German biofuel manufacturer Verbio has completed the acquisition of US corn-based ethanol producer South Bend Ethanol.

The German biofuel firm will invest $230m into expanding South Bend’s Indiana ethanol plant to produce biomethane. The plant currently produces 250,000 tonnes per year (TPA) of ethanol. After the end of investments in 2026, it will have capacity to produce 850,000MWh of biomethane. This, Verbio expects, will allow it to benefit from provisions under the 2022 Inflation Reduction Act (IRA).

The IRA contains a number of provisions granting subsidies and bonuses to biofuel firms. One such example is the $0.50 per gallon alternative fuel credit, which biomethane qualifies for. The 250,000 TPA of ethanol will more than double the 175,000 TPA the firm gets from its plant in Iowa. The Iowa plant is also undergoing  changes to biomethane production.

Biomethane is a fossil fuel substitute that Verbio produces from organic waste and straw. As the waste materials decompose, the gas they produce is collected and scrubbed until it is almost pure methane. Biomethane can be used interchangeably with natural gas, but is generally not captured. Since its industrial use prevents wasteful emissions of the gas and offsets fuel use, substituting it for use in vehicles it can reduce overall CO2 emissions by 90%.

Verbio and the IRA

Verbio CEO Claus Sauter said: “The IRA fits our business model perfectly and, with its investment and production support, acts like a ‘double turbo’ for our development in North America.”

Sauter furthered his statement by saying: “Europe urgently needs to respond to the IRA if it wants to play any role in modern technology globally. As a German company, we have no choice but to invest even more in the US and take advantage of the opportunities that the IRA offers us”. The IRA has already seen other European renewable manufacturers, such as battery firm AMTE, divert production to the US in search of subsidies.