    [House Hearing, 114 Congress]
    [From the U.S. Government Publishing Office]

                     EXAMINING THE RENEWABLE FUEL STANDARD

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

                                    HEARING

                                   BEFORE THE

                          SUBCOMMITTEE ON THE INTERIOR

                                    AND THE

                          SUBCOMMITTEE ON HEALTH CARE,
                       BENEFITS AND ADMINISTRATIVE RULES

                                     OF THE

                             COMMITTEE ON OVERSIGHT
                             AND GOVERNMENT REFORM
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 MARCH 16, 2016

                                   __________

                               Serial No. 114-154

                                   __________

    Printed for the use of the Committee on Oversight and Government Reform

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

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

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                  COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                         JASON CHAFFETZ, Utah, Chairman
    JOHN L. MICA, Florida                ELIJAH E. CUMMINGS, Maryland,
    MICHAEL R. TURNER, Ohio                  Ranking Minority Member
    JOHN J. DUNCAN, Jr., Tennessee       CAROLYN B. MALONEY, New York
    JIM JORDAN, Ohio                     ELEANOR HOLMES NORTON, District of
    TIM WALBERG, Michigan                    Columbia
    JUSTIN AMASH, Michigan               WM. LACY CLAY, Missouri
    PAUL A. GOSAR, Arizona               STEPHEN F. LYNCH, Massachusetts
    SCOTT DesJARLAIS, Tennessee          JIM COOPER, Tennessee
    TREY GOWDY, South Carolina           GERALD E. CONNOLLY, Virginia
    BLAKE FARENTHOLD, Texas              MATT CARTWRIGHT, Pennsylvania
    CYNTHIA M. LUMMIS, Wyoming           TAMMY DUCKWORTH, Illinois
    THOMAS MASSIE, Kentucky              ROBIN L. KELLY, Illinois
    MARK MEADOWS, North Carolina         BRENDA L. LAWRENCE, Michigan
    RON DeSANTIS, Florida                TED LIEU, California
    MICK MULVANEY, South Carolina        BONNIE WATSON COLEMAN, New Jersey
    KEN BUCK, Colorado                   STACEY E. PLASKETT, Virgin Islands
    MARK WALKER, North Carolina          MARK DeSAULNIER, California
    ROD BLUM, Iowa                       BRENDAN F. BOYLE, Pennsylvania
    JODY B. HICE, Georgia                PETER WELCH, Vermont
    STEVE RUSSELL, Oklahoma              MICHELLE LUJAN GRISHAM, New Mexico
    EARL L. ``BUDDY'' CARTER, Georgia
    GLENN GROTHMAN, Wisconsin
    WILL HURD, Texas
    GARY J. PALMER, Alabama

                       Jennifer Hemingway, Staff Director
                Ryan Hambleton, Senior Professional Staff Member
                              William Marx, Clerk
                     David Rapallo, Minority Staff Director
         Subcommittee on Health Care, Benefits and Administrative Rules

                           JIM JORDAN, Ohio, Chairman
    TIM WALBERG, Michigan                MATT CARTWRIGHT, Pennsylvania,
    SCOTT DesJARLAIS, Tennessee              Ranking Minority Member
    TREY GOWDY, South Carolina           ELEANOR HOLMES NORTON, District of
    CYNTHIA M. LUMMIS, Wyoming               Columbia
    MARK MEADOWS, North Carolina         BONNIE WATSON COLEMAN, New Jersey
    RON DeSANTIS, Florida                MARK DeSAULNIER, California
    MICK MULVANEY, South Carolina, Vice  BRENDAN F. BOYLE, Pennsylvania
        Chair                            JIM COOPER, Tennessee
    MARK WALKER, North Carolina          MICHELLE LUJAN GRISHAM, New Mexico
    JODY B, HICE, Georgia                Vacancy
    EARL L. ``BUDDY'' CARTER, Georgia
                                     ------

                          Subcommittee on the Interior

                      CYNTHIA M. LUMMIS, Wyoming, Chairman
    PAUL A. GOSAR, Arizona               BRENDA L. LAWRENCE, Michigan,
    BLAKE FARENTHOLD, Texas                  Ranking Minority Member
    KEN BUCK, Colorado, Vice Chair       MATT CARTWRIGHT, Pennsylvania
    STEVE RUSSELL, Oklahoma              STACEY E. PLASKETT, Virgin Islands
    GARY J. PALMER, Alabama

                                C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held on March 16, 2016...................................     1

                                   WITNESSES

    Mr. Christopher Grundler, Director, Office of Transportation and
      Air Quality, U.S. Environmmental Protection Agency
        Oral Statement...............................................     5
        Written Statement............................................     8
    Dr. John M. DeCicco, Research Professor, University of Michigan
      Energy Institute
        Oral Statement...............................................    11
        Written Statement............................................    13
    Ms. Kelly Stone, Policy Analyst, ActionAID USA
        Oral Statement...............................................    34
        Written Statement............................................    36
    Mr. Wallace E. Tyner, James and Lois Ackerman Professor,
      Department of Agricultural Economics, Purdue University
        Oral Statement...............................................    40
        Written Statement............................................    42
    Mr. Nicolas D. Loris, Herbert and Joyce Morgan Fellow, The
      Heritage Foundation
        Oral Statement...............................................    50
        Written Statement............................................    52

                                    APPENDIX

    Statement for the Record of Mr. Blum of Iowa.....................    92
    Questions for the Record for Mr. Christopher Grundler, submitted
      by Chairman Lummis.............................................    94

