Business

Ethanol could be boosted by carbon capture credits in Biden’s climate law


By Lea Douglas

WASHINGTON, August 18 (Reuters)A major expansion of tax credits for companies that capture and store carbon emissions under US President Joe Biden’s new climate law could be a boon for the ethanol industry as it seeks to meet its mid-century climate goals.

The Inflation Reduction Act (IRA) that Biden signed on Tuesday dramatically expands tax credits for industrial projects that capture emissions of carbon dioxide, the main gas responsible for climate change, and store it underground or use it as a base for other products.

The industry hopes to use carbon capture and storage (CCS) technology, aided by a network of carbon transport pipelines across the Midwest, to reach a goal of net zero emissions by 2050. The technology could help ethanol manufacturers to position their product as a green fuel in the context of the electrification of public transport.

Geoff Cooper, president and CEO of the ethanol trade group, the Renewable Fuels Association, said the IRA is “the most significant federal commitment to low-carbon biofuels since the expansion of the renewable fuel standard 15 years ago”.

The IRA allows companies that own and operate CCS equipment to collect up to $85 per tonne, compared to $50, of captured carbon stored underground, and $60 per tonne, compared to $35, of captured carbon used in other manufacturing processes. or for oil recovery.

One set of projects that could benefit from the expanded credits is a proposed network of pipelines in the Midwest to capture and transport emissions from ethanol plants.

Three companies – Summit Carbon Solutions, a subsidiary of Iowa-based Summit Agricultural Group; Wolf Carbon Solutions, an Alberta-based subsidiary of Wolf Midstream; and Navigator CO2 Ventures, a subsidiary of Texas-based Navigator Energy Services, hopes to run more than 3,600 miles (5,800 km) of pipeline from ethanol plants in six states to underground storage sites.

The projects could capture up to 39 million tons of carbon per year, according to the company’s websites, potentially making them eligible for more than $3.3 billion in tax credits.

In statements to Reuters, the three companies applauded the IRA and its inclusion of expanded credits.

Pipelines are at different stages of the licensing process in each state. Widespread dissent among landowners along the proposed pipeline routes could pose a barrier to the projects as they move forward.

Ethanol production lends itself well to carbon capture projects because the manufacturing process emits a pure stream of carbon dioxide, said Jessie Stolark, public policy and member relations manager for the Carbon Capture Coalition.

“They were the first in a lot of ways,” Stolark said.

(Reporting by Leah Douglas in Washington edited by Timothy Gardner and Matthew Lewis)

(([email protected];))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

nasdaq

Back to top button