Hennen: The Midwest power grid deserves a fair deal on the 45Z tax credit
Scott Hennen Contributed / Scott Hennen
By Scott Hennen
December 27, 2025 at 5:04 AM
No region does more to fuel the U.S. economy than the Midwest, yet rural communities are so often shortchanged and unrecognized.
However, with the July 4 passage of the “One Big Beautiful Bill,” Congress and President Trump established a market-based solution. It’s called “45Z” — a tax credit for American fuel production that could bring billions of dollars in private capital to farmers and the rural power grid.
When I say “the grid,” I of course mean more money for new Midwest power plants. But I also mean more money for the linemen — the unsung heroes of the American energy industry.
You might wonder how a tax credit for fuel would be related to linemen or power plants. Fuel production requires electricity. When fuel producers show that they are using clean American energy, such as nuclear, hydro, or solar, they earn a larger 45Z tax credit. The larger the 45Z credit for fuel producers, the more private capital flows into the Midwest grid.
Trump and Congress created a framework that allows private markets to invest in rural grid infrastructure at a moment when more investment is sorely needed. The 45Z grid capital structure is based on two things: raw electrical power and energy data.
To make a 45Z filing, fuel producers document their production inputs, such as crops and electricity. For electricity, fuel producers enter into special contracts with American power plants. These contracts, called energy attribute certificates, contain granular energy data to support a 45Z claim. This data is tracked on a public ledger, similar to how transactions are tracked on blockchain systems.
Because Midwest power plants can generate additional revenue by selling data-backed electricity contracts, and fuel producers want to buy those contracts to increase their tax credit value, these arrangements could result in billions of dollars in new private investment flowing into the rural power grid.
That kind of private 45Z capital could mean new jobs for linemen, more raw power generation, stronger transmission systems, and, most importantly, lower energy costs for farmers and working families. Rural electric cooperatives that serve our communities stand to gain significantly due to the resources in their portfolios and their critical role in the energy supply chain.
But we’re not there yet. This opportunity depends entirely on how the U.S. Treasury finalizes the rules. Done right, 45Z could serve as a lifeline for Midwest communities. Done wrong, the U.S, Treasury could deny rural America billions of dollars in much-needed infrastructure investment.
We need to preserve the 45Z power market for our local economy. The U.S. Treasury must protect 45Z-qualifying EACs and ensure these contracts are sourced from the same grid region that powers the farms and refineries producing the fuels.
That’s how 45Z can be a real win. That’s why a group of us came together to form Farmers for a Fair Deal. The 45Z tax credit must be finalized in a way that ensures our local communities benefit.
I encourage readers to learn more about these efforts at www.farmersforafairdeal.com. We all need to be in this together.
By Scott Hennen