Minnesota-made, but not sold here

Minnesota's newest biofuel wants a place at the pump.

It's called isobutanol, and like ethanol it is made from corn and can be mixed with gasoline as a motor fuel.

But the state's fuel-blending law was written years ago with ethanol in mind -- and new biofuels don't qualify to be part of the mandated 10 percent mix.

Now, as the nation's first commercial-scale corn-to-isobutanol plant nears completion in Luverne, Minn., plant owner Gevo Inc. says it can't legally offer the fuel at Minnesota pumps.

"What we want to see is a level playing field," said Chris Ryan, president and chief operating officer of Gevo, based in Englewood, Colo., who testified about the problem before a House committee Thursday.

Ryan said in an interview that the state's blending restriction, a relic of the era when ethanol was the only biofuel on the market, could affect Gevo's further expansion in the state. He said Minnesota and Florida appear to be the only states where isobutanol faces such legal barriers.

Isobutanol, also called butanol or bio-butanol, is an alcohol, a cousin to ethanol. The U.S. Environmental Protection Agency cleared the fuel for blending with gasoline in November. Minnesota's ethanol law dates to the early 1990s. "It made sense when it was written," Ryan said. "Ethanol really was the only product we could make from a bio-source to blend into gasoline."

The bill's chief sponsor, Rep. Paul Anderson, R-Starbuck, said he was unaware that butanol faced a problem until Gevo and others appeared before the House Agriculture Committee Thursday.

Anderson, a corn farmer, said he supports expansion of biofuels in the state, but that it may be too late in the session to make a major change in the law.

That's also the view of the Minnesota Bio-Fuels Association, a trade group. "Our approach is, let's work on it when the Legislature is not in session," said Brian Kletscher, CEO of Highwater Ethanol in Lamberton and president of the trade group. "Let's do it the right way and come out and endorse advanced biofuels."

Highwater is considering a shift to butanol production, but not immediately. The company is in discussions with a potential partner, Butamax Advanced Biofuels, a Wilmington, Del., firm that is a competitor to Gevo. Butamax and Gevo are in a patent dispute over bio-butanol technology.

Ryan said Gevo has tried to work with the industry, but made little progress until the legislative hearing. He said the company would prefer action soon, and he's gotten support from Rep. Joe Schomacher, a Republican whose district includes the Luverne plant. "They want to make sure they have a market," said Schomacher, who hopes legislators can act before the session ends.

A 2007 federal renewable fuels law opens the door for selling butanol in other states. But shipping it out of Minnesota boosts the cost, Ryan said.

Gevo sees a key market for butanol in the chemical industry, and also is seeking approval to sell it for jet fuel. It plans to convert other ethanol plants to butanol in joint ventures. The only deal announced is in South Dakota, but Gevo said others are in the works.