                     EXAMINING THE RENEWABLE FUEL STANDARD

                                  ----------

                           Wednesday, March 16, 2016

                      House of Representatives,
              Subcommittee on Interior, joint with the
            Subcommittee on Health Care, Benefits, and
                                  Administrative Rules,
                  Committee on Oversight and Government Reform,
                                                       Washington, D.C.
        The subcommittees met, pursuant to call, at 2:00 p.m., in
    Room 2154, Rayburn House Office Building, Hon. Paul Gosar
    [chairman of the Subcommittee on Interior] presiding.
        Present from Subcommittee on Interior: Representatives
    Gosar, Buck, Russell, Lawrence, and Cartwright.
        Present from Subcommittee on Health Care, Benefits, and
    Administrative Rules: Representatives Jordan, Walberg,
    DeSantis, Walker, Carter, Cartwright.
        Also Present: Representative Welch.
        Mr. Gosar. The Subcommittees on Interior and on Health
    Care, Benefits, and Administrative Rules will come to order.
        Without objection, the chair is authorized to declare a
    recess at any time.
        I am going to acknowledge myself for my introductory
    statement.
        The Renewable Fuel Standard, or RFS, is a mandatory minimum
    of biofuels that must be used in the national transportation
    fuel supply. The program was first established by Congress in
    2005 and was later expanded in 2007 under the Energy
    Independence and Security Act to mandate that 36 billion
    gallons of biofuels must be blended into the fuel supply by
    2022. The original goals of the RFS were to help curb air
    pollution, reduce greenhouse gas emissions, and reduce U.S.
    energy dependence through the use of biofuels.
        Much has changed since the first 10 years that RFS has been
    in effect. When the original laws were passed, Americans had
    serious concerns about the rising price of gas and about our
    dependence on foreign oil. However, since almost immediately
    after the law was passed, the U.S. has experienced an
    extraordinary energy supply boom. Today, gasoline is selling
    for historically low prices. The assumption under the RFS that
    demand for oil would continue to rise has not been realized,
    and we must take a hard look at how this affects the success of
    the program.
        Unfortunately, the way the law was written makes it
    incapable of adequately adjusting to these changes. The EPA is
    responsible for developing and implementing regulations for the
    RFS, but due to the challenging reality the RFS operates in,
    EPA has continually been late in issuing its renewable fuel
    obligation levels and has often had to issue these annual
    renewable fuel mandates retroactively.
        This past November, EPA issued the final renewable fuel
    volume levels for the year 2014, 2015, and 2016. This would
    make 2016 one of the few years EPA has issued that mandate on
    time.
        In addition, EPA has often elected to use its waiver
    authority to issue volume mandates that are below the levels
    set by law further showing how the original mandates are
    unsustainable in today's reality.
        The current RFS mandates have caused the Nation's fuel
    supply to reach the blend wall of 10 percent ethanol
    incorporated into the fuel supply. This blend wall barrier is
    the highest level of ethanol blended into fuel that can be
    sustained in the current automobile market. If any percentage
    higher than this is used in vehicles, serious engine problems
    can occur in older cars or void warranties in newer models.
    This creates a serious problem for consumers.
        The implementation of the RFS has also created some
    unintended and adverse consequences. The rapid expansion of
    biofuel production using corn has caused an increase in food
    prices, which in turn hurts the poorest and most vulnerable in
    our society both at home and abroad.
        Furthermore, some studies have shown that current ethanol
    production may actually contribute to higher greenhouse gas
    emissions. Accordingly, in a 2011 National Academy of Science
    study, EPA's own emissions analyst found corn ethanol to have a
    higher lifecycle greenhouse gas emission than that of gasoline.
    This is in direct contrast with the original RFS goal of
    improving air quality. These are just some of the problem that
    must be addressed as we examine the effectiveness and viability
    of the RFS as a program.
        Today, we are joined by Mr. Christopher Grundler from the
    EPA Office of Transportation and Air Quality. I hope that the
    EPA can help us help you. Tell us what Congress needs to do to
    make it able to do its job.
        I also hope to hear about the effects of the RFS from other
    members of the diverse panel that we have here today. I look
    forward to having a productive discussion with our witnesses on
    what we can do to best address the problems in the RFS program.
    I want to thank you for all taking the time to appear today,
    and I look forward to your testimony.
        Mr. Gosar. And with that, seeing that the ranking member is
    not here, I am going to recognize the vice ranking member, Matt
    Cartwright, for his opening statement.
        Mr. Cartwright. Thank you, Dr. Gosar and Chairman Jordan,
    for holding today's hearing. I also want to thank our witnesses
    for coming today and sharing your expertise with us.
        Renewable energy and energy efficiency technology play an
    instrumental role in improving America's energy independence
    and in reducing carbon emissions. Certainly, renewable energy
    sources are our future. Congress has to help facilitate and
    expedite our inevitable transition away from fossil fuels and
    the Renewable Fuel Standard, the RFS, can play an important
    role in the transition.
        Established in 2005 and expanded in '07, the RFS was
    crafted by Congress to address our nation's dependence on
    foreign oil, as well as spark clean energy innovation and job
    creation. The RFS requires the EPA to issue annual standards on
    four different categories of renewable fuels: total, advanced,
    biomass-based diesel, and cellulosic. These standards identify
    the percentage of each biofuel category that producers and
    importers of gasoline and diesel must blend into transportation
    fuel, heating fuel, and jet fuel.
        I hope we can all agree that the goals of the RFS are
    laudable and deserve all of our support. And the industry has
    certainly achieved some success in meeting them. Biofuels, and
    especially advanced biofuels, hold the promise of dramatically
    reducing the carbon and environmental footprint of our
    transportation sector. According to the biotech industry, over
    its 10-year lifespan, the RFS has reduced U.S. transportation-
    related carbon emissions by 589.33 million metric tons.
        Moreover, the industry is creating jobs. The cellulosic
    biofuel industry operates commercial biofuel plants in Kansas,
    Iowa, Mississippi, and Florida. Twenty States have biofuel
    facilities at different levels of development.
        However, we do have to acknowledge the growing pains this
    industry has faced over the past decade, and I do have my own
    concerns. I have concerns about the RFS's impact on
    agriculture, food prices, and a series of unintended but
