Iowa could become the first state in the nation with fuel pumps sporting the new 15% ethanol (E15) labels approved this week by the Environmental Protection Agency along with final rules allowing E15 to be used in all 2001 and newer passenger vehicles later this summer.

Effective July 1, Iowa retailers are eligible for a three cent per gallon tax credit for every gallon of E15 sold. “With the EPA in the process of clearing the final hurdles, now is the time for all retailers to evaluate how E15 could fit into their business model,” said Monte Shaw, Iowa Renewable Fuels Association (IRFA) Executive Director. He notes that retailers with blender pumps will be able to take advantage of the new state incentive immediately since E15 can be already be sold to flex-fuel vehicle owners.

Shaw says that IRFA members are happy to see the EPA issue a final ruling for E15 use but still dissatisfied with the label design, even though it is an improvement over the initial proposal. “The Halloween pumpkin orange ‘draft’ label was apparently left to fade in the sun for a couple of months. That is a ‘peachy’ improvement,” said Shaw. “However, IRFA is very disappointed the EPA left in the ‘may cause damage’ warning for vehicles 2000 and older. The EPA admitted that they have ‘insufficient’ data to conclude that damage would occur, so I guess ethanol is guilty until proven innocent. Under the EPA’s rationale, E0 (gasoline only) pumps should have a similar warning, because running a car on gasoline certainly degrades the emissions control system over time.”

The new E15 incentive was part of a package of renewable fuels initiatives passed by the Iowa legislature this year and signed into law by Governor Terry Branstad which also includes a tax credit for E85 of 10 cents per gallon; a biodiesel tax credit of 3 cents per gallon for blends of B2 and higher; and infrastructure grants of up to $50,000 to install biodiesel, E85 and blender pumps.