The renewable fuels industry in Iowa contributed $800 million less to the state’s economy in 2024 compared to 2023, according to a recent study released by the Iowa Renewable Fuels Association (IRFA), reports Successful Farming.
The industry association attributed this decline to “stagnant corn demand,” stating that the best way to boost demand and revitalize the industry’s economic impact is to gain access to ultra-low carbon ethanol markets.
“That is the most cost-effective and impactful tool we can provide our farmers and producers,” said Monte Shaw, IRFA Executive Director, in a statement.
Despite the economic downturn, the IRFA emphasized that the direct impacts of biofuels within the state “remain strong,” noting another “record for fuel production.”
Overall, the report found that the renewable fuel industry accounted for 2% of Iowa’s 2024 gross domestic product, totaling $5.7 billion. The industry also supported over 34,000 direct and indirect jobs across the state, a decrease from the 52,000 jobs reported in 2023.
Shaw explained that while some of the job reduction is due to completed construction projects and a facility closure, the majority stems from the indirect impacts of the stalled market.
“The bigger thing is those multiplier effects,” he said. “When you’re buying corn at $7, that income flows through the economy and supports jobs and other aspects of Iowa’s economy… When farmers don’t have money, they’re not out buying new equipment, they’re gonna make stuff last another year, and so that is where those job losses have happened.”
Shaw stressed that increasing the overall demand for ethanol is crucial to boosting the industry’s economic contribution.
He noted that current supply outweighs demand for corn and soybean commodities, leading to falling corn prices over the past two years, a trend projected to continue into the 2024-2025 crop year.
“Our farmers are very productive, very competitive… they’re producing more corn with fewer inputs on the same acres,” Shaw said. “But we have not been able to build demand fast enough.”
Ryan Sauer, Vice President of Market Development for the Iowa Corn Growers Association, warned that if current trends persist and Iowa fails to tap into new markets for corn, the state could face a situation reminiscent of the 1980s farm crisis.
“You’ve got commodity prices that are going to stay stagnant, you’ve got input prices that will remain high, and I mean, there’s only so long that the banks can allow a farmer to do that,” Sauer said.
One potential avenue for increased demand is congressional approval of nationwide, year-round E15, a fuel blend containing 15% ethanol.
According to studies by the National Corn Growers Association, a 5% increase in ethanol blends, as E15 represents, would equate to an additional demand of 2.3 billion bushels of corn annually. The IRFA study found that 62% of corn in Iowa is processed by the ethanol industry.
Sauer highlighted the importance of the E15 market for Iowa farmers, particularly if tariffs negatively impact corn export markets.
“If we’re not going to be able to export it because of tariffs and all this, we need all the demand domestically we can get, and E15 will allow us to do that,” Sauer said.
While also advocating for year-round E15, the IRFA is heavily focused on developing low and ultra-low carbon ethanol markets, which Shaw described as the “near-term market” and the “market growth opportunities that we see on the horizon.”
These emerging markets include sustainable aviation fuel (SAF), as well as fuels for the marine industry, trains, and some construction and agricultural equipment.
The IRFA study indicated that ethanol producers would need to “lower the carbon intensity” of their production to access the SAF market.
“This is most easily achieved through environmentally friendly feedstock production practices and access to opportunities for carbon capture and sequestration of carbon dioxide from ethanol production,” the study stated.
Industries purchasing these advanced biofuels require them to be produced with lifetime greenhouse gas emissions below specific thresholds, sometimes even requiring corn feedstock grown using carbon-reducing farming practices.
Shaw argued that the ability to reduce carbon emissions through carbon capture and sequestration (CCS) technologies, such as the controversial Summit Carbon Solutions pipeline, could unlock “tens of billions of gallons” of additional biofuel demand over the next two decades.
“Do you want to be sitting here around $3.50 corn, and having a bad farm economy?” Shaw asked. “Or, do we want to access these new markets that will literally say, ‘Give me every gallon you can?’”
However, CCS pipelines like the Summit project and the now-terminated Wolf Carbon Solutions pipeline have faced significant opposition from landowners, some politicians, and environmental groups like the Sierra Club.
Opponents cite safety concerns, referencing a past pipeline rupture in Mississippi, and object to the use of eminent domain to acquire easements on agricultural land, particularly after the Summit project was conditionally granted this right in Iowa.
These issues have been a prominent topic of debate at the Iowa Capitol this legislative session, with the House voting to ban the use of eminent domain for carbon sequestration pipelines.
Emma Schmit, a director with the Bold Alliance, a group opposing the pipelines, argued that the “unyielding commitment to carbon capture pipelines” is actually hindering the biofuels industry.
“To imply stagnation suddenly has the industry on death’s door unless a risky carbon capture pipeline is allowed to destroy over 1,000 miles of prime Iowa farmland is a stretch,” Schmit said, pointing to figures in the study showing continued high ethanol production and consistent corn utilization by the industry.
“If expanding markets via decarbonization is the goal, there are a multitude of options available that don’t depend on the destruction of thousands of parcels or the misuse of eminent domain,” Schmit added.
According to Summit Carbon Solutions, they have secured easement agreements for over 75% of the route for the first phase of their pipeline project. However, construction is currently stalled pending permit approval in South Dakota, where a recent ban on eminent domain for CO2 pipelines led to the denial of Summit’s initial permit application. The company has stated its intention to reapply with a reduced scope in the state.
The project could face similar challenges in Iowa if lawmakers advance the House-passed bill, although significant amendments have been proposed in the Senate.
Shaw warned that without carbon sequestration capabilities, Iowa could lose its position as the “most cost-effective place to turn corn into ethanol” to neighboring Nebraska, where a roughly 400-mile carbon dioxide sequestration pipeline is expected to be operational by the end of 2025.
“People are treating this like it’s some sort of political board game, and they’re ignoring the very real ramifications that are happening around us,” Shaw concluded.
