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Earlier this month the Minnesota Bio-Fuels Association, along with the American Coalition for Ethanol, the Renewable Fuels Association and 29 other stakeholders, lent its name to the white paper, “A Clean Fuels Policy for the Midwest.” For more than nine months we participated in stakeholder discussions that developed the white paper, which lays the foundation for a clean fuels policy that could expand ethanol usage in Minnesota’s transportation sector.
Simply put, a clean fuels program is a performance-based incentive program that supports the usage of fuels with a lower lifecycle carbon intensity (CI) such as ethanol. Moreover, this program is designed to contribute to existing goals at the state level such as the Minnesota Petroleum Replacement Promotion Law, which calls for ethanol to comprise 30 percent of all transportation fuel in Minnesota by 2025.
While we are unlikely to meet that target in the next five years, a Minnesota Clean Fuels Policy could set us on the right path to achieving that goal and more. This is because when there is an economic value on carbon, the right incentives are placed for more ethanol usage in Minnesota’s transportation sector.
Here’s how the policy would work: a governing body is established and a price is set for a ton of carbon (greenhouse gas emissions). As farmers and ethanol producers continue to improve their respective CI scores, so does ethanol’s CI score improve. The standards set through the policy and ethanol’s low CI then provides the necessary incentive for the petroleum industry to use more ethanol.
The policy could also lead to the usage of mid-level blends of ethanol as well as the introduction of new vehicles such as a plug-in flex fuel hybrid because auto manufacturers would also be provided an incentive.
And just like it would for the Minnesota Petroleum Replacement Promotion Law, a Minnesota Clean Fuels Policy would contribute to achieving the Walz Administration’s greenhouse gas emissions goal in the transportation sector.
Last year, the Minnesota Department of Transportation released a report that said a push for higher blends of ethanol and the necessary storage and dispensing infrastructure is a critical component in decarbonizing the state’s transportation sector.
The need for rapid GHG reductions underscores the need for more ethanol in the global transportation system. Over here in Minnesota, ethanol’s GHG savings are widely known but there hasn’t been an official policy that recognizes ethanol’s improving CI scores as a result of sustainable farming practices and increased efficiencies at ethanol plants.
Furthermore, a properly crafted Clean Fuels Policy for Minnesota holds the potential to further transform production efficiencies from the farm to ethanol plants to end-users and in turn, replace significant volumes of carbon-intensive petroleum. If we get this right, the beneficiaries will be farmers (and by extension rural communities), ethanol producers and present and future generations of Minnesotans.
The Covid-19 pandemic has upended much of life as we knew it a few weeks ago. First, and foremost, we extend our best wishes to all of you as you work to protect the safety and health of your teams and family members. And to the ethanol producers that have stepped up to the current challenge by managing multiple priorities while making renewable transportation fuel, animal feed and ingredients for sanitizers, we thank you.
In an effort to slow the spread of Covid-19, Gov. Tim Walz has issued a shelter-in-place order in Minnesota for two weeks. During this period, there will be a big decline in the sale of transportation fuel which in turn will adversely impact Minnesota’s ethanol industry.
We will continue to engage with members of Minnesota’s Congressional Delegation, the Minnesota Department of Agriculture and state lawmakers by providing updates on the present and anticipated challenges facing our ethanol industry and offering some suggestions for ways to keep our ethanol industry viable.
One suggestion is a funding package to keep ethanol plants open. Rural Minnesota needs the jobs created and provided by ethanol plants and retaining those jobs is our top priority. We are also looking at various funding mechanisms to cover some of the costs associated with the procurement of corn.
Finally, on the advocacy front, we have been working with a variety of state agencies and the Governor's office to find certain regulatory flexibility in response to the need for sanitizers and other valuable ethanol co-products.
We are also working with E15 fuel retailers in the state to shift an even greater share of their existing and foreseeable consumer demand to E15. We have also launched advertising campaigns encouraging consumers in the Twin Cities who have to travel during this period to support Minnesota’s local economy by fueling up with E15.
To all of our friends and supporters, we wish you the very best during this challenging time and extend our sincerest gratitude to all front line healthcare workers.
Since the onset of the COVID-19 pandemic, Minnesota’s ethanol industry, like the rest of the nation, has and continues to face an unprecedented crisis. Some plants have reduced production by as much as 50 percent while others have temporarily idled production. This, in turn, has adversely affected the countless number of industries that work closely with Minnesota’s ethanol industry.
Over here at the Minnesota Bio-Fuels Association, we have been working closely with our state government and congressional delegation to find ways to keep our industry afloat and position it toward an upward trajectory when this crisis ends.
