Iowa GOP pushes ethanol funding effort

| 12/1/2005

Fuel stations in Iowa would get $5 million annually in grants to install new tanks to hold 85 percent ethanol blends under a plan by state Senate Republicans.

The GOP lawmakers said the nine-year effort could dramatically boost the availability of renewable fuel. They said it is the way most likely to increase ethanol use in the state.

About 100,000 vehicles in the state are equipped to run on E85, but only 26 tanks in Iowa dispense the fuel, The Associated Press reported.

With the current high cost of fuel, Senate Republican President Jeff Lamberti of Ankeny said demand for flexible-fuel vehicles would soar if the fuel were more widely available.

The cost to install the tanks and pumps is up to $80,000 per station.

The Republican plan would provide grants of $25,000 to retailers to install the new pumps, as well as make them eligible for federal tax credits.

A 10-cent-per-gallon tax credit also would be extended to biodiesel.

Money to pay for the E85 program would come from the Iowa Values Fund, the state’s economic development revenue source.

Gov. Tom Vilsack, a Democrat, said the proposal was a “worthwhile idea,” but questioned tapping into the values fund, the Sioux City Journal reported. Instead, he said money from the state’s settlement with tobacco companies might be a better source.