Monte Shaw. (IRFA photo)

The Iowa Renewable Fuels Association has released an economic study that says using carbon dioxide pipelines at ethanol plants will increase profits and keep most of the industry from leaving the state.

Dave Miller of Decision Innovation Solutions wrote the report which says taking advantage of federal tax credits for reducing carbon in ethanol would dramatically improve margins. “We built the industry on operating margins in the 20 to 30 cents a gallon range on gross operating margins. Our estimate is that with a 45-Z tax credit that gross operating margin basically doubles,” he says.

The carbon dioxide has to be taken out to make ethanol more carbon friendly to compete with other fuels. Miller says without carbon sequestration, the ethanol production in Iowa would move out to another state who would take advantage of the tax credits. “From about 2007 to 11, we built the Iowa ethanol industry, and in about that same period, that whole industry could move, probably not far beyond the borders of Iowa,” Miller says.

Iowa Renewable Fuels Association president, Monte Shaw, says Iowa farmers could still sell their corn to ethanol plants but would have to pay to ship it. “When you are shipping corn instead of adding value to it where you are dropping it off — you are not going to get the same money — about ten billion dollars in lost revenues,” Shaw says. Miller says pipelines are the best way to ship the carbon dioxide to keep the costs down and allow the plants to expand.

Dave Miller. (IRFA photo)

“It is an additional $2.16 billion a year that would flow into the state. We have not done an economic impact study on what all the secondary and tertiary effects are of that,” Miller says. But he says the second impact would exist and stimulate substantial economic activity within the state.

Shaw says other carbon capture options for ethanol plants take time to develop and Iowa could lose 75% of its plants without the pipelines. “You know, we’re in a competition to produce low-carbon transportation options. And so this technology — this carbon capture and sequestration technology is the single biggest and best tool we have to keep liquid fuels like ethanol, competitive with electric vehicles going forward,” Shaw says.

Shaw says he understands the concerns about pipelines but says overall pipelines have an incredibly safe track record. And when it comes to payment for easements — Shaw says the pipeline companies are willing to negotiate. “I have yet to run into a landowner who has a pipeline, proposed to go across their land, who has engaged with one of the companies. And then who I’ve talked to, that said, ‘you know, they really just weren’t offering a fair price’.” Shaw says.

Shaw says he’s familiar with one negotiation near his hometown and wishes the pipeline was running across his land because it would have been about the best way for his farm to make money for the next five years. Shaw says landowners should see what they can get for their easements.”We’re not saying hey, ram these things through, we’re saying ‘fair and equitable’. So we urge landowners not to listen to some of the misinformation that’s definitely been put out there about these pipelines. But to sit down and talk, bring your list of questions, bring your list of concerns,” he says.

Shaw says if we can’t have low-carbon biofuels, we’re going to be stuck with no choice other than electronic vehicles, and he says there should be competition and options for consumers.

Radio Iowa