Earlier this month, as demand for sanitizing agents skyrocketed, the FDA relaxed its rules concerning the use of industrial alcohol from ethanol plants for sanitizer. Back here in Minnesota, we worked closely with the Minnesota Pollution Control Agency, the Departments of Agriculture and Public Safety - Alcohol and Gambling Division and the Department of Employment and Economic Development (DEED) to provide our ethanol producers with the necessary guidelines to produce 190 proof and 200 proof ethanol for hand sanitizer or surface sanitizer. Since then, several ethanol producers in Minnesota have diversified their operations to produce ethanol for in-demand sanitizer products.
Other opportunities for diversification for the ethanol industry include meeting the growing demand for CO2 from beverage makers and the livestock industry. We have engaged several engineering firms to explore some options for the rapid deployment of systems to capture CO2 during the ethanol production process. We hope we’ll be able to share some developments in this area with you in the very near future.
Still, it is important to note that these diversification opportunities are not nearly enough to replace the gallons of ethanol that have been lost from this crisis. As such, we have been working with our congressional delegation, the Walz Administration and state lawmakers for some aid that could keep our ethanol industry afloat.
One of our proposals includes cash payments for bushels of corn that were processed by an ethanol plant over a certain date range based on tracked and recorded data. These cash payments would help ethanol plants remain financially viable for a few months so that they will be ready to resume full production when this crisis begins to dissipate. Additionally, we have been working with DEED to provide our ethanol producers with up-to-date information about the federal Paycheck Protection Program (PPP) and other loan options that are part of the CARES Act to help them retain their teams.
For the medium and long-term viability of the ethanol industry, we have long advocated to our congressional delegation on the need for funding for fuel infrastructure that can dispense E15 and other higher blends of ethanol. We are pleased to note that on April 28, Minnesota’s Rep. Angie Craig introduced the bipartisan Clean Fuels Deployment Act of 2020 which authorizes $500 million over five years to help retailers offer higher blends of ethanol. This initiative will help increase the availability and use of E15 and other blends and provide rural Minnesota with some much needed economic relief while reducing harmful greenhouse gas emissions.
In the coming days and weeks, we hope we will be able to share with you more positive developments for our industry. There is a light at the end of the COVID-19 tunnel and it is aimed at a new and positive upward trajectory for our renewable fuels industry.
When the US Senate returns from its one-week Memorial Day break, it will begin discussions for a fifth coronavirus relief bill.
With unemployment at record highs and the economy contracting at unseen rates, there is little time for discussions. Relief is needed now and this time around, the Senate should follow the lead of its colleagues in the House and include the ethanol industry in any aid package.
More than 130 ethanol plants across the nation have partially or fully shutdown operations as a result of the COVID-19 pandemic which has led to a plunge in fuel demand. In Minnesota, the traffic volume in the Twin Cities metro area was 67.1 percent below a baseline for 2016-2019.
Since then, as the state economy has slowly reopened, the traffic volume has increased. But as of May 20, it was still 15.5 percent lower than the baseline. As such, the ethanol industry in Minnesota is still in serious distress, putting in jeopardy the 18,000 jobs it supports.
The Senate does not need to look too hard to find a way to help the ethanol industry.
Two of its members, Sen. Chuck Grassley and Sen. Amy Klobuchar, introduced the Renewable Fuel Feedstock Reimbursement Act last week.
Advocates for the ethanol industry like MN Biofuels have in the past month suggested to both Sen. Klobuchar and Sen. Tina Smith that cash payments for bushels of corn processed by an ethanol plant during a specific timeframe would help keep them financially viable for a few months.
This bill does that.
Under the act, the USDA will use the Commodity Credit Corporation to reimburse ethanol producers 75 percent of the price of feedstock purchases made from Jan 1, 2020 to March 31, 2020.
The Senate could also take a page out of the HEROES Act that was recently passed by Congress.
The HEROES Act includes the Renewable Fuel Reimbursement Program which would require the USDA to make payments to renewable fuel or advanced biofuel producers that experienced unexpected market losses due to the pandemic.
The program will pay ethanol producers 45 cents per gallon of ethanol produced from Jan 1, 2020 to May 1, 2020. Minnesota’s Rep. Collin Peterson and Rep. Angie Craig were both instrumental in including aid for the ethanol industry in the HEROES Act.
The ethanol industry, and to a larger extent the agriculture industry, cannot wait for the Senate to drag its feet during the deliberations for the upcoming relief package.
Both the Renewable Fuel Feedstock Reimbursement Act and the Renewable Fuel Reimbursement Program would significantly help the ethanol industry. Either one would provide the industry with a much-needed shot in the arm.
Members of the Senate who like talking about homegrown industries and American jobs should act fast to save America’s ethanol industry.
