Governor Kim Reynolds is trying once again to require gas stations to offer gasoline with a higher blend of ethanol, after a broader proposal last year fell victim to battles between fuel retailers, transportation groups and providers of renewable fuels.
“Iowans deserve to have cheaper, cleaner fuel, grown and made here,” Reynolds, a Republican, told a crowd of hundreds Tuesday at the Iowa Renewable Fuel Summit in Des Moines.
Its new legislation, House Study Bill 594, advanced through a subcommittee meeting at Iowa House on Tuesday after lawmakers heard a range of objections from transportation groups, gas stations and others, as well as praise from producers of renewable fuels.
Despite the objections, key lawmakers say the two sides are much closer to agreeing on language that both can accept, in contrast to the wide chasm that was evident last year.
“We started with a bill around this time last year, we spent a lot of time in meetings listening to different people and trying to build consensus, and I think we’re very close now,” said Representative Lee Hein, R Monticello. Farmer chairs the Ways and Means Committee in the House of Representatives.
Participation: Get the Register’s policy newsletter in your inbox every morning
How will the bill work?
Fuel retailers such as gas stations will be required to offer gasoline at 15% ethanol, known as E15, starting in 2026. This will dramatically increase the availability of E15, which is currently available at a small portion of gas stations and truck stations in Iowa.
But, unlike last year’s version, this requirement only applies if the gas station has infrastructure compatible with a higher blend of ethanol. Reynolds’ earlier proposal would have required many gas stations, truck stations and convenience stores to upgrade their equipment to offer a higher blend of ethanol, which retailers said would cost prohibitively.
For gas stations without compatible equipment – such as very old tanks – the bill provides the option of a waiver. The retailer can either submit an application describing why their machines cannot support the higher ethanol blend or they can designate someone to inspect their facility and certify that they cannot meet the requirements.
As of April 2021:Bumpy road ahead to the bill with support from Governor Kim Reynolds mandating the use of renewable fuels at Iowa pumps
Mike Neige, the Iowa Secretary of Agriculture, who supports the bill, called the new legislation a “very practical approach.”
“I think it recognizes the fact that some gas stations lack the equipment, or compatible equipment, to deliver those higher blends and that the cost of upgrading those facilities is meaningless in every case,” he said. “So there is a way to accommodate that either by conceding or acknowledging that the equipment is incompatible with those higher combinations.”
Reynolds is also proposing to spend $10 million annually over five years to upgrade Iowa’s pumps so they can use a higher blend of ethanol, increase tax credits for biodiesel production, and fuel retailers to expand access.
By law, any new or upgraded fuel infrastructure must be compliant with E85, gasoline 85% ethanol, and B20, which contains at least 20% biodiesel, starting next year.
Industry groups raise concerns about mandates and compliance
Some groups in the subcommittee on Tuesday disputed the bill’s language about whether certain infrastructure — such as pipes and tanks — was compliant, saying retailers could still be required to “break concrete” to install new equipment at their stations.
“This compatibility, the ‘concrete crack’ part of the bill really needs to be looked at,” said Tom Cobb, a lobbyist for Casey’s General Stores. “Because we’re really concerned that it could have a negative impact on stores, particularly located in a small town in Iowa.”
more:Governor Kim Reynolds’ support for “carbon sequestration solutions” does not include incentives for pipelines
And some, like Mark Beltram, an Iowa lobbyist, disagreed with Reynolds and lawmakers’ assertion that the new law would allow Iowa to choose to purchase E15 from the pump.
“This is not a market-based approach,” said Mark Beltram, a member of the Fuel Iowa lobby. “I say it respectfully. This is the ruler who dictates an access point.”
Bob Rafferty, a lobbyist at Truckstops of Iowa, said he was expecting retailers to deliver the E15 from at least one fuel pump. But for stations with more than one compatible fuel pump, legislation requires 50% of their pumps to deliver E15.
“When you go to 50% of the pumps that require E15, if customer demand is there, that’s not an issue,” he said. “But if the customer order is not there, it will create a very important authorization.”
Renewable fuel kits hail ‘more choices at the pump’
Reynolds touted biofuel legislation as one of her priorities in her state speech earlier this month, and renewable fuel groups quickly praised the proposal as soon as it was released this week.
“Iowans will have more options at the pump, not less,” said Monty Shaw, executive director of the Iowa Renewable Fuel Association.
About 300 of the 2,000 convenience stores in Iowa now offer E15, Shaw said. His group estimates that 900 to 1,000 petrol stations will offer E15 by 2026, depending on the age of the facilities and their need for an infrastructure upgrade.
Xu said E15 will sell itself, “as soon as consumers have access to it.”
more:Lawmakers seek to save summer E15 fuel
Michael Walz, vice president of public affairs for Poet, the nation’s largest ethanol producer, described E15 as “America’s next standard fuel” and credited Reynolds with “leading the way.”
“Iowa deserves the freedom to choose E15 every time they fill up,” he said in a statement. “E15 will save Iowans money at the pump, create new value for farm families, support thousands of jobs and drive economic growth across the state.”
Lance Lillibridge, president of the Iowa Corn Growers Association, said the legislation would make Iowa “a leader in the use of clean, burning, locally grown ethanol.”
“ICGA will be proactive and will continue to work on this bill until it reaches the finish line and increases the chances for Iowa to choose a higher ethanol blend at the pump,” he said in a statement.
Reynolds compares Iowa’s approach to the Biden administration
At the Renewable Fuels Summit and in her State of the State address, Reynolds compared Iowa’s support for ethanol and biodiesel with President Joe Biden’s efforts to encourage electric cars.
She said the Biden administration has focused “all of its efforts on electric cars and is actively trying to eliminate gas-powered cars. This is a mistake, especially as China looks to sequester the precious metals that make electric car batteries.”
“Instead of supporting the communist economy thousands of miles away, we should support our own,” Reynolds said. “We need to take the approach of all of the above, where we support the energy sources that come from here in Iowa and have the capacity to scale today.”
Reynolds said Iowa should combat “the illegal and abusive regulatory actions of the Environmental Protection Agency.”
Reynolds, along with the Iowa Agriculture and Renewable Fuels groups, has criticized Biden’s EPA for proposing to lower U.S. ethanol blending requirements retroactively for 2020, which were set in 2019. The EPA is also proposing a 2021 mandate for ethanol from corn without Legal requirements.
These steps will reduce the amount of ethanol oil refineries have to blend into gasoline under the federal renewable fuel standard, causing a financial loss for ethanol producers in Iowa.
more:EPA proposal to reduce retrospective blending requirements for renewable fuels raises contempt
“The EPA on both sides reneged on their commitment to renewable fuels, and we had to bring them back,” Reynolds said. “And we have to do it again.”
When a lobbyist in the governor’s office made similar comments at the subcommittee meeting on Tuesday, it drew a negative response from the committee’s Democratic member, Rep. Mary Wolf of Clinton.
“I think it’s unfortunate in what is supposed to be a bipartisan bill that almost the first thing we heard was gratuitous partisan comment about the Biden administration,” said Wolf, who backed the biofuels bill introduced by Reynolds last year. “So I’m not sure how relevant that is to this bill. I don’t think it’s a great start to this discussion but I am opening my mind.”
Stephen Gruber Miller covers the Iowa State Assembly and the politics of the registry. He can be reached via email at firstname.lastname@example.org or by phone at 515-284-8169. Follow him on Twitter at Tweet embed.