[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
               THE GAS IS GREENER: THE FUTURE OF BIOFUELS

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

                                HEARING

                               before the
                          SELECT COMMITTEE ON
                          ENERGY INDEPENDENCE
                           AND GLOBAL WARMING
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 24, 2007

                               __________

                           Serial No. 110-15




             Printed for the use of the Select Committee on
                 Energy Independence and Global Warming

                        globalwarming.house.gov




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                SELECT COMMITTEE ON ENERGY INDEPENDENCE
                           AND GLOBAL WARMING

               EDWARD J. MARKEY, Massachusetts, Chairman
EARL BLUMENAUER, Oregon              F. JAMES SENSENBRENNER, Jr., 
JAY INSLEE, Washington                   Wisconsin, Ranking Member
JOHN B. LARSON, Connecticut          JOHN B. SHADEGG, Arizona
HILDA L. SOLIS, California           GREG WALDEN, Oregon
STEPHANIE HERSETH SANDLIN,           CANDICE S. MILLER, Michigan
  South Dakota                       JOHN SULLIVAN, Oklahoma
EMANUEL CLEAVER, Missouri            MARSHA BLACKBURN, Tennessee
JOHN J. HALL, New York
JERRY McNERNEY, California
                                 ------                                

                           Professional Staff

                     David Moulton, Staff Director
                       Aliya Brodsky, Chief Clerk
                 Thomas Weimer, Minority Staff Director


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Edward J. Markey, a Representative in Congress from the 
  Commonwealth of Massachusetts, opening statement...............     1
    Prepared statement...........................................     3
Hon. F. James Sensenbrenner, Jr., a Representative in Congress 
  from the State of Wisconsin, opening statement.................     5
Hon. Hilda Solis, a Representative in Congress from the State of 
  California, opening statement..................................     6
Hon. John Shadegg, a Representative in Congress from the State of 
  Arizona, opening statement.....................................     6
Hon. Stephanie Herseth Sandlin, a Representative in Congress from 
  the State of South Dakota, opening statement...................     7
Hon. Marsha W. Blackburn, a Representative in Congress from the 
  State of Tennessee, opening statement..........................     8
    Prepared statement...........................................     9
Hon. Emanuel Cleaver II, a Representative in Congress from the 
  State of Missouri, opening statement...........................    11
    Prepared statement...........................................    12
Hon. John Sullivan, a Representative in Congress from the State 
  of Oklahoma, opening statement.................................    13
Hon. Jay Inslee, a Representative in Congress from the State of 
  Washington, opening statement..................................    13
Hon. John Hall, a Representative in Congress from the State of 
  Washington, opening statement..................................    13
Hon. Candice Miller, a Representative in Congress from the State 
  of Michigan, Prepared statement................................    15

                               Witnesses

Mr. Adam Gardner, co-founder Reverb and member of Guster.........    20
    Prepared statement...........................................    23
    Answers to submitted questions...............................   116
Mr. Don Endres, CEO, VeraSun.....................................    31
    Prepared statement...........................................    34
    Answers to submitted questions...............................   119
Mr. Stephen J. Gatto, Chairman and CEO, BioEnergy International, 
  LLC............................................................    40
    Prepared statement...........................................    43
    Answers to submitted questions...............................   125
Dr. Susan Leschine, Professor, University of Massachusetts-
  Amherst and Founder and Chief Scientist, SunEthanol............    50
    Prepared statement...........................................    53
    Answers to submitted questions...............................   129
Mr. Nathanael Greene, Natural Resources Defense Council..........    67
    Prepared statement...........................................    69
    Answers to submitted questions...............................   134


      THE GAS IS GREENER ON THE OTHER SIDE: THE FUTURE OF BIOFUELS

                              ----------                              


                      WEDNESDAY, OCTOBER 24, 2007

                  House of Representatives,
            Select Committee on Energy Independence
                                        and Global Warming,
                                                    Washington, DC.
    The committee met, pursuant to call, at 9:41 a.m., in room 
2175, Rayburn, Hon. Edward J. Markey (chairman of the 
committee) presiding.
    Present: Representatives Markey, Inslee, Solis, Herseth 
Sandlin, Cleaver, Hall, McNerney, Sensenbrenner, Shadegg, 
Sullivan and Blackburn.
    The Chairman. This hearing is called to order. And I thank 
everyone for their participation in it.
    With oil prices, oil imports and global warming pollution 
rising, we urgently need alternatives to oil that enhance our 
economy, our security and our environment. Biofuels offer an 
alternative to oil that could allow us to use grass to make a 
greener gas. And although the United States has supported 
biofuels since the oil embargoes of the late 1970s and is now 
the largest producer in the world, biofuels still account for 
only 3 percent of total U.S. fuel consumption.
    In contrast, the potential of biofuel is great. The 
Department of Energy predicts that biofuels could displace 30 
percent of current fuel consumption by 2030. To get from 
today's 3 percent to tomorrow's 30 percent is going to require 
smart policies that focus innovation, investment and 
infrastructure towards the next generation of biofuels.
    Realizing the potential of biofuels to significantly reduce 
our oil dependence and global warming pollution will require 
unlocking the energy in the parts of plants currently 
considered too tough to use. Developing technologies to produce 
the so-called cellulosic ethanol and other advanced biofuels 
will open up an array of sources from which to produce 
alternatives to oil. Everything from agricultural and municipal 
waste to native prairie grasses could power our vehicles in the 
next few years and decades.
    In the future, the corner gas station might advertise that 
they can put a tulip in your tank rather than a tiger. By 
expanding the fuel possibilities, the next generation of 
biofuels will also expand the opportunity for all regions of 
the country to produce the fuels that meet their needs the 
best.
    Massachusetts once played a critical role in the U.S. 
energy supply back when Melville was writing by whale oil lamps 
about Captain Ahab's pursuit of Moby Dick. With the deployment 
of technology now being developed in the State, Massachusetts 
could once again begin to meet its own fuel needs and help 
other parts of the country do the same.
    Despite the promise of biofuels, we can't let them become 
our white whale of energy policy. We can't relentlessly pursue 
them and lose sight of the larger goals that combat global 
warming, preserve clean air and water and protect wildlife and 
human health.
    The 18th Century whalers almost hunted their fuel source 
out of existence. We must learn from them as we literally grow 
the fuel of the 21st Century. We have a chance to help develop 
a whole new industry that is good for people, their pocketbooks 
and the planet.
    As we reconcile the Senate and House energy bills this 
fall, we have the opportunity to steer the United States in a 
new energy direction. The Senate language would expand 
America's commitment to renewable fuels from 4.7 billion 
gallons required today to 36 billion gallons by 2022, more than 
half from new cellulosic and other advanced biofuels. This 
would save almost 1.6 million barrels of gasoline equivalent 
per day. Combining this with an increase in fuel economy and 
the rest of the best of the House and Senate legislation, 
Congress could send an energy bill to the President that has 
the potential by 2030 to save more than twice the amount of oil 
we currently import from the Persian Gulf, reduce U.S. global 
warming pollution by up to 40 percent of what we must do to 
save the planet and create over 1.5 million new jobs.
    Our witnesses today represent a broad spectrum of 
stakeholders in the biofuels industry from innovators to 
producers to consumers. I look forward to their testimony in 
hearing from them how Congress can help guide the development 
of a fuel source that reduces our oil imports and the dangers 
of global warming. I would now like to recognize the ranking 
member of the committee, the gentleman from Wisconsin, Mr. 
Sensenbrenner.
    [The prepared statement of Mr. Markey follows:]

