Iowa Governor Signs Landmark Biofuels Legislation into Law

JEFFERSON CITY, MO – Iowa Governor Kim Reynolds today signed into law some of the most comprehensive state biofuels legislation in the nation, a move applauded by Clean Fuels Alliance America. The legislation (HF2128) is expected to boost the sale of higher blends of biodiesel through an incentive-based approach.

Among other things, the bill increases a Biodiesel Production Tax Credit from 2 to 4 cents per gallon while updating the state’s Renewable Fuel Infrastructure Program to increase access to higher blends of biofuels. The legislation maintains a Biodiesel Fuel Tax Differential, but applies it to blends of 20% biodiesel (B20) rather than B11. It extends current fuel retailer tax credits for B11 and higher, while introducing new credits for higher blends like B20 (7 cpg) and even B30 (10 cpg) – a national first.

“We congratulate Iowa on this significant legislation, helping to strengthen the biofuels corridor throughout the Midwest,” Clean Fuels CEO Donnell Rehagen said. “Iowa joins the ranks of Illinois, Minnesota and others with some of the most forwarding-thinking legislation that values the production and use of biodiesel. Along with renewable diesel, it is our nation’s best option here-and-now to decarbonize the heavy-duty transportation and home heating oil sectors.” 
The governor herself originally proposed the legislation, dubbed the Governor’s Biofuel Access Bill, and made it a top priority for the legislative session. It was guided through the Iowa General Assembly by Sen. Dan Zumbach (R-Ryan), Sen. Waylon Brown (R-Osage) and Rep. Lee Hein (R-Monticello).

“I am proud that my biofuels legislation will lead to the single greatest expansion of biofuels in our state’s history, while providing our industry with consistency in the face of ever-changing federal policy,” Reynolds said.

Iowa produced an estimated 340 million gallons of biodiesel in 2021, making it the top biodiesel-producing state. A study by ABF Economics shows biodiesel supported 6,513 jobs in Iowa in 2021 and contributed $1.2 billion to the state’s Gross Domestic Product.

“We applaud House and Senate leaders, and Governor Reynolds, for making this bill a priority,” said Grant Kimberley, Iowa Biodiesel Board executive director and Iowa Soybean Association sr. director of market development. “In the face of market uncertainty, the expansion of our state’s producer credit offers a new cushion for biodiesel producers that is quite significant. Worldwide uncertainty and fuel price instability also impact consumers. A diverse fuel supply with more low-carbon fuel made in America benefits everyone from soybean farmers to the end consumer.”

Kimberley noted that previous legislation successfully encouraged blends of B11, but that the state has reached a plateau. He said the state is “…eager to move Iowa’s energy transformation onward and upward toward higher blends like B20 and B30.”

The bill will also make E15 ethanol more available statewide, with enhanced infrastructure cost-share opportunities for retailers.

The IBB, ISA and Iowa Renewable Fuels Association championed the effort on the ground, along with Farm Bureau, Iowa Corn and other ag and industry groups. Clean Fuels Alliance America provided valuable regulatory and technical assistance throughout, IBB and ISA said.

ABOUT CLEAN FUELS ALLIANCE AMERICA

Made from an increasingly diverse mix of resources such as recycled cooking oil, soybean oil, and animal fats, the clean fuels industry is a proven, integral part of America’s clean energy future. Clean Fuels Alliance America is the U.S. trade association representing the entire biodiesel, renewable diesel and sustainable aviation fuel supply chain, including producers, feedstock suppliers and fuel distributors. Clean Fuels receives funding from a broad mix of private companies and associations, including the United Soybean Board and state checkoff organizations.