LINCOLN, Neb. (DTN) -- Minnesota lawmakers last week moved one step closer to passing a clean transportation standard although some agriculture and biofuels interests are concerned about some aspects of the legislation that advanced from a state senate committee on March 9.

In particular, representatives from two state agriculture and biofuels interest groups said the legislation would favor electric vehicles.

The bill would establish the Clean Transportation Standard, which would require the state to reduce carbon emissions from transportation fuel by 25% by 2030, by 75% by 2040 and 100% by 2050. The standard would be similar to California's low-carbon fuel standard.

During a March 9 hearing held before the Minnesota Senate Committee on State and Local Government and Veterans, both agriculture and biofuels interests raised questions about senate file 2584 introduced by Democratic state Sen. Scott Dibble, https://www.revisor.mn.gov/….

The committee passed the bill and moved it on to the Minnesota Senate Environment, Climate and Legacy committee.

Alex Trunnell, public policy specialist for state and federal policy and advocacy for the Minnesota Corn Growers Association, said during the hearing the bill has provisions favorable to electric vehicles and less favorable to biofuels and agriculture.

While the corn growers support the concept of a technology- and feedstock-neutral policy when it comes to fuels, Trunnell said the bill is "neither technology nor feedstock" neutral.

In particular, he said the bill would prohibit certain technologies and crops from generating biofuel credit revenues. The bill would establish a carbon-credit trading system to allow obligated parties to meet the standard.

In addition, the Minnesota Pollution Control Agency would be responsible for implementing the program, something that does not sit well with some ag and biofuels interests.

"We have major concerns with the way that this bill leaves many policy decisions up to agency rulemaking," Trunnell told the committee.

For example, the bill would give the MPCA the option to coordinate with third-party entities or other states to review and approve fuel pathways.

"Which begs the question, who would be those third-party entities and what states would we be potentially coordinating with?" Trunnell said.

"We think that there needs to be some additional clarification on how MPCA would be approving these fuel pathways whether it be on our own or through the California Air Resources Board or another entity."

GREET MODEL USED

Although the bill calls for the use of Argonne National Laboratory's GREET model to determine greenhouse gas emissions of fuels, Trunnell said, the MPCA commissioner would have power to adapt the model to the state's needs without setting parameters on what that might look like.

The GREET model is considered by many industries to the be the gold standard of lifecycle emissions models.

"Additionally, we have a lot of questions about how credit revenue generated under this policy can be used," he said.

In particular, he said farmers who are implementing soil-health practices should be receiving credits.

"Will the biofuels producers, who we work very closely with, also be receiving these credits? And how will these credits potentially trickle down to the farmers implementing these practices?" Trunnell said.

Dibble told the committee the bill was designed to promote the use of all low-carbon fuel sources.

"There are a number of ways of reducing greenhouse gas emissions in transportation fuel," he said, "whether that's electrification or, of course, biofuels added to regular fossil fuels."

If the measure becomes law, Dibble said the MPCA would be required to consult on program rules with a variety of state agencies including agriculture.

Brian Werner, executive director of the Minnesota Bio-Fuels Association, told the committee his group also has concerns about the MPCA's involvement.

Werner said such a standard has the potential to lower greenhouse gas emissions while supporting rural agricultural communities.

In December 2022, the Minnesota Bio-Fuels Association joined a coalition of state agriculture and biofuel stakeholders in sending a letter to Democratic Gov. Tim Walz outlining principles and policies to consider when setting a clean transportation standard.

"We are concerned that this bill as introduced does not reflect many of those principles and policies outlined from that letter," Werner said.

"Most notably, the bill defers critical policy design considerations to rulemaking from several state agencies, led by the Minnesota Pollution Control Agency. We have concerns about whether MPCA is the appropriate agency to lead the administration of a program that relies heavily on low-carbon biofuels."

That is because in recent years many biofuels producers have experienced delays of up to five years or more in obtaining permits from MPCA to build, expand or operate their facilities, Werner said.

Low-carbon or clean-transportation standards are complex and multifaceted," he said.

"In order for such a policy to be successful in Minnesota, we have to get the details right. And all stakeholders have to be at the table. We urge caution and proceeding without considering and addressing the concerns of Minnesota farmers and renewable fuel producers."