    potentially serious impacts on our environment. I am concerned
    about the RFS's influence on the conversion of forestlands and
    wetlands to corn and soy fields. And I am concerned about the
    different estimates of the carbon footprint of corn ethanol.
    And I want to understand better what the true current and
    future climate impact of the RFS will be.
        Looking forward, I hope that the progress of the biofuels
    industry, which, without the RFS, never would have occurred,
    can lay a foundation for a bright future for renewable fuels.
    Carbon reductions and environmental benefits have thus far
    fallen short of the heights we may have hoped for, and
    cellulosic biofuels have not reached the production levels
    predicted when the RFS was first established.
        But despite this, I still see a bright and essential future
    for renewable fuels, and the RFS is the most important policy
    tool we have to allow this industry to continue to innovate and
    expand. The biotech industry asserts that cellulosic and
    advanced biorefineries have now reached commercial status and
    that additional biorefineries can be built at lower capital
    costs.
        I hope that the recent standards announced by EPA can
    provide certainty and propel us toward the advanced fuels that
    will truly meet the original goals of the RFS. I hope to work
    with my colleagues to get over hurdles such as the E10 blend
    wall and constraints in the supply chains that have limited the
    industry.
        Our reliance on fossil fuels to power our transportation
    sector is unwise and unsustainable, and Congress was smart to
    provide a path for renewable fuels. The implementation of the
    RFS has raised valid concerns from many corners, but I believe
    the industry is ready to take a major step forward toward the
    advanced biofuels that will have an important and positive
    impact on the environment, on jobs, and on the transportation
    sector.
        I look forward to hearing from our witnesses today better
    to understand the RFS and look forward to working with them and
    my colleagues in laying out a path toward a renewable energy
    future.
        And I yield back, Mr. Chairman.
        Mr. Gosar. I thank the gentleman. I am glad that we also
    worked on potato potahto.
        I would like to recognize Mr. Jordan, the chairman of the
    Subcommittee on Health Care, Benefits, and Administrative Rules
    for his opening statement.
        Mr. Jordan. Thank you, Mr. Chairman. Let me thank you for
    having this hearing.
        You know, this would be laughable if it wasn't so serious.
    This is a classic example of what happens when you get a bunch
    of politicians together and think they are smarter than the
    marketplace. A bunch of politicians got together back in 2007
    and said you know what, we think we should blend it at this
    rate this year and then keep increasing it.
        And now all of a sudden we have hit the blend wall where
    even the EPA says--Mr. Grundler, who is here to testify today,
    testified even 3 years ago and said it is not feasible for the
    system to absorb that much ethanol, right? So instead of
    letting the hundreds of millions of consumers figure this out
    and the marketplace figure this out, politicians got together
    and they said we are smarter than everybody else, and we are
    going to put this schedule together. We think this is the way
    to go, and we are going to invest taxpayer money and skew the
    system in a way--this is a classic example of why you shouldn't
    do that, why you would let the marketplace work.
        And I look forward to hearing from our witnesses. I hope
    our witnesses will just say we never should have gone down this
    road in the first place, and the best thing we can do is get
    out of it as quickly as possible. And short of that, maybe
    there is some other remedy, but this is, again, just a great
    example of why you don't let a bunch of people in Washington
    who think they are smarter than everybody else start some
    program that winds up creating all kinds of problems.
        With that, I yield back.
        Mr. Gosar. I thank the gentleman.
        I now recognize Mrs. Lawrence, ranking member of the
    Subcommittee on Interior, for her opening statement.
        Mrs. Lawrence. Thank you, Chairman Gosar and Chairman
    Jordan, for holding this hearing today. I also want to thank
    our witnesses for your time and testimony today.
        A Republican Congress passed and a Republican President
    signed into law the Energy Policy Act, which established the
    Renewable Fuel Standard. The RFS seeks to decrease our nation's
    dependency on foreign oil, as well as to promote clean energy
    innovation and job creation. The need for RFS remains as true
    today as it was in 2005.
        I am proud to say that the innovation by Ford Motor Company
    headquartered in my home State of Michigan has sparked
    tremendous progress due to the RFS. For instance, since 2013,
    vehicles sold by Ford Motor Company in the U.S. are capable of
    running on gasoline as well as E15 blended ethanol fuel. To
    date, Ford has manufactured more than 6.4 million flexible fuel
    vehicles globally. Ford Motor Company's efforts demonstrate
    tremendous strides in advancing and promoting the use of
    renewable fuels, creating jobs and expanding our national
    economy.
        In addition, according to the biotechnology industry, the
    RFS has displaced nearly 1.9 billion barrels of foreign oil
    over the past decade by replacing petroleum fuel with homegrown
    biofuels.
        Although the RFS has experienced challenges, it is not the
    time to abandon the RFS. We owe it to our constituents, the
    future generations to keep the RFS on track as a means to
    reduce our carbon emissions and dependence on fossil fuels, and
    to create jobs building a cleaner energy future.
        I look forward to working with my colleagues to keeping
    this important piece of legislation intact.
        Thank you, and I yield back.
        Mr. Gosar. I thank the gentlewoman.
        I will also hold the record open for 5 legislative days for
    any members who would like to submit a written statement.
        We will now recognize our panel of witnesses. First, I am
    pleased to welcome Mr. Christopher Grundler, director of the
    Office of Transportation and Air Quality at the U.S.
    Environmental Protection Agency. Our second guest is Mr. John
    DeCicco, Ph.D., research professor at the University of
    Michigan Energy Institute. Did I say it right?
        [Nonverbal response.]
        Mr. Gosar. Ms. Kelly Stone, policy analyst at ActionAid
    USA; Mr. Wallace Tyner, Ph.D., the James and Lois Ackerman
    professor at the Department of Agricultural Economics at Purdue
    University; and our final witness is Mr. Nicolas Loris, the
    Herbert and Joyce Morgan fellow at the Heritage Foundation.
    Thank you all. Welcome to you all.
        Pursuant to committee rules, witnesses will be sworn before
    they testify. Will you please rise and raise your right hand?
        [Witnesses sworn.]
        Mr. Gosar. Let the record reflect that the witnesses
    answered in the affirmative.
        Thank you and please be seated.
        In order to allow for discussion, please limit your oral
    testimony to 5 minutes. Your entire written statement will be
    made part of the record.
        With that, I would like to recognize Mr. Grundler for 5
    minutes.

