Iowa's ethanol industry is facing a competitive crisis as Nebraska launches its first carbon pipeline to lower emissions and unlock lucrative federal incentives. Without a similar pathway, Iowa ethanol plants could lose billions in potential revenue, further stressing an already fragile farm economy.

The Tallgrass Trailblazer Pipeline, a $1.5 billion converted natural gas line, went live last week in Nebraska. The first ethanol plant onboard, Mid America Agri Products/Wheatland (MAAPW), is now capturing carbon dioxide and sending it to Wyoming for underground sequestration. This move opens the door to the 45Z Clean Fuel Production Credit, potentially adding 66 cents per gallon to ethanol's value.

"Since 2000, Iowa has worn the crown as the world's best place to turn corn into ethanol," said Monte Shaw, executive director of the Iowa Renewable Fuels Association (IRFA).

"Last week, we got knocked off."

Shaw warned that Nebraska, North Dakota, and Illinois are already benefitting from carbon capture and leaving Iowa behind.

$3 Billion in Potential Annual Losses

Carbon capture and sequestration (CCS) can lower an ethanol plant's carbon intensity score by 33 points, allowing it to qualify for the 45Z credit. Given that a bushel of corn produces about three gallons of ethanol, Iowa could be missing out on $1.98 per bushel in value.

If Iowa had the needed infrastructure, Shaw estimates the state could gain over $3 billion annually in added value from ethanol production alone.

David Miller, chief economist at Decision Innovation Solutions, added that CCS could also unlock additional gains from farm-level conservation practices, potentially bringing $2.1 billion more each year to Iowa plants.

But these benefits are only available to plants with carbon intensity (CI) scores under 50-a threshold unreachable without CCS.

Financial Pressure on Farmers

The broader implications hit Iowa's corn growers directly.

"Right now, the Iowa agriculture economy is in tough shape," said Steve Kuiper, vice president of the Iowa Corn Growers Association.

"Farmers are farming at a loss. Lenders are very, very anxious right now."

Kuiper warned that some farmers may need to sell land or equipment before year's end, underscoring the urgency of securing new revenue streams like CCS-linked ethanol markets.

Pipeline Politics Roil Iowa

Despite clear economic stakes, carbon pipeline projects face political resistance in Iowa. Opponents cite landowner rights and environmental concerns. In contrast, Nebraska has no regulatory commission overseeing carbon pipelines-allowing quicker project approvals.

Gov. Kim Reynolds vetoed a bill in June that would have restricted eminent domain use for pipeline projects, but the political divide persists. By comparison, South Dakota banned eminent domain for CCS, making Nebraska the regional front-runner.

Shaw and Kuiper argue that pipelines are safe and well-compensated infrastructure projects.

"A carbon pipeline doesn't scare me as much as a 36-inch natural-gas line," said Kuiper."Farmers who allow these projects are compensated very well."

Nebraska's Ethanol Industry Expands

Seth Harder, CEO of Husker Ag and Lincolnway Energy, said CCS brings $60 million annually to a typical 100-million-gallon plant. Nebraska ethanol plants are not only securing new revenue but planning capacity expansions.

"We see a paradigm shift," said Harder, noting interest in doubling production at some facilities.

With California approving E15 sales and Congress considering year-round E15 access, the demand for low-carbon ethanol is growing fast. Sustainable aviation fuel (SAF) is also in play-with Nebraska now positioned to lead.

"For the Nebraska plants on the pipeline, that door has now been open," said Miller.

"We think Nebraska is going to move forward and be a mover on ethanol-to-jet."

Iowa's Path Forward

Without action, Iowa's top biofuel producers risk falling behind in a rapidly evolving energy economy. Industry leaders say time is running out to secure carbon capture routes, safeguard farmer income, and retain market competitiveness.

"There are economic realities if Iowa is permanently shut out of the CCS ability," warned Shaw.