Biodiesel Plants Shut Down across Iowa

January 18, 2025

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by Brent Barnett (Brownfield Ag News) The head of the Iowa Renewable Fuels Association says several biodiesel plants have idled across the state. Monte Shaw tells Brownfield the plants stopped production after the blenders tax credit ended on December 31st. “They were going to have all of these tax credits expire and then go into this new catch-all 45Z tax credit that people talk about. Well, the rules for that aren’t out, so people can’t claim it. It’s got the whole supply chain in flux.”

He says he’s disappointed in the lack of 45Z guidance from the federal government. “Right now when nobody knows how that program is going to work or what the incentive will be, nobody knows how to price their feedstock or how to price their biodiesel. Our best estimate right now is 5 out of our 10 plants in Iowa are shut down. It could be higher than that, but that’s where we think we are now.”

Shaw says he hopes the temporary shutdowns don’t become permanent. READ MORE

Related articles

FCL pauses Regina biodiesel, canola crush plant projects for 'foreseeable future' (Regina Leader-Post)
Iowa biodiesel plants idled after Biden administration fails to provide new tax guidance (Des Moines Register; includes VIDEO)
Iowa Biodiesel Production Grows, But Future Uncertain (Energy.AgWired.com)
Many biodiesel plants have paused production (Brownfield Ag News)
FutureFuel Announces Certain Matters with Respect to Its Biodiesel Production (FutureFuel/Globe Newswire)

Excerpt from Regina Leader-Post: The company cites "regulatory and political uncertainty, potential shifts in low-carbon public policy, and escalating costs" as reasons for pausing the projects.

Federated Co-operatives Limited (FCL) is pausing the two main projects associated with its proposed Integrated Agriculture Complex in Regina.

The company has taken this action due to “regulatory and political uncertainty, potential shifts in low-carbon public policy and escalating costs,” said an FCL news release on Friday, which added that plans for the renewable diesel facility and joint-venture canola crush plant have been “paused for the foreseeable future.”

FCL CEO Heather Ryan said the company made the decision after taking a look at the cost analysis of the project using recent data.

“Quite honestly, there was a lot of escalating cost with respect to this magnitude of a project that played a large part in our decision as well,” Ryan told the Regina Leader-Post Friday afternoon.

Pausing that project was done in conjunction with AGT, according to the release, which notes the canola crush plant would have supplied feedstock to FCL’s wholly-owned renewable diesel facility.

Continuing the project would have to meet the factors that led to the shelving, and it would need to be the “right time for that investment given the market and given the industry,” Ryan said.

“We have strong relations with Murad and his team at AGT, and if we were to start something up in the future we would continue to have those conversations,” she added.

“While it is not the right time to continue our JV canola crush facility, agriculture remains a growth sector in Saskatchewan’s economy, where we will continue to look for new opportunities for investment,” Murad Al-Katib, president and CEO of AGT Foods, said in the release.

The statement goes on to say that FCL “continues to pursue pathways to compliance” with Canada’s clean fuel regulations and notes that FCL is “making important investments in carbon capture projects at the Co-op Refinery Complex (CRC) and Co-op Ethanol Complex.”

The Leader-Post reported in November 2024 that the company had filed a proposal with the City of Regina to build a rail yard north of its Regina refinery. The proposal was a step in FCL’s plan to increase renewable fuel production at the refinery to comply with federal clean regulations introduced in 2023. READ MORE

Excerpt from Energy.Agwired.com: Despite many challenges, Iowa biodiesel production in 2024 totaled 353 million gallons, up from 350 in 2023 and the highest production since the record 365 million in 2018.

Iowa biodiesel plants managed to power through being undercut by a drastically low Renewable Fuel Standard (RFS) blending level for 2024, but could not escape uncertainty surrounding tax policy as the long-time biodiesel blenders credit expired while the rules for the new 45Z Clean Fuel Production Credit remain in flux. By the end of 2024, multiple Iowa biodiesel plants were not producing.

“Iowa biodiesel producers powered through most of 2024, but the end of the year brought a time of uncomfortable uncertainty,” said Iowa Renewable Fuels Association Executive Director Monte Shaw. “We need quick action in Washington to prevent 2025 from being worse. Multiple plants are sitting at idle waiting and hoping for the Treasury Department to finalize the rules for the new 45Z Clean Fuel Production Tax Credit. Tax credit uncertainty has tied the entire biodiesel supply chain up in knots. We need action now. Biodiesel remains a key part of ensuring domestic energy security while boosting rural communities and farmers.”

Soybean oil continues to be the main source of biodiesel in Iowa, accounting for 77 percent of the production in 2024. Animal fats made up 9 percent, while canola oil, distillers corn oil, and used cooking oil (UCO) each made up over 4 percent of feedstocks.

Iowa’s ten biodiesel plants have the capacity to produce 416 gallons annually. The IRFA compiled production information from a confidential industry survey. READ MORE

Excerpt from Brownfield Ag News: Uncertainty in the industry has many biofuels plants on hold.

Nathan Burk, senior vice president of fats, oils, and greases with StoneX, tells Brownfield, “The majority of our clients that we work with specifically in biodiesel, we’ve seen completely shutter after December 31st with the lapse of the dollar just because the margins went into the red.” He says, “Renewable diesel producers seem to have pulled back to more minimum run rates like 60%.”

He says current biodiesel margins are running up to 70 cents per gallon in the red, and the slowdown is starting to impact soybean crush.

“We’ve already heard a handful of soybean crushers talking about scaling back.” He says, “It still seems like we have an over abundant supply of soybean oil. I think you’re going to see soybean oil stocks really grow.”

Burk says further guidance on available tax credits is needed.

“Hopefully we get a little bit further guidance from the Trump administration on 45Z, or if there’s a chance for a blenders tax credit to come back.”

Brownfield spoke with Burk at the 2025 Clean Fuels Conference in San Diego. READ MORE

Excerpt from FutureFuel/Globe Newswire: FutureFuel initiated its scheduled annual maintenance and turnaround of its Biodiesel plant at the end of December 2024. This turnaround has proven more extensive than expected. Therefore, the Company currently believes the turnaround will continue through February 2025. Biodiesel production will not commence until this turnaround is complete.

Biodiesel production has been enabled through the support of Section 40(A), the Blenders’ Tax Credit, which expired on December 31, 2024. This key incentive program has been replaced by a producer's tax credit, IRA 45Z, which became effective January 1, 2025. However, the applicable government agencies have not yet published sufficient details of the IRA 45Z. This creates a level of uncertainty for the Biodiesel industry which has caused other Biodiesel producers and their capacity to go offline. The Company will be closely monitoring this as it considers its approach to Biodiesel production and its role in the biofuels market. READ MORE