PIERRE (Joshua Haiar/South Dakota Searchlight) — A bill to incentivize the sale of more ethanol passed through the state Senate on Tuesday with 33 yes votes and no opposition.
The legislation outlines a new tax refund that would be in effect from 2025 to 2030. It would allow gas stations to claim a fuel tax refund of up to 5 cents per gallon of E15 fuel sold.
E15 is 15% ethanol and 85% gasoline, which is a higher portion of ethanol than the typical E10 blend. Ethanol is made primarily from corn.
To pay for it, the bill would use an existing ethanol fund overseen by the Governor’s Office of Economic Development. That fund receives 1.5% of a tank inspection fee charged to fuel sellers.
The initiative would be a boost to the ethanol industry in South Dakota, according to Tim Dougherty, who lobbies for POET Biofuels, a major ethanol producer headquartered in Sioux Falls. He testified during the bill’s initial committee hearing earlier this month.
The existing Ethanol Infrastructure Incentive Fund was created in 2011 to support the installation of ethanol fuel pumps and storage facilities at gas stations. The fund awarded up to $25,000 for an ethanol fuel pump installation, and up to $10,000 for each additional pump. The state is not currently accepting applications for those installations.
Dougherty said there’s about $1 million in the fund.
If the bill passes in the House and is signed into law by Gov. Kristi Noem, gas stations would need to apply for a refund each year, and the amount would depend on how much money is available in the fund. If there’s not enough money for everyone to receive 5 cents per gallon, available credits would be evenly allocated to eligible applicants. .
On the floor of the Senate, the lawmaker sponsoring the bill, Sen. Casey Crabtree, R-Madison, called the bill a “win-win” for South Dakota.
“By encouraging gas stations to carry or expand E-15 at their pumps, we can keep our homegrown fuels closer to home and closer to consumers,” he said, “which will increase profits for corn growers, while at the same time reducing fuel costs for consumers.”
Sixty-four percent of the corn grown in South Dakota goes to ethanol plants, Crabtree said, supporting 11,000 farms and 30,000 jobs in the state.
The bill includes a five-year sunset on the program.