By James Q. Lynch
DES MOINES — Mandating the use of biodiesel is an opportunity for Iowa to re-establish its leadership in renewable fuels, representatives of the industry told lawmakers Monday.
Passage of Senate File 464, which would mandate the use of a diesel blend containing at least 5 percent biodiesel, would “show the rest of the country we want Iowa to be the center of renewable fuels,” Randy Olson, executive director of the Iowa Biodiesel Board told the House Ag Committee.
Iowans spend $48 million a year on Persian Gulf oil for diesel fuel, he said. If a 5 percent biodiesel blend was mandated, Iowa producers could meet a third of the demand now, Olson said, and capacity would be likely to grow.
A biodiesel plant in Keokuk has been sold and reportedly the equipment will be shipped to India, meaning Iowans might be buying biodiesel from India someday, Olson said.
“We have an opportunity now and if we don’t do something, we may as well shutter the industry,” Olson told the committee. “Our biodiesel industry is dying. We’re not using enough.
“The industry will exist — here or somewhere else,” Olson added.
He and Monte Shaw of the Iowa Renewable Fuels Association addressed several issues relating to the mandate including price and performance. Biodiesel equals or outperforms traditional diesel, they said.
The price is likely to fall if the mandate is enacted because biodiesel will be more available. Shaw downplayed arguments against the mandate from groups that say they are protecting consumer choice. Ninety percent of Iowans don’t have the choice of filling their diesel-burning vehicles with biodiesel now, “so that argument rings hollow,” he said.
However, Iowans for Consumer Fuel Choice, a coalition of retailers, truckers, unions and utilities, said the mandate relies on “upside down economics.”
“This mandate is attempting to force demand by eliminating competition for suppliers,” said Wayne Newkirk, a Drake University professor and president of Economic and Financial Consulting. “Removing competitive products will inevitably drive up price and consumers will have to pay or choose to refuel outside of Iowa.”
Dawn Carlson, chief executive officer for Petroleum Marketers and Convenience Stores of Iowa, said there’s no validity to the argument that the mandate would lower prices at the pump.
The benefits of the mandate would go beyond price, Olsen said. He called the mandate a jobs bill as well as help for Iowa’s family farms.
“They won’t exist without value-added production,” he said.
SF 464 currently is in the House Ways and Means Committee.
