Executive Decision

States take initiative to incentivize their biodiesel industry where federal incentives fail to
By Bryan Sims | June 14, 2011

Iowa is positioned to become the nation’s leader in biodiesel production and consumption. That’s because in May, the state’s Senate and House both voted to extend its biodiesel tax credit program, which was set to expire at the end of the year, to Jan. 1, 2018. The biodiesel tax incentives are one portion of a comprehensive renewable energy bill (Senate File 531) worth an estimated $89.6 million aimed at creating a system that incentivizes local biofuel production and consumption in The Hawkeye State. Gov. Terry Branstad signed the bill just before press time.

Specifically pertinent to biodiesel, the new bill: extends the Iowa biodiesel retailer credit at 2 cents per gallon for blends of B2 and 4.5 cents per gallon for B5 in 2012, followed by 4.5 cents per gallon of B5 through 2017; makes it easier for petroleum marketers to achieve the credit; adds a biodiesel producer incentive of 3 cents per gallon in 2012, 2.5 cents per gallon in 2013 and 2 cents per gallon in 2014 (for first 25 million gallons per producer) and provides $3 million a year to the Renewable Fuels Infrastructure Board to help companiesoffset the cost of installing infrastructure components, such as fuel pumps.

For biodiesel producers, like Ag Processing Inc., which operates a 30 MMgy facility in Sergeant Bluff, the proposed biodiesel tax credit system is a strong indication of how Iowa supports not only bolstering biodiesel production, but also promoting increased use of the biofuel by end-users within the state.

“It’s especially helpful that the provisions that benefit consumers have been extended,” AGP Vice President John Campbell tells Biodiesel Magazine. “The main thing is to help consumers buy it. If consumers buy it, we’ll make it and this bill has both sides of it."

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