Minnesota’s biofuels industry is a major economic driver, generating about $13.3 billion in annual output, contributing nearly $4.0 billion in value, producing $2.1 billion in labor income, and supporting over 22,000 jobs. Its impact extends well beyond fuel production, influencing agriculture, transportation, trade, finance, and household spending across the state.
The report examines how adopting a Low Carbon Fuel Standard (LCFS) could reshape this economic landscape. While the policy aims to reduce carbon emissions, evidence from California shows it can significantly shift feedstock demand. Initially, soybean oil played a strong role in biofuel production, but within a few years, its use dropped dramatically as the LCFS incentivized alternative, non-land-based feedstocks like used cooking oil, often imported. Even early beneficiaries like beef tallow saw declines over time.
Overall, while an LCFS could drive environmental goals, it may also reduce demand for key agricultural products, creating ripple effects throughout Minnesota’s farming and biofuels economy.