But is Carbon Intensity Real?
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You’ve probably heard this question or something like it: “Is carbon intensity real?”
It’s a fair question, and it really boils down to a more practical consideration: “Should I calculate carbon intensity, even if I’m skeptical about climate change?”
For both of these questions, the answer is practical, not philosophical.
Imagine this scenario: If your doctor said that he’s doing a study to see if coffee is bad for your blood pressure, and he’d give you $10,000 for reporting your blood pressure every week and answering how many cups of coffee you drank, would you do it?
I would.
Even if I were completely convinced that my daily cup of joe had nothing to do with my blood pressure, my mom didn’t raise a fool. Ten grand is ten grand.
We’re in a similar situation with carbon intensity.
Why Carbon Intensity Matters
So, why should we care about carbon intensity? Let the academics argue about climate change. Right now, the Inflation Reduction Act is incentivizing carbon intensity scoring for both ethanol and sustainable aviation fuel.
When regulations like this start, they’re unlikely to ever go away. The government always pushes for higher fuel efficiency and lower environmental impact. And it’s not just our government. Around the world, from the Paris Agreement to the Kyoto Protocol, leaders are pressing for lower carbon intensity.
Are Carbon Intensity Scores Political?
Yes.
And no.
Obviously, one party is pushing more for “climate change” related initiatives in this country, and the other party questions the validity of these initiatives.
We have a knack for making all sorts of things political, which can leave Ag and biofuel leaders feeling like they’re caught in the middle of a game of ping pong.
In the months after 9/11, when America began its global war on terror, certain countries, like France, were reluctant to join us in the fight.
Americans reacted, and many businesses deemphasized anything in their products that could be tied to France.
Many restaurants started renaming “French fries” to “Freedom fries.”
The golden, salty, fried potatoes didn’t change one bit, but their name did for a time.
“Carbon Intensity” could be called “Carbon Output,” “Carbon Byproduct,” or “Freedom Intensity.” It’s just a term. The reality is, the amount of CO2 produced in farming and biofuel production can be measured no matter who is in the White House.
More important, the Inflation Reduction Act is a law that passed through both houses of Congress and was signed into law. The subsidies for ethanol and Sustainable Aviation Fuels (SAF) exist for the next three years, regardless of the 2024 election results.
A president could lead a fight to repeal the Inflation Reduction Act, but that would cost a lot of political capital, and it would take money out of businesses and local communities - something neither party really wants to be associated with.
Money Talks
In reality, red or blue doesn’t matter as much as green - as in dollars.
Credit markets are already interested in Carbon Intensity scoring data, the potential for creating exchanges, futures, etc.
There are already small scale exchanges for carbon credits, but the market hasn’t organized itself formally . . . yet.
Regardless of politics, one thing remains true in this country: if there’s a way to make money on something, Americans will find it.
When is the last time we can think of where a political party introduced legislation that disbanded an entire market? If these guys let crypto exist, they’re not about to decimate an Ag market.
It’s in the political interest of both parties to let Americans do what Americans do best: create value.
Conclusion
Whether you believe in climate change or not, the reality is that carbon intensity scoring is here to stay. It’s being incentivized with tax credits now, and it will likely become both a regulatory requirement and a major credit exchange in the near future. Early adopters stand to benefit from subsidies and incentives, while late adopters will face compliance mandates.
Even if you’re skeptical about the science behind climate change, carbon intensity scoring is a practical step towards staying competitive and compliant. The push for sustainability isn’t a political fad—it’s the direction the world is moving. As always, being proactive can provide significant advantages.
