Biodiesel supporters from across Iowa gathered at the State Capitol to urge lawmakers to extend and increase the state’s Biodiesel Production Tax Credit, calling it the most important step to stabilize the struggling industry, Biodiesel Magazine reported.
The event, known as Iowa Biodiesel Day on the Hill, was organized by the Iowa Biodiesel Board. It brought together biodiesel producers, soybean farmers and industry representatives to meet with legislators and discuss challenges facing the sector, along with policy measures aimed at keeping plants open and workers employed.
Industry leaders said the past year has been one of the toughest on record. Biodiesel production in Iowa is estimated to have fallen by nearly one-third compared to the previous year. Many plants have temporarily shut down or reduced operations due to uncertain federal policies and unfavorable market conditions that have made production financially unsustainable.
Against this backdrop, supporters argued that strengthening the state’s Biodiesel Production Tax Credit would help the industry recover.
Grant Kimberley, executive director of the Iowa Biodiesel Board, said the credit is the state’s most effective tool to keep facilities operating and employees working. He said increasing the incentive to five cents per gallon and extending it through 2030 would provide long-term stability, allowing producers to plan and invest with greater confidence. He added that the measure would benefit farmers, rural communities and the state’s energy security.
The tax credit is currently scheduled to expire on Dec. 31, 2027. Proposed legislation would raise it from four cents to five cents per gallon and extend it through 2030. When the credit was last extended in 2022 under the governor’s biofuels access legislation, Iowa had 11 operating biodiesel plants. That number has since fallen to eight.
Kimberley noted that because the credit is capped per facility and fewer plants are operating, the overall cost to the state is expected to remain within its original budget limits.
Uncertainty at the federal level has also weighed on the industry. Although proposed Renewable Fuel Standard volumes for biomass-based diesel for 2026 and 2027 are the highest ever, the rule has not yet been finalized. At the same time, guidance on the federal 45Z Clean Fuel Production Credit has only recently been proposed and still contains unresolved issues, making it harder for producers to fully use the incentive.
Despite these challenges, industry leaders said biodiesel continues to play a major role in Iowa’s economy. In 2024, biodiesel plants generated more than $1.6 billion in direct sales and supported 1,609 jobs statewide. When indirect effects are included, the industry contributed $520 million in added value to Iowa’s economy, according to Decision Innovation Solutions.
During meetings at the Capitol, board members also discussed other legislative priorities, including removing the cap on Renewable Fuels Infrastructure Program grants for biodiesel projects, requiring state-leased diesel vehicles to be compatible with B20 fuel, and improving fuel retailer reporting to better track biofuel usage.
Even so, Kimberley emphasized that extending and increasing the Biodiesel Production Tax Credit remains the industry’s top priority.
He said strengthening the credit would help ensure a stable market for soybeans, protect jobs in rural communities and maintain Iowa’s position as a national leader in biofuel production.
Iowa is the country’s leading biodiesel-producing state and the top producer of soybean oil.
