[Senate Hearing 112-912]
[From the U.S. Government Publishing Office]
S. Hrg. 112-912
OVERSIGHT ON DOMESTIC RENEWABLE FUELS: FROM ETHANOL TO ADVANCED
BIOFUELS
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HEARING
BEFORE THE
COMMITTEE ON
ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
APRIL 13, 2011
__________
Printed for the use of the Committee on Environment and Public Works
Available via the World Wide Web: http://www.fdsys.gpo.gov
__________
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COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
BARBARA BOXER, California, Chairman
MAX BAUCUS, Montana JAMES M. INHOFE, Oklahoma
THOMAS R. CARPER, Delaware DAVID VITTER, Louisiana
FRANK R. LAUTENBERG, New Jersey JOHN BARRASSO, Wyoming
BENJAMIN L. CARDIN, Maryland JEFF SESSIONS, Alabama
BERNARD SANDERS, Vermont MIKE CRAPO, Idaho
SHELDON WHITEHOUSE, Rhode Island LAMAR ALEXANDER, Tennessee
TOM UDALL, New Mexico MIKE JOHANNS, Nebraska
JEFF MERKLEY, Oregon JOHN BOOZMAN, Arkansas
KIRSTEN GILLIBRAND, New York
Bettina Poirier, Majority Staff Director and Chief Counsel
Ruth Van Mark, Minority Staff Director
C O N T E N T S
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Page
APRIL 13, 2011
OPENING STATEMENTS
Boxer, Hon. Barbara, U.S. Senator from the State of California... 1
Inhofe, James M., U.S. Senator from the State of Oklahoma........ 2
Johanns, Hon. Mike, U.S. Senator from the State of Nebraska...... 3
Lautenberg, Hon. Frank R., U.S. Senator from the State of New
Jersey......................................................... 5
Carper, Hon. Thomas R., U.S. Senator from the State of Delaware,
prepared statement............................................. 132
WITNESSES
Vilsack, Thomas, Secretary of Agriculture, U.S. Department of
Agriculture.................................................... 6
Prepared statement........................................... 9
Responses to additional questions from:
Senator Carper........................................... 26
Senator Inhofe........................................... 28
McCarthy, Gina, Assistant Administrator, Office of Air and
Radiation, U.S. Environmental Protection Agency................ 35
Prepared statement........................................... 38
Responses to additional questions from:
Senator Inhofe........................................... 44
Senator Carper........................................... 45
Kelly, Henry, Acting Assistant Secretary for Energy Efficiency,
Office of Energy Efficiency and Renewable Energy, U.S.
Department of Energy........................................... 46
Prepared statement........................................... 48
Responses to additional questions from:
Senator Inhofe........................................... 52
Senator Carper........................................... 53
McAdams, Michael J., president, Advanced Biofuels Association.... 64
Prepared statement........................................... 66
Responses to additional questions from:
Senator Carper........................................... 74
Senator Inhofe........................................... 74
Koninckx, Jan, global business director, Biofuels, Dupont Applied
Biosciences, E.I. Dupont De Nemours and Company, Inc........... 76
Prepared statement........................................... 78
Responses to additional questions from Senator Carper........ 83
Kiser, Kris, executive vice president, The Outdoor Power
Equipment Institute............................................ 86
Prepared statement........................................... 88
Responses to additional questions from:
Senator Inhofe........................................... 99
Senator Carper........................................... 101
Faber, Scott, vice president of Federal Affairs, Grocery
Manufacturers Association...................................... 103
Prepared statement........................................... 105
Responses to additional questions from:
Senator Carper........................................... 108
Senator Inhofe........................................... 109
Coleman, Brooke, executive director, Advanced Ethanol Council.... 111
Prepared statement........................................... 113
Response to an additional questions from Senator Carper...... 125
ADDITIONAL MATERIAL
Overview, Impacts of Mid-Level Ethanol On-road and Non-road
Engines and Equipment, prepared by Dr. Ron Sahu, May 15, 2009.. 133
Letters:
Several organizations regarding Petition for Rulemaking Under
the Clean Air Act to Require the Continued Availability of
Gasoline Blends of Less Than or Equal to 10 percent Ethanol 155
Simonsen, Gerald, chairman, Board of Directors, National
Sorghum Products........................................... 161
Statements:
Cox, Craig, senior vice president for Agriculture and Natural
Resources, Environmental Working Group..................... 164
Gilligan, Dan, Petroleum Marketers Association of America
(PMAA)..................................................... 169
National Association of Convenience Stores (NACS)............ 171
Feraci, Manning, vice president of Federal Affairs, National
Biodiesel Board............................................ 178
Elam, Thomas, president, FarmEcon LLC, on behalf of the
National Turkey Federation................................. 183
OVERSIGHT ON DOMESTIC RENEWABLE FUELS: FROM ETHANOL TO ADVANCED
BIOFUELS
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WEDNESDAY, APRIL 13, 2011
U.S. Senate,
Committee on Environment and Public Works,
Washington, DC.
The full committee met, pursuant to notice, at 10:05 a.m.
in room 406, Dirksen Senate Office Building, Hon. Barbara Boxer
(chairman of the committee) presiding.
Present: Senators Boxer, Inhofe, Lautenberg, Whitehouse,
Udall, Merkley, Johanns and Boozman.
STATEMENT OF HON. BARBARA BOXER, U.S. SENATOR FROM THE STATE OF
CALIFORNIA
Senator Boxer. Welcome to this important hearing.
This hearing will focus on the Federal Government's efforts
to increase our Nation's energy independence by expanding our
Nation's production of renewable fuels. President Richard Nixon
recognized the need to reduce our dependence on foreign energy
when he created Project Independence. That was in 1973. We are
still working at it. It goes on.
In 2005, Congress set goals of production of renewable
fuels and in 2007 Congress expanded the goals. Congress also
called for the increased use of fuels such as cellulosic
ethanol and advanced biofuels which can turn waste into fuel.
Just this March, President Obama redoubled the Federal
Government's commitment to energy independence and the use of
renewable fuels when he issued the blueprint for a secure
energy future. When he released this study, he emphasized our
Nation must discover and produce cleaner renewable sources of
energy that also produce less carbon pollution which is
threatening our climate. That is his quote.
The President also highlighted the support that our armed
forces have for the use of biofuels. The Air Force has the
Raptor 22, a jet that flies faster than the speed of sound
using a fuel blended with biofuels. The Air Force has a goal of
getting half of its domestic jet fuel from alternative sources.
I support the use of advanced and cellulosic biofuels and
believe the Federal Government should be developing stronger
initiatives to promote their use.
Today's oversight hearing on the Renewable Fuels Standard
will help us better understand the current status of these
critical issues and I look forward to hearing from our
witnesses.
I am also happy to call on my friend, my Ranking Member.
STATEMENT OF HON. JAMES M. INHOFE, U.S. SENATOR FROM THE STATE
OF OKLAHOMA
Senator Inhofe. Thank you, Madam Chairman. This is one of
the times when I can just say I agree with you and then not
have an opening statement.
Senator Boxer. Could you say that again? Could you say that
again?
[Laughter.]
Senator Boxer. Because it sounds so great.
Senator Inhofe. Do not get your hopes up.
[Laughter.]
Senator Inhofe. First of all, Secretary Vilsack, I am very
happy to have you here. I am also from Iowa, so I know of the
background. I know that the subject here today is going to be
pretty much, it is not partisan, but it is geography, and so we
understand that.
First of all, I want to mention that there is a lot of
discussion on the corn-based ethanol. I have legislation that
I, we have not started trying to get co-sponsors and all that,
but it is to opt out. What it does, to opt out a State has to
pass a bill, signed by the Governor, stating its choice.
It does not mean that they cannot use, if they want to use,
all the corn ethanol or anything else they want to use. But it
means, as is in the case of my State of Oklahoma today, not in
Virginia, not in Maryland, not in the District, but in
Oklahoma, that if you want to use clear gas, as it is called,
without any of the corn ethanol, you can do it.
So, it does not, it would be very hard to argue against it
because you are giving people the choice. You can either have
it or you do not have to have it.
I think with the passage of the 2007 Energy Bill that
Congress blundered in pushing too much of the corn ethanol too
fast, and the ethanol has serious problems including its
compatibility with existing engines and its environmental
sustainability as well as its transportation infrastructure
needs.
I think we have some witnesses that we are going to be able
to get some answers from on the next panel, and you may want to
address this also, that the overly aggressive ethanol mandate
has led to a particularly pronounced consumer backlash, not
just in my home State, but I suspect all around. You have a lot
of these engines, small engines, farm engines, that can run on,
they can make it on maybe E10 but not on anything more than
that. So, that is a problem that we have.
I recognize people like my very good friend, Senator
Johanns, is from a corn State. Oddly enough, I am from a corn
State, too. But I would like to have the people in my State of
Oklahoma have that choice. So, we are going to be having a
chance to talk about this as opposed to just doing away with
subsidies, just offering the choice.
Now, I think that we are for all of the above. We have to
do it. I do not talk about this in terms of our dependence on
foreign countries for our ability to produce energy because our
problem is we have all the energy we need in America, but
politically we cannot get at our energy. But that is not really
the subject of this thing today.
So, I look forward to the hearing and I think we will find
a lot of agreement.
[The prepared statement of Senator Inhofe follows:]
Statement of Hon. James M. Inhofe, U.S. Senator from the
State of Oklahoma
I'd first like to thank the Chairman for holding this timely
hearing. I'm working on introducing a simple bill that responds to the
increasing call for more consumer choice to purchase ethanol-free
gasoline. Simply put, my bill is a compromise that allows a State to
opt out of the corn ethanol portions of the renewable fuel standard--if
you want to use ethanol you can use it.
To opt out, a State must pass a bill, signed by the Governor,
stating its choice. The opt-out would be recognized by the
Administrator of the EPA, who would then reduce the amount of the
national corn ethanol mandate by the percentage amount approved by the
State in question.
This legislation would allow a State to opt-out of only the corn
ethanol mandate. It would not affect other portions of the renewable
fuel standard, such as the cellulosic or advanced biofuels volumetric
requirements.
With the passage of the 2007 energy bill, I believe Congress
blundered in pushing too much corn ethanol too fast. Ethanol has
serious problems, including its compatibility with existing engines,
its environmental sustainability, as well as its transportation and
infrastructure needs. These problems have galvanized an unusual
coalition against corn-based ethanol. Opponents range from Friends of
the Earth and the Environmental Working Group to the National Marine
Manufacturers Association and the National Petrochemical and Refiners
Association.
This overly aggressive ethanol mandate has also led to a
particularly pronounced consumer backlash in my home State of Oklahoma,
where one convenience store chain experienced a 30 percent drop in fuel
sales once they began selling fuel blended at E-10 levels.
Despite the drawbacks of today's corn-based ethanol mandates, I do
support a role for ethanol and other biofuels. The idea that we can
grow and produce biofuels all over the country_not just in the Midwest_
is something worth pursuing_and that's why I support research into a
variety of advanced feedstocks and alternatives such as algae, bio-
butanol, cellulosic, natural gas, and other options.
I believe America's energy supply should be stable, clean, diverse,
and affordable. Continued development of home-grown biofuels translates
into energy security and creates jobs and economic growth in America.
On that note, I look forward to working with each of you to explore
the unintended consequences of this mandate and how we can improve the
Renewable Fuel Standard.
Senator Boxer. Well, that is good.
Senator Johanns, welcome.
STATEMENT OF HON. MIKE JOHANNS, U.S. SENATOR FROM THE STATE OF
NEBRASKA
Senator Johanns. Madam Chair, thank you very much.
Mr. Secretary, it is good to see you again.
I appreciate the opportunity to just offer a few words
before we get started today. I think, as everybody knows, I
have long been a supporter of renewable energy sources,
including ethanol specifically. As a former Governor, I worked
to create new incentives for ethanol production, did all I
could to increase the ethanol blend in gasoline to address the
environmental concerns which we oftentimes forget related to
MTBE use. As Secretary of Agriculture, I worked with others in
the Cabinet to promote renewable energy.
Agriculture is a part of the solution, not only for the
short-term, but for the long-term domestic energy needs.
Renewable fuel production increases our energy security and
decreases our dependence on foreign oil.
Currently, around 60 percent of our oil is imported from
other countries. We are very energy dependent. We all agree
that we have to take steps to become less reliant on other
nations, for our energy needs. Renewable fuel production,
including ethanol, can play a role.
The production and use of 10.6 billion gallons of ethanol
in 2010 displaced about 445 million barrels of oil and it kept
$34 billion in the United States' economy. We have invested in
domestic renewable fuels, we have built the infrastructure, we
have hired good people and it has been a boost to our rural
economy.
In 2010, the ethanol industry supported more than 400,000
jobs in the United States. It contributed $53.6 billion to the
National Gross Domestic Product and generated $11 billion in
tax revenues.
Nebraska is the second largest producer of ethanol in the
United States. Currently, the State has 24 plants with a
combined production capacity of over 1.8 billion gallons
annually. These plants represent $1.4 billion in capital
investment and employment of roughly 1,000 Nebraskans. While
ethanol production helps sustain profitability for corn
producers, its byproduct, distiller grains, adds value to our
livestock sector.
Today, the renewable fuels industry is at a critical point.
