Kinder Morgan sees tax credits speeding up clean energy investments

U.S. funding for clean energy projects will help energy pipeline operator Kinder Morgan accelerate its investments in renewable natural gas and carbon sequestration, executives said on Wednesday.

The $430 billion Inflation Reduction Act (IRA) signed into law last September expanded tax credits for industrial projects that capture, reuse or permanently store carbon dioxide, a gas that contributes to climate change.

The funding "accelerates growth opportunities" in renewable natural gas (RNG), renewable diesel, hydrogen as well as carbon capture and storage (CCS), according to a presentation by Kinder Morgan, the largest operator of carbon dioxide pipelines in North America.

Opportunities to speed up development targets for CCS projects are tied to the increase in credits - to $85 per ton from $50 per ton - for carbon sequestration.

The law also provides $60 per ton for carbon used for enhanced oil recovery, used in Kinder Morgan's oil business.

Earnings before depreciation and amortization in its carbon dioxide business are set to grow 9% to $879 million this year, it said.

The company, which has a network of pipelines that transport natural gas and refined products, recently expanded its energy transition business with three acquisitions and as well as a carbon dioxide transportation and sequestration deal.

Last week, Kinder Morgan said it would move forward with an agreement with Red Cedar Gathering Company to transport and sequester carbon. It also decided to go ahead with a plan to convert its Autumn Hills landfill to an RNG facility, with construction scheduled to begin this month.

The Houston company also is evaluating whether to keep sites dedicated to producing electricity to take advantage of the EPA's proposed regulations allowing for the creation of e-RINs, a new type of credit that would be sold by electric vehicle makers if they can prove their cars and trucks are being powered by electricity from plants that burn biofuels.