June 1, 2017 (Vol. 37, No. 11)

It’s time to get back to our natural roots—literally, the roots or stocks of crops that are normally removed from the field after harvest can and should be processed into biochemical properties. The beautifully complex chemistry found in nature is all we ever needed to replace petroleum-based plastics, or manufacture medical devices or industrial cleaners. It’s the next frontier of biosciences—an estimated $250 billion global industry—and one Midwest state is set to capture the largest slice of the pie: Iowa.

Like the global petrochemical industry developed in clusters around available feedstock—oil refineries—so too will the biobased chemical industry develop around feedstock sources: biorefineries. Iowa is the land of biorefineries, producing more ethanol and biodiesel than any other state. The only piece missing for total success was the right supporting policies, and in 2016, the Iowa Legislature passed the country’s first tax credit specifically designed for renewable chemical production.

The biorenewable chemical industry has immense economic potential and Iowa is prepared to capture a majority of this economic activity. For example, the tax credit offers $0.05 per pound of qualified chemicals produced, and start-up companies can claim up to $1 million annually. The USDA has called Iowa’s Renewable Chemicals Production Tax Credit the“strongest” incentive for the biobased chemical industry.

The program allocates $100 million in tax credits over ten years to be applied to the manufacturing of 40 key building block chemicals. Here are five quick things to know about the Renewable Chemicals Production Tax Credit program.

1.  No other state has an incentive like this
The program offers tax credits equal to five cents per pound of qualified chemicals produced, and the state will have the authority to grant up to $10 million in tax relief annually. A 2016 USDA report, “An Economic Impact Analysis of the U.S. Biobased Products Industry,” says Iowa’s Renewable Chemicals Production Tax Credit program, “represents the strongest existing incentive package for the global biobased chemical industry.”

2.  It’s not for food, feed, or fuel
Products eligible under this program must not be primarily used for food, feed, or fuel. However, food additives may be eligible.

3.  Iowa has the infrastructure and raw materials in place for advanced bioprocessing
Iowa has a network of more than 50 bioprocessing sites and one of the nation’s highest amounts of harvestable biomass. In addition, the state’s robust transportation infrastructure provides easy access to national and international markets.

4.  Bioprocessing research is concentrated in Iowa
Iowa is home to the National Science Foundation Engineering Research Center for Biorenewable Chemicals led by Iowa State University (ISU), the ISU BioCentury Research Farm, and the University of Iowa’s Bioeconomy Institute. With these essential pieces already in place, the passing of this bill further cements Iowa’s position as an innovative leader in a growing industry that accounts for more than $250 billion in revenue and thousands of jobs each year.

5.  This is a tax credit built on a stable foundation
The legislation creating the Renewable Tax Credit Program passed the Iowa State Senate 46-3 and the House 95-1, indicating its broad support, and demonstrating how businesses in Iowa benefit from fair and consistent government. 

Iowa Economic Development Authority

200 East Grand Avenue, Des Moines, IA 50309

Phone: (515) 725 3000

Website: www.iowaeconomicdevelopment.com

Number of Employees: 120

For more information on this tax credit program and doing business in Iowa, visit:
iowaeconomicdevelopment.com/bioproducts

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