Serving Minnesota and Northern Iowa.

Isobutanol can't be sold in transportation fuels in Minnesota

By Janet Kubat Willette
jkubat@agrinews.com

Date Modified: 04/28/2012 9:51 PM

E-mail article | Print version

ST. PAUL — Nearly a year ago, ground was broken in Luverne for the world's first commercial scale isobutanol plant.

Now, 230 construction workers are working two shifts a day to get the plant running in June, Paul Dwyer of Gevo told the House agriculture committee on March 15.

But the isobutanol produced at the plant won't be sold from Minnesota's fuel pumps. State law mandates that only ethanol be blended with gasoline to meet oxygenate requirements.

Gevo was aware of the mandate when it acquired the former Agri Energy plant in Luverne, said Jack Huttner, executive vice president of public affairs for Gevo, but the legislation is due to sunset in December 2012.

Legislation is moving in both the state House and Senate to extend the ethanol mandate. House legislation, sponsored by Rep. Paul Anderson, R-Starbuck, extends the mandate to December 2015. Senate legislation, which is included in the omnibus ag policy bill carried by Sen. Doug Magnus, R-Slayton, extends the deadline to December 2013 and calls for a report from the Next Generation Energy Board by February on a plan to move foward.

"Certainly, our goal is to support our current biofuels industry," Magnus said, but legislators must also look at the next generation of renewable fuels.

Minnesota and Florida are the only two states where specific language bans isobutanol from the fuels market, Dwyer testified.

New technology is changing the biofuels market, he said. Gevo just wants a fair chance to compete in the market.

"If you specify ethanol in the legislation and thereby put up a barrier to any other biofuel entering the state's gasoline, you'll be denying Minnesotans the opportunity that motorists in other states will have," Dwyer said. "The opportunity to buy and use the most innovative biofuels available. Biofuels made right here in Minnesota. In summary, we urge you to stay in the forefront of the biofuels industry. Do not stifle innovation by picking a winner."

Rep. Joe Schomacher, R-Luverne, drafted an amendment to allow any kind of biofuel to be used, but the bill didn't meet legislative deadlines.

Schomacher said the Gevo plant in Luverne is creating jobs and he's concerned that if the language isn't changed, isobutanol technology will move to other states.

Where will Gevo expand, he asked, in states that don't allow for the sale of it or states like South Dakota that have reimbursements?

While a portion of isobutanol produced at Luverne is committed to the chemicals market, some is available for blending with gasoline, Huttner said. Gevo has potential partners in the refining and distribution business for transportation fuels, but they aren't able to sell to them if the mandate is extended.

A good discussion occurred about ethanol and isobutanol in the ag committee hearing, Schomacher said.

Several people spoke in favor of extending the deadline, including John Mages, president of the Minnesota Corn Growers Association. Mages and his wife, Cindy, farm 1,200 acres near Belgrade in central Minnesota and own shares in two ethanol plants.

Ethanol plants have enhanced the quality of life in rural Minnesota and provide additional income to farmers, Mages said. More than a billion gallons of ethanol are produced in the state.

He's concerned that a change in state law made to benefit one plant puts other plants at risk, a risk he's not willing to take.

The corn and ethanol industry support 70,000 jobs in Minnesota and generates $12 billion in economic activity, said Tim Rudnicki, executive director of the Minnesota Biofuels Association. It also reduces the price at the pump. Studies over the past three to four years have shown that ethanol suppresses the price of gasoline 89 cents per gallon, he said.

Rudnicki argued for an extension of the sunset date by three years to give state and federal agencies and biofuel producers time to work together on how to expand the biofuels market.

Anderson said biobutanol is a relatively new industry with a strong future. However, there is a concern about overproduction and oversupply of ethanol. As time goes on, he said there will be a place for biobutanol.

He advocates a go-slow approach that keeps ethanol as the base of the biofuel industry in the state.

Legislators saw the issue of isobutanol and the extension of the ethanol sunset as two issues.

"If we allow the ethanol industry to be undermined in this state, we all lose," said Rep. Kent Eken, DFL-Twin Valley. Yet, he added, an opportunity exists to move forward with the biobutanol industry.

Rep. Terry Morrow, DFL-St. Peter, asked Anderson if he'd be willing to work with the folks who testified about biobutanol to talk about a hearing on the expansion of biofuels other than ethanol.

Anderson said he would and he gave his assurance that he would work in the interim to find a way to include biobutanol in the energy future of the state.

The bill to extend the ethanol-only language for three years passed the committee by a vote of 19 to 1.