North Dakota Democrats float renewable energy bill
By Mikkel Pates, Agweek Magazine Knight Ridder/Tribune Business News
The North Dakota governor's staff says a Democratic proposal to use $20 million in Bank of North Dakota profits to fund renewable energy initiatives isn't likely to get into the governor's biennial budget.
Gaebe says the profits from the bank "are already dedicated" to
other parts of the budget, and that many of the bill's provisions are redundant
to existing laws and agencies.
Gulleson and Heitkamp on Nov. 11 announced a "Comprehensive Renewable
Energy Initiative." They say they'll introduce it as an appropriations bill
early in the Legislature.
They spoke in a news conference in a West Fargo (N.D.) Cenex that promotes
E85 fuel. They were flanked by North Dakota Agriculture Commissioner Roger
Johnson, also a Democrat.
Attending the news conference was Jocie Iszler, executive director of the
North Dakota Corn Growers Association and chairman of a Renewable Energy
Partnership, which has been working to come up with its own legislative
recommendation.
Iszler says her groups support "any initiative that will advance the
development of renwables in the state."
The Democrats say the "big and bold" centerpiece piece of their
proposal is the use of 30 percent of profits of Bank of North Dakota profits or
$20 million per biennium -- whichever is less -- to fund a Renewable Energy
Trust Fund to be used by a new Renewable Energy Development Commission.
Johnson, whose staff works with the partnership, says a number of Gulleson's
proposals will "parallel" the partnership's proposals.
Heitkamp says the state is in a strong financial position and gasoline prices
are going up. "At what point do we invest in ethanol?" he says.
"We won't have a better opportunity than what's in front of us right now
on this issue, clearly," Gulleson says. "I think we've all recognized
that there were times when those profits needed to flow into the general fund,
but it's a different day. It's a good day, and a lot of that has to do with ag
producers in this state, so it's time we start reinvesting back."
Gulleson says bank transfers to the general fund have tripled during the past
decade and are used to "keep the lights on" rather than making
investments for which they were intended.
The proposed commission would spend the money from the fund. The commission
would include the commissioner of agriculture or the commissioner's designee, as
well as director of the state energy office, the department of commerce, as well
as representatives from councils for soybeans, oilseeds, corn utilization, wind,
biomass, petroleum, petroleum marketers and the state chamber of commerce.
The bill also would:
--Require any retailer with "more than one" gas pump to provide 10
percent ethanol in one of them. A similar proposal was defeated in the 2003
Legislature.
--Create a $1,500 tax credit for people to purchase fuel cell-powered
vehicles.
--Create a 50 percent income tax credit on equity investment in a qualifying
renewable energy product -- maxed out at $20,000 per person per project.
First, Gaebe says, the Renewable Energy Development Commission would perform
functions already within the scope of the Agricultural Products Utilization
Commission, which provides ag-related grants for feasibility and start-up
enterprises, he says.
Other funds currently help with the financing, equity and subordinated debt
for value-added projects. "If we can get funds in place, we'd prefer to use
existing entities rather than a whole new layer of bureaucracy," Gaebe
says.
Gaebe says the Bank of North Dakota already participates in value-added ag
projects, but as a lender.
"I think that kind of number ($20 million) might be presented for drama,
so there can be grumbling when it's not there," Gaebe says. Investment tax
credits in the proposal already work for any value-added project, Gaebe says.
Johnson praises Gulleson for her "all-encompassing approach" to
advocating renewable energy, and for her past leadership in promoting renewable
fuels policies in past legislatures "that were way beyond what the
Legislature was willing to consider, but in my mind, were very future-oriented,
forward-looking, the policies that this state needs to adopt."
Johnson calls the bill an "early discussion" about the
"beginnings of a bill" to go to the Legislature. Johnson says a bill
like this could help North Dakota realize its No. 1 "potential" status
in wind energy production, considering its No. 12 actual production status among
the states.
