[Senate Hearing 113-556]
[From the U.S. Government Publishing Office]




                                                        S. Hrg. 113-556

                           ADVANCED BIOFUELS:
                        CREATING JOBS AND LOWER
                           PRICES AT THE PUMP
=======================================================================

                                HEARING

                               before the

                       COMMITTEE ON AGRICULTURE,
                         NUTRITION AND FORESTRY

                          UNITED STATES SENATE


                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION


                               __________

                             APRIL 8, 2014

                               __________

                       Printed for the use of the
            Committee on Agriculture, Nutrition and Forestry


        Available via the World Wide Web: http://www.fdsys.gov/
        


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            COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY



                 DEBBIE STABENOW, Michigan, Chairwoman

PATRICK J. LEAHY, Vermont            THAD COCHRAN, Mississippi
TOM HARKIN, Iowa                     MITCH McCONNELL, Kentucky
SHERROD BROWN, OHIO                  PAT ROBERTS, Kansas
AMY KLOBUCHAR, MINNESOTA             SAXBY CHAMBLISS, Georgia
MICHAEL BENNET, COLORADO             JOHN BOOZMAN, Arkansas
KIRSTEN GILLIBRAND, NEW YORK         JOHN HOEVEN, North Dakota
JOE DONNELLY, INDIANA                MIKE JOHANNS, Nebraska
HEIDI HEITKAMP, NORTH DAKOTA         CHARLES E. GRASSLEY, Iowa
ROBERT P. CASEY, PENNSYLVANIA        JOHN THUNE, South Dakota
JOHN WALSH, MONTANA

             Christopher J. Adamo, Majority Staff Director

              Jonathan J. Cordone, Majority Chief Counsel

                    Jessica L. Williams, Chief Clerk

              Thomas Allen Hawks, Minority Staff Director

       Anne C. Hazlett, Minority Chief Counsel and Senior Advisor

                                  (ii)

  
                            C O N T E N T S

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                                                                   Page

Hearing(s):

Advanced Biofuels: Creating Jobs and Lower Prices at the Pump....     1

                              ----------                              

                         Tuesday April 8, 2014
                    STATEMENTS PRESENTED BY SENATORS

Stabenow, Hon. Debbie, U.S. Senator from the State of Michigan, 
  Chairwoman, Committee on Agriculture, Nutrition and Forestry...     1
Cochran, Hon. Thad, U.S. Senator from the State of Mississippi...     3

                                Panel I

Childress, Richard, President and Chief Executive Officer, 
  Richard Childress Racing, LLC, Welcome, North Carolina.........     4
Koninckx, Jan, Ph.D., Global Business Director for Biorefineries, 
  Dupont Industrial Biosciences, Wilmington, Delaware............     6
Coleman, Brooke, Executive Director, Advanced Ethanol Council, 
  Boston, Massachusetts..........................................     7
Arora, Sumesh M., Ph.D., Vice President, Innovate Mississippi, 
  and Director, Strategic Biomass Solutions, Ridgeland, 
  Mississippi....................................................     9
Young, Nancy N., Vice President, Environmental Affairs, Airlines 
  for America, Washington, DC....................................    11
                              ----------                              

                                APPENDIX

Prepared Statements:
    Cochran, Hon. Thad...........................................    30
    Arora, Sumesh M..............................................    31
    Childress, Richard...........................................    37
    Coleman, Brooke..............................................    43
    Koninckx, Jan................................................    58
    Young, Nancy N...............................................    64
Document(s) Submitted for the Record:
Arora, Sumesh M.:
    Supporting Testimony for the Record..........................    78
Question and Answer:
Arora, Sumesh M.:
    Written response to questions from Hon. Debbie Stabenow......   106
    Written response to questions from Hon. Thad Cochran.........   109
Childress, Richard:
    Written response to questions from Hon. Debbie Stabenow......   113
    Written response to questions from Hon. Thad Cochran.........   113
    Written response to questions from Hon. Tom Harkin...........   113
Coleman, Brooke:
    Written response to questions from Hon. Debbie Stabenow......   116
    Written response to questions from Hon. Thad Cochran.........   117
    Written response to questions from Hon. Joe Donnelly.........   118
Koninckx, Jan:
    Written response to questions from Hon. Debbie Stabenow......   121
    Written response to questions from Hon. Thad Cochran.........   123
Young, Nancy N.:
    Written response to questions from Hon. Debbie Stabenow......   125


 
                           ADVANCED BIOFUELS:

                        CREATING JOBS AND LOWER

                           PRICES AT THE PUMP

                              ----------                              


                         Tuesday, April 8, 2014

                              United States Senate,
          Committee on Agriculture, Nutrition and Forestry,
                                                     Washington, DC
    The Committee met, pursuant to other business, at 9:58 
a.m., in Room 328A, Russell Senate Office Building, Hon. Debbie 
Stabenow, Chairwoman of the Committee, presiding.
    Present: Senators Stabenow, Harkin, Brown, Klobuchar, 
Bennet, Gillibrand, Donnelly, Heitkamp, Casey, Cochran, 
Chambliss, Boozman, Hoeven, Grassley, and Thune.

STATEMENT OF HON. DEBBIE STABENOW, U.S. SENATOR FROM THE STATE 
 OF MICHIGAN, CHAIRWOMAN, COMMITTEE ON AGRICULTURE, NUTRITION 
                          AND FORESTRY

    Chairwoman Stabenow. So we would invite our witnesses to 
join us today. We are very, very pleased to have this hearing 
on Advanced Biofuels: Creating Jobs and Lower Prices at the 
Pump. I think, a really important group of people representing 
many, many different sectors that are involved with biofuels. 
So we will take just a moment to welcome you to come up to the 
table.
    [Pause.]
    Chairwoman Stabenow. Well, good morning again. We are 
moving to the second portion of our hearing, and again, we will 
pause for a business meeting as soon as we have a quorum. We 
expect to have a quorum in just a few moments, so thanks to all 
the members for coming, I know, as close to 10 o'clock as we 
could to do the business portion. I want to thank all of you 
for being here.
    We have heard for years that advanced biofuels are just 
around the corner. Well, we are here. We are at the point where 
it is actually happening instead of having one more hearing 
where we hear, ``Five years from now, we will have cellulosic 
ethanol.'' We are excited to have people here today that will 
be able to touch on some of the success stories that are out 
there. I want to just highlight a few.
    INEOS Bio has announced it is producing cellulosic ethanol 
at a commercial scale. Sapphire Energy announced that it had 
paid off its entire $54 million USDA Energy Title loan and will 
be producing 100 barrels of green crude per day from algae by 
2015.
    POET's Project Liberty broke ground last spring and is on 
pace to begin producing cellulosic ethanol from corn stover 
this year.
    DuPont, which is represented on our panel today--very 
pleased--is expected to produce cellulosic ethanol from stover 
in Iowa later this year.
    As I have said before, as we all know, the farm bill is a 
jobs bill, and that is why I am so proud of the work that we 
all did together in developing a robust energy title. The 
Energy Title funds critical programs to help our farmers 
produce energy from non-food sources and helps companies get 
low interest loans for those facilities. And, of course, all of 
that creates jobs.
    We are going to hear from representatives of companies that 
are out there doing just that: creating jobs and growing rural 
economies while producing advanced biofuels, which ultimately 
help us become more energy independent and lower our gas prices 
at the pump.
    Some of you may be surprised to learn that my home State of 
Michigan was actually an early adopter of ethanol in 1896. I 
was not there at the time, but in 1896, Henry Ford designed his 
first car, the Quadricycle, which we all know as the 
``horseless carriage,'' to run on pure ethanol. When it was 
released in 1908, Ford's Model T was able to run on gasoline, 
ethanol, or a combination of the two.
    Henry Ford continued to advocate for ethanol as a fuel, but 
the lower price and abundance of oil made it more attractive to 
consumers at that time. Interesting how our policies have 
affected all of that.
    Yet today we are still working to make ethanol more 
competitive in the U.S. We would love the same tax policies for 
ethanol that we have had for oil, I would say as an editorial 
comment, and we do know, though, that in other countries we are 
seeing a different mix and competitiveness.
    I was in Brazil with Secretary Vilsack last summer. 
Brazil's gasoline is blended with ethanol at a nearly 30-
percent rate. In fact, they have lower gas prices because of 
the higher blends. Meanwhile, here in the United States, 
ethanol makes up 10 percent of our fuel supply.
    An Iowa State University study found that, in 2010, using 
ethanol reduced the cost of gas by 89 cents a gallon across the 
country, and by as much as $1.37 in the Midwest. These are 
enormous savings for American families.
    In the U.S. we consumed about 138 billion gallons of 
gasoline in 2010. That comes out to about 446 gallons per 
person or 892 gallons for a family of four, and when you think 
about that, well, what do those numbers mean, 892 gallons? 
Well, you could drive from D.C. to Los Angeles and back four 
times on 892 gallons. That family could have saved $794 in 2010 
because of biofuels. According to USDA numbers, that $794 comes 
to up to 5 weeks' worth of groceries.
    Biofuels are making a difference and could make an even 
bigger difference, and that is what we are here to talk about 
today. It is our goal to make sure we move to non-food-based 
advanced biofuels, and it is happening, and in places that some 
may not be aware of.
    As we will hear today, some of our airlines have undertaken 
their own biofuels initiatives because it makes good business 
sense for them to do so. But to continue growing this industry, 
we need policies that support it.
    This Committee and Congress took an important step forward 
passing the farm bill with the funding for the Energy Title. 
Now we need to provide certainty through a strong, Renewable 
Fuel Standard and tax credits to support long-term investments 
in our energy future. Getting off foreign oil is in our 
strategic interest, and doing so, we will be saving money and 
be saving lives.
    So we thank all of you for being here, and I would turn now 
to Senator Cochran for his opening statement.

