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Iowa 'gas tax' proposal would spur growth of biodiesel use

In the US, the Iowa Biodiesel Board (IBB) has registered its support of legislation that would raise the state's fuel tax. A provision of the legislation would give a partial exemption to the new tax for diesel blended with at least 11% biodiesel (B11).

The proposed tax increase (HF 351 and SF 257) is $0.10 a gallon for both diesel and petrol as part of a plan to address Iowa's infrastructure needs. A provision provides a $0.03 exemption for biodiesel blends of B11 and above for five years.

The IBB, whose membership includes biodiesel producers, soybean farmers and other stakeholders, called the biodiesel nod a bold leadership move.

'This is smart policy on the part of our state leaders that will benefit the entire state, and we thank them,' says Grant Kimberley, executive director of IBB. 'Doing everything we can to encourage biodiesel production and usage generates significant economic activity for Iowa. Every gallon of biodiesel we use at home is one less equivalent gallon from the Middle East, and keeps money in our state.'

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.

Moreover, encouraging the blending of biodiesel into the state's diesel supply can help Iowa meet its own renewable fuel goals, Kimberley said. According to a recent Iowa Department of Revenue report, ' [....] the study forecasts that approximately 13% of Iowa's petroleum will be replaced by biofuels in 2020, falling short of the legislative goal of 25%.'

Currently in Iowa, petrol is taxed at 21 cents per gallon with ethanol blends containing at least 10% taxed at only $0.19 per gallon. Diesel is taxed at over $0.22 per gallon with no incentive for biodiesel. The ethanol differential would continue.

'Unfortunately, federal legislation has proven to be unreliable for biodiesel,' Kimberly adds. 'The states that create the most supportive environment for biodiesel will be the most successful in reaping the industry's economic benefits.'

 

SOURCE: Iowa Biodiesel Board





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