BISMARCK, N.D. (AP)--Although North Dakota raises corn and soybeans and has abundant wind, the state trails badly in developing alternative fuels, say lawmakers who want to invest $20 million in a new initiative.

However, the legislation's opponents say it has a glaring flaw--a requirement that all North Dakota filling stations sell gasoline with a 10 percent ethanol blend. The fuel is a common, but not universal, offering at the service station pump.

"We have to continue to work together, and this is not a form of working together," said Ron Ness, director of the North Dakota Petroleum Council. "Trying to stick it in our ear every session, and force these (ethanol) markets, is not a healthy way to grow these industries."

Rep. Pam Gulleson, D-Rutland, and Agriculture Commissioner Roger Johnson said aggressive state promotion of ethanol and other alternative fuels was warranted.

Minnesota requires service stations to sell ethanol, and it has reaped benefits, including corn farmers getting higher prices and high-quality livestock feed that is a byproduct of ethanol production, Gulleson said.

North Dakota has two ethanol plants, both built in the 1980s. Other ethanol projects have struggled to get started.

"Those states that are the most aggressive in term of offering either an incentive or a mandate standard have gone the farthest in promoting and making their state really active in this whole area," Gulleson said.

Ness, Gulleson and Johnson were among those who spoke Feb. 1 at a Senate Finance and Taxation Committee hearing on the legislation. The full Senate will vote on the proposal later.

The bill would establish a new "renewable energy development commission," which would oversee a $20 million fund to aid the industry. The money would be provided by profits from the state-owned Bank of North Dakota.

It would require service stations to include a 10 percent ethanol blend among their gasoline offerings. North Dakota's state government car and truck fleet would have to use either gasohol or biodiesel, a blend of diesel fuel and soybean oil.

If a highway construction contractor landed a state job worth more than $100,000, the company would have to use gasohol and biodiesel in its vehicles and equipment.

State agencies, when buying electricity, would have to make sure at least 10 percent of the power was generated by wind turbines, the bill says.

The legislation also includes tax credits for biodiesel sellers and users, tax breaks for hydrogen fuel cell development, and an income tax credit for renewable energy projects.

Johnson said North Dakota has been lagging in developing its ethanol, wind energy and biodiesel industries, even though the state's corn and soybean production is rising and its wind energy generation potential is the greatest in the country.

The American Wind Energy Association ranks the state's potential as first among the 50 states, saying it could generate an average power output of 138,400 megawatts. It now generates 66 megawatts, the association says.

"This bill is about changing some of our relative ranking in the rest of the country," Johnson said. "We are way behind, and we need to do something very dramatic to begin to catch up."

Ness said alternative fuels, particularly ethanol, need to do a better job of attracting private investment, rather than relying on government payments and subsidies.

"I think the growth of ethanol plants in this state would be a good thing," Ness said. "However, these industries have to find the ability to attract private funds, and get some of this done themselves."

Date: 2/24/05

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