Iowa E85 Laws and Incentives

State Incentives

Alternative Fuel Research and Development

The $100 million Iowa Power Fund, administered through the Office of Energy Independence, supports research, development, commercialization, and deployment of biofuels, renewable energy technologies, and energy efficiency technologies, while seeking to cut greenhouse gas emissions. The fund will educate the public about these technologies and aims to increase the demand for them. The $100 million fund will be run by an 18-member board, with oversight from a seven-member committee of legislative and university leaders. (Reference House File 918, 2007)

Alternative Fueling Infrastructure Cost-Share Program

A state cost-share program is being developed to provide financial incentives for the installation or conversion of E85 refueling infrastructure and infrastructure required to establish terminal facilities that store biodiesel for distribution to service stations. The program will also provide for the addition of at least 30 new or converted E85 retail outlets and four new or converted terminal facilities used to store ethanol. The program will provide for a maximum of $325,000 annually for the fiscal period beginning July 1, 2005, and ending June 30, 2008. (Reference Iowa Code 15.401)

Alternative Fuel Vehicle (AFV) Grants

The Iowa Department of Natural Resources conducts marketing and education outreach to encourage the use of alternative fuels and, contingent upon funding, also awards demonstration grants to persons who purchase vehicles that operate on alternative fuels, including but not limited to, high ethanol content blends, compressed natural gas, electricity, solar energy, or hydrogen. (Reference Iowa Code 214A.19)

Ethanol Tax Credit

A tax credit is available to retail service stations at which more than 60% of the total gallons of gasoline sold through metered pumps are blended with ethanol. Once station owners surpass the 60% threshold, they are eligible for a tax credit of $0.025 for every additional gallon of gasoline blended with ethanol and sold during the tax year, through December 31, 2008.

Beginning in 2009 an Ethanol Promotion Tax Credit will replace the current incentive for each gallon of ethanol sold. The Ethanol Promotion Tax Credit will provide a $0.065 tax credit to any retailer meeting the renewable fuel standard (RFS) schedule for a given year. For retailers within 2% and 4% of meeting the RFS schedule, the tax credit will be $0.045 and $0.025, respectively, for every gallon of ethanol sold.

(Reference Iowa Code 422.33)

Biofuels Infrastructure Grants

The Renewable Fuel Infrastructure Program provides financial assistance to E85 retailers and biodiesel wholesale distributors. Cost-share grants are available for retailers to upgrade or install new E85 equipment, up to 50% of the total cost of the project or $30,000, whichever is less. Applicants may also qualify for supplemental incentives to upgrade or replace an E85 refueling dispenser, for up to 75% of the cost of making the improvement or $30,000, whichever is less. The supplemental incentive is available only to applicants who made the improvement no later than 60 days after the date of the publication in the Iowa administrative bulletin of the state fire marshal's order providing that a commercially available refueling dispenser is listed as compatible for use with E85 by an independent testing laboratory.

Biodiesel blenders may apply for a cost-share grant for terminal distribution facilities, up to 50% of the total project or $50,000, whichever is less. A Renewable Fuels Infrastructure Board was established under the guidance of the Iowa Department of Economic Development; this 11-member board has authority to determine the eligibility of applicants.

(Reference Senate File 551, 2007, and Iowa Code 15G.203)

Alternative Fuel Loan Program

Iowa's Alternate Energy Revolving Loan Program (AERLP) for alternative energy projects is administered by the Iowa Energy Center. Through a participation agreement with the project lender, the program provides up to half the cost of biomass or alternative fuels related fuel production projects, up to a maximum of $250,000 per facility. The AERLP funds are provided at 0% interest with the lender's funds bearing market interest. Fuel production facilities must be located in Iowa. (Reference Iowa Code 476.46)

Alternative Fuel Production Loans

The Value-Added Agricultural Products and Processes Financial Assistance Program offers a combination of forgivable and traditional low-interest loans for business projects involving the production of biomass or alternative fuels. The mixture of forgivable and low-interest loans varies according to the size of the award. Research and development projects are not eligible for this program.

Alternative Fuel Production Tax Credits

The Enterprise Zone Program and the High Quality Job Creation Program offer state tax incentives to business projects for the production of biomass or alternative fuels. Depending on the program, incentives may include: an investment tax credit equal to a percentage of the qualifying investment, amortized over five years; a refund of state sales, service, or use taxes paid to contractors or subcontractors during construction; a doubling of the state's refundable research activities credit; additional funding for training new employees, and; a local property tax exemption of up to 100% of the value added to the property.

