[Senate Hearing 110-1251]
[From the U.S. Government Publishing Office]





                                                       S. Hrg. 110-1251

                    ENVIRONMENTAL PROTECTION AGENCY
                      OVERSIGHT: IMPLEMENTING THE
                        RENEWABLE FUEL STANDARD

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

                                HEARING

                               before the

                       SUBCOMMITTEE ON CLEAN AIR 
                           AND NUCLEAR SAFETY

                                 of the

               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 10, 2008

                               __________

  Printed for the use of the Committee on Environment and Public Works


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                            congress.senate
                            

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               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                       ONE HUNDRED TENTH CONGRESS
                             SECOND SESSION

                  BARBARA BOXER, California, Chairman
MAX BAUCUS, Montana                  JAMES M. INHOFE, Oklahoma
JOSEPH I. LIEBERMAN, Connecticut     JOHN W. WARNER, Virginia
THOMAS R. CARPER, Delaware           GEORGE V. VOINOVICH, Ohio
HILLARY RODHAM CLINTON, New York     JOHNNY ISAKSON, Georgia
FRANK R. LAUTENBERG, New Jersey      DAVID VITTER, Louisiana
BENJAMIN L. CARDIN, Maryland         JOHN BARRASSO, Wyoming
BERNARD SANDERS, Vermont             LARRY E. CRAIG, Idaho
AMY KLOBUCHAR, Minnesota             LAMAR ALEXANDER, Tennessee
SHELDON WHITEHOUSE, Rhode Island     CHRISTOPHER S. BOND, Missouri

       Bettina Poirier, Majority Staff Director and Chief Counsel
                Andrew Wheeler, Minority Staff Director
                              ----------                              

              Subcommittee on Clean Air and Nuclear Safety

                  THOMAS R. CARPER, Delaware, Chairman
JOSEPH I. LIEBERMAN, Connecticut     GEORGE V. VOINOVICH, Ohio
HILLARY RODHAM CLINTON, New York     JOHNNY ISAKSON, Georgia
BERNARD SANDERS, Vermont             LAMAR ALEXANDER, Tennessee
BARBARA BOXER, California (ex        JAMES M. INHOFE, Oklahoma (ex 
    officio)                             officio)
    
    
                            C O N T E N T S

                              ----------                              
                                                                   Page

                             JULY 10, 2008
                           OPENING STATEMENTS

Carper, Hon. Thomas R., U.S. Senator from the State of Delaware..     1
Bond, Hon. Christopher, U.S. Senator from the State of Missouri..     4
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma...     6
Boxer, Barbara, U.S. Senator from the State of California........     8
Craig, Hon. Larry E., U.S. Senator from the State of Idaho.......    10

                               WITNESSES

 Meyers, Robert J., Principal Deputy Assistant Administrator, 
  Office of Air and Radiation, U.S. Environmental Protection 
  Agency.........................................................    12
    Prepared statement...........................................    15
    Responses to additional questions from Senator Boxer.........    25
 Chalk, Steven G., Deputy Assistant Secretary for Renewable 
  Energy, Office of Energy Efficiency and Renewable Energy, U.S. 
  Department of Energy...........................................    26
    Prepared statement...........................................    28
    Responses to additional questions from Senator Boxer.........    33
Pierce, John, Vice President, Dupont Applied Biosciences 
  Technology.....................................................    48
    Prepared statement...........................................    51
    Responses to additional questions from Senator Boxer.........    63
Faber, Scott, Vice President for Federal Affairs, Grocery 
  Manufacturers Association/Food Products Association............    71
    Prepared statement...........................................    73
    Responses to additional questions from Senator Boxer.........    83
Greene, Nathanael, Director of Renewable Energy Policy, Air, and 
  Energy Department, Natural Resources Defense Council...........    84
    Prepared statement...........................................    86
    Responses to additional questions from Senator Boxer.........   124

                          ADDITIONAL MATERIAL

Articles:
    Rising Food Prices: Policy Options and World Bank response...   142
    USDA, Global Agricultural Supply and Demand: Factors 
      Contributing to the Recent Increase in Food Commodity 
      Prices.....................................................   154
    High-Level Conference on World Food Security: The Challenges 
      of Climate Change and Bioenergy............................   184
    Another Inconvenient Truth...................................   234
    International Food Policy Research Institute: High Food 
      Prices, The What, Who, and How of Proposed Policy Actions..   291
    The Role of Biofuels and Other Factors in Increasing Farm and 
      Food Prices................................................   303
    CRS Report for Congress, High Agricultural Commodity Prices: 
      What Are the Issues?.......................................   337
    American Forest & Paper Association..........................   384

 
 ENVIRONMENTAL PROTECTION AGENCY OVERSIGHT: IMPLEMENTING THE RENEWABLE 
                             FUEL STANDARD

                              ----------                              


                        Wednesday, July 10, 2008

                               U.S. Senate,
         Committee on Environment and Public Works,
               Subcommittee on Clean Air and Nuclear Safety
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10 a.m. in 
room 406, Dirksen Senate Office Building, Hon. Thomas R. Carper 
(chairman of the subcommittee) presiding.
    Present: Senators Carper, Inhofe, Bond, Boxer, Craig.

          OPENING STATEMENT OF HON. THOMAS R. CARPER, 
            U.S. SENATOR FROM THE STATE OF DELAWARE

    Senator Carper. The hearing will come to order. Good 
morning, everyone.
    I am delighted that we are joined by the first panel of 
witnesses. Mr. Meyers and Mr. Chalk, welcome, and also my 
friend and colleague, former Governor, Kit Bond. We will be 
joined by some of our other colleagues as we get into the 
hearing.
    We have two panels of witnesses today. I have just learned 
that our first vote in the Senate is going to occur roughly at 
10:50 a.m., but that may change, so we will work with that, but 
we may have the opportunity to complete this first panel and 
the questions for the first panel, and maybe take a break, go 
vote, and then come back and bring the second panel before us 
and proceed along those lines.
    As you may all know, today's hearing is focused on the 
implementation of the renewable fuel standard. The renewable 
fuel standard was first enacted in legislation called EPACT 
2005. It was later expanded in the Energy Independence and 
Security Act of 2007 that we passed less than a year ago.
    The EPA implements the provisions of the renewable fuel 
standard under the authority of the Clean Air Act. Our 
witnesses today will discuss issues related to the greenhouse 
gas life cycle analysis currently being conducted by the EPA, 
as well as developments in advanced biofuels. Senators will 
have roughly 5 minutes for opening statements. I will then 
recognize EPA Assistant Administrator Robert J. Meyers to offer 
his statement to the Committee.
    Following his statement, Steve Chalk, Deputy Assistant 
Secretary for Renewable Energy from the Department of Energy 
will offer his statement. And then we will have at least one, 
maybe two rounds of questions, which may be determined as much 
by the votes as our interest in asking those questions. Then 
our second panel of witnesses will come forward and their 
testimony will be followed by a round or two of questions as 
well.
    At a time when Americans are facing high food and fuel 
prices, I believe that today's hearing on the renewable fuel 
standard is an especially timely topic. As many of you know, 
the renewable fuel standard is within the Clean Air Act and 
therefore under the jurisdiction of this Subcommittee, which 
Senator Voinovich and I are privileged to lead. Although this 
is the first hearing in the Subcommittee on this issue, I 
assure you that it will not be the last.
    First implemented, as I said, in the 2005 Energy Policy Act 
and enhanced in the 2007 Energy Independence and Security Act 
we adopted last December, the renewable fuel standard is 
intended to promote energy independence and to protect the 
environment at the same time. The EPA must implement the 
renewable fuel standard to meet both of these objectives.
    Of course, there are several other critical issues that 
must be carefully weighed when considering the effectiveness of 
the standard. Increasing energy prices are already placing a 
strain on families across our Nation. In light of growing gas 
prices, there are a number of things I believe can be done that 
will reduce financial burdens, as well as provide energy 
security.
    One, I believe that oil and gas companies should drill for 
oil on the 68 million acres of land that the Federal Government 
has provided. In addition, Congress has provided opening a 
500,000 acre section in the Gulf of Mexico to new drilling.
    And the second point I would hope we would keep in mind in 
this Country is that the lion's share of oil produced in the 
United States should stay in the United States. Most of our oil 
should be sold to Americans and consumed here, and not shipped 
overseas.
    A third point I would want to start off here with is that 
our Nation needs to make a stronger commitment to reducing our 
energy demands through conservation and investments in 
renewable energy alternatives. I also believe we must develop 
advanced biofuels that reduce greenhouse gas emissions and do 
not divert crops from the food stream.
    Increasing food prices have been blamed on biofuel 
mandates. From leaked reports to published studies, the impact 
of biofuels mandates and subsidies and rising commodity prices 
ranges from as low as 3 percent to as high as 75 percent. In 
truth, we don't know the exact impact on food costs, but we do 
know the technology is coming online that will enable us to 
produce the biofuels needed to support energy independence and 
reduce greenhouse gas emissions without impacting food prices.
    We must evaluate any unintended consequences of the 
renewable fuels provision. As academia, government and industry 
continue to research these effects, this Subcommittee will 
maintain strong oversight.
    Today, we will begin to review the methods EPA will use to 
evaluate the greenhouse gas emissions of biofuels compared to 
traditional fuels. In addition, we will hear testimony about 
advancement in the next generation of biofuels. It is important 
we take a close look at the State of new biofuels which will be 
based on feedstocks of waste materials that are not competing 
with food sources.
    Personally, I am excited about the investments and the 
advancements that DuPont is making in renewable fuels, and look 
forward to hearing about the result of the company's current 
pilot programs. We need to ensure that facilities to 
manufacture new biofuels and the infrastructure needed to 
deliver the product to the public will be in place to meet the 
established target of $20 billion gallons of advanced biofuels 
by the year 2022.
    The renewable fuel standard makes these new biofuel 
technologies a viable choice for business. Ultimately, the 
renewable fuel standard must be implemented in a way that 
positively impacts the environment and our economy. I believe 
this Subcommittee must work together to make sure that happens.
    [The prepared statement of Senator Carper follows:]

           Statement of Hon. Thomas R. Carper, U.S. Senator 
                       from the State of Delaware

    At a time when Americans are facing high food and fuel 
prices, I believe today's hearing on the Renewable Fuel 
Standard is an especially timely topic. As many of you know, 
the Renewable Fuel Standard is within the Clean Air Act--and 
therefore under the jurisdiction of this Subcommittee. Although 
this is the first hearing in the Subcommittee on this issue--I 
assure you, it will not be the last.
    First implemented in the 2005 Energy Policy Act and 
enhanced in the 2007 Energy Independence and Security Act, the 
Renewable Fuel Standard is intended to promote energy 
independence and protect the environment. The EPA must 
implement the Renewable Fuel Standard to meet both these 
objectives.
    Of course, there are several other critical issues that 
must be carefully weighed when considering the effectiveness of 
the Renewable Fuel Standard. Increasing energy prices are 
already placing a strain on families across this Nation. In 
light of growing gas prices, there are a number of things I 
believe can be done that will reduce financial burdens as well 
as provide energy security:
    1. I believe that oil and gas companies should drill for 
oil on the 68 million acres of land that Federal Government has 
provided. In addition, Congress has approved opening a 1.5 
million acre section off the Gulf of Mexico to new drilling.
    2. The lion's share of oil produced in the United States 
should stay in the United States. Most of our oil should be 
sold to Americans and consumed here, not shipped overseas.
    3. Our nation must make a stronger commitment to reducing 
our energy demands through conservation and investments in 
renewable energy alternatives. I also believe we must develop 
advanced biofuels that reduce greenhouse gas emissions and do 
not divert crops from the food stream.
    Increasing food prices have been blamed on biofuel 
mandates. From leaked reports to published studies, the impact 
of biofuel mandates and subsidies on rising commodity prices 
ranges from 3 percent to 75 percent. In truth, we don't know 
the exact impact on food costs. But we do know that technology 
is coming online that will enable us to produce the biofuels 
needed to support energy independence and reduce greenhouse gas 
emissions without impacting food prices.
    We must evaluate any unintended consequences of the 
renewable fuel provisions. As academia, government and industry 
continue to research these effects, this subcommittee will 
maintain strong oversight.
    Today, however, we will begin to review the methods the EPA 
will use to evaluate the greenhouse gas emissions of biofuels 
compared to traditional fuels. In addition, we will hear 
testimony about advancements in next generation biofuels. It is 
important that we take a close look at the State of new 
biofuels, which will be based on feedstocks of waste materials 
that are not competing with food sources.
    I am excited about the investments and advancements DuPont 
is making in renewable fuels. And look forward to hearing about 
the results of the company's current pilot programs. We need to 
ensure that facilities to manufacture new biofuels and the 
infrastructure needed to deliver the products to the public 
will be in place to meet the established target of 20 billion 
gallons of advanced biofuels by 2022. The Renewable Fuel 
Standard makes these new biofuels technologies a viable choice 
for business.
    Ultimately, the Renewable Fuel Standard must be implemented 
in a way that positively impacts the environment and economy. I 
believe this subcommittee must work together to make sure this 
happens.
    I am grateful to all the witnesses here to today, and look 
forward to hearing your testimony.

    Senator Carper. Again, we are grateful to all our witnesses 
for being here today. We look forward to hearing your 
testimony. With that having been said, I am not sure who I 
should yield to first. Should I yield to the Ranking Member of 
the Committee?
    All right. Senator Bond, why don't you lead off, and then 
we will go to Senator Inhofe and then Senator Craig.
    Thank you. We are delighted to see you. Thank you.
    Senator Bond.

          OPENING STATEMENT OF HON. CHRISTOPHER BOND, 
            U.S. SENATOR FROM THE STATE OF MISSOURI

    Senator Bond. Thank you, Mr. Chairman.
    As an officious intermeddler, I am happy to participate in 
this Subcommittee hearing today. I thank you and Chairman Boxer 
and Senator Inhofe for holding the hearing. And I thank and 
welcome our witnesses today.
    I think we all should agree that we need a massive re-start 
of United States energy production and conservation across the 
board. The high cost of energy is burdening families, 
threatening the viability of many businesses, potentially 
crippling our economy which is already suffering from the 
impact of $4-plus a gallon gasoline.
    As the Chairman noted, several years ago Congress passed a 
mandate to begin using clean-burning American farm-grown 
ethanol and biodiesel as an alternative fuel. Gentlemen, I am 
here to say it has worked. Last year, 6.7 billion gallons of 
ethanol were used in America. That is 6.7 billion gallons that 
we did not have to import from Venezuela, the Middle East or 
Russia. This clean-burning fuel reduced greenhouse gas 
emissions by 10 million tons, the equivalent of taking 1.5 
million cars off the road.
    Ethanol has turned out to be a much less expensive form of 
energy. Vendors are now paying around $2.55 per gallon at the 
ethanol plants in Missouri, and a State mandate we have to use 
10 percent ethanol has reduced the average price of gasoline to 
$3.79 per gallon, which I paid last weekend in my home of 
Mexico, Missouri, when the national average is $4, and I was in 
Alaska where the average is about $5.
    Thousands of farmers in Missouri and across the Nation have 
invested large sums pursuant to the congressional ethanol 
mandate to develop the infrastructure to produce this energy. 
To repeal the mandate now, as some have advocated, would be a 
major break of faith with all of these small investors, the 
farmers who grow corn primarily. It would cause our imports to 
rise and increase the amount of pollution coming from other 
petroleum sources.
    Contrary to popular myths being fostered by the petroleum 
industry, ethanol is more efficient to produce than gasoline. 
According to the U.S. Department of Energy and U.S. Department 
of Agriculture, consumers get 30 percent more energy from 
ethanol for every unit of energy used for production. Whereas, 
consumers get 19 percent less energy from gasoline for each 
unit of energy used for production.
    Another myth is that ethanol and biodiesel are having a 
vast impact on food prices. In actuality, it is negligible 
because there is less than a dime's worth of corn even at the 
higher prices in a $3.69 box of corn flakes on sale in Central 
Missouri now. Corn farmers have increased their productivity 
through genetically enhanced seeds and better production. In 
the 2007 crop year, producers brought in 2.6 billion more 
bushels of corn than the previous year, when only 900 million 
bushels were needed to meet the increased ethanol demand for 
that same period of time.
    The real cost of food comes from off-farm costs, which are 
approximately 81 percent. Much of this cost is due to higher 
oil prices in the form of transportation costs, since the 
average food item travels 1,300 miles to the grocery store. 
Thus, rather than driving up the price of food, the far less 
expensive ethanol and biodiesel actually could help hold food 
costs down.
    As I said earlier, energy is one of the biggest burdens on 
our economy. We absolutely must start now with a whole new 
commitment to use all possible means to reduce the supply 
demand imbalance. A wide range of conservation measures are 
needed, as well as more renewable, clean fuels, more nuclear 
power, more oil and gas production in North America, more clean 
coal technology. This means continuing to develop renewable 
fuels beyond the technologies we use today.
    I am very excited about cellulosic ethanol made from wood. 
We did a study, and the University of Missouri carried it out. 
We have 1.4 million acres of forest land that is clogged with 
low-grade timber that has no market value. It is holding down 
the good tree production. On one square mile, the university 
identified 4,200 tons of green timber that should be harvested 
to keep our forests are healthy, to avoid the spread of 
disease, and to prevent ruinous fires.
    Yet when I talk to the scientists, they tell me we are not 
there yet, at an efficient economical means of converting wood 
into cellulosic ethanol. Congress in its ``wisdom'' has said we 
must produce 16 billion gallons by 2022, and we aren't there 
yet.
    I am going to have to leave for an Intelligence Committee 
meeting, so I won't be able to ask questions, but I might ask 
our grocery manufacturer friends if only 5 percent of the 
increased costs of corn flakes, five cents in the $3.69, comes 
from corn, where does the other 90 cents come from? Is it 
possible those off-farm costs such as transportation are 
running it up? I would be interested to hear your views on 
supporting additional sources of energy to bring these crushing 
high prices of fuel down.
    I thank the Chair and I appreciate your courtesies.
    Senator Carper. We are delighted you are here. Before you 
slip out, as many of our colleagues know, Senator Bond, along 
with Senator Rockefeller who chairs the Intelligence Committee, 
and Congressman Steny Hoyer who is the Democratic Leader in the 
House, worked for many months, and will try to bring us to 
consensus on a difficult issue. The difficult issue deals with 
how do we make sure that our intelligence agencies are able to 
intercept communications from people who wish us harm from 
outside of our Country, to sources within this Country. How do 
we do that in a way to protect our safety and our security in 
this Country, but at the same time to protect the civil 
liberties of the folks who live here, the Americans who live 
here? They worked very hard to find a way to do both--protect 
civil liberties and to try to make sure that we protect our 
safety and security.
    The issue before us I think here today is not dissimilar. 
How do we find a way to use biofuels to make us more energy 
independent, to protect us on that security side of the 
equation, and at the same time to make sure that we have food 
to eat at prices we can afford and the rest of the world can 
afford. That is a challenge for us, but I think today we were 
brought into session in the U.S. Senate, and the guest chaplain 
was from Delaware, Reverend Patricia Bryant Harris. She prayed 
for, among other things, for wisdom for us, and we need wisdom 
to work through this one. We needed wisdom to work through 
FISA. We did it, got it, and my hope is we can do as well here 
today.
    So thanks very much for your work and effort.
    Senator Inhofe.

          OPENING STATEMENT OF HON. JAMES M. INHOFE, 
            U.S. SENATOR FROM THE STATE OF OKLAHOMA

    Senator Inhofe. Thank you, Mr. Chairman.
    I am glad that we are finally holding today's hearing. The 
EPW Committee oversight hearing on the renewable fuel standard 
is long overdue. We have talked about this for a long time, and 
we have been trying to get one. This is the first one that we 
have had in this Committee. At the same time, the Senate Energy 
and Natural Resources Committee has held four hearings. House 
Energy and Commerce has held three hearings. The Senate 
Agriculture Committee has held two hearings. Even the Homeland 
Security Committee has had a hearing. And yet that is all in 
the 110th Congress, and this is where the jurisdiction should 
be.
    It is important to note that today is also nearly 7 months 
after Congress has passed a massive fivefold increase in 
biofuels mandates.
    When I was Chairman of this Committee, the Committee and 
the Subcommittee held 14 hearings on the RFS program, examining 
some of the issues from the future of transportation fuels to 
the most recent and unfortunately last oversight hearing in 
September 2006, which highlighted the implementation of the 
program.
    In the face of mounting questions surrounding ethanol's 
effect on livestock feed prices, which is what I hear in my 
State of Oklahoma, its effect on food prices, its economic 
feasibility, its transportation and infrastructure needs, its 
water usage, and its numerous environmental impacts, the 
majority has chosen to avoid examining these real issues. 
Instead, the focus of today's oversight hearing is on the 
status of life cycle analysis and advancements in next-
generation biofuels. No doubt, that is an important issue, but 
hardly as pressing as the raging food and fuel debate that is 
occurring across the Country today.
    Right now, there is only one issue in America, and that is 
the price of fuel at the pumps. Now, if you question that, talk 
to my wife and I am sure there are others who would stand 
behind that. Now, as far as what we are trying to do with 
biofuels, you mentioned the University of Missouri. Oklahoma 
State University and the Noble Foundation are very, very active 
right now. In fact, a former Senator from Oklahoma is now 
heading up that program on his own.
    Well, a lot of things have been printed recently that I 
would like to share with the record and with the Committee. The 
New York Times has stated: ``Soaring food prices, driven in 
part by demand for ethanol made from corn have helped slash the 
amount of food aid the government buys to its lowest level in a 
decade, possibly resulting in more hungry people around the 
world this year.'' The U.N. Secretary General Ban Ki-Moon 
recently warned that high food prices could wipe out progress 
in reducing poverty and hurt global economic growth.
    In April, a Time magazine article titled The Clean Energy 
Scam, by reporter Michael Grunwald, stated that our current 
policies on corn ethanol are ``environmentally disastrous. The 
biofuels boom, in short, is one that could haunt the planet for 
generations, and it is only getting started.''
    Even Miles O'Brien, who is one that I have had several 
confrontations with, and the one thing we have in common is we 
both love aviation, so we have that, but even Miles O'Brien of 
CNN, a man who I have been harshly critical of for some of the 
climate change reporting, understands our current problems. 
Miles O'Brien reported on CNN in February that, and I am 
quoting now, if every last ``ear of corn grown in America were 
used for ethanol, it would reduce our oil consumption by only 7 
percent.'' He said, ``Corn ethanol is not as clean, efficient, 
or practical as the politicians claim.''
    On Earth Day, Lester Brown, who has been dubbed the guru of 
the environmental movement, called on Congress to ``revisit 
recently enacted Federal mandates requiring the diversion of 
foodstuffs for production of biofuels.''
    Now, when you have--and I say this to the Chairman who has 
joined us now, Senator Boxer--when you have Lester Brown, Miles 
O'Brien, Time magazine, the New York Times, the United Nations 
and me all in agreement on the need to reexamine our current 
renewable fuels policy, you can rest assured this current 
policy is horribly misguided. It is this Committee's delegated 
responsibility to exercise oversight, to reassess, and to 
legislate on the renewable fuel standard. I hope that we will 
be able to do that.
    I do agree with the previous speak that we do have a 
serious problem. It is one that we are going to have to deal 
with in supply and demand. I believe that we are going to have 
to really look at the supply side in terms of what is available 
now. How do we run this machine called America? What is out 
there that can be used? I certainly am going to be joining the 
Senator from Missouri in trying to resolve that problem.
    Thank you, Mr. Chairman.
    [The prepared statement of Senator Inhofe follows:]

            Statement of Hon. James M. Inhofe, U.S. Senator 
                       from the State of Oklahoma


 environmental protection agency oversight: implementing the renewable 
                             fuel standard


    I'd first like to thank the Chairman for finally holding 
today's hearing. An EPW committee oversight hearing on the 
Renewable Fuel Standard is long overdue. Despite the enormous 
amount of attention and the eventual legislative enactment of 
the now greatly expanded RFS program, the EPW committee has 
failed to hold even one hearing on RFS in the 110th Congress--
until today. Not one hearing despite the fact that the EPW 
committee is the primary committee of jurisdiction.
    The Senate Energy and Natural Resources Committee has held 
4 hearings. The House Energy and Commerce Committee has held 3 
hearings. The Senate Agriculture Committee has held 2 hearings. 
Even the Senate Homeland Security Committee has held a hearing. 
In the 110th Congress we've seen at least 5 House and Senate 
committees hold at least 12 hearings reviewing biofuels policy, 
but EPW has not held one--until today. It's important to note 
that today is also nearly 7 months after--after Congress passed 
a massive fivefold increase in the biofuels mandates. Where was 
the RFS oversight and legislative input before enactment of 
this act? Not anywhere before this committee.
    Under my leadership, the committee and subcommittee held 14 
hearings on the RFS program, examining issues from the future 
of transportation fuels to the most recent and unfortunately 
last oversight hearing in September 2006 which highlighted the 
implementation of the RFS program.
    I'm further disappointed that today's hearing appears to 
merely be a ``check the box'' exercise for the majority. In the 
face of mounting questions surrounding ethanol's effect on 
livestock feed prices, its effect on food prices, its economic 
feasibility, its transportation and infrastructure needs, its 
water usage, and its numerous environmental impacts, the 
majority has purposely chosen to avoid examining these real 
issues. Instead, the focus of today's oversight hearing is on 
``the status of life-cycle analysis and advancements in next 
generation biofuels.'' No doubt that's an important issue, but 
hardly as pressing as the raging food vs. fuel debate that's 
occurring across the country and around the globe--a debate 
occurring everywhere but before the EPW committee.
    Additionally, limiting this hearing to just three outside 
witnesses does not even begin to address the numerous issues 
arising from the RFS mandates. In my home State of Oklahoma, 
many cattlemen, pork producers, and poultry producers are 
struggling with the record high corn prices. We need to hear 
from the livestock producers, the corn growers, the ethanol 
producers, the States, the oil refiners, the economists and 
others to fully understand and appreciate the consequences of 
this program. I hope the majority will schedule the hearing 
which I requested in my May 5th letter to Chairman Boxer to 
fully examine these issues.
    The New York Times has stated, ``Soaring food prices, 
driven in part by demand for ethanol made from corn, have 
helped slash the amount of food aid the government buys to its 
lowest level in a decade, possibly resulting in more hungry 
people around the world this year.''
    U.N. Secretary-General Ban Ki-Moon recently warned that 
high food prices could wipe out progress in reducing poverty 
and hurt global economic growth.
    In April, a Time Magazine article titled ``The Clean Energy 
Scam,'' by reporter Michael Grunwald stated that our current 
policies on corn ethanol are ``environmentally disastrous... 
The bio-fuels boom, in short, is one that could haunt the 
planet for generations--and it's only getting started.''
    Even Miles O'Brien of CNN, a man whom I have been harshly 
critical of for his climate change reporting, understands our 
current problems. O'Brien reported on CNN in February, that 
``if every last ear of corn grown in America were used for 
ethanol, it would reduce our oil consumption by only 7 
percent.'' O'Brien also reported, ``Corn ethanol is not as 
clean, efficient, or practical as the politicians claim.''
    On Earth Day, Lester Brown, who has been dubbed ``the guru 
of the environmental movement,'' called on Congress to 
``revisit recently enacted Federal mandates requiring the 
diversion of foodstuffs for production of bio-fuels.''
    When you have Lester Brown, Miles O'Brien, Time Magazine, 
the New York Times, the United Nations, and James Inhofe all in 
agreement on the need to reexamine our current renewable fuels 
policy, you can rest assured this current policy is horribly 
misguided. It's this Committee's delegated responsibility to 
exercise oversight, to reassess, and to legislate on the 
Renewable Fuels Standard. I sincerely hope that process will 
finally start today.

    Senator Carper. Thank you, Senator Inhofe.
    We have been joined by full Committee Chairman Boxer. We 
are delighted you are here. You are recognized.

           OPENING STATEMENT OF HON. BARBARA BOXER, 
           U.S. SENATOR FROM THE STATE OF CALIFORNIA

    Senator Boxer. Thank you very much.
    I want to thank you very much, Senator Carper, for your 
leadership on this, and for calling this hearing, and for all 
the work that you put into it. We really appreciate it.
    We spend billions of dollars overseas each year to buy 
foreign oil, often to unstable regions of the world. We all 
know that burning fuel for transportation is responsible for 
about one-third of our global warming pollution. There are 
solutions to our fuel crisis that will cut prices, cut our 
imports of foreign oil, and cut global warming emissions. I 
believe that renewable fuels certainly start us down that path.
    But we need to have stronger incentives to move us away 
from oil and conventional biofuels, and incentives toward 
cellulosic and other advanced biofuels that have a smaller 
carbon and environmental footprint, are good for our economy, 
and will make us more secure. Cellulosic ethanol and other 
advanced biofuels can be made from agricultural waste, grass 
and many non-food sources.
    I want to place in the record a letter from the California 
Poultry Federation. They are experiencing hugely larger costs. 
I am sure you are hearing this in your State as well. I think 
that what is really disturbing to me about this--and you can 
all read it in the record, I won't take the time of the 
Subcommittee to do it now--is that it is so expensive now for 
them to produce the turkeys and such that people are switching 
from turkey breast meat to hot dogs to feed their family. The 
visit I had from the poultry federation in California, they 
just said they can't keep the hot dogs on the shelves, and yet 
they are stuck with the more healthful products. So they are 
very, very concerned about this.
    So we do need strong incentives to move us away from the 
conventional biofuels. That is why I support the development of 
cellulosic ethanol and why the Boxer-Lieberman-Warner global 
warming legislation included many strong incentives, including 
a low carbon fuel standard to move us toward those advanced 
biofuels.
    I believe we must do everything possible, again, to move in 
that direction. I think we have to understand the implications 
for the economy, including food prices and current policies 
that promote the increased use of corn-based ethanol. The role 
that the ethanol mandate is playing in the recent spike in food 
prices is controversial. I read your statement. We don't know 
exactly what the impact is. The Administration has estimated it 
is about 3 percent of the increase in global food prices.
    The Agriculture Department estimates the recent upswing in 
biofuels production is only a small contributor to increased 
domestic food prices, an increase of .025 percent or less. But 
other estimates of the cost impacts of biofuels production are 
higher, and it is clear that corn prices are affected by 
ethanol production. Higher corn prices are having impacts on 
some food producers, again I reference the California Poultry 
Federation.
    I believe we must create stronger incentives for moving 
more quickly toward cellulosic and advanced biofuels. We must 
move away from reliance on corn-based ethanol. I am concerned 
about increasing corn and soybean prices. I look forward to 
hearing more about this issue. I believe we need to review our 
policies regarding grain ethanol incentives, including domestic 
ethanol subsidies.
    And here is an important point. The tariffs on foreign 
ethanol, I think that is one that is really counterproductive 
to the well being of the people of this Nation. With the energy 
bill that we passed in December 2007, we have taken the first 
step through the expanded renewable fuel standard to replacing 
oil in our cars with home-grown fuels. We have set targets for 
advanced biofuels in the bill. We must consider lifestyle 
greenhouse gas emissions and environmental impacts when 
evaluating biofuels. Getting off oil is the crucial benefit, 
but we must also maximize the reduction in global warming 
pollution.
    We are very close to significant breakthroughs in biofuels. 
I have met with people in my home State. It is the most 
exciting time in many ways for us to be here in the United 
States because we will witness the way we will transform how we 
power our cars and trucks, how we cleanup our air, improve our 
energy security, keep our dollars at home, and protect our 
climate. We really do owe it to our grandchildren to push 
aggressively for these new solutions that will transform our 
economy and save our planet.
    Again, I want to say to Senator Carper thank you very much 
for convening this important oversight hearing. I look forward 
to hearing from our witnesses.
    Senator Carper. Thank you, Madam Chair, and thanks very 
much for your terrific work and leadership on renewable fuel 
standards to get us to this point today.
    Senator Craig from Idaho, welcome. Please proceed.

