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Iowa Ethanol Mandate Proposed

posted on January 28, 2010

While the President called for continued investment in "advanced biofuels," ethanol proponents claim their predominantly corn-based product will need greater acceptance if the homegrown fuel is to satisfy production mandates of 12 billion gallons in 2010.

Iowa leads the nation in ethanol production. Last year nearly half of the "Hawkeye State's" 2.4 billion bushels of corn were used to produce more than 3 billion gallons of the high-octane fuel.

Surprisingly, Iowa does NOT require a percentage of gasoline sold within the state to contain ethanol, and more than 30 states consume a higher percentage of the fuel. But one group of supporters wants to capture more of the market through legislation.

Iowa Ethanol Mandate Proposed

Ethanol proponents in Iowa -- the nation's production leader -- have taken their cause to lawmakers in an attempt to increase use of the predominately corn-based fuel. The Iowa Renewable Fuels Association is asking legislators to pass into law an E-10 mandate requiring all gasoline sold in the state to be a mix of 90 percent gasoline and 10 percent ethanol.

Monte Shaw is Executive Director of the Iowa Renewable Fuels Association.

Monte Shaw, Iowa Renewable Fuels Association: "Iowa should step up and do this, and it will benefit Iowa ethanol producers, Iowa corn growers, and others in the ag economy if we can be the tip of the spear."

In addition to increasing ethanol use, Shaw sees the legislation as a way to set the stage for E15 -- a blend of 85 percent gasoline and 15 percent ethanol. The door would open to the new blend if the Environmental Protection Agency follows through with approval of E15 sometime in May.

Monte Shaw, Iowa Renewable Fuels Association: "Right now most retailers have two fuel tanks, underground storage tanks. Typically in Iowa, one will hold E0, the non-ethanol blend, and one will hold E10. So what an E10 fuel quality standard does by making E10 your base fuel is you will be opening up that second tank for potentially E15. So consumers will still have two choices, but instead of having the foreign refiner 100 percent oil expensive option, they're going to have an E15 with 15-percent locally produced ethanol that, quite frankly, will be five or six cents cheaper than the E10 in the marketplace today. It's about Iowa hopefully spearheading an E15 movement around the country, which would add billions of gallons of demand, billions."

Pushing-back against any kind of E-10 mandate are owners of the state's 1,500 convenience stores represented by the Petroleum Marketers and Convenience Stores of Iowa.

Dawn Carlson is president of the trade organization.

Dawn Carlson, Petroleum Marketers and Convenience Stores of Iowa: "If a mandate passes, you take away competition. Today your retailers in Iowa buy ethanol directly from the ethanol plants and they buy the gasoline directly from the oil companies. There are no retail stations that are owned by the oil companies in Iowa, so when we buy a product, we're actually pitting the ethanol plants against the oil companies and trying to find the best price for the consumer. If you take away the ability to do that and mandate that ethanol is in every product, who will hold the ethanol plants accountable on their price? Who is to keep them in check from raising them to a level that consumers simply cannot bear?...We pit the petroleum people against ethanol producers to get a better price... We have been a big promoter of ethanol. "

Though Carlson's organization favors offering various blends to consumers, she sees E15 as a problem which could expose retailers to increased liability as well as additional spending on modifications to infrastructure.

Dawn Carlson, Petroleum Marketers and Convenience Stores of Iowa: "Congress is going to have to pass a law that provides retailers complete liability protection from product and engine. One - we need to have all the stakeholders at the table saying that they will support E15. Auto manufacturers need to say we will warranty the engines and there won't be any problems. The tank manufacturers, the pipeline manufacturers -- and as of today we do not have any tanks or equipment that have been UL certified to handle anything higher than an E10 product, so there is no legal protection for any retailer who offers a higher blend than E10."

Despite the position of either group, the legislation Shaw would like to see adopted has yet to be introduced in the Iowa Legislature. Even then, it is unclear if the measure will have a high enough priority for lawmakers to even bring the bill up for debate. The only state to successfully pass such legislation has been Minnesota.


Tags: biofuels ethanol Iowa news renewable fuels