By Jared Strong
Federal incentives for low-carbon fuels would be a boon to Iowa ethanol producers — potentially more than tripling their profit margins — but they also put those producers at risk if they are unable to take advantage of the tax credits, ethanol proponents say.
If Iowa producers are able to capture the carbon dioxide they would otherwise emit into the atmosphere, an ethanol plant that produces 100 million gallons per year might benefit to the tune of more than $40 million annually, according to a recent study commissioned by the Iowa Renewable Fuels Association. That calculation is dependent on whether pipelines are built to carry the greenhouse gas away.
On the other hand, if the pipelines aren’t constructed — and if the plants don’t find a different destination for their carbon dioxide — ethanol production might shift to other nearby states, the study concluded.
“Iowa ethanol is at a crossroads,” said Al Giese, president of the association, which lobbies for policies that benefit the industry and commissioned the study.
The study by Decision Innovation Solutions of Urbandale predicted that a lack of carbon capture and sequestration for the state’s ethanol plants could shift three-quarters of their current production out of state, resulting in lost revenues that might exceed $10 billion annually.
That relies on the premise that production will increase in nearby states that have better access to sequestration, especially where the geology is more amenable to retaining the gas deep underground.
Little is known about Iowa’s potential for underground sequestration, largely due to a comparative lack of oil exploration. Geologists have noted that about half of the state’s ethanol plants are located in areas that have potential for sequestration but that it might take years to fully evaluate that potential.
“We’re not going to be around to find out,” said Monte Shaw, executive director of the association, insinuating that the state’s ethanol plants would be imperiled by the delays.
The study did not take into consideration the potential for localized or regional sequestration in Iowa.
Environmental groups that oppose carbon dioxide pipelines have derided the doomsday predictions as scare tactics that are meant to block new legislationthat could halt the projects.
“It’s fearmongering,” said Jess Mazour, of the Sierra Club’s Iowa chapter.
The group has argued that carbon sequestration will unnecessarily extend the use of ethanol fuel as the nation shifts to electric vehicles. It further has concerns about safety hazards from pipeline leaks and environmental damage from their construction.
The potential for revenue increases from sequestration is muddied somewhat by the agreements that have been forged between the pipeline companies and the ethanol producers, which have not been publicly revealed.
David Miller, an economist for the company that conducted the study, said standard rates that ethanol producers pay other companies to transport carbon dioxide were used to calculate revenue projections.
“We have not been privy to the individual negotiations of any of the ethanol plants with the pipelines,” he said.
Shaw also said he is unaware of the agreements: “When you run a trade association, the last thing you try to do is ever get into the business side of the business.”
Shrinking carbon footprints
Fuels are scored with a carbon index that compares how much carbon dioxide is produced to create a certain amount of energy. The indexes for gasoline and diesel fuels are in the mid 80s.
The ethanol produced by Iowa plants average among the lowest carbon scores of any state, according to the U.S. Department of Agriculture. The lower the score, the better in terms of emissions. The USDA estimated in late 2020 that the average for Iowa ethanol was just under 60.
Ethanol plants can reduce those scores by increasing their energy efficiency and using low-carbon sources of fuel and electricity.
The plants could further reduce their carbon indexes by buying corn from farmers who use techniques to reduce their own greenhouse gas emissions.
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