The Iowa House on Wednesday passed by a vote of 97–1 a Renewable Fuels measure that will require that 25% of motor fuel sold in Iowa by 2020 come from renewable sources. The bill—which creates the most aggressive Renewable Fuels Standard (RFS) in the country—now goes to Governor Tom Vilsack for signature.
If signed by the governor, the bill will make Iowa the fifth state with its own RFS. (Earlier post.)
To reach that goal, the sale and use of E85 will have to climb dramatically. Gas stations that embrace E85 will be in line for millions of dollars in state tax credits and incentives. In Iowa, E85 is currently available at only 30 fuel outlets across the state.
The House bill, HF 2754, creates:
An aggressive, accountable renewable fuels standard (RFS) starting at 10% in 2009 and increasing to 25% by 2020.
A new ethanol promotion tax credit for each gallon of ethanol blended into gasoline (replaces existing tax credit beginning in 2009). This incentive is linked to a retailer dealer’s achievement of the RFS schedule. The tax credit increases from $0.025 per gallon for retailers within 4% of the RFS schedule to $0.065 per gallon for retailers meeting or exceeding the RFS schedule.
A retail tax credit for E85 of $0.25 per gallon (phases out by 2020).
A retail tax credit for biodiesel blends of $0.03 per gallon (for retailers who sell more than 50% biodiesel blends.
An expanded infrastructure program designed to help retailers and wholesalers offset the cost of bringing E85 and biodiesel blends to consumers.
The RFS allows gasoline retailers flexibility in meeting the standard through the sale of E10, E85, and biodiesel blends.
By the end of 2006, Iowa will have a minimum of 27 ethanol plants capable of producing over 1.7 billion gallons per year. In addition, at least 6 biodiesel plants will be capable of producing more than 120 million gallons per year, according to the Iowa Renewable Fuels Association.
To qualify under the bill, the ethanol must be agriculturally-derived.
Iowa House File 2754