[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
THE AMERICAN ENERGY INITIATIVE, PART 26: THE ROLE OF FEDERAL AGENCIES
IN ALTERNATIVE TRANSPORTATION FUELS AND VEHICLES
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY AND POWER
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
__________
JULY 17, 2012
__________
Serial No. 112-166
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
JOE BARTON, Texas HENRY A. WAXMAN, California
Chairman Emeritus Ranking Member
CLIFF STEARNS, Florida JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky Chairman Emeritus
JOHN SHIMKUS, Illinois EDWARD J. MARKEY, Massachusetts
JOSEPH R. PITTS, Pennsylvania EDOLPHUS TOWNS, New York
MARY BONO MACK, California FRANK PALLONE, Jr., New Jersey
GREG WALDEN, Oregon BOBBY L. RUSH, Illinois
LEE TERRY, Nebraska ANNA G. ESHOO, California
MIKE ROGERS, Michigan ELIOT L. ENGEL, New York
SUE WILKINS MYRICK, North Carolina GENE GREEN, Texas
Vice Chairman DIANA DeGETTE, Colorado
JOHN SULLIVAN, Oklahoma LOIS CAPPS, California
TIM MURPHY, Pennsylvania MICHAEL F. DOYLE, Pennsylvania
MICHAEL C. BURGESS, Texas JANICE D. SCHAKOWSKY, Illinois
MARSHA BLACKBURN, Tennessee CHARLES A. GONZALEZ, Texas
BRIAN P. BILBRAY, California TAMMY BALDWIN, Wisconsin
CHARLES F. BASS, New Hampshire MIKE ROSS, Arkansas
PHIL GINGREY, Georgia JIM MATHESON, Utah
STEVE SCALISE, Louisiana G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio JOHN BARROW, Georgia
CATHY McMORRIS RODGERS, Washington DORIS O. MATSUI, California
GREGG HARPER, Mississippi DONNA M. CHRISTENSEN, Virgin
LEONARD LANCE, New Jersey Islands
BILL CASSIDY, Louisiana KATHY CASTOR, Florida
BRETT GUTHRIE, Kentucky JOHN P. SARBANES, Maryland
PETE OLSON, Texas
DAVID B. McKINLEY, West Virginia
CORY GARDNER, Colorado
MIKE POMPEO, Kansas
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia
______
Subcommittee on Energy and Power
ED WHITFIELD, Kentucky
Chairman
JOHN SULLIVAN, Oklahoma BOBBY L. RUSH, Illinois
Vice Chairman Ranking Member
JOHN SHIMKUS, Illinois KATHY CASTOR, Florida
GREG WALDEN, Oregon JOHN P. SARBANES, Maryland
LEE TERRY, Nebraska JOHN D. DINGELL, Michigan
MICHAEL C. BURGESS, Texas EDWARD J. MARKEY, Massachusetts
BRIAN P. BILBRAY, California ELIOT L. ENGEL, New York
STEVE SCALISE, Louisiana GENE GREEN, Texas
CATHY McMORRIS RODGERS, Washington LOIS CAPPS, California
PETE OLSON, Texas MICHAEL F. DOYLE, Pennsylvania
DAVID B. McKINLEY, West Virginia CHARLES A. GONZALEZ, Texas
CORY GARDNER, Colorado HENRY A. WAXMAN, California (ex
MIKE POMPEO, Kansas officio)
H. MORGAN GRIFFITH, Virginia
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)
(ii)
C O N T E N T S
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Page
Hon. Ed Whitfield, a Representative in Congress from the
Commonwealth of Kentucky, opening statement.................... 1
Prepared statement........................................... 3
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, opening statement............................... 4
Hon. John Shimkus, a Representative in Congress from the State of
Illinois, opening statement.................................... 5
Hon. Michael C. Burgess, a Representative in Congress from the
State of Texas, opening statement.............................. 6
Hon. Bobby L. Rush, a Representative in Congress from the State
of Illinois, opening statement................................. 6
Witnesses
Howard K. Gruenspecht, Deputy Administrator, Energy Information
Administration, Department of Energy........................... 8
Prepared statement........................................... 11
Answers to submitted questions............................... 79
Margo T. Oge, Director, Office of Transportation and Air Quality,
Environmental Protection Agency................................ 24
Prepared statement........................................... 26
Answers to submitted questions............................... 81
Kathleen Hogan, Deputy Assistant Secretary for Energy Efficiency,
Department of Energy........................................... 34
Prepared statement........................................... 36
Answers to submitted questions............................... 85
THE AMERICAN ENERGY INITIATIVE, PART 26: THE ROLE OF FEDERAL AGENCIES
IN ALTERNATIVE TRANSPORTATION FUELS AND VEHICLES
----------
TUESDAY, JULY 17, 2012
House of Representatives,
Subcommittee on Energy and Power,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 3:02 p.m., in
room 2123, Rayburn House Office Building, Hon. Ed Whitfield
(chairman of the subcommittee) presiding.
Members present: Representatives Whitfield, Shimkus, Terry,
Burgess, Scalise, Gardner, Pompeo, Griffith, Barton, Upton (ex
officio), Rush, Castor, Markey, Green, and Waxman (ex officio).
Staff present: Charlotte Baker, Press Secretary; Anita
Bradley, Senior Policy Advisor to Chairman Emeritus; Maryam
Brown, Chief Counsel, Energy and Power; Andy Duberstein, Deputy
Press Secretary; Cory Hicks, Policy Coordinator, Energy and
Power; Heidi King, Chief Economist; Ben Lieberman, Counsel,
Energy and Power; Mary Neumayr, Senior Energy Counsel; Chris
Sarley, Policy Coordinator, Environment and Economy; Charlotte
Savercool, Executive Assistant; Lyn Walker, Coordinator, Admin/
Human Resources; Michael Aylward, Democratic Professional Staff
Member; Phil Barnett, Democratic Staff Director; Greg Dotson,
Democratic Energy and Environment Staff Director; Caitlin
Haberman, Democratic Policy Analyst; and Alexandra Teitz,
Democratic Senior Counsel, Environment and Energy.
OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF KENTUCKY
Mr. Whitfield. I would like to call this hearing to order.
This is the 26th day of our hearings on the American Energy
Initiative. Last week we held a day of hearings on the
alternative fuels and vehicles that focused on nongovernmental
perspectives. We did not complete that hearing so today we are
going to hear three governmental perspectives: The Energy
Information Administration and projections on alternative fuel
and vehicle trends from them; the Environmental Protection
Agency, which implements several rules and several fuels and
vehicle programs, like the renewable fuel standard and CAFE
greenhouse gas standards for cars and trucks; and the
Department of Energy, which heads up the Federal research
efforts on alternative fuels and vehicles.
Among the things we hope to explore today is the proper
role for the government in spurring innovation in alternative
fuels and vehicles. Where the Federal Government is already
involved, we need to monitor its progress and make revisions if
necessary. For example, I believe that the renewable fuel
standard created in the 2005 bill and expanded in the 2007 bill
has worked well in several respects. The Nation has
successfully ramped up ethanol and biodiesel production to meet
the standards. Some believe there are challenges with the RFS
that require congressional review.
EPA is also involved in fuel economy greenhouse gas
standards for cars and trucks, and indeed, we expect a final
rule for light duty standards for 2017-2015 very soon. We do
need to scrutinize the impact of these standards. While they
are going to improve fuel efficiency and save money in that
way, we know that they will also increase the price, the
sticker price of automobiles, and we want to be sure that
middle-class Americans can still afford these vehicles.
The good news is that a variety of transportation
alternatives are on the table; electricity, biofuels, natural
gas, propane, et cetera. Each offers its own unique mix of
potential economic, environmental or national security
benefits, as well as cost and technical challenges that need to
be overcome. So I look forward to our witnesses today on this
last panel. I will introduce them right before we will receive
their opening statements. And at this time, I would like to
recognize the gentleman from California, Mr. Waxman, for his 5-
minute opening statement.
[The prepared statement of Mr. Whitfield follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Waxman. Thank you, Mr. Chairman.
We are holding our 26th day of hearing on the American
Energy Initiative. And what we will hear from the Republican
majority I think will be disconnected from reality as have the
other 25 previous hearings. For 18 months, the Republicans have
tried to talk about energy policy without even mentioning, let
alone addressing, the problem of carbon pollution and climate
change.
Climate change is inextricably linked to our energy
choices, and sound energy policy is critical to strengthening
our energy security, boosting our economy, improving our
international competitiveness, growing jobs, reducing pollution
and protecting public health. We must tackle climate change and
our other energy challenges together, or we will inevitably
fail to achieve these goals.
The Republicans' approach is like trying to make America
more secure without acknowledging the threat of terrorism. It
is like trying to improve our international competitiveness
while pretending China doesn't exist. It is doomed to failure.
And that failure has a very high price. We are now starting
to get a clear picture of the cost of unchecked climate change.
The recent wildfires, drought, heat waves and extreme weather
events, even in Kentucky, are exactly the types of extreme
events that scientists have been predicting and that this
committee has been ignoring.
According to the National Oceanic and Atmospheric
Administration, more than 40,000 hot temperature records have
been set this year. The past 12 months were the warmest 12-
month period ever recorded in the United States. At the end of
June, more than 100 million people in the U.S. were in areas
under extreme heat advisories. Two-thirds of the country is
experiencing drought. And last week, the Agriculture Department
declared a Federal disaster area in more than 1,000 counties
covering 26 States, making it the largest disaster declaration
ever made by the USDA. More than 2 million acres have burned in
wildfires this year.
A recent study by NOAA and the U.K. Hadley Center found
that due to climate change, the odds that Texas will experience
an extreme heat wave like it did last summer are now 20 times
higher compared to the 1960s. According to economists at the
Texas Agri Life Extension Service, last summer's drought caused
Texas agriculture $7.6 billion. That is just a portion of the
cost of one extreme event that was made far more likely by
climate change.
But instead of tackling this problem, the Republicans have
refused to acknowledge it. Representative Rush and I have
written to Chairman Upton and Chairman Whitfield 15 times this
year to request hearings on various climate change reports and
topics. We have yet to get a response.
And the Republicans have done worse than just ignore
climate change. They are actually pushing policies that would
make it worse. The House Republicans have voted 81 times on the
House floor to block action to address climate change and
establish clean energy policies. Republicans have even voted to
block the EPA carbon pollution tailpipe standards, which we
will hear about today. As proposed, those standards will save
consumers on average $4,400 at the pump, net a vehicle cost, as
well as reduce carbon pollution by 2 billion metric tons and
save about 4 billions barrels of oil.
Only an extreme ideology can view these standards as a bad
idea that Congress needs to stop.
Mr. Chairman, 26 hearings in this subcommittee, and we
continue to ignore the real and urgent problem of climate
change. As Americans across this country continue to experience
devastating extreme events which are becoming far more frequent
as the earth warms, it is increasingly clear that we don't have
any more time to waste. And I am not going to waste any more
time and yield back my 19 seconds.
Mr. Whitfield. Thank you very much.
At this time, I recognize the gentleman from Illinois, Mr.
Shimkus, for 5 minutes.
OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS
Mr. Shimkus. Thank you, Mr. Chairman. And thank you for
holding this hearing today and the follow-up with the hearing
that we had last week on really the renewable fuels portion of
our national energy security and standard.
It was in this hearing room in 2005 that we established the
renewable fuel standard, which has credibly helped in reducing
our reliance on imported crude oil, and it has helped change
the liquid transportation market to something other than
totally a crude-oil-based economy.