    [GRAPHIC] [TIFF OMITTED] T8242A.001
    
    [GRAPHIC] [TIFF OMITTED] T8242A.002
    
    Mr. Sensenbrenner. Thank you very much, Mr. Chairman. I 
would first like to start out by thanking you for today's 
hearing. I believe that any discussion of energy policy must 
include a thorough examination of current and future 
technologies. And today's hearing on biofuels should give my 
colleagues and me the opportunity to explore the future of 
transportation fuels. I urge the Chairman to schedule more 
hearings on technologies that can help address energy 
independence and global warming. By creating fuel from crops 
and other biological materials, biofuels hold great potential 
to help we, in the United States, from dependence upon foreign 
oil and to help reduce our greenhouse gas emissions.
    While biofuels do offer some answers to both of these 
problems, one question is whether biofuels offer the right 
answers. They could very well. But at this point, the questions 
biofuels raise outnumber the answers. For instance, how much 
does the Federal Government need to subsidize corn-based 
ethanol, which seems to offer slight improvement in CO2 
emissions but also seems to put more pressure on food prices, 
water supply and quality and land use. Or would it be better to 
make biofuels from soybeans, sugarcane or switchgrass? In 
August, The Wall Street Journal reported the cultivation of a 
plant called Jatropha, a shrub found in India that can grow in 
almost any climate and can potentially produce biodiesel fuel 
at a cost cheaper than any of the other plants that I have 
mentioned today.
    Is the Jatropha plant an answer? And what about the 
alternative, such as hydrogen fuel cells? This technology has 
the potential to propel cars and trucks without creating any 
carbon dioxide emissions. But is it better than the biofuels 
currently under development? I don't know the answers to these 
questions, and I suspect the Congress doesn't either. This is 
another situation where I worry that instead of letting the 
markets decide which product or technology is best, the 
government will try to pick winners and losers.
    In July, this committee held a hearing on the plug-in 
gasoline electric hybrid car. At that time, I raised some 
questions but said, the free market should be free to figure 
this out on its own. Just yesterday, it appears that the market 
forces are starting to produce the answer. While General Motors 
and Toyota intend to keep developing hybrid technology, 
executives from Renault, Nissan and Honda said they see 
gasoline electric hybrid technology as flawed and will 
apparently invest in all electric car technology instead. 
Fortunately these executives made their decision without having 
to ask us in Congress what we think or us in Congress telling 
them what to do. An undercurrent of today's hearing is that the 
Federal Government should increase its mandated use of biofuels 
through a renewable fuel standard. Congress enacted such a 
standard in 2005, and witnesses today tell us that biofuel 
production has already exceeded the production requirements.
    Some will say that we need to raise the government's 
mandate even higher because the free market isn't responding. I 
am not so sure that it isn't. General Motors is aggressively 
advertising its fleet of flexible fuel vehicles. Both Chevron 
and British Petroleum are proudly highlighting their research 
on biofuels. The larger question is how we move from petroleum 
to alternative fuels without disrupting our economy. One way or 
another, the free market will give us an answer, and I will 
anxiously await the results. Thank you, and I yield back the 
balance of my time.
    The Chairman. Great. The gentleman's time has expired. The 
chair recognizes the gentlelady from California, Ms. Solis.
    Ms. Solis. Thank you, Mr. Chairman. And I want to commend 
our panelists for coming here this morning as well. I want to 
talk a little bit differently on another subject matter, and I 
know we are going to hear from you on the importance of 
biofuels and researching renewable energy.
    But I want to talk about what is happening right now in 
Southern California and the communities surrounding my 
district. Unfortunately, many people still don't believe that 
climate change is affecting States like California where, right 
now, we have 20 fires that are out of control. The fires have 
burned well over 420,000 acres, destroyed more than 1,200 homes 
and have forced evacuations of 1 million people who right now 
we are seeing the most devastating effects of climate change in 
the history of the State of California.
    Residents, as we know right now, are being sheltered at 
Qualcomm Stadium in San Diego, a military installation, and at 
high schools. The California Guard and Marines are being 
deployed to both help with the fires and provide security and 
assist in evacuations. Resources are also being volunteered by 
our friends south of the border, from Mexico. And these fires 
are devastating families, our communities, our economy and our 
State.
    And in June 2006--I just want to reiterate this--Science 
Journal researchers concluded that more than land use changes 
or forest management practices, the changing climate was the 
most important factor driving the increase in the average 
number of large wildfires in the western United States. Human 
activity has caused climate change. And only through human 
action can we mitigate and adapt these changes. Now more than 
ever I believe that we must have the courage to take swift 
action to implement an energy policy that relies less on 
greenhouse-gas-emitting fuels and a mandatory emissions 
reduction policy that quickly brings down emission levels. And 
I hope all my colleagues here on the dais and from all regions 
of the United States will join me in supporting our communities 
in Southern California as we struggle to stop the spread of 
these wildfires and cope with the devastation that they are 
leaving in their wake. And I hope my colleagues will join me in 
supporting efforts to combat global warming before its 
dangerous impacts become irreversible and more communities will 
suffer. I yield back the balance of my time.
    The Chairman. The gentlelady's time has expired, and we 
thank you for reminding us all of that here today. The 
gentleman from Arizona, Mr. Shadegg.
    Mr. Shadegg. Thank you, Mr. Chairman. And in the interest 
of getting to our witnesses' testimony, I will abbreviate my 
statement and ask unanimous consent to put my whole statement 
into the record. I want to begin by thanking you for holding 
this hearing on the importance of biofuels to both our 
environment and our economy. I strongly believe we need to 
reduce our dependence on oil and diversify our sources of fuel, 
especially our transportation fuels.
    I would note, however, a cautionary concern. This Congress 
in the past mandated MTBE without fully knowing the 
consequences of that additive, and as we all know, it has 
caused concern to our environment in terms of the migrating of 
that fuel out of tanks and damage to the environment. It seems 
to me we should use that experience as a guide here, learn as 
much as we can about alternative fuels, learn as much as we can 
about ethanol, encourage its use but encourage the use of those 
kinds of fuels in a way that will spur innovation. I think the 
Congress is not particularly well suited to predict the 
scientific future and to look into the future and to know what 
in fact are the best fuels and what in fact are the safest 
fuels and will cause the least environmental damage. But that 
is what this process is about, and I applaud the Chairman for 
holding the hearing.
    I do want to add as a point that, earlier this year, in the 
markup of the energy bill along with my colleague Mr. Melancon, 
I offered an amendment to require the EPA to both study higher 
concentrations of ethanol to determine what effect they will 
have on safety, air quality, engine operability in vehicles. 
And we also required in the amendment that the EPA take public 
comment and consider studies and review the impacts of higher 
blends of ethanol before those are used. My amendment was not 
intended to be anti-ethanol. It was intended to enable us to be 
fully informed before we proceed with the use of those higher 
concentrations of ethanol. The Australia version of the EPA has 
found in its studies that mid-level ethanol blends can cause 
problems in terms of--in current engines, obviously, hopefully, 
we can modify those, resulting in failure of exhaust 
components, engine damage, engine stalling, failure of engine 
cut-off switches and fuel leakages and blockage of fuel lines.
    Let me be clear, I am not suggesting that we ought not move 
forward with both ethanol and other alternative fuels. What I 
am urging is that we do so in a cautious and thoughtful way so 
that we get input; we get science; we hear from experts like we 
have before us here today. The amendment was supported by, 
among others, the American Lung Association, Clean Air Watch 
and the Natural Resources Defense Council.
    So I look forward to our witnesses' testimony today. I look 
forward to encouraging as much as we possibly can alternative 
fuels in a way which does benefit both the economy and the 
environment of the Nation and the world.
    The Chairman. Great. The gentleman's time has expired. The 
chair recognizes the gentlelady from South Dakota, Ms. Herseth 
Sandlin.
    Ms. Herseth Sandlin. Thank you very much, Mr. Chairman. I 
want to thank you for holding this hearing and for your 
leadership on this issue. As you and I think the rest of the 
members of the panel know, this is an issue about which I am 
quite passionate. I believe that a strong commitment to 
biofuels production and use in this country must be one of the 
linchpins of our National Energy Policy in the decades to come 
and helps provide a significant part of the solution to global 
climate change.
    With that in mind, I am especially pleased and appreciative 
we have invited one of the most innovative biofuels 
entrepreneurs in the country here to testify before us today. 
Don Endres of Brookings, South Dakota, is the founder of 
VeraSun Energy, which has, in the few short years since its 
creation, grown to be one of the largest ethanol producers in 
the country. Don is one of my touchstone contacts on all 
matters pertaining to energy and biofuels, and I consider him 
one of the foremost experts in the country on biofuels issues. 
I think you will find his testimony and experience to go 
directly to some of the comments already made by other members 
of the panel as it relates to the importance of technological 
advancement, not only for corn ethanol but cellulosic ethanol 
and the work that he and others in the industry are doing to 
reach the goals that we have been advocating. I am very pleased 
he was able to attend the hearing today, commend his testimony 
to all of my colleagues. I think he will offer a description of 
the current market conditions, which support the need for 
fostering the market further with a more aggressive Renewable 
Fuels Standard. I also am pleased to inform you that there will 
be a biofuel vehicle demonstration following the hearing.
    I drive a Chevy Impala that runs on E85 and a Jeep Liberty 
that runs on biodiesel. So I am pleased that other Members of 
Congress will get a chance to learn more about those vehicles 
today and the importance of infrastructure for distribution of 
biofuels and the production of flex fuel vehicles. So, thank 
you, again, Chairman Markey, for holding the hearing. I thank 
all of our witnesses for their testimony this morning.
    The Chairman. The gentlelady's time has expired. The 
Chairman recognizes the gentlelady from Tennessee, Mrs. 
Blackburn.
    Mrs. Blackburn. Thank you, Mr. Chairman.
    I also thank you for holding the hearing today. And I thank 
the witnesses for being with us today. I will submit my full 
statement for the record. And we are all anxious to move on to 
what they have to say. But just very briefly, we are all 
concerned about energy security. We are glad that there are 
entrepreneurs who are looking at the issue and looking at the 
use of biofuels. We all understand the nature of biofuels from 
which they are derived. We also know that there are some 
inventive processes, like Mr. Gardener's, that are taking place 
with some mixed usage. We are looking forward to hearing a 
little bit more about that. We do have some concerns. Water, 
land, availability, the cost, the impact that it has on food, 
figuring out what works and what doesn't work, looking at waste 
products, seeing what is going to be economically and 
commercially viable are all issues that we will want to talk 
with you about.
    Looking at the distribution and infrastructure systems of 
those, hearing a little bit more from you about that 
commercialization and distribution process is going to be of 
interest to us. We know that there is no silver bullet, but we 
appreciate the perspective that you bring to us. And with that, 
Mr. Chairman, I will yield back and look forward to the 
question-and-answer session.
    [The prepared statement of Ms. Blackburn follows:]

    [GRAPHIC] [TIFF OMITTED] T8242A.003
    
    [GRAPHIC] [TIFF OMITTED] T8242A.004
    
    The Chairman. Great. The gentlelady's time is expired. The 
chair recognizes the gentleman from Missouri Mr. Cleaver.
    Mr. Cleaver. Thank you, Mr. Chairman. I appreciate your 
leadership and the vision you have for the work of this 
committee. I will reserve my time primarily for questions from 
these experts who are before us.
    I do recognize that biofuels are a part of the solution to 
the tailpipe CO2s that are generating the greenhouse 
gases that helped fuel the fires in California. Even though I 
recognize, as I operate out of no illusion, biofuels will not 
solve the enormous challenges before us, but I do believe that 
we can and should maximize the use of sustainable sources of 
domestic energy. And so I am looking forward to hearing from 
our panelists and finding out from them what the challenges 
they face in producing and developing biofuels. Thank you very 
much, Mr. Chairman. And I yield back the balance of my time.
    [The prepared statement of Mr. Cleaver follows:]

    [GRAPHIC] [TIFF OMITTED] T8242A.005
    
    The Chairman. Great. The gentleman yields back the balance 
of his time. The chair recognizes the gentleman from Oklahoma 
Mr. Sullivan.
    Mr. Sullivan. Thank you, Mr. Chairman. And I just want to 
thank the witnesses for being here today, and I look forward to 
hearing what you have to say about this very important issue, 
biofuels. And I yield back.
    The Chairman. Great. The gentleman's time has expired. The 
chair recognizes the gentleman from Washington State, Mr. 
Inslee.
    Mr. Inslee. Thank you. I think it is a very important 
hearing. I appreciate the chair having it. I have been 
travelling a lot the last couple of months, talking about clean 
energy issues. And what strikes me is the people's love of 
biofuels, which is also matched by their anxiety about what 
happens if we don't move forward in biofuels. And I think it is 
very important to share with the public the potential of the 
next several generations of biofuels so that we can continue 
this train on the tracks. So I appreciate this hearing and 
opportunity to do that. Thank you.
    The Chairman. Great. The gentleman yields back the balance 
of his time. The chair recognizes the gentleman from New York 
State, Mr. Hall.
    Mr. Hall. Thank you, Mr. Chairman.
    With oil headed toward the astronomical height of $90 per 
barrel, the skyrocket gas prices in the home heating season 
rapidly coming upon us, it is clear that there could be no 
better time to have a serious discussion of biofuels.
    In my own home, I am burning the highest possible blend of 
biodiesel in my heating oil. In my district, there are several 
commercial and private producers of biofuels, and nationally, 
an aggressive investment in biofuels technologies could have 
tremendous results for our economy, our independence, our fight 
against global warming and our sovereignty.
    I just heard in a briefing this morning by Lee Hamilton, 
half of the leadership of the Baker-Hamilton study, of course, 
about how our options in terms of promoting democracy in Saudi 
Arabia is severely and seriously limited by our being held over 
a barrel, literally, a barrel of oil by the Saudis because of 
our current need for their product. We should be doing more to 
increase the production of cellulosic biofuels and biodiesel at 
home, providing more Federal investment to help the existing 
production grow and financing research and development of new 
types of biofuels.
    We need to make it easier for these fuels to come to 
market. I had a constituent call one of our offices in New York 
all excited because he had just bought a flex-fuel vehicle, and 
she wanted us to tell her where the nearest pump was. And we 
were sorry to tell her there were only two E85 pumps in New 
York State, out of the 1,300 or so in the country. So even if 
you have a flex fuel car, the odds are you are not going to be 
able to get the benefit from it. Thirdly, we need to make it 
easier for the average consumer to use these products, which 
means making furnaces that can burn biofuels and more cars that 
can run on them more available and more affordable. Working 
towards these goals, we also need to be careful that we are 
sure that we are getting the most out of our investment by 
making sure that we maximize our greenhouse gas reductions and 
produce biofuels in a way that is consistent with land use and 
does not adversely affect the cost of fuel or feed. I look 
forward to hearing from our witnesses and yield back.
    Mr. Chairman, thank you.
    The Chairman. The gentleman's time has expired. All time 
for opening statements from members of the Select Committee has 
expired.
    [The prepared statement of Ms. Miller follows:]

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    The Chairman. We will now turn to our witnesses. And our 
first witness is Adam Gardner. Even though Adam now calls 
Portland, Maine, home, he and his bandmates from Guster are 
indeed favored sons of my home State of Massachusetts. They 
formed a band while at Tufts University and sold their CDs in 
Harvard Square. Today, Guster has sold over a million records 
and has become one of the Nation's leading touring bands, 
playing sold out shows from Radio City Music Hall to Farm Aid 
to the Boston Symphony Hall, where they performed with the 
famous Boston Pops.
    Four years ago, Adam and his wife, Lauren, decided to start 
Reverb, a nonprofit that educates fans and other musicians 
about environmental sustainability. They have greened 42 
touring bands and, among many initiatives, encouraged touring 
musicians to switch to biodiesel bus travel.
    Mr. Gardner, whenever you are ready, please begin.

