New version of ethanol mandate likely to come before Iowa Legislature

Source: By Erin Murphy, Gazette Des Moines Bureau • Posted: Tuesday, January 4, 2022

Under earlier plan, sales of ethanol-free fuel restricted

DES MOINES — As corn did with finding a second life as automobile fuel, a proposed renewable fuel mandate in Iowa likely will get a second chance during the upcoming legislative session.

In 2021, Gov. Kim Reynolds proposed enacting new state requirement that almost all gasoline sold in the state contain at least 10 percent corn-based ethanol, and then increasing that to 15 percent by 2025. Under the proposal, only one pump per station could sell ethanol-free gasoline.

That proposal never made it into state law. It was supported by renewable fuels groups, but opposed by retailers and consumer choice advocates. When those interests could not agree on a compromise, state lawmakers bailed on the legislation.

The debate figures to renew sometime after the 2022 session of the Iowa Legislature reconvenes on Monday. Those interested parties have been discussing the proposal in the months since the last session finished, and legislative leaders said they expect to again discuss the topic again this year.

The proposal may look different this time around, although elected and industry officials said the details of the proposal cannot yet be confirmed.

“We all know that ethanol is really important to this state and it’s an economic driver in our state. So I would expect that bill to come back, and we’ll continue to work on it through the interim,” said Jack Whitver, the Republican Senate majority leader from Ankeny.

“I know a lot of the different interested parties, whether it’s the ethanol groups or biofuel groups or the fuel retailers, they’ve been working together, which is, in my opinion, how it should work,” Whitver said. “Our fuel retailers, they are the ones that distribute those biofuels all over the state. So to have buy-in from everybody, I think, is the best policy going forward.”

Pat Grassley, the Republican House speaker from New Hartford, said he supports the idea of some sort of state renewable fuel mandate not just because it would support Iowa farmers and agribusiness, but also because he feels the federal government under both Republican and Democratic administrations has wavered on its commitment to the federal Renewable Fuel Standard.

The federal standard requires that a certain number of gallons of renewable fuels be blended into the nation’s fuel supply. But that federal requirement has been weakened over time by, among other actions, delayed publishing of volume requirements and waivers of complying with the law granted to oil companies.

“If as a state we’re going to harp on President (Donald) Trump and President (Joe) Biden and their administrations, and we can’t pass something as a state, I don’t think that sends the right message,” Grassley said. “So I’m hopeful that the groups get this worked out. It sounds like they’re getting closer.”

Reynolds declined to be interviewed for this article by The Gazette Des Moines Bureau.

Monte Shaw, executive director of the Iowa Renewable Fuels Association, said that since Iowa is a national leader in ethanol and biofuel production, the state should also be a leader in renewable fuels policies. He noted the pressures placed on the renewable fuels industry by vehicles that continue to become more fuel efficient, an increasing number of electric vehicles on the roads and drivers driving less.

Shaw said the association’s board has discussed last year’s proposal and brainstormed potential compromises to address concerns raised by others, and shared those ideas with Reynolds, legislative leaders and retailers. But Shaw also said the group wants to see legislation that would “move the needle” on Iowa ethanol and biofuel production.

“IRFA is not interested in passing a window-dressing bill,” Shaw said in an emailed response. “Whether the governor and Legislature pick up where they left off in 2021 or whether they narrow the focus of the bill to the key issue of giving consumers across Iowa access to higher ethanol and biodiesel blends, there is going to be a big push to pass national-leading biofuels policy that will truly impact demand and boost Iowa’s ag economy.”

One of retailers’ primary concerns with the original proposal was the potential cost for equipment upgrades.

“Work remains to find an approach that does not impose significant costs on small fuel retailers, primarily in rural and low-income areas of our state, by mandating equipment upgrades on a short time frame with little help from the state. If these stores are forced out of business as a result, we will see communities lose the only place in town to buy and receive fuel and essential services,” Ron Langston, president and chief executive officer of FUELIowa, which represents Iowa’s fuel industry, said in an emailed statement. “We will remain engaged and are committed to finding a solution that is beneficial to both Iowa’s biofuel industry and the fuel retailers that sell biofuels to Iowa consumers.”

Democratic leaders in the Legislature said they in theory would support legislation that would bolster renewable fuels in Iowa, but withheld a pledge of support until a new proposal is introduced.

“I think generally speaking, Senate Democrats and House Democrats have been very supportive of renewable fuels in this state and see it as an important part of a renewable energy future,” said Zach Wahls, the Democratic Senate minority leader from Coralville. “But I think it’s just (that) the devil’s in the details.”