CFCC says 45Z mass balance books should stay with grain owners

The Clean Fuel Credit Consortium has published a reading of USDA chain-of-custody rules that would place 45Z mass balance tracking with the party that takes title to scored grain, not the storage site. The group is seeking industry comment before releasing protocol v2 and wants Treasury and IRS to adopt the rule as written in final regulations.

Why it matters: - The Clean Fuel Credit Consortium says clearer chain-of-custody rules could unlock more participation in the 45Z market. - The Consortium argues that farmers only capture the 45Z premium if buyers, elevators, merchandisers, and ethanol plants know exactly who keeps the books. - The reading could preserve the way grain already trades by title, which would reduce friction in existing commercial systems.

What happened: - The Clean Fuel Credit Consortium published an article titled “Delivering 45Z Value to Farmers Through the Grain System They Already Use.” - The article interprets Treasury’s Notice 2026-53 and USDA chain-of-custody standards in 7 CFR Part 2100 as placing reduced-carbon-intensity mass balance obligations on the entity that takes ownership of scored grain. - The Consortium says the rule should apply at the owner level, not the site or bin where grain is stored. - The group is inviting industry comment ahead of protocol v2.

The details: - Part 2100, as the Consortium reads it, ties mass balance books to title transfer. - A broker that never takes title keeps no mass balance books under this interpretation. - Scored bushels bought plus opening stock must equal scored bushels sold plus closing stock, by carbon intensity, over periods of no more than three months. - Mixing scored and conventional grain in the same bin is allowed, but not required. - Three documents are expected to accompany each sale: proof the seller was verified, the farm’s Biofuel Feedstock Report, and a signed attestation of amount and carbon intensity. - The article says a field-level identifier helps prevent double counting before a claim enters any ledger. - The article raises one open question for Treasury: whether the claim moves with the sale when scored grain ships from a location other than where it was received. - The Consortium says it engaged verifiers, USDA’s Office of the Chief Economist, tax assurance providers, and credit buyers and brokers while developing the article. - The Consortium is asking Treasury and the IRS to adopt Part 2100 as written in final regulations. - The full article is available here. - Industry participants can request the full article and the Consortium’s Entity-Level Mass Balance Protocol, and submit comments, here.

Between the lines: - The Consortium is pushing a reading of the rules that fits current grain commerce rather than creating a separate tracking layer at each storage point. - That approach would likely favor adoption if regulators accept the idea that ownership, not geography, controls the ledger. - The article also signals that final 45Z regulations are still a moving target, so market participants are seeking clarity before the protocol is finalized. - The Consortium’s disclosure notes that members and partners provide mass-balance ledger and geospatial clearing services to 45Z market participants. - USDA, Treasury, and the IRS have not reviewed or endorsed the article, the protocol, or any registry.

What's next: - Treasury and the IRS are expected to issue final 45Z regulations. - The Consortium wants its entity-level mass balance reading reflected in those final rules. - The group says it wants feedback from elevators, merchandisers, ethanol plants, verifiers, and policy staff before v2 of the protocol. - The Consortium also says its technology, commercials, and plants are ready for the market.

The bottom line: - CFCC is trying to settle a core 45Z question before it hardens into practice: who owns the carbon-intensity books, and where those books live.