  STATEMENT OF ADAM GARDNER, CO-FOUNDER, REVERB, AND MUSICAL 
                         ARTIST, GUSTER

    Mr. Gardner. Check, one, two. Is this on? Hello? Sorry. 
This is always what we do when we play gigs.
    Chairman Markey, Ranking Member Sensenbrenner, and ladies 
and gentlemen of the committee, thank you for inviting me to 
testify today. It is truly an honor to be part of this dialogue 
on global warming. As a musician who spends most of his time 
either on the road in a tour bus or on stage in a t-shirt, I 
also want to thank you for the opportunity to wear this suit 
today to something other than a wedding or a funeral.
    My band Guster started touring 14 years ago from our home 
base in Boston. We started in a small van and eventually 
graduated to a tour bus and an 18-wheel truck for our 
equipment.
    We knew our tours consumed a lot of fuel, and you can only 
nickname your tour bus The Earth Eater for so long before 
making a change. We wanted our actions to match beliefs and I 
thought there were a lot of other bands out there that felt the 
same way but just didn't know where to begin. In response, my 
wife, Lauren Sullivan, who has been working in the 
environmental community as long as I have been playing in a 
rock band, decided to create Reverb, a nonprofit organization 
dedicated to educating and engaging musicians and their fans to 
promote environmental sustainability.
    Over the past few years, we have worked with over 45 major 
national tours to implement a laundry list of greening efforts 
that reduce waste and carbon emissions backstage while 
simultaneously educating and activating concertgoers through a 
festival like Eco-Village out front. Reverb also launched The 
Campus Consciousness Tour, now in its third year, to bring our 
unique environmental program to college campuses across the 
country while adding daytime activities, such as open town hall 
forums with students, band members, environmental groups on 
campus, faculty and administrators, to discuss sustainability 
on campus and what students can do to make a difference.
    To date Reverb's efforts have reduced CO2 
emissions by more than 25,000 tons, facilitated the use of over 
250,000 gallons of biodiesel, involved more than 1,400 local 
and national environmental groups in the Reverb Eco-Village and 
reached over 4.4 million concert goers face to face.
    Reverb does green tours for Dave Matthews Band, Norah 
Jones, Red Hot Chili Peppers and many, many more. Reverb's 
biodiesel efforts seemed to spark the most interest in 
conversation on the road with everyone from truck drivers to 
record label executives. I suppose this is because biodiesel 
appeals to so many different stakeholders and has a wide array 
of possible uses and benefits. Biodiesel allows us to power 
vehicles while also protecting the environment, facilitate our 
independence from dangerous foreign oil dictatorships and can 
support jobs in local and rural communities. The use of 
biodiesel is radically changing the music touring industry. And 
there is no reason why we couldn't continue to broaden its 
reach. Ideally, some day soon, our fans will drive to concerts 
in biodiesel cars of their own, maybe even plug-in hybrids. 
That would be cool.
    For Guster, making strides towards kicking our own oil 
addiction hasn't been easy. We had to leave our first bus 
company to find one that would allow us to put B20 in the 
tanks. At the time, there were only one or two such companies 
in existence. Finding biodiesel pumps on tour has been hard. 
With just 1,100 around the country, Reverb has to coordinate 
local suppliers to deliver fuel to bands on the road. But since 
we have started, we have seen biodiesel skeptics quickly 
convert to advocates. Drivers found that engines ran cleaner 
and cooler, and bus and truck companies have been responding to 
the increased demand from artists.
    While our Nation has made great strides in biodiesel 
production, there are a number of ways we could continue to 
improve. The energy bills that the House and Senate passed this 
summer are a great start. Increasing production from renewable 
energy sources like sugar, wood and algae, while beefing up 
infrastructure, allowing consumers better access to biofuels at 
the pump is a key component. I encourage you to keep this 
energy bill green, allowing Congress to take its first real 
step in the fight against global warming.
    Corporations can do more as well. I would like to see auto 
companies encourage the use of biodiesel in higher blends all 
the way up to pure B100 rather than holding the line at a 5 
percent blend.
    I would also hope that the agricultural community could 
come together. Guster was thrilled to play with Willie Nelson 
at Farm Aid where we heard firsthand from small family farmers 
who want to be part of the solution. There I had the pleasure 
of meeting the founders of the Sustainable Biodiesel Alliance. 
The SBA is a nonprofit group whose mission is to promote 
sustainable biodiesel practices from harvesting to production 
to distribution, keeping both environmental and social 
considerations to heart. It would be awfully ironic to go from 
reliance on irresponsible oil companies to a biofuels industry 
dominated by large-scale commercial farming at the expense of 
small farmers, community economics and the environment.
    If done right, biodiesel offers the unique opportunity for 
a field product that is not just less bad than petroleum diesel 
but is an actively good fuel that can reinvigorate our local 
economies and actually replenish and revive the environmental 
damage that we have caused.
    On my path I have encountered so many inspiring, motivated 
and truly selfless individuals who are determined to create and 
propagate positive change. From pioneer artists like Neil Young 
and Bonnie Raitt, who have been circling the country using 
biodiesel for several years now, to the City of Milwaukee's 
Venu Gupta, who powers his fleet municipal fleet with millions 
of gallons of biodiesel made right in Mr. Sensenbrenner's home 
State of Wisconsin.
    Most inspiring are the countless conversations held with 
the millions of music fans at the Reverb Eco-Village. I invite 
you all to the next Reverb show, so you can take part in this 
dialogue where talk of global warming doesn't center around 
doom and gloom but rather optimism, commitment and creative 
solutions. It is a generation that stands ready to stare down 
the greatest challenge they will have to face, but they also 
look to you on your stage to lead the way.
    I see this moment in time, a relative flicker when 
considering the earth's age, as a critical one. The growing 
wave of momentum to defeat global warming during this small 
window of opportunity could very well determine what life will 
look like on the other side of that flicker. Thank you.
    [The prepared statement of Adam Gardner follows:]

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    The Chairman. Thank you, Mr. Gardner, very much.
    Our next witness is Don Endres, who is the CEO of VeraSun 
Energy, the second largest ethanol producer in the United 
States, 250 million gallons a year and growing. Only ADM is 
beating you. They have also developed a technique to produce 
biodiesel from distillers grains, one of the byproducts of corn 
ethanol. VeraSun has plants in Ohio, Indianapolis, Minnesota, 
Iowa, Michigan and Mr. Endres's home State of South Dakota.
    Recently VeraSun and Enterprise Rent-A-Car announced that 
the two companies will work together to use VeraSun E85 brand 
in Enterprise's flex-fuel vehicles wherever E85 is available.
    Mr. Endres, when you are ready, please begin your 
testimony.

          STATEMENT OF DON ENDRES, CEO, VERASUN ENERGY

    Mr. Endres. Good morning, Mr. Chairman, members of the 
committee. Thank you for inviting me to testify today on behalf 
of VeraSun.
    I grew up on a farm in South Dakota, and I am pleased to be 
representing one of the Nation's largest biofuels companies. We 
have four operating facilities in production today. We have 
four more under construction and one more facility under 
development. Once we are complete with these new facilities, 
VeraSun will have an operating capacity of approximately 1 
billion gallons per year. We believe ethanol from cellulosic 
feed stocks will complement corn-based ethanol in meeting the 
growing demand for renewable fuels. VeraSun has have invested 
in SunEthanol, a Massachusetts-based company working to 
cellulosic ethanol production technology.
    The ethanol industry has grown significantly in recent 
years due to the demand from the market in part because of the 
policies put in place by the Federal Government. Today, 
approximately 50 percent of the Nation's gasoline is blended 
with ethanol. Because of the growth of the ethanol industry, it 
appears now that there will be enough ethanol to blend 10 
percent and 100 percent of the U.S. gasoline business.
    Clearly, the expansion of the ethanol industry is a success 
story. It is the most significant step this Nation has taken to 
diversify our liquid transportation fuel since the advent of 
the automobile a century ago. But we are just beginning. Today 
the industry is still too small. Our 7 billion gallons of 
current capacity makes up only 5 percent of the 140 billion 
gallon gasoline market.
    Now is the time to springboard from the solid foundation of 
the ethanol industry to diversify both the feed stock used to 
produce renewable fuels and how they are used in our 
transportation fleet. If we are going to make game-changing 
steps towards energy independence, addressing global warming 
and creating new economic opportunities, three very important 
items have to come together.
    First, enterprise must be empowered to work. Second, the 
Federal Government must lay the framework to enable the 
industry to succeed. And third, consumers must have both the 
access and the incentive to join our commission.
    Oil is now regularly breaking new record highs. This has 
caused a lot of players to jump into the race to find 
alternatives. In the past, their enthusiasm in investment rose 
and fell with the cost of a barrel of oil. While this could 
happen again, I believe that world events have created a 
fundamental change.
    Walter Wristen, the former chairman of Citibank, once 
famously said that capital goes where capital is well treated. 
And the worst way to treat capital is to throw it into 
uncertain situations. It is critical now more than ever that we 
have Federal support to help achieve ethanol's potential.
    Our first objective should be to look at every opportunity 
in Congress to achieve the certainty that vital investment 
capital is looking for, product demand. I experienced firsthand 
the importance of government policy when we took VeraSun public 
in 2006. It became very clear very quickly that people 
participating in the financial markets understood the 
importance of renewable fuels, and they were excited about 
investing in something that could do so much good for our 
national security, our economy and our environment.
    Their big questions were about policy. What role would the 
government play in promoting renewable fuels? Would the 
Renewable Fuels Standard work as promised? The same questions 
about government policy that faced VeraSun in 2006 are facing 
those seeking investment in cellulosic technologies from the 
financial markets today. How much demand will there be for 
ethanol beyond 14 billion gallons of demand created through the 
E10 market? Will the Federal Government expand the RFS? How can 
E85's availability be jump started?
    It is critical that the Federal Government act this year to 
pass an energy bill that begins to address these questions if 
we want to see continued growth of the ethanol industry. The 
ethanol industry is outpacing the current RFS schedule. Under 
the current law, if RFS mandates the use of 4.7 billion gallons 
of ethanol in 2007. And according to the Renewable Fuels 
Association, the ethanol industry is on pace to produce nearly 
6.5 billion gallons of ethanol this year. Because of this, the 
RFS is not acting as a market driver at the present time. That 
being said, with ethanol selling at $1.55 per gallon and 
conventional gasoline selling at over $2 a gallon, ethanol 
clearly is lowering fuel cost at the pump. By blending ethanol 
and gasoline today, some refiners are passing considerable 
savings to consumers.
    Unfortunately, not all refiners are capitalizing on the 
economic advantages of blending ethanol. One of the most 
effective things Congress and the President can do in the short 
term is to enact an energy bill this year that increases the 
RFS. The Senate-passed RFS calls for 8.5 billion gallons in 
2008; 10.5 in 2009; and 12 billion gallons in 2010. These early 
increases are critical to fostering the continued development 
of the ethanol industry.
    Beyond addressing these near-term issues, the Federal 
Government should send a clear long-term message to the 
industry to support continuing investment in growth. We support 
the Senate's call to expand the RFS to 36 billion gallons by 
2022, including a significant call for ethanol production from 
cellulosic material. We believe this is a very achievable goal 
but one that will require widespread adoption of E85 usage. 
Without E85 demand, the market will not support the early-stage 
development that is necessary to unlock the potential that 
cellulosic ethanol holds.
    As one of the largest biofuels producers, we assumed large 
responsibility to ensure a robust E85 market occurs. Today, 
only 1,350 stations of 180,000 offer E85. We must do better. In 
early 2005, VeraSun launched the Nation's first blended E85 
product. We began the program in May of 2005 with the 
conversion of 35 pumps in Sioux Falls, South Dakota. At the 
time, we launched a marketing program to raise awareness to the 
benefits of flex-fuel vehicle ownership, E85 use and enlisted 
the support of GM. E85 sales rose. Demand for flex fuel 
vehicles increased, and consumers have been very pleased.
    Today, VeraSun has a total of 110 retail locations around 
the country selling E85, including one right here in the 
District of Columbia. From this experience, we have gained 
significant insight about what is necessary to develop E85 in 
the United States. As VeraSun works to expand the number of 
stations----
    The Chairman. If you could summarize, that would be great.
    Mr. Endres. Sure. I would like to just conclude by saying, 
ethanol today represents a great early solution to the biofuels 
industry. It doesn't come clearly formed, complete in perfect 
form. But in fact we very much believe that ethanol today 
represents a great opportunity to reduce reliance on foreign 
oil, reduce greenhouse gases and improve fuel economies around 
the country.
    [The prepared statement of Don Endres follows:]

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    The Chairman. Thank you, Mr. Endres, very much. Our second 
witness, Steven Gatto, is the Chairman and CEO of BioEnergy 
International, a company that has two 108 million gallons per 
year of corn ethanol plants in Pennsylvania and Louisiana. They 
are also planning to build a smaller scale cellulosic pilot 
plant.
    Mr. Gatto, we are very pleased to have you with us today. 
Whenever you are ready, please begin.

  STATEMENT OF STEPHEN J. GATTO, CHAIRMAN AND CEO, BIOENERGY 
                      INTERNATIONAL, LLC.

