[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]


 
                      ENDING OUR ADDICTION TO OIL:
                    ARE ADVANCED VEHICLES AND FUELS
                              THE ANSWER?

=======================================================================

                             FIELD HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON ENERGY

                          COMMITTEE ON SCIENCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                              JUNE 5, 2006

                               __________

                           Serial No. 109-52

                               __________

            Printed for the use of the Committee on Science


     Available via the World Wide Web: http://www.house.gov/science


                    U.S. GOVERNMENT PRINTING OFFICE
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                                 ______

                          COMMITTEE ON SCIENCE

             HON. SHERWOOD L. BOEHLERT, New York, Chairman
RALPH M. HALL, Texas                 BART GORDON, Tennessee
LAMAR S. SMITH, Texas                JERRY F. COSTELLO, Illinois
CURT WELDON, Pennsylvania            EDDIE BERNICE JOHNSON, Texas
DANA ROHRABACHER, California         LYNN C. WOOLSEY, California
KEN CALVERT, California              DARLENE HOOLEY, Oregon
ROSCOE G. BARTLETT, Maryland         MARK UDALL, Colorado
VERNON J. EHLERS, Michigan           DAVID WU, Oregon
GIL GUTKNECHT, Minnesota             MICHAEL M. HONDA, California
FRANK D. LUCAS, Oklahoma             BRAD MILLER, North Carolina
JUDY BIGGERT, Illinois               LINCOLN DAVIS, Tennessee
WAYNE T. GILCHREST, Maryland         DANIEL LIPINSKI, Illinois
W. TODD AKIN, Missouri               SHEILA JACKSON LEE, Texas
TIMOTHY V. JOHNSON, Illinois         BRAD SHERMAN, California
J. RANDY FORBES, Virginia            BRIAN BAIRD, Washington
JO BONNER, Alabama                   JIM MATHESON, Utah
TOM FEENEY, Florida                  JIM COSTA, California
RANDY NEUGEBAUER, Texas              AL GREEN, Texas
BOB INGLIS, South Carolina           CHARLIE MELANCON, Louisiana
DAVE G. REICHERT, Washington         DENNIS MOORE, Kansas
MICHAEL E. SODREL, Indiana           DORIS MATSUI, California
JOHN J.H. ``JOE'' SCHWARZ, Michigan
MICHAEL T. MCCAUL, Texas
MARIO DIAZ-BALART, Florida
                                 ------                                

                         Subcommittee on Energy

                     JUDY BIGGERT, Illinois, Chair
RALPH M. HALL, Texas                 MICHAEL M. HONDA, California
CURT WELDON, Pennsylvania            LYNN C. WOOLSEY, California
ROSCOE G. BARTLETT, Maryland         LINCOLN DAVIS, Tennessee
VERNON J. EHLERS, Michigan           JERRY F. COSTELLO, Illinois
W. TODD AKIN, Missouri               EDDIE BERNICE JOHNSON, Texas
JO BONNER, Alabama                   DANIEL LIPINSKI, Illinois
RANDY NEUGEBAUER, Texas              JIM MATHESON, Utah
BOB INGLIS, South Carolina           SHEILA JACKSON LEE, Texas
DAVE G. REICHERT, Washington         BRAD SHERMAN, California
MICHAEL E. SODREL, Indiana           AL GREEN, Texas
JOHN J.H. ``JOE'' SCHWARZ, Michigan      
SHERWOOD L. BOEHLERT, New York       BART GORDON, Tennessee
               KEVIN CARROLL Subcommittee Staff Director
          DAHLIA SOKOLOV Republican Professional Staff Member
           CHARLES COOKE Democratic Professional Staff Member
                    MIKE HOLLAND Chairman's Designee
                     COLIN HUBBELL Staff Assistant


                            C O N T E N T S

                              June 5, 2006

                                                                   Page
Witness List.....................................................     2

Hearing Charter..................................................     3

                           Opening Statements

Statement by Representative Judy Biggert, Chairman, Subcommittee 
  on Energy, Committee on Science, U.S. House of Representatives.    10
    Written Statement............................................    12

Statement by Representative Michael M. Honda, Ranking Minority 
  Member, Subcommittee on Energy, Committee on Science, U.S. 
  House of Representatives.......................................    13
    Written Statement............................................    14

Statement by Representative Daniel Lipinski, Member, Subcommittee 
  on Energy, Committee on Science, U.S. House of Representatives.    15

                               Witnesses:

Dr. James F. Miller, Manager, Electrochemical Technology Program, 
  Argonne National Laboratory
    Oral Statement...............................................    17
    Written Statement............................................    18
    Biography....................................................    20

Mr. Alan R. Weverstad, Executive Director, Mobile Emissions and 
  Fuel Efficiency, General Motors Public Policy Center
    Oral Statement...............................................    20
    Written Statement............................................    23
    Biography....................................................    25
    Financial Disclosure.........................................    26

Mr. Jerome Hinkle, Vice President, Policy and Government Affairs, 
  National Hydrogen Association
    Oral Statement...............................................    27
    Written Statement............................................    30
    Biography....................................................    52

Dr. Daniel Gibbs, President, General Biomass Company, Evanston, 
  IL
    Oral Statement...............................................    52
    Written Statement............................................    53
    Biography....................................................    68

Mr. Deron Lovaas, Vehicles Campaign Director, Natural Resources 
  Defense Council
    Oral Statement...............................................    68
    Written Statement............................................    70
    Biography....................................................   125

Mr. Philip G. Gott, Director, Automotive Custom Solutions, Global 
  Insight, Inc.
    Oral Statement...............................................   125
    Written Statement............................................   127
    Biography....................................................   135
    Financial Disclosure.........................................   136

Discussion.......................................................   137

              Appendix: Additional Material for the Record

``The Billion-Ton Biofuels Vision,'' editorial by Chris 
  Somerville, Science, Vol. 312, June 2, 2006, p. 1277...........   152

``Toward Efficient Hydrogen Production at Surfaces,'' article by 
  Jens K. Norskov and Claus H. Christensen, Science, Vol. 312, 
  June 2, 2006, pp. 1322-1323....................................   153

A Further Assessment of the Effects of Vehicle Weight and Size 
  Parameters on Fatality Risk in Model Year 1985-98 Passenger 
  Cars and 1985-97 Light Trucks, Volume 1: Executive Summary, 
  R.M. Van Auken and J.W. Zellner, Dynamic Research, Inc., 
  January 2003...................................................   155

2006 KPMG Global Auto Executive Survey, Momentum, KPMG 
  International, January 2006....................................   167


   ENDING OUR ADDICTION TO OIL: ARE ADVANCED VEHICLES AND FUELS THE 
                                ANSWER?

                              ----------                              


                          MONDAY, JUNE 5, 2006

                  House of Representatives,
                            Subcommittee on Energy,
                                      Committee on Science,
                                                    Washington, DC.

    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
the Main Council Chambers, Naperville Municipal Center, 400 
South Eagle Street, Naperville, Illinois 60566, Hon. Judy 
Biggert [Chairman of the Subcommittee] presiding.



                            hearing charter

                         SUBCOMMITTEE ON ENERGY

                          COMMITTEE ON SCIENCE

                     U.S. HOUSE OF REPRESENTATIVES

                      Ending Our Addiction to Oil:

                    Are Advanced Vehicles and Fuels

                              the Answer?

                          monday, june 5, 2006
                         10:00 a.m.-12:00 p.m.
                      naperville municipal center
                         400 south eagle street
                          naperville, il 60540

1. Purpose

    On June 5, 2006, the Subcommittee on Energy of the House Committee 
on Science will hold a field hearing titled Ending Our Addiction to 
Oil: Are Advanced Vehicles and Fuels the Answer? The hearing will 
examine progress made in the development of advanced on-board vehicle 
and fuel technologies for passenger vehicles that can increase fuel 
economy or reduce oil consumption through fuel substitution.

2. Witnesses

          Dr. Daniel Gibbs is President of the General Biomass 
        Company in Evanston, IL. His research interests are in enzymes 
        that digest cellulose, paper waste utilization and cellulosic 
        ethanol production.

          Mr. Philip G. Gott is Director for Automotive Custom 
        Solutions at Global Insight, a major economic and financial 
        forecasting firm.

          Mr. Deron Lovaas is the Vehicles Campaign Director 
        for the Natural Resources Defense Council.

          Mr. Jerome Hinkle is the Vice President for Policy 
        and Government Affairs with the National Hydrogen Association.

          Dr. James F. Miller is Manager of the Electrochemical 
        Technology Program at Argonne National Laboratory. He is an 
        authority on energy storage and energy conversion technologies, 
        with a particular expertise in fuel cells and batteries.

          Mr. Al Weverstad is the Executive Director for Mobile 
        Emissions and Fuel Efficiency at the General Motors Public 
        Policy Center. He began his engineering career in 1971 with 
        General Motors' Pontiac Motor and Marine Engine Divisions.

3. Overarching Questions

    The Committee hearing will address the following questions:

        1.  What progress has been made towards realizing the Hydrogen 
        Economy since the 2002 field hearing?

        2.  What new vehicle technologies and fuel choices might be 
        available in the near future that could increase U.S. energy 
        independence?

        3.  What technical and economic obstacles might limit or block 
        the availability in the marketplace of cars built with new 
        technologies or using advanced fuels?

        4.  What should the Federal Government be doing (or not doing) 
        through research and development spending and through the 
        implementation of energy policies to encourage the 
        commercialization of, and demand for new vehicle technologies 
        and fuels?

4. Brief Overview

    Currently, the U.S. consumes roughly 20 million barrels of oil 
daily. Of that, 40 percent is used to fuel cars and trucks at a cost to 
consumers of more than $250 billion per year. By 2020, oil consumption 
is forecast by the Energy Information Administration to grow by nearly 
40 percent, and our dependence on imports is projected to rise to more 
than 60 percent. A 10 percent reduction in energy use from cars and 
light trucks (achieved by introducing an alternative fuel or improving 
fuel economy) would result in displacing nearly 750,000 barrels of oil 
per day. A similar percentage reduction in petroleum energy use from 
heavy-duty trucks and buses would displace around 200,000 and 10,000 
barrels per day, respectively. Both the Federal Government and industry 
are funding programs designed to create affordable vehicles that would 
use less or no gasoline or petroleum-based diesel fuel, including 
programs on hydrogen-powered fuel cells, biofuels, and hybrid vehicle 
technologies.
    The Federal Government will spend over $200 million in fiscal year 
(FY) 2006 on such research and development (R&D) programs.
    One focus of federal programs to increase fuel economy, and part of 
the President's Advanced Energy Initiative announced this year, is R&D 
to advance hybrid vehicles. Hybrid vehicles, such as the Toyota Prius 
or the Ford Escape, use batteries and an electric motor, along with a 
gasoline engine, to improve vehicle performance and to reduce gasoline 
consumption, particularly in city driving conditions. Plug-in hybrid 
vehicles are a more advanced version of today's hybrid vehicles. Plug-
in hybrid vehicles require larger batteries and the ability to charge 
those batteries overnight using an ordinary electric outlet. Such a 
change would shift a portion of the automotive energy demand from oil 
to the electricity grid. (Little electricity in the U.S. is generated 
using oil.) Additional R&D is needed to increase the reliability and 
durability of batteries, to significantly extend their lifetimes, and 
to reduce their size and weight.
    Fuel substitution R&D focuses on two fuel types: hydrogen and 
biofuels. Hydrogen gas is considered by many experts to be a promising 
fuel in the long-term, particularly in the transportation sector. When 
used as a fuel, its only combustion byproduct is water vapor. If 
hydrogen can be produced economically from energy sources that do not 
release carbon dioxide into the atmosphere--from renewable sources such 
as wind power or solar power, from nuclear power, or possibly from coal 
with carbon sequestration--then the widespread use of hydrogen as a 
fuel could make a major contribution to reducing the greenhouse gas 
emissions. On-board hydrogen storage remains a major technical hurdle 
to the development of practical hydrogen-powered passenger vehicles.
    Biofuels, such as ethanol and biodiesel, are made from plant 
material, and therefore can result in decreased greenhouse gas 
emissions, since the carbon dioxide emitted when biofuel is burned is 
mostly offset by the carbon dioxide absorbed during plant growth. 
Biofuel R&D is directed toward developing low-cost methods of 
industrial-scale production, which includes advanced biotechnology and 
bioengineering of both plants and microbes (to help break down the 
plants into usable materials).
    On May 24, 2005, the House of Representatives passed H.R. 5427, the 
appropriations bill for FY 2007 that includes funding for these 
programs. In the bill:

          the overall Vehicle Technology sub-account received 
        $173 million, a reduction of six percent from last year's 
        level. Within this amount, Hybrid and Electric Propulsion, part 
        of the President's Advanced Energy Initiative, received $50 
        million, up 14 percent from last year.

          the Hydrogen Technology sub-account received $196 
        million, an increase of 26 percent from last year's level; 
        about 42 percent of this is directed to the FreedomCAR program 
        for hydrogen vehicles.

          the Biomass Technology sub-account, part of the 
        President's Advanced Energy Initiative received $150 million, a 
        65 percent increase, most of which is directed toward biofuel 
        development.

    Historically, both the Hydrogen sub-account and the Biomass sub-
account have been heavily earmarked, with 27 percent of Hydrogen 
funding and 57 percent of biomass funding diverted to Congressionally 
directed projects in FY 2006.

5. Background

    On June 24, 2002, the Energy Subcommittee of the House Committee on 
Science held a field hearing at Northern Illinois University in 
Naperville, IL titled Fuel Cells: The Key to Energy Independence?\1\ 
The hearing focused on developments in hydrogen fuel cell R&D and 
provided a broad overview of fuel cells for all applications, not just 
transportation. Witnesses at that hearing were unanimous in their 
assessment that current technical approaches to on-board storage of 
hydrogen gas require too large a volume to be practical in vehicles. 
Solving the storage problem was identified as one of the toughest 
technical hurdles for the use of hydrogen as a transportation fuel. 
Their assessment was echoed subsequently by expert reports from the 
American Physical Society and the National Academy of Sciences.
---------------------------------------------------------------------------
    \1\ The Science Committee and its Subcommittees have held numerous 
hearings on the use of hydrogen since the announcement of the 
FreedomCAR Initiative by then-Secretary of Energy Spencer Abraham on 
January 9, 2002. The FreedomCAR program was centered on fuel cell 
vehicles that use hydrogen as fuel. The Full Committee held the 
following hearings:

   GFebruary 7, 2002--Full Committee Hearing on The Future of 
---------------------------------------------------------------------------
DOE's Automotive Research Programs

   GApril 2, 2003--Full Committee Markup of H.R. 238, Energy 
Research, Development, Demonstration, and Commercial Application Act of 
2003

   GMarch 5, 2003--Full Committee Hearing on The Path to a 
Hydrogen Economy

   GMarch 3, 2004--Full Committee Hearing on Reviewing the 
Hydrogen Fuel and FreedomCAR Initiatives

The Energy Subcommittee held the following hearings:

   GJune 26, 2002--Subcommittee on Energy Hearing on 
FreedomCAR: Getting New Technology into the Marketplace

   GJune 24, 2002--Subcommittee on Energy Field Hearing on Fuel 
Cells and the Hydrogen Future

   GJuly 20, 2005--Joint Hearing--Subcommittee on Energy and 
Subcommittee on Research--Fueling the Future: On the Road to the 
Hydrogen Economy
    Since that 2002 field hearing, the Federal Government has focused 
more attention on the development of advanced vehicle and fuel 
technologies. In his 2003 State of the Union Address, President Bush 
announced a $1.2 billion Hydrogen Fuel Initiative to reverse America's 
growing dependence on foreign oil by developing the technology needed 
for commercially viable hydrogen-powered fuel cells. From fiscal 2004 
to 2006, over $625 million has been allocated to hydrogen research in 
Department of Energy (DOE), over 40 percent of which was directed to 
the FreedomCAR vehicle program. The White House Office of Science and 
Technology Policy established the interagency Hydrogen Research and 
Development Task Force to coordinate the eight federal agencies that 
fund hydrogen-related research and development. The Energy Policy Act 
of 2005 authorized a broad spectrum of research programs related to 
advanced on-board vehicle, hydrogen and liquid fuel technologies.
    With the release of his FY 2007 budget request, the President 
announced his Advanced Energy Initiative. This initiative provides for 
a 22 percent increase in funding for clean energy technology research 
at DOE. Two major goals of the initiative are to reduce demand through 
greater use of technologies that improve efficiency, including plug-in 
hybrid technology; and to change the way Americans fuel their vehicles 
by expanding use of alternative fuels from domestically-produced 
biomass and by continuing development of fuel cells that use hydrogen 
from domestic feedstocks.
Hydrogen
    The widespread adoption of hydrogen as a transportation fuel has 
the potential to reduce or eliminate air pollution generated by cars 
and trucks, but the source of the hydrogen is important. Hydrogen must 
be produced from hydrogen-bearing compounds, like water or natural gas, 
and that requires energy--and, unlike gasoline, more energy is always 
required to produce it than is recovered when hydrogen is burned or 
used in a fuel cell. Hydrogen has the potential to reduce America's 
dependence on foreign oil, but how much it would reduce dependence 
depends on what energy source would be used to generate hydrogen gas in 
the first place.
    If hydrogen can be produced economically from energy sources that 
do not release carbon dioxide into the atmosphere--from renewable 
sources such as wind power or solar power, from nuclear power, or 
possibly from coal with carbon sequestration--then the widespread use 
of hydrogen as a fuel could make a major contribution to reducing the 
emission of greenhouse gases.
    A fuel cell is a device for converting hydrogen and oxygen into 
electricity and water. Fuel cells have been used extensively for 
electrical power in space missions, including Apollo and Space Shuttle 
missions. In cars, the electricity would then be used to run electric 
motors to drive the wheels. Technological breakthroughs have reduced 
the cost and size of fuel cells, making them promising sources of power 
for automobiles, but fuel cells are still far too costly for everyday 
use.
    Furthermore, there are research challenges with the fuel itself. To 
serve as automobile fuel, hydrogen must be stored on-board, but storing 
pure hydrogen at room temperature requires a large volume. Researchers 
are therefore working on developing complex fuels that can be stored 
compactly but can release pure hydrogen as needed. A final obstacle to 
widespread use is the need for new fueling infrastructure. To make 
hydrogen-fueled automobiles practical, hydrogen must be as easily 
available as gasoline, requiring a widespread network of hydrogen fuel 
stations.
    Virtually all major foreign and domestic automakers have produced 
hydrogen-powered concept and demonstration vehicles. For example, 
General Motors has produced several fuel cell vehicle prototypes, 
including the Hy-wire, Sequel and AUTOnomy concept cars and the 
HydroGen3 minivan. The minivan is being used in demonstration fleets, 
but at a cost of more than $1 million per vehicle, these vehicles are 
far from ready for the market. There are fourteen hydrogen fueling 
stations in the U.S., including one that General Motors and Shell 
opened in Washington, D.C., as part of a joint demonstration program. 
There are nine hydrogen stations in California, which has allowed Honda 
to offer one of its fuel cell cars, the Honda FCX, to a family in 
Southern California to demonstrate its day-to-day use.

Biofuels
    Rising oil prices in recent years have heightened interest in a 
variety of alternative sources of liquid fuels. At present, two 
biologically-derived fuel forms, ethanol and biodiesel, are used in the 
United States to supplement supplies of conventional gasoline and 
diesel. Although biofuel combustion releases carbon dioxide, growing 
the agricultural products to create ethanol consumes carbon dioxide. 
Both ethanol and biodiesel can be readily blended with conventional 
gasoline or diesel, respectively, although the fraction of either 
biofuel is limited by compatibility with some materials in the fuel 
system and engine, or by gelling of the fuel mixture at low 
temperatures.
    Ethanol is a renewable fuel produced by fermenting sugars from 
biological products. Many different sources can provide the 
fermentation feedstock, such as trees and grasses and municipal solid 
waste, but in the United States, ethanol is now most commonly made from 
corn. Research is focused on developing feedstocks other than corn, 
particularly feedstocks that are not otherwise used for food. This 
requires the development of enzymes to digest what is otherwise waste 
plant material--stalks, leaves and husks--into fermentable sugars. 
Known as cellulosic ethanol, ethanol produced using both digestion and 
fermentation can use more parts of a plant and can expand the variety 
of economically viable feedstock for the production of ethanol. This 
would allow introduction of a wide variety of other feedstocks, 
including woody plants like willow and fast growing switchgrass. As 
with all ethanol, compatibility with the current fuel infrastructure is 
not perfect: transportation and energy content are two concerns. 
Ethanol's detractors argue that because ethanol can absorb water, it 
cannot be transported in gasoline pipelines, and use of carriers other 
than pipelines may complicate gasoline substitution on a national 
scale. Additionally, ethanol is lower in energy per gallon than 
gasoline, so consumer expectations about how far they can drive on a 
gallon of fuel need to be managed accordingly.
    Ethanol, in use for years in the Midwest as a gasoline additive for 
improving octane levels, is now finding wider use by replacing an older 
octane-boosting additive found to contaminate drinking water. Ethanol 
can, however, serve as a primary ingredient in vehicle fuel. One blend 
of ethanol and gasoline is E85, 85 percent ethanol and 15 percent 
gasoline. Many automobile manufacturers produce Flex-Fuel Vehicles 
(FFVs) that can run on either E85 or ordinary gasoline, a capability 
that does not significantly add to vehicle price. General Motors, 
DaimlerChrysler, Ford, and Nissan all produce FFV cars and trucks. 
(Some analysts point out that most of these FFVs were produced by 
manufacturers because they get a credit against their corporate fuel 
economy requirements, rather than because of any consumer or market 
demand for the fuel flexibility option.)
    Ethanol fuels are also in widespread use abroad. Brazil instituted 
a policy to encourage flexible fuel cars during the energy crisis of 
the 1970s, and between 1983 and 1988 more than 88 percent of cars sold 
annually were running on a blend of ethanol and gasoline. Flex-fuel car 
sales fell after withdrawal of the subsidy, but even today, fuel in 
Brazil has a minimum of 25 percent ethanol. Most ethanol in Brazil is 
produced from sugar cane, a much more efficient process than producing 
ethanol from corn, as is done in the United States.
    Biodiesel is a renewable fuel that can be used in diesel engines, 
but is produced from vegetable oils and animal fats instead of 
petroleum. Using biodiesel instead of petroleum diesel reduces 
emissions of pollutants such as carbon monoxide, particulates, and 
sulfur. Biodiesel-petroleum diesel blends, with up to 20 percent 
biodiesel, can be used in nearly all diesel equipment. Higher biodiesel 
percentage blends may require specialized engines, delivery, and 
storage technology. Biodiesel is used in the fleets of many school 
districts, transit authorities, national parks, public utility 
companies, and garbage and recycling companies.
    E85 and biodiesel fuel stations are scattered around the country. 
There are 637 E85 fuel stations in the U.S., with 102 in Illinois, and 
there are 362 biodiesel stations in the U.S., with 11 in Illinois. 
Compared to the more than 200,000 standard gasoline stations, these 
biofuels are still very difficult to find. The Alternative Fuels Data 
Center provides maps indicating the locations of fueling stations with 
advanced fuels.\2\
---------------------------------------------------------------------------
    \2\ See http://www.eere.energy.gov/afdc.
---------------------------------------------------------------------------
Plug-in Hybrids
    Hybrid vehicles combine batteries and an electric motor, along with 
a gasoline engine, to improve vehicle performance and to reduce 
gasoline consumption. Conventional hybrid electric vehicles recharge 
their batteries by capturing the energy released during braking or 
through a generator attached to the combustion engine. These energy 
management techniques mean that these cars dissipate less of the energy 
contained in their fuel as waste heat. Nearly 200,000 hybrid passenger 
vehicles, such as the Toyota Prius or the Ford Escape, were sold in the 
U.S. from 2000 to 2004. Over 40 transit agencies in North America use 
hybrid buses. There are approximately 700 hybrid buses in regular 
service in North America, with another 400 planned deliveries through 
2006.
    Plug-in hybrid vehicles are a more advanced version of today's 
hybrid vehicles. They involve larger batteries and the ability to 
charge those batteries when parked using an ordinary electric outlet. 
Unlike today's hybrids, plug-in hybrids are able to drive for extended 
periods solely on battery power, thus moving some of the energy 
consumption from the gasoline tank to the electric grid (batteries are 
typically charged overnight) and moving some of the emissions from the 
tailpipe to the power plant (where, in theory, they are more easily 
controlled).
    Because most Americans commute less than 40 miles a day, plug-in 
hybrids operable for 40 miles on an overnight charge from the electric 
grid could reduce U.S. gasoline consumption significantly. The 
potential for oil savings is related to how far a plug-in hybrid can 
travel solely on battery power. The electricity used to charge the 
batteries overnight would be generated from domestic sources (only 
three percent of the electricity used in the United States is generated 
from oil) and that electricity would primarily be consumed at night 
when demand is low.
    President Bush, as part of his Advanced Energy Initiative, has 
established the goal of developing technology that would enable plug-in 
hybrids to travel up to 40 miles on battery power alone. Plug-in 
hybrids could benefit consumers because of their greater fuel economy 
and the relatively low cost of energy from the electric grid. Some 
proponents of plug-in hybrids claim that consumers will be able to 
recharge their batteries overnight at gasoline-equivalent cost of $1 
per gallon.
    While plug-in hybrid vehicles offer many advantages, high initial 
costs prevent widespread commercial application. Specialty conversion 
kits are available to upgrade an ordinary hybrid to a plug-in hybrid--
although in very limited quantities and at high cost (about $10,000 per 
kit). Many component technologies, particularly the batteries, will 
need to achieve significant cost reductions and improvements in 
reliability before plug-in hybrids are truly attractive to consumers at 
mass-market scale. Car companies are reluctant to invest in these 
technologies without demonstrable consumer demand. R&D is needed to 
increase the reliability and durability of batteries, to significantly 
extend their lifetimes, and to reduce their size and weight.
    Because batteries on board a plug-in hybrids are recharged by 
plugging the vehicle into an outlet, these vehicles do not need new 
types of fuel stations. The large batteries used in plug-in hybrids 
might also be used to provide power back to the electric power grid. A 
fleet of plug-in hybrids could offer regulatory services (keeping 
voltages steady, etc.) to a modernized grid. Advocates say that such 
vehicle-to-grid transmissions could benefit individual car owners by 
allowing them to sell the use of their energy storage capacity to grid 
operators.
    The development and widespread use of plug-in hybrid vehicles could 
act as a stepping stone toward hydrogen-based transportation and fuel 
cell vehicles, because the electric motors and power control 
technologies that are required for plug-in hybrid cars would also be 
useful in fuel cell vehicles.
    The first plug-in hybrid produced by a major automaker, the 
DaimlerChrysler Sprinter van, has been delivered to U.S. customers for 
test purposes. Many other plug-in hybrids are being tested in prototype 
form by small firms and individuals.

6. Witness Questions

Dr. Daniel Gibbs

        1.  How widely available is ethanol today, and how many cars 
        can use it?

        2.  What are the obstacles to expanding the variety of 
        feedstocks available for conversion to ethanol? Are these 
        hurdles mainly market failures and other economic barriers or 
        are they technical in nature?

        3.  What is the largest technical hurdle for each of the 
        following fuels: Corn ethanol, biodiesel, cellulosic ethanol? 
        Does the current federal research agenda adequately address 
        these technical barriers? What actions would most rapidly 
        overcome these technical barriers?

        4.  Some advocates suggest that biofuels should substitute for 
        25 percent or more of the Nation's transportation fuel use. Are 
        there market or other barriers that policy might overcome to 
        accelerate realization of the 25 percent biofuels goal?

Mr. Philip Gott and Mr. Deron Lovaas

        1.  The auto industry in recent years has generally used 
        technological improvements to increase performance instead of 
        fuel efficiency. What would be required to lead automakers to 
        apply technology advancements to improving fuel economy?