                           WITNESS STATEMENTS

                   STATEMENT OF CHRISTOPHER GRUNDLER

        Mr. Grundler. Chairman Gosar, Ranking Member Lawrence,
    Chairman Jordan, Ranking Member Cartwright, and other members
    of the committee, I appreciate the opportunity today to testify
    on the Renewable Fuel Standard program and the EPA's recent
    final rule setting the annual volume standard for 2014, 2015,
    and 2016, as well as the biomass-based diesel volume
    requirement for 2017.
        As has been noted, the program began in 2006 under the
    Energy Policy Act of 2005 and modified by the Energy
    Independence and Security Act of 2007, or EISA, which
    established new annual volume targets for renewable fuel that
    increase every year to reach a total of 36 billion gallons by
    2022. It included 21 billion gallons of advanced biofuels.
    Congress also included waiver provisions for EPA to use to
    adjust these statutory targets in specified circumstances,
    including where the statutorily prescribed volumes could not be
    met.
        After an extensive notice and comment process, including
    working closely with our Federal partners at the U.S.
    Department of Agriculture and the U.S. Department of Energy,
    EPA finalized regulations to implement the EISA requirements,
    and those regulations went into effect in July 2010.
        The law requires EPA to issue annual standards for four
    different categories of renewable fuels, and the chairman
    already described these. We also established the applicable
    volume of biomass-based diesel, commonly referred to as
    biodiesel, that will be required in 2017. With this final
    action, we believe the RFS program is back on schedule and
    we're determined to keep it on schedule.
        Biofuel use over the past decade has increased
    significantly, especially for ethanol and biodiesel, and
    recently, we've seen important developments in the production
    of advanced renewable fuels, including cellulosic biofuel
    production. Most of this growth in EISA's renewable fuel
    targets for 2015 and beyond comes from these advanced
    cellulosic biofuels. We are committed to doing what we can to
    encourage and support production and blending of such fuels to
    maximize reductions in greenhouse gases.
        The final standards will increase the amount of biofuel in
    the market beyond historic levels, which is consistent with
    Congress's intent. The final standards provide for ambitious
    yet achievable growth and incentivize growth in advanced fuels
    that achieve substantial reductions in greenhouse gas emissions
    compared to the transportation fuels they replace. The rule
    uses the law's waiver authorities to adjust the annual volume
    targets but does so in a judicious way.
        The final rule addresses 3 years' worth of standards and
    sets the volume requirement for biomass-based diesel for a
    fourth year. For '14 and '15, we finalized standards at levels
    intended to reflect the actual amount of biofuel used
    domestically. For 2016 and for 2017 for biomass-based diesel,
    the standards we have finalized provide for increases over past
    levels. The final 2016 volumes for total and advanced renewable
    fuels reflect our consideration of two essential factors:
    first, that the market can respond to ambitious volume targets;
    and second, that today there are limits to the volumes that can
    be supplied to consumers.
        The final rule goes into considerable detail why some of
    the volume targets established in the statute cannot be
    reached. There are several reasons why, and some of them have
    already been mentioned: slower-than-expected development of the
    cellulosic biofuel industry and the resulting shortfall in
    cellulosic biofuel supply; a decline in gasoline consumption
    rather than the growth originally projected in 2007; and
    constraints in supplying certain biofuels to consumers, ethanol
    in greater than 10 percent of gasoline in particular.
        Our final rulemaking includes a discussion of this last
    constraint, known as the E10 blend wall. If gasoline demand is
    flat or trends downward, increasing the amount of ethanol used
    in the fuel pool will require a significantly greater use of
    fuels with higher ethanol content such as E15 and E85, which
    can be used in flexible fuel vehicles.
        However, EPA recognizes that there are real limitations in
    today's market to the increased use of these higher-ethanol-
    content fuels, including current and near-term limits on
    fueling infrastructure. USDA is working to expand this ethanol
    fueling infrastructure.
        Overall, the final rule requires that total renewable
    standards grow by more than 1.8 billion gallons from 2014 to
    2016, which is an 11 percent increase over 2014. The final
    cellulosic standard is nearly 200 million gallons, or seven
    times more than the market produced in 2014, and for an
    advanced biofuel, the 2016 standard is nearly 1 billion gallons
    or 35 percent higher than the actual 2014.
        In addition, the biodiesel standard also grows steadily
    over the next several years, reaching 2 billion gallons by
    2017, a 23 percent higher level than the actual 2014 volumes.
    We believe that these volumes are achievable and consistent
    with Congress's clear intent to drive renewable fuel up even as
    we use the authorities that Congress provided EPA to manage the
    program responsibly.
        We've taken other steps to improve the administration of
    the RFS program. We've improved the petition review process for
    new pathways under the program, and they're already making a
    difference. Since launching this new process, we've approved
    over 50 petitions for more efficient corn ethanol plants with
    an average review time of less than 2 months. This is an 80
    percent improvement over our prior performance. We've also
    proposed new--six new pathways for second-generation--I'm
    sorry, finalized six new pathways for second-generation
    biofuels and proposed five more.
        Having finalized these standards as we look towards 2017,
    it's important to remember that the RFS program is only one
    part of the overall picture. Both USDA and DOE have programs
    supporting development of--and infrastructure, and we work
    closely with them in our work to implement this program.
        Thank you for the opportunity to appear before you today.
        [Prepared statement of Mr. Grundler follows:]

     [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Gosar. Thank you very much. And in the spirit of the
    NCAA tournament, -losic is 4, -losic is 0.
        [Laughter.]
        I would like to now introduce Mr. DeCicco from the
    University of Michigan.

