Iowa legislature urged to reauthorize biofuel tax differentials

As Iowa’s elected leaders prepare to return to the State Capitol and wrap up the 2020 legislative session, Iowa Renewable Fuels Association members urge legislators to take action on key biofuel legislation.

House File 2279 and Senate File 2403 would extend and modernize fuel tax differentials for E15 and higher ethanol blends and B11 and higher biodiesel blends, which are set to expire June 30. With the passage of either bill, Iowa will not only continue to support renewable fuels but put millions of dollars back into the Road Use Tax Fund each year for vital infrastructure projects.

“If the legislature allows the biofuel tax differentials to expire, not only will it raise prices on consumers at the pump, it will also hurt Iowa’s farmers and biofuels producers who are suffering as a result of the COVID-19 pandemic and trade disputes,” said Nathan Hohnstein, IRFA policy director. “Since the implementation of the current tax differential, we’ve seen biofuel blend sales increase dramatically, but with June 30 just around the corner, it is imperative the legislature take action now. Iowa cannot afford to take a step backward in promoting the use of renewable fuels.”

Since the first fuel tax differential bill was passed, which included E10, Iowa has seen E10 and B11 and higher biodiesel blends go from niche fuels to making up 86 percent and 57 percent of sales in 2019, respectively. Hohnstein pointed to this as a sign the fuel tax differentials are doing what they are designed to do. Because of this success, the new fuel tax differential modernizes the ethanol side of the policy by applying it to E15 and higher blends, making millions of dollars available for road and bridge repairs.

“The fuel tax differential helped make E10 Iowans’ fuel of choice,” Hohnstein said. “Now is not the time to let up and jeopardize the progress we’ve made. If reauthorized, the modernized tax differential will continue to help grow sales of Iowa’s own home-grown higher blends of ethanol and biodiesel.”