Full Breakdown
USDA Finalizes Regenerative Biofuel Feedstock Rule, Unlocking New Revenue for Farmers
7/2/2026, 1:19:25 PM
Background & Context
USDA issued the Regenerative Agricultural Biofuel Feedstocks rule and updated the Feedstock Carbon Intensity (CI) Calculator, providing a way to quantify carbon reductions from cover crops, nutrient management and conservation tillage. The rule resolves uncertainty around the 45Z tax credit for low-carbon biofuels.
Core Policy Change
The guidelines tie regenerative practices to the biofuel supply chain for corn, soybeans, sorghum and canola, requiring physical delivery of the crop to an ethanol plant or elevator under a mass-balance system; book-and-claim is excluded.
Key Figures & Groups
Mitchell Hora, farmer and Continuum Ag founder, said the rule clarifies access. Mike Appert, a farmer who runs an ethanol plant with CO2 capture, noted revenue from low-CI fuel sales. Clean Fuels Alliance America (CFAA), represented by Vice President Kurt Kovarik, endorsed the rule. USDA, IRS and DOE are regulators.
Data & Statistics
USDA estimates a five-point CI reduction adds roughly 10 ¢/gal or 30 ¢/bushel in value. Hora projects $40/acre without practice changes and up to $100/acre where ethanol plants offer higher premiums. Appert reports an extra $1/bushel for corn sold into low-CI fuel markets.
Official Statements & Responses
USDA officials said the rule offers a clear framework for documenting carbon-intensity reductions and linking them to diesel, biodiesel and aviation fuel markets, while ensuring mass-balance accounting for feedstock delivery. CFAA said the regulations will help farmers capture more value from the biomass-based diesel market and praised USDA’s responsiveness.
Criticism & Opposition
No explicit opposition was identified in the source material.
Why It Matters
The rule turns regenerative practices into measurable incentives, raising farm income by $40-$100 per acre. Linking carbon reductions to the 45Z credit encourages wider adoption of conservation practices, improves soil health and supports low-carbon fuel growth for transport and aviation.
Verbatim Quotes
- “The bottom line is we know now that the calculator is good enough to move the needle and to drive some serious economic opportunity for the ethanol plants and for the farmers,” — Mitchell Hora, Continuum Ag
- “For 45Z and regarding farmers and the feedstock, we finally have that rule, so we’re able to act with at least more clarity than what we had before.” — Mitchell Hora, Continuum Ag
- “Our ethanol plant was one of the first in the nation to do the CO capture storage, and we actually were able to sequester right on site on our own land because we’re above the geological formation,” — Mike Appert, North Dakota farmer
- “These rules will help farmers get more value from the expanding domestic market for biomass-based diesel,” — Kurt Kovarik, Vice President of Federal Affairs, Clean Fuels Alliance America
- “Book and claim would have decoupled and then you could sell the crop where you want to sell the crop and sell the data separately, it’s not that you have to keep the data and the crop together.” — Mitchell Hora, Continuum Ag
What’s Next
The IRS and DOE must issue guidance to apply the 45Z credit using USDA’s CI scores. Verifiers will certify scores, and USDA plans updates to add feedstocks and conservation practices.
