Iowa Grabs the Honor

It’s the first state to incentivize E15
By Kris Bevill | June 13, 2011

On May 26, Iowa Gov. Terry Branstad signed into law a comprehensive renewable fuels package that included a specific incentive for E15, making Iowa the first state to enact financial incentives for retail sales of E15. 

Fuel retailers in Iowa will become eligible to receive a 3-cent tax credit for each gallon of E15 sold beginning July 1, or as soon as the U.S. EPA gives final approval for the fuel’s use in vehicle models 2001 and newer. In 2015, the tax credit will be reduced to 2 cents per gallon. In addition, the bill provides misfueling liability protection for retailers.

The bill also modifies the existing E85 Promotion Credit. The tax credit was previously set at a sliding scale, providing 20 cents per gallon of E85 last year but decreasing to 10 cents per gallon for 2011. The legislature approved modifications to provide 16 cents for each gallon of E85 sold for the next six years, beginning in January. This modification will provide more stability to the program, according to Mindy Larsen Poldberg, director of government relations for the Iowa Corn Growers Association. Another important modification is an increase from 6.5 cents per gallon to 8 cents per gallon paid to retailers whose renewable fuel sales comprise at least 12 percent of a station’s total fuel annual fuel sales.

Other provisions in the bill include:
• A 4.5 cent per gallon tax credit for retailers selling biodiesel blends of B5 or greater.
• A three-year production tax credit of 2 to 3 cents per gallon for biodiesel producers.
• The approval of $3 million per year for three years to fund the state’s Renewable Fuels Infrastructure Program. The program provides cost share grants of up to 70 percent for the installation of retail biofuels infrastructure, including blender pumps and biodiesel stations.

Iowa Renewable Fuels Association Executive Director Monte Shaw says the newly enacted legislation finally makes Iowa a leading state in terms of ethanol policy. “While we’ve led in production for years, a lot of times our neighbors have led on the policy side, at least on a state level,” he says. “Iowa’s never been in the forefront on some of the other issues.” Taking a good-natured jab at Iowa’s neighbor to the north, Shaw expressed a little pleasure in finally one-upping Minnesota on policy measures. “They’ve carried the burden for awhile and when you’re from Iowa it’s embarrassing to get teased that you’re behind Minnesota in anything,” he says. “So it provides a bit of extra motivation.”  —Kris Bevill