    Mr. Gatto. Thank you, Mr. Chairman, members of the 
committee. Thank you for inviting me here today to talk about a 
very important issue. I applaud your leadership in recognizing 
the urgent need to change our energy paradigm.
    To the Chairman in particular, your leadership has inspired 
me over the last 15 years. When I would come to Washington back 
in the late 1990s to discuss ethanol, I was occasionally 
referred to as the village idiot. Gasoline was selling for 
about $1.30 a gallon, and no one had ever heard of the word 
cellulose. Mr. Chairman, you were one of the few who listened 
and inspired me to make a difference, and for that, I 
profoundly thank you.
    Since then, I have had the privilege of serving on the 
Biomass Technical Advisory Board under President Clinton and 
President Bush. I have also worked with some congressional 
committees, helping to create the Energy Policy Act, 
particularly the cellulose component.
    As the Chairman knows, I came to this industry somewhat 
circuitously in the late 1980s. I have a cousin who is an avid 
environmentalist who took me to New Hampshire to talk about 
composting of municipal solid waste. And about the same time 
frame, I was introduced to a technology that had just gotten 
patent number 5 million. It was a little bug that loved to eat 
all the sugars from biomass. I figured it had to be a hell of a 
lot more profitable for us to make booze instead of making 
dirt. As a result, I launched what was one of the first 
cellulosic ethanol companies in the country.
    BC International, which later became Celunol and is now 
Verenium, proved the technology was viable after developing and 
operating three successful pilot plants. We arranged financing 
for what would have been the first commercial cellulosic 
demonstration on sugarcane, bagasse and rice hulls in 
Louisiana; 9/11, a change in administration, the deal fell 
apart, the industry set back a decade, set back not because of 
a failure in technology but because of lack of incentives, and 
moreover, a lack of vision of what was to come.
    Today, with oil pushing $90 a barrel, the tragic loss of so 
many lives in the Middle East and hydrocarbons fueling the 
climate crisis, we cannot afford another decade of delay. My 
message is simple yet urgent. The ethanol industry is at a 
tipping point. We are at the brink of the next industrial 
revolution, on the verge of transforming our economy from a 
carbon-based society to a carbohydrate-based program with next-
generation biorefineries. I would suggest this is the year we 
either commit ourselves to an all-out offensive to reduce our 
dependency on oil, to stop funding radical countries that 
continue to do us harm and to reduce our insatiable use of 
fossil fuels to stem our climate crisis.
    I don't want to tell my grandchildren we failed because of 
lack of will. We need bold leadership to replace foreign oil 
with domestic production, first from corn, then cellulosic feed 
stock, such as agricultural waste and municipal waste.
    This effort is no different than the challenge faced in the 
1960s by President Kennedy. He wanted to put a man on the moon. 
However, we did not attempt to do this all at once. We had a 
program sparked by vision, propelled by leadership, but 
grounded and faced yet ambitious milestones. We shot a rocket 
in the air, circled the earth, flew around the moon and finally 
landed on the moon. It changed history forever. We need that 
kind of vision and commitment from you all today.
    Let there be no doubt, the energy bill this year is the 
fight of our generation. Clearly, with all the discussion of a 
glut, the biofuels industry has met the call to action and 
surpassed the current RFS for all the right reasons: energy 
independence, global climate change, jobs and American 
prosperity. The question and opportunity is, what do we need to 
do to provide America with a self-sustaining program that has 
an evolution with a beginning, a middle and an end? Home-grown 
fuels initially from corn, then biomass, which is available 
from every region of this country. The earth's ability to 
produce sugar from biomass is virtually unlimited. The story 
sounds too good to be true, but it is real and has already 
committed to an economic boom in this country, as other 
sectors, such as housing, lag.
    Today I serve as Chairman and CEO of Bioenergy 
International, a science and technology leader in the 
development of multiproduct biorefineries that produce a wide 
range of biofuels and bio-based specialty chemicals.
    We just launched the first-of-its-kind research facility in 
Woburn, Massachusetts, after spending the better part of the 
last 2 years assembling a world renowned team and developing a 
strategic vision, routed in the integration of three specific 
initiatives. First was the creation of a secure cash flow 
stream from traditional corn plants. It pays the bills. It gets 
the business started. These are our cheap sugar platforms. 
Second is the use of BioEnergy's novel biocatalyst to 
manufacture green chemicals and biopolymers from the very same 
cheap sugar. This diversifies revenue. And lastly, with the 
integration of our cellulose technology, retro-fitting existing 
and building future plants that drive down costs and move away 
from food-based raw materials.
    These three collective steps we believe are essential to 
ensure long-term financial success and continue to drive 
investment and interest in this sector. I believe we are very 
close to a day when a pound of sugar can replace a barrel of 
crude in the manufacture of everything from the fuel we put in 
our cars to the plastics and fabrics we use in our everyday 
lives. I am especially proud of the ethanol industry and its 
extraordinary progress in the fight to reduce our Nation's 
dependence on imported oil.
    The Chairman. If you could summarize, please.
    Mr. Gatto. With an expanded RFS, we achieve energy 
independence, combat global warming and provide American jobs 
in communities throughout the country. The bottom line is, corn 
has and cellulose technology will change the game forever, and 
it will spur $2 to $3 trillion in new investment. Today we not 
only have the responsibility to transition away from fossil 
fuels; with ethanol, we have the ability to do so. The 
immediate challenge for all of us here today is not to get 
bogged down in the incidental issues of first-generation corn 
plants but to focus the real challenge to this committee and 
all of us to wean ourselves off the perils of oil as quickly as 
we can. Thank you.
    [The prepared statement of Stephen J. Gatto follows:]

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    The  Chairman. Thank you, Mr. Gatto, very much.
    And our next witness is Dr. Suzanne Leschine, who is a 
professor of microbiology at U. Mass-Amherst and codirector of 
the Biofuels Research Institute. She is also the founder and 
chief scientist of a cellulosic ethanol company, SunEthanol.
    We welcome you, Doctor. Whenever you are ready, please 
begin.

   STATEMENT OF SUSAN LESCHINE, FOUNDER AND CHIEF SCIENTIST, 
            SUNETHANOL, AND PROFESSOR, U. MA-AMHERST

    Ms. Leschine. Good morning, Mr. Chairman, and members of 
the committee. I thank you for giving me this opportunity to 
speak today on the subject of biofuels and the impacts of 
biofuel development on energy independence and global warming. 
I am a professor of microbiology at the University of 
Massachusetts, Amherst, and a founder and chief scientist at 
SunEthanol, a new biofuels technology company headquartered in 
Amherst.
    I also serve as codirector of the Institute of 
Massachusetts's Biofuels Research at U. Mass-Amherst, which was 
established by an interdisciplinary team of scientists and 
engineers to develop cost-effective technologies for producing 
biofuels and other value-added materials from biomass. Our goal 
is to establish the scientific and technological basis to 
enable the U.S. to meet the Department of Energy 30/30 goals, 
30 percent gasoline reduction by 2030.
    The link between fossil fuel combustion and global warming 
is compelling. We urgently must begin to limit greenhouse gas 
emissions. The need to limit greenhouse gas emissions has 
become even more critical with recent results reported this 
week in the proceedings of the National Academy of Sciences; 
first that carbon dioxide emissions are growing at a much 
faster rate than anticipated, and secondly, the ability of the 
land and the oceans to absorb carbon dioxide from the 
atmosphere has actually diminished.
    Clearly, as we look to the future in meeting our 
transportation fuel needs, we must limit the use of fossil 
fuels. The only form of energy that can contribute 
substantially to fulfilling transportation fuel requirements at 
costs competitive with fossil fuels is solar energy captured by 
photosynthesis in plants and stored in the form of biomass. At 
present, plant biomass is the only significant source of liquid 
transportation fuels that may replace the world's finite supply 
of oil.
    Ethanol derived from biomass is one of the most promising 
biofuels. In addition to reducing our dependence on imported 
oil, thereby improving domestic energy security and lowering 
the U.S. trade deficit, biomass ethanol production will also 
yield environmental benefits in the form of reduced greenhouse 
gas emissions. In addition, the increased value of agricultural 
crops, crop residues, new energy-specific crops will benefit 
rural economies through higher incomes and increased employment 
opportunities. Economic modelling studies suggest that simply 
integrating cellulosic biomass crops into the agricultural 
rotation of existing cultivated acreage could increase the net 
income of U.S. farmers by 32 percent or $23 billion.
    In Massachusetts, where forest growth exceeds wood harvest, 
biomass from wood is a sustainable resource. The total woody 
biomass supply in Massachusetts has been estimated to be 4.4 
million tons per year, which could theoretically yield more 
than 400 million gallons of fuel ethanol.
    The relative benefits of biomass ethanol compared with 
fossil fuels have been passionately debated. Important 
questions have arisen concerning the energy return on 
investment, the ratio of ethanol energy output compared to 
nonrenewable energy input required to produce ethanol fuel. It 
is very important to note that several peer-reviewed studies 
have concluded that the energy return on investment for fuel 
ethanol production is favorable. Corn ethanol energy yields are 
favorable, and cellulosic ethanol energy yields have the 
potential to be even more favorable.
    Clearly, the production of ethanol from cellulosic biomass, 
such as wood chips, switchgrass, corn stover and other 
agricultural waste, has a clear advantage over gasoline. In 
large part, this energy advantage arises from the fact that 
biomass ethanol production makes use of the whole plant. The 
useable fermentable components of a plant, cellulose, which we 
now know what that means, and other polysaccharides are 
separated from the nonfermentable liquid component, which then 
can be burned and used as fuel to power ethanol production 
facilities.
    It is very important to point out that the corn ethanol 
industry will play a central role in the future development of 
biofuels in this country. New technologies for cellulosic fuels 
are being built upon the pioneering expertise developed by the 
corn ethanol industry. Also, the industry has demonstrated that 
the agricultural sector of our country can play a key role on 
our path to energy independence.
    Cellulosic ethanol is a reality. Demonstration plants are 
in operation and full-scale commercial plants are in 
construction. At the same time, new technologies are being 
developed and must be developed for more efficient and more 
cost-effective conversion of biomass to ethanol biofuel, 
specifically to overcome the resilience of cellulosic biomass.
    Plants are tough things. Plant biomass is composed of 
highly ordered sugar polymers, such as cellulose. These plants' 
components are shielded by a matrix of other complex plant 
polymers. The recalcitrants of cellulosic biomass to 
processing, for example, by enzymes poses a significant 
obstacle to developing cost-competitive cellulosic ethanol 
technologies.
    The Chairman. If you could please summarize.
    Ms. Leschine. Yes. I just want to conclude by saying that, 
at SunEthanol, we are developing a strategy to overcome the 
recalcitrants of cellulose using a microbe actually discovered 
in Massachusetts, a microbe from Massachusetts. And we hope 
that by using this technology, we will be able to bring down 
the costs of cellulosic ethanol production and make this a 
reality.
    In conclusion, cost-effective cellulosic ethanol production 
is achievable in the near term. This will be a monumental task. 
It is essential that there be significant resources invested 
for research and development at both the applied and basic 
science levels. Such investments will have enormous positive 
impacts on the environment and the economy, especially 
benefiting rural economies. Given that biomass is a regional 
resource, the impacts will be broad and widespread across the 
country. Perhaps most importantly, it is essential that we 
begin to limit greenhouse gas emissions. Renewable and 
sustainable biofuel production must be a key component of our 
energy future. Thank you.
    [The prepared statement of Susan Leschine follows:]

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    The Chairman. Thank you, Doctor, very much.
    And our final witness, Nathanael Greene, is a senior energy 
policy specialist working on issues that relate to renewable 
energy for the NRDC, the National Resource Defense Council.
    We welcome you, Mr. Greene. Whenever you are ready, please 
begin.

 STATEMENT OF NATHANAEL GREENE, SENIOR POLICY ANALYST, NATURAL 
                   RESOURCES DEFENSE COUNCIL

    Mr. Greene. Thank you, Mr. Chairman, and members of the 
committee.
    As was noted earlier, in the fight against global warming, 
there is no silver bullet. At best, there is a silver buckshot. 
I believe that biofuels can be an important contributor to the 
fight against global warming, one of those pieces of buckshot.
    But as opening statements of all the members of the 
committee noted, there is also the potential for biofuels to 
backfire, to make global warming worse and to threaten our 
lands, forests, water, wildlife and the public health. New 
crops and technologies that are being developed today and moved 
from the lab to the marketplace, such as the technologies we 
have heard about from some of the other witnesses, will make it 
easier to produce a lot of biofuels with a smaller 
environmental footprint. But just because we can use those 
technologies in a more sustainable way doesn't mean that we 
will. I think it is a critical mistake to assume that 
technologies or feed stocks are a quick fix to the challenges 
of biofuels.
    I think these new technologies are very promising, but just 
as it is a mistake to assume that they will fix our problems, 
it is a mistake to assume that the existing corn ethanol 
technologies are somehow inherently flawed just because they 
only provide marginal benefits. We can make corn technologies 
much better, and we can use advanced technologies in very 
unfortunate and flawed ways.
    To address this issue, we really need strong environmental 
safeguards and performance standards. It is time to shift our 
bioenergy policies and our global warming policies really away 
from a ``more is better'' strategy to a ``better is better'' 
strategy. This means moving away from a simple volume-related 
standard and the flat per-gallon tax credit to policies that 
reward performance.
    Congress should adopt a low-carbon fuel standard, as 
California is planning to do. The low-carbon fuel standard 
rewards progressive reductions, requires progressive reductions 
in the average greenhouse gas emissions from our transportation 
fuels. This approach rewards gallons of renewable fuels, 
electricity, hydrogen, any transportation fuel that can help 
reduce the average greenhouse gas emissions of transportation 
fuels.
    In the context of the current comprehensive energy bill 
that is being debated and reconciled between the House and the 
Senate, we should include an expanded Renewable Fuels Standard, 
but we should make sure that it includes the environmental 
safeguards and performance standards that will move it towards 
this better-is-better approach. The industry is at a critical 
juncture at this point. As we have heard earlier, investors, 
university labs, entrepreneurs are all working to see if the 
United States is committed to reducing our addiction to oil and 
starting to reduce our global warming emissions.
    We are at risk of losing a lot of the momentum that the 
industry has gained in the last few years, but we are also at 
risk of pushing the industry forward in the wrong direction. 
And that is why we need the environmental safeguards and 
performance standards to be built into the Renewable Fuels 
Standard.
    My testimony goes into a fair amount of detail about the 
types of safeguards and standards that we would recommend. But 
at a high level, I would say, we need to make sure that we are 
making a downpayment on global warming reductions. This means 
setting a global warming emissions performance standard as a 
central part of the Renewable Fuels Standard. We need to make 
sure that we are not going into critical sensitive habitats and 
lands held in public trust. We need to make sure that we are 
growing our new crops with the same best practices that we 
require of our existing commodity crops. We need to make sure 
that we are protecting public health by setting rigorous air 
quality standards that require these new fuels that combust in 
different ways than our traditional petroleum-based fuels to be 
at least as clean at the tailpipe as our old fuels are. We need 
a labelling program to actually understand how these fuels are 
made, what their performance characteristics are and then to 
link our incentives to those labels.
    It is very clear from your opening remarks that you are all 
aware of how complicated biofuels are. They are probably, in my 
opinion, the most complicated and important solution to global 
warming out there. But because of the urgency of global 
warming, we need to struggle through these challenges. And so I 
urge you to continue with these sorts of hearings and really 
grapple with this problem because your leadership on this issue 
will be essential. Thank you.
    [The prepared statement of Nathanael Greene follows:]

