By Leah Douglas

WASHINGTON (Reuters) – 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 Tuesday significantly expands tax credits for industrial projects that capture emissions of carbon dioxide, 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.

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