back into the atmosphere.

Increasing the use of biofuels also presents an opportunity to reduce carbon emissions in the transportation sector. There are active state and federal policy discussions about how low-carbon corn ethanol produced today can achieve greater emission reductions through technology implementation such as carbon capture and storage.

Below are several resources* that may be helpful to farmers as they explore carbon markets and related topics.

MCGA will publish more information about carbon and carbon markets as it becomes available.

What is Low Carbon Fuel?

“Low carbon fuel” is any transportation fuel from non-petroleum origin that reduces greenhouse gas emissions compared to fossil-based gasoline or diesel. Ethanol made from field corn is an example of a low carbon fuel, reducing greenhouse gas emissions by 46% on average compared to gasoline. Policies such as the Renewable Fuel Standard (RFS) and the California Low Carbon Fuel Standard (LCFS) have created incentives to encourage the production and use of low carbon fuel, and additional low carbon fuel policies are being contemplated at both the federal and state levels. Currently, a top legislative priority for MCGA is the Next Generation Fuels Act, that paves a way to incorporate higher ethanol blends into America’s fuel supply, increasing corn demand.

What is a Carbon Intensity (CI) Score?

Carbon intensity (CI) is a measure or “score” of the rate of greenhouse gas emissions per unit of energy consumed. In the context of climate discussions and low carbon fuel policies, fuels with lower CI receive greater incentives for lower overall lifecycle emissions in the production of the fuel. Under low carbon fuel policies, fuels such as corn ethanol stand to benefit by lowering their CI scores. Options to lower the CI score of corn ethanol include adopting certain farming practices, utilizing wind and solar power, maximizing efficiency of ethanol plant operations and adopting technology such as Carbon Capture and Storage (CCS).

What is Carbon Capture and Storage (CCS)?

Carbon dioxide emissions from processing facilities like ethanol plants are captured before the emissions can be released into the atmosphere. Then the carbon dioxide is transported via pipeline to geological formations and injected thousands of feet underground where it is stored in geologic formations.

What is the Carbon Capture and Storage Tax Credit (45Q)?

The Carbon Capture and Storage Tax Credit, also known as 45Q based on its section in the tax code, provides an incentive for CCS projects. The credit amount is based on each metric ton of qualified carbon dioxide captured and stored.  To be eligible to receive the tax credit, carbon emissions must be measured at capture as well as injection and meet specific storage requirements.

What is the Next Generation Fuels Act?

The Minnesota Corn Growers Association along with the National Corn Growers Association support the Next Generation Fuels Act. This bipartisan legislation paves a way to incorporating higher ethanol blends into America’s fuel supply, increasing ethanol demand and ultimately markets for corn farmers.

The legislation takes a cooperative approach to reducing carbon emissions, while protecting the livelihood of farmers and ensuring consumers continue to have affordable fuel and vehicle choices. This legislation requires octane sources in the fuel to result in at least 40% fewer greenhouse gas emissions than unblended gasoline, reducing emissions compared to what is currently available.  Today’s ethanol is nearly 50% lower in carbon intensity than gasoline and continues to improve, thanks to ongoing environmental footprint reductions on corn farms and at ethanol production plants. 

Where does the Minnesota Corn Growers Association stand on landowner rights?

One of the long-standing positions of MCGA has been and continues to be, we believe in individual landowner rights. We will not, nor do we believe anyone should tell you what to do with your land.

Carbon Markets 101: This MCGA publication shares helpful background on carbon sequestration, carbon markets, and offers key questions that farmers might consider before participating.

Carbon Market Contract Basics: This MCGA publication shares information on carbon market terminology, key considerations, and contracts for Minnesota farmers.

Knowing the language of carbon markets is important for the modern farmer, but it can sometimes feel like speaking a foreign language. Below we break down some of the common technical jargon.

Additionality

Some of the carbon market programs recognize that farmers have been using practices over the years that qualify for credits now. These might include “reducing tillage, changing nitrogen rate or practices, planting cover crops and/or changing crop rotation” (Sellars et al., 2021).

Additionality means that soil carbon outcomes are being reached by growers as a result of incentives provided by brokers in the market. It’s important to know that there’s now more emphasis on the outcomes rather than the practices themselves. If a grower has been using these practices, they should check with their broker to see if they can receive payment for a certain number of years prior to starting a carbon program. This may permit looking back for as many as five years.

Aggregator vs. Data Manager

There are two routes for a farmer to enter the carbon credits marketplace.

With the aggregator approach, the grower turns over ownership and control of their full project and all credits to the aggregator. A contract includes all terms and conditions. The aggregator owns the farmer’s carbon credits, and has control over whether and when to take them to market, accept a price and share any data.

With the data manager approach, the grower works with a data manager at a negotiated price (fee or percentage of revenue), in return for supporting the grower as they join the market (Donnelly 2021). In both cases, contracts can last 10–20 years.

Carbon credits

A way of measuring carbon emissions. The way carbon credits are measured is by metric tons of CO2-eq. This means carbon dioxide equivalent. CO2-eq compares various greenhouse gas emissions based on their potential to trap heat in the atmosphere and calculates that potential into units.

Carbon markets

Trading carbon credits, on a compliance (cap and trade system) or voluntary approach.

Carbon prices

Carbon credits can be paid out using any combination of cash, cryptocurrency or credits toward purchases. Prices may range from $10–20 guaranteed per metric ton of CO2-eq.

Note that these prices will not include any fees or carbon losses as calculated by a broker, so in the end a grower will receive back less than the enlisted price.

Carbon sequestration

Any steps taken to capture and store carbon dioxide from the atmosphere or prevent release into the atmosphere. Geologic sequestration involves keeping carbon stored in rock formations underground, while biologic sequestration is all about storing carbon in soil, plants, water, trees, etc. (USGS, n.d.).

Carbon sinks

The places where carbon can be stored, such as rocks, plants, soil and water.

Greenhouse gas (GHG) emissions

Greenhouse gases include carbon dioxide (CO2), nitrous oxide (NO2), synthetic chemicals and methane (CH4), and emissions can be naturally occurring or created by humans. Whether GHG emissions are from natural or human sources, both impact climate change, which can impact our climate. This happens when the energy put out by the sun and by our planet are not in balance. High concentrations of GHGs in the atmosphere trap too much heat energy from the sun and increase temperatures beyond natural variability.

If you have questions regarding the carbon capture pipeline projects in Minnesota, MCGA encourages you to reach out directly to those involved companies for a conversation.

Navigator CO2 Ventures LLC

Summit Carbon Solutions

Growth Energy – Achieving Net Zero Ethanol

Global CCS Institute – CO2 Transport Fact Sheet

EPA – Overview of CCS technology 

Decode 6 — Decoding Carbon and Ecosystem Services

CARB – Overview of CCS technology

*This is not legal advice. Talk with your attorney or another trusted advisor regarding legal questions about your farm and before signing any contracts.