The conversion of biomass into ethanol and biodiesel provides farmers an additional market for their crops. Over the years, many federal and state rules have been developed to promote biofuels production for use in industry and reformulated gasoline. While this page does not include an exhaustive list of ethanol incentives, the rules on this page are unique in that they encourage ethanol and biodiesel production on a small scale. A decentralized, rural biofuels industry tends to favor a greater number of farmers over a wider area. Production credits for smaller facilities also promotes the formation of farmer-owned cooperatives that further increase returns to farmers.
More Information:
- The Energetics of Ethanol: An Introduction and Link to Studies – How much energy does it take to make a gallon of ethanol? Make up your own mind by looking at the studies themselves!
- Cellulosic Biofuels: Another Opportunity for Washington to Marry Agriculture and Energy Goals – by David Morris, published in Ethanol Today Magazine, May 2008
- Ethanol and Land Use Changes This February 2008 policy brief criticizes the authors of two recent studies published in Science for advancing a conclusion not supported by their own studies. The paper notes that the vast majority of today’s ethanol production comes from corn cultivated on land that has been in corn production for generations. Since little new land has come into production, either directly or indirectly, the current use of ethanol clearly reduces greenhouse gas emissions.
- Scale & Ownership of Renewable Energy – a presentation by John Farrell at the Local Energy Initiatives Forum in Cloquet, MN on September 13, 2007
- Wind and Ethanol: Economies and Diseconomies of Scale – This August 2007 report finds that there are indeed small cost reductions from very large scale, absentee owned renewable energy facilities. But that these are overshadowed by the significant loss in potential economic benefits from locally owned and more modestly scaled facilities.
- Give Ethanol a Chance: The Case for Corn-Based Fuel – by David Morris, published on AlterNet, June 13, 2007
- Energizing Rural America: Local Ownership of Renewable Energy Production is the Key This January 2007 paper by David Morris was originally published by the Center for American Progress. This report argues that Congress must recognize the dramatic benefits of clean, renewable energy on rural communities and then ensure that the federal farm bill policies work to maximize local ownership of the rapidly expanding biofuels and wind energy industries. Numerous policy options are recommended.
- Making Cellulosic Ethanol Happen: Good and Not So Good Public Policy – This January 2007 report provides an analysis of federal policies that are both good and bad related to creating a viable cellulosic ethanol industry based on two building blocks: 1) Commercial technologies that produce ethanol from cellulose and 2) A cultivation, transportation and storage infrastructure that delivers cellulose to biorefineries
- By the People, For the People: Toward a community-owned, decentralized biofuel future – by David Morris published in Grist, December 8, 2006
- The Strange Legislative History of the Cellulosic Ethanol Mandate – by David Morris, in RenewableEnergyAccess.com, December 4, 2006
- Ethanol as a Renewable Fuel: An Overview – video of a speech by David Morris, ILSR Vice President, presented at the Minnesota Pollution Control Agency’s Air Quality Series, September 28, 2006 (streaming video, 1.5 hours)
- Putting the Pieces Together: Commercializing Cellulosic Ethanol – September 2006 A report examining federal policies supporting cellulosic ethanol production and advocating that the Federal government adopt strategies that support farmer-owned biorefineries.
- The New Ethanol Future Demands a New Public Policy – by David Morris, June 21, 2006 [this is an expanded version of an opionion column published in the NY Times
- The Once and Future Carbohydrate Economy – by David Morris, published in the American Prospect magazine, March 2006
- Ownership Matters: Three Steps to Ensure a Biofuels Industry That Truly Benefits Rural America This February 2006 paper by David Morris was adapted from a speech given at the Minnesota Ag Expo 2006. The paper provides a snapshot of today’s biofuels industry and a roadmap to ensure that local farmers see significant benefits from the expanding industry in the future.
- The Carbohydrate Economy, Biofuels and the Net Energy Debate – by David Morris, Institute for Local Self-Reliance, August 2005
- How Much Energy Does It Take to Make A Gallon of Ethanol?– Institute for Local Self-Reliance, August 1995
Biodiesel Mandate – Minnesota
In March 2002, Minnesota enacted the nation’s first biodiesel mandate that would require nearly all diesel fuel sold in the state contain at least 2 percent biodiesel by 2005 (earlier if certain conditions are met). Biodiesel is a fuel additive derived from animal fats or plant oil, typically soybeans. Proponents of the biodiesel requirement argue it would be a boon for the state’s farmers and improve the state’s use of alternative fuels. The new law isn’t perfect but a good model for other state’s to work from. The law could be strengthened by adding a provision to require the mandate to be met through biodiesel production from farmer-owned cooperatives.… Read More
Biodiesel Use Incentives for School – West Virginia
West Virginia state law provides a financial incentive for schools to fuel their bus fleets with alternative fuels. Under the state school aid formula, counties receive about 85 cents for every dollar in transportation costs. By switching to alternative fuels like biodiesel blends or compressed natural gas [CNG], the reimbursement increases to 95 cents.… Read More
Ethanol and Biodiesel Incentives – Missouri
In 2002, Missouri enacted two incentive programs that will promote in-state, cooperatively-owned biofuels production. Targeted at increasing homegrown production of ethanol and biodiesel, the five year incentive programs provide grants to producers that are at least fifty-one percent owned by agricultural producers actively engaged in agricultural production for commercial purposes in the state. Ethanol incentives include a payment of 20 cents per gallon for the first 12.5 million gallons and 5 cents per gallon for the next 12.5 million gallons. Biodiesel incentives are 30 cents per gallon for up to 15 million gallons of production.… Read More
Ethanol Investment Tax Credit – Hawaii
In early 2000, legislation passed in Hawaii to provide tax credits for the production of ethanol in the state. The new law will help sugar growers on Kauai and Maui by offering incentives to use molasses and other wastes as the feedstock for ethanol. Supporters also hope the possibility of using municipal solid waste as a feedstock will cut down on the amount of waste being landfilled. Manufacturers that produce between 500,000 and one million gallons of ethanol will receive a non refundable 30% investment tax credit or $150,000, whichever is less.… Read More
Ethanol Producer Credit – Wisconsin
Wisconsin’s 2000 Act 55 provides ethanol producers a credit much like Minnesota’s – beginning July 1, 2000 it will provide 20 cents per gallon for no more than 15 million gallons of production. The feedstock must come from a "local" source, definition to be determined.… Read More
Ethanol Production Incentives – North Dakota
In April 2003, North Dakota’s Governor signed into law an Ethanol Production Incentive bill (Senate Bill 2222). The legislation implements the first program in the nation to create a market-based support system for the growing ethanol industry. The ethanol incentive operates on a counter cyclical feature that is market-based. It is not a fixed payment, but is provided to a facility when the price of ethanol drops or the price of corn increases to levels that make ethanol less profitable. Incentives are based on a combination of a$1.80/bushel price for corn and a $1.30/gallon rack price for ethanol(price at the terminal).… Read More
Ethanol Program – Minnesota Model
To meet its goal of replacing 10 percent of its fuel needs with ethanol, in the late 1980s Minnesota instituted a producer payment program of 20¢/gallon on up to 15 million gallons of ethanol per year for a maximum of 10 years. The payment is limited to in-state producers, and the small scale requirement has resulted in the formation of nearly a dozen farmer-owned ethanol processing cooperatives. Minnesota-based ethanol plants, especially coops, benefit the state economy by spending more of their money on raw materials inside the state, and by keeping more of their profits and dividends inside the state.… Read More