By Kathleen M. Roberts
On May 12, 2017, the Iowa Biodiesel Board (IBB) praised Governor Terry Branstad for signing into law the Rebuild Iowa Infrastructure Fund bill (HF 643), which provides $3 million in funding for the Renewable Fuels Infrastructure Program. IBB stated that it, along with industry partners, worked closely with legislature to ensure the funding language was included in Iowa’s budget, and acknowledged Branstad for being a steadfast supporter of funding renewable fuels and the infrastructure program, which is designed to encourage fuel retailers to offer biofuels. Grant Kimberley, the IBB Executive Director, stated that proactive state policies played a key role in expanding Iowa’s biodiesel production and maintaining Iowa as the leading national producer. According to the Iowa Department of Revenue, 471 on-road Iowa retailers carried biodiesel blends in 2016 compared to 304 in 2011.
By Kathleen M. Roberts
On April 13, 2017, the Iowa Renewable Fuels Association (IRFA) released a statement regarding the passage of a bill, HSB 187, by the Iowa House Appropriations Committee that would cut the value of the Iowa biofuels tax credits and complicate the mechanism for receiving the credit. According to the bill, the value of the tax credits would be determined based on annual sales, and the amount of the credits would be capped on an annual, statewide basis. The purpose of the biofuels tax credits was to incentivize consumers to purchase higher blends of ethanol and biodiesel, such as E15, E85, and B11, by offering a tax credit to fuel retailers. IRFA states, however, that the amendments to HSB 187 undercut the entire purpose of the tax credits since fuel retailers cannot pass the price reduction to the consumer if they do not know what the credit is at the time the fuel is sold.
By Lauren M. Graham, Ph.D.
On April 4, 2017, the Iowa Biodiesel Board (IBB) announced that the Iowa Department of Revenue’s 2016 Retailers Fuel Gallons Annual Report demonstrated that more than half of Iowa’s fuel retailers carried biodiesel blends in 2016. In 2016, 344.8 million gallons of on-road biodiesel blends were sold, which accounts for 54.7 percent of total on-road diesel fuel sales. The report also showed that twice as many gallons of 11 - 20 percent biodiesel (B11-B20) were sold compared to lower blends. IBB credits the growth in the use of higher biodiesel blends to Iowa’s proactive state policies, which are working as intended to increase production and consumption. Due to the instability at the federal level, Grant Kimberley, the IBB executive director, stated that Iowa’s biofuel producers need state tax credits to stay in place now more than ever to remain competitive.
On February 16, 2017, a coalition of Iowa farmers, renewable fuel producers, and retailers urged Scott Pruitt, just prior to his being confirmed as the U.S. Environmental Protection Agency (EPA) Administrator, to protect the Renewable Fuel Standard (RFS) by rejecting the petition to change the program’s point of obligation. The coalition, which includes the Iowa Renewable Fuels Association (IRFA), the Iowa Corn Growers Association (ICGA), Petroleum Marketers and Convenience Stores of Iowa (PMCI), and the Iowa Biodiesel Board (IBB), stated that it is committed to opposing a change in the point of obligation since such a change would be devastating to wholesalers and retailers, who have invested in supporting the RFS program, and to consumers, who would experience a change in pricing dynamics at fuel terminals. Agreeing with EPA’s decision under the Obama Administration, the coalition stated that changing the point of obligation 11 years into the program would create unnecessary chaos and delay. A final decision will be made once EPA has reviewed the public comments on the issue.
On May 24, 2016, Iowan Governor Terry Branstad signed Senate File 2309, an Act providing for tax credits and refunds relating to renewable fuels including their component biofuels and including effective date provisions. The bill extends a state biodiesel production tax credit providing 2 cents per gallon (cpg) on the first 25 million gallons of production per biodiesel plant. The bill also extends a credit for petroleum retailers of 4.5 cpg on blends of 5 percent biodiesel or more through the end of 2017, with the incentive changing to 3.5 cpg for 5-11 percent biodiesel blends and 5.5 cpg for biodiesel blends above 11 percent from 2018 to 2024. Without the extension, the bill was scheduled to sunset on December 31, 2017, but will now continue through December 31, 2024.
