Minnesota 2% biodiesel mandate becomes effective September 29

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Friday, September 2, 2005

A Sample of Biodiesel.

On September 29, Minnesota will become the first U.S. state to require diesel fuel sold at filling stations in the state to be blended with 2% biodiesel. This follows the statewide mandate requiring ethanol to be mixed into gasoline—also a first by Minnesota—which took effect in 1997. The biodiesel mandate was approved by the 2002 state legislature, and was sent to then-Governor Jesse Ventura. Ventura allowed the bill to become law without his signature, stating his concern that the increased cost of fuel would affect the trucking industry—potentially spurring inflation—though he felt that this was nearly balanced by the positive impact the mandate would have on agriculture in the state.

The law had an initial target date of July 1, 2005, but would only go into effect once production capacity exceeded 8 million gallons (30 millon liters) per year. At the beginning of 2005, the state was only capable of producing three million gallons each year, but two new facilities in Albert Lea and Brewster increased state capacity twentyfold when they opened this summer. Each of the two new plants can produce 30 million gallons (113 ML) annually. Agriculture Commissioner Gene Hugoson verified production levels in the August 29 edition of the Minnesota State Register, meaning that the law will become effective following a month-long notification period.

The prices of diesel and biodiesel have equalized, so the negative economic impact initially feared by Ventura are not expected to come to pass and the effect should be pennies more or less per gallon. Despite the dramatic increase in capacity, biodiesel production is not yet a broad solution to shortages or high prices—in 2001, the state used 14.3 million gallons of petroleum every day.

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