Iowa House Appropriations Committee Passes Bill that Undermines Biofuels Tax Credits Vital to Rural Recovery

Contact: Cassidy Riley

JOHNSTON, IOWA – Today on a party line vote of 14 to 10 (one not voting), Republicans on the Iowa House Appropriations Committee passed a bill that undermines several biofuels tax credits vital to pulling rural Iowa out of its current downturn.  The credits incented consumers to purchase higher blends of ethanol and biodiesel, like E15, E85 and B11.

“IRFA is very concerned by today’s vote,” said Iowa Renewable Fuels Association Executive Director Monte Shaw.  “The measure moved forward today not only cuts the value of the credits, but even worse, does so through a complicated mechanism that severely cripples their usefulness.  If fuel retailers don’t know what the tax credit is at the time they sell the fuel, how can they pass along a price reduction to the consumer?  This bill undercuts the entire purpose of these successful credits. IRFA will be asking the House Ways and Means Committee, the full House, the Senate and the Governor to reconsider this misguided effort.”

The biofuels credits impacted by the bill include tax credits claimed by fuel retailers when they sell E15, E85 and blends of biodiesel like B11.  Under the bill, the amount of the credits would be capped on an annual, statewide basis.  The “per gallon” value of the credits would only be determined after annual sales figures were compiled, thereby precluding retailers from knowing their value at the time of the actual fuel purchase. If the credit can’t be passed on to consumers, then additional sales won’t be incented.  Without increased sales, commodity prices and the rural economy will continue to struggle, which is sadly ironic given that lower than expected tax revenues from rural Iowa sparked the current review of tax credits.

“The biofuels tax credits were thoroughly reviewed and extended by the Legislature just last year,” said Shaw. “Based on the certainty provided by the recent, multi-year extension of the biofuel tax credits, today hundreds of millions of private dollars are being invested to expand Iowa’s ethanol and biodiesel production capability. Similarly, tens of millions is being invested by fuel retailers to expand consumer access to higher blends of ethanol and biodiesel as we speak.  This private investment will increase ethanol and biodiesel production in Iowa, boost ag commodity prices, and lower consumer fuel prices.  It is not good public policy to pull the rug out from under these critical investments in rural Iowa’s future.”

Shaw concluded, “It is troubling to see an effort to reduce biofuels use when farmers are struggling.  We would take no issue with the Legislature conducting a thoughtful, case-by-case review of Iowa’s various tax credits, especially if it were done in the context of overall tax reform.  Today’s action was the mirror opposite.”

The Iowa Renewable Fuels Association represents the state’s liquid renewable fuels industry and works to foster its growth. Iowa is the nation’s leader in renewable fuels production with 43 ethanol refineries capable of producing 4 billion gallons annually – including nearly 55 million gallons of annual cellulosic ethanol production capacity – and 12 biodiesel facilities with the capacity to produce over 350 million gallons annually. For more information, visit the Iowa Renewable Fuels Association website at: