Iowa biofuel standard would create jobs, grow economy

By Erin Voegele | February 15, 2021

Legislation recently introduced in Iowa that aims to establish a state biofuels standard would create more than 3,500 new jobs and generate nearly $550 million in household income by 2026, according to a study released by the Iowa Renewable Fuels Association on Feb. 15. It will also add more than $450 million to Iowa’s GDP, which in turn generates approximately $182 million in new state and local tax revenue by 2026.

Iowa Gov. Kim Reynolds introduced the bill on Feb. 8. If signed into law, the legislation would set a 10 percent minimum ethanol standard for gasoline fuel and an 11 percent minimum biodiesel standard for diesel fuel. Both standards would have limited exceptions. The biodiesel standard would increase to 20 percent blends during the summer months, starting in 2024. The bill would also give the governor the discretion to increase the ethanol standard to 15 percent beginning in 2025.

The bill also adds $5 million from the general fund for the Iowa Renewable Fuels Infrastructure Program. That is in addition to the $5 million from the separate Rebuild Iowa Infrastructure Fund called for in the governor’s budget proposal, according to the IRFA. The legislation would reduce the cost of existing biofuels tax credits to more than offset the increase in RFIP.

The study released by the IRFA on Feb. 15 was authored by John Urbanchuk of ABF Economics. He found that the bill would increase ethanol demand and production in Iowa by 117 million gallons and biodiesel production by 203 million gallons between 2022 and 2026.

Approximately $341 million of the estimated $457 boost to Iowa’s GDP would come from biodiesel. The remaining $116 increase would be provided by ethanol. The boost in biodiesel blending would also be responsible for approximately 2,350 new jobs, while increased ethanol demand would add approximately 1,125 jobs.

“If you look at it from a state of Iowa standpoint, from a consumer standpoint, from a taxpayer standpoint, this is a really good piece of legislation,” said Monte Shaw, executive director of the IRFA. “The Iowa Biofuel Standards will boost farm income and support thousands of jobs while generating millions in tax revenue to help with Iowa’s economic recovery. The standards bill will create stable market demand for Iowa farmers and biofuels producers right here in Iowa, provide retailers with the resources they need to upgrade infrastructure to offer higher biofuel blends, and give consumers greater access to cleaner, lower-cost fuel options. It will do all of this while also adding to the bottom line of both Iowa families and the state’s general fund. It’s a win all the way around.”

A full copy of the study can be downloaded from the IRFA website.  

 

 
 
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