Iowa passes aggressive biofuels legislation

By | July 01, 2006
Iowa has always been a leading farm state, and it recently confirmed its position as a leading biofuels state as well. Gov. Tom Vilsack signed into law two renewable fuels and infrastructure bills (HF 2754 and HF 2759) in late May. One major incentive will give retailers a 3-cent income tax credit on each gallon of a B2 blend or higher. To qualify, at least half of the retailer's diesel sales must be B2 or higher blend levels.

The groundbreaking bill also established a renewable fuels standard, stating sales of ethanol or biodiesel must equal 25 percent of a retailer's fuel sales by 2020. There are exceptions for small fuel retailers.

The bill provisions will encourage more retail and wholesale sales. According to the Iowa Soybean Association, over 350 fuel distributors in Iowa-50 being retailers-already offer low blends of biodiesel. Thanks to this tax credit and other support provisions, distributors will likely expand sales as well. Distributors can be considered retailers if they sell non-taxed off-road fuel to farms, for example.

Specifics of Iowa's biodiesel and renewable fuels bills include the establishment of a 3-cent-per-gallon tax credit until 2012; a system for the delivery of infrastructure support for biodiesel point-of-sale, as well as infrastructure grants; 50 percent cost-share assistance up to $50,000 per project for biodiesel-related projects, such as retail sites or terminal racks; statutory recognition of the ASTM and U.S. EPA definitions of biodiesel; and support for increased state monitoring of fuel quality.
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