STATEMENT OF HON. THAD COCHRAN, U.S. SENATOR FROM THE STATE OF 
                          MISSISSIPPI

    Senator Cochran. Madam Chair, thank you very much. I am 
pleased to join you in welcoming our distinguished panel of 
witnesses, one of whom is from my State of Mississippi. Dr. 
Arora is here. He is involved in an initiative for the 
commercialization of advanced biofuel technologies through the 
so-called Strategic Biomass Solution Initiative. I am anxious 
to hear more about this and to learn more about the questions 
that confront the policymakers, both in the administration and 
in Congress, to examine these alternatives to traditional 
sources of energy and enterprise.
    Thank you very much.
    Chairwoman Stabenow. Thank you very much.
    I understand that we will have two more members that we 
need for a quorum in just a moment, so I am going to proceed to 
introduce our panel, and at that point I think we will be in a 
place where we can stop for our business meeting and then 
proceed with the panel. We are so pleased to have all of you 
with us today.
    Our first witness on the panel is Mr. Richard Childress, 
the president and CEO of Richard Childress Racing. It is always 
good to see you, Richard. He serves on the Board of Directors 
at Growth Energy. As a driver, Mr. Childress earned 76 top ten 
finishes in 285 races, and his racing team has logged 200 
overall NASCAR victories and 14 NASCAR championships, and I can 
say as a NASCAR fan, it is always good to see you at the races. 
I know you will be coming to Michigan in just a bit, so I look 
forward to seeing you.
    Our second witness today is Mr. Brooke Coleman--we are so 
pleased you are here--executive director of the Advanced 
Ethanol Council. Mr. Coleman has been involved in the energy 
and environmental sectors at the regulatory and policy level 
since 1997. He has founded or co-founded several organizations 
or projects, including the Advanced Ethanol Council, the New 
Fuels Alliance, the California Renewable Fuels Partnership, the 
Northeast Biofuels Collaborative, and the Renewable Energy 
Action Project.
    Our third witness is Dr. Jan Koninckx, global business 
director for biorefineries at DuPont Industrial Biosciences. 
Dr. Koninckx oversees the development and commercialization of 
advanced biofuel technologies like cellulosic ethanol and 
biobutanol. Dr. Koninckx has worked for DuPont for over 20 
years, has served as chair of the board for Butamax Advanced 
Biofuels LLC since its inception in 2009, and is also a member 
of the Board of Directors of Vivergo Fuels. Welcome. Good to 
have you.
    Our fourth witness is Dr. Sumesh Arora, and Senator Cochran 
has already mentioned him, and I will give just a little bit 
more information. We are so pleased that you are here. Vice 
president and director of Strategic Biomass Solutions at 
Innovate Mississippi, a nonprofit organization focused on 
creating technology-based economic development in Mississippi. 
He launched the Renewable Energy Venture Startup Academy in 
2010 and has served as Mississippi's representative to the 
Governor's Biofuels Coalition since 2006.
    Our fifth and final witness is Nancy Young, vice president 
of environmental affairs at Airlines for America, the oldest 
and largest airline trade association. Ms. Young is an 
environmental attorney with more than 20 years of experience. 
At A4A, Ms. Young directs environmental programs, provides 
counsel on environmental issues, and represents A4A in 
international negotiations. She also participates in several 
airline environmental initiatives, including the Farm to Fly 
initiative--I need to know more about that; Farm to Fly, that 
is very interesting--Commercial Aviation Alternative Fuels 
Initiative, and Advisory Committee to the Aviation 
Sustainability Center.
    So we are pleased to have such a distinguished panel with 
us, and we are waiting for one more member before we can do our 
votes.
    So we are going to proceed with Mr. Childress. We are so 
glad that you are here today. Welcome.
    Mr. Childress. Thank you.
    Chairwoman Stabenow. We would like you to go ahead.
    Mr. Childress. Oh, okay.
    Chairwoman Stabenow. We would like you to share with us 5 
minutes' worth of remarks. You can watch the buttons on there, 
and then anything that you would like to give us further in 
writing we would be happy to accept as well. So good morning.

 STATEMENT OF RICHARD CHILDRESS, PRESIDENT AND CHIEF EXECUTIVE 
OFFICER, RICHARD CHILDRESS RACING, LLC, WELCOME, NORTH CAROLINA

    Mr. Childress. Thank you. I have sent in written testimony, 
but I will. Thank you, Chairman Stabenow, Ranking Member 
Cochran, and members of the Senate Agriculture Committee. Thank 
you for allowing me this opportunity today to tell you about 
all of the things that 15-percent ethanol is doing in NASCAR 
racing today.
    I was raised on a tobacco farm. As a kid, I know how tough 
it was to see farmers and live as a farm kid. But once it is in 
your blood, it is in your blood, so today I am in the farming 
business, been in it for 30 years. I have vineyard, Angus 
cattle. We raise our own hay, wheat, corn, soybeans. So I know 
what it is like for the farmers today, and ethanol is 
definitely a great plus for our farmers in America today.
    I am also an avid sportsman and conservationist. I am on 
the Board of Directors for the NRA. I served 6 years with the 
Congressional Sportsmen's Foundation. Also, as you said 
earlier, I am on the Board of Directors for Growth Energy. 
Growth Energy is the country's leading trade association of 
ethanol and renewable fuel products.
    I have been involved in NASCAR for 45 years both as a 
driver and owner. I have seen a lot of changes. For those that 
don't understand NASCAR, we have over 70 million race fans. We 
rank second only to the NFL in TV viewing and audiences.
    NASCAR always looks at what the manufacturers are doing. 
When we were running leaded fuel back years ago, NASCAR was 
running leaded fuel. When they went to unleaded fuel, we went 
along with them with unleaded fuel. When they decided to go 
with an ethanol blend of fuel, in 2010 NASCAR started looking 
at ways and what was the right, correct blend to use. They came 
up with--after many tests, they came up with E15 was the fuel 
to use in our race cars.
    As RCR, we did our own testing. We did a lot of testing. We 
tested all the way up to E30. I wish we were here today talking 
about how we were all running E30 in our cars.
    Nothing but positive results came out of our tests. Our 
engines ran cooler. We made more horsepower. Ethanol makes more 
octane, so it makes more horsepower; less carbon buildup; 
better emissions; and our parts, when we tore the engines down, 
looked much better.
    Since 2011, NASCAR has raced more than 5 million miles, put 
5 million miles on E15. That is some of the most toughest 
racing, toughest demand on an engine you could get. We turn 
those engines over 9500 RPMs week in and week out for 4 and 5 
hours.
    From a consumer's standpoint--and I better hurry. From a 
consumer's standpoint, more testing was done on E15, more than 
any other fuel approved by the EPA. The Department of Energy 
tested 86 vehicles for more than 6 million miles. With the 
Department of Energy's testing results, the EPA approved a 
waiver for E15 in all vehicles 2001 and newer, which is more 
than 80 percent of the vehicles on the highway today. Studies 
show by moving America to E15 blends or better, we would create 
136,000 jobs, limit greenhouse emissions, and reduce the demand 
for foreign oil.
    The economic impact of ethanol today to America is in 
billions. It creates jobs, farm equipment sales. If ethanol is 
the future for America--I feel ethanol is the future for 
America. The challenges we have today with our security, we 
cannot depend on foreign oils. We cannot keep sending our 
dollars overseas to maybe used against us someday. The main 
thing is our children and grandchildren, we have got to think 
about them for the future and the energy sources that they will 
have in the future.
    With that said, thank you for letting me testify, and God 
bless America.
    [The prepared statement of Mr. Childress can be found on 
page 37 in the appendix.]
    Chairwoman Stabenow. Thank you so much, Mr. Childress. We 
are so pleased to have you here and wish you luck with your 
vehicles racing.
    Mr. Childress. Thank you.
    [Whereupon at 10:14 a.m., the Committee proceeded to other 
business and reconvened at 10:18 a.m.]
    Chairwoman Stabenow. We want to continue with our very 
important testimony. We thank all of you for your patience as 
we stopped, but let us proceed right now. Dr. Koninckx, 
welcome.

STATEMENT OF JAN KONINCKX, PH.D., GLOBAL BUSINESS DIRECTOR FOR 
   BIOREFINERIES, DUPONT INDUSTRIAL BIOSCIENCES, WILMINGTON, 
                            DELAWARE

