A major expansion in tax credits for companies that capture and store carbon emissions under U.S. President Joe Biden’s new climate law could be a boon to the ethanol industry as it seeks to meet its mid-century climate goals.
The Inflation Reduction Act (IRA) Biden signed on Aug. 16 significantly expands tax credits for industrial projects that capture emissions of CO₂, the main gas blamed for climate change, and either store it underground or use it as a building block 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 makers position their product as a green fuel against the backdrop of transit electrification.
Geoff Cooper, president and CEO of ethanol trade group the Renewable Fuels Association, said the IRA is “the most significant federal commitment to low-carbon biofuels since the Renewable Fuel Standard was expanded 15 years ago.”
The IRA allows companies that own and operate CCS equipment to collect as much as $85 per ton, up from $50, of captured carbon that is stored underground, and $60 per ton, up from $35, of captured carbon that is used in other manufacturing processes or for oil recovery.
One set of projects that could benefit from the expanded credits are a network of pipelines proposed in the Midwest to capture and transport ethanol plant emissions.
Three companies—Summit Carbon Solutions, a subsidiary of Iowa-based Summit Agricultural Group; Wolf Carbon Solutions, an affiliate of Alberta-based Wolf Midstream; and Navigator CO2 Ventures, a subsidiary of Texas-based Navigator Energy Services—hope to run more than 3,600 miles (5,800 km) of pipeline from ethanol plants across six states to underground storage sites.
The projects could capture as much as 39 million tons of carbon annually, according to the company websites, potentially making them eligible for more than $3.3 billion in tax credits.
In statements to Reuters, the three companies cheered the IRA and its inclusion of the expanded credits.
The pipelines are in varying stages of the permitting process in each state. Widespread dissent among landowners along the proposed pipeline routes could present an obstacle to the projects as they proceed.
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 at the Carbon Capture Coalition.
“They have been the first mover in a lot of ways,” Stolark said.
Recommended Reading
CEO: Linde Not Affected by Latest US Green Subsidies Package Updates
2024-02-07 - Linde CEO Sanjiv Lamba on Feb. 6 said recent updates to U.S. Inflation Reduction Act subsidies for clean energy projects will not affect the company's current projects in the United States.
NAPE: In Basins Familiar to E&Ps, Lithium Rush Offers Little Gold
2024-02-07 - A quest for sources of lithium comes as the lucrative element is expected to play a part in global efforts to lower emissions, but in many areas the economics are challenging.
The Risks and Benefits of the IRA’s 45Q, 45Z
2024-01-29 - The Inflation Reduction Act sections 45Q and 45Z are incentives to invest in energy transition and renewable energy projects, but they involve legal considerations to account for.
Tax Credit’s Silence on Blue Hydrogen Adds Uncertainty
2024-01-31 - Proposed rules for the 45V hydrogen production tax credit leave blue hydrogen up in the air, but producers planning to use natural gas with carbon capture and storage have options.
US EPA Removes Existing Gas Plants From Proposed Carbon Rule
2024-02-29 - The U.S. Environmental Protection Agency will exclude existing natural gas power plants from its proposed carbon regulations that it plans to finalize in April.