Shaw: Report is ‘wake-up call’ for Midwestern states to improve biofuel policies

A new study released in early February finds biofuels continue to have a significant positive impact on Iowa’s economy, but recent market challenges reduced the job and household income impacts of ethanol and biodiesel production in the state.

The study, authored by John Urbanchuk of ABF Economics and commissioned by the Iowa Renewable Fuels Association, found the production of ethanol and biodiesel accounts for nearly $4 billion in state gross domestic product (GDP), supports 37,000 direct and indirect jobs, and boosts Iowa household income by $1.8 billion. All three metrics are down 20 to 25 percent compared to 2019.

“Biofuels still provide a major boost to Iowa’s economy, but quite frankly, the report is a wake-up call to redouble our efforts at the state level,” said Monte Shaw, IRFA executive director. “Midwestern states like Iowa must be aggressive to drive local demand for biofuels in a meaningful way, thereby providing a sturdy market foundation, even as we supply the rest of the United States and markets around the world. IRFA will continue to work with Gov. Kim Reynolds and the Iowa Legislature to improve our biofuels policies and programs.”

In 2020 Iowa biodiesel production increased slightly, but the COVID-19 pandemic, trade disputes, and Renewable Fuel Standard exemption abuse led to ethanol production decreasing by half a-billion gallons compared to the previous year.

“The renewable fuels industry continues to make a significant contribution to the Iowa economy in terms of job creation, household earnings, and state and local tax revenue,” Urbanchuk stated. “Further, policy and regulatory actions taken by Iowa, and other Midwestern states, to boost the use of biofuels locally will provide a buffer from the uncertainty of federal policy and export demand. By creating a larger and more stable local demand situation, Iowa can greatly enlarge the latent economic benefits of biofuels production represented by the more than 800 million gallons of unutilized ethanol production capacity and 50 million gallons of unutilized biodiesel production capacity. Putting this existing manufacturing infrastructure to work would greatly increase the GDP, household income and job benefits related to Iowa biofuels production.”

To view the full study, click here.