Energy & Environment

Gassing Up in Minnesota

A state ups the ante on alternative fuels.
by | January 2006

Minnesota made a name for itself in the renewable fuel market in 1997. That's when it became the only state to require that gasoline sold in the state contain 10 percent ethanol. Now the state is making its mark again. The mandate this time requires that almost all diesel fuel sold in the state contain at least 2 percent biodiesel--a cleaner-burning fuel produced from domestic, renewable resources such as vegetable oils, animal fats or soybeans.

The law, which was passed by the legislature in 2002, went into effect in September and already Minnesota boasts the nation's two biggest biodiesel plants. These two plants and a third are expected to produce 63 million gallons of biodiesel a year. The state agriculture department estimates that the biodiesel mandate will increase the demand for Minnesota's soybean crop by between 4 and 10 percent annually and generate an additional $206 million to $515 million in total statewide earnings. More than 3,000 farmers have already invested millions of dollars in the soybean crop.

There have, however, been some problems on the road to implementation. The mandate was temporarily suspended after a quality problem inside one of the plants caused refiners and blenders to stop selling the fuel in October. There also is some concern about biodiesel's performance during frigid weather.

Ralph Groschen, of the agriculture department, says kinks are inevitable. He notes that similar situations occurred with the ethanol mandate. "We have seen most of what has happened and what will happen," he says, "and now we'll do it with biodiesel."

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