By Tom Still

MADISON – In the same week that state senators in Wisconsin killed a bill to require gasoline in the state to include ethanol, policymakers in another Midwestern state were celebrating their latest step toward a more bio-based economy.

Agri-business giant Louis Dreyfus Corp. announced it will build the world’s largest biodiesel production plant in northern Indiana, where it plans to crush nearly 50 million bushels of soybeans each year. That will produce more than 80 million gallons of biodiesel and 1 million tons of soybean meal.

Boasted Indiana Gov. Mitch Daniels, whose conservative credentials include working for Presidents Reagan and Bush and running the free market Hudson Institute: “This announcement is the capstone of a tremendously successful year. If you think about what oil did for a state like Texas, biofuels can do that for a state like Indiana.”

U.S. Sen. Richard Lugar, an Indiana Republican who has long championed biofuels, also praised the Louis Dreyfus announcement and congratulated the neighboring Illinois State Senate for passing a bill requiring gasoline sold in that state to contain 10 percent ethanol (E-10). A similar bill is awaiting passage in Indiana; Minnesota has already acted.

“We are facing a coming energy crisis because our nation imports 60 percent of our petroleum needs,” said Lugar, chairman of the U.S. Senate Foreign Relations Committee. “Governments control more than half of the world’s oil reserves. The oil industry does not operate under market forces. Rather, it can be driven by the political agendas of the oil-controlling nations.”

While states such as Indiana, Illinois and Minnesota zoom ahead with bio-based strategies, Wisconsin appears stuck in neutral. Policymakers here appear bent on arguing the details while missing the much larger picture.

The ethanol bill killed for this session in the Wisconsin Senate would have required all regular unleaded gasoline to contain 10 percent ethanol, a fuel additive typically made from corn, by October 2007. The mandate, passed by the Assembly in December, would not have applied to mid-grade and premium gas.

Supporters argued the bill would create thousands of jobs in the ethanol industry, open a new market for farmers and reduce dependence on foreign oil. But the 12 Republicans and five Democrats who voted against it said government should not force consumers to use ethanol or any other fuel. They raised questions about ethanol’s potential effect on gas prices, the environment, engines and fuel efficiency.

For example, a study released in September by the state Department of Natural Resources warned the mandate would degrade air quality and increase ozone levels on hot summer days. However, the DNR later said the bill would not require additional regulation of utilities or manufacturers, and environmental groups supported the measure because a provision allowed the DNR to kill the fuel mandate if it harmed air quality.

It’s not that problems don’t exist with ethanol, but those problems won’t be solved if policymakers stand in the way of what now appears inevitable – the emergence of a bio-based economy that will help enhance national security. The Bush administration has set a goal of 25 percent of all available energy in the United States coming from agricultural resources by 2025, and the transition is already underway.

Wisconsin needs to seize opportunities first and worry about the details over time, as technology improves processes and create new products and markets. States that leap ahead with their bio-based economies may encounter bumps in the road, but they’re grabbing market share now and engaging private industry as partners. Wisconsin cannot afford to sit idly by while Indiana, Illinois and Minnesota (and, for that matter, Brazil) surge ahead.

Concerns about “letting the market decide” about ethanol are fine in the abstract, but the market has already decided in some very real ways that our economy must disengage from reliance on oil that is largely produced elsewhere. Perhaps the ethanol bill is dead in Wisconsin for now, but there’s no avoiding the fact that bio-based fuels and products will become a big part of the state’s economic future. The only question is whether policymakers embrace that future or slow it down.

Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal in Madison.