Story County plant getting Iowa tax incentives to resume cellulosic ethanol production

Source: By Tyler Jett, Des Moines Register • Posted: Sunday, March 21, 2021

Ethanol production is coming back to a Story County renewable fuels plants.

Verbio North American Corp. received $2.6 million in tax incentives from the Iowa Economic Development Authority on Friday to build an $80 million ethanol production line in its Nevada plant, previously the nation’s largest producer of an experimental variety of the renewable fuel.

The company pledged to hire 48 workers, including 33 who make at least $27 an hour — about $56,000 a year. Verbio previously received incentives from the authority to produce renewable natural gas, which the company expects to go on line this fall.

Verbio President and CEO Greg Northrup said the company will initially make natural gas using corn stover — cobs, stalks and other debris from harvesting. Once the company builds out its ethanol line, it will use a byproduct from the ethanol to make the natural gas. It will sell both energy sources.

“We believe renewable fuels will continue to grow over the next five to 10 years,” Northrup said.

“This was always part of the grand plan for them,” Debi Durham, executive director of the Iowa Economic Development Authority, said of the added ethanol production. “… You’re going to continue to see capital investment at this facility, which was the plan all along.”

When it purchased the former DowDuPont plant in November 2018, Verbio said it planned to produce renewable natural gas by summer 2020. Northrup said Friday that the company fell behind schedule because of complications with building out the plant during the COVID-19 pandemic.

The authority awarded the company $1.3 million in tax credits at the time of the purchase, promising to add 44 jobs. Thus far, Verbio has hired only 18 workers.

The subsidiary of the Germany company Verbio Vereinigte BioEnergie AG did not return an email seeking comment and a phone number for the company provided no option for leaving voicemail.

Maicie Pohlman, business finance project manager for the Iowa Economic Development Authority, said the agency will check Verbio’s payroll this September to see if it has hit its employment target from the first round of text credits. She said the company expects to hire more workers this summer as it prepares to produce the natural gas.

When it opened in 2015, the Nevada plant was hailed as harbinger of the ethanol industry’s future. DuPont hoped the $400 million plant would become the world’s largest producer of cellulosic ethanol, using waste materials and avoiding the reliance of most ethanol makers on crops that might otherwise be part of the food supply. Half of the corn growing in Iowa each year goes to ethanol production.

DuPont was buying 700,000 bushels of stover from farmers each year to produce 30 million gallons of ethanol. But the dream died fast, with DuPont idling the plant two years later.

DuPont had just merged with Dow Chemial, creating the new giant DowDuPont. The company said at the time that it was making “a strategic shift in how we participate in the cellulosic biofuels market.”

The authority had given DuPont about $17 million in tax incentives, about $10 million of which it clawed back. Much of the money DuPont kept came from an incentive program that rewarded companies for using new technologies — not, unlike the other credits. for hiring and maintaining workers.

When Verbio purchased the plant, it told the authority it would spend about $35 million on machines so that workers at the plant could make renewable natural gas instead of ethanol.

“We can use part of the installed equipment for our production,” Verbio CEO Claus Sauter said at the time.

Cellulosic ethanol lost another key player in Iowa in November 2019, when Poet DSM Advanced Biofuels idled its plant in Emmetsburg. The company received about $16.9 million in tax incentives, which the authority did not reclaim. 

As with DuPont, the authority could not force Poet to return $14.8 million of that money because it came from a grant for using the new technology. The authority also did not claw back the other $2.1 million, which came to Poet in the form of tax credit for making an investment in Iowa.

Among other companies that the authority granted incentives Friday:

  • Innovative Injection Technologies in West Des Moines received $531,000 to expand a warehouse by April 2024. The company will increase its workforce to 245 from 185.
  • Underground Magnetics in Johnston received $360,000 to build more office and warehouse space by January. The company, which makes locators for horizontal directional drilling, will increase its staff size to 18 from 13.

This article has been revised to say that the ethanol the plant produces will be marketed.

Tyler Jett covers jobs and the economy for the Des Moines Register. Reach him at, 515-284-8215, or on Twitter at @LetsJett.