That is why I appreciate this hearing, Madam Chair. We need to
do everything we can to look at the whole picture here because
I think that we all agree that what we are doing here can have
a profound impact on our energy dependence on other countries
in the future.
With that, I will look forward to the hearing and the
opportunity to ask questions.
Thank you.
[The prepared statement of Senator Johanns follows:]
Statement of Hon. Mike Johanns, U.S. Senator from the State of Nebraska
Thank you, Chairman Boxer, for calling this important hearing
today. Today's hearing focuses on a topic which is important to many in
my home State and across our country. I have long been a supporter of
renewable energy sources, including ethanol.
As Governor, I worked to create new incentives for ethanol
production and increase the ethanol blend in gasoline to address
environmental concerns from MTBE use.
As Secretary of Agriculture, I worked with others in the Cabinet to
promote renewable energy as a way to reduce our dependence on foreign
oil. Agriculture is part of the solution not only for the short-term
but for our long-term domestic energy needs. Renewable fuel production
increases our energy security and decreases our dependence on foreign
oil. Currently, around 60 percent of our oil is imported from other
countries, many with which do not share our values. We have to take
steps to become less reliant on these nations for our energy needs and
more reliant on domestic sources.
Renewable fuel production, including ethanol, can play a role. The
production and use of 10.6 billion gallons of ethanol in 2010 displaced
over 445 million barrels of oil and kept $34 billion in the U.S.
economy. We've invested in a domestic renewable fuels industry. We've
built infrastructure. We've hired good people.
Ethanol production boosts rural economies. In 2010, the ethanol
industry supported more than 400,000 jobs in the United States,
contributed $53.6 billion to the national Gross Domestic Product, and
generated $11 billion in tax revenues. Nebraska is the second-largest
producer of ethanol in the country. Currently, the State has 24
operational ethanol plants, with a combined production capacity of over
1.8 billion gallons annually. These plants represent over $1.4 billion
in capital investment and provide employment for roughly 1,000
Nebraskans. While ethanol production helps sustain profitability for
corn producers, its byproduct--distillers grains--also adds value to
the livestock sector, particularly Nebraska's beef producers.
Today, the renewable fuels industry is at a pivotal point--tax
credits expire at the end of this year; some have concerns about using
potential food or feed sources for fuel; we are seeing increases in
energy costs across the board. And, at this point, three key factors
come to mind:
(1) The increased productivity of American agriculture continues to
amaze me. Farmers are growing more corn per acre every year. In 1980,
U.S. farmers produced about 6.6 billion bushels of corn. By 2010, that
number had nearly doubled to 12.4 billion bushels. And, due to
significant advances in efficiency, that production increase was
accomplished on almost exactly the same amount of land--about 85
million acres.
(2) Ethanol has been and will continue to be part of our domestic
energy solution. We've built the infrastructure. We have industry
investing in next generation technologies. We cannot turn our backs on
this good work.
(3) Renewable fuels are not some faceless adversary. This industry
represents thousands of jobs in rural communities. When we are looking
at employment numbers across the country, renewable fuels jobs in my
State and elsewhere have been key in weathering our economic challenges
in recent years.
I think everyone on this panel can agree that these issues are
complex and abrupt changes in policy could have real impacts on
domestic energy sources, jobs, and local economies. As such, I look
forward to engaging in a thoughtful discussion of renewable fuels
policy with my colleagues on this committee and others in the Senate in
the weeks and months ahead.
I look forward to hearing from our witnesses today and learning
from their perspectives on an industry that is very important to the
State of Nebraska and the lives of many others across our Nation.
Senator Boxer. Thank you so very much. Do you want us to
put your full statement in the record?
Senator Johanns. Yes, that would be great.
Senator Boxer. We will do that, as with everyone.
Senator Lautenberg, we have gone down to just 3 minutes per
person because we have three panels. So, you are recognized.
STATEMENT OF HON. FRANK R. LAUTENBERG, U.S. SENATOR FROM THE
STATE OF NEW JERSEY
Senator Lautenberg. Thanks, Madam Chairman.
Next week marks the first anniversary of the oil spill
disaster in the Gulf of Mexico, our country's worst
environmental catastrophe and a harsh reminder about our
addiction to oil.
Under President Obama's leadership, we are finally taking
steps to kick this dangerous addiction by investing in better
and smarter ways of moving people and goods. This includes
creating a national high speed rail network, which I was
disappointed to learn today has been on the chopping block for
the naysayers. This includes creating a national high speed
rail network and expanding the number of electric cars on
America's roads.
Of course, bullet trains and plug-in vehicles alone will
not break our addiction. We must also invest in cleaner,
cheaper fuels to power the Nation's automobiles.
But I have serious concerns about corn ethanol's ability to
serve as one of the leading alternatives. The fact is corn
ethanol is only slightly better for the environment than
gasoline. Sometimes corn ethanol is more harmful.
To make room for corn crops, forests are cut down,
grasslands are plowed, the equipment that farmers use to grow,
harvest and ship corn is powered by burning fuel which produces
more emissions. Growing corn requires enormous amounts of
fertilizers and pesticides which can runoff in the rivers and
seriously damage marine ecosystems, including creating so-
called dead zones in the water.
Additionally, using corn for fuel instead of food drives up
prices for people already struggling to put food on the table.
Economists agree that steady growth and demand for ethanol has
helped raise food prices including costs in the United States
where almost 40 percent of the corn crop is grown for fuel, not
food.
Corn ethanol also increases our deficit because the
industry receives billions of dollars in wasteful subsidies.
For every gallon of ethanol produced in the United States,
taxpayers have to pay 45 percent. I will call it a ransom.
Last year alone, the tax credit deprived the Treasury of
more than $5 billion in revenues, according to an audit by the
Government Accountability Office, which determined the industry
is mature enough to stand on its own two feet.
The Wall Street Journal editorial page agrees. They urged
Congress, 2 weeks ago, to end ethanol subsidies that are
driving up the cost of food and fuel with no benefit for the
environment or American energy security.
Instead of making taxpayers support this industry, we
should invest in cleaner fuels such as cellulosic ethanol which
is made from waste products and non-food crops. Cellulosic
ethanol will not drive up the cost of food, it will not drive
up the planet's temperature by generating carbon pollution or
other greenhouse gases.
Madam Chairman, I ask for unanimous consent that my full
statement be included in the record.
Senator Boxer. Without objection. Thank you.
[The prepared statement of Senator Lautenberg was not
available at time of print.]
Well, welcome, Mr. Secretary. We are very happy to see you
here and just the press of business today is major. We have
three panels. So, we are going to ask you to start. If you
could keep to 5 minutes and then answer our questions.
STATEMENT OF THOMAS VILSACK, SECRETARY OF AGRICULTURE, U.S.
DEPARTMENT OF AGRICULTURE
Secretary Vilsack. Thank you, Madam Chair. Thank you very
much for the opportunity and I will stay within the 5-minute
time period.
I would ask that our statement that we provided be put in
the record, and I would like to speak from the heart for just a
few minutes about renewable fuels.
Senator Boxer. Yes, without objection.
Secretary Vilsack. Let me put it in context. Ninety percent
of the persistent poverty counties in this country are located
in rural America. Rural Americans earn $11,000 per capita less
than their urban and suburban counterparts. More than half of
the rural counties in this country have lost population in the
last census. The reality is that there has been a history of
unemployment and poverty at higher levels in rural America.
The ethanol industry and the renewable fuel industry now
has 400 biorefineries located in 46 States which, according to
a report commissioned by the Renewable Fuels Association titled
``Contribution of the Ethanol Industry to the Economy of the
United States,'' is helping to produce more than the 400,000
jobs that Senator Johanns referred to. One point nine million
of the 2.1 million farmers in this country simply do not make,
on average, enough money from their farming operation to
support their families, which is why it is important and
necessary for us to look for alternative ways for farmers to
succeed.
We continue to import far too much oil from other
countries. Seventeen percent of our imported oil comes from the
Persian Gulf, a very unstable place today.
When the Congress established the Renewable Fuels Standard
goals, what you did is created the opportunity for over $100
billion of capital investment in rural communities, the
opportunity and the chance to produce more than 1 million jobs
in rural America, increased income opportunities for farmers,
and reducing our dependence on that foreign oil from unstable
sources.
At USDA, we have continued the work of then-Secretary
Johanns and others to meet the challenge of that Renewable
Fuels Standard. We have established five regional feedstock
research development centers focused on feedstock development,
sustainable production systems, and biorefining. We are looking
for alternative ways in addition to corn-based ethanol to be
able to produce 36 billion gallons of renewable fuel.
We have provided five commitments to biorefineries that are
located in parts of the country other than the Midwest, and we
look forward to meeting the President's challenge of breaking
ground on four additional biorefinery plants in the very near
future. These plants will focus on feedstocks other than corn-
based ethanol.
We continue to provide assistance and help to biorefinery
producers who are using advanced biofuel production mechanisms.
There are now 30 pilots in operation around the country.
We just recently announced an effort to expand a more
convenient ethanol supply for consumers by using some of our
REAP funding to permit and to incentivize blender pumps
throughout the country.
We are continuing to operate the Biomass Crop Assistance
Program (BCAP) program notwithstanding the reductions that
occurred as a result of the budget deal that was recently
announced.
Let me respond, in the minute and a half that I have left,
to some of the frequent arguments about ethanol.
First of all, the issue of food prices. It is important to
point out that farmers only get 16 cents of every food dollar.
Eighty-four cents goes someplace else. I think, based on the
2008 study of what happened when food prices went up the last
time, we saw that ethanol production was responsible for one-
tenth of the increase. I suggest that perhaps the issues of
energy costs today are more responsible for increasing food
costs than ethanol production.
Some have suggested that ethanol is not efficient from an
energy producing and utilization perspective. Today's ethanol
production systems generate 2.3 BTUs for every BTU used, which
is actually a better ratio than oil. When we reach the 36
billion gallon threshold, 138 metric tons of CO2
equivalent will be reduced from the atmosphere, the equivalent
of taking 27 million cars off the road.
The most important point I can make today is that we need
to redefine this debate. Instead of trying to limit America's
opportunities, particularly in rural areas, we need to look for
ways in which we can expand opportunities. We should not doubt
the capacity of American farmers and ranchers to be able to
produce the feedstocks, beyond corn-based ethanol, to be able
to meet the 36 billion gallon requirement.
I realize there is work to do and we have to accelerate our
pace. But we are committed to making that happen at USDA.
Thank you, Madam Chairman.
[The prepared statement of Secretary Vilsack follows:]
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Senator Boxer. Thank you.
I have decided to ask Senator Inhofe to go first and I will
close. So, we will go from Senator Inhofe to Senator Lautenberg
to Senator Johanns and then I will close.
Senator Inhofe. OK. Well, thank you, Madam Chairman.
I listened carefully and I happened to tune in on a, I know
this huge corn ethanol lobby that is out there. There is a
program on National Public Radio I happened to hear on Sunday
and they went into all of this detail arguing, refuting
everything that my people in Oklahoma tell me. Because I did
not have a dog in this fight. But I ended up, because of
choice, objecting to even the initial mandates.
Now, I guess you are saying, you are trying to overcome the
arguments that the, a high percentage of corn ethanol is not
good on engines and the top one on the marine manufacturers,
the small engine manufacturers, that is their No. 1 issue right
now. They say that some of these engines can operate on E10 but
nothing more than that, it is damaging to those even then. So I
want you to respond to that.
But also, on April 8, you announced a plan to install, let
us start with this one, 10,000 flexible fuel pumps nationwide
within 5 years. Now, I would ask you, do you have any estimate
how much this will increase corn ethanol production and what
kind of budget would there be for this?
As I understand, these flexible fuel pumps give you a
range, I guess the dollars are adjusted with it, all the way
from clear gas to what is the highest level of, E85? Yes, E85.
Well, what do you think about, if that is a possibility, the
bill that I have, I am going to pull it because we will not
need it anymore.
Secretary Vilsack. Well, Senator, first of all I think it
is important to point out that the utilization of corn-based
ethanol to meet the 36 billion gallon threshold is capped by
Congress at 15 billion gallons and we are very close to getting
to that cap.
It is also very clear that our attention needs to be
focused on alternative sources, alternative feedstocks. We are
looking at algae, woody biomass.
Senator Inhofe. Yes, I agree.
Secretary Vilsack. So, the other 21 billion gallons is
going to be from sources other than corn-based ethanol. Corn-
based ethanol is still going to be a viable mechanism for
getting to that 36 billion gallons, but it is capped.
As far as the flexible fuel pumps are concerned, this
basically provides a more convenient ethanol supply and should
increase the use of renewable fuels, not necessarily corn-based
ethanol, because, again, it is capped.
Senator Inhofe. But they would start with what we refer to
as clear gas then on a flexible pump? Is that what you
envision?
Secretary Vilsack. As I understand it, what it would be is
you would have a pump that would give you the appropriate blend
of ethanol. I am not sure that it would necessarily be zero
blend----
Senator Inhofe. Oh, I see. OK.
Secretary Vilsack. Because of the nature of the pumping and
distribution systems, it would be 10 percent ethanol, 15
percent ethanol, in some cases 20 percent ethanol, and some
States have that mandate 85 percent ethanol. It would make it
more convenient to get the level of ethanol that you need for
your vehicle and hopefully it would encourage the development
of more flexible fuel vehicles.
