Rural Incentives in Missouri Tax Cut Proposal Target Biofuels, Small Producers for Help

September 13, 2022

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by Rudi Keller (News from the States) When lawmakers return this week for a special session, most of the attention will be on Gov. Mike Parson’s proposal to cut income taxes by $700 million a year.

But Parson also wants the bill to include several tax credits intended to benefit rural Missouri by increasing the demand for crop-based fuels, encouraging small meat processors and boosting food production in urban areas. Some of the incentives are new, some are extensions of expired programs. And they were all included in a bill Parson vetoed because he didn’t like the short time they would be in existence.

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Three of the credits are new programs designed to support production and sale of gasoline and diesel with higher blends of alcohol and seed oil.

They are:

A 5-cents-per-gallon credit to retailers selling E15 gas, which is 15% ethanol instead of the 10% blend sold by most stations. The program would be capped at $5 million annually.
A credit of 2 cents per gallon or 5 cents per gallon for retailers that sell diesel with a biodiesel blend. The amount of the credit, capped at $16 million annually, is based on whether the blend is more or less than 10% biodiesel. The credit is refundable, which means that if retailers’ credits exceed their taxes, they will receive the difference from the state.
A refundable credit of 2 cents per gallon to biodiesel producers, capped at $4 million annually. Biodiesel is generally made from soy or other seed oil, but it can also be made from waste oil from plants or animals.

Missouri has six ethanol plants capable of producing 287 million gallons of ethanol per year, about 2% of national capacity. There are six plants making biodiesel, with a capacity of 253 million gallons, almost 9% of national capacity and the third-largest biodiesel industry of any state.

But ethanol and biodiesel are just a small fraction of the fuel used for cars and trucks. Ethanol supplies about 13% of the demand for gasoline nationally and biodiesel is about 5.3% of the diesel used for transportation.

In April, in response to rising gas prices, President Joe Biden relaxed rules limiting the sale of E15 fuel in summer months because of smog concerns. But relatively few stations offer it, in part because their equipment isn’t certified for it, said Ron Leone, executive director of the Missouri Petroleum and Convenience Association

And while most cars made in the past 10 years are rated by the manufacturer to use E15 fuel with no mechanical issues, many older cars are not. That also makes stores reluctant to offer the fuel, Leone said.

The association is opposed to any mandate requiring retailers to sell E15 fuel, he said.

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Providing incentives for retailers to buy new equipment or have existing pumps and tanks certified for E15 would increase consumption of Missouri-made energy, said Chris Wilson, general manager of Mid-Missouri Energy in Saline County, the state’s largest ethanol plant.

Right now, he said, ethanol makers export much of their production.

“I do think there is ample room for increased demand,” Wilson said. READ MORE

Tax cut on track in Missouri Senate (St. Louis Post Dispatch)