Expert Study Finds Carbon Sequestration Vital to Future of Iowa Ethanol Production
February 14, 2023
Contact: Jared Palmer 515-322-0435
JOHNSTON, IA- Agricultural economic experts released a new study today that found Iowa ethanol production is at a crossroads. Without viable access to carbon capture and sequestration (CCS), Iowa could see 75 percent of its ethanol production migrate to states that facilitate sequestration.
The study, conducted by Decision Innovation Solutions (DIS), determined that current market and policy dynamics would results in Iowa ethanol production becoming noncompetitive with catastrophic results for Iowa ethanol producers, Iowa farmers and the Iowa economy. The finding included:
- Production will migrate out of state. By the end of the decade, Iowa ethanol production could contract by 75 percent (nearly 3.5 billion gallons per year) leading many plants to shut down.
- Iowa farmers would lose local markets for over 1 billion bushels of corn annually, depressing local corn prices.
- Iowa would realize an eventual decline in revenues from ethanol plants of more than $10 billion per year.
DIS concluded: “Margins matter. And the 45Z tax credits are a game changer. Clean fuels such as ethanol which are produced with CO2 capture and sequestration via pipeline are the future for the renewable fuels industry. Iowa’s ethanol industry is at a crossroads – will it be positioned to be the leader in ethanol and other clean fuels or watch that future move over the horizon?”
The Iowa Renewable Fuels Association (IRFA) commissioned DIS to conduct an all-encompassing economic impact study based on a scenario where Iowa ethanol plants are precluded from utilizing CCS technology via pipelines while surrounding states allow such projects to move forward. Phase 2 of the study, which is scheduled to be completed later this month, will determine the negative impact on local corn prices from the projected reduction in the Iowa corn grind.
“Legislation that would effectively shut down CCS pipelines would also shut down Iowa ethanol production,” stated IRFA executive director Monte Shaw. “The reality that Iowa ethanol producers face is that reasonable access CCS could be the difference between operating and shuttering their operations. We all recognize the important and emotional issues at play here, but IRFA members are calling on Iowans to unite to support a fair and equitable path forward for CCS. The future of Iowa ethanol production and Iowa corn prices depends on it.”
Decision Innovation Solutions (DIS) is the premier economic research and analysis firm for agriculture in Iowa. The leading author was David Miller, Consulting Chief Economist at DIS and former long-time chief economist and researcher for the Iowa Farm Bureau Federation.
The Iowa Renewable Fuels Association represents the state’s liquid renewable fuels industry and works to foster its growth. Iowa is the nation’s leader in renewable fuels production with 42 ethanol refineries capable of producing 4.5 billion gallons annually – including 34 million gallons of annual cellulosic ethanol production capacity – and 11 biodiesel facilities with the capacity to produce 410 million gallons annually. For more information, visit the Iowa Renewable Fuels Association website at: www.IowaRFA.org.