Iowa Incentives and Laws

Last Updated May 2006

State Incentives

Ethanol 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 that 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 11-103.16(8A))

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 availability, 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. Grants are awarded for research connected with the fuel or the vehicle, but not for the purchase of the vehicle itself. A vehicle may be purchased with these funds only if the department retains the title to the vehicle and if the vehicle is used for continuing research. If the vehicle is sold, the proceeds of the sale of the vehicle will be used for additional research. (Reference Iowa Code 214A.19)

Point of Contact

Allan Goldberg
Clean Cities Coordinator
Iowa Clean Cities Coalition
Phone (515) 281-8912
allan.goldberg@dnr.state.ia.us
http://www.iowadnr.com/energy/cleancities/index.html
 

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, until 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 fuels 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 and House File 2754, 2006)

Biodiesel Tax Credit

Through December 31, 2011, retailers whose diesel sales are at least 50% biodiesel (B2 and higher blends) are eligible for a $0.03 per gallon tax credit on each gallon of B2 or higher blend sold. (Reference Iowa Code 422.11P and House File 2754, 2006)

Biofuels Infrastructure Grants

An infrastructure program has been created to provide financial assistance to E85 retailers and biodiesel wholesale distributors. More than $13 million over three years was appropriated for the grant program. Cost-share grants for retailers to upgrade or install new E85 equipment will be available; a retailer could receive 50% of the total cost of the project up to a maximum of $30,000. Biodiesel blenders may apply for a cost-share grant for terminal distribution facilities; grants could cover 50% of the total project up to a maximum of $50,000. A Renewable Fuels Infrastructure Board will be established under the guidance of the Iowa Department of Economic Development; this 11-member board will have authority to determine the eligibility of applicants. (Reference House File 2754, 2006)

Alternative Fuel Loan Program

Iowa's Alternate Energy Revolving Loan Program for alternative energy projects is administered by the Iowa Energy Center. The program offers zero-percent interest loans for up to half the cost of biomass or alternative fuels related fuel production projects, up to a maximum of $250,000 per facility. The remaining loans are made by participating lenders at a negotiated interest rate. Fuel production facilities must be located in Iowa. (Reference Iowa Code 476.46)

Point of Contact

Keith Kutz
Administrative Specialist
Iowa Energy Center
Phone (515) 294-8819
Fax (515) 294-9912
iec@energy.iastate.edu
http://www.energy.iastate.edu/renewable/incentives
 

Alternative Fuel Loan Program

The Iowa Renewable Fuel Fund's Value-Added Agricultural Products and Processes Financial Assistance Program offers a combination of forgivable and traditional low-interest loans for projects involving biomass and alternative fuel technologies. Approximately 20% of the money awarded to the project is in the form of a forgivable loan and the remaining 80% is a low-interest loan; 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.

Point of Contact

Joe Jones
Program Coordinator
Iowa Department of Economic Development, Bureau of Business Finance
Phone (515) 242-4801
Fax (515) 242-4776
joe.jones@iowalifechanging.com
http://www.energy.iastate.edu/renewable/incentives
 

Alternative Fuel Loan Program

The Iowa Values Fund assists with infrastructure development for E85 retail sites and biodiesel off-site terminal locations. The Iowa Renewable Fuels Association, through a management agreement with the Iowa Department of Economic Development, manages the loan program, which provides funding on a cost-share basis to cover equipment upgrades and new installations for E85 retail sites and on-site or off-site biodiesel terminal locations. The Legislature awarded $325,000 annually for three years. Applicants are eligible to apply if the upgrade or new installation took place or begins after July 1, 2005.

Point of Contact

Lucy Norton
Iowa Renewable Fuels Association
Phone (515) 252-6249
Fax (515) 225-0781
info@iowarfa.org
http://www.iowarfa.org/ethanol_values.php
 

State Laws and Regulations

E85 Fuel Exclusivity Contract Regulations

Any motor fuel franchise contact entered into or renewed on or after May 30, 2006, must allow for the delivery of volumes of E85 at any time demanded by the motor fuel dealer or allow the dealer to purchase those volumes of 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 volumes 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 House File 2754, 2006, and Iowa Code 323A)

Renewable Fuels Standard

The goal of the Iowa Renewable Fuels Standard (RFS) is to replace 25 percent 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:

(Reference House File 2754, 2006)

Alternative Fuel Vehicle (AFV) 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)

Alternative Fuel Use

All state agencies must ensure that all bulk diesel fuel procured contains at least 5% renewable content by 2007, 10% renewable content by 2008, and 20% renewable content by 2010, provided fuel that meets ASTM D 6751 is available. Agencies must ensure that diesel vehicles operate on biodiesel blends whenever the blends are available. (Reference Executive Order 41, 2005)

Alternative Fuels Tax

Effective January 1, 2006, E85 is taxed at a reduced rate of $0.17 per gallon, while conventional gasoline is taxed at $0.203 per gallon. Those who blend conventional motor fuel with ethanol may file for a refund for the difference between sales taxes paid on the motor fuel purchased to produce ethanol-blended gasoline and the tax due on the ethanol-blended gasoline. Compressed natural gas used as a motor fuel is taxed at $0.16 per 100 cubic feet. These tax incentives expire June 30, 2007. (Reference Iowa Code 452A.3, 452A.21 and 11-103.16(8A))

Point of Contact

Allan Goldberg
Clean Cities Coordinator
Iowa Clean Cities Coalition
Phone (515) 281-8912
allan.goldberg@dnr.state.ia.us
http://www.iowadnr.com/energy/cleancities/index.html
 

Biodiesel Use

A biodiesel fuel revolving fund has been created in the state treasury. The fund consists of money received from the sale of Energy Policy Act (EPAct) credits banked by the Iowa Department of Transportation (IDOT) as of April 19, 2001, and other money obtained or accepted by IDOT for deposit in the fund. The fund shall be used by IDOT for the purchase of biodiesel fuel for use in IDOT vehicles. An IDOT motor vehicle operating on biodiesel fuel must be affixed with a brightly visible sticker that notifies the traveling public that the motor vehicle uses biodiesel fuel. (Reference Iowa Code 307.20)

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 (IDOT) 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. (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)

Electric Vehicle (EV) Registration Fee

The annual registration fee for an electric motor vehicle is $25.00. However, if the vehicle is more than five model years old, the annual registration fee is $15.00. This section does not apply to low-speed vehicles that are electric. (Reference Iowa Code 321.116)

Low-Speed Vehicle Access to Roadways

A low-speed vehicle may not be operated on a street with a posted speed limit greater than 35 miles per hour (mph). A low-speed vehicle may cross a street with a posted speed limit greater than 35 mph. (Reference Iowa Code 321.381A)

Utilities/Private Incentives

There are currently no known utility or private incentives offered in Iowa

Iowa Points of Contact: