Iowa provides COVID-19 relief to biofuel producers, retailers

By Erin Voegele | August 25, 2020

Iowa Gov. Kim Reynolds announced on Aug. 25 that the state is allocating approximately $100 million of federal CARES Act relief funds to seven ag programs to offset the impact of COVID-19. Approximately $22.5 million of that will support biofuels.

To support renewable fuels, Iowa will allocate $15.5 million to the State Biofuel Grant Program and $7 million to a Renewable Fuel Retail Recovery Program. Other allocations include $60 million for the Iowa Livestock Producer Relief Fund, $6 million for the Iowa Beginning Farmer Debt Relief Fund, $2 million to the Meat Processing Development and Expansion Program, $500,000 to the Farm Produce and Protein Program, and up to $9 million for the Iowa Disposal Assistance Program.

The $15.5 million being allocated to the State Biofuel Grant Program will provide relief to Iowa ethanol and biodiesel producers based on gallons produced. To be eligible, biofuel producers must have manufactured at least 500,000 gallons of biofuel between Jan. 1 and March 31. Eligible producers must also have experienced revenue losses due to price damage on produced gallons of biofuels, the idling of plants or other curtailment of production on or after March 17 as a result of the COVID-19 pandemic.

The program will pay eligible producers 2.25 cents per gallon for biofuel produced between Jan. 1 and March 31, up to a maximum payment of $750,000 per company, depending on program demand. Biofuel producers that receive relief funds under the program must use the grant dollars for the reimbursement of purchased feedstock. Only one application per biodiesel or ethanol production company will be accepted on behalf of all of its Iowa production plant locations.

The State Biofuel Grant Program is being administered by the Iowa Economic Development Authority. Applications will be accepted from Aug. 31 through Sept. 14.

The biofuel industry will also benefit through the $7 million being awarded to the Renewable Fuel Retail Recovery Program, which helps expand retail fueling infrastructure for higher blend renewable fuels, including E15 or higher and B11 and higher. The program is administered through the Iowa Department of Agriculture and Land Stewardship.

According to the IDALS, the Renewable Fuel Retail Recovery Program aims to help gas stations, truck stops and other fuel retailers recover from lost demand caused by COVID-19. Iowa fuel retailers that dispense, or have plans to dispense, ethanol blends of E15 or higher or biodiesel blends of B11 or higher and biodiesel terminal facilities are eligible to apply for the funds. To quality, applicants must demonstrate a COVID-19-related business interruption or loss of business income related to COVID-19. Projects considered may include, but are not limited to, expenses incurred for the construction, installation, upgrade and retrofit of equipment associated with the sale of renewable fuels. Retailers may be awarded up to a $30,000 grant per project and may submit applications for more than one project.

The application period for the Renewable Fuel Retail Recovery Program is now open. Project application will be accepted as long as funds remain. The IDALS will begin reviewing applications on Sept. 14.

“The renewable fuels industry is critical to Iowa’s economy. It provides jobs in rural communities, additional markets for agricultural products, and gives consumers greater access to affordable, cleaner-burning fuels,” said Iowa Secretary of Agriculture Mike Naig. “I know fuel retailers and the renewable fuels industry, like so many others, have a long road to recovery. I’m grateful to Gov. Reynolds for making additional funding available to support ethanol and biodiesel retailers as they work to recover from this pandemic.”

The Iowa Renewable Fuels Association and Iowa Biodiesel Board have spoken out in support of the funding allocations.

“Governor Reynolds has provided a much-needed lifeline for Iowa’s renewable fuels producers,” said Monte Shaw, executive director of the IRFA. “At its peak, the COVID-19 pandemic led to the idling of roughly 50 percent of Iowa’s biofuels production capacity. Even today fuel use has not returned to normal and biofuels producers are struggling to simply break even. IRFA members from across the state are deeply grateful for Governor Reynold’s leadership as they work to recover from the financial blow wrought by the pandemic.”

“We appreciate the work done by our federal legislative champions on language for the next COVID relief package,” he added. “Ethanol and biodiesel producers across the country are suffering from suppressed fuel demand and still need comprehensive, in-depth relief from the federal government. Today’s action by Governor Reynolds will help Iowa’s biofuels producers keep going until Congress and the Trump Administration act.”

“IRFA members want to thank Governor Reynolds and Secretary Naig for seeing the many benefits biofuels provide to the state of Iowa and prioritizing their growth,” said Nathan Hohnstein, policy director at the IRFA. “Iowa fuel retailers and biofuel producers have both been struggling under the weight of demand destruction from COVID-19. These grants will help retailers stay competitive by adding low-cost, home-grown biofuel blends and provide a demand boost for Iowa’s biofuels producers.”

“Virtually every industry has felt the negative economic impact of the COVID-19 pandemic, and with the pandemic’s corresponding drop in fuel demand, biodiesel has not escaped unscathed,” said Grant Kimberley, executive director of the IBB. “I am grateful to the governor’s office for heeding our call to action on providing relief. Our state’s biodiesel producers, as well as soybean farmers, thank her for her work in shoring up this vital sector of Iowa’s economy.”