Unlike those senators, the industry doesn’t have the luxury of taking a one-week Memorial Day break.
The worst may be over for the ethanol industry as production in Minnesota and other parts of the country begin to approach pre-pandemic numbers. But it would be a mistake for anyone to believe the industry is back on a sound footing.
When traffic volumes plunged in April and May, ethanol production throughout the country fell to unforeseen levels with many plants idling production while others reduced output by 50 percent.
That is why it is imperative for the Senate to include the financial aid package for the ethanol industry that was introduced by Sen. Chuck Grassley and Sen. Amy Klobuchar in the next COVID-19 relief bill.
While this aid package is much needed for the short-term to stabilize the industry in this turbulent time, there are several measures that can be adopted at the state level to rebuild and regrow the ethanol industry for the medium and long-term.
Moreover, these measures would grow the economy, retain jobs in the ethanol industry and significantly cut greenhouse gas (GHG) emissions in the transportation sector.
One way is to boost the use of E15. State vehicle fleets should be able to have access to, and use, E15 and E85. As more fleets use E15 and E85, these renewable fuels will gain even greater acceptance and become the new standards.
The second measure is focused on the use mid-level blends in non-flex fuel vehicles. The Walz Administration could set up a task force to identify the next steps to obtain data required by the EPA to certify a mid-level blend fuel for use in non-flex fuel vehicles and obtain certification.
Biofuel infrastructure should also be a high priority to give Minnesotans greater access to renewable fuels. This can be done through creative funding options to help fuel retailers transition to E15 and higher blends. With 370 fuel retailers in the state already offering E15, we should focus on bringing another 290 retailers online.
With 660 fuel retailers offering E15 and higher blends, we will reach critical mass and help E15 become the new standard in Minnesota.
Another medium to longer term project would be a clean fuels policy. If such a policy were properly designed to account for the GHG value of ethanol and technology improvements made at ethanol plants, the policy would amplify the benefits of ethanol compared to petroleum. This could provide a huge catalyst for the petroleum industry in Minnesota to use E15 as the new regular fuel.
Another measure would be to use the Clean Cars Minnesota rulemaking process to stimulate automakers to offer a variety of Low Emission Vehicles (LEVs) powered with ethanol.
This vehicle rule gives us an opportunity to advocate for flex fuel, hybrid flex fuel and plug-in hybrid flex fuel as well as evolving technologies that can use E100. Success with this initiative will ensure future vehicles are compatible with E15 and higher blends.
All these measures will serve to fulfill a vision wherein Minnesota’s transportation sector is powered with increasing amounts of a homegrown renewable fuel and the energy dollars now used to import petroleum are kept in Minnesota, and the GHG emissions from the transportation sector are more rapidly reduced.
To say that 2020 has been a challenging year for the ethanol industry would be a severe understatement.
A recent analysis by the Renewable Fuels Association shows that the industry has already suffered $3.4 billion in lost revenue this year with the possibility of losing up to $9 billion next year.
Just to reiterate, this is an industry that annually supports some 350,000 jobs nationwide and contributed $43 billion to GDP last year.
But somehow, every time the Senate comes up with a coronavirus relief package, the ethanol industry gets passed over.
Their latest relief package includes $20 billion allocated for agriculture which could theoretically be used to help ethanol producers. But considering what the industry has been put through in the last few years, you’ll forgive us if we’re a bit skeptical that this would actually happen.
Even more absurd is the fact that the Senate is refusing to include a proposal by Sen. Chuck Grassley and Sen. Amy Klobuchar to provide direct financial aid to ethanol producers through the Renewable Fuel Feedstock Reimbursement Act of 2020.
The problems the renewable ethanol industry have been saddled with require immediate financial aid. The problems are real, relevant and big.
Despite their track record on inaction, the Senate can still get this right - provide direct financial aid, now, to the ethanol industry so it can fulfill the Renewable Fuel Standard.
The industry has a proven track record of building up rural communities, stimulating the economy and cutting greenhouse gas emissions in the transportation sector.
Surely, this is an industry worth helping?
Then again, considering how tone-deaf some members of the senate seem to the plight of Americans suffering from a recession, why should we expect anything different?
On a personal note, we want to express our condolences to Larry Johnson’s family.
Larry was known as the “ethanol man.” But when I met him in 2011, and throughout the intervening years, I came to know Larry as the renewable fuel visionary. He also saw a pathway to advanced biofuels and understood the role it could play in aggressively cutting greenhouse gas emissions in the transportation sector. When we get the costs and benefits properly adjusted, that vision will again take off.
We will miss Larry’s foresight in all things ethanol.