    Mr. Koninckx. Thank you, and good morning, Chairman 
Stabenow and members of the Committee. As a responsible member 
of a large public company that commercializes technology all 
the time, it is my pleasure to be here with you today and share 
my personal knowledge of the incredible advances that companies 
like DuPont are making in this field of biofuels.
    Science companies like ourselves share the credit for these 
achievements with the entrepreneurial farmers across the 
heartland. These growers work with us every day to realize the 
vision of the Renewable Fuel Standard. It is because of their 
courage and because of their dedication that I am able to sit 
here today and confirm that ethanol, cellulosic ethanol, is 
viable and growing as a new industry in 2014.
    How did we get there?
    Chairwoman Stabenow. Let me ask, is the microphone on? You 
may want to speak a little bit more directly into it if the red 
light is not on.
    Mr. Koninckx. Okay. I will come closer. The red light is--
okay. Sorry.
    How did we get there? Allow me to give you a brief recap of 
DuPont's role in the development of this technology and an 
update of exactly where we stand today.
    DuPont began its research into cellulosic ethanol a decade 
ago, and over those years we have collaborated with public 
institutions, with academia, with private entities, to overcome 
the tremendous technical and practical obstacles we face. Our 
challenge outlined in the RFS was to bring advanced renewable 
fuels like cellulosic, a technology that was yet to be created, 
and put the U.S. on a path towards improved energy security, 
lowered greenhouse gases, and economic opportunities for rural 
economies in America.
    This was no small feat. We had to unlock the sugars trapped 
in biomass, biochemically convert them into advanced fuel, and 
create an entirely new supply chain. Step by step, with our 
partners, we knocked out these technical challenges, and in 
2009 we opened a one-of-a-kind demonstration facility 
Tennessee. Today this facility continues to churn out data and 
know-how on how to process and convert all different types of 
biomass to fuel.
    The first feedstock we worked on was corn stover, and it is 
that feedstock that we will be using in our commercial-scale 
cellulosic ethanol facility that is currently under 
construction in Nevada, Iowa.
    For the past 4 years, DuPont has been out in the fields 
with farmers working together to devise an entirely new supply 
chain that will feed this 30 million gallon per year 
biorefinery, and that supply chain and the biorefinery are 
fully sustainable. Remember, this is a supply chain that was 
never before attempted.
    For some perspective, the bales, the stover bales that we 
will be using are taller than I am at 8 feet, and certainly 
weigh much more at half a ton each. We will harvest these, bale 
them, store them, and transport them--in total, more than 
700,000 of these bales each year. We will do this in a way that 
is fully sustainable, and that is an achievement we are 
particularly proud of and one that our fossil fuel competitors 
cannot even contemplate achieving. We share that credit with 
partners like the USDA, with whom we developed standards for 
biomass harvest and land management.
    The bottom line here is that, driven by the RFS, we have 
completely reinvented how we fuel our vehicles using renewable 
fuel, and we do so without adding additional CO2 into the 
atmosphere. DuPont has more than 210 years of experience of 
bringing scientific innovation to market, and in my estimation, 
we have never delivered this type of disruptive technology this 
fast.
    It is not the end of the story. It is actually the 
beginning. We start with unlocking the sugars in cellulose for 
biofuels. Tomorrow these same sugars and supply chains will 
enable a whole new world of bio-based chemicals and materials, 
delivering on the promise of an economy that is in part 
resourced by renewable agriculture.
    DuPont is already working on it. Since 2006, we have been 
delivering plant starch-based product, which is used in 
carpeting, in automobile parts, in de-icing fluids, and other 
personal and industrial applications. Many more of these 
advances will be possible when the supply chains that I have 
just described mature, enabling lower costs and higher 
efficiencies.
    In closing, I emphasize that the Renewable Fuel Standard 
works as intended. Seven years ago, this Congress set the 
country on a course to change its energy destiny, and DuPont, a 
historic American company, answered that call. This year, we 
are going to be bringing biomass into our refinery fit for the 
21st century, one fueled not by what is drilled up from the 
ground, but what actually is grown from it, a modern technical 
marvel that is a model on how to create jobs in rural 
communities, work with our environment not against it, and give 
consumers an opportunity to choose homegrown renewable fuels at 
the pump.
    DuPont is proud to be part of this success story, and we 
thank the Committee for your continued interest and support for 
this innovative field. Thank you.
    [The prepared statement of Dr. Koninckx can be found on 
page 58 in the appendix.]
    Chairwoman Stabenow. Thank you very much.
    Mr. Coleman, welcome.

   STATEMENT OF BROOKE COLEMAN, EXECUTIVE DIRECTOR, ADVANCED 
             ETHANOL COUNCIL, BOSTON, MASSACHUSETTS

    Mr. Coleman. Thank you. I will get this microphone just 
right here. Good morning, Chairwoman Stabenow, Ranking Member 
Cochran, and members of the Committee. My name is Brooke 
Coleman. I am the executive director of the Advanced Ethanol 
Council. The AEC represents worldwide leaders in the effort to 
develop and commercialize the next generation of ethanol fuels 
and products made from wood chips, agriculture residue, energy 
crops, municipal solid waste, and algae. My chairman, of 
course, is Bill Brady of Mascoma, which is in Michigan.
    I have submitted a fairly substantial written testimony 
that you will be happy I am not going to try to rehash here, 
but I want to touch on a few points.
    I think it is safe to say that the biofuel issue can be 
volatile. The question is: Why? I think if you look at the 
trajectory of the biofuels industry and who is being forced to 
change, you will have your answer. In just 10 years, fledgling 
industries like ethanol and biodiesel have emerged to create 
hundreds of thousands of jobs and displaced the need for 
billions of gallons of petroleum imports annually.
    If you look at perhaps the most controversial biofuel, 
ethanol, you will find that it is also the most disruptive to 
the status quo. The ethanol industry now supports hundreds of 
thousands of jobs in the U.S. all by itself and wants to create 
consumer choice at the pump with fuels like E15 and E85. They 
are a target for a reason.
    Now the industry, I am happy to say, is evolving. While the 
Wall Street Journal editorial page insists that the advanced 
biofuel industry is underperforming, our production capacity 
actually exceeded the RFS targets last year by 250 million 
gallons.
    From an investment perspective, a recent analysis found 
that the United States ranks number one for advanced biofuel 
development among 69 countries, attracting almost 70 percent of 
global ventures in advanced biofuels.
    The news is also good when it comes to cellulosic biofuels. 
It is easy to say we are finally breaking through at commercial 
scale, but the truth is we are just 6 years past the signing of 
RFS2, and financial markets were frozen for much of this 
period. Yet DuPont's plant in Nevada, Iowa, Abengoa's plant in 
Hugoton, Kansas, and POET-DSM's plant in Emmetsburg, Iowa, are 
all scheduled to start up this year. Each of these plants is 
creating new multi-million-dollar markets for local farmers 
making cellulosic ethanol out of agricultural residue.
    Some of the numbers are very interesting. DuPont's 
feedstock network is around 500 farmers strong. At one point 
during construction, Abengoa had roughly 1,000 workers and 
engineers on site in a town of 1,400. POET-DSM's facility will 
produce enough renewable electricity as a co-product to power 
itself and the grain ethanol facility next door. That is the 
good news.
    The bad news is--and I think I have said this before--the 
oil industry has enough money to make it seem like it is 
raining on a sunny day. The very programs that put us ahead of 
Brazil and China, like the Energy Title in the farm bill and 
the Federal RFS, are under fire from big industries that do not 
want to see value-added agriculture in rural America and do not 
want to see consumer choice at the pump.
    The target is not the three projects that I mentioned but, 
rather, the next three dozen projects in the cellulosic ethanol 
biofuel pipeline that I have not mentioned.
    While my time is limited, I think it is also important to 
refute some of the common arguments made against us to correct 
the record.
    The oil industry claims we do not need biofuels anymore 
because we have this boom in domestic oil production. We do not 
have anything against the oil industry. While it is true that 
we produce marginally more oil than we used to, up from about 7 
to 10 percent of the world's supply, we consume more than 20 
percent of the world's oil at steadily increasing prices. So 
foreign oil dependence is sort of like a gambling addiction. We 
are gambling one fewer night per week but at more expensive 
tables and calling it progress. With fiscal responsibility in 
mind, there is simply no bigger drain on the U.S. economy and 
revenues than foreign oil dependence.
    On the issue of pump prices, oil industry executives have 
the tendency to be quite forthcoming after they retire. For 
example, former Shell Oil President John Hofmeister recently 
stated, ``[w]e need a competitor for oil. We need to open the 
market to replacement fuels. Competition will drive 
transportation fuel prices down, structurally and 
sustainably.'' This is exactly what is happening.
    Energy economist Philip Verleger, who served as an adviser 
to both Ford and Carter, recently said, ``the U.S. renewable 
fuels program...translates to consumers paying between $0.50 
and $1.50 per gallon less for gasoline'' by adding the 
equivalent of Ecuador to extremely tight world liquid fuel 
markets.
    Finally, we are aware of the livestock industry blaming 
biofuels for increases in the price of its feed. I know this is 
a difficult issue for agriculture. I would point out that corn 
prices today are about the same as they were in 2008 when these 
programs started. But the issue is bigger than that for 
advanced biofuels. We remember the downside of sub-$2 bushel of 
corn when U.S. farmers were price takers, selling oversupplied 
grains at below cost and struggling to make a living. Congress 
responded in part by committing to policies promoting value-
added agriculture. We believe that Congress was right to take 
this path, that the development of cellulosic biofuels is a key 
part of this vision, and that more prosperity and new markets 
in rural America are a good thing.
    The question for our industry is no longer whether we are 
going to commercialize. Globally speaking, it is when and 
where. The programs you have established are the right 
programs, and if allowed to work, they will pay dividends for 
generations.
    Thank you for the privilege of speaking today, and I look 
forward to your questions.
    [The prepared statement of Mr. Coleman can be found on page 
43 in the appendix.]
    Chairwoman Stabenow. Thank you very much.
    Dr. Arora, welcome.

 STATEMENT OF SUMESH M. ARORA, PH.D., VICE PRESIDENT, INNOVATE 
    MISSISSIPPI, AND DIRECTOR, STRATEGIC BIOMASS SOLUTIONS, 
                     RIDGELAND, MISSISSIPPI

