Minnesota, Montana Consider Ethanol Mandates

Published May 1, 2005

Consumers in Montana will have to purchase gasoline containing 10 percent ethanol if a bill supported by Gov. Brian Schweitzer (D) passes, while consumers in Minnesota could have their ethanol mandate raised from 10 percent to 20 percent under legislation being considered by the state legislature.

Even as legislators consider the bills, experts are questioning whether ethanol can deliver the economic and environmental benefits promised by its proponents.

Montana Debates Incentives, Mandates

As the Montana legislative session neared its late-April completion, legislators were considering two competing bills regarding ethanol. Senate Bill 293, supported by Schweitzer, would require that most gasoline sold in the state contain 10 percent ethanol. House Bill 674, alternatively, would provide incentives for ethanol production but would not contain a mandate.

Schweitzer has made it clear he will attempt to politically punish any legislator who merely encourages, rather than requires, Montanans to purchase ethanol.

“If you are in a rural district, you will not be able to hide if you don’t vote for a legitimate ethanol bill,” said Schweitzer in a March 24 news conference. “I travel from time to time to all 56 counties, and it’s likely to slip out.”

While some Montana Republicans support ethanol production, most have been reluctant to give state government officials the final say on which products can and cannot be produced or consumed.

Montana Ethanol More Expensive

Montana House Agriculture Committee Chairman Ed Butcher (R-Winifred) noted in the March 24 Billings Gazette that a similar law already enforced in Minnesota is more economically justifiable because corn is more readily available there. In Montana, a significant amount of ethanol would have to be made from wheat and barley, which are more expensive than corn. Ethanol produced from grain crops is also a less-efficient energy source than ethanol made from corn, according to the April 10 Great Falls Tribune.

Importing corn into Montana from other states would not be economical, Butcher told the Gazette. The key issue, he asserted, is whether Montana can produce affordable wheat- or barley-based ethanol, keep gas prices reasonable, and avoid having to import corn from other states.

“We will not succumb to the governor’s threats,” Butcher told the Gazette.

Ethanol’s Efficiency Questioned

Butcher’s concerns were supported by an April 7 article by Chris Bryant, a reporter for the Missoula Independent. Noted Bryant, “A Congressional Research Service report from 2003 paints a picture of an industry with potential, but points out it currently has an uncertain future and a heavy reliance on federal and state support.

“According to the report,” Bryant continued, “a 1998 study found that the market for ethanol would dwindle from 1.5 billion gallons a year to 290 million gallons per year [a drop of more than 80 percent] without a 5.2 cents exemption from the federal excise tax on gasoline. For a 10 percent ethanol blend, that amounts to a subsidy of 52 cents a gallon.”

Noting ExxonMobil does not oppose the use of ethanol blended fuels, Bruce Brodie, manager of an ExxonMobil refinery in Montana, told the March 21 Greenwire, “The company is absolutely opposed to mandates because they upset the free market mechanism and increase costs for consumers.”

Furthermore, Bryant observed in his article, “Several researchers have looked at the overall life cycle of ethanol production to see if it really should be considered a source of clean energy. An early ’90s report by Cornell University researcher David Pimental sheds doubt on ethanol’s clean credentials. Pimental’s report, and several since, questioned whether ethanol–with all the pesticides, water, and fuel needed to grow an energy-intensive corn crop, and the transportation of ethanol from producing regions to far-flung markets on the coasts–consumes more energy than it produces.”

“Blending of ethanol in gasoline increases hydrocarbon emissions, which contribute to the formation of ozone,” added Joseph Bast, president of The Heartland Institute and publisher of Environment & Climate News. “It also reduces fuel economy, which is the opposite of what advocates of higher fuel economy standards, subsidies for hybrids, and opponents of crude oil imports say they want.”

Minnesota May Toughen Mandate

Most ethanol is produced in the large corn-growing states of Minnesota and Iowa. Iowa does not mandate ethanol be used in gasoline blends, but Minnesota has had a 10 percent ethanol blend requirement for a decade.

The current Minnesota legislative session is considering a 20 percent mandate, which would double the state’s annual consumption of ethanol from 260 to 520 million gallons.

“I think it is going to be extremely hard to stop,” said State Sen. Dallas Sams (DFL-Staples), chief sponsor of the Minnesota legislation. With 14 ethanol plants already operating in Minnesota and three more in the works, he said, Minnesota could produce enough ethanol to reach the 20 percent target.

The legislation has the support of Gov. Tim Pawlenty (R), who in his January 2005 State of the State address said of the 20 percent ethanol blend recommendation, “It’s good for our farmers, it’s good for rural economic development, it’s good for national security, and it’s good for the environment.”

According to the Taxpayers League of Minnesota, federal and state subsidies to ethanol producers total $3.8 billion.

Craig Westover ([email protected]) is a Minnesota-based freelance reporter and columnist.