Iowa's ethanol producers will ask the Legislature this session to shift the half-cent-per-gallon state income tax credit from the 10 percent ethanol blend now most commonly sold to the 15 percent blend that the U.S. Environmental Protection Agency approved last week for use in autos of the 2001 model year and later.
Monte Shaw, executive director of the Iowa Renewable Fuels Association, told the group's annual summit meeting in Des Moines that "most gasoline retailers have just two tanks, one filled with unblended unleaded gasoline and the other with E10. We want them to shift that second tank to E15."
Gov. Terry Branstad appeared at the meeting, held at the Polk County Convention Complex, and told about 700 attendees that "I want to work with the Legislature to change the credit from 10 percent to 15 percent."
Rep. Annette Sweeney, R-Alden, she has drafted a bill that would shift the tax credit.
The legislation would be part of the ethanol industry's effort to speed retail and consumer acceptance of E15, which is expected to be slow.
Retailers must first await a new EPA-approved label for their pumps (not expected until April), reaffirm their insurance status with the different fuel blends, and then reconfigure their tanks and pumps to accommodate the new blend as well as unblended gasoline and premium gasoline, not to mention diesel in rural areas.
The logistical challenge of getting E15 into the market at retail pumps has caused even ethanol insiders to warn that the impact of the higher blend won't be felt for a while.
Jim Jordan & Associates, a Houston biofuels market consultant, said in a report that "we anticipate it will take 18-24 months to overcome the numerous labeling, liability, warranty and state regulation issues before E15 is widely available at local gas stations."
The present credit for E10 costs the state about $8 million annually in tax revenue, Shaw said, and dates from 2001.
Ethanol's long-standing chief lobbyist in Washington, D.C., Robert Dinneen, president of the Renewable Fuels Association, came out swinging against the oil industry in his talk to the Des Moines meeting.
Dinneen warned the producers that they face renewed attacks on ethanol over the food versus fuel issue, environmental concerns and tax subsidies.
He compared the concern over ethanol's 46-cent-per-gallon tax credit, or the $1-per-gallon credit for biodiesel, with the depreciation and foreign tax credits for oil companies, which he said total $286 billion annually.