    Mr. Arora. Good morning. Chairwoman Stabenow, Ranking 
Member Cochran, and members of the Committee, thank you for the 
opportunity to testify today in support of advanced biofuels. 
My name is Sumesh Arora, and I am the vice president of 
Innovate Mississippi, a nonprofit organization dedicated to 
technology-and innovation-based economic development, and I 
also serve as adjunct faculty in entrepreneurship.
    I hope to provide a perspective on how advanced biofuels 
and bioenergy options may be accelerated in the southeastern 
U.S., where considerable activity is already taking place on 
multiple fronts.
    Today I will address five challenges and opportunities for 
furthering these goals.
    2014 is a breakthrough year for the advanced biofuels 
industry, but this industry is still in its infancy. Currently 
there is no dominant design for advanced biofuels technologies 
or feedstocks, which means that many different technologies are 
being perfected that can use a broad array of feedstocks. This 
is leading to many technical and business innovations ranging 
from deploying very large-scale biorefineries, as we heard, to 
small modular and even on-farm systems. Achieving the concept 
of dominant design makes a technology more bankable and much 
easier to be adopted by the masses. However, there is a 
significant need to educate entrepreneurs and investors to look 
at risks in five key areas: technology, markets, management, 
finance, and execution.
    Innovate Mississippi has developed the Renewable Energy 
Venture Startup Academy for training entrepreneurs to evaluate 
and mitigate these risks. REVSup workshops have been conducted 
all over the country in the last 3 years. Furthermore, linking 
business plan competitions and business accelerators around the 
country is critical to encourage new investment in these 
ventures.
    Second, many parts of the country, especially the 
southeastern U.S., are well suited to generate current and 
emerging feedstocks in an ecologically sustainable manner, thus 
providing very effective regional solutions. For example, 
forestry and poultry are two of the biggest industries in the 
South that can currently supply feedstocks for advanced 
biofuels. Emerging dedicated energy crops such as grasses and 
algae also grow very well in that climate, but additional 
research and market development is still needed to optimize 
these feedstock supply chains.
    Third, deployment of these technologies will lead to an 
increase in the number of Science-Technology-Engineering (STEM) 
related jobs across the country, which cannot be offshored and 
will also lead to rural wealth creation. However, we need to do 
a better job of connecting and leveraging Federal research 
assets with local universities, schools, businesses, and 
nonprofit organizations to accelerate these innovations to 
market. For example, Innovate Mississippi is the original 
member among nine partners with the USDA Agricultural Research 
Service, among nine partners with ARS, with the goal to 
facilitate commercialization of ARS research. I applaud the 
2014 farm bill for urging the Department of Agriculture to move 
forward with further development of such public-private 
partnerships to provide venture development training for 
innovative technologies.
    Fourth, advanced biofuels should be viewed in a more 
holistic manner to include viable biomass-based energy and 
biochemical options in gaseous, liquid, and solid forms. This 
requires a long-term comprehensive energy policy that provides 
clear market certainty. The announcement by President Obama on 
March 28 unveiling a strategy to curb methane emissions does 
that to a great extent; however, the national Biogas Roadmap 
scheduled for release in June this year will focus mainly on 
the dairy industry, which is quite small in the South compared 
to poultry. Millions of tons of poultry waste is generated in 
States from Maryland to Arkansas, and the contributions to 
biogas production from this very viable feedstock have largely 
been ignored. There are tremendous entrepreneurial 
opportunities in deploying such systems that can lead to rural 
job growth and keep energy prices low for farmers, while 
improving soil health and water quality.
    Fifth, large volumes of advanced biofuels and energy 
options in the overall mix will help keep fuel prices in check 
by diversifying our energy supply and enhancing our national 
security, but market-conditioning efforts led by various 
Federal agencies must continue for greater adoption of such 
fuels.
    Our work at Innovate Mississippi can be summed up in two 
words: ``coach and connect.'' While this may sound simple, 
coaching early stage innovation-based enterprises and 
connecting them with resources like early-stage capital, 
technical research, and entrepreneurial service providers is 
challenging. The ultimate goal is to create fast-growing, 
profitable companies, which also yield great returns for the 
early-stage investors. Innovate Mississippi relies on various 
sources of State, Federal, and private sector funding to 
provide such services at low or no cost to the entrepreneurs.
    I am proud to say that, due to the combined efforts of many 
stakeholder organizations, Mississippi is emerging as a 
regional leader and the proving ground for commercial-scale 
production of various advanced clean energy technologies such 
as woody biomass and MSW-based cellulosic biofuels, biogas 
production from poultry waste, torrefied wood pellets, thin 
film solar panels, and energy efficient windows.
    In closing, I would like to make the analogy that investing 
in renewable energy is just like investing for your retirement. 
In this case, we have to invest to diversify our Nation's 
energy portfolio, which is dependent on fossil fuels for nearly 
93 percent of its transportation sector needs. From a timing 
standpoint, we cannot put off making these serious investments 
in renewable forms of energy until the expiration of these 
fossil fuels is imminent.
    Thank you very much.
    [The prepared statement of Dr. Arora can be found on page 
31 in the appendix.]
    Chairwoman Stabenow. Thank you very much.
    Ms. Young, welcome.

  STATEMENT OF NANCY N. YOUNG, VICE PRESIDENT, ENVIRONMENTAL 
        AFFAIRS, AIRLINES FOR AMERICA, WASHINGTON, D.C.