Senator Inhofe. OK. If that is the case and you stated that
we are near the cap anyway, what would be the objection to
passing a bill, like my legislation, that does not reduce what
you want to have if you want to have corn ethanol or any other
type of ethanol, but merely says that you have a choice within
a State if the State legislature asks you to do it so that if
you want to have clear gas you can. The choice is there.
Now, if we are already close to the cap, why, what would be
the argument against that?
Secretary Vilsack. Well, we still have a long way to go to
meet the 36 billion gallon threshold that Congress has set. We
have to figure out ways in which to produce that 21 billion
gallons of different type of fuel, cellulosic----
Senator Inhofe. But right now that would have to be corn
ethanol though, would it not, where technology is?
Secretary Vilsack. No. No. Right now, once we hit the 15
billion gallon threshold, we have to go to a different approach
to producing renewable fuel. We have to go to cellulosic
ethanol that could be using corn stover, not the kernel but the
husk or the cob. It could be biofuel made from algae. It could
be woody biomass. It could be landfill waste. It could be
animal waste. All of those, and many other ways of producing--
--
Senator Inhofe. The technology is coming. I understand
that. We, actually in my State of Oklahoma, we are
experimenting with that. In fact, I went up to California in
2008 where they are talking about the algae and the successes
already. That is all great.
I am talking about where technology is today, and even when
the time comes, why would it not be a good idea to have it
market-based so that if somebody like my wife, who will not put
corn ethanol in her car, would not have to do it? In other
words, we would have the choice.
Secretary Vilsack. Well, some States currently provide that
choice, No. 1, and 87 percent of the gas that is produced today
is an ethanol blend. So, I mean, consumers have made a choice.
I know in my State we gave folks a choice and we see close to
80 percent of consumers opting to use ethanol and they like it
for a multitude of reasons, not the least of which it helps
American farmers and ranchers.
Senator Inhofe. Well, I would say, I could make the same,
you are making my case for me because in my State, just the
reverse is true and the farmers and ranchers' concern there is
the cost of feedstock, and our cattle people, our poultry
people. Anyway, that makes the case for a choice, I believe.
Senator Vilsack. Well, the other problem is whether or not
the choice can be an environmentally equivalent choice, and I
am not sure that that is necessarily the case with the clean--
--
Senator Inhofe. Well, the environmentalists support my
legislation, so I do not think you ought to use that argument.
Secretary Vilsack. Well, I am deeply concerned about water
quality which is what led us into this, the beginning of this
conversation, many, many years ago.
Senator Inhofe. OK. Thank you, Madam Chairman.
Senator Boxer. Senator Lautenberg, I am going to ask you to
go next. I am going to wait.
Senator Lautenberg. Thanks, Madam Chairman.
Thanks, Mr. Secretary, for your presentation. When, as you
make the case, one cannot help but be sympathetic to what might
develop as job loss, or opportunity, especially when the people
who are growing that corn for ethanol believe that they were
doing the country a favor by doing that. As it turns out, we
learn as we go and it is not dissimilar from the coal dilemma
where it is available, abundant, and yet it brings on terrific
environmental problems.
The one thing that came up now, as a result of our
discussions, a New York Times article yesterday said, it is
entitled ``High Prices Sow Seeds of Erosion'' and they say long
and defined erosion is once again rearing as a threat because
of an aggressive push to plant on more land, changing weather
patterns and inadequate enforcement of protections, scientists
and environmentalists say.
So, what, where do we go from here in terms of satisfying
the need for the country to have a better environmental
response to its energy use and job losses? When we look at
this, American taxpayers give more than $7 billion in subsidies
to biofuels every year, with most of that going to corn
ethanol. Given that Federal law already mandates an increasing
amount of biofuels to be used every year until 2022, what is
the net gain for our taxpayers?
Secretary Vilsack. Well, Senator, 400,000 people are
employed according to the Renewable Fuels Association. We found
out when Congress did not continue the biodiesel tax credit
that the impact of that was, for a period of time, 50 percent
of the production went down immediately and, according to the
National Biodiesel Board, 12,000 jobs were lost immediately.
Our view, and my view, is that I think we ought to be
asking a different question about those incentives, whether or
not they could be used for this maturing industry in a more
effective way to grow the industry. I do not think there is any
question that you all will over time, and should over time,
reduce those incentives, but I think if you create a cliff, you
are going to create a significant job loss in rural America at
a time when we are just now beginning to turn the corner in
terms of the economy. No. 1.
No. 2, you could use those incentives effectively to
produce greater, more convenient supply and to encourage more
flexible fuel vehicle production and purchase, which would be
beneficial in terms of creating more jobs and more opportunity.
No. 3, if I can, I just want to comment on the issue of the
New York Times article. I think the New York Times article
failed to realize that we are investing a substantial amount of
money, particularly in the Upper Mississippi River Basin, on
conservation practices.
We have just announced another general sign up for the
Conservation Reserve Program (CRP) and we have received a
number of inquiries from farmers across the country in that
program. We are very cognizant of our need for continued
commitment to conservation and you are going to continue to see
a commitment.
In fact, we are also gauging the impact of that
conservation. Our recent assessment in the Upper Mississippi
River shows that there is a substantial commitment to
conservation by producers and that it is actually reducing
phosphorous and nitrogen going into our rivers and streams and,
ultimately, into the Mississippi River.
So, there is a significant commitment there.
Senator Lautenberg. Well, I appreciate that and I believe
it is well intentioned. The problem is that we are now in the
State where erosion, other violations of a better environment,
continues to exacerbate the problem. The question is, how do we
catch up?
Mr. Secretary, one thing that ran through my mind as I was
listening to you, was whether or not there ought to be a
transfer of funds as we reduce these subsidies, perhaps to give
farmers a chance to find other purposes for their product.
Now, with food shortages, and there are food shortages,
that is demonstrated by higher prices, that may give them a
chance to convert back to something that is less harmful in
terms of the environment but keeps them producing for
themselves and their families.
I think something like that has to be examined, whether or
not we penalize the car driver now, the user, and a result of
trying to keep, just looking at the focus on jobs is kind of a
difficult equation and I think we have to work with it. But I
do not think we can afford to stop looking for that change.
Secretary Vilsack. Senator, if I can just respond? I think
you are headed in the right direction in terms of the right
question to ask. Rather than trying to suggest that American
farmers and ranchers are limited in their capacity, we ought to
be looking for ways in which we can expand their capacity.
There is an interesting study from Michigan State and Penn
State about the possibility of double cropping which would
essentially create more feedstock opportunities on corn and
soybean land. It would create additional income opportunities
for farmers. It would be better for the environment. It would
address the erosion issue, although we have seen a 69 percent
reduction in soil erosion as a result of our investment in
conservation programs in the Upper Mississippi River Basin.
So, I think there are ways in which we can look at a
different, redesigned agricultural production system that
addresses some of your concerns.
I would say that there are many reasons why there are food
shortages globally, but none of them have to do with American
farmers and ranchers in the sense that we continued to be
extraordinarily productive. We have seen a 300 percent increase
in corn production in my lifetime, a 200 percent increase in
production of soybeans.
Storms, drought, floods in other parts of the world, export
controls that were imposed by other countries, the currency
issues, there are a multitude of reasons why we have some of
the shortages that we see today in other parts of the globe.
Senator Lautenberg. Madam Chairman, the one thing that I
think that we have to consider is having, reducing the punitive
tariff on imported ethanol, sugar, reduce that and let the
competitive marketplace decide where they want to go, and
advertise what the damage does or does not do to the
environment.
Thanks very much, Mr. Secretary.
Senator Boxer. Thank you very much. Senator?
Senator Johanns. Madam Chair, thank you.
Mr. Secretary, remembering the days when you and I were
both Governors, the year 2000, tough, tough time in our States,
we had a situation where agriculture was really, really
struggling. If I remember correctly, and I am drawing this off
from memory, I think the Ag subsidies in the year 2000 were
like $30 billion. It was a historic amount. Congress doubled
the AMPTA and just a whole bunch of things going on.
Compare those days to the support, if you will, relative to
ethanol. I would just like to get a frame of reference as to
how we have reduced those subsidies over the last decade.
Secretary Vilsack. Well, we have reduced the per gallon
credit, tax credit, to ethanol by a significant amount
recently. In terms of overall Ag subsidies, many of them are
not even being utilized, in large part because the Ag economy
is healthier than it was in 2000. One of the reasons that it is
healthier is, in part, because of the opportunities that
biofuels and renewable fuels present.
As you well know from your days as Secretary, many farmers
are required to have off farm income in order to keep the farm.
Those 400,000 jobs supported by biofuels production are
extraordinarily important in those rural communities. When you
have the opportunity to produce another 400 or 500
biorefineries and an opportunity to use a waste product that no
longer has value, that too can result for a lack of need for
that safety net that it important.
We all, in a sense, benefit from that safety net. It is not
just the farmers. It is all of us because we are, in a sense,
self-sufficient from a food perspective in this country and we
pay less for our food than most other people on this globe,
which gives our citizens a lot more flexibility with their
paycheck than anyplace else.
Senator Johanns. Mr. Secretary, speaking specifically of
food, in the USDA, studies on the price of food on an ongoing
basis, primarily because the USDA is very definitely in the
food business, there is always this rap against ethanol when
food prices increase that, oh, it is because of ethanol.
Recently, in the Financial Times, you said something that
caught my attention: ``The production of corn-based ethanol
does not deserve the scapegoat reputation it has too often
assumed in this conversation.'' I would like you to explain
what you mean by that. What are thinking of in terms of the
relationship of ethanol to other costs in food production?
Secretary Vilsack. Well, first of all, I think it is
important to recognize that, as I said, American farmers are
the most productive in the world and they continue to be
productive. They have embraced innovation. We are going to
continue to see yields increase and continue to see production
increase because of American ingenuity.
I would expect and anticipate this year you are going to
see higher yields in part because of decisions that folks are
making, but not necessarily resulting in any more environmental
damage. No. 1.
No. 2, we did a study in 2008 when food prices went up and
we asked the question, how much of this is a result of ethanol?
I was surprised, and I think you might have been surprised as
well, to find that when food prices went up 45 percent, one
one-tenth of that increase was from ethanol.
That stands to reason when you recognize that farmers only
get 16 cents of every food dollar. Eighty-four cents goes
someplace else. It goes to the folks who refrigerate, package,
process, truck, shelve, and all of that relates to energy
costs. So, when oils go up, that is obviously a reason and a
driver.
No. 3, there are a lot of reasons why, globally, we are
faced with potential shortages that have nothing to do with
ethanol. They have to do with drought in some parts of the
world, they have to do with export controls imposed by some
countries like Russia, they have to do with the fact that
technology has not been embraced in some parts of the world as
it has in the United States and so people are not as productive
as they potentially could be. So, there are a multitude of
reasons here.
But to suggest that ethanol is the reason when you have
increased productivity of American farmers, when you have so
little of the food dollar going to the farmer, when you have
multiple reasons outside of the United States that are
responsible for any shortages that might exist, it just does
not, to me it is just not fair.
Senator Johanns. Thank you, Mr. Secretary. Thank you, Madam
Chair.
Senator Boxer. Thank you.
Mr. Secretary, you said we are nearing the 15 billion
gallons? You said we are nearing the 15 billion gallons where
you get the subsidy?
Secretary Vilsack. Right. We have plant capacity today,
online, of roughly 14.2 billion gallons of ethanol production.
We will produce somewhere in the neighborhood of 13 to 14
billion gallons this year. So, we are very close to reaching
the cap.
Senator Boxer. OK. Then, under the law, what happens to
that subsidy at that point?
Secretary Vilsack. What happens, I am sorry, what?
Senator Boxer. To the subsidy.
Secretary Vilsack. Well, that subsidy continues. Part of
that subsidy is also encouraging cellulosic ethanol production
and what we hope to be able to do with the pilot projects, with
the biorefineries that we are going to provide resources to. We
hope to be able to identify alternative feedstocks.
Our goal here is to have a renewable fuel industry that is
operating in all parts of the country. We have programs in the
Northwest looking at woody biomass. We have programs in the
Southwest looking at algae. We have programs in the Southeast
looking at perennial grasses and landfill waste. I mean, there
is a multitude of opportunities here.
That is what is exciting about this future, that we can
wean ourselves off an over-dependence on foreign oil. We can
create jobs and a revitalized rural economy with this industry.
This is a linchpin to really turn the situation around in rural
America.
Senator Boxer. Well, the thing that I like about cellulosic
is that you do not destroy food product.
Secretary Vilsack. Well, so little of the corn, in a sense
it is not that we are growing corn that folks eat. The corn is
obviously fed to livestock. Most of what we grow is fed to
livestock. It is not----
Senator Boxer. That is important.
Secretary Vilsack. Well, it is important. But a lot of
folks fail to realize the point that Senator Johanns made
earlier, which is when ethanol is produced, it is not just
ethanol that is produced. There are a number of co or
byproducts that are produced, one of which is a distiller's
dried grain that is a feed supplement that is significant, so
significant that it is now also not only feeding our livestock
but also is a great export opportunity for us to bring
additional wealth into the country. That creates more jobs.
Senator Boxer. OK. My last question. So, when we reach this
15 billion of corn ethanol, we will then shift our focus to
these other kinds of cellulosic. Is that right?
