A major expansion in tax credits for companies that capture and store carbon emissions under the Inflation Reduction Act could be a boon to the ethanol industry as it seeks to meet its mid-century climate goals, Reuters reported.
When President Biden signed the law on Tuesday, Emily Skor, CEO of Growth Energy, a company that builds and runs ethanol plants, praised Biden and listed the tax credits that will apply to the biofuels industry.
"This initiative includes key provisions designed to expand the use of low-carbon biofuels, including infrastructure investments and tax credits for Sustainable Aviation Fuel (SAF), carbon capture, cellulosic biofuels and bio-based diesel.
“We applaud President Biden and Congressional leaders for advancing our nation’s investment in low-carbon biofuels for a cleaner future,” said Skor.
“Biofuels are critical to meeting climate goals, and this law will help maximise our industry’s contributions to a cleaner future by expanding the volume of low-carbon biofuels available across the entire transportation sector – on the ground, in the air and at sea. This initiative will help jump-start climate progress, while delivering more savings at the pump, greater long-term energy security, and a welcome economic boon to rural communities.
"Included in the Inflation Reduction Act are several key priorities for the biofuels industry:
- 45Q tax credits for carbon oxide sequestration and utilization extended through 2032 with adjusted rates of $85/ton for sequestration and $60/ton for utilization.
- Clean Fuel Production Credit starting in 2025 and expiring at the end of 2027 for the production of low-carbon fuels.
- Five Years of Sustainable Aviation Fuel (SAF) credits: A stand-alone credit for SAF then as part of the Clean Fuel Production Credit for three years.
- $500 million for biofuels infrastructure through the end of 2031.
- Extension of Biomass-Based Diesel Blenders Credit and the Second-Generation Biofuels Producer Credit for two years.
- $300 million grant program to increase domestic production and deployment of SAF and low-emission aviation technologies."