    Ms. Young. Thank you for the opportunity to discuss the 
benefits that advanced alternative jet fuels can bring to the 
United States airline industry, our economy, and our Nation. My 
name is Nancy Young. I am vice president of environmental 
affairs of Airlines for America, representing the major 
passenger and cargo airlines of the United States.
    The U.S. airline industry is indispensable to our Nation 
and its economy. To place this in context, the Federal Aviation 
estimates that civil aviation supports more than 10 million 
jobs, $1.3 trillion in economic activity, and over 5 percent of 
the GDP. Even so, the steady rise of jet fuel prices and price 
volatility have had tremendous negative impacts not only on the 
airlines and their customers but their employees and the 
communities that the airlines serve.
    Fuel is our number one cost center, representing over one-
third of operating expenses. Although U.S. airlines consumed 5 
billion fewer gallons of jet fuel in 2013 than they did in 
2000, they spent a staggering $34 billion more. A stable 
domestic supply of commercially viable alternative jet fuel 
would provide a competitor to petroleum-based fuel, tempering 
jet fuel price and volatility. It would also help the U.S. 
airlines build on their strong environmental record.
    But the benefits of advanced aviation biofuels would not 
inure to the airline industry alone. Our armed forces would 
derive similar benefits. In addition, a vibrant alternative jet 
fuel industry would create American jobs and spur economic 
development in the areas that are most hit by the recession.
    Rural America would benefit greatly from access to new 
markets for biomass crops while industrial areas would be 
revitalized. Moreover, the energy security of the Nation would 
be improved.
    For the past several years, A4A and our members have been 
working in earnest to achieve these synergistic benefits. As a 
co-founding and leading member of the Commercial Aviation 
Alternative Fuels Initiative--CAAFI--we have significant 
successes to report. Through CAAFI we helped lead the 
successful effort for specifications certifying two alternative 
jet fuels, and other fuel conversion technologies are now up 
for approval.
    A4A and our members are committed to ensuring that the 
alternative fuels we accept will have reduced life-cycle 
emissions compared to today's fuels and not compromise the food 
basket. Thus, I am pleased to report that we have developed 
methods and tools to demonstrate that these aims are met. Our 
vigorous pursuit of alternatives has sent an unmistakable 
signal to farmers, fuel producers, and investors: U.S. airlines 
are committed to making alternative jet fuels viable and will 
do our part.
    But we recognize we cannot do it alone. Working in public-
private partnerships, we have gone beyond testing and test 
flights to commercial airline and military jet flights. Yet we 
still need to scale up supply and make it fully cost 
competitive.
    Central to this effort is our Farm to Fly initiative. Since 
2010 we have worked with the U.S. Department of Agriculture, 
Boeing, and other stakeholders to align U.S. biofuels 
agricultural policy to support advanced aviation alternative 
fuels. Farm to Fly has brought farmers, fuel producers, and 
airlines together. It has spawned two regional initiatives to 
foster alternative jet fuels derived from homegrown biomass, 
and more efforts are in the works. But I note that this 
initiative could not exist without the Energy Title of the farm 
bill. Hence, we commend this Committee for its leadership in 
seeing that legislation through to passage. By assuring multi-
year authorization and funding for critical programs, Congress 
will provide the stability needed for further progress.
    Our joint efforts are bearing fruit. For example, United 
Airlines has executed a purchase agreement with AltAir Fuels 
for 15 million gallons of advanced bio jet fuel over a 3-year 
period, to begin at the end of this year. Alaska airlines has 
entered an agreement for the future purchase of sustainable 
aviation biofuel from Hawaii BioEnergy, with deliveries slated 
to begin in 2018.
    Although these initial purchases are promising, we cannot 
be complacent in our efforts. To see these projects through to 
fruition and spur more, we must continue to employ all the 
tools we have to further scale up supply. This is exactly what 
the Defense Production Act project between the USDA, Department 
of Energy, and Department of Defense is designed to do in 
partnership with private industry. We urge Congress to continue 
to support this important program.
    In sum, the aviation industry and would-be alternative jet 
fuel suppliers are on the cusp of creating a viable alternative 
jet fuel industry--a synergistic win for the airlines, the 
traveling and shipping public, U.S. jobs, our armed forces, our 
economy, and our Nation. But continued Government partnership 
is needed in the near term to get us over the cusp. With 
sustained support, advanced aviation biofuels will, quite 
literally, get off the ground.
    Thank you.
    [The prepared statement of Ms. Young can be found on page 
64 in the appendix.]
    Chairwoman Stabenow. Well, thank you to all of you. In 
listening to all of you, I think from race cars to airlines and 
everything in between, biofuels are a very exciting new 
opportunity, a growing opportunity, and some would say, again, 
back to Henry Ford, not new but an opportunity now for us to 
create jobs and create new opportunities for agriculture and to 
get us on to cleaner types of fuel and energy.
    We are in a situation, though--and I would like each of you 
to respond for a moment--in that what is facing us right now is 
the EPA talking about lowering the 2014 RFS volumes. In the 
face of all of this, when we see, on the one hand, we can grow 
more, we have more opportunities that are coming on the market 
every day, assuming that we can continue to see that happening 
and financing and so on, given the RFS situation, and we have 
the consumer end of it, whether it is airlines or race cars or 
whether it is automobiles, people at the pump. Yet here we are 
with the EPA talking about the ``blend wall'' and the impact 
that they would argue.
    So I guess I would like each of you to respond specifically 
to that. Is there a limit to the percentage of biofuels that 
can be blended in conventional gasoline? What do we do to 
increase the market penetration? What happens if, in fact, the 
EPA goes ahead in terms of the ability to do the things that we 
are talking about this morning? Mr. Childress?
    Mr. Childress. I think if they do that, the consumer is the 
one that will pay. At the end of the day, all of our Americans 
will end up paying the price. If we cannot get more ethanol, we 
have got to have blend pumps at these service stations to give 
our consumers a choice. It would be one of the most negative 
things, in my opinion and in Growth Energy's opinion, that if 
they lower the standards, it will be devastating to our public. 
It just opens the door for more foreign oil.
    Chairwoman Stabenow. You know, Dr. Koninckx, I am going to 
ask you to respond, but I often think what a crazy situation we 
are in where we are trying to create more competition so prices 
will go down at the pump for consumers. Yet the folks that do 
not want competition control whether or not there is the pump 
there to create the competition. This is kind of a crazy 
situation that we certainly need to figure out how to get 
beyond. Dr. Koninckx?
    Mr. Koninckx. Yeah, and the EPA decision or the EPA's 
proposal unfortunately makes it worse and basically goes along 
with that faulty assertion. What is really a problem here is 
that the EPA has used a method, a logic to restrict or to limit 
the RVOs on the basis of the supply chain, which the incumbent 
controls, and that is more devastating than any other aspect of 
their proposal, because this really would put biofuels in a 
downward movement, and this really would slow down and stop the 
positive impact that it has had on agriculture, on energy 
prices, by lowering the demand for oil. Also, immediately there 
will be an impact on greenhouse gas emissions, which will 
increase.
    There is really no blend wall. I call it the ``blend 
step.'' The technology to go beyond E10 is there. My neighbor 
here has talked about it already. There are numerous options 
there, and really the EPA--we are surprised and disappointed 
about their proposal. The EPA there makes an error that is 
going to cost us.
    Chairwoman Stabenow. Mr. Coleman
    Mr. Coleman. Thanks for the question. You hit the nail on 
the head that the oil companies control the pumps, and so then 
you need--if you have that situation, then you are not going to 
have competition without policy. The RFS is actually designed 
to push higher renewable fuel blends into the marketplace. One 
of the ways it does that, because Jan has so articulately 
described it to this point, is using the RIN. One of the things 
that has happened is EPA has decided that what happened last 
year is a bad thing and they are dialing the program back, 
when, in fact, what happened last year was the oil industry 
refused to comply with the program, RIN prices went up, and 
then other independents were just getting in the big game and 
they were going to grease the skids to comply with the program.
    So the program was actually working as designed last year, 
and if EPA sees that and reacts to it and decides that it is 
going to make changes, that it is going to convert an obligated 
party into a non-obligated party, the investors are going to 
see that, and they are going to run away from the industry. 
That is really the situation that we face.
    E15, for example, is certified in 2001 and newer vehicles. 
That is three-quarters of the cars on the board. You have got 
diesel fuel--I drive a diesel car. You have diesel fuel sitting 
there. They have made the investment to put diesel there. A 
small percentage of passenger cars are diesel cars.
    So we have the infrastructure to go where we need to go. It 
is really all about the program pushing incumbents there.
    Chairwoman Stabenow. Thank you.
    Dr. Arora and then Ms. Young. I know I am running out of 
time here, but I would like to hear from each of you for a 
minute.
    Mr. Arora. Thank you for the question. I think regarding 
the question of blend wall, Brazil shows that really there are 
no technical limits to blend walls, and you can put even up to 
100 percent ethanol. So does NASCAR show that as well. But I 
think what also we are missing the point on is that biofuels 
really offer good options to have regional strategies, and we 
are trying to, I think, pursue a one-size-fits-all strategy for 
the whole country. So we should also be looking at ethanol, 
which really works beautifully in the Midwest, as well as for 
other applications. We should also be looking at drop-in 
biofuels in the Southeast where the feedstocks are different so 
you can match--take woody biomass or poultry industry biomass 
and convert that over to the biofuel. So we need to look at it 
more on a regional basis as opposed to a one-size-fits-all 
strategy for the country.
    Chairwoman Stabenow. Thank you.
    Ms. Young?
    Ms. Young. Jet fuel is not subject to the volume 
requirements of the RFS for good reason: Making jet fuel to 
meet the rigorous safety requirements we have is a higher 
hurdle than it is for ground-based fuels. But we have a win-win 
opportunity here. Under the RFS program, the very projects I 
was talking about that produced advanced jet fuel, advanced 
biofuel, can qualify under the RFS, and in those cases they can 
offset the obligation of the producer for purely ground-based 
fuel.
    So it is sort of a win-win in that it can take some of that 
pressure off of ground-based fuel. The more we can do with 
alternative jet fuel, the better for everybody.
    Chairwoman Stabenow. Very interesting. Thank you very much. 
My time is up.
    I will turn to Senator Cochran for questions.
    Senator Cochran. Madam Chair, let me join you in thanking 
our panel of witnesses for being here today and helping us 
understand some of the issues involved in this subject.
    I wonder, are any of you specifically recommending the 
adoption by Congress of changes in the existing law that would 
help meet some of the goals and targets that you think would be 
fair to this competitive environment that we are trying to help 
support?
    Mr. Coleman. Well, I guess I will go first. The answer is 
an emphatic no. The program is designed well at the legislative 
level. The issues that we have are entirely administrative, and 
we are working with EPA, and Members of Congress have been 
helpful in that regard.
    Mr. Koninckx. Yeah, I would join exactly that. We would ask 
you to use your oversight authority to encourage EPA to 
implement the law as it was designed, and to not look at the 
supply chain that is controlled by the oil industry as an 
obstacle to its implementation.
    Senator Cochran. Ms. Young?
    Ms. Young. I think from our perspective, our message is 
largely ``stay the course.'' I think that is very important for 
fuel producers and investors and others right now. With due 
respect, some of the uncertainty in the programs has been 
difficult for the investor community and fuel producers and 
airlines alike who want offtake agreements. So we are greatly 
appreciative of the work you did on the farm bill, and we are 