Secretary Vilsack. In a sense, we have shifted our focus in
the sense that we are focusing our commitments and our time and
our research on identifying feedstocks and alternatives so we
can grow out this industry.
Senator Boxer. But unless there is action taken, the corn
subsidy would continue?
Secretary Vilsack. Well, you have actually, I think, time
limited it to this year. It expires at the end of this year. My
hope is that you think not about creating a cliff but creating
a glide path, phasing this out over a period of time, and,
frankly, phasing out the tariff over a period of time, but
utilizing those incentives to grow this industry, to make the
supply more convenient with more blender pumps, to figure out
ways in which we can----
Senator Boxer. What industry?
Secretary Vilsack. The renewable fuel industry, which would
include cellulosic, advanced biofuels and the like.
Senator Boxer. OK, thank you.
We are going to move to our next panel and I am going to
call on Senator Whitehouse to lead the questions on that panel.
Because we have to move along.
We are going to call on our panel two, Hon. Gina McCarthy,
Assistant Administrator for the Office of Air and Radiation,
U.S. Environmental Protection Agency, and Dr. Henry Kelly,
Acting Assistant Secretary for Energy Efficiency and Renewable
Energy, U.S. Department of Energy.
Because of our press for time, we are going to see if you
can do your statement in 4 minutes and then we will keep our
questions to 4 minutes each.
So, Hon. Gina McCarthy, welcome. It is nice to see you.
STATEMEMT OF GINA McCARTHY, ASSISTANT ADMINISTRATOR, OFFICE OF
AIR AND RADIATION, U.S. ENVIRONMENTAL PROTECTION AGENCY
Ms. McCarthy. Thank you, Senator, it is nice to see you as
well. Should I begin?
Senator Boxer. Please.
Ms. McCarthy. OK. Chairman Boxer, Ranking Member Inhofe,
members of the committee, I appreciate the opportunity to
testify. I will try to be very quick.
Biomass can play an important role in reducing our
dependence on foreign oil, decreasing greenhouse gas emissions
and improving our rural economies.
A year ago, in compliance with the directives of the Energy
Independence and Security Act, EPA finalized revisions to the
national Renewable Fuels Standard Program, which we commonly
call RFS.
These provisions established new annual volume standards
for renewable fuels, reaching a total of 36 billon gallons in
2022. This includes a total of 21 billion gallons of advanced
fuels including 16 billion gallons of cellulosic fuel, 4
billion gallons of other advanced biofuels, and a minimum of 1
billion gallons of biofuel-based diesel.
The greater volumes of biofuels required by the RFS will
displace about 13.6 billion gallons of petroleum-based gasoline
and diesel, about 7 percent of expected annual gasoline and
diesel consumption in 2022.
EPA strongly supports expanded use of advanced biofuels, in
particular, cellulosic biofuels. When Congress enacted EISA, it
recognized that cellulosic targets were very aggressive. It
included provisions directing EPA to reduce the mandated levels
set in the statute if cellulosic ethanol production were lower
than the statutory mandates. Simply put, Congress did not want
us to require refiners to use more cellulosic ethanol than
would be produced.
Unfortunately, the cellulosic industry did not develop as
quickly as Congress anticipated and we had to lower the
cellulosic ethanol mandate. For 2010 and 2011, we set
cellulosic standards at about 6.5 million gallons,
substantially below the EISA targets of 100 and 250 million
gallons for these years.
Although EPA then had the discretion to reduce the total
advanced and total renewable fuel standards, we did not do so
because we fully expected sufficient volumes of other advanced
biofuels would be available.
We set these standards in a transparent rulemaking process.
Before we even proposed the annual standard, we conducted a
thorough review of the cellulosic industry, including one-on-
one discussions with each of the producers. We worked with the
Department of Agriculture. We worked with the Department of
Energy and the Energy Information Administration in an open and
transparent process. That is how the standards are set.
We intend to propose a 2012 standard early this summer and
to finalize them by the end of November 2011.
The biofuel sector is a dynamic one. We frequently hear
from companies who are developing using innovative, new
production techniques or different types of feedstock. We
recognize the importance of evaluating and qualifying such new
biofuels and, where possible, to input them as quickly as we
can into the RFS Program.
Current advances in cellulosic biofuels approved for RFS
include biodiesel and renewable diesel from certain feedstocks,
ethanol from sugarcane, diesel and renewable diesel from algal
oil, ethanol and diesel from approved cellulosic feedstocks,
jet fuel and heating oil from certain feedstocks.
We also have a process that has been put in place to
evaluate new biofuels and it is exciting to see that last year
we approved canola-based biodiesel and we have a number of new
technologies in the queue that seem very promising.
So in closing, EPA is currently working successfully to
implement the RFS Program, both by following the specific
direction in the statute, as well as by working with the
companies to understand what technologies are available and how
we can get those into market to achieve the requirements under
the statute.
The program today contains several innovative elements that
together provide incentives for the advanced and cellulosic
biofuels sector, and we recognize that the current cellulosic
production is not in line with the volumes established under
EISA, but we will continue to closely monitor it and the
progress of the sector, and set standards as the statute
instructs.
Thank you very much.
[The prepared statement of Ms. McCarthy follows:]
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Senator Boxer. Thank you, so much.
Mr. Kelly, we welcome you. Acting Assistant Secretary for
Energy Efficiency and Renewable Energy, Department of Energy.
STATEMENT OF HENRY KELLY, ACTING ASSISTANT SECRETARY FOR ENERGY
EFFICIENCY, OFFICE OF ENERGY EFFICIENCY AND RENEWABLE ENERGY,
U.S. DEPARTMENT OF ENERGY
Mr. Kelly. Thank you, Chairman Boxer, Ranking Member Inhofe
and members of the committee. I am happy to be here to discuss
the Department of Energy's biofuels programs.
The transportation sector accounts for about two-thirds of
the U.S.' oil consumption and contributes about one-third of
the Nation's greenhouses gases. After housing, transportation
is the second biggest monthly expense for American families. As
the President said in his recent speech, ``In an economy that
relies so heavily on oil, rising prices at the pump affect
everybody.''
But emphasizing that ``there are no quick fixes,'' the
President outlined a series of actions which, taken together,
could cut U.S. oil imports by one-third by 2025. These include
programs that would increase the efficiency of vehicles as well
as increase the use of new sources of fuel for the
transportation sector. Home-grown biomass that can create jobs
in the United States is clearly a part of the solution to this
problem.
My office in the Department of Energy, the Office of Energy
Efficiency and Renewable Energy, works very closely with EPA,
the Department of Agriculture and other Federal organizations
to accelerate the use of biomass. We do two things. One, we try
to put forward programs that will accelerate the use of current
biomass technologies. Then we support research and development
and demonstration on the next generation of biomass technology.
We are making very rapid progress. Domestic biofuels
production increased from less than 4 billion gallons a year in
2005 to nearly 13 billion gallons a year today. But there is a
lot more work to be done.
We have worked closely with EPA to get the data needed to
understand the potential impact of gasoline containing up to 15
percent ethanol by volume on compliance with the vehicle and
emissions standards established under the Clean Air Act.
Gasoline containing up to 10 percent ethanol by volume is
allowed today. Using DOE and other test procedure test data,
the EPA ultimately determined that E15 may be introduced into
commerce for use in Model Year 2001 and newer vehicles once
several other conditions are met.
DOE is also working with auto manufacturers to assess the
viability of making new vehicles compatible with the higher
ethanol blends, and working to ensure that fuel pumps and
underground fuel storage tanks are compatible with these fuels.
But DOE is also making investments in the next generation
of biofuel technology and this includes technologies that
convert a variety of feedstocks, such as corn stover, wood
waste and other cellulosic materials, into a variety of fuels.
We are also exploring ways of converting corn and cellulose to
cost-competitive, drop-in substitutes for gasoline, diesel and
jet fuel.
Drop-in fuels would remove many of the barriers to
commercial adoption of biomass fuels since they would be
compatible with existing vehicles and delivery systems. There
is substantial demand in the aviation industry for drop-in
fuels and we are supporting the FAA and the commercial aviation
sector in developing jet biofuels as participants in the
Commercial Aviation Alternative Fuels Initiative.
DOE is supporting two main pathways to produce these
advanced fuels, thermo-chemical, based on pyrolysis and
gasification, and biochemical, using enzymes, fermentation and
other mechanisms.
We are also working on cutting the costs of collecting,
transporting and storing cellulosic materials. Algae may be a
long-term strategy for biomass as well, and we are supporting
programs in all of these areas using Recovery Act Funding.
Many of the research projects are rapidly leading to
technologies that can be deployed at a commercial scale and we
have very ambitious goals, as has been discussed, for these
advanced fuels. We have a target of 21 billion gallons a year
from advanced biofuels.
The President recently set a goal on breaking ground on at
least four commercial scale cellulosic or advanced
biorefineries over the next 2 years. The Navy has set a goal
for renewable fuels to comprise 50 percent of its
transportation fuels by 2020.
Senator Boxer. OK, you are going to have to wrap it up in a
sentence.
Mr. Kelly. Yes. So, our 2012 budget request will buy you
all of this. We think we have a good program in place and we
are confident that we can meet our goals.
[The prepared statement of Mr. Kelly follows:]
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Senator Boxer. Thank you.
Because I failed to call on him at the last panel, Senator
Whitehouse, you start it off for us.
Senator Whitehouse. Thanks very much, Chairman.
This is an exciting week for a Rhode Island company because
on Friday in Shenandoah, Iowa, they will be opening a very
significant bioprocess algae plant that is a, creates kind of a
wonderful tableau.
It begins with the corn in the field, then goes to the old
fashioned barn in which the corn is put up, and then it goes to
the modern steel ethanol producing facility, and then it will
go to these towers, glowing green towers that the carbon
effluent from the ethanol process will be bubbled through. They
have done a very good job of figuring out how the algae can be
kept separate and can be encouraged to feed aggressively off of
the carbon that would otherwise be out polluting our
atmosphere. Then of course the algae grown successfully off it
can make lipids that make oil. Off you go.
So, it is a big day for BioProcess Algae of Portsmouth,
Rhode Island that has a lot of the technology behind this Iowa
project. That happens all on Friday.
In the light of that, I just wanted to get your thoughts on
what you thought the obstacles were to further growth in the
algae fuel area and how important a landmark you felt this was.
Mr. Kelly. Well, we have supported a number of algae
projects as part of our Recovery Act Funding and are optimistic
that many of these projects are going to lead to cost-
competitive fuels.
Algae can do two things. It can produce the cellulosic,
biomass feedstock itself, but it can also be used, as I believe
is the case in the Rhode Island plant, as a conversion unit so
that it converts sugars into lipids that can be converted
directly into fuel.
But we are trying to support a portfolio of ideas. The
scientists have developed a number of different approaches,
many of which are going to be, we hope, commercially
competitive with today's fuel prices in the next few years.
Senator Whitehouse. Good. Well, thank you very much.
Friday, all eyes on Shenandoah.
Mr. Kelly. Yes. Congratulations.
Senator Boxer. All right. Very good.
Senator Inhofe.
Senator Inhofe. Well, every time we get into these
discussions I always have to get on the record that if people
are serious about lessening our dependence on foreign
countries, the Middle East, it is very easy to do. All we have
to do is exploit our own resources. As I think we have said
many, many times, no one will argue with the fact that the CRS
has reported that the United States has more of the reserves,
recoverable reserves, in coal, gas and oil of any country. So
all you have to is produce and exploit our own resources as
every other country in the world does. But, having said that,
let us talk about a couple of the things that are of interest.
First of all, I would agree, and I think that the Chairman
and I agree on this, that we are looking to the time when we
have cellulosic ethanol. It is coming. It is exciting. I have
been to a lot of places where they are using it.
It is my understanding that right now, to put this in
context, only 6 million gallons of cellulosic non-corn ethanol
were produced last year as opposed to 13 billion gallons of
corn ethanol. Is that somewhat accurate?
Mr. Kelly. Yes, I believe that is true.
Senator Inhofe. Yes. That is just amazing. Less than 1
billion. Well, anyway, that being the case, when the Secretary
of Agriculture testified, and we are talking about my bill.
See, I still think that is the answer. You give people an
option. He said, well, 80 percent of the people in Iowa want to
use corn ethanol. That is fine. If they have an opt out, they
can use all, they can use all, they can use 100 percent corn
ethanol. But also, in States where they do not believe that,
they can use something else. That is the reason that I hope
that people seriously consider that as an approach.
Now, Mr. Kelly, can you discuss the impact of E10 and
potentially higher level blends have on non-road, small and
older vehicle engines and materials durability? Could you?
Mr. Kelly. Well, we are, we have not done extensive
testing. We have done a little testing. We have worked with EPA
on the specific issue of what automobiles are compatible with
E15 and the decision was made that, based on our testing, that
2001 and newer vehicles would not have any damage to the
emission control system.
Senator Inhofe. We are talking about the smaller engines
now. I think you know that the marine manufacturers have this
as their highest goal right now is to be able to offer a
choice. Do you want to comment on that, Ms. McCarthy?
Ms. McCarthy. The only thing I would add to what Mr. Kelly
has said is to indicate to you that in our decision on E15, we
tried to be very clear about where testing was adequate and
where we had verified, scientifically credible data to indicate
that E15 could be used.
We did raise concerns. I am no just saying that data was
not readily available on those smaller engines, but also
raising concerns based on our engineering assessment that there
could be potential problems with E15 usage in those engines and
we did not approve that for use in those engines for that
reason.
Senator Inhofe. OK. Well, I want to, I would encourage you
to continue with these studies so that people will be informed
and can look back to the Environmental Protection Agency as
their source.
Now, we have talked about E10, we have talked about E15,
they are even talking about E85. I know this is something that
has been discussed up in Iowa. The EPA has done some studies on
this. Ethanol at 67 percent of the BTU content in gasoline,
according to the EPA, and I think I am accurate on this, tell
me if I am not, and I am quoting now, operating on E85 usually
experience a 20 to 30 percent in miles per gallon due to
ethanol's lower energy content. These results were seconded by
the Consumer Report study that found E85 resulted in a 27
percent drop in fuel efficiency.
Is that accurate?
Ms. McCarthy. I believe that is. We have done some studies
on fuel efficiency related to E85. I think Mr. Kelly has worked
with us on those issues from DOE's perspective. There are
tradeoffs here, and we balance those issues, and EPA is looking
at, obviously, at other venues to increase fuel efficiency in
vehicles. Here, we are just looking at what the impact is of
different fuel usage on air quality. Certainly E85 is an
allowable use. It does not create a problem for the emission
systems in these vehicles, and for that reason it is allowable.
Senator Inhofe. [presiding.] Well, it is going to have to
be a lot of makeup if you talking about 27 percent. Thank you.
Madam Chairwoman has gone. Who is next? Senator Merkley?
Did she give me the gavel?
Let me announce here that when Senator Boxer left she gave
me the gavel and I assume that is a permanent gift.
[Laughter.]
Senator Inhofe. Senator Merkley.
Senator Merkley. Thank you very much, Mr. Chair. Do not let
go of it. Hold tight.
I wanted to followup a little bit on the corn ethanol
front. In the past, it was often observed, or argued, that
there was a ratio that was somewhere close to one to one in
terms of the energy input and the output. I have seen recent
reports and show that the industry has revolved and that has
changed substantially and that perhaps the ratio of energy in,
energy out is as high as 2.3 to 1.
How do you all evaluate that change in the industry and the
amount of energy consumed versus that produced?
Mr. Kelly. Well, the fact is that the industry has gotten
much more efficient over recent years. The one thing that has
been quite controversial is that industry has to use mostly
natural gas and other energy sources to produce this ethanol.
So one of the most controversial issues has been whether corn
ethanol reduces CO2 production. Recent studies have
shown that it does reduce CO2 production in
comparison with standard petroleum-base fuels. Not as much as
cellulosic ethanol, certainly.
Senator Merkley. So, must my specific question is, is the
ratio of 2.3 units of energy out for one energy unit in a fair
assessment of the technology?
Mr. Kelly. I am going to have to get back to you on that. I
do not have that number in my head right now.
[The information follows:]
The energy ratio of corn ethanol (energy in ethanol divided by the
fossil energy used to produce the ethanol) has increased in recent
years due to a reduction in fertilizer use per bushel of corn harvested
in farms and energy use per gallon of ethanol produced in ethanol
plants. According to the Greenhouse gases, Regulated Emissions, and
energy use in Transportation (GREET) model developed by Argonne
National Laboratories, the energy ratio in 2009 was 1.64 for corn
ethanol; that is, for every Btu of fossil energy used to manufacture
corn ethanol, 1.64 Btus of ethanol were produced.
Other studies that use different methods of considering ethanol co-
product (namely distillers' grains and solubles [DGS], which is used
for livestock feed) in their life-cycle analyses (LCAs) have yielded
higher energy ratios for corn ethanol. GREET considers DGS using the
displacement method (which accounts for the input energy requirement of
the conventional feed product DGS displaces) while some other studies
have used other methods such as process-based allocation of energy
expenditure in ethanol plants (which allocate the energy and
environmental burdens of ethanol plants between ethanol and DGS). A
process-based allocation method, which yields somewhat higher energy
ratios for corn ethanol, was used to calculate the energy ratio of 2.3.
EPA and California use the displacement method in their examination
of corn ethanol life-cycle energy and environmental effects, since that
is the default co-product method in the GREET model. The GREET results
are documented in a recent journal article published in ``Biomass and
Bioenergy'' (Vol 35, Issue 5, May 2011, pages 1885-1896).
Senator Merkley. If you could, that would be helpful. One
of the ethanol producers noted that their fuel has the lowest
carbon intensity of any commercially available transportation
fuel and lifecycle, looking at all the inputs and getting it to
market. Does that fit, then, with the point that you were just
making about carbon dioxide production, if you will, carbon
dioxide footprint?
Mr. Kelly. Well, clearly we want to go toward a fuel that
has extremely low carbon dioxide output namely a cellulosic
fuel input and a very, very efficient conversion technology.
So, we are optimistic that we have technologies, possibly
including the one that you are describing, that will achieve
that goal very quickly.
Senator Merkley. That is kind of a different answer than
the question I was asking though, in terms of comparing it to
our other generally available transportation fuels at this
point, whether it is carbon, I recognize that we have over the
horizon, and I will speak to one of those in just a moment, but
in terms of the current options, is it fair to describe it as
the lowest carbon footprint?
Mr. Kelly. Well, I would say of the current options, if you
can go directly from a cellulosic input to a fuel, that is
probably the lowest CO2 per mile driven that you are
going to get. If you can get electricity from a renewable
source, an electrical vehicle would be comparable. But right
now, that is not the average for electricity.
Senator Merkley. Ms. McCarthy.
Ms. McCarthy. The only thing I was going to add, Senator,
is that what we are finding is that the refineries themselves
are getting more and more efficient which is part of, I think,
the answer to the question. It is also very exciting that we
right now have a petition to qualify ethanol from algae. So,
there are some really exciting ways in which you cannot only
make the plants more efficient, and they are getting more
efficient in terms of their CO2 output, but looking
at the upstream and full life cycle analysis as well.
Senator Merkley. Thank you. I certainly wanted to note that
ZeaChem in Oregon expects to start limited production this fall
and that is a straight from popular tree cellulosic process,
with a chain of products that I believe involves vinegar, paint
thinner and then ethanol. They can interrupt it to sell at the
right point. But it has a dramatically substantial high ratio
for energy in and energy out and very low carbon footprint.
Senator Boxer. [presiding.] Thank you.
Senator Johanns.
Senator Johanns. Thank you, Madam Chair. Thank you for
being here.
Senator Inhofe asked you about the efficiency of ethanol
versus gasoline and studies do indicate that there just simply
is less gas mileage if you are burning ethanol versus burning
gasoline.
But that tradeoff exists with any energy source. I mean,
you can power an 18 wheeler today on electricity. You probably
are not going to power an 18 wheeler on natural gas. Diesel
operates differently than unleaded gasoline. Would that not be
the case across the entire energy specter?
Mr. Kelly. Well, you have to be a little careful about how
you state fuel efficiency. We try to use miles per gallon with
gasoline equivalent to make sure that we are comparing the
energy content of different fuels consistently. Because alcohol
has about 60 percent of the energy density of gasoline. So that
is just inherent in the product.
Now, there are ways of converting the corn with new
technologies to other fuels that have a much higher energy
density and we are working on those and are optimistic about
them. For diesel and for aircraft, the Defense Department needs
something with high energy density and a number of these
products that we are developing right now and that should be
available in a few years will be able to be direct drop-in
replacements.
Senator Johanns. Which kind of leads me to the next
observation or question that I wanted to ask, and that is that
I happened to be on the Cabinet when the RFS was being
discussed and there was a lot of debate at what level and a lot
of effort to try to understand the science and the development
and glimpse into the future.
But I think at the end of the day, really what Congress was
attempting to do was to send a stable signal to the marketplace
that investment in the research, the development, existing
plants for corn-based ethanol, was going to be supported, much
like we support many industries, the oil industry, etcetera.
Would you agree with that assessment?
Mr. Kelly. Well, obviously I cannot speak for the intent of
Congress. But certainly the result has been to create a stable
market for this new technology and we hope that we will find a
way to create a stable market for the next generation of
technologies that follow.
Senator Johanns. What happens if the rug is just pulled out
and all of a sudden it ends tomorrow, no blenders' credit,
somebody is successful in altering the tariff, somebody is
successful in changing the RFS. What happens to the industry,
in your judgment?
Mr. Kelly. Well, we certainly want to be careful in how we
make this adjustment. The President has said that he wants to
work with Congress on ways of making the subsidies adapt to the
current technical situation while still respecting the
taxpayers.
So, we look forward to working with you to make sure that
we transition to support this next generation of technology
without a major disruption.
Senator Johanns. Ms. McCarthy, I did not mean to ignore
you. I am sorry. Is there anything in that, I have about 30
seconds left, is there anything that you wanted to offer in any
of those questions?
Ms. McCarthy. No, Senator. The only thing I would add is
that this is a very young program and the exciting thing is the
number of new feedstocks that we are looking at right now. All
I can tell you is that those are, those are small, growing
companies that are really looking for investors and want the
stability to know that we can make the decisions about their
feedstocks quickly and they will have an ability to get up and
running.
So, from my perspective, what they tell us is that this
program is very important for their business and the innovation
that they are trying to grow in our economy.
Senator Johanns. Thank you, Madam Chair.
Senator Boxer. Senator Udall.
Senator Udall. Thank you, Madam Chair.
First, I would like to thank the Department of Energy and
the Department of Agriculture for the combined support of over
$100 million in grants and loans for the first integrated algae
biorefinery to be constructed by Sapphire Energy in Luna
County, New Mexico. We are very proud of that.
On the topic of algae, testimony from the second panel,
from the Advanced Biofuels Association and DuPont, discuss how
our biofuel policies, both tax incentives and Renewable Fuels
Standard, treat different feedstocks differently. They
indicated a technology neutral approach would be both fair and
more successful.
Do you support efforts to level the playing field so that
advanced biofuels qualify for the same tax incentives and
treatment under the Renewable Fuels Standard regardless of
feedstock?
Mr. Kelly. Well, as I said earlier, we are committed to
finding ways of updating the incentive system now in place to
include the variety of different products and the variety of
different feedstocks and the variety of different fuels we can
produce. We would be happy to work you on that.
Senator Udall. Ms. Assistant Administrator McCarthy, can
you answer that?
Ms. McCarthy. Senator, all I will tell you is that at this
point in time we have a program up and running. We are able to
look at these feedstocks. We will do whatever Congress asks us
to do in terms of looking at different standards that they
believe will move the most and the best products into the
market as quickly as possible.
Senator Udall. I hope that you both have the benefit of
hearing the next panel and their testimony and their advocacy
on that particular issue.
Assistant Administrator McCarthy, one just off-topic
question. We have an air quality issue in New Mexico on the San
Juan Generating Station. Apparently Region 6 EPA in Dallas is
operating under a deadline to issue a Federal implement plan
very soon.
The State of New Mexico's Environment Department sent a
letter back in March asking for a 90-day extension so that they
can finalize an alternative State implementation plan. I hope,
I am not aware that EPA Region 6 has answered that letter, so I
was hoping that you would keep us in the loop. I do not know if
you know that right now off the top of your head.
Ms. McCarthy. Senator, I am familiar with that issue. I met
with the folks from New Mexico and we had the Region plugged in
on the phone. I probably met 2 weeks ago with them. I think
that New Mexico is absolutely on the right track. They are
really interested in doing their own plan. We are always
interested in deferring to them. I will make sure that they
have the correct signals if they did not when we met.
I do not know whether we actually need to go to a formal
extension because they can do that at any time. But I will make
sure that I keep abreast of that and we give them every
opportunity.
Senator Udall. Great. Thank you very much. I am sorry that
I am going to miss some of the other testimony here. I have
several other commitments. I appreciate your being here today.
Thank you.
Senator Boxer. Thank you.
Senator Boozman.
Senator Boozman. Thank you, Madam Chair.
Dr. Kelly, as you know, the Energy and Independent Security
Act contains a Renewable Fuels Standard that severely limits
the ability for wood biomass to participate. The current
definition limits biomass utilization to just 10 percent of
America's forest. This is a problem for Arkansas as well as
many other States which are rich in biomass.
In the past, Secretary Vilsack has noted that the
definition from the 2008 Farm bill, to quote, is a common sense
and practical approach that enables market participation while
simultaneously considering the sustainability of our lands.
I hope that the Administration will express support for the
biomass definition used in the 2008 Farm bill. Can you all
comment as to where you are at on that?
Mr. Kelly. I am afraid that I am not familiar with the Farm
bill. I would defer to my colleagues.
But what I can say is that we have very aggressive programs
to convert wood into useful fuels and the ultimate goal here is
to have something that is fully competitive on a price basis
with gasoline, and of course the mark keeps changing.
But we are very optimistic that there are ways of taking
forest waste products and other intentionally grown crops and
converting it into diesel jet fuel and other materials that are
fully competitive. That is the real home run.
We think the market will make these decisions because these
will be simply the best fuels available and we are convinced we
will get there certainly within this decade.
But we will certainly talk to our colleagues about that
provision.
Senator Boozman. OK. That would be very helpful. The other
thing is, does it make any sense to have the subsidized
American ethanol that is ultimately exported? How does that
accomplish the goals that we are intending? Is that a wise use
of taxpayer money?
