In April 2003, North Dakota’s Governor signed into law an Ethanol Production Incentive bill (Senate Bill 2222). The legislation implements the first program in the nation to create a market-based support system for the growing ethanol industry. The ethanol incentive operates on a counter cyclical feature that is market-based. It is not a fixed payment, but is provided to a facility when the price of ethanol drops or the price of corn increases to levels that make ethanol less profitable. Incentives are based on a combination of a$1.80/bushel price for corn and a $1.30/gallon rack price for ethanol(price at the terminal).
While the incentives on a per gallon basis could be large, annual distribution of ethanol incentives cannot exceed $1.6 million and that limits payments to around 4 million gallons per year. Each ethanol facility is limited to a cumulative total of $10 million in state incentive payments.
Thenew Ethanol Production Incentive program provides financial incentives for the production of ethanol in any newly constructed ethanol production plants. The New Rules Project believes that the provision allowing any type of ethanol plant to receive incentives was a missed opportunity for North Dakota to promote farmer-owned ethanol production facilities. Minnesota’s ethanol rules are a good example of a state ethanol program designed to encourage not only renewable fuels production but also local, farmer ownership.
Aportion of farm vehicle registrations will finance the ethanol incentive fund. The fund is expected to accumulate about $3 million each biennium. In the upcoming biennium $1.2 million is reserved specifically for newly constructed ethanol production plants. The remaining money will be provided to the two existing ethanol plants in Grafton and Walhalla to phase out their reliance on the state incentive. The new law stipulates that in future bienniums, the entire$3 million will be devoted to new ethanol.
More:
- Full Text of the ND Ethanol Incentives Act (2003 SB No. 2222) – signed into law, April 14, 2003
- ND Department of Commerce is tracking corn and ethanol prices to determine the incentives available to ethanol producers.
More Resources:
- The Energetics of Ethanol: An Introduction and Link to Studies – How much energy does it take to make a gallon of ethanol? Make up your own mind by looking at the studies themselves!
- Cellulosic Biofuels: Another Opportunity for Washington to Marry Agriculture and Energy Goals – by David Morris, published in Ethanol Today Magazine, May 2008
- Ethanol and Land Use Changes
This February 2008 policy brief criticizes the authors of two recent studies published in Science for advancing a conclusion not supported by their own studies. The paper notes that the vast majority of today’s ethanol production comes from corn cultivated on land that has been in corn production for generations. Since little new land has come into production, either directly or indirectly, the current use of ethanol clearly reduces greenhouse gas emissions.(View Press Release) - Scale & Ownership of Renewable Energy – a presentation by John Farrell at the Local Energy Initiatives Forum in Cloquet, MN on September 13, 2007
- Wind and Ethanol: Economies and Diseconomies of Scale – This August 2007 report finds that there are indeed small cost reductions from very large scale, absentee owned renewable energy facilities. But that these are overshadowed by the significant loss in potential economic benefits from locally owned and more modestly scaled facilities.
- Give Ethanol a Chance: The Case for Corn-Based Fuel – by David Morris, published on AlterNet, June 13, 2007
- Energizing Rural America: Local Ownership of Renewable Energy Production is the Key
This January 2007 paper by David Morris was originally published by the Center for American Progress. This report argues that Congress must recognize the dramatic benefits of clean, renewable energy on rural communities and then ensure that the federal farm bill policies work to maximize local ownership of the rapidly expanding biofuels and wind energy industries. Numerous policy options are recommended. - Making Cellulosic Ethanol Happen: Good and Not So Good Public Policy – This January 2007 report provides an analysis of federal policies that are both good and bad related to creating a viable cellulosic ethanol industry based on two building blocks: 1) Commercial technologies that produce ethanol from cellulose and 2) A cultivation, transportation and storage infrastructure that delivers cellulose to biorefineries
- By the People, For the People: Toward a community-owned, decentralized biofuel future – by David Morris published in Grist, December 8, 2006
- The Strange Legislative History of the Cellulosic Ethanol Mandate – by David Morris, in RenewableEnergyAccess.com, December 4, 2006
- Ethanol as a Renewable Fuel: An Overview – video of a speech by David Morris, ILSR Vice President, presented at the Minnesota Pollution Control Agency’s Air Quality Series, September 28, 2006 (streaming video, 1.5 hours)
- Putting the Pieces Together: Commercializing Cellulosic Ethanol – September 2006
A report examining federal policies supporting cellulosic ethanol production and advocating that the Federal government adopt strategies that support farmer-owned biorefineries. [see also ILSR Press Release] - The New Ethanol Future Demands a New Public Policy – by David Morris, June 21, 2006 [this is an expanded version of an opionion column published in the NY Times – also in PDF]
- The Once and Future Carbohydrate Economy – by David Morris, published in the American Prospect magazine, March 2006
- Ownership Matters: Three Steps to Ensure a Biofuels Industry That Truly Benefits Rural America
This February 2006 paper by David Morris was adapted from a speech given at the Minnesota Ag Expo 2006. The paper provides a snapshot of today’s biofuels industry and a roadmap to ensure that local farmers see significant benefits from the expanding industry in the future. - How Much Energy Does It Take to Make A Gallon of Ethanol?– Institute for Local Self-Reliance, August 1995