looking forward to continued support for the Defense Production 
Act project that DOE, USDA, and the Navy are working on 
together so diligently.
    Senator Cochran. Dr. Arora?
    Mr. Arora. Yes, I absolutely support the consensus with the 
rest of the panelists here and would add the fact that I think 
as a whole the industry has underestimated the proverbial value 
of death in trying to come out of the perspective of bringing 
these biofuels to markets. Oftentimes the biofuels industry has 
been compared to bringing a new drug to market, which now takes 
$1 billion and 10 to 15 years to come to market. In respect of 
that, the biofuels industry has actually done a great job of 
really moving these technologies to commercialization much 
quicker than a lot of other industries have. So we must stay 
the course with the RFS.
    Senator Cochran. Thank you.
    Thank you, Madam Chair.
    Chairwoman Stabenow. Thank you very much.
    Senator Donnelly?
    Senator Donnelly. Thank you, Madam Chairwoman. Gosh, there 
is so much I want to talk about here. I am an all-in-America 
energy person. The more, the better, as long as it is, from our 
country and from North America. But I view this not only as an 
economic issue or an environmental issue but a national 
security issue in that every barrel of American fuel we make is 
one less that we have to get from places that might not be 
friendly toward us.
    You know, I know other members of the Committee were 
recently in Ukraine as well, but I was there, and a huge 
portion of everything that is going on there is the Russians 
holding the Ukraine hostage over natural gas. You think the 
very technologies that you are talking about today can help 
change the world, that it provides jobs, helps the environment, 
increases our national security, and makes us independent. And 
so I view this as critical.
    When we were landing in Ukraine, you looked and it looked 
just like Indiana, the farmland there, and the things that can 
be grown there. And to use your technology over there and 
helping them to become energy independent changes the world.
    Mr. Childress, I want to thank you for not only moving this 
technology along and promoting it, but also for the smiles you 
put on the faces of Hoosiers every week, and for also employing 
a Hoosier driver. We are very excited about that as well. He is 
a pretty good driver, too.
    Dr. Koninckx, what I wanted to ask you is this advanced 
cellulosic, has always been, ``In 5 years, we are going to have 
this.'' Then 5 years late, it would be, ``Five years from now 
we are going to have this.''
    Obviously with stover we are there. How about woody pulp 
and all the other different sources?
    Mr. Koninckx. Yeah, indeed, Senator, with corn stover we 
are in construction right now, and numerous--several other 
companies--Brooke mentioned them already, Abengoa, POET-DSM--
are in the same place and will start up this year. As you said, 
this is a great competitive advantage for the U.S. to use. 
Agricultural productivity is phenomenal here. Our farmers are 
very good, and as a company invested in agriculture and very 
active in agriculture, we know this very well and we connect 
with that.
    We are in our facility in Tennessee, where we--as I alluded 
to, the facility that we use to develop data and know-how on 
how to develop additional biomasses as feedstock, we are 
already active. We work with switchgrass. We work with 
agricultural wastes of different types. So, absolutely, this 
will be extended.
    We picked corn stover as a starting point, a crop we know a 
lot about, a crop the U.S. is tremendously competitive in, and 
a crop, corn stover itself, we do not need to convince anybody 
to grow. It is there, and we now have to harvest it.
    Senator Donnelly. How hard is it--so you picked corn 
stover. You have basically unlocked the code on that.
    Mr. Koninckx. Right.
    Senator Donnelly. Is what you are learning from that going 
to help us unlock the code on woody pulp and other----
    Mr. Koninckx. Absolutely. This is a tweak, I would call it, 
in technology. It is an optimization of technology to another 
feedstock. It is not a redevelopment. It is really a tweak.
    Senator Donnelly. Cost-wise, how competitive is this 
product going to be?
    Mr. Koninckx. The product at first, when we start up these 
plants, will be more expensive than corn ethanol and more 
expensive than fossil fuel. But over time this will come down, 
and we continue--as we have always said, we continue to 
anticipate to be competitive with oil at about $80 a barrel. 
The cost for carbon that we pay is far lower than crude, and it 
is our entitlement to then work down the conversion cost, to 
bring that down. Just as the oil industry has been able to do 
over a century, we will bring this down much faster, and as I 
said, we anticipate being competitive over time with oil at $80 
a barrel.
    Senator Donnelly. Mr. Coleman, one of the biggest 
challenges we have is infrastructure. The EPA has told us the 
reason they have done this is the lack of infrastructure. It 
seems like shaky logic to me. But we do have infrastructure 
challenges. What are you recommendations to overcome those 
infrastructure challenges?
    Mr. Coleman. Well, the first thing is the industry itself 
has made a lot of progress since the inception of RFS2. So one 
of the things that I think is incorrect with regard to when EPA 
is talking about infrastructure is they talk about it like it 
is a big problem that has not been solved. So we have made 
great steps forward with regard to E85 and made great steps 
forward with regard to E15. There is much more interest in the 
marketplace at today's gas prices to do some of these things.
    Senator Donnelly. I mean, they say we cannot get--we have 
the product, it works great, we cannot get it to market.
    Mr. Coleman. Right. The big issue is that the oil industry 
is standing in our way, and so the mechanism that the RFS puts 
into law actually solves that problem. It actually--so the way 
that RINs work--and whenever we talk about RINs, it is a scary 
thing because the eyes can glass over. But the way that RINs 
work is the oil companies that do not want to do it have to buy 
RINs. If they buy a lot of RINs, the RIN prices go up, and then 
the oil companies that suddenly have an opportunity to make 
money on RINs jump in, and you flow the fuel into the 
marketplace, and you have market penetration. There is one 
critical point--and I am sure Jan can add to this--this RIN 
trading that goes on, it does not increase gas prices because 
it is an intra-trading scheme in the oil industry.
    So if you do not want to do it, you can buy RINs. But when 
you do not want to do it, it allows the folks the independence 
that do want to do it to get in the game. That is what the EPA 
is short-circuiting when it decides to go backwards.
    So it is not all about the number. We have heard 
Administrator McCarthy says we are going to increase the 
numbers, and our investors say, well, that is good, because 
shrinking marketplaces send investment the other way. But we 
have to get at this mechanism question.
    Senator Donnelly. Well, I want to thank all of you for your 
investment in our country, and that every day you do this, 
please know you make our Nation stronger not only economically 
but also safer as well.
    Thank you.
    Chairwoman Stabenow. Thank you very much.
    Senator Hoeven?
    Senator Hoeven. Thank you, Madam Chairman. I want to thank 
all of you for being here. Mr. Childress, I want to commend you 
on your incredible record, and thanks for being here today. As 
Senator Donnelly said, we have many NASCAR enthusiasts as well 
and enjoy watching you and your team very much.
    Let us start with you. How do we get the petroleum industry 
and the biofuels industry to work together? Look, we all want 
more domestic supply, and at the pump we want our consumers to 
have more choices and lower prices. So how do we get the 
traditional oil industry, the petroleum industry and the 
biofuels industry, how do we help them work together better to 
serve the consumer? What can we do?
    Mr. Childress. You know, I think it boils down to our 
Nation, the economic side of it, we have to have more choices 
for our consumers. Until we can convince our oil companies that 
it is good for America, I do not think we will ever get there. 
It is kind of like trying to get a big bully to do something 
over a young kid. You will never convince them.
    So I would like to see the big oil companies understand how 
important ethanol is. But when you talk about taking dollars 
out of someone's pocket, it is hard to get them to work with 
you.
    Senator Hoeven. Touch on for a minute the mileage issue 
with the biofuel blends and also some of the liability issues 
that we hear in terms of impacts on engines and that kind of 
thing. You are running 30 percent, obviously, in your cars. You 
talked about higher blends. So touch both on mileage and on the 
liability issues at least as you perceive them.
    Mr. Childress. Yeah, okay. We run E15. Sunoco E15 is what 
we run in our cars. We tested all the way up to E30, and that 
is where I wish we were at in America today, was working more 
closely to E30 to give our consumers a better choice at the 
pumps.
    You know, the liability side of it, a lot of that is a 
myth, in my opinion. In research that we have done, the 
liability, the way we run our engines is not there. If you talk 
about small engines, having a small engine, you cannot run a 
lawn mower or whatever this is. That engine, Briggs & Stratton, 
may cost $30. But the piece that maintains the correct ratio of 
fuel to air for ethanol fuels would probably costs another 30 
bucks. So that is the reason they are not putting it in there.
    In our cars we have a sensor that goes through our ECU that 
assures the correct ratio of fuel to air so there are no 
problems. The newer cars, 2001 up, will not have a liability 
problem because they were built from the factories to sustain 
ethanol fuels.
    You know, the other thing that we all have got to look at 
in the future is in 2025, I think it is, they are going to 
mandate a higher fuel mileage. Well, you get fuel mileage by 
octane. We are going to have to have smaller cars--I think it 
is 57 or 67 miles a gallon. We are going to have to have 
lighter cars. We are going to have to have smaller engines. The 
way we are going to get there, one of the ways to get there is 
ethanol, is a higher octane. It will make more power, it will 
burn cleaner, and it will help all of our greenhouse emissions.
    So that is something we have all got to look at when it 
comes to 2025, when we all have to go to higher fuel mileage. 
You can get there, but it has to be done with octane.
    Mr. Hoeven. One thing you mentioned that I want to follow 
up on is blender pumps, and I think you talked a little bit 
about blender pumps as being important in terms of consumer 
choice and pricing. Just talk about you feel blender pumps can 
make an impact?
    Mr. Childress. There are several--well, one, the cost. You 
know, it is more economical if you put ethanol in your cars and 
blend it. If we have got more stations sitting out there today 
with blend pumps that will give our consumers a choice, it is 
going to be more economical. We are going to use more ethanol. 
I was just reading in here, I think if we could put ethanol in, 
we will save 7 billion gallons of foreign oil coming into this 
country, and that is a big number. But the blend pumps are 
already being put in a lot of stations--not near what we need, 
but when we can get it, it will give our consumer a greater 
choice, and it is going to mean more dollars in their pocket 
that they can go spend in other places. We are being held 
hostage by foreign oil.
    Senator Hoeven. Again, Mr. Childress, thanks for being 
here. We enjoy following your racing team. To all of you, 
thanks for being here today. I appreciate it.
    Mr. Coleman. Do you mind if I add one quick point on the 
choice question?
    Chairwoman Stabenow. Sure.
    Mr. Coleman. Thank you. Respectfully, thank you.
    One quick thing that was not mentioned was E15, the fuel 
that is causing heartburn for AAA and small engine makers, is a 
choice fuel. It is an option at the pump. I think when a lot of 
consumers and trade associations think of ethanol, they think 
of it as a 10-percent blend, they are going to have to put it 
in their car if they use 87 octane. We are moving into a new 
territory here where, if you have a small engine, you have a 
lawn mower, you do not have to put E15 in your lawn mower. In 
fact, they ask you not to. It is banned from doing that. So----
    Senator Hoeven. You are talking with the use of blender 
pump?
    Mr. Coleman. Well, no, if we did--without blender pumps, if 
stations tomorrow decided to put E15 on the island, it is a 
choice fuel. They cannot get rid of the other fuels. So what we 
are facing here is a situation where you pull up and you have 
this new choice of E15. You can pass on it, but that ultimately 
is where our industry needs to go because we should--people 
should have the choice to use more and people can have the 
choice to use less.
    Senator Hoeven. What I would come back to is the question I 
started with Mr. Childress on: How do we make it easier to do 
that? How do we make it more cost-effective to do that for our 
petroleum retailers? I think that is a real key to get to what 
