[Senate Hearing 111-1184]
[From the U.S. Government Publishing Office]




                                                       S. Hrg. 111-1184
 
OVERSIGHT_THE ENVIRONMENTAL PROTECTION AGENCY'S 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 ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 1, 2009

                               __________

  Printed for the use of the Committee on Environment and Public Works
  
  
  
  
  
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               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                     ONE HUNDRED ELEVENTH CONGRESS
                             FIRST SESSION

                  BARBARA BOXER, California, Chairman
MAX BAUCUS, Montana                  JAMES M. INHOFE, Oklahoma
THOMAS R. CARPER, Delaware           GEORGE V. VOINOVICH, Ohio
FRANK R. LAUTENBERG, New Jersey      DAVID VITTER, Louisiana
BENJAMIN L. CARDIN, Maryland         JOHN BARRASSO, Wyoming
BERNARD SANDERS, Vermont             MIKE CRAPO, Idaho
AMY KLOBUCHAR, Minnesota             CHRISTOPHER S. BOND, Missouri
SHELDON WHITEHOUSE, Rhode Island     LAMAR ALEXANDER, Tennessee
TOM UDALL, New Mexico
JEFF MERKLEY, Oregon
KIRSTEN GILLIBRAND, New York
ARLEN SPECTER, Pennsylvania

                    Bettina Poirier, Staff Director
                 Ruth Van Mark, Minority Staff Director
                              ----------                              

              Subcommittee on Clean Air and Nuclear Safety

                  THOMAS R. CARPER, Delaware, Chairman
MAX BAUCUS, Montana                  DAVID VITTER, Louisiana
BENJAMIN L. CARDIN, Maryland         GEORGE V. VOINOVICH, Ohio
BERNARD SANDERS, Vermont             CHRISTOPHER S. BOND, Missouri
JEFF MERKLEY, Oregon                 JAMES M. INHOFE, Oklahoma (ex 
BARBARA BOXER, California (ex            officio)
    officio)
    
    
    
    
    
    
    
                                 (II)
    
    
    
    
    
                            C O N T E N T S

                              ----------                              
                                                                   Page

                             APRIL 1, 2009
                           OPENING STATEMENTS

Carper, Hon. Thomas R., U.S. Senator from the State of Delaware..     1
Wyden, Hon. Ron, U.S. Senator from the State of Oregon...........     4
Vitter, Hon. David, U.S. Senator from the State of Louisiana.....     6
Boxer, Hon. Barbara, U.S. Senator from the State of California...    15
Merkley, Hon. Jeff, U.S. Senator from the State of Oregon........    15
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma, 
  prepared statement.............................................   129
Bond, Hon. Christopher S., U.S. Senator from the State of 
  Missouri, prepared statement...................................   130

                               WITNESSES

Drevna, Charles T., President, National Petrochemical and 
  Refiners Association...........................................    15
    Prepared statement...........................................    18
    Responses to additional questions from Senator Inhofe........    38
Tiller, Kelly, Director of External Operations, University of 
  Tennessee Office of Bioenergy Programs.........................    43
    Prepared statement...........................................    45
McAdams, Michael, President, Advanced Biofuels Association.......    47
    Prepared statement...........................................    50
    Response to an additional question from Senator Boxer........    61
    Responses to additional questions from:
        Senator Udall............................................    62
        Senator Inhofe...........................................    63
Greene, Nathanael, Director of Renewable Energy Policy and Energy 
  Department, Natural Resources Defense Council..................    64
    Prepared statement...........................................    66
    Response to an additional question from Senator Boxer........    89
    Responses to additional questions from Senator Inhofe........    90
Early, Blake, Environmental Consultant, American Lung Association    92
    Prepared statement...........................................    94
    Responses to additional questions from:
        Senator Boxer............................................   102
        Senator Inhofe...........................................   103

                          ADDITIONAL MATERIAL

December 4, 2007, letter to President George W. Bush.............   132


    OVERSIGHT--THE ENVIRONMENTAL PROTECTION AGENCY'S RENEWABLE FUEL 
                                STANDARD

                              ----------                              


                        WEDNESDAY, APRIL 1, 2009

                               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, Boxer, Voinovich, Cardin, Vitter, 
and Merkley.

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

    Senator Carper. Well, Senator Wyden, nice to see you. 
Senator Wyden and I spent a lot of time together on another 
committee called the Finance Committee, and he is going to help 
write the book, I think, on health care reform in this Country. 
But we held a couple of hearings a week, and Senator Baucus, 
our Chairman, is putting us through our paces.
    But he and I share interests in a whole lot of stuff, 
including trying to reduce our dependence on foreign oil and 
fossil fuels and so forth, and do something about climate 
change and the quality of our air. But I recognize him as our 
entire first panel.
    I want to call the hearing to order. We welcome Senator 
Wyden and each of our witnesses who are here. We welcome all of 
our guests as well. And I appreciate your efforts to be with us 
today and to prepare for this hearing.
    Today's hearing, as you know, is focused on the renewable 
fuel standard. In light of the current economic conditions, 
including reductions in fuel consumption and Environmental 
Protection's forthcoming life cycle analysis in its proposed 
renewable fuel standards rulemaking, in this case a Senator 
will have, Senators will have 5 minutes for their opening 
statements.
    Senator Wyden can speak for as long as he wishes. We will 
break for lunch around noon and take it from there. But we will 
ask our witnesses to try to keep their comments close to 5 
minutes, and if you run a little bit over, that is OK. We will 
probably be voting a fair amount today. My hope is that we can 
wrap this up before we get into the heavy duty voting, but we 
will see.
    Senator Vitter will be coming here in a little bit, and we 
will probably have some other colleagues to drift in and out 
during the course of the morning.
    You all recall not along ago, in fact about a year and a 
half ago in 2007, our Nation was part of a booming global 
economy and a healthy capital market. We were in a global fight 
for oil, competing with other nations to keep our economy and 
our automobiles moving. We were consuming about 21 million 
barrels of day per day and importing 60 percent of our oil from 
overseas. Our demand was, get this, 25 percent of the world's 
oil supply, but we have less than 2 percent of the world's oil 
reserves.
    All signs were pointing to an increase in U.S. oil demand. 
It was clear that we needed to start changing or driving habits 
and to move us quickly away from traditional oil.
    To address some of these concerns, we passed bipartisan 
energy legislation in 2007 that reduced our dependence, or 
seeks to reduce our dependence on foreign oil and to reduce at 
the same time harmful emissions into our air.
    In the bill, we amended the Clean Air Act to greatly 
enhance the renewable fuel standard. We required 9 billion 
gallons of renewable fuels to be blended into our gasoline 
starting in 2008, last year. And this mandates ramps up, as you 
may recall, to 36 billion gallons per year by 2022.
    In the renewable fuel standard, we provide clean, clear 
direction to the EPA to make sure that environmental 
protections are included such as reducing our carbon footprint 
and moving away from biofuel made from corn, or at least from 
kernels of corn. We hope to slowly increase our levels of 
biofuels and to increase our second generation of biofuels.
    Two short years, and we all know we all face a vastly 
different world. We face trying economic times that are 
impacting our way of life, including our fuel consumption and 
our investments in advanced fuels. These economic challenges 
have created questions in the renewable fuel standard, 
questions I hope we will begin answering today with our 
hearing.
    Gasoline consumption is down 2 billion gallons per day, and 
that is a good thing. As consumption decreases, though, our 
biofuel standard increases. The question is: Are we moving too 
fast for our infrastructure and for our engines to handle 
biofuels safely?
    The lack of capital has made it difficult to make the 
needed investments for a new second generation biofuel market. 
Will we be able to meet our advanced biofuel marks in the 
capital-starved world that we face today? And EPA still has not 
proposed a rule on how to move forward on environmental 
protections we put in place in 2007, and how is that impacting 
the market?
    Hopefully, we can answer these questions and evaluate any 
unintended consequences of the renewable fuel provisions and 
begin doing that, as I said earlier, today.
    Personally, I believe biofuels, if done right, are a good 
thing, maybe a very good thing. Biofuels provide us with an 
environmentally friendly option to move away from foreign 
fossil fuels. We know our trade deficit is huge. It is about 
three-quarters of a trillion dollars this year, and we know 
about one-third of that is attributable to imported oil.
    But I also believe that the renewable fuel standard must be 
implemented in a manner that positively impacts both our 
economy and our environment. And I believe this Committee must 
work together amongst ourselves, with the full Committee and 
others in the Senate, to make sure that this happens.
    [The prepared statement of Senator Carper follows:]

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

    In 2007, our Nation was part of a booming global economy 
and a healthy capital market.
    We were in a global fight for oil--competing with other 
nations to keep our economy and our automobiles moving.
    We were consuming 21 million barrels of oil per day and 
importing 60 percent from overseas. Our demand was 25 percent 
of the world's oil supply, but we only had 1.7 percent of the 
world's oil reserves.
    All signs pointed to an increase in U.S. oil demands--it 
was clear we needed to start changing our driving habits and 
move us quicker away from traditional oil.
    To address some of these concerns, we passed a bipartisan 
energy bill in 2007 that reduced our dependence on foreign oil 
and reduced harmful emissions into our air.
    In the bill, we amended the Clean Air Act to greatly 
enhance the Renewable Fuel Standard.
    We required 9 billion gallons of renewable fuels be blended 
into our gasoline starting in 2008.
    This mandate ramps up to 36 billion gallons by 2022.
    In the new Renewable Fuel Standard, we provide clear 
directions to the EPA to make sure environmental protections 
are included--such as reducing our carbon footprint and moving 
away from biofuel made from corn.
    We had hoped to slowly increase our levels of biofuels and 
increase our second generation of biofuels.
    In 2 short years, we face a very different world.
    We face trying economic times that are impacting our way of 
life--including our fuel consumption and our investments in 
advanced fuels.
    These economic challenges have created questions in the new 
Renewable Fuel Standard. Questions I hope we will start 
answering today.
    Gasoline consumption is down 2 million gallons per day.
    As consumption decreases--our biofuel standard increases. 
Are we moving too fast for our infrastructure and engines to 
handle the biofuels safely?
    The lack of capital has made it difficult to make the 
investments needed for a new second generation biofuel market. 
Will we be able to meet our advanced biofuel marks in a 
capital-starved world?
    And EPA still has not proposed a rule on how to move 
forward on the environmental protections we put in place in 
2007--how is that impacting the market?
    Hopefully, we can answer these questions and evaluate any 
unintended consequences of the renewable fuel provisions.
    But I believe biofuels done right, is a good thing. 
Biofuels gives an environmentally friendly option to move away 
from foreign fossil fuels.
    I also believe the Renewable Fuels Standard must be 
implemented in a manner that positively impacts the environment 
and economy.
    And I believe this subcommittee must work together to make 
sure this happens.

    Senator Carper. And now I would like to recognize Senator 
Vitter for any comments that he wishes to make. Go ahead, 
Senator Vitter.
    [Laughter.]
    Senator Carper. Senator Vitter wanted to wish all of you a 
happy April Fools' Day. And we are now going to adjourn the 
hearing. No, I am kidding. I love April Fools' Day. I don't 
know about the rest of you. I have already had a great time 
pulling people's legs and chains. And I would just remind us 
all it is about 10:10 in the morning, and April Fools' Day 
lasts for about almost another 14 hours. Make full use of it. 
Have a good time and just enjoy this day. That is what it is 
meant to be.
    And we always enjoy being with Senator Wyden, and I am 
pleased that he is here and has some interesting thoughts to 
share with us. He has interesting thoughts on a lot of issues, 
but certainly on this one.
    We welcome you today. You are welcome to proceed for a 
reasonable period of time. But if we get to lunch, we will 
break.
    [Laughter.]

             OPENING STATEMENT OF HON. RON WYDEN, 
             U.S. SENATOR FROM THE STATE OF OREGON

    Senator Wyden. Mr. Chairman, thank you very much, and as an 
alum of this Committee, I know the work you are doing is 
especially important.
    I also want to say I appreciate your graciousness in 
accommodating me. I know you have a terrific panel of 
witnesses, and I also appreciate the good work that you are 
doing because I know in this area, like health care and so many 
of the big issues, the enduring changes only come about by 
going at it in a bipartisan way. And that is what you have 
sought to do again and again and again. And that is why we so 
appreciate working with you. And I thank you for it.
    We also are very pleased that Jeff Merkley is now a member 
of this Committee. He has an outstanding record in terms of 
renewable fuels when he was Speaker of the House and will be a 
very effective advocate.
    And Senator Merkley and I both share a great interest in 
biomass as a source of renewable fuel because this is an 
opportunity to use wood waste as a source of clean energy. And 
what we have been up against, Mr. Chairman, and I am going to 
make this case very briefly, is that current law excludes the 
use of biomass from Federal lands for renewable fuel. And so 
what I have essentially done is change the definition of 
renewable biomass in order to meet this renewable fuel 
standard. In my view, it is especially important because 
without expanding the universe of available biofuels, my view 
is it is going to be pretty hard to meet the renewable fuel 
standard without again diverting more corn and feed grains and 
private forest land to feed the fuel market.
    This is also in addition to an energy matter, a very 
important issue as it relates to forest management because what 
we have seen is this huge buildup on the forest floor in our 
forests become fuel for catastrophic fires. So instead of being 
part of the path to energy independence, biomass on Federal 
lands now creates a problem for forest management and 
communities that border on the Federal forests. So when you 
come from a community, a State like Jeff Merkley and I do where 
the Federal Government owns much of the land, this is a very 
real and palpable problem.
    So because of these concerns, I introduced S. 536. It has 
been referred to this Committee and would allow this woody 
biomass on Federal lands to become part of the solution to 
America's energy problems. So it would give us a chance to use 
the biomass for fuel, help pay for programs to reduce dangerous 
levels of dead and dying trees that fuel the wildfires, and 
also let us thin out the unhealthy second growth forests.
    So specifically, what the legislation does is it would 
allow biomass from national forests and BLM forests to qualify 
as renewable biomass under the Federal renewable fuel standard. 
At the same time, we would exclude biomass from the parks and 
the wilderness and other environmentally protected areas.
    Second, the legislation requires the Federal land managers 
to ensure that the quantity of biomass harvested from these 
kinds of eligible lands are sustainable. Biomass holds a lot of 
potential as a clean source of energy, but we want to make sure 
that it is harvested in a sustainable way.
    And finally, we do restrict the kind of biomass to be 
harvested so that old growth trees will continue to be 
protected. I think it has been the general feeling of folks in 
our part of the Country where we have the Federal Government 
own so much of the land, that there are literally millions and 
millions of acres of second growth, and that is where you can 
particularly go for the opportunity to look to biomass, while 
at the same time protecting old growth.
    At the end of the day, this kind of excess biomass, the 
small diameter trees, the limbs, the debris, this is an 
opportunity to really generate the kind of green energy that we 
in Congress, that the President has talked about in terms of 
creating green jobs, and at the same time put us in a better 
position to meet the requirements of the renewable fuels 
standard.
    So I hope that we can work together on this. My sense is 
that there is a lot of bipartisan support for a biomass 
definition along the lines this legislation calls for because 
it gives us a chance to balance sound energy policy with sound 
environmental policy, while creating jobs in the woods and 
practical and sustainable use of our forests.
    Mr. Chairman, thank you. It is April Fools' Day, and I will 
not try to trick you with a secret kind of filibuster, but will 
break my speechifying off today.
    I also want to extend my thanks to Senator Vitter for the 
chance to come. Louisiana, like Oregon, has a lot of forestry 
and I have often worked with Senator Landrieu on forestry 
issues, so this will be another opportunity to team up and work 
with both of you in a bipartisan way.
    Senator Carper. Thank you.
    Before you head out, Senator Vitter, Senator Wyden has just 
outlined a proposal to be able to use wood waste to be able to 
completely eliminate our dependence on oil and natural gas from 
the Gulf of Mexico and other places, and I didn't know if you 
had any question of him.
    Senator Wyden. April Fools' Day, April Fool.
    [Laughter.]
    Senator Carper. Just one question, and what I think I would 
like to do is maybe ask a quick question of Senator Wyden. And 
if you want to ask any questions or have any comments, that 
would be great. And then I will recognize you for your opening 
statement.
    A question, you make the case in favor of using this 
resource in a positive way. I am sure there are folks who have 
some reservations about doing this. Could you just sort of 
outline the reservations, those reservations that have been 
addressed about this proposal? And just tell us how those 
reservations or concerns can be addressed?
    Senator Wyden. Senator Craig and I tried to work this out 
in the last Congress. The concern I think first and foremost 
has come from the environmental community that has been 
concerned about the prospect of an approach involving greater 
use of biomass somehow leading to additional cutting of old 
growth forest. And so that is why we have specifically 
segregated out that kind of approach. That is why I mentioned 
we leave alone the parks and the wilderness areas.
    I expect to be introducing separate legislation before long 
to promote thinning in the second growth area. But essentially 
after Senator Craig and I began to make progress in the Energy 
and Natural Resources Committee on which I serve, that became 
arguably the only question that became part of sort of vigorous 
debate, and I think we have addressed that.
    We have worked closely with environmental groups that I 
know want to do the right thing, and I think we have addressed 
it in this legislation.
    Senator Carper. Thanks very much.
    Senator Vitter, any comments or questions with Senator 
Wyden?

