Ethanol (corn based) and biodiesel (soybean based) are the two renewable fuels agriculture would like to see used more frequently. The reasons are simple: they’re clean burning, made from U.S. corn and soybeans, and lessen our nation’s dependence on foreign oil.
Legislators have introduced bills in the Illinois General Assembly during the 2003 session that would give an incentive to produce and use more ethanol and biodiesel.
The current Illinois sales tax is 6.25 percent for regular petroleum-based gasoline and diesel. Gasohol, which is gasoline blended with 10 percent ethanol, and E-85 (15 percent gasoline and 85 percent ethanol) has a sales tax rate of 4.38 percent. The current biodiesel blends are taxed at the 6.25 percent rate.
Even though the current ethanol blended sales tax rate is less than the regular sales tax rate of 6.25 percent, it’s scheduled to sunset in 2014, which would give equal sales tax rates for both renewable and petroleum-based fuels.
The Farm Bureau is pushing for legislation which would lesson the state sales tax on biodiesel and extend the tax credit on ethanol-based fuels. Why should this legislation be passed? The first question is whether consumers would really be paying more when you look at the big picture. What is the cost to ensure a continuous flow of petroleum from foreign countries into the U.S.?
The basic formula when figuring the increased cost of biodiesel as compared to petroleum-based diesel is 1 cent more per gallon for every 1 percent of biodiesel. For instance, B2, which is petroleum-based diesel with 2 percent biodiesel added, would cost 2 cents more per gallon.
There are a few other things to consider when weighing the benefits of using ethanol and biodiesel that has a direct impact on our local economy and our health.
Illinois ranks second in the U.S. in corn production, with more than 1.5 billion bushels produced annually. Corn grown in Illinois is used to produce 40 percent of the ethanol consumed in the United States. More than 95 percent of the gasoline sold in the Chicago area contains 10 percent ethanol. Investment by the ethanol industry in Illinois exceeds $1 billion, generating 800 jobs in plant operations and 4,000 jobs in the industry-related service sector. Illinois ethanol production alone has increased the national market price for corn by 25 cents a bushel. This is 25 cents farmers put right back into the economy.
Biodiesel, the other clean burning fuel, is registered with the EPA as both a fuel and fuel additive. It has similar horsepower, fuel economy, and performance as compared to conventional diesel. Biodiesel is the only alternative fuel to have passed the Health Effects testing requirements of the EPA Clean Air Act. Those test results show it’s non-toxic, biodegradable, and free of sulfur.
Tests have shown the cancer-causing potential for biodiesel particulate matter is 94 percent less than petroleum diesel. Also, biodiesel reduces most EPA targeted emissions, such as carbon monoxide, unburned hydrocarbons, and particulate matter. For every gallon of diesel displaced by biodiesel, an 80 percent reduction in greenhouse gases is achieved. IBI