Ethanol and Biodiesel

Date: 20 Nov 2008 | posted in: agriculture, Energy, environment | 0 Facebooktwitterredditmail

The conversion of biomass into ethanol and biodiesel provides farmers an additional market for their crops. Over the years, many federal and state rules have been developed to promote biofuels production for use in industry and reformulated gasoline. While this page does not include an exhaustive list of ethanol incentives, the rules on this page are unique in that they encourage ethanol and biodiesel production on a small scale. A decentralized, rural biofuels industry tends to favor a greater number of farmers over a wider area. Production credits for smaller facilities also promotes the formation of farmer-owned cooperatives that further increase returns to farmers.

More Information:

Biodiesel Mandate – Minnesota

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.… Read More

Biodiesel Use Incentives for School – West Virginia

West Virginia state law provides a financial incentive for schools to fuel their bus fleets with alternative fuels. Under the state school aid formula, counties receive about 85 cents for every dollar in transportation costs. By switching to alternative fuels like biodiesel blends or compressed natural gas [CNG], the reimbursement increases to 95 cents.… Read More

Ethanol and Biodiesel Incentives – Missouri

In 2002, Missouri enacted two incentive programs that will promote in-state, cooperatively-owned biofuels production. Targeted at increasing homegrown production of ethanol and biodiesel, the five year incentive programs provide grants to producers that are at least fifty-one percent owned by agricultural producers actively engaged in agricultural production for commercial purposes in the state. Ethanol incentives include a payment of 20 cents per gallon for the first 12.5 million gallons and 5 cents per gallon for the next 12.5 million gallons. Biodiesel incentives are 30 cents per gallon for up to 15 million gallons of production.… Read More

Ethanol Investment Tax Credit – Hawaii

In early 2000, legislation passed in Hawaii to provide tax credits for the production of ethanol in the state. The new law will help sugar growers on Kauai and Maui by offering incentives to use molasses and other wastes as the feedstock for ethanol. Supporters also hope the possibility of using municipal solid waste as a feedstock will cut down on the amount of waste being landfilled. Manufacturers that produce between 500,000 and one million gallons of ethanol will receive a non refundable 30% investment tax credit or $150,000, whichever is less.… Read More

Ethanol Producer Credit – Wisconsin

Wisconsin's 2000 Act 55 provides ethanol producers a credit much like Minnesota's - beginning July 1, 2000 it will provide 20 cents per gallon for no more than 15 million gallons of production. The feedstock must come from a "local" source, definition to be determined.… Read More

Ethanol Production Incentives – North Dakota

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).… Read More

Ethanol Program – Minnesota Model

To meet its goal of replacing 10 percent of its fuel needs with ethanol, in the late 1980s Minnesota instituted a producer payment program of 20¢/gallon on up to 15 million gallons of ethanol per year for a maximum of 10 years. The payment is limited to in-state producers, and the small scale requirement has resulted in the formation of nearly a dozen farmer-owned ethanol processing cooperatives. Minnesota-based ethanol plants, especially coops, benefit the state economy by spending more of their money on raw materials inside the state, and by keeping more of their profits and dividends inside the state.… Read More

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