Clean Fuel Credit Consortium publishes reading of 45Z chain-of-custody rules

The Clean Fuel Credit Consortium recently published “Delivering 45Z Value to Farmers Through the Grain System They Already Use.”

CFCC said “the article addresses one of the most practical open questions in the 45Z clean fuel production credit market—who keeps the mass-balance books for reduced carbon-intensity (CI) grain, and where.”

Notice 2026-53 from the U.S. Department of the Treasury ties reduced-CI claims to USDA’s chain-of-custody and verification standards in 7 CFR Part 2100, and final regulations are still pending, CFCC noted.

The consortium said its reading is that Part 2100 attaches mass-balance obligations to the entity that takes ownership of scored grain, not to the site or bin where the grain is stored.

“That matches how grain already trades by title,” CFCC stated. “It means elevators, merchandisers and ethanol plants can buy and manage scored bushels with the same contracts and systems they use today.”

Farmers can only capture the 45Z premium if the market is clear about who keeps the books, CFCC said.

“Part 2100 as written already answers that—the books stay with the owner,” the consortium stated. “More clarity brings more participation, and more of the value reaches the farm.”

The article outlines four provisions of Part 2100 that determine where the books are kept:

• The rule attaches to ownership. Any party that takes title to scored grain keeps mass-balance books and is audited on them. A broker who never takes title keeps none.

• The books close by entity. Scored bushels bought plus opening stock must equal scored bushels sold plus closing stock, by CI, over periods of no more than three months.

• Mixing is allowed, not required. Scored and conventional grain can share a bin. The books and the audit protect the claim.

• Three documents go with every sale: proof the seller was verified, the farm’s biofuel feedstock report, and a signed attestation of amount and CI.

The article also covers how a field-level identifier guards against double counting before a claim enters any ledger.

It flags one question for the treasury department: whether the claim moves with the sale when scored grain ships from a location other than where it was received.

In developing the article, the consortium engaged with verifiers, USDA’s Office of the Chief Economist, tax-assurance providers, and credit buyers and brokers.

The consortium asks the treasury department and Internal Revenue Service to adopt Part 2100 as written, applied at the entity that takes ownership, in the final regulations.

“The technology, commercials and plants are ready,” CFCC stated. “What the market needs now is regulatory clarity, and the consortium wants to hear from the people who move the grain before [version 2] of the protocol.”

The article is available here.

Elevators, merchandisers, ethanol plants, verifiers and policy staff can request the full article, with the rule text quoted in full, and the consortium’s entity-level mass-balance protocol, and submit comments, here.

CFCC disclosed that members and partners provide mass-balance ledger and geospatial-clearing services to participants in the 45Z market.

USDA, the treasury department and the IRS have not reviewed or endorsed the article, the protocol or any registry.