we want in terms of the consumer, more domestic supply, more 
choice, lower prices.
    Chairwoman Stabenow. Thank you very much.
    Senator Heitkamp?
    Senator Heitkamp. Thank you, Chairman and Ranking Member, 
for holding this hearing.
    It is clear from the testimony today that we are so far 
advanced in the technology of creating these fuels that our big 
problem is marketing these fuels, is actually getting it into 
the market. There is a whole lot of kind of myths, and, Mr. 
Childress, I think today you dispelled very many of those 
myths. Every day when you run your cars, that tells the story 
that this is not something consumers should be afraid of.
    But I do reject in some ways the argument that the oil 
industry is so integrated vertically that they control every 
pump or every station. I can tell you what consumers do. If you 
do not have a predisposed inclination against ethanol--which I 
do not--I look up when I am driving in, and I say, ``What price 
gets me the cheapest gasoline?'' Right? You pull into that 
pump, and you say, ``This is what I am going to run.'' We know 
we can get fuel economy and fuel efficiency from ethanol. That 
is another myth: number one, it will wreck your engine and 
destroy your warranty. The other is that it is not as efficient 
and you will not get as high a mileage.
    We can dispel each one of those, but that is pervasive in 
my State, even in my State, which is an agricultural State. We 
are also an oil-producing State.
    My question is: What is the next generation of marketing 
strategies beyond Renewable Fuel Standards, beyond what we are 
doing with the RINs? What have your companies or your industry 
thought about in terms of how do we transition to providing 
greater incentives and responding to some of the concerns that 
our dealers have, our petroleum marketers have? I guess, Mr. 
Coleman, that would really fit your lane best.
    Mr. Coleman. Yes, thanks for the question. You know, I 
think you are seeing it. I think the NASCAR thing is very 
helpful. You are seeing our industry work more directly with 
the gas station retailers. Recently, over the last couple 
years----
    Senator Heitkamp. Can you provide some examples of that? 
Because my dealers come in, and obviously, we are pro-ethanol 
in North Dakota for the most part, but yet they talk about 
concerns about their underground tanks and whether that is 
going to create leakage and destroy their small business into 
the future. They talk about marketing and the huge investment 
that they would have to put in to accommodate those products. 
So how do I respond to that?
    Mr. Coleman. Well, so what we saw over the last year or so 
was retailers and independent marketers reacting very quickly 
to the RFS. The signal last summer was very clear: ``We are 
going to use more ethanol.'' We had Mapco, we had Zarco, we had 
some of these stations making big investments in blender pumps, 
400 pumps that would have fundamentally changed how much 
ethanol could get in the marketplace. We are talking about one 
business deal alleviating 17 percent of EPA's supposed gap that 
we cannot do. So those are specific examples, and then when EPA 
said, well, we might go backwards, they all stopped.
    So what I would say to you is the single most important 
thing that we can do is make sure that the RFS continues to go 
forward. Everything flows around it from there. I would have a 
hard time answering your question the other way, to be totally 
honest. People build higher docks to deal with incoming tide. 
They do not build higher docks to deal with outgoing tide. If 
the tide starts to flow out on renewable fuels, we are not 
going to have people signing up for marketing deals.
    Senator Heitkamp. Well, I guess my point is that as we move 
forward, I think the real challenge is not only a regulatory 
challenge, but it is also a public policy challenge. You know, 
I do not know what would happen if you put Renewable Fuel 
Standards to a vote today in the United States Congress. Right? 
You know, we would like to think we would maintain it and be 
able to present those arguments. But it may not be factual, and 
so I think it is really important that we start talking about 
what is the next generation of incentives, what is the next 
generation--just like you guys are doing advanced biofuels, 
what is the new advanced marketing strategy? How do we get it 
out there as you are working on equality and pricing?
    Like I said, if I know that I can offer a product at 10, 15 
cents lower than the product across the street, I am going to 
put that product in because I am going to get that business. So 
it is all a game of money, it seems to me, and consumer choice. 
I totally agree with that. But I think that we need to think 
beyond Renewable Fuel Standards, is actually I guess my point, 
which is what is the next thing that we need to do to guarantee 
that the infrastructure gets built out so that we can offer 
this consumer choice, so that we can continue the diversity of 
the American fuel industry. I really applaud what the airline 
industry is doing. I think we are going to see some other 
alternative fuels, whether it is compressed natural gas--there 
are some creative things that are happening to diversify this 
industry, but we are challenged by the marketing. So I look 
forward to other ideas.
    Mr. Koninckx. Senator, if I can comment on that, as a 
company that is investing very much in advanced biofuels, I 
chair the board of our joint venture with BP, Butamax, that is 
developing butanol and will commercialize butanol. It is a good 
example of the kind of things you ask for.
    But I have to say at the same time these kind of 
initiatives are less likely to succeed if the RFS is being 
questioned. If there is lack of stability in the regulatory 
environment, investors in this kind of difficult technology 
development will shy away.
    Senator Heitkamp. You know, and I get that, but the 
argument you get on the other side is: When is this product 
going to stand on its own feet and market itself in a way that 
does not require any Government mandates, any Government 
programs? I just raise that because, I think about all the 
arguments that the oil industry or all the detractors from RFS 
present us, and we need to have responses to those, and we need 
to have the next generation of marketing strategies.
    Chairwoman Stabenow. Thank you very much.
    Senator Grassley is next.
    Senator Grassley. Thank you. Thank you all. I heard all of 
the testimony except for Ms. Young. I am sorry. I had to go 
back to Finance.
    There is a lot of debate in Congress about moving towards 
non-corn, non-food biofuels. Of course, I support every effort 
to develop advanced biofuels, but I think there is a 
misunderstanding about the role of corn ethanol in developing 
advanced biofuels.
    For instance, there are Members of Congress that have 
offered legislation to repeal the corn ethanol portion of the 
Renewable Fuel Standard. Some of the same members have also 
advocated on behalf of advanced or non-corn biofuels.
    So to Mr. Coleman and Dr. Koninckx, can you help me 
understand the relationship between first-generation and 
second-generation biofuels? Can we have an advanced biofuel 
industry if we eliminate the Renewable Fuel Standard for corn 
ethanol or traditional biofuels? Would we have an advanced 
biofuel industry without the corn ethanol industry?
    Mr. Coleman. Senator Grassley, thank you for the question. 
We have a partnership with the Renewable Fuels Association for 
a reason. They work on corn ethanol; we work on next-generation 
ethanol. The reason we have a partnership with them is because 
at the end of the day we are connected at the business sense, 
at the market sense, et cetera. I have given examples in my 
testimony. If you look at some of the first movers in 
cellulosic ethanol, you will see POET, you will see DuPont, you 
will see Abengoa with 500 million gallons of corn ethanol. But 
the list goes on and on: Quad County, Pacific Ethanol is 
moving.
    The reason they are moving so quickly is because they have 
an interest in diversifying feedstock at the plant. These are, 
in essence, integrated ethanol refineries. It is in their best 
interest to also use stover in addition to the corn kernel. 
When corn prices go up, they want to find other feedstocks, 
too. So there is a clear connection--not in all cases but in a 
lot of cases with regard to the first movers--between the 
first-generation ethanol guys and the second.
    Now, specifically with regard to Senator Feinstein's 
proposal, it is not a good proposal for a number of reasons. 
First is when Congress makes a 15-year commitment and changes 
the rules a third of the way through, it does not matter 
whether you think it is warranted or not, the message to the 
investment community will be that Congress changes its mind. So 
it is clear that Senator Feinstein does not like the corn 
ethanol part of the RFS. The problem is realistically it will 
affect our industry. What she is proposing to do is already 
done. Ninety percent of the gallons left in the RFS are 
advanced biofuel gallons. So it is unclear to me what exactly 
the point is of the legislation.
    The last piece of this that we do not find believable is 
that she is proposing to amend the Clean Air Act in the RFS in 
a very politically clean way and that they can control the 
politics. Our investors will not believe that.
    Thank you.
    Mr. Koninckx. Brooke gave a very complete answer, Senator. 
Thank you for your question. Absolutely, the advanced biofuels 
would be much more difficult, if possible at all, if there was 
not a corn ethanol industry as well that provides tremendous 
synergy and provides an example for further diversification of 
feedstock.
    Very much as Brooke, as Mr. Coleman just indicated, what we 
need is a stable regulatory environment, and if it is shown 
that the regulatory environment is changed in mid-course in 
these very difficult development cycles--and, trust me, I have 
worked on this myself for the last 7 years, coming out of the 
laboratory to commercial scale--stability in the regulatory 
environment is needed. Investors--and we are particularly 
worried about a second wave of investors. You know, we see 
direct foreign investment that is interested in this and is 
shying away when we see a lack of stability in the regulatory 
environment. So any change in the RFS will threaten the further 
growth in advanced biofuels as well.
    Senator Grassley. Mr. Coleman, for the last few years we 
have heard that advanced and cellulosic biofuels are just a 
year or two away from commercialization. Since you represent 
one of the largest organizations representing advanced biofuel 
producers, are we at a critical juncture for commercialization? 
If so, what effect has the EPA proposal had on cellulosic 
facilities that will be coming online in the near future?
    Mr. Coleman. We are a critical point. We are just 6 years 
past the signing of RFS2, and so our industry has been in the 
lab for a long time. But we all know that the key to 
commercializing a fuel is to have a demand trajectory, and it 
is hard to have a demand trajectory when you are asking the oil 
companies to buy a product they do not want to buy. RFS2 solved 
that problem, and since then we have made very, very good 
progress, notwithstanding the financial markets. We have all 
these plants coming online. You can visit them. They are big 
metal, concrete objects. You have seen them, and we have seen 
them, and that is really exciting.
    What the EPA proposal did, first the leaked version in 
October and then in November, is it froze everything. We have 
had--every single one of my companies--there are no 
exceptions--have either picked up the phone or testified in 
meetings with Congress that what EPA has done is froze 
everything. What we are waiting to see is if the Obama 
administration and EPA turns around on this and addresses both 
the retraction on the numerical side and also properly 
reinstitutes the mechanism that would force change in the 
marketplace. If that is done, we will recover, and we will 
recover well.
    Senator Grassley. Can I ask one more question?
    Chairwoman Stabenow. Sure.
    Senator Grassley. Mr. Childress, I understand you have 
tested ethanol. What did your testing conclude about the use of 
higher ethanol blends such as E30? Did you find any serious 
issues with blends above E15?
    Mr. Childress. Yes. When we were testing E30, it actually 
showed better in the engines from horsepower--the octane built 
more horsepower, which would go back to what I was talking 
about earlier, the 2025 mandates on fuel economy, and you get 
through octane.
    I think one of the other things that we--going back to what 
you had asked earlier, is educating our consumer. There are so 
many myths out there, again, what you said about the food. We 
only use one-third of the corn, out of the corn, to make 
ethanol with. The rest of it goes into distiller's grain, which 
goes to the animals. This is not corn we eat. So that is a big 
myth that people have tried to let our consumers think that it 
is food versus fuel. It is not. We have got the greatest 
shortage today on beef that we have ever had in America since 
the 1940s, but a lot due to the drought. The same with the 
disease on some of our pork.
    So there are a lot of myths out there that a lot of people 
are using today. I know that is not in the question you asked, 
but I had to say that. Thank you, sir.
    Chairwoman Stabenow. Thank you.
    Senator Grassley. Well, give me more time.
    [Laughter.]
    Chairwoman Stabenow. I did, Senator Grassley, I did.
    Senator Klobuchar?
    Senator Klobuchar. Well, thank you very much, Madam 
Chairwoman. Thank you for holding this important hearing.
    I truly believe that the success, the story of the success 
of the Renewable Fuel Standard is only half-written. You look 
at the fact that we have reduced our dependency on foreign oil 
by 60 to 40 percent. Now, that is a combination of things. We 
know it is. Some of it is the drilling going on of oil and 
natural gas in my neighboring State of North Dakota there. Some 
of it is the gas mileage standard increases that we have seen 
that have been so positive. Some of it is biofuels, and I 
sometimes think people do not understand that biofuels is now 
10 percent of our fuel supply. People seem to dismiss it as 
some kind of a boutique fuel. That is not true.
    That is why I was so concerned when the EPA came out with 
the rule. I think it creates uncertainty, something that you 
were just talking about, Dr. Koninckx, that is going to be bad 
for the market, and especially when we are in a situation where 
oil has kept its nearly $40 billion in tax credits and ethanol 
has literally lost theirs, as well as any kind of incentive 
from the tax credit standpoint for advanced biofuels. So that 
really concerns me, and that is why I think that this renewable 
fuel standard is so important.
    I think I wanted to start with something specific that you 
had alluded to, Dr. Koninckx, and that is biobutanol and the 
blend wall. How do you see biobutanol--we actually have a plant 
in Luverne, Minnesota, and DuPont has signed on to an agreement 
to convert another ethanol plant in Lamberton, Minnesota, to 
also produce this fuel. How do you see it in other advanced 
biofuels working to overcome some of the blend wall problems 
that have been raised?
    Mr. Koninckx. Well, as I mentioned earlier, Senator, I do 
not think of it as a blend wall but a blend step. It is a 
transition in the market that the RIN mechanism that Mr. 
Coleman spoke about earlier enables and facilitates. Butanol 
would be one and will be one of the mechanisms that allows for 
further blending of renewable energy into fuels without any 
adjustment or change to the infrastructure.
    So with butanol, you can basically bring twice the 
renewable content and renewable energy to gasoline without any 
changes to the existing infrastructure. In an equivalent of 
E15, you could implement the entire Renewable Fuel Standard 
without infrastructure changes.
    In addition, butanol brings a number of advantages to 
refiners and really allows all refiners to make better use of 
the oil barrel in total as they make gasoline, jet fuel, and 
other products.
    But I would say, again, it is one of the possible ways to 
increase the renewable content, the energy content, and it is 
something that we invest a lot of effort, our best resources 
in, together with our partner BP. We look very much at the 
stability and the implementation of the Renewable Fuel Standard 
to continue that.
    Senator Klobuchar. Thank you.
    Mr. Coleman, I hosted a meeting in my office with 
Administrator McCarthy and with a number of people in this 
room, half Democrats, half Republicans, about our concern about 
the changes to the Renewable Fuel Standard and their proposal. 
One of the things I was struck by was that the Director 
continues to believe that renewable fuels are cleaner and 
better for the environment than petroleum-based fuels. Can you 
talk about the improvements the renewable fuels industry has 
made in reducing the greenhouse gas intensity and water 
consumption and how you see advanced biofuels making 
improvements in this area?
    Mr. Coleman. Thank you for the question. So at a basic 
level, cellulosic biofuels are the lowest carbon fuels in the 
world. Some of our fuels are carbon neutral or better, and so 
when we are talking about building these plants, if carbon is 
something you care about, these are the lowest carbon fuel 
plants in the world, and they are a tremendous opportunity for 
fundamentally changing the marketplace.
    With regard to another point which I made in answering 
Senator Grassley's question, there are synergies between 
conventional and advanced biofuels. Some of our members are 
bolting on technology to conventional plants, so that then 
raises the question, well, how much and to what degree are 
those plants improving? What we have seen over the last 10 to 
15 years is an industry going in starkly the opposite direction 
of the oil industry. The oil industry is running out of light 
sweet crude and is using--has to go heavier and heavier and 
more carbon intensive. We have reduced our water and our 
energy, et cetera, in the vicinity of 30, 40, 50 percent.
    Senator Klobuchar. Right. Do you see biodiesel as part of 
this? That has also been quite a success story, and we have not 
talked as much about that. But the feedstock diversification 
and also the wider number of fuels like bio jet fuels.
    Mr. Coleman. I do. I do, and I think over--one of the 
things you are going to see a decade from now is a lot of 
different companies being in both the gasoline and diesel fuel 
marketplace. We have companies that said they were all about 
ethanol, and there are really integrated biorefineries, and 
some of them now are producing jet.
    Senator Klobuchar. Speaking of jets, Ms. Young, we are a 
Delta hub, and I know Delta actually, to try to reduce some of 
this volatility, has gotten its own refinery going. But how do 
you look at advanced biofuels helping to reduce volatility and 
provide more competition in the jet fuel market? I look at 
this, as head of the Tourism Caucus, as also an economic issue. 
Foreign tourists spend an average of $4,000 when they visit our 
country. It is a huge boon to us, and if we have a 
diversification of fuel and we do not see these spikes, it is 
going to make it easier to bring in tourists because they are 
going to be able to afford to come in, and then they spend 
their money at the Mall of America in Bloomington, Minnesota, 
or--I do not know, I am trying to think where they would spend 
their money--in Des Moines, in Iowa. Senator Grassley, they 
would tour an ethanol plant in Iowa, for instance.
    Ms. Young. Well, thank you for the question. With fuel as 
our airlines' number one expenditure, we are really focused on 
trying to have a competitor to petroleum-based fuel exactly for 
the reason that you say. I think, price volatility certainly in 
the last several years has sort of eaten airlines' lunch, so to 
speak. With that big of a cost center, not being able to 
predict, airlines like Delta, have had challenges, and our 
airlines lost a lot of money.
    Now we are in a period of going from a lot of loss, over 
$50 billion lost over 10 years, to a period of very razor-thin 
profits. But if we cannot manage the fuel price and volatility 
issue, those very razor-thin profits are going to be 
diminished.
    As I noted before, it is really not just good for the 
airlines, it is good for their customers, it is good for the 
economy, and it is good for really the industries that we would 
be supporting--the new biomass industries, the farmers, et 
cetera--if we can get this competitor to petroleum-based jet 
fuel.
    Senator Klobuchar. Thank you very much.
    Chairwoman Stabenow. Thank you very much.
    As we wrap up, there is one other question I wanted to ask, 
and I know Senator Cochran had a question as well. As we 
conclude, I wanted to ask Dr. Koninckx, we are going to be 
later in the spring talking about bio-based manufacturing, 
which is something I know that you are very involved in as well 
with DuPont. In the farm bill, we made important steps by 
expanding the Energy Title to include not only biofuels, which 
are very, very important, but the ability to focus more on bio-
plastics, bio-based manufacturing opportunities. We want to 
highlight that later this spring, but I wondered if you could 
just talk about the fact that biorefineries can integrate a 
number of different processes, at one location produce more 
than just biofuels and multiple--renewable chemicals that have 
multiple purposes or polymers that can be used, as I mentioned 
in bio-plastics.
    So I wondered if you might just take a moment sort of 
teeing up what we will be discussing later down the road, how 
the production of biofuels can create additional manufacturing 
opportunities.
    Mr. Koninckx. Yes, certainly, and I cannot thank this 
Committee enough for the support that you have given through 
the farm bill for these programs. It is a great encouragement 
for us.
    We are already working on biochemicals. As I mentioned 
earlier, we already produce something called propanediol in 
Tennessee from sugar in a biorefinery. It happens to be a corn 
wet mill. That sugar is being used to produce the propanediol, 
which is then used to make things like carpet fiber and so on.
    But the development that we see going forward is one in 
which the supply chain that is growing for biofuels will enable 
efficiency and low-cost access to renewable carbon for 
biochemicals in a way that is not possible up until now. So 
just like petrochemicals grew with the petroleum supply chain 
and an energy market as a supply chain source, we expect the 
same as biofuels will be enabling the growth of biochemicals. 
So this is very much critical for that.
    Chairwoman Stabenow. Thank you very much.
    Senator Cochran had a question, and then, Senator Grassley, 
since you are remaining as well, we might just let you ask one 
more question, if you would want to do that. So it is up to 
you.
    Senator Cochran?
    Senator Cochran. Madam Chairman, thank you very much.
    Dr. Arora, you mentioned in your testimony that in the 
Southeast there are many opportunities in terms of emerging 
feedstocks that are readily but not traditionally used for food 
or feed use. Can you elaborate on some of the barriers to 
development of advanced biofuels in the South?
    Mr. Arora. Sure, I would be glad to do that. I think one of 
the things, as I mentioned earlier, the South, we are able to 
grow a lot of different types of feedstocks, which includes 
switchgrass and also grasses like miscanthus, one of them 
actually that was developed at Mississippi State University and 
is now being licensed commercially. But when we say ``licensed 
commercially,'' we are still talking about very small, 
relatively small penetration on these things.
    Tennessee, for instance, has over 6,000 acres of 
switchgrass growing, but when you compare that to conventional, 
traditional crops like corn, it is just a very small amount of 
acreage that is dedicated to these advanced biofuels and 
biofuels feedstock. So we need much greater penetration of the 
acreage for these feedstocks that can grow easily in this 
region.
    Additionally, as I mentioned earlier in my testimony also, 
the poultry litter is actually a tremendous potential that is 
generated in not only the South but just from Maryland all the 
way across to Arkansas, and the numbers that I have seen are we 
have over 26 billion pounds of poultry manure that is 
generated, and we oftentimes see that as a liability for our 
country. Yet indeed that can actually lead to about over $550 
million worth of biogas that is trapped, methane gas, actually 
that is trapped within the poultry litter. If you think of the 
future implications, we are talking about products like Bio 
Compressed Natural Gas (BioCNG) that could be produced from 
that and help with the RFS requirements.
    Senator Cochran. Thank you
    Chairwoman Stabenow. Thank you very much.
    Senator Grassley, if you would like to offer the last 
question, you are welcome.
    Senator Grassley. I do not have a question, but I would 
have a couple suggestions: first of all, to thank Mr. Childress 
for bringing credibility to this industry through his use of 
the product and, most importantly, the outspokenness where he 
is willing to take a stand. I appreciate that very much.
    I would suggest to you that you send Mr. Coleman's 
testimony to the Wall Street Journal.
    [Laughter.]
    Chairwoman Stabenow. I will do that. In fact, we are going 
to send all the testimony over to EPA as well.
    We want to thank everyone for being here today. You can 
tell that our Committee is very committed to extending and 
expanding opportunities through biofuels as well as bio-based 
manufacturing. We are talking about jobs and growing rural 
communities and helping us to become more energy independent. 
We understand that we need policies that give us long-term 
certainty so that investments can be made in the future. We 
know this is a fight--it really is--about competition, and we 
are on the side of the consumers that want lower costs, lower 
competition, whether it is a business consumer like in the 
airlines or whether it is a family trying to make ends meet and 
stretch every dollar and pulling up to the pump, or somebody 
who is enjoying a great race on a NASCAR weekend. So we thank 
you very, very much for being here.
    Any additional questions for the record should be submitted 
to the Committee clerk 5 business days from today. That is 5:00 
p.m. on Tuesday, April 15th. The meeting is adjourned.

    [Whereupon, at 11:29 a.m., the Committee was adjourned.]
      
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