California generates 2,000 megawatts while North Dakota generates 66
megawatts.
Minnesota has nine times the generation production than North Dakota. It is
unclear how the Democratic proposal might affect the actual legislative outcome.
Political credit
Gaebe says the Renewable Fuels Partnership -- involving ethanol, biodiesel
and wind -- has been working on a legislative proposal. The group wants to join
forces in much the same way that the North Dakota Agriculture Coalition already
does in general agricultural issues.
"We're hoping this (Democrat) group didn't try to jump ahead, so to
speak," Gaebe says. "If there's some folks working together, one of
the first things you can do to mess it up is try to take credit for it
yourself."
Gaebe says North Dakota Soybean Council officials he contacted on the morning
of the Democrats' announcement "didn't know a thing about it." But at
the news conference, Gulleson and Heitkamp discounted the notion that they might
be pre-empting ideas of the Renewable Fuels Partnership.
Gulleson says she announced her bill with the Renewable Energy Partnership
offered it as a "basis" to use all or part of it for their own.
"If they feel they need another bill, a separate one, I'll be supporting
that one also. It's OK for us to have our ideas," Gulleson says.
She says she can "guarantee" that she'd support the governor and
Republican ideas on the topic "as long as they're investing in this
industry."
Johnson will be up for re-election in two years. The news conference came
just a week after he narrowly defended his position against Republican
challenger Doug Goehring. One of Goehring's criticisms of Johnson was that he is
too willing to take political credit for accomplishments of others.
Johnson says he was "delighted" when Gulleson and Heitkamp
contacted him to be at the news conference.
"I gave them the same answer I would give if any other legislator, or
any other public official or any other commodity group -- if they wanted me to
stand up and support other renewable energy proposals that are going to make
sense for the industry. I think, frankly, that is my role as ag
commissioner," Johnson says.
Iszler says it's "important to get some initiatives out there and get
the ball rolling" on legislation.
Asked whether Republicans might reflexively oppose the initiatives because
the Democrats came out with them as "a negative view of the political
process," Iszler says. "Whatever we come up with is going to be an
amalgamation of many different approaches."
Governor's plans
Gaebe says North Dakota Gov. John Hoeven has some things "in
progress" to build on past successes in renewables, but isn't specific.
During the last Legislature, Gaebe says, the governor was successful in
getting $3 million in ethanol production incentives as well as three bills for
wind energy and $500,000 for renewable fuel promotion and education.
Consumer use of ethanol blends in North Dakota has increased from 15 percent
to 37 percent during the past few years for a variety of reasons.
Gaebe says the governor would like to see ethanol blend usage increase to 50
percent of the fuel purchased in the state, which still would be behind the
two-thirds market share for ethanol in South Dakota and nearly 100 percent in
Minnesota, where all gasoline fuels must include ethanol.
But Gaebe can't explain why North Dakota shouldn't require all fuel to have
an ethanol blend, as Minnesota does. Minnesota's Gov. Tim Pawlenty has announced
a proposal to increase Minnesota's mandated blend from 10 percent to 20 percent.
"It's a different environment, I guess," Gaebe says of Minnesota.
"We have a resident refinery, a resident petroleum industry and a lot of
consumers who want to make their own choices."
Gaebe says if customers want ethanol, retailers will "happily provide
it," but a mandate still "tells folks what they've got to do without
paying for it."
"Some consumers still want to buy gas without ethanol in it," Gaebe
says. "We're more inclined to make it incentive-based, where (people) want
to buy it, not have to buy it."
Gulleson says North Dakota is more "risk-averse" than Minnesota for
embracing a mandate.
Johnson says he'd favor such an ethanol mandate.
Heitkamp says he thinks there is bipartisan support in the Legislature for a
10 percent mandate.
Asked why she didn't include the mandate in her proposal, Gulleson answers:
"I think we always need to take people so far, and if they want to go
further, we're ready."
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