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Ethanol subsidies needed for state to maintain edge

ST. PAUL - Minnesota must intervene to help the state maintain its ethanol leadership, supporters of the next generation of the plant-based fuel say.

The intervention would include providing subsidies to farmers growing grass or other plants that are more efficient sources for ethanol than the traditional corn. It also would give loans to build new facilities to produce ethanol from nontraditional plants such as switch grass.

Minnesota lawmakers are looking at more comprehensive ethanol changes than any other state, state Rep. Aaron Peterson, DFL-Appleton, said Tuesday shortly after receiving a committee's approval for his proposal. Several other committees need to hear the proposal in both the House and Senate before either house considers it.

Farmers cannot start the new technology on their own, Peterson said. Private businesses "are not ready to write the checks yet," he added.

Incentives provided by the state would help, he said.

"This is a decision of whether we are going to step forward and lead or whether we are going to follow," Don Arnosti of Clean Energy Minnesota said.

Incentives in the bill vary according to the type of plants being used to make ethanol.

The proposal is patterned after the corn-based ethanol lawmakers approved a decade ago that subsidized corn farmers who built ethanol plants. That plan worked so well that Minnesota leads the country in the number of E-85 ethanol pumps in the country and is among the leaders in ethanol production.

E-85 is a vehicle fuel with 85 percent ethanol and 15 percent gasoline. Most Minnesota gasoline includes 10 percent ethanol.

Thus far, corn has been ethanol's main ingredient. However, plants such as switch grass and other native Minnesota vegetation may be a more efficient way to make the fuel, although researches still need to work out some kinks in using different plants.

The University of Minnesota, Morris is a step ahead and is preparing a facility that would use those plants to produce electricity.

"We will redistribute about $500,000 that we pay for natural gas ... to within 25 miles of Morris," the committee heard from Lowell Rasmussen, associate vice chancellor for plant services and master planning at the Morris campus.

The Morris plan illustrates a second part of Peterson's bill. The measure would provide help to organizations looking to produce electricity from plants.

David Morris of the Institute for Local Self Reliance told committee members that the state needs to choose "biology over geology" in finding ways to replace oil as the major fuel. However, he added, the state needs to spend some money if it's to be a leader.

"There actually is a race across America to get there," Peterson said.

That race would cost $27 million a year to spur ethanol fuel production, Arnosti said.

Don Davis
Don Davis has been the Forum Communications Minnesota Capitol Bureau chief since 2001, covering state government and politics for two dozen newspapers in the state. Don also blogs at Capital Chatter on Areavoices.