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Strong show of support for biodiesel at Iowa Capitol

Article cover photo
Members of the Iowa Biodiesel Board outline legislative priorities while meeting with Lt. Governor Adam Gregg during the Iowa Biodiesel Day on the Hill last week. (Photo: Joseph L. Murphy/Iowa Soybean Association)

By Bethany Baratta, ISA senior writer

   

Iowa Biodiesel Board members and farmers last week urged state lawmakers to continue supporting policies which have proven to increase the production and usage of Iowa biodiesel.

State policies incentivizing the production and use of biodiesel have worked, as evidenced by the growth of the biofuels industry in Iowa. There were 539 Iowa retailers offering biodiesel in 2017, up 126 percent from 2010, according to the Iowa Department of Revenue. Iowa leads the nation in biodiesel production, making 365 million gallons in 11 plants in 2018, a nod to state policies which support industry growth.

The Iowa Biodiesel Board took to the Iowa Capitol to advocate for its 2019 legislative priorities. They include maintaining support for:

  • Biodiesel retailer credit: Retailers carrying 5 percent biodiesel (B5) can claim a 3.5 cents-per-gallon incentive. Retailers carrying B11 or higher can claim a 5.5 cents-per-gallon incentive.
  • B11 Fuel Tax Differential: A 3-cent differential in Fuel Tax for blends of 11 percent of higher.
  • Biodiesel production credit: An incentive of 2 cents-per-gallon to encourage in-state production.
  • A fully-funded renewable fuels infrastructure program: $3 million annually for biodiesel and ethanol to help upgrade petroleum equipment to grow renewable fuel availability in Iowa.

Iowa’s biodiesel-friendly policies help grow the industry, the board said.

“Iowa is the bright shining star of our industry,” said Shelby Neal, director of state governmental affairs for the National Biodiesel Board. Other states look at Iowa as an example of how state policies can support the industry, Neal said.

“A big portion of Iowa’s success is that we have strong state policies that benefit the user of the fuel, the producer of the fuel and even the marketer with the healthy tax credit that gives them incentives on the fuel tax,” Tom Brooks said. Brooks chairs the Iowa Biodiesel Board and is general manager of Western Dubuque Biodiesel, a 30 million-gallon production facility in Farley.

Iowa Lieutenant Governor Adam Gregg said Governor Kim Reynolds understands the importance of biodiesel and remains a champion for the industry.

“I think you would be hard-pressed to find a stronger advocate for renewable fuels than Governor Reynolds. I think she’s proven that in her actions many times over,” Gregg said.

Biodiesel Day on the Hill 2019
Biodiesel Day on the Hill 2019

State policies incentivizing the production and purchase of biodiesel in the state have created a strong demand in the state, said Dawn Carlson, president and CEO of FUEL Iowa (formerly known as Petroleum Marketers and Convenience Stores of Iowa).

“State policy decisions are helping to drive economic development in the state. We’ve got fuel marketers investing in their facilities and trying to make sure they have the means to offer these biofuels and it’s really gone a long way,” Carlson said.

Based on DOR figures, about 51 percent of the diesel gallons sold in Iowa contain biodiesel, Carlson noted.

“State policies are certainly helping to drive that demand. They’ve been very useful tools in helping drive biodiesel consumption here,” Carlson said.

Demand and biodiesel-friendly policies are driving growth in the biodiesel sector, said Courtney Lawrenson, senior director of renewable fuels at Ag Processing, Inc. (AGP). The company has been producing biodiesel in Iowa since 1996, growing from 12 million gallons per year to 135 million gallons per year recently.

She said state policies create some certainty that federal policies currently lack. Lawrenson told lawmakers that the renewable fuels infrastructure program helps companies like AGP keep locally-produced biofuels right here in the state.

“It’s important to keep state funding for this infrastructure program because that allows us to sell to retailers in the state and keep the fuel here rather than railing it farther away,” she said.

The growth of the biofuels industry not only supports more than 4,600 jobs in the state, according to ABF Economics, it also supports soybean farmers like Dave Walton of Wilton.

“If you look at biodiesel as a whole, it adds about 63 cents to a bushel of beans. So, for my operation, that’s about $36 an acre,” Walton said.

And in tough economic conditions, that matters, Walton said.

“That’s the difference between red and black this year. When times are tough, this is a really critical market for us,” he said. Walton not only benefits from the value-added product, he also uses it. He said he uses biodiesel in his farm equipment—B5 in the winter, B20 in the summer.

Lawmakers said the understood the importance of biodiesel to the state and were supportive of the IBB’s efforts.

“You don’t have to sell me on it (biodiesel), because I already am,” Iowa State Senator Tom Shipley said. “Anything that we can do to create income out there is a good thing. We know that it adds 63 cents on to a bushel of beans and some people don’t think that sounds like much, but that’s not chump change by any stretch of the imagination.”

Senator Janet Petersen said she was supportive of biodiesel and said she would continue advocating for the industry.

“We’re excited about your industry,” she told the board in her office at the Capitol. “We hate to see tax policy and budget going out the door. We’d rather invest in companies that invest in Iowans like what you’re doing.”

   

Contact Bethany Baratta at bbaratta@iasoybeans.com.

For media inquiries, please contact Katie Johnson, ISA Public Relations Manager at kjohnson@iasoybeans.com or Aaron Putze, ISA Communications Director at aputze@iasoybeans.com

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