Mr. Kelly. Well, as we said, these subsidies undoubtedly do
need to be revisited. There has been a lot that has changed
since the program was put in place. I think the producers
themselves recognize that and we are working with them and
would be happy to work with you on the appropriate revisions.
Senator Boozman. So, do you think that is something that
needs to be revisited?
Mr. Kelly. We think that, yes, the current system plainly
needs to be revisited. The goal is to create jobs here in the
United States as well as find energy supports for imported
petroleum. We need to honor both of those objectives in
whatever new program----
Senator Boozman. So, do you agree that that really does not
make a lot of sense?
Mr. Kelly. Well, we do try to help exporters in other
areas, creating jobs here in the United States. So, I would
like to discuss that with you at greater length. But the goal
of job creation, particularly job creation in rural area, is
the part of the program that we should maintain. One of the
things that we are hoping to do is increase U.S. exports.
Senator Boozman. But that could be true of any industry. If
you heavily subsidize any industry, you are going to increase
the exports.
Mr. Kelly. I am not arguing that we should not revise it.
Senator Boozman. That, to me, just makes no sense because
the program was not set up on that basis. I mean, that does not
help our energy independence at all. If we are creating an
export program, then I would argue that we need to get other
industries in line that could vie for the same dollars. We have
all kinds of industries that are desperately in need of help
for their survival.
Mr. Kelly. Oh, I completely agree. We are anxious to take
all of these considerations into account if we are trying to
create the right incentives.
Senator Boozman. Thank you, Madam Chair. Thank you for
being here. I have enjoyed the testimony.
Senator Boxer. Senator, I thought that was an interesting
line of questioning because I remember once I had an amendment
that would have stopped certain subsidies for Big Oil that was
exploiting from Alaska. But it lost by a hair. But maybe we can
team up. Because I agree with you.
Senator Inhofe. We need to talk before the team sets up.
[Laughter.]
Senator Boxer. OK, moving right along.
Senator Boozman. I will team up with you and Senator
Inhofe.
Senator Boxer. Oh, yes, you will protect yourself that way
for sure.
[Laughter.]
Senator Boxer. Dr. Kelly, in your testimony you talked
about 18 research and development demonstration projects for
innovative biorefineries. Could you just give us in my
remaining time, very briefly here, one or two of those that are
real, live?
Mr. Kelly. Well, we are able to support something like 29
different pilot projects and commercial projects because of
Recovery Act Funding. A number of those are reaching a
commercial scale, they are fully ready to go forward. One of
them is called BOET. They are all converting various kinds of
feedstocks----
Senator Boxer. Would you describe that one that you just
mentioned? POET, did you say?
Mr. Kelly. I am afraid I am going to have to get help on
that one.
BOET is what feed? But what is the input?
Senator Boxer. The input?
Mr. Kelly. It is corn stover to ethanol. It is in Iowa.
Senator Boxer. What is stover?
Mr. Kelly. Corn stover is what is left over when you take
the seed out. So, the good thing is, it is available with no
additional inputs. It has already been produced. So, you do not
have to put additional water----
Senator Boxer. Very interesting. Well, that is good.
Mr. Kelly. The reason I am confused is that there are so
many different permutations and combinations that have been----
Senator Boxer. I know. I have seen a lot of these projects
in my home State. It is very exciting. I mean, the potential
here is just enormous and it is, as I think Hon. Gina McCarthy
said, that it is slower than we would like. But it is just
there, and you just know we are going to have a breakthrough
and it is going to change our world. That is important.
Well, I want to thank both of you very much and call up our
last panel. Michael McAdams, president of Advanced Biofuels
Association, Jan Koninckx, global business director for
Biofuels, DuPont, Kris Kiser, executive vice president, Outdoor
Power Equipment Institute, Scott Faber, vice president, Federal
Affairs, Grocery Manufacturing Association, and Mr. Brooke
Coleman, executive director, Advanced Ethanol Council.
We welcome all of you. We also thank you for your patience.
We are happy to start with you, Mr. McAdams, president of
Advanced Biofuels Association.
Mr. McAdams. Madam Chairman, could I ask permission to have
my full----
Senator Boxer. All of your statements will be placed in the
record. If you could summarize them for us.
Mr. McAdams. I have a new statement. I made some changes
and I wanted to have the new statement----
Senator Boxer. Absolutely, yes.
Mr. McAdams. Thank you, Madam Chairman.
STATEMENT OF MICHAEL J. McADAMS, PRESIDENT, ADVANCED BIOFUELS
ASSOCIATION
Mr. McAdams. Madam Chairman, Ranking Minority Member
Inhofe, members of the committee, I am honored to be here this
morning to speak on behalf of the Advanced Biofuels
Association, a collection of 31 of our Nation and world's top
advanced biofuels and bioproducts companies.
Two years ago, the ABFA appeared before this very committee
to discuss the opportunities for advanced and cellulosic
biofuels. Since that time, advanced and cellulosic biofuels
have seen some positive developments and some disappointments.
On the positive side, I am delighted to report to you that
as a result of your work on EISA, we now have several new
plants operating both in the United States and around the world
which are producing advanced drop-in biofuels. These plants are
making renewable fuels for the first time that can be used
without changes to the transportation fleet or requiring any
infrastructure changes to deliver them.
For example, Tyson Foods, in combination with Syntroleum of
Oklahoma, is currently producing 75 million gallons in
Louisiana of a jet fuel from animal fats and food greases.
These fuels, which are being produced as we speak, are
identical to those produced in refineries across America from
traditional barrels of oil. The initial sales of this plant
have been to the U.S. Air Force and major U.S. oil refineries.
As a result of its recent successful Initial Public
Offering, Gevo has begun its plans to retrofit a traditional
corn ethanol plant to produce 18 million gallons of isobutanol
in June of next year. Additionally, they have announced plans
to develop over 350 million gallons of isobutanol production by
2015. If successful, this could ease some of the pressure with
existing blend wall restrictions.
These developments would simply not be occurring if it were
not for the vision of this committee and the Congress from 2005
to date to enact the Renewable Fuels Standard.
I urge you to reject the naysayers on advanced biofuels.
They are simply not telling you the truth. The fuels are real,
some are here today, and many more are on the way.
Our Association and member companies strongly believe the
current RFS is the most important Federal policy in supporting
for the development of the biofuels industry in this country.
We would specifically urge this committee, and Congress, not to
tinker with the statute at this time. Since the rules were only
final last July, we strongly urge the Congress to allow the
markets and the players in the market to work within the
current framework and see how much progress we can make toward
reaching the overarching goals of the original legislation in
the short term.
As far as the specifics of the RFS, we want to compliment
the EPA on bringing forward the energy density and equivalency
provisions from the original RFS I program. In addition, we
support the manner in which EPA has allowed the advanced
biofuels mandates to continue as mandated despite shortfalls in
some categories.
One concern we would call to the attention of the committee
today is the overall intent of Congress to back out foreign oil
with as wide a range of products as possible. This is why you
expanded the statute, to include other product lines, not just
gasoline.
Currently, the EPA, in their RIN certification process, is
showing a tendency to be very prescriptive and narrow in
allowing some of the determinations for new qualified pathways
as well as qualifying some significant potential feedstocks. We
would urge the Congress to stay closely engaged with the agency
on these determinations. Many are moving forward at this time
and could have a significant chilling effect if the existing
commercial delivery chains are not approved.
We should take full advantage of the ability to back out
all the various components of the market. As most of you are
aware, the chief challenge of the advanced biofuels and
cellulosic industry has been to achieve necessary funding to
build new generation facilities. The primary reason has been
the Tax Code and its lack of consistency, parity and
applicability for those in a manner those companies could use
it.
I thank you for the opportunity to be here with you today
and I will look forward to your questions.
[The prepared statement of Mr. McAdams follows:]
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Senator Boxer. Thank you so much.
Mr. Jan Koninckx, global business director for Biofuels,
DuPont.
STATEMENT OF JAN KONINCKX, GLOBAL BUSINESS DIRECTOR, BIOFUELS,
DUPONT APPLIED BIOSCIENCES, E.I. DUPONT DE NEMOURS AND COMPANY,
INC.
Mr. Koninckx. Good morning Chairman Boxer, Ranking Member
Inhofe and members of the committee.
I am Global Business Director for Biofuels at DuPont. In my
testimony, I will provide our views on the future of biofuels
and the role of the Renewable Fuels Standard in that future.
I have two key messages for you. First, advanced biofuels
are a technological reality. They will soon be a commercial
reality. Second, the single most important thing that Congress
can do for advanced biofuels is to provide a stable policy
environment. Keep the RFS and advanced biofuels tax policies as
they are. We simply ask that you do no harm. With a stable
policy and access to the fuel pool, we will succeed.
DuPont brings a uniquely broad perspective to bear on
biofuels issues. Our seed business, Pioneer Hi-Bred, has
enabled steadily rising production per acre for over 80 years.
We have 208 years of demonstrated commercialization success of
technical innovation and manufacturing expertise. We bring
significant biotechnology, process engineering, plant
operations and agricultural to bear to this endeavor.
When the U.S. Government called on the private sector to
step forward in advanced biofuels technologies and production,
we responded with 10 years of work, hundreds of millions of R&D
dollars and investment dollars, and our brightest minds. We are
confident of our capabilities to cost-effectively produce
advanced biofuels.
What have we done? What are we working on? First, with our
partner, BP, we have developed and demonstrated biobutanol, a
higher alcohol with excellent fuel properties. We are on track
to commercialize this in the United States by 2013. This drop-
in fuel is the first biofuel specifically developed for its
fuel performance characteristics in that it behaves very
similarly to gasoline.
Second, our other biofuel joint venture, DuPont Danisco
Cellulosic Ethanol, will shortly announce the construction of a
commercial-scale cellulosic ethanol facility based on corn
stover, with production, again, in the 2013 timeframe. We are
currently demonstrating this technology on corn stover and on
the energy crop switchgrass, providing the opportunity to
produce biofuels both inside and well outside of the Midwest.
We recognize a variety of ramifications of our dependence
on oil. They are becoming more acute. Biofuels are making solid
progress in that problem. Biofuels' production in the United
States offsets about 10 billion gallons of petroleum each year,
10 billion of very expensive gallons that we do not have to
import. That alternative fuel supply has been built by the
first generation corn grain ethanol industry.
The RFS has helped now to move the biofuels market in the
direction of multiple feedstocks and production technologies as
well as desirable fuel attributes. There are multiple
technology developers preparing to produce cellulosic ethanol,
biobutanol and other drop-in fuels in demonstration or
commercial quantities over the next 24 months. The economics
and carbon performance of grain ethanol continues to improve,
agriculture productivity is strong, remains strong, and will
grow.
These trends suggest that while the RFS targets are
aggressive, as they should be, they are not out of reach.
Advanced biofuels are delayed versus the annual RFS targets,
but we are confident that they are on track to meet the overall
goals. EPA has all the authority it needs to adjust annual
targets on the way to meeting the overall goal.
The RFS does not need to, nor should it be, reopened. In
fact, reopening the RFS would seriously undermine the market
predictability that is allowing us to move forward with
significant investments in these businesses.
I thank you for the opportunity to speak with you today on
this important topic. I have tried to illustrate in my remarks
biofuels technologies are demonstrated and implementable. We
are poised to see commercial-scale production from multiple
companies producing various fuels just as it should in a
competitive market. We are confident that several of these
technologies will prove out at commercial scale.
Congress has done an effective job of creating a policy
framework that has allowed this to happen, especially the RFS.
Your job now is simply to maintain that policy so that we have
the predictability to move forward.
Thank you. I look forward to your questions.
[The prepared statement of Mr. Koninckx follows:]
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Senator Boxer. Thank you very much.
Mr. Kiser, executive vice president, Outdoor Power
Equipment Institute.
STATEMENT OF KRIS KISER, EXECUTIVE VICE PRESIDENT, THE OUTDOOR
POWER EQUIPMENT INSTITUTE
Mr. Kiser. Thank you, Chairman Boxer and members.
Our 80 member companies make small engines and put them on
vehicles and products. These are working machines. Typically,
when one of our machines operates, someone is doing a job.
We have some 200 million units in use today throughout the
United States. Their uses are too numerous to mention. We have
900 engine families that are regulated by the EPA and
California Air Resources Board for emissions. A transition to
any new fuel presents a challenge to us.
Our members understand and appreciate the work Congress has
done on reducing our dependence on foreign oil and energy
dependence in the use of biofuels. We support that.
Our members make a wide range of product, diesel electric
hybrids, propane, compressed natural gas, battery, electric,
etcetera. Moving to a different gasoline-based fuel presents an
enormous challenge for our industry. None of our product, none
of engines, none of our product, no marine product, no ATV, not
snowmobile, etcetera is designed, built or warranted to run on
any gasoline fuel containing more than 10 percent ethanol.
The EPA did not make a sub sim declaration on E-15. They
did not approve its use for any of our products. A sub sim
declaration is a substantially similar. What they are saying
is, this is a different fuel.
We are not anti-ethanol. Our members can design a product
to run on anything. We can design a product to run on E-10, E-
20, E-30. It does not matter. The products we have designed and
built and put into the marketplace were not designed for E-15.