So the question is, Where do we go from here? We are still
importing 60 percent of the crude oil to meet our needs for
transportation. That is why in 2007, then again later, we
continued to move the renewable fuel standard and portfolio
even further. That is why always this is an opportunity to take
advantage to highlight the bipartisan bill that Mr. Engel and I
have dropped, H.R. 1687, which is the open fuel standard.
And I think the hearing that we had last week really helps
build on that piece of legislation. Because as I have been
thinking about the hearing--and we all know there is a
plentiful supply of natural gas available, and that is really
going to help on electricity generation, on emissions and the
like. Being from a coal State, I have obviously some concerns
that my coal will be disenfranchised, but I do believe in the
competitive marketplace. If the EPA wasn't making the
additional cost so high, it would still be competitive, but
that is an argument for another time.
On the liquid transportation front, why can't we take the
natural gas, move it into methanol, add methanol, add ethanol,
encourage, incentivize, plead with the auto industry to have a
one fuel standard for vehicles and then have real competition
at the refilling stations, so that the individual consumer
could go up and decide what is the best fuel at the best price
and let market competition take over? As my friend said last
week, we really have--we are still constrained, and I think
some of the opening statements by our panelists will highlight,
that we are still constrained and reliant on crude oil as a
base feed stock for transportation fuels.
What the open fuel standard says is, let's break that, we
are still going to be highly reliant on crude oil, but let's
bring other feed stocks and let the individual consumer choose,
choose at the pump and fight. So I want to take this
opportunity to highlight H.R. 1687, thank my friend Mr. Engel,
who has actually been carrying this a lot longer than I was the
primary sponsor. We appreciate the associations and the
national defense folks, who are really involved with this
because our reliance on imported crude oil throughout the world
and the Strait of Hormuz, and we understand the firing from
yesterday, so this is always a timely thing to discuss.
And with that, Mr. Chairman, I do appreciate having this
hearing, and I yield back the balance of my time.
Mr. Burgess. Mr. Chairman, would you mind yielding to me?
Mr. Shimkus. I would yield time to my friend from Texas.
OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF TEXAS
Mr. Burgess. And I appreciate the gentleman for yielding. I
just want to point out this last weekend we had our annual
energy efficiency summit in my district back at the University
of North Texas. Constituents are concerned about what they see
as the increasing cost of electricity in their fuel bill, so
this hearing is timely today. The keynote speaker for our event
was our railroad commissioner, David Porter, who has the
responsibility for regulating the oil and gas industry in the
State of Texas, and he provided a great deal of insight how
Texas is leading the way in energy technologies, particularly
in the alternative shale formations, which are now so prevalent
in our State and has been a boon to the region and much of the
rest of the country. Lower costs to consumers are driving more
people to drive hybrid vehicles and make their homes more
energy efficient, all good things, without the need for
government incentives to do so. That is how the market was
designed to work, and we should be cautious at any moves that
might distort the market.
For the same reason, I have been concerned about the EPA's
mandates in the renewable fuel standard. I have legislation out
there, H.R. 424, The LEVEL Act, to keep the EPA from fast-
tracking the use of E15 in our fuel systems. The cost of
consumers from this move both at the pump and at the mechanic
shop is going to be significant. And we have yet to provide any
satisfactory liability protection for the small retailer. I
thank the chairman for the recognition and I yield back.
Mr. Shimkus. And I yield back the time.
Mr. Whitfield. That gentleman yields back the balance of
his time.
At this time, I recognize the gentleman from Illinois, Mr.
Rush, for 5 minutes.
OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS
Mr. Rush. Why, thank you, Mr. Chairman, for holding yet
another hearing ad infinitum on this subject. Mr. Chairman,
this is our 26th hearing on this particular subject matter, and
we have not had a law passed yet, nothing has been signed into
law yet. So, Mr. Chairman, at some point, this subcommittee
needs to move away from holding partisan doomed-to-fail
political messaging votes and get on with the business of
working together to actually enact policies that will help move
this country's energy policies forward and help move us away
from the point of no return in regards to the serious matter of
climate change.
Yet another hearing, Mr. Chairman, and during last week's
industry hearing, we heard that we faced most significant
opportunities and challenges as we started to meet the goal of
$36 billion of biofuels by the year 2022 as mandated by the
renewable fuel standards, which was included in the Energy
Independence and Security Act back in 2007.
And Mr. Chairman, today more than ever, we see why it is
extremely necessary to move our country towards a greater
reliance on alternative and renewable sources of energy as
opposed to carbon-intense fossil fuels that emit dangerous
levels of greenhouse gases and contribute enormously to ever-
present climate change.
Over the past few years, we have seen an uptake in severe
wildfires and extreme weather events associated with global
climate change that is occurring all around this Nation and
indeed around the world. According to NOAA, the United States
has set more than 40,000 high temperature records this year
alone. And the last 12 months have been the hottest ever
recorded in the history of this Nation. And at the end of June,
Mr. Chairman, more than 113 million people in the U.S. were in
areas under extreme heat advisories. And just last week, the
U.S. Department of Agriculture declared a Federal disaster area
in more than 1,000 counties, covering 26 States, making it the
largest disaster declaration ever made by the USDA. Today two-
thirds of the country is experiencing drought in States from
your home State of Kentucky to the Midwest, where I live,
facing severe losses of corn and other crops due to lack of
rain.
On my way in from the airport earlier, one of the airport
employees bemoaned the fact that corn, the corn crop this year
would be disastrous and thereby was driving up the cost of
enormous amounts of consumer goods to the American people that
is hurting already under this economic times that we live in.
Mr. Chairman, at least half of the Nation's grazing pastures
are in poor or very poor condition, and up to 30 percent of the
Nation's corn crop is in poor or very poor condition, which
will impact, again, the price of food, consumer goods and
ethanol. Dry conditions are taking a toll on the Great Lakes
where water levels in four of the five lakes have plummeted
this summer due to high evaporation rates and insufficient
rainfall, which of course may pose a significant challenge for
us who rely on the lakes for drinking water and other economic
activities.
Even here in the Nation's Capital two weeks ago, a storm
caused over 1 million homes to lose power in the DC Region,
while States from Florida to Minnesota have experienced some of
the most damaging floods in history due to torrential
downpours.
Mr. Chairman, this is not about party. Regardless of party
or geography or whether you like President Obama and/or his
policies, this committee and this subcommittee can no longer
afford to stick their heads in the sand and pretend that mother
nature is not showing us the signs that we need to act. The
scientists are also increasingly sounding alarms and informing
us that these natural catastrophes are anticipating
consequences of climate change and are expected to continue.
Mr. Chairman, what are we doing here, when are we going to
stop the charade, when are we going to move to bring forth
meaningful bipartisan legislation to deal with real problems
and real issues? With that, I yield back the balance of my
time.
Mr. Whitfield. The gentleman didn't have any time to yield
back, but we appreciate your opening statement.
I would like to introduce the witnesses on the first panel
this afternoon. First of all, we have Mr. Howard Gruenspecht,
who is the deputy administrator, U.S. Energy Information
Administration. We have Ms. Margo Oge, who is director, Office
of Transportation and Air Quality, U.S. Environmental
Protection Agency. And we have Dr. Kathleen Hogan, who is the
deputy assistant secretary for energy efficiency at the
Department of Energy.
We genuinely appreciate your being here today, we look
forward to your testimony. And each of you will be given 5
minutes for an opening statement, and then, at the end of that
time, there will probably be some questions.
STATEMENTS OF HOWARD K. GRUENSPECHT, DEPUTY ADMINISTRATOR,
ENERGY INFORMATION ADMINISTRATION, DEPARTMENT OF ENERGY; MARGO
T. OGE, DIRECTOR, OFFICE OF TRANSPORTATION AND AIR QUALITY,
ENVIRONMENTAL PROTECTION AGENCY; AND KATHLEEN HOGAN, DEPUTY
ASSISTANT SECRETARY FOR ENERGY EFFICIENCY, DEPARTMENT OF ENERGY
Mr. Whitfield. So, Mr. Gruenspecht, you are recognized for
5 minutes for your opening statement.
STATEMENT OF HOWARD K. GRUENSPECHT
Mr. Gruenspecht. Chairman Whitfield, Ranking Member Rush,
members of the subcommittee, I appreciate the opportunity to
appear before you today.
The Energy Information Administration is the statistical
and analytical agency within the Department of Energy. EIA does
not promote or take positions on policy issues and has
independence with respect to the information and analysis we
provide. Therefore, our views should not be construed as
representing those of the Department or other Federal agencies.
The transportation sector and the use of petroleum fuels
are tightly linked. In 2010, 71 percent of total U.S. petroleum
consumption occurred in the transportation sector, while
petroleum products provided 93 percent of total transportation
energy. Light duty vehicles, both passenger cars and light duty
trucks, accounted for 60 percent of total transportation energy
use in 2010, with petroleum based fuels providing 94 percent of
that. Gasoline-only nonhybrid vehicles had an 86 percent market
share out of 10.8 new vehicles sold in 2010 followed by flex
fuel, hybrid electric and diesel vehicles at 9 percent, 3
percent and 2 percent respectively.
EIA's annual energy outlook 2012 provides projections for
the U.S. energy system through 2035. The reference case is a
business-as-usual trend estimate using known technology and
technological and demographic trends and the assumption that
current laws and final regulations, including any applicable
sunset dates, remain unchanged. Annual energy outlook 2012 also
includes several alternative cases with market technology or
policy assumptions that can significantly change the outlook
for light duty energy use, including high and low oil price
cases, a case that includes the fuel economy standards proposed
by NHTSA and EPA for model years 2017 through 2025, an extended
policy case that raises fuel economy standards beyond 2025 and
a case that considers cost breakthroughs and battery
technology.
Although growth in the number of drivers and vehicle miles
per driver results in a projected 35 percent growth in light
duty vehicle miles of travel between 2010 and 2035 in the
referenced case, projected light vehicle petroleum use in 2035
is about 7.2 million barrels per day, 11 percent lower than in
2010, due to changes in the fuel mix and improved fuel economy.
In the CAFE standards case, overall light vehicle energy
consumption decreases by 20 percent over the same time period
with petroleum use falling to only about 5.8 million barrels
per day.
In both cases, petroleum products remain the dominant fuel
for light duty vehicles, but biofuels are projected to provide
a growing share of their energy use, driven primarily by the
renewable fuel standard mandate that has been discussed in the
opening statements. Electricity usage begins to grow but
remains quite small. It grows much more rapidly in the high
technology battery case.
Our fuel economy case analysis indicates a marked increase
in the efficiency of gasoline engines both with and without
microhybrid technologies. My testimony discusses several
challenges surrounding the Federal renewable fuel standard
targets. First, since the Energy Independence and Security Act
was first enacted, EIA has projected that rates of technology
development and market penetration for cellulosic biofuels
would likely fall short of the specified targets and
timetables. We do believe that you get there 25 years from now,
but you don't get there as quickly as the timetables are set
up.
Our near-term projections for cellulosic biofuels have been
further reduced in this current addition of the outlook.
Second, nearly all U.S. motor gasoline already contains 10
percent ethanol, so increased absorption of ethanol into a fuel
pool that is not growing fast requires market acceptance of
ethanol blends up to 15 percent, which EPA has approved for use
in model year 2001 and new or nonflex fuel vehicles or the
increased use of E85 in flex fuel vehicles, both of which face
some significant market obstacles.
