Iowa ethanol producers would have a cheaper, more direct way to get their product to major East Coast markets under federal legislation being proposed today. In February, two companies announced a joint plan to build a 1,700 mile ethanol pipeline from Iowa to New York, estimating it would cost three-billion dollars.
Iowa Senator Tom Harkin says his Biofuels Pipeline Act of 2008 would change the tax code to provide the same incentives for ethanol pipeline builders that oil pipeline builders already get.
"The tax code effectively bars publicly-traded partnerships from handling renewable fuels," Harkin says. "This is an absurd situation and it presents a major obstacle to America’s future use of ethanol and other renewable liquid biofuels."
Harkin hopes the legislation will jump-start the development of this, and other, green pipeline projects across the country. "There are a couple of companies that want to do this," Harkin says. "They have right-of-way right now from Illinois to New York and getting right-of-way from Iowa to central Illinois will not be that much of a problem."
Iowa is the nation’s number-one ethanol producer. The companies involved are Oklahoma-based Magellan and Buckeye Partners of Pennsylvania. The current proposal calls for three "hub" sites on the pipeline in Iowa. Ethanol producers could truck their fuel directly to one of the hubs, to be located near Mason City, Fort Dodge, and in O’Brien County, with other sites in Indiana and Ohio.
The facilities would also have connections to several Iowa ethanol plants which could feed the pipeline directly. Harkin, a Democrat, says the legislation would even out the tax codes to make the prospect of an ethanol pipeline a more attractive venture.
"What it would mean is that, right now, if they wanted to build an oil pipeline, they would get certain tax advantages, but if they build an ethanol pipeline, they don’t get ’em," Harkin says. "We just want to put them both on the same level playing field and it probably would reduce that three-billion dollar price tag substantially."
The pipeline would carry ten-million gallons of ethanol a day from the Midwest to the East Coast. The federal government is requiring refiners to be using 36-billion gallons of ethanol and other biofuels by 2022. Harkin says without ethanol offsetting some of the cost of fuel, gasoline prices would likely be up to 50-cents a gallon higher.