News Releases for January 2005
January 24, 2005
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Hoeven, Legislative Leadership: Ethanol Initiative Seeks To Increase E85 Use
Hearing Scheduled for Tuesday, 9 a.m. in Fort Totten Room, State Capitol
BISMARCK, N.D. - Gov. John Hoeven, House Majority Leader Rick Berg, Rep. Wes Belter, and other Republican legislative leaders are promoting legislation to encourage the consumption of E85, a blended motor vehicle fuel comprised of 85 percent ethanol and 15 percent gasoline.
The House Finance and Tax Committee will hold a hearing tomorrow on HB 1478, which is sponsored by Berg, Belter, Representatives Jon Nelson, and Chet Pollert and Senators Duane Espegard and Jerry Klein. The bill calls for a 20 cents/gallon reduction in gas tax on E85 fuel, essentially dropping the tax from 21 cents to one cent per gallon. The goal is to encourage consumers to purchase the renewable fuel that can be made in North Dakota ethanol plants from North Dakota-grown corn.
“Over the last two bienniums, we’ve developed a comprehensive program to expand the production and use of ethanol in North Dakota, including a countercyclical production incentive, a consumption incentive and tax credits for new facilities,” Hoeven said. “This is a good addition to the steps we’ve already taken to boost the industry in North Dakota.”
“This legislation provides a significant incentive to consumers to purchase ethanol and increase the demand for it at gas pumps in North Dakota,” Berg said. “Ethanol production can help generate new wealth for our state and in doing so we can play an important role in reducing our nation’s dependence on foreign oil.”
Belter, chairman of the House Finance and Taxation Committee, said ethanol has huge potential as a value-added crop for North Dakota. “The demand for energy and fuel in this country is only getting larger,” Belter said. “Supporting the growth and development of a vibrant ethanol industry in North Dakota not only helps farmers but everyone who has a stake in growing our economy.”
State highway funds will not be impacted by the initiative, as the road tax will be replaced with special energy and value-added funds.
Only flexible fuel vehicles (FFV) are equipped to use E85 fuel. These include certain models of DaimlerChrysler, Ford, GM, Mazda, Mercury, Mercedes, Nissan and Isuzu. Many FFVs have a decal inside the fuel door or in the owner’s manual indicate that E85 fuel may be used. The most significant mechanical difference in an FFV vehicle is that any part that comes in contact with the fuel is upgraded to be tolerant to alcohol. It is not currently possible to convert a standard vehicle to operate on E85.
Jocie Iszler, executive director of the North Dakota Corn Council and the North Dakota Corn Growers Association, said her groups expect this program to significantly boost the use of E85 in North Dakota.
“This program gives consumers a big incentive to use ethanol,” Iszler said. “We are excited about the potential impact it can have and about the opportunity this program gives us to educate consumers about the many benefits of ethanol as a clean, renewable fuel that can have a significant economic impact for North Dakota.”
Currently, North Dakotans consume 400 million gallons of gasoline per year. Of that, 120 million gallons are ethanol-blended fuel, and of that only 100,000 gallons are E85. This bill seeks to increase the use of E85 significantly.
The North Dakota Corn Utilization Council and the North Dakota Corn Growers Association want to increase the consumption of ethanol, which will help increase demand for corn and support the development of additional ethanol plants in the state. While not all North Dakota land is suitable for growing corn, more and more farmers are planting it because the profit margin that can be $50 higher per acre than wheat.
Additionally, the economic impact of a new ethanol plant is considerable. Typically, a plant producing 40 million gallons/year creates nearly 700 permanent new jobs, generates nearly $20 million in household income and $1.2 million in tax revenue, and has an annual economic impact on a local economy of $110 million.
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