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Iowa's First Biodiesel Plant Shuttered
USAgNet - 09/27/2019

The unknown future of the biodiesel tax credit and the endless granting of small refinery waivers has forced one Iowa biodiesel plant to close. W2 Fuel announced earlier this week that it would be shuttering two of its biodiesel plants in Crawfordsville and in Adrian, Michigan.

Nearly 50 employees have lost their jobs and demand for millions of bushels of soybeans has been destroyed.

"This is one more example of how the federal policies have an impact on real peoples' lives," said Grant Kimberley, executive director of the Iowa Biodiesel Board and director of market development for the Iowa Soybean Association.

At full capacity, the Crawfordsville plant produced nearly 10 million gallons of biodiesel. The Adrian plant produced about 15 million gallons per year. That's now a lost market for roughly 16.67 million bushels of soybeans.

"And there's no end in sight until these issues are resolved," Kimberley said.

W2 Fuel CEO Roy Strom testified before the EPA in March, warning the agency and the Trump administration of the harm caused by granting small refinery exemptions.

"To succeed, the biodiesel industry needs signals that allow us to forecast market demand. While the RVO (renewable volume obligation) should be the forecast, the current practice of granting retroactive small refinery exemptions undermines that signal," he said on the record.

Now, almost six months after his testimony, Strom is directing cleanup crews before turning the lights off for good.

"I think if the biodiesel tax credit came back, I would need to see it include 2020 to make a go of it again," Strom said.

The ultimate fix would be a reallocation of lost gallons as a result of the small refinery exemptions and an extension of the federal $1-per-gallon biodiesel tax credit to producers which blend biodiesel with petroleum.

Only the White House and the EPA can change the demand at this point. And it's up to Congress to pass the biodiesel tax credit extension.

"When the tax credit is up in the air, you're just gambling. Do I want to bet on the tax credit or not? It makes it very difficult to run a business," Strom said.

The biodiesel industry is now running 21 months without the biodiesel tax credit. It's clearly hurting the industry, said Brad Wilson, president and general manager of Western Iowa Energy and the newly-elected chair of the Iowa Biodiesel Board.

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