Energy Bill Not Passed

For several months, it has appeared highly likely that the U.S. Congress would pass a comprehensive Energy Bill that would enhance opportunities for development of renewable energy sources and potentially benefit rural communities. However, as the year ends, Congress has not reached final agreement on the Energy Bill. Supporters of the Energy Bill are hopeful that Congress can finalize approval of the legislation early in 2004.

The U.S. House of Representatives has passed, by a wide margin, the Omnibus Energy Bill that was approved by a Conference Committee. However, the U.S. Senate was a couple of votes short of immediate passage (a “Cloture” vote) of the Bill. Both Sen. Mark Dayton and Sen. Norm Coleman of Minnesota have been supporters of the Energy Bill. President Bush is expected to sign the legislation into Law, once the Energy Bill is approved by Congress.

The major “sticking point” that is delaying final approval has been in language that addresses the fuel additive MTBE, which has been used for several years by the large oil companies as a gasoline additive. The Conference Committee language would limit the liability that the large oil companies have related to ground water contamination caused by MTBE, while U.S. Senate opponents to the current bill would like that language removed. This is not a major issue in most Midwestern states, but is a major issue in California and on the East Coast, where there have been problems with MTBE in groundwater supplies. The whole discussion on the Energy Bill has turned quite “political,” which may further complicate passage of the Bill early in 2004.

The Energy Policy Act of 2003 mandates greater use of ethanol and biodiesel, which is expected to double the amount of corn used in ethanol production to nearly 2 billion bushels by 2012. Incentives would also be created to expand the market for biodiesel, which would increase the demand for soybean oil and encourage development of new soybean processing plants. USDA estimates that the Energy Bill could create over 200,000 jobs in the U.S., would significantly increase demand for agricultural products, and would increase U.S. net farm income by an estimated $2-4 billion by 2012. USDA also estimates that passage of the Energy Bill could increase the U.S. average corn price by as much as 10-30 cents/bushel by 2012, which would reduce potential government spending for farm program payments in the future. U.S. Secretary of Agriculture Ann Veneman stated: “The Energy Bill offers increased opportunity for agricultural producers and for energy consumers who want renewable, domestically produced and environmentally friendly energy.”

Bottom Line

It is pretty apparent that the pending comprehensive Energy Bill is a “win-win” proposition, as far as developing a renewable energy industry in the U.S. that lowers our reliance on foreign oil imports, is safer for the environment, and enhances rural economic development and farm income. Let’s hope that our Congressional Leaders can get beyond the “politics” and work out the differences on the MTBE provisions in the legislation so the new Energy Bill can be passed and signed into law early in 2004. Most of the Minnesota congressional delegation has been highly supportive of the new Energy Bill. Please thank them for their support and encourage them to keep working toward a final agreement when Congress goes back in session in January, 2004.

Northstar Ethanol, LLC

Work continues on the development of a Northstar Ethanol, LLC, the proposed new ethanol plant for Lake Crystal, MN. The project is being developed under the leadership of the the board of directors for Northstar Ethanol, LLC, and the Broin Companies of Sioux Falls, SD. The Broin Companies have been involved in planning, designing, and constructing nearly 20 ethanol plants in the Upper Midwest. They are a major player in the U.S. ethanol industry. In recent weeks, company officials have been meeting with officials from the city of Lake Crystal, Blue Earth County, and the State of Minnesota to work out details on site selection and development for the new ethanol plant. It appears likely that the new ethanol plant may end up about two miles west of Lake Crystal, just north of Highway 60. However, there are still many details to be worked out in the coming weeks.

Editors note: Kent Thiesse is a former University of Minnesota Extension educator and now is Vice President of MinnStar Bank, Lake Crystal, MN. You can contact him at 507-726-2137 or via e-mail at kent.thiesse@minnstarbank.com.