Chevron closes western Iowa, Wisconsin biodiesel plants amid harsh market, blames Biden EPA

Blaming the Biden administration for difficult market conditions, an Ames company is closing its biodiesel plant in west-central Iowa, laying off two dozen workers.

Chevron Renewable Energy Group is “indefinitely idling” its biodiesel plants in Ralston and Madison, Wisconsin, Neville Fernandes, a Chevron vice president, said Thursday. The plants have been shuttered since December, given economic conditions that “have become very harsh,” Fernandes said.

Fernandes blamed the federal government for the biodiesel industry profit squeeze and the plants’ closure.

Under the federal Renewable Fuel Standard, the U.S. Environmental Protection Agency establishes how much biodiesel, ethanol and other renewable fuel must be blended into the nation's fuel supply. The 2005 mandate is intended to reduce U.S. greenhouse gas emissions and support production of domestically made fuel derived from corn, soybeans and other farm products.

Critics last year said the EPA set the 2023 to 2025 blending requirements for biodiesel and other biomass-based fuel too low, failing to capitalize on renewable fuels’ ability to cut emissions that contribute to climate change.

For example, biodiesel and renewable diesel made using soybean oil, used cooking oil, fats and other feedstock produces about 70% fewer greenhouse gas emissions than standard diesel, on average, and ethanol produces 46% fewer than standard gasoline, studies show.

More: Iowa losing mid-size farms as smallest, largest ones increase, new U.S. ag census shows

While the EPA increased the biomass-based fuel blending requirements for 2023, it was about 1 billion gallons below what the industry produced, Fernandes said.

“That caused an imbalance in supply and demand,” he said, and as a result, credits tied to biodiesel production have dropped about 70%.

Grant Kimberley, Iowa Biodiesel Board executive director, said the group hadn't heard of other Iowa biodiesel plants planning to close. "However, this possibility has been a concern," he said in an email.

"The industry warned EPA about this when it set the RFS renewable volume obligations well under our overall capacity," Kimberley said, hurting "the bottom line of biofuel plants.”

Industry to push for higher biodiesel requirement

Fernandes said the industry will lobby the EPA this year to increase biodiesel blending requirements. With improved profit margins, the Ralston and Madison plants could reopen, he said.

Until then, Fernandes said, Chevron will seek to reemploy the plants' workers, including 26 in Wisconsin, at other facilities. The company has two other biodiesel plants in Newton and Mason City. It will offer severance benefits to workers unable to find jobs within the company, Fernandes said.

California-based Chevron, which reported about $21.4 billion in earnings last year, purchased the Renewable Energy Group in 2022 for $3.15 billion. The Ralston plant, which can produce 30 million gallons annually, opened in 2002 and was the first biodiesel plant for the Renewable Energy Group.

The company spent $32 million expanding and upgrading the plant, completing the work in 2018.

Iowa is the largest U.S. producer of biodiesel, making 350 million gallons in 2023. It's the biggest ethanol producer, at 4.6 billion gallons last year, the Iowa Renewable Fuels Association reported in February.

Suzanne Shirbroun, Iowa Soybean Association board president, said the plant closings come as farmers are struggling to lock in profits this year, with rising costs and falling crop prices. “Low biodiesel sales further put the farm economy at risk," Shirbroun, a northeast Iowa farmer, said in a statement.

"A strong Iowa biodiesel market helps farmers weather difficult economic times," she said. "By increasing soybean oil value, biodiesel supports 13% of the per bushel price soybeans."

Donnelle Eller covers agriculture, the environment and energy for the Register. Reach her at deller@registermedia.com or 515-284-8457. 

This article originally appeared on Des Moines Register: Blaming EPA, Ames company closes Iowa, Wisconsin biodiesel plants