Ethanol expansion ’a big push’ as Iowa Legislature nears adjournment

Source: By Rod Boshart, The Gazette • Posted: Sunday, May 2, 2021

Mandate advances as critics warn drivers would face less choice and higher costs

Ethanol expansion ’a big push’ as Iowa Legislature nears adjournment

E15 fuel is offered for sale at a Marion station. (The Gazette)

DES MOINES — Farm interests, fuel retailers and others whipsawed a state Senate panel Thursday over a legislative proposal seeking to push more use of renewable fuels that proponents hailed as an economic boon for Iowa-based industries and critics panned as a government intrusion that would cost drivers more at the pump.

Five members of a Senate Ways and Means subcommittee heard over 75 minutes of impassioned testimony on a bill Gov. Kim Reynolds introduced to promote more ethanol and biodiesel sales in Iowa, but that House Speaker Pat Grassley, R-New Hartford, conceded to reporters “is a difficult push” as the 2021 legislative session pushes toward adjournment.

“It’s a pro-consumer, pro-Iowa, pro-national security bill,” said Reynolds’ legislative liaison Logan Shine in promoting an amended Senate File 549. His comments came one day after the governor told Statehouse reporters she has not given up on her plan to boost the sale of corn-based ethanol and biodiesel derived from soybeans even though the concept requiring gas stations and convenience stores to offer fuel with a 15 percent ethanol blend by 2026 has been revised in hopes of striking a legislative compromise.

Shine said the bill raises the fuel standard in Iowa without telling retail locations they can’t sell certain products and maintain consumer choice. But petroleum marketers and retailers took issue with claims the reworked bill represents a compromise and insisted it still was a costly government mandate that will drive some stations out of business.

“This new version continues to have restrictions and things in place that are really going to upend the fuel market in the state of Iowa,” said Tom Cope, a lobbyist for Casey’s convenience stores — one of a group of speakers who told legislators the requirements would force expensive infrastructure upgrades that could not be accomplished under the bill’s timeline and with the level of grant money being included to assist locations that would need to “crack concrete” to meet the new demands.

Provisions of bills being fashioned in the House and Senate would push fuel retailers to phase out gasoline and prioritize biofuels by requiring them to have a “special-use label” for both E-0 fuel without ethanol and gasoline containing a 10 percent ethanol blend, and at least one nozzle for E15 gasoline with a 15 percent ethanol blend. Beginning Jan. 1, 2025, retail restrictions would expand to allow only one nozzle to dispense fuels below E15. Similar restrictions would be in place for biodiesel sales.

The most commonly used ethanol blend now is E10.

Other provisions cover biodiesel sales during summer and winter months, requirements for state agencies operating vehicles powered by renewable fuels, new tax credits for retailers that sell biofuels and incentives for infrastructure upgrades that dispense up to E85 and B-20 fuels.

“It’s going to drive retailers out of business. There’s no doubt about it,” said Jason McDermott, a Cascade retailer who operates five service stations.

Representatives of pipeline companies told subcommittee members their terminals currently lack the biofuel blending capacity to meet the higher standard and are not eligible under the proposed state infrastructure grant program. Trucking industry officials warned that Iowa would become a “pass-through” state due to higher prices spurred by the new requirements at a time when renewable fuel sales in Iowa already rose despite the COVID-19 pandemic.

“We believe our customers will fill up outside of Iowa,” said Michael Whitney of Pilot/Flying J stations that are Iowa’s largest diesel retailers. “We believe that this policy harms consumer choice, will drive up prices and will force consumers to fill up outside of the state of Iowa. We think that this goes in the wrong direction. We think that right now the policy is working and so if it isn’t broke, we don’t understand why it needs to be fixed.”

However, representatives from corn, soybean and biorefinery sectors praised the bill as good for Iowa’s farms, economy and air quality. They said it promotes needed improvements that benefit consumers and enhances Iowa’s position as the nation’s leader in renewable fuels.

“There’s no boogeyman here,” said Matt Steinfeldt of the Iowa Farm Bureau Federation. “These are tried and true methods. They have worked in other states and they have moved the needle.”

Members of the Fuel Choice Coalition made up of fuel distributors, retailers, wholesalers and transportation groups estimated the proposed mandate — which begins by requiring E10 immediately and then later requires E15 or higher in 2025 at all but one fuel position — will cost businesses at least $1 billion in infrastructure upgrades to meet the requirements. They also contended there are provisions exempting farmers from some of the requirements.

Sen. Annette Sweeney, R-Alden, was among the GOP subcommittee members who voted to forward SF 549 to the full committee for consideration, but Sen. Pam Jochum, D-Dubuque, said she had too many unanswered questions to support the current language that contained “too little money” and “too little time” to do the needed upgrades.

Sen. Dan Dawson, R-Council Bluffs, chairman of the subcommittee and the Senate Ways and Means Committee, said he was advancing the measure because he did not want the tax-writing panel “to be greased to go to punch a bill through, nor was it designed to be a kill committee. What the future looks like, I cannot tell.”