            OPENING STATEMENT OF HON. LARRY CRAIG, 
              U.S. SENATOR FROM THE STATE OF IDAHO

    Senator Craig. Mr. Chairman, thank you. Like my colleagues, 
without question, this is an important hearing.
    I find it fascinating that almost all of us aren't really 
in disagreement. We are all very excited about what is going on 
in the marketplace of energy today, at least I am. One of the 
things I say at home is that the bad news is that it is $4 a 
gallon. The good news is that it is $4 a gallon. America is 
awakening like never before. We thought we could conserve our 
way out of this business, and now we know we can't.
    So the question is, how do we do it and do it in a 
reasonable way that takes the markets where they want to go, 
and build the type of energy supplies that are clean, 
renewable, and sustainable? That is really our challenge. It is 
a fundamental challenge.
    And how do we get from here to there in that 10-or 20-year 
period? How do we transition from traditional energy sources 
that are now less reliable because foreign nations have them 
and foreign governments have them, and are at best risky at 
times? The marketplace is reacting and the American consumer is 
experiencing something that took them from anger to fear. Now 
they fear, because they can't understand why everything is 
going up at a phenomenal rate at this moment--their food bill, 
their energy bill.
    I am also fascinated that almost every week we have a new 
study blaming somebody for something. We have new modeling and 
new formats that say, well, there is no question corn ethanol 
has shot food prices out the window. You know, if it hadn't 
been for increased commodity prices with 20 percent and 25 
percent increases in input cost to the farm for fertilizers and 
fuels, our farmers would be in bankruptcy today and we would be 
bailing them out. But they aren't in bankruptcy. They are 
experiencing substantial profits today, but against phenomenal 
high new costs of operations.
    So the marketplace works really quite well, and instead of 
the American taxpayer picking up the subsidy to keep 
agriculture alive, the American consumer is paying for it 
today. Maybe that is a marketplace that has more viability in 
it and more sustainability in the long term.
    Mr. Chairman, I visited with a young man the other day that 
I found quite fascinating. I had never met him before. He is 
back here. He is working in Washington. He is the son of an 
Iowa farmer. He has two brothers. One is a lawyer and one is a 
doctor. They all left the farm. When he left the farm, dad said 
don't come back, because we can't make a living for ourselves 
and for you and your family. Go out and find something else to 
do.
    Now, his dad is saying come home. The farm is profitable 
again, and I am ready to retire and you can take it over. So he 
is having this debate with his wife about going home. What 
happens when he goes home? The average age of the farmer on 
that farm drops from 70 years of age to 42 years of age and 
America's agricultural portfolio gets renewed.
    Now, there is nothing wrong with that. So let the 
marketplace work. We dropped the subsidy on corn-based ethanol 
from 51 cents to 45 cents in the farm bill. We are beginning to 
ratchet that down. I don't disagree with Senator Boxer at all 
on cellulosic, but it is out there a little ways. I was in 
Ottawa several months ago with Iogen. They probably lead in the 
area with the enzymes that deal with straws and cornstover and 
the waste we see in agriculture. Their enzymes aren't as good 
as some enzymes as it relates to wood, and that is another form 
of cellulosic, and we will get there, but we are not there.
    So this morning, I am on a radio show, and the fellow who 
was asking the questions at the other end out in Idaho is on 
the board for the senior center in Twin Falls. I used to chair 
the Aging Committee. He said, Senator, the problem today is we 
can't find people to deliver the meals on wheels to our shut-in 
aging. Now, it wasn't the cost of the food that was in the car. 
It was the cost of fuel that was in the tank. They couldn't 
afford to drive down the street and stop at the houses to 
deliver the food to the shut-in.
    We will get this right, but the best news today is America 
has awakened to the reality that we have to be producers 
because we are aggressive consumers. We quit producing, but we 
kept consuming for the last two decades, and we ran ourselves 
up against a brick wall. American consumers have grown very 
angry today at their public officials who denied them the right 
of production.
    How do we do it? I hope we do it well. I hope it is clean. 
I hope it is responsible. I hope we go after our oil reserves 
that are sitting out there in environmentally sensitive areas 
where we know we can get it in environmentally sensitive ways 
and use them as transitional fuels while we wait for the 
cellulosics to come online, while we wait for other 
technologies and biomass to come online, and we reduce our 
carbon footprint--a phenomenal challenge.
    So the bad news is gas is $4 a gallon. The good news is it 
is $4 a gallon.
    Thank you.
    Senator Carper. Thank you for those comments.
    My colleagues have heard me quote from time to time Thomas 
Edison, who used to say that sometimes we miss out on 
opportunity because it comes along wearing overalls and is 
disguised and looks a lot like work. We certainly have a 
challenge here, but there is also a terrific opportunity, and 
those opportunities can be translated into technological 
breakthroughs and economic opportunity and job creation.
    With that having been said, again to our witnesses, 
Assistant Administrator Robert Meyers, to Deputy Assistant 
Secretary Steven Chalk, we welcome you. You are recognized. 
Your full statement will be made part of the record. We will 
ask you to summarize, and stay as close as you can to 5 
minutes. If you go a little bit long, that is OK, but not too 
long. Thank you.
    Mr. Meyers, why don't you proceed. Thank you.

   STATEMENT OF ROBERT J. MEYERS, PRINCIPAL DEPUTY ASSISTANT 
ADMINISTRATOR, OFFICE OF AIR AND RADIATION, U.S. ENVIRONMENTAL 
                       PROTECTION AGENCY

    Mr. Meyers. Yes, thank you, Mr. Chairman. I appreciate the 
opportunity to come before you today to testify on the 
implementation of the renewable fuel provisions of the Energy 
Independence and Security Act, EISA, and advancements in 
biofuels.
    The Environmental Protection Agency is responsible for 
implementing the RFS program, which was originally established, 
as noted earlier, in the Energy Policy Act of 2005, as section 
211(O) of the Clean Air Act. Since EISA was enacted in December 
2007, the Agency has been working to develop an effective 
program under the new and amended RFS provisions Congress 
approved, commonly referred to as RFS2.
    In this regard, Agency staff have met with more than 30 
different stakeholders, including renewable fuel producers, 
technology companies, petroleum refiners and importers, 
agricultural associations, environmental groups, gasoline and 
petroleum marketers, pipeline owners, and fuel terminal 
operators. Of course, we also continue to meet our statutory 
obligations to collaborate regularly with the Departments of 
Agriculture and Energy.
    While EPA can and will draw from its experience in 
developing the original RFS regulations, it is important to 
understand that EISA made a number of significant changes to 
the RFS program. First, as noted, EISA increased the total 
renewable fuel volume mandate fivefold over the 2005 energy 
bill, and extended the statutory schedule for the RFS by 10 
years.
    In addition, the very character of renewable fuels used for 
transportation will likely change over this period by force of 
law and expected technology developments. New emerging fuel 
production technologies hold the potential to make gasoline-and 
diesel-like fuels from renewable sources, as opposed to simply 
blending such fuel into traditional petroleum-based fuel.
    Second, EISA extended the RFS program to include both on-
road and non-road gasoline and diesel fuel volumes. Extending 
the program to producers and importers of on-road and non-road 
gasoline and diesel fuel is a significant change and may affect 
many new parties, possibly including a number of small 
businesses.
    Third, EISA increased the number of renewable fuel 
categories and standards to a total of four, including total 
renewable fuels and three new subcategories, each with its own 
required minimum volumes: advanced biofuels, biomass-based 
diesel and cellulosic biofuels. EISA also specified that by 
2022, cellulosic volume should exceed the volumes required for 
what might be termed conventional corn-based ethanol.
    Fourth, new provisions included in EISA that require EPA to 
apply life-cycle greenhouse gas performance threshold standards 
to each category of renewable fuel. Life-cycle greenhouse gas 
emissions is a defined term within the RFS2 program and 
generally refers to the aggregate quantity of greenhouse gas 
emissions related to the full fuel life-cycle, including all 
stages of fuel and feedstock production and distribution.
    There are many separate elements of this definition, and 
certainly there are significant complexities, but EPA is 
presently working with our interagency partners to develop 
approaches for utilizing such analysis within the RFS2. In 
general, work is necessary with respect to the modeling 
framework for life-cycle analysis, better understanding of GHG 
emissions sources, the development of key components for the 
agricultural sector, biofuel production, and baseline petroleum 
fuel. While EPA has done considerable work in this area, 
additional new and improved analysis will be necessary.
    Fifth, EISA adds a number of other new provisions, 
including changing the definition of renewable fuel feedstocks 
in a fundamental manner. Developing appropriate and enforceable 
regulations addressing this provision will require extensive 
dialog with USDA, USTR, DOE, the agricultural community, and 
renewable fuels producers and others.
    Finally, as required by Congress, we will also be assessing 
the impacts of EISA on vehicle emissions, air quality, 
greenhouse gases, water quality, land use and energy security. 
These analyses will provide important information to the public 
and Congress on the effectiveness of the new legislation.
    We expect other implementation issues. As you may be aware, 
Texas Governor Rick Perry sent a letter to EPA Administrator 
Johnson on April 25 requesting a partial waiver of the 2008 RFS 
volume obligations. EPA then issued a Federal Register notice 
on May 22 requesting public comment on the request, and the 
comment period just closed back on June 23.
    All together, we have received about 15,000 comments, with 
about 150 substantive comments, from a wide range of 
stakeholders, including individual companies, associations 
representing renewable fuel producers, farmers, the cattle, 
beef and poultry industries, the food and grain industries and 
many others.
    We are currently evaluating these comments and other 
pertinent information, and conducting the analysis that is 
necessary under the law to support the decision by the 
Administrator. Also as part of this effort, we are continuing 
to work with the assistance of the Department of Agriculture 
and the Department of Energy, and we also additionally have 
been closely monitoring the aftermath of the Midwest floods to 
determine to what extent the natural disaster may impact the 
Renewable Fuel Program.
    Again, I will just end right here. I would say overall we 
are faced with many challenges. The law that Congress passed 
creates many new definitions, many new challenges for the 
Agency, and we are attempting to work through all the issues in 
the legislation and utilize the successful approach we did with 
the RFS1 Program. We look forward to working closely with the 
Committee and Members of Congress and other stakeholders.
    Thank you very much.
    [The prepared statement of Mr. Meyers follows:]
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    Senator Carper. Mr. Meyers, thanks very much for your 
statement today.
    Mr. Chalk, you are recognized. Please proceed.

 STATEMENT OF STEVEN G. CHALK, DEPUTY ASSISTANT SECRETARY FOR 
  RENEWABLE ENERGY, OFFICE OF ENERGY EFFICIENCY AND RENEWABLE 
               ENERGY, U.S. DEPARTMENT OF ENERGY