Another pathway involves the development and market
penetration of drop in renewable fuels or renewable fuel
components, such as biobutanol. Four key areas of uncertainty
in the annual energy outlook projections, including fuel
prices, technology costs, consumer acceptance and potential
changes in policies, are addressed in my testimony. The impact
of alternative assumptions about technology costs are
particularly striking for battery technologies. Success in
attaining DOE goals leads to a very significant increase in
projected market penetration of hybrid electric vehicles, plug-
in hybrids and electric vehicles compared to the sales
projected in the referenced case using our default cost
assumptions and would likely be even more significant in the
CAFE standards case.
That concludes my statement, Mr. Chairman, and I would be
happy to answer any questions that you or the other members may
have.
[The prepared statement of Mr. Gruenspecht follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Whitfield. Thank you very much.
And Ms. Oge, you are recognized for 5 minutes.
STATEMENT OF MARGO T. OGE
Ms. Oge. Thank you.
Chairman Whitfield, Ranking Member Rush, and other members
of the subcommittee, thank you so much for the opportunity to
testify today. I would like to give you a brief overview of
EPA's efforts implementing the renewable fuel standards and our
efforts in developing the vehicle and truck greenhouse gas
centers.
In November 2011, EPA and NHTSA proposed vehicle standards
for model years 2017 through 2025, calling for a CO2 standard
of 160 grams per mile or equivalent 54.5 miles per gallon by
2025. Now this builds upon greenhouse gas and fuel economy
standards for model years 2012 through 2016. These regulations
provide incentives for manufacturers to produce and sell the
most advanced vehicle technologies. These standards will save
an estimated $1.7 trillion for consumers and businesses in our
country and cut our country's oil consumption by 12 billion
barrels of oil while reducing greenhouse gas emissions by 6
billion metric tons. Consumers on average will see fuel cost
savings of about $8,000 for an average 2025 vehicle compared to
an average 2010 vehicle over that vehicle's lifetime.
Last year, the agencyalso completed the first greenhouse
gas and fuel economy standard for model years 2014 through 2018
for trucks and buses. These standards will reduce CO2 emissions
by about 2 70 million metric tons and save about 530 million
barrels of oil over the life of the vehicles that are built
from 2014 through 2018.
Now, I want to note that owners of a 2018 truck will enjoy
net savings of $73,000 over the vehicle lifetime with a payback
period for that cost for about a year.
Also recognition of the introduction of advanced
technologies in our vehicles and alternative fuel vehicles, EPA
and DOT in 2011 jointly issued an overhaul of the EPA fuel
economy label. These new labels have a lot of new information,
but I want to highlight that for the first time, the labels
will highlight the fuel savings or increased cost that the
consumers will experience as compared to fuel costs for an
average vehicle in the marketplace, whether that fuel is
gasoline, diesel, electricity, hybrids and/or CNG. Now shifting
over to biofuels, these fuels are a critical part of the
evolving alternative fuel landscape.
In 2010, EPA finalized regulations to implement the EISA
revisions to the RFS program. Congress, as you know, set the
target of 36 billion gallons by 2022. EISA requires EPA each
year to publish an annual standard for total advanced biomass
based diesel and cellulosic renewable fuels. As directed by
Congress, each year EPA conducts a thorough review of the
cellulosic industry including one-on-one discussions with each
producer to determine its individual production capacity.
We also consulted with our colleagues from EIA, our
colleagues from DOE and USDA before we proposed the annual
volume standards. As a result of these reviews, EPA reduced the
cellulosic standard to about 6.5 million gallons for 2010 and
2011 and 8.6 million gallons for 2012. That is about 98 percent
below the EISA target for those years.
This summer, we plan to finalize the 2013 biodiesel volume
levels and propose the other 2013 RFS volume standards.
I want to note that the biofuel sector is a dynamic one. We
already have a significant list of qualified advanced and
cellulosic biofuels for the oil transportation sector as well
as jet fuel and heating oil uses. Last year, we added canola-
based biodiesel and a number of other new technology based
pathways. Most recently, we took comments on a number of
advanced and cellulosic biofuels, including grain sorghum,
camelina, Napier grass, sugarcane and others, and we hope to
finalize this analysis later this year. We are currently
evaluating dozens, I want to say over 30 additional petitions
for new biofuels, both feed stocks and different pathways.
EPA recognizes the value of these fuels and the value of
advanced vehicle technologies and we look forward to a
successful development introduction of these new fuels and
advanced technology to the marketplace. Thank you.
[The prepared statement of Ms. Oge follows:]
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Mr. Whitfield. Thank you.
Dr. Hogan, you are recognized for 5 minutes.
STATEMENT OF KATHLEEN HOGAN
Ms. Hogan. Thank you Chairman Whitfield, Ranking Member
Rush, and members of the subcommittee. I do thank you for the
opportunity to be here today.
As part of the President's all-of-the-above approach to
American energy, the department is advancing transportation
innovations to do a number of things. That is to reduce our
dependence on foreign oil and the nearly $1 billion we send out
of the country for oil each day; helping our vehicle
manufacturing industry, that accounts for 5 percent of GDP and
millions of jobs, compete in this global industry; and then to
provide consumers with more transportation choices and cost
savings, as transportation is the second biggest monthly
household expense.
The DOE portfolio is broad spanning light, medium and heavy
duty vehicles, and including advanced combustion electric drive
biofuels, hydrogen fuel cells, lightweight materials and other
efforts, and we are making important progress. Electric
vehicles is one important focus. Electricity is cheaper than
gasoline. At about $1 per gallon equivalence, it offers
competitive performance at-home charging convenience, less
pollution and is almost oil free. Other countries, of course,
recognize these benefits and are making their own investments,
and we here have a critical opportunity to grow U.S.
manufacturing building upon our past successes.
Today DOE-developed battery technology is in nearly every
hybrid vehicle on the road. We have achieved a 35 percent cost
reduction in the next generation of batteries, and we expect an
additional 50 percent reduction by 2014. President Obama has
announced a new EV everywhere grand challenge just this last
March to enable U.S. companies to lead the world in producing
plug-in EVs that are as affordable and convenient as gasoline-
powered vehicles, and to truly spur the U.S. to further reduce
costs, extend vehicle range and improve performance and
convenience. Biofuels are also important to reducing our
dependence on foreign oil and developing a home-grown industry,
and again we are making great strides with cellulosic ethanol
production.
In the past 2 years, four DOE supported commercial
cellulosic ethanol biorefineries broke ground, and we have also
developed the know-how to produce cellulosic biomass at about
$2 per gallon when it is scaled, having reduced these costs by
a factor of four over the last 10 years.
Beyond ethanol, we are working to reduce the cost for
cellulosic and algal based drop in biofuels, so that we can
overcome some of the infrastructure issues, use our existing
infrastructure and displace diesel, jet fuel and gasoline. Our
goal here is $3 per gallon drop ins by 2017.
Integrated biorefineries are a critical part of our work to
help commercialize first-of-a-kind approaches. Currently 20 of
24 DOE supported biorefineries are in construction or operating
with an overall combined total of nearly 100 million gallons
per year of advanced biofuel capacity expected by 2014.
We also continue to work with hydrogen fuel cells to make
them cost competitive. Here the global market has doubled in
the last 3 years and offers important opportunities for U.S.
manufacturing. Our goal is for automotive fuel cells to be cost
competitive with internal combustion engines by 2017 and for
renewable hydrogen to be competitive with conventional fuels by
2020.
Progress here includes the cost of automotive fuel cells
being down 80 percent since 2002; hydrogen delivery costs down
40 percent; 3 million monitored miles for fuel cell electric
vehicles demonstrating good durability and more than twice the
efficiency of today's gasoline vehicles; and manufacturers on
track to commercialize some fuel cell electric vehicles by 2015
in that timeframe; and many States developing stationery
applications and infrastructure.
Here--so I guess broadly the President has proposed the
National Community Development Challenge to enable local
communities around the country to accelerate the deployment of
clean alternative fuel vehicles and infrastructure, helping
communities use the technologies that best fit their local
needs, whether it is electric drive, natural gas, biofuels or
another fuel.
So, just in summary, the transportation sector does offer a
number of critical opportunities for the U.S. to meet major
national objectives, such as reducing our dependence on oil,
keeping America on the cutting edge of advanced manufacturing,
as well as environmental issues. And so thank you for the
opportunity to discuss this, and we welcome your questions.
[The prepared statement of Ms. Hogan follows:]
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Mr. Whitfield. Thank you, Dr. Hogan.
And at this time, I will recognize myself for 5 minutes of
questions.
We appreciate your testimony.
I want to start off with just a little editorial comment.
You had mentioned that the President is committed to an all-of-
the-above energy policy, which he frequently does state
wherever he goes. And I know we are focusing today on fuel and
transportation primarily. But when he came out with his
campaign Web site on energy sources, he neglected to even
mention coal. And of course, we can't remain competitive in the
global marketplace, unless we can produce electricity at a
competitive rate. So I just wanted to throw that out there,
even though that is not our subject matter today because he
sometimes says he is for all the above, but some of his actions
in my view do not indicate that.
Ms. Oge, under the renewable fuel standard law, EPA is
required to publish its required volume obligations for certain
fuel categories on an annual basis. These obligations inform
industry stakeholders as to the specific amounts of renewable
fuel that must be produced, purchased, blended or imported in
order to comply with the program.
Now, you all are given discretion when it relates to
biomass based diesel. And I can't get all of my dates exactly
right, but at one point, you all had established proposed
volumes for 2012 and called I think for 1.28 billion gallons of
biomass diesel in 2013. However, when EPA issued its final
rule, it included the 2012 volumes but omitted the 2013 volumes
for biomass diesel. And we had actually written a letter to you
all about that and was asking for an explanation of why was
that omitted in the 2013 year.
Ms. Oge. Mr. Chairman, you are absolutely right. We did
propose a biodiesel level of 1.28 billion gallons for 2013. We
received a lot of comments, especially in the area of the cost
associated with increasing the volume from 1 billion gallons to
1.28. So the agency had to go back and do additional analysis.
So what we decided to do was to finalize the 2012 volumes, and
we are in the process of finalizing the 2013. Actually, our
final action has gone over to the Office of Management and
Budget, and we expect the final release very soon to establish
the 2013 volumes for biodiesel.
Mr. Whitfield. Do you expect it to be released within a
month?
Ms. Oge. I hope so.
Mr. Whitfield. OK. So you do intend to do it?
Ms. Oge. Yes.
Mr. Whitfield. And there were just some technical issues
with it?
Ms. Oge. Yes.
Mr. Whitfield. OK. Well, thank you very much.
Mr. Gruenspecht, I noticed in your testimony you talked
about that by the year 2035, you projected the use of oil for
transportation purposes being in the neighborhood of 5.8
million barrels a day, which was significantly less than today.
How did you conclude that that is the volume it would be in
2035? What assumptions did you all use?
Mr. Gruenspecht. Well, we develop estimates of the amount
of travel. That is driven by the number of licensed drivers,
travel per licensed driver.
Mr. Whitfield. And a lot of it I am assuming would be
improved fuel standards would help----
Mr. Gruenspecht. A lot of fuel economy helps a great deal
in that. So efficiency sort of offsets the growth in travel.
And we also have a significant increase in the use of biofuels,
so that also offsets petroleum use.
Mr. Whitfield. One of the things that bothers me is we talk
about electric cars. We talk about fuel cells. We talk about
compressed and liquid natural gas. We have a multitude of fuels
that we are looking at for our transportation purposes. All of
them take a significant amount of infrastructure, which really
is not out there right now. And I am just concerned myself on
the availability of capital, the lack of this infrastructure,
going off in so many directions. I mean, within your agencies,
do you all ever discuss that fact, or do you just want to
continue pursuing a multi-source fuel sources for
transportation?
Ms. Oge. Well, let me give you an example. We are in the
process of finalizing the 2017 to 2025 greenhouse gas and fuel
efficiency standard for light duty vehicles. We, again based on
the Clean Air Act, we are using the Clean Air Act, our
colleagues from NHTSA is using their law, we are looking at
advanced technologies, existing technologies and advanced
technologies that companies can use to achieve those standards.
And just to give you an example, for the 2025 timeframe, we
expect that the levels of standards that we have proposed, if
indeed we finalize those standards, will be met, for the most
part, over 90 percent of it will be met with existing
technologies, gasoline and diesel. And less than 3 percent will
be relied on electric power train, like electric vehicles and
plug in hybrids.
Mr. Whitfield. Less than 3 percent.
Ms. Oge. Less than 3 percent. The remaining of it will be
based on gasoline and diesel and hybrids.
Mr. Whitfield. Well, I had planned to ask six questions,
and I am already out of time so I will recognize Mr. Rush for 5
minutes.
Mr. Rush. I yield to the ranking member, Mr. Waxman.
Mr. Whitfield. I am sorry. Mr. Waxman.
Mr. Waxman. Thank you, Mr. Rush, for allowing me to go
first with my questions.
Dr. Gruenspecht, at a similar hearing last year, I raised
concerns about EIA's analysis of the vehicle fuel efficiency
and tailpipe standards. At that time, many of EIA's assumptions
about vehicle technologies differed substantially from NHTSA
and EPA projections, and EIA appeared to not have adequately
engaged with NHTSA and EPA in developing the EIA analysis. The
annual energy outlook 2012 reflects improvements in this area,
but there are still some outstanding concerns about the
underlying vehicle technologies, data and analysis used by EIA.
For example, the California Air Resources Board has raised
concerns that the EIA analysis still fails to incorporate the
latest data and analysis into its models. CARB has worked very
closely with EPA, NHTSA and the auto industry to develop what
it describes as a most comprehensive, accurate and up-to-date
database of efficient and low-polluting vehicle technologies
anywhere in the world, along with associated modeling
capability to project how automakers will comply with the
standards.
Dr. Gruenspecht, does EIA view the vehicle technologies
data and analysis developed by NHTSA, EPA and CARB as a
valuable source of information in this area, and if so, will
you commit to working more closely with these agencies to
inform your own models and analysis.
Mr. Gruenspecht. We do consider that information to be very
valuable, and we do consult with our colleagues, and we also
consult with nongovernmental organizations and manufacturers,
and we expect to continue to do so.
Mr. Waxman. Thank you.
Given the remarkable joint effort on the fuel efficiency
and tailpipe rulemakings and the wealth of information it has
produced, incorporating such information should produce a
stronger analytic product. I think it is worth spending a few
minutes on the tailpipe standards themselves, given their
tremendous benefits.
Ms. Oge, would you please summarize the full suite of
benefits from the tailpipe standards?
Ms. Oge. So, Congressman Waxman, on my opening remarks, I
have to find the papers, my opening remarks I summarized the
overall benefits of the two programs. But just to give you a
brief overview of the benefits of the 2017 to 2025 program,
which is the program that we have proposed and we are in the
process of finalizing, based on the proposal, we expect that
the cost on an average for the fleet, that doesn't mean for
every vehicle, but on an average would be about $2,000 per
vehicle on an average for 2025. However, the benefits, the net
benefits that the consumer will achieve as a result of the fuel
savings will be $4,400.
Mr. Waxman. So, after accounting for any increased cost for
the vehicle over its life, consumers would save on average
$3,000 under the current standards and another $4,400 under the
proposed standards. Consumers save this money because these
vehicles use a lot less gasoline. The best way to save money at
the pump is to drive right by it, but we are more used to
thinking about savings at the pump in terms of gas prices.
So I asked EPA to calculate how much lower gas prices would
have to be to save a consumer the same amount of money. For a
new 2012 vehicle, the net savings experienced by a consumer are
equivalent to dropping the price of gas by $0.14 per gallon,
and those savings will rise over time as the new vehicles
become more efficient. By 2025, the proposed standards are
equivalent to lowering gas prices for the consumer by $1.13 per
gallon. As the fleet turns over, eventually every light duty
vehicle driver on the road will experience these savings.
Could you tell us, Ms. Oge, about EPA's heavy duty vehicle
standards.
Ms. Oge. So for the heavy duty vehicle standards, as I
mentioned in my opening remarks, the cost for a tractor, let's
say these are the heavy duty diesel tractors that you see on
our highways, in 2018 will be $6,200.
Mr. Waxman. These are significant benefits, but the House
Republicans have already passed legislation that would block or
imperil all of EPA's tailpipe standards and make Americans
continue to spend more money at the pump, as well as exacerbate
climate change and our dependence on oil. Next week, they are
bringing a regulatory bill to the floor that would stop EPA
from finalizing the proposed tailpipe standards until
unemployment falls below 6 percent. This is nonsensical.
Preventing Americans from saving money at the pump certainly
isn't going to help our economy.
Thank you, Mr. Chairman. I yield back my time.
Mr. Whitfield. At this time, I recognize the gentleman from
Texas, Mr. Barton, for 5 minutes.
Mr. Barton. Thank you, Mr. Chairman, and thank you for your
diligence in pursuing these hearings.
My first question is to the representative from the
Department of Energy. Could you tell us what the Department of
Energy thinks the purpose of the renewable fuel standard is,
what is the goal? I asked DOE, but if EPA wants to comment.
Ms. Oge. I still work for EPA.
Ms. Hogan. I believe there are multiple goals to the
renewable fuel standard, and I think it includes improving our
independence from imported oil, as well as addressing
environmental issues.
Mr. Barton. Does the EPA want to comment on that?
Ms. Oge. Agree.
Mr. Barton. Well, based on that assumption, it is not a
mutually conducive goal. If the goal is to reduce oil imports,
then clean coal technology and more use of natural,
domestically produced natural gas should be a part of any
discussion about a standard, although clean coal and natural
gas are not renewable in the classic sense. Both of those,
certainly natural gas, would reduce emissions. I mean, I am
just a little, I am a little puzzled because I read the
testimony and most of the--the gentleman from the Energy
Information Agency is just talking about what has happened,
which is kind of what EIA's job is to do. The EPA and to some
extent DOE's testimony is talking about the increased use of
ethanol. The problem with ethanol is that if you are looking to
reduce greenhouse gases, ethanol goes the other way. Now, I am
not--I don't believe that CO2 is the danger and the enemy that
some people do, but if your goal is to reduce greenhouse gases,
definitely CO2 is a greenhouse gas and you can't get there with
ethanol. You can't get there with ethanol on a cost basis.
So if the goal is to reduce foreign imports, then we look
at natural gas as a transportation fuel, and we also look at
using clean coal to produce diesel and things like that.
Dr. Hogan, do you agree with that, what I just said?
Ms. Hogan. I believe we are trying to address multiple
objectives and you are trying to address them over the period
of time of the RFS, which is over some period of time. And if
you do look at the fuels that the RFS is promoting, clearly one
of the things you are looking to do is to address carbon.
There has certainly been a number of studies that have been
brought forward on the carbon profile of ethanol. I think the
most recent set of studies actually show about a 20 percent
benefit from ethanol. And then what I mostly talked about in my
statement was not corn-based ethanol but really cellulosic
based ethanol which really gets you a very, very, very
substantial carbon benefit. And certainly we can have a
conversation of the multiple objectives we are trying to
advance in this country. But as I understand the RFS, it was
mostly, it was for carbon as well as oil imports and it is
delivering on that. And as we look at the growing, I guess,
requirements for cellulosic based ethanol we would see even
greater benefits going forward.
Mr. Barton. Well, my time is about to expire, but the
statistic that I have in front of me is that ethanol contains
only 61 percent of the energy of gasoline. It takes 1.64
gallons of ethanol to do the same amount of work as a gallon of
gasoline. That 1.64 gallons of ethanol emits 20.5 pounds of
CO2. Ethanol emits 1 pound more of CO2 in the air than using a
gallon of gasoline. Now, I don't know if that is a correct
statement, but that is what my staff has prepared. Do you agree
with that?
Ms. Hogan. We can certainly share with you our
calculations. I do know that the studies that we are engaged
with take into account the energy value of ethanol versus the
energy value of a gallon of gasoline, and we are happy to share
our numbers with you.
[The information follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Barton. Well, I would encourage the department to look
at both clean coal and also natural gas as a transportation
fuel because they are both abundant domestic resources and,
especially in the case of natural gas, definitely reduce the
amount of CO2. And clean coal done properly also does that.
And with that, I yield back.
Mr. Whitfield. At this time I recognize the gentleman from
Illinois, Mr. Rush, for 5 minutes.
Mr. Rush. Thank you, Mr. Chairman.
Mr. Chairman, when I was in the fifth grade in a history
class, I was astounded when my history lesson mentioned the
fact that Emperor Nero fiddled while Rome burned.
Mr. Chairman, America is burning right now, and we, Mr.
Waxman and I, have asked the Republicans 15 times in the matter
of a few months to hold a hearing on climate change, and we
have been rebuffed on each and every occasion.
You are out of touch, Mr. Chairman. This is the committee
of jurisdiction. And this committee is out of touch with the
plight of the American people. In my opening statement, I
mentioned that some of the most extreme weather events that
America has ever faced are occurring right now: 40,000 high
temperature records set this year. For the last 12 months, they
were the hottest months on record; 113 million people in the
U.S. in areas of extreme health advisory. America is burning,
and this subcommittee is fiddling and twiddling.
The U.S. Department of Agriculture declared a Federal
disaster area in over 1,000 counties in 24 States. Two-thirds
of the U.S. is experiencing a drought. One-half of U.S. grazing
lands are in poor or very poor condition. America is burning,
and this committee is fiddling and twiddling; 30 percent of the
U.S. corn crop is in poor or very poor condition. And we are
talking about burning coal when America's crops and corn,
America's corn is burning. The Great Lakes have had low water
levels due to lack of rain.
Mr. Chairman, when is this committee going to get in touch
with what is happening in America? I would like to ask the
witnesses, Ms. Oge and Ms. Hogan, why is it important that the
Federal Government play a role in steering energy policy in the
direction of the IFS and CAFE standards? Again, my Republican
colleagues like to say that we need to leave all this to the
market, and everything will work out just fine. Why is it
important that we have leadership from Congress to move energy
policies toward greater energy efficiency, additional
alternative fuels and diversity in the Nation's energy
portfolio?
Ms. Oge and Ms. Hogan.
Ms. Oge. Let me just give you an example.
Using the authority under the Clean Air Act, EPA working
with our colleagues from NHTSA, we have undertaken three very
significant programs in the last couple of years to address
greenhouse gas emissions and improve fuel efficiency for our
vehicles, our light duty vehicles, and for our trucks. I
believe that these programs are a win-win situation. And you
just have to take a look and see that these programs are
supported--not just by the Federal Government and State
government--they are supported by the industries. The car
companies have supported this program, the truck companies, the
American Trucking Association. And the reason for that is
because these investments that they will make, they pay back to
the consumer. So it is good for the consumer. It is good for
the economy, but also it is good for our environment and for
energy security.
Mr. Rush. Ms. Hogan. Go ahead.