What would it take to cut petroleum use by at least 85 percent in the near term? What vehicle powertrain can use two renewable sources of energy and on one fill provide a range greater than 450 miles? It’s the plug-in flex fuel hybrid vehicle.
As California and other states, including Minnesota, explore the role of ultra low emission vehicles in cutting harmful greenhouse gas emissions, it’s time for a closer look at the plug-in flex fuel hybrid, which is built on existing powertrain technology.
This vehicle is comprised of three key components.
The plug-in component enables this vehicle to charge a traction battery and operate in electric vehicle mode. An electric vehicle range of approximately 30 miles, according to research from the University of Southern California, Davis, is sufficient for commutes in certain metro areas. To make the EV power component truly green and low emission, the electricity used for charging the battery should be generated with only renewable energy sources such as that from wind or solar photovoltaic systems.
Then there is the flex fuel component of this vehicle that can use E85. When a driver exhausts the EV mode, the flex fuel powered engine operates the powertrain. This dual energy combination (from the plug-in and ethanol) significantly extends the range of travel. The dual energy arrangement is especially well suited for those climate zones where greater amounts of energy are required to provide vehicle cabin cooling and heating.
The hybrid component mirrors that in vehicles with traditional hybrid powertrain systems. In typical braking systems, the brakes convert vehicle momentum into heat which is lost to the environment. A hybrid system, however, captures the energy from braking to charge the traction battery.
Moreover, as noted above, carmakers won’t have to make significant investments to offer plug-in flex fuel hybrid powertrains in their vehicles. Plug-in hybrids and flex fuel vehicles already exist in the market. In fact, in 2017, Toyota introduced a flex fuel hybrid vehicle in South America.
With the right signals from regulators and consumers, carmakers will be compelled to offer plug-in flex fuel hybrids to the market in the near term and improve energy security by cutting dependence on one energy source and dramatically reduce greenhouse gas emissions in the transportation sector.
The Governor’s Council on Biofuels, earlier this month, set forth some constructive recommendations for attaining at least 25 percent volume ethanol in Minnesota by 2025, stimulating enhanced production efficiency of biofuels and helping to reduce Greenhouse Gas emissions in the transportation sector. These recommendations, when taken as a package, chart a very positive future for ethanol in Minnesota.
Five key recommendations of the Council, if fully implemented, hold the potential to boost the agriculture sector, significantly increase demand for renewable ethanol over more carbon intensive petroleum and renew Minnesota’s leadership role on ethanol issues.
One of the recommendations calls for making the transition from the standard E10 fuel to E15. Most notable in these recommendations is the realization that many fuel retailers will need some type of financial assistance to properly upgrade their fuel storage and dispensing systems to offer the better emission reduction E15 to Minnesotans. Interestingly, the Council also calls for equipment standards that will enable fuel retailers to offer even E25 at some point in time.
In its wisdom and foresight, the Council also set the course for work on a Clean Fuels Program. Absent action by the Minnesota Legislature in the 2021 session, the recommendation calls for the use of a working group to chart a course of action. If properly constructed, a CFP holds the potential to stimulate further reductions in transportation sector GHG emissions while giving a boost to Minnesota agriculture. Agriculture holds tremendous potential for reducing and sequestering GHG emissions. Therein rests an important tool and economic opportunity for farmers.
While it seems straightforward, there are a number of hurdles to getting E85 and E15 into state fleet vehicles. Council recommendations call for the Governor to use an Executive Order to make biofuels a priority for use in State vehicles. This is where the Minnesota Bio-Fuels Association biofuel locator app can of service - rather than paper documents in vehicles, state employees can simply use the app to find the nearest fuel retailer that offers E15 and higher bends.
Most of us know the level of disinformation that surrounds ethanol. Given the challenges on this front, the Council calls for a coordinated communications and education program to provide Minnesotans with the facts about homegrown and produced ethanol and to provided a stable source of funding.
Lastly, the Council calls for increased funding to the bioincentive program. This is a sure path to boosting the production of advanced biofuels and further lowering their carbon intensity thereby making it an even greater value to Minnesotans.
Although the Minnesota ethanol industry is confronted with some short-term challenges due to the Covid-19 crisis, implementation of the Councils recommendations suggest a positive future and some new paths for renewable ethanol in Minnesota to boost the economy and reduce GHG emissions.
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In the past few weeks, we have been working with state lawmakers to advance a bill that would provide partial funding for fuel retailers to make the necessary infrastructure upgrades to offer E15. This initiative holds the potential to strengthen market signals to speed the adoption of E15 in Minnesota.
Let’s be clear, MN Bio-Fuels has long held the position that it is the duty and obligation of the petroleum industry to provide the necessary fueling systems to offer at least E15 to Minnesotans.
