The Rebounding Effect of Good Energy Policy

By Randy Olson | September 08, 2011

Rick Davis, general manager of Soy Energy in Mason City, Iowa, recently shared with me his challenges of the past several years. Shortly after hiring him, the company halted plans to build a biodiesel plant in Marcus, Iowa. They were already in early stages of construction. But this year, the implementation of the revised renewable fuel standard (RFS2) and the passage of favorable Iowa legislation gave them new hope to return to the biodiesel business. 

Rather than building a new facility, Davis and his board negotiated to buy a shuttered biodiesel plant in Mason City, Iowa. Soy Energy has since resurrected the 30 MMgy facility, transforming it into a state-of-the-art plant, able to handle many feedstocks. Davis expects it to be running at full capacity within a few months. 

This is just one of many stories of biodiesel facilities on the rebound. The implementation of the RFS2 has breathed new life into the struggling biodiesel industry, and nowhere is this more evident than in Iowa. Home to 15 plants with 315 million gallons of capacity annually, virtually all of our state’s plants shut down or operated at reduced capacity in 2010. Today, most of the same plants that held on by their fingernails are operating again, many at their full potential. Other idled plants have changed hands, and I am buoyed by the fact that they are not lost to us. The dreary silence of vacant plants will soon be replaced with the humming of American ingenuity—and our slow economic recovery. 

The RFS2 has also stimulated an investment in infrastructure, which is critical to the long-term success of biodiesel in our nation’s energy portfolio. In Iowa, Magellan Pipeline has announced plans to install equipment for biodiesel blending at its Des Moines terminal. Other Iowa terminals carrying biodiesel are in Mason City, Ottumwa and Fort Madison. The RFS2 serves as a stabilizing force that will make these investments pay off over the long-term. Despite claims of RFS2 opponents, the needed infrastructure is falling into place.   

For all our hard work, and everything we’ve done right as an industry, ultimately our anticipated record biodiesel production is the result of policy. It’s our leaders who recognize our nation’s need for domestically produced, renewable advanced biofuel that have helped this important new industry thrive. I’m proud to say that Iowa’s entire congressional delegation signed on as sponsors to federal legislation to extend the biodiesel tax incentive for three years, a move that would support thousands of new U.S. jobs and spur economic growth in Iowa and across the country. Iowa is the first state to have a clean sweep of co-sponsors to the legislation.

At the state level, Iowa successfully passed a bill this year that does three things to promote the growth of Iowa biodiesel. The legislation: 

• Extends and expands a tax credit to encourage retailers to make biodiesel available at the pump.

• Provides a production incentive.

• Helps fund infrastructure needed to move biodiesel in the state.

Biodiesel champions in Iowa worked to pass a requirement, like a handful of other states, that would have ensured Iowa uses its own products while displacing foreign oil. Despite our disappointment in the legislators rejecting that effort, the legislation they passed is a step in the right direction. States that enact policies to make their own biodiesel industries a priority will be the states where the RFS2 is delivered.  

Davis, who is also a soybean farmer, told me that despite four years in limbo, he hasn’t wavered because he is still a believer. He believes in making Iowa the renewable energy capital of the world. He believes that we should use our own products, and in the importance of energy policy that reduces foreign oil. Why should we spend billions of dollars on foreign oil when our farmers can grow so much energy from their own fields, and our producers can deliver economic development through green energy? Let’s help our lawmakers keep that question at the front of their minds as they continue to make difficult decisions for America, while making economic development a priority. 

Author: Randy Olson
Executive Director, Iowa Biodiesel Board
(866) 683-4172

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