Iowa Law Promotes Soy Transformer Oils


Iowas governor signed into law yesterday financial incentives that encourage electric utilities to use transformer oils made using soybeans. Proponents said that annual sales of as much as 1 million gallons of fluid could be at stake.

This could have a significant impact in Iowa, said Luis del Valle, global marketing director for Cargill Industrial Oils and Lubricants, which manufactures soy-based transformer oils. There are a couple big public utilities in the state, and then there are numerous farm cooperatives. The biggest thing that this program will do is help cooperatives cover the costs of converting.

The bill signed yesterday by Gov. Tom Vilsack offers tradable tax credits to utilities that use soy-based transformer fluids. The state will give credits of $2 per gallon on up to 20,000 gallons to each utility. The program is modeled after a law that Iowa adopted last year to encourage manufacturers to convert to soy-based metalworking fluids. That rule offered tax credits of $2 per gallon on the first 2,000 gallons changed.

The tax credits for soy-based oils was one of four bills that Vilsack signed yesterday and which were written to foster alternative fuels and alternatives to petroleum products. Proponents say these measures will support Iowa farmers while helping reduce the nations dependence on oil imports.

Industry sources estimated that Iowa consumes roughly a million gallons of transformer oils per year, most of it made from naphthenic base oils.

Minneapolis-based Cargill may be the nations only manufacturer of transformer oils made from soy beans. Under a manufacturing, marketing and distribution alliance it makes oils sold under Cooper Power Systems Inc.s Envirotemp brand. Cargill also markets smaller volumes of oils under the Biotrans brand, which it purchased in 2002 from the University of Northern Iowas National Ag-Based Industrial Lubricants Center.

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