Increased motor fuel tax contains biodiesel incentive, shoring up support from state
DES MOINES - The Iowa Biodiesel Board today praised the signing of a bill that will raise the state's fuel tax while providing a small incentive for biodiesel. A provision of the bill, signed by Gov. Terry Branstad, gives a partial exemption to the new tax for diesel blended with at least 11 percent biodiesel (B11).
The increase of 10 cents a gallon for both diesel and gasoline will help repair and improve Iowa's roads and bridges. Biodiesel blends of B11 and above will receive a 3-cent exemption for 5 years.
"We commend our state legislators and Governor Branstad for once again demonstrating leadership in fostering Iowa-grown energy," said Grant Kimberley, executive director of IBB. "Such thoughtful energy policy will stimulate biodiesel production and usage, generating economic activity and benefiting the state."
Kimberley added that IBB members are hopeful the 5 year sunset will be extended to 10 years down the road.
Iowa biodiesel plants produced 227 million gallons in 2014, down slightly from the 2013 record of 230 million gallons. Yet the state's 10 operating biodiesel plants have an annual capacity of more than 300 million gallons, showing a lost economic opportunity for Iowa.
New research shows in 2014, the increase in economic activity generated by biodiesel production supported more than 4,300 full-time equivalent jobs. It contributed more than $471 million to the state's Gross Domestic Product. Other research shows biodiesel adds 74 cents a bushel to the price of soybeans, lowers soybean meal feed costs for livestock producers by $25 - $40 a ton and also adds value to livestock production.
The Iowa Soybean Association also supported the bill.
Biodiesel is an advanced biofuel made from agricultural byproducts and co-products, including soybean oil. The Iowa Biodiesel Board is a state trade association representing the biodiesel industry.