    Mr. Chalk. Thank you, Chairman Carper and members of the 
Committee. Thanks for the opportunity to appear before you 
today to discuss the renewable fuel standard, or RFS, included 
in the Energy Independence and Security Act of 2007, the latest 
energy bill known as EISA, particularly to address the life-
cycle analysis of alternative fuel usage and the Department of 
Energy's research and development of alternative fuels, 
especially advanced biofuels.
    The effect of increased volumes of alternative fuels on air 
pollutants and harmful emissions are particularly relevant to 
your Committee's jurisdiction over the Clean Air Act. All of us 
recognize the national and economic security importance of 
reducing our dependence on oil. The implementation of the RFS 
is one way that Congress and the Administration have come 
together and responded to the urgency of expanding the use of 
non-petroleum-based fuels to improve energy security and reduce 
greenhouse gases.
    The Department believes that the RFS is critical to scaling 
up production of the use of current biofuels in the United 
States and deploying the next generation of biofuels, so 
creating a predictable policy environment for investors is 
critical to ensuring growth in all parts of the biofuels supply 
chain. This is from the feedstocks to the refineries to the 
delivery infrastructure.
    In both the short term and the long term, relaxing the RFS 
enacted just 6 months ago would likely undercut these 
investments in new capacity, as well as research, development 
and demonstration of cellulosic or next-generation ethanol or 
other advanced biofuels. Additionally, as the RFS included in 
EISA could act to displace petroleum used in transportation and 
reduce greenhouse gases, repealing or relaxing that mandate 
would hinder progress toward these efforts. Right now, in 
gasoline is the only alternative or substitute today that is 
making a difference and having a significant impact on reducing 
oil demand.
    DOE has projected that in the short term, the 
transportation fuel industry has the ability to meet the nine 
billion gallon requirement for renewable fuels this year, from 
ethanol, biodiesel, as well as credits from refiners from the 
2007 blending levels. However, the effects of the recent 
flooding in the Midwest are fully analyzed, and of course we 
can't predict future catastrophic events related to the 
weather.
    Over the long term, to ensure continued availability of 
resources to meet the RFS volume requirements in an 
environmentally sustainable manner, the Department is focused 
on robust empirical validation of all the environmental impacts 
of bioenergy across the production life-cycle. This is from 
planting of feedstocks all the way to the tailpipe of a 
vehicle. We are working with Argonne National Laboratories and 
Purdue University to address the issues of direct and indirect 
land use changes that could potentially occur with the 
expansion of biofuels. Purdue's model will be expanded to 
include cellulosic ethanol feedstocks, such as switchgrass, and 
the results of that model will be integrated and rolled up into 
Argonne's total life-cycle model known as GREET. This is the 
overall life-cycle model that is used by the EPA in calculating 
life-cycle impacts of fuels.
    One of the most important ways the Department supports 
achieving RFS volumes and positively affecting the air and 
environment is through its activities in research and 
development and technology deployment in advanced fuels. We 
have a goal to make biofuels from non-food feedstocks cost-
competitive by 2012. We have made a lot of progress over the 
last 5 years or so, where we have brought the costs of that 
down by about 60 percent.
    Cellulosic ethanol is expected to improve upon the already 
positive energy balance of today's corn ethanol by delivering 
four-to six-times as much energy to the vehicle as it took to 
actually make cellulosic ethanol. Additionally, DOE research 
has shown that cellulosic feedstocks can reduce life-cycle 
greenhouse gases by as much as 86 percent compared to gasoline 
today.
    The United States is now recognized as the world leader in 
committing to advanced renewable fuels as a key component of 
its energy security strategy. We believe that the expanded RFS 
creates the predictable investment climate that we need to 
enable substantial participation of the private sector, whose 
commitment is essential to scaling our current biofuels use and 
deploying next-generation renewable fuels necessary to make a 
large impact on reducing oil use and greenhouse gas emissions.
    Mr. Chairman, thank you again for holding this important 
hearing, and for the opportunity to address EISA's renewable 
fuel requirements, and the Department of Energy's use in 
advanced biofuels. This concludes my prepared statement and I 
would be happy to answer any questions the Committee may have.
    Thank you.
    [The prepared statement of Mr. Chalk follows:]
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    Senator Carper. Thank you, Mr. Chalk. We will be happy to 
ask some questions. Thank you for a very good statement.
    I have just learned, colleagues, that our first and only 
vote of the morning, a cloture vote on the housing bill, will 
occur at 10:55, and we may have a couple of nomination votes 
later this afternoon, but one vote that will probably interrupt 
this hearing.
    I think Senator Inhofe and I might try to do some type of 
tag-team here where he goes and votes early, and then we start 
the questioning so we don't have to break, and we can just keep 
on rolling, so that is what we are going to try to do.
    My first question is for you, Mr. Meyers, and it is sort of 
a two-part question. In your testimony, you outline the steps 
that EPA is taking to develop the regulations and analyses that 
are needed to implement the renewable fuel standard. My first 
question is, do you have the staff resources and expertise that 
are needed to complete these tasks? And second, when do you 
expect the proposed regulations to be promulgated?
    Mr. Meyers. Yes, Mr. Chairman.
    Senator Carper. The second question is, when do you expect 
to propose the regulations for the renewable fuel standard--
first to propose--and then second, when do you think they might 
be finalized?
    Mr. Meyers. Yes.
    Senator Carper. Do you have the resources that you need? 
And second, the time line for the proposed regulations and the 
final regulations.
    Mr. Meyers. On the resource question, yes, we do have the 
resources. EPA has been responsible for fuel regulations for 
decades under the Clean Air Act, and has substantial expertise. 
We have a lab facility up in Ann Arbor, Michigan. We have 
approximately 400 employees working on vehicle and fuel issues, 
including our headquarters staff.
    Of course, we work with the Department of Energy and tap 
into their resources, too, on these type of rulemaking efforts, 
and we work with the Department of Agriculture and their 
experts. So I don't think it is a situation where we lack the 
staff or resources.
    In terms of the proposed schedule, we anticipate the 
proposed rule will be coming out this fall. As you know, when 
we put together the RFS1, it took us approximately 18 months 
from the time the law was passed to get a final regulation in 
place. Since EISA was passed in December, we anticipate 
something along that same schedule, even though I think the law 
itself is much more complex and carries with it new analytical 
requirements like life-cycle analysis and the definitions I 
referred to. So the proposal this fall, and then we would be 
looking to final next year.
    Senator Carper. And what time next year? Spring? Winter?
    Mr. Meyers. I hesitate, since we will be transitioning 
Administrations during that period, to say what the next 
Administration will be doing with a rule that is in a proposed 
form, so I don't think I can project that.
    Senator Carper. OK. I understand.
    Mr. Meyers. But I would say we are devoting the resources 
to do this as quickly as we can. We believe we will have a 
final rule by mid-next year.
    Senator Carper. Good. Thanks.
    Mr. Chalk, for your question, to what extent is the 
Department of Energy collaborating with EPA to develop the 
greenhouse gas life-cycle and analysis?
    Mr. Chalk. Very much, sir.
    Senator Carper. Can you talk with us a little bit about 
that?
    Mr. Chalk. Very much. Argonne National Lab, as I said, 
developed the GREET model, which is the life-cycle analysis 
used by the EPA. Also, we have two people designated at the 
Department of Energy to work with the EPA on the rulemaking and 
on the calculations that would go into analyzing the greenhouse 
gases. In fact, there is a meeting today on this very subject 
with DOE, EPA and other agencies.
    Senator Carper. Good. What criteria are you all considering 
in your modeling? And how do the new models differ from the 
previous life-cycle analyses that were conducted after the 
passage of the Energy Act that we adopted in 2005?
    Mr. Chalk. The biggest difference that we are adding to the 
model is indirect land use.
    Senator Carper. Talk with us a little bit about that.
    Mr. Chalk. Yes, this is land that may be affected if we 
grow or use more acreage in the United States. It could impact 
land use elsewhere in the world. To equalize the supply and 
demand, it may have impacts elsewhere. So this indirect land 
use is a very complicated issue. It has not been modeled well, 
in our opinion. So I think any conclusions today that are drawn 
from current models are very susceptible. I think the biggest 
challenge is to incorporate indirect land use into the life-
cycle model.
    Senator Carper. OK. A different question, if I could, for 
you, Mr. Chalk. We have already alluded to this in our earlier 
comments from the dais here, but biofuels have received some 
bad press for contributing to global forest loss, for requiring 
more fossil fuel inputs than they displace, and for driving up 
food prices. We have a wide range of as much as 3 percent 
increases in food prices to as much as 75 percent.
    What is the potential for producing advanced biofuels that 
neither weaken food security nor threaten forests and wildlife?
    Mr. Chalk. The potential is great. All of our work is 
focused on non-food-based biofuels, so cellulosic ethanol is 
what we are primarily concentrating on now because we think it 
can make the biggest difference in the near future. We are 
about halfway to our cost goal, so progress is very good. We 
believe that this will have minimal impact on food prices.
    Really the biggest impact so far to date on food prices has 
been increased worldwide demand for food. It has been energy 
prices. Oil and natural gas has gone up tremendously. Also, 
other countries are changing their diets dramatically. So we 
have calculated, with the U.S. Department of Agriculture, that 
the contribution of biofuels to driving up food prices is about 
5 percent. So it is a rather modest contributor, however I 
would say that if the price does increase more, there is, I 
think, even though we are determined to do this, that we have 
to be very cautious about what it does to livestock feed and 
things like that. So that is an issue that we have to pay 
attention to.
    Senator Carper. I have personally visited the DuPont's 
experimental station and had a chance to witness the 
partnership between the Department of Energy and the DuPont 
Company, and then the development of cellulosic ethanol. I 
certainly applaud that work.
    I also learned a couple of months ago from a friend who 
works at General Motors that GM has taken an equity position in 
a biofuels company called Coskata. I had never heard of them 
before, but they apparently developed an advanced biofuel that 
uses about maybe a little less than a gallon of water to 
produce a gallon of fuel.
    The energy content that is provided by the fuel is about 
seven times greater than the energy that goes into developing 
the fuel. We are told it can be developed for about $1 a 
gallon, and they can create the biofuel out of, among other 
things, municipal garbage, plant waste, even old tires from the 
vehicles that we drive. So that kind of stuff is pretty 
exciting, and I presume that is the sort of things that you are 
promoting at DOE.
    Mr. Chalk. We are. And that is why we think the RFS is 
really important so the investment keeps coming online. The 
other thing is we are focused, as I said, on cellulosic 
ethanol, but we are trying to mitigate our risk, so to speak, 
by looking at other feedstocks such as algae for producing 
biodiesel. We are also trying to mitigate our risk by looking 
at various conversion steps. We are very focused on 
biochemical, but we expand that to thermochemical processes.
    We are also have increased our work in our Office of 
Science to create what we might call third-or fourth-or fifth-
generation biofuels. So I think we have a very comprehensive 
program to be successful.
    Senator Carper. Good. It sounds like it.
    Senator Craig, you are next, and then Senator Boxer.
    Senator Craig. Thank you very much, Mr. Chairman.
    Mr. Meyers, Mr. Chalk, thank you for being with us.
    Steve, I am pleased you talk about looking at a variety of 
things. Waste obviously has its potential. In Idaho, we do have 
an ethanol plant that operates off of potato waste. So the 
value of the food is already out there in the market. It is the 
waste that comes, the trimmings, the skins and all of that, and 
it is producing several millions of gallons per year in ethanol 
as a biowaste. It is pleasing for me to see that, and to see 
that there are diversities out there.
    It is also pleasing for me to see you focused on 
cellulosic. I have spent a good deal of time with it, 
recognizing that there are a variety of enzymes out there that 
some like wood, some like straws or other types of cellulosic 
materials. And we are on the edge of seeing that technology 
come to market in a variety of ways.
    At the same time, I think, Mr. Chairman, what we have to be 
is careful about our selectivity of feedstocks or our limiting 
of feedstocks. This last year when we legislated the RFS, I 
attempted to include biomass from public lands in there, and it 
was not allowed by this Congress. The environmental community 
moved in and said, oh no you don't, and stopped it.
    Now, if we are really going to get serious about it, 
biomass from public lands, i.e. forested lands, has great value 
in cellulosic ethanol. It also has another value, Mr. Chairman. 
You can revitalize your dead and dying forests and make them 
young and vibrant and capable of sequestering carbon. But 
somehow we constantly run and get out old ethics in front of 
our new ethics, or our old policy in front of new policy, and 
we stumble and fall. In this instance, we stumbled.
    I am not going to be here next Congress, but I would hope 
that Congress gets realistic. I guess my question to both of 
you would be, if we develop these new technologies, but we 
limit the feedstocks, and narrow access to abundance of 
feedstocks, what do we do to the price of feedstocks, No. 1? 
And what do we do on the investment cycle when the investment 
community and Wall Street can see no certainty long term in the 
feedstocks that supply the plant, therefore why finance the 
plant?
    What are the realities there if we create these kinds of 
political limitations, when in reality we have the technology 
to do it right?
    Mr. Meyers. Well, Senator, I think you are referencing some 
provisions of EISA which established a renewable biomass 
definition. That definition restricts, as opposed to the 
previous law in 2005, the actual feedstocks that can be used 
for the production of fuel that would qualify as meeting the 
mandate. So there are several restrictions with regard to 
agriculture land-use and its production, as well as I think you 
referenced the forest provisions. This is a challenge for us, 
obviously, at EPA.
    We need to interpret those provisions when proposing and 
going final on the regulations, giving full faith, of course, 
to the law that Congress passed. But certainly there is a 
difference between the EPACT 2005 in terms of feedstocks that 
can be used and the more restrictive definitions in 2007, as 
well as the other elements that I have mentioned with respect 
to life-cycle analysis that EPA will be utilizing in the 
evaluation of whether they meet the life-cycle thresholds in 
the bill.
    Senator Craig. Thank you.
    Mr. Chalk. I guess I would add that it is an improvement 
that we think would be worth evaluating. There is a precedent 
set in other industries like the forest products industry where 
we use public lands. I would say we evaluate it eyes wide open, 
according to our sustainable practices, which consider land 
use, soil health, water use, air quality, and greenhouse gas 
emissions. We ought to at least evaluate that option.
    Senator Craig. I thank you for those answers. I agree. I 
think we ought to at least evaluate the options before we deny 
them politically. Thank you.
    Thank you, Mr. Chairman.
    Senator Carper. Thank you, Senator Craig.
    Senator Boxer.
    Senator Boxer. Just following up on this conversation, what 
are the reasons that environmentalists give for not wanting to 
open up the national forests? Maybe I should ask Mr. Meyers?
    Mr. Meyers. I probably could not say exactly the 
environmental testimony on this point when Congress considered 
the provision. So I do not know the rationale of the provision. 
I think the rationale of some of the land use provisions 
obviously relates to the environmental purposes of the RFS.
    Senator Boxer. But isn't it true that the RFS does allow 
some use of the forests?
    Mr. Meyers. Yes, it does.
    Senator Boxer. OK. That is good. I think that is kind of a 
straw-man issue myself. There is so much that is available and 
that is open.
    I want to talk about this business of putting tariffs on 
imported ethanol. Are either of you aware of how much that 
could potentially let in to our Country?
    Mr. Meyers. I am sorry. Is the question how much is being 
imported now?
    Senator Boxer. How much is being kept out, do we think? How 
much ethanol is being kept out?
    Mr. Meyers. I am not sure we have an analysis of what is 
being kept out. I think last year somewhere around 430 million 
gallons was imported, from my memory.
    Senator Boxer. About 400 million gallons were imported last 
year?
    Mr. Meyers. I believe around that figure. I think the 
figure may be up this year. As part of the implementation 
standard, obviously we will be looking at the entirety of the 
economics here in a regulatory impact statement. So when we 
analyze the overall costs, we will take account for different 
policies.
    Senator Boxer. OK. If you don't mind getting back to me on 
that.
    Mr. Meyers. Sure. I would be happy to.
    Senator Boxer. I have a chart here that shows how much we 
import, but it could be more if we didn't have tariffs. So I 
would just like to get your analysis of that, if you could do 
that.
    Mr. Chalk, what could be done to speed our transition to 
cellulosic biofuels? In your written testimony, you note that 
using cellulosic feedstocks could reduce life-cycle greenhouse 
gas emissions by 86 percent compared to gasoline. That is a 
tremendous reduction. So what could we do more here to speed 
our transition to cellulosics?
    Mr. Chalk. I think, as I talked about before, expanding the 
potential feedstocks, putting more effort on different 
conversion techniques.
    Senator Boxer. What do you mean by that?
    Mr. Chalk. Well, right now we are looking at grasses. There 
are potential feedstocks like algae that I mentioned, or other 
potential grasses to look at, or other types of woody biomass. 
There is a lot of work going on in our Office of Science on 
developing new microorganisms that actually work better to 
speed along enzyme processes or processes to ferment the sugar. 
So there are a lot of things that are coming along.
    We have really tried to emphasize in the last couple of 
months developing what we could call pilot plants--10 percent 
scale plants--where we have awarded about a half-dozen or so 
new technology grants, all with different types of feedstocks 
and conversion process. So we are broadening our portfolio, so 
to speak, in terms of how we are converting the feedstock into 
ethanol or into an advanced biofuel.
    Senator Boxer. How do we broaden your portfolio?
    Mr. Chalk. Pardon me?
    Senator Boxer. How do we do that? What could we do to do 
that? I am confused about it.
    Mr. Chalk. Right now, we are focused mainly on cellulosic 
ethanol. We don't want to lose a grip on that focus because 
that is our best bet for large quantities in the next three or 
4 years. But over time, I think we want to broaden that out and 
find more areas that go into different feedstocks as we get 
successful on cellulosic ethanol.
    Senator Boxer. Well, so you are doing a lot of work right 
now, and you mentioned what that work is. I am asking you, can 
we do anything to speed up that work? Do you need more funding? 
What do you need? Do you need Manhattan Project? What do you 
