Minnesota Considers State E15 Mandate

OMAHA (DTN) -- Biofuels and agriculture interests are rallying behind a bill working its way through the Minnesota Legislature to mandate E15 in the state as it faces pushback from the gasoline retailer industry.

Concerns were raised during a state senate hearing on Wednesday that the bill would be too costly for stations to comply.

The bill would require all Minnesota gasoline retailers to comply with the mandate by July 2022. Retailers say it would be costly to comply and the deadline is too tight.

Lance Klatt, executive director of the Minnesota Service Station and Convenience Stores Association, told the Minnesota Senate Agriculture and Rural Development Finance and Policy Committee it could cost gasoline retailers between $50,000 and $300,000 per site to upgrade infrastructure.

"The MPCA (Minnesota Pollution Control Agency) can confirm a large number of gasoline retail sites are not compatible to sell E15, which we all wish they were," Klatt told the Minnesota Senate Agriculture and Rural Development Finance and Policy Committee.

"Many of them are my members. There are so many sites and would take multiple years to complete and would really fail to achieve the July 2022 date."

"If the MPCA and the EPA would come out and say all sites currently selling E10 are grandfathered and are compatible to sell E15, that would be so great," Klatt said. "But we follow regulatory processes."

Many retailers in the state, he said, face uncertainty when it comes to the future when it comes to electric vehicles and other types of fuels such as biofuels.

Klatt said his association would like to see the state set the compliance date back to July 2030, to allow retailers to make other infrastructure decisions.

"A lot can happen in the next nine years," he said. "This window allows fuel retailers to make decisions right for the businesses, whether to invest in biofuels, EV charging stations or both."

Klatt said E15, also known as unleaded 88, represents about 30% of overall fuel volume sold in the state.

"E15 has validated consumers like the choice of fuel and use E15 on a regular basis," he said, "benefiting from the lower emissions while saving pennies at the pump. We support the biofuels industry. We love supporting your local farming communities. We also believe we need to do this in the right way, giving fueling retailers a chance to adopt a great fuel without being burned in a window of uncertainty."

EQUIPMENT COMPATABILITY

Ron Lamberty, senior vice president of the American Coalition for Ethanol, said he understands why retailers are concerned about an E15 mandate.

However, he said he believes most of those retailers have equipment already compatible with E15.

"I want to assure everybody that the ethanol industry has no interest in putting E15 in tanks that are incompatible with it," he said.

"That would be counterproductive for us. But, one of the most important things for people to understand, if they own a station, the equipment they have is compatible."

Lamberty said when pump and tank standards were first adopted for ethanol blends, E15 was selected by EPA as a test fuel. That's because Underwriters Laboratory standards for unleaded gasoline was up to 15% ethanol.

"Most of the pump manufacturers going back to 2008 have been warranting their dispensers for up to 15% alcohol because of that UL standard," he said.

"Again, I would applaud you for taking on this thing and Minnesota has always been a leader. Just to reiterate the fact that I understand why retailers and marketers and station owners would be uncomfortable, but we want them to know that for the most part they probably don't need to be uncomfortable."

Tim Gross, executive director of the Minnesota Petroleum Marketers Association, said his group supports the "spirit of the bill" but has concerns retailers would be unable to comply with the mandate by 2022.

The Minnesota Pollution Control Agency estimates there are about 3,500 retail facilities across the state, "and 85% or greater of those facilities cannot prove compatibility at this time," Gross said.

Estimates from the three largest equipment providers in Minnesota, he said, show retailers would need to invest at least $771 million in infrastructure to comply with an E15 mandate.

In addition, Gross said retailers face a limited construction season in the state, a lack of enough service providers and equipment to meet a 2022 deadline.

HELPING FARM ECONOMY

Brian Thalmann, director of the Minnesota Corn Growers Association, told the committee passing the bill would help state farmers to recover from the economic swings of 2020.

"Somebody asked if our state has sufficient production of ethanol to meet this 15% standard," he said.

"Absolutely yes we do. After the standard is enacted we will still be exporting over two-thirds of our ethanol to customers beyond Minnesota's borders. The corn is already also being produced in Minnesota. The time is right. The time is now. We can do this."

Chris Hanson, general manager of POET LLC's ethanol plant in Preston, Minnesota, said a statewide E15 mandate would help consumers.

"Not only can E15 protect consumers from unpredictable spikes in the price of foreign oil, it can help free farmers from uncertain assistance from Washington," he said.

"Predictable demand growth for E15 would also support thousands of good-paying biomanufacturing jobs, attract new capital investment for plant construction, improvements, and equipment, and generate additional tax revenues in rural communities across our state."

Last week, Iowa Republican Gov. Kim Reynolds announced a plan to require gasoline retailers to sell fuel with at least 10% ethanol and 11% biodiesel.

Iowa is the nation's largest ethanol and biodiesel producer. A study by the Iowa Renewable Fuels Association showed the fuel mandate would generate demand to sell 117 million gallons more ethanol and 203 million gallons of biodiesel from 2022 to 2026. The plan would generate nearly $460 million in economic activity by 2026, the IRFA study stated.

Last year, the Minnesota Governor's Council on Biofuels recommended Minnesota shift to E15 as "a near-term policy priority to accelerate progress toward the petroleum-replacement goal of 25% biofuel use in gasoline by 2030."

Todd Neeley can be reached at todd.neeley@dtn.com

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