But 13 years after the RFS and the Minnesota Petroleum Replacement Law (which calls for 30 percent biofuel by 2025) and the availability of E15 for eight years, only 10 percent of fuel retailers offer E15.
Rather than make the necessary infrastructure investments, big name fuel brands have divested many retail stores and shifted the costly infrastructure burden to the local retailers. So, despite the higher standards called for in the laws mentioned above, fuel retailers have not significantly increased access to renewable ethanol.
In the first Biofuel Infrastructure Partnership under the USDA, the fuel retailers that participated in the program did upgrade their storage and dispensing equipment to offer E15 and higher blends. With the better value E15 at these retailers, some competitors in a stronger financial position adapted their existing fuel systems so they could compete by offering E15.
But, there are only 384 fuel retailers, out of about 3,300, offering E15 in Minnesota. To put a finer point on this matter, based on the National Renewable Energy Laboratory’s study on E15 market penetration, Minnesota needs approximately 660 stations offering E15 to attain an adequate market presence to make E15 the new standard. By providing some infrastructure funding assistance to fuel retailers through this proposed bill, we could get closer to that number.
As for the previous EPA’s proposed rule to change underground storage tank rules, does the proposed rule actually remove the barriers to E15? We are in the process of ascertaining the potential effect of the rule given the prevalence of secondary containment systems for underground storage tanks and pipes in Minnesota.
Moreover, the underground storage tank is only one part of the fuel distribution system. The compatibility of dispensers must still be addressed. If the underground storage tank is eliminated as a barrier to E15, dispensers will still need to be brought into compliance.
As such, in light of the ambiguity in the proposed rule by the EPA and other existing barriers in the market, the aforementioned infrastructure bill is essential to expanding access to E15 in Minnesota. And this initiative can augment all efforts to make E15 the new standard in Minnesota.
The recently released Climate-Smart Agriculture Progress Report from the USDA is a good first step in compiling initial conversations and recommendations for a unified strategy to build climate resilience and cut greenhouse gas (GHG) emissions.
The report explores various “themes” that emerged from comments and stakeholder process, including the role of voluntary environmental markets and concerns about at-the-farm level policies or programs.
Moreover, it is an excellent first step in a very complex process of building on the strengths of the agricultural sector and its role in fighting climate change. That role, through voluntary incentives, could involve direct on the farm actions to increase energy efficiency as well as to green the biomass supply used to produce biofuels. Many herculean and creative efforts will indeed be needed to timely and effectively tackle climate change.
E15 and higher ethanol blends are tools which are already reducing GHG emissions in the Minnesota transportation sector. Even more can be done with those tools to further reduce GHG emissions. One action, for instance, is to give biofuels greater access to the marketplace via additional storage and dispensing infrastructure. The result will be reduced carbon intensity of liquid transportation fuel.
While ethanol producers strive to use the latest technology and processes to reduce the carbon intensity of their renewable fuel, even more can be done to reduce the carbon intensity of the biomass supply chain.
While the report covers many issues, as part of the ongoing dialogue with stakeholders, we welcome the opportunity to explore how voluntary incentives could be used to more rapidly “green” the biomass supply chain. For biofuel producers in particular, the foundational issues are whether the biomass supply chain is actually made “greener” (lower carbon intensity) and the carbon accounting method is robust and accurate.
The report and what it reflects is certainly a step in the right direction but it is missing clear goals and timelines for action and results. Now is the time to build upon the strengths in the agriculture sector so as to foster the rapid adoption of GHG reduction practices and buy-in to voluntary environmental markets. The data, information, science and evidence is crystal clear on climate change: time is of the essence when it comes to drastically cutting GHG emissions.
On June 26, Gov. Walz signed into law the Agriculture Omnibus Bill (Chapter 3, House File 8). The bill contains a variety of provisions, but the ones of special interest to biofuel stakeholders are those with specific policy language and funding for biofuel infrastructure. Read in conjunction with the recommendations of the Governor’s Council on Biofuels, this is a bridge funding package to expand access to E15. The provisions of this law will enable more retailers to upgrade their storage and dispensing systems now while new policy is shaped to create a robust and enduring funding mechanism so hundreds more fuel retailers can cross over to E15.
The law, at Section 2, subdivision 4, addresses both the funding and policy factors. Grants, totaling $6 million, will be available through June 2023. Fuel retailers will be eligible for the grants if they have 10 or fewer stations located in Minnesota and their equipment is unable to handle E25. The grants can be used to upgrade dispensers, fuel storage tanks and other dispensing system equipment. With a maximum grant award of $200,000, at least 30 fuel retailers will be able to upgrade their storage and dispensing systems to offer E15 and higher ethanol blends. In cases where, for instance, only the fuel dispensers need to be upgraded, the available funds will enable even more fuel retailers to offer E15.