need?
    Mr. Chalk. The funding right now is appropriate. I think 
what we need to see is over the next year or so how this 
progresses, but we are really I think in all fronts attacking 
this.
    Senator Boxer. Good.
    Mr. Chalk. So I think we are in very good shape, but these 
six or seven grants that I mentioned that we just awarded, and 
we are about to award two more grants, we have to see how they 
progress.
    Senator Boxer. OK. And so you will know more in the next 
year?
    Mr. Chalk. Yes, we will know a lot more.
    Senator Boxer. Good. OK, my last question: Is EPA devoting 
enough resources to the project you are supposed to be working 
on, developing the biofuels life-cycle analysis? And are you on 
track to complete that rulemaking by this December?
    Mr. Meyers. As I mentioned, we are looking to propose a 
rule this fall. The timeframe in which we do the RFS rulemaking 
is approximately 18 months. Congress did establish a 1-year 
deadline, but with the substantial complexities that I think we 
have referred to here in life-cycle analysis, with the 
additional fuel categories, with the other legal definitional 
legal issues, as well as the analytical challenges, we are 
moving very fast, I think, with all due speed, but the 
complexity of the task requires a complexity of effort on our 
part, so we anticipate a proposal this fall, but it would be 
difficult to meet the statutory deadline by the end of the 
year.
    Senator Boxer. OK. What is your date for that, meeting the 
deadline?
    Mr. Meyers. As I mentioned, I think we will be 
transitioning Administrations between this period of time, but 
in terms of our projections we believe we can go final next 
year, somewhere in the middle of the year.
    Senator Boxer. Thank you.
    You are in charge.
    Senator Inhofe.
    [Presiding.] Well, first of all let me apologize to the 
panel here. We were to have a vote that was delayed a minute at 
a time until it was about 20 minutes late, so we are trying to 
work this all the way through. I believe that the Chairman has 
further questions.
    Mr. Meyers, in your testimony you State that if the E10 
blends are used nationwide, it would utilize just 15 billion 
gallons of ethanol. The new mandate requires 36 billion gallons 
of ethanol. Are you concerned with the Nation's ability to 
absorb more than 15 billion gallons of ethanol?
    Mr. Meyers. Well, certainly that will be a challenge in the 
program and there will be the necessity for new outlets. That 
can happen in several ways. The E85 vehicles certainly use a 
higher blend rate and flexi-fueled vehicles use higher blend 
rates. There are infrastructure issues with regard to the E85 
and its distribution.
    Also, we are actively working. There are some efforts out 
in the State of Minnesota to look at intermediate blends above 
E10. Currently, we do not have an active request that is 
necessary under law to proceed on that, but we have been 
cooperating with DOE and others in private industry out there 
to look at that. But when we look at approving above E10, we 
have to consider its utilization in not only cars, but other 
vehicles that use off-road equipment, power equipment, lawn 
mowers--the whole host of engine uses. So we have to look to 
make very sure of its effect in different engines and different 
utilizations. That is part of the process contemplated by the 
law when we receive the application.
    Senator Inhofe. The newly revised RFS includes requirements 
for studies on various aspects of biofuels, to include impacts 
on feed grain. As you heard me mention in my opening statement, 
that is something that is certainly of great concern in my 
State of Oklahoma. But also it impacts on not just feed grains, 
but livestock food, forest products and the energy industry, 
and its environmental and resource conservation impacts.
    Now, if the results of these studies were found to be 
negative and produce harmful impacts on industries or the 
environment, does the bill require the EPA Administrator to 
adjust the mandate to prevent unintended consequences?
    Mr. Meyers. There are several provisions that allow for 
waivers of either the general applicable volume or for specific 
fuel categories. I mentioned in my testimony we are in receipt 
of a waiver request from the State of Texas right now. There 
are also individual waiver provisions that are applicable and 
assessment requirements that are applicable to cellulosic 
volumes.
    Additionally, apart from that, as part of the energy law 
section 1541 passed in the 2005 law, EPA has certain emergency 
authorities for fuel supply issues. So there are a number of 
different authorities. Of course, we will look closely at the 
statutory terms that are provided to us in evaluating any 
request we get under that or are required to do.
    Senator Inhofe. Do you think it would be helpful to have, 
or beneficial for the EPA to have the authority to alter a 
mandated RFS if these studies showed----
    Mr. Meyers. Well, there is an ability, depending on the 
existence of previous waiver activity, to adjust the applicable 
volume after two consecutive years. That is already existing in 
legislation. So there is a trigger and then there is an ability 
for the EPA to adjust that volume on a forward-looking basis.
    But again, these are all issues that will have to be 
considered in the context and time in which they are raised. 
Right now, we have one waiver request which we are studiously 
reviewing and going through the comments on. So I would not 
want to speculate as to any action EPA would take on future 
waiver requests.
    Senator Inhofe. As you know, the ozone air quality 
standards have been changed. I would ask you the question, what 
are the ozone air quality impacts of large increases of ethanol 
and biodiesel consumption? And also, was that taken into 
consideration at any time back in 2005?
    Mr. Meyers. Yes, it was, sir. In the 2005 analysis, we saw 
various effects from the modeling we did there. In terms of 
looking at the volumes, we did a 7.5 billion case, and then a 
9.8 billion case for our air quality analysis. But when we 
looked at those volumes, we saw some reductions in CO, carbon 
monoxide. We also saw some reductions in benzene. But we did 
project also volatile organic and NOX increases from the 
mandate, mostly in the areas that had not used ethanol 
previously. So if an area had not mixed ethanol previously in, 
we saw NOX increase on the order of about 4 percent to 5 
percent on the limited modeling we did then. Of course, we will 
be doing more extensive analysis as part of the 2007 law.
    Senator Inhofe. OK.
    Mr. Chalk, as of today, the AAA states that E85 on an mpg-
BTU-adjusted basis cost 26 cents more per gallon than regular 
gasoline. That is despite a 45-cent blended credit and a 54-
cent import tariff. Will consumers be willing to pay more for 
E85 and what will it take for E85 to be cost-competitive 
without subsidies? And about how long would that be?
    Mr. Chalk. Our goal is to have cellulosic ethanol cost-
competitive by 2012, so in another 4 years we believe we will 
be there, so on an energy basis, it is cost-competitive with 
gasoline. As you point out, ethanol has less energy than a 
gallon of gasoline, so we are trying to do that on a gasoline-
equivalent basis. We should be there by 2012.
    Senator Inhofe. Good, good. Well, this is an interesting 
hearing. In my opening statement, you heard me say that we 
should have been having these hearings all along. I think a lot 
of the unintended consequences come because we are not really 
sure and we didn't have a chance to have the hearings before 
these decisions were made.
    This is also kind of interesting in another way because 
things in this Committee get pretty partisan. In this case, I 
don't think this is. I think I agree with the Chairman more 
than I do with the Senator from Missouri in this rare case, so 
it is an interesting case.
    Now, what we are going to do, I was hoping we would get to 
the next panel and get started on the next panel. However, 
Senator Carper had one more question to ask. He is going to be 
back after this vote, so I am going to put us into a not more 
than a 3-or 4-minute recess at this time, and then we will call 
back to order.
    [Recess.]
    Senator Carper.
    [Presiding.] We will resume our deliberations now. The 
first vote is over. I think we are clear through noon. This 
will be really our second round of questions.
    I think what I want to do is go back and talk about the 
work that--DuPont is doing a lot of work on biofuels. We will 
hear about some of it from one of the witnesses on our next 
panel from DuPont, with I think an $18 million grant from the 
Department of Energy about four or 5 years ago. A lot of work 
has been done on cellulosic ethanol. I think a pilot plant has 
been built I want to say out in Iowa, if I am not mistaken.
    DuPont is also working in partnership I believe with BP to 
develop something called biobutanol, which has better energy 
density than does traditional corn ethanol. It travels better 
in pipelines. I think ethanol does not travel well in 
pipelines. I understand that the biobutanol mixes better with 
gasoline at different temperatures than does ethanol.
    Has the Department of Energy been involved at all with 
developing a biofuel-like biobutanol? Or has your focus been 
more exclusively on cellulosic ethanol?
    Mr. Chalk. We have been to date very focused on cellulosic 
ethanol. As I was responding to Senator Boxer, what we are 
doing in the future is expanding our feedstocks, but also 
expanding the number of advanced biofuels we are working on. So 
ethanol is not the end-all of all fuels. In fact, biobutanol in 
this case that DuPont is working on is, as you stated, very 
much more compatible with the existing infrastructure, with 
existing gasoline engines and so forth.
    So as our work matures, especially in the Office of 
Science, and our thermochemical conversion process, we have 
more ability to synthesize molecules from the ground up, if you 
will, to make them longer-chain and more like a diesel molecule 
today, more like a gasoline molecule, and they can still be 
carbon-neutral.
    So I think that is sort of the next generation after 
cellulosic ethanol. We are looking to ramp-up our work in that 
area. As we become more successful with getting cellulosic 
ethanol, that work completed, we are focusing on that right now 
because we have to get that out to meet the mandate. But these 
other fuels, these other feedstocks are very, very important. 
You can just call them other energy carriers, if you will. 
These higher-chain molecules are more fungible in the current 
system and they act more like what we are used to. So this is 
definitely a consideration in the future is to expand our work 
in that area.
    Senator Carper. Mr. Meyers?
    Mr. Meyers. Yes, I would say from EPA's perspective, we 
meet with a number of companies. Some are working on very 
advanced technologies. Part of our responsibility in terms of 
implementing the RFS is we have to look at down the road we 
have various mandates coming up, the sub-mandates I referred to 
before. So we have to essentially analyze what fuels we think 
will be available and when in order to do this sort of 
sophisticated economic and environmental monitoring and 
modeling that we need to do.
    So we are also looking at the issue of availability of 
future biofuels in the context of the regulations and the 
regulatory effort we have ongoing.
    Senator Carper. OK. Coming back to us in the Congress, 
these hearings are helpful because we hear from you, we hear 
from industry groups. They give us advice and counsel on what 
we need to be doing in the legislative branch of our government 
to help make sure that we--and it is all well and good that we 
set the mandates for 36 billion gallons I think by 2022, but we 
have to do more than just say eat your spinach and produce. We 
have to help provide the support that we can.
    What are we doing that is helpful to getting us toward 
heading in the right direction toward meeting those mandates? 
What further do we need to do in the next several years?
    That would be really for Mr. Chalk.
    Mr. Chalk. As I said in my testimony, we think that the RFS 
as it is, it is really important to keep the investment going--
about $500 million invested last year in venture capital into 
the technology; about $4 billion invested in plants and so 
forth. So we think that assured market is critical for industry 
to invest. So I think keeping that in place is very important 
to us. Otherwise, it will undercut the investment that is 
occurring.
    The other issue is to keep supporting the cellulosic 
ethanol, which has been very well supported by Congress in the 
appropriations. So I think we won't have lack of resources. We 
will be able to put the right programs in place. We have a lot 
of confidence that we are going to be successful in making it 
cost-competitive with gasoline today.
    Senator Carper. All right. Good.
    I am going to yield to my friend, Senator Craig. Any more 
questions for this panel?
    Senator Craig. In the discussion you have just had with the 
Chairman, I think all of us look at the reality of where our 
Country wants us to be with clean energy sources and abundant 
energy sources. We understand the carbon footprint that exists 
today with corn-based ethanol. I have spent a good deal of time 
looking at cellulosic and see that as a more closed cycle, if 
you will, from the standpoint of generating its own energy and 
therefore the carbon footprint goes down substantially in the 
actual process of making it.
    These other types of alternative fuels you are talking 
about, are they similar in their character as it relates to a 
carbon footprint? Or are they fairly consumptive of other forms 
of energy to create the energy they provide?
    Mr. Chalk.
    Mr. Chalk. They are very similar. The carbon absorbed by 
the plant is eventually going to be emitted out the tailpipe no 
matter what the form of the carrier is. So they would be very 
similar to what we would call carbon-neutral.
    Senator Craig. Yes. OK. That is good to hear.
    I don't believe I have, Mr. Chairman, any further questions 
of these gentlemen.
    Thank you again for the work you do and your involvement. 
We appreciate your presence.
    Senator Carper. I do have maybe one more. Maybe it was 
Senator Boxer who was asking about transporting these biofuels. 
I mentioned earlier the biobutanol developed by DuPont has the 
advantage of being able to transport through pipelines. I am 
told that corn ethanol does not.
    This is mostly for you, Mr. Chalk. What thoughts do you 
have on what we need to be doing, you and us, in this Country, 
and the private sector, in order to address the issue of 
transporting the fuels? It is all well and good that we produce 
it in some part of the Country, but if we can't get it 
efficiently to other parts of the Country, it is not as great a 
value.
    Mr. Chalk. What we see as a potential option is higher 
blends of ethanol. Right now, we are using roughly E10 and 
gasoline when it is reformulated in cities that have 
requirements for that. If we went to E15 and E20, we believe it 
would be pretty much compatible with existing infrastructure, 
and we can increase the amount of ethanol in gasoline by 
another 50 percent or perhaps double it to 100 percent. So we 
are working with the EPA now to see what contribution higher 
levels of ethanol have on emissions like NOX and so forth.
    We are fairly confident that for most vehicles that they 
will still be in spec if we were to increase, say, from E10 to 
E15 of E20. The smaller engines like weed whackers and things 
like that are air-cooled get a lot hotter. They could have NOX 
emissions issues. But I think that could be addressed. I 
wouldn't want to let that issue, with no disrespect to the 
small-engine manufacturers, but have that get in the way of 
solving a national problem, and the amount of wealth that we 
transport every day to the Middle East. So I think that can be 
solved and it could be solved with time, just making changes.
    I think the big issue of going with the higher blends will 
be what do we do with the legacy vehicles. Will they still be 
under warranty if we introduce a new fuel? And again, I don't 
think that is insurmountable, but I think that is something 
that has to be part of any solution to go to higher blends.
    Senator Carper. And the last question I want to ask, and it 
could be of either of you, but just clarify for me if you will, 
we are expecting to reduce greenhouse gas emissions--maybe more 
than expecting--requiring reduction in greenhouse gas emissions 
from ethanol by roughly 25 percent below gasoline, and roughly 
50 percent reduction in greenhouse gas emissions from 
cellulosic ethanol, maybe even higher for other kinds of 
biofuels?
    Mr. Chalk. Well, corn-based, it depends on how the factory 
making the ethanol is powered, but roughly 19 percent or 20 
percent better than gasoline today on a life-cycle basis for 
greenhouse gases. With cellulosic, it was about 86 percent 
better than gasoline.
    Senator Carper. Mr. Meyers.
    Mr. Meyers. Senator, I would say those are issues we are 
looking at. I think it is very important. When we are looking 
at the legislative provisions that we have to interpret, we 
have to look at the full life cycle. So how the ethanol 
facility is powered, for example, makes a difference. If it is 
a coal-based facility versus a natural gas-based facility, you 
have some differences there.
    With respect to the parameters you are talking about, the 
bill did create thresholds with regard to cellulosic. There is 
a 60 percent threshold for greenhouse gas life-cycle 
performance, and when we get to biomass-based fuels, 50 
percent. And with regard to existing corn-based ethanol, there 
is a grandfather for existing facilities, but for new 
facilities that is a 20 percent requirement. So these are sort 
of essentially hurdles that the law puts there that will need 
to be cleared. That is the type of analysis we are doing now. 
So I think we have not settled in.
    We have done a lot of life-cycle analysis before with 
respect to the RFS1. We did a lot of improvements last year. 
But these are issues that we will be studying and actually as 
part of our proposed rule, and part of the analysis, they have 
legal import. So I think that it is important that we, on a 
going-forward basis, are using the best information. But that 
will be part of our public comment process going forward on our 
analysis in terms of how we evaluate the different fuels.
    Senator Carper. Thank you.
    I will close out this panel with this thought, and maybe a 
question for Mr. Chalk, and just a brief response would be 
helpful.
    In our efforts to reduce greenhouse gas emissions, 
particularly from coal-fired utility plants, which provide 
about half of our electricity, but also provide a whole lot of 
our greenhouse gases, as you know, I have heard some more than 
talk, but ideas of trying an experiment where we use the carbon 
dioxide that flows off a coal-fired plant in conjunction with 
algae or with fast-growing plants that could then be used to 
provide a biofuel. Are you all looking at anything like that at 
DOE?
    Mr. Chalk. Yes, we are. In our Office of Science, we have 
three Bioenergy Research Centers. You can use carbon dioxide as 
a fuel. So essentially you are using that as a fuel, and you 
can synthesize fuel molecules by reacting it with other things. 
So we are very much looking at that. I would say that is very 
much a long-term technology, not something we will have within 
5 years, but perhaps 10 or 15 years that we could have 
demonstration of that.
    Senator Carper. All right.
    Thank you, gentlemen. Thank you very much for your 
testimony and responding to our questions. We will have some 
members of our Committee who were here, and maybe some who 
weren't, who will have some additional questions. We would just 
ask that you respond to those in a timely way. But thank you so 
much for joining us.
    We welcome our second panel here today. This is actually a 
panel that I have looked forward to with a lot of anticipation. 
I hope it is matched by your anticipation in being here. We 
welcome you.
    On the panel, we have three witnesses. Our first witness is 
John Pierce, Vice President of DuPont Applied Biosciences 
Technology. Welcome, John. It is nice to see you. I am glad you 
are here.
    And we have Scott Faber, Vice President for Federal 
Affairs, Grocery Manufacturers Association and Food Products 
Association. Mr. Faber, welcome. We are happy you could join 
us.
    And Nathanael Greene, Director of Renewable Energy Policy, 
Air and Energy Department, Natural Resources Defense Council. 
Mr. Greene, welcome. We are happy to see you.
    Again, your entire statement will be made a part of the 
record. If you would like to summarize it, feel free. I would 
ask you to stay fairly close to 5 minutes, but we won't cut you 
off right there.
    Mr. Pierce, you are recognized to lead off. After you guys 
have concluded, we will have some questions. Thank you.