        2.  What hurdles must hybrids, flex-fuel, and hydrogen-powered 
        vehicles clear before the automobile industry, industry 
        analysts, and the automotive press accept these technologies 
        and consumers buy them? How more or less likely is it that 
        these radically new technologies--fuel cells, electric drive 
        trains, or significant battery storage capabilities, for 
        example--will be incorporated into cars rather than incremental 
        innovations to internal combustion engines?

Mr. Jerome Hinkle

        1.  Many experts indicate that on-board hydrogen storage is the 
        major bottleneck facing realization of the hydrogen economy. 
        What research paths look the most promising for solving the on-
        board storage problem?

        2.  What technical barriers in the production and distribution 
        need to be overcome to permit hydrogen to fuel a quarter of the 
        cars on the highway?

        3.  What are the tradeoffs between centralized and distributed 
        hydrogen production for fueling the transportation 
        infrastructure?

Dr. James Miller

        1.  What are the two most significant technical obstacles to 
        making hydrogen-powered fuel cell vehicles affordable and 
        practical to use? What are those obstacles for plug-in hybrids? 
        How soon is significant progress likely to be made on removing 
        each of the obstacles you mention? Can either hydrogen fuel 
        cell vehicles or plug-in hybrids advance rapidly enough to be a 
        more practical alternative to reducing energy consumption and 
        pollution than making continuing improvements in the internal 
        combustion engine would be?

        2.  Batteries need to be more durable, more rapidly chargeable, 
        have longer lifetimes, and reduced size and weight if plug-in 
        hybrids are to become practical. How are those traits related 
        to one another and are there trade-offs between these 
        performance parameters? Which are the easiest to address? Which 
        of these contribute most significantly to cost?

Mr. Al Weverstad

        1.  What are the significant cost and technical differences 
        between a flex-fuel engine and a conventional engine? Are there 
        specific challenges to incorporating flex-fuel technologies in 
        plug-in hybrid electric vehicles? Why aren't these technologies 
        incorporated in every car sold?

        2.  What technologies would automakers adopt first to enable 
        passenger vehicle to have a fuel economy significantly higher 
        than available today, say 60 miles per gallon? What 
        technologies would be used to hit a 45 mile per gallon target? 
        What technologies would be used to hit a 35 mile per gallon 
        target?

        3.  Are there gaps in the government's advanced vehicles and 
        fuels research and development portfolio that could help with 
        the more rapid adoption of new technologies? Do the Department 
        of Energy programs have the correct balance between research 
        and technology demonstration?
    Chairwoman Biggert. Good morning.
    I would like to call this meeting to order. Welcome to 
today's hearing entitled ``Ending Our Addiction to Oil: Are 
Advanced Vehciles and Fuels the Answer?''
    I would now recognize myself for an opening statement.
    I want to welcome everyone here to this Energy Subcommittee 
hearing. Today we're going to examine how new technologies and 
advanced fuels for passenger vehicles could help our nation's 
addiction to oil.
    I want to thank my Ranking Member Mr. Honda for traveling 
here from his home in the Silicon Valley of California. I 
greatly appreciate the time he has taken to come to my favorite 
part of Illinois.
    I also want to welcome my fellow Member of the Illinois 
Delegation and the Science Committee, Mr. Lipinski, and thank 
him for joining us today. He didn't have to come quite so far.
    I also want to thank our host, Mayor Pradel, and the 
citizens of Naperville for opening their Municipal Center for 
us today.
    Finally, I hope you all got a chance to look at the 
advanced vehicles parked outside, many of which run on 
alternative fuels. And that's why I'm afraid we started a 
little bit late because I got involved in driving a scooter and 
sitting in all the cars. So if you didn't have a chance to do 
that, they will still be out there after this hearing is over.
    We wouldn't be able to peek under the hood or kick the 
tires of these hybrid, plug-in hybrid and flex-fuel vehicles 
today if it weren't for the good people at General Motors, 
Argonne National Laboratory, the Illinois Institute of 
Technology and Northern Illinois University. So, we thank them 
very much.
    Transportation is always a major issue for suburban 
communities whether they are in my District, Mr. Honda's or Mr. 
Lipinski's. As a matter of fact, it was better roads, 
inexpensive vehicles and cheap gasoline that allowed these 
suburbs to flourish.
    We see that transportation and oil are becoming 
increasingly important to the growing populations in China and 
India as well. In addition, various studies suggest that we 
have reached the peak of production, or will very soon, meaning 
the gap between supply and demand will only grow larger. This 
will give countries with sizeable oil resources, many of which 
are hostile to the United States, and their cartels even more 
opportunities to manipulate the global market for oil.
    The bad news is that this confluence of factors already is 
hitting the pocketbooks of American families with oil and gas 
at more than $70 per gallon. The good news--oh, I'm sorry. Per 
barrel. Thank goodness it's not gallon yet.
    The good news is that there's nothing like a $3 a gallon of 
gasoline to get everyone thinking about new and creative ways 
to make transportation more affordable, less polluting and less 
susceptible to the verges of the world oil market. More than 
anything else Americans just want to be able to hop into their 
cars and go. Very few care what makes their car go, they just 
want it to be inexpensive and easy to get.
    Our interest today is in retaining that convenience and 
minimizing the cost to our national security, to our economic 
security and to our environment, not to mention to the family 
budget through the use of research and technology. We need to 
work towards cars that can run on whatever energy source is 
available at the lowest cost be it electricity, gasoline, 
biofuel, hydrogen or some combination of these.
    In addition, we need to find ways to make these diverse 
fuels readily available across the country.
    It is clear that both technical and market obstacles remain 
to realizing the potential benefits of all of the advanced 
vehicle technologies or alternative fuels that we will be 
discussing. What are the technical or cost competitiveness 
issues related to the important components such as batteries, 
fuel cells or power electronics? What are major hurdles that 
stand in the way of the production or distribution of advanced 
biofuels? What technology challenges have not received 
sufficient attention? Or, are the hurdles not technical? Do 
consumer preferences or auto industry inertia present the 
highest hurdles? What about the infrastructure costs?
    I want to give the city Naperville credit for focusing on 
the demand side of this equation. As a founding member of the 
Plug-In Partnership Campaign, Naperville is one of 132 public 
power utilities in 43 cities, counties and local governments 
that have made soft purchase orders indicating a strong 
interest in buying flexible fuel, plug-in hybrid vehicles if 
they are manufactured. In one of these vehicles the average 
American who drives between 25 and 30 miles a day could 
complete his or her commute and run some errands without 
burning a drop of gasoline. That's good for energy security , 
not to mention the pocketbook.
    As I see it, one of the most significant potential benefits 
of the plug-in hybrid is that it does not require a whole new 
refueling infrastructure. You can just pull into your garage at 
the end of the day and fill her up by plugging your car into a 
regular 120 volt socket in the garage. Imagine the convenience 
of recharging your car just as you recharge your cell phone, 
Blackberry or laptop every evening by simply plugging it in. 
The next morning unplug and you're ready to go.
    The city of Naperville realizes that the best way to hasten 
the arrival of plug-in hybrids was to commit to buying one. You 
can do the same thing simply by going to 
wwww.pluginpartners.com, click on ``What you can do'' tab and 
fill-in the plug-in partner's petition. Let the automakers know 
that you'd be willing to pay a few thousand dollars more up 
front to buy a vehicle that would be much cheaper to operate, 
cleaner and could run on domestically produced electricity.
    We are looking to our witnesses today to help us identify 
the most significant technical and market obstacles facing the 
widespread availability of the advanced fuel--advanced vehicle 
technologies and alternative fuels that will make our cars less 
dependent on imported oil. We need your help in determining 
what steps the Federal Government can take to remove those 
barriers, whether it's through focused research or tax 
incentives. Your input at this hearing is greatly appreciated 
and we look forward to your expert advice.
    But, first, I would like to recognize the Ranking Member 
Mr. Honda for his opening statement.
    Mr. Honda.
    [The prepared statement of Chairwoman Biggert follows:]

              Prepared Statement of Chairman Judy Biggert

    Good morning. I want to welcome everyone to this Energy 
Subcommittee hearing. Today we are going to examine how new 
technologies and advanced fuels for passenger vehicles could help end 
our nation's addiction to oil.
    I want to thank my Ranking Member, Mr. Honda, for traveling here 
from his home in the Silicon Valley of California. I greatly appreciate 
the time he has taken to come visit my favorite part of Illinois. I 
also want to welcome my fellow member of the Illinois delegation, Dr. 
Lipinski, and thank him for joining us today.
    I also want to thank our hosts, Mayor Pradel and the citizens of 
Naperville, for opening their Municipal Center to us today.
    Finally, I hope you all got a chance to look at the advanced 
vehicles parked outside, many of which run on alternative fuels. If you 
didn't, not to worry; they will still be there after this hearing is 
over. We wouldn't be able to peek under the hood or kick the tires of 
these hybrid, plug-in hybrid, and flex fuel vehicles today if it 
weren't for the good people at General Motors, Argonne National 
Laboratory, the Illinois Institute of Technology, and Northern Illinois 
University.
    Transportation is always a major issue for suburban communities, 
whether they are in my district, Mr. Honda's, or Mr. Lipinski's. As a 
matter of fact, it was better roads, inexpensive vehicles, and cheap 
gasoline that allowed the suburbs to flourish.
    We see that transportation and oil are becoming increasingly 
important to the growing populations in China and India. In addition, 
various studies suggest that we have reached peak oil production, or 
will very soon, meaning the gap between supply and demand will only 
grow larger. This will give countries with sizable oil reserves, many 
of which are hostile to the United States, and their cartels even more 
opportunities to manipulate the global market for oil.
    The bad news is that this confluence of factors already is hitting 
the pocketbooks of American families, with oil over $70 per barrel. The 
good news is that there is nothing like a $3 gallon of gasoline to get 
everyone thinking about new and creative ways to make transportation 
more affordable, less polluting, and less susceptible to the vagaries 
of the world oil market.
    More than anything else, Americans want to be able to hop into 
their cars and go. Very few care what makes their car go. They just 
want it to be inexpensive and easy to get. Our interest today is in 
retaining that convenience and minimizing its cost--to our national 
security, to our economic security, and to our environment, not to 
mention to the family budget--through the use of research and 
technology.
    We need to be working towards cars that can run on whatever energy 
source is available at the lowest cost: be it electricity, gasoline, 
biofuel, hydrogen, or some combination of these. In addition, we need 
to find ways to make these diverse fuels readily available across the 
country.
    Plug-in hybrids or hydrogen-powered fuel cells would allow us to 
run our cars using renewable sources such as solar and wind, other 
clean and abundant sources like nuclear and even coal preferably from 
power plants employing advanced clean coal technologies that I hope 
will soon be the norm. Flex fuel vehicles running on renewable 
biofuels, such as ethanol and biodiesel made from all kinds of plant 
material--not just corn--can significantly decrease greenhouse gas 
emissions. And as demand for biofuels increases, we can simply grow 
more of the feedstock, whether that's corn, sugar cane, or switchgrass. 
And the benefit of these advanced vehicle technologies and alternative 
fuels will reduce our dependence upon imported sources of oil.
    It is clear that both technical and market obstacles remain to 
realizing the potential benefits of all of the advanced vehicle 
technologies or alternative fuels we will be discussing. What are the 
technical or cost-competitiveness issues with important components, 
such as batteries fuel cells or power electronics? What major hurdles 
stand in the way of the production or distribution of advanced 
biofuels? What technical challenges have not received sufficient 
attention?
    Or are the hurdles non-technical? Do consumer preferences or auto 
industry inertia present the highest hurdles? What about infrastructure 
costs?
    I want to give the City of Naperville credit for focusing on this 
market or demand side of the equation. As a founding member of the 
Plug-In Partner Campaign, Naperville is one of 132 public power 
utilities and 43 cities, counties, and local governments that have made 
``soft'' purchase orders indicating a strong interest in buying 
flexible fuel plug-in hybrid vehicles--if they are manufactured. In one 
of these vehicles, the average American, who drives between 25 and 30 
miles a day, could complete his or her commute and run some errands 
without burning drop of gasoline. That's good for energy security, not 
to mention the pocketbook.
    As I see it, one of the most significant potential benefits of the 
plug-in hybrid is that they do not require a whole new ``refueling'' 
infrastructure. To think that you could pull into your garage at the 
end of the day and ``fill 'er up'' just by plugging your car into a 
regular, 120-volt socket in the garage is very appealing. Imagine the 
convenience of recharging your car just as you recharge your cell 
phone, blackberry, or laptop every evening--by simply plugging it in. 
The next morning, unplug it and you are ready to go.
    The City of Naperville realized that the best way to hasten the 
arrival of plug-in hybrids was to commit to buying one. You can do the 
same thing. Simply go to www.pluginpartners.com, click on the ``What 
You Can Do'' tab, and fill in the Plug-In Partners petition. Let the 
automakers know that you'd be willing to pay a few thousand more 
dollars to buy a vehicle that would be cheaper to operate, cleaner, and 
could run on domestically produced electricity.
    We are looking to you, our witnesses here today, to help us 
identify the most significant technical and market obstacles facing the 
widespread availability of advanced vehicle technologies and 
alternative fuels that will make our cars less dependent upon imported 
oil. In addition, we need your help determining what steps the Federal 
Government can take to remove those barriers, whether it's through 
focused research or tax incentives.
    Your input at this hearing is greatly appreciated and we look 
forward to your expert advice, but first I would like to recognize the 
Ranking Member, Mr. Honda, for his opening statement. Mr. Honda.

    Mr. Honda. Thank you, Madam Chair. And I'm very, very glad 
to be here in the great prairie State of Illinois. Having grown 
up in the south side and north side Chicago, I feel close to 
home.
    And this podium is beautiful. So the city really ought to 
be very proud of their facility. But this bench up here makes 
me feel like I'm in a sushi bar. So if anybody wants to, you 
can just step right up.
    So I want to also thank all the witnesses for being here 
today to testify, and to all of you who have come here to hear 
more about this very important subject.
    I'm especially glad that we've got a panel that can talk 
about a wide range of vehicle and fuel options for the future. 
Because I suspect it is going to take some combination of a 
number of different approaches to truly end our addiction to 
oil. We will probably need to use different solutions at 
different points of time, and we will probably want to use 
multiple technologies at the same time depending on the 
application. And what do I mean by that? Well, I have a hybrid, 
a Toyota Prius. I recently had the opportunity also to drive a 
Honda hydrogen fuel cell car. And while I wasn't able to 
participate, there was a plug-in hybrid test drive near the 
Capitol. These are three different technologies at different 
states of commercial readiness. One is here today, the hybrid; 
one will be available fairly soon, the plug-in hybrid as our 
Chairperson said, and some really would say that it's ready to 
go and all you have to do is put the money, and; one still 
requires the development of technology and infrastructure to be 
viable.
    At different points in time different technologies will 
make the most sense economically. When you think about 
applications, passenger car use in the city is very different 
than freight hauling over long distances. Different 
technologies are likely to prove most appropriate for the 
different uses, and so a single solution probably isn't the 
best way to go.
    That can be a good thing. Even if a traditional hybrid in 
use today gets bumped aside by plug-in hybrids for urban 
passenger use, we will still be able to use hybrids for other 
purposes.
    Back in Washington we have had a few hearings over the last 
couple of years about particular aspects of this subject. Plug-
in hybrids, prizes for development of hydrogen technology, 
hydrogen and the progress that is being made in addressing 
technical barriers to the use of hydrogen in vehicles, but 
because of the time constraints we have to work with there, we 
aren't able to get a broad group of people together in this 
time.
    I'm glad that today we'll get to hear about many different 
technologies all in one hearing and we will have the 
opportunity to compare them to each other and see where they 
compliment each other. I know that in many cases there's still 
much basic R&D that needs to be done to overcome technical 
barriers, and I certainly want to hear about those so we can 
learn where we need to focus our efforts on the Subcommittee. 
And the barriers are both economical and technical. And perhaps 
if you have the will, you might want to also share with us some 
of the political barriers you may see in the development of 
these kinds of technologies.
    But I also hope that we will hear about the value of 
demonstration projects which can serve to help identify some of 
the very technical barriers that an increased emphasis on 
research will aim to overcome. I fear that we might miss more 
obstacles until after we have made significant investments and 
time and resources if we stop working on demonstration 
projects. Back in my own District we are fortunate to have some 
projects such as the Santa Clara Valley Transportation 
Authority's Zero Emission Bus program and the use of natural 
gas vehicles at the Norm Mineta San Jose Airport, that have 
helped to demonstrate the feasibility of alternative fuel 
vehicles.
    Chairman Biggert, thank you for putting together an 
interesting and technologically diverse panel from whom I look 
forward to learning a lot today.
    I yield back.
    [The prepared statement of Mr. Honda follows:]

         Prepared Statement of Representative Michael M. Honda

    I'm glad to be here in the Prairie State today, and I thank 
Chairwoman Judy Biggert for inviting me to participate in this hearing.
    Thanks to all of the witnesses for being here to testify and to all 
of you who have come to hear more about this very important subject.
    I'm especially glad that we've got a panel that can talk about a 
wide range of vehicle and fuel options for the future, because I 
suspect it is going to take some combination of a number of different 
approaches to truly end our addiction to oil.
    We will probably need to use different solutions at different 
points in time, and we will probably want to use multiple technologies 
at the same time depending on the application.
    What do I mean? Well, I have a hybrid Toyota Prius, I recently had 
the opportunity to drive a Honda hydrogen fuel cell car, and while I 
wasn't able to participate, there was a plug-in hybrid test drive near 
the Capitol.
    These are three different technologies at different states of 
commercial readiness--one is here today (hybrid), one will be available 
fairly soon (plug-in hybrid, some would say it is here today!) and one 
still requires the development of technology and infrastructure to be 
viable. At different points in time, different technologies will make 
the most sense economically.
    When you think about applications, passenger car use in the city is 
very different from freight hauling over long distances. Different 
technologies are likely to prove most appropriate for the different 
uses, and so a single solution probably isn't the best way to go.
    That can be a good thing--even if a traditional hybrid in use today 
gets ``bumped aside'' by plug-in hybrids for urban passenger use, we 
will still be able to use hybrids for other purposes.
    Back in Washington, we have had a few hearings over the last couple 
of years about particular aspects of this subject--plug-in hybrids, 
prizes for developments of hydrogen technology, hydrogen and the 
progress that is being made in addressing technical barriers to the use 
of hydrogen in vehicles--but because of the time constraints we have to 
work within there, we aren't able to get a broad group of people 
together at the same time.
    I'm glad that today we will get to hear about many different 
technologies all in one hearing and we will have the opportunity to 
compare them to each other and see where they complement each other.
    I know that in many cases there is still much basic R&D that needs 
to be done to overcome technical barriers, and I certainly want to hear 
about those so we can learn where we need to focus our efforts on the 
Subcommittee.
    But I also hope that we will hear about the value of demonstration 
projects, which can serve to help to identify some of the very 
technical barriers that an increased emphasis on research would aim to 
overcome. I fear that we might miss more obstacles until after we have 
made significant investments of time and resources if we stop working 
on demonstration projects.
    Back in my own district, we are fortunate to have some projects, 
such as the Santa Clara Valley Transportation Authority' Zero Emission 
Bus program and the use of natural gas vehicles at the Norm Mineta San 
Jose Airport, that have helped to demonstrate the feasibility of 
alternative fuel vehicles.
    Chairwoman Biggert, thank you for putting together an interesting 
and technologically diverse panel from whom I look forward to learning 
a lot today. I yield back the balance of my time.

    Chairwoman Biggert. Thank you, Mr. Honda.
    We don't normally have opening statements from the Members, 
but since this is a field hearing I will recognize Mr. Lipinski 
for three minutes.
    Mr. Lipinski. Thank you, Chairwoman Biggert.
    I appreciate the opportunity to speak here today, and I 
appreciate you putting this together. It's certainly a critical 
problem that we're facing right now. Not just with the high gas 
prices, but all the other problems that are caused by our 
current energy situation. And I appreciate the work that you've 
done in terms of helping us in terms of research and 
development, and especially your work with Argonne Lab here. So 
you've done a lot of important work in the energy area.
    So right now we're all being effected by high energy 
prices. But as I said, it's not just our pocketbooks that are 
hit by our current energy paradigm. Also our national security 
is threatened and our environment and public health are also 
threatened by the current burning of fossil fuels which we use 
now to fuel our vehicles. We really need to develop a new 
energy model and find solutions here at home, solutions that 
will strengthen our national security, boost our economy, and 
help protect our environment.
    Now there are may possible alternatives, you know, ranging 
from the short-term such as conservation and increasing 
efficiency to long-term approaches such as the use of hydrogen, 
bottled fuels and batteries as well as other ideas that we'll 
hear about from our witnesses today.
    I'm especially interested as a former mechanical engineer 
to hear ideas and suggestions that our witnesses have today for 
where they think we should go, what they think the 
possibilities are.
    Now some of these tools are already at use on our highways. 
I have a Ford Escape hybrid, which has served me very well, and 
this technology certainly has proven valuable. But it's not the 
solution to all of our problems. We really need to find and 
work, do the R&D on all these different areas.
    One area that I'm particularly interested in is hydrogen, 
which has a great potential to provide much of our 
transportation energy needs and be environmentally friendly 
when the hydrogen is produced from renewable fuels.
    I'm very pleased that a couple of weeks ago the House of 
Representatives passed legislation that I introduced along with 
Representative Bob Inglis to create the H-Prize. Now the H-
Prize Act of 2006 creates different prizes for different 
advances in the use of hydrogen as a fuel since there are 
problems with creation, storage, transportation; all these must 
be overcome so that we can use hydrogen as a fuel, we could put 
a hydrogen car in everyone's driveway.
    I drove a hydrogen car a couple of weeks ago. It drove 
fantastic. The only problem is the price tag, it's about $1.5 
million. It's a little too high right now. So we need to do 
more work to bring down the price of this, but it's available, 
it's possible. And as we saw the cars out front, these 
technologies are there. The problem is making them efficient 
enough so that we can use this to give everybody a vehicle such 
as these in order to wean ourselves off of oil, which we use 
right now to move our vehicles.
    Americans over the years have consistently faced monumental 
challenges, consistently have overcome them. And we did this 
with air travel, space exploration, just to name a couple, and 
now we have to do this with energy. We need to use our greatest 
resource, which is our ingenuity and creativity, which is on 
display right now from our witnesses. So I look forward to 
hearing from our witnesses and hear the testimony today.
    Thank you.
    Chairwoman Biggert. Thank you, Mr. Lipinski.
    I'd like now to introduce our witnesses.
    If Members wish to submit further additions to their 
opening statements, your statements will be added to the record 
without objection.
    First of all we have Dr. James Miller, who is the Manager 
of the Electrochemical Technology Program at Argonne National 
Laboratory, right here in the 13th District. Welcome.
    Mr. Alan Weverstad, who is the Executive Director for 
Mobile Emissions and Fuel Efficiency at the General Motors 
Public Policy Center. Thank you for being here.
    Mr. Jerome Hinkle, Vice President, Policy and Government 
Affairs, the National Hydrogen Association.
    Dr. Daniel Gibbs, President of the General Biomass Company, 
which is located in Evanston.
    Mr. Deron Lovaas, Vehicles Campaign Director for the 
Natural Resources Defense Council.
    And then Mr. Philip G. Gott, Director for Automotive Custom 
Solutions at Global Insight.
    Welcome all of you.
    As our witnesses probably know, the spoken testimony is 
limited to five minutes. After each witness, Members will 
have--after all of the witnesses, Members will have five 
minutes each for questions.
    And with that, we will begin with Dr. Miller. You're 
recognized for five minutes, or about.

  STATEMENT OF DR. JAMES F. MILLER, MANAGER, ELECTROCHEMICAL 
        TECHNOLOGY PROGRAM, ARGONNE NATIONAL LABORATORY

    Mr. Miller. Chairman Biggert and Members of the Energy 
Subcommittee. Thank you for the opportunity to testify today 
and share my thoughts on the role that fuel cell vehicles and 
plug-in hybrids can play in reducing our nation's petroleum 
consumption. Let me start my testimony by recalling the 
benefits that fuel cell vehicles can provide to our nation.
    Fuel cell vehicles offer the potential to provide operation 
on petroleum free fuel with a fuel economy significantly 
exceeding today's internal combustion engine vehicles while 
omitting only water vapor at the tailpipe. However, in order 
for fuel celled vehicles to achieve widespread market 
penetration, key technical problems must be solved. Cost and 
durability are the major challenges to fuel cell 
commercialization. Size, weight and thermal management are also 
key barriers.
    In order to have widespread market penetration, the cost of 
fuel cells needs to be reduced from their current cost, about 
$3,000 per kilowatt in small volume fabrication to a target 
cost of about $30 per kilowatt in mass production.
    Independent studies have analyzed the cost of automotive 
fuel cell systems if manufactured in mass production levels of 
500,000 units per year. The results show that the cost 
projections for mass produced fuel cells have been reduced by 
more than a factor of 50 percent since 2002. Further work at 
Argonne National Laboratory is directed toward reducing or 
eliminating the platinum content in the fuel cells, which if 
successful would have a direct effect on further reducing fuel 
cell costs.
    Similar gains have been made in operating life. An 
operating life of at least 5,000 hours is required for 
automotive applications. During the last four years the 
durability of fuel cell systems has been extended from 1,000 
hour or less to greater than 2,000 hours under real world 
cycling conditions. Much progress has been made, but additional 
research is needed.
    The key to enhancing longevity is to understand performance 
degradation and failure mechanism so that new materials or 
engineering solutions may be devised to overcome them. This is 
another line of research at Argonne.
    Let me now turn to plug-in hybrid vehicles. Nickel metal 
hydride batteries are used in conventional hybrid vehicles 
today. However, lithium-ion batteries are the most promising 
technology for use in this application due to their high energy 
density and high power density. It is only a matter of time 
before they replace nickel metal hydride batteries in hybrid 
vehicles.
    For the same amount of stored energy and power, lithium-ion 
batteries will be about two-thirds the size of a comparable 
nickel metal hydride battery. The current state of the art 
lithium-ion battery already possesses suitable power, energy, 
weight and volume for use in plug-in hybrids that could provide 
at least a 20 miles range capability on batteries only. The 
issues of ruggedness, by that I mean ability to withstand 
overcharging and extreme temperatures as well as long lifetimes 
and cost, remain barriers for this technology.
    There exists numerous opportunities for reducing cost, 
extending life and further increasing the energy density 
lithium-ion battery technology. Currently there are worldwide 
R&D efforts focused on the development of advanced electrode 
materials that are less expensive and inherently more stable 
than those used in current state of the art lithium-ion 
batteries. And Argonne is one of the world leader in this area.
    Several of the these advanced electrode materials offer the 
promise for: Simultaneously extending electric range through 
increased battery energy density; extending battery life 
through enhanced stability of materials, and; reducing battery 
cost via two mechanisms, lower battery materials cost and 
reduced complexity of the battery management and control 
system.
    In conclusion, in my opinion there is no single solution. 
The future will include a mix of technologies that includes: 
Improved internal combustion engines; alternative fuels; 
hybrids; plug-in hybrids; electric vehicles and fuel cell 
vehicles. A range of technologies that will be needed to make 
fuel cell vehicles viable are the subject of ongoing research. 
These include light weight materials, advanced batteries, power 
electronics and electric motors.
    The vision of fuel cell vehicles and plug-in hybrids as 
solutions to foreign energy dependency, environmental pollution 
and greenhouse gas emissions is a compelling vision. We at 
Argonne are excited about the prospect of helping our nation in 
its transition to environmentally friendly, domestically 
produced sources of energy.
    Thank you. And I will be happy to answer questions.
    [The prepared statement of Dr. Miller follows:]

                 Prepared Statement of James F. Miller

    Chairman Biggert and Members of the Energy Subcommittee, thank you 
for the opportunity to testify today and share my thoughts on advanced 
automotive technologies. I will address the role that fuel cell 
vehicles and plug-in hybrids can play in reducing our nation's 
petroleum consumption and automotive emissions. I will discuss the 
major technical problems and research opportunities for each of these 
technologies, and provide an update on the recent progress that has 
been achieved.

Fuel Cell Vehicles

    Let me start my testimony by recalling the benefits that fuel cell 
powered vehicles can provide to our nation. Fuel cell vehicles offer 
the potential to provide operation on petroleum-free fuel, with a fuel 
economy significantly exceeding today's internal combustion engine 
vehicles, while emitting only water vapor at the tailpipe. The 
Department of Energy (DOE) estimates that, if hydrogen reaches its full 
potential, the Hydrogen Fuel Initiative and FreedomCAR program could 
reduce our oil demand by over 11 million barrels per day by 2040--
approximately the same amount of crude oil America imports today.
    However, in order for fuel cell vehicles to achieve widespread 
market penetration, key technical problems must be solved Cost and 
durability are the major challenges to fuel cell commercialization. 
Size, weight, and thermal and water management are also key barriers. 
Under the FreedomCAR and Fuel Partnership, a model of public/private 
collaboration, the Department of Energy is working closely with its 
national laboratories, universities, and industry partners to overcome 
critical technical barriers to fuel cell commercialization. The 
research program continues to focus on materials, components, and 
enabling technologies that will contribute to the development of low-
cost, reliable fuel cell systems.
    For automotive fuel cells, the two greatest problems are the cost 
and durability of fuel cells. In addition, on-board hydrogen storage 
and a viable supporting infrastructure of hydrogen production and 
distribution will also have to be established, but these issues have 
been addressed by previous witnesses today.
    In order to have widespread market penetration, the cost of fuel 
cells needs to be reduced from their current cost (about $3,000/kW in 
small volume fabrication) to a target cost of $30/kW (in mass 
production). Independent studies, conducted by industry for the 
Department of Energy, have analyzed the cost of automotive fuel cell 
systems, if manufactured at mass production levels of 500,000 units per 
year. The results show that the cost projections for mass-produced fuel 
cells have been reduced by more than 50 percent since 2002 (from $275/
kW to $110/kW) under the Hydrogen Fuel Initiative. This cost reduction 
was the result of increased power density; advancements in membrane 
materials; reductions in both membrane material cost and amount of 
membrane material required in the fuel cell; enhancement of specific 
activity of platinum catalysts; and innovative processes for depositing 
platinum alloys. Further work at Argonne National Laboratory (and 
elsewhere) is directed towards reducing or eliminating the platinum 
content in the fuel cells, which, if successful, would have a direct 
effect on reducing fuel cell costs. Similarly, other components of the 
fuel cell and system (e.g., polymer electrolytes, hydrogen storage) 
stand to achieve higher performance at lower cost by the development of 
new materials.
    Similar gains have been made in operating life. An operating life 
of at least 5,000 hours is required for automotive applications. During 
the last four years, the durability of fuel cell systems has been 
extended from 1,000 hours or less, to greater than 2,000 hours under 
real-world cycling conditions. Much progress has been made, but 
additional research is needed. The key to enhancing longevity is to 
understand performance degradation and failure mechanisms so that 
materials or engineering solutions may be devised to overcome them. 
This is another line of research sponsored by DOE at Argonne and other 
research organizations.

Plug-In Hybrid Electric Vehicles

    ``Plug-in'' hybrids (i.e., those that can be plugged in and 
recharged from the electric grid and which provide some driving range 
on battery power only) offer the potential to provide significant fuel 
savings benefits, particularly for commuter and local driving. 
Additional research and development is needed for cost-effective plug-
in hydrids. Specifically, improved batteries and corresponding 
improvements to the electric drive systems (motors, power electronics, 
and electric controls) will be required. Needed battery improvements 
include reduced size and weight, greater durability and lifetime, and 
lower cost. Since 2002, however, the projected cost of a 25-kW battery 
system for hybrid vehicles, estimated for a mass production level of 
100,000 battery systems per year, has dropped by more than 35 percent.
    The plug-in hybrid vehicle is a demanding application for the on-
board energy storage device (battery). Nickel metal hydride batteries 
are used in conventional hybrid vehicles today. However, lithium-ion 
batteries are the most promising technology for use in this 
application, due to their high energy density and high power density. 
It is only a matter of time before they replace nickel metal hydride 
batteries in conventional hybrid electric vehicles. For the same amount 
of stored energy and power, lithium-ion batteries will be about two-
thirds the size of a comparable nickel metal-hydride battery. The 
current state-of-the-art lithium-ion batteries already possess suitable 
power, energy, weight, and volume for use in plug-in hybrids that could 
provide at least a 20-mile range capability on batteries only. The 
issues of ruggedness (e.g., ability to withstand overcharging and 
extreme temperatures), long lifetimes, and cost remain barriers for 
this technology.
    Various tradeoffs can exist in battery technology. For example, 
batteries with thick electrodes tend to have high stored energy but low 
power capability. On the other hand, batteries with thin electrodes 
tend to have high power density but lower energy density. This allows 
the battery developer the flexibility to design a battery with high 
power for a hybrid vehicle application, or one with high energy (and 
therefore high range) for an electric vehicle, or some intermediate 
combination that may be required for a plug-in hybrid. Similar 
tradeoffs between cost and life are also sometimes possible. However, 
in order for a battery to be successful, it must meet all the 
application requirements simultaneously. This can only be achieved 
through the development of new materials, components, and enabling 
technologies.
    There exist numerous opportunities for reducing cost, extending 
life, and further increasing the energy density of lithium-ion battery 
technology. Currently, there are worldwide R&D efforts focused on the 
development of advanced anode and cathode materials that are less 
expensive and inherently more stable than those used in current state-
of-the-art lithium-ion batteries (and Argonne is one of the world 
leaders in this area, via its DOE-funded R&D programs). Several of 
these advanced electrode materials offer the promise for simultaneously 
extending electric range (via increased battery energy density), 
extending battery life (via enhanced stability of materials), and 
reducing battery costs via two mechanisms--lower battery material costs 
and reduced complexity of the battery management and control system 
(due to use of these more inherently stable materials).
    The issue of rapid recharge for plug-in hybrids is much more an 
infrastructure issue than it is a battery issue. With 220-volt, 20-
ampere electrical service available in households, it will take more 
than two hours to charge a 10-kWh battery (the approximate size battery 
needed for a electric range of 20-40 miles). Even current state-of-the-
art lithium-ion batteries are capable of accepting a one-hour recharge.

Conclusion

    In my opinion, there is no single solution--the future will include 
a mix of technologies that includes improved internal combustion 
engines, alternative fuels, hybrids, plug-in hydrids, electric 
vehicles, and fuel cell vehicles. A range of technologies that will be 
needed to make fuel cell vehicles viable are the subject of ongoing 
research. These include lightweight materials, advanced batteries, 
power electronics and electric motors. Considerable progress to 
overcoming the barriers associated with each of these advanced 
technologies has been achieved during the last four years. The rate of 
continued progress will certainly depend on future levels of public and 
private investment.
    The vision of fuel cell vehicles and plug-in hybrids as a solution 
to foreign energy dependence, environmental pollution and greenhouse 
gas emission, is compelling. The challenges on the road to achieving 
this vision can be addressed with innovative high-risk/high-payoff 
research. Argonne National Laboratory, together with other national 
laboratories, has a number of significant programs that will contribute 
to these future automotive technologies. We are working with the DOE 
Offices of Science, Energy Efficiency and Renewable Energy, Fossil 
Energy, and Nuclear Energy to create useful processes for building a 
hydrogen economy. We at Argonne are excited at the prospect of helping 
our nation in its transition to environmentally friendly, domestically 
produced sources of power.
    Thank you, and I will be happy to answer questions.

                     Biography for James F. Miller

    Dr. James Miller is currently the Director of the Electrochemical 
Technology Program at the U.S. Department of Energy's Argonne National 
Laboratory. He has over 33 years of research experience in developing 
advanced batteries for electric and hybrid vehicles, hydrogen storage 
materials, and fuel cells for automotive applications and distributed 
power. He has served on numerous review panels for the National 
Research Council and for the Department of Energy. He was the recipient 
of the 1998 Department of Energy Fuel Cell Program Award. He holds a 
Ph.D. degree in Physics from the University of Illinois, and an MBA 
degree from the University of Chicago.

    Chairwoman Biggert. Thank you, Dr. Miller.
    Next we have Mr. Weverstad. You're recognized for five 
minutes.

  STATEMENT OF ALAN R. WEVERSTAD, EXECUTIVE DIRECTOR, MOBILE 
  EMISSIONS AND FUEL EFFICIENCY, GENERAL MOTORS PUBLIC POLICY 
                             CENTER

    Mr. Weverstad. Good morning. My name is Alan Weverstad and 
I'm Executive Director for the Environment and Energy Staff at 
the GM Public Policy Center.
    I'm pleased to speak to you today regarding GM's plans for 
development and implementation of advanced technologies into 
our future vehicles. This plan includes near-term steps such as 
continuing to make improvements to today's internal combustion 
engines and transmissions with increased E85 flex-fuel 
availability.
    Mid-term steps, which are beginning right now such as more 
affordable and flexible hybridization of vehicles and long-term 
steps such as fuel cell powered vehicles with hydrogen. The 
answer to today's energy issues are not simple, and we believe 
that all of these technology will play an important role in 
America's energy future.
    GM is leading the effort on flex-fuel vehicles capable of 
running on gasoline or E85 ethanol. These vehicles offer a 
choice to consumers, a choice that has significant energy and 
economic benefits. Ethanol is renewable and in high 
concentration blends helps reduce greenhouse gas emissions. As 
E85 it helps reduce United States' dependency on petroleum, 
diversifies our sources of transportation fuel and reduces smog 
forming emissions. Ethanol usage provides great opportunities 
for the domestic agriculture industry and should help spur new 
job growth in other areas.
    When gasoline prices spiked in the aftermath of the 
hurricanes that devastated the Gulf Coast, ethanol become more 
visible and GM recognized an opportunity to become part of this 
growing movement. Earlier this year General Motors launched a 
national advertising campaign to promote the benefits of this 
fuel and the fact that we have today vehicles capable of using 
E85. We followed up with the launch of our Live Green Go Yellow 
website to make this information even more widely available. 
Traffic to that website quickly rose to the millions as 
consumers wanted to know about E85, GM flex-fuel vehicles and 
station locations.
    With nearly two million E85 capable vehicles already on the 
road at General Motors and a plan to offer 14 separate E85 
capable models in 2007 we wanted to make sure our consumers 
knew when they were getting this flexible capability. So GM 
launched a labeling effort that included an external badge on 
the vehicle noting its flex-fuel capability and a yellow gas 
cap to remind customers that their vehicle is capable of 
running on E85.
    We have also embarked on--upon several significant 
partnerships to increase the availability of the ethanol 
fueling infrastructure. We have partnered with ethanol 
producers, fuel suppliers, State governments and others in 
Michigan, Indiana, California, Illinois, Minnesota and Texas 
with more to come.
    For the United States, the growth of the ethanol industry 
raises enormous potential for displacing gasoline consumption 
in the transportation sector. If all of the five to six million 
flex-fueled vehicles on the road by the end of this year were 
fueled using E85, the United States could offset the need for 
3.6 billion--that's with a B, billion gallons of gasoline 
annually. And for the individual consumer regularly filling a 
2007 Tahoe with E85 would displace the use of over 600 gallons 
of gasoline each year.
    These are impressive numbers so we need to find ways to 
increase availability of E85 in the marketplace.
    Although E85 technology is generally well known, it is not 
costless to the manufacturers. E85 flexible-fuel capable 
vehicle requires fuel system materials with improved corrosion 
resistance. The fuel system parts involve include the fuel 
tank, the fuel pump and the fuel level sender, on board 
diagnostic pressure sensors and fuel injectors. Both the fuel 
pump and the injectors must be sized for significantly higher 
flow rates to compensate for E85's lower energy density. The 
cylinder heads and valve materials within the engines need to 
be able to withstand E85's different chemical properties. And 
finally, the fuel system software and calibrations must be 
tailored to recognized E85 or gasoline and adjust the fueling 
and spark timing accordingly.
    Effecting all of these changes across a range of vehicles 
will take time. Effecting all of these--especially for full 
line automakers like GM which have a variety of engines and 
fuel systems that will need to be modified. In some cases for 
low volume products the new--or the new direct injection 
technologies it may not be cost effective to add this 
technology, especially since ethanol will not be displacing 
gasoline across the board like unleaded gasoline did in 
replacing leaded gasoline.
    On the hybrid technology front later this year we will 
introduce the 2007 Saturn View Green Line Hybrid powered by a 
new more affordable hybrid system with a fuel economy 
improvement of approximately 20 percent over the conventional 
engine. The Saturn View Green Line is expected to deliver an 
estimated 27 miles per gallon in the city and 32 miles per 
gallon on the highway, the best highway milage of any SUV. This 
new more affordable hybrid system is leading the way for GM to 
offer the all new two mode full hybrid Chevy Tahoe and GMC 
Yukon in 2007.
    In addition, GM is evaluating the potential for and cost 
effectiveness of plug-in hybrid vehicles. Essential to make 
this technology a success are lower costs, lighter faster 
charging batteries that can be used to propel the vehicle in 
most local commuting and other trips of up 20 miles without 
needing to use the internal combustion engine. While extensive 
battery research is being done, we are still not at the point 
where this technology is ready for widespread implementation.
    Looking to the long-term, General Motors has placed a very 
high priority on fuel cells and hydrogen as a power source and 
an energy carrier for automobiles. To accomplish this GM's fuel 
cell program is focused on lowering costs and increasing 
reliability of the fuel cell stack demonstrating the promise of 
technology through validation programs and collaborating with 
other parties on the infrastructure issues that need to be 
addressed. We have made significant progress in several of 
these areas, including fuel cell power density by a factor of 
seven while enhancing the efficiency and reducing the size of 
our fuel cell stack. It's now half the size it was before 
significantly increasing fuel cell durability, reliability, 
reliability and cold start capability developing a safe 
hydrogen storage system that approaches the range of today's 
vehicles and reducing costs through technology improvements and 
system simplification.
    With respect to collaboration, we are working with key 
partners on virtually every aspect of fuel cell and 
infrastructure technology. The FeedomCAR and the California 
Fuel Cell Partnership, and the Fuel Cell Partnership managed 
through the United States Department of Energy has proven to be 
an important forum for developing these issues and challenges.
    Clearly huge challenges remain. Reliability of fuel cell 
stacks and storage of the hydrogen on board the vehicle must be 
resolved to draw American consumers to these vehicles. And the 
fueling infrastructure must be available so that owners of 
these vehicles have no concerns about where to get the 
hydrogen.
    In conclusion, there is no one single solution to the 
challenges we face. We are concentrating our energies on a 
number of different fronts and believe that many of these 
technologies will coexist in the marketplace. General Motors 
has a rational advance technology plan that goes from the near-
term focused on alternative fuels like E85 ethanol to the long-
term hydrogen powered fuel cells. We are executing that plan. 
All of these will help to simultaneously reduce United States' 
energy dependence, remove the automobile from the environmental 
debate and stimulate economic and jobs growth.
    Thank you.
    [The prepared statement of Mr. Weverstad follows:]

                Prepared Statement of Alan R. Weverstad

    Good morning. My name is Alan Weverstad and I am Executive Director 
for Environment and Energy in the GM Public Policy Center. I am pleased 
to be able to speak to you today regarding GM's near- and longer-term 
plans for development and implementation of advanced technologies into 
our future vehicles.
    GM has always been a leader in the development and use of 
technologies in vehicles. From the move away from hand-cranked 
starters--to the highly successful catalytic control technology for 
vehicle emissions--to efforts to produce an innovative electric vehicle 
in the 1990s, GM has been instrumental in the implementation of 
advanced technologies.
    Today, we are continuing to focus on ways to advance vehicle fuel 
economy, safety and emissions. And GM is actively engaged in all of 
these activities. We have a plan to address both the needs of our 
customers and the critical public policy issues facing us. This plan 
includes near-term steps, such as continuing to make improvements to 
today's internal combustion engines and transmissions and increased E85 
flex-fuel capability; mid-term steps, such as more affordable and 
flexible hybridization of vehicles; and long-term steps, such as fuel 
cells powered by hydrogen. The answer to today's energy issues is not 
simple, and we believe that all of these technologies will play an 
important role in America's energy future.
    Today, I am here to speak about our work in these areas.
    GM is leading the effort on flex-fueled vehicles capable of running 
on gasoline or E85 ethanol. These vehicles offer a choice to 
consumers--a choice that has significant energy and economic benefits. 
Ethanol is renewable and, in high concentration blends, helps reduce 
greenhouse gas emissions; as E85 it helps reduce U.S. dependence on 
petroleum, diversifies our sources of transportation fuel, and reduces 
smog-forming emissions. Ethanol usage provides great opportunities for 
the domestic agriculture industry and should help spur new job growth 
in other areas.
    Until last fall there was limited interest in the development of 
ethanol as an alternative fuel. But when gasoline prices spiked in the 
aftermath of the hurricanes that devastated the Gulf Coast, ethanol 
became more visible and GM recognized an opportunity to become part of 
the solution. Earlier this year, General Motors launched a national 
advertising campaign, beginning with the very visible 2006 Super Bowl, 
hosted in our own home city of Detroit. After the Super Bowl, we 
continued through the 2006 Winter Olympics, including launching our 
``Live Green, Go Yellow'' website. Traffic to that website quickly rose 
to the millions--as consumers wanted to know more about E85, GM flex-
fuel vehicles and station locations.
    But that was just the beginning. With nearly two million E85 
capable vehicles already on the road and a plan to offer 14 separate 
E85 capable models in 2007, we wanted to make sure our customers knew 
when they were getting this flex-fuel capability. So, GM launched a 
labeling effort that included an external badge on the vehicle noting 
its flex-fuel capability and a yellow gas cap to remind customers that 
their vehicle is capable of running on E85.
    We have also embarked upon several significant partnerships to 
increase the availability of the ethanol fueling infrastructure. Most 
recently, GM partnered with Meijer, CleanFuelUSA, the State of Michigan 
and the State of Indiana to work toward approximately forty new retail 
outlets. We have previously announced similar partnerships in 
California, Illinois, Minnesota and Texas--working with a variety of 
energy companies, State agencies, and distribution outlets.
    For the U.S., the growth of the ethanol industry raises enormous 
potential for displacing gasoline consumption in the transportation 
sector. If all of the five million flex-fueled vehicles on the road 
today were fueled using E85, the U.S. could offset the need for 3.6 
billion gallons of gasoline annually. And for the individual consumer, 
regularly filling a 2007 Chevrolet Tahoe with E85 would displace the 
use of over 600 gallons of gasoline each year. These are impressive 
numbers, so we need to find ways to increase availability of E85 in the 
marketplace.
    Although E85 technology is generally well known, it is not costless 
to the manufacturers. Each E85 flex-fuel capable vehicle requires fuel 
system materials with improved corrosion resistance. The fuel system 
parts involved include the fuel tank, fuel pump, the fuel level sender, 
the on-board diagnostic pressure sensor and the fuel injectors. Both 
the fuel pump and the injectors must be sized for significantly higher 
flow rates to compensate for E85's lower energy density. The cylinder 
heads and valve materials within the engine need to be able to 
withstand E85's different chemical properties. And finally, the fuel 
system software and calibrations must be tailored to recognize E85 or 
gasoline and adjust the fueling and spark timing accordingly. Effecting 
all of these changes across a range of vehicles will take time--
especially for full-line automakers like GM, which have a variety of 
engines and fuel systems that will need to be modified. In some cases--
for low volume products or new direct injection technologies--it may 
well not be cost effective to add this technology--especially since 
ethanol will not be displacing gasoline across the board, like unleaded 
gasoline did in replacing leaded gasoline.
    On the hybrid technology front, later this year, we will introduce 
the 2007 Saturn Vue Green Line Hybrid, the first GM vehicle powered by 
a new, more affordable hybrid system. With a fuel economy improvement 
of approximately 20 percent over the Vue's conventional engine, the 
Saturn Vue Green Line is expected to deliver an estimate 27 mpg in the 
city and 32 mpg on the highway, the best highway mileage of any SUV. 
This new, more affordable hybrid system reduces fuel consumption in 
five ways. First, the system shuts off the engine when the vehicle is 
stopped, to minimize idling. Second, the system restarts the engine 
promptly when the brake pedal is released. Third, fuel is shut-off 
early while the vehicle is decelerating. Fourth, vehicle kinetic energy 
is captured during deceleration (regenerative braking) to charge an 
advanced nickel metal hydride battery. And finally, the battery is 
charged when it is most efficient to do so. This new and more 
affordable hybrid technology is leading the way for GM to offer the all 
new two-mode full hybrid Chevy Tahoe and GMC Yukon in 2007.
    In addition, GM is evaluating the potential for and cost 
effectiveness of plug-in hybrid electric vehicles (PIHEVs). Essential 
to make this technology a success are lower cost, lighter, faster 
charging batteries that can be used to propel the vehicle in most local 
commuting and other trips (up to 20 miles or more) without needing to 
use the internal combustion engine. While extensive battery research is 
being done, we are still not at the point where this technology is 
ready for widespread implementation From GM's prior work on pure 
electric vehicle technology (especially production of the EV1) and 
through the company's broad work in hybrid technology, GM sees several 
challenges automakers will need to overcome to get this technology into 
the market.
    The first is the significant cost challenge that is already present 
with hybrid vehicles, but then is amplified with the addition of plug-
in capability. The increase in battery size is the most significant 
contributor to this additional cost.
    Secondly, the additional battery mass and volume present 
considerable technical challenges to the vehicle design. With the 
pressure today to reduce vehicle mass and packaging space already at a 
premium for hybrid vehicles, this is a challenge that requires 
significant advances in battery mass and volume to accommodate.
    Thirdly, the PIHEV will require advances in battery technology, 
specifically the development of a battery that has long life with high 
charge/discharge capabilities needed to propel the vehicle during EV 
operation. Promising results have been seen with next generation 
lithium ion battery technology, but this still requires study to know 
that the full range of vehicle performance characteristics can still be 
met.
    Looking to the long-term, General Motors has placed very high 
priority on fuel cells and hydrogen as the power source and energy 
carrier for automobiles. To accomplish this, GM's fuel cell program is 
focused on lowering cost and increasing reliability of the fuel cell 
stacks, demonstrating the promise of the technology through validation 
programs and collaborating with other parties on the infrastructure 
issues that need to be addressed. We have made significant progress in 
several of these areas:

          In the last six years, we have improved fuel cell 
        power density by a factor of seven, while enhancing the 
        efficiency and reducing the size of our fuel cell stack.

          We have significantly increased fuel cell durability, 
        reliability, and cold start capability.

          We have developed safe hydrogen storage systems that 
        approach the range of today's vehicles.

          We have made significant progress on cost reduction 
        through technology improvements and system simplification.

    With respect to collaboration, we are working with key partners on 
virtually every aspect of fuel cell and infrastructure technology. The 
FreedomCAR and Fuel Partnership, managed through the U.S. Department of 
Energy, has proven to be an important forum for addressing these issues 
and challenges.
    Clearly huge challenges remain. Reliability of the fuel cell stacks 
and storage of the hydrogen on board the vehicle must be resolved to 
draw American consumers to these vehicles. And the fueling 
infrastructure must be available so that owners of these vehicles have 
no concerns about where to get the hydrogen.
    In conclusion, there is no one single solution to the challenges we 
face. We are concentrating our energies on a number of different 
fronts, and believe that many of these technologies will coexist in the 
marketplace. General Motors has a rational advanced technology plan 
that goes from near-term, focused on alternative fuels like E85 
ethanol, to the long-term hydrogen-powered fuel cells. We are executing 
that plan. All of these will help to simultaneously reduce U.S. energy 
dependence, remove the automobile from the environmental debate, and 
stimulate economic and jobs growth.

                    Biography for Alan R. Weverstad
    ALAN R. WEVERSTAD, Executive Director Mobile Emissions and Fuel 
Efficiency, Public Policy Center, General Motors Corporation. Mr. 
Weverstad began his career in 1971 in the engineering area with Pontiac 
Motor Division where he worked as a design release & development 
engineer in the chassis and engine development sections. In 1985 he 
became a part of the Chevrolet-Pontiac-GM of Canada team where he was 
involved in the emission certification of 77 engine families. He then 
joined the Marine Engine Division and in 1991 moved to the 
Environmental Activities Staff and GM Research working on vehicle 
emissions issues. He is now the Executive Director of the Environment & 
Energy Staff of the Public Policy Center.
    Mr. Weverstad is the immediate Past Chairman of the California Fuel 
Cell Partnership and Vice President of the Engine Manufacturers 
Association. He is also on the Board of Directors for the Electric 
Drive Transportation Association and on the Board of Advisors for UC 
Riverside and California H2 Highway.
    Mr. Weverstad is a graduate of General Motors Institute and holds a 
Bachelor of Science degree in Engineering from Oakland University.




    Chairwoman Biggert. Thank you very much.
    Mr. Hinkle, you're recognized for five minutes.

