Titled, Private Sector Perspectives, the panel focused on the demand for low-carbon feedstocks and climate-smart ingredients. The other members of the panel were Courtney Hall, director of International Business Development, Crop Nutrient Product Lines at CHS and Tom Rabaey, senior R&D manager at General Mills. The panel was moderated by Patrick Molloy, principal of Climate-Aligned Industries at Rocky Mountain Institute. 

Here's an exerpt of Werner's remarks at the panel.

How is green ammonia being considered for use in your sector? What are the areas driving engagement around this?

Conventional ammonia as a direct application fertilizer for corn production is emissions intensive. As a result, ammonia production is a significant contributor to the lifecycle carbon intensity of corn production and therefore ethanol production. 

According to lifecycle analysis conducted by the Renewable Fuel Association, about 40 percent of the emissions associated with ethanol come from corn production. For example, if an average ethanol plant in Minnesota has a Carbon Intensity (CI) score of 53, the corn production would account for 22 g/MJ of GHG emissions.

In the Argonne GREET model – the U.S. Department of Energy’s carbon lifecycle model that is updated on an annual basis - farming GHG reductions can come from what USDA has started calling “Climate Smart Agriculture” or CSA practices. These CSA practices include things like cover crops, manure application, precision fertilizer application, and no-till. Under the GREET model’s Feedstock Carbon Intensity Calculator (FD-CIC), green ammonia use reduces the CI score by 6 points – or roughly 10%.

An ethanol plant becomes eligible for the Inflation Reduction Act’s 45Z “Clean Fuel Production” tax credit when it crosses the 50 CI score threshold, so green ammonia use by corn growers delivering to an ethanol plant alone would potentially get that plant below the threshold. 

There will be challenges with verification, supply chain traceability, and incorporating these CI reductions into applicable LCA models for federal tax credit purposes (40B tax credit for SAF did not allow for green ammonia use to reduce the CI score), but the ethanol industry in Minnesota has committed to producing net-zero or net-negative ethanol by 2050.

And regardless of the 45Z credit surviving the incoming administration’s efforts to rollback IRA funding, we are seeing more and more marketing opportunities for low-CI biofuels in Low Carbon Fuel Standards in California, Oregon, Washington State, and Canada. Other Midwestern states like Minnesota, Illinois, and Michigan are exploring creating their own LCFS programs. Green ammonia and other climate smart agricultural practices are key options for accomplishing GHG reductions and selling ethanol into those markets. 

There's significant focus generally on the carbon intensity scores. How does fertilizer use factor into your or your sectors considerations in the broader environmental context?

 Well again, CI scores and Lifecycle Analysis are increasingly becoming a business necessity in fuel policy. Regardless of the policy choices of the incoming administration, I don’t see the push toward transportation decarbonization going away anytime soon. Even if the 45Z performance-based tax credit is repealed, which is not a given, there will be markets for low-CI or net-negative biofuel. We are on the cusp of having the best year for U.S. ethanol exports that we’ve ever had. Part of that is foreign governments like Japan, India, and others setting transportation decarbonization targets and adopting aggressive ethanol blending goals to achieve them.

And I’d also like to say that decarbonization isn’t the only goal in the broader environmental context for ethanol. Like I mentioned earlier, all MBA members have committed to net-zero ethanol production by 2050, but we also understand that Minnesotans are increasingly worried about other environmental issues – be it clean water, nutrient run-off, and soil health.

Climate-smart agricultural practices are a WIN-WIN because they not only lower the CI score of ethanol and help address the climate crisis, but they also benefit Minnesota’s natural resources through healthier soil, carbon storage, and less nutrient runoff.

What are the challenges that you see for adoption that are most critical to address? And how do these challenges impact stakeholders? (Farmers, Co-Ops, producers)

Some of the key obstacles for incorporating green ammonia use by farmers into the ethanol production process are cost and regulatory uncertainty.

There are significant costs associated with adopting CI reduction technologies at ethanol plants and CSA practices on the farm. At the end of the day, ethanol producers cannot return dividends to their farmer owners or employ rural Minnesotans unless they’re in the black. Installing solar panels or wind turbines next to a plant or replacing natural gas with RNG requires significant capital expenditures. Installing a cover crop or switching to no-till may lead to short term yield losses.

At the federal level, in terms of incentives and regulatory guidance for these decarbonization technologies and practices, we have a lot of uncertainty. The 45Z credit starts in less than 30 days and we still don’t know how an ethanol plant can become eligible to claim it. The 40B tax credit guidance came out a year and a half into a two-year credit.

Will 45Z survive the new Republican congress and administration? If so, will it be extended beyond 2027? What will the guidance on qualifying for that credit entail? Will it incorporate additional CSA practices and industrial energy technologies into the Lifecycle methodology? Ethanol producers cannot make forward-looking business decisions when facing regulatory uncertainty.

Another challenge lies in the traceability and chain of custody requirements for CSA feedstocks. This ties into the lack of certainty on guidelines for the 45Z tax credit. How should feedstocks using green ammonia as a fertilizer be tracked through the supply chain, validated, and certified? The ethanol industry in Minnesota has concerns about requiring CSA feedstock to be tracked through the supply chain as in an “identity preservation” system, which we think would prevent widespread adoption by farmers. Instead, our preference would be to utilize a “book and claim” system that would allow the physical bushels of grain to be decoupled from their CSA attributes. This would also give farmers additional flexibility to market their CSA feedstock to other private entities and return more value to the farm directly.

What levers for action are need and where do you feel the most progress has been made?

Green Ammonia is scientifically complicated. Unless you’ve got a degree in chemistry, it’s hard to fully explain it. I mean, I don’t know that I still understand the Haber-Bosch process and I’m up here on stage! There’s a lot of science and chemistry and lifecycle analysis involved with all this. Communicating the very basics of the green ammonia production process is difficult, so I have to say that we’ve made a lot of progress in getting the public “up to speed”, which is what this summit is accomplishing. 

And while there is now more widespread understanding of the need for decarbonization technologies like green ammonia, we need to do more to “prove it”. That means pilot projects to learn about the barriers and obstacles to adoption. That’s why it was good to see the announcement in July between CF Industries and POET to test how using green ammonia as a fertilizer can be tracked through the supply chain. We will ultimately need more demonstration projects like this to gather additional insight and research. 

We also need more policymakers to understand why regulatory certainty and financial incentives are important in this context. I know a lot of folks in this room are connected to policymakers in D.C. and often make lobbying trips to express their policy priorities. I’d urge everyone to continue to tell this story and the world of opportunities that will result from unlocking green ammonia.

What makes you optimistic for the role of green ammonia and related products in the coming year?

The ethanol industry’s development in the state of Minnesota was very much a grassroots effort by rural stakeholders – farmers, business leaders, bankers, Greater MN legislators – to build a new value-added industry that could help to keep the economic value of agriculture in these rural communities. 

I see the same stakeholders and the same enthusiasm around decarbonization technologies and innovating with a new product that is rural-based and rural-focused. The ethanol industry started from a cooperative model, and I want to commend folks like the Minnesota Farmers Union for emphasizing a cooperative model that promotes farmer ownership for green ammonia. I’m always so impressed with the dedication, drive, and ingenuity of Minnesota’s farmers. So, my optimism lies in the fact that Minnesota has demonstrated success in building other industries based on this model. I think through hard work and prior experience we will be successful again.