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    The Chairman. Thank you, Mr. Greene, very much. That 
completes the time for opening statements from the witnesses.
    And the Chair will now recognize himself for a round of 
questions.
    Mr. Gardner, you are out there on an ongoing basis, talking 
with the young people across the country. Can you give us a 
sense of what this green generation is calling for Congress to 
do? Or its government to do?
    Mr. Gardner. Sure. Well, it has just been exciting to talk 
to all these folks. When we came up with the idea for Reverb--I 
am first and foremost a musician--and we thought we would take 
advantage of the relationship that bands have with their fans 
to spread environmental awareness. And it turned out to be a 
really positive side effect that it actually strengthened that 
relationship to be talking about these issues to our fans. And 
their response has been enormous; it has been enthusiastic. I 
have learned about so many young people out there working hard 
already, whether they are on campuses, working on biodiesel 
plants right there on campus, converting waste, probably 
vegetable oil, from their dining halls to biodiesel in their 
science labs and running their buildings and grounds vehicles 
on the stuff, to coordinating and rallying a large number of 
youth groups across the country.
    I was just recently in Michigan with a rally--it was 
actually a Campus Climate Challenge rally around environmental 
issues on campus. And just it was amazing to see the excitement 
and energy that young people have around these issues. They 
definitely want leadership. They are leading themselves, but 
they are certainly looking to all of you to help.
    The Chairman. Thank you, Mr. Gardner.
    Mr. Gatto, you have been through the ups and downs of the 
biofuels industry. Entrepreneurs always talk about this valley 
of death between the time of development of the technology and 
commercialization.
    What recommendations do you have for us in terms of 
congressional policies that we can put on the books that would 
help entrepreneurs to make it through that valley of death?
    Mr. Gatto. Thank you. I think that is a question that has 
been most often asked, and I think there are three very 
important elements. One is market-based incentives that have 
the ability to pull the use of the products that we intend to 
make. So, in this particular case, talking about an expanded 
RFS, specifically to cellulose versus corn components, is an 
important element here; policy that effectively opens the 
playing field to accept the products. I mean, let's face it, in 
the case of cellulosic ethanol or corn ethanol, the oil guys 
dictate what goes in their pump and what comes out of the pump. 
So I think it is very important to have an open playing field 
so that the products we seek to make and put into the 
marketplace can be utilized. And then I think the third thing 
is to educate. What is a key imperative here, and we talk an 
awful lot about ethanol, but the reality is what these plants 
are all about are creating new biorefineries. Why? Because what 
they all have in common is they all make cheap sugar. And the 
very same science that is today being used to convert the 
sugars that come from cellulosic materials, the organisms that 
are needed to replace yeast--so if any of you have ever made 
beer or wine at home, you take your yeast; you add it with your 
hops; that is how you are making your ethanol. Here we create 
new organisms, and they accomplish the same thing. 
Interestingly, however, we can take those very same 
fundamentals and apply them to all sorts of things, like 
plastics, fabrics. DuPont, for example, coming out with 1,3-
propanediol from an organism now made at an ethanol plant, now 
producing textile fibers and products that can be used in 
everyday life.
    The Chairman. Let me just ask a quick question of everyone 
on the panel, if I may. In the legislation that passed in the 
Senate there is a mandate of 3 billion gallons of cellulosic 
fuel being produced by the year 2016, but there are no earlier 
deadlines in the legislation, there are no earlier timetables 
for 1 billion, 2 billion, heading up to 3 billion.
    Do you think there should be earlier targets in any 
legislation which would pass for cellulosic? Are we more likely 
to hit the 3 billion gallon goal by 2016?
    Mr. Endres.
    Mr. Endres. That is a very good point. In fact, there has 
been a fair amount of discussion within industry about that 
point. It is hard to project what the number will be, so it is 
difficult to try to put a number down on a piece of paper. All 
of the projections are very hard to know, but clearly it would 
be helpful to consider potential to include cellulosic ethanol 
as it is produced. That might be a consideration. As the 
product becomes available, it is required to be blended in the 
fuel stream. That would give investors security that it would 
be needed in the fuel stream.
    The Chairman. Do you think we need earlier targets?
    Mr. Endres. I think it is possible, that early signs are 
positive, I think it would be very helpful to increase.
    The Chairman. Quickly, yes or no. Earlier targets, Mr. 
Gatto?
    Mr. Gatto. Absolutely.
    The Chairman. Mr. Gardner.
    Mr. Gardner. Yes.
    The Chairman. Doctor.
    Ms. Leschine. Yes.
    The Chairman. Thank you. Mr. Greene.
    Mr. Greene. Absolutely. It is important to note that the 3 
billion gallon advance biofuels target is not explicitly 
cellulosic, it is open to any technology basically that is not 
corn starch, which is a rather arbitrary definition. I think 
your interest in advancing cellulosic early is well put, but 
you need to understand it is a different fix than just bringing 
that forward.
    The Chairman. Thank you, Mr. Greene.
    The Chair recognizes the gentleman from Wisconsin, Mr. 
Sensenbrenner.
    Mr. Sensenbrenner. Thank you very much. Mr. Chairman, I 
will start out by saying I am not a real big fan of ethanol. 
Most of the counties in my Congressional district in the 
Milwaukee suburbs are under a reformulated gas mandate, a few 
of them are not. And the experience that we have had is that if 
you use nonreformulated gas, meaning none with ethanol or gas 
with no ethanol in it, the mileage goes up about 10 percent 
during the summer and about 15 percent during the winter. So 
that any fuel savings through the use of reformulated gas ends 
up being eliminated as a result of the lower gas mileage and by 
burning more fuel to get to where you are going. My 
constituents end up putting more particulate pollution in the 
air.
    The result of the market working is that there are a number 
of entrepreneurs that have put gas stations in right across the 
county line in the nonreformulated gas area, and they started 
going from four pumps, and now a couple of them are up to 16 
pumps because again the market is working, even though there is 
not that much of a price differential. So it is a quality 
differential that causes my constituents to drive a few more 
miles to get fuel outside there.
    I think we are getting hooked, particularly on corn-based 
ethanol, and I would like to first ask Mr. Endres and Mr. Gatto 
whether you favor a repeal of the $0.54 a gallon tariff that we 
put on sugar-based ethanol that largely comes from Brazil. And 
if so, why and if not, why not?
    Mr. Endres. Well, first let me address the issue.
    Mr. Sensenbrenner. No, I've got 5 minutes. Please answer my 
question.
    Mr. Endres. No. The reason the $0.54 tariff is in place is 
to protect the taxpayer. There is a blended credit in place to 
incent blenders to put ethanol in the fuel.
    Mr. Sensenbrenner. Mr. Gatto.
    Mr. Gatto. No. Again, I think there is a misnomer that 
Brazil is this panacea. The reality in Brazil is that Brazil 
operates 6 months a year, and during the growing season down 
there they are consuming much of the product that they are 
manufacturing, and that that is left available for export they 
do find a way to either send it here or overseas.
    Mr. Sensenbrenner. Now, my next question is addressed to 
both Mr. Endres and Mr. Gatto. Do you favor a repeal of the 
$0.54 a gallon subsidy that we apply at the wholesale level for 
ethanol production?
    Mr. Endres. It is $0.51 today. And no, I don't favor it. It 
is an important market driver today.
    Mr. Gatto. I do not as well. Again, this is one of the most 
important drivers to show that the United States has a 
commitment to the long-term success of this program.
    Mr. Sensenbrenner. Let me just respond with this 
observation. When the government puts a protective tariff on 
and then grants a subsidy over and above that, that might be 
nice when a market is starting out.
    The ethanol market I think is now well matured, and I get 
very, very fearful when I hear major ethanol producers saying, 
we need both a continued subsidy and we need to have the 
protection that prevents sugar-based ethanol from coming into 
this country without a rather large tariff applied on it. This 
is kind of double protectionism and the consumer ends up paying 
for that in the end.
    Now, you know, I personally think that the subsidy that the 
taxpayers give the ethanol production is corporate welfare; you 
are a beneficiary of that corporate welfare. The corn farmers 
who end up selling a lot of corn to you folks end up having a 
price advantage because of the tariff that we place on the 
import of sugar-based ethanol in Brazil.
    Now, if this is such a panacea, why can't we let the market 
work without a protective tariff and without a taxpayer 
subsidy?
    I have 37 seconds left, Mr. Endres and Mr. Gatto.
    Mr. Endres. Yes. First of all, the ethanol industry is not 
receiving the blender's credit. The market is such that the oil 
companies are keeping that, which is in fact to help create new 
markets. So it is an important element to open these new 
markets up. Again, we don't receive the benefit of that today. 
The long term, I believe actually you will see that biofuels 
can be produced for less than gasoline, less than ethanol, less 
than a gallon of gasoline.
    Mr. Sensenbrenner. Shouldn't we have been able to get to 
that point now with the tremendous emphasis with ethanol, 
particularly in the nonattainment areas under the Clean Air Act 
with the reformulated gas mandates?
    Mr. Endres. Well, biofuels development has increased more 
rapidly than what the RFG markets need ethanol to satisfy the 
action requirement.
    Mr. Sensenbrenner. Thank you, my time is up.
    The Chairman. The gentleman's time has expired.
    The gentlelady from California, Ms. Solis, is recognized.
    Ms. Solis. Thank you. I wanted to ask all the panelists 
this question, if you could, each of you, respond. We know that 
biofuel production spans the entire globe. Unlike fossil fuels 
it seems as if every country can produce its own fuel, 
biofuels. However, I would like to know from you, is there a 
push to transition to biofuels? And some of the concerns that I 
want to raise, is there a risk that the push to biofuels can 
create the same type of market problems associated with fossil 
fuels? That is one question. And if yes, how can we prevent 
this from occurring?
    And then two, how do we separate biofuels productions from 
fuels used from the agricultural market needed for foodstuffs 
and to combat hunger?
    We will start with Mr. Endres.
    Mr. Endres. Thank you. It is a very good point. First of 
all, the ethanol industry is continuing to fragment. There's 
131 ethanol biorefinery facilities running today. So it is a 
very fragmented market, very different than the oil industry 
that has consolidated over many years.
    I think that is really great news. A lot of farmers have 
invested in the technology and the production facility, so we 
see that fragmenting.
    So on the food front it is very interesting the 25-year 
food inflation rate is about 3 percent, the food inflation rate 
on products directly or indirectly derived from corn is only 
3.4 percent from June of '05 to June '07. So the data doesn't 
show increased food costs.
    As it relates to people starving in the world, 
unfortunately, we have had people starving in the world where 
we have had grain rotting in bins, so I don't think that is the 
issue.
    We think that in fact the additional protein that the corn 
ethanol facilities produce will actually increase milk 
production, livestock production. There is a delayed effect, 
but in fact we believe there will be significant new protein 
available that will address the food versus fuel issue.
    Ms. Solis. Mr. Gatto.
    Mr. Gatto. I would have to agree with Don, and just 
further, that what we are talking about is a transition to next 
generation programs. When you start to look at the impact of 
cellulosic ethanol, for example, you see a dramatic shift in 
terms of how these facilities are sited, where these facilities 
are sited. One could never imagine, for example, in 
Massachusetts building an ethanol plant that would be able to 
service the community there. Today we can talk about whether it 
is wood waste, cranberry bogs or a variety of other materials.
    Congressman Sensenbrenner talks about the fact that corn 
ethanol has had some issues with respect to Wisconsin. 
Interestingly, when we start looking at paper mills, and 
sawmill waste, and logging opportunities that have been going 
on in this country and the jobs that have been lost as a 
function thereof, this is an opportunity for us to gain back 
those jobs, to reinvest into those areas. So we are talking 
about a broad proliferation of these facilities.
    So to the market issue, let us put this in perspective. If 
it is 20 billion gallons which is associated with cellulosic 
ethanol, and the average ethanol plant today, new plants, are 
about 100 million gallons, cellulosic ethanol plants will 
probably be in the 30 to 50 million gallons at the outset. So 
we are talking about some several thousand plants that would 
need to be built throughout the United States, not giving any 
one company necessarily the specific strength to dictate price 
terms or otherwise.
    Mr. Gardner. I think it is important to emphasize the 
triple bottom line whenever we are talking about fuel 
production and sales. People profit and plan it. Some of the 
principles that are outlined in my written testimony from 
Sustainable Biofuels Alliance actually outline what we can be 
doing to avoid the pitfalls of transferring our issues from 
petroleum oil to biofuels.
    I do have to agree with, you know, as far as food--having 
