Biodiesel supporters are optimistic that a Biofuel Standards Bill will be passed in the Iowa legislature. This week they discussed the proposed legislation on The Big Show. (Photo: Joseph L. Murphy/Iowa Soybean Association)
BIG support for biofuels bill
March 11, 2021 | Bethany Baratta
Passage of the Biofuel Standards Bill introduced in Iowa would mean stronger soybean demand for farmers, reduced feed costs for livestock farmers and increased affordable fuel choices for consumers.
“We’re 7 months away from another record crop and every avenue we can take to find places to move our soybeans is going to benefit Iowa soybean farmers,” said Iowa Soybean Association (ISA) President Jeff Jorgenson from Sidney. “Why not do that right here in our own state using our soybeans?”
Proponents of the Biofuel Standards Bill voiced their support for the homegrown fuels in a big way this week during a ‘biodiesel takeover’ on WHO Radio’s The Big Show program.
The legislation would initially set an 11% minimum biodiesel standard for diesel fuel and a 10% minimum ethanol standard for gasoline. Both standards have limited exemptions.
For biodiesel, the legislation calls for fuel incentives that will increase demand of higher biofuel blends such as B20, thus improving the quality of the fuel supply.
The proposed legislation would include a phased-in approach to the biodiesel standard:
B20 standard would start on April 1, 2024.
B5 blends allowed from October through March.
Beginning in 2025, Iowa Governor Kim Reynolds would have the discretion to increase the ethanol standard to 15% blends if certain federal regulatory conditions are met.
Biodiesel adds about 13% to the net market value of the price of soybeans, or about $1.50-1.80 in today’s prices, ISA Senior Director of Market Development Grant Kimberley told The Big Show hosts Bob Quinn and Andy Petersen.
Biodiesel production also benefits livestock producers by reducing the price of soybean meal by $21 per metric ton. This legislation could expand on these benefits.
“Quite frankly other states are ahead of us when it comes to the usage of biofuels,” Kimberley says. “We’re a leading producer of biofuels; we also need to be a leading consumer of biofuels.”
Expanding biodiesel marketing
Passing this legislation would support biofuel producers like Western Iowa Energy, which employs 27 in Wall Lake. The company has a biodiesel production capacity of 30 million gallons annually.
“Most of our fuel goes out of state to Minnesota and California because they have already instituted biofuels policies and standards like the one that Iowa is proposing,” says Brad Wilson, president and general manager of Western Iowa Energy. “That passes many incentives down, which turn into dollars, down the value chain into other company’s hands and states.”
This means Iowa biofuels producers like Western Iowa Energy are missing out on valuable state incentives.
“This Iowa Biofuels Standard is a way for more of our biodiesel —made from soybean oil from crush plants, animal fats from rendering and DDGS from ethanol plants and other wasted fats and greases—to bring more value back to Iowa biofuels producers and farmers,” Wilson says.
By reforming existing biofuel tax credits, this legislation provides significant sources of revenue for the underfunded, overutilized Renewable Fuels Infrastructure Program (RFIP). The program utilizes grant incentives to help fuel retailers convert their equipment to allow for the expanded use of renewable fuels in Iowa.
If retailers offer blends above those minimum standards, they will continue to receive tax credits to continue doing so, says Monte Shaw, executive director for the Iowa Renewable Fuels Association (IRFA).
“At the end of the day, what that’s going to mean is more choices for consumers,” Shaw said.
Currently only about 250 fueling stations out of 2400 in the state provides E15 (often marketed as E88).
“Under this bill there would be savings from tax credit reforms going into a grant program for retailers so they could build out infrastructure they need to offer E15. We see it as a win to give consumers choice as well as the added demand for farmers’ commodities.”
“We’re excited really for the consumers out there,” says Scott Fenwick, technical director for the National Biodiesel Board. “We’ve been working with vehicle and engine manufacturers for decades to help prove that biodiesel is compatible with their engines and offers the same level of performance that their consumers and customers expect.”
Fifty-eight percent of all on-road diesel contains B11 or higher biodiesel blend, but other states are seeing higher usage due to their biofuel standards, Kimberley notes.
“We estimate that this bill would increase the total demand for biodiesel by over 200 million gallons over the course of 5 years. That translates back to an increase of over 108 million bushels of additional soybean demand,” says Kimberley, who also serves as the executive director for the Iowa Biodiesel Board.
Ninety-three percent of farmers responding to an ISA Farmer Member survey conducted by Harvest Research in the fall of 2020 said they either use biodiesel, have used it in the past, or would like to use it in the future.
“We are ready to use more of what we produce,” Jorgenson says.
The bill is currently under consideration in both the Iowa House and Senate Ways and Means Committees.
Listen to a replay of the biodiesel takeover on The Big Show.