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USDA announces $100M in biofuel infrastructure grants

Ethanol is advertised as a cleaner fuel.
Charlie Riedel
Iowa Public
An ethanol blend fuel is advertised as a cleaner alternative in Iowa.

Corn is South Dakota's most popular crop and a big reason for that is ethanol. Twooutof every three rows of the state's corn crop become ethanol according to SDSU's extension service. Recent news out of Washington D.C. suggests that number may grow.

The USDA announced $100 million in grants to build biofuel-related infrastructure such as pumps, dispensers, and storage tanks as part of an effort to sell higher blends of ethanol and biodiesel. The grants cover up to 50% of a project's total cost.

Those projects could mean a lot for the state's ethanol and corn industries said Doug Berven with POET, a Sioux Falls-based ethanol production and research company. He said anytime more biofuel infrastructure is made available, that means more demand.

"Consumers want lower prices at the pump and bioethanol delivers that everywhere. It's a superior product. It's cleaner. It's more affordable and readily available. And any help we can do to deliver that to the consumer is going to be a great benefit," Berven said.

The move is part of President Biden’s Inflation Reduction Act. The USDA said biofuels are an important part of the administration’s commitment to lowering gas prices.

The strategy suggests that an increase in the fuel supply will result lower gas prices.

Corn farmer Todd Brown of Dell Rapids, thinks investing in ethanol will do just that. He said increasing ethanol production is not only good for farmers.

"If we could get gas prices down to three dollars a gallon, I think a recession or any kind of economic slow down goes away," Brown said.

However, critics are weary of putting more money into biofuels given the only currently viable option is corn-based ethanol.

Silvia Secchi, a natural resource economist at the University of Iowa, said any savings that may occur at the pump are lost when factoring in corn subsidies. Secchi said any environmental benefits are lost when factoring in the amount of ground tilled for planting, nitrogen and fertilizers applied, and diesel fuel burned to transport and dry the corn once harvested.

"They got rid of pastures and they planted the corn. And by getting rid of those grasslands and pastures they essentially emitted a bunch of greenhouse gases because those land uses were really good at sequestering carbon," Secchi said.

But those within the ethanol industry say their product is the best option currently available.

And POET's Doug Berven said the industry is continually looking to improve.

"We came out with a sustainability report recently that said POET is committed to being at least 70% better than gasoline by 2030. And carbon neutral by 2050, which means that there are a lot of different pathways to improve the greenhouse gas benefits," Berven said.

Critics don't doubt biofuels are useful, but they say we are producing the wrong kinds.

In fact, Secchi said cellulosic biofuels, from things like wood waste and grasses, was the original plan for the Renewable Fuel Standard when introduced in 2007 — but that's not happening.

"The idea was that corn ethanol was going to be a bridge fuel because everybody knew that corn is not the best feedstock to use," Secchi said. "This year we were supposed to produce 16 billion gallons of [cellulosic] biofuels, and we don't even produce one billion. And so the problem is we are trying to pretend that there has not been a failure in the policy."

To receive a federal biofuel grant, applications are required by November 21, 2022. Click here to learn more.

Joshua is the business and economics reporter with SDPB News.