varied feedstocks is the way forward. So what we were referring 
to is advanced biofuels. It is certainly I think the way 
forward and where we can end up in a way that we are not 
putting anything in danger and only creating a positive.
    Ms. Leschine. Well, I agree with what has been said. I just 
want to emphasize that this is a very complex problem that will 
be solved through lots of different channels. And the biomass 
is a regional issue. Different regions will develop different 
strategies for converting biomass into renewable fuel. And has 
been said, we are on a path, this is the path we are on, to 
this advanced biofuels where the issue of competition with food 
will be solved.
    Mr. Greene. The only thing I can really add to the 
excellent comments that have come so far is it is important to 
understand that as of today there has been no market really for 
cellulose, so there has been no effort by farmers to figure out 
how to integrate the production of cellulose into the 
production of other food crops or the forest industry thinking 
about how to produce cellulose for fuel either.
    So I think as the market develops we will see a potential 
for integration that it is hard for us to imagine, which is why 
I think it is important to focus on the benefits.
    Ms. Solis. Thank you.
    The Chairman. The gentlelady's time has expired. The Chair 
recognizes the gentleman from Arizona, Mr. Shadegg.
    Mr. Shadegg. Thank you, Mr. Chairman. I want to thank all 
the witnesses. It is very educational testimony and very 
helpful.
    I have all kinds of concerns and all kinds of questions. It 
seems to me and maybe, Mr. Endres and Mr. Gatto, you can help 
me a little bit, critics of corn-based ethanol engage in a 
debate about whether or not the marginal energy gain is worth 
the effort. I would be interested in two general questions. Do 
you see cellulosic ethanol as having a greater spread between 
the energy consumed to produce it and the energy it produces? 
And if you do see that, do you see corn-based ethanol as a 
transition to cellulosic ethanol?
    Mr. Endres. There has been a lot of talk about it. 
Unfortunately, it is amazing that even though nine different 
groups have studied the energy balance, eight of the nine for 
the last 10 years have concluded that ethanol has a positive 
energy balance for all BTUs put in versus BTUs out.
    Mr. Shadegg. Yes, the question is, is it enough? My 
question is, is cellulosic better?
    Mr. Endres. Yes. The early returns is it looks as though 
because you can burn the lignin there actually is a further 
extension of energy, but we get about six times the energy out 
of ethanol than what we put into it from a liquid fossil fuels 
perspective. So we are getting a 6X extension by making 
ethanol. So I think it is something that is missed--it is a 
very good point. I think cellulosic ethanol has a chance 
because you are burning lignin to increase the----
    Mr. Shadegg. Mr. Gatto.
    Mr. Gatto. It is a very good question. In fact, the Energy 
Policy Act of 2005, one of the key essential elements that you 
will note was the opportunity to create incentive under the 
mandate of basically two and a half to one and that was really 
an implication as to the environmental benefits provided, that 
were provided as a function of cellulose compared to, say, 
traditional corn. So this was looked at. A great amount of 
discussion and debate has really been had about the global 
warming implications, and so forth.
    Cellulosic ethanol first generation plants obviously are 
going to have issues, but I think overall we are going to see a 
transition over time. Very much the same way that we have seen 
a transition in the countryside. If you look at ethanol plants 
built in the 80's versus the ethanol plants today, we have seen 
a dramatic improvement. Just in the water consumption alone, 
for example, we have seen anywhere from 5 to 6 gallons of water 
per gallon of ethanol drop down now to new, latest and 
greatest, at 1-1/2.
    So all of these implications, I think, for both the 
transition from ethanol, corn ethanol, and then later to 
cellulose are going to be fairly dramatic.
    Mr. Shadegg. My colleague referred to the tragic forest 
fires burning in California right now. Mr. Gatto, you talked 
about the use of other feedstocks. In northern Arizona we have 
a lot of forests and a lot of potential to use forest 
undergrowth as a feedstock, and we are trying to move forward 
with that right now.
    Dr. Leschine, you answered the other question. The enzymes 
that you are working on and developing, do you see those as 
being able to increase essentially the margin of gain in energy 
over cellulosic, for cellulosic ethanol over corn-based or 
sugar-based?
    Ms. Leschine. Yes. Actually what we are working on is a 
microbial strategy where a microbe makes its own enzymes, and 
so what that does is it will eliminate the need for separately 
produced enzymes, which is one of the cost considerations in 
cellulosic ethanol. So this is one advance--an example of one 
advance we hope to see in the future, that just as the corn 
ethanol industry has developed new technologies and new ways to 
improve efficiency and the energy gain in cellulosic ethanol, 
it is just in its infancy and there are many technologies being 
considered, and, yes, this is one.
    Mr. Shadegg. I am almost out of time. Let me ask a quick 
question. I expressed concern earlier about Congress having 
mandated MTBE and having caused some damage by not being able 
to see far enough down the road. I am interested in any advice 
you can give to us on how we might foresee unanticipated 
consequences and avoid--Congress doesn't move very quickly, the 
science you work in actually moves quicker than we do. So that 
is one question that I would like to see you address, how can 
we avoid that.
    Mr. Greene.
    Mr. Greene. I mentioned earlier in my statement the idea of 
a low carbon fuel standard and I think the risk of picking a 
number of gallons, as you bring out, you pick the wrong number, 
and that is almost invariably it. If instead we focus on the 
amount of benefit that we want and let the market figure out 
the cheapest, best way to get there, I think we would have 
better results.
    Mr. Shadegg. One quick question and the chairman is going 
to jerk my chain, should we be mandating a separate standard 
for cellulosic as opposed to other ethanol? I understand from 
the testimony the Senate bill doesn't say just cellulosic. 
Should we be separating those out? Anybody who wants to 
comment. Mr. Gatto, you wanted to speak to that last question.
    Mr. Gatto. Yes, if I could just add to one point you made 
with respect to forest fires, it is very interesting because 
the State of California actually had the Quincy Library Group 
get together, it was loggers, it was oil folks, it was people 
in the cellulose community, and really tried to focus on this 
issue and clearing out the underbrush and doing an effective 
job on trying to manage what was really fueling these fires. So 
I point out that was a key component to this and represents 
extraordinary opportunity.
    With respect to cellulosic ethanol, and the differentiation 
between corn and/or ethanol, I guess my view is ethanol is 
ethanol. What we want to do is to create incentives and we want 
to drive the markets to next generation biorefineries by using 
the latest and greatest technologies.
    What we don't want to do is destroy the fundamentals of the 
ethanol industry. I guess my foundation would reside in the 
following way, and that is that if it is not ethanol it is oil. 
And so today what we want to try and do is transition this to 
the most effective, cleanest, most diligent way of getting to 
the bottom line.
    One thing I would point out, MTBE, a blue ribbon panel 
looked at the health impact studies of ethanol.
    The Chairman. Mr. Greene, do you want to add a word here?
    Mr. Greene. I am sorry, I was listening to the----
    The Chairman. The gentleman's time was----
    Mr. Shadegg. I appreciate the indulgence.
    The Chairman. The Chair recognizes the gentlelady from 
South Dakota.
    Ms. Herseth Sandlin. Thank you, Mr. Chairman.
    I first want to thank Dr. Leschine for her comments about 
corn ethanol playing a central role in the future development 
of biofuels in the country, and I want to state for the record 
my strong disagreement with the statement of the ranking 
member, Mr. Sensenbrenner, that the tariff and the blender's 
credit together constitute corporate welfare. I think it is 
unfortunate that when we are trying to promote protection for 
taxpayers, leveling a playing field and achieving important 
policy objectives related to energy independence, that such a 
statement would be made from such a distinguished and long 
serving Member of Congress, particularly as it relates to 
leveling a playing field and driving a market that is good for 
a number of policy objectives and taxpayers.
    Let me build on that and ask Mr. Endres, in your testimony 
you stated that ethanol is selling at $1.55 per gallon and 
conventional gasoline is selling at over $2, but that not all 
refiners are capitalizing on the economic advantages of ethanol 
blending. So if ethanol is so much cheaper than gasoline right 
now, why are some refiners still not maximizing their use of 
ethanol in your opinion?
    Mr. Endres. Well, the challenge is the refiners have a lot 
on their plate. Quite honestly, we work closely with our 
customers and in fact have a number of issues, reducing sulfur, 
trying to expand their facilities. They just have a lot of 
priorities on their plate, and so that is why it is important, 
I believe, that we continue to drive them to innovate the 
product in the field stream.
    We are working diligently to help that happen as well, but 
this will clearly set the stage. In fact many times we have 
heard them say, just tell us what it is that is a priority and 
we will focus on it, and so I think that is it.
    Ms. Herseth Sandlin. And so a measure to drive them that 
way. Given that we have had tax incentives, the blender's 
credit for a number of years before we had the Renewable Fuel 
Standard of the Energy Policy Act of 2005, would you agree that 
not only do we need earlier targets for cellulosic ethanol, as 
Chairman Markey was questioning earlier, but that we have more 
aggressive targets within the Renewable Fuel Standard, 
particularly for the years 2008 to 2010?
    Mr. Endres. Yes.
    Ms. Herseth Sandlin. And Mr. Gatto, you would agree with 
that?
    Mr. Gatto. Absolutely. I think the most important thing for 
the committee to realize is that ethanol right now is at a 
transition point, and without a very aggressive campaign to 
expand the RFS in 2008 and through 2010, what you are going to 
see is the investment community absolutely run from this space. 
We have already seen it, we have had a record pace with which 
we were building plants. We have now seen that over 50 percent 
of the new plants that were to be built have been put aside. We 
have seen certain banks in this space have now started to take 
their teams that were focused on biofuels and move those teams 
into other areas of business. So it is an absolute imperative.
    Ms. Herseth Sandlin. Thank you.
    Also for Mr. Endres and Mr. Gatto, before I have a question 
for Mr. Greene. The EPA has a current chart based on the 
percentage change of greenhouse gas emissions of a number of 
different fuels, and right now corn ethanol averages 21.8 
percent reduction compared to conventional gasoline. Now, just 
as you responded to Mr. Shadegg's question, Mr. Endres, as to 
how technological advances have increased the energy balance, 
the energy output of ethanol compared to earlier plants, do you 
agree with the statement that technological advancements will 
also increase beyond 21.8 percent reduction as it relates to 
reducing greenhouse gas emissions?
    Mr. Endres. Absolutely. There has been work within the 
industry that shows in fact we could move that much closer, in 
fact corn-based ethanol to cellulosic levels, potentially 50 
percent reduction in fossil fuel use. So by integrating new 
fuel systems, energy fuel systems, actually potentially burning 
biomass could help us get there.
    Ms. Herseth Sandlin. Thank you. Mr. Gatto, I am going to 
cut you off just so I can move to Mr. Greene and visit with you 
afterward, and you can take that as a written question for the 
record.
    Mr. Greene, you state in your written testimony that ``on 
farms and on forests across the country and abroad imprudent 
biomass harvesting would cause soil erosion, water pollution, 
habitat destruction while also substantially reducing the 
carbon sequestered on land.''
    Now, much of the excitement about biomass that I hear of 
from where I am and other parts of the country centers around 
dense perennial grasses that use very little water or 
fertilizer and can be harvested year after year without 
cultivation. So if we can achieve this, it doesn't sound like 
the scenario that you are painting in your testimony. So I 
would like to know exactly what about the model of those types 
of perennial grasses would concern you.
    Mr. Greene. I think the critical part of the sentence that 
you read is the imprudent part. The challenge I see is that 
even though there are models out there that are very exciting 
with the mixed perennial grasses and crops, just because we 
have those models doesn't mean that we will use them. It is 
easy to envision switchgrass becoming a monoculture being bred 
to have a lot of above ground biomass, much lower root 
structure. These are the pressures that the marketplace will 
put on farmers and breeders unless we put a reward out there 
for good management.
    Ms. Herseth Sandlin. Thank you. Thank you, Mr. Chairman.
    The Chairman. Gentlelady's time has expired.
    The Chair recognizes the gentleman from Missouri, Mr. 
Cleaver.
    Mr. Cleaver. Thank you, Mr. Chairman. I live in a city that 
suffers from the Nation's failure in geography. And people will 
ask me how are Dorothy and Toto despite the fact that I live in 
Missouri, or are you the mayor of Kansas. The truth is Kansas 
City is the largest city in our State, most people would 
probably say St. Louis, but Kansas City is significantly 
larger, 322 square miles, it is a huge city, one of the largest 
cities geographically in the country.
    We have one E85 service station. It is in south Kansas 
City. So if you land at the airport you are somewhere in the 
neighborhood of about 45 minutes away from an E85 service 