Ms. Hogan. And, I certainly agree with what Ms. Oge had to
say, and I think another aspect that the Department of Energy
works hard to bring to the table is to support our
manufacturing base here in this country. There is innovation
happening all the time, and we want our manufacturing base to
be competitive with the activities in these global industries.
Mr. Whitfield. The gentleman's time has expired.
At this time, I recognize the gentleman from Illinois, Mr.
Shimkus, for 5 minutes.
Mr. Shimkus. Thank you, Mr. Chairman.
And thanks again for coming. I--don't take this bad. I am
friendly, friendly on this hearing.
But I do want to ask Ms. Oge a question on your on EPA
estimates on the cost of--with the new CAFE and greenhouse gas
standards, by 2016, it will add another thousand dollars to a
cost of a car. And then by 2025, you are projecting $3,000 for
an additional car; is that correct?
Ms. Oge. No, $2,000. So it is $900 for 2016 and $2,000 for
2025. I think the total probably----
Mr. Shimkus. Oh, yes. It is cumulative, I think, so we had
one plus two, then. Then let me go on.
And you also calculated, I think this is good for the
record, that you are projecting that people will buy new cars
and they will keep them, their lifetime will be about 200,000
miles. Is that correct?
Ms. Oge. Yes.
Mr. Shimkus. OK. I think that is pretty generous, but I
hope you are correct in that.
For both Ms. Oge and Ms. Hogan, I am reading, I do believe
that we are on the verge of getting close to the cellulosic
goals and desires. I am very fortunate to have the National
Corn and Ethanol Research Center at SIU, Edwardsville. And last
month, they, the researchers at Southern Illinois University
Edwardsville say they have successfully produced ethanol from
cellulosic portion of the corn kernel by utilizing existing
technology that you can find in the commercial marketplace, and
then obviously they believe it is built on cellulosic ethanol
reality, which--and I tried to do this last in the last hearing
of last week. I kind of portrayed a, what is a kernel of corn,
for the lay people and there is about six different parts of a
kernel of corn, that some go to fermented ethanol, but the
benefit of cellulosic is using another portion of that.
I also tried to highlight in just the fuel food debate,
that even when you are doing the fermentation, a byproduct is
distilled or dried grains, which goes into the livestock feed
market, and we actually ship that all over the world as a
commodity product. But there is--that is why we have these
hearings so that we can get out the full fact and full data and
statistics on this.
Ms. Oge, I was curious on the CAFE standards and trying to
rectify that with what Eliot Engel and I are trying to do with
the open fuel standard, which is that bill that I talked about.
Basically it has a phase in of flex fuel vehicles, for the most
part, to 50 percent by the vehicle fleet by 2014 and 80 percent
by 2016. Under your ability to do that with, how would we go
about that based on what you all have been able to do with CAFE
and the greenhouse gas rules? How does that segue into that
process?
Ms. Oge. So, for the greenhouse gas standards, we, until,
through 2016, we will provide the car companies the same
benefit that they will get introducing flex fuel vehicles in
the marketplace that they are getting under the CAFE program.
As you know, those incentives go away in 2019 for CAFE.
But EPA will continue to evaluate how much actually E-85 is
used in the marketplace, and then we clearly know the car
companies that they are selling flex fuel vehicles. And we will
give them credit toward meeting the greenhouse gas standards
for light duty vehicles.
Mr. Shimkus. I just want to make sure I keep on record, I
love fossil fuels, so I am not anti-fossil fuels. I am
concerned about the 45 percent that we import and the national
security implications. And I do hope that with Keystone and
coal to liquid, and other things that we can also have more
local supply but my focus has always been the national security
ramifications of the sea lanes closing and that then the
catastrophic events that could occur. So, for all of my crude
oil folks and refineries and my coal guys, don't worry, I am
still on board, and I am still part of the, part of the overall
team.
Ms. Oge, I want to ask--the last question is on the E-15.
Can E-15 be introduced for some vehicles but not others without
widespread misfueling? And then the agency has issued
misfueling mitigation plan. Do you think that is adequate?
Ms. Oge. So we have looked at the Clean Air Act, our
existing regulations, and we believe, again, based on the law
that is in front of us we have used the best legal
specifications and scientific specifications to waive E-15 for
the years of 2001 and newer vehicles. However there is lack of
data. To what extent E-15 could potentially impact the
environmental control systems for vehicles older than 2001 and
off-road equipment. And that is what we need to look when we
look, when we do these waivers; it is really to what extent a
new fuel will impact the pollution control systems. And based
on the lack of data, we have decided that we are not going to
allow E-15 to be used in the marketplace for those older
vehicles and off-road equipment.
Now, what I have to say is that when we waive the use of E-
15 for 2001 and newer vehicles, we are not mandating it. So we
are not requiring the marketplace to use E-15, but we are
telling all of the parties involved that if you use E-15, there
are a number of things that you need to do. And you need to
make sure that there are products that transfer data that we
can evaluate from point A to point Z. We want to make sure that
there is an appropriate labeling at the stations. Clearly,
there are issues that go beyond my office that have to do with
dispensing units and to what extent are appropriate to be used
with E-15, If they have not been designed to be used for E-15
underground storage tanks. So there are a slew of issues that
accompany the marketplace. We have to decide to what extent
they are going to have to meet in order to market E-15 in the
market place.
Mr. Whitfield. At this time, I will recognize the
gentlelady from Florida, Ms. Caster, for 5 minutes.
Ms. Castor. Well, thank you, Mr. Chairman.
And thanks to the witnesses. Actually, I think it is fairly
remarkable, the chart that is attached to the EIA's testimony
tells a very positive story, and frankly, you know, for
decades, all you heard in America was, we are increasing our
use of fossil fuels or increasing our use of oil; oil
consumption has risen steadily until very recently. Until very
recently, the Energy Information Administration has
consistently projected that U.S. oil consumption would continue
to rise into the future. And every President I can remember and
past Congresses have talked about reducing our dependence on
oil, but none has succeeded in doing so until now.
This year's annual energy outlook projects that America
will consume less and less oil for decades to come. And this is
great news for the climate. It is good news for consumers and
their pocketbooks, at a time when they need a little relief. It
is very positive for America's energy security, and you have to
say our manufacturing sector that has been improving, improving
the last couple of months, a little shakier, but I think this
is going to be an area where we will be able to create jobs in
the future.
Mr. Gruenspecht, how has the Obama administration's final
and proposed fuel efficiency and tailpipe standards affected
EIA's forecast for oil consumption over the coming years? You
can get into a little more detail than your opening statement.
Mr. Gruenspecht. Sure. Well, again, the projections for
transportation energy use depend on economic activity, depends
on the number of licensed drivers, how much they travel, the
efficiency of the vehicles, which the fuel economy standards
definitely have an impact. Light duty truck fuel economy
standards started to be raised in the previous administration
and then this administration came in and proposed first the
model year 2012 to 2016. That chart that you referred to in my
testimony by the way is for the reference case. It would look
to be even lower energy consumption with the CAFE standards
case. So, again, in my testimony, there is a little table that
shows what difference the efficiency standards make. Certainly
energy prices are also make making a difference. Less welcome
to the American people in part. You know, if one is looking not
only at petroleum consumption, if one is looking at imports,
then energy production is also making a contribution.
So we are both reducing our petroleum demand, if you will,
both by greater efficiency and by substituting other fuels, and
we are also increasing our domestic production.
Ms. Castor. And clearly, these projected reductions didn't
just magically appear. They are in substantial part the result
of the administration's fuel efficiency and tailpipe standards.
I think it is a tremendous achievement for the Obama
administration. But even better, these standards also save
consumers money and reduce our dependence on foreign oil.
I thank my colleagues who have been here for a while that
were oftentimes pushing past administrations, and a few years
ago, the Congress, under Democratic control, gave a substantial
push to, so to my colleagues who were there then, my hat is off
to them as well.
Ms. Oge, would you tell a little bit more about how the
these standards will save Americans at the pump? And I can tell
you just from personal experience, I have a relative that
purchased one of these, and you see more and more of them on
the road, and he loves the fact that he gets 50 miles per
gallon. And, you know, when--gas prices have fallen again, but
when they were up, he loved driving by the gas station and
driving by it again and again because 50 miles per gallon, you
know, I know that it cost a little bit more, but over the life
of the vehicle and now with teenage daughters that may be
looking to drive, I know they are going to save money. But go
head.
Ms. Oge. So, as you said, this program collectively,the
2012 to 2016, greenhouse gas fuel efficiency improving
standards for light-duty cars, 2015 to 2025 that is the
proposal that we just made and the truck rule for trucks and
buses are good for the users and the consumers, climate, energy
security and innovation in this country.
Just to give you an example: So our greenhouse gas fuel
efficiency standards started this year. So actually this year,
there are about a hundred models that you can go out and buy
that meets the standards of 2017 of what we propose for 2017.
So that tells you the innovation that is going on in our
country. Developing this technology, and as you know, the car
industry is doing extraordinary well----
Ms. Castor. Well, my time has run out, but I do want to
congratulate you and your whole team for the progress that you
have made.
And to close, Mr. Chairman, I would like to encourage you
to call a hearing on climate change. And I think that the
committee and the Congress could benefit from the testimony of
many experts that could advise us on policy and what else we
should be doing to address this serious problem.
Mr. Whitfield. Well, I really appreciate that suggestion,
and I might remind everyone over the last 5 years, we have had
a multitude of hearings on climate change, and I am sure that
we will in the future as well.
At this time, I would like to recognize Mr. Terry for 5
minutes.
Mr. Terry. Thank you, Mr. Chairman.
Mr. Gruenspecht, help me with a couple of things here.
First of all, as energy usage is related to economy in a sense
that if the economy is growing, well, the effect will be energy
use grows. Is that a correct assumption?
Mr. Gruenspecht. All else equal, economic growth does lead
to more energy use.
Mr. Terry. And a shrinking economy results in less usage of
energy historically.
Mr. Gruenspecht. We have seen that.
Mr. Terry. You have seen that. In fact, we have seen it in
the last 4 years.
Mr. Gruenspecht. Well, I mean, well, we saw it for a
portion of the last 4 years.
Mr. Terry. Yes.
Mr. Gruenspecht. And I think now the economy is growing,
but there was a time certainly when the economy was not growing
over the last 4 years, and energy use did fall dramatically.
Mr. Terry. Yes. So if we want to, in general, compliment
the administration for bringing down usage of gasoline, we
should also then compliment them for our slow in recession,
slow growth economy and recession. That is a rhetorical
question. You don't have to answer that.
Mr. Gruenspecht. Thank you.
Mr. Terry. But you do have to answer this one. And this is,
you know, when we were debating on the floor and developing the
renewable fuel standard several years ago, there was an
assumption that a good part of the growth would come from
cellulosic ethanol. We haven't seen that yet today.
So I am going to ask you both, you Mr. Gruenspecht and you,
Ms. Hogan, why haven't we? Why, why aren't we seeing mass
production of cellulosic energy in July of 2012?
Mr. Gruenspecht. Well, I follow the data more, so I think
Ms. Oge could go into the reasons, but, you know, we are, as
suggested in Ms. Oge's testimony, we do every year in the
legislation provide an estimate to EPA of our view of what
might be produced. I think the estimate we provided them this
past year for 2012 was 6.7 million gallons, which is a lot less
than the 500 million that was envisioned in the statute.
Mr. Terry. So instead of repeating back the statute,
because, as you know, I have very little time----
Mr. Gruenspecht. Right.
Mr. Terry [continuing]. Educated in how to use that up. But
if you would just answer, why aren't we seeing it? I am asking
honestly.
Mr. Gruenspecht. No, I am not trying to----
Mr. Terry. I support it.
Mr. Gruenspecht [continuing]. But I think it is hard. I
think the technology--you know, that some plants are going to
come on this year we believe. It will not be as high as what we
thought. It will certainly not be as high as the legislation--
--
Mr. Terry. Has EIA, in regard to biofuels and ethanol and
biodiesel, began to factor in the consequences of the drought
hitting the corn belt this year, and is that going to in any
way affect fuel prices?
Mr. Gruenspecht. It would affect ethanol prices to some
extent. Corn is the major input to ethanol. One gets about 2.8
gallons of ethanol per bushel of corn. So if the price of a
bushel of corn would, would rise, that would tend to lead to an
increase in the cost of producing ethanol. Ethanol is not the
only product. Distillers dried grains are also produced, and
those have some value. So it is not that the full increase in
the price of corn has to show up in the cost of producing
ethanol, but a lot of it will.
Again, keep in mind that ethanol right now is about 10
percent of the fuel, you know, the content of gasoline by
volume so an increase of you know 50 cents per gallon of
ethanol, which would be more than the impact, a lot more than
the impact.
Mr. Terry. So if it is only 50 cents, I think it would be
lucky.
Ms. Oge, do you have anything to add now with those two
questions?
Ms. Oge. You know, I asked the same question myself. So
what I did this year is I asked the major cellulosic companies
to come and talk to me, and I said, let's talk, let's figure
out what is going on, because like you, you said what is going
on? And this is what I have learned. What I have learned is we
are talking about 5 years. EISA passed in 2007, So we are
talking about 5 years. And I have concluded that significant
progress has been made when you consider we are talking very
advanced biofuels and technologies, from R&D to pilot
demonstration to commercial availability, and this year, we are
going to see commercial scale cellulosic plants in this
country.
The other thing that we need to keep in mind is that
despite--this is what I learned from this company--despite the
tough economic conditions that our country has been going
through, significant private sector investments have been made
in the sector. What I was told is that about $2.4 billion from
venture capitalists have been, you know, invested for these
fuels. And furthermore, what I am hearing is that we are
moving, not only we are moving from pilot to large commercial
scale, but when you talk to large companies, like BP and
Dupont, that again are investing a significant amount of money,
they are committed to bring large commercial scale of
cellulosics in 2014 time frame.
So I think we are beginning to see a move, significant move
from pilot to commercial scale, and if that continues, I think
that the hope of cellulosics will be realized.
Mr. Terry. Thank you.
Mr. Whitfield. At this time, I recognize the gentleman from
Texas, Mr. Green, for 5 minutes.
Mr. Green. Thank you, Mr. Chairman, and I thank each of you
for being here today.
Ms. Oge, my questions today, just to reminisce, we had a
subcommittee hearing in Oversight and Investigations last week
on the RIN fraud issue. And Mr. Bunker and Mr. Brooks answered
some of my questions, but I understand you also are involved in
finding a solution to these problems. I wanted to make sure I
look at the opportunity--took this opportunity to discuss this
with you as well.
The EPA maintains that petroleum refineries are expected to
exercise good business judgment and use due diligence. I know
that the obligated parties have been pressing the EPA for
months to formally define what merits due diligence. And what
do you expect from that? My first question is, will the agency
be able to propose and finalize the rules so that programs can
be in place before 2013?
Ms. Oge. Congressman, we are working very hard to come up
with solutions. The goal is to have the final actions taken
place by the end of the year. We want to make sure that both
sides of the industry, the biodiesel sector and the obligated
parties, which is the refining industry, are working with us.
And up to date, I want to let you know is that we have had very
collaborative efforts. So I am very optimistic that we are
going to be able to resolve this issue.
Mr. Green. OK. And I know from our testimony last week by
Mr. Bunker and Mr. Brooks, there is a cooperative effort. Is it
possible for EPA to issue a separate expedited rulemaking to
ensure that the rule becomes effective before 2013?
Ms. Oge. We will work very hard and do our best, sir.
Mr. Green. OK. If not, could EPA make some other type of
administrative adjustment to help small biodiesel producers
before 2013? We heard from some of them last week that a lot of
refiners in my area are just not going to go to these folks
because they don't know what due diligence is.
Ms. Oge. Yes. Clearly the solutions that we are evaluating,
and you can imagine that there are solutions and proposals from
both sides, we want to make sure that we are not going to have
unintended consequences, which is impact of small biodiesel
producers.
Mr. Green. OK. Aside from the notice of violations issued
to three fraudulent biodiesel producers, how many invalid RIN
producer investigations are ongoing? Do you know? I know we
have three that are public, but do we have a number of other
investigations ongoing?
Ms. Oge. I don't know, sir. I am not overseeing the
enforcement office at EPA.
Mr. Green. OK. And do you know how many invalid RIN
investigations were concluded that found no violation occurred?
Ms. Oge. I don't.
Mr. Green. OK. If you could, if you could check and get
that back with us.
In May of 2011, we held a similar hearing to this one, and
I submitted a question for the record asking EPA for its
estimate for misfueling was in the first few years of the E-15s
existence at gas pumps. EPA responded that you didn't have
enough information on the E-15 market penetration to make an
estimate. But since then, EPA has registered over 65 companies
to market E-15 and has approved over 50 companies' misfueling
mitigation plans. Additionally, over 80 companies have enrolled
in an approved national compliance survey. Are you in a place
where you could now make an estimate on that question?
Ms. Oge. My understanding is that there is only one station
in the country that is introducing E-15. So, again, we don't
have the data available to us given the limited introduction of
E-15 in the marketplace. However, we did approve the misfueling
mitigation plants from 60 to 80 of new biofuel producers, and
we believe that these plants will minimize the misfueling
concerns that you have expressed.
Mr. Green. OK. Only one station in the country has E-15?
Ms. Oge. That is my understanding.
Mr. Green. I assume it is in Mr. Terry's district or Mr.
Shimkus's.
Mr. Oge. I believe it is in Kansas.
Mr. Green. OK. That is close enough.
I want to follow up on my colleague from Texas, Congressman
Barton, because, again, some of the success we have had and we
are seeing it slowly in natural gas to be a transportation
fuel, and I know it is not a renewable fuel. But it is one that
we are producing substantially in our country, and of course, 7
years ago, I would not be talking about it because natural gas
was $12.50 or $13 per million cubic feet. But now it is less
than $3. Is EPA actually looking at that sustainable growth in
using natural gas as a transportation fuel with the benefit of
the clean air issues and the carbon issues?
Ms. Oge. Clearly, we are looking at that as part of the
2017, 2025 greenhouse gas rule. We have received a number of
comments from the natural gas industry and OEM's about the
potential benefits of natural gas vehicles. So we are in the
process of evaluating these comments and suggestions that we
have received. But natural gas is cleaner at the tailpipe,
about 18 to 20 percent less carbon, so I think it can compete
very well on this, for these new standards that we are planning
to finalize sometime this summer.
Mr. Green. OK. Well, appreciate the time.
Thank you, Mr. Chairman.
Mr. Whitfield. At this time, I recognize the gentleman from
Texas, Mr. Burgess, for 5 minutes
Mr. Burgess. Thank you, Mr. Chairman.
Ms. Oge on that same line, there is a large tractor trailer
manufacturing plant in Denton, Texas, the district that I
represent, the Peterbilt Cooperation, that is actually
producing an off the line natural gas vehicle for the long haul
as well as short-haul applications, and my understanding is
that is a little bit more expensive, but the expectation is the
fuel cost recovery will happen in a very short period of time,
12-18 months, which over the lifecycle of that vehicle is very
manageable. And they are doing it all without Federal
subsidies, without any Federal law. They are doing it because
it is the right thing to do, and people are anxious to purchase
that type of vehicle, and natural gas, of course, as we have
seen the story on that from 10 years ago to now, the cost has
come down tremendously.
I am concerned and have been concerned since we had a
briefing between Department of Energy and the Environmental
Protection Energy on the E-15 gas. And you have approved that
for models, automotive models that are later than 2001. But you
haven't approved it for earlier engines. You haven't approved
it for marine vehicles, for boats. And you haven't approved it
for the small engines. So what are the problems with those pre-
2001 engines, boat engines, small engines? What are the
problems that occur that led you to refrain from approving the
use of E-15 in those engines?
Ms. Oge. Is the question for me or----
Mr. Burgess. Yes, for the Department of Energy.
Ms. Oge. So, clearly, when we look at the data for older
vehicles older than 2001, there was insufficient data to
approve it, but also our engineering judgement was that, given
the technologies that those vehicles were using--and again, we
are talking about the emission control systems. We were
sufficiently concerned that E-15 could potentially increase the
emissions from those vehicles, so the agency decided not to
approve those vehicles.
Mr. Burgess. How many did you test?
Ms. Oge. Excuse me?
Mr. Burgess. How many did you test? Do you know?
Ms. Oge. For the testing that took place was only under the
Department of Energy for 2001 and newer vehicles, and Ms. Hogan
can speak about, about the work that they have done.
So when we approved the 2001 and newer vehicles, we had the
data and we had significant additional data for newer vehicles.
However, there is very limited information for older vehicles
and off-road equipment so the agency decided, given on this
lack of data or rather limited data, not to approve the use of
E-15.
Mr. Burgess. But, I mean, I am old enough to remember when
unleaded gasoline became the norm, and you had the side-by-side
fueling pumps, and you changed the nozzle sizes and all that
stuff. But still there were mis--there were fueling accidents,
misfueling applications that occurred. Do you have any
experience from going back to the seventies, that serves as a
template to prevent misfueling problems?
Ms. Oge. I wasn't in the agency in the 1970s, but the
agency does have experience. The only thing I want to say,
there is, there is a difference between the unleaded gasoline
and the E-15. Back in the 1970s, there was a mandate for using
unleaded gasoline for certain even vehicles. Here E-15, you
know, we are not mandating E-15 be used----
Mr. Burgess. No, you are mandating a volume of ethanol to
be blended with all of the gasoline that is sold in the
country, and as a consequence, every snowblower, every
lawnmower, every pump is going to be contaminated with E-15
within a very short period of time, and you know that. I mean,
that is going to happen. That is a sad reality of where we have
gone, which is why, and I think, you know we have heard
reference from Mr. Rush. This a tough summer. Grain production
is way off. Why are we continuing to follow this foolhardy
policy?
I mean, it was done under President Bush and I acknowledge
that, but I think it is time to recognize the limitations of
this and move away from what really is a, it is not, it is not
a policy that follows commonsense.
Ms. Hogan, I just wanted to ask you a question. On your bio
on the Web site, it talks that you were the, one of the
principle overseers of $16 billion in stimulus funding at EERE,
is that correct?
Ms. Hogan. That is correct.
Mr. Burgess. And I know you wouldn't have it with you
today, but can we ask you to provide the committee with some
detail on how that money has been spent, how much is left, what
it was spent for? You referenced in your testimony the new law
with new batteries that are going to be produced. I am having
difficulty trying to calculate the cost per battery. It looked
high, but I want to be fair about it. So could you provide us
the line item budgetary detail on that $16.4 billion that your
agency administered?
Ms. Hogan. We absolutely can provide you with that detail.
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Mr. Burgess. All right. Mr. Chairman, I appreciate that,
and I will yield back the balance of my time.
Mr. Whitfield. At this time, the chair recognizes the
gentleman from Kansas, Mr. Pompeo, for 5 minutes.
Mr. Pompeo. Thank you, Mr. Chairman.
Thank you, witnesses, for coming out today.
