If Iowa blocks CO2 pipelines, would the state lose out on tax credit gold rush?

If Iowa lawmakers pass legislation blocking carbon dioxide pipelines, the pipelines still will move forward in other states, leaving Iowa out of a tax credit gold rush and forcing Iowa farmers to ship their corn out of state, according to the Iowa Renewable Fuels Association.

“If you’re not allowed to participate, your economic picture changes,” said Monte Shaw, the group’s executive director, during a news conference Monday.

The group, which represents Iowa’s 53 ethanol and biodiesel plants, released results of a study Monday on the economic impact on Iowa farmers if ethanol plants close because they can’t compete for new federal tax credits available to companies reducing carbon dioxide emissions.

The study, conducted by Decision Innovation Solutions for the association, says Iowa’s ethanol industry will take a $10 billion hit if CO2 pipeline projects fail to advance in Iowa. Three proposed projects would gather CO2 from ethanol plants, ship it through pipeline and store it underground at sites in Illinois and North Dakota.

If up to 75 percent of Iowa’s ethanol plants go out of business — as the study predicts — Iowa corn growers would have to pay 35 cents more per bushel to transport corn out of state. That’s $35,000 more a year for a farmer with 500 acres of corn, at 200 bushels per acre.

“Likely that corn will have to be stored longer and travel much more distance to find an equitable market,” said David Miller, an agricultural economist with Decision Innovation Solutions who used to work for the Iowa Farm Bureau Federation.

The study’s findings are based on the assumption CO2 pipelines would be approved in Iowa’s neighboring states, but that isn’t at all certain. Pipelines also have faced opposition from citizen groups and governing boards in Illinois and Minnesota.

Wally Taylor, an attorney for the Sierra Club of Iowa, called the study “fearmongering” in a recent letter to the Iowa Legislature.

“Even if pipelines were built in Iowa and more ethanol plants were built, would that benefit corn farmers? Would, or could, Iowa farmers grow more corn than they are now to supply the additional ethanol plants?,” Taylor wrote. “Or is the carbon capture proposal just a scheme to make more money for the ethanol industry with no additional benefit to farmers?”

The study also assumes there are no other ways to significantly reduce carbon emissions at ethanol plants — which is what triggers the 45Z tax credits worth up to $1 per gallon.

“I don’t even know if Congress, quite frankly, understood what they were doing when they passed it,” Shaw said of the tax credit provision. “It is a game-changer for us.”

But the study itself notes Iowa has four ethanol plants that are capturing CO2 for beverages, dry ice and refrigeration and there may be other ways to use large volumes of CO2, such as converting it to methanol. These methods also could qualify for tax credits.

Some Iowa House Republicans have been advocating for House File 565, which would require pipeline companies to secure 90 percent of the land for the pipeline through voluntary easements before the Iowa Utilities Board would grant the right to use eminent domain to force sales for the remainder.

More than three-quarters of Iowans surveyed by the Des Moines Register/Mediacom Iowa Poll this month said they are opposed to use of eminent domain for pipelines, the Des Moines Register reported.

The bill has other provisions, such as prohibiting the board from issuing a permit until a project has other state and federal permits.

Shaw said he’s not surprised so many Iowans oppose eminent domain. But he’s optimistic HF565 will be modified or defeated.

“I like our chances because we’ve had so many thoughtful conversations up there (the Iowa Statehouse),” he said. “There is key leadership that supports House File 565. I hope it does not become law the way it is because it will kill these projects.”

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