Testimony of Roger Johnson
Agriculture Commissioner
North Dakota Department of Agriculture
Senate Bill 2310
House Natural Resources
Pioneer Room
March 20, 2003

Chairman Nelson and members of the House Natural Resources Committee. I am Agriculture Commissioner Roger Johnson and I am here in support of the amendments to Senate Bill 2310 offered by an eight member bipartisan group of legislators.

These amendments:

• Require any retail establishment that has more than one pump at which fuel for use in motor vehicles is offered for sale at retail to offer ethanol fuel.
• Require that the state fleet must have a minimum of 25 percent of vehicles that can utilize E-85 fuel.
• Provide for a renewable energy fund financed through a renewable energy fee of two cents per mile for all light vehicles in the state fleet.
• Declare that it is the public policy of this state to stimulate the development of renewable energy within the State of North Dakota.
• Create a renewable fuels development commission with a four point agenda to be accomplished in the next two years.
• Provide an incentive to increase biodiesel sales in the state.

I would like to address several of the points in the amendments.

The public policy of the State of North Dakota should be to develop renewable energy sources. As our nation is heading for war in the Middle East, we are reminded almost constantly that we are even more dependent on foreign oil than we have been in the past. Not only can our farmers produce high quality food and fiber, they can also be in the forefront of meeting the energy needs of this country. For North Dakota farmers to be producers of two of the most essential needs of humankind - food and energy- is both exciting and doable.

I support the concept of funding this public policy through a surcharge applied to all of the state agencies except one, and I'm not sure that the Highway Patrol should be excluded. This will not be a hardship on any one agency, yet the two cent energy fee will provide the seed money to make things happen.

I believe that the seven member commission includes the major stakeholders in renewable fuels. It allows for the appointment of other members should that be necessary to carry out the duties prescribed in the amendments. These amendments provide for a focused agenda which allows the legislature to easily assess its accomplishments when you meet two years from now.

One of the particularly important points about the commission is that most of the major players are sitting at the same table and are responsible for a broader agenda than each of their own individual roles. It is not healthy, nor in the best interest of farmers or the State of North Dakota, to have these different renewable energy groups looking only at their special areas of expertise. If the soybean and other oilseed interests were to oppose hydrogen development because it is a competing fuel with bio-diesel, the broad public purpose is not served. If the ethanol and bio-diesel interests jealously guard their own renewable fuel without looking at the overall benefit that North Dakota farmers and consumers will reap by developing both fuels, neither the farmers nor the State of North Dakota will gain the full benefits. The fact that these interests will be sitting together at the table, developing a comprehensive approach, is good for North Dakota.

I would like to comment on the particular agenda that is assigned to the commission.

E-85 Refueling Stations

The first agenda item calls for the commission to provide six new refueling facilities during the 2003-05 biennium for E-85 vehicles. I have attempted to use E-85 vehicles in my own travels when I use the state fleet, but with re-fueling sites only in Bismarck and Grand Forks, it does pose a major problem. Having more access points to purchase fuel is essential, and I think this is a laudable goal.

The public in North Dakota needs to become more aware of the availability of E-85 vehicles. I was surprised at a legislative hearing earlier in the session at which a legislator did not know what an E-85 vehicle was and certainly did not know that there are several car manufacturers who sell E-85 vehicles that don't require any adjustments to utilize 85 percent ethanol blends. When we use 85 percent ethanol as opposed to the universal 10 percent blend, there is a huge increase in ethanol usage. Someone has suggested that perhaps the two cent energy fee might be waived to agencies that request and utilize the E-85 vehicles. This would be an incentive to increase demand for them within the state fleet. I will leave it to your good judgment as to whether that might help to increase the use of the E-85 vehicles. However that is worked out, the first key thing that needs to be done is to have better availability of the fuel.

Biodiesel Development

The fourth agenda item for the commission is to develop a long term strategy to promote bio-diesel in the state. Bio-diesel has great potential. One of the questions often asked is "how feasible is it to have a plant in our state?" Last fall, our department, working with the local economic development office in Carrington, commissioned NDSU to do research to determine if a small, integrated facility that included an oil crushing plant, a bio-diesel plant, a livestock confinement unit, a New Zealand style slaughter plant and a greenhouse would be economically feasible. The goal was to see if plants like these might be replicated in small communities across the state. (The concept was to be small enough so one wouldn't get snuffed out by the large corporate giants, but efficient by utilizing all available products in an efficient manner.)

Thus the advantages of this total utilization could offset the problems with lack of scale. We are still waiting for the results of that study.

Wind and Hydrogen

The third item on the agenda is to develop a project using our wind resources to produce hydrogen. Most experts say that hydrogen is the fuel of the future, and we should be in the forefront in its development. President Bush has made it a top priority, and Senator Dorgan is a leader in the Senate favoring hydrogen development. We are late in the development of wind energy, considering our wind energy potential. We have problems getting our wind energy to out- -of-state consumers via power lines. Perhaps we can find alternative ways to utilize our wind resources through hydrogen production. Much needs to be learned about this issue, but it would be a tremendous boost to our rural economy if North Dakota can become a leader in this area.

Focal point for other renewal fuel projects

The fourth agenda item for the commission is to serve as a resource to and promoter of economically viable projects developed by the private sector. The commission can be a focal point for innovative ideas that our citizens develop. I believe that one of the important things that the commission can do in this area is to become experts on the President's hydrogen initiative and find ways for North Dakotans to utilize some of the huge amounts of moneys that will be available for hydrogen research and development.

There are several other proposed amendments to this bill. One calls for a requirement that every retail fuel establishment with more than one pump must offer ethanol. I support a mandated program for ethanol and have testified to that effect several times to various legislative committees this session

Mr. Chairman and members of the committee, I commend the efforts of those legislators who have given you the opportunity to pass some progressive and historic provisions on renewable fuels. These amendments are meaningful. The amended bill requires participation of all of state government. It codifies the commitment that I believe most of you have regarding the development of renewable fuels. It is action oriented. It will be easy for the next legislature to measure accountability through results.

I urge you to give a favorable recommendation to the amendments that have been presented to you today. I would be happy to respond to any questions.