    STATEMENT OF JEROME HINKLE, VICE PRESIDENT, POLICY AND 
     GOVERNMENT AFFAIRS, THE NATIONAL HYDROGEN ASSOCIATION

    Mr. Hinkle. Chairman Biggert, Ranking Member Honda and 
Representative Lipinski and guests, good morning. The National 
Hydrogen Association welcomes the opportunity to discuss 
progress toward building the hydrogen economy. We would like to 
focus on those technical and policy challenges that will be 
most important to transforming our energy systems. Under your 
leadership, the Energy Subcommittee continues to help guide our 
country's search for critical energy alternative. We hopes--
excuse me. We hope today's hearing will provide some insight 
gain in several key areas.
    I notice that I'm slightly to the left of GM here, so I 
need to pick up my act.
    For 17 years, the National Hydrogen Association has 
promoted transition to a hydrogen economy. Its 103 members 
represent considerable diversity; large energy and automobile 
firms, utilities, equipment manufacturers, small businesses, 
transportation agencies, national laboratories, universities 
and research institutions. In partnership with the United 
States Government and each other, we are a key part of the wave 
front of technical and economic action on hydrogen in the 
United States and abroad.
    Hydrogen is our nation's premier energy destination. We'll 
need an army of dedicated and talented people to solve all the 
technical and market-building challenges along the way. The 
stakes are high, and we've got a lot of tough homework to do.
    I note here that the Energy Policy Act of 2005, which is an 
important document here that needs to be completely realized in 
the appropriations process, intends with the regard to the 
hydrogen title in particular, to accelerate the research, 
development and demonstration programs in DOE, make government 
a more durable partner in its industrial relationships, give 
permanent authorization to the hydrogen programs in DOE and 
broaden the Secretary of Energy's authorities and provide the 
Secretary more than triple the resources to accomplish this. It 
builds on the strong foundation of DOE's prior work on hydrogen 
and the President's Hydrogen Fuel Initiative.
    Recently the House passed H.R. 5427 where they fully funded 
DOE's request for $246 million for these programs, but there's 
a policy lag in the hydrogen program. Less than half, 47.5 
percent of the Energy Policy Act's authorized funding level of 
$518 million has been requested by DOE for fiscal year 2007. We 
don't want to see the many opportunities for enhancing DOE 
hydrogen technology programs slip away at a crucial time in 
their history. For FY 2008 we would urge their program 
managers, perhaps with the support of the Committee, to utilize 
a much higher share of their budget authority which grows from 
$517/518 million in FY '07 to $740 million in FY '08. These are 
all in the authorization levels.
    Nearly 53 percent of this funding is for R&D, including 
basic science which also needs to be expanded beyond its--
beyond its $50 million in the current energy and water 
appropriation.
    Adequate on-board storage is widely agreed to be a 
fundamental necessity for a successful light duty vehicle. Much 
progress has been made in resolving many of those technical 
issues since the Committee's last field hearing in 2002. As Mr. 
Weverstad mentioned GM and then Ballard also have made great 
strides in improving costs and energy density. And there's a--
there's a--in the handout there is a combined set of graphs 
from the Department of Energy that shows how some of this 
improvement has transpired.
    And I just want to note that this work, there's still lots 
to do but their work continues at an urgent pace.
    And benefits have come with more orderly program planning 
that identifies a wide range of alternative approaches. And 
improving the program management in DOE has led to manageable 
gains in storage performance. So you can see how important that 
is.
    We see real progress in storage but believe that smart full 
use of the increased resources for fuel cell technologies, 
Section 805 of the Energy Bill, could definitely improve 
program performance. We urge DOE to request full funding for 
that in their FY 2008 budget.
    A systems view of storage--it takes on a different 
personality in a whole vehicle context. It's important to 
remember that a modern gasoline fueled automobile only utilizes 
less than 1.5 percent of the fuel's energy to propel the 
vehicle's payload. This leaves a lot of room for improvement.
    Extra mass is just ballast. With more intensive application 
of modern aerospace composite materials and high strength, 
lightweight steels and alloys, coupled to the new flexibility 
in vehicle design that fuel cells and electric drive subsystems 
offer, a much more efficient vehicle package can be designed.
    GM in particular has--has worked on this and looked at the 
flexibility in purpose built composite vehicle design. And 
Section 808 of the Energy Policy Act, Systems Demonstrations, 
encourage combined--combined learning demonstrations with 
optimized advance composite vehicle design. We'd like to see 
DOE fund some of that activity.
    And as Amory Lovins once remarked ``Why waste a fuel cell 
on a primitive platform.''
    To storage and distribution. There are technical barriers 
in production and distribution that need to be overcome. With 
about 220 millions cars registered in the United States, and 
that number will grow and about 17 million sold per year, the 
National Academy of Science estimates that 25 percent of the 
fleet would be replaced within 12 years while GM sees about 20 
years to replace the entire fleet with good superior products 
in the market. This makes it possible to evolve hydrogen supply 
infrastructure along with vehicle production. Shell and Ballard 
and GM, all in a Senate hearing on hydrogen R&D last summer, 
late last summer, concurred that we could see a manufacturable 
fuel cell vehicle by 2010-2012 that would be competitive with 
those cars then for sale. And GM, of course, has made it fairly 
plain what their targets are with regard to this in 2010.
    We've got in the handout packet there's some slides from 
Shell Hydrogen that you might find interesting with regard to 
where hydrogen production is right now. On a satellite picture 
of the United States at night, for instance, overlaid by a 100 
kilometer circle surrounding today's refinery production sites 
for hydrogen, this covers over 100 of these cities and in urban 
areas and which puts about 60 percent of the U.S. population 
today within a 100 kilometers of a major source of hydrogen. 
And these are the places where the introduction of hydrogen 
fuel cell vehicles would likely to be focused starting with 
fleets of municipal and commercial buses and delivery vehicles 
and then evolving to fleets of cars and light trucks and 
finally to consumers
    And we don't want to ignore the rule of stationary and 
portable fuel cells, and leading these transitions to providing 
high quality supplemental and distributed power to businesses 
and municipalities, and the early establishment of hydrogen 
supply networks.
    New job growth and retention of existing jobs during a 
transformation to a hydrogen economy is going to be important. 
We'll see altered refinery and utility operations in producing 
hydrogen. In addition, we'd likely see considerable expansion 
in renewable energy production both for electricity and 
biofuels in widely dispersed agricultural regions of the United 
States some distance from the urban demand centers.
    Also much of the hydrogen in the early years will likely be 
produced from widely distributed sources using electricity off 
the existing grid or natural gas in the existing pipeline 
system. These distribution networks, this infrastructure is 
large, it's reliable and it reaches all urban areas. In some 
places as the Hydrogen Utility Group says for decades we 
brought electrons to every home and business in the United 
States, why not protons? Well, that's a little different 
technical challenge, but the operations of these--this 
infrastructure is well understood and key investments have 
already been made. The smoothest stage of the supply transition 
will be made in this way.
    These are valuable and essential assets, but they will need 
to be adapted to new business models. Depending on the highly 
varied and unique regional mix of generating capacity, the 
relative production efficiencies and carbon footprint of the 
possible hydrogen fuel cycles will all be quite different. As 
has been said here and has been--and needs to be said often, no 
single production strategy will work for the United States and 
all feasible techniques and sources for making hydrogen will 
likely be needed.
    Chairwoman Biggert. Mr. Hinkle, could you sum up?
    Mr. Hinkle. Yes, ma'am.
    Chairwoman Biggert. Thank you.
    Mr. Hinkle. Well, we have in the written package a number 
of suggestions for public investments in this area. And as Dan 
Quayle once observed: ``the future will be better tomorrow.''
    Thank you.
    [The prepared statement of Mr. Hinkle follows:]

                  Prepared Statement of Jerome Hinkle

    Chairman Biggert, Ranking Member Honda, Representative Lipinski and 
guests, good morning. The National Hydrogen Association welcomes the 
opportunity to discuss progress toward building the Hydrogen Economy. 
We would like to focus on those technical and policy challenges that 
will be most important to transforming our energy systems. Under your 
leadership, the Science Committee continues to help guide our country's 
search for critical energy alternatives--we hope today's hearing will 
provide some insight gain in several key areas.
    For 17 years, the National Hydrogen Association has promoted a 
transition to a hydrogen economy through its extensive work in codes 
and standards, education and outreach, and policy advocacy. Its 103 
members represent considerable diversity: large energy and automobile 
firms, utilities, equipment manufacturers, small businesses, 
transportation agencies, national laboratories, universities and 
research institutions. In partnership with the U.S. Government and each 
other, we are the wave front of technical and economic action on 
hydrogen in the U.S. and abroad--these are the people and organizations 
that are making great progress along a broad technical front, and will 
have a key role in implementing these technologies (please see the 
attached slides about the NHA).

    Hydrogen is our nation's premier energy destination. We'll need an 
army of dedicated and talented people to solve all the technical and 
market-building challenges along the way. The stakes are high, and 
we've got a lot of tough homework to do.
    The Committee has requested our views in several areas. We will 
comment on some of the key technical and deployment issues, and relate 
these to important provisions of the Energy Policy Act of 2005.

Energy Policy Act of 2005 (P.L. 109-58) and Fiscal Year 2007, 2008 
                    Budget Action

    Many of the provisions in EPAct 05 originated in S. 665, the 
Hydrogen and Fuel Cell Technology Act of 2005, introduced on March 17, 
2005. Written in concert with industry and the Senate's Hydrogen and 
Fuel Cell Caucus, it became the heart of the Hydrogen Title (VIII) in 
the Senate's Energy Bill, S. 10, and subsequently a substantial part of 
the hydrogen language negotiated in the Conference Committee. It was 
signed into law by the President on August 8, 2005. Significant 
sections of the Act's Vehicle and Fuels Title (VII) also deal with 
early market transition for hydrogen and fuel cells.
    Section 802 of the Act establishes the purposes of the Hydrogen 
Title:

          Enable and promote comprehensive development, 
        demonstration and commercialization in partnership with 
        industry

          Make critical public investments that build links to 
        industry and the research community

          Build a mature hydrogen economy that creates fuel 
        diversity in the massive U.S. transportation sector

          Create, strengthen and protect a sustainable energy 
        economy.

    In Titles VII and VIII, the Act clearly intends to accelerate the 
research, development and demonstration programs in DOE, makes the 
government a more durable partner in its industry relationships, gives 
permanent authorization to the hydrogen programs in DOE, broadens the 
Secretary of Energy's authorities and provides more than triple the 
resources to accomplish this. It builds on the strong foundations of 
DOE's prior work on hydrogen and the President's Hydrogen Fuel 
Initiative, which has planned to devote $1.2 billion to this work from 
2004 through 2008. The EPAct 05 authorizes $3.73 billion over Fiscal 
Years 2006 through 2011, and ``such sums as are necessary'' through 
2020 (please see the attached slides about the EPAct 05).
    The House recently passed H.R. 5427, the Energy and Water 
Development Appropriations Act for Fiscal Year 2007. It mirrors DOE's 
Budget Request for hydrogen--$246 million for those programs included 
in Titles VII and VIII (under the Energy Efficiency and Renewable 
Energy and Science offices of DOE).
    RD&D activity in the Government is fueled by these public 
investments. The level of funding requested by DOE is on a path 
established by the Hydrogen Fuel Initiative in early 2003. Much has 
changed since--by February 2003, we had already seen energy prices 
beginning their rise--the average world oil price was about $28/barrel, 
but by the end of May 2006 that price was nearly $64/b. The President 
and Congress have anticipated the need to seriously search for 
transportation fuel alternatives, but there is a policy lag in the 
hydrogen program--less than half (47.5 percent--$246 million) of the 
EPAct 05's authorized funding level of $518 million has been requested 
by DOE for FY 2007.

    Action  We don't want to see the many opportunities for enhancing 
DOE hydrogen technology programs to slip away at a crucial time in 
their history. Built on program success, Congress has given the 
Secretary extensive authority in the EPAct 05 to enhance Section 8o8 
demonstration programs, particularly with respect to learning 
demonstrations, broader vehicle/fuel supply systems (including 
community systems), and the ability to have results from demonstrations 
revise the direction of R&D projects. DOE is well into planning for the 
FY 2008 budget cycle--we would urge their program managers, with the 
support of the Committee, to utilize a much higher share of their 
budget authority, which grows from $517.5M in FY07 to $739.5M in FY08. 
Nearly 53 percent of this funding is for R&D, including basic science, 
which also needs to be expanded beyond its $50M in the current Energy 
and Water appropriation. There are also significant opportunities in 
Title VII (Vehicles and Fuels) to have federal and State agencies take 
a leadership role in purchasing stationary and portable fuel cells and 
hydrogen supply systems as early adopters. This could be coupled, for 
instance, with DOE's Clean Cities program to demonstrate real systems 
in the urban areas where the first commercial deployments of vehicle 
fleets is most likely.

Critical Technical and Economic Challenges

    In its pacesetting report, The Hydrogen Economy: Opportunities, 
Costs, Barriers and R&D Needs (April 2004), the National Academy of 
Sciences summarized their four most fundamental technological and 
economic challenges:

          Develop and introduce cost-effective, durable, safe 
        and environmentally desirable fuel cell systems and hydrogen 
        storage systems

          Develop the infrastructure to provide hydrogen for 
        the light duty vehicle user

          Reduce sharply the costs of hydrogen production from 
        renewable energy sources, over a time frame of decades

          Capture and store the carbon dioxide byproduct of 
        hydrogen production from coal.

    Storage  As the Committee has noted, adequate on-board storage is 
widely agreed to be a fundamental necessity for a successful light duty 
vehicle. Stationary storage can be just as important for the fueling 
stations supplying the vehicles. Much progress has been made on 
defining and resolving some of the storage issues since the Committee's 
last field hearing in 2002. Both on-board and stationary storage have 
seen considerable improvement, especially in concert with the industry/
DOE Technology Validation program.
    GM and Ballard, for instance, have greatly improved fuel cell power 
density--GM by a factor of seven in the last six years, while enhancing 
efficiency and durability and reducing the stack size. Ballard reduced 
the cost in four years by 80 percent to $103/kW, still about three 
times the DOE's 2010 goal of $30/kW to be competitive with current ICE 
powered cars, but on a path to achieve that goal. Durability increased 
ten-fold. Their work continues at an urgent pace.
    DOE and Department of Defense work, the President's Hydrogen Fuel 
Initiative of February 2003, and its support by industry and the 
Congress--all have led to more orderly program planning that identifies 
a wide range of alternative approaches to the materials and methods 
that could be used to store hydrogen. Improving the program management 
has led to measurable gains in storage performance (a summary 
description of the progress for 2005 is available on DOE's web site, 
www.hydrogen.energy.gov--the Annual Progress Report, pp. 459-462; see, 
also www.er.doe.gov for the DOE Science program, which has considerable 
work underway on fundamental science with regard to hydrogen storage).
    (Note: please see the attached slide from DOE comparing the 
relative performance of several storage methods: Hydrogen Storage 
Technologies, which shows storage capacity and costs.)
    From the graphs, it is clear that by the end of 2005, volumetric 
capacity (volume storage effectiveness) and gravimetric capacity 
(storage by weight) do not yet match the goals DOE has set for 2010 and 
2015. Neither has system cost reached the targets, but all the 2010 
goals are being approached in steady fashion. Can progress toward these 
goals be reached more quickly? We see real progress in storage, but 
believe that smart, full use of the increased resources for Fuel Cell 
Technologies (Sec. 805) included in the EPAct 05 could definitely 
improve program performance. We urge DOE to request full funding in 
their FY 2008 budget.
    Associated graphs show how the cost curve for proton exchange 
membrane fuel cells is dropping with steady research effort, and also 
how hydrogen cost goals for fuel cell vehicles relate to gasoline/
electric hybrids and gasoline/internal combustion engines, taking into 
account their relative efficiencies.
    Something missing from DOE's planning is direct combustion of 
hydrogen in advanced piston engines. This is a conscious program 
resources decision to focus on what they see as the highest payoff 
efforts. Two NHA members, BMW and Ford, have done considerable work 
with a variety of engines running on hydrogen. BMW plans to introduce a 
7 Series with a V-12 bi-fuel engine, perhaps before the end of the 
year. It has remarkable emissions, and excellent performance. We would 
like to see DOE devote some funding to direct combustion, as it offers 
much earlier market introduction and a bridge to the hydrogen economy 
through the establishment of hydrogen supply stations for a wider 
variety of vehicles and collocated stationary fuel cells for electrical 
power.

    A systems view  Focusing on storage and achieving a 300 mile range 
as if they were separate from other vehicle design parameters may limit 
the search for solutions within a whole vehicle context. It is 
important to remember that a modern gasoline-fueled automobile only 
utilizes less than 1.5 percent of the fuel's energy to propel the 
vehicle's payload. This leaves considerable room for improvement.
    Extra mass is just ballast. With more intensive application of 
modern aerospace composite materials and high strength, lightweight 
steels and alloys, coupled to the new flexibility in vehicle design 
that fuel cells and electric drive subsystems offer, a much more 
efficient vehicle package can be designed. Aircraft designers have been 
coping with these problems for a hundred years. A personal vehicle, 
however must be much cheaper and simpler.
    There is a significant interaction between mass and the size of the 
fuel cell, the amount of hydrogen stored on board, and range. Although 
DOE has advanced materials, vehicles and manufacturing projects, it is 
unclear whether these have achieved a high level of integration. Hence 
Section 808 (b) of the EPAct 05, Systems Demonstrations, that 
specifically combine learning demonstrations with optimized advanced 
composite vehicle design. DOE already plans for second generation 
vehicles in their Technology Validation learning demonstrations. Again, 
this is a real opportunity for DOE to utilize some of their new 
authority and resources in advancing the art of whole vehicle design. 
General Motors, for instance, has built several vehicles that 
incorporate not only advanced hydrogen fuel cell electric drive 
systems, but totally different platforms. As Amory Lovins has remarked, 
``Why waste a fuel cell on a primitive platform?''
    (Note: please see the attached charts from General Motors, which 
highlight what they see as the key goals and challenges.)
    Of some note is the GM chart encouraging DOE to strengthen their 
hydrogen program, a ``bold new approach.'' By simply ratcheting up 
Corporate Average Fuel Economy standards, and achieving this through 
the use of hybrids of various types we do save oil, but only delay 
solving the critical transportation fuel diversity/security problem. 
The conclusion here is that we already know enough about the potential 
of a hydrogen economy, and the stakes are so high that we need to focus 
on total solutions rather than partial ones.

Technical barriers in production and distribution--where will the H2 
                    Economy get built?

    The Committee is concerned about the technical barriers in 
production and distribution that would need to be overcome to permit 
hydrogen to fuel a quarter of the cars on the highway. With about 220 
million cars registered in the U.S., and about 17 million sold per 
year, it would take several years after a competitive vehicle was 
available for 25 percent of the existing fleet to be replaced. Since 
many owners have more than one registered vehicle, and there are 
somewhat fewer drivers than the entire vehicle stock, significant 
operational oil savings would occur well before 25 percent replacement. 
The National Academy study ``upper bound'' market penetration case 
assumes that competitive fuel cell vehicles enter the market in 2015 as 
part of the mix of hybrids and conventional internal combustion engine 
(ICE) powered vehicles. They estimate that 25 percent of the fleet 
would be replaced within 12 years, or by 2027.
    GM and others see that within 20 years the entire fleet could turn 
over with a superior group of products, which makes it possible to 
evolve hydrogen supply infrastructure along with vehicle production. In 
testimony before the Senate last July, GM, Shell and Ballard all 
concurred that we could see a manufacturable fuel cell vehicle by 2010-
2012 that would be competitive with those cars then for sale. GM's 
urgent target is to validate a fuel cell propulsion system by 2010 that 
has the cost, durability and performance of a mass produced internal 
combustion system.
    GM and others have estimated that an infrastructure for the first 
million vehicles could be created in the U.S. for $10-$15 billion, 
making hydrogen available within two miles for 70 percent of the U.S. 
population, and connecting the 100 largest U.S. cities with a fueling 
station every 25 miles. Others see broader deployment costing nearer 
$20 billion, not appreciably more than what the industry reportedly 
spends each year to simply maintain its current gasoline supply system.
    Substantial oil savings would result when 25 percent of the fleet 
is replaced, resulting in lessening peak refinery capacity needs, as 
gasoline demand begins to shrink. Since much of the current industrial 
hydrogen production is utilized by oil refineries in making modern 
gasolines, some of this could now become merchant hydrogen supply. The 
attached Shell Hydrogen slides are suggestive.
    The first of these shows a satellite picture of the U.S. at night, 
overlaid by 100 km circles surrounding today's refinery production 
sites for hydrogen. These are also the major urban, higher density 
gasoline demand areas--over 100 of them--meaning that at some 60 
percent of the U.S. population is within 100 km of a major source of 
hydrogen today. And these are where the introduction of hydrogen fuel 
cell vehicles would likely be focused--starting with fleets of 
municipal and commercial buses and delivery vehicles, and then evolving 
to fleets of cars and light trucks, and finally to consumers. We would 
expect stationary and portable fuel cells to lead these transitions in 
providing high quality supplemental and distributed power to businesses 
and municipalities, and the early establishment of hydrogen supply 
networks.
    Shell's next few slides discuss how a transition needs to be 
managed--in terms of key ``Lighthouse'' projects--those sized correctly 
and smart enough to provide a beacon to lead the way to something 
larger. A critical component is the quality of public/private 
partnerships--something the EPAct 05 stresses. The coordination of 
``Infrastructure Rollout'' is a critical aspect--if it is 
uncoordinated, excess retail and manufacturing capacity outruns demand, 
leading to high costs for hydrogen that further dampen demand and 
shrink profitability. They see that an excellent match between the 
rates of demand and supply growth optimizes investment in capacity, and 
a more orderly and rapid transition. Lighthouse Projects are the 
harbingers of commercial success, and primary showcases for how well 
public and private institutions cooperate in establishing the climate 
for growth--whether it be in North America, Europe or Asia.
    It is interesting to speculate on how the industrial base for a 
hydrogen economy might evolve. As a result of a study called for in 
Section 1821 of the EPAct 05, Overall Employment in a Hydrogen Economy, 
DOE will soon have underway an economic development analysis that looks 
at different transitions to varied forms of a hydrogen economy, to 
accompany other such work on market and technology transitions. It is 
expected that both new job growth and retention of existing jobs during 
a transformation like this would center on the supply chain for new 
vehicles, and much altered refinery and utility operations producing 
hydrogen. In addition, we would likely see considerable expansion in 
renewable energy production--both electricity and biofuels--in widely 
dispersed agricultural regions of the U.S. some distance from urban 
demand centers.
    Also, much of the hydrogen in the early years will likely be 
produced from widely distributed sources, using electricity off the 
existing grid or natural gas from the existing pipeline system. These 
distribution networks are large, reliable and reach all urban areas. 
The combined electrical grid is connected everywhere--as the Hydrogen 
Utility Group suggests, ``For decades, we have brought electrons to 
every home and business in the U.S.; why not protons?'' Their 
operations are well understood, and key investments already made. The 
smoothest stage of the supply transition will be made in this way.
    And since hydrogen does not lend itself to worldwide transport like 
oil and liquefied natural gas, it will not be as fungible 
internationally as oil--yielding domestic and regional markets where 
value can be based largely on market fundamentals and cost of 
production and transportation, unhooked from global volatility. This 
could also make the tools of government incentives--investment, 
production and use tax credits, loan guarantees, etc., more effective 
and predictable. Domestic production of hydrogen is the next wave of 
products for the energy industry, and promises considerable economic 
growth opportunities.
    Depending upon how existing manufacturing capacity is converted and 
preserved in traditional areas, the automobile supply chain might have 
more inherent flexibility in locating new and old operations. The 
advanced fuel cell vehicle could have only one-tenth as many moving 
parts as today's cars, SUVs and pickups, and much of the rest of the 
vehicle would be different. Transformation would happen everywhere. 
True worldwide markets will evolve for components and vehicles, and 
manufacturing capacity is more mobile than hydrogen production.
    Large export markets are expected to evolve for vehicles and 
components, and also for the technology surrounding hydrogen production 
and storage. Due to its particular appeal in improving the efficiency 
and shrinking the carbon footprint of conventional fuel cycles, 
hydrogen-related technologies will help create an even wider range of 
new export opportunities. International competition could be fierce.

Centralized and Distributed Hydrogen Production

    As noted above, the U.S. has some of the basic infrastructure 
already in place that could be utilized in transitioning to a hydrogen 
economy--plants near oil refineries that manufacture hydrogen from 
natural gas and some byproduct plant fuel, and the nationwide electric 
power grid. These are valuable and essential assets, but they will need 
to be adapted to new business models. Depending upon the highly varied 
and unique regional mix of generating capacity (coal, hydroelectric, 
nuclear, renewable), and how effectively they can grow, the relative 
production efficiencies and carbon footprint of the possible hydrogen 
fuel cycles will be quite different.
    No single production strategy will work for the U.S., and all 
feasible techniques and sources for making hydrogen will likely be 
needed--but more uniform emissions, costs and oil savings criteria can 
be applied. There may be an important new role for the Federal Energy 
Regulatory Commission (FERC), especially with regard to enabling rule-
makings for producing more renewable electricity if a national 
Renewable Portfolio Standard were to be adopted (in the Senate's Energy 
Bill, but defeated in the EPAct 05 Conference). Investment decisions 
selecting between alternative sources of hydrogen could vary 
considerably, and the Committee needs to encourage R&D investment that 
can make these distinctions.
    In shaping possible regulations for greenhouse gas management in 
the U.S., emission allowances and credit valuations could be designed 
to favor system design and technology deployment that minimize carbon 
emissions across the entire fuel cycle, not just for a particular 
energy sector. Proposals for investing in advanced low carbon 
technologies, funded by the sale and trade of carbon credits, might be 
structured to assist the most promising hydrogen supply and use 
technologies. The EPAct 05 Hydrogen and Incentives Titles are 
reasonably clear on the intent to select those public investments in 
technologies that optimize their carbon footprint. The carbon 
characteristics of particular projects funded through the Indian Energy 
Title are likewise important system performance criteria.

    Action  So, where does the key technical work need to be done, and 
what is government's role? The above discussion of the EPAct 05 
advocates fuller funding in FY08 of all the key components of the Act 
with regard to hydrogen and fuel cells for vehicles. The Act attempts 
to reach forward to give DOE the authorities it needs to be more 
aggressive in creating more technical solutions more quickly. Besides 
making the vehicle and drive package lighter, cheaper and more 
efficient, the supply infrastructure needs equivalent attention, and 
new legislation might be needed to help.

          Multiple sources of H2--the U.S. has enormous coal 
        reserves, but some reluctance to move quickly on solving its 
        fundamental problems at an equivalent scale. The EPAct 05 has 
        an excellent Coal Title, but little of it has been funded. 
        There needs to be some agreement forged on the scale of public 
        investment, including projects like that in Section 411, which 
        is a regional 200 mW Integrated Gasification Combined Cycle 
        (IGCC) facility that would make hydrogen and electricity, used 
        in a power park setting. Many unused opportunities exist in 
        Title XVII, Incentives for Innovative Technologies, (loan 
        guarantees) which could be applied very fruitfully in 
        combination with Title V, Indian Energy (which has its own loan 
        guarantee program), and Title VIII, Hydrogen. We need to build 
        flexibly sized, innovative commercial scale plants that match 
        the pace of the hydrogen technology program's accomplishments 
        with vehicles. Additionally, Title XVI, Subtitle A, National 
        Climate Change Technology Deployment, could readily be combined 
        with the Coal, Indian Energy, Incentives and Hydrogen Titles to 
        put some key projects in place that would provide substantial 
        learning and commercial possibilities.

          Although there is a uniform strategic plan for the 
        climate program in DOE and other agencies, there are a very 
        wide variety of projects across the government whose 
        effectiveness in actually solving critical problems with coal, 
        for instance, may be unlikely. It is unclear that the degree of 
        fragmenting allows critical focus on solving key public 
        problems, especially since they are located in so many separate 
        agencies. A critical review and redeployment could be useful.

          Very useful R&D can be planned at the front end of a 
        small commercial scale demonstration, encouraging an iterative 
        R&D evolution much like the Learning Demonstrations are 
        employed to revise R&D agendas in the H2 programs. Full scale 
        tests of new materials and processes could speed eventual 
        commercial deployment. We would include consideration of how 
        Title VI, Subtitle C, Next Generation Nuclear Plant Project, 
        could be enhanced.

          There are significant opportunities, for instance, 
        for advanced ceramic materials to be used in higher temperature 
        applications for carbon capture from advanced coal gasification 
        processes, and in nuclear hydrogen production. The American 
        Competitiveness Initiative in the DOE Science program has an 
        advanced materials program that could contribute fundamental 
        knowledge in these areas.

          DOE has been working to improve the efficiency and 
        durability of electrolyzers, which are a critical component of 
        early distributed generation strategies. More needs to be done 
        in the area of materials, processes, manufacturing and 
        validation.

          Renewable H2--again, less innovative use of the EPAct 
        05 authority shrinks our horizons. The public investment in 
        wind, biomass and solar production of hydrogen needs to grow, 
        both with regard to fundamental science and learning 
        demonstrations. For those technologies that have true 
        commercial appeal, the suite of authorities in the Incentives, 
        Climate Change, Indian Energy, and Electricity Titles offer 
        some intriguing possibilities for R&D focused on solving real 
        public problems. More exploratory work in the DOE Science 
        program could speed the availability of direct biological and 
        solar hydrogen production, perhaps teamed in their advanced 
        stages in Learning Demonstrations in specific regions and 
        cities.

          Electrical grid--sizable renewable resources are 
        often far away from urban load centers, but the Western Area 
        Power Administration (WAPA) could be a key factor in bringing 
        renewable electricity to high growth population centers in the 
        Southwest and California. Significant planning studies have 
        already been done on how to get more wind on the wires so 
        renewable electricity from the Northern Great Plains--where the 
        richest wind resources are--could be moved to high demand areas 
        for hydrogen.

          Important work needs to be done on much more 
        sophisticated control systems, composite materials and 
        processes for enhancing transmission efficiency and high 
        throughputs in corridors where there are significant siting 
        problems. Much could be done to improve the potential for 
        transmitting renewable energy to market.

          Management organization--The Committee is considering 
        versions of an ARPA-E bill, based on the quick and flexible 
        management often used in the Department of Defense by the 
        Advanced Research Projects Agency, and placing such an 
        organization within DOE. Working directly under the Secretary 
        of Energy, an ARPA-E would be able to identify promising 
        technologies in an R&D stage, and nurture them through 
        demonstrations and early market acceptance. They would have 
        expedited personnel and procurement authorities, and be able to 
        integrate all their necessary technical authorities into a 
        single management structure. For instance, in the above 
        examples of combining multiple authorities from the EPAct 05, 
        it is unlikely that a traditional federal agency structure 
        could accomplish blending the necessary functions, because they 
        are often assigned to completely separate programs whose 
        cooperation is incidental.

