Iowa to receive USDA funding to help expand sale of ethanol

Source: By Christopher Doering, Des Moines Register • Posted: Friday, September 11, 2015

Iowa, the country’s largest ethanol producer, will be among 21 states sharing a total $100 million from the Agriculture Department to expand use of higher blends of the renewable fuel.

The USDA said the grant, to be matched by states and private investors, will help expand the renewable fuels infrastructure to allow distribution of higher blends of ethanol at service stations and convenience stores. The department first announced the program in May. Today’s announcement revealed which states will receive the grants and how many pumps could be installed.

Agriculture Secretary Tom Vilsack estimated the $200 million federal-state investment will finance nearly 5,000 fuel pumps — including nearly 200 in Iowa — for selling higher blends at more than 1,400 fueling stations across the country.

“We’ll continue to look for ways in which we can provide help and assistance for this industry, particularly at this point in time when crop prices are lower and obviously revenue sources and demand are important,” Vilsack told reporters. “When consumers have access… they purchase higher blends.”

Iowa said it has requested $5 million in federal grant money. The state plans to use it to help finance its “Fueling our Future 100” initiative, which aims to add 100 new fueling sites with 187 blender pumps over 18 months. The new fueling locations will help lower costs for consumers, add value to agricultural products, enhance the country’s energy security and improve air quality, government officials said.

Iowa produced a record 3.9 billion gallons of ethanol in 2014, about 27 percent of the country’s production. The state depends heavily on the fuel to create jobs, boost commodities and pump money into rural economies.

“This program will give Iowans more choices at the pump and greater access to clean-burning, home-grown renewable fuels,” said Iowa Agriculture Secretary Bill Northey. “It is important we build the infrastructure that will allow Iowans to access and use the fuels we produce right here in our state.”

In May, the Environmental Protection Agency proposed lowering how much ethanol must be blended into the country’s gasoline supply through 2016, saying prior forecasts put in place by Congress in the Renewable Fuel Standard in 2007 were too aggressive and are no longer attainable.

The EPA said it had legal authority to lower the congressional standard, citing slower-than-expected growth in cellulosic ethanol, lower gasoline consumption than had been predicted, and spotty acceptance of higher-ethanol blends such as E15 and E85.

Most gasoline today is E10, meaning it contains 10 percent ethanol and 90 percent gasoline.

Ethanol groups have pushed for wider use of higher blends, and blamed the oil industry for blocking growth.

“It is unfortunate that the obligated parties refuse to follow the law and blend increasing amounts of renewable fuel, but the steps by the administration and Secretary Vilsack will ensure higher ethanol blends, such as E15, penetrate the marketplace, and provide consumers with a choice and savings they deserve,” said Tom Buis, chief executive of Growth Energy.

The oil industry has warned that increasing the required amount of ethanol in gasoline to 15 percent or more would damage car, motorcycle and boat engines, and that consumers have not shown demand for these blends.

The American Petroleum Institute, a trade group representing more than 600 oil and natural gas companies, has called the Renewable Fuel Standard outdated and aggressively campaigned for its overhaul or repeal. The trade group said this week that complying with the blending requirements in the Renewable Fuel Standard “could cause severe harm to consumers and the U.S. economy.”

“Current mandates try to force more ethanol into gasoline than is safe for the majority of cars on the road,” said Bob Greco, downstream director with the API. “While API continues to press for full repeal or significant reform of the RFS, we understand that will take time.”