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Michigan Farm Bureau applauds E15, E85 state tax-credit legislative proposal

According to an economic analysis, implementing E15 statewide would require an additional 220 million gallons of ethanol. The value of this output including ethanol, DDGS, distiller’s corn oil would amount to more than $400 million. Total economic activity would add nearly $530 million to Michigan GDP, generate $166 million of household income and generate nearly $47 million of state and local tax revenue. | The Andersons Image credit: The Andersons
Date Posted: February 14, 2022

Legislation to create state-level tax credits for Michigan retailers selling E15 and E85 ethanol-blended fuels to provide cleaner, more affordable options for Michigan drivers is being applauded by Michigan Farm Bureau, the state’s largest farm organization.

Michigan Farm Bureau Industry Relations Specialist Theresa Sisung says an analysis, Economic Impact of Statewide E15 Use in Michigan, shows expansion of E15 would be a major win-win scenario for the state’s environment, economy and corn farmers.

“Michigan drivers consumed 439 million gallons of ethanol through E10 blended fuels in 2019,” Sisung says. “While impressive that volume pales in comparison to the total 4.5 billion gallons of gasoline purchased by state motorists that year, according to the report.”

Sponsored by Sen. Kevin Daley (R-Lum), the proposal would create a 5-cents-per-gallon tax credit for the sale of E15 and a .085-cent-per-gallon credit for the sale of E85, with both expiring after five years unless renewed by the state Legislature.

Michigan’s several operating ethanol plants produced an estimated 238 million gallons of ethanol in 2019, meaning Michigan imported ethanol from other ethanol producing Corn-Belt states to meet that demand.

Sisung says the report compiled by ABF Economic, a biofuel consulting firm, pegged the farm gate value of the 78 million bushels of corn feedstock used to produce ethanol in 2019 was $291 million, based on then-current market values for corn.

According to the analysis, implementing statewide E15 use would require an additional 220 million gallons of ethanol. The value of this output including ethanol, DDGS, distiller’s corn oil would amount to more than $400 million.

The additional ethanol demand and resulting economic benefits would provide an incentive for the Michigan ethanol industry to expand by adding new production capacity, according to Sisung.

The analysis estimated the economic activity generated by this industry output would add nearly $530 million to Michigan GDP, generate $166 million of income for Michigan households and generate nearly $47 million of state and local tax revenue.

MFB Legislative Counsel Rebecca Park says member-approved policy supports expanding the biofuel distribution infrastructure, including blending capability at the retail level.

“Our policy clearly supports establishing economic incentives and streamlining the permitting and licensing process to encourage biomass fuel production and broadening the use and distribution of biofuels with incentives targeted to producers, blenders, distributors and end-users,” Park says.

The legislation has been referred to the Senate Committee on Agriculture for an expected hearing in the near future.