Iowa RFA pushes for state E10 mandate

By Luke Geiver | March 16, 2010
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A new study citing the positive contribution of the biofuels industry to Iowa's economy has drawn interest from those in the ethanol industry, and action from legislators. The study, titled, "Contribution of the biofuels industry to the economy of Iowa," was issued in January and ranks Iowa as the nation's leader in biofuels output, with ethanol from the state accounting for nearly 30 percent of U.S. ethanol production. According to the study, Iowa is expected to benefit from continued expansion and development in the industry over the next decade, but the Iowa Renewable Fuels Association notes an ethanol shortfall in the state. "Iowa is lagging behind the rest of the country in ethanol use," Monte Shaw, executive director of IRFA said. "Ethanol fuel blends sold in Iowa remain close to 75 percent while the rest of the nation stands at 80 percent."

Now, new legislation passed by the Iowa State Senate Agriculture Committee has Iowa one step closer to catching up with the rest of the nation. At the IRFA Summit held in January, Shaw spoke on ethanol's impact to Iowa's economy and referenced the study. According to the study, done by LECG LLC, ethanol and biodiesel make up 8 percent of Iowa GDP, or about $11.5 billion. The IRFA also proposed an E10 mandate requiring all motor vehicles to use the 10 percent blend. In 2006 the IRFA proposed a similar mandate predicated on boosting E10 use and after four years, it appears legislators are listening.

The E10 Fuel Quality Standard legislation (SF107) was go to the full Senate after passing a voice vote in February. The bill, which would require all gasoline sold for highway use (exemptions from highway use include outboard motors, power tools and lawn equipment) contain at least 10 percent ethanol, was initially introduced by Sen. Jack Kibbie. "Iowans should be proud of their renewable fuels industry," Kibbie said. "People need to understand that without ethanol, corn and farmland would be worth about half as much as they are today."

According to the LECG study, locally-owned ethanol plants make up a full third of production capacity, and account for almost half of the existing ethanol fuel plants in Iowa. To produce 3.2 billion gallons of ethanol, the industry spends roughly $5 billion, mainly on corn used to produce ethanol.

Shaw expects the bill before the Iowa legislature will aid ethanol in securing a new segment of the market if the U.S. EPA approves an expanded blend limit from 10 percent to 15 percent. "The expansion to E15 won't mean a hill of beans if there is no incentive for retailers to pump it," Shaw said. Although bills such as SF107 have appeared before, some note that there is now a change in thinking. Sen. Thomas Courtney said people finally recognize the positive impact of ethanol. "People have learned that ethanol works. This idea that it harms your engine is BS."

Even with the changed attitude and first-round success of an E10 mandate in Iowa, Shaw believes there are still problems to address. "We're obviously pleased," Shaw said. "But this was the first step in the long process." One of the problems Shaw pointed out relates to the new RFS2 ruling. "By declaring that corn ethanol achieves the necessary GHG reductions," Shaw said, "it will allow corn ethanol production beyond the 12 billion gallons that were grandfathered. Over time, some plants may expand or there may be new projects that take the capacity closer to the 15 billion gallon cap for corn ethanol." But IRFA believes the idea of an arbitrary 15 billion gallon cap is a long-term problem for the corn ethanol industry and needs to be addressed.

Shaw and others remain hopeful the E10 mandate will ultimately pass. Rep. Annette Sweeney echoed a sentiment among many in the state legislature. "I know there's interest in the bill," she said. "And there will be more once the case is made for how important the ethanol industry is to Iowa." Unfortunately, in mid-March news reports indicated the bill died before reaching a Senate vote after Senate leadership chose not to schedule a debate on the bill. "This is very disappointing," Shaw said. "I think we had the support. But if the bill isn't brought up for debate there's little we can do."