                      STATEMENT OF JOHN M. DECICCO

        Mr. DeCicco. Thank you. I wish to thank the chairs,
    Representatives Gosar, ranking members Representatives Lawrence
    and Cartwright, as well as the other members of your
    subcommittees and the overall committee who are here today. My
    name is John DeCicco, and I'm a research professor at the
    University of Michigan's Energy Institute. My main focus is
    transportation fuel use and its environmental impact. I have a
    doctorate in engineering from Princeton University and I've
    worked on America's energy challenges for nearly 40 years,
    including 21 years at environmental organizations before
    returning to academia in 2009. My research has included
    scientifically rigorous evaluations of the RFS and other
    policies that promote biofuels such as ethanol and biodiesel.
        RFS proponents claim that the policy reduces CO2 emissions.
    I have found that it does not. In fact, from its inception, the
    RFS has increased rather than decreased CO2 emissions compared
    to petroleum fuels such as gasoline. My findings contradict the
    conventional wisdom about biofuels. They reveal errors in the
    computer modeling on which the environmental rationale for the
    RFS was based. It's no surprise that some biofuel researchers
    and advocates have criticized these findings and those of other
    scientists who also have found flaws in the modeling that backs
    the RFS.
        The claims that biofuels reduce CO2 emissions rely on a
    method known as lifecycle analysis. It's a way to compare fuels
    according to their carbon footprint. When it expanded the RFS
    through EISA in 2007, Congress required EPA to evaluate the
    lifecycle emissions of advanced biofuels. The Agency also
    adapted the method for its RFS impact assessments.
        EPA did not originate fuel lifecycle analysis. Rather, the
    method was largely developed at the Department of Energy and by
    academic proponents of renewable energy, and its use was
    advocated by the green groups who backed the RFS.
    Unfortunately, lifecycle analysis makes a mistake by assuming
    that biofuels are automatically carbon neutral. Only under
    certain conditions does replacing a fossil fuel with a biofuel
    neutralize the CO2 that leaves tailpipes. For that to occur,
    harvesting the corn or other feedstock must greatly speed up
    how quickly cropland pulls CO2 from the air. That doesn't
    happen for the corn and soybean harvests diverted to produce
    renewable fuels as mandated by the RFS.
        My analysis looks directly at farm data, and those data
    show that in practice the carbon neutrality assumption is not
    met. My research team evaluated corn ethanol for which a
    lifecycle analysis study claims a 40 percent reduction in
    greenhouse gas emissions compared to gasoline. We found no
    significant reduction of emissions. Moreover, under typical
    crop rotations, net emissions could be as much as 70 percent
    higher than those of gasoline. These results do not even
    include indirect land-use change, which would increase biofuels
    emissions' impact even more.
        So here we are 10 years after the 2005 energy bill first
    established the RFS, 8 years after it was expanded by EISA, and
    the policy has worsened CO2 emissions. It turns out that the
    studies used to justify it are flawed. Environmentally
    speaking, it would be best to repeal the Renewable Fuel
    Standard. Short of that, helpful reforms would include scaling
    the mandate back to well below the blend wall and striking
    lifecycle analysis from the policy.
        Thank you for letting me share my findings, and I'll look
    forward to your questions.
        [Prepared statement of Mr. DeCicco follows:]

     [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Gosar. I thank the gentleman.
        I now recognize the gentlewoman, Ms. Stone, for her 5
    minutes.

                        STATEMENT OF KELLY STONE

        Ms. Stone. Thank you, Chairman Gosar, Chairman Jordan,
    Ranking Members Lawrence and Cartwright, and members of the
    committee. Thank you for inviting me to testify on the
    Renewable Fuel Standard. I greatly appreciate the opportunity
    to share ActionAid USA's perspective on the RFS and the need
    for reform.
        ActionAid is an international organization committed to
    countering extreme poverty and social injustice. We make long-
    term commitments to empower the communities that we work with
    helping them to identify and address the challenges they face
    in realizing their human rights and overcoming extreme poverty.
        ActionAid USA advocates for reform of the RFS because of
    its impact on food security, land tenure, and water. Mandates
    for food-based biofuels such as the RFS increase hunger around
    the world, drive land grabs in developing countries, and divert
    resources such as water to fuel.
        First, on food, I want to emphasize to the subcommittee how
    fundamentally important food security is. Hunger impacts every
    aspect of development, from health to education and the
    workforce. Without food security, real development is not
    possible.
        One of the primary ways biofuel mandates impact hunger is
    by increasing food prices. Of course, many factors go into
    determining the price of food. However, it is widely recognized
    that food-based biofuels create an upward pressure on food
    prices. And while prices have dropped from 2012, they are still
    high compared to historical levels and present real challenges
    to poor families.
        Mandates for food-based biofuels impact prices by driving
    up demand for a particular feedstock. This increase in demand
    impacts the price not only of that feedstock but any food that
    requires that feedstock for production or feedstocks that can
    be a substitute. For example, significantly increased demand
    for corn creates upward pressure on food prices for corn, dairy
    because cows eat corn as feed, and for other grain like wheat.
    If people find corn prices have gone up, they may try to
    substitute for corn with wheat, but that means demand and
    prices for wheat have gone up as well.
        Access to safe and nutritious food often comes down to the
    ability to pay, so food price is a critical part of food
    security. Poor families in developing countries often spend a
    significant amount of their income on food, sometimes as much
    as 80 percent. What looks like a small increase to us can be
    devastating to poor people trying to feed their families.
        On land, demand for biofuels also drives up demand for land
    on which to produce those biofuels. This results in small
    family farmers being forced off their land in developing
    countries to make way for large biofuel plantations. Instead of
    producing food for the local community, that land is used to
    produce fuel for a developed country. ActionAid has worked with
    communities in Central America, Africa, and Asia who've had
    their land threatened or taken in this way.
        I want to emphasize what a loss of land means to these
    farmers. This is not simply a loss of property for which they
    can be easily compensated. For small-holder farmers, secure
    land tenure is crucial to their ability to feed themselves,
    their families, and their communities. Land is their
    livelihood, their investment in the future, and in some cases,
    a part of their cultural identity. That security is not easily
    replaced.
        Last May, I met with some family farmers in Mato Grosso,
    Brazil. They were struggling to grow food because of the
    biofuel production next door, including the aerially sprayed
    chemicals involved in a production were hurting their crops.
    One man's voice in particular stays with me because he did not
    just talk about the loss of food but a loss of identity. He had
    been a farmer his whole life but now he cannot grow food for
    his family. It was as if he felt that his identity had been
    taken from him, as well as his crops.
        Finally, water, like land, is a finite resource. There is
    only so much available to a community at any given time for
    growing and preparing food, drinking, and hygiene needs. Water,
    as you know, is profoundly important for human survival, as
    well as development. ActionAid USA's research has found that in
    most cases expanding biofuel production in countries that the
    U.S. imports these fuels from results in an increase in water
    consumption. Even when biofuel crops are rain-fed, that
    resource is being used to produce fuel for export instead of
    being used to meet the community's fundamental needs.
        The RFS is a broken policy that is badly in need of reform.
    Many in Congress supported the RFS in 2005 and again in 2007
    with the best of intentions. However, the evidence is now clear
    that this is a policy that is not helping the environment and
    it is doing real harm to people. We need a fundamental shift in
    our approach to biofuels, and we must end mandates for food-
    based biofuels such as corn ethanol.
        Thank you.
        [Prepared statement of Ms. Stone follows:]