   STATEMENT OF JOHN PIERCE, VICE PRESIDENT, DUPONT APPLIED 
                     BIOSCIENCES TECHNOLOGY

    Mr. Pierce. Good morning, Chairman Carper.
    Senator Carper. Just make sure your button is pushed so 
everyone can hear you.
    Mr. Pierce. Can you hear me?
    Senator Carper. I can hear you now.
    Mr. Pierce. Good morning. I am Vice President for 
Technology for Applied Biosciences at DuPont, which includes 
our biofuels and biomaterials business. I am pleased to be here 
today to talk about the renewable fuel standard.
    DuPont spans the biofuels value chain. Our seed business, 
Pioneer Hi-Bred, sells corn, soybean and other crop seeds to 
farmers. With BP, we are developing biobutanol, a high-
performance biofuel, and with Genencor, we are developing 
cellulosic ethanol technology.
    Our existing biofuels policies, including the RFS, have 
been successful in standing up a U.S. ethanol industry that 
offsets a variety of the security, environmental and economic 
impacts of our dependence on petroleum.
    Today, U.S. ethanol production decreases petroleum demand 
enough to lower gasoline prices by 25 cents to 40 cents a 
gallon, which is a significant savings for American consumers. 
Next-generation biofuel technologies will expand upon the solid 
foundation we have built with grain-based ethanol.
    U.S. agriculture has a long track record of expanding the 
production of crops used for food, fuel and fuels. Back in 
1915, some 90 million acres were used to grow feed for horse 
and mules, which was our transportation at that time. When 
Henry Wallace formed our Pioneer subsidiary in 1926, corn 
yields were about 27 bushels per acre and corn was about three 
times more expensive than petroleum by the pound. Today, corn 
yields are five times higher and even with current corn prices, 
a pound of corn is three times cheaper than a pound of 
petroleum.
    We expect to see U.S. corn yields grow from today's 150 
bushels to 200 bushels per acre and more in 2020. The rest of 
the world lags U.S. productivity, often by large margins, so 
there are dramatic opportunities to expand global agricultural 
production from existing acreage. Agriculture can provide for 
our food and fuel needs. We simply do not need to make 
artificial choices among these uses.
    The RFS provisions enacted last year recognized the need 
for more technology in feedstock-neutral approaches to 
producing biofuels. For example, our cellulosic ethanol 
technology using the non-food parts of the corn plant as feed 
stock will be producing fuel at pilot scale next year and at 
commercial scale soon thereafter. By modifying existing bio-
refineries, we will be able to increase the amount of ethanol 
from an acre of corn by about 25 percent to 35 percent. The 
technology can be applied to other cellulosic feedstocks.
    We are fleet-testing biobutanol and are on-target to be at 
pilot scale in 2010. We heard that biobutanol is compatible 
with existing fuel and pipeline infrastructure, has higher 
energy density and lower air emissions than ethanol, and also 
improves ethanol-gasoline blends. This advanced biofuel 
provides great opportunities for expanded biofuels use. There 
are now literally hundreds of biofuel developers intent on 
producing cellulosic ethanol and advanced biofuels in the next 
few years, utilizing an impressive array of feedstocks and a 
multitude of processing technologies. These trends suggest that 
the RFS targets are within reach.
    As we consider the sustainability of biofuels and their 
feedstocks, we need to ensure that policies are based on solid 
understanding of issues like the role of agriculture in land 
use. Farmers grow and have always grown crops that serve 
multiple markets. We run the risk of balkanizing agriculture if 
we set standards for biofuels-related agriculture that differ 
from those of agriculture generally. Rather, we should continue 
to advance the sustainability of agriculture as a whole and 
avoid multiple standards for crops destined for different end-
uses.
    Last, some want to attribute rising global food prices to 
ethanol-driven corn demand and suggest that the RFS be stalled 
or decreased. As a member of the Grocery Manufacturers 
Association, we are sorry to see GMA take that position. Others 
have detailed the variety of factors that have caused the 
prices of a wide range of commodities to rise, from steel and 
copper to cement, energy, and yes, grains and other foods.
    I would simply observe that in 2007, when ethanol 
production consumer about one-fifth of the U.S. corn crop, the 
U.S. had its largest corn export volumes ever and we finished 
the year with unused corn stocks.
    Senator Carper. Excuse me. Would you just make that last 
statement again please?
    Mr. Pierce. I would simply observe that in 2007, when 
ethanol consumed about one-fifth of the U.S. corn crop, the 
U.S. had its largest corn export volumes ever and we finished 
the year with unused corn stocks.
    Senator Carper. Thank you.
    Mr. Pierce. Rising global food prices are a real and 
important concern, but slowing U.S. biofuels production is not 
the solution. Agriculture can supply the solution providing 
adequate resources for food, feed and fuel far into a 
sustainable future, just as it has done for as far back as we 
care to look.
    In closing, the current policy framework provides a sound 
basis for developing a robust biofuels industry and should 
continue to evolve to be more performance-based. We look 
forward to working with Congress through that process, and 
thank you for the opportunity to speak with you today.
    [The prepared statement of Mr. Pierce follows:]
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    Senator Carper. Mr. Pierce, thank you so much.
    Scott Faber, you are recognized for your testimony. 
Welcome.

 STATEMENT OF SCOTT FABER, VICE PRESIDENT FOR FEDERAL AFFAIRS, 
  GROCERY MANUFACTURERS ASSOCIATION/FOOD PRODUCTS ASSOCIATION

    Mr. Faber. Thank you, Mr. Chairman. Thank you for the 
opportunity to testify today.
    I think you are well aware that food prices are now rising 
twice as fast as inflation by about 5 percent last year, and 
are expected to rise by about 6 percent this year. This is 
obviously a serious challenge for poor Americans. The poorest 
20 percent of Americans spent about one-third of their after-
tax income on food. It is a life-or-death challenge for many in 
the developing world who spend up to 70 percent of their income 
on food.
    Let me just be very clear. There are many factors 
contributing to the rising price of commodities and the rising 
price of food, including poor weather in some parts of the 
world, export restrictions, rising demand for food globally, 
the weak dollar, higher energy prices, and changes in our 
commodities markets. But the most significant new factor and 
the only factor affecting food and feed prices that is under 
the control of the Congress is the significant and sudden 
increase in food-to-fuel production.
    This year, corn ethanol production will divert roughly one-
third of our corn crop, up from actually 24 percent in 2007. 
This rapid expansion of corn ethanol production in the last few 
years is the dominant factor in a 200 percent increase in corn 
prices since the 2005 crop year. Experts, including former USDA 
Chief Economist Keith Collins, estimate that ethanol production 
is responsible for as much as 60 percent of the increase in 
corn prices between the 2006 and 2008 crop years.
    Just in the last few days, a World Bank paper was released, 
and I would just like to quote from it really quickly. ``The 
World Bank's index of food prices increased 140 percent from 
January 2002 to February 2008. This increase was caused by a 
confluence of factors, but the most important was the large 
increase in biofuels production in the U.S. and E.U. Without 
the increase in biofuels, global wheat and maize stocks would 
not have declined appreciably and price increases due to other 
factors would have been moderate.''
    There is another quote that I would just like to quickly 
read to you because I think it is really fascinating, again, 
bolded in the World Bank Study, increased biofuel production 
has increased the demand for food crops and been the major 
increase in food prices. This expansion not only impacts corn, 
but also creates a competition for land that increases the cost 
of other commodities including soybeans.
    I am sorry to say that this problem is not going to get 
better. It is going to get significantly worse. As food-to-fuel 
production increases in response to Federal mandates and 
subsidies and more corn and more vegetable oil are diverted to 
our fuel supplies, food prices will continue to increase over 
the next few years. About 40 percent of our corn crop and about 
30 percent of our vegetable oils will be diverted from food and 
feed to fuel. As a result, independent experts predict that 
annual food inflation will average about 9 percent between 2008 
and 2012 as the impact of commodity prices are slowly reflected 
in retail food prices.
    In particular, the price of milk, meat and eggs, basic 
staples consumed in every home in America will rise 
dramatically in response to higher feed prices and reductions 
in herd size. For every corn farmer who is enjoying record 
profits, there are many more livestock farmers facing record 
losses or even bankruptcy. In Delaware, for example, the cost 
of producing a chicken has increased 45 percent just in the 
last year alone.
    One problem with these mandates, Mr. Chairman, is that 
ethanol takes the same share of the corn crop regardless of 
supply and this year serves as a perfect example. Although the 
wet spring and floods have reduced expected yields, ethanol 
mandates require that ethanol will still consume about four 
billion bushels of corn, forcing food and feed to compete for 
the balance, driving up the price of food.
    That is why, Mr. Chairman, a broad coalition of 
environmental, labor, industry, farm and anti-hunger interests 
believe that Congress should revisit and restructure our food-
to-fuel policies to ensure that we are not pitting our energy 
needs against the needs of the hungry of the environment.
    The first step is to freeze our food-to-fuel mandates. 
Freezing these mandates would immediately address runaway food 
inflation. What is more, freezing the mandates would give EPA 
and other experts the necessary time to carefully assess the 
environmental impacts of food-to-fuel production.
    The second step, as Senator Boxer had mentioned, is 
reevaluating our tax credits and tariffs to accelerate the 
development of second-generation fuels.
    So let me just conclude by reiterating that many factors 
are contributing to high food prices, including dramatic 
increases in global demand and the rising cost of energy. Food-
to-fuel production is clearly not the only culprit, but it is 
precisely because of these other factors that we should revisit 
policies that artificially and needlessly increase the price of 
food.
    Thank you.
    [The prepared statement of Mr. Faber follows:]
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    Senator Carper. Thank you for that testimony.
    Mr. Greene, you are our cleanup hitter here. Welcome.

  STATEMENT OF NATHANAEL GREENE, DIRECTOR OF RENEWABLE ENERGY 
 POLICY, AIR, AND ENERGY DEPARTMENT, NATURAL RESOURCES DEFENSE 
                            COUNCIL