            OPENING STATEMENT OF HON. DAVID VITTER, 
            U.S. SENATOR FROM THE STATE OF LOUISIANA

    Senator Vitter. No. I would submit my opening statement for 
the record. I really don't want to take up the time of everyone 
here with it, but I will submit it for the record.
    [The prepared statement of Senator Vitter follows:]

             Statement of Hon. David Vitter, U.S. Senator 
                      from the State of Louisiana

    I'd first like to thank the Chairman, Senator Carper, for 
holding this hearing as an opportunity discuss the latest 
issues facing the Renewable Fuels Industry. Second, I'd like to 
thank all the witnesses here today to discuss everything we are 
learning about the future of renewable fuels.
    There are many opportunities for advanced biofuels in 
Louisiana, including ideas such as cellulosic ethanol from 
biomass, jet fuel from chicken fat, and biodiesel from 
switchgrass.
    The new Renewable Fuel Standard increases the volume of 
renewable fuel required to be blended into gasoline from 9 
billion gallons in 2008 to 36 billion gallons by 2022. 
Beginning in 2015, only 15 billion gallons of corn ethanol may 
be produced to meet the mandate, while the remainder must come 
from advanced biofuels, such as cellulosic ethanol. By 2022, 21 
billion gallons must come from advanced biofuels--and 16 
billion gallons of these advanced biofuels must come from 
cellulosic biofuels.
    At the time Congress established the new RFS mandates, 
there was little reason to expect that gasoline consumption 
would not continue to rise. However, gasoline consumption has 
declined--the Energy Information Administration reports that 
U.S. consumption fell nearly 7 percent in 2008 and expects 
another 2.2 percent decline in 2009. In addition, expansion of 
E85 infrastructure has not occurred over the past few years, 
leaving the E85 market lagging 2007 projections. With a 
reduction in fuel demand, a lagging E85 market, and the RFS 
mandate specified in gallons--producers are concerned that the 
market for ethanol will soon be saturated at the 10 percent 
blending limit (the E10 ``blend wall''), even though the 
Federal RFS mandates steadily rising ethanol production.
    One of the problems with the current mandate of increasing 
biofuels into our energy portfolio is the lack of testing on 
small engines. For example, there are currently 18 million 
recreational boats and marine engines currently in operation in 
the United States, all currently designed, calibrated, and EPA-
certified to run on not more than E10. What safety concerns may 
arise if these engines fail on open waters miles from the 
shore?
    To date, there have been no Environmental Protection Agency 
or Department of Energy studies or testing on the impact of 
mid-level ethanol blends (E12, E15, E20, etc.) on marine 
engines, fuel systems or components. There are a handful of 
private studies, including the Australian Orbital Study, on 
marine engines which indicate that mid-level ethanol blends 
pose serious problems for marine engines and equipment.
    I also understand that one of the potential impacts of 
increasing the ethanol blend allowance is an increase in 
nitrous oxide, or NOx, emissions, a smog-forming 
pollutant and a danger to public health.
    Meeting air quality standards in the State of Louisiana is 
a major issue and it is imperative that we know what the impact 
of increased biofuels, of any make-up, will have on air quality 
and EPA attainment requirements.
    Beyond air quality, what is the impact of mid-level ethanol 
blends on non-road engines and equipment, including the 18 
million pieces of marine product currently on the market that 
are designed to run on not more than E10? My understanding from 
reviewing DOE and EPA information is that there have been no 
studies at all on mid-level ethanol's impact on marine engines, 
for example, by either DOE or EPA. On other small engines, only 
a DOE ``screening study'' has been performed, which revealed 
significant engine failures and performance problems for a 
group of non-road handheld power equipment. What can we expect 
in terms of safety from chainsaws, snow blowers, off-road 
vehicles and other legacy products if the blend rate were to be 
increased?
    Given that there are known problems associated with 
increasing the concentration of ethanol in gasoline for marine 
and other non-road engines and equipment, including 
performance, safety, and air emissions problems, we must 
require a robust analysis of new technologies and biofuels 
before they enter the market.
    Biofuels will likely provide one of the greatest tools for 
segueing into our energy future and to achieve energy 
independence. It is important that we know what options are 
available, what their impact may be on the economy and 
environment, that we ensure competitive markets and that 
support those options that are the most viable with the least 
amount of government intervention.

    Senator Vitter. I appreciate the Senator's leadership and I 
certainly look forward to our other witnesses as well.
    Senator Carper. Does that mean we have to wait until the 
printing of the record to know what is on your mind here or 
not? Is that it?
    [Laughter.]
    Senator Carper. All right. We will wait.
    Senator Wyden, thanks so much. We will look forward to 
voting with you early and often today and tomorrow and tomorrow 
night. Maybe Friday as well.
    Senator Wyden. I can tell this is going to be a rollicking 
April Fools' Day hearing.
    [Laughter.]
    Senator Wyden. Mr. Chairman, thank you very much for your 
courtesy, and look forward to working with you.
    Senator Carper. Thanks for getting us off on the right 
foot.
    All right, let me invite our next panel of witnesses to 
join us at the table. I will take just a moment to introduce 
them, then we will welcome their testimony.
    While our witnesses are coming, I will just ask unanimous 
consent. We have no witness today from EPA, but we do have 
submitted to our Subcommittee a statement for the record, and I 
would ask at this time unanimous consent that that statement be 
made part of the record.
    Without objection, so ordered.
    [The referenced document follows:]
    
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    
    Senator Carper. Welcome, everybody. I will just provide a 
very brief introduction to each of you today.
    First of all, Charles T. Drevna is the President of the 
National Petrochemical and Refiners Association. He has been 
with the Association for 6 years and served as President for 
the past 2 years. President Drevna, welcome. We are glad that 
you are here.
    Joining the President today is Dr. Kelly Tiller, Director 
of the External Operations for the University of Tennessee's 
Office of Bioenergy Programs where she manages a $70 million 
State and university commitment to develop a cellulosic 
biofuels industry in Tennessee.
    We are also joined here by a member of my staff. You have 
probably met Laura Haynes who spent a lot of her life in 
Tennessee, too, and helped us prepare for this hearing.
    Dr. Tiller also serves as President and CEO of Genera 
Energy which has pioneered with DuPont, my constituent, to 
construct and operate a pilot scale cellulosic ethanol 
biorefinery in Tennessee. I might add that I think really the 
model, the operating model for the plant that you all are 
building literally had its roots in the experimental station in 
Wilmington, Delaware, the experimental station of the DuPont 
Company, a project that our congressional delegation gained 
money from the Department of Energy to help fund, and we are 
pleased to see that it is moving forward.
    Next, our third president--I think you have to be president 
to be able to be on this panel--but our third president is 
Michael McAdams, President of the Advanced Biofuels 
Association. Good to see you. Thanks so much for coming today. 
Formerly, he worked for BP. Is that Beyond Petroleum?
    Mr. McAdams. [Remarks off microphone.]
    Senator Carper. Thank you. And was involved with the design 
and implementation of BP's climate program as well as their 
efforts in clean fuels. And BP has been doing good work with 
DuPont with respect to biobutanol, and maybe we will hear 
something about that today.
    Mr. Nathanael Greene, nice to see you, from the Natural 
Resources Defense Council, and is the Director of Renewable 
Energy Policy there. He is responsible for coordinating NRDC's 
work on renewable fuels and power.
    And finally, Mr. Blake Early from the American Lung 
Association. Mr. Early, good to see you. Over the past several 
years, he has testified a number of times before the full EPW 
Committee and before this Subcommittee. He is no stranger and 
we are delighted to welcome him back.
    Each of you will have 5 minutes to provide us with your 
opening statement. The full contents of your written statement 
will be included in the record.
    Before we begin, as I said earlier, I want to submit for 
the record EPA's comments and thoughts and we have done that. 
And my hope is, while EPA could not be here today, we expect 
EPA to be before us after they have published a proposed rule 
on the implementation of the new renewable fuel standard. 
Currently, the proposed rule is before the Office of Management 
and Budget, and hopefully we will see a rule soon, and begin a 
healthy comment period on these tough issues.
    We have been joined by the Chair of the full Committee, and 
just before that, Senator Merkley.
    Senator Boxer, do you want to settle in? Or could I call on 
you for a statement at this time?

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

    Senator Boxer. I would say that I don't have an opening 
statement. I am here to thank you so much for calling this 
hearing, and I am really here to learn and listen.
    Senator Carper. OK, good. You all are welcome.
    Senator Merkley, how are you doing on April Fools'?
    Senator Merkley. I am doing very well, Mr. Chair. It is a 
pleasure to be here.
    Senator Carper. All right. Would you care to make any 
opening statement?

            OPENING STATEMENT OF HON. JEFF MERKLEY, 
             U.S. SENATOR FROM THE STATE OF OREGON

    Senator Merkley. Only to say that I echo everything that 
Senator Wyden said about the importance of taking advantage of 
biofuels in our overgrown second growth forests, and I applaud 
his efforts in that field.
    Senator Carper. Good. Thanks so much.
    All right. President Drevna, you are our leader. Why don't 
you go ahead and tell us what you would like to say. Thanks for 
coming.

      STATEMENT OF CHARLES T. DREVNA, PRESIDENT, NATIONAL 
             PETROCHEMICAL AND REFINERS ASSOCIATION

    Mr. Drevna. Thank you and good morning, Chairman Carper, 
Ranking Member Vitter, and Madam Chair and Senator Merkley.
    I am pleased and privileged to have the opportunity to 
testify this morning not just on behalf of NPRA, but also on 
behalf of the National Marine Manufacturers Association and the 
Outdoor Power Equipment Institute.
    NPRA is a national trade association with more than 450 
members including those who own or operate virtually all U.S. 
refining capacity, as well as most of the Nation's 
petrochemical manufacturers. NMMA is a leading national 
recreational marine trade association with nearly 1,700 members 
involved in every aspect of the boating industry. And OPEI is 
the major international trade association representing the $15 
billion forestry, utility, landscape, lawn and garden equipment 
manufacturing industry.
    Collectively, our associations have just one fundamental 
message for the Subcommittee today. Ethanol should not be 
blended into gasoline at levels higher than 10 percent for use 
in nonflexible fuel motor vehicles and non-road gasoline-
powered engines until comprehensive independent testing 
demonstrates that these so-called mid-level ethanol blends are 
safe for consumers and do not harm the environment or public 
health.
    Our joint message is certainly not intended to be, nor 
should it be categorized, as anti-ethanol. Our organizations 
recognize the importance of biofuels, including ethanol, in 
diversifying our Nation's fuels portfolio.
    However, before the use of mid-ethanol blends is permitted, 
we must ensure that these blends are safe for consumers, do not 
harm gasoline-powered engines, and do not lead to increases in 
emissions that will harm the environment.
    We are collectively opposed to any legislative or 
regulatory action to approve the introduction of mid-level 
ethanol blends until thorough unbiased testing of the safety, 
operational and environmental effects of those fuels has been 
completed.
    Currently, the maximum level of ethanol that may be blended 
into gasoline for conventional gasoline-powered engines is 10 
percent by volume or otherwise known as E-10. Some advocate 
breaching the blendwall, as the E-10 cap is categorized, 
through an administrative action by the Environmental 
Protection Agency or through legislative fiat.
    We urge this Committee, this Congress and the Obama 
administration to heed President Obama's words when he stated 
that science, not politics, would guide his Administration's 
approach to difficult public policy issues we face today.
    To quote from President Obama's March 9, 2009 memorandum on 
scientific integrity, ``Science and the scientific process must 
inform and guide decisions of my Administration on a wide range 
of issues, including improvement of public health, protection 
of the environment, increased efficiency in the use of energy 
and other resources, mitigation of the threat of climate 
change, and protection of national security.''
    We are certainly not alone in our desire that science be 
placed above politics in this debate. Attached to my written 
testimony is a letter sent recently to senior officials in the 
Obama administration and signed by more than 50 national, 
State, local, business, environmental, public health and 
agriculture groups that echo the same sentiment. Comprehensive, 
independent testing of mid-level ethanol blends must be 
completed before these fuels are allowed into commerce.
    Until this has been done and it has been demonstrated that 
these blends do not pose risks to the public health, the 
environment or consumers, we urge you in joining us in opposing 
the premature introduction of mid-level ethanol blends into the 
marketplace.
    In addition, I have a copy of a recent letter from the 
Alliance for Automobile Manufacturers on mid-level ethanol 
blends that lends support to our associations' science-first 
message. With your permission, Mr. Chairman, I would like to 
submit this letter for the hearing record.
    Senator Carper. Without objection.
    [The referenced material was not received at time of 
print.]
    Mr. Drevna. Despite what some may say to date, there simply 
has not been sufficient testing of motor vehicle and non-road 
equipment engines to justify a determination that any mid-level 
ethanol blend would meet current Federal air quality protection 
requirements or be safe for consumers to use.
    In fact, existing test results suggest that mid-level 
blends may not only be incompatible with most of today's 
vehicle and non-road equipment engines, but may actually lead 
to increases in emissions from those engines over their 
lifetimes. These test results also raise significant consumer 
safety concerns as mid-level ethanol blends may defeat engine 
safety features and may contribute to engine unreliability and 
malfunction.
    Consumer safety, public health and environmental protection 
must be ensured through robust and thorough testing before EPA 
allows these blends for general sale in gasoline-powered 
engines, whether on-road or non-road.
    Any decision to allow the use of mid-ethanol blends must be 
guided solely by unbiased science and must be undertaken 
through an open, public and transparent process that takes into 
account both the increased air pollution that will result from 
these higher blends and the potential risk to consumers driving 
vehicles or handling engines fueled with those blends.
    Mr. Chairman, our associations stand ready to work with 
Congress, the Administration and other stakeholders to assure 
an effective, realistic, stable policy that will assist 
consumers and protect the environment.
    This concludes my statement. Thank you again for this 
opportunity to testify this morning, and I will be happy to 
answer any questions that you may have.
    [The prepared statement of Mr. Drevna follows:]
    
    
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    Senator Carper. Great. Mr. Drevna thank you so much.
    Dr. Tiller, you are now recognized. Welcome.

