Alternative Fuels — Federal and State Legislation
On This Page
Biofuels have been the subject of legislation and incentives both at the state and federal level. This page is meant to give a basic overview of current legislation and provide links to more information, and will be updated periodically to include current state and federal legislation related to biofuels.
Federal Legislation
The federal government has recently enacted several mandates to help bolster the biofuels industry, including setting goals to increase the production of biofuels. The three major pieces of federal legislation affecting the biofuels industry are the Energy Independence and Security Act of 2007 (which incorporates the Renewable Fuel Standard, or RFS); the Food, Conservation and Energy Act of 2008 (known as the “Farm Bill”); and Title II of the Emergency Economic Stabilization Act of 2008.
1. Energy Independence and Security Act of 2007
This act was designed to include protection of the environment and increase the production of alternative fuels. Title II: Energy Security Through Increased Production of Biofuels, Subtitle A: RFS, relates directly to biofuels production.
- The act's RFS mandates the following goals for the nation’s biofuels industries:
- Produce 36 billion gallons of biofuels by 2022, including:
- 15 billion gallons of corn-based ethanol by 2015.
- 21 billion gallons of advanced biofuels by 2022.
- Increase to 10 percent the biodiesel in diesel fuel sold in Minnesota (B10) by May 1, 2012, and 20 percent biodiesel (B20) by May 1, 2015. (Content levels apply only during warm-weather months (April – October), with B5 required during remainder of the year unless a fuel standard is in place to address cold-weather diesel issues.)
- Produce 36 billion gallons of biofuels by 2022, including:
- The act makes available federal assistance, in the form of the following grant money for biofuels industries:
- $500 million for FY08-FY15 for the production of advanced biofuels that have at least 80 percent reduction in lifecycle greenhouse gas (GHG) emissions relative to current fuels.
- $200 million grant program for FY08-FY14 for the installation of fueling infrastructure for mid-level biofuel blends, including E85.
- $50 million for FY08 or until spent for cellulosic ethanol and biofuels research and development grants.
A summary and complete text of the act is available at the link below to the Library of Congress' Web site. (The Library’s THOMAS site provides summaries and complete text for all federal legislation.)
The Renewable Fuels Association (RFA), a national trade association for the ethanol industry, provides a summary of the Renewable Fuel Standard on its Web site:
2. Food, Conservation, and Energy Act of 2008
This act was passed by the House and Senate in June 2008 over veto as a new bill enacting 15 titles. The act includes funding through loan and grant monies available to farmers and rural business for research and development on renewable biomass feedstocks and biofuels, and to support expanding ethanol and biodiesel production. The act also provides for the continuation of agricultural and other programs of the Department of Agriculture through FY2012.
More information about the Farm Bill is available from the following resources listed below:
2008 Farm Bill Renewable Energy Provisions - USDA fact sheet 
- Library of Congress THOMAS Web site H.R. 6124
- Food, Conservation and Energy Act of 2008 aka 2008 Farm Bill - MPCA presentation
- Food, Conservation and Energy Act of 2008 – The “Farm Bill” - MPCA presentation
3. Emergency Economic Stabilization Act of 2008 – Title II
Title II deals with Transportation and Domestic Fuel Security Provisions. It makes changes to tax credits for biodiesel and extends incentives for cellulosic biomass facilities. More information on the act is available from the Library of Congress THOMAS Web site H.R. 01424.
State Legislation
The state of Minnesota has made it a priority to have a leading role in the development of the biofuels industry. The Minnesota Legislature has passed a number of pieces of legislation toward this goal, as well as creating taskforces and committees which focus on biofuels and their expanding industry. The following three examples of recent legislation are applicable to the biofuels industry in Minnesota.
1. Ethanol
The following mandates or goals for ethanol are contained in state statutes.
- Currently all gasoline in Minnesota must contain 10% ethanol.
- Should the EPA grant a waiver to the Clean Air Act certifying 20% ethanol as a legal fuel, the percentage rises to 20% by 2013.
- Goal of attaining annual ethanol production of 480,000 gallons by 2008 (this goal has been met and surpassed)
- Goal of one-quarter of the ethanol blended with gasoline in Minnesota by 2015 be derived from cellulosic sources, or 60 MGY, whichever is first.
More information on Minnesota’s laws and incentives relating to ethanol is available from the following resources:
- Minnesota E85 Laws and Incentives, US Department of Energy, Alternative Fuels and Advanced Vehicle Data Center
- Minnesota Statute, 239.77, Biodiesel Content Mandate
2. Biodiesel
Currently all diesel sold in Minnesota must contain 2% biodiesel (B2). Future mandates are for 5% (B5) by May 2009, 10% (B10) by May 2012, and 20% (B20) by May 2015. Content levels apply only during warm-weather months (April-October), with B5 required during the remainder of the year unless a fuel standard is in place to address cold-weather diesel issues.
