This article first appeared in the July-August 2017 issue of Soybean Business.
Minnesota’s biodiesel mandate started as a pipe dream more than 20 years ago.
“There was no blue print, no road map,” says Ed Hegland, former Minnesota Soybean Growers Association (MSGA) treasurer and vice president. “We just made it up as we went along.”
Before legislation was even conceived, Rock County farmer Jim Willers remembers selling a bushel of soybean for $3.99 in 1999. Something had to give, he recalls.
“Prices were just lousy,” says Willer, a director with the Minnesota Soybean Research & Promotion Council (MSR&PC) and United Soybean Board (USB). “Back in those days, Minnesota Soybean wasn’t very active. We thought if we were worth our salt, we had to go do something about increasing demand.”
The biodiesel industry has since flourished, thanks to the jumpstart from Minnesota’s soybean leaders in the late ’90s and early 2000s. Today, biodiesel ads an estimated 63 cents to a bushel of soybeans, and production totals nationwide are nearing 3 billion gallons.
The national movement began slowly in Minnesota’s rural counties before descending upon the state capital in St. Paul.
“The industry did exist, but it was quite small and there wasn’t much production nationwide,” Hegland says. “We were looking at the very cheap soybean oil that was in tanks throughout the country, and we were dreaming of a way to utilize that product.”
The dedicated group of famers who helped the original B2 (2 percent biodiesel) mandate gain traction didn’t envision how the commercial biodiesel experiment would guide the industry. But the journey has been worth the ride.
“It was an exciting time,” says former MSGA President and current secretary Bob Worth. “It was really a good team effort. It proves right there that when you have a solid team working for a good cause, positive things do happen.”
Mike Youngerberg, Minnesota Soybean’s senior director of product and commercialization, was a crucial player from the outset.
“It’s been a testament to good people doing the right thing,” he says. “Biodiesel is something that’s good for Minnesota’s economy and the environment. All the points we’ve been making since the B2 days have become a reality.”
Minnesota Soybean had partnered with the National Biodiesel Board (NBB) in the mid-1990s to sponsor a biodiesel additive called Soy Shield. It treated about 50 gallons, and was dispersed at county events. A similar soy additive product was selling like hot cakes, Youngberg says.
“There was an attitude at the time, ‘Well, we got 10 percent ethanol – why can’t we have something requiring biodiesel added to diesel fuel?’” Youngerberg recalls.
The wheel started rolling once farmers approached Torrey Westrom, a Minnesota legislator, who helped introduce the first B2 bill in 1999. The soybean team was inexperienced in the nuances of politics; the bill languished that session, but helped build bipartisan momentum for the ensuing years.
“The politicians wanted to know what biodiesel was,” Willers says. “They thought we were cute, and they thanked us for showing up. We thought we better have a plan next time, so we got serious and started lobbying.”
They returned the next year with a renewed desire, enhanced industry support and a formidable team of lobbyists. The bill received numerous hearings, and Minnesota Soybean was ready to fight for biodiesel. A biodiesel tax credit proposal was floated, then dismissed.
“Then we came up with a plan to try and get a mandate,” Hegland says. “We thought we could start moderately with a 2 percent mandate.”
The biodiesel team faced opposition from a bevy of directions in the petroleum and trucking industries. The Republican opponents in the political chamber were against biodiesel mostly because of the law’s wording.
“They were good guys, but they just didn’t believe in a mandate,” Hegland says. “They believed in the product, just not in the mandate.”
In 2001, the B2 bill received more than a dozen committee hearings. Hegland remembers making 13 trips to the Twin Cities in a 10-week period and dozens of farmers appearing at committee hearings. By then, Minnesota Soybean had garnered the backing and support of NBB, Farm Bureau, Farmers Union and the American Lung Association, just to name a few.
“To have all those groups testifying side-by-side at hearings, we knew we were onto something good,” Hegland says. “That was an indication that, OK, this is something people want.”
The growers were resolute in their determination. Finally, in March 2002, the blood, sweat and tears paid off. The B2 mandate passed legislation, and was sent to Gov. Jesse Ventura’s desk.
“They thought they we were going to blink, but we weren’t going to do that,” Hegland says. “We weren’t going to fold.”
The governor declined to formally sign-off on the mandate, but through a series of measures, B2 became law in Minnesota.
“I don’t know how many years it took off Mike Youngerberg’s life, but we rose above it,” Hegland says, laughing. “We were at the leading and bleeding edge.”
Then the work really started.
By 2003, biodiesel had a champion in newly-elected Gov. Tim Pawlenty. Later that year, the GOP governor commissioned a Biodiesel Task Force – which is still in place today – to help streamline the B2 implementation process.
“Governor Pawlenty believed in renewable fuels 100 percent,” Worth says. “He was a true leader.”
The industry in Minnesota was required to produce 8 million gallons of B100 in production sites before the Minnesota Department of Agriculture (MDA) could give final clearances. Three biodiesel plants were built in Minnesota between 2002 and 2004, more than enough to meet the production requirement. By August 2002, the requirement had been met, and Gov. Pawlenty approved implementation on Sept. 29, 2005.
