A coalition of agriculture and energy companies has urged the Kansas House to approve a $5 million annual state tax credit aimed at encouraging gas station operators to expand the distribution of E15 fuel. This initiative seeks to benefit farmers, consumers, and rural economies by promoting higher ethanol blends. Currently, only 7% of fuel stations in Kansas offer E15, despite its approval for use in vehicles manufactured since 2001. The proposed tax incentive would provide retailers with a 5¢ credit per gallon of E15 sold between 2026 and 2031, potentially leading to increased infrastructure investments and broader consumer access to this alternative fuel.
Economic Benefits for Farmers and Consumers
The introduction of E15 fuel could have significant economic implications for both farmers and consumers. By expanding the availability of higher ethanol blends, this initiative aims to boost demand for locally grown crops like corn and sorghum. Rep. Ken Rahjes emphasized that such incentives would not only support renewable fuel production but also enhance market opportunities for agricultural producers. Additionally, consumers stand to benefit from potentially lower fuel costs due to the expanded availability of E15.
In recent years, approximately one-third of Kansas' corn production has been used in ethanol manufacturing. A modest increase in ethanol content within fuel blends could result in an additional 16 million gallons of ethanol consumption annually, sourced from nearly 5.7 million bushels of corn or sorghum. While precise price impacts are difficult to predict, increased demand for these commodities is expected to positively influence farmer prosperity, especially during periods of depressed agricultural prices. For instance, a 25¢ increase per bushel could yield a $25,000 premium for a producer harvesting 100,000 bushels of corn.
Addressing Industry Skepticism and Expanding Biodiesel Support
Despite the potential benefits, some lawmakers expressed concerns about targeting specific industries with tax incentives. Rep. Francis Awerkamp questioned whether such policies were justified when numerous sectors claim to benefit the state economy. However, advocates argue that Kansas must catch up with neighboring states that have already embraced similar strategies to promote E15 sales. Steve Seabrook from POET Ethanol Products highlighted the need for market development and consumer choice as key drivers behind the proposed tax credits.
During the committee hearing, representatives from the soybean and biodiesel industries also sought support for a companion bill aimed at enhancing biodiesel production and sales. This legislation would introduce a $5 million annual income tax credit for biodiesel blends of 10% or higher. Both bills propose capping the total annual tax credit at $5 million per industry and allowing unused credits to be carried forward for up to five years. These measures aim to stimulate investment in renewable fuels while fostering economic growth across rural communities.