Iowa Legislature considers ethanol bill

Source: By Randy Paulson, • Posted: Sunday, March 7, 2021

REGIONAL—Kelly Nieuwenhuis thinks it’s time for Iowa to increase the amount of ethanol it blends into the state’s fuel supply.

Nieuwenhuis, board president of the Siouxland Energy Cooperative ethanol plant in Sioux Center, spoke in favor of a biofuels standards bill Gov. Kim Reynolds proposed to the Iowa Legislature earlier this month.

House Study Bill 185 would set the state’s ethanol standard at 10 percent and limit gas stations to one pump for ethanol-free gas. It also would set a minimum of 11 percent blend for biodiesels for April 15-Sept. 30 and 5 percent Oct. 1-April 14.

Starting in 2024, the standard for biodiesels would jump to 20 percent during the summer months. The bill also would seek to eventually raise the ethanol standard to 15 percent in 2025.

“This isn’t anything out of the ordinary. When Iowa is No. 1 in biodiesel and ethanol production, it’s just time we do this,” Nieuwenhuis said.

He referenced a study prepared for the Iowa Renewable Fuels Association by ABF Economics estimated the bill would increase ethanol demand and production by 117 million gallons 2022-26. Nieuwenhuis said that would equate to about 40 million bushels of corn.

Nieuwenhuis also said the bill could save consumers 30-40 cents per gallon and boost the state’s gross domestic product by about $457 million.

Besides setting the minimum renewable standards, the bill also would require motor fuel sites to update their equipment to be able to store ethanol of 15 percent blends or higher and biodiesels of 20 percent or higher. It would offer tax credits to fuel providers to offer ethanol and biodiesel options with more than the minimum blends.

Additionally, it would allocate $5 million from the state general fund beginning July 1 to be put toward the Iowa Renewable Fuels Infrastructure Fund Program. That amount — up from $3 million in previous years — would be allocated to the fund each future fiscal year.

From the infrastructure fund, $1.25 million would be available each fiscal year through June 30, 2024, to help finance infrastructure changes accommodating the new ethanol and biodiesel minimums.

Nieuwenhuis, who also sits on the board of the infrastructure fund program, said the program has granted more than $38 million in assistance during the past 12 years to retailers wanting to update their fuel infrastructure to accommodate higher blends of ethanol and biodiesel.

“It would cover for a retailer up to 70 percent of the cost of a project or $50,000 for each — biofuels and biodiesel — max,” he said. “If you were putting both in, you could get up to $100,000 through this grant program. And there’s been overwhelming requests for that grant funding.”

Nieuwenhuis called the bill a win-win for consumers and farmers. There is, however, one recently formed group in the state that opposes the bill: The Fuel Choice Coalition.

The coalition describes itself as “a unified voice of Iowa fuel distributors, retailers, wholesalers and transportation groups,” according to a statement it issued Feb. 11 in opposition to the governor’s proposed legislation.

The group’s main contentions are a statewide mandate would limit consumer choice and competition and increase costs for retailers when it comes to upgrading infrastructure. It argues the total cost to fully upgrade retailers’ infrastructure would be about $1 billion, much more than the money the bill would allocate for infrastructure, and that cost then would be pushed onto consumers.

The coalition members include:

  • A.B.A.T.E. of Iowa (A Brotherhood Aimed Towards Education).
  • American Council of Engineering Companies.
  • Americans for Prosperity — Iowa.
  • Casey’s.
  • FUELIowa.
  • Iowa Motor Truck Association.
  • Iowa Motorcycle Dealers Association.
  • Kum & Go.
  • Kwik Star.
  • Truckstops of Iowa.

Ronald Langston, president and chief executive officer of FUELIowa — a group that represents the state’s fuel industry — said in the statement FUELIowa believes in the importance of biofuels for the economy but argued Reynolds’ bill takes the wrong approach.

“Instead of appropriately funding our fuel infrastructure to sell greater amounts of biofuels, the proposed government mandate under this legislation would be dictating what Iowans can and can’t use at the pump — leading to higher fuel costs, fewer consumer choices at the pump and would disproportionately impact Iowa’s rural fuel distribution network,” Langston said.

“We urge the Legislature to back away immediately from supporting mandates and instead support the infrastructure that will actually increase the usage of biofuels.”

Nieuwenhuis agreed that “nobody likes mandates’’ but pointed out consumers still would have fuel choice since the bill allows gas stations to carry one pump of nonethanol gas. He also noted a majority of vehicles are able to use ethanol and that 10 percent blends already are widely available across the country.

“It’s frustrating to me to hear any fuel organization in the state of Iowa not 100 percent support the biofuels industry and help our state grow as far as our economy is concerned,” Nieuwenhuis said.

Iowa House and Senate subcommittees recommended the bill for passage Feb. 17. The next step for it would be consideration in committee meetings before coming to a vote before the full chambers, which Nieuwenhuis said could take a few more weeks.