This grant program is an excellent first step in building the bridge to get us from about 400 fuel retailers who now offer E15 to many hundreds more offering at least E15 across Minnesota. Based on recent interviews with fuel retailers, MN Bio-Fuels estimates that nearly 80 are ready to apply for grant funding so they can offer Minnesotans E15 and higher ethanol blends.
Since the interest in the E15 grant funding is so popular, the next step would be the adoption of the recommendations of the Governor’s Council on Biofuels that call for the development of “a state funding package with a dedicated funding source, modeled after the Petrofund.... Funds could be used to leverage federal funds and funds from private sources through public/private partnership with biofuel interests and other vested parties.”
That said, this grant program will further accelerate the momentum for E15. Rep. Sundin, Sen. Westrom and Gov. Walz are to be commended for their leadership on this issue and their commitment to fulfilling the Petroleum Replacement Promotion Law (Minn. Stat. 239.7911) by enabling more fuel retailers to offer E15. As we use more homegrown fuel in Minnesota, we will further boost the economy, decrease our dependence on petroleum and cut more greenhouse gas emissions in the transportation sector. These are real wins for Minnesotans.
By Brian Werner, Executive Director.
Besides perhaps for Prince, if there’s one thing for which our state is known, it is our reputation of being “Minnesota Nice.” You’ve heard this a million times, right? When I introduce myself at out-of-town receptions as a Minnesotan, it’s always one of the first questions I’m asked (often in the Fargo accent). What is MinnesOOOta Nice?
While there are many ways to define this cultural stereotype, most people would say it is a proclivity toward being passive-aggressive, possessing mild-mannerisms, or having the urge to not stand out from the crowd.
All that being true, when I first started working on biofuel and agriculture policy for Minnesota public servants like U.S. Senator Amy Klobuchar and former U.S. Representative and House Agriculture Committee Chairman Collin Peterson, I was surprised to learn the prominent role that our state played in establishing the ethanol industry. Often referred to as the “Minnesota Model,” the ethanol industry’s foundations began here in the Upper Midwest with the dedicated, grassroots efforts of our farmers, and the partnerships they formed with one another and private and public entities.
If kick-starting the homegrown energy renaissance wasn’t enough, Minnesota doubled down on ethanol policy in the subsequent years. To start, we became the first state in the nation to mandate the use of ethanol in our fuel supply. Second, we started selling E15 or Unleaded 88 at Penn Minnoco in south Minneapolis in October 2013 and today, in just under ten years, you can find E15/U88 at 422 Minnesota retail locations. Lastly, if you take a flex-fuel vehicle out for a drive around Minnesota this fall, you’ll have access to more E85 fueling locations than anywhere else in the nation.
When it comes to ethanol, Minnesota stands out.
That is why I am honored and excited to assume the role of Executive Director of the Minnesota Biofuels Association. Minnesota has a wonderful story to tell about developing and fostering a homegrown source of transportation fuel that is better for consumers, better for the environment, and better for rural economies. We shouldn’t be shy about telling that story.
But while we should absolutely tout our successes more often, we can’t afford to rest on our laurels. As the critical need to decarbonize transportation, reduce dependence on imported oil, and save consumers money at the pump grows, the leadership opportunities for ethanol grow, too.
Minnesota’s leadership on biofuel policy is needed now more than ever. I look forward to working with all of you to strengthen the voice of the Minnesota Biofuels Association and the biofuels industry as a whole to ensure that ethanol’s best days have only just begun.
Last week, Minnesota Governor Tim Walz released his budget proposal for Fiscal Years (FY) 2024 – 2025 and incorporated several important priorities for the bio-economy. But if you didn’t read all the way to page 63 of the agriculture recommendations, you may have missed this important sentence: “E15/Unleaded 88 appears to be on its way to becoming the ‘new normal’….”
It is undeniably true that we are well on our way to meeting an ethanol blend rate of 15 percent. According to recent data from the U.S. Energy Information Administration, Minnesota led the nation in 2021 with an ethanol consumption rate of 12.58 percent. Because ethanol cuts carbon emissions by nearly 50 percent compared to gasoline and is cheaper at the pump (E15 saves consumers an average of $0.10/gal), the higher we go, the higher the benefit to Minnesota’s environment and economy.
As this legislative session continues, the Minnesota Bio-Fuels Association will be working to secure biofuel infrastructure investment and the removal of regulatory barriers for higher ethanol blends because certainty in agriculture markets, lower fuel prices, and cleaner air should be the “new normal” in Minnesota.
Much like a successful “March Madness” basketball team, a successful legislative strategy needs to combine an efficient offense with a lock-down defense.
