Study: biofuels industry added 10% to Iowa's GDP in 2007
A study prepared for the Iowa Renewable Fuels Association (IRFA) details the dramatic impact the growing renewable fuels industry has on Iowa’s economy. Biodiesel and ethanol production and the construction of new biorefineries proves to be a major force in driving Iowa’s economy forward, especially in rural communities. The sector added as much as 10% to Iowa's GDP in 2007. The report titled "Contribution of the Biofuels Industry to the Economy of Iowa" [*.pdf], was prepared by economist John Urbanchuk, a director with LECG, LLC.
Its main findings are that the sector has added substantial value to agricultural commodities produced in Iowa, has brough a large number of jobs, and has made a significant contribution to the state's economy. Based on the size of the biofuels industry at year-end 2007, ethanol and biodiesel:
Critics will say that these dramatic benefits are only possible because the sector is heavily subsidised (previous post). Moreover, it is unclear how heavy the indirect social and environmental costs of the mainly corn-based ethanol industry in Iowa are: the international effect of increased food prices, especially on the urban poor in maize importing countries, must be taken into account.
What is more, the potential local environmental costs - such as water depletion, nitrogen runoff, etc - as well as the effects of the complex "displacement effect" should not be underestimated. This displacement effect, which consists of indirect land-use changes, seems to be playing out in Brazil, where deforestation recently shot up in a rush to produce more soybeans as the U.S. shifts land from soy to corn (previous post). However, these effects are difficult to measure or to establish with certainty.
Nonetheless, the IRFA sees the numbers as proof of the fact that the biofuels industry is capable of bringing major local social and economic benefits:
energy :: sustainability :: biomass :: bioenergy :: biofuels :: corn :: soy :: ethanol :: biodiesel :: biorefinery :: economics :: employment :: Iowa ::
With its new Energy Bill, the United States has set itself on a track to become a major biofuels producer that will ensure 20% of all transport fuel consumption comes from renewable, bio-based fuels by 2022.
Under the bill, the Renewable Fuels Standard increases to 36 billion gallons (136 billion liters) by 2022, roughly the equivalent of between 1.8 and 2 million barrels of oil per day. Of that amount, corn ethanol production is capped at 15 billion gallons per year starting in 2015 (56.8 billion liters), a three-fold increase of current production levels; the remainder is expected to be provided by 'advanced biofuels', the majority of which are cellulosic biofuels. In the final year of the standard (2022), cellulosic biofuels should contribute more (16 billion gallons) than does corn ethanol (15 billion gallons) (previous post).
In an earlier report, the Department of Agriculture (USDA) showed that the biofuels industry in the U.S. has brought farm income to all-time record highs. The USDA's Economic Research Service (ERS) showed in its annual Agricultural Income and Finance Outlook, that net farm income reached $87.5 billion in 2007, up $28.5 billion from 2006 and exceeding the 2004 record (more here).
References:
John M. Urbanchuk, Contribution of the Biofuels Industry to the Economy of Iowa [*.pdf], report prepared for the Iowa Renewable Fuels Association, LECG LLC, January 2008.
IRFA: Renewable Fuels Power Iowa Economy ) New Study Outlines Dramatic Increases in Job Creation and Household Income as Renewable Fuels Industry Grows - January 31, 2008.
Biopact: US becomes biofuel nation as Congress approves Energy Bill - December 19, 2007
Biopact: Scientist: U.S. corn subsidies drive deforestation in the Amazon - January 04, 2008
Biopact: Subsidies for uncompetitive U.S. biofuels cost taxpayers billions - report -
October 26, 2006
Biopact: USDA: Biofuels lead to all-time record farm income in the United States - December 17, 2007
Its main findings are that the sector has added substantial value to agricultural commodities produced in Iowa, has brough a large number of jobs, and has made a significant contribution to the state's economy. Based on the size of the biofuels industry at year-end 2007, ethanol and biodiesel:
- Added $12.7 billion, or about 10 percent, to Iowa GDP
- Generate $2.9 billion of household income for Iowa households
- Supported the creation or retention of more than 96,000 jobs through the entire Iowa economy
- Generated nearly $790 million in state tax revenue
Critics will say that these dramatic benefits are only possible because the sector is heavily subsidised (previous post). Moreover, it is unclear how heavy the indirect social and environmental costs of the mainly corn-based ethanol industry in Iowa are: the international effect of increased food prices, especially on the urban poor in maize importing countries, must be taken into account.