  STATEMENT OF KELLY TILLER, DIRECTOR OF EXTERNAL OPERATIONS, 
      UNIVERSITY OF TENNESSEE OFFICE OF BIOENERGY PROGRAMS

    Ms. Tiller. Thank you, Senator Carper and Members of the 
Committee. I am Kelly Tiller and I am here representing today 
the University of Tennessee and Genera Energy, and our efforts 
to develop a biomass-based energy industry in the State of 
Tennessee.
    The expanded renewable fuels standard established in 2007 
provides a market-based program supporting and accelerating the 
commercialization of second generation cellulosic and other 
advanced biofuels. Meeting the RFS will require aggressive 
build-out and expansion of cellulosic biofuels.
    For several years, we have been on the verge of technical 
and commercial feasibility for cellulosic ethanol. We are no 
longer on the verge. Technology breakthroughs and technical 
milestones are occurring very rapidly. Cellulosic biofuels are 
being produced today in several pilot and pre-commercial 
demonstration facilities around the Country with more than two 
dozen new projects in development and in construction phases.
    We still need intense focus on the basic science like that 
coordinated at DOE's three bioenergy science research centers 
and at many of our Nation's academic institutions. It will take 
years to fully optimize conversion processes and technology, 
but basic technology is no longer a barrier to startup 
cellulosic ethanol facilities.
    Perhaps the most significant remaining challenge to 
commercial success of advanced biofuels is the availability of 
large quantities of sustainably produced biomass feedstocks at 
prices that are attractive to both farmers and biorefineries. 
This requires much more than simply picking regionally 
appropriate and sustainable feedstocks as the production of 
biomass is only one piece of the entire biomass feedstock 
supply chain.
    In Tennessee, we have learned much about a fully integrated 
biomass supply chain by using switchgrass as a dedicated energy 
crop to supply a cellulosic ethanol biorefinery. Through 
Tennessee's biofuels initiative, we have partnered with DuPont 
Danisco Cellulosic Ethanol and jointly invested in a 
demonstration scale cellulosic ethanol biorefinery in 
Tennessee. The biorefinery is under construction and will begin 
production of cellulosic ethanol by the end of this year.
    To supply the pilot biorefinery, conduct large scale 
cellulosic ethanol feedstock research and development, and 
develop a portfolio of uses for switchgrasses, we are 
contracting with farmers within a 50-mile radius of the 
biorefinery to grow 6,000 acres of switchgrass. Nearly 3,000 
acres are already in production on 41 local farms.
    Switchgrass has proven to be an ideal platform for our work 
to develop an integrated biomass supply solution. Switchgrass 
in Tennessee has yielded between 6 and 12 tons of carbon-
sequestering biomass per acre. It is being grown on marginal 
land not well suited for food or feed crops, requiring only 
minimal fertilizer and other chemicals, using existing farm 
equipment without irrigation.
    Research is underway to increase production yields of 
energy crops through several routes. Additionally, ongoing work 
seeks to reduce the relatively high cost of harvesting, 
handling, densification, storage and transportation. Both 
target areas offer significant opportunities for near-term 
gains in feedstock efficiency and cost reductions.
    Without a doubt, commercial success of advanced biofuels 
will require development of sustainable integrated biomass 
feedstock systems that are largely nonexistent today. To 
provide the millions of tons of biomass feedstocks required to 
meet the RFS, we need more focused efforts and support for 
biomass feedstock production, supply chains and logistics.
    Substantial investment and participation of the private 
sector are also clearly required to meet the expanded RFS. A 
predictable investment climate is essential to enabling the 
commitment of the private sector and achieving RFS goals.
    Stable policies and market-based supports for the biofuels 
industry are absolutely critical.
    Thank you again for this opportunity to appear before you 
today. We are well on the path to build a large scale 
commercial cellulosic biofuels industry. Now, we must ensure 
that we achieve the profound positive impacts that cellulosic 
biofuels can deliver. We must continue and expand focused 
efforts to develop biomass feedstock systems, not just crops, 
but integrated systems. We need policies that promote long-term 
stability and a market that is attractive for investment.
    Support of achievable market-based underpinnings like the 
RFS are setting the stage for success.
    Thank you for everything this Committee and the Senate is 
doing to support this important energy alternative.
    [The prepared statement of Ms. Tiller follows:]
    
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    Senator Carper. Thanks so much.
    We have been joined by Senator Voinovich. Senator Voinovich 
introduced me to the concept of roundtables a couple of years 
ago, as opposed to a more formal hearing setting, and I have 
found them to be of great virtue. I think it was at one of 
those roundtables that George and I convened where I first 
heard of the virtues of switchgrass. I was pretty impressed at 
the end of the hearing. I described switchgrass as the grass 
that saved the world, or maybe will save the world. I don't 
know that that is, that may be a bit of an overstatement, but I 
am encouraged by what you have had to say here today. We look 
forward to discussing it and other aspects of your testimony.
    Mr. McAdams, we are happy you are here. Please proceed.

  STATEMENT OF MICHAEL McADAMS, PRESIDENT, ADVANCED BIOFUELS 
                          ASSOCIATION

    Mr. McAdams. Thank you, Mr. Chairman, Madam Chairman, 
Members of the Committee.
    I am delighted to be here this morning with you on behalf 
of the Advanced Biofuels Association. The Association, newly 
formed, represents 16 second generation biofuels companies, 
three of which are in California, that hold the promise to 
deliver significant scalable volumes of high performance, 
environmentally advantageous fuels.
    In my remarks, I will focus on four points: not all fuels 
are created equal; not all advanced technologies are 
cellulosic; not all advanced fuels are ethanol; and this 
Country needs a transition that balances feedstocks over time.
    Our Association strongly urges the Congress to continue to 
support a technology neutral approach and not advantage one 
type of fuel or technology over another.
    Let me turn to my first point. I have attached several 
slides to my presentation. The first slide is a depiction of 
the current RFS. As you can see, there are four distinct 
categories of fuels mandated under the law. If you do the 
simple math, you will see that the current law allows 4 billion 
gallons of advanced biofuels other than biomass-based diesel 
and cellulosic fuels. The law was drafted to specifically 
designate Brazilian ethanol with its significant greenhouse gas 
reductions as an advanced biofuels so as not to take gallons 
away from first generation ethanol.
    The second and third slides represent two advanced biofuel 
technologies of different types of fuels other than ethanol. As 
you can see from the charts, these fuels have dramatically 
different volatility ranges. The volatility of a particular 
fuel is significant for two important reasons. First, it 
affects the components a refinery must remove from its base 
blendfuel, currently called RBOB, which then impacts the fuel's 
cost to consumers now and in the future.
    Second, the higher volatility parameter, the greater the 
potential for a particular renewable fuel to negatively impact 
environmental performance and backslide under the Clean Air Act 
on ground level ozone. As we move forward, advanced biofuels 
other than ethanol can address these concerns. Not only are 
they on the short developmental timeframe, they can also be 
made in existing ethanol plants.
    In sum, all fuels are not created equal and the types and 
amounts of particular fuels that may move forward could have a 
dramatic impact on our ability to maintain attainment in a 
number of areas across America.
    Second, there are significant advanced biofuels 
technologies that are not cellulosic. In the attached packet, I 
have included a slide on types of renewable diesel. As you can 
see, there are a variety of different technologies, a number of 
different technologies which can make diesel utilizing a 
diverse range of feedstocks and literally produce a hydrocarbon 
molecule which is totally fungible as if it came out of a 
barrel of oil.
    For most of these technologies, the renewable diesel will 
meet the existing standard specification for all diesel fuels.
    We applaud the Congress for the manner in which it 
constructed the biomass-based diesel provision contained in 
EISA 2007 because it is both technology and feedstock-neutral, 
allowing second generation renewable diesel fuels an 
opportunity to contribute over time in the market.
    To illustrate the third and fourth points of this 
testimony, many second generation companies, including a 
majority of the Association members, will make a molecule which 
is not ethanol, but a hydrocarbon or an ester. These processed 
technologies are being demonstrated on existing commercial 
feedstocks from around the world, currently other than 
cellulosic material.
    Let me state for the record, we are extremely optimistic 
and supportive of the cellulosic technologies and support their 
development. For many of these cellulosic companies, their 
mission is to turn cellulosic biomass into a sugar feedstock. 
Should the cellulosic industry be able to convert these large 
volumes of material into commercially competitive sugar-based 
feedstocks, many of the Association members would welcome the 
opportunity to combine their respective technologies and 
produce advanced fuels.
    Until such time as the cellulosic companies are able to 
provide commercially competitive feedstocks, we urge all 
policymakers to allow the continued development of various 
advanced technologies from today's affordable and available 
feedstocks. Given the current economic realities and the credit 
market, it is crucial for these companies to have the 
flexibility in terms of their ability to utilize these 
feedstocks and bid on the solicitations in the Department of 
Energy research and development programs, the Recovery Act, and 
other programs in the Federal Government.
    Last, I personally had the opportunity to work with the 
Office of Mobile Sources on a variety of issues, from the Clean 
Air Act to the low sulfur diesel rule. This is one of the most 
dedicated and talented groups of people we have in our 
government. They understand these issues and they have a long 
track record of delivering tough, but fair solutions to the 
challenge of fuels, engines and air quality.
    Clearly, there will be much debate in the upcoming 
rulemaking. The current proposed life cycle and indirect land 
use provisions, as well as how to construct an appropriate 
methodology to reward more energy-dense and environmentally 
friendly fuels. But it is now time to get on with the work and 
we would urge the Administration to get this rule out for an 
open comment period and allow the market to respond.
    The disagreements should be aired in public where science, 
not politics, drives the process.
    Thank you for the opportunity to be here.
    [The prepared statement of Mr. McAdams follows:]
    
    
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    Senator Carper. Mr. McAdams, thank you. Thanks for that 
testimony and for your good work.
    Nathanael Greene, welcome. Please proceed.

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

    Mr. Greene. Thank you, Senator, and thank you for this 
opportunity to share some of my views on the opportunities and 
challenges in implementing the renewable fuel standard.
    My name is Nathanael Greene, and I am a Senior Policy 
Analyst with the Natural Resources Defense Council and our 
Director of Renewable Energy Policy.
    I think this hearing is incredibly timely. While on the 
face of it, it may seem like not a lot has happened since you 
held a similar hearing a year ago, actually the renewable fuels 
standard is at a critical junction right now. EPA has drafted a 
rule to implement the renewable fuel standard as amended under 
EISA 2007, but the Administration has yet to put this rule out 
for public comment.
    Some in Congress are pressing the agency to strip out key 
provisions before there is even a public debate around EPA's 
proposals. Others are trying to remove the law's critical 
safeguards before they even go into effect.
    Biofuels are probably the most complicated possible 
solution to global warming. A few numbers help to illustrate 
the opportunity and challenges they pose. As you no doubt know, 
transportation makes up about 30 percent of our global warming 
pollution here in the United States, and light duty vehicle 
emissions make up about 60 percent of that 30 percent, so 20 
percent of the total.
    So if, for example, we zeroed out all of the emissions from 
the rest of the economy and all of the emissions from the light 
duty vehicle fleet, say through electrification, we would 
achieve a 90 percent reduction in our overall greenhouse gas 
emissions.
    So can we achieve an 80 percent goal by 2050 without 
biofuels? Technically, yes. In reality, it would be extremely 
difficult. On the other hand, it is extremely easy for biofuels 
to be produced in a way that actually results in more global 
warming pollution than gasoline and diesel.
    For example, if using an acre's worth of corn to make 
ethanol leads to just one-tenth of an acre of rainforest 
clearing, then all of the greenhouse gas pollution benefits 
from gasoline for the first 30 years of production are wiped 
out.
    And while there is much debate about the land use change 
issue, I have found it helpful to keep asking myself whether it 
is possible for us to add new demand for corn and soy and wood 
or any other crop and for there somehow to result in less 
demand for land. I believe the answer is no. New demand for 
biomass from the land leads to new demand for land, simple 
supply and demand.
    We can debate the greenhouse gas emissions from bringing 
new land into production and whether that is small or large, 
but it must be greater than zero.
    So I would urge you to tell EPA to move ahead with a public 
comment period for its proposed rule and keep the emissions 
from land use change in its proposal. I would also urge you to 
protect the renewable biomass sourcing safeguards in the law 
and in the proposed rule. These are not guidelines on how to 
harvest biomass sustainably. They are merely protections 
against the most destructive sources of biomass. Senator Thune 
has a proposal that would essentially remove all of these 
safeguards, and I urge you to oppose that.
    With regard to Senator Wyden's proposal that the Senator 
talked about earlier, let me just say I certainly applaud 
Senator Wyden's interest in environmental sustainability and 
protections for biomass sourcing. His amendment deserves 
careful study. NRDC's forestry staff are committed to working 
with Senator Wyden and all the other Members of Congress to 
ensure that all biomass legislation meets our shared goals.
    Senator Carper, in your opening statement you asked if we 
are moving too fast with the renewable fuel standard. I think 
with regards to the blendwall, it is quite possible that we 
are. Fortunately, you have some of the leading experts on this 
issue, including my friend Blake here who will tell you more 
about that, so I will defer to him on that specific issue.
    On the broader question of advanced biofuels and whether or 
not they will be ready, there has often been the joke that 
cellulosic biofuels are about 5 years out, and they will always 
be 5 years out. I think now finally we can say that they are 
actually 3 years out, and hopefully we won't have to wait 3 
years to say that again.
    But I don't think the technical and economic and public 
support challenges facing advanced biofuels can be overstated. 
To address those, I would like to make a modest proposal. We 
really need advanced biofuels to work from a global warming 
perspective. But if we are lucky, this year we will produce 
about 1 million gallons of advanced biofuels from all the pilot 
projects and demonstration projects out there. And that is if 
all those projects fund flat out, which is not how they are 
designed to run.
    The real challenge is not getting to 16 billion gallons or 
22 billion gallons for advanced biofuels. It is the 
thousandfold scale-up from 1 million gallons to a billion 
gallons that needs to happen in the next 5 years. I believe 
that we need to implement a billion gallon challenge. If we do 
this right, we cannot only launch a commercial scale advanced 
biofuels industry, but also reestablish a broad consensus on 
how to do biofuels right.
    I think we can do this by fully funding a range of existing 
programs and getting the agencies responsible for them to work 
in a coordinated way so that we have a cohesive package of 
support from field to fuel. But with significant support must 
come significant environmental responsibility. We need to make 
this billion gallons a billion gallons of the best. And this, I 
believe, is the basis for a new consensus around biofuels.
    Finally, we need to stop spending our tax dollars on mature 
technologies and technologies that cause more harm than good. 
This means reforming policies like our biofuels tax credits so 
that they pay for performance.
    Thank you for this opportunity.
    [The prepared statement of Mr. Greene follows:]
    
    
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    Senator Carper. Thank you, Mr. Greene.
    Blake Early. Mr. Early, please proceed.

 STATEMENT OF BLAKE EARLY, ENVIRONMENTAL CONSULTANT, AMERICAN 
                        LUNG ASSOCIATION

    Mr. Early. Good morning, Chairman Carper. Good morning, 
Chairman Boxer and Members of the Committee. I am happy to be 
here on behalf of the American Lung Association once again to 
talk about the renewable fuel standard.
    My testimony will address the use of mid-level ethanol to 
meet RFS goals. The American Lung Association sees serious 
limitations in recent studies looking at the impact of the use 
of mid-level ethanol vehicles and non-road engines in use 
today, and most critically on the levels of ozone precursors 
emitted by those vehicles.
    We urge that the U.S. EPA take no action to authorize the 
use of these blends until the impact of these fuels can be 
fully reviewed in independent peer-reviewed studies. We also 
oppose legislation that would require mid-level ethanol use.
    The ethanol industry has shifted focus away from E-85. When 
EISA 2007 was being deliberated and adopted, there was broad 
consensus that E-85 was the best way to use ethanol because 
FFVs must certify to the same emissions standards as gasoline. 
It is lower in evaporative emissions than gasoline, and from a 
volume perspective, every gallon of E-85 consumers eight times 
more ethanol than E-10. E-10 would be used while E-85 
distribution ramped up, or EPA approved other ethanol blends.
    Today, it has become clear that the ethanol industry's 
strategy for selling ethanol has changed. Their energy and 
their emphasis appears to have shifted to promoting mid-level 
volumes of E-12 or higher as the main means of selling ethanol. 
While the ethanol has not abandoned E-85, most of the money and 
public discussion appears to be invested in obtaining approval 
now, just 15 months after passage of EISA, for the use of E-12, 
13, 15, or 20.
    Unfortunately, this shift in strategy also involve using 
mid-level ethanol in many millions of vehicles and other 
engines that were not designed or certified on mid-level 
ethanol.
    My main message today is that we need to look before we 
leap to mid-level ethanol. We must better understand the effect 
these blends may have on emissions, on the durability of 
emissions control systems, and especially on the catalysts 
themselves and on other engines that use gasoline.
    As we move forward to adopt strategies to reduce our 
dependence on foreign oil, promote clean energy and bolster the 
farm economy, we must make smart choices that also reduce air 
pollution. Smart choices are made more urgent by the most 
recent and disturbing new research showing that ozone pollution 
can kill. Let me repeat: ozone kills.
    Significant scientific evidence shows that high ozone days 
increase the risk of dying early, and a new study just out this 
past month found that breathing moderate levels of ozone day in 
and day out, year after year, can increase the risk of dying 
from respiratory causes. That troubling new evidence 
underscores the need for us to clean up ozone pollution now.
    Evidence on mid-level ethanol is severely limited. Only one 
scientifically based study has been done on tailpipe emissions 
from today's cars operating on E-15 or E-20, and no testing has 
been done on E-12 or E-13. The only well-conducted peer-
reviewed study of emissions has recently been completed by the 
Department of Energy, and that study raises a number of 
troubling questions.
    DOE applies a statistical measure that ignored as 
insignificant findings that 9 out of 16 vehicles using E-20 had 
an increase in NOx emissions; six vehicles had 
increases when using E-15. The Department of Energy conducted 
no testing on catalyst durability and there has been no testing 
in the U.S. of the impact of ethanol on vehicle engines and 
emission systems over their useful life.
    The DOE study found seven of 13 vehicles experienced 
significant catalyst temperature increases. According to DOE, 
116 million vehicles are registered across the U.S. that are 
pre-tier II model vehicles, which may be vulnerable to high 
temperatures in wide open throttle mode. The only study, an 
Australian study using E-20, two out of five vehicles exhibited 
catalyst temperature increases and damage to the catalyst, 
which caused increases of 200 percent in hydrocarbon emissions 
and 500 percent increase in NOx emissions in one 
vehicle.
    While very limited, this study demonstrates engine and 
catalyst durability could be a problem. We need to make 
decisions about additional ethanol use with full understanding 
of the impacts on our health and on our vehicles and engines. 
Too much is at stake.
    Clearly, the path forward is to do the needed testing and 
see under what circumstances and how more ethanol could be used 
in our gasoline. Based on the current information, E-85 is the 
safest path forward if we are to use ethanol in our national 
fleet.
    Thank you very much, Mr. Chairman.
    [The prepared statement of Mr. Early follows:]
    
    
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     Senator Carper. Mr. Early, thank you very much.
    Senator Vitter needs to be on his way to another engagement 
here in a few minutes, so I am going to ask him just to go 
first.
    Senator Vitter. Thank you very much, Mr. Chairman.
    And first, I would just like consent to submit the 
following letters into the record as testimony from the 
National Marine Manufacturers, the Alliance of Automobile 
Manufacturers, the National Alliance of Forest Owners, and the 
American Petroleum Institute.
    Senator Carper. I object.
    OK, it's April Fools' Day. I don't object.
    [Laughter.]
    [The referenced materials were not received at time of 
print.]
    Senator Vitter. Thank you, Mr. Chairman.
    Since it is clearly a leading issue, let me just ask the 
whole panel, does anyone on the panel think we know enough to 
move forward now with mid-level ethanol blends?
    Mr. Drevna. Senator Vitter, no, not until we do the 
appropriate science and testing to verify that statement.
    Mr. McAdams. My members would make a fuel that would not 
need a mid-level blend requirement.
    Senator Vitter. Does anyone think we can move forward now? 
I mean, is it a consensus to say we need to know more about its 
impacts before we move forward with it?
    Mr. Early. That's the consensus I give, Senator.
    Senator Vitter. Yes. For the record, let me just 
articulate, since the stenographer cannot take down either nods 
or blank stares, that that seems to be a consensus of the 
witnesses.
    Mr. Drevna, what exactly do you think we need to focus 
continuing studies on?
    Mr. Drevna. Well, Senator, there are a number of things. As 
I mentioned in the testimony and as also my friend, Mr. Early, 
has suggested that we have--there are a number of unknowns out 
there. The engines of today, whether they are in what we call 
the legacy fleet, and which will continue to be the legacy 
fleet as cars are being manufactured for the next few years, 
and the off road and power equipment and marine equipment--
those have only been designed for E-10. We know what we don't 
know.
    And so the couple of things that we have to do is verify, 
and if it works, great. But if it doesn't, we have to know that 
before we add this to the fuel system.
    Senator, I think the other thing we need to do, as Ms. 
Tiller mentioned, and we wholeheartedly agree that ISO '07 says 
we are going to be bringing on advanced biofuels, including 
cellulosic. And it is coming and it will come. We are very 
confident that it will come.
    Unfortunately for my industry, and again I am speaking only 
for my industry in response to your question here, we are here 
now as far as the industry. We are required, if you look at 
those charts of the different biofuels that we have to blend, 
we are required to blend cellulosic now, not later. We are 
required to use advanced biofuels now in certain quantities.
    So our suggestion would be let's suspend the RFS to corn 
ethanol at where it is right now, take a look-see where we are, 
and then use an on ramp on biofuels when they are available. We 
support biofuels. We need them. We need everything we can get 
our hands on these days as far as transportation fuels.
    But again, let's do it in a systematic process, not a 
static statutory process that may or may not fit the economics 
and the realities of today.
    Senator Vitter. OK.
    Does anyone else want to comment on that? Obviously, Mr. 
Early spent most of his testimony on that. But anyone else?
    OK. A final question, I am concerned that the regulations 
to implement renewable fuel standards in EISA were required to 
be finalized last December, and aren't in sight. Isn't it true 
that without final regulations, obligated parties will be 
unable to comply with both the advanced and the bio-based 
diesel mandates in 2009? Can you talk about the impact of that 
delay, what it is going to mean to parties who are supposed to 
be doing things this year? That would be a question for anyone.
    Mr. Greene. You are absolutely right. That is why I think 
there are two particular risks right now. One is efforts to 
actually take out critical provisions, either through sort of 
back door politics or through legislative efforts. I think both 
of those would really undermine the goals of the RFS, but even 
just simply delaying it, which is what appears to be going on 
right now, as you pointed out, risks implementing next year's 
goals which are the first year where you would have volumes 
that have to comply, particularly with the greenhouse gas 
standards.
    Obviously, you can't comply with that if you don't know how 
to measure the greenhouse gas standards. And I think to the 
issues of how do we give the security and certainty to the 
industry so that investors can know, especially in these 
economic times, that they can rely on the Federal Government 
and our policies to stay in place and actually drive forward 
this technology, if we don't stay on track with this 
regulation, I think that is going to send a real shockwave 
through the investment community.
    I think it is part of the reason that I would also suggest 
that we add to our policy portfolio something like the billion 
gallon challenge, where we really focus efforts on those 
advanced biofuels.
    Mr. McAdams. I just would briefly agree with Nathan on the 
need to get this rule done in these credit markets. If you look 
at what has happened in terms of investment in the fourth 
quarter of 2008, at investment, you are going to see the 
numbers come out for the first quarter of 2009, it is like it 
has dropped off the cliff. And this is a very key component of 
driving the markets to continue to fund these advanced biofuels 
technologies in the short and medium term.
    Ms. Tiller. I would just echo that there is a sense of 
urgency for some certainty in moving forward, and the industry 
certainly will require that certainty in order to make the 
progress that we need to rapidly.
    Mr. Drevna. If I may, Senators, my industry needs certainty 
also, but right now we are certain that we have to go out and 
find either the ethanol of the RENS to make up the difference. 
Whether the rule is out now or not, we would love to have the 
rule, would love to have a sound rule, but whether it is out or 
not, we still have to comply with the statutory mandates of 
volumes, even at the same time as demand has plummeted.
    So I believe when Congress wrote the rule, we all, or most 
thought that gasoline demand would continue to increase. Who 
would have thought we would be in this economic recession, 
gasoline demand plummets, but meanwhile the RFS responsibility, 
as obligated parties, increases.
    So right now, we are out chasing RENS that don't exist. And 
companies are spending upwards of $140 million, $150 million a 
year not on producing fuel, on buying credits. So we, too need 
the certainty. And that is why I suggest that the first action 
is to suspend at least the corn ethanol portion of the RFS 
where it is, and not use, not use what I call the off ramp 
rather than the on ramp and have discretionary waivers by EPA 
because that just creates more uncertainty in the marketplace.
    Thank you.
    Senator Vitter. Great.
    Thank you very much, Mr. Chairman.
    Senator Carper. Thanks a lot. Thanks a lot for being with 
us and for those questions.
    I think I will ask my first question of Mr. Drevna. As you 
mentioned, reduced fuel consumption is accelerating the 
industry's approach of the E-10 blendwall. Why this may not be 
a problem next month or even in 6 months, we could hit the 
blendwall as early as next year, certainly very likely by 2011.
    Describe, if you will, the timeframe that you are 
envisioning for sufficient comprehensive independent testing of 
the safety, operational and environmental effects of mid-level 
ethanol-blended fuel.
    Mr. Drevna. I would suggest it shouldn't take more than a 
couple of years, no more. Maybe even 18 months to 2 years. I 
don't see, I believe that should be sufficient to get the job 
done. But in the meantime, I think the worse thing we can do, 
Senator, is to roll the dice and subject the consumer to 
potential equipment failures and hazards that right now would 
be--they are never necessary, but right now would be 
counterproductive.
    I think we should take a deep breath, and again, I agree 
with Blake. Let's look before we leap and make sure that we 
know exactly what the consequences, unintended or not, are of 
injecting more ethanol into the current gasoline supply.
    Senator Carper. Let me just follow up by asking, to what 
extent do you think has independent testing already occurred? 
Do you think we are part way there, halfway there, most of the 
way there?
    Mr. Drevna. There has been some testing, Senator. From what 
I understand of the testing, there has been a DOE test on it, 
and the interesting point about that is that there has been, it 
was almost like, well, this stuff it is OK if you glance at it 
and if you look at the executive summary of the DOE testing.
    But there is a Dr. Ron Sidhu who has a bachelor of 
technology from the Indian Institute of Technology, and an M.S. 
and Ph.D. from California Institute of Technology, Cal Tech, he 
has taken that report apart and commented on it very, very 
intensively. He has come up with five, six different red flags, 
so to speak, that have to be addressed before any of this can 
even be thought to be put into commerce, and those include 
engine reliability, safety and environmental concerns, et 
cetera.
    So again, there have been reports out there, and then of 
course the ethanol industry has done what they call a test, and 
it hasn't been peer reviewed. It had a limited number of 
vehicles tested. I think Mr. Early really talked about some of 
those.
    So let's do it comprehensively. Let's agree to what we 
don't know and figure out how to answer those questions, and 
then see if it works. If it works, great. We are ready, but we 
are not ready now.
    Senator Carper. All right.
    Dr. Tiller, in your testimony I believe you stated that, 
``We are close enough to remove technology as a barrier to 
startup.'' You were talking about for cellulosic ethanol. What 
barriers remain on the path to large scale commercial advanced 
fuels if not technology?
    Ms. Tiller. Well, I think that one of them we have already 
discussed earlier in this panel, which is the issue of 
stability in the market. There is going to be significant 
private investment required and without a clear path forward, 
it is going to be difficult to achieve that investment and 
certainty.
    But perhaps one equally important, maybe even more 
important, is developing right now a path to a sustainable 
quantity of biomass feedstocks that can support this. That is 
fairly independent of the type of technology that is laid on 
top of it. But building that entire biomass infrastructure in a 
way that is sustainable, that does account for greenhouse gases 
and life cycle balances and all of the considerations that need 
to be taken into account, that is something that has been 
assumed to be in place, but certainly we have a long ways to go 
to make sure that we fully address all of the issues to supply 
the biomass in the very large quantity that will be required.
    Senator Carper. All right. Why did DuPont pick Tennessee as 
its partner to establish the pilot scale cellulosic 
biorefinery? What were some of the reasons that led them to 
that choice?
    Ms. Tiller. I think that DuPont Danisco chose Tennessee as 
a very good strategic fit for their process technology, largely 
because of the emphasis and the program we have in biomass. So 
they recognized that the employment of the technology will 
require large amounts of biomass. We have a very longstanding 
program and a comprehensive program that looks at all aspects 
of the entire supply chain for biomass, and I think they felt 
that that was a very good fit for long-term growth of the 
technology that they are demonstrating.
    We also had a significant commitment from the State, from 
Governor Bredesen and the legislature, of more than $70.5 
million available for development of this industry, and that 
was attractive as well.
    Senator Carper. All right. I understand construction is 
underway and production is expected to begin I think, is it 
within the year?
    Ms. Tiller. That is correct. We expect to be operational by 
the end of 2009.
    Senator Carper. OK. And any idea what the anticipated 
output of the refinery would be?
    Ms. Tiller. The output? The quantity, it is scaled largely 
as an R&D facility so it has a lot of the flexibility required 
to be able to investigate technology improvements over time, 
and new technology developments in a whole suite eventually of 
feedstocks and products. But the optimum scale determined for 
that is between 250,000 and 300,000 gallons annual capacity.
    Senator Carper. All right. Thanks very much.
    OK. I think under the early bird rule, I believe, unless 
Madam Chair, you need to flee, to head out. OK.
    It is not every day that you have the entire Senate 
delegation from Oregon come to a hearing of this Subcommittee. 
We are honored.
    Senator Merkley.
    Senator Merkley. Thank you very much, Mr. Chair.
    And I wanted to follow up on that conversation about the 
experimental project. If you could describe a little bit to 
what degree the process being used involves temperature and 
pressure? Or whether it is primarily an enzyme-based strategy 
and kind of what is being learned in terms of the consumption 
of energy in order to produce the ethanol.
    Ms. Tiller. Thank you. DuPont Danisco Cellulosic Ethanol's 
technology package is an enzymatic-based sugar-based, I am 
sorry, biochemical process and certainly at the stages where we 
are now ready to demonstrate, there are tremendous 
opportunities to improve the overall energy and life cycle 
efficiency within the plant.
    That certainly is a focus of the project moving forward, 
but I think that we are comfortable with the technology and the 
milestones that we have reached so far that the technology is 
ready to demonstrate and is at levels that are certainly very 
attractive at this point with continued opportunity to improve.
    Senator Merkley. Let me dive in a little bit further. In 
terms of getting through the cell wall into the sugars inside 
the cell, what is the strategy being employed to accomplish 
that?
    Ms. Tiller. Well, one effort that I would also point to is 
that of the DOE's Bioenergy Research Centers, one of which is 
in the Oak Ridge National Laboratory, and certainly that is the 
primary focus of that effort. That is funded with a $135 
million investment from DOE. So they are looking at the issue 
of recalcitrance and cell walls really from two different 
perspectives.
    One is making plants and biomass that more readily digests 
so that those cell walls can be broken down more efficiently, 
rapidly, with fewer input. And then the second is on developing 
the technology, the integrated process technology that more 
efficiently, effectively and cost effectively does the job of 
breaking down the cell wall.
    There have been tremendous advances through that work, 
through all of those Bioenergy Science Centers, as well as the 
private companies such as DDCE. And I think that we have lots 
behind our belt so far, but tremendous opportunity to continue 
that work as well.
    Senator Merkley. I want to switch to Mr. Greene, if I 
could. You made the point that if--and I want to restate this 
and see if I caught this correctly--that if in the course of 
producing an acre of a crop in order to produce some form of 
biomass or cellulosic feedstock, you create a demand that 
results in one-tenth of an acre in Latin America or somewhere 
else in the world, South America, being converted from jungle 
to crop land, you have lost 30 years' worth of the value?
    Mr. Greene. That is right. The gasoline that you would 
avoid, it would produce about--we can get about 400, 420 
gallons of ethanol per acre of corn we use today. So if we 
avoided that much gasoline use over 30 years, we would avoid a 
fair amount of greenhouse gas emissions from that gasoline. But 
if we clear land to meet the supply demands for food crops, 
fiber crops, whatever it is, just a little land clearing can 
obviate all of those avoided greenhouse gas emissions.
    Senator Merkley. Then does that kind of accentuate the 
value of the potential philosophy, if you will, of forest 
thinning, which Senator Wyden referred to earlier and you 
referred to it in your testimony. We are looking at second 
growth forests that are overgrown because they were planted so 
densely, and they haven't been thinned because it is not cost-
effective, but you are not essentially putting new acreage into 
production. And the fewer trees that are left also grow much 
fast and absorb more carbon.
    Is that a significant advantage, if you will, as compared 
to food feedstocks?
    Mr. Greene. Absolutely. Any crop, or any source of biomass 
that we can get that we can collect without putting new demands 
on our landscape has a real value by avoiding this land use 
change.
    Senator Merkley. I believe that I have seen statistics that 
say currently, not including, if you will, the increase in the 
effect on crop land or conversion of crop land overseas or so 
forth, that it takes about 80 percent of the value of the fuel 
produced in the corn ethanol cycle in order to produce the corn 
ethanol.
    And if you or anyone else would like to comment on that, 
but I want to compare that to where we stand now with the 
switchgrass technology. How much, what percentage of the final 
product, energy, is utilized in the process of making the fuel 
switchgrass cellulosic ethanol? So if maybe the two of you 
could comment on that.
    Mr. Greene. Yes. There are two issues there, obviously. 
There is just the energy balance, which is important obviously 
from an energy security perspective. And then there is the 
greenhouse gas balance. Not surprisingly, I am a little more 
concerned with the greenhouse gas balance from where I sit. But 
for both of them, it is really important that we distinguish 
between the renewable energy that is going into the process and 
the fossil fuel energy that is going into the process.
    Obviously, the fossil fuel energy is where we get a lot of 
greenhouse gas emissions. And so the challenge with corn 
ethanol particularly is that there is a lot of value in corn 
kernels, so we don't burn up any of that to drive the process 
forward. We put the distiller grains into the food market. We 
put the starch into the ethanol market, and we are not left 
with anything to drive the process forward.
    One of the advantages of going to cellulosic is that there 
is enough energy there to produce fuel and drive the process 
forward that is in the biomass itself. So we avoid bringing 
fossil fuels into the equation.
    I am sure Dr. Tiller can be more precise than I.
    Ms. Tiller. Yes, that is correct. The lignin co-product 
that is produced in the biochemical process from switchgrass 
and other cellulosic feedstocks does allow enough energy to not 
only operate the entire facility, but to provide some excess 
energy back to the grid. So it certainly has tremendous 
advantages.
    The high productivity of switchgrass and some of the 
cellulosic feedstocks is certainly advantageous, as well as 
their ability to actually store carbon in the soil. We estimate 
that we can get 1,000 gallons of fuel from one acre of 
switchgrass using our current technologies, so certainly there 
are attractive balance economics in that equation.
    Senator Merkley. Thank you very much.
    Senator Carper. Thank you, thank you.
    Senator Boxer, our Chairman.
    Senator Boxer. Thank you, Mr. Chairman.
    Senator Carper. Our Chair.
    Senator Boxer. Whatever.
    [Laughter.]
    Senator Carper. The woman, our leader.
    We are glad you are here.
    [Laughter.]
    Senator Boxer. You are using up all my time.
    Senator Carper. I am sorry.
    Senator Boxer. OK.
    Mr. Greene, I am going to put you on the spot because I 
always put--I love your organization and you say it like it 
is--so forget the politics, forget what is correct, and give me 
your heartfelt answer to this question.
    Mr. McAdams makes a point, he says to the Congress, don't 
pick winners and losers. I get that. And theoretically I agree 
with it, however, if we know certain things already, and it 
gets to Jeff's questions and Tom's questions and everybody's 
questions, and David Vitter's questions.
    If we know that for some of these fuels it takes up a lot 
of land, and if you figure the life cycle, you are talking 
about a problem with greenhouse gas emissions which we weren't 
focused originally on the life cycles. We know we have to look 
at the life cycle. I think--is it Dr. Early? Mr. Early's point 
for the health community, we need to think about what this does 
to our lungs of our citizens.
    So I guess what I want to say to you, at this point in the 
research and in what has gone on, and I am so excited about how 
much progress has been made here, believe me. Without picking 
winner and lose, just saying, at this time where do we see the 
most promise for a substitute here that will not hurt people's 
lungs, will not have a big impact on greenhouse gases, 
considering the life cycle? And where do you see that at this 
time?
    Mr. Greene. Well, I guess I would answer that question in 
two ways. I think there are technologies that we can identify 
today as being extremely promising. By technologies, I think it 
is important to look both at the feedstock technologies, where 
are we going to get the biomass, and then obviously also the 
conversion technologies, because you need both of those.
    Senator Boxer. Right.
    Mr. Greene. And Dr. Tiller mentioned the logistics to 
connect them all. So I am happy to go through that in more 
detail. I think also, though, to get to your question, you also 
need to think about the policy, where we see the most promise 
in the policy. And actually, I think your home State really is 
again setting a real shining example there by taking a low-
carbon fuel standard approach, as opposed to a renewable fuels 
standard approach.
    The renewable fuel standard really was groundbreaking in 
establishing threshold greenhouse gas and trying to really 
force the industry forward into advanced biofuels. But it still 
has a fair amount of picking winners approach to it. The low-
carbon fuel standard, by design, really forces fuels to compete 
against each other based on their greenhouse gas performance, 
and so the best fuels will win. And it encourages electricity 
to compete against biofuels and natural gas to compete against 
liquid fuels.
    So ultimately, we need the technologies to work, but we 
also need the right policies to draw out the best from the 
technologies.
    Senator Boxer. But you didn't give me a very 
straightforward answer.
    [Laughter.]
    Mr. Greene. Let me try again.
    Senator Boxer. No, I mean, out of all the technologies you 
have seen, taking into account the true greenhouse gas 
emissions and other things, where do you think we are headed 
here?
    Mr. Greene. OK. I would say we need to move to feedstocks 
that require very little land. I think cover crops are 
extremely exciting.
    Senator Boxer. What is?
    Mr. Greene. Cover crops, crops that we plant during the 
winter when we often would leave the soil barren. We want to 
protect it, keep the soil there, keep the nutrients there. I 
think there are also lots of potential to use marginal lands 
more productively, lands that we can't really produce food off 
of that have been degraded by agricultural practices over time.
    So the broader category there is feedstocks that don't add 
to our demand for land.
    Senator Boxer. Good. That is helpful.
    Mr. Greene. I think there are specific examples there.
    On the conversion technology side, my reading of the 
science today suggests that the biological processes ultimately 
they have the biggest room for cost reduction. We know how to 
do thermochemical conversion better today, so we have a little 
better sense of what their costs look like. The biological 
process, there is huge room for advance there, so we think the 
cost will come down very significantly.
    I think the other really critical thing, and Mr. McAdams 
mentioned it, is that there is a huge amount of potential for 
developing new fuel molecules. So it is not just how you 
convert it, it is what you convert it into. And I think ethanol 
has helped us move in the right direction, but we ultimately 
are I think very likely to find fuel molecules that integrate 
into our system better, perform better in our vehicles, avoid 
some of the public health concerns, and will allow us to move 
forward more rapidly.
    More specific?
    Senator Boxer. That was very helpful.
    Mr. Chairman, I just, I am going to have to go to another 
meeting now. I wanted to thank you so much for this because I 
think what we are learning here is that we have made a lot of 
progress. More than anything else, we know better now how to 
approach this.
    I wanted to point out that at Senator Alexander's behest in 
our last bill, we did have a low-carbon standard in the 
greenhouse gas bill. We put forward the global warming bill.
    But thank you for your leadership.
    Senator Carper. You bet. And thank you for yours and for 
being here today to work with us on this.
    Senator Cardin and I, this is our second joint venue today. 
I started my day with him and we will probably spend a lot of 
time together today voting into the night. Yes, 10 votes, here 
we go.
    Ben, we are glad you are here. Please proceed.
    Senator Cardin. Thank you, Mr. Chairman.
    I want to join our Chairman, Chairman Boxer, and thank you 
for holding this hearing. I think this is critically important.
    Let me make it clear, we need an energy policy in this 
Country that will provide for energy security and deal with the 
greenhouse gas emissions and global climate change. The 
renewable portfolio for fuel standards is going to be 
critically important in meeting those goals. I am a strong 
advocate of it.
    On the other hand, I agree, Mr. Drevna, with your point 
that we want good science to judge how we make these decisions. 
We don't want unintended consequences to undermine the ability 
to achieve our objectives. The marine industry is very 
important in Maryland. It is a large part of the history of our 
State, as well as the economy of Maryland.
    So I am going to give you a chance to present more 
information if you have it here or make it available to our 
Committee about your concerns on some of these standards as it 
may relate to the types of engines that are currently available 
and can be made available, and the blends of ethanol as to 
whether we have an issue here that needs to be attended to as 
we develop renewable standards for our fuels.
    Mr. Drevna. Thank you, Senator Cardin. I would be more than 
happy to address your issue there.
    I think to look at this thing now, we have to look a little 
bit at the history of this. When the first renewable fuels and 
blending ethanol into gasoline, which again is a good thing, 
given the right circumstances, the right quantities, the right 
and proper use. But you know, the first time the EPA had 
granted the E-10 and certified it, it was fine because there 
had been some testing and engine manufacturers, both 
automobiles, light duty trucks, and marine equipment and hand-
held equipment, power equipment all said fine. We will warranty 
these things up to 10.
    Right now, if you are going forward with the proposal to 
breach that blendwall, as I mentioned before, there are four or 
five issues that have to be addressed. Marine engines, we are 
getting sued now for E-10. The oil industry, refining industry 
is being sued for E-10 because of some of the problems with 
marine equipment.
    Anytime water is introduced into the system, and 
unfortunately marine means water. It has a tendency to separate 
the ethanol from the gasoline and cause problems in the engine 
and cause problems with valves and fittings.
    The power equipment, you have to look at increased exhaust 
temperatures, potentially, which will, if you are using power 
equipment in a wooded area, whether it is commercial or 
residential, and there is an increased temperature in the 
exhaust, that could cause problems with fires. The clutch on 
some of the handheld equipment, power saws come to mind. They 
could automatically start it without the operator knowing. That 
is definitely a hazard.
    And the list goes on. Environmental, again the 
environmental things that both Nathanael and Blake talked 
about.
    So again, we are just urging caution. I think, again, the 
next statement, I am solely representing NPRA on this issue and 
perhaps not the other two organizations that I am testifying 
for today. But I think I have to bring up the point that 
interestingly, in the petition from the ethanol producers and 
the energy group, to breach the blendwall, it is just go ahead 
and do it, just go ahead and do it.
    We have to address these issues. We want to make sure that 
these things don't happen before introducing. One thing that is 
significantly missing from that petition, and again speaking 
only for NPRA, is the acceptance of any liability for these 
kinds of potential problems.
    My statement to you, Senators, is petitioners are so 
confident in their product, then let them accept the liability 
for these kinds of things, and not foist it on the equipment 
manufacturer, the engine manufacturers, or the refining 
industry.
    Senator Cardin. Well, I would suggest that part of this is 
making a commitment to get the science answers to these 
questions.
    Mr. Drevna. Absolutely.
    Senator Cardin. Some of these are solvable problems, and 
let's make a common commitment to find out the answers, and 
then look at the tradeoffs and make sure it is the right way to 
go for the goals that we are trying to accomplish. I think you 
make a good point there.
    I want to ask, if I might with the Chairman's indulgence, 
one additional question, and that is algae is a source of 
biofuel. It is happening in downtown Baltimore today as a 
company is working on this issue. I am impressed by some of the 
preliminary information on it. If any of you have a view on 
that, I would appreciate hearing it.
    Mr. McAdams. What is interesting in this area of advanced 
biofuels is there are a number of different technologies in a 
lot of the subcategories. So for instance, one of the companies 
in the Advanced Biofuels Association is a company in 
California, Solazyme. They are going through over 60,000 
different types of algae to create a fermentation process with 
sugars with a specific algae they are basically engineering, so 
that they don't even have to use sunlight. And by using that 
process, they can make a hydrocarbon molecule that can be 
placed with Charlie's products at the refinery, moved up the 
pipeline with zero cost in terms of infrastructure, and deliver 
energy density and performance as if it came from a barrel of 
oil.
    The one that you are speaking about in Baltimore I believe 
is Algenol. They are looking at a different type of ALO process 
which would use saltwater to make an ethanol in the desert.
    So again, one of the reasons that we advocated for 
technology neutrality was at this juncture in time, there is a 
myriad of different technology pathways that are being 
developed. And as Dr. Tiller has said, it is the combination, 
just like the EPA over the last 20 years has taken the fuel and 
the engine and made it into one emissions system. As we move 
forward, we are going to have to get our feedstock balance 
correctly with these types of technologies, and it is not going 
to be one technology. It is going to be a suite of 
technologies. And some of these technologies are going to 
combine to make these fabulous molecules.
    Senator Cardin. Thank you. Thank you for the response. I 
appreciate it.
    Thank you, Mr. Chairman.
    Senator Cardin. You are quite welcome. Thank you.
    Mr. McAdams, let me stick with you just for a moment. I 
think we have touched on this. I want to go into it a little 
bit more though. What do you see is the primary barrier or 
barriers to commercially viable, next generation renewable 
fuels, especially advanced biofuels that are not ethanol?
    Mr. McAdams. Let me talk about one on the policy side, 
because Chairman Boxer talked about technology neutrality. One 
of the reasons that our Association supported the Senate bill 
last year, which called for 21 billion gallons without buckets, 
was what the bill did was it created a 15 billion gallon choice 
of corn-based ethanol, and then it created a 16 billion gallon 
choice for cellulosic.
    And one of the challenges that we have with the current 
administration and the solicitations process is the definitions 
between what is the USDA biorefining program and the 
definitions in the solicitations for the biorefining program 
for commercial and demonstration projects are differing 
definitions.
    Now, I totally understand the political debate we had last 
summer around food versus fuel. And what we can't do is go to a 
black or white answer in response to food versus fuel. We need, 
as the doctor has suggested here, we need to have a very 
thoughtful discussion about how we transition current available 
cost-effective feedstocks and develop these technologies.
    For instance, I have eight different sugar-based 
technologies. They are fermentation technologies.
    Senator Carper. When you say you've got them, you mean?
    Mr. McAdams. I mean in the Association. And so DuPont has 
one, BP and DuPont have one, for instance. Amherst has one. LS9 
has one. Gevo has one. They all have a little different tweak, 
but what they are basically doing is making the software that 
could be plugged into an existing ethanol plant. That software 
package that they are creating today needs sugar-available 
feedstocks to ramp up their efficiency so that they can come 
into the market.
    On the cellulosic train, as Dr. Tiller suggested, you are 
trying to develop an enzymatic pathway that reduces the cost so 
that you can be competitive with $40 or $50 crude oil in a 
perfect world.
    So as Chairman Boxer was suggesting, we would say the other 
element you need to look at is not only environmental 
reduction, which we agree with Mr. Greene on. But also the 
cost----
    Senator Carper. When you say environmental reduction, what 
do you mean?
    Mr. McAdams. I mean life cycle reduction, to bring these 
things down, to bring up the energy density of the individual 
molecules, to bring fungibility into the marketplace so that 
you reduce infrastructure cost.
    If we bring these molecules in, I have seen numbers as high 
as $9 billion to create the infrastructure to deliver ethanol 
from one part of the Country to the next. If we can avert the 
need for that, think of the savings to consumers. And if we 
partner with the ideas that Mr. Greene is talking about and we 
remove the commercial impediments right now so that they have 
access to developing these technologies under the recovery 
package moneys that were packaged, then we may really be on an 
exciting path forward in a very short period of time.
    Senator Carper. All right.
    Let me just follow up. Several people have mentioned the 
need for us to be technology neutral. When we were working in 
the Finance Committee on some of the energy portions of the--
some of the manufacturing components of the--and energy 
provisions of the tax, the stimulus bill, we talked a lot about 
being technology neutral, trying to come up with a way to 
stimulate manufacturing here for sources of electricity, but 
not to favor solar over wind, over thermal, over nuclear or 
other aspects.
    Several of you talked about technology neutral, and I think 
you stressed in your earlier comments the importance of 
Congress supporting a technology neutral approach to fuel 
technology.
    Mr. McAdams, do you believe that the RFS is technology 
neutral?
    Mr. McAdams. Yes.
    Senator Carper. All right.
    Mr. McAdams. And I want to compliment the Finance Committee 
in at least two applications that really show the desire to 
move in that direction.
    First of all, we began with a dollar one tax provision for 
cellulosic ethanol. Senator Salazar, Senator Baucus and others 
changed that provision before it was passed on the Extenders 
Act last year. It is now a cellulosic biofuel provision. That 
means that if her technology can develop a jet fuel or a diesel 
fuel which might have higher marketability value, that it will 
still receive the production tax credit.
    A second area where the Congress made a major change was in 
what was the renewable diesel tax credit. They have not made 
that the biomass base diesel tax credit which harmonizes with 
the RFS, the way that the definition was written for the RFS.
    That allows whether it is a thermal depolymerization 
technology, whether it is biotechnology, whether it is Fischer-
Tropes technology, it allows them to make that type of 
renewable diesel and all receive parity funding. Because in the 
fuels market, a 50 cent difference in terms of a tax credit 
will literally take an advanced technology out of the game.
    Senator Carper. Mr. Greene.
    Mr. Greene. On that, particularly on the tax credits 
because I think they are incredibly important, we will spend 
probably about $5 billion, or we will forego about $5 billion 
worth of tax revenue this year through the biofuels tax credit. 
I think it is important that we shift to a technology neutral 
approach, but not one that is simply blind to technology, which 
means we really need to shift to something that pays for 
performance.
    Senator Carper. We talk a lot about that in health care 
reform, pay for performance.
    Mr. Greene. Exactly, and it is not totally dissimilar. 
Right now, our tax credits simply pay for a lot of volume, push 
as much production through as you can get, as many gallons as 
you can produce, and that is not a particularly good value for 
the taxpayer's dollars. We need the tools like the greenhouse 
gas measurement metrics that are in the renewable fuels 
standard being developed today by EPA, being developed in 
California by the Air Resource Board. But we also need to look 
at the actual performance--I am falling off the table.
    Senator Carper. You are not the first witness who has done 
that.
    [Laughter.]
    Mr. Greene. Look at other aspects, water use, soil 
protection, wildlife protection. These are the real-world 
impacts of producing biofuels, and biofuels can add benefit 
there or cause real harm there. And we should be paying for the 
benefits. That is how we use tax dollars well.
    Senator Carper. All right.
    This is a question for, actually I am going to forego my 
next question and just yield to Senator Merkley. I have a 
couple more questions, but it is your turn.
    Senator Merkley. Thank you very much, Mr. Chair.
    I wanted to follow up on the commentary, Mr. McAdams. In 
your testimony, you refer to, and I think you refer to it in 
your verbal testimony as well, the volatility parameter. The 
higher the volatility parameter, the greater potential for a 
particular renewable fuel to negatively impact environmental 
performance and backslide under the Clean Air Act on ground 
level ozone.
    Can you address that volatility parameter and how ethanol 
feeds into that?
    Mr. McAdams. In your package, there is a slide. What I have 
done is I have given you a slide with biobutanol versus 
ethanol.
    Senator Merkley. Is this the slide you are referring to?
    Mr. McAdams. Yes, sir.
    And what I am trying to just show there is that different 
levels of concentration, and Charlie can talk to this as well 
because this really impacts what Charlie's refineries have to 
spend to be able to blend with gasoline for ethanol at 10 
percent. And what you see is that for different compounds, and 
I am not picking on ethanol, but with different compounds with 
different volatility parameters at different levels, you have a 
higher volatility. And that in the summer time when Charlie's 
refineries have to reduce their volatility to hit the clean air 
specs, to try to make sure we are in attainment, he has to 
remove a lot of the lighter ends out of the crude to blend 
with.
    Senator Merkley. So for those of us who are non-scientists, 
I want to get a handle on this.
    Mr. McAdams. Right.
    Senator Merkley. The volatility factor here is not the 
propensity, if you will, to burn, but to off-gas. So if you are 
standing nearby, you are breathing components of the fuel? Can 
you explore this a little?
    Mr. Drevna. Senator, can I weigh in a little bit?
    Basically, when you mix ethanol with gasoline, after you 
get to about 2 percent of ethanol and gasoline, you get a spike 
in volatility. It is one of the most significant contributions 
to the gasoline evaporating and contributing to smog. That 
spike flattens out from 2 percent to about 15 percent, and then 
it starts to go back down. And by the time you get to E-85, the 
mixture of 85 percent ethanol and gasoline is actually lower in 
volatility than gasoline by itself. So it is a very complicated 
curve, but you do have to really pay attention to it because 
the volatility of gasoline is one of the most important 
contributors to smog formation.
    Senator Merkley. And to impact on ground level ozone.
    Mr. Drevna. Exactly.
    Mr. McAdams. And on cost of the gasoline.
    Senator Merkley. Great.
    Mr. Drevna.
    Mr. Drevna. Well, I mean, exactly what Blake said, and 
there has been some suggestion, Senator, that well why don't we 
just bifurcate the system. Let's have an E-10 blend stock for 
all the vehicles, the legacy vehicles and the legacy equipment, 
the marine gear and the off-road power equipment. Let's just 
have those use E-10 or less and let's have the newer vehicles 
use the new blends.
    Well unfortunately, that just causes a morass in the 
marketplace. The infrastructure complications are probably 
insurmountable. The cost is way off the charts, and the problem 
being that the misfueling will be rampant. So bifurcation of 
the system doesn't work.
    What we would have to do as refineries is make two separate 
blend stocks, one for E-10 and lower, one for above E-10. And 
you know, put two separate blend stocks into a pipeline, more 
costs associated with it, as Mike or Blake has mentioned, we 
have to take the lighter ends out.
    I don't think people really understand that even at E-10, 
when you are making a blend stock for E-10, that is not 
commercial grade gasoline. At refineries, we are not even 
making gasoline anymore. If you are going to an E-10 blend 
stock, you are making a sub-grade gasoline that only could 
become a certified commercial grade gasoline once the ethanol 
is blended into it. And the more and more we take out those 
lighter ends, the more and more costly it becomes to refine the 
product.
    Senator Merkley. As I listen to the issues both on the 
consumption side and the production side, it makes me wonder if 
we should be bypassing, at least for commuter transportation, 
this issue in terms of essentially requiring all passenger 
vehicles to be able to go 40 miles, if you will, on 
electricity. Of course, you still have to produce electricity, 
but it is an interesting set of issues that are being raised.
    Thank you, Mr. Chair.
    Senator Carper. You bet. Thanks a lot for being here. 
Thanks for your very good questions.
    Who at the table can give us an update on biobutanol? I 
think DuPont, BP have been working in biobutanol. I think they 
are doing some kind of demonstration maybe in Britain. Can 
somebody give us an update on how that is going?
    Mr. McAdams. I spoke to BP this morning. They are 
proceeding with trying to build a demonstration plant at the 
moment. Their efficiency curves are moving in the right 
direction, very similar to Dr. Tiller's process which is a 
different one.
    Another company that is looking at biobutanol is Gevo. They 
are based in Denver, Colorado. They are getting ready to build 
their first demonstration plant in Missouri. So similar types 
of technologies, but it is hitting its process timeframes at 
this time.
    Senator Carper. Good. Thanks.
    Anybody else? OK.
    What was the name of the company that GM invested in?
    Mr. McAdams. Coskata.
    Senator Carper. Coskata. Who can tell us what is going on 
there? Anybody? I understand Coskata has the ability to, or 
they think they have the technology that allows them to take 
garbage, allows them to take old tires, and turn it into a 
biofuels. I understand the energy in this is pretty good, and 
that it costs about a buck a gallon, they think. Is that pretty 
much what they advertise?
    Ms. Tiller. Well, I certainly can't speak for Coskata, but 
just in general certainly the thermochemical approach that they 
have taken has been demonstrated and I think is on track and is 
near ready for expansion from the small pilots that they are 
currently demonstrating.
    Certainly, one concern long term is costs of some of these 
compared to some of the alternative advance fuels. And I think 
that there are some feedstocks that are very well tailored to 
that, and are probably cost-effective in the long run, such as 
municipal solid waste. However, for long term----
    Senator Carper. We have plenty of it.
    Ms. Tiller. We do, but we also have lots of demand.
    Senator Carper. Yes, OK.
    Ms. Tiller. And they are fairly regionally located, those 
waste are. They are not available at large scale, only in 
certain places.
    So certainly there are some challenges. But again, as has 
been emphasized earlier, I think that there are a number of 
different technologies and approaches that can all fit 
harmoniously and address the large scale problem that we have 
and contribute efficiently and effectively and meaningfully.
    Senator Carper. All right.
    Mr. McAdams. Mr. Chairman, just to give you some gallons.
    Senator Carper. Please.
    Mr. McAdams. For instance, last year Tyson, in conjunction 
with Syntroleum from Senator Inhofe's State, created a 
partnership called Dynegy. They are building a jet fuel plant 
from chicken fats in Geismar, Louisiana. That is going to be a 
75 million gallon plant. It should come onstream third quarter 
2010. Neste Petroleum out of Finland has already built a 60 
million gallon isomerization process, and is making a 99 cetane 
zero sulfur neat diesel in Europe. They are looking at the 
United States. They would like to bring their technology to the 
United States. That could use a range of feedstocks, primarily 
oils.
    Range in Georgia is looking at things. Another company that 
is very interesting in Alabama, Cello, has just finished the 
completion of a 20 million gallon plant that is a catalyst to 
technology which would make a renewable diesel. They are in the 
first 2 months of operation. This is a plant, if it hits its 
goals, could make a very significant material contribution 
because they are cheap to build, they are quick to build, and 
he can make jet fuels out of a range of things as far-ranging 
as tires to grasses to wood pulp.
    Senator Carper. All right.
    A question for Dr. Tiller, and maybe ultimately for 
everybody. But since Tennessee is making an investment in 
biofuels, is the State also making an investment in E-85 
infrastructure?
    Ms. Tiller. Yes, sir, we are.
    Senator Carper. Could you talk about that?
    Ms. Tiller. Yes. The State of Tennessee, in addition to the 
$70.5 million committed for developing the biofuels industry, 
has also invested a significant amount of money in developing 
corridors and infrastructure for E-85 fueling, largely centered 
around the interstate system and making sure that that is 
available on long corridors throughout the State, given 
especially that Tennessee does have a lot of primary 
interstates that run both north-south and east-west.
    Just yesterday, the Governor announced a policy 
recommendation that was provided by the State's Energy Task 
Force, and certainly that, as well as energy efficiency, were 
very big parts of those recommendations. And I think we will 
see additional action and funding supporting those going 
forward.
    Senator Carper. Thanks for that response.
    For anybody at the table, what can jump start the E-85 
market? Any thoughts? Yes, sir.
    Mr. Drevna. Senator, I think consumer acceptability is 
going to have to--there are three things that have to happen. 
One, you have to have consumer acceptability, and I will get to 
that in a second. Two, you have to have the vehicles out there 
that can use it. And three, you have to have the infrastructure 
to put it. Let me go reverse on those.
    First of all, the infrastructure doesn't exist today to 
have E-85 nationwide, the reason being because of the first 
two. Even though there are about 3 million or 4 million 
vehicles out there on the road today that are certified as flex 
fuel vehicles, the vast majority of vehicles coming off the 
line today are still conventional kind of gasoline vehicles, 
and it will be for a long time. Even if you double or triple 
it, it is still not going to make that dent.
    The second thing is, E-85 is a great product, but still it 
is 25 percent to 30 percent less efficient than conventional 
gasoline, which means the consumer is going to have to fill up 
25 percent of 30 percent more often than his neighbor.
    So is there a role for it? Yes. Is it the panacea we see 
out there? Probably not. It is going to take, as a number of us 
on the panel have said today, it is going to take a mix of 
things. I would caution that we don't try to put all these 
proverbial eggs in that one basket because we have seen what 
that can do with corn ethanol, and let's not repeat those.
    Senator Carper. All right.
    Anybody else?
    Mr. Early. My only remarks is that if we are not going to 
use ethanol as E-85, then we have a serious problem because 
most of the discussion today has been on very exciting and 
exotic new ways of producing the ethanol. Well, we are going to 
have to use the stuff, and the question is how are we going to 
use the stuff in a way that does not threaten public health.
    And right now, it is not at all clear. When EISA 2007 was 
enacted, I think a lot of people thought that the path forward 
was E-85. There was a lot of talk about that. And if Mr. Drevna 
is right, and that is not happening, then we need to start 
figuring out how we are going to use all this exciting new 
ethanol, the non-corn ethanol as well as the corn ethanol, 
because as far as today's vehicle technology, it doesn't matter 
whether the ethanol is made from corn or from cellulose or from 
algae, it still interferes, has the potential of interfering 
with the operation of the pollution control systems or the 
engine itself, and we need to figure out what to do about that.
    Senator Carper. Mr. Drevna.
    Mr. Drevna. One more comment. And also, Senator, the two 
other organizations that I am representing today, the Marine 
Manufacturers and the Outdoor Power Equipment Institute, you 
could not use E-85 in those engines. So again, it is going to 
take a mix.
    Senator Carper. All right. I am going to call on Senator 
Merkley for another round of questions. But before I do that, 
let me telegraph my next pitch. Major league baseball season 
starts in just a couple of days, and so I am going to telegraph 
a pitch with that in mind.
    I am going to ask you, sometimes we have panels before us 
who are very diverse. There is not much consensus on the issues 
that we face. One of the things that we have to do 
legislatively and working with the Administration, EPA and 
others, we have to come up with a consensus and a path forward 
that is respectful and reflective of the diverse opinions.
    We actually have diversity in your opinions here and your 
thoughts. But actually, a fair amount of consistency, too, 
consensus. And one of the things I will ask you before you 
leave today is I am going to ask each of you to kind of go down 
the road here and take maybe a minute apiece and give us your 
sort of like Cliff Notes of how we should be proceeding on this 
front.
    Don't do it yet. I am going to yield to Senator Merkley, 
but just be thinking about that. Thanks.
    Senator Merkley. Thank you, Mr. Chair.
    Mr. Early, I wanted to follow up on your last comment about 
the need to proceed with E-85 infrastructure so that we have a 
way of consuming the ethanol of lower volatility, if you will. 
You made a reference to the challenge of designing cars, 
pollution control systems, other components. Isn't that 
basically solved under the flex vehicles that are being 
produced today?
    Mr. Early. Yes. Flex fuel vehicles are very tight. They 
don't allow much evaporation. They can operate and meet 
standards. They are required to certify on both E-85 and E-10. 
In other words, conventional gasoline. And they are clearly the 
future and manufacturers are producing a lot of FFVs.
    Where the train wreck is coming is that we are not going to 
have those FFVs replacing what has been referred to as the 
legacy fleet in the timeframe that the ethanol industry insists 
they need in order to sell more ethanol.
    As I said, we have 116 million vehicles on the road today 
that are what we refer to as pre-tier II vehicles. We have 
another 40 million tier II vehicles which may or may not be 
able to accommodate mid-level. Most experts think they are 
better able to, but that is a lot of vehicles.
    And so the replacement time is a long way out, but the 
ethanol industry is saying, we have to do mid-level ethanol 
now. As I said, we just sort of see this train wreck coming if 
we can't find a way of using ethanol in a way that doesn't harm 
the environment and public health.
    Senator Merkley. Your comments about legacy assets takes me 
back to earlier in the week in the Banking Committee, where 
legacy assets is now the term being used for the toxic 
collateralized debt obligations. And so I guess in whatever 
field it is, legacy assets are a problem.
    Say, I wanted to ask you all, whoever would like to comment 
on two aspects on the algae front. One is the role of DNA 
engineering in modifying how algae produces the potential for 
fuel. As I understand it, in some cases the goal has been to 
directly produce fuel inside the algae cell, and what you see 
as the breakthroughs that we are close to or that we have 
already accomplished, and might be on the near horizon.
    The second aspect of this is commenting on how the use of 
algae might also simultaneously play into carbon capture 
technologies for coal plants.
    Anyone who would like to, it would be interesting to get 
your insights.
    Mr. Greene. I can talk more to your second question than 
your first question. I know that there is a tremendous amount 
of work being done on engineering algaes. I know also that we 
have barely scratched the surface on just discovering the 
algaes that are out there. And from my perspective, algae 
falls, particularly for biofuels, somewhere between 
bioengineered crops, where we are intentionally designing 
something to put out in nature, and industrial genetic 
engineering, where we are putting something in a vat under a 
lot of pressure.
    I have deep concerns about putting genetically engineered 
crops out in the field. We have to be very careful about how we 
do that. I am much less concerned, though, and I think we still 
need to take care with industrial products that are under very 
special conditions.
    Algae crops, we are talking about thousands, hundreds of 
thousands of acres of the stuff, but on the other hand it is 
likely to be under relatively unique conditions. So I think we 
have to be careful there, which is not really what you asked, 
but what I can talk about.
    On the carbon capture side, I think it is particularly 
important to recognize that while algae does pull carbon out of 
whatever air is around it and grows much faster if it is 
exposed to a high CO2 concentration, it is actually 
indifferent as to whether that carbon is coming out of the 
atmosphere or coming out of a smokestack.
    And so from a carbon balance perspective, the benefit comes 
not from sucking carbon out of flue gas, but from leaving oil 
in the ground. And so if we attach an algae farm to a power 
plant, we can assign that benefit of leaving the oil in the 
ground to the algae products or to the power plant, but you 
can't do it twice.
    So we either have a low-carbon algae biofuel or we have a 
low-carbon electric product, but you can't take the credit 
twice.
    Senator Merkley. Would other folks like to comment? One of 
the questions I am curious about is whether in terms of 
bioengineering algae, if there is one particular type of fuel 
that is better fitted, if you will, as the discussion has gone 
from ethanol to butanol, et cetera, et cetera.
    Mr. McAdams. Again, the different advanced biofuels all 
have different properties. What I would say that works for all 
the members of the Association, particularly in the synthetic 
biology phase that Dr. Chu is very familiar with because two of 
the companies I represent came out of Cal Berkeley's labs.
    When these gentlemen, including the algae folks, sat back 
and tried to design the molecule they want to make for whatever 
process, they asked themselves, what would a good molecule be? 
A good molecule would be energy dense that carried the same 
volume of density as if it came from a barrel of crude. That is 
why we use crude, because it carries energy very effectively.
    It would also be environmentally friendly in terms of the 
footprint that Nathan's been trying to talk to on a life cycle 
basis, and it would be fungible. You wouldn't have to have E-85 
cars and separate tankage and separate fuel systems.
    So coming to your specific question, the one company that 
is in our Association, Solazon out of the Bay Area, California, 
has a closed loop system which addresses the genetic 
modification that Nathan is concerned about putting in nature. 
Not only does it make a fuel, it makes a food. So this is a 
technology that has been designed to make both food and fuel 
through fermentation.
    Ms. Tiller. If I may, I might add one more criteria to that 
list of desirables, and that would be that it is also cost-
competitive with alternatives, and I think that there are 
certainly some challenges there with respect to algae.
    Senator Merkley. Thank you all very much.
    Senator Carper. Well, thank you. Do you have any more 
questions you want to ask? You are all in? All right.
    I telegraphed a pitch earlier, so I just wanted to go to 
each of you. Maybe we will start with Mr. Early.
    Just give us your guidance going forward as we try to 
address this challenge, but also realize these opportunities 
that are before us.
    Mr. Early. Well, obviously, as you know, I have been 
focusing on the renewable fuels standard. Mr. Drevna has 
already suggested that we may need to take a time out on the 
renewable fuels standard because it is sort of relentless in 
terms of the way it is structured under EISA 2007 in terms of 
raising the amount of ethanol that must be sold by Mr. Drevna's 
companies year after year. It goes up, I think it is 11 billion 
gallons this year. It goes up another 1.5 billion to 12.5 
billion, I think, next year. And we just don't know whether we 
are going to get the testing done in time to know whether we 
can use ethanol in other ways.
    So I think that the Congress really needs to start looking 
very hard at some kind of time out that would put the renewable 
fuels standard on hold so we can get the testing done and then 
proceed. Of course, you are going to hear screams of protest 
from the ethanol industry, who has made a lot of investment in 
producing more and more mostly corn ethanol, but I just--it is 
sort of hard to imagine that the timing is going to work out at 
this point, although it is conceivable.
    Senator Carper. OK, thank you.
    Mr. Greene. I absolutely agree that we can't afford to 
sacrifice our public health. On the other hand, we can also ill 
afford to sacrifice advancing technologies that should reduce 
global warming. So I think we have to figure out a path forward 
here.
    I think the challenge is made particularly acute because we 
simply don't know with the policies that we have today that we 
will get real environmental benefits from biofuels. I think the 
lack of public consensus and support for biofuels that has 
really developed over the last year and a half reflects a real 
challenge to doing biofuels in the right way.
    And so that is part of the justification behind the policy 
idea that I put forward. It is attached to my testimony, this 
idea of a billion gallon challenge, that let's go out there and 
figure out how to keep the advanced biofuels moving forward, 
but attach to them real high bar environmental standards so 
that we can prove to ourselves that we can do biofuels, 
advanced biofuels that provide a broad suite of environmental 
benefits.
    I think if we can bring those technologies to the market at 
a commercial scale and bring them in a way that everyone agrees 
is good for the environment, then I think we will have the 
consensus that we need to make the investments to avoid public 
health tradeoffs. Maybe in that process we also bring 
alternative molecules to the market. That is great, but if we 
come to the end of that process and we are still primarily 
using ethanol, we will need to make the investments to get to 
E-85.
    But right now, there is a certain chicken and egg issue 
that people are generally reluctant to resolve because we 
simply don't know if we are going to get what we are bargaining 
for.
    Senator Carper. All right.
    Mr. McAdams.
    Mr. McAdams. Thank you, Mr. Chairman.
    Senator Carper. I want to mention, just good advice for us. 
What should we be doing legislatively? What should we be doing 
in terms of regulations?
    Mr. McAdams. Well, first of all, we need to get on with the 
renewable fuels standard. We need to get the rulemaking out in 
public and we need to have a public discussion where science 
drives the conclusion to many of the life cycle issues, many of 
the issues on how we are going to evaluate hitting the targets 
in the law.
    One of the things I would specifically recommend that we 
consider is that in the RFS 1, we have equivalency standards, 
so more energy dense fuels receive an equivalency. For 
instance, biodiesel gets 1.5 to 1; renewable diesel gets 1.7; 
cellulosic gets 2.5 to 1. We ought to carry that forward in the 
future because we need to monetize better performance fuels.
    The second thing I would say in the short term with the 
credit issues being tight in the markets, the government has 
put a lot of money in the recovery package. We need to avail 
those funds to the widest suite of technologies available. 
Let's not pick on. Let's not try to fill the gasoline pool with 
one type of compound. Let's see what kinds and types of 
molecules develop over the next 3 years.
    And last, I would suggest that your comment about the tax 
code. We should revisit the tax code to try to put things on 
parity, so that these fuels all come out on an even playing 
field. And we ought to also look at biofuels in the same vein 
as we just looked at helping the wind and the solar industries 
out with an investment tax credit. Perhaps what we should do is 
put a comma and add biorefining after that investment tax 
credit because we are suffering the same types of credit issues 
that the wind and solar folks are.
    Thank you for letting me be here today.
    Senator Carper. You bet. Thank you so much for coming.
    Dr. Tiller.
    Ms. Tiller. Thank you. I agree with a number of the 
comments that have been made that we need a science-based, 
balanced approach and that we need something very quickly. 
Certainly this market has tremendous momentum right now, and in 
order to sustain that and continue to progress toward our goals 
I think we need some certainty as rapidly as possible.
    With that said, I think that one opportunity is to again, 
with some neutrality to various technologies and advanced 
technologies that are still under development, there is a 
tremendous amount of work that can be supported and done right 
now today to develop a feedstock infrastructure that will be 
relevant for any of these technologies.
    That certainly is an area that I think we have been slower 
to make the investments and recognition of the value, but 
certainly one that can have tremendous long-term potential, and 
to echo some of the other comments, is one that we can do right 
or we can do wrong, and now is the opportunity to do that 
correctly.
    Senator Carper. All right.
    Mr. Drevna.
    Mr. Drevna. Again, Senator, thank you. And again, science 
and technology must prevail. This Congress, this institution 
cannot let political ideas overcome science and technology on 
this particular issue, or any issue for that matter.
    We are heartened to hear from the refining sector, again, 
that these advancements in technologies are just around the 
corner. Again as I said, we have already made that turn in the 
refining industry. We need certainty now. We need to do 
something now so we can be compliant.
    So again, we are asking what the Congress can do is please 
suspend the current RFS mandate, mostly, if not all, corn 
ethanol on the 2009 level. And as we go forward, as these 
technologies are developed, as I am sure they will be, that you 
use an on ramp and not an off ramp. As these things are 
developed, as the Secretary of Energy and the Administrator of 
EPA can verify that they are out there in commercial 
quantities, that they are safe for the environment, safe for 
the user, let's bring them on.
    But the refining industry and engine manufacturers can't 
keep saying, OK, we are listening, it's coming, be patient. So 
again, an on ramp is very I think instrumental in getting his 
done right.
    And last thing, Senator, I don't know if I am sorry that 
Senator Boxer is not here or glad she is not, but I must talk 
about the LCFS just a bit, the low-carbon fuel standard. That 
is one of those things again that sounds great. Let's just do a 
low-carbon fuel standard. And the euphoria of the passage of 
the bill in California, but the reality, the implementation has 
yet to happen, and there are significant problems with it.
    We have to be very careful on what we call a low-carbon 
fuel standard, what it really means, and what impact it is 
going to have on infrastructure and on the ability of Americans 
to get from point A to point B and for this economy to grow 
again.
    We are willing to work with anybody on that issue, but it 
is a lot more than a phrase and a slogan. Thank you.
    Senator Carper. Thanks for that conversation. I think 
Senator Boxer, I just heard her come in the door in the 
anteroom.
    We haven't talked much about the effect of the cost of oil. 
When we had our last hearing here about 6 months ago on 
biofuels, I think the price of a barrel of oil, maybe it was 
close to $140 a barrel, but down to $40. For me that's just 
like the 800-pound gorilla in the room. We have not really 
talked about the effect on all these efforts that you 
represent. Would somebody want to talk about that?
    I was talking to a friend the other day, and he said, we 
are not always going to be buying gas for $1.80 or $1.85, $2 a 
gallon because demand in this Country, because the economy is 
going to come back, people start traveling again, and China and 
India and places like that, they are building their own 
domestic auto industry now, and where they may only have now a 
million or 2 million people driving cars on the road, trucks on 
the road, that is going to change rapidly, and there will be a 
lot of demand for petroleum to allow people to drive those 
vehicles. So he said don't worry, eventually demand will come 
back and prices will go up.
    We hear from folks who build cars, trucks and vans--
Chrysler, GM, Ford--that they are concerned, they are fearful 
that they are going to be building vehicles to meet our CAFE 
standards, more energy-efficient vehicles, and that if the 
price of fuel stays down, then it is going to be harder to 
convince people to buy those. But I suspect that the drop in 
the cost of oil is a reprieve, but probably not going to be 
with us forever.
    But your thoughts with respect to the cost of oil, dramatic 
stop in the price of oil, and sort of looking ahead as to how 
that factors into the demand and the relevance of biofuels.
    Mr. Early. Senator, I apologize, but I have to bow out now. 
I have an appointment that I cannot miss.
    Senator Carper. Do you want to say anything before you 
leave in answer to my question?
    Mr. Early. I appreciate it very much. Really, it is not my 
area of expertise. I will let these other experts kind of give 
you their wisdom.
    Senator Carper. All right. Enjoy the rest of this day. 
Thanks a lot for joining us and for your testimony and input.
    Anybody? Yes.
    Mr. Drevna. Senator, one thing that I have learned over 
some 38 years in the energy business is that the last thing 
anyone should do is predict where the price of anything is 
going to be. If I were to have sat here in July 2008 and told 
you that in March, 2009 we would be looking at $35 or $40 
barrel of oil, you would have summarily dismissed me.
    But that being said, we can't control, and when I say we, 
not anybody on this panel specifically, but generally in this 
Nation, we cannot control what the price of crude is going to 
be. What we can control is how to operate within a wide range 
of prices. And to do that, we need policies that instill 
stability, not uncertainty.
    And we can't be changing the rules every 2 years, every 4 
years because investments have to be made now, today, on 15, 
20, 30-year kinds of projects.
    So if I can suggest that, if I knew how to control the 
price of oil, that would be pretty good, I guess, but we can't. 
And again, we have to have a system in this Country that is 
open for all fuels: petroleum, coal, nuclear, biofuels, 
everything, renewables.
    As this Country grows, and we will grow, we will get out of 
this mess, we are going to need it all. It is just how we are 
going to use it, where it is going to be used, and the best way 
to use it. And that is all we are asking for is certainty.
    Mr. McAdams. Just on a practical application matter, let me 
just give you a couple of data points. Again, Dr. Tiller, she 
said one of the key components of biofuels moving forward is 
cost. So what happened last year? What happened last year when 
we entered the year was we had about a $1 margin between RBOB 
and ethanol. And so everybody was blending it. And when we came 
into the last 3 months of the year, with the price of crude 
collapsing, the margins collapsed.
    So if you look at the RIN credits, the RIN credits topped 
out at an all time high at the end of the year last year. They 
went to 16 cents. Now, they are back to 12 cents. So the 
practical effect was, with the price of crude dropping, a lot 
of folks who wanted to blend ethanol didn't want to blend it 
anymore because it was not advantageous in the marketplace on 
the street. And so you saw production capacity drop the last 
couple of months.
    On the finance side, and if you would like I will submit 
for the record some of New Generation Finance's charts, and it 
shows you the drop in investment in ethanol plants, biodiesel 
plants and other technologies, because it will just help you 
track the very significant reduction.
    Senator Carper. All right.
    Mr. Greene.
    Mr. Greene. I would just argue that, actually agree with 
Mr. Drevna that we need stability and certainty in the market, 
but draw a very, I think, different conclusion than he seems to 
be suggesting, which is we do need stability and certainty, and 
the biofuels industry needs that.
    We adopted the renewable fuel standard knowing that it was 
a technology-forcing standard, and the low-carbon fuel standard 
is a performance-forcing standard. And you know, I would choose 
performance over technology, but either way we are trying to 
provide long-term stability as to where we are going.
    And the only question, the only real challenge I think we 
have right now is whether we want to hold onto that stability 
and certainty, how we want to provide that. And the only reason 
I think we are questioning ourselves is because we are not 
certain we are actually going to get the performance, the 
environmental benefits that we want from the rules that we have 
right now.
    So I don't think the answer is to simply back off and let 
the oil industry decide how much we will use and when we will 
use it. But on the other hand, I do think we need to really 
figure out how we are going to make sure we get the benefits, 
the environmental benefits that drove us to want to improve our 
energy mix and our greenhouse gas performance.
    Senator Carper. OK.
    Mr. Drevna. Senator, if I may respond to Mr. Greene's 
comments.
    Senator Carper. Sure.
    Mr. Drevna. I didn't suggest that the oil industry said the 
oil industry should decide when and how much to use. We have 
rules on the books. My thought is that as--and if these are 
technology or process-driven, let's wait until the technology 
and the process is commercially available before we enact 
legislation that forces us to use something that doesn't exist 
today, and write checks to the U.S. Treasury because we can't 
do it any other way. That by no means is energy security in our 
estimation.
    Again, there is nothing wrong, we believe, with an on ramp. 
When it is out there, when it is commercially available, and 
when it is competitive, let's use it.
    Senator Carper. Make sure you button is on.
    Mr. Greene. That sort of undermines the whole purpose of a 
technology forcing approach, which is to force the technology 
into the marketplace. If you have to wait for the fish to jump 
into your boat, then you are not going to get a lot of fish.
    Mr. Drevna. My response, and I guess I know we shouldn't be 
getting into a debate with a panelist here, but it is April 
Fools' Day.
    Senator Carper. This reminds me a little of ping-pong, you 
know?
    Mr. Drevna. Yes, right.
    Senator Carper. Dr. Tiller will probably have to leave and 
you guys can just carry on. But go ahead.
    Mr. Drevna. But as these new technologies, these 
technology-forcing legislation and regulations come on or at 
least right now, aren't on, what is the refining industry to 
do? Are we to just continue in search of RINs? Are we to 
continue to write checks when we are not producing any fuel? 
There is nothing wrong with technology-forcing legislation, but 
give it a timeframe. Once it is there, make it enacted. But 
again, I just ask the question: what do you want us to do 
today?
    Senator Carper. All right.
    Dr. Tiller, anything for closing?
    Ms. Tiller. Well, I have just one other comment, and that 
is that the volatility that I think we expect certainly going 
forward. I don't think we expect that this is a permanent price 
and even a narrow band. But I think what is important to 
recognize, too, is that volatility has real costs in the 
marketplace, that the instability that it causes has real costs 
associated with it, and that by moving to a domestic renewable 
home grown solution for energy, it is certainly an opportunity 
to reduce that volatility and to have more control over our 
destiny and improve the opportunity for performance in the 
market.
    Senator Carper. All right.
    You all have been very generous with your time. We 
certainly appreciate that. We are going to leave the record 
open for a while. For what, a week or so? A week or so for 
folk, for other Members of the Committee to be able to ask 
questions that they weren't able to ask here today. We would 
just ask that if you receive those questions, please try to 
respond to them in a prompt manner.
    I will just close by saying that I represent Delaware. We 
have not a lot of land, but we have a lot of chickens. We have 
300 chickens for every person, in fact, who lives in our State. 
We didn't get into whether or not you could create electricity 
or a biofuel from chicken manure, but there has been a fair 
amount of effort to do that.
    I have been interested in this issue for a couple of 
reasons. One, I hate the fact that we have these huge trade 
deficits, a lot of which is attributable to imported oil. I 
don't like the fact that we send our money to--I know we send 
our money when we fill up our cars, trucks and vans with 
gasoline, we send our money to countries in some cases to 
people who don't have our best interests at heart. I am 
convinced they use our money to try to harm us.
    I am always looking for ways to try to keep farmers on the 
land so that we don't end up, with all respect to Joni 
Mitchell, we don't want to pave paradise and put up a parking 
lot all over Delaware or all over this Country, so we want to 
make sure--and I always like to look for market forces as the 
way to drive good public policy. So if a farmer is going to 
actually make more money by not just selling kernels of corn to 
make popcorn or whatever we want to make with it, but also be 
able to take the cornstalks and the leaves and the corn cobs, 
at least part of them, and put some of them back into the land, 
but the rest, if we can turn it into energy, that would be a 
very good thing.
    I like the idea of developing these technologies, and your 
Association, Mr. McAdams, is doing some really exciting stuff 
to develop technologies that we cannot only use to put people 
to work, but hopefully do some good things for the environment 
and reduce our dependence on oil and fossil fuels, but also 
create products that we can sell, technologies that we can sell 
around the world to address our economic needs.
    All that makes sense. One of the roles of government, not 
the only role of government, but one of the roles of government 
is to, not to be a lapdog for businesses or industry, but I 
think to provide a nurturing environment for job creation and 
job preservation. And we want the businesses to play by the 
rules. We want them to be good stewards, including stewards of 
the environment.
    And one of the things I learned a long time ago was that 
businesses have a need for consistency, for predictability. We 
have heard those words here over and over again. And we have 
this expectation for EPA to promulgate some regs, and I 
understand the regs have been drafted and they are over at OMB 
awaiting action. I wish I had thought about this yesterday 
because we hosted a meeting of centrist Democrats here in the 
Capitol. We hosted Peter Orszag, our OMB Director. I would have 
asked him what is going on with those regs.
    One of the things I think we will do is draft a letter and 
ask my colleagues to consider joining us in a letter to the 
Administration saying, about those regs. We have been rattling 
their cage on regs involving offshore wind, with the Marine 
Service. We are going to be reaching out to the Administration 
to say let's see if we can't get these regulations moving, and 
finally we will have some certainty.
    A lot of people have mentioned science. The only person I 
have heard mention science more than this panel is probably the 
President. Several people have said, guided by science. I am 
reminded of an old song called Blinded by Science. We don't 
want to be blinded by science, but we do want to be guided by 
science. I think what you are saying is actually consistent 
with where this Administration is coming from, I think, for 
most of us.
    I don't know that we have answered all the questions that 
need to be answered. We have asked a bunch of them, and you all 
have provided a number of the answers that we need and I think 
better equipped us to go forward in a way that is important for 
all our Country.
    Thank you very much and we look forward to working with 
you.
    With that, this hearing is adjourned.
    [Whereupon, at 12:20 p.m. the committee was adjourned.]
    [Additional statements submitted for the record follow:]