LETTER TO WALZ

In the letter to Walz the biofuels and ag groups said a clean transportation standard should be technology and feedstock neutral, properly account for feedstock production practices in evaluating carbon intensity of fuels, increase market access for renewable fuels and should follow a regional model.

The letter was signed by Minnesota Bio-Fuels Association, Green Plains Inc., Minnesota AgriGrowth Council, Minnesota Corn Growers Association, Minnesota Farm Bureau Federation, Minnesota Farmers Union, Minnesota Soybean Growers Association, Minnesota Rural Electric Association, Poet LLC, and the Cooperative Network.

The groups expressed concern the legislation would follow California's lead. California has called for the phasing out of internal combustion engines by 2035.

"Reducing carbon emissions from our transportation sector and putting Minnesota on track to meet its climate goals will take an all-of-the-above approach," the letter said.

ELECTRIC VEHICLES BENEFIT

There is a section in the bill that directs credits revenue toward supporting electric-vehicle technologies.

"We would have some real questions," Trunnell said.

"Are these the only two areas that we're going to be able to use credit generated through this program or are there going to be other options for producers to use those credits for? We would also question why a bill that has such impacts on agriculture and working with agriculture producers is using the MPCA as the agency to implement this policy."

The Minnesota Pollution Control Agency commissioner would be required to consult with a variety of state departments including agriculture to set annual standards.

"When establishing the annual standards schedule, the commissioner must consider the cost of compliance, the technologies available to a provider to achieve the standard, the need to maintain fuel quality and availability, and the impact on achieving the state's greenhouse gas emissions reduction goals," according to the bill.

The commissioner would be required to calculate the carbon intensity of transport fuels.

The legislation would require fuel pathways to be consistent for all fuel types, based on science and engineering, reflect differences in vehicle fuel efficiency, and account for additional energy use by carbon-capture technologies used in making fuel.

When it comes to biofuels, the bill would prohibit the generation of credits from carbon capture and underground storage of carbon dioxide, the production of biofuels from feedstock grown on croplands with fewer than five consecutive years of cropping history, and renewable natural gas produced from new or expanded agricultural livestock production facilities.

CREDIT PREMIUMS FOR SOIL HEALTH

The legislation would allow for a credit premium of 5% for cropland-derived biofuels produced on land using "soil-healthy" farming practices and fertilizer best-management practices.

It would also allow for a 10% credit premium for cropland-derived biofuels produced on acreage using continuous-living cover-cropping systems.

As an alternative to using a statewide average on carbon intensity, biofuels producers would have the ability to calculate a "unique carbon-intensity score." That would involve using the GREET model and other models, "taking into account impacts on farm-related emissions and sequestration of greenhouse gases."

That would allow biofuels producers to account for on-farm practices including reduced tillage, no-till, reduced on-farm fuel use, reduction of fertilizers and other inputs, cover crops, perennial strips, manure applications, application of biochar and other practices.

INFLATION CONCERNS

A Republican committee member said a clean transportation standard could increase the price of fuel and other goods if implemented in Minnesota.

"What this will do it is just gonna inflate prices more," Sen. John R. Jasinski said.

In California where a low-carbon fuel standard is in place, he said gasoline is about $4.88 per gallon, or about $1.58 higher than in Minnesota.

"This is something that's going to even increase inflation more because if our truck drivers and ... delivery people are using this gas at a higher price, the price of everything is going to continue to go up even more," Jasinski said. "So, it's frustrating."

Brendan Jordan, vice president of transportation and fuels at the Great Plains Institute, told the committee that while California drivers pay higher gasoline prices it is not because of the state's low-carbon fuel standard.

"We've also worked with ICF Consulting to study the impacts for Minnesota, and they found that a clean-transportation standard would result in net-positive economic impacts including for the two major fuel consuming sectors," he said.

"So, that's households as consumers of gasoline and the trucking sector that is the largest consumer of diesel."

Jordan also has been working on the development of a potential Midwest low-carbon fuel standard, working with the American Coalition for Ethanol and others.

The legislation is receiving support from the Great Plains Institute, Minnesota Future Fuels Coalition and electric vehicle manufacturing interests.

The Minnesota Future Fuels Coalition includes the American Coalition for Ethanol, the Renewable Fuels Association, Amp Americas, ClearFlame Engine Technologies, sustainable aviation fuel developer Gevo Inc., Union of Concerned Scientists, Delta Airlines and others.

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @DTNeeley

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