The Iowa Senate

State of Iowa

Eighty-First General Assembly

STATEHOUSE

Des Moines, Iowa 50319

For Immediate Release

Monday, Nov. 21, 2005

Senate Republicans Work to Encourage Use of Renewable Fuels

Incentive will Boost Number of E85 Pumps in Iowa

DES MOINES – Iowa Senate Republicans today unveiled a measure to encourage Iowans’ use of E85, the fuel that is 85 percent ethanol and 15 percent gasoline.

“The future of ethanol sales in Iowa depends on E85 and we want to help prime the pump,” said Senate Republican Leader Stewart Iverson (R-Dows).

The measure would use $5 million annually from the Iowa Values Fund to provide $25,000 grants that help pay retailers’ cost of installing E85 pumps and storage tanks. The grants would assist 200 Iowa retailers each year over the next nine years for a total of 1,800 new E85 pumps. Currently, there are 26 E85 pumps in Iowa.

“As more and more people turn to flexible fuel vehicles, the demand for E85 is growing,” said Senate Co-President Jeff Lamberti (R-Ankeny). “It is critical that we help to build the infrastructure necessary for drivers to have access to E85.”

Republican senators say the E85 grants could dovetail with tax incentives Congress included in the federal energy bill. The federal legislation provides retailers with a tax credit of up to $30,000 for E85 tank installation. If a retailer receives the maximum federal tax credit, the combined state-federal assistance would be $55,000 to help defray E85 installation costs. The estimated cost to install an E85 pump and tank is between $60,000 and $80,000.

The Senate Republican measure also would provide retailers a 10 cent-per-gallon credit on each gallon of E85 sold. The Department of Natural Resources projects 650,000 gallons of E85 will be sold in Iowa this year.

Republican senators are also proposing an incentive for bio-diesel sales in Iowa. Under the measure, retailers would receive a 10 cent-per-gallon credit on each gallon of bio-diesel sold.

“Encouraging the use of renewable fuels is good for Iowa’s economy and our environment,” said Sen. David Johnson (R-Ocheyedan), co-chair of the Senate Agriculture Committee. “Ethanol and bio-diesel add value to Iowa’s ag industry, lessen our dependence on foreign oil and burn cleaner than regular fuel.”

Senate Republicans will introduce their renewable fuels package when the 2006 legislative session convenes in January.

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Senate Republican Renewable Fuels Package

A. E85 Grants

· $5 million from Iowa Values Fund each year for the next nine years

· Grants of $25,000 would be given to retailers for constructing E-85 pumps

o A new pump/ tank assembly costs between $60,000 and $80,000

o Federal assistance is a 30 percent tax credit on a maximum $100,000 pump

o Combined with federal incentives, the total state/federal assistance could reach $55,000

· The annual $5 million in state E85 grants would assist 200 retailers each year in installing E-85 pumps.

o At the end of nine years, the grants would help install 1,800 E85 pumps in Iowa.

o Currently, there are 26 E85 pumps in the state

B. E85 per-gallon incentive

· Retailers would receive a 10 cent-per-gallon credit on each gallon of E85 sold

· DNR projects 650,000 gallons of E85 will be sold in Iowa this year.

C. Bio-diesel retailer incentive

· Retailers would receive a 10 cent-per-gallon credit on each gallon of bio-diesel sold.