Biodiesel Mandate – Minnesota

  • Nov 21, 2008
  • ILSR
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  • State Policy
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    In March 2002, Minnesota enacted the nation’s first biodiesel mandate that would require nearly all diesel fuel sold in the state contain at least 2 percent biodiesel by 2005 (earlier if certain conditions are met). Biodiesel is a fuel additive derived from animal fats or plant oil, typically soybeans. Proponents of the biodiesel requirement argue it would be a boon for the state’s farmers and improve the state’s use of alternative fuels. The new law isn’t perfect but a good model for other state’s to work from. The law could be strengthened by adding a provision to require the mandate to be met through biodiesel production from farmer-owned cooperatives.

    Six Reasons to Support the Biodiesel Mandate
    By David Morris, Institute for Local Self-Reliance

    By wide margins, both houses of the Minnesota Legislature have approved a bill that requires all diesel fuel sold in the state to contain at least 2 percent vegetable oil. Gov. Jesse Ventura should sign the bill. If he does not, the Legislature should override his veto.

    Here’s why:

    First, the mandate does not go into effect until June 30, 2005, and only if a sufficient quantity of biodiesel to satisfy the mandate is produced in the state.

    Second, the mandate will raise the price of diesel a trivial 1-2 cents per gallon. Keep in mind that Ventura’s budget deficit-reduction plan included a 5-cent increase in the gasoline tax.

    Third, the most enthusiastic supporters of the mandate will shoulder much of its cost. Farmers consume one-third to one-half of all diesel fuel covered by the mandate.

    Fourth, the mandate forces the diesel fuel and diesel truck industries to do what they should be doing anyway. In the last few years, the federal government reduced by 90 percent the allowable amount of sulfur in diesel fuel. The U.S. Environmental Protection Agency soon may demand an additional 96 percent reduction by 2006. The refinery process that reduces sulfur also reduces lubricity, which in turn increases wear on fuel-injection equipment and could result in catastrophic engine failure. Biodiesel is an excellent lubricity enhancing additive.

    Fifth, the impact of the mandate will ripple through Minnesota’s rural economies. Currently, the state exports in an unprocessed state about 60 percent of the soybeans grown here. The biodiesel mandate will result in more value-added processing inside the state and its accompanying increase in jobs and rural income.

    Sixth, the mandate begins to do for diesel fuel what we have made great strides in doing for gasoline — wean ourselves away from a dependence on regions of the world actively hostile to our way of life. A 2 percent vegetable oil blend is a small step toward energy independence. But then, every long journey begins with small steps.

    The mandate’s not perfect. An improvement would require that the biodiesel be made in a farmer-owned facility. That way a much greater portion of the benefits would go directly to farmers. But that may happen anyway. In any event, as the adage goes, perfection too often is the enemy of the good.

    TheBiodiesel mandate furthers Minnesota’s leadership in encouraging renewable fuels. Similar legislation helped Minnesota build a homegrown ethanol industry based on small, farmer-owned production facilities throughout the state . See New Rules Project’s section on the Minnesota Ethanol Model for more information on that policy.

     

    Full Text of Minnesota’s Biodiesel Mandate Law:

    LAWS OF MN 2002 – CHAPTER 244 [S.F.No. 1495]

    Anact relating to agriculture; providing for a biodiesel fuel mandate; proposing coding for new law in Minnesota Statutes, chapter 239.

    BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: Section 1.  [239.77] [BIODIESEL CONTENT MANDATE.]

    Subdivision1.  [BIODIESEL FUEL.] "Biodiesel fuel" means a renewable, biodegradable, mono alkyl ester combustible liquid fuel derived from agricultural plant oils or animal fats and that meets American Society For Testing and Materials Specification D6751-02 for Biodiesel Fuel(B100) Blend Stock for Distillate Fuels.        

    Subd. 2.  [MINIMUM CONTENT; EFFECTIVE DATE.]

    (a) Except as otherwise provided in this section, all diesel fuel sold or offered for sale in Minnesota for use in internal combustion engines must contain at least 2.0 percent biodiesel fuel oil by volume.

    (b) The mandate in paragraph (a) is effective on and after the date that the conditions in clauses (1) and (2), or in clauses (1) and (3), have been met:

    (1) thirty or more days have passed since the commissioner of agriculture publishes notice in the State Register that annual capacity in Minnesota for the production of biodiesel fuel oil exceeds 8,000,000 gallons;

    (2) eighteen months have passed since the commissioner of agriculture publishes notice in the State Register that a federal action on taxes imposed, tax credits, or otherwise creates a reduction in the price of two cents or more per gallon on taxable fuel that contains at least two percent biodiesel fuel oil and is sold in this state;

    (3) the date June 30, 2005, has passed.

    Subd. 3.  [EXCEPTIONS.]

    (a) The minimum content requirement of subdivision 2 does not apply to fuel used in the following equipment:

    (1) motors located at an electric generating plant regulated by the Nuclear Regulatory Commission;

    (2) railroad locomotives; and

    (3) off-road taconite and copper mining equipment and machinery.

    (b) The exemption in paragraph (a), clause (1), expires 30 days after the Nuclear Regulatory Commission has approved the use of biodiesel fuel in motors at electric generating plants under its regulation.

    Sec. 2.  [239.771] [DISTRIBUTOR EXPENSE REIMBURSEMENT.]

    Subdivision1.  [ELIGIBILITY.] A distributor that made capital expenditures necessary to adapt or add equipment to  blend biodiesel fuel oil under the mandate in section 239.77 may be eligible for partial reimbursement for those expenditures if the mandate is repealed within eight years of the date the mandate is effective.

    Subd. 2.  [APPLICATION; ELIGIBILITY.]

    (a) A distributor may apply to the commissioner of agriculture for a reimbursement from money appropriated for this purpose on the following schedule:  If the mandate is repealed within two years of its effective date, the commissioner shall reimburse up to 80 percent of expenditures.  The total amount eligible to be reimbursed must decline by ten percent each year after the mandate is effective and must end at 20 percent in the eighth year.

    (b) The commissioner must require detailed proof of expenditures made solely to comply with the mandate. Presented to the governor March 13, 2002

    Became law without the governor’s signature March 15, 2002

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