What is more, the potential local environmental costs - such as water depletion, nitrogen runoff, etc - as well as the effects of the complex "displacement effect" should not be underestimated. This displacement effect, which consists of indirect land-use changes, seems to be playing out in Brazil, where deforestation recently shot up in a rush to produce more soybeans as the U.S. shifts land from soy to corn (previous post). However, these effects are difficult to measure or to establish with certainty.
Nonetheless, the IRFA sees the numbers as proof of the fact that the biofuels industry is capable of bringing major local social and economic benefits:
Corn and soybean prices are up. Land values are up. Household income is up. State tax revenue is up. The common denominator is renewable fuels. John Urbanchuk’s report paints a dramatic picture of the far-reaching positive impacts of producing biodiesel and ethanol in Iowa. But the best news is that we’re just getting started. The new 36-billon gallon federal renewable fuels standard will drive the industry forward and Iowa will remain front and center. - Monte Shaw, IRFA Executive DirectorNationally, total ethanol capacity expanded 37 percent to 7.5 billion gallons. Iowa is the largest biofuels producer accounting for 31 percent of U.S. ethanol and 20 percent of biodiesel production capacity. At the end of 2007 Iowa’s 28 operating ethanol plants had operating capacity of more than 2 billion gallons and its 14 biodiesel plants had 318 million gallons of capacity. In addition, three ethanol plants are expanding production and 14 new ethanol plants and two new biodiesel plants are under construction. When completed, these new plants will increase Iowa’s biofuel production capacity by nearly 70 percent:
energy :: sustainability :: biomass :: bioenergy :: biofuels :: corn :: soy :: ethanol :: biodiesel :: biorefinery :: economics :: employment :: Iowa ::
With its new Energy Bill, the United States has set itself on a track to become a major biofuels producer that will ensure 20% of all transport fuel consumption comes from renewable, bio-based fuels by 2022.
Under the bill, the Renewable Fuels Standard increases to 36 billion gallons (136 billion liters) by 2022, roughly the equivalent of between 1.8 and 2 million barrels of oil per day. Of that amount, corn ethanol production is capped at 15 billion gallons per year starting in 2015 (56.8 billion liters), a three-fold increase of current production levels; the remainder is expected to be provided by 'advanced biofuels', the majority of which are cellulosic biofuels. In the final year of the standard (2022), cellulosic biofuels should contribute more (16 billion gallons) than does corn ethanol (15 billion gallons) (previous post).
In an earlier report, the Department of Agriculture (USDA) showed that the biofuels industry in the U.S. has brought farm income to all-time record highs. The USDA's Economic Research Service (ERS) showed in its annual Agricultural Income and Finance Outlook, that net farm income reached $87.5 billion in 2007, up $28.5 billion from 2006 and exceeding the 2004 record (more here).
References:
John M. Urbanchuk, Contribution of the Biofuels Industry to the Economy of Iowa [*.pdf], report prepared for the Iowa Renewable Fuels Association, LECG LLC, January 2008.
IRFA: Renewable Fuels Power Iowa Economy ) New Study Outlines Dramatic Increases in Job Creation and Household Income as Renewable Fuels Industry Grows - January 31, 2008.
Biopact: US becomes biofuel nation as Congress approves Energy Bill - December 19, 2007
Biopact: Scientist: U.S. corn subsidies drive deforestation in the Amazon - January 04, 2008
Biopact: Subsidies for uncompetitive U.S. biofuels cost taxpayers billions - report -
October 26, 2006
Biopact: USDA: Biofuels lead to all-time record farm income in the United States - December 17, 2007
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