New ethanol law could spark regional trend, biofuels exec says

Source: BY JARED STRONG, Iowa Capital Dispatch • Posted: Wednesday, May 18, 2022

A new state law that requires most of Iowa’s fuel stations to sell a gasoline blend with 15% ethanol will rapidly expand the fuel’s availability, but the law’s long-term effects might be more potent, according to the executive director of the Iowa Renewable Fuels Association.

Gov. Kim Reynolds signed House File 2128, aimed at boosting the use of corn-based ethanol to fuel the state’s vehicles, into law on Tuesday. Her action capped a protracted and hard-fought legislative initiative that began last year.

The 2021 proposal would have required nearly all gasoline pumps to dispense fuels blended with ethanol — similar to Minnesota’s requirements — but it failed to generate enough support for passage. This year’s compromise bill requires at least half of gasoline pumps to dispense E15 but has exceptions for smaller fueling stations and others with outdated tanks that would be too expensive to replace. It underwent several revisions this session before the Iowa House and Senate each approved it in late April.

The new law is also expected to boost the sales of diesel blends that contain 20% biodiesel, which is often made with soybean oil.

“This is an exciting day for Iowa as we sign truly a landmark biofuels bill into law,” Reynolds said Tuesday on a farm near Prairie City, east of Des Moines.

Gov. Kim Reynolds signs biofuels legislation May 17, 2022, at a farm near Prairie City. (Photo by Kathie Obradovich/Iowa Capital Dispatch)

Monte Shaw, the Iowa Renewable Fuels Association’s executive director, predicts that E15 will be available at 1,000 more stations in 2026, when the ethanol requirement goes into effect. That would more than quadruple the current total, according to state data.

Shaw estimates the new requirements will lead to an increased demand for ethanol of about 60 million gallons per year. That’s not a huge increase compared to the state’s production capacity of more than 4 billion gallons per year, but the new law sets the stage for future expansion on two fronts, Shaw said.

“I honestly believe that we’ll look back on this and say that this was the most important piece of biofuels legislation Iowa has ever enacted,” he said.

First, the law also requires new fuel station infrastructure — the tanks, fuel lines and pumps — to be compatible with higher blends of ethanol, which can degrade certain plastics and rubbers. That will help facilitate future increases in blend requirements, perhaps with gasoline blends of 30% or 40% ethanol, Shaw said.

Incompatible equipment was a primary roadblock for the current legislation, with some small-town fuel stations warning that earlier drafts of the bill had requirements that would have put them out of business. The final version exempted gas stations that sell fewer than 300,000 gallons per year.

“We really wanted to be conscientious of the small retailers in rural Iowa,” Reynolds told reporters after the bill-signing event. “I was not going to be a governor that shut down a gas station in rural Iowa.”

Second, Shaw said Iowa will be an example to other states that could adopt similar ethanol requirements.

“Iowa is the tip of the spear,” he said. “We can show that it works in Iowa. We can show that consumers will respond to it in Iowa. But then we want to export these policies. Let’s face it, there’s a lot of states that burn more fuel than Iowa.”

He specifically mentioned Nebraska and Minnesota to potentially consider higher ethanol blend requirements.

But standing in the way of further E15 expansion are federal rules that prohibit the summer sales of certain E15 blends because federal regulators have considered them more likely to evaporate in warmer temperatures and pollute the air. The Biden administration lifted that restriction — which affects about two-thirds of the country — for this summer to help reduce fuel prices.

Advocates for ethanol say the fuel’s reduced tailpipe emissions compared with gasoline more than compensate for the evaporation pollution. But a recent study found that ethanol is worse for the environment than gasoline when emissions from growing corn and processing it into ethanol are taken into account.

Reynolds and other Midwestern governors have lobbied federal lawmakers to allow year-round E15 sales permanently. Shaw said he was confident those efforts will be successful, but oil companies have long opposed such a move. Further, the Biden administration has put great emphasis on switching to electric vehicles.

The demand for ethanol has large implications for Iowa farmers. About half of their corn is used to produce the fuel.

“Ethanol means a lot to me because, as a young farmer, I didn’t grow up on a farm where we farmed full time,” said Will Cannon, a Jasper County farmer who introduced Reynolds on Tuesday. “It’s taken a lot of hard work and persistence to be able to farm full time, but it’s also taken markets and opportunities for good prices, and ethanol is one of those markets that helps to get good prices so that someone like me has an opportunity to farm.”

Gordon Wassenaar, owner of the farm outside Prairie City where the bill was signed, quipped that “oil is too valuable to blow it out your tailpipe.”

He said oil can be used for many things besides fuel, and once it’s burned, it’s gone.

“And here with ethanol, you can turn around and grow another crop of corn,” Wassenaar said.

— Editor Kathie Obradovich contributed to this article

|