New Study: Renewable Fuels Are Backbone of Resilient Iowa Economy

New Study: Renewable Fuels Are Backbone of Resilient Iowa Economy

Biodiesel needs policy/market boost to reach potential.

At the 4th Annual Iowa Renewable Fuels Summit held yesterday in Des Moines, the Iowa Renewable Fuels Association released a new study detailing the vital impact the renewable fuels industry has on Iowa's economy. The study shows that the biofuels industry makes Iowa's economy more resilient.

Even as Iowa struggles to emerge from the downturn in the general economy, production of biodiesel and ethanol is boosting the ag sector of Iowa's economy. Additionally, bringing currently idled biodiesel plants back into production could create more green collar jobs and further grow Iowa's economy.

"2009 was a year of recovery for the renewable fuels industry," said economist John Urbanchuk, who conducted the study and works for LECG, LLC, a private economic research firm. "While all of the Iowa ethanol plants that were idled in 2008 were brought back on line, the biodiesel industry was particularly hard hit during 2009 and the industry outlook is clouded by the failure of Congress to reauthorize the biodiesel excise tax credit that expired on December 31."

Plants cut back biodiesel production, waiting for Congress to act

As the industry now waits for Congress to reinstate the biodiesel tax credit, hopefully sometime early in the 2010 session, many biodiesel plants have either been shut down or have significantly cut back on biodiesel production.

According to the report, "Contribution of the Biofuels Industry to the Economy of Iowa," Urbanchuk found that ethanol and biodiesel producers are part of a manufacturing sector that adds substantial value to ag commodities produced in Iowa and makes a significant contribution to the state's economy. Based on the size of the renewable fuels industry at year-end 2009, ethanol and biodiesel:

  • Accounts for nearly $11.5 billion or about 8%, of Iowa's gross domestic product;
  • Generates $2.3 billion of household income for Iowa households;
  • Supports more than 70,000 jobs through the entire Iowa economy (or 4.6% of private, non-farm employment); and,
  • Boosts state tax revenue by $532 million.

Ethanol producers did better than biodiesel producers in 2009

"Despite the challenges, 2009 proved the staying power of Iowa's ethanol producers," said IRFA executive director Monte Shaw. "Iowa plants have created more green collar jobs than ever. Iowa ethanol production hit a record 3.1 billion gallons. On the other hand, 2009 proved extremely challenging for Iowa's biodiesel producers. With the lapse of the federal blender's tax credit, the industry has ground to a near-halt. If Iowa took the needed steps to get the biodiesel industry producing again, this report shows it could result in thousands of new jobs and millions in new household earnings and state tax revenue."

Iowa is the leader in renewable fuels production. Iowa has 39 ethanol refineries capable of producing nearly 3.3 billion gallons annually. In addition, Iowa has 15 biodiesel facilities with the capacity to produce over 322 million gallons annually.

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.

Poll: 68% of American voters support "COOL for Fuel"

Also at the January 25 IRFA annual meeting in Des Moines, it was announced that a new poll shows 68% of American voters support country of origin labeling on gasoline. Poll data on the "COOL for Fuel" idea was released by Growth Energy, the U.S. coalition of ethanol supporters.

Growth Energy, a trade group of ethanol producers and others promoting renewable fuel, wants the federal government to require "COOL for Fuel"—which would mean putting country-of-origin labeling on fuel made from imported oil. The labels could be put on pumps at gas stations where consumers fill up vehicles.

Seeking Country-of-Origin labeling on fuel from imported oil

The polling data was released in conjunction with an announcement by U.S. Representative Bruce Braley, D-Iowa, that he intends to introduce legislation in Congress mandating that all gasoline sold in the U.S. carry country-of-origin labeling (COOL). Growth Energy launched its Labelmyfuel.com initiative last August, in an effort to create more market transparency for American consumers of foreign petroleum.

"Congressman Braley's bill would let U.S. drivers know where they are sending their dollars when they gas up. If the oil is from Venezuela, or Abu Dhabi, or Saudi Arabia, let people know. Americans deserve to know where their money goes – whether it stays here or goes overseas," says retired U.S. Army General Wesley Clark, who serves as co-chair of Growth Energy. "Growth Energy's poll shows that the American people want to know where their fuel is from – and this bill would give them that information. Knowing that 68% of people in America support COOL for Fuel tells us that Congressman Braley is on the right track."

Growth Energy's national poll of 1,200 voters, conducted by McKeon & Associates, asked the question: "Would you favor or oppose country of origin labeling for gasoline so consumers would know where their fuel comes from?" The poll showed 68% favored COOL for fuel, 15% opposed and 17% don't know. The poll has a 4.1% margin of error.

60% of all American gasoline is refined from overseas oil

As much as 60% of all American gasoline is refined from overseas oil. The reliance on imported oil comes at a cost to taxpayers of at least $50 billion a year to protect oil shipping routes. Anywhere from $20 billion to $30 billion is drained from the U.S. economy each month to purchase the foreign oil–-money that could be spent in the United States to create jobs if it were invested in renewable, low-carbon ethanol.

"In truth, that reliance on foreign oil means we are subsidizing the economies of other nations, when we could use that money right here at home, spurring on our own economy," said Clark. "Think about what our U.S. economy would look like if we invested that money here, instead of sending it overseas. We could do that--we could really boost our economy--if we invested in ethanol."

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