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        Mr. Gosar. I thank the gentlelady.
        I now recognize Dr. Tyner for his 5 minutes.

                     STATEMENT OF WALLACE E. TYNER

        Mr. Tyner. Thank you for the opportunity to be here today
    and to share my observations on the Renewable Fuel Standard and
    its possible impacts.
        In general, biofuel policies have--in the RFS have had
    three major objectives. One is to enhance rural incomes, two is
    to reduce oil imports, three is to reduce greenhouse gas
    emissions. My assessment is that the RFS has been successful in
    achieving all three of these objectives. And as was indicated
    earlier, the final numbers for the 2014-2016 RFS were released
    by EPA in November of 2015. Let me review briefly what they
    said in each of the three major categories.
        For cellulosic biofuels, basically the decision that EPA
    made is that they cannot mandate something be blended which
    doesn't exist. So they've taken a ``build it and we will come''
    attitude. That is, they estimate the amount of cellulosic
    biofuel that will be available in the following year, and that
    becomes the RFS level.
        For biodiesel, EPA believes the system can absorb much more
    than the original RFS level, so they set the 2016 level at 1.9
    billion gallons, almost twice the original RFS level.
        For corn ethanol, EPA took into account the blend wall but
    also the fact that the original congressional intent of the RFS
    was to pull into the market more biofuels than would have come
    into the market by market forces alone. My sense is that they
    made a reasonable compromise between conflicting issues and
    objectives.
        Next, I want to comment on greenhouse gas emission
    estimations. When biofuels are produced and consumed,
    greenhouse gases are released, and these must be measured and
    compared with fossil fuel emissions to determine the extent of
    emission reductions for each biofuel pathway. Agencies use some
    combination of attributional and consequential lifecycle
    analysis to estimate these emissions.
        Economic models are used to estimate the market-mediated
    responses to the higher demand for the agricultural
    commodities. Possible responses include--to the higher
    commodity prices include reduced consumption, crop-switching
    from one crop to another, converting forest or pasture to
    cropland, more intensive use of cropland, and changes in
    international trade and production.
        Consequential lifecycle analysis is driven by market
    forces. Some have argued for an approach called additional
    carbon. The basic argument is crops grown for biofuels would
    have been grown anyway so there is no additional carbon
    sequestered in producing the biofuel crops. Any crop used for
    biofuels just reduces use elsewhere in the economy.
        The empirical evidence in my view does not support this
    argument. For example, harvested corn area of the United States
    has increased to roughly 10 million acres over the last two
    decades. Global harvested area of grains, cotton, and oilseeds
    has increased over 200 million acres between 2003 and 2012. In
    other words, there has been additional carbon taken from the
    atmosphere in producing these additional crops.
        The U.S. Environmental Protection Agency, the California
    Air Resources Board, and the European Union all use some
    combination of attributional and consequential lifecycle
    analysis to measure the greenhouse gas reductions of biofuels.
    None accept the additional carbon argument.
        Next, I want to comment on biofuel impacts on developing
    countries. The reasons for commodity price increases in 2008
    and again in 2011 have been extensively researched. Most
    studies have concluded that biofuels did play a role but not a
    predominant role in the price increases. To the extent that
    biofuels played a role in commodity price increases, it's clear
    that urban consumers in developing countries are adversely
    affected.
        But there's another side to the story, and that is that
    rural areas and farmers in developing countries can be made
    better off by those higher prices. The World Bank says 70
    percent of the world's poor live in rural areas in developing
    countries and derive their primary livelihood from agriculture.
    To the extent that these higher prices are transmitted to rural
    areas, farmers and other rural residents can be made better off
    as their incomes increase.
        Last, some comments on the road to the future. The
    scientific community has concluded that climate change is real
    and is caused by human intervention. Most economists believe
    that the most efficient way to deal with the adverse impacts of
    climate change is through pricing emissions, through a market
    mechanism with a carbon tax. But Washington so far prefers a
    regulatory approach, so we have CAFE standards for fuel
    economy, the Clean Power Plan for electricity, and the
    Renewable Fuel Standard for reducing automotive emissions.
    Absent a market-based approach, I think the Renewable Fuel
    Standard and the other regulations are an appropriate and
    effective means to move our economy towards lower greenhouse
    gas emissions.
        [Prepared statement of Mr. Tyner follows:]

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        Mr. Gosar. I thank the gentleman.
        And now our last witness, Mr. Loris, you are recognized for
    5 minutes.

