At least five Iowa-based companies have projects in the works that would benefit from passage this year of a biorenewable chemicals tax credit, according to a new white paper, “Biobased Chemicals: The Iowa Opportunity,” released today by the Cultivation Corridor and the Iowa Biotechnology Association.

Among the companies that provided input for the report were Des Moines-based Kemin Industries Inc., Ames-based Renewable Energy Group LLC and Corn Oil One LLC in Des Moines.

In the report, Corn Oil One’s general manager, Joe Riley, said his company has plans to build a new facility to produce a biolubricant based on a new process it developed for purifying bio-oils. Additionally, the company plans to produce a low carbon biodiesel feedstock and an ingredient for bio-paint.

Kemin has plans to locate a new business in Iowa that would produce propionic acid, a key chemical it uses to control molds in animal feed, using ethylene sourced from corn. Kemin also has plans to expand production of butryric acid, a chemical that helps young animals better absorb food. CEO Chris Nelson said in the report that the tax credit would be an important factor in locating these operations in the state.

The bill provides for up to $10 million in tax credits to be issued on a first-come, first-served basis to companies, based on a tax credit of 5 cents per pound of biorenewable chemicals produced in the state during the calendar year.

Companies could receive up to $1 million in tax credits over a five-year period for investing in additional biobased renewable chemical facilities in the state, whether they’re add-ons to existing biofuel facilities or new construction.

“It’s fairly modest when we look at the fact that most of these facilities are tens of millions of dollars of capital investment,” said Brent Willett, executive director of the Cultivation Corridor.

The tax credit proposal, which is outlined in Senate Study Bill 3001, is structured to provide more access to the credits to smaller companies, Willett said: “So this is really not a credit that has currency for major companies. We see in the biorenewable chemical industry a number of small companies like Glycerin Solutions in Boone that are doing huge things. Those are the kinds of companies we’re targeting with this bill.”

 

Brent Shanks, Steffenson professor and director of the NSF Engineering Research Center for Biorenewable Chemicals at Iowa State University, co-authored the white paper with lead researcher Dermot Hayes, and Jill Euken. Shanks said that Iowa has the most deployed capital across the biobased processing industry of any state in the country. “On top of that, that capital is deployed across the entire state of Iowa, so it influences the entire state,” he said. 

“The other thing that’s very important is that as this grows off the existing industry, what will happen is this industry will nucleate, it will grow off its existing pieces,” Shanks said. “So if you are not there at the nucleation, you can be left on the sideline and not be part of it. So it’s absolute key to being there first so that this operation does not go somewhere else in the states.”

Iowa Economic Development Authority Director Debi Durham said the climate for passing the biobased renewables tax credit bill is much different now than it was in the previous legislative session, when the measure died in the Senate.

“We’ve come a long way,” Durham said following the announcement of the white paper. “Part of it was that (Senate President Michael) Gronstal challenged us that for his caucus we needed to look at something not just under the (tax credit) cap but truly revenue-neutral. What we did was basically carved out a space within the High Quality Jobs program, so it’s a dedicated tax credit under High Quality Jobs. Looking at our pipeline, I am very confident that we can do that without any compromise to our other programs.”

Sen. Rita Hart, chair of the Senate Economic Growth Committee, and Rep. Mary Ann Hanusa, who chairs the House Economic Growth Committee, both expressed support for the measure and said it carries bipartisan support during a press conference today at the Capitol.

Durham said she believes all the objections to the bill have been put to rest.