“Renewable fuel production has a long history in this state and now it is time to move forward and increase access to E15 to our citizens and those traveling through our great state,” Rahjes said.
Only 150 of 2,000 fueling stations in Kansas about 7% statewide offer products containing 15% ethanol and 85% unleaded gasoline. For more than a decade, E15 has been approved for use in U.S. vehicles manufactured in 2001 or after.
St. Marys Rep. Francis Awerkamp, a Republican on the tax committee, asked why the Legislature should target an income tax break for fuel station operators rather than enact tax policy useful to a wide range of Kansas businesses.
“There’s a lot of businesses in Kansas that can make a claim that they’re good for Kansas,” Awerkamp said. “How do we explain carving out a very, very specific industry and giving them essentially a subsidy for their capital investment?”
Steve Seabrook, an executive at POET Ethanol Products in Wichita, indirectly responded to Awerkamp’s skepticism. He said Kansas needed the state income tax incentive to catch up with Nebraska, Missouri, Iowa and other states that embraced the strategy in a bid to jumpstart E15 sales.
“We’ve had a hard time getting it rolling,” Seabrook said. “The main reason you put an incentive out here is to get market development and consumer choice out in front of everybody.”
He said POET marketed 2 billion gallons of ethanol annually from 34 refineries, including POET’s 27 plants. POET also purchased 7% of the U.S. corn crop each year and was tied to 22% of the nation’s ethanol production.
During the House committee hearing Monday on House Bill 2012, soybean growers and biodiesel manufacturers stepped up to request consideration of a companion bill that would expand the concept to create a $5 million income tax credit to bolster production and sales of biodiesel in Kansas. That tax break would apply to sales of 10% or higher blends of biodiesel.
“The same way ethanol is to gasoline markets, biodiesel and renewable diesel are to the diesel markets,” said Kaleb Little of the Kansas Soybean Association. “Our economy is powered by the diesel engine.”
Under both pieces of legislation, unused state income tax credits could be carried forward by alternative-fuel retailers for up to five taxable years. The credit wouldn’t be refundable. Both bills would cap the annual tax credit for their respective industries at $5 million per tax year. The incentive would apparently be allocated by the Kansas Department of Revenue to qualified retailers on a first-come, first-served basis.
Josh Roe, CEO of the Kansas Corn Growers Association, said that in the past five years an average of 33% of corn produced in Kansas was used in ethanol production.
He said Kansas consumers bought nearly 1.1 billion gallons of gasoline annually. A 1% increase in the percentage of ethanol in the fuel blend would lead to consumption of 16 million additional gallons of ethanol drawn from 5.7 million bushels of corn or sorghum, he said.
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