                     STATEMENT OF NICOLAS D. LORIS

        Mr. Loris. Thank you. Chairman Gosar, Chairman Jordan,
    Ranking Member Lawrence, Ranking Member Cartwright, and
    distinguished members of the subcommittees, thank you for this
    opportunity to discuss the Renewable Fuel Standard. The views I
    express in this testimony are my own and should not be
    construed as representing any official position of the Heritage
    Foundation.
        Austrian economist Friedrich Hayek famously wrote that
    ``The curious task of economics is to demonstrate to men how
    little they know about what they imagine they can design.''
    Truer words could not be spoken about the Renewable Fuel
    Standard. The policy reveals the inability of the Federal
    Government to centrally plan energy markets and the unintended
    consequences it creates when doing so. The quota concentrates
    benefits to a select few and disperses the costs amongst the
    rest of us.
        Even within the agricultural community, the RFS rewards
    special interests connected to the policy and adversely impacts
    much of rural America. No matter how brilliant or well-
    informed, politicians cannot predict the future of energy
    markets, and even though the EPA can adjust the biofuel
    targets, the blend wall concerns, and Congress grossly over
    predicting the commercial viability of cellulosic ethanol
    demonstrates why the government shouldn't set production quotas
    in the first place.
        And the RFS is far from the only mechanism the government
    has used to prop up the biofuels market. We've spent billions
    on targeted tax credits, imposed tariffs on imported ethanol,
    provided loan guarantees to cellulosic ethanol plants, and
    continue to spend taxpayer dollars on biofuel infrastructure in
    attempting to commercialize advanced biofuels.
        The RFS and these complementarity subsidies have not
    contributed to meaningful reductions in oil supply or oil
    consumption. However, the mandate's cost to Americans is a
    substantial, as we pay tens of billions of dollars more in
    higher food and gas prices each year. These higher prices hurt
    low-income families both here and abroad the most. These are
    the citizens that spend a disproportionately higher percentage
    of their budget on these goods.
        The mandate distorts commodity production and prices and
    takes land away from competing crops. About 40 percent of
    America's corn crop goes to ethanol for fuel. In 2012 the
    amount of corn used to produce ethanol in the U.S. exceeded the
    consumption of the entire continent of Africa and every single
    country with the exception of China.
        Biodiesel generated from soybeans presents the same food-
    for-fuel problem. In 2004, the year before Congress first
    created RFS, less than 1 percent of the soybean crop was used
    for biodiesel. By 2014 that figure jumped to 23 percent.
    Consequently, the diversion of crops to fuel raises the input
    prices for livestock producers. In total, the Congressional
    Budget Office estimates that Americans spend $3.5 billion more
    per year at the grocery store because of this mandate. Research
    from several universities finds the cost to be significantly
    higher. Whatever the most accurate estimate is, the direction
    is always the same: We pay more.
        The RFS drives up prices at the pump as well. Americans are
    paying $10 billion more annually to blend ethanol into our
    gasoline. According to DOE and EPA's own website, a motorist
    could spend an additional $450 per year to run a flex fuel
    vehicle on E85 compared to a regular gasoline blended with E10.
        And the RFS has unintended environmental impacts. Even the
    EPA acknowledges that increases in soybean production as a
    result of the mandate can cause adverse effects to water
    quality, ecosystems, and habitat while increasing criterion
    pollutants like sulfur dioxide and nitrous oxide.
        Furthermore, the alleged climate benefit from the RFS is
    dubious at best. Even under the assumption that switching from
    oil to biofuels significantly reduces greenhouse gas emissions,
    which is a very generous assumption, the impact on global
    temperatures would be negligible.
        But the real problem with RFS is not the use of biofuels
    themselves. Rather, it is Washington deciding what goes in our
    gas tanks. Ethanol would likely exist in a world without the
    mandate, though clearly not in as great of quantity. But that
    should be for the market to determine.
        Collectively, Americans spent hundreds of billions of
    dollars on gasoline each year. Globally, the transportation
    fuels market is a multi-trillion dollar opportunity. Any
    alternative energy source won't need a government program
    mandating its production and consumption. The profit incentive
    rewards cost-competitive fuels.
        Broadly speaking, the RFS provides valuable lessons about
    the problems when the Federal Government intervenes in energy
    markets. Bad policies that award preferential treatment remain
    in place or expanded because of the supposed political
    importance trumps economic viability. Even former Vice
    President Al Gore admitted that he supported the corn ethanol
    mandate because he had a strong incentive to please his
    constituents in Tennessee and the farmers in Iowa. It was only
    until after he stopped running for office that he could call
    first-generation biofuels a mistake.
        The RFS, and all other energy subsidies for that matter,
    create a vicious loop of politicians, lobbyists, and special
    interests protecting these policies and determining who
    produces what. The most effective solution to this problem is
    to eliminate the preferential treatment altogether.
        In conclusion, Congress should recognize the entire mandate
    is a failure and the government has no legitimate role in
    propping up one energy source over another. The only viable
    reform is to repeal RFS in its entirety, and Congress should do
    so as part of fundamental reform that eliminates subsidies for
    all energy sources. Such reforms will empower the private
    sector and innovative companies to drive fuel competition and
    choice.
        Thank you, and I look forward to your questions.
        [Prepared statement of Mr. Loris follows:]

