by Tim Gannon and Robert Bonnie
American corn and soybean farmers are hurting. Trump’s trade war has raised fertilizer and other input costs while suppressing prices. The worst part is that international markets may not come back soon as trading partners like China turn to Brazilian farmers to supply their needs.
This means that domestic markets for U.S. commodities are critical. Biofuels markets today for soybeans and corn use 45% of soybean oil and 40% of corn production. And today’s biofuels are good for the environment with one peer-reviewed study showing greenhouse gas emissions that are 46% lower than fossil fuels. That’s why there is bipartisan support, as evidenced by the extension of the 45Z tax credit, which rewards fuel producers that produce low-carbon biofuels with fewer GHGs.
In the beginning of this year, then-Agriculture Secretary Tom Vilsack announced a new rule establishing the guidelines for quantifying, reporting, and verifying the greenhouse gas emissions associated with the production of biofuel feedstock commodity crops grown in the United States. Under 45Z, biofuel manufacturers who produce fuels lower in carbon intensity than petroleum based fuels can receive a $1 per gallon tax credit.
In order to meet that threshold, those manufacturers will need to lower their carbon intensity and that could include contracting with farmers who produce low carbon corn and soybeans using practices such as cover crops, conservation tillage, and enhanced efficiency fertilizers. Farmers can therefore expect higher prices for their commodities.
In making the announcement Vilsack said, “The new guidelines are a win for farmers, biofuel producers, the public, and the environment. The action today marks an important milestone in the development of market-based conservation opportunities for agriculture.”
The two of us worked on the 45Z tax credit and, frankly, we were frustrated that the Biden administration wasn’t able to finalize the rule so it could take immediate effect. The Treasury Department was unwilling to adopt the rule in its tax guidance on 45Z without a public comment period on the portion of the rule that measured carbon intensity associated with biofuels. In essence, we ran the ball to the two-yard line with the expectation that the Trump administration would run it into the end zone in a matter of a few weeks.
That comment period concluded in the early spring and yet months later, the Trump administration has yet to even try to move the ball. Why?
It’s not because the administration is opposed to farmers adopting what we called climate-smart agricultural practices and what they call regenerative practices. Earlier this month, Agriculture Secretary Brooke Rollins, along with Health and Human Services Secretary Robert F. Kennedy, Jr., and Mehmet Oz, administrator of the Center for Medicare and Medicaid Services announced a $700 million Regenerative Pilot Program to help American farmers adopt practices that improve soil health, enhance water quality, and boost long-term productivity.
And while the initiative doesn’t actually create any new financial resources for farmers, the practices that will help farmers produce lower carbon feedstocks to make ethanol, biodiesel, and sustainable aviation fuel that Tom Vilsack was talking about in January are the same tools in the Trump administration’s announcement. Planting cover crops, reducing or eliminating tillage, improving the timing and quantity of fertilizer, and employing technology to more precisely apply crop inputs are the same tools that would be used in producing lower carbon feedstocks and in improving the health of our soil.
We fear there may be two other reasons the Trump administration has yet to move on 45Z. First, the Administration has been friendly to fossil fuel interests who have traditionally opposed biofuel initiatives. And second, there is no champion – no Tom Vilsack — for biofuels policy within the Trump administration.
There is still time for the Trump administration to get this right, but they must move quickly. The Treasury Department is currently writing the regulation that will be used for the clean fuel production tax credit, known as 45Z.
Treasury can choose to include the regenerative practices that will both create new market opportunities for struggling farmers and lead to healthier soil and cleaner water … or it can opt to leave them out. If the department includes regenerative ag practices in 45Z, the incentives for regenerative practices in 45Z dwarf the resources available in the administration’s $700 million initiative.
It meets the demand of domestic transportation industries, it opens markets overseas where customers want lower carbon liquid fuels, and it creates market-based opportunities for farmers to increase their profitability even as they help reduce emissions.
This article was originally published on December 23, 2025 in AgriPulse.
Tim Gannon is a farmer and agricultural policy consultant who served in various positions at USDA during the Barack Obama and Joe Biden administrations. Robert Bonnie served USDA as undersecretary of farm production and conservation under Biden and undersecretary of natural resources and environment under Obama. He is a distinguished fellow with UC Berkeley’s Stone Center for Environmental Stewardship.