          Some have described the quest for a hydrogen economy 
        as needing an Apollo or Manhattan Project's urgency--symbolic 
        models for sustained high levels of funding and commitment to 
        results. An ARPA-E for DOE could do that--placing all hydrogen 
        and carbon reduction enabling work under single directorates, 
        and holding them to high standards of performance until 
        critical results are achieved.

    We greatly appreciate the opportunity to contribute to a discussion 
that is critical to our collective future. The National Hydrogen 
Association looks forward to working with the Committee in shaping and 
achieving our common goals.



                      Biography for Jerome Hinkle

    Vice President for Policy and Government Affairs, National Hydrogen 
Association. During 2003 to early 2006, Mr. Hinkle was a senior advisor 
to U. S. Senator Byron Dorgan on a Brookings Fellowship from the 
Department of Energy. His work focused on energy and environmental 
policy, especially with regard to the various energy bills considered 
by the Congress from 2003-2005. He was responsible for helping form and 
manage the Senate's Hydrogen and Fuel Cell Caucus, a hydrogen industry 
working group and drafting and negotiating much of the hydrogen 
legislation in the Energy Policy Act of 2005. Besides hydrogen, he 
worked extensively on other titles of the Act, including Energy 
Efficiency, Coal, Indian Energy, and Vehicles and Fuels.
    He served for 28 years at DOE and EPA in various capacities, 
including prototype engines and alternative fuels, environmental 
policy, international energy security and most recently as the senior 
economist for the U.S. Naval Petroleum Reserves. His interests include 
carbon management and renewable energy. His career also includes 
aerospace engineering and research physics, with a varied education--
degrees in mathematics and physics from Miami University and public 
policy from the University of Michigan, with extensive graduate work in 
international politics and sociology.

    Chairwoman Biggert. Thank you. And I'm sure we'll get to 
some of the other things in the questions.

   STATEMENT OF DR. DANIEL GIBBS, PRESIDENT, GENERAL BIOMASS 
                            COMPANY

    Dr. Gibbs. Chairman Biggert and Mr. Honda and Mr. Lipinski 
thanks for inviting me today.
    Ethanol's here today and it fits our current 
infrastructure. The United States ethanol industry today 
produces about four billion gallons of fuel ethanol per year 
from corn grain. About 20 new plants will come on line this 
year adding another one billion gallons of capacity, and 
another billion is planned. Current ethanol production is about 
300,000 barrels per day.
    All United States' automobiles and light trucks can use 
ethanol today at 10 percent or E10 without any modification. In 
addition, about five million flex-fuel vehicles can use E85 or 
85 percent ethanol gasoline or any mixture in between. So the 
infrastructure is there.
    Flex-fuel technology is cheap. My figures of about $200 per 
car. Eight major auto manufacturers currently offer E85 
vehicles.
    To date the flex-fuel technology has been offered primarily 
in larger vehicles, I believe in order to obtain Clean Air 
credits. What we need to do is to put that technology together 
with hybrid technology, in my view, to give us E85 hybrids 
which could in principle get hundreds of miles per gallon of 
gasoline with the rest coming from ethanol.
    The central problem then becomes how do we make enough 
ethanol and other biofuels to fill the demand. The national 
necessity and desirability of a large cellulosic ethanol 
industry is not yet widely recognized. I believe there's a lack 
of national urgency to make it happen in the time frame needed.
    To be clear, we need to make not only ethanol as a 
substitute for gasoline, but we need to make all the other 
hydrocarbons for diesel fuel, jet fuel and for industrial 
chemicals and plastics. The only realistic nonfossil source for 
these materials is biomass in all its forms. These include 
energy crops like switchgrass, agricultural waste, paper from 
municipal solid waste, which is about 40 percent paper, forest 
and wood waste. If we use these sources, we'll provide a more 
diversified fuel and chemical base and create thousands of 
jobs.
    The United States has substantial cellulosic resources, as 
does Canada, which can be developed if determination resources 
are there.
    Let me just say a quick word about carbon. Carbon is not a 
bad thing. Carbon enables us to make large molecules for liquid 
fuels like gasoline, jet fuel and diesel which have a high 
power density. That's why we use them, that's why we make them. 
The question is where does that carbon come from? Does it come 
from beneath the ground from Saudi Arabia at high cost or does 
it come from domestic biomass? And that's a choice that is 
before us. So carbon is not a bad thing. Carbon from the air is 
a good thing. Carbon from beneath the ground is going to cause 
us problems in the future.
    We're asked about the barriers to the cellulosic ethanol 
industry. Ironically, the great success of the corn ethanol 
industry constitutes a barrier to the development of the next 
phase for the cellulosic industry. And I hoped to show a slide, 
by the way, in the question and answer period.
    The corn is cheap right now. Ethanol plants cost only a 
$1.50 per annual gallon of capacity. In contrast cellulosic 
ethanol plants with current technology cost about six times 
that much, and that is a severe barrier to the introduction of 
that technology.
    In limited time, I won't go into the technology and 
logistical hurdles that are listed in the testimony, again just 
to give a couple of overview numbers here. The current corn 
crop is about 10 or 11 billion bushels a year, which is divided 
among ethanol, food products, animal feed, exports and 
carryover. Our probable limit for cellulosic ethanol or, I'm 
sorry, corn ethanol is about 11 billion gallons, which would be 
six percent of our 140 billion gallon gasoline supply. So we 
must go to cellulosic ethanol.
    Biodiesel is a great fuel. This year it's only going to 
produce about 150 million gallons verses four billion for 
ethanol.
    Let me just conclude by suggesting that there are a number 
of challenges. I think we need to collaborate with other 
countries. More than half the knowledge base is developed 
outside the United States. We need to collaborate with Canada. 
They've got a quarter of the boreal forest in the world. We 
need to have much more support for small business. And as 
indicated in the testimony, the support--federal support right 
now is very small.
    We need to train people for this new industry.
    And thank you.
    [The prepared statement of Dr. Gibbs follows:]

                   Prepared Statement of Daniel Gibbs

1.  How widely available is ethanol today, and how many cars can use 
it?

    The United States ethanol industry produces about four billion 
gallons of fuel ethanol per year from corn grain. About 20 new ethanol 
plants will come online in 2006, adding another one billion gallons of 
capacity. Current ethanol production is about 300,000 barrels/day.
    All U.S. automobiles and light trucks can use ethanol at 10 percent 
(E-10) without modification. In addition, about five million flex-fuel 
vehicles (FFVs) can use 85 percent ethanol (E85), gasoline or any 
mixture in between.
    Flexfuel technology is cheap, about $200 per car, consisting of 
improvements to the fuel injector, gas line and gas tank. Eight major 
auto manufacturers currently offer E85 vehicles. Ethanol has about two-
thirds the energy per gallon (76,100 Btu/gal) as compared to gasoline 
(113,537 Btu/gal), but a much higher octane (100-105). To date, flex-
fuel technology has been offered primarily in larger vehicles to obtain 
Clean Air credits. If flex-fuel technology and E85 were combined with 
hybrid technology, all available today, it would be possible to make 
E85 hybrids which could get hundreds of miles per gallon of gasoline, 
the rest coming from ethanol.

2.  What are the obstacles to expanding the variety of feedstocks 
available for conversion to ethanol? Are these hurdles mainly market 
failures and other economic barriers or are they technical in nature?

    The national necessity for a large cellulosic ethanol industry is 
not yet widely recognized. There is a lack of national urgency to make 
it happen in the time frame needed. High oil prices and global warming 
have come upon us rather suddenly, and both markets and government 
institutions are slow to react.
    Commercialization of any new technology, and building new 
industries takes time and investment. Many different technical elements 
must be discovered, tried and perfected in a context which results in 
profitable businesses. As an example, it has taken the corn ethanol 
industry about 30 years to develop from small experimental plants to 
today's situation of 25-50 percent growth over the next year or so from 
the current four billion gallons/year.
    Ironically, the current success of the corn ethanol industry and 
the low price of corn are barriers to the investment and risk-taking 
needed to jump-start the new cellulosic ethanol industry. Corn is 
currently cheap ($2.50/bushel), and the engineering technology for corn 
ethanol plants is so good that new plants cost only $1.50 per annual 
gallon of capacity. In contrast, cellulosic ethanol plants using 
current technology cost about six times that much for the same ethanol 
capacity (Iogen estimates).
    Specific technical and logistical hurdles include:

        (1)  transportation of large volumes of low density biomass, 
        e.g., 27 truckloads of switchgrass to make one truckload of 
        ethanol;

        (2)  the need for safe, rapid pretreatments to process large 
        volumes of raw biomass into cellulose and other components;

        (3)  large quantities of cellulase and other enzymes to convert 
        cellulose to glucose for making ethanol. For example, a single 
        25 million gal/yr. ethanol plant would require 2,750 tons of 
        cellulase enzymes. Adding just one billion gallons of 
        cellulosic ethanol would require 40 such plants, with a total 
        annual cellulase protein requirement of 110,000 tons/yr. For 
        comparison, all U.S. industrial enzymes in 1994 amounted to 
        about half that, 60,000 tons/year.

        (4)  new ways to solve the conflict between the need to build 
        large plants for economies of scale, and the opposing need to 
        transport low-density biomass over short (<30-40 mile) 
        distances. Developing technology to enable smaller, cheaper 
        cellulosic ethanol plants would have a large impact on lowering 
        ethanol costs and promoting the widespread local development of 
        biomass resources.

3.  What is the largest technical hurdle for each of the following 
fuels: Corn ethanol, biodiesel, cellulosic ethanol? Does the current 
federal research agenda adequately address these technical barriers? 
What actions would most rapidly overcome these technical barriers?

    Corn ethanol can be considered a fairly mature industry, in that 
there is good technology, reliable and experienced engineering firms 
and plant operators, and plenty of available capital for expansion. The 
problem for corn ethanol will be that its success will eventually raise 
the price of corn, and reach the limits of available corn supply. A 
typical U.S. annual corn crop is 10-11 billion bushels/year, divided 
among ethanol, food products, animal feed, exports and carryover. A 
probable limit for the ethanol fraction from corn is about four billion 
bu/yr., which would produce (2.8 gal/bu) about 11 billion gallons of 
ethanol, or about six percent of our current 140 billion gal gasoline 
supply.
    Biodiesel is a good fuel with standards, great customer acceptance 
and a small but growing production industry. That industry will double 
production in 2006 to 150 million gallons. The main problem for 
biodiesel is limited feedstock. Biodiesel is made from animal fat or 
vegetable oil feedstocks including soybean oil, rapeseed (Canola) oil, 
and waste cooking grease. The fats or triglycerides are combined with 
an alcohol, usually methanol or ethanol, to make biodiesel and 
glycerol. Because the feedstocks come from food products, they are 
usually expensive or in limited supply. Given the demand for biodiesel, 
it would make sense to support federal and private research to greatly 
expand the production of plant oils, probably through biotechnology.
    Cellulosic ethanol is more difficult to make than corn ethanol, 
because cellulose and biomass are structural materials, unlike corn 
starch which is a food material. The components of biomass: cellulose, 
hemicellulose and lignin, have evolved to resist breakdown for many 
years. However, the abundance of plant matter has driven the evolution 
of many microorganisms and genes dedicated to breaking down cellulose 
and extracting the glucose and other sugars. We can harness these genes 
and organisms to make a variety of petroleum substitutes from biomass, 
as part of the growing field of industrial biotechnology.
    The chemistry, engineering and biotechnology needed to build this 
industry are complex.
    Some specific technical hurdles were listed in response to question 
2. Researchers at federal labs, notably NREL, ORNL and NCAUR, and at 
U.S. universities have addressed many of these issues over the years.
    Much work has been done outside the U.S., in Canada, Sweden and 
Japan among other countries. More than half of the necessary knowledge 
base for biofuels has been and continues to be developed outside the 
United States. We need to find ways to use the best available 
technology from around the world, and not assume that our federal labs 
can provide all the answers, capable and dedicated as they are. We also 
need to foster training and international collaboration in developing 
alternatives to oil. Non-OPEC countries including the United States 
have a common need to develop cheap domestic fuel sources, or else face 
increasing economic costs and competition for scarce oil, as well as 
the effects of global warming.
    Building a large and successful biofuels industry in the United 
States will require a sustained long-term commitment and adequate 
funding on the federal side. We need to leverage federal funds by 
making more federal support available to small business and 
commercialization efforts which can then attract venture capital and 
other nonfederal investment. In this way, we will build a healthy 
competitive industry with many players and different approaches.
    DOE has wisely supported a number of important areas, including 
pretreatment research, enzyme development, and genomics, but still has 
a top-down central planning approach which needs to be augmented by 
more support of other innovative approaches developed outside the 
central plan. As an example, in 2005 the USDA/DOE Biomass Research and 
Development Initiative (BRDI) program received over 600 applications 
for $15 million of funding, or about 12 grants. The DOE SBIR program 
likewise offers minimal support for innovative projects in cellulosic 
ethanol and is inadequately funded. Outside grants in the range of 
$300,000 to $3 million would fill an important gap in enabling startups 
to demonstrate new technological approaches, and thereby attract the 
investment necessary for commercialization.

4.  Some advocates suggest that biofuels should substitute for 25 
percent or more of the Nation's transportation fuel use. Are there 
market or other barriers that policy might overcome to accelerate 
realization of the 25 percent biofuels goal?

    As indicated above, we need to make this a national priority. The 
U.S. has achieved economic success in part by using large amounts of 
fossil fuels per capita. The downside is that we are now particularly 
vulnerable to price increases and supply disruptions, as well as 
incurring an increasing energy trade deficit.
    To be clear, we need to make not only ethanol as a substitute for 
gasoline, but all the other hydrocarbons for diesel fuel and jet fuel 
(Rostrup-Nielsen, 2005), and for industrial chemicals and plastics. The 
only realistic non-fossil source for these materials is biomass in all 
its forms. These include energy crops like switchgrass (Gibbs, 1998; 
Greene et al., 2004), agricultural wastes, paper from municipal solid 
waste, and forest and wood wastes. Using all of these sources will 
provide a more diversified fuel and chemical base, and create many 
thousands of jobs. The United States has substantial cellulosic 
resources which can be developed if the determination and resources are 
there (Perlack et al., 2005).
    Federal support for university and private R&D is vital, as 
indicated above. Commercialization, pilot, and demonstration plant 
subsidies are needed to move toward the goal of smaller and cheaper 
cellulosic ethanol plants. The level of public and private funding 
should over time reflect its importance to the United States, which is 
on a par with curing cancer and the Apollo program. In this case, there 
will be substantial private funding, once initial efforts begin to show 
some success. This is part of the ``cleantech'' investment sector which 
is growing rapidly.
    Another barrier not discussed yet is developing trained people. 
Biomass research has heretofore been an arcane area pursued by a small 
number of scientists and engineers in academic and government labs. As 
with the biotechnology industry, growth brings the need for many people 
with specialized knowledge in the areas of biomass and biofuels. Dr. 
Lee Lynd et al. (1999) have recommended graduate programs in 
biocommodity engineering, including biotechnology, process engineering, 
and resource and environmental systems. Their paper provides a good 
overview of this emerging industrial area. Graduate and postdoctoral 
fellowships for study abroad in these areas would also be helpful in 
accessing the knowledge resources of other countries.

References:

Gibbs, D., 1998. Global Warming and the Need for Liquid Fuels from 
        Biomass. BioEnergy '98, Madison, WI, pp. 1344-1353.

Greene, N. et al., 2004. Growing Energy: How Biofuels Can Help End 
        America's Oil Dependence. Natural Resources Defense Council. 
        www.nrdc.org/air/energy/biofuels/contents.asp

Lynd, L.R., Wyman, C.E., and Gerngross, T.U., 1999. Biocommodity 
        Engineering. Biotechnol. Prog. 15:777-793.

Perlack, R.D. et al., 2005. Biomass as Feedstock for a Bioenergy and 
        Bioproducts Industry: The Technical Feasibility of a Billion-
        Ton Annual Supply. ORNL/USDA. feedstockreview.ornl.gov/pdf/
        billion-ton-vision.pdf

Rostrup-Nielsen, J.R., 2005. Making Fuels from Biomass. Science 
        308:1421-1422.

General Biomass Company

    General Biomass Company is an Illinois corporation founded in 1998 
to develop and commercialize biomass technologies. We develop 
biotechnology for renewable fuels, with a focus on cellulase enzymes 
which are essential for the conversion of abundant cellulose wastes and 
biomass crops to low-cost glucose for the production of cellulosic 
ethanol, other biobased chemicals, and plastics.
    General Biomass Company is a member of the American Coalition for 
Ethanol and the Illinois Biotechnology Industry Organization.



                       Biography for Daniel Gibbs

    Daniel Gibbs is President of General Biomass Company. His research 
interests are in cellulase enzymes, paper waste utilization and 
cellulosic ethanol production. He has over 20 years of experience in 
basic research in biological sciences at Stanford, the University of 
Washington, and DePaul University, and five years of experience in 
pharmaceutical and diagnostic R&D at Abbott Laboratories, including new 
technology development and evaluation, patent analysis and evaluation, 
bioinformatics and software development. He is the author of nine 
scientific papers including ``Global Warming and the Need for Liquid 
Fuels from Biomass,'' presented at BioEnergy '98, a paper on ethanol 
from switchgrass, a renewable energy crop. He was an invited speaker on 
biomass ethanol at the American Coalition for Ethanol annual meeting. 
At Abbott Labs, he worked in Pharmaceutical Division R&D on 
bioinformatics, genomics and gene sequence databases, and in 
Diagnostics Division R&D on software and patent support for process 
control of fluidic and chemical systems. He was previously Associate 
Professor of Biological Sciences at DePaul University and received an 
NIH grant for research on insect neuroendocrinology. He was an NIH 
Postdoctoral Fellow at the University of Washington and an NIH 
Predoctoral Fellow at Stanford. Dr. Gibbs received a B.A. in Biology 
from Wesleyan University and an M.A. and Ph.D. in Biological Sciences 
from Stanford University.

    Chairwoman Biggert. Thank you very much, Dr. Gibbs. Mr. 
Lovaas.

  STATEMENT OF MR. DERON LOVAAS, VEHICLES CAMPAIGN DIRECTOR, 
               NATURAL RESOURCES DEFENSE COUNCIL

    Mr. Lovaas. Thank you. Chairman Biggert, Ranking Member 
Honda, thanks for the opportunity to testify today.
    America's addicted to oil, the President said in his State 
of the Union. Transportation drives this fact, accounting for 
more than two-thirds of U.S. oil demand. Our cars and trucks 
specifically account for 40 percent of total demand. If trends 
continue, our thirst for 21 million barrels a day of oil will 
grow by a third by 2030. Consequences include dependence on 
hostile regimes, a huge transfer of wealth overseas and global 
warming pollution.
    Drivers and consumers on a roll price roller coaster. Not 
since marketplace turmoil in the '70s have prices increased as 
much as the early 2000's. Prices at the pump are approaching 
all time highs.
    The EIA confirmed that high prices are here to stay in 
their 2006 Outlook. Their reference case projects that oil 
prices will drop from $70 levels of recent months to $47 in 
2014 only to increase to $54 per barrel, $21 higher than their 
2005 Outlook by 2025.
    The last time prices spiked like this the effect was 
profound as described in a recent report by auto analyst Walter 
McMannis. Drivers began shunning large gas guzzling cars made 
by American automakers in favor of fuel efficient cars built in 
Japan and Germany. Between 1978 and '81 U.S. automaker sales 
dropped by 40 percent to a decline of about 5.2 million units. 
The second oil shock came six years after the first shock which 
prompted Congress in 1975 to adopt fuel economy standards. This 
law required a doubling in passenger car efficiency to 27.5 mpg 
between 1975 and '85. Some argue that the United States' big 
three share loss in this period would have been even worse had 
they not been forced to begin building at least some more fuel 
efficient cars to comply with the new law.
    History is beginning to repeat itself, unfortunately. 
Domestic automakers are suffering due to over reliance on fuel 
inefficient vehicle offerings. GM sales slide 12 percent in May 
compared to a year ago. The collective Detroit automakers share 
drooped to 52.9 percent. Meanwhile, they may only account for 
one to two percent of total United States' sales, but hybrid 
sales have doubled or nearly so for every year since the turn 
of the century. A variety of such technologies can break our 
old addiction.
    First, off-the-shelf improvements to conventional vehicles 
such as four valve cylinders, variable valve timing, automatic 
engine shutoff, slicker materials for reduced drag, better 
tires and five and six-speed transmissions. The cumulative 
effect in an average SUV would yield at least a one-third 
improvement in fuel economy performance. So that's conventional 
technologies.
    Hybrid electric vehicles, hybrids fueled by electricity and 
gasoline. They run the gambit from mild hybrids to full ones. 
Although costs of the technology have come down since the first 
one was unveiled in 1999, there is still a costly proposition. 
However, a recent analysis found that $3 per gallon changes 
everything. Opting for more efficiency is nearing cash flow 
neutrality for consumers. That's good news.
    Three. Flex-fuel vehicles. They ran on alcohol fuel and/or 
gasoline. Alcohol fuel being a fuel like ethanol. This adds 
modest expense to manufacture of automobiles. One estimates 
places per vehicle cost at a modest $100 to $200. Draw backs 
include the fact that blending ethanol in low proportions to 
gasoline increases smog forming pollution. Ethanol also has 
lower energy content so for it to be a cost effective 
alternative, it must be at least 25 percent cheaper than 
gasoline.
    Also, less than 2.6 percent of American autos are flex-
fueled and there is a infrastructure lag that's even great. 
Since 700 stations offer ethanol, less than one-half of one 
percent of gas stations.
    Four, plug-in hybrids. Rely more heavily on electricity as 
a fuel, although they can also run on gasoline or both alcohol 
fuel and gasoline if they're flex-fueled, too. Batteries remain 
expensive and have limited ranges. A hybrid might cost as much 
as $4,000 more than a similar conventional vehicle. A plug-in 
with a range of 20 miles could cost $6,000 more. And one with a 
range of--20 that's 20 miles actually. One with a range of 60 
miles could cost $10,000 more. Now the limited range itself may 
not be an issue since 31 to 39 percent of annual miles driven 
are for the first 20 miles of daily driving.
    Plug-ins don't suffer from the chicken and egg problem that 
plagues hydrogen. They are powered by the existing electrical 
grid. So there are advantages. And if they use surplus power or 
the grid is powered by clean renewables, pollution would drop.
    So, in summary, to set America free of oil we must invest 
in all of these technologies, a message you've heard before. 
Consumers appreciate choices and the cumulative effects are 
likely to be great. For example, as Dan mentioned, the 
combination of an E85 FFV and a hybrid vehicle like the new 
Ford Escape E85 FFV.
    Two of the best ways to make sure that these choices are 
available to consumers are to:

        1. LEnact H.R. 4409, the Fuel Choices for American 
        Security Act, sponsored by Representative Kingston, 
        Engel and Saxton; and

        2. LTo enact the Boehlert Markey Amendment to increase 
        fuel economy performance.

    These bills boost new technologies like the ones I 
described and they're effective policy responses to oil 
addiction.
    Thank you.
    [The prepared statement of Mr. Lovaas follows:]

                   Prepared Statement of Deron Lovaas

    ``America is addicted to oil,'' the President said in his State of 
the Union. He was right. We're hooked. Why is that the case?
    Transportation drives our addiction. For starters, we're taking 
more trips. More Americans rode trains and buses 80 years ago, and 
transit use spiked during World War II. Then it plummeted, leveling off 
at less than half of its peak level. Meanwhile vehicle miles traveled 
climbed steadily, and are at the three trillion per year mark.\1\
---------------------------------------------------------------------------
    \1\ Based on Federal Highway Administration and American Public 
Transportation Association figures.
---------------------------------------------------------------------------
    Increasing travel by private vehicle is exacerbated by two other 
trends: An increasingly wasteful fleet of cars and trucks and pitifully 
small use of alternatives to fuels made from oil.
    Thanks largely to the proliferation of larger vehicles--
particularly SUVs--improvements in fuel economy of the fleet stalled in 
1988. The largest recent jump in performance happened in the late 70s, 
driven by policy and consumer choices in reaction to embargoes and 
price runups.\2\
---------------------------------------------------------------------------
    \2\ U.S. EPA, ``Light-Duty Automobile Technology and Fuel Economy 
Trends: 1975 Through 2003.''
---------------------------------------------------------------------------
    The third factor is alternative fuel use, or rather non-use, in 
transportation. We fill our tanks with fuel, and 97 percent of the time 
it's a petroleum-derived liquid, mostly gasoline.
    Meanwhile, domestic production peaked and has been declining 
steadily since 1970. Currently, we produce about 8.9 million barrels a 
day but that's only enough to meet about 40 percent of America's daily 
consumption of 21 million barrels daily.\3\
---------------------------------------------------------------------------
    \3\ Energy Information Administration (EIA), Department of Energy.
---------------------------------------------------------------------------

The Oil Price Roller Coaster

    Not since the embargo and marketplace turmoil in the 1970s have 
prices increased as much as in the early 2000s. In fact, gasoline 
prices are approaching all-time highs (see graph below).



    Underpinning soaring prices are the oil markets, as shown in the 
graph below.



    The fundamentals underpinning the oil price trends are described in 
a recent report by NRDC, the Office for the Study of Automotive 
Transportation and the University of Michigan Transportation Research 
Institute:\4\
---------------------------------------------------------------------------
    \4\ ``In the Tank: How Oil Prices Threaten Automakers' Profits and 
Jobs,'' July 2005.

         Most analysts agree that market fundamentals of high demand 
        and limited supply, and not speculation or market hysteria, are 
        the primary reason for today's high oil prices. These prices 
        can be explained, in part, by explosive growth in oil demand, 
        especially from China. Oil demand has grown a robust five 
        percent since 2003, despite a doubling of oil prices during 
        that period. It appears likely that increased global oil demand 
        and tight global oil supplies will keep fuel prices high for 
---------------------------------------------------------------------------
        the next several years.

         There is little spare oil production capacity to cushion a 
        sudden loss in supply and the mix of easily extractable crude 
        oil is moving away from ``light, sweet'' toward more ``sour'' 
        grades that fewer refineries can handle. Considering these 
        factors, oil prices may abruptly jump even higher, as happened 
        during the first two oil crises of 1973-75 and 1979-81. But 
        unlike these last two oil crises, important oil market 
        fundamentals could favor a higher price lasting for much 
        longer--and perhaps becoming a permanent feature of the 
        environment.

         One reason we can expect sustained high oil prices is that we 
        have limited spare capacity. Historically, producers were 
        accused of holding back supplies when prices rose. But most 
        industry experts agree that the Organization of the Petroleum-
        Exporting Countries (OPEC) and other suppliers are now pumping 
        at or near the upper limits of their capability. Indeed, there 
        are concerns that rapid exploitation degrades the long-term 
        viability of some oil fields.\5\ Spare capacity, often used to 
        cushion oil price spikes, is essentially gone.
---------------------------------------------------------------------------
    \5\ Simmons, Matt. Twilight in the Desert: The Coming Saudi Oil 
Shock and the World Economy, John Wiley & Sons (2005).

