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Mandate It and They Will Come: Minnesota’s Biodiesel Law

| Written by John Farrell | No Comments | Updated on Jan 13, 2005 The content that follows was originally published on the Institute for Local Self-Reliance website at https://ilsr.org/mandate-it-and-they-will-come-minnesotas-biodiesel-law/

Since enactment of the nation’s first state mandate for nearly all diesel fuel sold in the state to contain a small percentage of biodiesel, there was always some uncertainty whether or not production facilities would be built to meet the goal in the law. Language in the law would have allowed the mandate to never take effect unless the in-state production reached 8,000,000 gallons per year. With the opening of one plant in December and two more under construction, the mandate is expected to come into force at the end of June 2005.

To meet the mandate’s minimum requirements, approximately 16 million gallons of biodiesel will be required each year. If all of the facilities under construction reach their full capacities, about 63 million gallons of biodiesel production capacity will be in place in Minnesota by Fall 2005. Interestingly, when the biodiesel mandate was originally proposed it would have required diesel sold in Minnesota to contain 5 percent biodiesel, an amount that could easily be met by the new in-state production.

There have been several news reports on the opening of the new biodiesel plant (see MPR story ) so we here at Democratic Energy thought we would just try to clarify and fill in some information that wasn’t covered.

The Farmers Union Marketing and Processing Association, a 75-year old cooperative, has built the state’s first plant in Redwood Falls, MN. The plant began operations in December 2004 and is starting up using soybean oil as the feedstock and is planning on switching to use two-thirds animal fats around mid-April 2005 . The plant will scale up its operations to full production of nearly 3 million gallons per year. The plant will have six new employes at the plant along with a few other support positions.

Some of the biodiesel is being used onsite in a five percent blend in 5 diesel electric generators [they also have 3 natural-gas fired generators] that are used for back up power needs. Total capacity of the diesel units is 5.2 MW – 42,175 gallons of diesel fuel was used in 2004. The on-site generation is enough to fully power the facilities but with an attractive interruptible power rate from their utility, the generators are only used sporadically.

The fuel from the new plant is being actively marketed [~$2.15 per gallon before tax credit] and interested buyers should visit their Northland Choice Biodiesel web site or send e-mail to Chuck Neece.

The two other plants under development in Minnesota are the SoyMor project in Albert Lea and the Minnesota Soybean Processors (MnSP) plant in Brewster. Both of these plants will convert soybean oil into biodiesel.

The $25 million SoyMor plant [web site] is organized as a limited-liability company (LLC). The Soy-Mor cooperative – owned by about 500 farmers – is the largest member of the LLC. Each farmer had to pay a minimum of $5,500 to join the cooperative. Other investors can buy into the LLC for a minimum $50,000 investment. The facility will have an annual production capacity of 30 million gallons [currently permitted for 25 million gallons] and is expected to begin operations by July 1, 2005.

The Minnesota Soybean Processors (MnSP) project [web site] had its construction timeline delayed but they reported in November 2004 that the company is expected to complete construction and begin production by September 2005. The facility will have a production capacity of 30 million gallons [currently permitted for 25 million gallons]. MnSP is a large soybean cooperative with around 2,300 farmer members.

The MN Dept. of Agriculture believes that recent enactment of federal tax incentives for biodiesel will result in no net increast in the cost of diesel fuel in the state as a result of the biodiesel requirements.

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About John Farrell

John Farrell directs the Energy Democracy initiative at the Institute for Local Self-Reliance and he develops tools that allow communities to take charge of their energy future, and pursue the maximum economic benefits of the transition to 100% renewable power. More

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