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The New Rules Project
The conversion of biomass into ethanol provides farmers an additional market for their crops. Over the years, many federal and state rules have been developed to promote ethanol 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 production on a small scale. A decentralized, rural ethanol industry tends to favor a greater number of farmers over a wider area. Production credits for smaller ethanol facilities also promotes the formation of farmer-owned ethanol cooperatives that further increase returns to farmers.
RULES
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. 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).
Hawaii Ethanol Investment Tax Credits
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.
Minnesota Ethanol Program - A 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 more than a dozen farmer-owned ethanol processing cooperatives.
Wisconsin Ethanol Program
Wisconsin's 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.
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