The adoption problem: new tie-up hopes to incentivise farmers to produce low carbon corn

By Oliver Morrison

- Last updated on GMT

Image: Getty/DS70
Image: Getty/DS70

Related tags corn Biofuel

Indigo Ag has announced a sustainable biofuels collaboration to allow farmers to benefit from clean fuel tax credit programmes.

Agribusiness marketplaces is one sector bucking the trend of slowing investment​ across the agtech space. One example is Boston, US-based Indigo Agriculture, which offers digital tools and services to farmers as well as working with plant microbes to improve crop yields.

Its latest project is a collaboration with Red Trail Energy, a corn-based ethanol production facility located in Richardton, North Dakota.

The pair have announced they will look to source low carbon intensity corn to support farmers using sustainable practices and benefit from emerging clean fuels market tax credit programmes. Using Indigo’s measurement, reporting and verification (MRV) and remote sensing capabilities, RTE will work with Indigo Ag to measure field level carbon intensity and then identify, enrol, and verify farmers with the highest potential to produce low carbon intensity feedstock.

Read more: How on earth can we better unlock the full potential of climate-smart ag? Reduce the risk for farmers

Indigo Ag will produce the data required for tax credit compliance, including data collection, verification and analysis of eligible practices and clean fuel calculators. These include the GREET (Greenhouse gases, Regulated Emissions, and Energy use in Technologies) model is a full life-cycle analysis tool sponsored by the US Department of Energy's Office of Energy Efficiency and Renewable Energy, which evaluates the energy use and emissions output of various vehicle and fuel combinations.

According to Indigo Ag, this level of data collection will enable Red Trail to maximise benefits from clean fuel markets across the US and Canada, starting in January 2025 with the 45Z Clean Fuel Production Credit, established by the Inflation Reduction Act (IRA)​, is a tax credit programme designed to encourage the production of clean transportation fuels.

“Red Trail Energy is a leader in fuel decarbonisation and we are looking forward to working with leading companies like Indigo Ag as our sustainable biofuels partner,” said Jodi Johnson, CEO of Red Trail Energy. “Indigo Ag’s science backed MRV capabilities will ensure we can receive all of the benefits from clean fuel market tax crediting programmes and share those benefits with growers who are doing the hard work on the ground.”

Red Trail says it will be among the first ethanol producers to take advantage of the Clean Fuel Production Credit, or 45Z, in January 2025, utilising 2024 crops. 45Z will pay 2 cents per gallon for every carbon intensity point reduction below the minimum threshold, and will be the first clean fuels program to enable the generation of credits from lower CI agricultural feedstock in a meaningful way.

Sustainable farming practices like cover crops or no till have the potential to lower ethanol carbon intensity scores by more than 20 points.

Indigo Ag’s says that over the last six years it has helped some of the world’s largest companies make progress against their climate goals following stringent policy guidelines for carbon credit offsets, scope 3 emissions and water conservation. These capabilities will be used to help Red Trail assess its supply chain and leverage the carbon intensity of their feedstock draw areas to help maximise 45Z tax credit generation.

“Indigo Ag has all of the capabilities in science, policy and technology to offer a proven solution that connects physical crops with sustainability attributes throughout the agricultural supply chain, ensuring real environmental impacts with the highest data quality standards,” said Dean Banks, president and CEO of Indigo Ag.

In February 2024, Indigo Ag announced the successful completion of its third carbon crop. With 163,048 carbon credits produced, Indigo now claims it is the only company to complete three carbon harvests at scale. Since its inception in 2019, farmers participating in Indigo Ag’s carbon program have sequestered or abated the equivalent of nearly 300,000 metric tonnes of carbon dioxide, helping over 2,000 farmers in Indigo Ag’s sustainability programmes earn more than $12 million.

“Our record breaking third carbon crop reinforces that farmers can earn money and have a real and measurable impact leveraging agricultural soil as one of the world’s largest carbon sinks,” said Dean Banks, CEO of Indigo Ag. “As carbon projects continue to be scrutinised, we are incredibly proud to be the largest issuer of nature-based, registry issued agricultural soil carbon credits in the world, driving real value for farmers and corporations.”

“Joining the Indigo Carbon programme was well worth my time,” said Julia Strnad, a 4th generation farmer with Strnad Land and Cattle located in Kansas. “It’s exciting when we get that carbon payment check, and it more than pays for the time we spend entering data. We’ve seen the data entry process get easier each year, and when you have as many fields in the programme as we do, that makes a big difference. We’ve evaluated other programs, but we chose Indigo because they’re invested in improving the health of our soil and getting us paid to do practices that make it better.”

Indigo is also working closely with its expanding network of more than 25 agribusiness partners to use unique insights to support growers in deepening their transition to sustainable practices.

“Corporations are increasingly demanding sustainability solutions that deliver both climate and nature benefits, and Indigo programmes have been positioned to meet these exact needs,” added Banks. “We have the highest integrity soil carbon programme on the voluntary market today, and that’s allowed us to secure future buyer commitments with purchase prices in the range of $60-$80+, depending on the time of delivery. This forward price curve will mean more money in our farmers’ pockets over time.”

For its fifth carbon crop, covering 2024 planting season and already open for farmer enrolment, Indigo is expanding the list of eligible crops in its sustainability programmes adding hemp, perennial alfalfa and millet. Corn, soybean, and collards have also been added as eligible cover crops, giving farmers additional options for programme eligibility.

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