Gov. Mark Dayton announced in mid-August that, starting in May, the state will require a biodiesel blend of 20 percent. The move makes Minnesota an outlier. State officials decided once again to pick winners and losers, and, this time, soybean farmers won.
The increased biofuel mandate of 20 percent is expected to increase the profits for one of Minnesota's largest cash crops, soybeans. With a likely 63 cents added to the current price of almost $10 per bushel of soybeans, farmers who supply soybeans to the state's three biodiesel refineries will see some relief in the coming year, courtesy of state-government requirements.
So, while a few will benefit, the rest of us will pay.
This is yet another area where Minnesota is an outlier with government mandates and incentives. None of the states around us - not Illinois, Iowa, Nebraska, North Dakota, South Dakota, Michigan, nor Wisconsin - have biodiesel mandates or a minimum content of biodiesel in their fuel requirements. While several states have incentives for farmers and renewable-fuel refineries, no other state in the Midwest has adopted a mandate like Minnesota's.
Furthermore, several states are eliminating entirely the biofuel mandate. After several years on the market, consumers and the marketplace should be able to decide what form of diesel fuel best serves their needs while protecting the environment.
Dramatically expanding this mandate is especially strange considering the mixed results truckers and bus drivers have experienced in the past few years with biodiesel blends, especially during Minnesota's extended cold-weather months. Biodiesel blends as low as 2.5 percent have been reported to cause clogged engine filters when outdoor temperatures drop below 50 degrees.
You can easily see how a statewide mandate like this may cause considerable disruption to school-bus service in northern Minnesota. It's not unusual for northern Minnesota to see temperatures below 50 degrees in September and April. As a result, this mandate may cause delayed school buses, which would leave young children waiting in the cold for buses running behind schedule. It's just another problem with a one-size-fits-all mandate in a large and diverse state like ours.
If schoolchildren are left out in the cold next spring, they won't be the only ones suffering under this new government edict. Another unintended consequence could be higher prices at the pump and at the grocery store. Gov. Dayton seeks to dramatically increase production and use of this biofuel in a very short period of time. As such, Minnesotans likely will pay more for goods and services simply because state officials have decided to increase the mixture of fuels required to produce biodiesel - while refineries and suppliers struggle to keep up with production.
Today, a gallon of biodiesel costs approximately $2 per gallon more than regular diesel fuel. These costs are almost always passed directly on to consumers. A shortage of this blended fuel in a state largely dependent upon trucking to ship goods to market could cause considerable cost increases: Some 70 percent of our Minnesota communities depend upon trucks to bring goods into and out of their communities each week.
Biodiesel isn't a new product, nor should it continue to need government mandates to survive in the marketplace. After 15 years of it in the marketplace, it's time for Minnesota leaders to join several other states and phase out this expensive energy mandate.
Annette Meeks is CEO of the Minneapolis-based Freedom Foundation of Minnesota (freedomfoundation.publishpath.com/).