Green Plains returns to profit on 45Z tax credits, carbon capture
Ethanol producer posts $0.17 EPS vs expected loss, guides to $188M in 2026 clean fuel credit EBITDA
Green Plains returned to profitability in the fourth quarter, driven by newly available federal clean fuel tax credits and the full activation of its carbon capture infrastructure at three Nebraska facilities.
The ethanol producer reported net income of $11.9 million, or $0.17 per diluted share, for the quarter ended December 31, 2025, compared with a net loss of $54.9 million, or $0.86 per share, in the same period a year earlier. The results significantly exceeded analyst expectations, which had projected a loss of $0.03 per share.
Adjusted EBITDA reached $49.1 million in the quarter, including $23.4 million in value from Section 45Z Clean Fuel Production Credits, a federal incentive that took effect January 1, 2025 and provides credits of up to $1 per gallon for low-carbon transportation fuels.
Revenue fell 26.5% to $428.8 million from $584 million in the prior-year quarter, a decline the company attributed to strategic plant sales and the termination of a marketing agreement. Green Plains sold its Tennessee plants in Obion and Rives for a combined $360 million during 2025, moves intended to strengthen its balance sheet and focus resources on its Nebraska operations.
The company achieved 97% plant utilization across its eight operational ethanol facilities during the quarter. Perhaps most significantly, all three Nebraska ethanol plants in Central City, Wood River, and York are now fully operational with carbon capture systems that are capturing approximately 800,000 tons of biogenic carbon dioxide annually. The captured CO₂ is transported via the Tallgrass Trailblazer pipeline for permanent sequestration at a hub in southeast Wyoming.
Green Plains received its initial 45Z tax credit payment of approximately $14 million in December 2025, representing a portion of credits generated last year. The company has entered into an agreement with Freepoint Commodities LLC to monetize its 45Z credits from the Nebraska facilities, an arrangement that generated between $40 million and $50 million in 45Z-related EBITDA in 2025.
Looking ahead, the company provided guidance of at least $188 million in 45Z-related Adjusted EBITDA for 2026. The agreement with Freepoint includes a term sheet for potential extensions covering 2026 through 2029, providing visibility into future cash flows from the tax credit program.
Green Plains ended the quarter with $230 million in cash and reduced debt, completing a balance sheet transformation that began with the Tennessee plant sales. The company has been transitioning from a traditional ethanol producer to a low-carbon fuel provider with significant exposure to federal incentives for sustainable energy.
The Section 45Z credit program is designed to encourage the production of cleaner transportation fuels through 2029, aligning with Green Plains' strategy to leverage its carbon capture capabilities to reduce the carbon intensity of its ethanol production. The credits are supported by third-party emissions verification and tax insurance, providing additional certainty for investors.
Shares of Green Plains, which have a 52-week trading range of $3.14 to $12.49, were recently changing hands near $12.60. The stock has gained significant ground over the past year as the company executed its strategic transformation and began realizing benefits from the 45Z program.
Analysts remain divided on the company's prospects, with a consensus target price of $12.11, according to market data. Three analysts rate the stock a buy, five recommend hold, and one advises sell, reflecting uncertainty about the long-term sustainability of tax credit-driven earnings and the competitive dynamics of the renewable fuels market.