Iowa legislation encourages biodiesel growth

Iowa Governor Terry Branstad today signed legislation that encourages the production and distribution of biodiesel.

“This bill represents the most comprehensive state legislation passed this year, and it is sure to stimulate additional demand for biodiesel in Iowa,” said Shelby Neal, director of state governmental affairs, National Biodiesel Board. The bill positions Iowa among the elite states in terms of having a comprehensive set of biodiesel policies that help create a positive business climate, Neal said.

The renewable energy bill, Senate File 531, will:

• Extend the Iowa biodiesel retailer credit at 2 cents per gallon for blends of 2% biodiesel (B2) in 2012, and 4.5 cents per gallon for 5% biodiesel (B5) in 2012 through 2017
• Make it easier for petroleum marketers to achieve the credit
• Add 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 the first 25 million gallons per facility)
• Provide $3 million per year to the Renewable Fuels Infrastructure Board
• Provide the Iowa Biodiesel Board with representation on the Renewable Fuels Infrastructure Board

Iowa has 15 biodiesel plants. Like many other states, its production facilities were mostly idle or forced to drastically cut production in the past year. That reduction was largely due to the lapse of the federal tax incentive, which has since been restored, reported the National Biodiesel Board.

The state legislation is expected to enhance Iowa's role in meeting the demand created by the federal Renewable Fuels Standard-2. The biodiesel industry is poised to sell 800 million gallons of biodiesel nationally this year. Iowa's capacity is about 300 million gallons a year. It is believed that the states with the strongest policies will capture the largest share of that market.