DES MOINES — Grant Kimberley spent more time saying thanks than he did asking for favors during his visit to the state capitol with other leaders of Iowa’s biodiesel industry last week.
Kimberley, a farmer who also serves as head of the Iowa Biodiesel Board, was on hand for the organization’s Day on the Hill event. He said the state has done a good job of supporting the biodiesel industry. The bigger issues, he said, are on the federal side of things.
And the biggest of those federal issues is the tax credit for biodiesel. That incentive for producers has been stuck on retroactive auto-pilot in recent years, with Congress voting at an ever-later rate to renew it retroactively as part of various tax extender packages. Right now it has not been approved for 2018, much less this year.
While there is no set in stone date for a renewal, Kimberley says it would be extremely helpful to get it done for last year before the end of the tax season on April 15.
Sen. Charles Grassley, R-Iowa, and Sen. Ron Wyden, D-Wash., have introduced the extension in the Senate. There is bipartisan support in the House, but there has been discussion on the House side about whether to include the idea as part of a broader tax bill or to introduce it as stand-alone legislation.
What Kimberley and others in the industry would like to see is a seven-year extension so that ethanol producers could plan ahead with some certainty, but any kind of extension would be welcome, he said.
Meanwhile, any legislative proposals in Iowa would be limited to passage of necessary appropriations for existing programs. Iowa has four different programs which address various aspects of biodiesel production and usage in the state:
- There is a biodiesel retailer credit. Retailers carrying 5 percent biodiesel mixes (B5) can claim a 3.5 cent per gallon incentive. Retailers carrying B11 or higher mixes can claim a 5.5 cent per gallon incentive.
- The B11 fuel tax differential gives retailers a chance to pay 3 cents less per gallon in state fuel taxes on B11 or higher blends.
- The biodiesel production credit is aimed at biodiesel producers, offering a 2 cent per gallon production credit on the first 25 million gallons of production.
- A fully funded renewable fuels infrastructure program includes $3 million annually divided between ethanol and biodiesel to help upgrade equipment, such as to install storage tanks or blender pumps. That is a cost-share program paying up to 50 percent or a maximum of $100,000.
The infrastructure program is operated by the state department of agriculture, and about $500,000 of that $3 million fund is for management of the program, as well as testing and other related costs.
“All these programs work together,” Kimberley said. “They have helped make Iowa the No. 1 producer of biodiesel.”
The state has the capacity to produce about 400 million gallons per year, he said, and last year’s production was about 365 million gallons. Farmers have benefited because biodiesel is estimated to add about 63 cents to the price of soybeans, and because the increased demand is for soy oil, it has helped livestock producers who buy the soy meal byproduct.
But Kimberley said the Iowa fuel tax differential program does sunset on June 30, 2020, so the industry would like to see that extended. It also wants to make sure lawmakers continue to provide appropriations for the infrastructure program, an item that is included in the governor’s budget request for the next fiscal year.
Industry leaders are also keeping an eye on other energy-related items, such as proposed legislation regarding net metering for solar panels, because some farmers and biodiesel producers use solar power as a way of saving money and of making their product more attractive to out-of-state markets as an environmentally friendly product. For example, biodiesel producers who want to sell into the California market may benefit from using solar power at their facilities.