Green Plains Inc., the Omaha-based producer of corn-based ethanol, said Friday it reached an agreement to sell as much as $325 million in federal clean-fuel tax credits, providing a new source of cash as the company continues to adjust its business and finances.
The agreement covers a minimum of $250 million in 2026 credits under the federal Clean Fuel Production Credit, commonly known as 45Z. Buyers can purchase additional credits under the agreement, bringing the total to $325 million. Green Plains also said the buyer has an option to acquire another $30 million, depending on credit availability.
The company expects all of the credits included in the agreement to qualify under the federal program. The 45Z incentive took effect at the beginning of 2025 and is based on the carbon intensity of a transportation fuel across its full production chain.
“This agreement illustrates the value we’ve built into our low-carbon platform and converts that value into meaningful, predictable cash flow,”
Chris Osowski, Green Plains president and chief executive officer, said.
Credits depend on fuel production
The federal credit is tied to emissions associated with producing and using transportation fuel. For ethanol producers, the calculation can include farming practices used to grow corn, along with processing, transportation and other parts of the production chain. Green Plains has said it expects its credits from the program to meet federal requirements.
The company has been developing a business strategy focused on lower-carbon fuel and other products made from corn. About six years ago, Green Plains began a plan to move beyond its traditional role as an ethanol producer and develop what it described as an agricultural technology business focused on lower-carbon and higher-value products.
- The agreement guarantees a minimum sale of $250 million in 2026 45Z credits.
- The scheduled purchases can rise to $325 million, with a separate option for another $30 million if credits are available.
Green Plains reported a $67 million profit in the second quarter, compared with a $72 million loss in the same period a year earlier. The company said proceeds from the credit transaction are expected to support its balance sheet and provide flexibility for additional investments.
The announcement comes as the biofuels industry awaits final rules from the U.S. Treasury Department governing the 45Z program. Those rules are widely expected in November. Green Plains also recently announced a program called Farm Forward to track and reward farming practices that reduce carbon intensity, according to Kristen Owen, an Oppenheimer analyst cited in coverage of the agreement.