station. Even if you have the desire to purchase a flex fuel 
vehicle and you want to get it, you know, there are not many 
people who are going to drive 45 minutes to get gasoline.
    What can we do to help move, create more of these stations 
in our country? The chances are the only places you can find an 
E85 service station is near a GSA facility because they have 
been mandated to use biofuels. And so that is why you would 
only have two in New York, because it is based primarily on 
GSA. What can we do?
    Mr. Endres. First, we have been pretty vocal on this. 
VeraSun has worked for a long time with E85, we continue to see 
the expansion of it, but it is still way too small. We believe 
that the blender's credit worked for E10, it clearly worked, 
and we think there should be a blender's credit that is focused 
on E85 to give the blenders a clear signal that in fact the 
product will be available. And our challenge today with E85 is 
that it gets less mileage because the vehicles don't optimize 
for the octane in the vehicle. So we need to discount that fuel 
in order to make it available and compelling for consumers.
    And so one of the things that again we advocated is within 
the VEETC system providing for E85 blender's credit so that it 
becomes affordable. We think blenders would roll it out quite 
quickly.
    Mr. Cleaver. Anyone else?
    Mr. Greene. I would just point to the importance of setting 
a long-term trajectory and a clear commitment from our country 
to shifting away from using oil as a primary transportation 
energy to using alternatives. That is the signal to the market, 
to oil companies, to the gasoline stations it can play a 
critical role in their decisions to invest what will eventually 
be hundreds of billions of dollars over time to a new 
infrastructure.
    Mr. Cleaver. But if Brazil is deriving about 30 percent of 
their fuel from ethanol and someone said, I am not sure whether 
it was a correct figure, that most of that or half of that is 
eaten up during the production season, and we don't have the 
capacity here geographically in terms of the acreage to produce 
the corn to do 30 percent, I don't think; isn't it going to be 
too difficult to push someone to invest in an E85 service 
station, realizing at the optimum, at the maximum level they 
wouldn't be able to sell but 10 percent?
    Mr. Endres. Well, I would just say that it is working to a 
certain extent because companies like ours and other ethanol 
producers have provided the fuel at a value to make it work and 
that in fact we now see a number of new models coming out that 
are flex fuel. So it is kind of a chicken and egg problem, but 
we do believe that autos will come out and produce more 
efficient flex fuel vehicles once they see the market is there 
for them and that in fact the economics will significantly 
improve, and therefore the blender's credit could be a short-
term kick start to making this work.
    Mr. Gatto. This is not a supply issue, nor is it a price 
issue. I think it is an issue of access and one where, you 
know, to the extent that the consumer had the opportunity to 
truly understand that if they went and bought that car, that 
Chevy Impala for example, and had a place to go and fill up 
that they would do so more often. It is quite interesting if 
you travel through Brazil and look at the service stations down 
there, they have two signs. They have a sign talking about 
ethanol and the ethanol price and they have the petroleum 
price. And down there in fact the amount of ethanol that is 
being consumed is well over 60 percent of the total consumption 
and expanding to 90 percent.
    Mr. Cleaver. Thank you, Mr. Chairman.
    The Chairman. Gentleman's time has expired.
    The Chair recognizes the gentleman from Washington State, 
Mr. Inslee.
    Mr. Inslee. Thank you. I very much appreciate all of your 
testimony, because I just got done writing a book talking about 
the great potential benefit of biofuels and I am glad I wasn't 
totally wrong. So you sort of comforted me, particularly Mr. 
Gatto's reference to President Kennedy, because we named the 
book Apollo's Fire after basically that whole concept.
    I want to ask you in that vein, aren't we just pathetically 
short of the real challenge here as to what we really need to 
do to get this going? I mean, last night I was talking to a 
group about this issue and I was sort of bragging about all the 
great stuff we are doing, and this lady stood up and said, you 
guys are pathetic, you are doing one-tenth of what you really 
need to do to get this job done. Looking at what is going on in 
the ecosystem right now, I sort of agree with her.
    Do you have any comments about what we really ought to be 
doing here? We went from 3,000 planes in 1939 in America to 
30,000 in 1943. Couldn't we accelerate these numbers much more 
rapidly than we have? Anybody want to just comment on that?
    Mr. Endres. Absolutely, and the market is gearing up for 
it, but there is a clear question now on whether or not there 
will be a market for the product. So absolutely. Look, the 
Renewal Fuel Standard required about 4.7 billion gallons be 
incorporated this year. At the time that was being debated 
there was a lot of discussion about how it just could not be 
done, there was no way it could be done. The industry produced 
6.5 billion gallons this year. So the capital is ready to flow 
in and willing to be put to work, but there is a clear question 
today because of concern over a lack of demand for the product.
    Mr. Inslee. Is there any reason we wouldn't statutorily 
codify this commitment to make 50 percent of cars at least flex 
fuel in short order? Does that make sense?
    Mr. Endres. In effect, the autos have made a commitment to 
produce more than 50 percent of vehicles as flex fuel vehicles.
    Mr. Inslee. Let me ask you about requirements for pumps. 
When I talked to folks in Brazil, they told me, look, you will 
never get this done unless you really have some requirement for 
people to put in pumps, because as long as one entity has 
control of a fossil fuel base and that is almost all they sell, 
they are not going to willingly work with you to get ethanol 
pumps in and biodiesel pumps in. Shouldn't we have some legal 
requirement for a percentage under certain circumstances that 
biofuel pumps be put in for distributors of certain sizes? 
Anyone want to take that?
    Mr. Gatto. I think you have really hit the nail on the 
head. Here again you look at the ethanol industry, it has risen 
to the occasion. During the blue ribbon panel talking about 
phasing out MTBE, the community at large was saying can we 
create enough ethanol to satisfy the need? We did that in 2 
years.
    So the problem is not supply, the problem is not 
investment. The problem is that the investment community is 
unsure whether or not this truly is going to be something 
sustainable. And so you can make the product, you can make it 
available to the consumer at a price that is certainly far more 
competitive than gasoline in many instances. The problem is if 
you don't control the pump, you don't control what comes out.
    So I would say absolutely it is an imperative that if we 
are talking about an expansive RFS, we also have to include the 
ability to put the cars on the road and create the 
opportunities for customers to be able to use the product.
    Mr. Inslee. I have been fighting for this to let you know 
we will continue that effort.
    Mr. Gardner.
    Mr. Gardner. I would just like to add that the demand is so 
clearly there. And I want to echo the sentiments that we have 
heard today, because a large part of our work is helping bands 
fuel up because they can't find it at pumps. I would love for 
you all to put us out of business, because I don't want to be 
spending time doing that. I would love every band to find it at 
a Flying J or any truck stop and fuel up. We can spend our time 
doing other things in other areas. So absolutely the demand is 
there and we can hardly keep up with it just within our little 
community.
    Mr. Endres. I would say that I agree that we need the 
infrastructure in place, but I am much more a fan of the 
incentive-based approach to make this happen. If you mandate 
it, it is very difficult if you mandate it in areas where there 
is no ethanol in the market. So I would just absolutely agree 
we need the infrastructure, but the incentive-based approach is 
a better way to do it because those markets that have ethanol 
will definitely put the infrastructure in place.
    Mr. Inslee. Mr. Greene.
    Mr. Greene. I will just add I think it is critical when we 
think about biofuels and their role and potential that we think 
about it in a broader context of solving the big picture 
problem that I think you are talking about here, solving global 
warming.
    I think the issues that are being debated right now on the 
energy bill, improving vehicle fuel economy performance, making 
our electric sector cleaner through use of renewable 
electricity, when you put a package together like that with 
biofuels, suddenly the potential for biofuels becomes much 
greater, because for using less fuel and our economy is getting 
cleaner, then again a round of biofuels are going to go a 
longer way to clean up the atmosphere, doing their share. So I 
think the package approach that is being discussed is 
absolutely critical.
    Mr. Inslee. Thank you.
    The Chairman. Yes.
    Ms. Leschine. I would like to add, actually completing, 
looking at the whole package and concluding that there still is 
room for new technologies and actually the development of new 
technologies will be essential. And so I think an important 
component will be support for basic research and development of 
these technologies which will really be a driver for the next 
stage of biofuels.
    Mr. Inslee. Thanks very much.
    The Chairman. The gentleman's time has expired.
    I just want to point out here that in Massachusetts we have 
150,000 flex fuel vehicles right now driving around and one 
pump, which makes an awful long line at the gas station, so we 
definitely have to solve this problem. People are buying the 
vehicles and then have no place to go to buy fuel for it.
    Gentleman from New York, Mr. Hall.
    Mr. Hall. Thank you, Mr. Chairman.
    I would just follow up on what you are saying by remarking 
that some might consider this a hoax perpetrated on the 
American people by the automobile industry, which advertises 
that you are doing something green by buying a flex fuel 
vehicle when in fact you can't get the fuel in most parts of 
the country.
    So with that in mind I am curious, starting with Mr. 
Greene, what you think of some way to incentivize the 
availability and an infrastructure being put in by linking 
incentives for flex vehicles to the number of pumps available 
in the State where the buyer lives, for instance?
    Mr. Greene. I think it is critical to think about that. 
Solving this problem takes three parts. You need the fuel, the 
pumping station, and you need the vehicles, and they need to 
come together simultaneously in time and space, because having 
a fueling station over there and a vehicle over here is not 
going to do you any good. So linking them together like that 
makes a lot of sense.
    Mr. Hall. And perhaps combining that with incentive for the 
oil companies, and I say oil because, as mentioned before, if 
that is their primary product, they don't really have that much 
incentive, unless they are heavily invested in biofuels, to 
blend ethanol or other biofuels in. Once the profit of a given 
company exceeds a certain percentage in addition to the price 
of the raw barrel of oil that it will then be considered to be 
excess profit and they have a choice of paying it as an excess 
profit tax or investing it in pumps that provide blended fuels. 
There must be some way of going at this from both ways to 
motivate the oil companies and also motivate the auto industry 
in their promotion and advertising.
    Thoughts from anybody else briefly on that?
    Mr. Endres. Yes, I think that is kind of a stick approach 
versus a carrot and a stick, and we think that again there is a 
lot of ethanol now across the country, all these new 
reformulated fuel markets. Ethanol is in place, so we now need 
to take that fuel and put it out into E85 pumps, not just E10. 
Where you have E10 you can potentially have E85 pumps as well. 
We just need an incentive, a way for us to in the short run 
bridge this fuel economy difference, and I think you would see 
a pretty dramatic roll out of E85.
    And realize too not all stations are owned by oil 
companies, they are owned by a lot of independent people and 
they are very willing to put these pumps in. But again when we 
do the math with them it becomes difficult. I believe the 
incentive approach may get you there and do it in a more smooth 
fashion than trying to use some sort of a severe mandate.
    Mr. Hall. Thank you. I would just comment--I only have a 
short bit of time, so I will make a comment and another 
question and then I will be out of time. In Westchester County, 
which I represent, the county buses have been for the last 
couple of years hybrid buses, and our county executive just 
decided to switched them all over to biodiesel hybrid buses. 
When you start pyramiding one technology on top of the other, 
then when he turns them into plug-in hybrid biodiesel buses you 
start to get the multiplication of these different new 
technologies to increase--I should say decrease the amount of 
petrochemicals that we are burning.
    This would go, I guess, to Dr. Leschine. If you could tell 
us how--for instance, in my district and others around the 
country farmland is constantly battling development pressure 
and we are hoping biofuel growth can play a role keeping that 
land open. We don't have a lot of corn, we have a variety of 
other crops that are grown. At the same time if we are going to 
be growing more fuel crops we need a plan to make sure our soil 
and water resources can support that. What kind of strategies 
should we be devising should Congress, USDA, and EPA and others 
take to make that happen?
    Ms. Leschine. Well, what we are talking about is 
diversifying biomass, sources of biomass which can be utilized 
for cellulosic ethanol production. And there certainly is a 
great deal going on to do that in order to make, to develop 
technologies that will be able to make use of plants which can 
be grown in all regions. So what this is going to require is 
working with the agricultural community as well as the research 