Offense
Legislative Committees in Minnesota must act favorably on major appropriation and finance bills covering the next biennium (fiscal years 2024 and 2025) by next Tuesday, April 4. Ahead of this deadline, we have been actively working to advance key funding priorities to assist ethanol producers in Minnesota.
- Biofuel Infrastructure. Legislation has been introduced in both chambers (SF 1246 – Kupec; HF 1474 – Frederick) to provide grant funding for upgrading or replacing infrastructure at fuel retail locations to offer higher biofuel blends. We testified in support of both bills and, this week, both committees included biofuel infrastructure funding in their respective omnibus finance bills. The Senate bill matches Governor Walz’s budget proposal at $9 million ($4.5 million per year), while the House proposes $6 million ($3 million per year).
- Bioincentive payments. Legislation to provide funding to reimburse biofuel producers for the commercial-scale production of advanced biofuels has been introduced in both chambers (SF 1178 – Hauschild; HF 1477 – Tabke). We provided supportive testimony and when the House and Senate Agriculture committees released their omnibus bills this week they included strong Bioincentive funding. The Senate bill provides $12 million ($6 million per year), while the House provides $13.5 million ($6.75 million per year), of which $1 million per year is set-aside to backfill claims from previous fiscal years.
Defense
Many bills have been introduced this session that would subject ethanol production plants to duplicative or unnecessary administrative and environmental reporting, monitoring, and testing requirements.
- Biofuel Monitoring & Testing for PFAS and Treated Seeds. Legislation has been introduced (HF 2761 – Hansen) and included in the House Environment committee’s omnibus bill to require biofuel facilities to monitor and test for neonicotinoids and PFAS. We testified against the bill because no ethanol plant in the state of Minnesota uses treated seed as a feedstock. If they proposed to do so, they would need a new permit from MPCA.
- Disclosure of Sensitive Business Information. Legislation has been introduced (HF 475 – Hansen) and included in the House Agriculture committee’s omnibus bill to require Bioincentive program participants to disclose sensitive business information in order to qualify. No other program administered by the Minnesota Department of Agriculture requires such disclosure, and changing program requirements midstream would undermine the goal of attracting investment in advanced biofuels with carbon reductions 70 percent lower than petroleum.
Neither of the above bills have been included in Senate omnibus bills and MN Bio-Fuels will be working to keep them out of any final conference committee agreement while working in the long-term to educate members of the DFL majority about the ethanol production and permitting process.
MN Bio-Fuels will continue to advocate on behalf of Minnesota’s ethanol industry and ensure that a balanced offensive and defensive strategy leads to legislative success.
The 93rd Minnesota Legislative Session officially closed on Monday, May 22. By any objective measure, it was a historic session that saw the enactment of significant legislation related to the budget, infrastructure bonding, taxation, and employment and workforce law. The $72 billion two-year budget signed by Governor Walz represents an increase of nearly 40 percent as compared to the last biennium.
Despite a lower budget target for agriculture overall and the need for significant outreach and education to members of the DFL majority on biofuels specifically, we were able to secure several policy and budget “wins” that will serve to strengthen Minnesota’s biofuel industry.
- Biofuel Infrastructure: $6.75 million
- The investments in biofuel infrastructure for 2024 and 2025 will increase the number of retailers in Minnesota offering higher blends of ethanol like E15 (Unleaded 88), which will lower costs for consumers and improve air quality through lower greenhouse gas emissions. With the help of this strong investment, we will soon surpass 500 retail stations selling E15 (Unleaded 88) in the state.
- Bioincentive Program: $11.5 million
- Minnesota ethanol plants are producing next-generation, advanced biofuels that further reduce greenhouse gas emissions. The investments in the bioincentive program for 2024 and 2025 will help to spur development of new low-carbon fuels while promoting rural economic development.
- Intermediate Blends Reporting: More data = better research
- Minnesota is the only state that reports monthly E15 (Unleaded 88) sales. The enactment of a provision to require more retail stations to report the gross number of gallons of intermediate blends (between 10 and 50 percent) sold will improve data collection efforts and allow us to better track sales growth and consumers savings.
- Clean Transportation Standard Working Group: Biofuel representation in the formation of a Minnesota Clean Transportation Standard
- If crafted properly and combined with complementary policies – a clean transportation standard in Minnesota offers the potential to lower greenhouse gas emissions from our transportation sector and support rural, agricultural communities. A working group authorized to study and report recommendations to the legislature will include representatives from the biofuel industry.
- Sustainable Aviation Fuel Tax Credit: $1.50 per gallon
- Providing tax incentives for the development and production of Sustainable Aviation Fuel in Minnesota will help spur new markets and new uses for biofuel and biofuel co-products like corn oil.
