Gov. Kim Reynolds says she will seek legislation that sets a renewable fuel mandate in Iowa, requiring that motor fuel sold in the state contains at least 10% ethanol and 11% biodiesel.
“I am excited to advance policies that will grow the biofuels and ag industry,” Reynolds said during the Iowa Renewable Fuels Summit on Tuesday. “As a leader in biofuels production, that means making biofuels the clear choice for Iowa drivers by implementing an E10 and B11 fuel standard at Iowa pumps.”
Iowa produces the most ethanol and biodiesel in the nation. About half of Iowa’s corn crop, the largest in the U.S., is used to make ethanol. Iowa is the second-largest grower of soybeans, which are used in biodiesel production.
Reynolds told the virtual summit she also would require any newly constructed and upgraded retail fuel stations to install pumps compatible with higher-blend fuels. The governor said she will propose that the state make $10 million available annually for fuel retailers to upgrade pumps, underground tanks and other infrastructure to offer the higher blends.
Already, the state provides $3 million annually for such improvements to retailers, who share the costs.
Reynolds’ proposal is similar to a federal renewable fuel standard that requires oil refiners to blend ethanol and biodiesel into the nation’s fuel supply each year. The U.S. Environmental Protection Agency sets the blending requirements.
Most gasoline sold in the U.S. contains at least 10% ethanol, federal data shows.
Reynolds’ legislation hasn’t been introduced, but if it is approved, Iowa would follow Missouri and other neighboring states in setting a renewable fuel standard that requires a certain amount of biodiesel and ethanol to be included in its fuel.
Monte Shaw, the Iowa Renewable Fuels Association’s executive director, said the state legislation likely would allow exemptions. Missouri, for example, allows marinas to sell gasoline without renewable fuels for boat engines.
Shaw said the proposal would provide a small increase in the amount of ethanol Iowa plants sell, at about 15 million to 20 million gallons. But the legislation could significantly improve demand for biodiesel.
Shaw said he expects the mandate, combined with proposed increased funding for higher-blending infrastructure, would make it easier for Iowans to buy higher blends of ethanol, such as gasoline with 15% ethanol, called E15.
The renewable fuels association plans to ask Iowa lawmakers to provide $15 million annually over five years, for a total of $75 million, to help upgrade pumps and other retail infrastructure to support higher renewable fuel blends.
“I think it would make for meaningful growth of ethanol use in Iowa,” Shaw said.
Former Iowa Gov. Terry Branstad, who served as the Trump administration’s ambassador to China, said he he supports Reynolds’ call for a renewable fuel standard.
“Hopefully, we’ll see other states do something similar,” said Branstad, who participated in a panel at the conference that discussed renewable fuel exports.
Josh Pedrick, managing editor of S&P Global Platts’ American Biofuels, said his group’s analysts see gasoline and ethanol demand rebounding once the pandemic subsides.
But Pedrick, who participated in a panel discussion looking at markets in a “post-COVID” world, added: “The margins that producers face now are challenging, and they’ll remain challenging in the coming months.”
Pedrick said ethanol producers face challenges getting some consumers to pull the pump handle for E15.
“What we’ve seen is in the Midwest, close to ethanol and biofuel production there, are a lot of consumers who want to support their local industry,” he said. “That’s a challenge when you get outside of the Midwest.”
In her remarks, Reynolds touted her support of the renewable fuels industry in 2020, a year that was difficult for several agricultural sectors, including $12 million the state provided to 23 biofuel plants to help them remain operational.
While voicing concern about California’s push to electric vehicles, Shaw also voiced optimism that ethanol would be part of a push by several states and countries to adopt low-carbon fuel standards to reduce greenhouse gas emissions.
Emily Skor, CEO of Growth Energy, a Washington, D.C., ethanol advocacy group, echoed Shaw’s concerns.
“Leaders need to know what we know — there is no silver bullet to decarbonizing the transportation sector,” she said during the summit. “But growing the share of renewable biofuels in our fuel supply can and will accelerate our transition to a healthier, zero-emission future and reduce our dependence on fossil fuels.”