Senate bill would repurpose ethanol fund to pay for low‑carbon fuel projects; agriculture and ethanol industry back the change

Senator Terry Wanzek introduced Senate Bill 2333 to the Senate Finance and Taxation Committee, proposing to replace the existing Ethanol Production Incentive Fund with a Low Carbon Fuels Fund that would support capital projects that reduce the carbon intensity of ethanol production.

“By aligning incentives with infrastructure investment that reduces carbon intensity, this bill positions North Dakota to continue to compete in emerging low‑carbon markets,” Tracy Olsen, chief operating officer of Guardian Energy Management and president of the North Dakota Ethanol Producers Association board, told the committee.

Under the bill, current funding—40% of receipts from registration of certain farm vehicles now directed to the production incentive—would be redirected to the Low Carbon Fuels Fund. The bill would raise the fund cap from $7.5 million to $30 million and allow grants or incentives to cover up to 50% of eligible project costs, with a per‑facility limit of $3 million per biennium and a cumulative cap of $10 million over 10 years for any single facility.

Sponsor Terry Wanzek (Sen.) described the fund as a tool to help ethanol facilities adopt carbon capture, energy efficiency improvements or other capital upgrades that would reduce their carbon intensity scores and make plant output eligible for markets such as sustainable aviation fuel (SAF). Wanzek and supporters said lowering carbon intensity could open substantial new demand: testimony cited national and global SAF market projections and noted that current ethanol carbon‑intensity scores would need to fall to meet SAF thresholds.

Industry and agriculture groups strongly supported the bill. North Dakota Agriculture Commissioner Doug Goehring said the fund would “help offset the cost of equipment and technologies to capture CO2 and decrease the carbon intensity score” and noted two North Dakota ethanol facilities already operating carbon capture. Tracy Olsen and Leslie Isenoggle (North Dakota Corn Growers Association) told the committee that ethanol supports roughly 46% of the state’s corn use and that improving carbon scores will help keep markets—and related farm income—local.

Opponents included Dakota Resource Council, which said continued public support for carbon capture and additional pipelines raises public‑safety and property‑rights concerns; the organization urged a do‑not‑pass recommendation. Testimony opposing the bill cited concerns that continued state support could accelerate pipeline construction and use eminent domain for project siting.

Committee members asked detailed questions about fund mechanics and verification. The bill includes a $1 million allocation to develop verification systems for carbon intensity reductions. Supporters said verification and documentation are complicated but necessary, and that the fund would be used primarily to help a small number of plants make large, eligible investments.

No committee vote was taken during the hearing. Testimony reflected strong backing from ethanol producers, corn growers and agriculture officials, with opposition from some community groups focused on pipeline siting and property rights.