A 10-cent per gallon increase in the state of Iowa's motor fuel tax is being proposed in the Iowa Legislature as part of a comprehensive plan to address Iowa's infrastructure needs. Currently, gasoline is taxed at 21 cents per gallon, with blends containing at least 10% ethanol taxed at only 19 cents per gallon. Diesel is taxed at 22.5 cents per gallon with no incentive for biodiesel.
Farmers are being asked by the Iowa Soybean Association this weekend and early next week to contact their state representative and state senator. "You should do this by Monday, Feb. 2 and urge your legislator to expand the biodiesel market and the biodiesel industry as the Iowa Legislature considers an increase in the fuel tax," says Carol Balvanz, ISA policy director.
"We support the fuel tax increase but as our state legislature considers the issue, we need its support for a significant and meaningful incentive," explains Grant Kimberley, executive director of the Iowa Biodiesel Board and director of market development for the ISA. "The IBB is committed to include an exemption of at least five cents per gallon for biodiesel blends higher than B10 in any diesel motor fuel tax increase."
Pushing for partial exemption for higher blends of biodiesel
Kimberley, who farms near Maxwell in central Iowa, says doing so would immediately expand the availability and use of biodiesel in the state of Iowa, and help biodiesel businesses during trying times for the industry.
"Iowans should be encouraged to buy an Iowa-produced fuel vs. imported oil," he says.
Kimberley says many legislators will be hosting forums this weekend. "Those venues provide an ideal opportunity to visit with legislators and ask them for their support." Click on the links below to find out additional information and read the ISA issue brief.
Legislative web pages with information about weekend forums:
National Biodiesel Board calls for EPA to act on RFS
In other news concerning biodiesel, the National Biodiesel Board on Friday asked the U.S. Environmental Protection Agency to immediately establish biodiesel volumes for the Renewable Fuel Standard. The NBB highlighted the fallout from the Obama Administration's ongoing failure to establish a functioning renewable fuels policy for the second straight year.
Industry leaders said the EPA's recent decision to allow streamlined imports of biodiesel from Argentina under the RFS has only added new urgency to the need for stable policy. In a letter to EPA Administrator Gina McCarthy sent Friday, former biodiesel producer and NBB Governing Board Member Ben Wootton challenged McCarthy's recent comments suggesting that the RFS delays haven't hurt renewable fuels industries. Wootton lost his Pennsylvania biodiesel plant, Keystone Biofuels, in bankruptcy last year as a result of RFS uncertainty. In his letter, he explained to McCarthy how the loss of his plant also forced him to lay off 30 employees and caused him to lose his daughters' college funds and his retirement savings.
Highlights the loss of jobs, bankruptcy as a failed policy
In a statement late last year, McCarthy said: "While I would have preferred to have this rule done earlier, it hasn't slowed down that industry that I can see."
"I would invite EPA administrator McCarthy to come to my shuttered plant and talk to some of the laid off workers, or to visit practically any biodiesel plant across the country to see the damage that is taking place," Wootton says. "It is obvious this administration doesn't understand the severe damage that the uncertainty surrounding this rule has caused our industry and the thousands of employees it represents. It is beyond frustrating that an administration I have strongly supported has inflicted so much harm on an industry it says it supports."
EPA has failed to establish biodiesel volume requirements under the RFS for 2014, 2015 and 2016. Under federal law, all three years' volumes should have been set. While certain sectors of the renewable fuels industry have fared better in absorbing the RFS uncertainty – particularly more mature industries such as corn ethanol – the delays have been disastrous for new industries still getting off the ground. This is particularly true for biodiesel, the first EPA-designated Advanced Biofuel under the RFS to reach commercial-scale production nationwide.
EPA's decision to allow biodiesel imports adds insult to injury
Aggravating the difficulties facing the industry, the EPA earlier this week approved a streamlined approach for allowing imports of Argentinian biodiesel into the US, fast-tracking foreign imports under the RFS that are subsidized by Argentinian tax policy and are likely to undercut U.S. production. The decision has been perceived by biodiesel producers and the domestic soybean industry as adding insult to injury.
"It is shocking that at a time when our renewable fuels policy is in a shambles, the EPA has essentially greenlighted biodiesel imports from Argentina to qualify for the RFS, with very little oversight or verification that the resources used to make the fuel will be grown under the normal RFS sustainability requirements," says Joe Jobe, NBB CEO. "We've done all we can for two years to help this Administration develop reasonable policy that matches President Obama's stated support for renewable fuels, but we are at wit's end. We are desperately searching for any indication that this support actually exists."
Dozens of biodiesel plants have cut production, laid off workers
Adds Wootton: "Based on years of statements by President Obama and Administrator McCarthy, we all believed we had an ally in this Administration. I and many others in a similar situation are stunned and frustrated by this lack of leadership and failure to act."
Recent EPA statistics show that the U.S. biodiesel market dropped in 2014, from a high of 1.8 billion gallons in 2013 to 1.75 billion gallon last year. But the total volumes— which remained steady only because EPA last year signaled it would finalize a strong RFS—mask the fact that dozens of biodiesel plants have stopped production or laid off workers in recent months. The most recent casualty was Green Earth Fuels, a large plant outside Houston that filed for bankruptcy earlier this month.
Biodiesel industry has dozens of producers barely hanging on
"Our overall production numbers were down only slightly for 2014, but that is an illusion," Jobe says. "This is an industry hanging on broken promises and leveraging everything waiting for the EPA to comply with the law. We have dozens of biodiesel producers just barely hanging on."
Know your biodiesel: Biodiesel is made from a variety of resources including recycled cooking oil, plant oils such as soybean oil, and animal fats. It is the first EPA-designated Advanced Biofuel to reach commercial-scale production nationwide. According to EPA, biodiesel reduces greenhouse gas emissions by 57% to 86% compared to petroleum diesel. With plants in nearly every state in the country, the biodiesel industry supports some 60,000 jobs. For more information on biodiesel, visit biodiesel.org.