States Encourage Farmer-owned Biorefineries

Date: 30 Aug 2004 | posted in: Energy, Energy Self Reliant States | 0 Facebooktwitterredditmail

Note: This article was originally published in the April 2002 issue of Democratic Energy.

In March 2002, Ohio Gov. Bob Taft signed a bill giving Ohioans a $5,000 state tax credit for every $10,000 invested in farmer-controlled ethanol plants located in the state. Under the legislation, if an ethanol plant is certified as majority-owned by Ohio farmers, investors will be eligible for the credit. The law creates an Ethanol Incentive Board, consisting of five members, including the Ohio Director of Agriculture, who will review the business plans submitted by owners of an ethanol plant wishing to receive the tax credits.

In 2001 Missouri’s legislature provided an incentive to Missouri school districts that use biodiesel for their bus fleets. Any school district may contract with an eligible farmer-owned cooperative (value-added manufacturer in the state) to purchase biodiesel fuel for its buses of a minimum of B-20 (20 percent vegetable oil). The state will then reimburse the school district so that the net price to the contracting district for biodiesel will not exceed the price of regular diesel. The law begins with the 2002-03 school year and lasts through the 2005-06 school year. As of this writing no schools are able to take advantage of this program since there are not any farmer-owned biodiesel manufacturing facilities operating in Missouri. According to the MO Dept. of Agriculture there are a few plants in the very early stages of development.

In the 1980s, Minnesota introduced a direct payment to ethanol producers located in the state. The 20 cent per gallon payment is capped at 15 million gallons. The result has been the construction of many small and medium sized facilities. That in turn has enabled farmer and local ownership. Today Minnesota boasts 14 biorefineries; 12 of them are farmer owned. A 1997 Minnesota legislative auditor’s report concluded that the economic benefits from the state’s ethanol incentives far surpass its public cost (see )

John Farrell
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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.

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