Post on 27-Dec-2015
Minnesota Biofuels Programsand the E20 initiative.
Perry Aasness – Deputy Commissioner
Minnesota Department of Agriculture
Biofuels in Minnesota
• State Government and the Rise of Renewable fuels in Minnesota
– Goals for program:1. Boost the farm and rural economy
2. Reduce dependence on foreign fossil fuels
3. Improve urban air quality
Biofuels in Minnesota
• Minnesota responds:– 1980 Minnesota Legislature creates “Blender’s
Credit”• Blenders get tax credit of 4 cents/gallon for gas
blended with 10 percent ethanol
• Leads to over 40% market share for E10
Biofuels in Minnesota
• Problems arise:– Pump credit reduced from 4 to 2 cents– Gasoline marketers resist– By 1986, ethanol’s market share down to 7
percent– State production capacity stalled at 1 million
gallons
Biofuels in Minnesota
• Farm crisis gives ethanol new life:– Minnesota loses 8,000 farms between 1984 and
1986– Two-thirds of corn crop exported as low-priced
raw commodity– Virtually no in-state corn processing– Policy-makers make ethanol a priority
Biofuels in Minnesota
• Air quality emerges as third driver:– Federal Clean Air Act requires Minneapolis-St.
Paul Area to include oxygen in all gas sold in winter months staring November, 1992
– State requires year-round in use 1995– State requires statewide use in 1997
Biofuels in Minnesota
• Increasing Ethanol Production:– Statutory Goal: boost from 1.5 million gallons
to 220 million gallons (later increased to 450 million)
– Key elements• 20 cent per gallon producer incentive payments
• Financial, technical and organizational support
• 10% mandate gives market assurance to lenders
Biofuels in Minnesota• State producer incentive payments:
– 20 cents per gallon– Limited to first 15 million gallons produced by
a plant each year– 10-year limit for payment eligibility– Eligibility requires local equity & financing
partner – Payments follow documentation of quarterly
production
12
34
5
7
9
11
14 14
0
2
4
6
8
10
12
14
Nu
mb
er o
f P
lan
ts
1986 1988 1991 1994 1995 1996 1997 1998 1999 2005
Year
Number of Ethanol Plants in Minnesota
Biofuels in Minnesota
• The results:– 14 ethanol plants of which 12 were built as farmer-
owned coops and LLCs - two more under construction
– Production capacity surpasses 450 million gallons by June 2005
– 20 percent of corn crop used for industrial processing
– $200 million in value added to commodities
– 750 new jobs in the plants, 5,000 external jobs supported by plants
Biofuels in Minnesota
• Impacts of farmer-owned processing:– Corn-to-ethanol adds $2 to $2.50 in value per
bushel– Each 15-million gallon plant adds up to $14
million in value to 5.5 million bushels of corn each year
– Money pumped into local communities
Biofuels in Minnesota• Goals achieved:
– Boost farm and rural economy • Value added to 20 percent of corn crop
• 12 farmer-owned value-added coops & LLCs
– Reduce reliance on foreign energy • Each gallon of ethanol cuts import needs by 7
gallons
– Clean up environment • Twin Cities in attainment for carbon monoxide
Biofuels in Minnesota
• September 2004: Governor Pawlenty takes Minnesota to the next level– Rolls out plan to make Minnesota the “Saudi
Arabia of renewable energy”• Move to 20 percent ethanol content in state gasoline
• Boost E-85 fuel use in state fleet
• As chair of Governors’ Ethanol Coalition, advocate for other states to adopt E-10
Biofuels in Minnesota
• Minnesota legislature approves with bi-partisan support– E-20 bill signed into law in May 2005, passed by
House (91-43 vote) and Senate (54-12 vote)– E-20 ethanol requirement will take effect in 2013
unless ethanol has already replaced 20 percent of the state’s motor vehicle fuel by 2010
- $500,000 allocated to assist stations in converting to E-85—over 150 stations online.
- $200,000 to study ethanol combustion (E20)
Biofuels in Minnesota
• Biodiesel Mandate reaches targetMinnesota’s 2 percent biodiesel requirement will become effective September 29th
– FUMPA-Redwood Falls –3 million gallons– Soymor-Albert Lea—30 million gallons, operating– MSP- Brewster—30 million gallons, in production – Minnesota has 32,000 farmers growing soybeans– Minnesota is the third largest producer of soybeans
U.S. Oil Production vs. Imports