Iowa’s Governor has indicated that he will sign legislation (HF 2754) passed this week calling for Iowa to have renewable fuels – ethanol and biodiesel – meet 25 percent of the state’s motor fuel needs by 2020. The new renewable fuels standard relies on a 10 percent ethanol blends and a rapid expansion of E-85 (85% ethanol) infrastructure to get to the goal.
June 29, 2006 UPDATE: When we published this story, we mistakenly called this initiative a renewable fuels mandate. Gas retailers in Iowa are not required to meet the biofuels goals so it isn’t a mandate. If they don’t meet the targets they may not receive the full tax incentives. Here is an updated story from DOE’s Energy Efficiency and Renewable Energy Program: New Iowa Legislation to Boost Renewable Fuel Use.
For consumers, the legislation will mean expanded access to E-85, which is currently available at only 30 outlets across the state. By contrast, neighboring Minnesota boasts more than 200 locations for E-85.
The Iowa Renewable Fuels Association (IRFA) was pleased with the outcome and provided the following summary of the main provisions in the bill:
- A new ethanol promotion tax credit for each gallon of ethanol blended into gasoline (replaces existing tax credit beginning in 2009). This incentive is linked to a retailer dealer’s achievement of the renewable fuels goal schedule. The tax credit increases from 2.5 cents per gallon for retailers within 4% of the schedule to 6.5 cents for retailers meeting or exceeding the schedule.
- A retail tax credit for E-85 of 25 cents per gallon (phases out by 2020).
- A retail tax credit for biodiesel blends of 3 cents per gallon (for retailers who sell more than 50% biodiesel blends.)
- An expanded infrastructure program designed to help retailers and wholesalers offset the cost of bringing E85 and biodiesel blends to consumers.
A companion bill (HF 2759) provides $2 million in funding to expand the E-85 network at filling stations across the state.
Iowa has plenty of in-state biofuels capacity to meet the renewable fuels goals. IRFA says that by the end of 2006, Iowa will have a minimum of 27 ethanol plants capable of producing over 1.7 billion gallons per year. In addition, at least 6 biodiesel plants will be capable of producing more than 120 million gallons per year.