The boom in the biofuel industry in Iowa is evident butit has created concerns about increasing food prices as corn is used to produceethanol.

A study accomplished by the Iowa Renewable Fuels Associationtitled, “Contribution of the Biofuels Industry to the Economy of Iowa”,revealed that the annual contribution by Iowa’s ethanol and biodieselindustries in the state’s economy was $12.7 Billion last year, as reported by   Desmoinesregister  .

Iowa’s biofuel sector is well stocked with biofuel. It has28 ethanol refineries in the state, which have a capacity to produce 2.1Billion gallons ethanol, and an additional 16 refineries are under-constructionor expansion. Besides, there are 14 biodiesel refineries with capacity ofproducing 315 Million gallons diesel and another two are under-construction. In2007, the biofuel industry estimated to have made a total contribution of $790Million in state tax revenue.

There has been a strong boost to the usage of alternativefuels, like ethanol, extracted from corn and sugarcane and other biofuel, dueto rising crude oil prices and Canada’s stress on cleaner and renewable energy.The source of biofuel is the food crops that absorb the greenhouse gas (carbondioxide) during growth and release it back when the biofuel is burned, making biofuelsenvironmentally-friendly.

The rapid industrialization and spurt in the number ofvehicles hitting the Iowa’s roads have further pushed up the demand for biofuelin the state. Although the fuel demand is rising, the resources of oil andother fuels are limited. Hence, the Iowa government is extensively promoting biofuelas the primary source of fuel.

On the other side, critics have said that the benefitswouldn’t be as impressive had the sector was heavily subsidized. Yet, it isalso to be fully determined to what extent the indirect social andenvironmental damage corn-based ethanol industry in Iowa will cause. The globalimpact of rising food prices, particularly on the urban poor in maize importingnations, needs to be considered.

According to a Research Analyst at   RNCOS  , “The increasing concerns about globalwarming in the world are highlighting the need for increasing use biologically-generatedfuels. Thus, growth in Iowa’s biofuel market in future is quite evident. At thesame time, concerns about increasing food prices becomes a major threat. Thegovernment is therefore likely to pursue the quest for other alternative fuelslike biogas that have their source in waste materials rather than consumables.”

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