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Study: Iowa ethanol production would shrink if carbon pipelines don't move forward in Iowa but do in other states

Katie Peikes
IPR file
The study by Decision Innovation Solutions says Iowa’s ethanol industry would lose more than $10.3 billion a year if carbon capture and sequestration pipelines don't move forward in Iowa, but move forward in other states in the Midwest.

A study done for the ethanol industry predicts dire consequences if carbon dioxide pipelines don’t go forward in Iowa but do in other states.

The study, which was done by economic research and analysis firm Decision Innovation Solutions and commissioned by the Iowa Renewable Fuels Association, says that if Iowa ethanol plants aren’t able to access pipelines to capture, transport and store their carbon dioxide emissions, they won’t be competitive with neighboring states that use carbon capture and sequestration pipelines and can receive tax credits for them.

“Iowa’s ethanol industry is at a crossroads,” the study concludes. “Will it be positioned to be the leader in ethanol and other clean fuels or watch that future move over the horizon?”

During a Tuesday news conference where the Iowa Renewables Fuels Association unveiled the study, northwest Iowa farmer Al Giese, the president of the association’s board of directors, called carbon capture and sequestration “life or death” for Iowa ethanol facilities.

“Capturing and sequestering carbon will be life or death for many Iowa ethanol plants over the next five years,” Giese said. “And it has the potential of drastically impacting the Iowa economy as well.”

Iowa is the top ethanol-producing state in the country. The study says if Iowa ethanol plants aren’t able to access carbon capture and sequestration pipelines, Iowa ethanol production could shrink by 75% by 2030 and many plants would close. Ultimately, the study says, Iowa’s ethanol industry would lose more than $10.3 billion a year.

The study comes as three proposed carbon dioxide pipelines inch along in Iowa. Each has attracted opposition from residents, farmers and environmentalists. They say they’re worried about the impacts to their land and crop yields. During meetings, pipeline safety and concerns of past pipeline ruptures feature prominently.

As opponents of the proposed pipelines continue to cry foul, the ethanol industry touts these pipelines as a means to extend the life of ethanol as a viable fuel.

Reducing the carbon footprint of Iowa's ethanol production has become increasingly important as newer technologies, such as electric vehicles, gain steam and the Biden administration focuses on curbing greenhouse gas emissions. Iowa has 42 ethanol plants, with 34 of them participating in the proposed pipeline projects, according to the study.

“Carbon capture and sequestration technology is the single biggest and best tool we have to keep liquid fuels like ethanol competitive with electric vehicles going forward,” Iowa Renewable Fuels Association executive director Monte Shaw said.

Tax credits have been made available or expanded under the Inflation Reduction Act for carbon dioxide capture and storage projects as well as clean fuel production. But in order for an ethanol producer to claim one of those types of tax credits and get a certain amount of money per gallon, they have to lower their carbon footprint, called a carbon intensity score.

David Miller, the report’s author and chief economist with Decision Innovation Solutions, said most Iowa ethanol plants have carbon intensity scores in the low to mid-50s. Participating in carbon capture and sequestration pipelines, he said, would lower their scores by about 30 points.

Miller said if Iowa ethanol plants can participate in pipelines and capture one of the credits, called 45Z tax credits, those credits could be worth as much as $2.16 billion a year.

“That kind of income flow would stimulate substantial economic activity within the state,” Miller said.

The study puts into perspective how carbon pipelines can “reshape financial opportunities for ethanol plants … and how that might change the industry itself going forward,” said Iowa State University agricultural economist Chad Hart. Asked if capturing and sequestering carbon is “life or death” for the ethanol industry, Hart said he wouldn’t agree with that claim.

“But I would agree that it does have a major impact on for how long the ethanol industry will remain a very strong, viable industry within the power and fuel sector,” Hart said.

Some environmental groups are criticizing the industry-commissioned study. Jess Mazour, the conservation program coordinator for the Iowa chapter of the Sierra Club, which opposes the pipelines, said the study is based on an “unrealistic scenario.”

The current proposed routes for the three pipelines include Iowa and would need to be heavily rerouted if Iowa said no to the projects but other states said yes. She added that there are vocal opponents of the pipelines in the other participating states as well.

“Without those ethanol plants in Iowa [participating], would they still be able to make those projects make sense?” Mazour said. “That scenario itself I think is incredibly unlikely.”

The study’s findings “seems like a lot of scare tactics,” Mazour said.

Katie Peikes was a reporter for Iowa Public Radio from 2018 to 2023. She joined IPR as its first-ever Western Iowa reporter, and then served as the agricultural reporter.