Dive Brief:
- Bank of America closed on a $205 million tax equity financing deal with decarbonization platform Harvestone Low Carbon Partners last week that will allow the bank to purchase clean energy production tax credits from the biofuels startup’s North Dakota carbon capture facility, according to a Sept. 5 release.
- Bank of America will have access to 45Q carbon capture tax credits generated by HLCP subsidiary Blue Flint Ethanol’s carbon capture, utilization and sequestration facility near Underwood, North Dakota, which is co-located alongside its biorefinery in the area, per the release.
- The structure of the tax equity financing is the first of its kind, HLCP said. Bank of America will also be able to purchase clean fuel production credits generated by the Blue Flint biorefinery “when available,” the company said.
Dive Insight:
Blue Flint’s biorefinery was the third in the nation to capture its own carbon dioxide emissions, HLCP said in the release. The carbon capture facility, which opened in October 2023, was the first such operation to open in the U.S. following the passage of the Inflation Reduction Act in 2022, according to the release.
HLCP, which is a portfolio company of energy investor Energy Capital Partners, said the novel structure of the financing was enabled by its ownership of assets across the entire ethanol supply chain.
HLCP chief financial officer Marc Stratton said in the release that Bank of America’s investment will help lower the emissions at the biorefinery. The deal falls in line with the bank’s “strong track record of innovative financing transactions for decarbonization technologies,” according to its global head of sustainable finance, Karen Fang.
“We are engaging with all of our clients including partners like Harvestone and providing them a full suite of financial solutions tailored to meet their needs as they take steps to transition to a more sustainable future,” Fang said in the release.
The North Dakota carbon capture facility has captured and sequestered over 125,000 metric tons of carbon dioxide since opening, HLCP said in the release. The company said that “going forward” it expects to capture more than 200,000 metric tons of carbon dioxide annually — the equivalent single year emissions of over 47,000 cars, according to the Environmental Protection Agency’s greenhouse gas equivalencies calculator.
Blue Flint’s carbon capture and sequestration infrastructure captures carbon dioxide emissions generated during the ethanol production process. The captured carbon dioxide is then compressed into a liquid and stored in Class VI injection wells — which are focused on regulating the geologic sequestration of carbon dioxide — deep underground, according to the release.
The sequestration of the carbon dioxide in the injection wells generates the 45Q carbon sequestration tax credits, which were increased and extended by the Inflation Reduction Act, according to the Congressional Research Service. These credits provide incentives and monetary credit for carbon capture, utilization and storage projects.
HLCP CEP Jeff Zeuger said in the release that the project has allowed the facility to “dramatically reduce emissions” and produce lower carbon intensity ethanol while strengthening the agricultural and ethanol markets in the state.
North Dakota is one of three states with Class VI well permits, along with Wyoming and Louisiana. The EPA recently took steps toward making Texas the fourth, granting draft permits for three Class VI wells to Occidental Petroleum subsidiary Oxy Low Carbon Ventures last week.
The 45Z tax credits, or clean fuel production credits, Bank of America will have the ability to purchase were established by the Infrastructure Reduction Act and consolidated tax credits for a variety of fuel credits that will expire at the end of the calendar year, per the Congressional Research Service. Among those, the bill consolidates credits for biodiesel, agri-biodiesel, sustainable aviation fuel, alternative fuels, alternative fuel mixtures and biofuel.
Clean fuels produced starting in January 2025 and used or sold before the end of 2027 will be eligible for the credits, according to the Internal Revenue Service.