News Releases for April 2003
April 14, 2003
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Hoeven, Legislature Launch Ethanol Incentive Plan To Promote Industry Expansion
BISMARCK, N.D. - Gov. John Hoeven today signed into law Senate Bill 2222, the Ethanol Production Incentive bill. The legislation, sponsored by Senators Jerry Klein, Tony Grindberg and Ron Nichols, and Representatives Chet Pollert, Keith Kempenich and Phil Mueller, implements the first program in the nation to create a market-based support system for the growing ethanol industry.
The new Ethanol Production Incentive program, a concept that Hoeven announced in November, establishes a counter cyclical financial incentive for the production of ethanol in any newly constructed ethanol production plants.
“Ethanol is a good fit for our farmers, our rural communities and the environment,” Hoeven said. “The program we launch today with this legislation is a fiscally smart, lean program that can help encourage more ethanol production in our state.”
The ethanol incentive operates on a counter cyclical feature that is fair and market-based. It is not a fixed payment, but is provided to a facility when the price of ethanol drops or the price of corn increases to levels that make ethanol less profitable.
Rep. Chet Pollert of Carrington and Sen. Jerry Klein were instrumental in passing the legislation in the House and Senate.
“This legislation builds on two of North Dakota’s most important industries, agriculture and energy,” said Sen. Jerry Klein of Fessenden, who serves on the Senate agriculture committee. “This is a new and innovative way to provide money for new plants that will create jobs in rural areas and improve prices for farmers. It will be a tremendous boost to the entire state.”
Pollert, who is vice-chairman of the House agriculture committee, said the legislation will have huge benefits, not only for corn growers but for the livestock industry.
“This will help create value-added opportunities for farmers and help raise the price of corn,” Pollert said. “It will also benefit the livestock industry by giving ranchers opportunities to purchase valuable by-products from the production of ethanol.”
A portion of farm vehicle registrations will finance the ethanol incentive fund. The fund is expected to accumulate about $3 million each biennium. In the upcoming biennium $1.2 million is reserved specifically for newly constructed ethanol production plants. The remaining money will be provided to the two existing ethanol plants in Grafton and Walhalla to phase out their reliance on the state incentive. The new law stipulates that in future bienniums, the entire $3 million will be devoted to new ethanol.
"Corn production in North Dakota has increased by 45% over the five years. Last year North Dakota produced 113 million bushels of corn,” said Mike Clemens, a Wimbledon corn producer and President of the North Dakota Corn Growers Association. “One of our goals is to develop value added markets for that corn. A 30 million gallon ethanol plant will use 11 million bushels of corn."
“Just last week the U.S. House of Representatives approved a five billion gallon per year renewable fuels standard as part of the new energy bill,” Hoeven said. “This bill makes it clear to ethanol producers everywhere that North Dakota is the right place at the right time for ethanol.”
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