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Iowa’s biofuel tax credits are important

Published: Thursday, April 20, 2017 10:44 a.m. CDT

From Dawn Carlson

President and Chief Executive Officer of Petroleum Marketers and Convenience Stores of Iowa. Carlson serves on the executive committee of both the Iowa Biodiesel Board and the Petroleum Marketers Association of America.  

As Earth Day approaches, April 22, Iowa’s petroleum marketers take pride in the advancement of cleaner burning fuels like biodiesel and ethanol. We know all too well that the petroleum industry is generally not known for its greenness, but when it comes to biofuels here in Iowa, we excel. 

Unfortunately, our state legislature is considering legislation that would take us backwards. 

Fuel retailers across the state have made substantial investments in offering and promoting the sale of biofuels. Department of Revenue data shows from 2010 to 2016:

• The number of retailers offering biodiesel jumped from 239 to 514.

• The biodiesel (B100) gallons sold increased from 7.4 million gallons to 44.8 million gallons.

• The state’s higher-blend ethanol sales increased 30 percent.

This progress is at risk. The House Appropriations Committee has passed HSB 187, a bill including an amendment that caps successful retailer biofuel tax credits in a way that would render them utterly unworkable. Under the bill, the per-gallon value of the credits would only be determined after annual sales figures were calculated. Keeping fuel retailers in the dark as to the value of the credit at the time of the sale is simply infeasible. This would take us backwards in making biofuels available to consumers at a competitive price.  

We appreciate the legislature’s efforts to review Iowa’s tax credits while addressing a difficult budget situation. But Iowa’s biofuel tax credits were thoroughly reviewed, updated and extended just last year. Any significant changes to them now would make biofuels less competitive in the marketplace, and undermine expansion investments already begun based on these legislative promises.

Legislative leaders have said one of the factors in lethargic state revenue is the agricultural economy, and the impact of lower commodity prices. Biofuels tax provisions play an important role in mitigating this, and can help drive Iowa’s rural economy to prosperity. Farmers, biofuel producers, retailers, and Iowa consumers all directly benefit from Iowa’s biofuel tax credits.

In 2016, Iowa produced a record 4.1 billion gallons of ethanol, and a record 305 million gallons of biodiesel. An ABF Economics study shows the increase in economic activity generated by ethanol and biodiesel supported about 42,400 full-time equivalent jobs, generated over $4.7 billion of Iowa’s GDP and more than $2.3 billion of household income. 

Our state shouldn’t take this thriving industry for granted. Continued instability and uncertainty at the federal level with the Renewable Fuel Standard could have grave impact. The federal tax incentives for biodiesel and cellulosic ethanol have also lapsed. Iowa needs to maintain its support now more than ever to stay competitive. The states with the most proactive, comprehensive policies will reap the greatest economic benefits of biodiesel and ethanol. 

Petroleum distributors in Iowa are proud to be a part of this movement and to promote homegrown Iowa biofuels. On Earth Day, let’s remember that sometimes what’s better for the environment is also better for the economy – if we are wise enough to let biofuels take us down that road. 

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