    The Energy Information Administration (EIA) confirmed that high 
prices are here to stay in the Annual Energy Outlook 2006 (AEO 2006). 
The reference case projects that oil prices will drop from the $60-$70 
levels of recent months to $47 in 2014, only to increase to $54 per 
barrel--$21 higher than the 2005 outlook--in 2025. And the high price 
case actually flirts with the $100 per barrel level in 2030.\6\
---------------------------------------------------------------------------
    \6\ EIA, AEO 2006.
---------------------------------------------------------------------------

Deja vu All Over Again: Prices Affecting Auto Sales

    Of course, price fluctuations are not a new thing. The last time 
oil prices leapt to this level the effect was profound, as described 
again in the ``In the Tank'' report:

         [D]rivers also began shunning large, gas guzzling cars made by 
        American automakers in favor of fuel-efficient cars built in 
        Japan and Germany. Between 1978 and 1981, U.S. automaker sales 
        dropped by 40 percent, a decline of about 5.2 million units.\7\ 
        The second oil shock came six years after the first shock, 
        which Congress in 1975 to adopt fuel economy standards (under 
        the Energy Policy and Conservation Act of 1975, known as 
        ``EPCA''). This law required a doubling in passenger car 
        efficiency to 27.5 mpg between and 1985. Some argue that the 
        U.S. Big Three's share loss in this period would have been even 
        worse had they not been forced to begin building least some 
        more fuel-efficient cars to comply with the new law.
---------------------------------------------------------------------------
    \7\ The second oil shock came six years after the first shock, 
which Congress in 1975 to adopt fuel economy standards (under the 
Energy Policy and Conservation Act of 1975, known as ``EPCA''). This 
law required a doubling in passenger car efficiency to 27.5 mpg between 
and 1985. Some argue that the U.S. Big Three's share loss in this 
period would have been even worse had they not been forced to begin 
building least some more fuel-efficient cars to comply with the new 
law.

         Employment plunged along with automobile sales. It dropped 30 
        percent from 1978 to 1982, for a total loss of more than 
        300,000 jobs in direct auto and part manufacturing jobs--and 
        even more jobs were lost if auto-related jobs are considered. 
        And the Detroit Big Three suffered record losses. In 1980, GM 
        lost $762 million, Ford lost $1.7 billion, and Chrysler lost 
        the most, $1.8 billion. Chrysler's situation was so bad that in 
        1979 Congress agreed to bail out the company with $1 billion in 
        loan guarantees.\8\
---------------------------------------------------------------------------
    \8\ Doyle, J., Taken for a Ride, the Tides Center, 2000, p. 173-4.

         Worse, when gasoline prices returned to pre-shock levels, U.S. 
        automakers failed to regain their lost market share in 
        passenger cars. Indeed, the three periods of sharpest growth in 
        import market share, 1973-75, 1979-81, and 2003-present, 
        coincide precisely with the largest increases in per gallon 
---------------------------------------------------------------------------
        gasoline prices.

    History is beginning to repeat itself. On the one hand, sales of 
larger vehicles, like the overall economy, have been remarkably 
resilient in the face of high prices: In 2003, the share of sales for 
large light-duty vehicles was 73.3 percent and it edged down slightly 
to 73.1 percent in 2005.\9\
---------------------------------------------------------------------------
    \9\ Ward's Automotive Reports, 2003-2006, monthly.
---------------------------------------------------------------------------
    But slicing the data more finely yields a fundamental shift in auto 
sales. Based on data from the Planning Edge, the graph below shows 
tremendous growth in the crossover utility vehicle segment, while large 
SUV sales took a hit in 2005.



    And while they only account for one to two percent of total U.S. 
sales, the other trend that has received a great deal of press 
attention is soaring sales of hybrid-electric vehicles. In fact, hybrid 
sales have doubled or nearly so every year since the turn of the 
century:



Biofuels

    Biofuels are liquid, alcohol fuels derived from plant matter. The 
U.S. primarily uses ethanol using corn as a feedshock. While our 
transportation sector is 97 percent dependent on petroleum-derived 
fuels--especially gasoline--ethanol makes up for the remainder.
    And it has been growing rapidly, as shown by the chart below (in 
millions of gallons per year of corn ethanol):



    Beyond corn, the next generation of biofuels is being developed. 
Specifically, ethanol derived from the cellulose of plants offers 
promise. The President referred to this emerging technology in his 2006 
State of the Union speech when he talked of making ethanol from 
switchgrass. As explained in the NRDC report ``Growing Energy'':

         Cellulosic biomass is basically all the parts of a plant that 
        are above ground except for the fruit and seeds, such as corn, 
        wheat, soybeans, and rapeseed. Technically, cellulosic biomass 
        is the photosynthetic and structural parts of plant matter. 
        Other examples of cellulosic biomass include grass, wood, and 
        residues from agriculture or the forest products industry. Most 
        forms of cellulosic biomass are composed of carbohydrates, or 
        sugars, and lignin, with lesser amounts of protein, ash, and 
        minor organic components. The carbohydrates, usually about two-
        thirds of the mass of the plant, are present as cellulose and 
        hemicellulose--thus the term cellulosic biomass.\10\
---------------------------------------------------------------------------
    \10\ Greene, et al., ``Growing Energy: How Biofuels Can Help End 
America's Oil Dependence,'' December 2004.

    Advantage of this process and its reliance on feedstocks besides 
corn include dramatic increases in energy and environmental benefits, 
including big reductions in carbon dioxide emissions.

Heartening Trends, But Slow Progress Overall

    In percentage terms trends in hybrids and biofuels are impressive. 
But in absolute terms they barely make a dent in our oil addiction. A 
higher price plateau notwithstanding, current demand of about 21 
million barrels per day is projected to increase by more than a third 
by 2030.\11\
---------------------------------------------------------------------------
    \11\ EIA AEO 2006.
---------------------------------------------------------------------------
    This has serious economic consequences. First, we're already 
transferring a huge amount of wealth overseas thanks to a ballooning 
trade deficit. The economic costs would be steeper, if not for the fact 
that our policy response to the energy crisis in the '70s helped to 
drive the oil intensity (a measure of barrels used to produce GDP) of 
our economy down by about one-third, providing better insulation from 
today's high prices. This is why demand has barely slackened and the 
economy hasn't slipped into recession.
    However, these gains have slowed dramatically in recent years. It's 
clear why this is so in transportation--stagnating fuel economy and 
increasing travel. For electricity, it's due to the fact that there's 
just not much left to shift--we have pretty much weaned that sector off 
oil. This means that our economic shock absorbers are wearing thin once 
more.
    Spiky, high prices have been a hardship for U.S. consumers, but the 
pain is more deeply felt in the developing world. According to the 
World Bank, a sustained oil price increase of $10 per barrel will 
reduce GDP by an average of about 1.5 percent in countries with per-
capita income of less than $300, compared to a loss of less than .5 
percent for developed countries.
    And of course the consequences for national security are alarming 
too, as described a joint NRDC-Institute for the Analysis of Global 
Security report ``Securing America: Solving Our Oil Dependence Through 
Innovation'' (attached).

Breaking the Oil Addiction Requires New Policies

    Policy-makers must provide frustrated consumers with a means to 
react to persistent price signals. Thankfully, this doesn't require a 
12-step program. It does require significant policy reforms.
    Many of the necessary reforms are included in a bill supported by 
the Set America Free coalition. H.R. 4409, the Fuel Choices for 
American Security Act, currently has 75 co-sponsors and has four 
components:

          A national oil savings requirement starting at 2.5 
        million barrels of oil per day within ten years and increasing 
        over time, achieved through a menu of existing and new 
        authorities and incentives;

          federal manufacturer retooling incentives for 
        production of efficient vehicles and authority to set 
        efficiency standards for tires and heavy duty trucks;

          programs that increase fuel choice in the 
        transportation sector; and

          a national energy security media campaign to educate 
        the public about oil dependence.

    The targets can be achieved via oil savings from any sector, any 
technology. Much of the savings will come from transportation, which is 
responsible for about two-thirds of our oil consumption and is utterly 
dependent on petroleum.

Overview of Technologies

    There are a variety of options available to reduce our oil 
dependence. Some of the advantages and challenges posed by each one are 
summarized below.

          Off-the-shelf improvements to conventional vehicles: 
        As summarized in the graphic below from NRDC's web site, these 
        include improvements such as four-valve cylinders, variable 
        valve timing, automatic engine shut-off, slicker materials for 
        reduced drag, better tires and five- and six-speed 
        transmissions. The Union of Concerned Scientists has calculated 
        that making similar improvements to an average SUV yields at 
        least a 31 percent improvement in fuel economy performance.\12\
---------------------------------------------------------------------------
    \12\ Union of Concerned Scientists, ``Building a Better SUV,'' 
http://www.ucsusa.org/clean-vehicles/
cars-pickups-suvs/building-a-better-suv.html



          Hybrid-Electric Vehicles (HEVs): These increasingly 
        popular cars and trucks are fueled by electricity and/or 
        gasoline. They run the gamut from mild hybrid models (for 
        example, Chevrolet Silverado comes in a hybrid version) to full 
        ones (Toyota Prius). Although costs of the technology have come 
        down since the first hybrid was introduced in 1999 by Honda 
        (the Insight, now discontinued), and prices of gasoline have 
        come up, these fuel-sippers are still a relatively costly 
---------------------------------------------------------------------------
        proposition for consumers.

           Consumer Reports recently analyzed five-year costs 
        (purchase, sales tax, insurance, maintenance, financing) and 
        benefits (federal tax credits, lower fuel costs, higher resale 
        value) of five hybrids and found that only two penciled out, 
        barely: The Toyota Prius and the Honda Civic. Their analysis 
        assumed gas prices rising over time to $4 per gallon.\13\
---------------------------------------------------------------------------
    \13\ Consumer Reports, April 2006, ``The Dollars and Sense of 
Hybrids.''

           On the other hand, a recent Consumer Federation of America 
        report found that a threshold has been crossed with $3 per 
        gallon gasoline. Their analysis shows that consumers no longer 
        pay a premium for efficiency. Opting for a more efficient 
        technologies including hybrid-electric engines should be 
        ``cash-flow neutral'' for consumers, according to this 
        analysis.\14\
---------------------------------------------------------------------------
    \14\ Cooper, Mark, ``50 by 2030: Why $3.00 Gasoline Makes the 50 
Mile per Gallon Car Feasible, Affordable and Economic,'' May 2006.

          Flexibly-Fueled Vehicles (FFVs): These vehicles are 
        capable of running on a mixture mixture of alcohol fuels such 
        as ethanol and gasoline. This adds some expense to the 
        manufacture of automobiles, specifically to ensure that tanks 
        and fuel hoses are able to tolerate alcohol. One estimate 
        places per-vehicle cost at a modest $100-$200.\15\ There are 
        other challenges with displacement of gasoline with ethanol. 
        When blended in low proportions to gasoline, smog-forming 
        pollution (oxides of nitrogen and volatile organic compounds) 
        increases compared to gasoline. Higher blends such as E85 (85 
        percent ethanol, 15 percent gasoline) yield a cleaner-burning 
        fuel.
---------------------------------------------------------------------------
    \15\ ``Ethanol Fact Sheet,'' American Petroleum Institute, March 
23, 2006.

           Another drawback of ethanol is its lower energy content 
        compared to gasoline. Due to the difference, for ethanol to be 
        a cost effective alternative it must be at least 25 percent 
---------------------------------------------------------------------------
        cheaper than gasoline.

           Last but not least is the chicken-and-egg problem with this 
        fuel: Precious few stations feature ethanol pumps. This is 
        changing rapidly (see graph below) and resources for locating 
        pumps are readily available (see http://afdcmap2.nrel.gov/
        locator/FindPane.asp). But the 710 stations currently offering 
        this choice adds up to less than .5 percent of the total number 
        of retail outlets.\16\
---------------------------------------------------------------------------
    \16\ According to the National Petroleum News (May 2005) as quoted 
by EIA there are 168,987 gas stations in the U.S.



          Plug-In Hybrid Electric Vehicles (PHEVs): These are 
        vehicles which rely more heavily on electricity as a fuel, 
        although they can also run on gasoline, or a blend of alcohol 
        fuel and gasoline. Although Honda and Toyota remain skeptical 
        due to marketing concerns (awareness has only recently become 
        widespread that hybrids DON'T have to be plugged in), there is 
        growing interest in these vehicles as a tool for breaking the 
---------------------------------------------------------------------------
        oil habit. Significant challenges remain, however.

           First among these is battery technology. Batteries remain 
        expensive and have limited ranges. So in spite of cost savings 
        due to a smaller internal combustion engine and electrification 
        of other vehicle components too, while an HEV might cost 
        $2,500-$4,000 more than a similar conventional vehicle, a PHEV 
        with a range of 20 miles would cost $4,000-$6,000 and one with 
        a range of 60 miles would cost $7,400-$10,000.\17\
---------------------------------------------------------------------------
    \17\ EPRI, 2001 as quoted in Plotkin, Steven, ``Grid-Connected 
Hybrids: Another Option in the Search to Replace Gasoline,'' TRB 2006 
Annual Meeting.

           Range may not be a troubling issue, since 31-39 percent of 
        annual miles driven are the ``first 20 miles'' of daily 
        driving.\18\ Therefore, the daily needs of many drivers would 
        be satisfied with this range.
---------------------------------------------------------------------------
    \18\ 1997 Nationwide Personal Transportation Survey, U.S. DOT, as 
quoted in Plotkin, Steven, ``Grid-Connected Hybrids: Another Option in 
the Search to Replace Gasoline,'' TRB 2006 Annual Meeting.

           PHEVs would also save a great deal of fuel. One estimate 
        found that while a conventional vehicle uses 523 gallons per 
        year and a HEV uses 378, a PHEV with a 20 mile range would use 
        219. And a PHEV with a 60 mile range would use a miniscule 83 
        gallons annually.\19\
---------------------------------------------------------------------------
    \19\ Plotkin, Steven, ``Grid-Connected Hybrids: Another Option in 
the Search to Replace Gasoline,'' TRB 2006 Annual Meeting.

           There are other advantages to PHEVs. They don't suffer from 
        the chicken-and-egg problems that plague biofuels and hydrogen, 
        since an electrical grid already exists.\20\ If charged at 
        homes at night, they would make use of surplus, off-peak 
        electricity. And so long as the grid is powered by relatively 
        clean fuels--such as natural gas, hydroelectric, wind or 
        solar--air pollution would also be reduced.\21\
---------------------------------------------------------------------------
    \20\ Luft, Gal, ``Plug in for America: California should encourage 
electric cars,'' San Francisco Chronicle, May 26, 2006.
    \21\ Plotkin, Steven, ``Grid-Connected Hybrids: Another Option in 
the Search to Replace Gasoline,'' TRB 2006 Annual Meeting.

          Transit Use: In urban areas, providing alternatives 
        to driving is another viable tool for curbing oil use. 
        According to the American Public Transportation Association, 
        public transportation now saves us almost 125,000 barrels of 
        oil a day. But if we increased reliance on public 
        transportation to, say, the level of our neighbors in Canada, 
        we would save more oil than we import from Saudi Arabia every 
---------------------------------------------------------------------------
        six months.

Conclusion

    Breaking our addiction, as the President called it, is a tremendous 
challenge. The costs to our security, our economy and our environment 
are terribly high. We meet this threat head-on, with similar 
determination that drove us to win World War II and to put a man on the 
Moon.
    Fortunately we don't have to invent the key to our oil-soaked 
shackles. The technology exists, and the costs are coming down, 
especially in relation to the price of fuel.
    To set America free, all of the technologies described above 
deserve greater investment and deployment. Consumers will appreciate 
the choice, and cumulative effects are likely to be great. For example, 
envision a more efficient car--whether a conventional vehicle with off-
the-shelf improvements, an HEV, or a PHEV--that is also capable of 
running on E85. This could yield hundreds of miles per gallon of 
gasoline, as some have claimed.\22\
---------------------------------------------------------------------------
    \22\ Zakaria, Fareed, ``Imagine: 500 miles per gallon,'' Newsweek, 
March 7, 2005.
---------------------------------------------------------------------------
    One of the best ways to put us on the path to energy security is to 
enact H.R. 4409, the ``Fuel Choices for American Security Act'' 
sponsored by Representatives Kingston, Engel and Saxton. This bill 
specifies specific ends--oil savings of 2.5 million barrels per day in 
2015 and five million barrels per day in 2025--and provides a host of 
means to achieve them. It doesn't pick winners, but gives a boost to 
the various technologies described above. I urge you to support it.
    Thank you for your time and interest.

    
    
                       Biography for Deron Lovaas

    Deron Lovaas is Vehicles Campaign Director at the NRDC. He 
currently directs the ``Break the Chain'' oil security campaign and was 
the chief lobbyist on the federal Transportation Equity Act for the 
21st Century (TEA-21) reauthorization bill. A graduate of the 
University of Virginia, he has worked in the field of environmental 
policy and advocacy for more than a decade, in positions such as 
director of Sierra Club's Challenge to Sprawl campaign and specialist 
in transportation and air-quality planning at Maryland's Department of 
the Environment. He has authored or co-authored numerous articles and 
publications, most recently ``Taking the High Road to Energy Security'' 
in In Business magazine, ``From Gas Crisis to Cure'' on tompaine.com 
and NRDC's ``Securing America: Solving Oil Dependence Through 
Innovation.''

    Chairwoman Biggert. Thank you very much, Mr. Lovaas.
    Mr. Gott, you're recognized for five minutes.

  STATEMENT OF PHILIP G. GOTT, DIRECTOR FOR AUTOMOTIVE CUSTOM 
                SOLUTIONS, GLOBAL INSIGHT, INC.

    Mr. Gott. Thank you, Chairman Biggert, Mr. Honda, Mr. 
Lipinski and others Members of the Subcommittee.
    What would be required to lead automakers to apply 
technology advancements to improving fuel economy? The 
automotive industry will respond to increased demands for fuel 
economy from the consumer: Changes in consumer behavior that 
place a higher priority on fuel economy will result in the 
increased deployment of presently available technology such as 
hybrids, down size and turbo charged gasoline engines, 
displacement on demand, et cetera. A clear regulatory position 
on the future of emission standards beyond tier two will enable 
manufacturers to make an assessment of the likely future 
prospects for regulatory acceptance of the diesel, the one 
technology that meets all consumer expectations for performance 
while delivering a 20 to 30 percent improvement in fuel 
economy.
    Changes in consumer behavior can be expected if and when 
the need for fuel consumption reduction better resonates with 
the core values of the consumers. The bulk of today's car 
buying public places high priority on the need for economic, 
physical and social survival. With current fuel prices and 
availability, fuel consumption on a lower priority than other 
vehicle attributes such as a high seating position which 
increases aerodynamic drag, faster acceleration which usually 
results in a engine that operates at off peak efficiency most 
of the time, and high perceived levels of mobility and safety 
that result in vehicles heavier than might normally be 
necessary.
    Policies in the United States have lacked from the very 
beginning any component that attempts to change consumer 
behavior. Emphasis has been placed instead on maintaining 
mobility and lifestyle in a business as usual consumer 
environment. What is needed is a series of coordinated efforts 
all aimed at conservation. Programs that sponsor the 
development of high risk technologies need to be continued 
simultaneously with public education programs that increase 
public awareness of the need to conserve and to make it in 
their best interests to do so.
    It is likely that the high risk technologies will have some 
limitations or will change to some extent the normal 
expectations of today's vehicles with respect to range, 
refueling, convenience or performance. The core values of 
future consumer generations can be influenced by including in 
the education of current school age children the need to 
conserve in all forms so that they embrace the new technologies 
and their differences from vehicles of today.
    Education programs need to be re-enforced with fiscal 
programs that are in alignment with conservation goals. 
Programs. Programs that tax excessive consumption and reward 
conservation for new vehicles as well as those in use will 
provide additional incentives to conserve.
    What hurdles must hybrids, FlexFuel and hydrogen powered 
vehicles clear before the automobile industry analysts and the 
press accept these technologies and consumers buy them? Without 
a change in consumer values, transparency is the primary 
condition that must be met for the consumer to adopt a new 
technology in today's marketplace. Cost, reliability, 
durability, range, refuel time and convenience all need to be 
equal or better than the technology we seek to replace. Hybrids 
suffer from higher costs, both initial and life cycle as their 
fuel economy is generally insufficient to give a payback, at 
least with today's fuel prices, to the original purchaser 
during the first ownership period, and battery life issues 
cloud the resale value.
    Hydrogen vehicles present a host of range, refueling and 
access challenges in addition to the technical issues and 
uncertainty of a net benefit when well to wheel issues are 
considered.
    Of these three technologies mentioned, Flex-fuel vehicles 
offer the one technologically transparent solution but only 
because ethanol-containing fuel is not required to run them. To 
make a difference in energy consumption, the six million FFVs 
produced to date must have accessed the E85 at competitive 
costs. At the moment there are less than 700 E85 stations 
nationwide versus 175,000 refueling sites for conventional 
fuels.
    How more or less likely is it that these radically new 
technologies, fuel cells, electric drive trains or significant 
battery storage capabilities, for example, will be incorporated 
into cars rather than incremental innovations to internal 
combustion engines? Historically radical technologies like 
these have not been incorporated into the vehicle fleet 
primarily because they are not transparent to the consumer when 
assessed on the basis of one or more of their criteria of cost, 
utility or convenience. Incremental changes and innovations 
have been the experience; evolution rather than revolution. 
This will be changed by the marketplace if and when they can 
meet the expectations of the core values of the consumers. 
Concurrent achievement of competitive cost, initial and/or life 
cycle, range, refueling time, all weather performance, well to 
wheel efficiency and greening house gas emissions remain 
significant challenges. Demonstration and other education 
programs can help consumers understand the benefits and the 
trade offs. Because it appears likely that these technologies 
will be accompanied by changes in these characteristics, the 
likelihood that these technologies can be incorporated into 
cars can be increased by also working through public education 
programs to influence the formation of core values of future 
generations, thus changing the willingness of the consumer to 
accept the changes.
    In sum, regardless of how the end results are achieved, we 
forecast that increases in efficiency of the vehicles through 
available nondistruptive power train technologies will reach 
the point of diminishing returns once an improvement of 
approximately 30 percent has been achieved when compared to the 
baseline gasoline engine. In the absence of radical new 
technologies to obtain improvements greater than this will 
require the use of either alternative fuels or a move by the 
consumer to inherently more efficient and lighter vehciles.
    Thank you very much.
    [The prepared statement of Mr. Gott follows:]

                  Prepared Statement of Philip G. Gott

    The following are the written answers to two questions posed by the 
Honorable Judy Biggert, Chairman, Subcommittee on Energy of the 
Committee on Science.

Question 1:

The auto industry in recent years has generally used technological 
improvements to increase performance instead of fuel efficiency. What 
would be required to lead automakers to apply technology advancements 
to improving fuel economy?

    Commercially successful manufacturers design, develop, build and 
sell vehicles that resonate with the core values of the consumer and 
that meet the needs of their life stage in the current and expected 
future business and economic environment. The automakers will design, 
develop, produce and sell whatever vehicles the consumer will buy. 
Advanced technologies have been applied to date to hold the CAFE 
performance of the U.S. light vehicle fleet at or close to regulatory 
levels while providing increased acceleration, levels of safety and 
interior feature content. If large numbers of consumers were to demand 
instead, or in addition, greater levels of fuel economy, the 
manufacturers would be able to respond with a broader range of hybrids, 
diesels, downsized and turbocharged gasoline engines, displacement on 
demand, etc. At this point in time, however, it is our view that while 
fuel economy is increasingly important to many consumers, most still 
place a higher priority on other vehicle features and attributes. If 
and when fuel economy becomes a higher priority for the consumer, the 
vehicle manufacturers can and will respond.



    What will increase the consumer's demand for fuel economy?
    Demand for fuel-saving technologies will increase when fuel 
conservation creates a greater resonance with the consumer's core 
values. Our research indicates that the Baby Boomers, the bulk of 
today's new car buying public, have core values that center around the 
need for economic, physical and social survival. They have an inherent 
need to prepare themselves to deal with any and all foreseeable 
adversities. The need for mobility itself is a key aspect of survival, 
and viewed as an unalienable right by virtually all Americans. The need 
to travel in perceived security under any adverse driving conditions 
gives rise to demand for four wheel drive. The need to command and 
control their driving environment gives rise to demand for a high 
seating position. The need to be better than the next person gives rise 
to demand for fast accelerating vehicles. The desire for perceived 
safety gives rise to demand for massive vehicles. Hence the demand for 
large, truck-based SUVs.
    However, fuel prices are currently very high, at least when 
compared to historical levels. For the moment, the high fuel costs have 
not been assimilated into the family budgets of most consumers, and 
demand is shifting to vehicles with attributes similar to the SUV, but 
on more fuel efficient front-wheel drive-based passenger car platforms 
(so-called ``crossover utility vehicles'' or ``CUVs''). (It is 
interesting to note that small car sales are NOT increasing at the same 
time due to their lack of appeal to the core values of the consumer.) 
This momentum towards more efficient vehicles could be sustained if 
consumers cannot adjust to higher gasoline prices. It is our view, that 
if prices stay at these current levels and don't go higher, some of the 
momentum will diminish and consumers will go back to older buying 
patterns.



    It must be recognized that the consumer has so far had an amazing 
capability, over the longer-term, to assimilate high fuel prices into 
the family budget. On the policy side, artificially high fuel prices 
due to taxation have not been acceptable due to the repressive nature 
of such taxation and the negative impact on the popularity amongst the 
voters of those who support them. (In this area, Americans are unique 
compared to consumers in many other major consuming countries.) 
Therefore, we need to find other, lasting solutions. Let's take a look 
at some of the consumer core values and how they can be reached by 
advanced technologies.
    The Baby Boomer consumer, as part of his/her value for survival, 
has a strong competitive ethic embodied in the need to be better than 
the next person. Hybrids, which do not provide a financial payback due 
to their inherently high cost and sensitivity to duty-cycles, are being 
re-engineered to return some fuel economy benefits while also offering 
high levels of acceleration. The diesel engine, which offers much 
higher levels of acceleration-producing torque as well as fuel economy 
when compared to a gasoline engine, can offer equal if not better 
acceleration than a gasoline hybrid while more reliably providing the 
fuel economy benefits desired by society.



    The need for survival also causes a person to seek a safe and 
secure environment. Conventional wisdom supports the notion that a safe 
vehicle is a heavy vehicle. Parents who want to ensure the safety of 
their children prefer to carry them around in a heavy vehicle such as 
an SUV. There is a current Country and Western song that even states 
``I'm not going to sacrifice the safety of my family just to save a 
gallon of gas.'' The relationship between safe and heavy needs to be 
discredited before one can expect a large shift away from heavy 
vehicles.
    Another aspect of survival is to ensure the safety and security of 
one's self and one's children. This includes preparation of a safe and 
secure future. A fact-based public education program about the need to 
conserve all forms of energy, including but not limited to the energy 
consumed for mobility, would be expected to increase demand for fuel-
saving technologies. Education programs have been successful in 
reducing smoking, seat belt utilization and reductions in drunk 
driving. Why not similar programs in the schools, on television and 
other media in support of energy conservation?
    Successful education programs can include:

          Fact-based propositions as to the net benefits to the 
        individuals and society

          Fact-based education as to the full costs of less 
        efficient practices and preferences

          Model behavior by role models, including movie stars, 
        pop idols, politicians, corporate fleets

          ``Placement'' of strategic messages within popular 
        culture and media: TV, movies, newspapers, etc.

          Requirements for obvious energy saving measures in 
        all aspects of life can provide a constant reinforcement of the 
        need to conserve in everything we do. In Europe and China, the 
        lights in hotel hallways are off unless the presence of a 
        person is detected. When you walk down the hall, the lights 
        follow you, turning on ahead of you and turning off a few 
        minutes after you pass. In America, lights burn brightly, often 
        24 hours per day.

          Classroom instruction during the formative childhood 
        years.