Other information on Minnesota’s laws and incentives regarding biodiesel is available from the following resources:
- Minnesota Biodiesel Laws and Incentives, US Department of Energy, Alternative Fuels and Advanced Vehicle Data Center
- Minnesota Statute, 239.77, Biodiesel Content Mandate
3. Next Generation Energy Initiative of 2007
In 2006, Governor Pawlenty announced the Next Generation Energy Initiative, with the goal that 25 percent of all energy used in Minnesota will be from renewable sources by 2025. More information on the initiative is available in Governor Pawenty's December 12, 2006 news release: Governor Pawlenty Introduces Next General Energy Initiative.
In 2007, Governor Pawlenty signed the Next Generation Energy Act, which addresses climate change and energy efficiency to reduce GHG emissions, and established the NextGen Energy Board (below). The full text of the act is available on the Minnesota Senate Web site at at: Next Generation Energy Act of 2007
The primary goals of the initiative are:
- Increased energy efficiency among electrical and natural utilities.
- Minnesota utilities are required to make a good-faith effort to provide 25 percent of electricity from renewable sources by 2025.
- Lowering statewide GHG emissions by15 percent by 2015, 30 percent by 2025, and 80 percent by 2050.
As part of the Next Generation Energy Act, a Climate Mitigation Action Plan was developed by the Minnesota Climate Change Advisory Group to advise policymakers on responding to climate change. This group published a list of recommendations, including:
- Reduce and/or sequester GHG emissions
- Promote energy-efficient technologies
- Encourage efficiency/use of renewable energy in new buildings—a goal of net zero carbon-based energy use was created.
To learn more, visit the Minnesota Climate Change Advisory Group Web Site.
Many of the initiatives listed on this webpage were brought about because of climate change concerns. To learn more, visit the MPCA’s Web page on Global Climate Change and its Impact on Minnesota and EPA's Climate Change Web site.
NextGen Energy Board
The NextGen Energy Board was created to provide recommendations to the Legislature and the Governor about how the state can most efficiently achieve energy independence through agriculture and natural resource sustainability.
The Board held eight meetings from June 2007 to January 2008. In its first four meetings, the Board heard presentations from groups focused on advancing renewable energy production. The remaining meetings focused on preparing a list of recommendations which was delivered to the legislature in February 2008.
To learn more, visit the NextGen Energy Board Web page on the Minnesota Department of Agriculture’s Web site.
The Board’s recommendations:
- Support legislation in the 2008 session to increase the biodiesel blending requirement incrementally from two percent to 20 percent (B2 to B20), and ask the Biodiesel Task Force to develop criteria and recommendations for increasing the sustainability of biodiesel fuel at each enhanced blend level.
- Support policies and activities to promote lower-carbon fuels, including supporting the development of a Low-Carbon Fuel Standard that takes advantage of the progress Minnesota has made in biofuels development.
- Promote the installation of methane digesters by encouraging the Agricultural Utilization Research Institute (AURI), the Minnesota State Colleges and University System (MnSCU), the University of Minnesota (U of M) and private colleges to work closely with the Departments of Agriculture and Commerce to attract more investment in on-farm and community-based methane digesters by increasing the public’s awareness of state and federal programs and incentives available for such projects.
- Support funding to implement a Reinvest In Minnesota – Clean Energy program in the 2008 Capital Investment bill.
- Support the process of AURI, MnSCU, the U of M and private colleges working closely with the Minnesota Department of Employment and Economic Development and the Legislature's education and workforce training committees to integrate the components of the Talent Development Initiative into the work of the agency and committees.
- Improve biomass energy permitting to encourage biomass energy development by:
- Improving understanding and characterization of different biomass air emission profiles.
- Improving understanding and characterization of the capacity and extent of water resources, including ground-water aquifers and surface water throughout Minnesota.
- Encourage technologies and processes that promote more efficient use of water and greater sensitivity to water availability when determining the location of proposed facilities.
Other Initiatives
The state of Minnesota has introduced initiatives to encourage the public and industry toward reaching federal legislative goals for energy conservation and renewable energy. Some examples of initiatives included in Minnesota legislation include:
Minnesota Biomass Center
Administered by the commissioner of agriculture, this proposed center would focus on biomass energy activities statewide. The center would be designed to provide information regarding biomass and coordinate its activities and the use of its staff and facilities with those of other entities involved in biomass energy projects.
Community Energy Planning; Grants
These grants are proposed to be given to cities or counties in order to improve the energy-planning capabilities of local governments. Priority would be given to those units of government that submit proposals that could result in significant savings of traditional energy sources, development of renewable energy systems, and broad community involvement. The commissioner shall also give priority to local units of government that provide staff or other support for a program and which request grants for programs which can be duplicated by other local governments. The grants may be used to purchase materials, employ staff or contract with other units of government or qualified consultants.
Renewable Energy Objectives
This statute requires electric utilities to make good faith efforts to generate or procure enough electricity generated by renewable energy technologies to provide to at least one percent of the electric utility's total electric sales to retail customers in Minnesota beginning in 2005. By 2010, this should be raised to seven percent of the electric utility's total retail electric sales. A tariff shall be established to optimize local, regional, and state benefits from renewable energy development and to facilitate widespread development of community-based renewable energy projects throughout Minnesota.
