Policy successes fuel biodiesel’s growth in 201709/14/2017 | Biodiesel, Policy
By Aaron Putze, APR
The biodiesel industry is arguably in the strongest position it’s been since commercial-scale production of the renewable fuel began just over a decade ago.
But now is not the time to rest or be satisfied agreed farmers and industry leaders gathered in Des Moines this week for a regional stakeholder meeting of the Iowa and National Biodiesel Boards.
“The industry has grown substantially, from around 25 million gallons to nearly 3 billion,” said Grant Kimberley, executive director of the Iowa Biodiesel Board. “In Iowa, we've expanded capacity by nearly 20 percent in the last two years and anticipate continued growth and expansion next year. While we're optimistic, we are still facing difficult circumstances currently with expired federal credit, imports and flat proposed Renewable Fuel Standard.”
Kimberley, who also serves as market development director for the Iowa Soybean Association and farms near Maxwell, said the industry’s success has been fueled by advancing sound policy favorable to the production, distribution and sale of biofuels.
- Passage in Iowa of a biodiesel producer tax credit of 2 cents per gallon on the first 25 million gallons of production per biodiesel plant (maximum $500,000 per facility). “That policy has helped stabilize our producers during leaner times,” said Kimberley.
- Legislative approval of a biodiesel promotion and retail tax credit. It provides Iowa’s petroleum retailers 4.5 cents per gallon on blends of B5 and higher. This credit runs through the end of the calendar year. Next year and continuing through 2024, the credit will be modified to 3.5 cents per gallon. For retailers moving up to blends of B11 or higher, the credit will increase to 5.5 cents per gallon, helping promote the production and usage of higher blends of biodiesel.
- Funding for the renewable fuels infrastructure program in Iowa. It provides cost share funding to blenders, retailers and terminals for facilities that can manage higher blends of biodiesel. “We had many meetings with the governor and lieutenant governor along with Iowa House and Senate leadership, ultimately securing $3 million in funding,” said Kimberley. “This is something we’ll need to keep working on from year to year but getting it approved during a tight budget year like this was a good start.”
Rep. Chris Hagenow (R-Windsor Heights) said the biodiesel industry’s engagement with legislators plays a big role in retaining the state’s financial support. That level of one-one-one involvement in the policy process will need to continue, particularly during a time of tightening state budgets.
Reductions in tax receipts resulting from more online sales is a fact of life for many states, said Hagenow, who currently serves as Iowa House Majority Leader. As budgets contract, the elephant in the room is what expenses get cut?
“Are all state funded programs priorities? They can’t be even though there’s not a lot of low hanging fruit left to trim,” he said. “Look for legislators to closely examine tax credits and exemptions next year. Those that remain will be those that prove to be most beneficial for the state and taxpayers.
“When we come around to the biodiesel tax credit, you’ll have to speak up,” Hagenow added. “It will be difficult to touch next year because of the value it brings back to Iowa. But you’re going to have to make the case for it and engage your legislator.”
Hagenow said the industry is one that he as an urban legislator can readily support.
“We’re an agricultural state and I want to leverage that industry to the benefit of Iowa,” said Hagenow, currently serving his fifth term in the Iowa House. “We have a built-in advantage to growing things in Iowa. Let’s leverage those advantages and look forward by building industry around them.
“The positive ripple effect of biodiesel in the economy is tremendous,” he added. “Renewable fuels in general are something many legislators support because you effectively make your case regarding how its production turns over and benefits so many families and businesses.”
Biodiesel leaders also recognized the importance of coordinating Congressional visits and the help of Iowa Sens. Charles Grassley and Joni Ernst to advancing policy favorable to the industry.
“We’ve taken our message to Washington to fight for the Renewable Fuels Standard while writing and presenting testimony to the Environmental Protection Agency urging it to increase the volume requirements for biodiesel,” said Donnell Rehagen, chief executive officer of the National Biodiesel Board. “We’re continuing to advance the need for increasing the volume requirements for biodiesel and hope to have good news to report later this year.”
News and notes
- Biodiesel feedstocks are comprised primarily of soybean oil (54%) followed by recycled oils (14%), animal fats and distillers corn oil (11% each) and canola oil (10%).
- Eighty-four percent of respondents to an online public opinion poll conducted in Iowa last month on behalf of the biodiesel industry said they were aware of the renewable fuel. Seventy-two percent had a positive impression of the industry. The most-cited reason for the favorable impression was that the fuel is produced in Iowa creating jobs and economic activity. Forty-percent of survey participants said they know where to find biodiesel while 88 percent said they would choose biodiesel over petroleum biodiesel if they had a diesel vehicle that could use the renewable fuel.
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