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

    I'd first like to thank the Chairman for holding today's 
hearing. On a jurisdictional matter, I hope that the Chair will 
agree with me that we need to aggressively exercise our 
jurisdiction over the Renewable Fuel Standard (RFS) which is in 
desperate need of a thorough evaluation on a host of issues.
    With the passage of the 2007 energy bill, Congress doubled 
the corn based ethanol mandate despite mounting questions 
surrounding ethanol's compatibility with existing engines, its 
transportation and infrastructure needs, its economic 
sustainability, and numerous other issues. Then as now, I 
argued it was just too early to significantly increase the 
mandate and that the fuels industry needed more time to adapt 
and catch up with the many developing challenges facing corn-
based ethanol. From everything we have witnessed over the past 
year, I was right. These mandates allow no room for error in a 
fuels industry already constrained by tight credit, dwindling 
capacity, environmental regulation, and volatile market 
conditions.
    This overly aggressive ethanol mandate has also led to 
consumer backlash in parts of the country. In my home State of 
Oklahoma, one convenience store chain experienced a 30 percent 
drop in fuel sales once they began selling fuel blended at E-10 
levels. The New York Times reported this growing consumer 
discontent in Oklahoma City last summer:

    Oklahoma City.--``Why Do You Put Alcohol in Your Tank?'' 
demands a large sign outside one gas station here, which 
reassures drivers that it sells only ``100% Gas.''
    ``No Corn in Our Gas,'' advertises another station nearby.
    Along the highways of this sprawling prairie city, and in 
other pockets of the Country, a mutiny is growing against 
energy policies that heavily support and subsidize the blending 
of ethyl alcohol, or ethanol, into gasoline.
    Many consumers complain that ethanol, which constitutes as 
much as 10 percent of the fuel they buy in most States, hurts 
gas mileage and chokes the engines of their boats and 
motorcycles.

    As we examine issues surrounding the blend wall, I am 
deeply interested in the EPA's implementation of RFS 2. Few 
could dispute that Congress erred in pushing too much ethanol 
too fast. In this light, I encourage the EPA to reject calls to 
short-circuit its regulatory obligation and instead fully 
utilize sound science to determine the feasibility of mid-level 
ethanol blends.
    Despite the drawbacks of today's corn-based ethanol 
mandates, I do support a role for both ethanol and other 
biofuels. The idea that we can grow and produce biofuels all 
over the Country--not just in the Midwest--is something worth 
pursuing and that's why I support research into cellulosic, 
algae, landfill waste, and other biofuel options.
    I have long said that America's energy supply should be 
stable, clean, diverse, and affordable. I believe we must 
utilize all domestic energy resources. Continued development of 
home grown biofuels translates into energy security and keeps 
jobs and dollars on American soil and in American pockets.
    On that note, I look forward to working with each of you to 
determine if these new mandates are even achievable and to 
explore the many potential ramifications of and solutions to 
the Renewable Fuel Standard.

          Statement of Hon. Christopher S. Bond, U.S. Senator 
                       from the State of Missouri

    Our Nation is facing a number of challenges right now.
    Families have been dealing with the collapse of housing 
prices, high gas prices, high food prices and spiraling health 
care and college tuition costs.
    Now, in the aftermath of this fall's financial crisis, 
people are worried about their retirement funds, their savings, 
and especially, their jobs.
    A lot of the talk in Washington has been--how do we 
stimulate the economy?
    Well, our folks in the farm community can point to one 
sure-fire success, particularly in the Midwest: the renewable 
fuels standard.
    Thanks to the RFS, in 2007, the increase in economic 
activity resulting from ongoing production and construction of 
new capacity supported the creation of more than 200,000 jobs 
in all sectors of the economy.
    These include more than 46,000 jobs in America's 
manufacturing sector--American jobs making ethanol from grain 
produced by American farmers.
    These are impressive numbers as much of the economic news 
has been job loss.
    In addition to job creation, in 2008, the Missouri E-10 
mandate saved consumers $285 million at the pump. That's $285 
million that will stay in our local economies rather than 
heading to foreign oil companies.
    In addition, ethanol has had a positive impact on our 
Missouri rural economies. Thousands of farmers in Missouri and 
across the Nation have invested large sums, pursuant to the 
congressional ethanol mandate, to develop the infrastructure in 
order to produce alternative energy sources. To repeal the 
mandate now would be a major break of faith with all of these 
small investors, cause our imports to rise, and increase the 
amount of pollution coming from other petroleum sources.
    Furthermore, the Department of Energy has stated that the 
increased use of ethanol has been good for the environment. The 
production and use of 6.5 billion gallons of ethanol in 
America's automobile fleet in 2007 resulted in the reduction of 
carbon dioxide and greenhouse gas emissions by 10 million tons, 
the equivalent of removing more than 1.5 million cars from the 
American roads.
    I propose that we not only continue to produce corn 
ethanol, but also explore other resources we have in Missouri. 
The RFS placed a great emphasis on cellulosic ethanol 
production, and Missouri can be a national leader. In addition 
to thousands of grassland acres, Missouri has 1.4 million acres 
of scrub timber waiting to be turned into fuel.
    I agree that we should thoroughly research the potential 
and impacts of using ethanol. But we must conduct this study 
without breaking the promise we made to our rural economies.

    [Additional material submitted for the record follows:]
    
    
    
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