The Legislature is in session and, with the state facing a budget shortfall, virtually every state program is on the table even though even-year legislatures traditionally deal only with bonding for capital projects.
Chances are good that three programs of interest to farmers and environmentalists will come up in one way or another. The danger is that the Legislature will listen only to advocacy groups and not pay attention to the needs of citizens as a whole.
The three are ethanol as a gasoline additive, wind-generated electricity and soybean oil as a diesel fuel additive.
The state has already implemented programs for the first two and proponents of “biodiesel,” while keeping a low profile thus far, reportedly are anxious to secure passage of their bill during the session.
These three initiatives all carry the promise of environmental improvement.
All could bring substantial financial advantage to specific groups. All could be implemented in ways that could produce higher returns relative to the cost. And all would be preferable for the groups who would benefit financially.
The concern, however, is that the programs may bring a cost that’s relatively higher than the environmental or social benefit.
It is up to the Legislature to take a broad look at such measures. But the political process is such that the voices of specific interest groups tend to drown out any consideration of society as a whole.
Minnesota has developed a considerable amount of wind power along the Buffalo Ridge in southwest Minnesota. That power is substantially more expensive to generate than power at coal-fired plants. But it doesn’t produce any greenhouse gases, mercury or other pollution that comes out of even the cleanest coal-fired plants.
Wind power, though, does have some environmental impacts, including danger to migratory birds, disruption of crop activities and what some consider visual pollution of the landscape.
Wind power so far generates less than 5 percent of electricity used in Minnesota. Development to date took place only because of a deal imposed on Xcel Energy in the mid-1990s when it sought permission to store spent nuclear fuel from its Prairie Island plant in dry casks.
The Legislature authorized such storage, but only if Xcel moved to get a specified amount of electricity from renewable sources. Xcel takes bids from wind power developers to buy generated wind power over the long term and passing that cost to its customers.
The benefits to Minnesota, the nation or the world may well exceed those costs, but such a calculation was never made. It should be before the program is extended.
Ethanol is added to virtually all gasoline sold in Minnesota and several other corn-belt states. Minnesota imposed a state mandate that all gas contain ethanol and provides building and operating subsidies to ethanol plants up to a certain size.
Adding ethanol does reduce some pollutants that threaten health in dense urban areas. It’s not poisonous as are some alternate “oxygenates” such as methanol and not carcinogenic like MTBE, an additive recently banned in California.
Ethanol production has benefited local employment in several Minnesota towns, including Marshall and Winnebago, and has raised corn prices for farmers, particularly those close to plants.
The legislative auditor did study the question in the mid-1990s and came to some cautious, very carefully phrased conclusions supporting the program. It did not, however, find that the benefits, however broadly measured, exceeded the costs.
The “biodiesel” initiative under which the state would mandate the mixing of some percentage of soybean oil into all diesel fuel sold in the state narrowly failed in the last session. Its proponents hope for success this year.
It’s an attempt by soybean processors, and to a much smaller extent by soybean growers, to reap the sort of benefits that corn producers and processors have received from the ethanol requirement.
Observers expect proponents to go for a 2 percent mandate, which wouldn’t necessarily increase consumption of Minnesota soybeans very much but which would increase demand for soy oil.
Like ethanol, biodiesel would reduce some pollutants in densely urban areas but would provide little environmental improvement for the state as a whole.
The hard knot here is that all three of these programs provide some genuine benefit to the environment or to specific towns or farmers. Politically they are very hard to criticize.
But in all three cases, the costs to society either in the form of taxes or more expensive energy, are substantial, and there is a lot of evidence that these costs exceed the benefits.
© 2002 Edward Lotterman
Chanarambie Consulting, Inc.