OPINION: USDA grant program aims to expand ethanol infrastructure

By Robert White, vice president of industry relations at the Renewable Fuels Association | May 29, 2020

What could possibly be better for a fuel retailer than selling more fuel at the pump and selling more retail goods inside the store? Someone that helps you pay to make that happen. And that’s why the U.S. Department of Agriculture is now accepting applications for their Higher Blends Infrastructure Incentive Program (HBIIP). This program has $86M dollars available for higher ethanol blends like E15 and E85, and another $14M for higher blends of biodiesel. If you are willing to consider offering higher blends of ethanol, you should apply for a grant.

We are routinely asked if there is really a market for these higher ethanol blends. Will you attract more customers? The answer for the thousands of stations that have made the leap is clear: Yes! Not only will some current customers make the switch to higher octane, lower-priced fuel, but new customers will appear. This statistic jumps tremendously if these products appear on the price sign, because adding these fuels also helps you stand out from the competition.

These markets are also growing each year. Last year, for the first time, E15 was approved for year-round use in conventional gasoline markets. The fuel is also legally approved for 95% of the vehicles on the roads today and that number is growing each year. In states that track E15 sales, sales were up and average of 35%. E85 has also seen a resurgence as low-carbon fuel standards drive demand in some areas, but it is also appearing in areas that have never seen the fuel before. For those Flex Fuel Vehicle (FFV) drivers, it is their first chance to use this alternative fuel.

Enter the HBIIP initiative. This new iteration of the Biofuels Infrastructure Partnership (BIP) Program, is available to all 50 states and U.S. territories. Grants can be as large as $5M. For those fuel retailers with 10 or less stations, 40% of this money is reserved for you. There are bonus points if you are in geographic areas underserved by these fuels, as well as for interstate corridors. There is something for everyone, but funds are limited and matching funds are required. The amount of required match varies, based on the equipment.

If the matching funds concern you, please remember that HBIIP is not the only funding source available. Last year, Congress renewed a federal tax credit for the installation of alternative fuels like E85. The Alternative Fuel Vehicle Refueling Property Credit allows fuel retailers that installed E85 to become eligible for a federal tax credit equal to 30% of the total spent to purchase and install qualified equipment, with a maximum credit of $30,000 per station.

Additionally, some states have other programs available for dispensers and/or tanks. For example, Iowa has its Renewable Fuels Infrastructure Program that provides cost-share dollars to fuel retailers to install blender pumps and other equipment necessary to offer higher blends of ethanol. It can provide up to 70% of the total costs. South Dakota has also funded millions in infrastructure to support higher blends of ethanol. Corn grower organizations in states like Nebraska and Kansas have also funded infrastructure grant programs. Other states have provided promotional dollars once retailers offer higher blends of ethanol.

Since 1981, the Renewable Fuels Association has represented U.S. ethanol producers. As a trade association, we do not have anything to sell, but we do have lots of information to give away. We can help you track down and apply for grants and funding   from all available programs, fill out the needed applications, do site equipment surveys, and even help pick out the right conversion kits or equipment. We have the only approved Misfueling Mitigation Plan (MMP) required by EPA to sell E15. We also have an E15 Retailer Handbook that outlines all requirements at the state and federal levels. And when you have added these fuels, we will help you promote them too.

If you are interested in learning more about the HBIIP initiative, please visit  www.EthanolRFA.org/HBIIP. You will find numerous resources and links, but also a recorded version of our recent webinar with USDA on the program. If you still have questions, or need help, please don’t hesitate to contact me directly at rwhite@ethanolrfa.org or RFA Director of Market Development Cassie Mullen at cmullen@ethanolrfa.org.