Mo. Senate endorses alternative fuel mandates, tax breaks

JEFFERSON CITY, Mo. -- Missouri senators sought to pump up the alternative fuels industry Thursday, endorsing a biodiesel fuel mandate and new tax breaks for motorists who fill up with ethanol or biodiesel fuels.

The legislation, which received first-round Senate approval, generally is backed by Missouri's agricultural community, which is supplying increasing amounts of corn and soybeans to new ethanol and biodiesel production plants popping up around the state.

An existing law will require most gasoline sold in Missouri to contain a 10 percent ethanol blend beginning next January, so long as the price of ethanol is not more expensive than regular gasoline.

A bill by Sen. Bill Stouffer, R-Napton, would apply a similar 5 percent biodiesel mandate to Missouri-sold diesel fuel beginning in April 2009 -- so long as its price is not more expensive than traditional diesel.

Not only would the biodiesel mandate benefit agriculture, but "this is something that's good for the environment," Stouffer said, "and I think it's going to be very good for the trucking industry."

The Missouri Motor Carriers Association, which represents the trucking industry, has remained neutral on the bill -- in contrast to trucking opposition to proposed biodiesel mandates elsewhere. The distinction is that the Missouri bill sets quality standards for biodiesel fuel, said Tom Crawford, president of the association.

Stouffer raises soybeans -- a chief ingredient for biodiesel -- and acknowledged in an interview that he has invested $15,000 in Paseo Biofuels LLC, a partner in a roughly $50 million biodiesel plant being built in Kansas City.

A conflict of interest policy adopted by State Treasurer Sarah Steelman would prohibit Paseo Biofuels from receiving state bank deposits for reduced-interest-rate loans, because Steelman disqualifies projects where even one investor is a legislator.

But Stouffer insisted there was no conflict between his bill sponsorship and biodiesel plant investment, which he described as relatively small and part of his role as an agricultural community leader.

Sen. Wes Shoemyer, D-Clarence, who already is an ethanol plant investor, said during debate that he also intends to invest in a biodiesel plant.

After endorsing the biodiesel mandate, senators gave preliminary approval to legislation by Sen. Luann Ridgeway, R-Smithville, granting a variety of alternative fuels tax breaks.

• Gas stations that install tanks and pumps for alternative fuels could receive income tax credits up to $20,000 or 20 percent of the cost, whichever is less. The state's total amount of those tax credits would be capped at $3 million next year, gradually phasing out by 2011.
• People who buy biodiesel or an 85 percent ethanol-blend gasoline could claim an income tax credit next year equal to 5 cents a gallon for biodiesel and 25 cents per gallon for ethanol. Those tax credits would be capped at $500 per taxpayer and $500,000 total in the state. They would phase out by 2012.
• Starting in 2008, Missourians who buy a hybrid vehicle could claim an income tax credit of up to $1,500 or 10 percent of the purchase price, whichever is less.
• And in 2008 only, the state would waive the sales tax for purchases of E-85 equipped vehicles.

Ridgeway said she hopes the short-term tax breaks will be heavily promoted. "If that raises awareness, then we've done our job," she said.

But as when the ethanol mandate passed last year, some lawmakers expressed a philosophical opposition to the biodiesel requirement. Sen. Chuck Purgason, R-Caulfield, who raises poultry, mockingly proposed an amendment that would require 5 percent of all quail and pheasants sold by Missouri restaurants, grocery stores and convenience stores to be produced in Missouri. It was ruled out of order. But his point was made.

"When government comes in and starts interfering in the free-market system, it can do nothing but mess everything up," Purgason said.

Both the bills require another Senate vote to move to the House.