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Appropriations committee advances bill redirecting ethanol production incentive funds to low‑carbon fuels program
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Summary
Senators voted to do‑pass Senate Bill 2333, which would repeal the existing ethanol production incentive fund, redirect its balance into a new low‑carbon fuels fund, raise the fund cap and provide matching grants to ethanol plants for carbon-reduction projects.
The Senate Appropriations — Government Operations Division voted to recommend passage of Senate Bill 2333, a measure that would repeal the state’s ethanol production incentive program and reallocate the fund balance to a newly created Low Carbon Fuels Fund aimed at reducing carbon intensity at ethanol plants.
Senator Wansick (presenting the bill) summarized the bill’s core provisions: repeal the production incentive program, move the fund balance (reported at approximately $6 million) into a new Low Carbon Fuels Fund and increase the statutory cap from $7.5 million to $30 million. Distributions would support capital projects that reduce carbon intensity — including CO2 capture and storage, energy-efficiency upgrades and ethanol-yield improvements. The bill limits distributions to any single facility to 50% of project costs, not more than $3 million per biennium and not more than $10 million cumulatively over 10 years from the first distribution to that facility.
Industry witnesses and agriculture groups testified in favor. Jeff Zuger, CEO of Harvest Stone Low Carbon Partners, described operational carbon-capture work at Blue Flint Ethanol and other facilities and said the market demand for low-carbon molecules — including sustainable aviation fuel (SAF) pathways — is driving investments. “Since October of 2023 we've been putting CO2 safely into the ground and lowering the carbon intensity for our fuels,” Zuger said, and he detailed how lower carbon-intensity scores are measured from field planting through finished fuel.
Supporters argued the program’s original incentive period had largely expired for facilities, and redirecting the continuing revenue stream (40% of certain farm-vehicle registration receipts) would finance projects to lower carbon intensity and help ethanol facilities sell into emerging low‑carbon markets. Lance Gaby of the North Dakota Farmers Union and representatives of the North Dakota Ethanol Producers Association urged passage.
The committee approved a do‑pass recommendation for SB 2333 after floor discussion and a roll call; senators signaled willingness to carry the measure to the full committee for final consideration.
Provisions in the bill are intended to leverage federal incentives (for example, 45Q and 45Z tax credits) and state matching aid to reduce project risk for private investors in carbon capture and other low‑carbon technologies. The committee record shows industry testimony estimating capital projects totaling tens of millions of dollars at individual companies; Zuger said his company planned roughly $130 million in near‑term investment and had already invested about $70 million at one site.
If enacted, the measure would repurpose a long-running state incentive into targeted support for projects that lower lifecycle carbon intensity and position North Dakota ethanol plants to enter expanding markets for low‑carbon fuels and feedstocks.
