May 30, 2006

IOWA: Governor Signs E85 Bill

Here is a reprint of a press release received from the National Ethanol Vehicle Coalition:


Iowa Governor Signs E85 bill

Jefferson City , MO - Iowa Governor Tom Vilsack signed a bill into law that is touted as being the most aggressive renewable fuels legislation in the country. The legislation is intended to boost availability of ethanol and biodiesel throughout the state. A 25% Iowa Renewable Fuels Standard (RFS) is the centerpiece of the comprehensive renewable fuels bill.

“With the Governor’s signature, Iowa is on the path to be the number one renewable fuels consuming state,” stated Iowa Renewable Fuel Associaiton’s (IRFA) Executive Director Monte Shaw. “ Iowa is already the ethanol and biodiesel production leader. Now we have the most aggressive renewable fuels usage policy of any state as well. IRFA has already been contacted by several states who want to follow in Iowa’s footsteps.”

House Bill HF 2754 and its companion appropriation bill, HF 2759, intends to assist retailers with E85 infrastructure and could reduce the price of the alternative fuel at the pump. The bills also create:

• An aggressive, accountable renewable fuels standard (RFS) starting at 10% in 2009 and increasing to 25% by 2019.
• A new ethanol promotion tax credit for each gallon of ethanol blended into gasoline (replaces existing tax credit beginning in 2009).  This incentive is linked to a retailer dealer’s achievement of the RFS schedule.  The tax credit increases from 2.5 cents per gallon for retailers within 4% of the RFS schedule to 6.5 cents per gallonfor retailers meeting or exceeding the RFS schedule.
• A retail tax credit for E85 of 25 cents per gallon (phases out by 2020).
• $13 million over three years to expand an infrastructure program designed to help retailers and wholesalers offset the cost of bringing E85 and biodiesel blends to consumers.

Shaw indicated that consumers should see immediate relief of pricing at the E85 pump.

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corndog said...

This is interesting. I feel it would work much better if the strategy of "incentivizing" gasoline retailers on the state level were accompanied by a national mandate requiring that ALL vehicles sold in America would be flex-fuel capable by a certain date.

The manufacturers could do this in a very short time if the expense to do so were exchanged for lessening the load CAFE places on them. There are 15 to 17 million new vehicles sold each year in this country, with 220 million total on the road, it wouldn't take long to place significant demand for ethanol into the marketplace. I believe the supply can be sufficient, because SO MUCH money would be there to be made on ethanol. In five years or less retailers would have enough demand to CONVERT their mid-grade (89 octane) dispensers to pump E85. These conversions would cost less than $2500 per pump.

I worry that, even in Iowa, merely incentivizing the proliferation of pumps will do nothing if there is not sufficient demand, and thus, the increase in supply. Maybe they figure the use of E10 will give them enough demand, I don't know.

C. Scott Miller said...

I agree that we should first draft a national mandate regarding making new cars flex-fuel compatible... why not? Brazil did... before we expect local gasoline retailers to begin adding ethanol pumps to their islands. If the incentive program is unsuccessful nobody wins and the experience will create vendor reluctance in the future.