- EPA Emergency Waiver for E15 Summer Sales: Lower Prices All Summer Long
- EPA provided certainty to fuel producers and retailers by approving an emergency waiver allowing the sale of E15 this summer. The benefits of E15 will remain available to Minnesota consumers all summer long.
One of the most overwrought narratives in energy and transportation policy today is the idea that liquid biofuels and Electric Vehicles (EVs) are battling “American Gladiator-style” in a zero-sum game over the future of the domestic automobile market.
Predictably, this narrative is fueled - energy pun intended - in large part by partisan politics and special interest groups that either have a personal stake in securing total victory for their preferred transportation option or want to use the issue as a wedge in the next campaign.
As with most public policy problems, the solution to decarbonizing our transportation sector isn’t quite as black-and-white as this worn-out narrative suggests. The reality is we need a strategy that utilizes an all-of-the-above approach to level the playing field for proven technologies and fuels that have a track record of quickly lowering emissions. To successfully reach our carbon reduction goals, this strategy must also carefully consider current market and supply chain trends.
False Narrative #1: An All-Electric Future
Shortly after his election, President Biden issued an executive order outlining a goal that by 2030 50 percent of all light-duty vehicle sales would be zero-tailpipe emissions vehicles (ZEVs). The Environmental Protection Agency (EPA) recently doubled down on this goal by releasing a proposed regulation for tailpipe emissions that would guarantee that 67 percent of new light-duty vehicle sales are EVs by 2032.
As I wrote in our comments to the EPA on the proposed rule earlier this month, the rule effectively compels automakers to produce battery electric vehicles to the detriment of similar technologies that can achieve the same or better environmental performance. Utilizing low-carbon liquid fuels in existing vehicles can achieve greenhouse gas reductions faster than new EVs can displace the existing fleet.
There are currently 278 million registered cars, vans, SUVs, pickups, and motorcycles in the U.S., of which about 1.2 percent are battery or plug-in hybrid EVs. EVs accounted for 5.8 percent of new light-duty vehicle sales in 2022. That means, under the proposed rule, a gap of 61.2 percent in EV sales needs to be filled in less than 10 years.
Such a rapid build-out of EV sales ignores the challenges associated with charging infrastructure availability, tax credit eligibility, consumer preference, critical mineral supply and demand, and battery range and performance.
False Narrative #2: War on Electric Vehicles
A recent campaign video from former President Trump referred to EV mandates as “a ridiculous Green New Deal crusade [that] is causing car prices to skyrocket while setting the stage for the destruction of American auto production.”
While we may agree that a top-down approach that picks winners and losers among zero-emissions technologies is the wrong approach, over-the-top political rhetoric like this feeds the narrative that the existence of EVs in the marketplace means that liquid biofuels will somehow become obsolete.
According to data from Oak Ridge National Laboratory, the average age of vehicles on the road is approximately 15 years, and 16 percent of passenger cars and 32 percent of light-duty trucks remain on the road for more than 20 years. We need to seek carbon reduction solutions for the hundreds of millions of cars operating on liquid fuels today.
For some consumers, that may mean trading in their internal-combustion engine vehicles in favor of an EV for short-range and urban-only travel. For many others, that may mean utilizing higher blends of ethanol, which reduce GHG emissions by 47 percent as compared to gasoline.
We cannot ignore that there has been significant government investment in the manufacture of EVs, batteries, and EV chargers, and many auto companies have announced similar investment in domestic EV manufacturing.
Instead of fighting to roll back or disincentivize these public and private investments, we should be pushing for a level playing field for all technologies and fuels moving forward, which will be the key to reaching net-zero greenhouse gas emissions by mid-century. EVs and liquid biofuels can and should be working in tandem to provide consumers with low-carbon transportation options.
Solution: Teaming Up on Clean Vehicles
The ethanol industry is working to break down these false narratives.
Our partners at the Renewable Fuels Association (RFA) recently debuted the first-ever Plug-in Hybrid Electric Flex Fuel Vehicle, which offers the best of both worlds. The vehicle has a range of 430 miles given a full tank of E85 and a full battery charge. Additionally, it has been shown to reduce emissions by about 80 percent compared to a vehicle running on gasoline.
This doesn’t need to be a zero-sum game whereby EVs win only if ethanol loses, and vice-versa. This innovative technological solution that marries ethanol and electricity shows that the two can work together to offer consumers an environmentally friendly option that maintains flexibility and reliability.
The Minnesota Bio-Fuels Association will continue working to ensure that Minnesota-grown, Minnesota-made biofuels are in a position to bring about meaningful and achievable reductions in greenhouse gas emissions from transportation.