Renewable fuels have been one of the most important demand drivers for Iowa agriculture over the past two decades, helping farmers absorb growing productivity while supporting jobs and investment in rural communities. But industry leaders say that momentum has stalled, even as farmers continue to produce more grain.
Iowa Renewable Fuels Association Executive Director Monte Shaw told members of the organization that the problem is not a lack of capacity or innovation, but a lack of policy certainty. Shaw said ethanol and biodiesel producers are ready to grow, but unclear state and federal signals have left the industry unable to move forward.
Shaw pointed to flat ethanol production in Iowa as a warning sign. For the third straight year, ethanol output has remained at about 4.6 billion gallons. While Iowa still leads the nation by a wide margin, Shaw said the industry is no longer keeping pace with the productivity gains farmers continue to make. He also noted that, for the first time in a generation, a modern dry-mill ethanol plant in Iowa shut down permanently last year.
Conditions have been even more challenging for biodiesel producers. Shaw said federal policy uncertainty left several biodiesel plants idled for much of the year, contributing to a 31 percent drop in Iowa biodiesel production in 2025. As a result, the number of operating biodiesel plants in the state has fallen from 12 to eight.
According to Shaw, the broader concern is what stalled growth means for farm income and rural economies. Renewable fuels helped agriculture work through oversupply and low prices in the past by creating new demand, and he believes the industry can do so again. But without clearer direction from policymakers, Shaw said renewable fuels remain sidelined at a time when farmers and rural communities are counting on growth.