State Laws and Regulations

Regional Biofuels Promotion Plan

Iowa has joined Indiana, Kansas, Michigan, Minnesota, Ohio, South Dakota, and Wisconsin in adopting the Energy Security and Climate Stewardship Platform Plan (Platform) (PDF 2 MB), which establishes shared goals for the Midwest region, including increased biofuels production and use. Specifically, the Platform sets the following goals:

• Produce commercially available cellulosic ethanol and other low-carbon fuels in the region by 2012;
• Increase E85 availability at retail fueling stations in the region to 15% of stations by 2015, 20% by 2020, and 33% of all fueling stations in the region by 2025;
• Reduce the amount of fossil fuel that is used in the production of biofuels by 50% by 2025;
• By 2025, at least 50% of all transportation fuels consumed by the Midwest will be from regionally produced biofuels and other low-carbon transportation fuels.

The Platform also establishes a regional biofuels corridor program. The program directs state transportation, agriculture, and regulatory officials to develop a system of coordinated signage across the region for biofuels and advanced transportation fuels and to collaborate to create regional E85 corridors. The program requires standardized fuel product coding at fueling stations as well as increased education for retailers about converting existing fueling infrastructure to dispense E85. The state transportation, agriculture, and regulatory officials are required to report their corridor implementation plans to the Midwest Governors Association by April 1, 2008.

E85 Fuel Exclusivity Contract Regulations

Any motor fuel franchise contract entered into or renewed on or after May 30, 2006, must allow for the delivery of E85 at any time demanded by the motor fuel dealer or allow the dealer to purchase E85 from another source. If a contract is already in effect on May 30, 2006, and does not have an expiration date, the franchisor must provide for the delivery of E85 at times demanded by the franchisee or allow the franchisee to purchase those volumes of E85 at those times from another source. (Reference Iowa Code 323A)

Renewable Fuel Standard (RFS)

The goal of the Iowa RFS is to replace 25% of gasoline in the state with biofuels (ethanol or biodiesel) by January 1, 2020. One provision of the standard is to require retailers to sell a certain percentage of renewable fuels as part of their total gasoline sales. Both biodiesel and ethanol count towards meeting the RFS schedule as follows:

2009: 10%	2014: 15%
2010: 11%	2015: 17%
2011: 12%	2016: 19%
2012: 13%	2017: 21%
2013: 14%	2018: 23%

(Reference Iowa Acts 2006, Chapter 1142, and Iowa Code 422.11N)

Alternative Fuel Vehicle (AFV) and Hybrid Electric Vehicle (HEV) Acquisition Requirements

All state agency non-law enforcement, light-duty vehicles procured by 2010 must be AFVs or HEVs when an equivalent AFV or HEV model is available. Furthermore, agencies must ensure that their flexible fuel vehicles operate on E85 whenever an E85 refueling facility is available. (Reference Executive Order 41, 2005)

E85 Fuel Use

By June 30, 2009, at least 60% of fuel purchases for the state's flexible fuel vehicles must be E85. A “State Government E85 Use Plan” must be created and will detail how this fuel use goal can be met and how the state and retailers can work together to ensure that all E85 purchases are electronically coded and reported accurately. The Department of Administrative Services will provide regularly updated lists of E85 refueling stations to state employees. (Reference Executive Order 3, 2007)

Alternative Fuel Vehicle (AFV) Acquisition Requirements

At least 10% of new light-duty vehicles purchased by institutions under the control of the state fleet administrator, Iowa Department of Transportation administrator, board of directors of community colleges, state board of regents, commission for the blind, and department of corrections must be capable of using alternative fuels. Vehicles and trucks purchased and directly used for law enforcement, off-road maintenance work, or to pull loaded trailers are exempt from this requirement. (Reference Iowa Code 216B.3, 260C.19A, 262.25A, 307.21 and 904.312A)

Alternative Fuel Vehicle (AFV) Conversion

When a motor vehicle is modified to use a different fuel type or to use more than one fuel type, the person in whose name the vehicle is registered must notify the county treasurer of the new fuel type or alternative fuel types within 30 days. If the vehicle uses, or may use a special fuel, the county treasurer shall issue a special fuel identification sticker. (Reference Iowa Code 321.41)

Alternative Fuel Labeling Requirement

If motor vehicle fuel containing a renewable fuel is sold from a motor vehicle fuel pump, the pump must have a decal affixed identifying the name of the renewable fuel. The decal may be different based on the type of renewable fuel used. The Department of Agriculture and Land Stewardship may approve an application to place a decal in a special location on a pump with special lettering or colors if the decal appears clear and conspicuous to the consumer. The application must be made in writing to the Department. (Reference Iowa Code 214A.16)