The U.S. ethanol industry could suffer a new boom with the new climate law signed by U.S. President Joe Biden that will allow a major expansion of tax credits for companies that capture and store carbon emissions.

The Inflation Reduction Act signed by Biden last Tuesday, 16, significantly expands tax credits for industrial projects that capture carbon dioxide emissions, the main gas blamed for climate change, and store it underground or use it as a building block for other products.

The U.S. ethanol industry hopes to use carbon capture and storage (CCS) technology, aided by a network of carbon transportation pipelines across the Midwest, to reach the zero net emissions target by 2050. The technology can help ethanol-making plants position their product as a green fuel against the backdrop of vehicle fleet electrification.

Geoff Cooper, president and CEO of ethanol trade group Renewable Fuels Association, told Reuters that the law is "the most significant federal commitment to low-carbon biofuels since the Renewable Fuel Standard was expanded 15 years ago."

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

Pipeline network to transport emissions

A set of projects that can benefit from expanded credits is a pipeline network proposed in the Midwest to capture and transport emissions from ethanol plants.

Three companies – Summit Carbon Solutions, a subsidiary of the Iowa-based Summit Agricultural Group; Wolf Carbon Solutions, an affiliate of Wolf Midstream, based in Alberta; and Navigator CO2 Ventures, a subsidiary of Texas-based Navigator Energy Services – expect to operate more than 5,800 kilometers of ethanol pipelines in six states to underground storage sites.

According to Reuters, projects can capture up to 39 million tons of carbon annually, potentially making them eligible for more than $3.3 billion in tax credits.  Pipelines are at different stages of the licensing process in each state, and widespread dissension among landowners along proposed pipeline routes still poses an obstacle to projects as they progress.

Speaking to Reuters, the three companies applauded the Inflation Reduction Act and its inclusion of expanded credits. According to Jessie Stolark, manager of public policy and member relations at the Carbon Capture Coalition, the Carbon Capture Coalition told Reuters, ethanol production lends itself well to carbon capture projects because the manufacturing process emits a pure flow of carbon dioxide. "They were the pioneers in many ways," Stolark said.

Source: RPA news