Legislation fuels growth in biodiesel

May 26, 2022 | Brock Johnston

The Iowa Soybean Association (ISA) and Iowa Biodiesel Board (IBB) heralded the Iowa Legislature’s passage of some of the most comprehensive biofuels legislation in the United States The legislation, signed by Gov. Kim Reynolds May 17 on a farm near Prairie City, (HF2128/SSB3084) will encourage the sale of higher blends of biodiesel through an incentive-based approach. It will also make E15 ethanol more available statewide, with enhanced infrastructure cost-share opportunities for retailers.

“This legislation will bring Iowa to the forefront of homegrown energy,” says ISA President Robb Ewoldt, a soybean farmer from Davenport. “As land stewards and community leaders across our 99 counties, the state’s 40,000 soybean growers understand the important role of biofuels in growing communities and investing in cleaner-burning fuels to meet carbon reduction goals.”

By increasing soybean oil value, biodiesel supports 13% of the price per bushel of soybeans. This equated to $1.78 per bushel in 2021, while lowering the price of meal for livestock producers and the food supply.

“We're grateful for Gov. Reynolds’ leadership and positioning our state as a leader on sustainable energy,” Ewoldt says.

Grant Kimberley, ISA’s senior director of market development and IBB executive director, applauded the passage.

“We anticipate that this landmark Iowa legislation will increase consumer access to higher blends of biodiesel,” Kimberley says. “Consumers, the economy and the environment all stand to gain.”

The legislation is the most comprehensive of any state and offers something for everyone. This includes the continuation of a fuel tax differential for consumers, infrastructure dollars and tax credits for fuel retailers, and an increased biodiesel production tax credit for producers.

Previous legislation successfully encouraged blends of 11% biodiesel (B11).

“In a sense, we have reached a plateau,” Kimberley adds. “We are eager to move Iowa’s energy transformation onward and upward toward more B20.” The legislation comes at a critical time. Supply chain challenges and federal policy limbo create a precarious time for the industry. The expansion of Iowa’s producer credit offers a new cushion for biodiesel producers. Worldwide uncertainty and fuel price instability also impacts consumers, Kimberley says.

“A diverse fuel supply with more low-carbon fuel made in America benefits everyone,” he says. “The passage of the Governor’s Biofuel Access Bill makes us optimistic for Iowa’s future as the leading biodiesel producing state.”

The biodiesel portion of the bill increases the Biodiesel Production Tax Credit from 2 to 4 cents per gallon. It also maintains the current Biodiesel Fuel Tax Differential, but applies this to blends of 20% biodiesel (B20) rather than B11. The fuel retailer tax credits for B11 and higher is extended while introducing new credits for higher blends like B20 and (7 cents per gallon for B20 and 10 cents per gallon for B30). Finally, the bill expands statewide funding for the state’s Renewable Fuel Infrastructure Program.

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