It was a landmark day for the national biodiesel market.
“What Minnesota did helped inspire other states to do similar legislation,” says Tom Verry, NBB’s director of outreach and development. “We learned so much as an industry from Minnesota.”
Every pioneer has to endure some hiccups and tribulations along the way; biodiesel in Minnesota was no different. In October 2005, just a few weeks into implementation, the biodiesel distributed didn’t meet specifications, causing filter plugging problems and tank issues. The Minnesota Department of Commerce issued a 10-day moratorium on biodiesel.
The news was met with fleeting moments of deflation.
“That was pretty much the low point,” Youngerberg says. “You don’t hardly get out of the gate and you get hit in your face. But we worked through it; through mishaps came learning.”
There were a lot of ‘I told you sos’ from biodiesel detractors. Worth remembers standing tall, having to grin and bear the criticism.
“I had truckers and farmers chewing me out,” he says. “I just stood there and defended it because I believe – and still believe – 100 percent in biodiesel. It’s a fantastic product.”
NBB helped with improving testing and higher fuel standards, employing procedures that are still used today. Educating consumers and debunking biodiesel myths became paramount to the industry.
“It was all educating, it was never the biodiesel’s fault,” says Worth, who was MSGA president from 2005 to 2007. “Once we started showing everybody how to take care of their supply tanks to get rid of the algae and the water, biodiesel wasn’t a problem anymore.”
The irons wrinkled out, B2 began increasing demand for soybeans. Some leaders in the industry started pushing for a move to B5. Others were wary of another long legislative slog and wanted other states to catch up to Minnesota.
“In the beginning,” Willers says, “all we thought we could realistically achieve was B5.”
On the eve of Farmfest in 2007, Gov. Pawlenty dropped a bombshell.
His administration informed Minnesota Soybean he was set to announce his intentions to go to B20 by 2012. The catch? The growers had about 24 hours to sign-off on the agreement.
It was put-up or shut-up time.
“We were all a little surprised,” Youngerberg says. “I remember farmers thinking, ‘Uh, oh.’ Then we quickly shifted into the mode of, ‘OK, the governor’s thrown it out there and we need to figure out a way to make this work.’”
Challenge accepted, governor.
Worth looks back fondly on Pawlenty’s involvement in biodiesel’s development; without a more sympathetic governor, Worth believes B10 and B20 might never have become a reality.
“He was the one who really put the system in place,” Worth says. “It took a person like Gov. Pawlenty to make this happen.”
The legislative leaders at the time, Rep. Al Juhnke and Sen. Jim Vickermann, who took the governor’s initiative and guided the bill through the state legislature.
“Through all this, it’s been the farmer support and crack lobbying, led by Jerry Schoenfeld, that’s kept the wheels moving forward,” Hegland says. “It was a huge team effort.”
B ready for B20
Minnesota moved to B5 in 2009 but was delayed in moving to B10 in 2010 when there wasn’t adequate blending infrastructure in southwest Minnesota. The issue was rectified in 2013, and B10 was implemented in 2014. B20 implementation during the summer months is set for May 2018.
The biodiesel industry continues to soar, not only in Minnesota, but nationwide. Other states still view Minnesota as the standard bearer.
“We learned so much from Minnesota,” Verry says. “They’ve been so inspiring at the NBB and for other states, and we’d like to keep that momentum moving forward. My observation of working with Minnesota Soybean is there’s no obstacle. They have an attitude of, ‘It’s always hard but let’s get going!’”
United States is the world’s largest biodiesel producer; according to NBB, the country’s biodiesel production grew from 9 million gallons in 2001 to more than 2 billion gallons in 2015. According to MDA, Minnesota consumes 77 million gallons a year and biodiesel’s total economic output impact in the state in 2016 hovered around $1.7 billion. The move to B20 will increase the state’s consumption to an estimated 115 million gallons.
“Minnesota has been a huge boost to the entire industry,” Hegland says. “All these years later, we’re held up at the national level as leaders.”
Minnesota’s biodiesel proponents are primed to bust through more legislative roadblocks. But a new generation of legislators are arguing against the language of a mandate.
“It’s basically the same people with the same story,” Hegland says. “So we’ve just rolled with it – here we go again. But we’re ready.”
Worth says he shutters to think what a halt to biodiesel’s momentum could bring to soybean farmers’ bottom line.
“I don’t want to go back to what it takes away if we lost biodiesel,” he says. “It would be devastating, but the fight goes on today to make sure that we don’t lose it.”
Verry vows the mandate will have NBB’s support. Minnesota, he says, is battle-tested. This is not the time for a step backwards, he says. An entire industry will be watching.
“We think the move to B20 in Minnesota is extremely important,” he says. “If that doesn’t stay in place, then other states might roll back their policies. But Minnesota Soybean’s a winner. They’ve been in a lot of fights, and they’ve won before. They blazed the trail.”