Winter 2011 Energy Update

• Published On:1/23/2012
• Author:Glenn Thompson
• Categories:Energy, Admin

The B10 mandate is delayed for at least a year and will NOT go into effect on May 1, 2012. In the following letter, the Commissioners inform the Chairman of the House and Senate Agriculture, Commerce and Transportation Committees that the criteria has not been met.

Dear Committee Chairman:
Minnesota became the fi rst state to mandate the use of bio-diesel in September of 2005 and currently requires a minimum content level of five
percent bio-diesel (B5) in diesel fuel sold in Minnesota.

By law, Minnesota’s minimum content mandate is set to increase to 10% bio-diesel (B10) in 2012 and 20% bio-diesel (B20) in 2015. Before
a new mandate can be implemented, however, the law (Minn. Stat. 239.77, Subd. 2 (a)) requires the commissioners of agriculture, commerce
and the pollution control agency to determine whether four statutory conditions have been met. These conditions involve federal standards for
blend specifi cations, the production capacity of bio-diesel in Minnesota, the amount of infrastructure and regulatory protocol for bio-diesel
blending, and the source of feed stocks.

After much discussion and in consultation with the Minnesota Bio-diesel Task Force and with stakeholders, the commissioners agree that these
four conditions have not been met completely in Minnesota. Therefore, the commissioners recommend a one-year delay in the implementation
of the B10 mandate. The commissioners acknowledge the following questions remain concerning the statutory conditions:

• Regulatory protocol: The Minnesota Department of Commerce, Weights and Measures Division is the enforcement agent for the state’s
  bio-diesel content mandate. Weights & Measures audits and samples bio-diesel stored at bulk delivery facilities or sold at retail outlets
  in the state to ensure adequate bio-diesel blends are offered. The division’s investigators inspect retail outlets on a regular schedule. The
  length of the interval between inspections might allow for an opportunity for undetected violations of the content mandate. Also, Weights
  & Measures does not have the authority to audit or inspect at farms or fl eet facilities to determine if Minnesota bulk facilities are delivering
  mandate-compliant fuel.
  • Amount of blending infrastructure: The majority of the state is equipped with adequate bio-diesel blending infrastructure. The southwestern
    portion of the state historically has experienced some issues with access to mandate-compliant fuel, leading to supply issues. The
    commissioners fi rmly support the current B5 mandate, as well as eventual moves to B10 and B20. Along with monitoring/addressing the
    above issues, the commissioners pledge to do the following:
  • The Department of Agriculture will convene the Minnesota Bio-diesel Task Force Cold Weather Issues Team. Created in 2008, this team
    has provided essential guidance to that state on technical issues related to the production, handling and use of bio-diesel in cold weather
    conditions. The team will discuss whether future waivers on #1 diesel are needed.
  • In accordance with Minn. Stat 239.77 Subd 2(e) the Commerce Commissioner must determine wholesale diesel blend price differentials
    in the region and whether they may cause economic hardship to diesel retailers in the state by February 1, 2012. If such an economic hardship
    is found, the Governor is empowered to delay the move to B10. The Commerce Department will collaborate with the Department of
    Agriculture, Pollution Control Agency and the Bio-diesel Task Force in the design and completion of this analysis.
  • The Department of Agriculture will work with industry partners and the Bio-diesel Task Force to track developments in federal support
    for bio-diesel Much uncertainty surrounds the question of whether the federal tax credit for bio-diesel blenders will be allowed to expire,
    and if so, how RIN values will respond. The tax credit lapsed for six months at the beginning of 2011, until being restored retroactively
    by Congress. It is assumed that RIN values will rise to make up some or all of the value of the tax credit, should the tax credit expire.
    Industry experts contend that the situation will become more transparent in the coming months. The commissions will reevaluate Minnesota’s
    readiness to implement B10, continuing to seek the input of the Minnesota Bio-diesel Task Force and stakeholders throughout
    the process.
    

Commissioner Dave Frederickson
MN Department of Agriculture

Commissioner Paul Aasen
MN Pollution Control Agency

Commissioner Mike Rothman
MN Department of Commerce