STREATOR, Ill. (DTN) -- Effective Wednesday, July 1, diesel blended with at least 11% biodiesel is eligible for a 3-cent-per-gallon tax exemption compared to petroleum diesel, according to the Iowa Biodiesel Board.
The biodiesel credit, which runs through Jan. 1, 2017, also provides 2 cents per gallon on the first 25 million gallons of biodiesel produced in any single plant.
Prior to 2015, the tax for diesel was 22.5 cents per gallon. The new diesel tax, already in effect, is 32.5 cents per gallon. Users of B11 or higher will now pay tax of 29.5 cents a gallon.
The law includes an E15 credit that pays 3 cents per gallon for the 15% of ethanol blended into gasoline sold Jan. 1 to May 31 and 10 cents for June 1 to Sept. 15. The credit reverts back to 3 cents from Sept. 16 to Dec. 31. The credit runs through 2020.
Signed by Governor Terry Branstad in February, "the law has already increased the state fuel tax by 10 cents a gallon for both diesel and gasoline to help improve Iowa's roads and bridges," according to a news release issued Tuesday by the Iowa Biodiesel Board.
"This state policy represents another link in the chain that secures Iowa's energy and economic future," said Grant Kimberley, IBB executive director. "This incentive, along with other state policies that encourage biodiesel production and use, shores up support for a fuel that delivers jobs, diversifies our fuel supply and reduces greenhouse gases."
Kimberley added that this won't automatically mean B11 is less expensive at the pump than diesel, but with "all of the pro-biodiesel policies in Iowa working together, plus federal programs that encourage energy independence, add up," he said. "This is likely to make B11 pretty competitive at the pump."
The bill also updates Iowa Code to define biobutanol as a renewable fuel option for Iowans.
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