Minnesota Advances to B20

OMAHA (DTN) -- Starting Tuesday, most diesel fuel sold in Minnesota will be a blend of 20% biodiesel and 80% petroleum, a long-awaited reality for soybean farmers and the biodiesel industry in the North Star State after years of planning and legislative battles.

"We've been at this since B2 (2% biodiesel) and we're now up to B20," said Tom Slunecka, CEO of Minnesota Soybean Research and Promotion Council.

The whole effort to push statewide biodiesel requirements in Minnesota began as far back as 1999 when the first bill was introduced. Minnesota had already moved to a 10% ethanol requirement. By 2005, 2% biodiesel became a reality, and within three years, former Gov. Tim Pawlenty was supporting legislation to go higher.

"It was not exactly an easy effort," said Mike Youngerberg, Minnesota Soybean's senior director of product development and commercialization and resident biodiesel expert. "Opponents lined up all around, the petroleum and the trucking associations -- a broad number of folks said they didn't like the stuff and would do everything to stop us. That just energized our farmers all the more to move forward."

Minnesota passed a law in 2008 going to 5% biodiesel then phasing it upward. The law requires that Minnesota also must produce 50% of the mandatory demand in the state, which is calculated only for on-road use.

"That can be a heavy burden at some point in time, but that was an important trigger for us to get any bill passed," Slunecka said. "And that is an important marker for us to have more value-added production in the state."

Minnesota is the third-largest state for soybean production with 380 million bushels produced last year, behind only Illinois and Iowa.

The National Biodiesel Board notes EPA recognizes biodiesel as an advanced biofuel for its ability to reduce greenhouse gas emissions 50% compared to petroleum diesel. Over the past decade, Minnesota's biodiesel requirements have already reduced 7.4 billion pounds of carbon dioxide emissions.

"We often refer to Minnesota as a 'trailblazer,' but somehow that just doesn't seem adequate anymore," said Donnell Rehagen, CEO of the National Biodiesel Board. "Upgrading virtually an entire state's diesel to contain 20% biodiesel represents a seismic shift in our country's liquid energy supply. It shows the status quo needn't remain. Americans have a choice to change our fuel identity to include much more renewable, economically powerful, clean energy -- just like the power industry has diversified with solar and wind."

The National Biodiesel Board, from a national perspective, calculated biodiesel adds 63 cents a bushel for soybeans. For the average farm of 500 acres of soybeans, $10-a-bushel beans at 45 bushels per acre, that's $14,000 for the average farm. That should be enough to drive farmers in other states to push for similar legislation, Slunecka said.

"If it was going to impact your farm by $14,000, wouldn't you spend $500 or $600 with your association to make it happen?" Slunecka said.

Since 1999, three biodiesel plants have been built in Minnesota, and two of those have also expanded. New biodiesel facilities are being built in neighboring South Dakota and North Dakota. Studies are also looking at the feasibility of new crush facilities in northern Minnesota. The biodiesel industry now has a $1.7 billion impact on the economy of the state.

"When we started the effort in Minnesota, we did not have any biodiesel plants," Youngerberg said. "One of the reasons they came in is because (they said) 'If you give us market opportunity, we'll build,' and they did."

B20 was behind schedule, though. The 20% blend was supposed to go into effect in 2015. However, statutory requirements on infrastructure statewide caused some delays because not every part of the state was ready to support higher blend levels.

"The infrastructure was lacking and it took a couple of years to get it in place," Youngerberg said.

In the process, lobbying and pushback on B20 also continued. Minnesota auto dealers had pushed back against biodiesel, but then found themselves drawing complaints from farmer-buyers who wanted the biodiesel expansion to continue.

"The message was carried by the farmers out to our local dealers," Slunecka said. "The buying power of the farmers and all the pickups and cars they buy in the local communities sent a message to the dealers association that this is something that is important to us."

In 2015, the Minnesota biodiesel industry also was uninvited to a Minnesota auto show even though the soybean growers had tried to work closely with the auto industry.

"We wore that like a badge," Slunecka said.

Slunecka said Minnesota farmers have had to remain engaged after 2008 because nearly every year there have been both legislative and legal battles regarding the B20 expansion.

"Just about every year since the expansion we are at the Capitol looking out for this concept to make sure it didn't get derailed," Slunecka said.

B20 will remain largely a summer fuel, going on sale from May 1 until the end of September. The state dials back to 5% requirements for the rest of the year largely because of the harsh winters and the effects on biodiesel fuel.

"Hopefully, as we move forward we find biodiesel technology that works well in extreme climates, but we're not there yet," Youngerberg said.

While Minnesota has stepped out in front with a 20% blend, so far no other states have followed. New York is moving forward on a 2% biodiesel requirement for home-heating oil, and legislation in the state has pushed to go to 5%. Connecticut, Louisiana and Massachusetts all have adopted 2% blend mandates that have not gone into effect because various conditions on state production have not been met, or other surrounding states have not agreed to adopt similar policies.

Oregon and Washington have biodiesel requirements as well, but are switching to a low-carbon fuels standard, much like California. With its low-carbon fuels standards, California could potentially be a 1-billion-gallon market for biodiesel in the near term.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

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