Truckers, motorists and biodiesel producers alike are now benefitting from a tax savings in Iowa on higher blends of biodiesel. As of July 1, diesel fuel blended with at least 11% biodiesel (B11) will enjoy a tax exemption of 3 cents a gallon compared to regular diesel. This is a 2015 legislative victory celebrated by the Iowa Biodiesel Board (IBB) and its supporters.
Signed by Gov. Terry Branstad in February, the Iowa new law has already increased the state fuel tax by 10 cents a gallon for both diesel and gasoline to help improve Iowa's roads and bridges. Beginning July 1, biodiesel blends of B11 and above will receive a 3-cent exemption for five years.
"This state policy represents another link in the chain that secures Iowa's energy and economic future," says Grant Kimberley, executive director of IBB. "This incentive, along with other state policies that encourage biodiesel production and use, shores up support for a fuel that delivers jobs, diversifies our fuel supply and reduces greenhouse gases."
Prior to 2015, the tax for diesel was $0.225 a gallon. The new diesel tax, already in effect, is $0.325 a gallon. Users of B11 or higher will now pay tax of just $0.295 a gallon.
Will biodiesel be cheaper than regular diesel fuel at the pump?
Kimberley points out this won't automatically mean B11 is less expensive at the pump than diesel, but "All of the pro-biodiesel policies in Iowa working together, plus federal programs that encourage energy independence, do add up," he says. "This is likely to make B11 pretty competitive at the pump."
Iowa is the No. 1 biodiesel-producing state. Iowa biodiesel plants produced 227 million gallons in 2014, down slightly from the 2013 record of 230 million gallons.
Biodiesel is an advanced biofuel made from agricultural byproducts and coproducts, including soybean oil. The Iowa Biodiesel Board is a state trade association representing the biodiesel industry.
IBB members stand up for biodiesel at EPA hearing
In other biodiesel news, a biodiesel-powered convoy traveled from Iowa to Kansas City last week, where members of the Iowa Biodiesel Board stood up for the fuel's future in the Renewable Fuel Standard.
The Environmental Protection Agency held a hearing in Kansas City on June 25 on its long-awaited proposed renewable fuel volumes under the federal RFS program. In biodiesel's primary RFS category, "biomass-based diesel," EPA has proposed 1.63 billion gallons in 2014, with gradual growth of about 100 million gallons per year to a standard of 1.9 billion gallons in 2017. Growth is also planned for the Advanced Biofuel category, which biodiesel can meet.
Biodiesel has power to produce positive impact on economy
Grant Kimberley, executive director of the Iowa Biodiesel Board and director of market development for the Iowa Soybean Association, testified. "I represent the entire Iowa biodiesel value chain, from the farmers who grow soybeans, to biodiesel manufactures, petroleum marketers and other industry stakeholders," Kimberley said. "But I am also an Iowa farmer who believes in the power of biodiesel to have a positive impact on my local, state and national economy."
EPA administrator Gina McCarthy visited Kimberley's family farm in 2009, where he had the opportunity to show her just how intertwined agriculture and energy are. "When we diversify farm income by allowing farmers to play a role in energy, it has a great benefit of enhancing food security," Kimberley told EPA officials. "The rise of biofuels has no doubt saved family farms, which means more food security. Farmers are innovative and will always rise to meet market demands."
Iowa is the No. 1 biodiesel-producing state
While most industry leaders do not take issue with the proposed 2014 and 2015 biodiesel volumes, consensus is that the volumes for 2016 and 2017 have been set too low by EPA. "I ask that you set a final rule that is closer to the industry's initial request of 2.4 billion gallons for 2016 and 2.7 billion gallons for 2017," Kimberley said. "We are more than capable."
Producer members of IBB who testified included AGP based in Sergeant Bluff, REG based in Ames, and Western Dubuque Biodiesel, a 30-million-gallon-per-year facility at Farley in northeast Iowa. "I'm a U.S. Air Force veteran who served in the Gulf, and I'm concerned about improving U.S. energy security," said Tom Brooks, general manager of Western Dubuque Biodiesel. "Our company has provided the first new hiring opportunity in our town of 900 in the past 15 years. These are well above average paying jobs."
Iowa Gov. Terry Branstad, an ardent biofuels supporter, also testified at the June 25 EPA hearing. The Iowa Biodiesel Board is a nonpartisan state trade association representing the biodiesel industry. To read Grant Kimberley's full testimony, click here.