EPA has approved E-15 for use in model 2001 and newer
automobiles. Again, it has not approved it for our use. But
they are going to move that fuel into the marketplace. How are
you going to put it into the marketplace? For 50 years you have
been able to drive to a gasoline station and what goes in the
car goes in the can. What goes in the can goes in the bass
boat, lawn mower, ATV, snow machine, et cetera. You are
changing that paradigm.
It is especially true for seasonal uses. When you add
alcohol to a petroleum-based product, you change the fuel. You
destabilize the fuel. So, if a product is seasonal use, like a
boat, landscapers' equipment, consumers need to know about its
storage, that storage capabilities have changed. The marine
environment is particularly challenged. Ethanol absorbs water.
Once it absorbs enough water, it phase separates and the
product fails.
The EPA has said they are going to put a label on E-15 at
the pump, at retail. This is to educate the consumers about its
use, what to put it in, not to put it in. We are concerned that
a label is inadequate to provide this knowledge to the user.
DOE did test our equipment. We have 900 engine families
regulated. They tested 28 engines in four families. We do not
disagree with their findings. What they found was it gives you
increased heat, performance irregularities, failure and
unintentional clutch engagement. Unintentional clutch
engagement is a fancy word for saying the blades engage when
the machines are in neutral. This is a problem. Failure is a
problem.
Again, we are not opposed to ethanol. But what we are
opposed to is bringing this fuel to the marketplace in a way
that does not put our users' economic interests or safety at
risk. We would encourage those in the ethanol industry to work
cooperatively to find a way to bring this fuel to the
marketplace that does not place people at risk.
Secretary Vilsack talked about blender pumps into the
marketplace. That allows you, or any user, to choose your level
of ethanol. It may be cheaper. It is less energy dense. You
might be incentivized to purchase E-30 for all of your
products. You might legally fuel your flex fuel product but
illegally fuel everything else.
Ethanol damage is permanent. It is irreversible. If you are
a landscape operator and you destroy all of your equipment, you
have hurt your business.
We want to work with Congress and believe the partial
waiver is a challenge where they have approved it for a subset
of the auto fleet. All engine makers, autos, and ourselves, and
the marine industry and others are challenging that in court.
As that works it way through the system, we would like to
work with Congress in finding meaningful alternatives to bring
biofuels to market.
Thank you.
[The prepared statement of Mr. Kiser follows:]
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Senator Boxer. Thank you very much. Other than that, you
love it, right?
[Laughter.]
Senator Boxer. Mr. Scott Faber, and let me say, vice
president, Federal Affairs, Grocery Manufacturers Association.
Welcome.
STATEMENT OF SCOTT FABER, VICE PRESIDENT OF FEDERAL AFFAIRS,
GROCERY MANUFACTURERS ASSOCIATION
Mr. Faber. Thank you, Madam Chair.
My name again is Scott Faber. The Grocery Manufacturers
Association represents more than 300 food, beverage and
consumer product companies. We directly employ 1.7 million
Americans in more than 30,000 communities, many rural
communities.
When I appeared before this committee in July 2008,
tightening supplies of basic commodities and rising and
volatile food prices was contributing to unrest in more than 30
countries and food inflation at home.
Unfortunately, tightening supplies of basic commodities are
once again contributing to high food prices. Overall, food at
home prices are expected to increase by 3.5 to 4.5 percent in
2011 with even higher prices expected for basic staples like
milk, meat and eggs.
The same factors that caused a perfect storm in 2008 are
once again contributing to rising food and food ingredient
prices including strong global demand, poor weather, rising
energy costs, commodities speculation and trade restrictions.
But one very significant difference between 2008 and 2011 is
that even more of our food, and primarily feed, is being
diverted to produce fuel.
In 2008, one-quarter of our corn crop was diverted from
food and feed to fuel. Today, nearly 40 percent of U.S. corn
production is diverted from feed and fuel to produce more than
13 billion gallons of corn ethanol. During the same period,
corn yields increased by less than 6 percent and as a result,
corn stocks are at or near record lows, contributing to high
prices and extreme volatility.
Unfortunately, rather than allowing the market to ration
these tightening supplies, our mandates and subsidies continue
to automatically divert more and more food and feed to our fuel
supplies and trade barriers continue to limit the importation
of less costly fuel alternatives.
As we heard from Secretary Vilsack this morning, the price
of food, especially the price of meat, poultry, dairy and eggs,
is closely linked to the price of feed and food ingredients. On
average, in particular feed costs, represent about 70 percent
of the cost of producing meat and poultry and a smaller but
significant share of processed foods.
While food manufacturers are reluctant to pass these costs
of production on to consumers, higher commodity prices often
result in higher retail food prices, especially for basic
staples. Many experts have confirmed the link between our food-
to-fuel policies and higher food prices.
The CBO, in fact, reported in 2009 that corn ethanol
production contributed 10 to 15 percent of the increase in food
prices that we saw between April 2007 and 2008.
So, let me just take a minute to provide some
recommendations.
We believe now is the time to revisit and reform these
policies to accelerate the development of advanced biofuels and
to freeze the amount of food and feed that is being diverted to
our fuel supplies. In particularly, we urge Congress to freeze
the amount of corn ethanol that must be blended into gasoline
in order to provide advanced biofuels more time to reach
commercial scale, to permit changes to engines unable to safely
operate with higher ethanol blends, to complete assessments of
the impacts of higher blends on engines and on the environment,
and to allow corn yields to catch up with the artificial demand
that has been created by the RFS.
Congress should also immediately end the Volumetric Ethanol
Excise Tax Credit, or VEETC, and instead invest in advanced
biofuels. Immediately ending the VEETC would save taxpayers
$4.8 billion and would have virtually no impact on corn ethanol
production. Economists at CBO, GAO and leading universities
have concluded that the VEETC is a costly redundancy to the
corn ethanol mandate.
Congress should also reject proposals to redirect the VEETC
to corn ethanol infrastructure until advanced fuels reach
commercial scale, investments and policies designed to bring
higher ethanol blends to the marketplace will divert even more
of the U.S. corn crop to our fuel supply.
So, let me conclude by saying that we strongly support
policies that will help bring advanced biofuels to the
marketplace.
Thank you.
[The prepared statement of Mr. Faber follows:]
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Senator Boxer. Thank you so much.
Well, this has been really interesting so far.
Last, but not least, Mr. Brooke Coleman, Executive
Director, Advanced Ethanol Council.
Before we begin, because of an 11:30 issue I have, I am
going to turn the gavel over to Senator Whitehouse.
Senator Whitehouse. Oh, come on.
Senator Boxer. I know.
[Laughter.]
Senator Boxer. We almost had a deal here, but Senator
Inhofe said he could not promise me that he would not overturn
any laws dealing with climate change. So, I had to call on my
pal over here.
[Laughter.]
Senator Boxer. Just kidding.
So, Mr. Brooke Coleman, if you could conclude.
STATEMENT OF BROOKE COLEMAN, EXECUTIVE DIRECTOR, ADVANCED
ETHANOL COUNCIL
Mr. Coleman. Chairman Boxer, thank you. Ranking Member
Inhofe, members of the committee, I appreciate the opportunity
to speak here today.
My name is Brooke Coleman. I am the executive director of
the Advanced Ethanol Council. The Advanced Ethanol Council
represents worldwide leaders in the effort to develop and
commercialize the next generation of ethanol fuels ranging from
cellulosic ethanol fuels from switchgrass, agriculture waste,
and wood chips to advanced ethanol fuels from energy crops,
municipal solid waste and algae.
I want to start quickly with the big picture. When people
talk about biofuels, and particularly ethanol, there is this
spatial amnesia that seems to kick in and we focus solely on
what is wrong with what we have today and not so much on where
we have come from and where we are headed. I want to pull the
lens back a little bit.
We talked a little bit this morning with Secretary Vilsack
about the benefits of the ethanol industry in rural America and
he talked about the job creation, etcetera. What we did not
talk about was the baseline. The baseline was, people seem to
think that $1.80 per bushel of corn was good for farmers, good
for the American taxpayer, that there was this nice balance
between supply and demand.
The reality was that grains were overproduced, farmers were
going belly up, and the taxpayer was footing that bill and
paying for that bill. So, when we think about, well, I am just
opposed to this corn ethanol stuff, I think we have to keep
that in perspective.
The other thing is that they built 200 biorefineries at a
time when we were exporting jobs and capital at an alarming
rate to China and India. Two hundred biorefineries.
The third thing, and this is what is most important to our
industry, is they are proving out the effectiveness of the
ethanol chemical in the marketplace. That is tremendous if you
are trying to produce it from a different set of feedstock
because investors, that reduces risk and investors know that
that chemical works.
The second big lens issue is foreign oil dependence and,
whether you like corn ethanol or not, they are displacing a lot
of foreign oil. Last year, the U.S. ethanol industry alone
displaced more oil than we import from Saudi Arabia every
single year. So, I think the second charge for the renewable
fuels industry with the Energy Independence and Act was to
reduce foreign oil.
But that brings, and there is a critical reason, of course.
People talk about the dangers of foreign oil all the time and I
would like to just focus on one issue. In 2008, Scott mentioned
that prices went up. During that period, American taxpayers
transferred almost $1 trillion to OPEC in wealth. So, when we
hear in the advanced biofuels industry, and that was over 6
months, so when we hear we cannot get $1.5 billion, $2 billion
in loan guaranty money, what we cannot afford is the status
quo.
Moving on to the third and most important issue, and that
is the advanced biofuels industry. I stand united with my
colleagues when I say that we have been asked to innovate, we
have been asked to put a lot of the gallons in the marketplace,
and we have stepped up. We have about 50 projects nationally in
various stages of development. We have attracted in the
vicinity of $1.5 billion in private sector investment.
I want to make clear as well that we have a proven
technology. So, step one is proving that you can produce the
fuel. Step two is showing that you can produce the fuel at the
ranges of fuel today, so $2.60, $2.70 a gallon. Our companies
have shown that. I am sure a lot of Mike's companies have shown
that. The next step of course is commercialization.
So why do we need this policy? Here is the most important
part. The marketplace is not competitive. It is monolithic. Our
cars are not FFVs like they are in Brazil. There is no choice
at the pump. The incumbent oil companies, who had subsidies for
100 years, continue to get subsidies. The blend wall, which
people talk about as a corn ethanol problem, is really a
problem for us because our investors are looking out 5 years
and seeing questionable demand. That creates a reverse domino
effect where they are looking and they are saying, the risk is
too high, we are not going to invest. And, of course, that
exacerbates plant finance problems.
So what are we going to do about it? The most important
thing, bar none, is no backsliding. We have to keep the RFS.
Even the perception that it might be overturned is bad for
advanced ethanol.
The second is we have to open up the marketplace. We need
the opportunity to compete. Everybody wants to see a free
marketplace, but it is not as easy as showing up with a cost-
competitive, cheaper fuel in this marketplace when it is this
vertically integrated.
Third, and this is very, very important as well, we need a
tax policy that reflects 2011 and the commitment that Congress
has made in the RFS instead of tax policy that is oriented 100
years ago when it was very important at that time to produce
more oil and to mitigate the risk of drilling in case there was
nothing found. So we really have to have the tax policy catch
up with the RFS to get this done.
So we stand ready to produce these gallons and what we need
more than anything else is certainty over time.
Thank you very much.
[The prepared statement of Mr. Coleman follows:]
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Senator Whitehouse. [presiding.] Thank you very much.
This has been a very helpful and instructive panel. Because
we are coming up on this April 15th moment in Shenandoah, IA
where we are doing the expansion of the plant to grow algae off
of the exhaust of the ethanol plant, I am interested in asking
each of you what role you see algae biofuels as playing in the
advanced biofuel mix.
Why don't I start with you, Mr. McAdams?
Mr. McAdams. It is a very important role. I would, I want
to point out to the committee there are various, different ways
in which algae can be used to make a biofuel. There are some
that not so elegantly describe it as the squish, which is where
you grow as efficiently as you can a lipid with high
concentrations of oil, and then you remove the oil and then put
it through a secondary process to make a traditional drop-in
fuel. There are other heterotrophic algae processes which do
not use sunlight or CO2, but use it as a mechanism
in a fermentation process.
We represent both types. We have Sapphire, who is going to
deploy in New Mexico, and we have Solazyme, who has just gone
out with their IPO. So, these are very promising technologies
and they certainly have a place in backing out foreign oil in
the future.
Senator Whitehouse. Thank you.
Mr. Koninckx.
Mr. Koninckx. We do some work in algae. We focus on
cellulosic ethanol and on butanol because the cellulosic
ethanol, of course, on corn stover, where we see a feedstock
that exists today and that is accessible today and that we can
grow immediately. Butanol, butanol is a technology that we can
apply in the existing ethanol industry, converting the industry
to a more valuable product.-
So, obviously there is long-term potential for algae and we
do some research work in it. But we focus right now on
cellulosic ethanol and butanol which we, as I stated before,
expect to commercialize in the near term.
Mr. Kiser. Senator, we are happy to build an engine to run
on anything. Give us the appropriate lead time, your make sure
the certification fuel of the EPA matches and the fuel is in
the marketplace, we are happy to do it. We are currently
testing isobutanol with a couple of our engine manufacturers.
It does not act as an alcohol. The challenge with ethanol, you
are burning it with gasoline, and it is a challenge.
So, there are biofuels that thus far show tremendous
promise. But----
Senator Whitehouse. The lipid technology that Michael
McAdams was talking about comes through just as oil, not as
ethanol.
