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Iowa Seeks To Lead $250B Biochemical Industry With Country's First Tax Credit

Iowa

It’s time to get back to our natural roots – literally, the roots or stocks of crops that are normally removed from the field after harvest can  and should be  processed into biochemical properties. The beautifully complex chemistry found in nature is all we ever needed to replace petroleum-based products. It’s the next frontier of biosciences – an estimated $250 billion global industry. And one Midwest state is set to capture the largest slice of the pie: Iowa.

Like the global petrochemical industry developed in clusters around available feedstock – oil refineries – so too will the biobased chemical industry develop around feedstock sources: biorefineries. Iowa is the land of biorefineries producing more ethanol and biodiesel than any other state. In 2016, the Iowa legislature passed the country’s first tax credit specifically designed for the renewable chemical production, cementing the state’s early leadership in the industry.

Iowa Economic Development Authority plans to leverage the state’s strengths in biofuels to lead growth in biochemical industry.

Iowa Economic Development Authority

The biorenewable chemical industry has immense economic potential, and Iowa is prepared to capture a majority of it. The tax credit offers $0.05 per pound of qualified chemicals produced, and start-up companies can claim up to $1 million annually.

Iowa has the industrial infrastructure and feedstock network already in place for cost-effective production, set up due to the state’s position as the country’s leading biofuel producer. According to a report published in January 2017 by ABF Economics, the state’s 43 operating ethanol plants produced nearly 4.1 billion gallons in 2016 or 27 percent of U.S. output leading the nation in ethanol production. Iowa is also the leader in biodiesel production and according to the Iowa Biodiesel Board, the state’s 13 plants produced 305 million gallons.

The ABF Economics report also found the state’s renewable fuels industry accounts for around $4.7 billion, or 3.5 percent, of Iowa GDP. The industry generates $2.3 billion of income for Iowa households and supports more than 42,000 jobs throughout Iowa’s economy. With the environment now ideal for biochemical production, the industry’s impacts are expected to continue to grow.

“Recognizing our leading position in biofuels, the state is aggressively and strategically moving to catalyze the growth of the renewable chemical industry,” said Debi Durham, director of the Iowa Economic Development Authority. “Our first step was the passage of the nation’s first renewable chemical tax credit. Coupled with our current biorefinery capabilities and our strong skilled workforce, we believe we are a great place for companies already in Iowa to expand, or for companies and startups looking to expand, to consider Iowa.”

In the updated report released in October by the USDA, “An Economic Impact Analysis of the U.S. Biobased Products Industry,” the authors note Iowa’s tax credit program, “…represents the strongest existing incentive package for the global biobased chemical industry.”

Renewable fuels have paid big for Iowa. The state has the raw biomass, processing infrastructure, research and policy in place for a similar biochemical success story. Iowa is ready to support the companies and innovative investors ready to make it big in the renewable chemical boom. Visit iowaeconomicdevelopment.com to find out more.

The Iowa Economic Development Authority (IEDA) works to share valuable information about the advantages of operating a business in Iowa. The organization’s mission is to strengthen economic and community vitality by building partnerships and leveraging resources to make Iowa the choice for people and business. IEDA administers several state and federal programs to meet its goals of assisting individuals, communities and businesses.