    Mr. Greene. I will try and do my best.
    Mr. Chairman, members of the Committee, thank you for this 
chance to share my views regarding biofuels and renewable fuels 
standards. My name is Nathanael Greene. I am the Director of 
Renewable Energy Policy for the Natural Resources Defense 
Council.
    At NRDC, we believe that biofuels produced following 
environmental safeguards, produced and processed efficiently, 
and used in efficient vehicles, can reduce our dependence on 
oil, reduce emissions of global warming pollution, contribute 
significantly to a vibrant farm economy, and avoid food price 
impacts. However, pursued without adequate safeguards and 
standards, large-scale biofuels production carries grave risks 
to our lands, forests, water, wildlife, public health, and 
climate.
    As of late, this potential for biofuels to be destructive 
has captured the headlines. Without a doubt, concerns about 
food availability and global warming pollution require 
proactive measures. Both concerns should be addressed head-on 
through agricultural trade and food aid policies, and by 
adopting an economy-wide cap-and-trade policy for greenhouse 
gas emissions.
    They should also be addressed proactively through our 
biofuels policy. The most important step that Congress must 
take at this point is to make sure that the EPA aggressively 
and effectively implements the safeguards in the renewable 
fuels standard.
    The latest research confirms Congress's foresight in 
crafting the RFS to do the following three things. First, set 
minimum life-cycle greenhouse gas emissions standards for all 
biofuels from new facilities with the vast majority required to 
come from renewable cellulosic biomass with life-cycle 
emissions of at least 60 percent less than gasoline.
    Second, define life-cycle emissions to include all of the 
emissions, including specifically the direct and indirect 
emissions from land use change. Accounting for emissions from 
land use change is the most important step to producing low-
carbon biofuels that take biofuels out of the food price 
equation. It is by increasing the competition for arable land 
that biofuels face the greatest risk of increasing global 
warming pollution and disrupting food supplies.
    Third, encouraging the production of plentiful feedstocks, 
including woody biomass, while ensuring the mandate does not 
drive the destruction of old-growth forests, native grasslands, 
imperiled ecosystems, or the degradation of our Federal 
forests.
    The effectiveness of the RFS depends entirely on EPA's 
implementation of these critical provisions. Congress should 
make sure EPA is fully funded and monitor EPA's progress 
closely to ensure that science, rather than politics, drives 
the resulting regulations, so hearings like this are really 
critical.
    The second proactive measure that Congress should take at 
this point is to replace the various existing biofuels tax 
credits and import tariffs with a single technology-neutral 
performance-based credit. The existing biofuels tax credits and 
import tariffs are blunt, volume-based policies that try to 
pick winners solely based on feedstocks. In doing so, these 
policies provide equal incentives for biofuels that cause 
negative environmental impacts and food displacement as to 
biofuels that use the most beneficial practices and 
technologies and have no food impact on food supplies.
    It is time to use these tax dollars in a better way. I 
recommend that we use the performance-based tax credits and 
import tariffs to encourage water efficiency, reduce water 
pollution, better soil management, enhanced wildlife 
management, and avoid food price disruption. With the RFS 
mandate in place, we should require better environmental 
performance for our money.
    New crops and conversion technologies are developing 
rapidly that will make it easier to produce lots of biofuels 
with a smaller environmental footprint, without impacts on food 
prices. But technologies are not a guarantee of environmental 
performance. Just because we can do it right, doesn't mean that 
we will. We need to shift our tax policy so that they pay for 
performance and defend the environmental safeguards in the RFS 
to guide the market so that innovation and competition will 
drive biofuels to provide the greatest benefits.
    Thank you again for this opportunity.
    [The prepared statement of Mr. Greene follows:]
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    Senator Carper. Thank you very much.
    Every now and then, I like to ask the witnesses to comment 
on another witness's testimony. I am going to do that in this 
case. I am not going to ask Mr. Pierce and Mr. Faber to gang up 
on you, Mr. Greene, but is there anything that he said that you 
would especially like to comment on?
    Mr. Faber. I would just like to say that, I am sure you 
know, Mr. Chairman, that until recently I worked for the 
Environmental Defense Fund for a number of years. I worked very 
closely with Tim Searchinger, author of the Science article on 
this subject on indirect land use issues.
    I agree with much of what Nathanael said. I think one of 
the real stumbling blocks we face is that we don't yet have a 
common set of accounting principles for verification methods to 
know whether or not biofuels are going to significantly reduce 
or significantly increase greenhouse gas emissions. I think 
this is not so much a criticism of NRDC or other environmental 
groups or so much a criticism of the Congress for getting ahead 
of the science. It seems to me that in light of the fact that 
there is a great deal of new analysis, but also a recognition 
that we don't yet have the tools necessary to adequately assess 
all these indirect land use effects, that we ought to step back 
and slow down and live with a 10 billion gallon ethanol 
industry as opposed to rushing ahead and building a 15 billion 
or larger billion gallon ethanol industry.
    Senator Carper. Thank you.
    Mr. Pierce.
    Mr. Pierce. Yes. I would just add a piece. I was trying to 
make the point that yield is a big deal. The more yield you 
have, the more sustainable any of your policies are going to 
be. The magical acre will go a long way.
    Senator Carper. What did you say in your testimony? I think 
you talked about going way back in time in terms of bushels of 
corn per acre. It seemed like it was 20 or 30 bushels?
    Mr. Pierce. That is right.
    Senator Carper. And we are looking now at?
    Mr. Pierce. We are average now 150 bushels. We are getting 
over 300 in high-yield cornfields. Soybeans are doing the same 
thing. These are phenomenal things that prevent hundreds and 
hundreds and hundreds of otherwise needed millions of acres 
that were otherwise meant to be planted, and technology is 
driving that even faster.
    Senator Carper. And prices are.
    Mr. Pierce. What is that?
    Senator Carper. And the price of oil as well.
    Mr. Pierce. I was just going to make one other point, and 
that is with respect to these indirect land use things, it is 
absolutely true that there are not sound mechanisms and 
algorithms to relate what you do mowing your front yard to what 
someone in Brazil does in their back yard. Absolutely true, and 
part of me thinks it will always be rather difficult making 
those connections because it is such a complex set of inputs.
    I think that if we are going to address deforestation, we 
ought to do it with direct policies, and addressing it through 
the use of biofuels policies or cotton growth policies or 
soybean growth policies or any other particular kind of thing 
is really kind of like trying to drive a car by driving a lug 
nut. I mean, it is just not going to work.
    So really, deforestation is a big deal. It should be 
addressed with policies, but you recall some years ago, I 
recall some years ago when deforestation was a huge, huge issue 
being addressed with lots of policies, and biofuels wasn't even 
a whimper on the landscape. So direct policies for direct uses.
    Senator Carper. All right. Thanks.
    Mr. Greene, do you want to make any comment in response? 
And then I have some other questions.
    Mr. Greene. Yes, sure. I think there is a real risk in 
assuming that we should just turn a blind eye, or just throw up 
our hands and say we can't do this. There is not an 
environmental issue that we don't face these days that hasn't 
been made worse by claims that because there is uncertainty 
around the science we should do nothing, or we should assume 
the value is zero.
    I think trying to just hold the market steady, try to push 
back on competition, or deny the importance of indirect land 
use impacts, which I think is what we have heard suggested 
here, really runs that risk. Rather than trying to claim that 
it is all too complicated or too hard, we need to use the best 
tools we have, the best science, the best modeling, and start 
pushing on the market to go in the direction that we know it 
can.
    Senator Carper. All right. Thanks.
    I mentioned earlier in one of my questions, I talked about 
this little biofuels company called Coskata. It is the firm in 
which GM has taken an equity position this year. They expect 
that they are going to be able to produce a biofuel for about 
$1 a gallon, use less than a gallon of water to produce a 
gallon of fuel, the energy it produces about seven times the 
amount of energy that goes into the production of the fuel, and 
greenhouse gas emissions are about 85 percent less than 
gasoline, and it can be created using plant waste, municipal 
waste, the old tires off our old cars, trucks and vans.
    I hope that is going to happen. They are talking about 
being able to produce maybe 100 million gallons or so in the 
nest several years from a facility.
    Another vision that I have is one in which you have a 
farmer, whether it is Delaware or some other place, who raises 
corn, going out into the field at harvest time, and on a single 
pass with their farm equipment being able to harvest not only 
the corn that is on the cob, but to also harvest corn holders, 
including the stalks and leaves, and to be smart enough to be 
able to leave something behind to fertilize the condition of 
the soil.
    How much of a pipedream is that? Or is that something that 
is doable in the foreseeable future?
    Mr. Pierce. Senator, let me take a crack at that. As part 
of our cellulosic ethanol program focused on corn cob, the way 
to harvest is a very important thing. We have been working for 
some years with a number of universities and companies like 
John Deere that are precisely focused on things like that. With 
one pass through, farmers turn out not to want to take a second 
pass through their field, and so they want to do it with one 
pass.
    Senator Carper. Not with fuel prices what they are, that is 
for sure.
    Mr. Pierce. Well, even without fuel prices, what they want 
is one pass through the field. In fact, we have done a life-
cycle assessment, and in fact have had someone from the NRDC on 
our life-cycle assessment board for this for the last 4 years. 
We have done county-by-county looks. It depends on the actual 
farm, but sometimes you can take maybe 50 percent or 75 percent 
of the cornstover and still have good soil health. Other times, 
you can only take maybe 25 percent. But on average, you can 
take about 40 percent to 50 percent of the cornstover, leaving 
the rest behind for soil health, as you say.
    Senator Carper. All right.
    Mr. Greene. I would just add, I think the Coskata example 
is a really exciting one. There has been just an incredible 
explosion of innovation in the area of conversion technologies. 
You heard the fellow from DOE talk about the level of private 
sector investment that has gone into that.
    I think the real challenge at this point is helping farmers 
bring that same type of innovative thinking to the feedstocks, 
so we do want to find feedstocks like the cornstover you are 
talking about, that would allow us to produce food and more 
food per acre, which we know we need to do to feed ourselves 
and feed the world, but then also be able to get fuel off of 
those same acres.
    Senator Carper. It reminds me a little bit of what the 
Indians used to do with buffalo. They would find a way to use 
almost every part of the buffalo, so none of it would go to 
waste.
    I would like to followup with Mr. Greene. I think you may 
be the only witness today who has mentioned cap-and-trade, 
although Senator Boxer and I had a brief discussion when she 
was here, about the role of cap-and-trade, adopting a cap-and-
trade system, putting it in place, the kind of positive role 
that might have on addressing these issues. Do you want to take 
a shot at that?
    Mr. Greene. There are two parts of the cap-and-trade system 
obviously that are just absolutely critical here. One is 
starting to level the playing field in terms of the cost of 
emitting carbon, putting a real value on that in the system so 
that the oil and our fossil fuel technologies can't just keep 
polluting our environment while other cleaner technologies 
don't get any benefit for avoiding pollution that they provide 
us.
    And then the second is obviously what you do with the 
revenues you create when you auction off the credits under the 
cap, and using that money smartly we can really drive all the 
sorts of innovation, create jobs, build whole new sectors, and 
dramatically expand the sectors that have been growing so 
rapidly recently in the clean-tech world. So really this is a 
beautiful two-step process, and we just need to get going as 
fast as possible if we want to revitalize our economy and 
protect our environment.
    Obviously, the legislation that was debated here in the 
Senate also contemplated a low carbon fuel standard, which I 
think is a critical next step, building off of the renewable 
fuel standard, because the renewable fuel standard has minimum 
life-cycle greenhouse gas requirements. So those are the floor. 
Below that, you are not legal. You are not allowed to play in 
this mandated market.
    But what we want is not people just to be just barely 
legal. We want them to be doing as good as they possibly can. 
That is what the low carbon fuel standard really encourages, 
but also acts as a defense against high carbon fuels such as 
tar sands or coal-to-liquids.
    So the legislation that was debated here in the Senate and 
that type of approach, both a cap on carbon emissions and using 
the dollar wisely to invest in our economy, invest in new 
technologies, and then other types of policies that get 
packaged like the low carbon fuel standard, all absolutely 
critical.
    Senator Carper. Mr. Faber.
    Mr. Faber. I would just add that the LCFS can actually help 
us address the----
    Senator Carper. LCFS?
    Mr. Faber. The low carbon fuel standard. It could be a 
benefit or it could be a curse. Let me explain. I think if you 
set the LCFS right, it could actually require a significant 
reduction in greenhouse gas, life-cycle greenhouse gas 
emissions, and you got the accounting right, and you got the 
verification systems right, which are a lot of ifs, then that 
could actually act as a brake on ultimately the amount of food 
that is converted into fuel.
    If you set the standard poorly, if the standard is too low, 
if corn ethanol is exempted or treated unfairly, then you could 
have the unintended consequence of effectively increasing the 
current mandate and diverting even more food into our fuel 
supply.
    So regardless of whether or not we should have a low carbon 
fuel standard, the details will really make an extraordinary 
difference in whether or not a low carbon fuel standard 
increases food prices or ultimately helps act as a brake on the 
amount of food that is being diverted to our fuel supplies.
    Senator Carper. All right.
    Mr. Pierce, DuPont is involved I am sure in a number of 
biofuels projects that I am not aware of. The ones that I am 
most aware of are working on cellulosic ethanol, in part fueled 
by a Department of Energy grant of some $18 million or $20 
million. I am aware of the work that you all have done with 
respect to biobutanol.
    Do you have a demonstration project going on in England 
with biobutanol, a partnership with BP that involves actually 
selling the product? What are you doing there? What are you 
learning from that endeavor?
    Mr. Pierce. Right. We are building a pilot facility in the 
UK on a BP site in northeastern United Kingdom. But perhaps the 
demonstration project you are thinking of is fleet testing 
biobutanol in a variety of cars.
    Senator Carper. I think that is it.
    Mr. Pierce. We have done a lot of fuel testing in cars in 
the United States, employees' cars and things like that looking 
for new effects. But now this is fleet testing, mixtures of 
biobutanol with gasoline in the UK with normal cars and normal 
gas stations and things like that. BP is a fuel company and 
they know all the types of things one needs to know when one is 
introducing new fuels, so we are taking those steps to 
understand how butanol is going to interact with that supply 
chain.
    Senator Carper. And when do you expect to have learned 
something from what you are doing over there?
    Mr. Pierce. Say that again please?
    Senator Carper. When do you expect to have learned?
    Mr. Pierce. Well, we have already learned a bunch of stuff, 
and so far it is good news. I mean, you keep moving the thing 
along and they start off with no effect, no effect, so getting 
a bunch of non-answers is a good thing. When we are done, if we 
never get a bad answer, we will consider it a resounding 
success. But this will keep going on until you are millions and 
millions and millions of gallons, and every time you go a 
little bit further, you keep your eye out and make sure that 
you are treading carefully.
    Senator Carper. All right.
    Can any of you talk to us about biofuels work that is being 
done that involves algae?
    Mr. Greene. Sure. The promise of algae is really in its 
incredible potential for yield.
    Senator Carper. We have to worry about algae that forms on 
the inland base in southern Delaware and the DelMarVa 
Peninsula. It would be nice to----
    Mr. Greene. You know how prolific it is.
    Senator Carper. Yes.
    [Laughter.]
    Mr. Greene. So just to give you a sense of why people are 
so excited about algae, with biodiesel you get roughly 60 
gallons per acre if you are using soy-based biodiesel; corn 
ethanol, roughly 400 gallons. People talk about cellulosic, and 
its relatively early levels getting 800 to 1,000, and maybe in 
the future getting, if we are wildly successful, over 2,000 
gallons per acre.
    People talk about algae starting at about 10,000--6,000 to 
10,000 gallons per acre, and going up as high as 100,000 
gallons per acre. So that is why it is such an exciting and 
important technology to be working on. Obviously, there are 
real challenges. To get those really high yields, you end up 
basically building very infrastructure-intensive systems, maybe 
enclosed systems. So you basically have plastic or glass 
covering acres and acres of land, hundreds of acres of land.
    There are important questions about water, both water use 
and water pollution concerns where the algae goes. So it is 
incredibly exciting technology, but one where there are lots of 
innovations and questions that we need to understand as the 
industry grows.
    Senator Carper. All right.
    Anyone else want to comment on this?
    Mr. Faber. I would just say that the law of unintended 
consequences is always in effect. That is certainly the case 
with all of these second-generation fuels. Let me just say, it 
is critically important that we get these advanced and 
cellulosic biofuels to commercial scale as quickly as possible, 
if only because the Congress has built this mature corn ethanol 
industry that has now made corn more valuable as an energy 
source than as a source of food.
    So for those of us who are worried about the price of food 
and our ability to feed the poorest among us, getting these 
second-generation fuels to commercial scale is critically 
important. If it is not done carefully, it could have the same 
effect as corn ethanol. To grow switchgrass or other grasses or 
even forest lands or plantations at a commercial scale for 
biofuels production, ultimately you could wind up displacing 
land that is now being used for food crops. If you squeeze the 
balloon, it is going to pop out somewhere else. That is why 
using these wastes--stover, rice straw, wheat straw--really 
hold the most potential to produce more fuel without pitting 
our energy needs against the needs of the hungry.
    Senator Carper. All right.
    Another question, if I could, for you, Mr. Greene. EPA's 
life-cycle analysis of greenhouse gas emissions associated with 
biofuels will hinge on the assumptions that they make and 
really the criteria that they use. As you know, there has been 
a debate over whether to account for indirect emissions in 
life-cycle modeling.
    My question is, does EPA have the authority to include 
international indirect emissions in its modeling? And a second 
half of that question would be, is it necessary to consider 
indirect emissions?
    Mr. Greene. Let me actually start with the second part of 
the question, which is that it is not only necessary, but it is 
absolutely critical. Most of the land use change that is 
happening in the agricultural sector is happening 
internationally, and a lot of that change is happening on 
biologically rich and carbon-rich landscapes like rain forests, 
like grasslands. So looking internationally and understanding 
the changes that happen internationally are just absolutely 