Mr. Kiser. We do not have a problem with it.
Senator Whitehouse. Mr. Faber.
Mr. Faber. Senator, all I will say is that we support any
of these fuels that do not pit our food security needs against
our energy security needs. So, anything that can accelerate the
development of fuel feedstocks that do not divert food and feed
into our fuel supplies would be a terrific development.
Senator Whitehouse. Mr. Coleman, if you could add, since
you are here on behalf of the ethanol folks. It seems to me
that there is a fairly healthy relationship between the algae
industry and the ethanol industry and that the algae industry
is able to absorb and put to use what would otherwise be carbon
dioxide emissions produced in the course of the development of
the ethanol. Correct?
Mr. Coleman. That is true.
Senator Whitehouse. It is symbiotic.
Mr. Coleman. Yes. You are hitting on a couple of points. I
am a great believer in the continuum theory, that this
renewable fuels industry will continue to evolve. Someone
producing ethanol from corn, when corn goes to, if there is one
thing I have in common with Scott it is that high corn prices
can be a problem at the production level, right? So, corn
ethanol folks see $7 corn they look for alternative feedstocks.
So they have an interest in not only sequestering carbon, but
also figuring out other ways to produce their product.
When you grow algae, you can produce oil and you can
produce ethanol from the biomass that you are producing. So
that is a huge benefit. The other one, and this is the most
important one for your company, is that it is tricky to finance
a plant no matter what type of energy source you are.
When you develop your technology, it is tremendously
helpful to reach out to people that have already that steel in
the ground and say, we have an option, we have a bolt on
solution that will help you in three different ways.
So, that is a huge issue for us.
Senator Whitehouse. Very good.
Senator Inhofe.
Senator Inhofe. Thank you, Mr. Chairman.
You now, I was the guy who requested this hearing and this
has been actually better than I thought it would be. We have
gotten some great responses.
Now, I want to give you, I do not think I need Mr. McAdams
and Mr. Koninckx to tell you that I am a strong supporter of
cellulosic. My only thing, in the legislation that I have, is
purely corn ethanol, it does not reflect anything else.
Look at our State of Oklahoma. Switchgrass. Look what the
Noble Foundation is doing. Look at Oklahoma State University.
We are a big player in this. So, I want to make sure everyone
understands that I am on your side on that.
I think you did a good job, Mr. Faber, in talking about the
costs. We quite often, and you specifically talked about the
CBO and their numbers as to what it is going to cost in terms
of increased fuel costs.
One thing that was not discussed, and I will go back to
you, Mr. Kiser, on this, that concerns me, I suspect that of
all of the 100 Senators, I use chainsaws more than anybody else
does. I pride myself every weekend in doing something that I
know that no other U.S. Senator is doing. So, I cut down the
trees and I split all the woods for all 20 of my kids and
grandkids. So, I know something about that.
Now, we know what can happen in terms of damage, let us
say, in a chainsaw. Someone is putting in a blend that is
damaging it, causes it to stick, it stays on, and with today's
tort laws and all of that, have you ever looked at how this is
going to affect people in terms of safety but then, connected
to that, the lawsuits that could come up? I mean, with a
chainsaw, it is easy to lose your life. You know what the tort
system is out there.
Any thoughts about that?
Mr. Kiser. Certainly. Senator, we are acutely aware of this
problem. We are consumer products companies. Our names are on
those things. We care about our customers' safety. In
particular, a chainsaw, and any open clutch-to-blade equipment,
you have hit it right on the head, is alcohol advances the
RPMs. The machine thinks it is throttling up and the blade will
move, simply move, when it is in neutral.
So this presents a very real safety problem for any user,
whether it is seated, I mean, if you have ever watched a
professional forester, they throw these things around like
handbags. They carry them up and down trees and hang them on
themselves.
So it is a huge problem. It is a warranty issue as well.
But when the warranty expires, our liability does not go away.
Senator Inhofe. Exactly.
Mr. Kiser. You also potentially face a recall. These are
company-crushing endeavors. If this fuel is in the marketplace,
and it is x dollars, and EPA knows what those numbers are that
trigger misfueling, and if you can foresee that the product
might be misfueled and an injury may result, you may have to
recall the product.
Senator Inhofe. Well, not just recall the products, but if
something happens, everyone is talking about it and you made
the statement, you can produce anything to burn on anything.
Mr. Kiser. That is right.
Senator Inhofe. But those things are still out there. In
1994, I was the, I guess, the reason that we passed the 18-year
repos on aviation products and that put America back into an
exporting position instead of importing on airplanes and
airplane products. Well, that was great. It was 18 year repos.
Now, you might say, wait a minute, something has been
running fine for 18 years, it should not go beyond that.
However, if you find somebody that does run on something that
you are forced to buy, there are still going to be thousands
and thousands of those out there that are going to come back to
you, your manufacturer, long after, years after they have been
performing well, just due to the blend that they are----
Mr. Kiser. Yes, sir.
Senator Inhofe. Am I off base on that? Am I missing
something?
Mr. Kiser. It is in the millions. In the marine industry,
if your machine, if your engine fails and you are 30 miles
offshore, this is a huge problem. If you are on a snow machine
and it fails in the wilderness, this is a huge problem.
So, again, we are not anti-ethanol. We are not opposed to
these fuels. But we want to educate that if this fuel is going
to be in the marketplace, you have to educate the folks about
how, what fuel goes in what and, in particular, a blender pump.
Senator Inhofe. Yes, I would only correct you in saying you
can educate them all they want, but if they end up losing their
lives, all the education in the world is not going to help
that.
In Oklahoma we still now, it may not last long, but as it
is now we have a choice. In Oklahoma there are big signs on
every major filling station, we sell no ethanol, no corn in our
gas. That is all over the place. So while the supply and demand
varies from State to State, I can assure you in Oklahoma what
it is.
So, I would assume then, if we had an opportunity to opt
out, keeping in mind now, I say to our friends on the left side
here, this only affects corn ethanol, nothing else. If there is
an opportunity to opt out of this, and I would say the same
thing to you, Mr. Faber, would that not pretty much solve this
problem? It is choice. If you want any kind of ethanol you can
have it, but if you want clear gas you can have that, too.
Mr. Faber. I think to your point, and to the question that
Senator Johanns asked, FAPRI, which is in some respects the
final word on agricultural economics, has looked at this
question of what if you change the mandate, eliminate the
mandate, eliminate the tariff, eliminate the tax credit, and
what would happen to ethanol production?
There would still be a significant amount of ethanol
production, depending on the year, but there would not be as
much. The price of ethanol would be lower. The price of corn,
and ultimately the price of food and feed, would be lower. So,
you would continue to have a mature industry that would be
competitive with other makers of fuels. You just would not be
spending $6 billion a year in subsidies and limiting consumer
choice.
Senator Inhofe. Americans can have the choice. This is the
thing that has been different in America than in any other
country.
Thank you, Mr. Chairman.
Senator Whitehouse. Thank you.
I just wanted, before I, do you want to do another round or
are you ready to conclude?
Senator Inhofe. I am ready to conclude.
Senator Whitehouse. OK. Let me just ask one last question
of Mr. Kiser. I take the prerogative of the Chair, since I am
also Senator from the Ocean State, and give you the opportunity
to elaborate just a little bit on your remarks with regard to
marine use of the fuel and what your recommendations are with
respect to the particular issues that marine use and saltwater
use of the fuel raise.
Mr. Kiser. I would note that the National Marine
Manufacturers is a co-participant with OPEI on both the
petition to ask EPA to make a formal rulemaking on misfueling,
to look at misfueling mechanisms beyond the label to help
educate folks. The National Marine Manufacturers Association
was also one of the petitioners with us in challenging the
decision. I note that the Coast Guard weighed in in opposition
to the E-15 waiver because of its potential effect in the
marine industry.
Their engines, like our own, are simply not designed for
the product. They can design a product for it. Now, they are a
little more challenged because alcohol absorbs water. You bring
water into the engine, a, it is corrosive, but it also phase
separates. So, they are uniquely challenged. Probably of all
the non-road community, marine has a very tough road here and
certainly maybe in the marina environment or in ocean
environments, a legacy fuel or an easy or neat fuel should be
made available for the foreseeable future.
They also have a very long lifetime span. Legacy products
in my field, maybe 10 or 20 years. You have boats, 30, 40, 50
years old, same thing with automobiles, legacy automobiles,
that are collectibles. None of this stuff is designed for, and
especially a fiberglass tanked boat. You simply cannot run E-10
in it. It will break up the resin. So, the marine folks are
genuinely challenged here.
Mr. Coleman. Mr. Chair, could I comment on that before you
finish?
Senator Whitehouse. Sure.
Mr. Coleman. From the perspective, just quickly on this
choice thing, from the perspective of the advanced ethanol
industry with regard to opt out, I think the common ground here
is we want to give consumers a choice. We want to give them a
choice not just to opt out, but to opt in, because if you give
them a choice just to opt out, you are going to have a
situation where you weaken the existing industry.
There is a plant in Southwestern Kansas right on the border
on Oklahoma, they are going to do a cellulosic ethanol biofuels
plant. It is an integrated plant but it is financed on the back
of a company that is healthy because they are selling corn
ethanol. So we do not want to weaken the ethanol industry while
we move toward choice.
I think the ultimate situation is where the consumer can
dial it up to 30 or 40, but then they can dial it down for zero
if they want to go offshore. I am a boat owner and I can
certainly sympathize with that. But we need to work on opt up
and opt down.
Senator Inhofe. Well, that sounds good. The only problem
with that is we are right up against the blend wall in my State
of Oklahoma today. I mean you can always opt up. The point is
what you cannot get is clear gas. You can now. But as we get
closer to that wall, we see that time coming to an end.
I am not going to subject my farmers, some people do not
realize, you commented you are a coastal State. Oklahoma has
more miles of freshwater shoreline than any State of all 50
States. Not many people realize that. So, it is a huge industry
there.
Well, anyway, thank you, Mr. Chairman.
Mr. McAdams. Mr. Chairman, I just wanted to make one
comment in the other direction. That is as you see these new
molecules and the advances in cellulosic coming into the
market, they are different than the molecules we have used in
the past.
So what you have, the oversight function in this committee
is attached to the Clean Air Act. EPA, moving forward, is going
to have to prove, under Tier 1 and Tier 2, the gasoline
molecules that come into the market. They are also going to
have to approve, under the RIN certification procedures,
whether the feedstocks, processes or products fit under the
definitions of the RFS II.
So, through your oversight, you need to be very careful
because our regulatory structure, driven by the Clean Air Act
for gasoline and diesels, has predominantly been skewed for
ethanol and biodiesel up to this point because that is where
the volumes have been. We need to have a regulatory framework
harmonized with the intention of the RFS II, moving forward, so
we can deploy these new molecules.
Thank you.
Senator Whitehouse. All right. Well, I thank the witnesses
very much.
I want to thank the Ranking Member for his leadership and
pulling this hearing together. I agree with him that it has
been very helpful and instructive.
Once again, I thank all of the witnesses.
I think we will leave the record of the hearing open for an
additional week in case anybody wishes to add anything. But
subject to that 1-week for the record, the hearing is hereby
adjourned.
[Whereupon, at 11:55 a.m., the committee was adjourned.]
[Additional statements submitted for the record follow.]
Statement of Hon. Thomas R. Carper, U.S. Senator from the
State of Delaware
As many of you know, next week is the 41st anniversary of Earth
Day, a day that is near and dear to my heart. Next week is also another
anniversary--one that is far more tragic--the 1-year anniversary of the
BP/Deepwater Horizon oil spill. I think that today, more than ever,
Americans understand the need to develop domestic sources of renewable
energy, and the need for us to become energy independent. Energy
independence is something that we have talked about in this country for
a long time.
Today's hearing provides us with an opportunity to assess if we are
indeed meeting some of the key time-tables and targets that were
established in 2007 to put us on a path toward energy independence.
Appropriately named, the Energy Independence and Security Act of 2007
established a second phase in the EPA's Renewable Fuel Standards
program that increased the demand for second generation biofuels. These
new biofuels were to be cleaner in emissions and were to be made from
renewable materials other than food stocks such as corn. I supported
this effort because I believe biofuels done right are a good thing.
Biofuels can give us an environmentally friendly option to move away
from foreign fossil fuels and safeguard our energy security.
However, since 2007 we've not seen the increases in next generation
biofuels as we had hoped. This country continues to depend on biofuels
that compete with our food supply and may be impacting our air quality.
Many of you here have heard me say that I believe the role of
government is to steer the boat, not row the boat. Today, we will be
grading our driving skills to see, are we steering in the right
direction toward energy independence? Today, we will ask if the
government is providing the right incentives to spur investment and
production of the next generation of biofuels. Are we providing the
certainty businesses need to invest in the new technology that we lead
us to these new fuels?
I look forward to hearing from our witnesses to see what advances
have been made and what the government could do better to help our
companies develop better biofuels. I'm also interested in learning how
our current renewable fuel standard has impacted all-aspects of our
economy and our air quality.
In closing, I believe the Renewable Fuels Standard must be
implemented in a manner that positively impacts energy security, the
environment and the economy. I look forward to working with my
colleagues on this committee to make sure this happens. Madame Chair,
thank you. And, to our witnesses today, welcome.
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