community to develop the appropriate cultivation techniques and 
the proper crops that can grow in particular areas working 
together.
    I think we really do need to have more cross-talk on this 
to understand more about what crops are the most appropriate 
for a particular area. We look at crops in terms of the 
production per acre, but the highest production per acre in 
some ideal place might not be the ideal crop for a particular 
area. I think we need to have more integration between the 
agricultural community and the agricultural workers and the 
research community that is developing these technologies for 
using in particular biomass crops.
    Mr. Hall. Thank you, Doctor. Thank you, Mr. Chairman.
    The Chairman. The gentleman's time has expired.
    The Chair recognizes Mr. McNerney.
    Mr. McNerney. Thank you, Mr. Chairman.
    Mr. Gatto, one of the things that really excites me about 
biofuels is the potential for job creation, especially in rural 
America. Could you go into that a little bit in terms of what 
kind of jobs you think would be created and how will it impact 
the rural economy?
    Mr. Gatto. I think I have some numbers that I had asked for 
because this is one of the things that I think is often missed. 
National picture, current ethanol, 234,000 jobs, household 
income increased by over $40 billion, domestic spending $70 
billion, and reduced cap outflow to oil producing countries by 
$64 billion.
    Mr. McNerney. On a yearly basis.
    Mr. Gatto. On an annual basis. This is the impact of 
ethanol. Cellulosic ethanol has the opportunity to quadruple 
that, because of the number of plants and, more importantly, we 
are talking about taking these facilities and moving them into 
communities very similar to your colleague in New York where 
rather than focusing necessarily on switchgrass we might be 
talking the paper sludge from the area mills, we might be 
talking about taking the mixed wastepaper that is coming from 
the municipal streams. So all of these become opportunistic and 
we start looking at what the origins of these feedstocks and 
how they can complete the cycle.
    Mr. McNerney. Thank you.
    I understand that total biodiesel production is rather 
limited due to acreage and crop limitations and so on. How do 
the limitations, and I am not sure who would be the best one to 
answer this question, how do the limitations between biodiesel 
and bioethanol compare in terms of potential for growth?
    Mr. Gatto. I am not sure that there is a differentiation 
necessarily. One of the interesting things, and maybe Don can 
speak to this, that is emerging is the opportunity to take one 
of the byproducts that comes from an ethanol plant and actually 
convert that to extract biodiesel. So again the context here is 
when you look at an ethanol plant today it is truly a 
biorefinery of the future. It is taking everything that comes 
in that front door and creating products that are renewable and 
sustainable in nature. So what comes out of an ethanol plant is 
something called DDGs, which is a high protein cattle feed. 
That product also has the possibilities of being turned into 
biodiesel and taking an even higher protein value product to 
put back into the marketplace.
    Mr. McNerney. Mr. Endres.
    Mr. Endres. We have tested that process, we have actually 
converted our oil from the germ in corn into biodiesel and we 
are building our first extraction facility and will be rolling 
that out of the facility. So the two go hand in hand. Ethanol 
only uses the starch in corn, the rest of the product, the 
protein, the oil, the fiber is a byproduct. And so we think 
that these facilities over time will significantly step into 
the utilization of that corn kernel, and so we think they will 
go hand in hand and we can actually provide feedstock to the 
biodiesel industry as well.
    Mr. McNerney. Mr. Greene.
    Mr. Greene. I would say, however, that the total amount of 
available vegetable oil and the crops that we know that produce 
vegetable oil around the world is substantially less than the 
amount of cellulose that we know is in the world. And the 
important thing to understand though is biodiesel is a process, 
it is a way of changing vegetable oil into diesel like 
alternative. Ethanol is a molecule. Both of these things are 
technologies and what we need to do is step back. There are 
other ways to make diesel alternatives from plant matter and 
there are other molecules other than ethanol. A lot of people 
talk about butanol, but butanol is just one other molecule. 
There are a lot of molecules out there. We need to be careful 
as we encourage this factory and try to bring along quickly 
that we don't lock ourselves into one technology, one 
conversion pathway such as biodiesel, one molecule such as 
ethanol. We need to focus on the benefits that we want and let 
the marketplace figure out what the best technology mix will 
be.
    Mr. McNerney. Could you segue from that into what sort of 
environmental considerations we need to take in terms of using 
large-scale agriculture for fuel?
    Mr. Greene. Well, I think biodiesel is a prime example of 
how it can be both done in a wonderful way and in a very 
destructive way. We have heard earlier about family farmers, 
small farmers or students using waste oil, producing vegetable 
oil. These are great examples of community-based agriculture, 
reusing waste materials to make transportation fuel.
    On the other extreme you have palm oil being grown on rain 
forest land, lands where they burned off the rain forest, 
burned the peat soil. The greenhouse emissions from that 
conversion process outweigh any benefits you get from avoiding 
oil for hundreds of years. So the extremes here are pretty 
stark and we need to again focus on the benefits that we want 
and make sure that we are picking those and not trying to tell 
farmers how to grow their crops, but say you have to produce a 
fuel with real greenhouse benefits, with real soil quality 
benefits, and then let them figure out how to do that. Our 
farmers are incredibly resourceful, and if we let them they 
will do great things for us.
    Mr. McNerney. Thank you. I yield back to the Chair.
    The Chairman. I thank the gentleman very much. We have a 
roll call which is about to be called out on the House floor, 
but we have a few more minutes before that would occur. Why 
don't we have a lightning round of 2 minutes apiece for each 
one of the members who would like to ask another round of 
questions. We will first recognize the gentlelady from South 
Dakota.
    Ms. Herseth Sandlin. Thank you, Mr. Chairman.
    Mr. Gatto, perhaps you could take 30 seconds to respond to 
my earlier question. And then Mr. Greene, if you could comment 
on your testimony where bioenergy feedstocks must not be grown 
or extracted from public forest lands. We have a lot of slash 
piles in the Black Hills National Forest and I just want you to 
clarify if those slash piles from projects by the Forest 
Service or from a timber contract sale wouldn't be used under 
that policy.
    And then finally, Mr. Gardner, thank you. Governor Brian 
Schweitzer from Montana has commented in the past about the 
importance of making conservation cool and I think that is true 
for concerns about climate as well. Your efforts, particularly 
among younger generations, will help us in our policy objective 
propel the consumer demand in particular for more 
environmentally friendly transportation fuels and electricity 
sector, and I just wanted to thank you for that. But Mr. Gatto, 
if you could.
    Mr. Gatto. Yes. The question was relative to corn ethanol 
emissions at 21.8 percent over gasoline and the question was 
can it segue closer, I believe, to what we are looking at in 
cellulose. Cellulose, interestingly EPA numbers as well target 
greenhouse gas emission reduction by over 99.9 percent. But if 
you look at traditional corn plants today, they are in fact 
already reducing greenhouse gases by as much as 40 percent.
    The Chairman. Mr.----
    Ms. Herseth Sandlin. Mr. Greene has maybe 5 seconds on that 
slash pile question.
    Mr. Greene. I think the potential for forest material from 
public lands to support a robust cellulosic industry is very 
limited. I think it is critical that we fend around homes to 
save lives, but I don't think the forest, our public forests 
are a major source of material for the cellulosic industry.
    The Chairman. The gentlelady's time has expired.
    The gentleman from Missouri.
    Mr. Cleaver. Thank you, Mr. Chairman. Biofuels are already 
heavily subsidized by the Federal Government in an attempt to 
encourage their use. Producers of biodiesel or diesel blends 
are able to claim $1 tax credit--I am sorry, $1 per gallon tax 
credit--that would seem to me to be a reasonably subsidized 
method of encouraging use.
    Is there anything else that can be done to encourage use? I 
guess, maybe more importantly, is that $1 per gallon subsidy 
adequate?
    Mr. Endres. I believe the dollar/gallon subsidy is very 
adequate, it is working. What is happening in the marketplace 
now is vegetable oil values have improved. So it is now 
incenting companies like ours to invest in technology to 
extract oil. Also new gasification technologies and catalyst to 
produce various oil blends to be converted to green diesel and 
other types of fuel. So I think it has been very impactful, it 
is working, and in fact you see technology developing as a 
result.
    Mr. Cleaver. Thank you, my time is up.
    The Chairman. The gentleman from Washington State.
    Mr. Inslee. Thank you. Let me ask Mr. Greene and Mr. Gatto 
to address this issue of how a low carbon fuel standard would 
work. Mr. Greene cautioned us not to choose a particular 
technology, but do it based on performance. Perhaps both of you 
could tell us how that should or should not work.
    Mr. Greene. Sure. As you know, the idea of the low carbon 
fuel standard is to get a goal for the transportation fuel 
industry and say we want you to reduce the average greenhouse 
gas emissions from all the gallons of fuel you sell. California 
is targeting a 10 percent reduction by 2020. A gallon of fuel, 
renewable fuel, that comes into the marketplace then is 
evaluated by the industry for its ability to reduce that 
average. A gallon of old-fashioned, ancient corn ethanol that 
produced a very small benefit would be valued less than a 
modern corn ethanol industry plant and versus a cellulosic 
industry would be valued even higher just because of the amount 
of greenhouse gas reductions each of those different gallons 
would provide.
    So it drives the market forward, also allows competition 
among technologies, the different diesel alternative 
technologies we heard about, ethanol, butanol, electricity, all 
the different technologies to get to compete on the benefit 
they provide the marketplace.
    Mr. Gatto. I think, from an industry perspective I think 
the question is going to be what does this transition period 
look like, what is the percentage or what is the right number. 
I think in general what it does do is it differentiates certain 
bad products and really moves us towards a better understanding 
of how we can take these programs, whether it is ethanol going 
to butanol or higher alcohols and actually making them more 
sustainable and certainly more environmentally beneficial.
    The key that I would like to stress here is, we are looking 
at corn today, which is a very, very good example of what we 
could do. It is a great improvement over where we are today 
with oil. Cellulosic ethanol is an extraordinary improvement 
over that and we have an opportunity to do more.
    The Chairman. The gentleman's time has expired. The 
gentleman from New York, Mr. Hall.
    Mr. Hall. Thank you, Mr. Chairman. I just wanted to thank 
Mr. Gardener for his work and say, as somebody who spent many a 
night at a truck stop with my band and crew and drivers, 
getting some food in the middle of a trip, there are 
opportunities for conversations with truckers. And I wouldn't 
be surprised if they and the teamsters and trucking companies 
might be interested in these possibilities. There might be 
another way of getting at it.
    Getting the word out is a big part of the problem. And when 
I found out that I could buy biodiesel for my own home, it was 
just me finally going, hey, I think I will call my fuel oil 
company. I picked up the phone in Dover Plains, New York, and I 
asked, and they said, sure. We have got 20 percent soy blend we 
could send you. Most people don't know to ask. So the more we 
spread the word, as you are doing, the more people will know to 
ask.
    The Chairman. The gentleman's time has expired.
    Mr. Gardner, maybe you will be a Member of Congress some 
day, too. We have a veteran from Orleans who is up here and who 
knows. Just not in my district, please, even though you were 
educated there.
    The gentleman from California, Mr. McNerney.
    Mr. McNerney. Thank you. I have a fairly straightforward 
question.
    Ethanol degradation of oil pipelines, is there a way to 
mitigate that? What is the solution to that issue?
    Mr. Endres. We have worked a great amount with our 
customers. In fact, we believe you will see now ethanol blended 
in pipelines. Remember, the issue of that pipeline is more so 
on water; there is water that lays in those pipes, and it picks 
up the water. That has been the principal challenge, not 
corrosion of the pipe. We pipe ethanol around it a great deal. 
We pipe it throughout our plants. It is a product we drink. It 
is just that, that is an overused issue. And in fact, we 
believe we will see some companies now starting to pipe ethanol 
in a regional method in the near future.
    Mr. McNerney. Thank you.
    The Chairman. The gentleman's time has expired. We thank 
our witnesses very much. We are committed to passing a bill 
with a strong renewable fuel standard in it. You have given us 
some of the other issues that we have to deal with as well, 
obviously the collateral environmental effects, that we will 
have to build in protections, and also the incentives to make 
sure that the pumps are out there so that people who are buying 
these flex-fuel vehicles have a place that they can then take 
advantage of this new fuel.
    So your testimony has been extremely helpful to us in 
helping to propel us forward towards producing this legislation 
before the Congress adjourns this year.
    We thank you. And with that, this hearing is adjourned.
    [Whereupon, at 11:42 a.m., the committee was adjourned.]

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