Senators open debate on bill seeking greater use of corn-based ethanol

Backers say it would help farmers and local jobs; detractors say the fuel doesn’t need state mandate or tax credit

By: - April 20, 2023 6:24 pm

An estimated 40% of Nebraska’s corn is sold to ethanol plants. This corn field, pictured last summer, was in Saunders County, Nebraska, just outside of Ashland. (Aaron Sanderford/Nebraska Examiner)

LINCOLN — An effort to increase use of higher blends of corn-based ethanol ran into an unusual group of opponents Thursday.

State Sens. Megan Hunt of Omaha and Jane Raybould of Lincoln — two of the more liberal senators in the Nebraska Legislature — joined with the conservative Americans for Prosperity in arguing that mandating what kind of gas pumps businesses should provide was government overreach.

“Government should not tell businesses what to sell,” said Hunt. “The ethanol industry can stand on its own without a government mandate.”

Raybould, whose family owns a chain of supermarkets that include gas pumps, said forcing retailers to have higher blend E-15 pumps was wrong-headed.

‘Why subsidize ethanol?’

“Why are we making the taxpayers subsidize the ethanol industry?” Raybould asked. “Why doesn’t the (Nebraska) corn board or ethanol board have skin in this game?”

State Sen. Myron Dorn
State Sen. Myron Dorn of Adams.
(Courtesy of Unicameral Information Office)

The comments came as the Unicameral opened debate on Legislative Bill 562, the priority bill of Adams Sen. Myron Dorn, a farmer.

It touched on one of the state’s largest industries, but one facing some headwinds given the growing switch to electric vehicles. In response, Nebraska’s federal delegation has also been pushing legislation to increase use of ethanol.

Nebraska is the second largest producer of ethanol in the country, and farmers who live in the vicinity of the state’s 24 ethanol plants get an estimated 21 cents a bushel more for their corn.

Supports local economy

That boosts profits for farmers in what is a $10 billion industry and provides a valuable byproduct, cattle feed, for livestock producers. Advocates said ethanol plants also provide good-paying jobs in rural areas across the state.

Glenvil Sen. Dave Murman noted that Nebraska is an agricultural state. An estimated 40% of the state’s corn crop goes to ethanol plants.

“We need to support our own economy. And this is a bill that will do that,” Murman said.

Dorn said the goal of LB 562 was to increase use of ethanol. Currently, he said, just under 10% of the fuel sold in Nebraska is ethanol, and the bill aims to increase that to 14% by 2027.

50% of pumps must provide E-15

Beginning Jan. 1, any new gasoline outlet, or any outlet replacing more than 80% of its pumps, would be required to have 50% of its pumps provide E-15, a blend that contains 15% ethanol.

Tax credits, capped at $5 million a year statewide, would be provided to retailers who provide E-15 pumps. The credit would start at 8 cents per gallon sold, a boost over a 5 cents a gallon credit approved last year.

Under a proposed amendment to LB 562, smaller gas retailers, or those facing expensive replacement of pumps and storage tanks, could be exempted from the mandate.

But if the state’s ethanol use doesn’t grow to at least 14% of all fuel by 2027, then every retailer in the state would be required to have at least one E-15 pump.

State Sen. Jane Raybould of Lincoln argued Thursday against providing state tax credits for providing higher blends of ethanol. (Zach Wendling/Nebraska News Service)

Americans for Prosperity opposed the bill because it dictated what businesses should do. Proponents of the measure argued that it wasn’t a mandate because it only increased “access” to the higher blend fuel.

Dorn said that when E-15 pumps are provided, consumers rapidly switch to it from the E-10 that stations commonly carry. About 10% of the state’s gas stations and convenience stores now offer E-15, he said.

Dorn estimated that the bill would increase statewide ethanol production by 40 million gallons, or about 5%, and, because E-15 averages about 17 cents a gallon cheaper, consumers could save up to $52 million.

Would need to replace E-10 with E-15

Raybould said that shoppers at her family’s supermarkets aren’t asking for E-15 and that retailers are in the business of providing what customers want.

Since gas pumps typically offer only three dispensers, she said retailers would be looking at replacing the highest selling option, E-10, or undertaking an expensive replacement of pumps. Some storage tanks, Raybould added, can’t hold the more corrosive E-15.

State Sen. Megan Hunt of Omaha  (Zach Wendling/Nebraska Examiner)

Hunt also raised concerns about whether ethanol had a long-term future, given the push to switch to electric vehicles.

“This is another handout to ag producers,” the senator said, questioning whether ethanol was becoming “an obsolete industry.”

She filed an amendment to the bill to provide $150,000 to the University of Nebraska to study the short- and long-term prospects for ethanol, as well as the impact on the environment and water resources in growing corn.

Hastings Sen. Steve Halloran complained that there was too much “gnashing of teeth” over LB 562 and that retailers could easily and inexpensively comply with the bill by switching pumps from E-10 to E-15.

Lawmakers adjourned for a four-day weekend before getting to a vote on Hunt’s amendment. But senators did reject her motion to kill LB 562 on a 38-1 vote.


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Paul Hammel
Paul Hammel

Senior Reporter Paul Hammel has covered the Nebraska state government and the state for decades. Previously with the Omaha World-Herald, Lincoln Journal Star and Omaha Sun, he is a member of the Omaha Press Club's Hall of Fame. He grows hops, brews homemade beer, plays bass guitar and basically loves traveling and writing about the state. A native of Ralston, Nebraska, he is vice president of the John G. Neihardt Foundation.