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Many ideas to promote new fuel sources

ST. PAUL -- The corn ethanol industry has flourished in Minnesota, and now legislators want to help the next generation of plant-based fuels. But differing approaches have developed as lawmakers rush to assist the emerging cellulosic ethanol indu...

ST. PAUL -- The corn ethanol industry has flourished in Minnesota, and now legislators want to help the next generation of plant-based fuels.

But differing approaches have developed as lawmakers rush to assist the emerging cellulosic ethanol industry and other renewable energy initiatives.

The debate boils down to whether the Legislature, as it drafts the next two-year state budget, should put money mostly toward research or start a program to pay biofuels producers.

There are promising signs of cellulosic ethanol's future that warrant a state program to support fuel producers, Sen. Gary Kubly said.

The Granite Falls DFLer authored a proposal in the Senate agriculture budget bill to create biofuel and bioenergy development programs. The state would offer payments to ethanol producers or to facilities that generate energy from plant materials. Payments would be based on the amount of fuel or energy produced.

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Senators gave the program final approval, but didn't provide funding for at least two years. Experts say large-scale production of ethanol from sources such as switch grass or woody plant materials is several years away.

"We don't think we're ready to go," Kubly admitted. "There's still research being done."

However, Kubly added, industry leaders should know Minnesota intends to reward investment in new biofuel sources. The payment plan would be similar to an existing program that pays corn-based ethanol producers for each gallon of fuel produced.

Gov. Tim Pawlenty, a Republican, said he has proposed a series of biofuel proposals as part of his NextGen Initiative. He also backed a producer payment program.

"We'll certainly be supportive of it," he said recently.

Some lawmakers believe it's too soon to talk about production payments.

"We don't have anything to produce yet," said Rep. Al Juhnke, DFL-Willmar, who is carrying the House agriculture bill that prescribes an alternative approach to supporting new biofuels.

Instead, the House agriculture budget bill, which will see a floor vote soon, would create a NextGen Energy Board. The appointed panel of lawmakers, state officials and others would consider how Minnesota should spend research money on alternative energy and fuel. It also would track whether Minnesota is taking advantage of federal agriculture and energy funding.

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Energy Board supporter Rep. Doug Magnus, R-Slayton, dismissed concerns that the panel might play favorites as it doles out research dollars. The board would include officials from five state agencies.

"That's their job to analyze this stuff," he said.

Minnesota could be bolder, said Rep. Aaron Peterson, who tried unsuccessfully to convince fellow House members to adopt the producer payment program.

Peterson, DFL-Madison, said the state "should plow ahead with an established method."

"If they know there's producer payments coming, that will encourage development," Peterson said of ethanol plant investors.

Sen. Rod Skoe, DFL-Clearbrook, a Senate Agriculture Committee member, said it would be good to adopt parts of each chamber's proposal when legislative negotiations begin.

"Everybody's trying to jump-start the industry," said Skoe. "I think in the end hopefully what we end up with is some research dollars going to figure out how to develop, store and handle the material."

Lawmakers in both the House and Senate want any state assistance for new biofuels production directed to facilities owned by local farmers or investors.

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That is in line with what U.S. Rep. Collin Peterson, DFL-7th District, has stressed while leading the effort in Congress to write new federal farm legislation this year. Peterson is chairman of the U.S. House Agriculture Committee.

Pawlenty and the Legislature have considered several other energy issues this year, including mandating that more electricity come from renewable sources and calling for increased energy conservation.

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Scott Wente works for Forum Communications Co., which owns the Bemidji Pioneer.

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