essential. Similarly, as John mentioned, some of the greatest 
potential for innovation is in international agriculture as 
well.
    As to the authority, I think not only does EPA have the 
authority, I think it was clearly the intent, if I can be so 
bold to read into it, of the language that Congress adopted. 
Congress had the wisdom to talk about the full life-cycle 
impacts, all of the aggregate emissions, and many other 
sections of the bill talk specifically about domestic issues 
and international issues, and in this instance did not 
specifically call out domestic only impacts.
    It is also important to understand that we are not talking 
about regulating land use internationally. We are just talking 
about understanding what is happening and including it in the 
calculus of fuels that are produced and how that changes the 
international landscape.
    So I believe it is critically important that they do. I 
hope and read the language, the plain English language to 
direct them to include the international issues, and I believe 
legally it is clearly within their scope.
    Mr. Faber. Yes, but the real challenge is--and John 
suggested this--applying sustainability standards to biofuels 
doesn't solve the problem if all you are doing is focusing on 
crops that are being used to produce fuels. This year we will 
use about 12 million acres of land that produces corn to 
produce corn ethanol in the U.S. Well, we are going to find 
another 12 million acres. It is not always a one-to-one 
relationship. But we are going to bring other land into 
cultivation to produce food that wouldn't be subject to these 
sustainability standards or these accounting principles or 
verification standards.
    So we can pretend that these biofuels policies are not 
going to have ultimately the indirect effects that I think we 
all know they will, if we just focus on land that is being 
brought into production for biofuel production. What will 
happen obviously is you will have two sets of books. These 
crops were produced on lands that were previously cultivated, 
therefore they ultimately don't create a problem; and these 
lands will produce food and feed and are not subject to the 
sustainability standards.
    If we are going to have a set of sustainability standards--
and that is I think an open question--it ought to apply across 
the board.
    Mr. Pierce. Or this crop is grown for biofuel, but this 
crop is grown for feed. The acreage use has exactly the same 
impact on whatever life-cycle analysis you may care to discuss. 
But if you have two different sets of books based on intended 
use, you run into a problem not only of keeping books, but 
having a rational calculation.
    Mr. Faber. And it is very hard to figure out. We don't have 
the tools today to assess these indirect effects issues. The 
notion that Congress has gotten ahead of this without having 
all the available science resolved for us is troubling. We have 
seen the consequences. According to the United Nations, there 
are 50 million more people who are in poverty primarily because 
of increased food prices driven by biofuels.
    Senator Carper. I see Mr. Greene over here who is shaking 
his head. Do you want to say something else on this?
    Mr. Greene. Yes. Unfortunately, Scott has misunderstood the 
issue of indirect land use issues. Maybe he thinks he is 
talking about the renewable biomass definition, which is an 
important part of the renewable fuel standard. But the indirect 
land use issue is something you add onto any acre. So it 
doesn't matter whether you are saying you are using it for food 
or you are saying you are using it for fuel, if you use it, it 
is what that acre could have done otherwise. So it is an 
economic calculation about how the world changes when you make 
the change in the use of a given acre of land.
    I think the argument that it is too complicated to certify 
sustainability on an acre or land, or that it is too 
complicated to bother calculating the indirect land use 
emissions again is an incredibly risky and poorly advised 
position. It argues that we can't ever differentiate in the 
markets between good practices and bad practices because maybe 
there is a shell game going on, or that because we don't know 
exactly how to calculate something, we should assume it is zero 
and therefore not address the impacts.
    So Scott's colleagues at Environmental Defense I am sure 
would not apply to that position, because it is exactly what 
has led us down the global warming path. It is because people 
have argued for so long that the uncertainty around global 
warming is too great that we can't regulate it, that we now 
find ourselves in a crisis in global warming, where we don't 
have the luxury of waiting around to find the perfect solutions 
to global warming. We have to move aggressively to get the best 
solutions into the market as fast as possible.
    Senator Carper. Yes, maybe just a quick point, and then we 
will move on.
    Mr. Faber. That is really a misrepresentation. I don't 
think anyone is suggesting that we shouldn't try to develop 
accounting principles and verification systems. I am only 
making the point that we haven't yet been able to do that and 
we need to do that before we proceed further.
    Mr. Greene. That is what EPA is doing right now.
    Mr. Faber. And while EPA is doing it, they are also 
simultaneously mandating that refiners blend nine million 
gallons of ethanol into our gasoline supplies this year.
    Mr. Pierce. Just a brief comment. There was discussion 
earlier about cap-and-trade and low carbon fuel standards, 
those are directly applicable, straightforwardly 
understandable, non-indirect measures that can be taken. The 
same type of non-indirect measures can and have dealt with 
things like deforestation and the like. We should allow a 
cotton farmer to choose to grow soybeans without having to do a 
recalculation about whether it is an appropriate use of the 
land, and that is within the United States, let alone what 
happens some thousands of kilometers away.
    Senator Carper. All right. We have come close to the end.
    I think mostly on this panel, but even on the first panel, 
we talked a bit about the challenge of expanding global 
agricultural output, and that to the extent we can help our 
neighbors around the world do a better job there, we address 
our problems and we also address their problems. We hear almost 
on a weekly basis about the violence in countries in South 
America, like in Colombia for example, where it would be great 
if the farmers there would grow things other than drugs, the 
crops used to create drugs. And Afghanistan, a huge creator--I 
think they produce the vast majority of poppies used to create 
heroin.
    I read an interview in the newspaper this past week with 
some farmers in Afghanistan where their crops are drying up. 
Their corn crops are basically, at least on these farmers' 
lands, pretty much worthless. And yet we have DuPont and other 
companies, your Pioneer subsidiary, are developing corn that 
can better face all kinds of pests and drought and so forth.
    But it seems to me that there is a real opportunity here 
for us to help them feed themselves, to help them particularly 
in countries where they are creating crops that are used to 
feed drug addictions here and around the world, and the need to 
make sure that food prices don't continue to go up.
    Any advice for us here in the Congress as to how we can 
help make that happen? This goes back to Thomas Edison talking 
about sometimes we miss out on an opportunity because it comes 
along wearing overalls and is disguised and looks a lot like 
work. There is real opportunity here.
    Mr. Faber. Clearly, we have not invested nearly enough in 
global agricultural development. We have paid a price for that. 
Global agricultural development increased by about 2 percent 
annually from 1970 to 1990. It has now slowed to about 1.3 
percent or 1.2 percent annually. So our ability to feed 
ourselves is gradually slowing.
    At the same time, global demand, especially in places like 
Asia and India, especially for meat protein, is growing 
dramatically. So clearly, we need to invest a lot more in 
global agricultural development. Those investments won't yield 
benefits for many, many years. So I think that anybody who has 
looked at this objectively, including the U.N. FAO and others, 
would say that we need to start making those investments, but 
we are going to see significant shortages or supply demand 
challenges in the next few years as more and more of our 
commodities are diverted for fuel production.
    Mr. Pierce. I do think that is something Congress can do 
via policy to enhance the type of agricultural aid and 
dissemination of current technologies throughout the world. I 
talked about going from 150 bushels an acre to 200 bushels an 
acre in the U.S., and that is pretty good. But you can go many 
factors in broad, broad swaths of the world using technology 
from just today, not even future technologies, not even GMO 
technology, just modern agricultural practices. So that is 
something that Congress could do.
    Another thing that you might consider is we talk about all 
this cellulosic feedstock. There is a whole part of the 
cellulosic feedstock world that is about collection. You talked 
about the combine going through the field, and the like. A lot 
of these technology companies like Coskata, they are focused on 
what happens in the plant, right? There is a whole distribution 
infrastructure for grains, but it does not yet exist for 
cellulose. So some type of assistance in various States--
Tennessee is doing it with switchgrass, there are some other 
small State efforts around--but putting that supply chain in 
place to go from the farm field to the facility would be 
something else that could be of assistance.
    Senator Carper. Good. Thanks.
    Mr. Greene.
    Mr. Greene. Yes. I think this is a really critical point 
that you have touched on. You are absolutely right that there 
are head-on things that we can do about making sure the poorest 
and most vulnerable among us have access to food, and that all 
of us face food prices that are affordable.
    I think the greatest risk in the position that Scott has 
put forward is the idea that the only thing, the only tool we 
have to address this critical and moral challenge is by 
tweaking the biofuels policies. In fact, if you look at the 
history of biofuels since the first RFS, where the industry has 
been consistently above the mandate, the argument that we could 
somehow change the mandate and that would magically solve the 
world hunger problem is just alarmingly dangerous, I would 
argue, because it distracts from the policies that are 
absolutely critical like the policies you are talking about 
here--agricultural trade policies, ways that we can help 
farmers around the world grow more, which not only addresses 
the near-term problems, but also goes to longer-term issues of 
how do we keep those farmers from going into forests, going 
into grasslands, while the population continues to grow.
    Mr. Faber. Well, the World Bank says the increase in 
global----
    Senator Carper. Mr. Faber, I know you want to say this, and 
go ahead and say it, just be brief, because I have one more 
question.
    Mr. Faber. I represent an industry.
    Senator Carper. I know you do. I want you to have a chance 
to say, but then I want us to be able to move on and then 
eventually to move out.
    Mr. Faber. I couldn't agree more.
    Senator Carper. Go right ahead.
    Mr. Faber. Well, again, a third party World Bank economist, 
disinterested party, the increase in global production and 
yields were above trend and would have been more than adequate 
to accommodate demand growth and even add to global stocks 
without the large increase in biofuel use.
    Clearly, there are a lot of factors driving food inflation, 
but according to the World Bank, the IMF, IFPRI, FAPRI, every 
independent agricultural expert who has looked at this issue, 
surging demand, especially between 2006 and 2008 for corn 
ethanol is a dominant factor in rising food prices. I don't 
think there is any escaping that. It is not the only solution, 
but clearly we should be looking hard at how much more ethanol 
we are going to produce while we are looking at other solutions 
such as increasing global agricultural development.
    Senator Carper. All right. Thank you.
    Mr. Greene, one last question for you, and I think what I 
am going to ask the panel, all of you, is a final question. 
This is like the second-to-last question, but this is just 
directed at you, Mr. Greene, but the others can be thinking 
about my last question.
    You bring different perspectives. Even Mr. Faber has put in 
some time at Environmental Defense, a fine outfit. I want to 
commend all of you for your work on the partnership that has 
been created on climate change. There is a lot of leadership at 
this table and we are grateful for that.
    But I want to ask you all to tell us, where do you think 
you agree in terms of the path forward for our Country? 
Obviously, there are some areas where you disagree, but where 
do you agree? So just be thinking about that, and we will come 
back to that at the very end, which is almost upon us.
    But Mr. Greene, as you are certainly aware, earlier this 
year a number of scientific studies were published analyzing 
greenhouse gas emissions associated with production, associated 
with transportation, associated with combustion of various 
types of biofuels. Some argue that it is difficult for 
virtually any type of biofuel to reduce carbon emissions when 
land use changes are taken into account, while others paint a 
more positive picture of biofuels' potential. What do these 
studies get right and what do they get wrong?
    Mr. Greene. Well, I think they point to a critically and 
undeniable true dynamic, which is that the laws of supply and 
demand work in agriculture and the fiber sector. So if you are 
taking supply out in one part, the market tries to reach 
equilibrium. There are really only three things the market can 
do. Prices can go up so people can consume less. We can bring 
new land into production. And we can intensify the production 
of the lands that we have. All three are going to play, so 
pointing out the critical importance of that dynamic, and when 
you do bring new lands into the system, how large those 
greenhouse gas impacts can be. That was really I think the 
fundamental information that woke up a lot of people that was 
particularly in some of the articles in Science early in 
February.
    I think what they also both acknowledged, and all the 
articles I have seen have acknowledged, the potential to 
produce biofuels in ways that avoid these impacts, that there 
are feedstocks out there that we are aware of today--waste, 
construction demolition debris, agricultural residues, some 
forest residues if they are collected in sustainable and 
responsible ways--and the potential for new feedstocks to be 
developed and agricultural practices to be developed that avoid 
those impacts. All of that I think they get right.
    I think the challenge at this point is how do we take that 
initial modeling, the initial estimates that came out of that--
it is one point; it does not represent a scientific consensus--
and use it, build on that modeling and develop new modeling and 
get the market moving in the right direction.
    We are not going to come up with the right point estimate 
or point number at day one, but some method of sending a clear 
signal to the market to avoid those types of impacts, to 
minimize those types of impacts, and maximize the production of 
feedstocks and fuels that either avoid it, or even better, 
produce more food and fuel. There are options out there that we 
know already that are not in the marketplace, but switchgrass, 
for instance, has more protein in it per acre than soybeans, 
and that is the primary reason we grow soybeans is to feed 
livestock.
    So if we could get more protein per acre, while getting the 
biomass residue that we want from switchgrass to make fuels, 
that is a solution that makes us all better off. I think that 
is what those articles pointed out is the direction we need to 
be heading.
    Senator Carper. Thank you.
    One of the things I try to do around here in the Senate is 
to try to get people to work together. Senator Voinovich, who 
was unable to be with us today because of a number of other 
conflicts in his schedule, that is one of the things that he 
does. There are others on our Committee who certainly endeavor 
to try to find a way to pull together and develop consensus on 
difficult issues.
    This is an issue on which we have developed a fair amount 
of consensus, but clearly we are going to need more going 
forward. We not only need to develop consensus, but to use 
common sense in developing that consensus.
    In closing, just share with us your thoughts of where you 
agree in terms of a path forward for our Country, including us 
in Congress, but for our Country.
    Mr. Pierce.
    Mr. Pierce. Yes, I will take a start at that. I have a 
sense from the discussion today that we all have a strong 
anticipation of the benefits of cellulosic technology and 
biofuels, as well as advanced biofuels; that policies like cap-
and-trade and low carbon fuel standards properly applied can be 
very helpful in getting us to that.
    We didn't talk at all really today about national security. 
We all talked about the environmental effects and this and that 
of course of other big parameters, but underlying a lot of this 
biofuels activity comes down to national security issues, too.
    But all in all, while there were I think some specific 
disagreements in terms of specific approaches one might take, 
the overall view that biofuels have a very positive impact to 
make came across loud and clear all day long.
    Senator Carper. All right. Thank you.
    Mr. Faber.
    Mr. Faber. I would just agree. I think there is a broad 
agreement that we need to get second-generation fuels, advanced 
cellulosic biofuels to commercial scale as quickly as possible, 
to make sure we have the right safeguards in place so that we 
are limiting the potential for unintended consequences.
    I think there is probably agreement that we ought to be 
reforming the tax credit that goes to refiners to really help 
favor the commercialization of those second-generation fuels, 
and probably some agreement--or we could easily find 
agreement--that we ought to reduce or significantly modify the 
tariff. A lot of these second-generation fuels aren't going to 
be produced here. They are going to be produced in equatorial 
regions where you can get multiple harvests, and eliminating or 
significantly reducing our tariff, or even somehow linking it 
to greenhouse gas emissions would be a significant step 
forward.
    Senator Carper. Thank you.
    Mr. Greene.
    Mr. Greene. I would echo what the other panelists have 
said, and particularly draw on that last point that Scott made, 
which is the tax credits and the import tariff today are very 
blunt tools that were appropriate when the industry was 
nascent. But today, we can and should get more for that money. 
It is a lot of money that is on the table. Even at 45 cents a 
gallon, when you put it in the context of the mandate, we 
should be getting more out of that money.
    I think with the climate legislation coming down the pike, 
with climate being part of the renewable fuel standard, we 
shouldn't stop at climate when we look at those tax credits. We 
should try to look at other types of sustainability aspects--
water use, water efficiency, water pollution, wildlife 
management, soil protection--the panoply of issues that make up 
sustainable agriculture, sustainable production of the 
feedstocks, and sustainable conversion. They should all be 
worked into those tax credits, but it seems a really ripe area 
for sending the industry to moving forward in an even better 
direction.
    Senator Carper. Well, gentlemen, we appreciate very much 
your taking the time out of your schedules, out of your lives, 
to be with us today, for your preparation for this hearing, and 
for your presentation, and for your willingness to respond to 
our questions.
    We have a lot of hearings around here, as you might 
imagine. I serve on five full committees. I don't even know how 
many subcommittees I am on. I chair three. In the course of a 
month, I sit through some subcommittee hearings or some 
committee hearings that when they are over, they are over, and 
you basically turn the page and that was that. Today's hearing, 
this was an exceptional hearing. I really thank the panelists 
for helping to make it so.
    I want to thank the members of our staff who worked very 
hard to prepare for this as well, and express our appreciation. 
It is important for our Country. We have to figure out how to 
get this right. To the extent that we do, I think we enhance 
our national security.
    We certainly enhance our environmental security and our 
economic security. I think we provide some added economic 
opportunity here in this Country, but we could also do that 
around the world and maybe even take a small step toward 
eradicating illegal drugs. I like to say switchgrass is a grass 
that will save the world. I don't know if that would be the 
case, but we have the potential here for doing a whole lot of 
good if we get this right. It is just important that we do 
that. So thank you for helping us to get it right.
    With that having been said, this hearing is adjourned. 
Thank you.
    [Whereupon, at 12:25 p.m. the subcommittee was adjourned.]
    
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