Fueling Freedom, One State at a Time

SD wants to implement a state version of Growth Energy’s Fueling Freedom Plan.
By Kris Bevill | February 15, 2011

In response to urging from the state’s ethanol producers, S.D. Gov. Dennis Daugaard introduced a plan during his Jan. 11 State of the State address to redirect a portion of the industry’s production incentives toward the installation of blender pumps within the state.

The state currently spends $7 million annually on production incentives for ethanol producers. Subsidies are capped at $1 million per facility and are distributed based on production volume. The reformed program would cut producer incentives by $2 million annually for the next five years and instead use that money to finance the build-out of blender pump infrastructure and provide funding for the state’s Revolving Economic Development Initiative.

Daugaard says this revamp will free up $3.5 million for blender pump installations and $10 million for the REDI fund over the course of five years. “This approach is a ‘win-win-win’,” he said during his address. “First, our economic development efforts will have more money to invest in South Dakota business. Second, our ethanol industry will get an investment in blender pumps—the infrastructure needed to expand ethanol markets. And third, we will do this at no additional cost to our budget.”

Although the plan will reduce the amount of money ethanol producers receive, it was actually initiated by the state’s producers. “The governor has called on all of us to assist in South Dakota’s economic recovery,” says Rob Skonsberg, senior vice president of public policy and corporate affairs for South Dakota-based Poet LLC and member of the state’s ethanol producers association. “This plan is one of those solutions. We can tighten our belt, assist in South Dakota’s recovery effort and invest in our future by simply restructuring an existing program.”

South Dakota’s plan is admittedly based on Growth Energy’s Fueling Freedom Plan, which calls for federal ethanol incentives to be redirected toward the build out of ethanol infrastructure. “South Dakota is really excited to be a poster child to show how this can work, how you can work with an industry to evolve subsidies from just cash down the barrelhead to ethanol producers to something that’s going to be able to help build infrastructure,” Dustin Johnson, the governor’s chief of staff, says. 

—Kris Bevill