Nebraska biofuel maker Green Plains sees boost from 45Z, carbon credits in 2026

Green Plains said it expects carbon-related earnings to reach at least $188 million in 2026, as the ethanol producer reported a profitable fourth quarter and welcomed proposed US Treasury regulations governing the 45Z clean fuel production tax credit.

The Omaha-based biofuels company posted net income of $11.9 million, or 17 cents per share, in the fourth quarter of 2025, compared with a loss of $54.9 million, or negative 86 cents per share, in the same period in 2024. Adjusted EBITDA swung to $49.1 million from a negative $18.2 million.

The turnaround reflects the company's bet on carbon capture and sequestration and low-carbon fuel production, executives said, with CEO Chris Osowski citing a "carbonization monetization strategy" that is now generating cash. Green Plains recognized $27.7 million in 45Z credits during the quarter, net of discounts, and received its first payment from the transfer of those credits.

"The release of Treasury's proposed 45Z clean fuel production credit regulations provides long-awaited clarity for the industry," Osowski said on the company's Q4 earnings call Feb. 5.

He cited the removal of indirect land-use change penalties and the recognition of CI improvements from on-farm practices as favorable developments for the company's strategy.

Tax credits boost

Green Plains said carbon capture equipment at its three Nebraska ethanol plants -- in York, Central City, and Wood River -- is now fully operational, with CO2 being transported for permanent sequestration in Wyoming. The company said all five compression units are capturing more than 90% of the CO2 produced at those facilities.

The upcoming carbon earnings projection includes approximately $150 million from the Nebraska operations, which benefit from both 45Z credits and voluntary carbon credits. The remaining $38 million is expected from the company's other plants, which produce lower-carbon-intensity ethanol that qualifies for 45Z even without sequestration.

The Trump administration's Feb. 3 45Z proposal laid the groundwork for the first guidance on changes mandated by Republicans' 2025 budget reconciliation legislation. That bill maintained the clean fuel production credit passed by Democrats in the 2022 Inflation Reduction Act, but extended it through 2029, altered previous land-use requirements, imposed new restrictions limiting feedstocks to crops grown in the US, Canada, or Mexico, and reduced bonuses for sustainable aviation fuel production.

The proposal was roundly praised by US ethanol and agriculture trade groups, who nonetheless sought further clarity even as US SAF market participants braced for headwinds.

Green Plains executives said the regulations could provide additional upside beyond the $188 million target. CFO Ann Reis said the company was "sharpening our pencils" to quantify the value of provisions granting credits for practices such as no-till farming and cover crops.

"We got a little bit of a surprise with the addition of the on-farming practices now qualifying for a reduction in (carbon intensity)," Reis said. "Anything will be an upside with looking at the on-farming practices."

The company has not yet announced a buyer for its projected 2026 tax credits, but is currently in active discussions with counterparties, Reis said.

The company purchases a majority of its corn directly from farmers rather than through commercial channels, positioning it to capture value from low-carbon feedstocks as USDA finalizes a carbon intensity calculator for farm-level emissions.

Ethanol market

Green Plains also cited improvements across its ethanol operations, including increased production capacity excluding its idled Fairmont, Minnesota, facility. Four plants set production records in 2025, and seven achieved record ethanol yields, it said.

Green Plains shares rose in premarket trading following the results. The stock dipped to a 52-week low of $3.14/share in 2025, when ethanol margins were depressed and uncertainty over 45Z rules weighed on the sector. Ethanol margins remain "well-positioned" due to a record corn crop, Senior Vice President Imre Havasi said.

"Ethanol production has been higher compared to last year, but we expect supportive demand -- both domestically and internationally," he said.

Oslowski said it was "easy to get caught up in the opportunities around carbon," but Trump administration and bipartisan support for new policies -- including the 2026-27 Renewable Fuel Standard blending requirements and a recent push for nationwide E15 -- would further "strengthen biofuel markets and support American farmers."