Ms. Oge, I read your testimony twice and I saw precious
little discussion of cost and price for consumer. It was all
about mandates and department investments and that kind of
thing. And that always troubles me an awful lot when you don't,
when you don't trust consumers to really do what is in their
best interest. And that I think is what RFS is riddled with.
Mr. Waxman mentioned price. He said that Republicans are
preventing consumers from saving money. Do you think that is
true?
Ms. Oge. That is not my position to say what the
Republicans or Democrats are doing, sir. I am a civil servant.
I am not here representing any political views.
Mr. Pompeo. Do you think if--yes, I am just repeating what
he said. Do you think that folks who oppose some of the RFS
standards, do you think that that is preventing consumers from
saving money?
Ms. Oge. I want to remind Congress that EPA is implementing
a law that Congress passed in 2007. So we are looking at the
law. We are using the best science and legal interpretation to
implement the law.
Mr. Pompeo. I appreciate that. I have seen some of that. An
electric vehicle today, if a consumer was going to go out and
purchase one, would it save that consumer money today?
Ms. Oge. A new vehicle?
Mr. Pompeo. Yes, ma'am. A new vehicle.
Ms. Oge. A new vehicle today would be more fuel efficient
than the vehicle of yesterday so on based on that analysis, the
answer is yes. And the data that I have that--I cannot tell you
about 2012--but the data that I have is for 2016. So if you buy
a new vehicle in 2016, you will pay $950 more, but you will
save $3,000 from fuel consumption savings and fuel, assuming
that the gasoline prices in 2016, according to EIA, will be
about the same level as it is today.
Mr. Pompeo. Sure. And so consumers aren't choosing that in
great numbers yet, you would agree with that?
Ms. Oge. Yes.
Mr. Pompeo. And the reason they are choosing more expensive
vehicles that are available in the marketplace today is because
of what set of circumstances?
Ms. Oge. I didn't say that they are choosing more expensive
vehicles.
Mr. Pompeo. I will come back. They are not choosing a whole
lot of electric vehicles, you would agree with that. Yet you
said it was more economical for them to choose that today. How
do you account for that disconnect?
Ms. Oge. What I said is that the 2012 to 2016 greenhouse
gas standards and fuel efficiencies standards are good for the
consumer because the consumer on an average will save money at
the pump that will more than offset the upfront cost of the
vehicle. And that is the data that we have. Furthermore, what I
want to note is that all the car companies have agreed on that,
and they are supporting the program. So I think they know
something more than I do.
Mr. Pompeo. Could be. I am just trying to figure out how
come consumers don't know as much as you do about what is good
for them.
How many cellulosic RINs have been generated over the life
of renewable full standards?
Ms. Oge. I don't have the number, but there were a number
of cellulosic RINs that were developed as part of the RFS 1;
that is the 2005 program. And I believe, for 2011, 20 percent
have the cellulosic RINs were used to meet the cellulosic
standard. But I need to get back to the specifics. But there
were cellulosic RINs that have been developed.
Mr. Pompeo. I would appreciate it if you could get that to
us. I looked at the Web site. It looked to me like there had
not been any during the entire course of the program. It looked
like on the EPA's Web site, there had been no cellulosic RINs.
So if I am wrong about that, I would appreciate you letting me
and the committee know.
Mr. Gruenspecht, if the RFSs fills 36 billion gallons--I
have seen estimates that that would mean that we would need 40
percent ethanol? Does that sound about right to you, assuming
the CAFE standards are fully met? Sound about right?
Mr. Gruenspecht. If it were all ethanol. We expect a lot of
you know, renewable diesel, a drop in fuels as well, but it
would be about 40 percent of the fuel cooled by volume if it
were all ethanol.
Mr. Pompeo. Right. And but today, the fleet can't handle on
average 40 percent fuel volume; is that right?
Mr. Gruenspecht. Not today. That would be right.
Mr. Pompeo. And so, Ms. Oge, where are we going to put all
of this extra ethanol?
Ms. Oge. Well, again, the 2007 is a rule that did not
mandate ethanol to be used. Congress did not actually mandate a
specific biofuel. And I think there is a lot of progress that
we have seen on drop-in fuels, biobutanal, bio master liquid
for both biodiesel and gasoline. Biogas and bioelectricy. As I
said, in my testimony, also we have seen uses beyond the cars
and trucks, jet fuel and home heating oil.
So I understand your concern, but again, I think there is a
lot of innovation in fuels that are not going to be limited by
this so-called blend war that has been----
Mr. Pompeo. I hope you are right. I hope it can be done
affordably. I am less optimistic than you are.
Mr. Chairman, I am out of time.
I yield back.
Mr. Whitfield. At this time, I recognize the gentleman from
Massachusetts, Mr. Markey, for 5 minutes.
Mr. Markey. Thank you, Mr. Chairman.
You know the thing about the auto industry is that they
never knew what was good for them. Their CEOs were oblivious.
They fought every year fuel economy standards in this
committee. How do I know? Because I made the amendment every
year, 2001, 2002, 2003, 2005, and the auto industry all sat out
there all sending the signal up, no, we can't do it. It is not
good for us.
And they did it very successfully until they had turned
themselves into technologically obsolescent companies heading
toward bankruptcy that then asked the American taxpayers with
hands out to please save us from the fact that no one wants to
buy our vehicles. And none of those CEOs are around any longer
because they all got canned because they did not know what was
good for their companies. And unemployment just kept rising
higher and higher in the automotive sector because no one would
by their vehicles. Then the Federal Government came in and we
gave them a loan to help bail them out.
But moreover, out of this committee in 2007 and out in the
House--or out of the conference committee, we passed a bill to
increase full economy standards to 35 miles per gallon. By the
way, all of the auto industry was saying they can't do it. So
we actually gave them a couple of more years to go to 2020 in
that bill. And then the Supreme Court ruled in Massachusetts v.
EPA that, that the EPA had a responsibility to make a decision
as to whether or not greenhouse gasses were dangerous to the
planet, which it did, which then ultimately empowered the use
of the California Clean Air Act.
And to President Obama's credit, he never passed any laws.
Let's be honest. He never filed any suits before the Supreme
Court. Let's be honest. But what did do was he took the
authority that we had given him, The Supreme Court had given
him, and he acted on it.
So here is where we are, ladies and gentlemen, back in
2007, I looked around, I looked around. I was really trying to
find a very good American hybrid sedan, and it was hard to
find; Matter of fact, nonexistent. So I bought a Camry hybrid
that got 33 miles per gallon, by they way, that is the EPA
standard for the purposes of NHTSA, for the purposes of
reaching 54.5 miles per gallon, which is really what we should
be talking about here so that everyone understands that it is
the NHTSA standard, not EPA. You should NHTSA down here, Not
the EPA. Then my car as it is in a 2011 version is now getting
47 miles per gallon, the Camry hybrid, today. And they have all
the way until 2026 to take the single most popular sedan in the
United States and figure out how to squeeze eight more miles
per gallon out of it.
. Now, can the auto industry figure that out? Well, the
Republicans say, no, they can't do it; it is going to paralyze
them. And so they are going to have a vote next week that
strips the EPA from completing the regulation from 2017 to 2025
that will get us to 54.5 miles per gallon when a Camry Sedan is
already at 47 miles per gallon today, as you walk into the
showroom.
Now, how sad a commentary is that on the confidence the
Republicans have in the innovation and the technological
capacity of the automotive industry? Sad isn't it? And by the
way, they bought into this American technological inferiority
arguments for all of the time I have been on the committee.
They just don't think America can do it. They don't think that
our auto industry can do it, even though Toyota is already up
to 47 miles per gallon for a Camry today.
Now what is the consequence of them repealing this? I will
tell you what. Between now and 2030, if we meet 54.5 miles per
gallon, it is 3 million barrels of oil a day. You want
sleepless nights for Saudi sheiks? That will do it. And it is
4.7 million barrels by the year 2040. Why should we export
young men and women over to the Middle East when we can be
exporting fuel efficient vehicles all around the planet made in
America. The unemployment rate is plummeting in the automotive
sector because they are now making vehicles people want to buy
because they are fuel efficient. And the Republicans are now
going to go back to the old plan of technological obsolescence
that led to the problem in the 1970s when I had to vote here to
bail out Chrysler. Then I wait and I get a second chance to
bail out Chrysler again in 2009. How fortunate am I that twice
I get to see how little they understand about the need for
continued innovation if they are going to be competitive on the
open marketplace. But the tragedy is, let's be honest, it is
the amount of oil that the Republicans are allowing to continue
to be imported from the Middle East because that is where we
put 70 percent of all of the oil we consume in our country in
gasoline tanks. And the single greatest weapon we have is
increased fuel economy standards, and they are going to repeal
that next week? Well, you are going right at the heart of the
number one national security vote that anyone is casting in
Congress this year, and we are going to have a hell of a debate
over whether or not that helps our country.
I yield back the balance of my time.
Mr. Whitfield. The gentleman's time has expired.
At this time, I recognize the gentleman from Louisiana, Mr.
Scalise, for 5 minutes.
Mr. Scalise. I thank the gentleman for yielding and again
thank this chairman for this continued conversation as we have,
as we have looked over hearing and hearings for months now
about ways that we can improve this country's woeful energy
policy and also work to create jobs.
I want to ask first, Mr. Gruenspecht, some of the data that
comes out of the energy information administration, we have--we
have viewed and you know, we look in the Gulf of Mexico at a
lot of--a lot of slow down in exploration as well as
production. And I understand that you all have come out with
some reports recently looking at, using some data to look at
production in the Gulf of Mexico. It is my understanding that
you have got projections that show that this year production
would be down roughly 30 percent from last year. Do you know
what the data your agency has on that is?
Mr. Gruenspecht. I would be, I would be surprised if that
number--maybe something like 30,000 barrels--but 30 percent
from last year to this year, that doesn't sound right to me,
but I will go back and check.
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Mr. Scalise. Do you have any data in front of you regarding
where production is? Just start with the Gulf of Mexico, and I
want to look at some other areas, too.
Mr. Gruenspecht. I don't really have, I don't have the
detail on the Gulf of Mexico in front of me. I know that for
crude oil production as a whole, and again, the Gulf of Mexico
has, as you know and I know, some issues that surrounded the
moratorium, but for the U.S. As a whole, crude oil production
rose by about 200,000 barrels a day in 2011.
Mr. Scalise. Now you are counting private land, Federal
land.
Mr. Gruenspecht. Everything, right.
Mr. Scalise. All right. If you just broke it down to
Federal lands.
Mr. Gruenspecht. Federal lands, I think in 2011, was down a
bit than 2010.
Mr. Scalise. What is a bit?
Mr. Gruenspecht. I don't have it in front of me, but I
would be glad to get it for you.
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Mr. Scalise. So you know exactly how much it is up overall
when you don't count Federal lands, but then you just
conveniently don't know how much it is down when you actually
talk about the areas that the Federal Government has control.
Mr. Gruenspecht. Because I have a summary of the short-term
outlook before me that doesn't have all of the regional detail,
but I will definitely get it for you----
Mr. Scalise. Well, when we are making policy in Washington,
you know, there are States that have their own programs in
place. You have people that have private land that are able to
lease that private land out, but then where we really have the
purview is over those areas where the Federal Government has
control through both the Department of Energy, with the EPA.
You have got of course the Department of Interior and all of
these agencies control Federal lands, and what we have seen is
that production is actually down in the areas where the Federal
Government has control. Now, do you dispute that, or do you
know----
Mr. Gruenspecht. In 2011, it was lower than 2010.
