Last year was tough ― by at least one estimate, the toughest ever ― for Iowa’s biodiesel industry.
The industry lost an estimated $89.5 million in 2025 and closed three plants in 2025, according to a new economic impact report.
The industry’s downturn began with the Biden administration’s decision in 2023 to slash how much biodiesel should be blended into the nation’s fuel supply through 2025. It worsened last year, with the loss of a significant federal tax credit, according to a report by Urbandale-based Decision Innovation Solutions that the Iowa Renewable Fuels Association released Monday, March 30.
“It all just combined to make it the worst year ever for the biodiesel industry,” said Grant Kimberley, the Iowa Biodiesel Board executive director.
“Things should start turning around,” Kimberley said, citing new federal renewable fuel blending requirements, released Friday, that should increase demand. “But the hole got pretty deep these last couple years, and it’s going to take a while to climb out of it.”
Iowa is the largest producer of biodiesel in the country. Even operating at a loss, the industry contributed nearly $1.5 billion to Iowa’s economy, the report showed.
Iowa also leads the nation in ethanol production, and the biofuels industries contributed nearly $23 billion to Iowa’s economy in 2025, the report said. The report looked at factors like the impact of workers’ salaries, demand for the corn and soybeans used to make biofuels and the sale of ethanol and biodiesel as well as byproducts like oil from the grain and high-protein feed for livestock.
Altogether, the renewable fuels industry helped support 31,140 jobs, according to the report, which uses modeling to determine the biofuels’ economic impacts.
In 2025, 41 ethanol plants in Iowa produced 4.6 billion gallons of fuel, about the same as 2024. But production from Iowa’s eight remaining biodiesel plants, totaling 266 million gallons, was down nearly 25% from the previous year, the report said.
The renewable fuels industry directly employs about 2,400 people in Iowa.
Iowa ethanol plants used about 1.6 billion bushels of corn last year, 57% of the state’s total corn production. And its biodiesel plants used about 2 billion pounds of soybean oil, requiring a 179 million bushels of soybeans, or 30% of Iowa’s soybean crop in 2025.
Last year, Iowa’s ethanol industry also produced about 6.5 million tons of high-protein feed byproduct, called dried distillers grain, which was enough to feed 11.5 million cattle, the report said.
Kimberley said the hit to the biodiesel industry has meant job layoffs and cuts. The jobs are typically high paying and in mostly rural areas.
“A lot of production was offline last year or ran at very low levels,” Kimberley said.
Companies closed plants in Crawfordsville in southeast Iowa and Clinton in eastern Iowa and indefinitely idled a plant in northwest Iowa’s Ralston.
Biofuels turnaround expected
The slowdown in the biodiesel industry came as Iowa and U.S. soybean farmers suffered a major setback in exports as a result of President Donald Trump’s trade war with China, the world’s largest buyer of soybeans.
There are signs of a pending turnaround. After boycotting U.S. soybeans last year, Beijing is again purchasing them, and Trump has scheduled a trip to China in May.
In addition, Kimberley said, some key state and federal decisions should help the biodiesel industry, including the Trump administration’s announcement Friday that it is boosting the amount of ethanol, biodiesel and other biofuels that must be blended into the nation’s fuel supply. The industry said the volumes mandated under the Renewable Fuel Standard set a record.
It’s also expecting come clarity about how the federal 45Z clean fuel production tax credit will be calculated. The new tax credit is set to replace the biodiesel blenders tax credit that expired at the end of 2024.
The corn and ethanol industry also have been intensely lobbying members of Congress and Trump administration officials for legislation providing year-round access to gasoline blended with 15% ethanol, called E15. The biofuel is available this summer, thanks to a Trump administration waiver, but typically is limited in some parts of the U.S. during warm weather due to air quality concerns.
Most gasoline sold in the U.S. is blended with 10% ethanol.
At the state level, the industry is lobbying the Iowa Legislature to increase the producers tax credit for biodiesel plants, a move that, in part because of the three plant closures, wouldn’t increase the overall level of state support, Kimberley said.
Donnelle Eller covers agriculture, the environment and energy for the Register. Reach her at deller@registermedia.com.
This article originally appeared on Des Moines Register: Iowa’s biodiesel industry loses $89.5M in 2025; three plants close
Reporting by Donnelle Eller, Des Moines Register / Des Moines Register
USA TODAY Network via Reuters Connect