On April 27, 2016, the Iowa Senate voted 49-0 to extend the Renewable Fuels Infrastructure Program (RFIP) through June 30, 2017. The legislation, House File 2464, was passed by the Iowa House 94-0 and provides funding for cost-share grants to upgrade fueling infrastructure. RFIP covers up to 70 percent of the installation cost of E15, E85, or biodiesel blend fuel pumps for Iowa retailers, up to $50,000 per project. "While we were hopeful for a long-term funding solution for the state's renewable fuels infrastructure program, we're very pleased today that the Iowa legislature was able to keep this vital initiative going for another year," stated Iowa Renewable Fuels Association (IRFA) Policy Director Grant Menke. "The [U.S. Department of Agriculture's (USDA)] Biofuels Infrastructure Partnership re-energized many Iowa retailers, leading to record participation in the blender pump program over the past year. This one-year funding extension allows us to build upon this momentum and ensure Iowans have greater access to cleaner-burning, lower-cost renewable fuels." The current source of RFIP funding is ending after this extension, so there is still need for a long-term solution to helping retailers supply more renewable fuels and higher ethanol blends to consumers.
On April 6, 2016, Iowa Governor Terry Branstad signed Senate File 2300, creating a five cent tax credit, per pound of renewable chemicals produced from biomass feedstock between 2017 and 2026. Spokesman for Governor, Ben Hammes, stated, "Gov. Branstad believes this biochemical tax program will go even further to continue spurring economic growth all over Iowa, creating more high-quality jobs and attracting investments in renewable chemical manufacturing and advanced bio-refining." The bill passed the Iowa Senate on March 16, 2016, with a vote of 46-3, and the Iowa House on March 28, 2016, with a vote of 95-1.
The tax credit will take effect July 1, 2016, and will be capped at $105 million for each fiscal year through June 30, 2021. After 2021, the general assembly will determine if the tax credit limitation will be continued. The law does not apply to renewable chemicals that are sold to be used as food, feed, or fuel, but does include building-block chemicals, supplements, vitamins, nutraceuticals, and pharmaceuticals as long as there is no caloric value. Biomass-derived ethanol, fatty acid methyl esters, and butanol are eligible for the credit as long as they are produced and sold for uses other than food or fuel.
On March 17, 2016, the Iowa State Senate voted 46-3 to approve Senate File 2300, a bill creating a production tax credit for renewable chemicals. The legislation was created to attract investment in renewable chemical manufacturing and biorefining to Iowa, and covers the production of higher value biochemicals from plant materials left over from biofuel production. The House Ways and Means Committee approved House File 2288, a companion bill, and sent the measure to the House floor. Senate File 2300 allows eligible businesses to claim a five cent tax credit per pound of renewable chemicals produced from biomass feedstock between 2017 and 2026. Tax credits resulting from the bill will be capped at $105 million per year, with a limit of $10 million per company. The Biotechnology Innovation Organization (BIO) released an announcement in favor of the renewable chemical tax credit. Brent Erickson, Executive Vice President of BIO's Industrial & Environmental Section, stated: "Renewable chemicals help protect the environment and create new jobs. Iowa's new tax credit will encourage biotechnology and renewable chemical companies to make investments and deploy innovative homegrown technology in Iowa. BIO will continue to work with the Iowa legislature, other states and the federal government to level the playing field in economic development incentives for renewable chemical and biobased manufacturing technologies."
On January 14, 2016, a report titled "Biobased Chemicals: The Iowa Opportunity" was released by Iowa's Cultivation Corridor and the Iowa Biotechnology Association at the Iowa Statehouse. This report is based on research by Iowa State University professors and outlines opportunities for Iowa to capitalize on bioprocessing developments in the United States. While Iowa has the advantage of a strong biofuel industry, there is still a need for the Iowa legislature to address the needs of the bio renewables industry beyond ethanol production to take full advantage of the $250 billion domestic chemical market.