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Landmark biofuels legislation comes into force in Iowa

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Iowa Governor Kim Reynolds 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.
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.
“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.
“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 senior 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.”