Mr. Scalise. And that is you know something I guess that
perplexes a lot of us when we hear the President out going
around the country bragging that production is higher and yet
when you look at the areas where the President has control,
production is actually down. The areas that he could help us to
increase production, it is actually going the opposite way
because of his policies.
In fact, we just saw what the 5-year lease plan that was
released. I am not sure if you have evaluated this. I know EIA
has looked at it, but from the reports we have seen, the latest
5-year lease plan in the Outer Continental Shelf that the
President released actually closes off about 85 percent of the
areas that were getting ready to come open for exploration.
Have you seen that? Have you looked at that data.
Mr. Gruenspecht. I have not looked at. I am aware that
there is going to be some drilling in the Federal offshore off
of Alaska, I believe, is planned for this year. And I believe
and we are projecting a growth in the Gulf of Mexico production
in the future, but there is no question that the aftermath of
the Macondo disaster did have an impact
Mr. Scalise. Well, but it was the--it was the aftermath
that was based on the President's policies that went against
actually some of his own scientists and engineers. It was a 30-
day report that the President put together a team of a
scientists and engineers after the Macondo explosion to look at
and evaluate what we do to increase safety. And then the
President tried to use that report to impose the moratorium
that you referred to. And the scientists and engineers,
basically, they called a foul and said, no we did not suggest
that and the White House recanted; somebody in the White House
doctored the report. But the scientists and engineers actually
said you will reduce safety in the Gulf. You will actually run
jobs out of this country. And we have seen that. We have seen
about almost 20,000 jobs, American jobs, that have been lost
because of that policy, and we have lost some of our best rigs,
Some of our most experienced crew base. So the President went
against his own scientists and engineers by saying you will,
you will reduce safety by having a moratorium. And so that may,
may have something to do with the reduced production on Federal
lands.
I want to ask Ms. Oge, we have been talking about the E-10
and increases potentially coming up, do you all work with gas
stations, with car manufactures that do have concerns they
brought up in this committee and other places about what
liability issues there would be, of the costs that would be
associated with, with going to a higher level? What kind of
coordination do you have with them to address those valid
concerns that they have.
Ms. Oge. We have had extensive discussions with gas
stations and extensive discussions with the car companies. And
again the basis for the waiver is the Clean Air Act that
requires the agency to evaluate the potential impacts on
emission control systems and emissions from vehicles as a
result of a new fuel, fuel additive. And that is the analysis
that we have done.
As far as the gas stations' concerns, we have incorporated
misfueling requirements for the renewable fuel producers. And
for the car companies, we, when we met with them and they did
express concerns, we asked them to provide to us any data, any
scientific data that they have that demonstrates that E-15 will
undermine emission control systems for 2001 and newer vehicles,
and they have not provided any data. So based on extensive
scientific data that we have received, testing from the
Department of Energy and other studies, the agency has
concluded that E-15 will not have any impact when it comes to
emission control systems for 2001 and newer vehicles.
Mr. Scalise. Does that address--I am out of time. I yield
back the balance of my time.
Mr. Whitfield. At this time, I recognize the gentleman from
Virginia, Mr. Griffith, for 5 minutes.
Mr. Griffith. Thank you, Mr. Chairman.
Sleepless nights for Saudi sheiks. In my part of the world,
you give Saudi sheiks sleepless nights by looking at turning
coal into gas. And I am just wondering what thoughts have gone
into that and if there is any intent to support my alt fuels
bill, H.R. 2036, which would allow for the alt fuels to include
coal that has been turned into gasoline, and it looks like we
can do it for about $94 a barrel, and we are the Saudi Arabia
of coal. So I am just wondering when are you all going to get
on that ship and sail with us to a better America?
Ms. Oge. Sir, I am not familiar with your bill, but I can
take your request back and take a look at it.
Mr. Griffith. All right, and generally, if not my bill,
some other bill regarding coal being converted into gas. What
are your thoughts on that? You don't have to be familiar with
my bill to have some thoughts on this, I assume.
Ms. Oge. I don't have any views.
Mr. Griffith. All right.
We heard the President talk about algae and its potential
and I'm just wondering if, if perhaps either of you can or any
of you can give my some idea of where we stand on that. My bill
also touches on algae. So it is not that I am anti-algae, I
just don't know whether we are ready yet. Where do we stand on
algae being converted into gasoline?
Ms. Oge. EPA has qualified algae as a feed stock to meet
the renewable fuel centers as with cellulosic. I know that
there are significant efforts by a number of companies,
including ExxonMobil, on algae research. I don't know to what
extent these efforts will allow them to bring commercial
available material into the marketplace any time soon
Mr. Griffith. And so do we have any idea what level of
production we have at this point?
Ms. Oge. I don't believe there is any commercial available
algae material.
Mr. Griffith. Do we have any expectation of production by
say 2015 or 2020?
Ms. Oge. I don't know, sir.
Mr. Griffith. So to be putting our money on algae at this
point, although it certainly should be researched, would be a
foolish bet for the next 15 or 20 years. Is that a fair
statement?
Ms. Oge. I am in no position to say that. Again, you know,
a lot of resources have been spent, a lot of companies--maybe
Ms. Hogan can speak to that. But for me to evaluate R&D efforts
and to what extent they will materialize in the next 5 or 10
years, I think that is an appropriate--that is not an
appropriate position for me to take.
Mr. Griffith. Ms. Hogan?
Ms. Hogan. So the algal resource is certainly a part of our
biomass R&D program where we are looking at a variety of sort
of bio-based sort of starters. Where we are with algae is it is
part of our drop-in fuels program, and that is one of the
strong areas. And where we expect is to get to sort of cost
competitiveness in about 10 years.
Mr. Griffith. Cost competitiveness. Competitive with what?
Ms. Hogan. With traditional fuels, gasoline
Mr. Griffith. And we have been talking a lot about or there
has been a lot of talk about electric cars, and of course, the
question asked in my, in my part of the world is, how are you
going to have all of these electric cars if you are not
producing enough electricity and obviously a big part of our
coal or part of our electricity is produced by coal.
Mr. Gruenspecht, did I get close on that?
Mr. Gruenspecht. Very close. Perfect.
Mr. Griffith. All right. If we keep raising the cost of
electricity, don't you think that will cause some concern or
some diminution in the advantages of going to an electric car?
Mr. Gruenspecht. I think my understanding is that the cost
of electricity once you have the electric vehicle is very
attractive relative to the cost of gasoline or diesel. The
question with the electric vehicle is the cost of the of the
electric vehicle.
Mr. Griffith. Right but part of the advantage of the
electric vehicle is that once you start using it, you have
lower costs but just today, a part of my district got notice
that their electric bill was going to go up because of
innovations made at a new coal-fired power plant, and of
course, that is state-of-the-art, but there won't be any more
of those built because we are going to shift the country away.
And just yesterday we had a hearing where the president of--or
CEO of Dominion Power indicated that one of the ways they have
been able to keep costs down for their customers is having a
wide diversity of different ways to produce their electricity,
and now coal is being taken away from them, away from them in
that mix and they don't think that is going to work for the
American consumers, and they believe electric costs are going
to go up. And in fact, Kentucky utilities indicated 10 to 14
percent in our region is going to be an increase just based on
new regulations from the EPA. So when you start raising the
cost of that electricity up, you are really going to damage
that value, are you not?
And I see my time is up, and I will yield back.
Mr. Whitfield. The chair recognizes the gentleman from
Colorado, Mr. Gardner, for 5 minutes.
Mr. Gardner. Thank you, Mr. Chairman.
And thank you to the witnesses for your time and
participation in today's hearing.
Dr. Hogan, I will start with you. As the Deputy Assistant
Secretary for Energy Efficiency, what does that entail? Just a
brief one-sentence job description.
Ms. Hogan. Just overseeing our energy efficiency R&D and
deployment portfolio.
Mr. Gardner. And when you research study energy efficiency
projects what do you take into account, aside from the energy
efficiency aspect itself?
Ms. Hogan. Certainly we are looking to find cost-effective
opportunities to improve efficiency of our homes, our
buildings, our transportation systems and our industry.
Mr. Gardner. Do you take into account jobs that would be
affected by the energy efficiency measures?
Ms. Hogan. We are very interested in strategies that we can
advance that will help build domestic jobs, jobs that cannot be
exported overseas.
Mr. Gardner. Do you take into account jobs that can be lost
as a result of some of the measures that you are considering?
Ms. Hogan. I think we try to look holistically at how to
have a robust set of jobs in the energy efficiency field.
Mr. Gardner. And obviously--my district in Colorado has a
large agriculture base. It is the 11th largest agricultural
district out of the 435 districts in Congress. A lot of the
corn growers are very concerned about what is taking place
around the country today. And I just got an email today from a
farmer in Colorado who asked this question, and I will read the
question to you; it says, a hearing talks about the EPA
relaxing the ethanol mandate due to corn shortage. What are you
hearing? And I know you have addressed this a couple of times.
So is the EPA, do you have the statutory authority, are you
considering relaxing the ethanol mandate due to the corn
shortage?
Ms. Hogan. I think I am going to share this one with my
colleague.
Ms. Oge. I am EPA. We are hearing the rumors also. Clearly,
there is concern that has been raised because of the drought,
so we have been in discussions with our colleagues from the
USDA. What we are hearing actually, although the yield, USDA
has lowered the yield by 10 percent, there are more acres and
more corn produced this year than was produced last year. And
actually, this year, we are going to have, based on the USDA
data, the third highest of corn production in the record of the
country.
Now, EISA, the Congress passed in 2007, provides an
opportunity for companies that are regulated under this law,
including State Governors, to petition EPA to waive the volume
of the renewable fuel standards based on a lack of availability
of renewable fuels and significant cost impacts to the region
or the State. We have not seen any petitions today. If we
receive a waiver, there is a process that the agency has, which
is a 90-day process to put the waiver out for comments and
potentially public hearing and will act accordingly.
Mr. Gardner. So there is no consideration at this point?
Ms. Oge. Absolutely not.
Mr. Gardner. And Dr. Gruenspecht, if I could ask you this
question about hydraulic fracturing. Do you know what
percentage of our energy production, oil and gas production, is
developed or achieved through hydraulic fracturing?
Mr. Gruenspecht. Well, I know that we are producing--excuse
me. I believe that we are producing more than a third of our
natural gas now from shale gas. And I think all of that
involves fracturing, and there may be some fracturing
additionally in some of the oil production and some of the
other gas production, so I imagine it is pretty significant.
Mr. Gardner. Could you get back to me with specific
numbers?
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Mr. Gardner. You have one for the natural gas, and then on
the oil side, I would be interested as well because there is a
lot of fracturing, hydraulic fracturing occurring in my
district, including oil and gas development. One-third of
natural gas. Could you also quantify the impact if hydraulic
fracturing were to be restricted? Do you know the number off
the top of your head what that would mean?
Mr. Gruenspecht. I don't know off the top of my head but I
will try to do that.
Mr. Gardner. Could you get back to us?
Mr. Gruenspecht. Yes.
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Mr. Gardner. I yield back my time.
Mr. Whitfield. The gentleman yields back the balance of his
time.
There are no further members for questions, so that will
conclude today's hearing.
Once again, we thank you. We appreciate you all being with
us, we appreciate your testimony. And during the question and
answer, there was some commitment on your part to provide some
additional information, which we would appreciate. And we will
keep the record open for a period of 10 days for any other
material that might be inserted.
And with that, we will conclude today's hearing. Thank you
very much.
[Whereupon, at 5:02 p.m., the subcommittee was adjourned.]
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