    Each of these channels of influence should work to embed the 
message that the core value of ``survival'' in adverse conditions 
(whatever they may be) is enhanced through energy-conserving solutions. 
That is, the core value of survival needs to encompass reduced 
dependency on a single source of energy. Survival also needs to be 
linked to minimization of greenhouse gases just as people came to 
accept the need to reduce toxic and smog-forming emissions in the 
1960s.
    Such educational programs should be enhanced with feebate and 
registration-tax programs. Under a feebate program, fees on less fuel-
efficient programs would be used to subsidize the purchase of more fuel 
efficient vehicles in a manner similar to what is done now in some 
states to reward safe drivers with a discount on insurance, the 
discount being funded by higher rates for unsafe drivers. Recurring 
carbon- or fuel-consumption based registration or ``circulation'' 
taxes, paid every year by the car owner, based on the fuel consumption 
rating of the vehicle, can also encourage the purchase of more fuel 
efficient new as well as used cars. Education programs coupled with 
cost savings through government managed stick and carrot programs can 
be effective.
    Another way to reach the core values of the consumer is to change 
the perception of mobility itself. It will be futile to try to reduce 
the consumer demand for mobility. A successful strategy could be 
instead to offer virtual mobility as an alternative. High speed 
communications provided through fiber optic networks into every home 
will reduce the waiting time for Internet-based communications 
exchanges. Telecommuting and video conferencing can become an even more 
viable alternative to physical commuting and shopping with higher 
upload and download speeds. Perhaps even a system of rewarding 
corporations (as opposed to the individual) for establishing satellite 
offices or encouraging ``working from home'' would go a long way to 
reducing fuel consumption. What is required is to make the consumer 
realize that this is a convenient and effective alternative form of 
mobility.

Question 2a:

What hurdles must hybrids, flex-fuel, and hydrogen-powered vehicles 
clear before the automobile industry, industry analysts, and the 
automotive press accept these technologies and consumers buy them?

    The primary caveat associated with the adoption of any new 
technology is that any negative attributes should be totally 
transparent to the consumer. That is, there should be:

          No cost penalty over the life of the vehicle

          No reliability/durability penalty

          No range penalty

          No functional penalty

          No convenience penalty.

    Flex-fuel (FFV) vehicles have been accepted by the public for many 
years, and they are cost competitive and `transparent' to the consumer 
in all aspects except range when fueled with the lower energy content 
E85. Since 1995, over six million have been produced and sold in North 
America. The incremental cost for their production is very small, and 
is largely associated with the use of a low-cost sensor and selection 
of fuel and intake system materials that are compatible with the fuel. 
The incentive has primarily been the CAFE credit given the vehicle 
manufacturer for selling such vehicles.



    In order for these FFV vehicles to make a difference in our 
national petroleum demand, the ethanol-based fuel E85 must be more 
widely available at a cost competitive with that of gasoline.
    There is less energy per gallon of ethanol than gasoline or diesel, 
so the cost must be adjusted to give the consumer a cost-per-mile that 
is equal or less than gasoline in order to gain widespread acceptance 
of the fuel. It is well-known within the government that of the 
approximately 175,000 refueling stations in the U.S., there are only 
4,992 alternative fuels stations reported by DOE, and of those, only 
637 offer E85.\1\
---------------------------------------------------------------------------
    \1\ http://www.eere.energy.gov/afdc/infrastructure/
station-counts.html

    Hydrogen has greater challenges than FFV, although some are similar 
in nature. Ford and BMW have demonstrated that it is possible to offer 
hydrogen powered vehicles today, burning the fuel in an internal 
combustion engine. However, hydrogen fuel requires new fuel production, 
distribution and vehicle fueling systems. In addition, as hydrogen is 
currently understood, it would require some changes in consumer 
behavior to operate. On-board storage issues result in reduced range 
and some restrictions on the access of these vehicles to all public 
places. In addition to these challenges, the major hurdle to creating 
demand for them is the almost total lack of a hydrogen refueling 
infrastructure.
    Technologically, there are a number of challenges to the 
production, distribution and storage of hydrogen so that there is a net 
benefit to society. Briefly stated, they are:

          Production: By most methods, the production and 
        compression of hydrogen will create more greenhouse gas and use 
        more energy than is saved by burning it in an engine. The 
        theoretically high efficiencies of the fuel cell are needed to 
        make a net gain possible with hydrogen fuel. Achievement of 
        these high efficiencies at commercially viable cost levels is 
        one of the major goals of fuel cell developers.

          Distribution: Hydrogen is the smallest natural 
        molecule known to man. It can therefore leak out of the 
        smallest holes, even finding its way through the very small 
        crevices and cracks that exist in many metals and joints that 
        contain other liquids and larger gas molecules very well. The 
        cost and technical challenges of setting up a distribution 
        system that can hold such a molecule has led many to consider 
        the deployment of decentralized refueling stations that 
        generate hydrogen on-site. These are not cheap either, and 
        without any vehicles on the road to use the fuel, there is no 
        incentive to make the investment. The classic chicken-and-egg 
        dilemma.

          Storage: The energy density of hydrogen is very low. 
        To give a vehicle a competitive range (distance between 
        refueling stops) it is necessary to store it at very high 
        pressures or other means of densification. Development of cost-
        effective tanks to provide such storage is underway, but making 
        certain that they are safe in all foreseeable accidents is a 
        major challenge. Also, most parking garages and many bridges 
        prohibit vehicles with compressed flammable gases. The access 
        of vehicles fueled by hydrogen and other gasses to these 
        structures needs to be addressed before full acceptance of 
        these vehicles can be expected.

          Refueling practices associated with the various 
        alternatives being explored for on-board storage would likely 
        be different and more complex than those currently accepted for 
        gasoline and diesel fuel. Standards for refueling systems and 
        associated safe practices will need to be developed. With the 
        current level of consumer expectations for self-service 
        gasoline or diesel, refueling with hydrogen is likely to be 
        anything but transparent to the consumer.

    Increasing emphasis should be placed on the solutions to these 
challenges: low-impact production of hydrogen, creation of a hydrogen 
refueling infrastructure and solving the on-board fuel storage and 
refueling challenges. If these issues are addressed and the 
manufacturers incented to produce, and the consumer incented to buy, 
hydrogen-fueled vehicles using internal combustion engine technology, a 
fueling infrastructure will evolve that will cause basic market forces 
to bring more efficient fuel cell technologies to market when their 
major hurdles have been overcome.

    Hybrids are transparent to the consumer and offer significant fuel 
savings to a limited number of vehicle owner/drivers. There are three 
major ``rules'' that govern where hybrids can offer financial payback 
to those who buy them:

        1.  The duty cycle must be highly transient. In other words, 
        there must be a lot of stop and start to really maximize the 
        savings of the hybrid powertrain. Hybrids work by capturing 
        energy normally expended in the brakes and recycling it to 
        assist the engine as it accelerates the vehicle. If there is 
        very little opportunity for energy capture, there is very 
        little opportunity for energy savings with the hybrid.

        2.  Fuel use must be high. That is, the distance traveled in a 
        year must be large so that there exists an opportunity for 
        financial payback.

        3.  An opportunity should exist to offset high brake 
        maintenance costs with the hybrid, adding to the financial 
        incentives to adopt the technology.

    For most consumers, fuel prices will have to be much higher before 
there is payback for the extra cost of the hybrid technology. Indeed, 
it is generally accepted that hybrids present a poor financial case for 
the average consumer.\2\ As the cost of batteries declines with 
advances in technology and market volumes, we expect that this payback 
period will be reduced. However, used vehicle residual values due to 
questions about battery condition and the still high cost of mature 
replacement batteries (we estimate about $1,500 based on discussions 
with battery chemists) will curtail widespread adoption of hybrids. 
Moves by the manufacturers to alter the image of hybrids from purely 
``green'' technologies to the position of a performance option 
(performance without guilt) are, in our view, attempts to put forth a 
more favorable value proposition, focusing on the competitive core 
value of the Baby Boomer population.
---------------------------------------------------------------------------
    \2\ Peter Valdes-Dapena, Best cars with great gas mileage, 
CNNMoney.com, May 8, 2006: ``We've selected five--a luxury car, family 
sedan, sports car, crossover SUV and a subcompact--that are smart buys 
and easy on fuel. For each category, we've also mentioned two 
alternatives. None of the top cars are hybrids. That's because, with 
their added cost, hybrids aren't really a good value from a purely 
economic standpoint. But we've provided a hybrid choice in some 
categories for those who are willing to pay more to burn less fuel.''
---------------------------------------------------------------------------
    Plug-in hybrids alter these rules somewhat, but are still duty-
cycle sensitive. Those who drive out of range of the charge provided 
from the grid will experience a penalty associated with the added 
weight of the additional batteries needed to store the grid power. 
Those who drive on pure-electric power close to the point of recharge 
are also driving less efficiently than possible because they are 
carrying around the unused internal combustion engine and related 
systems during the battery-only portion of the duty cycle. Questions of 
residual value due to battery issues are apt to be at least as acute as 
with non-plug-in hybrids. While most consumers may actually drive in 
duty cycles within the range afforded by the plug-in hybrid, their 
mindset is that they need a vehicle with a full 300 mile range, and 
have no good reason to give up or exchange this expectation with 
something else.
    There are some arguments that hybrids offer fuel savings on the 
highway due to their downsized engine, and that the extra power needed 
for acceleration can be obtained from the batteries. This is indeed the 
case. However, those who actually drive on the highways most of the 
time, or those who think they do and hence evaluate their car 
accordingly, can receive an equal or larger fuel economy boost at much 
lower initial cost with a downsized and turbocharged gasoline engine, 
which is also of significant benefit in the city.\3\
---------------------------------------------------------------------------
    \3\ Global Insight Inc. and TIAX LLC, Future Powertrain 
Technologies, 2008 to 2020, published 2001. Downsized and turbocharged 
gasoline engines yield about a 20 percent reduction in fuel 
consumption, or about the same benefit as a mild hybrid, when modeled 
over the FTP-75 test cycle.
---------------------------------------------------------------------------
    In sum, hybrids make the most sense in urban commercial 
applications where many miles are accumulated each year in stop and go 
traffic. The most attractive application are on heavy vehicles such as 
refuse trucks and urban buses where the financial savings due to a 
reduction in brake maintenance costs can help provide a payback to the 
hybrid.
    Their exists a viable alternative to the hybrid technology that is 
far less sensitive to the way it is driven, and that has much less of a 
residual value risk, yet offers an equal if not greater fuel economy 
and performance benefit: the diesel engine. The diesel has been 
challenged to meet the emission regulations. However, technology is 
advancing and we believe that there exists a high probability that 
further reductions in emissions beyond the current Tier 2 standards are 
possible.
    There remains a great deal of uncertainty over the future of 
emissions regulations beyond Tier 2. We believe that the vehicle 
manufacturers are reluctant to invest in manufacturing facilities for 
these engines based on a business case for the U.S. market due to this 
uncertainty. Policy-makers could move the situation forward by giving a 
clear signal to the automakers as to the level of post-Tier 2 emission 
standards. Technology developments and investments could then be made 
based on calculable risks rather than a very uncertain future governed 
by the unknown future of emissions regulation.
    Recent market acceptance of diesel-powered cars and light trucks 
suggests that the historic U.S. market reluctance towards the diesel no 
longer exists. The remarkable acceptance of diesel technology in 
Europe, where the diesel market share exceeds 50 percent of the new car 
fleet, further supports this view.



Question 2b:

How more or less likely is it that these radically new technologies--
fuel cells, electric drive trains, or significant battery storage 
capabilities, for example--will be incorporated into cars rather than 
incremental innovations to internal combustion engines?

    Historically, `radical' technologies like these have not been 
incorporated in the vehicle fleet, primarily because they are not 
transparent to the consumer when assessed on the basis of one or more 
of the criteria of cost, utility and/or convenience. Incremental 
changes and innovations have been the experience--evolutionary rather 
than revolutionary
    These and other advanced technologies offer further incremental 
improvements in fuel consumption. They will be adopted by the 
marketplace if and when they can meet the expectations of the core 
values of the consumers. Each of these, and indeed other innovations, 
are challenged to equal the current end expected evolution of the 
performance of the internal combustion engine. Concurrent achievement 
of competitive cost (initial and/or life cycle), range, refueling time, 
all-weather performance, well-to-wheels efficiency and greenhouse gas 
emissions etc. remain significant challenges.
    The likelihood that these technologies can be incorporated into 
cars can be increased by also working through public education programs 
to influence the formation of core values of future generations, as 
discussed above. The best chance of this happening long-term is via 
Generation Z and their Gen X parents (who tend to have a more 
altruistic bent than other generations). By definition, it is 
impossible to change the core values of the current generations of 
consumers, but one can possibly modify consumer behavior by putting the 
benefits and shortcomings, if any, of these technologies into proper 
juxtaposition with current consumer core values, again through 
education. Incorporation of the technologies into cars will occur as 
both the technology and consumer perceptions evolve towards each other.
    Regardless of how the end-result is achieved, we forecast that 
increases in efficiency of the vehicle through available or non-
disruptive powertrain technologies will reach the point of diminishing 
returns once an improvement of approximately 30 percent has been 
achieved when compared to a baseline gasoline engine. To obtain 
improvements greater than this will require the use either alternative 
fuels or inherently more efficient lighter vehicles.

Summary:

What would be required to lead automakers to apply technology 
advancements to improving fuel economy?

    The automotive industry will respond to increased demands for fuel 
economy from the consumer. Changes in consumer behavior that place a 
higher priority on fuel economy will result in the increased deployment 
of presently-available technologies such as hybrids, downsized and 
turbocharged gasoline engines, displacement on demand, etc.
    A clear regulatory position on the future of emissions standards 
beyond Tier 2 will enable manufacturers to make an assessment of the 
likely future prospects for regulatory acceptance of the Diesel--the 
one technology that meets all current consumer expectations for 
performance while delivering a 20 to 30 percent improvement in fuel 
economy.
    Changes in consumer behavior can be expected if and when the need 
for fuel consumption reduction resonates better with the core values of 
the consumer. The bulk of today's car buying public places high 
priority on the need for economic, physical and social survival. With 
current fuel prices and availability, fuel consumption has a lower 
priority than other vehicle attributes such as a high seating position 
(which increases aerodynamic drag), faster acceleration (that usually 
results in an engine that operates at off-peak efficiency most of the 
time) and high perceived levels of mobility and safety (that result in 
vehicles heavier than might normally be necessary).
    Policies in the U.S. have lacked from the very beginning any 
component that attempts to change consumer behavior. Emphasis has been 
placed instead on maintaining mobility and lifestyle in a business-as-
usual consumer environment.
    What is needed is a series of coordinated efforts, all aimed at 
conservation. Programs that sponsor the development of high-risk 
technologies need to be continued simultaneously with public education 
programs that increase public awareness of the need to conserve, and to 
make it in their best interests to do so. It is likely that the high-
risk technologies will have some limitations, or will change to some 
extent the normal expectations of today's vehicles with respect to 
range, refueling, convenience and performance. The core values of 
future consumer generations can be influenced by including in the 
education of current school-age children the need to conserve energy in 
all forms so that they embrace the new technologies and their 
differences from the vehicles of today.
    Education programs need to be reinforced with fiscal programs that 
are in alignment with conservation goals. Programs that tax excessive 
consumption and reward conservation for new vehicles as well as those 
in-use will provide additional incentives to conserve.

What hurdles must hybrids, flex-fuel, and hydrogen-powered vehicles 
clear before the automobile industry, industry analysts, and the 
automotive press accept these technologies and consumers buy them?

    Without a change in consumer values, transparency is the primary 
condition that must be met for the consumer to adopt a new technology 
in today's marketplace. Cost, reliability, durability, range, refuel 
time and convenience all need to be equal or better than the technology 
we seek to replace.
    Hybrids suffer from higher costs, both initial and life cycle, as 
their fuel economy is generally insufficient to give a payback to the 
original purchaser during the first ownership period, and battery life 
issues cloud the resale value.
    Hydrogen vehicles present a host of range, refueling and access 
challenges in addition to the technical issues and uncertainty of a net 
benefit when well-to-wheels issues are considered.
    Of the three technologies mentioned, Flex-fuel vehicles offer the 
one technologically transparent solution, but only because the ethanol-
containing fuel is not required. To make a difference in energy 
consumption, the six million FFVs on the road must have access to E85 
at competitive costs. At the moment, there are less than 700 E85 
stations nationwide, versus 175,000 refueling sites for conventional 
fuels.

How more or less likely is it that these radically new technologies--
fuel cells, electric drive trains, or significant battery storage 
capabilities, for example--will be incorporated into cars rather than 
incremental innovations to internal combustion engines?

    Historically, `radical' technologies like these have not been 
incorporated in the vehicle fleet, primarily because they are not 
transparent to the consumer when assessed on the basis of one or more 
of the criteria of cost, utility and/or convenience. Incremental 
changes and innovations have been the experience--evolutionary rather 
than revolutionary.
    They will be adopted by the marketplace if and when they can meet 
the expectations of the core values of the consumers. Concurrent 
achievement of competitive cost (initial and/or life cycle), range, 
refueling time, all-weather performance, well-to-wheels efficiency and 
greenhouse gas emissions, etc., remain significant challenges.
    Because it appears likely that these technologies will be 
accompanied by changes in these characteristics, the likelihood that 
these technologies can be incorporated into cars can be increased by 
also working through public education programs to influence the 
formation of core values of future generations, thus changing the 
willingness of the consumer to accept changes.
    Regardless of how the end-result is achieved, we forecast that 
increases in efficiency of the vehicle through available, non-
disruptive powertrain technologies will reach the point of diminishing 
returns once an improvement of approximately 30 percent has been 
achieved when compared to a baseline gasoline engine. To obtain 
improvements greater than this will require the use either alternative 
fuels or inherently more efficient lighter vehicles.

                      Biography for Philip G. Gott

    Phil Gott is a Director for Automotive Consulting within the 
Automotive Group of Global Insight, Inc. He specializes in identifying 
technical/competitive advantages, and creating and implementing 
technical, business and/or market entry strategies to exploit them and 
achieve targeted business results. He has served the automotive 
industry since 1975 and has conducted a number of technology and market 
assessments or developed market entry strategies for many light vehicle 
technologies, including powertrain, electronic and mechanical systems 
as well as advanced materials.
    Phil has primarily helped automotive vehicle manufacturers and 
component suppliers deal with the continuing changes in the automotive 
industry, whether the changes have been driven by regulatory, 
competitive or market forces. He both manages and participates in 
market research projects in which he has identified new product and 
market opportunities for component suppliers in the powertrain, 
driveline, chassis and suspension areas. He has managed major programs 
for vehicle manufacturers, providing the foundation for their long-term 
powertrain strategy. His work has also provided input to EPA, DOT and 
NASA on programs that support the development of regulatory standards, 
or assessing their impact. He has identified the need for, and led 
major multi-client studies assessing the likely changes in vehicle 
powertrain and electrical systems. To accomplish these, Phil draws upon 
his quarter century of industry experience, his mechanical engineering 
training (BS from Lafayette College) and his hands-on experience which 
includes building and testing experimental vehicles; designing, 
managing the construction and operation of one of North America's most 
advanced engine development laboratories; and preparing and developing 
five race cars, four of which are national or regional champions. He is 
a member of the Society of Automotive Engineers and the honorary 
engineering fraternity, Pi Tau Sigma. He also holds an SCCA National 
Competition license, campaigning an Acura Integra in the Northeastern 
U.S.
    Phil has authored a number of industry publications including the 
award winning Changing Gears, a 400+ page history of the automotive 
transmission and how the industry responded to different market, 
societal and business forces to develop new transmission technologies. 
This hardbound book was published by the Society of Automotive 
Engineers in 1991.



