Iowa lawmakers vote to extend, expand state biodiesel incentives

The Iowa House passed legislation April 21 to extend and expand state biodiesel incentives, a move commended by the Iowa Biodiesel Board. The incentives include a tax credit that helps keep the state’s 13 biodiesel producers competitive on a national scale, and a retailer’s credit that entices fuel retailers to carry biodiesel blends.

The legislation, SF 2309, extends the Biodiesel Production Credit through 2024, originally set to expire at the end of next year. The credit is 2 cents per gallon on the first 25 million gallons of production per biodiesel plant, and helps keep biodiesel production and economic activity in Iowa. 

It also extends and expands the Biodiesel Promotion Retail Tax Credit. The incentive will continue to provide petroleum retailers 4.5 cents a gallon on blends of at least 5 percent biodiesel (B5) through 2017. From 2018-2024, the B5 incentive will drop to 3.5 cents per gallon, but an additional incentive of 5.5 cents per gallon will take effect for gallons of B11 and higher.

“These policies help keep biodiesel production in Iowa, reinforcing our state’s leadership position in the drive for renewable energy,” said Grant Kimberley, IBB executive director. “With the addition of the retail incentive for blends of B11 and higher, we should see biodiesel begin to make up a more substantial portion of our state’s motor fuel supply, too. We can and should use our own fuel product to displace foreign oil.”

The legislation now goes to Gov. Terry Branstad for consideration.

In 2015, Iowa’s 12 operating biodiesel plants produced a record 242 million gallons of biodiesel. The industry supported more than 3,000 jobs and contributed almost $345 million in GDP for the year.

Biodiesel is an advanced biofuel made from agricultural byproducts and coproducts, such as soybean oil. The IBB is a state trade association representing the biodiesel industry.