Reynolds signs biofuel tax differentials bill

By Erin Voegele | June 30, 2020

Iowa Gov. Kim Reynolds on June 30 signed a bill that will extend Iowa’s biofuel tax differentials for six years and announced her intention to use $7 million of Iowa’s federal CARES Act funding to expand the Iowa Renewable Fuels Infrastructure Program.

Reynolds signed the bill and discussed the CARES Act funding during a visit to Pine Lake Corn Processors, an 80 MMgy ethanol plant located in Steamboat Rock, Iowa.

The bill, S.F. 2403, passed both of Iowa’s legislative chambers earlier this month. The legislation extends and modernizes fuel tax differentials for E15 and higher ethanol blends and B11 and higher biodiesel blends through June 30, 2026. Without the extension, the differentials were scheduled to expire today.

Since the first fuel tax differential bill was passed, E10 and higher ethanol blends and B11 and higher biodiesel blends, have grown to make up about 90 percent and 57 percent of sales in 2019, respectively. The new fuel tax differential modernizes the ethanol differential by applying it only to E15 and higher blends.

“At a time of unprecedented challenges facing our renewable fuels industry, today is welcome news. The renewable fuels industry benefits Iowa farmers, supports jobs in rural communities and gives consumers access to affordable, cleaner-burning fuels,” said Iowa Secretary of Agriculture Mike Naig. “Reauthorization of the biofuel tax differentials program will continue to boost biofuel demand. Gov. Reynolds’ commitment of an additional $7 million in funding for the RFIP program will allow us to further assist fuel marketers and retailers in building renewable fuels infrastructure, giving Iowans increased choices and savings at the pump. An investment in renewable fuels is an investment in Iowa."

The Iowa Renewable Fuels Association has spoken out in support Reynolds’ actions. “At today’s bill signing we say thank you to Governor Kim Reynolds for her leadership and strong support for Iowa biofuels,” said Nathan Hohnstein, policy director of the IRFA. “Reauthorization of the biofuel tax differentials will continue to expand Iowans’ access to cleaner-burning, home-grown biofuel blends like E15 and B11, supporting Iowa’s environment and economy at a time when it is much needed.”

“The governor’s intention to boost funding for Iowa’s biofuel infrastructure grant program is a terrific and welcome surprise,” Hohnstein added. “Iowa’s biofuels producers have been hit hard by the COVID-19 pandemic as travel has declined and fuel demand has plummeted. This additional funding will go a long way to increasing consumer access to higher biofuel blends and boosting biofuel demand.”

Poet issued a statement in support of S.F. 2403. “Iowa is once again blazing a trail to champion biofuels and reduce harmful emissions by actively encouraging the shift to E15 as America’s next standard fuel,” said Jeff Broin, founder and CEO of Poet. “We applaud Governor Reynolds and the entire Iowa legislature for recognizing the critical role of biofuels in driving grain demand, cleaning the nation’s air, improving human health and supporting rural communities.”

Growth Energy has also welcomed the signing of S.F. 2403. “The tax update offers a welcome source of market certainty for Iowa biofuel producers and our farm suppliers, who have faced unprecedented economic challenges in the wake of COVID-19,” said Emily Skor, CEO of Growth Energy. “We applaud Iowa lawmakers for crafting bipartisan legislation that can serve as an example for lawmakers nationwide seeking to support rural communities, save motorists money at the pump, and promote low-carbon fuels that keep our air clean. Smart tax policies like these are a proven strategy for accelerating infrastructure investments, creating rural jobs, and expanding consumer access to E15 and other higher biofuel blends.”