Iowa retailers marketing ethanol and biodiesel have a new source of financial aid to help them recover from business disruptions and lost demand caused by the COVID-19 pandemic. The Renewable Fuels Retail Recovery program offers relief to gas stations, truck stops, co-ops and other renewable fuel retailers who’ve suffered financially.
Iowa Secretary of Agriculture Mike Naig announced in early December that $7 million in funding from the Coronavirus Aid, Relief and Economic Security Act is being allocated for this new program. To date, 167 fuel retail locations in Iowa have been approved for the grants, with the money going to finance 101 ethanol projects and 137 biodiesel projects. Funding for the grants was allocated by Iowa Gov. Kim Reynolds from federal CARES Act money provided to the state.
The Iowa Department of Agriculture administers the Renewable Fuels Retail Recovery program. “I’m glad we are able to support so many renewable fuels retailers as they continue to battle demand disruption caused by the COVID-19 pandemic,” Naig said. “Renewable fuels are a win for everyone — consumers, retailers, farmers and rural communities. Restoring and expanding their availability is a great way to support our farmers and give all Iowans access to these more affordable, cleaner-burning fuels.”
Lower fuel demand
As Americans began spending more time at home to prevent the spread of COVID-19, fuel demand dropped drastically in 2020. More than 70 ethanol plants across the country were idled and 70 more cut production capacity, jeopardizing jobs in rural communities and further reducing corn and soybean prices. As of April 10, national ethanol production had dropped 44% compared to the same time in 2019.
Iowa leads the nation in renewable fuels production. Iowa is home to 43 ethanol refineries capable of producing over 4.5 billion gallons annually and 11 biodiesel facilities with capacity to produce nearly 400 million gallons annually. A complete list of Renewable Fuels Retail Recovery grant recipients is at iowaagriculture.gov/grants.
“We can have environmentally friendly and economically important ethanol and biodiesel sitting in tanks at production plants. But unless that renewable fuel makes its way into consumer’s vehicle fuel tanks, it’s a problem for the industry,” Naig said. “This program is all about helping renewable fuel retailers. They have costs to cover as they need to maintain equipment and improve their operation each year. They can apply for these grants to help do that.”
Access to higher blends
The goal is to make sure consumers have access to renewable fuels as motorists get back on the roads, but the emphasis is on providing higher blends of ethanol and biodiesel. The money provided to retailers by the Iowa Renewable Fuels Retail Recovery program is to be used to make sure the infrastructure (pumps, tanks, hoses) is connected to offering higher blends of ethanol and biodiesel.
“In providing this program money to retailers, we are asking that the equipment purchased and installed be used for E15 and higher blends of ethanol and for higher blends of biodiesel,” Naig said. “That’s part of the requirement.”
The Iowa Ag Department is also continuing to offer its other program — the annual Renewable Fuel Infrastructure Program — to retailers. This ongoing cost-share program is financed with a state appropriation to help biofuel retailers pay for blender pumps and tanks to handle higher blends.
“The new Renewable Fuels Retail Recovery program, funded by federal money, is focused on helping Iowa biofuel retailers get through this difficult time as a result of lower motor fuel demand due to the pandemic,” Naig said. “Both programs aim to help further strengthen Iowa’s renewable fuels industry by encouraging retailers to sell higher blends of ethanol and biodiesel.”