Boost for Higher Biodiesel Blends Included in Iowa Road Funding Bill

As part of Iowa’s new road funding bill, the Iowa Legislature recently passed a 3-cent per gallon differential tax rate for B11 and higher biodiesel blends.  This provision is expected to boost the availability and sales of cleaner-burning, locally-produced biodiesel. The bill was passed by a vote of 28 – 21 in the Iowa Senate, and a vote of 53 – 46 in the Iowa House.

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Under the legislation, diesel fuel will be taxed at a rate of 32.5 cents per gallon.  However, if diesel fuel is blended with 11 percent or more of biodiesel, the state excise tax is reduced to only 29.5 cents per gallon.  The 3-cent per gallon differential for B11 and higher blends will go into effect on July 1, 2015.

“The biodiesel community thanks the Iowa Legislature for its commitment to increasing the use and availability of higher biodiesel blends,” stated Iowa Renewable Fuels Association(IRFA) Policy Director Grant Menke.  “The 3-cent differential for blends containing at least 11 percent biodiesel will be a useful tool to build upon the progress we’ve made in cleaning up our air and supporting our economy through the use of homegrown Iowa biodiesel. The B11 differential further demonstrates Iowa’s policy leadership in expanding market access and consumer choice for renewable fuels.”

“With no end in sight on the federal policy uncertainty for biodiesel, I am grateful the Iowa Legislature took this opportunity to drive sales of higher biodiesel blends,” stated IRFA Vice President and Western Dubuque Biodiesel General Manager Tom Brooks.  “This 3-cent differential for B11 and higher blends represents another step forward for the economic, environmental and energy security benefits that come along with a strong Iowa biodiesel community.”

Biodiesel is made from a wide range of feedstocks, including soybean oil, animal fats, distillers corn oil, and used cooking oil. Iowa produced 227 million gallons of biodiesel in 2014, roughly 16 percent of U.S. biodiesel production for the year. According to the EPA, biodiesel reduces greenhouse gas emissions by 57 percent to 86 percent compared with petroleum diesel.

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