DES MOINES, Iowa — Iowa Gov. Tom Vilsack last Tuesday signed two key energy policy bills he said would promote and expand E85 use across the state, as well as boost ethanol production and consumption as Iowa prepares to become a world leader in renewable fuels.

“E85 gasoline is an important part of Iowa’s economy,” Vilsack said at a morning news conference in the Iowa Statehouse rotunda in Des Moines about the new law, which includes bills designed to advance wind, solar and new uses for soy-based products.

“With our continuing progress, Iowa is set to become the leader in research, development and distribution of all forms of renewable energy,” he said.

Currently, Iowa is the nation’s leading ethanol producer with 25 refineries producing over 1.5 billion gallons annually, and four ethanol refineries and two major expansions under construction with a combined annual capacity of 425 million gallons.

Iowa also produces nearly 11 billion pounds of dried distillers grain and spends nearly $2.5 billion annually, creating almost 5,000 jobs. In addition, Iowa is second in the nation in biodiesel production, having six refineries with a combined annual capacity of more than 100 million gallons either in operation or under construction.

Under House File 2754, or the Iowa Renewable Fuels Standard (RFS), a 6.5 cent base tax credit would be directly tied to the retailer’s ability to meet the RFS, which includes a 25-cent E85 tax credit, and a 3-cent tax credit for biodiesel. The RFS schedule starts with 10 percent in 2009, which would jump to 25 percent by 2020.

Under House File 2759, a 50 percent cost-share assistance of up to $50,000 per project would be appropriated to assist retailers in upgrading to E85 fuel.

The bill includes provisions that would create a $12 million infrastructure grant assistance program for biodiesel and E85, and provides support for increased state monitoring of fuel quality. In turn, state farmers would benefit from the steady growth of demand for soybeans to fuel biodiesel production, according to the Iowa Soybean Assoc. (ISA).

As a result of the bill, the ISA added, Iowa soybean farmers could expect average farm-level prices to increase an average of 9.5 cents per bushel over the next five years for an increase of $61 million in soybean cash receipts.

Craig Lang, president of the Iowa Farm Bureau Federation (IFBF) and a Brooklyn, Iowa dairy farmer, said ethanol plants not only raise the price that nearby corn farmers receive by 5-10 cents per bushel, they are also good for the state’s livestock industry, since local cattle eat the coproduct produced from ethanol.

“This aggressive, realistic RFS law will benefit all Iowa consumers and solidifies Iowa’s national leadership role in renewable fuels,” he said. “With support from ag and industry groups, and the dedication of Farm Bureau members statewide, Iowa’s new energy industry will benefit our children for generations to come.”

The Iowa Corn Growers Assoc. (ICGA) said it has been working for nearly 30 years on legislation to help stimulate Iowa’s ethanol market.

Keith Sexton, ICGA president and Rockwell City, Iowa corn grower, said the bills would offer “great benefits for Iowa growers and consumers at the pump” by providing an aggressive standard with tax incentives, infrastructure funds and accountability.

“As a grassroots membership organization, ICGA members challenged us to pass a law to aggressively increase the use of renewable fuels,” he said. “This legislation would not have happened if those members had not directed our organization to push forward on this issue.”

Now that the monies from the bills are readily available, Iowa House Speaker Christopher Rants, R-Sioux City, said Iowans will likely say, “‘OK, we would prefer to be one of the first in rather than one of the last in.’”

“I think we’ll see (an) immediate impact,” he said.

In fact, with the passage of HR 2754 and HR 2759, Iowa is on the path to securing its position as the nation’s number-one renewable fuels-consuming state, said Monte Shaw, executive president of the Iowa Renewable Fuels Assoc. (IRFA).

“Iowa is already the ethanol and biodiesel production leader,” he said. “Now we have the most aggressive renewable fuels usage policy of any state as well. (The) IRFA has already been contacted by several states who want to follow in Iowa’s footsteps.”

Vilsack also signed Senate Files 2402, a bill relating to state tax benefits for the use of soy-based transformer fluid by electric utilities and including applicability date provisions; Senate Files 2399, a bill relating to the renewable energy tax credit and the wind energy production tax credit; and Senate File 2398, a bill providing a sales tax exemption for purchases of solar energy equipment.

Nearly a week before Vilsack signed the bills, Frontier Ethanol Plant in rural Gowrie, Iowa, marked its grand opening by becoming the 100th ethanol plant to open in the United States.

This farm news was published in the June 7, 2006 issue of Farm World, serving Indiana, Ohio, Illinois, Kentucky, Michigan and Tennessee.