                               Discussion

    Chairwoman Biggert. Thank you very much.
    Now it's our turn, so each Member will have five minutes 
for questions. So the Chair recognizes herself for five 
minutes.
    And this question, really, is for all of you and brief 
answers, please, so we can get through this. But which comes 
first, advanced fuels or advanced vehicles? It's the classic 
chicken or the egg question, I think.
    How do we ensure that development and deployment of 
vehicles and fuels proceed in a coordinated fashion?
    We'll start with you, Dr. Miller.
    Mr. Miller. In my view I think you're going to see advanced 
fuels before you see many of the long-term advanced 
technologies such as fuel cells or electric vehicles or even 
plug-in hybrid vehicles.
    Clearly we have to have a national strategy and a national 
plan to do this coordination. But I think that has been put 
forth in the President's Advance Energy Initiative how we would 
do that. So I think there is a plan for doing so.
    Chairwoman Biggert. Thank you.
    Mr. Weverstad.
    Mr. Weverstad. I believe that it depends upon the advanced 
technology what comes first the fuel or the vehicle.
    Clearly E85, an alternative fuel, we've got an industry 
nearly six millions chickens on the road, we're just looking 
for some eggs. So that one we've got.
    When it comes to hydrogen we'll probably have to work at 
centrally fueled locations first and then develop the 
infrastructure.
    Chairwoman Biggert. Thank you.
    Mr. Hinkle.
    Mr. Hinkle. I think that the cooperation--this is an area, 
particularly with hydrogen, where the cooperation between 
government and industry is really critical. And I think that 
the--what the Department of Energy is learning with their 
learning demonstration, their fleet validation programs that 
hooks--that hooks fuel companies to auto companies and develops 
not only a consciousness but the technologies that will enable 
these things to happen. And that's a fundamental change, I 
believe.
    Chairwoman Biggert. Thank you.
    Dr. Gibbs.
    Dr. Gibbs. My view is that we simply need to make more of 
the fuels that we already know how to make. We need to make 50 
billion gallons of ethanol and to make that a national 
priority, as I've indicated in my testimony. That does not 
exclude, of course, developing all these other technologies. 
But the demand certainly the beginnings of the infrastructure 
is already there for ethanol. We simply need to make more of 
it.
    Chairwoman Biggert. Thank you.
    Mr. Lovaas.
    Mr. Lovaas. Well, the first step that we can take actually 
before looking at the two fuels that we think offer a lot of 
promise, biofuels and electricity, is to improve the efficiency 
of conventional vehicles. So there's plenty of technology that 
can come right off the shelf and become a standard part of cars 
and trucks. And it will drive up efficiency. And then with 
biofuels you're probably going to have, since there are already 
substantial number of them out on the road, production of 
vehicles ramp up further before you have a ramping of the fuel. 
Because it's going to take a while for the ethanol industry to 
even make a dent in our transportation sector, which is 97 
percent dependent on oil.
    We all hear about ethanol and the substantial growth in 
ethanol in recent years. And it is impressive in percentage 
terms. In absolute terms it is a minuscule fraction of overall 
transportation fuel demand.
    So on electricity, I'm not sure which is going to come 
first. I mean, we already have the grid in place if you're 
talking plug-ins, and we need to drive down the costs and drive 
up the range of batteries for plug-ins.
    Chairwoman Biggert. Thank you.
    Mr. Gott.
    Mr. Gott. Thank you.
    For most technologies I would think the fuel has to be in 
place to give the public the confidence that it--that it exists 
that the vehicles that they might be in the future or consider 
buying can be driven and conveniently refueled. The diesel is a 
good case in point.
    With a growing diesel fuel refueling network, Jeep expected 
to sell 5,000 diesel Liberties in the first year. They actually 
sold 10,000. Mercedes-Benz expected 3,000 E320s to be sold in 
diesel, 4,100 were sold. Volkswagen expected in--to sell about 
2,200 diesel vehicles and 4,500 had been sold.
    So clearly if you have a fueling infrastructure in place, 
you can certainly give the public the confidence needed to go 
ahead and buy the vehicles.
    Chairwoman Biggert. Thank you.
    Then, Dr. Gibbs and Mr. Weverstad, talking about there's 
about six million E85 fuel--flex-fuel vehicles on the road now 
and yet there's very few fueling stations for them. Why--why 
would the oil companies want to install facilities to encourage 
their customers to shift away from a product in which they have 
huge investments? And at one point I've heard that there's 
actually a contract with the distribution centers that 
prohibits some of them from putting in these stations. But why 
when they have these huge investment from the reserves in the 
ground all over the world to the refining and shipping capacity 
and even the standard gasoline pumps in the stations, why would 
they encourage that shift?
    Dr. Gibbs. I can't speak to the oil company's motivation. I 
can only tell you that it costs about $30,000 to $50,000 to put 
a new ethanol pump. So it's not expensive. I think there might 
even be a subsidy in the Energy Bill.
    Right now we have a temporary situation where there's a 
shortage of ethanol because of the switch to MTBE. The spot 
price of ethanol today is $3.50 a gallon. A year ago it was 
$1.30 a gallon. So we have enormous volatility in that market 
because of basically the lack of ethanol production capability. 
And I'm not defending the oil companies here. I'm just trying 
to describe the market.
    Virtually all of the 90 some ethanol plants are 
concentrated here in the midwest. There are virtually none in 
California, none in central and east coast. That's the 
importance of cellulosic ethanol because we could begin to make 
it in other places.
    But the answer is it's not that hard or expensive to put in 
an ethanol infrastructure. And there's an intermediate level of 
blenders, some of whom belong to the oil companies and some of 
whom are independent.
    Chairwoman Biggert. Mr. Weverstad.
    Mr. Weverstad. I think that, you know, the oil companies 
would have to answer clearly for themselves. But from our 
perspective we are--we understand a company wouldn't want to 
make a large investment in an alternative fuel. They did it 
with methanol and it didn't work out well for them. So we were 
trying to create some customer pull. That's what our Live Green 
Go Yellow campaign was about.
    We've actually worked with Shell and Chevron here in 
Illinois and in California. And a remarkable number of 
independents like Kroger and Meijer and many others to do 
demonstration projects to show them there really is a market 
for their fuels. We've had great results in the Chicago area at 
the--at the Shell stations and the Gas City stations actually 
selling more than they had anticipated.
    It isn't while $30,000 may be higher than converting a 
pump, if they have to dig a new hole to put a new pump in, it 
can be quite expensive. So I think what--what the Congress can 
do to help them is to help provide some tax incentives for them 
to, indeed----
    Chairwoman Biggert. I believe that there was one for the 
installation.
    Mr. Weverstad. Yes.
    Chairwoman Biggert. It was in the Energy Bill to pass it 
on.
    Mr. Weverstad. And we need to continue that. That's--that's 
really what we need. We will try to create some customer pull. 
And if they can get some incentives, I think we can make it 
happen.
    Chairwoman Biggert. Okay.
    Then just a follow-up to Mr. Hinkle, the refueling 
infrastructure problem is even greater for hydrogen. What 
lessons from ethanol from E85 can we apply to the potential 
shift to hydrogen?
    Mr. Hinkle. Well, you want to make sure you've got the 
molecules. That's--that's essential. But you need--you need a 
great deal of cooperation in advance, and that's--that's what I 
mentioned earlier. There's--the way that these things are--are 
rolled out is extremely important so that you don't build--so 
you don't build over capacity and don't build in prices with 
low demand over a long period of time.
    So--and--and part of the earlier question that oil 
companies, certainly the oil companies that we work with most 
closely, I mean there's a simple and complex survival aspect of 
this. What business do you want to be in in 15 or 20 years? And 
so the--and you don't have to believe in peak oil to see that 
the constant development of new products is really important. 
So I think that cooperation with--with the needs of the--of the 
using device with--with a vehicle and the cooperation between 
the--the producer of the fuel is exceedingly important.
    Chairwoman Biggert. Thank you.
    And I have exceeded my time. So I will apologize and now 
yield to Mr. Honda.
    Mr. Honda. You're the Chair, Madam, and you don't have to 
apologize to anybody, especially in your home. And thank you 
very much for this opportunity.
    Let me just make a real quick reaction or statement from 
what I heard this morning.
    I heard that folks need to hear, the consumers need to have 
been challenged in terms of their core values. I think that's 
already been done at $3 plus per gallon.
    The comment about having to exceed 30 percent efficiency in 
future cars in order for the consumers to consider alternative 
vehicles, that's been reached. My hybrid went from what I had 
in the car before is 20 miles to the gallon, which is a foreign 
car, to a hybrid, it went up to 42 miles on the highway and 50 
in the city. So we've exceeded that.
    The size of the vehicle was described to mean high seated 
and all the other stuff, which is nice. I had that in my van. 
But the hybrid technology has the ability to couple gasoline 
engines and hybrid engines together to be--to be put on a 
larger platform of a car. That is--that can be accomplished. So 
I think that what the consumer is looking at is when you all 
going to get started on this and what are we going to be doing 
in terms of providing that leadership in forcing--or having not 
the automobile industry to move forward, which is usually 
driven by consumers as we saw back in the '70s, but also I 
believe that the oil companies need to be put to task in terms 
of them providing the infrastructure. They have done that in 
the past and they can do it in the future because the amount of 
money they've earned over these past couple of years with the 
increase in gas is phenomenal. I think they can reinvest that 
money back into infrastructure that will provide the kind of 
services that consumers want.
    Having said all of that, I believe we're on the right track 
and I think that a hearing like this is good because the 
community needs to hear what it is that we're talking about and 
what the experts are saying, and what's really available. The 
automobiles already available you say six million. That's six 
million here against over 220 plus million available vehicles 
in this country. What people don't know is the conversion kits 
cost between $200 to $500. I'd be willing to spend that because 
I spent that much in two months with the increase in gas.
    Brazil has almost their entire fleet of cars out there are 
on flexibility fuel, E85. Most of those cars come from this 
country. And so the technology and the ability to do all that 
is ready. So the question really is what's our obstacle. And I 
ask the question that there are technological--there are 
barriers of economics and the barriers of political barriers.
    And so my question back to you is I would like a candid 
response in terms of the barriers that you do see. And coupled 
with that question let me ask the other question: With hybrid 
plug-ins, I think it's great everybody's going to be able to do 
that if you have a garage. You have a lot of urban dwellers who 
park in the streets. How do you--how do you perceive how we 
deal with and provide that kind of service using plug-ins for 
those who are city dwellers who have to park their cars out in 
the streets?
    I would appreciate a quick answer. It was a long question. 
Mr. Gott and Mr. Lovaas?
    Mr. Gott. In all due respect, Mr. Honda, while the numbers 
you quote are--are accurate for particular vehicles, the vast 
majority of the public isn't as forward thinking as you are. 
The most recent report from the EPA on trends in light duty 
motor technology suggests that the minimum weight of vehicles 
was around 1982. It's been getting heavier ever since. We show 
no--this is a sales weighted average. We show no change in that 
trend.
    Acceleration time was minimal at about the same time, 1980. 
It's interesting we had minimum weight and minimum acceleration 
time or maximum acceleration time at the same point. It's gone 
from about 15 seconds down to 10 on a sales weighted average.
    So the consumer hasn't gotten the message. And I don't 
think policy based on the assumption that the consumer has 
gotten the message is going to work. Yes, you can buy vehicles 
that are more efficient that have the advanced technologies. 
But the vast majority of the consumers are not yet buying them. 
And I think, you know, we need to address that issue.
    Mr. Lovaas. I would agree with my colleague if I hadn't 
read about the May sales figures for the automakers and seen 
just how much Toyota and Honda have jumped in terms of their 
market share, much to GM's mostly but also to Ford's costs. So 
I think consumers are getting it. Prices have not just spiked, 
but stayed high on a sustained basis. And EIA, even EIA which 
is very conservative in its Outlook traditionally, forecasts 
high prices as far as the eye can see. And I think consumers 
are realizing that.
    Now in terms of what's needed, you have the price signals. 
But in terms of consumers being able to respond to those price 
signals, you have a lack of choices in terms of fuel and 
vehicles because our oil dependencies are hard wired into the 
county, so to speak. And we need to look back at two responses 
in the 1970s. You mentioned Brazil. There's another response in 
the 1970s that was successful. We adopted fuel economy 
standards here doubling the fuel economy of cars, driving down 
the oil intensity of the economy by about a third, which is 
part of the reason it's so resilient and in spite of the pain 
at the pump the consumers are feeling, the economy has not 
slipped into recession partly because oil intensity has 
dropped. And if we hadn't adopted those fuel economy standards, 
gasoline consumption--this is according to the National Academy 
of Sciences in a 2002 report, would be about 40 percent higher. 
And we would be all the more dependent on foreign sources of 
oil.
    So we did--we did something then and we can do something 
similar now.
    We can also look at Brazil. Right now, as you referred to, 
70 percent of the vehicles sold in Brazil are flex-fuel 
vehicles. There's a mandate that ethanol be blended with 
gasoline at 20 to 25 percent. So that's about a quarter of the 
transportation demand fueled by ethanol derived from sugar cane 
in Brazil's specific case. Here it's just under three percent. 
Brazil prodded things along with policy in the 1970s in 
reaction to the last turmoil we faced in the marketplace 
because of oil embargoes and we adopted higher fuel economy 
standards in response to the same thing.
    Both approaches have been pretty successful. And 
legislation that we consider to address this problem, policy 
responses that we consider should learn from those lessons.
    Mr. Honda. Thank you.
    Dr. Gibbs. Did I hear in there that you'd like to hear 
about the hurdles to things like--let me just go over that from 
the testimony.
    If you think about something like oil or gasoline, what you 
have is a liquid that has a very high energy density. So if 
there's an accident or something, if you see an oil fire or a 
gas fire you see a lot of energy being released. In contrast, 
biomass is very low density matter. So think big diesel trucks 
full of hay or corn stalks.
    And the challenges in turning that material into a higher 
density fuel like ethanol involve solving this density problem.
    For example, in building ethanol plants we would like to 
build them as large as possible to achieve economies of scale, 
but that would mean hauling all this low density biomass a 
large distance with diesel trucks and having the trucks come 
back empty. So we need new technology to resolve that conflict, 
that inherent conflict between the need to build larger plants 
and the need to deal with low density biomass.
    The low density problem is a good thing in the sense that 
it creates lots of local jobs because you essentially have to 
build your plant wherever the biomass is.
    We need critical components for converting that biomass. 
One of those is cellulase, the enzymes. Just one billion 
gallons of cellulosic ethanol would require an amount of enzyme 
that is about twice the annual production for all industrial 
enzymes in 1994. And that's just one billion gallons. And I am 
advocating that we produce 50 billion or more.
    So we need to find ways to solve those problems.
    There's another problem known as pretreatment. Essentially 
we've got to--to process very large amounts of low density 
material into the higher density fuel. And that's the hurdle 
and the expense.
    Mr. Honda. Thank you.
    Mr. Miller. I'd like to address the issue raised about 
plug-in hybrids and what do people who do not have a garage and 
must park their car on the street do for recharging those plug-
in batteries.
    I think there's a perception out there that plug-in hybrid 
batteries would require overnight charging, a period of six to 
eight hours. That simply is not the case. Hybrid batteries are 
much different than the old electric vehicle batteries in a 
sense that they can be charged much, much quickly, as little as 
one hour. So I think the solution to the problem that you 
raised is to install, for example, public charging stations at 
places where you may, for example, go to a restaurant and be 
there for an hour, you could plug in or charge. Or in parking 
lots, that would be another example. Presumably it would be 
much lower in cost to install an electric charging station than 
it would a fuel gas refueling station for alcohol or hydrogen, 
whatever. So I think that's one potential solution.
    Mr. Honda. If you have a suburban model in terms of how we 
think about recharging these kinds of cars?
    Mr. Hinkle. I think there's many--many approaches to this.
    Mr. Honda. Okay.
    Mr. Hinkle. And we realize that the decisional calculus of 
the consumer is not like that of fleet operators. And, after 
all, we're sort of a bunch of noble savages with regard to 
this. So who knows what--how much gasoline--how much the 
gasoline prices have to rise. And that's why fleets are so 
important, not only with respect to demonstrating the viability 
of these things, and this is true for any fuel not just--not 
just hydrogen.
    Another thing with hydrogen, and it's also true with some 
of the biofuels, not so much with alcohols, but if you--if you 
don't have--and hydrogen is one of these things that's going to 
have even isolated national markets and regional markets for 
these things where the pricing is going to be a function of--
it's going to be cost based and it's going to be a function of 
transparent market fundamentals. So the likelihood that 
government incentives, the tools that government has to deal 
with both the demand and supply side could actually--you could 
actually experiment with them and see--see how they work. 
Because hydrogen is not going to fungible worldwide, but it 
might be from region to region. It's like the electricity grid. 
I mean there--actually there is not one grid, as we know. There 
are several of them. So electricity prices vary considerably. 
And I would expect for a while hydrogen would do that, but it 
gives you the opportunity in combination, say, with things like 
with individual states and regions with a renewable portfolio 
standard, you would see some interesting phenomena there. So 
that's a speculation about what the markets might do.
    Mr. Weverstad. I'd like to answer many of the questions 
that I heard there. And if I've missed something, poke me and 
I'll try to come up with something.
    But I'd like to start out by letting you know that actually 
GM has the most models of vehicles that get over 30 miles per 
gallon. And we lead in most of the categories in which we 
compete. Unfortunately, the world doesn't necessarily know that 
and that's a shame on us. We need to do a better job of 
explaining that.
    I would also point out that the Toyota Prius that you speak 
of is a wonderfully engineered vehicle. But if you wanted to 
save gallons of gasoline, you could drive a new Chevrolet 
Impala with E85 and you'd actually save nearly 200 gallons more 
gasoline gallons in a year of operation. And you could drive a 
four-wheel drive Yukon and compare that to your Prius, you'd 
save 133 gallons of gasoline.
    Mr. Honda. I'd agree with you, except that the 
infrastructure is not there yet.
    Mr. Weverstad. That's--yes. That's our challenge and we 
need----
    Mr. Honda. Well, that's the point of my comment
    Mr. Weverstad. Right. We need--we need--we need to develop 
that and we--and we're doing what we can to make that happen.
    As far as plug-in hybrids go, we don't want to throw away 
any technology. We need to look at all of them. But I will tell 
you as an engineer simple is better. Plug-in hybrids are the 
most complex. It has a complete electric system plus a complete 
gasoline system which makes it more complex and more difficult 
to engineer.
    I would also point out that the lithium-ion batteries that 
we talk about today as the most promising, if you had a volume 
of the same size as a 20 gallon fuel tank, which is what most 
of our vehicles are, that would be equivalent to one quart of 
gasoline.
    So there are some challenges and we're working on them.
    Our problem with E85 is clearly engineers to calibrate and 
validate in more models; that's what's happened in Brazil. They 
don't have nearly as stringent emission standards or onboard 
diagnostic requirements. We don't want to give that up. E85 is 
cleaner and we want to keep--we want to keep that. And we need 
to develop the infrastructure.
    Mr. Honda. Could I just ask a real question that somebody 
in my District asked me, I didn't know my answer. Butanol 
versus ethanol, what's the distinction? Is there an advantage? 
Is that more dense or what?
    Dr. Gibbs. Butanol is a four carbon alcohol and it is 
denser. It smells pretty awful. You can make it from biomass, 
but ethanol is a commodity today. We have futures being traded 
here in the Chicago Commodity Exchange. And I think that 
although Butanol could be an additive, ethanol really is going 
to be the central fuel in the infrastructure.
    Mr. Honda. Thank you, Madam Chair.
    Chairwoman Biggert. Mr. Lipinski, the gentleman from 
Illinois is recognized.
    Mr. Lipinski. Thank you, Madam Chairman. I'd again like to 
thank you for putting this hearing together. One of the most 
interesting hearings I've actually been to, not just because of 
the topic but also because of the quality of the witnesses. So 
I appreciate all the wisdom that you've shared with us today.
    There's a couple of things. Well, one problem I was going 
to say, is I could go on forever, which none of us want to do 
here. Can go on forever with questions tapping into your 
knowledge here. But let me start here and let the Chair stop me 
when--when she's tired of hearing me. Hopefully, not right now.
    Dr. Gibbs, I'm--I've been a big supporter of ethanol. And I 
think the Chairwoman has also been a big supporter of ethanol. 
The critics and I personally have come under attack, I think 
the Chairwoman has also, for supporting ethanol. The critics 
are--say that well it is really useless because you use more--
you consume more energy the more fossil fuels, usually, in 
creating ethanol than you would if you were just using the oil 
to run the cars. So ethanol is really worthless. I want to put 
that to you and explain to me why ethanol is worthwhile.
    Dr. Gibbs. That argument has been refuted. I'm blanking on 
the name of the professor who put that forward. Professor 
Pimentel's.
    There are probably three different recent studies which are 
compendiums or studies combining, let's say, six or eight other 
studies to examine them on an equal bases, the most recent of 
which Professor Kammen from Berkeley. And what they've done is 
to simply plot the results from all these different studies. 
Pimental's which was negative, and all the others which were 
positive for ethanol. And show that in fact that is basically 
sort of an urban myth. Those early studies did not account for 
all the energy value that you get from ethanol and then made 
assumptions like we have to include the value of the lunch that 
the farmer eats, and things like this.
    At any rate, and I could provide to the Committee if you'd 
like, the papers of Professor Kammen. On our website there's a 
link to Michael Wang, Dr. Wang at Argonne which essentially 
makes the case that there is a positive value.
    Let me just very quickly----
    Mr. Lipinski. How much of an increase?
    Dr. Gibbs. You get about--about 25 percent more with--
energy with corn. With cellulosic ethanol you get absolutely 
the best performance. And the reason for that is that you're 
able to use the other parts of the wood. The brown here and the 
brown in the wood is something called lignin. And so when you 
separate that out you can burn that. You get an additional 
process of energy instead of burning coal or natural gas. And 
then use the sugar to make ethanol. And the grams of CO2 
per mile and the energy balance are excellent for cellulosic 
ethanol.
    Mr. Lipinski. Okay. It would be very good for you to 
provide us with that. Because, as I said, there's been--there's 
one particular media outlet who has an editorial saying that we 
were wrong because ethanol just is worthless. So it's important 
to have good information when making any of these public policy 
arguments.
    I want to move on to Mr. Hinkle. I'm--certainly as I've--as 
I've talked about I was one of the individuals who introduced 
the H-Prize Act. I'm a big supporter of hydrogen.
    The first question I have is our hydrogen internal 
combustion engines, has basic--have they been put aside? I've 
actually heard BMW, I believe, has a car coming out that is 
supposed to be hydrogen internal combustion engine. I'm not 
sure that's true. But from most of what I hear that technology 
has been abandoned. Has it?
    Mr. Hinkle. Well it's been abandoned by the Department of 
Energy, which is different than being abandoned by industry.
    BMW certainly is ready. They've made--they've had some 
announcements here recently that they may have a seven series 
V12 that's a biofueled vehicle that will--that will be able to 
use hydrogen and some others. And the emissions are remarkable 
and there's no loss in performance. I mean, it's the control 
system.
    I mean, you can make these. You could--with hydrogen 
because of the enormous range of--of mixtures with air that it 
will tolerate, you could tune with the proper control system. 
You could tune one of these engines to do almost anything you 
wanted. It gives you--there's no other fuel that--that gives 
you that possibility. And, of course, you still have to have 
the supply. But BMW has done some pretty remarkable technical 
things, and they've also perfected a high pressure direct 
injection in the combustion chamber, which is a bit of a trick 
here. And people worked on that--they worked on that with the 
Formula 1 engines. Cosworth worked on that 30 years ago for 
Formula 1 cars and it wouldn't have fit into the rules. But 
they got some pretty dramatic horsepower increases. So--and 
Ford has done some--some good work on this.
    So it's--you know, for the Department of Energy it's a 
resource constraint. You know, you got to work on the things 
that have the highest strategic value and you--without large 
amounts of money. And--and--but BMW, there's some--there's some 
smart people that have not abandoned this.
    Mr. Lipinski. Do you think it's a mistake that DOE has 
abandoned it?
    Mr. Hinkle. Well, given the resource limitations and--and 
their--their devotion to the--to the President's Initiative 
rather than what the expansive authorities allow in the--in the 
Energy Policy Act, there's a transition here. Perhaps there 
will be some--some thoughts about that. I don't know how much 
of a strategic mistake that is, but certainly the--a hydrogen 
fuel combustion--you know direct burn car offers a bunch of 
bridge opportunities just like hybrids do because of the drive 
system.
    Mr. Weverstad. Could I offer one of the reasons that we at 
GM have reduced our effort in internal combustion hydrogen 
engines is primarily due to the lack of energy density in 
hydrogen and the--the--you have all of the infrastructure 
problems that you needed with a fuel cell vehicle. And a fuel 
cell is twice as efficient to start with. So we wanted to take 
advantage of that efficiency. In order to get a--the BMW to 
operate like a regular car, they put a much larger engine and 
super charge it, which adds to the cost considerably. So we 
went for simple is better, and the fuel cell itself, the 
efficiency improvements help.
    Mr. Lipinski. Okay.
    Dr. Miller.
    Mr. Miller. Let me--let me clarify the record here. DOE has 
not abandoned hydrogen and internal combustion engines. And in 
fact, we are currently today doing research in our labs with 
hydrogen and internal combustion engines that is sponsored by 
the Department of Energy.
    Mr. Hinkle is correct that it is a much smaller program 
than that for the fuel cell program. But as he correctly 
pointed out the Department does view hydrogen and internal 
combustion engines a transition technology, one that will allow 
us to get experience with hydrogen refueling stations, hydrogen 
in the marketplace and eventually be ready when the time that 
fuel cell vehicles are ready.
    Mr. Lipinski. Thank you.
    And one more question, the big question for Mr. Hinkle. I 
mean there are--in the H-Prize Act we give a prize for advances 
made in the production, distribution and storage and 
utilization of hydrogen. That's because there are major hurdles 
in all four of those areas.
    Why do you believe that hydrogen has the potential--has 
such a great potential to be the fuel for--for vehicles in the 
future?
    Mr. Hinkle. Well, the combination of strategic values at a 
30,000 foot level are very important. The carbon aspects, the--
the import, the wealth transfers from the imported oil bill. 
And then--and the efficiency gains. And so--and is it worth the 
complexity to--to evolve in this--in this fashion. It's an end 
point that combines, that essentially attempts to achieve the 
optimization of all those kind of features. And we're going 
to--as prices rise with gasoline and we're looking for 
alternatives and we--and--and the market mix evolves, we're 
going to have to from a policy standpoint make a lot of 
compromises with regard to how valuable is energy security? How 
valuable is a low carbon footprint and how valuable is--is high 
efficiency in--in achieving those things?
    The H-Prize is--is--had a remarkable vote and just the--the 
political aspects of that are pretty--are pretty amazing. We'll 
see what it does in the Senate. And we were--we participated 
quite a bit with Representative Inglis's staff on--on inputs to 
that. It's a good bill. It's got some--and we're helping out 
Senator Dorgan and Senator Graham with that in the Senate.
    But as--as the--and sorry, as the guys assured you in your 
hearing on this, it's not about the technology, it's about the 
human drama associated with this. And it lifts the--it tends 
to--these contests tend to lift the--the picture and the view 
and--and the--and the spirit of these--of these--of the 
technology and bring it into the--into focus for a lot of 
people who would otherwise not--not understand what this is.
    Hydrogen is a very complex business, and it's--but it can't 
afford to be a geek's paradise. It's--it's got to be--it's got 
to get--it's got to be practical.
    Mr. Lipinski. Well, since we're at the high note right 
there, I think I'll--I'll give my time.
    Chairwoman Biggert. Thank you, Mr. Lipinski.
    I wanted to--since this is a field hearing, I wanted to 
divert a little bit from what we normally do in the hearing. I 
would like to know, since we have all these people out in this 
audience, how many of you have hybrid cars raise your hands. 
High. Okay. How many of you would like to have a hybrid car? 
Ah. Okay. How many of you have the FlexFuel car? And there's 
some here. Great. And how many of you would like to have a 
hybrid plug-in when they become available? Okay. And how many 
would like to have a hydrogen car, which we have driven? Great.
    Well, I think we have a great audience here and it's 
probably why you're here because you really believe in--in what 
we're trying to do here, and that is to, you know, cut down on 
the use of fossil fuels and really find alternatives.
    I just wanted to say a couple of things. First of all, I 
don't know if you can answer, but I've talked to a lot of 
people that say they want a hybrid and they go to the car 
dealers and they're not available. There's a long waiting list, 
it's a lot more expensive than a regular car even though 
there's a tax credit. And you must know that there is a tax 
credit now. Some of you bought your hybrids probably before--
before the last Energy Bill, but there is a tax incentive for 
you to buy a hybrid car. And then--but still it's more 
expensive.
    And--and I also had received something from--from a member, 
I think a member of the audience that--that says that they 
noticed that the price for E85 at a local retail gas station 
fluctuates in direct proportion with the price of gasoline. It 
says if gasolines increases 20 cents, then E85 increases 20 
cents. And he's saying that it should--the only commonality 
between these two products is 15 percent gasoline, which then 
should represent only a three percent increase for the 20-cent 
example.
    So this is the cost of--and right now has been talked 
about, we only have--or we're really using mostly ethanol and 
the price seems to have gone up when suddenly ethanol has been 
very popular for use in ethanol--or the price of corn, I should 
say. The bushel of corn has gone up so much.
    So why, if you can give me an answer, why the price of 
ethanol goes in direct proportion to the gasoline? I would like 
to hear that.
    And also do you know, and particularly Dr. Gibbs and maybe 
Mr. Weverstad, with the cars--one other thing about the car, 
too, I'd like you to come back to is you talk about you have 14 
models that all feature good gas mileage. But are these cars--
you know, we--we in the United States have a love affair with 
the SUV. And I think what has happened is cars--manufacturers 
have tried to take that into account in making cars that have 
low--lower gas mileage and are hybrids. And that's a good 
thing. But are the models of your car the kind that, you know, 
the car that has all the bells and whistles on it and has as 
well as the good gas mileage? So if we want to start with maybe 
Dr. Gibbs?
    Dr. Gibbs. The price of ethanol is--should be tied to the 
price of gas and the current value normally would be that 
whatever the price of--of wholesale unleaded is plus the 
federal subsidy, which is about 51 cents. Right now that 
premium is running probably $1.50. As I mentioned, spot ethanol 
is $3.50, which is of course out of sight. A year ago it was a 
$1.30.
    I think the answer is as we make more ethanol, the price 
will come down. But in the short-term ethanol is more expensive 
that gasoline on a--on an energy basis. And so the hope is as 
we make more and more of it. And right now we're in a crunch 
because the eastern states have had to drop MTBE. So they're 
actually probably taking ethanol out of our gas in the midwest 
and sending it to the east coast.
    Chairwoman Biggert. So how soon do you think that that will 
happen? You talked about ethanol now is a product on the 
exchange, which I think is going to change the way that we 
think about ethanol.
    Dr. Gibbs. Well, again, it's production capacity. I mean 
our total capacity is only about five billion gallons out of, 
you know, versus 140 billion gallons of gas. When we get up to 
tens of billions of gallons, and just as a benchmark if we were 
just to go to E10, that is forget E85 and just go to E10, we 
need 14 to 21 billion gallons of ethanol to do that. We cannot 
do that from corn.
    Chairwoman Biggert. So it's back to the old supply and 
demand?
    Dr. Gibbs. Right. So supply and demand. And I think that 
the cellulosic, the cheaper technology is hoped for, DOE has 
always projected it, but it's always five years away. So we 
have to get there.
    Chairwoman Biggert. Thank you.
    Mr. Lovaas. Well, one of the more interesting components or 
experimental provisions, shall we say, of H.R. 4409, the Fuel 
Choices for American Security Act, is removing the tariff on 
imported ethanol. We do not apply a tariff to oil imports and 
yet we----
    Chairwoman Biggert. That's Dr.--or Representative 
Kingston's Bill?
    Mr. Lovaas. Kingston's Bill, exactly. So--and this would--
if this were enacted, it would provide an immediate spike in 
supply and help to remedy the fact that, you know, you do have 
this price problem, that is it's a product of economics, supply 
versus demands. So----
    Chairwoman Biggert. Even those in Illinois where the corn 
producer will have to look at that bill.
    Mr. Weverstad.
    Mr. Weverstad. To answer your question on our over 30 mile 
per gallon vehicles, they're not just small stripped down 
vehicles. You can buy a full size Chevrolet Impala that gets 
over 30 miles a gallon on the highway. It's--and what we're 
maybe most proud of is our full size sports utilities that are 
brand new this year. The combined average 55 city/45 highway on 
that full sized sport utility vehicle now exceeds 20 miles a 
gallon, which is a first in the industry for a vehicle that 
size to give that much utility and that much--people need those 
vehicles if they pull trailers or there are plenty of uses for 
those vehicles and they need good fuel economy as well.
    With regard to why the ethanol prices are--are--follow 
gasoline, I can't answer that. I don't--I don't know how they 
set prices on gasoline. I just know they seem awfully high.
    Chairwoman Biggert. Thank you.
    Mr. Honda.
    Mr. Honda. Thank you, Madam Chair.
    I was just going to make another comment. If the--if the 
goal is to be more independent of fossil fuel, what we haven't 
talked about is the utilization of solar on individual homes 
where individual homes will have what we call smart meters or 
net metering where you can use the static position of homes all 
across this country. And it'll vary based upon our climate. But 
it seems to me that coupling another technology with the 
technologies we're talking about relative to vehicles should be 
something that we should be including in our conversation. And 
so I was wondering in terms of electricity and plug-ins and all 
that sort of stuff, I think we depend upon two percent of our 
electricity is from petroleum, eliminate that. And we're trying 
to move away from carbons, even though carbons are our good 
friend that come from water and air rather than from petroleum 
or from the ground, it makes good sense.
    I was curious what other ideas you might have in 
conjunction with the mix and matching of our technologies? You 
may have to be brief because we only have a few minutes.
    Mr. Lovaas. Oh, we don't.
    I'm--I'm not that much of an expert on electricity. But as 
you said, two percent of our electricity comes from oil. So 
whatever we do in this sector with solar renewables, such as 
wind, isn't going to have much of an impact on our oil 
dependence. But shifting to those technologies will help and it 
will also help to displace the use of coal which is, frankly, a 
concern of NRDCs if we do using electricity more and more as a 
fuel in transportation. Unless we use surplus capacity, which 
is possible because a lot of people are going to be fueling up 
at night at their homes using off peak surplus capacity, and we 
don't have to build new plants, you know, that's okay. But if 
we have to build new plants, if we're concerned about the 
environment and about climate, then we have to make sure that 
we're cleaning up the grid and shifting away from coal to 
renewables.
    Chairwoman Biggert. The gentleman yields back.
    Mr. Lipinski for a quick question.
    Mr. Lipinski. Following up on that--on that use of 
renewables, I want to ask Mr. Hinkle about the use of 
renewables to produce hydrogen and how--how far you think that 
is a way to have maybe where you can produce hydrogen at your 
own home through a--maybe a solar? Because--I mean, this is 
something that's seen. There is a future of hydrogen, use solar 
energy at home, produce electricity with the solar, produce the 
hydrogen and how far away do you think something like that is?
    Mr. Hinkle. Well, Honda of course makes--makes a device 
now, it's not based upon solar, but it's--and it's a--but it's 
a bite size piece, it's a home sized piece that generates 
hydrogen.
    There needs to be just like on a very large scale with 
electrolyzers, there's a bunch of work still needs to be done 
on those even those there's been a commercial--a commercial 
technology for a long time. But the thing about hydrogen, it's 
scalable from very small to very large. And there still needs 
to be plenty of thinking and engineering and science that goes 
into that. But renewables, we did a lot of work when I worked 
for Senator Dorgan on wind on the wires in the Northern Great 
Plains. And wind on the wires for hydrogen could be very 
important, especially with the Western Area Power 
Administration, which is part of DOE. And that goes from the 
northern great plains into the great southwest and into 
California.
    Hydrogen in those high growth urban areas from renewable 
sources is going to be important, but you've got to do a bunch 
of stuff with the grid, you've got to invent some different 
control mechanisms and management for those and you've got to 
build things and you've got to do some things with extra 
materials to increase the throughput, the power throughput in 
the corridors where siting is a problem.
    So there's a big system problem associated with lots of 
renewables for hydrogen. But for solar, there's some 
interesting things and I hope California is able to--and 
Arizona are able to do things like that.
    Mr. Lipinski. Thank you.
    Chairwoman Biggert. Thank you very much.
    Thank you all. We've great panel of witnesses today. Thank 
you for your expert testimony and I think that we've all 
learned a lot and appreciate you being here.
    If there's no objection, the record will remain open for 
additional statements from the Members and answers to any 
follow up questions from the Committee. Without objection, so 
ordered.
    With that, this hearing is now adjourned.
    [Whereupon, at 12:02 p.m. the Subcommittee was adjourned.]

                               Appendix:

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                   Additional Material for the Record





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