Green Plains Strikes Deal to Transfer 45Z Credits Worth Up to $325 Million
Key Facts
Green Plains announced an agreement to transfer clean fuel production tax credits under Section 45Z, worth at least $250 million for credits expected to be generated in 2026, with the total potentially reaching $325 million if buyers purchase additional credits. Business Wire said the agreement provides that "buyers will purchase additional credits to bring the total to $325 million." The agreement converts incentives tied to fuel production into credits that can be transferred to buyers, while keeping the announced minimum separate from the higher total. The deal is based on future credits tied to the company's production during the year, not cash proceeds already recorded. It comes after 45Z credits became a prominent part of Green Plains' results and annual outlook.
Green Plains' first-half 2026 results showed the scale of that effect: the company recorded net 45Z credits, after discounts, of $134.0 million during the six months ended June 30, including $68.4 million in the second quarter. The credits reduced the cost of goods sold at the eight eligible plants, according to the company's quarterly report filed with the Securities and Exchange Commission. After discounts and other costs, the credits contributed $113.9 million to EBITDA in the first half and $58.7 million in the second quarter. The difference between the value of credits recorded and their EBITDA contribution reflects the discounts and costs the company took into account. The new agreement is therefore tied to a program whose impact had already appeared directly in operating results during 2026.
In the second quarter, Green Plains moved from a net loss attributable to the company of $72.2 million in the same period of 2025 to net income of $67.1 million in 2026. Adjusted EBITDA also rose to $93.3 million, compared with $16.4 million a year earlier. The company attributed part of the improvement to 45Z credits, while Chief Executive Chris Osowski said "the second quarter demonstrated the earnings power of the Green Plains platform." He added that operational excellence, improved ethanol economics and the low-carbon platform were reflected in the financial results. The comparison puts the credits' contribution in the context of a broader improvement in performance, without making them the sole driver.
Green Plains expects to generate between $200 million and $225 million in EBITDA tied to 45Z credit generation for the year ending Dec. 31, 2026, based on estimates of production, eligible gallons and expected credit sales. In its 2025 results, the company had forecast at least $188 million in adjusted earnings tied to these credits in 2026, with the result depending mainly on production volumes and carbon-intensity factors at eligible plants. The latest range estimates the credits' contribution after discounts and other costs, rather than the deal's gross value alone. The credit transfer agreement sets a minimum of $250 million and a total cap of $325 million if additional credits are purchased. Actual production results and credit sales will be among the factors affecting whether the annual forecast is achieved.
The company has a track record of monetizing 45Z credits; in September 2025, it reached an agreement with a Freepoint subsidiary to sell credits generated by ethanol production at three Nebraska facilities and signed a term sheet to expand the program to three additional facilities. Green Plains estimated at the time that the agreement and term sheet together would generate between $40 million and $50 million in EBITDA tied to 2025 credits, after applicable discounts and operating expenses. The company linked final proceeds to actual production and the timing of carbon capture system operations. It said credits under the earlier agreement would be transferred directly, with emissions verified by a third party and tax insurance in place. This provides context for the company's use of credit sales, while the new deal concerns credits expected in 2026.
Under U.S. Internal Revenue Service rules, eligible taxpayers can transfer all or part of the credit to an unrelated third party for cash. The 45Z credit is calculated based on the applicable amount per gallon and an emissions factor, linking the incentive's value to the volume of fuel produced and its emissions characteristics. The program covers clean fuel produced domestically and sold during the period from Jan. 1, 2025, to Dec. 31, 2029. For fuel produced after Dec. 31, 2025, the rules require feedstocks to be produced or grown exclusively in the United States, Mexico or Canada. Green Plains shares closed at $13.62 on Oct. 29, 2026, according to EL7 data, with the day's trading range unavailable. The company is scheduled to report third-quarter results on Nov. 5, the next occasion to track its estimates for 45Z credit generation during the year.