Even in Tough Year, Renewable Fuels Power Iowa Economy

New study shows idled ethanol and biodiesel production capacity is big opportunity for an Iowa economic rebound.

At the 3rd Annual Iowa Renewable Fuels Summit January 27 in Des Moines, the Iowa Renewable Fuels Association released a new study detailing the large impact the renewable fuels industry has on Iowa's economy. Even during the current economic slump, the production of biodiesel and ethanol and the construction of new biorefineries continue to power Iowa's economy.

Additionally, bringing idled biofuel production capacity back into production could help boost Iowa's economic turnaround, the study says.

"2008 was a year of unprecedented challenges for the biofuels industry," notes John Urbanchuk, a well-known economist who specializes in studying the renewable fuels industry for LECG, LLC, an economic analysis firm based in Pennsylvania. "Despite the challenge to profitability, the biofuels industry continued to grow and it met the federal Renewable Fuel Standard's target of 9- billion gallons for 2008. Iowa leads the nation in biofuels output accounting for 26% of U.S. ethanol and 12% of biodiesel production capacity."

Iowa biofuels industry continues to grow

According to the report, "Contribution of the Biofuels Industry to the Economy of Iowa", Urbanchuk and colleague Dan Kowalski found that ethanol and biodiesel producers are part of a manufacturing sector that adds substantial value to agricultural commodities produced in Iowa and makes a significant contribution to the Iowa economy. Kowalski presented the findings at the IRFA meeting.

Based on the renewable fuels refineries operating at year-end 2008, ethanol and biodiesel:

• Add nearly $12.0 billion, or about 9%, to Iowa GDP
• Generate $2.8 billion of household income for Iowa households
• Support nearly 83,000 jobs through the entire Iowa economy (or 5.4% of private, non-farm employment) and
• Generate $576 million in state tax revenue.

Need to boost demand for ethanol, biodiesel

"In addition to the rather large current impact, increased demand for renewable fuels would provide a serious boost to Iowa's economy," says IRFA executive director Monte Shaw. A total of nine plants are currently idle in the state, and IRFA is working hard to boost demand for biofuels, a boost that would help bring idled facilities back into production.

"If the nine idled biodiesel and ethanol plants in Iowa resumed production they would add $300 million to Iowans' income, create over 9,000 new direct and indirect jobs and put over $70 million in additional tax revenues into the state coffers," he says. "Clearly, boosting demand for renewable fuels to bring these plants back on-line should be a top priority for our state and federal officials."

A complete report of the study can be found on the IRFA Web site at www.iowarfa.org/member_news/2007_Iowa_Biofuels_Economic_Impact.pdf

Iowa is the leader in renewable fuels production, notes Shaw. Iowa has 38 operational ethanol refineries with a combined annual capacity of over 3 billion gallons. There are five ethanol refineries under construction that will add nearly 700 million gallons of capacity. In addition, Iowa has 14 biodiesel refineries with the capacity to produce over 317 million gallons annually. Two biodiesel refineries under construction or expansion will add 35 million gallons of annual capacity. Additional renewable fuels projects are under development.

The Iowa Renewable Fuels Association was formed in 2002 to represent the state's liquid renewable fuels industry. The trade group fosters the development and growth of the renewable fuels industry in Iowa through education, promotion, legislation and infrastructure development.

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