Iowa would lose 75% of ethanol plants without pipelines, study predicts

Iowa could lose 75 percent of its ethanol plants — with cascading harm to the corn industry — without carbon dioxide pipelines proposed for the state, according to a study commissioned by the Iowa Renewable Fuels Association.

Carbon capture and sequestration can help Iowa’s 42 ethanol plants reduce greenhouse gas emissions enough to qualify for federal tax credits that could save the industry, association leaders said Tuesday. However, many Iowans oppose carbon dioxide pipelines — particularly the use of eminent domain powers to acquire easements — and there are a handful of bills in the Iowa Legislature seeking to curtail these projects.

“Iowans must pull together and find a fair and equitable path forward for CCS because capturing and sequestering carbon will be life or death for many Iowa ethanol plants over the next five years,” said Al Giese, a board member of Quad County Corn Processors, an ethanol plant in Galva, and president of the Renewable Fuels Association board.

Through the Inflation Reduction Act, which President Joe Biden signed into law in August, the federal government will provide incentives for industries to reduce or sequester greenhouse gas emissions, which are contributing to climate change.

Three proposed pipeline projects in Iowa would gather CO2 from ethanol plants, compress it into a liquid and ship it underground to sequestration sites in Illinois and North Dakota.

Without pipelines, most of Iowa’s ethanol plants wouldn’t get the tax credits and would see markets dwindle, causing as many as three quarters of the plants to close, according to the study by Decision Innovation Solutions.

“Loss of 75% of the Iowa ethanol industry would result in an eventual decline in revenues from ethanol plants of more than $10.3 billion per year,” the study states. “These losses would reverberate throughout the Iowa economy as corn prices would adjust downward.”

The study predicts the ethanol industry would move to other Midwest states that have authorized CO2 pipelines.

Pipeline opponents say the projects provide too little benefit for Iowans while potentially forcing landowners to grant easements. Sen. Jeff Taylor, R-Sioux Center, has proposed five bills that would restrict CO2 pipeline development.

Senate File 101 goes the furthest by eliminating eminent domain authority for hazardous liquid pipelines. Another bill, Senate File 104, requires pipeline companies to get voluntary leases for 90 percent of land before asking to use eminent domain, which allows forced easements with compensation.

Some opponents have said ethanol plants could qualify for tax credits if farmers reduced their carbon intensity of growing corn.

“There are things farmers can do to reduce the carbon intensity score of the corn they produce,” said David Miller, an agricultural economist with Decision Innovation Solutions. “The 45Z tax credit will create incentives for those things to happen.”

Miller said during the news conference the tax credit would give farmers some incentive to lower their carbon intensity score. “But the magnitude is not nearly as great as what could be done relative to sequestration,” he said. “We might be able to take 10 points, maybe even 12 points, off the carbon score from the agronomic side. … It’s 30 right off the top by going to carbon sequestration.”

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