Ethanol Blog

LINCOLN, Neb. (DTN) -- Green Plains Inc. will be selling Clean Fuel Production Tax credits, also known as the 45Z tax credits, that the Omaha-based company generated this year as part of the Inflation Reduction Act and is expected to make between $40 million and $50 million on the sale, Green Plains announced this month.

The company entered into a sale agreement with Stamford, Connecticut,-based Freepoint Commodities LLC, on credits initially generated at its "low-carbon intensity" ethanol plants in York, Wood River and Central City in Nebraska.

"A portion of these credits are being generated prior to the expected launch of carbon capture later this year, highlighting the competitive carbon-intensity profile of the company's current strategy and operations," Green Plains said in a news release.

The so-called "Advantage Nebraska" carbon capture and sequestration strategy is expected to reduce carbon emissions by about 800,000 tons annually at Green Plains' three Nebraska plants.

Green Plains also signed a term sheet with Freepoint to monetize tax credits from three additional facilities expected to qualify under 45Z this year, according to a news release.

"Executing this agreement and term sheet aligns with our long-term strategy to monetize the value we're creating through low-CI production," said Chris Osowski, Green Plains CEO.

"Our focus on operational excellence has improved utilization and yields across our platform, while also lowering carbon intensity -- enabling several plants to qualify for 45Z credits during the current year. While we continue to advance carbon capture through the Trailblazer CCS (carbon capture and sequestration) project, this agreement demonstrates our ability to create near-term value from clean fuel production and expands our visibility into the monetization of carbon credits going forward."

Green Plains said the agreement covers the anticipated 2025 production year credits for the three Nebraska plans, with "full-year credits" included where operations allow.

"The parties may agree on mutually satisfactory terms to extend the agreement to purchase 45Z credits for 2026 to 2029," the release said.

"Based on current expectations for production volumes and eligible gallons, the agreement and term sheet combined are expected to generate between $40 million and $50 million in 2025…with the first credits being recorded in the third quarter. The final proceeds are dependent on actual production and the timing of startup for the carbon capture systems at Green Plains' Nebraska facilities."

Also on Monday, Irving, Texas,-based Darling Ingredients said it reached an agreement to sell $125 million in 45Z tax credits to a "corporate buyer," according to a brief statement on the company's website.

The credits were generated by Darling's Diamond Green Diesel joint venture in Port Arthur, Texas, according to the company.

Despite the announcements of the 45Z credit sales, the Trump administration has yet to release tax guidance on the 45Z.

Read more on DTN:

"Ag, Biofuels Laud House-Passed Big, Beautiful Bill's 45Z Clean Fuels Production Tax Credit Modifications," https://www.dtnpf.com/…

Todd Neeley can be reached at todd.neeley@dtn.com

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