Ethanol Industry Calls for Carbon Capture Support Following Economic Study

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<h1>The Renewable Fuels Industry in Iowa: A Mixed Economic Outlook for 2024</h1>

<img src="https://www.agriculture.com/thmb/RLng8ZfMj2gsjGkVHSdRjA4MTfY=/filters:no_upscale():max_bytes(150000):strip_icc():format(jpeg)/54422218704_4306ac9563_o-233521f62c594e098877df4c9a3cba63.jpg" alt="Agriculture in Iowa" />

<p><em>By Cami Koons</em></p>

<p>The Iowa Renewable Fuels Association recently released a study indicating that the economic impact of the renewable fuels industry in Iowa decreased by $800 million in 2024 compared to 2023. This decline reflects “stagnant corn demand,” which the association argues is hindering the sector's growth.</p>

<h2>Impact of Corn Demand on the Biofuels Sector</h2>

<p>Monte Shaw, the executive director of IRFA, stated that entering ultra-low carbon ethanol markets represents the most “cost-effective and impactful tool” for farmers and producers to stimulate demand.</p>

<p>Despite the hurdles, the IRFA maintains that the direct impacts of biofuels in Iowa remain strong, with the state achieving a record in fuel production. According to the report, the renewable fuel industry contributed to 2% of Iowa’s gross domestic product in 2024, amounting to $5.7 billion. However, job creation has plummeted, with over 34,000 direct and indirect jobs lost, down from 52,000 in 2023.</p>

<h2>Job Losses and Economic Factors</h2>

<p>Shaw explained that while some job loss can be attributed to completed construction projects and facility closures, most of it stems from the indirect effects of a stalled market. He emphasized the importance of multiplier effects in the economy that arise when farmers spend their earnings on equipment and services.</p>

<p>“When farmers don’t have money, they aren’t buying new equipment, which leads to job losses,” he noted, advocating for an increase in overall ethanol demand.</p>

<h2>Commodity Prices and Market Trends</h2>

<p>Currently, the supply of corn and soybean commodities exceeds demand, contributing to falling corn prices. Trends indicate that this will likely continue into the 2024-2025 crop year. Shaw highlighted the productivity of Iowa farmers, stating they have become more competitive but have struggled to increase demand.</p>

<h2>Concerns About Future Stability</h2>

<p>Ryan Sauer, vice president of market development for Iowa Corn Growers Association, warned that if current trends persist, Iowa could witness a repetition of the farm crisis of the 1980s. He outlined the implications of stagnant commodity prices against high input costs and expressed concern over the sustainability of financing for farmers.</p>

<h2>Potential for E15 and Legislative Support</h2>

<p>A significant opportunity for boosting demand lies in congressional approval of year-round E15—a blend of 15% ethanol fuel. Studies show that a modest increase of just 5% in ethanol blends may equate to a demand increase of 2.3 billion bushels of corn annually.</p>

<p>Moreover, the IRFA found that 62% of Iowa's corn is processed through the ethanol industry, underscoring the vital role it plays in supporting local agriculture.</p>

<h2>Exploring Low Carbon Markets</h2>

<p>Shaw pointed out that alongside E15, the industry is aiming to tap into low carbon and ultra-low carbon markets, such as sustainable aviation fuel (SAF). These markets are pivotal for the industry's future growth and sustainability. However, to access them, producers must lower the carbon intensity of ethanol production through environmentally friendly practices.</p>

<p>Shaw argued, “If we want to access new markets that demand biofuels, it is essential to reduce carbon emissions through methods like carbon capture and sequestration.”</p>

<h2>Challenges and Controversy Over Carbon Capture</h2>

<p>Despite the potential benefits, proposals for carbon sequestration pipelines have encountered considerable public opposition. Activists and local landowners have raised concerns about the implications for farmland and the risks associated with pipeline ruptures and environmental safety.</p>

<p>Opposition has led to legislative action, with discussions underway in the Iowa Capitol regarding the use of eminent domain for carbon sequestration projects. Activists like Emma Schmit argue that alternatives to carbon capture could bolster the industry without compromising agricultural land.</p>

<h2>The Path Forward</h2>

<p>As the renewable fuels industry grapples with fluctuating demand and emerging markets, the focus remains on innovative solutions, including the potential for new domestic demands amidst external pressures like tariffs. The state stands at a crossroads, balancing economic stability with environmental responsibility.</p>

<p>Shaw concluded, “Our farmers have the potential to excel, but we must overcome the obstacles in our path to sustain growth in the biofuel sector.”</p>

<p><em>This article is part of Iowa Capital Dispatch, a network of news bureaus supported by grants and a coalition of donors. For inquiries, contact Editor Kathie Obradovich at <a href="mailto:info@iowacapitaldispatch.com">info@iowacapitaldispatch.com</a>.</em></p>

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