By Keith Schneider

With the exception of federal and state programs to convert corn into ethanol and soybeans into biodiesel to fuel cars and trucks the United States has never regarded farming as a primary energy producer.

That changed when Congress passed the climate provisions of the Inflation Reduction Act last August. The law provides $140 billion in tax incentives, direct loans, and grants to replace fossil fuels with cleaner renewable energy that lowers emissions of carbon dioxide.

Along with the wind and the sun, the raw materials for a significant portion of that energy is directed at agriculture — from corn fermented into more ethanol, and methane from the billions of gallons of liquid and millions of tons of solid manure produced by big dairy, swine, and poultry operations.

Despite pushback from environmental groups concerned about increased water pollution from a new tide of farm wastes, developers across the country see opportunities to build ambitious renewable energy projects to convert crops and agricultural wastes to low-carbon energy. In effect, the Biden administration and Congress are pushing farmers to the center of U.S. industrial policy for energy and transportation. 

Legislation to encourage production of more renewable energy is encouraging grain farmers to generate harvests headed to ethanol and biodiesel refineries. Photo © J. Carl Ganter/Circle of Blue

Aviation Fuel From South Dakota Corn

One of the places where the new era is emerging is a 245-acre field just outside tiny Lake Preston, S.D. Last September Gevo, a Colorado developer, broke ground for Net-Zero 1, a $875 million, 6.5 million square-foot refinery to turn corn into low-carbon jet fuel.

Gevo asserts its “farm-to-flight” project will release 80 percent less carbon dioxide to the atmosphere than ethanol produced by a conventional plant. It does so by integrating 35 million bushels from roughly 100 contracted South Dakota growers, a wind farm to power the plant, a “green” production facility that generates hydrogen from water, equipment to capture and permanently dispose carbon dioxide from air emissions, and capacity to produce 65 million gallons a year. Patrick R. Gruber, the company’s chief executive, said the carbon reduction from producing the fuel is so substantial that it will completely offset the carbon released in jet engine exhaust.

“This will be the cleanest ethanol plant in the world with the lowest carbon footprint,” he said.

None of it would be possible without government support. Virtually every phase of Net-Zero 1 production, and a good portion of its revenue, benefits from tax incentives, grants, and direct payments for low-carbon renewable energy, and the nearly $20 billion that Congress approved since 2021 for permanently disposing carbon dioxide. When the plant begins production, scheduled for 2025, it qualifies for a $1.75 per gallon clean fuel tax credit, plus an $85 tax credit for every ton of carbon dioxide it permanently disposes in deep subsurface caverns.

That’s not all. Congress also directed $40 billion to the Department of Energy for loan guarantees to finance innovative carbon-reducing projects. Gevo is expecting the department to approve a $620 million loan guarantee to pay for 70 percent of the Net-Zero 1 construction costs.

And in September the U.S. Department of Agriculture awarded Gevo a $30 million grant to pay its contracted corn growers a 25 to 50 cents per bushel bonus if they apply “climate smart” growing practices to produce the crop. Such practices involve not plowing, planting cover crops, reducing commercial fertilizer use, and taking other measures meant to keep carbon in the ground, and limit nitrogen and phosphorus fertilizer from running into streams. The Gevo project is one of 141 climate smart demonstration projects that the USDA announced last year at a cost of $3.1 billion.