Amid Federal Uncertainty, Iowa’s Biodiesel Success Offers Key Lessons
- Grant Kimberley
- Jun 23
- 3 min read
Biodiesel sales in Iowa set records last year thanks to strong state policies, but these gains are in jeopardy if federal policy issues are not corrected soon.
This spring, like generations before me, I climbed into the tractor and planted soybeans on my family’s farm in central Iowa. Farming has always involved a certain level of risk—that comes with the territory. But this year, there was a different kind of uncertainty weighing on my mind. Not only about the weather, or even the markets and tariffs, but about what’s happening in Washington—and what it means for the future of biodiesel.
As both a soybean farmer and a biodiesel advocate, I’ve seen how closely tied our nation’s energy supply is to agriculture. And how quickly momentum can vanish when policy support falters.
That’s why the recent biodiesel-sales report from the Iowa Department of Revenue stood out. In 2024, Iowa set a record—nearly 86 million gallons of biodiesel sold, a 19 percent increase from the year before. B20 or higher blends made up the lion’s share of sales, coming in at 238 million gallons of blended fuel. The numbers are impressive and a hopeful reminder of what’s possible when good policy meets real-world demand.
But context matters. These gains came before the impact of federal policy uncertainty began to fully assert itself.
This year, Iowa biodiesel producers—like many across the country—have faced mounting challenges. Uncertainty around the Renewable Fuel Standard, instability in the biodiesel tax credit, and confusing signals on 45Z implementation have all contributed to a sharp downturn. Many plants in Iowa have since shut down or are operating at greatly reduced capacity. Long-term investments, including new soybean-crush capacity, are now at risk.
No state—not even one as deeply committed to biofuels as Iowa—can fully overcome that kind of federal uncertainty. Still, there’s no question that smart state policy made those 2024 gains possible and can help shape who benefits most when federal policies do work.
So what’s working in Iowa? Here are a few key policies that helped drive biodiesel demand last year:
A per-gallon producer incentive for in-state biodiesel manufacturers.
A retailer tax-credit structure rewarding higher biodiesel blends like B11, B20 and even B30—the first to do so.
A diesel-fuel tax differential, favoring biodiesel blends at the pump.
The Iowa Renewable Fuels Infrastructure Program, which supports retailer upgrades for seamlessly offering biofuels.
Together, these tools encouraged investments, built stability and predictability into the market, and strengthened public-private collaboration across the value chain. They’ve helped Iowa become a national leader in biodiesel blending, with over 90 percent of on-road diesel sold in the state containing at least 11 percent biodiesel.
But here’s the reality: Iowa’s diesel demand is small on a national scale. Even with strong state policies, we can’t support our entire industry without a reliable federal framework. Federal inaction now threatens to undo the success we built together just a year ago.
And it’s not just a policy problem—it’s personal. Many Iowa biodiesel plants are farmer owned. That means when a plant idles or closes, it’s not only workers and producers who lose out. It’s also the farmers who invested in those facilities to create value-added markets for their soybeans. This industry was built from the ground up by farmers, engineers, fuel marketers and innovators—and that foundation is at risk.
We don’t need perfect federal policy—but we do need consistent signals. The biodiesel tax credit must be clarified and extended. RFS volumes must be set on time and at levels that reflect real-world production. Small-refinery exemptions (SREs) must be accounted for and handled transparently. And outdated, subjective indirect land-use change (ILUC) penalties must be reevaluated to reflect current agricultural practices so soybeans aren’t unfairly penalized.
Biodiesel is a reliable, low-carbon fuel that’s already working. It’s reducing emissions, supporting rural economies and delivering value across the supply chain—from feedstock providers to fleet operators. But like any other infrastructure-intensive industry, it depends on long-term certainty to thrive.
As I reflect on the seeds planted this spring—both literally and figuratively—I’m hopeful we can get back to a place where federal and state policies align again. We’ve shown what’s possible when they do.
Author: Grant Kimberley
Executive Director
Iowa Biodiesel Board