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        Mr. Gosar. I thank the gentleman.
        The chair notes the presence today of our fellow OGR member
    Mr. Welch. We appreciate your interest in this topic and
    welcome your full participation in the hearing.
        Without objection, so ordered.
        I would like to first recognize the gentleman from
    Colorado, Mr. Buck, for his questions.
        Mr. Buck. Thank you, Mr. Chairman.
        Mr. Grundler, I have three different ethanol producers in
    my district. One of them tells me that the RFS is a ceiling,
    and the other one tells me the RFS is a floor. And I have
    received so much conflicting information on this. I have a few,
    I think, fairly straightforward questions for you.
        When does the RFS expire? You mentioned 2022. Is that the
    date that people agree on that the RFS expires?
        Mr. Grundler. The RFS does not expire.
        Mr. Buck. Okay. Well, when you mentioned 2022, what happens
    in 2022?
        Mr. Grundler. In 2022, the statutory mandates, the
    specified volumes that Congress put in the law and EPA is
    required to, after 2022, establish what the appropriate volumes
    should be.
        Mr. Buck. When does the market kick in? When does the
    consumer get the chance to say I want E85, I want E10, I want
    to E0?
        Mr. Grundler. The consumer has that choice today, sir.
        Mr. Buck. We don't have to have E10 in our car?
        Mr. Grundler. I'm sorry, the consumer has a choice of using
    all of those fuels with respect to E10. The refining industry
    and the transportation fuels of this industry have been using
    ethanol as an octane enhancer, as a volume extender for many,
    many years.
        Mr. Buck. So many of us believe the RFS is a failure
    because we have standards that are arbitrarily set and somehow
    the marketplace is supposed to react. Why is EPA in any better
    position in 2022 to do something that Congress failed to do
    properly up until 2022?
        Mr. Grundler. Well, the Congress did give the administrator
    a long list of factors to consider for what those future
    standards or volumes should be comprised of, including
    environmental impacts, the impacts on energy security, impacts
    on cost to consumers, the impacts on agriculture, the impacts
    on transportation ----
        Mr. Buck. Let me ask you this. There are blender pumps
    going in all across America right now, and blender pumps give
    individual consumers the ability to make choices between
    whatever level--actually, whatever level the law allows but
    hopefully someday whatever level they choose. Isn't that a
    better way to determine ethanol consumption in this country
    than to have either Congress or the EPA make that decision for
    consumers?
        Mr. Grundler. Well, sir, you know, our job that you
    directed us to do is to implement this law as ----
        Mr. Buck. I actually asked you for an opinion and not what
    the law was this time. Wouldn't that be a better way, given our
    marketplace in America, to allow consumers to make those
    choices?
        Mr. Grundler. Sir, I'm not here to provide an opinion or
    advice on how to change the law. I'm representing the Agency,
    and we do not have a position on that.
        Mr. Buck. Under the system as it is currently set up, does
    a refiner pay an ethanol producer if the refiner doesn't use a
    certain amount of ethanol each year?
        Mr. Grundler. No, the refiner buys--the refiner actually
    has a choice to either buy the ethanol, and along with that
    comes a credit, which is used to measure compliance, or the
    refiner can go to the marketplace and buy a credit. It's called
    a renewable--a RIN to ----
        Mr. Buck. Who gets the money from that RIN?
        Mr. Grundler. Who gets the money from that RIN? Whoever the
    refiner is buying it. He could be buying it from another
    refiner, it could be--they're--it's a marketplace. These are
    private transactions.
        Mr. Buck. Ms. Stone, I have a question for you. Just sort
    of summarize your testimony. You indicated that the ethanol
    production raises food prices. And I understand that there are
    other factors. There's water use and chemical use and other
    things, but is that a fair summary?
        Ms. Stone. Yes, that ----
        Mr. Buck. Okay.
        Ms. Stone. Yes.
        Mr. Buck. And that demand for ethanol drives up food
    prices?
        Ms. Stone. Yes.
        Mr. Buck. Is there any other demand out there that you
    would like to manipulate to drive down prices? And I paid a lot
    for my iPhone. I am just wondering if you could help me. Could
    we drive down demand for iPhones? And my car was really
    expensive also. Are there things that we could do to reduce the
    price of other things and perhaps not just blame farmers who
    are making more money as a result of ethanol being used, but we
    could blame high-tech companies, we could blame all kinds of
    producers in this country for the cost and the benefit that
    they receive.
        Ms. Stone. I appreciate the Congressman's question because
    I do want to be very clear that I in no way hold American
    farmers responsible for the impacts of the RFS. They are quite
    rightfully responding to a market that Congress has created.
        But what I am saying is that this energy policy is having
    detrimental impacts on the most vulnerable and poorest in the
    world and that I--and that it's also not achieving the goals
    that Congress set out for it initially. And so that is time to
    move away from food-based biofuels.
        Mr. Buck. I thank the chairman. I yield back.
        Mr. Gosar. I thank the gentleman, and I now recognize the
    gentlewoman from Michigan, Mrs. Lawrence.
        Mrs. Lawrence. Thank you, Mr. Chair.
        Supporters of the RFS point to its success. For instance,
    according to the biotechnology industry that RFS displaced
    nearly 1.9 billion barrels of fuel. Mr.--is it Grunder?
        Mr. Grundler. Grundler.
        Mrs. Lawrence. Grundler. I understand that the EPA
    recognizes that currently, market limitations are limitations
    to the increased use of higher-ethanol-content fuels, including
    current market, its near-terms limits on fueling
    infrastructure. What assurances can you provide to this
    committee that the new rules, as well as the future rules, will
    not cripple the RFS program's ability to encourage
    infrastructure investments?
        Mr. Grundler. Thank you, ma'am. The final stats we put in
    place by no means cripple this industry or its future. I'm not
    in a position to speculate what 2017 or 2018 or 2019 standards
    will be. That will be up to the administrator. We're doing the
    analysis right now for the 2017 volumes. But the trends are
    going up. We foresee steady growth in these fuels as
    competition increases and as more facilities come online to
    produce these advanced fuels.
        Mrs. Lawrence. Ms. Stone, you urge the committee to support
    reforming RFS, is that correct?
        Ms. Stone. That's correct.
        Mrs. Lawrence. So give us some suggestions. What would you
    like to offer to reform it?
        Ms. Stone. So what ActionAid USA would like to see moving
    forward with the RFS is an end to food-based biofuel mandates
    because of the reasons I outlined in my statement. They aren't
    working for the environment, but they are harming people.
        We would also like to see sustainability measures in place,
    both social and environmental, to ensure that land use, it does
    not compete with food production globally.
        Mrs. Lawrence. Okay.
        Ms. Stone. And that's also part of the reason that we have
    supported removing, at least at first, the corn ethanol mandate
    as a good first step.
        Mrs. Lawrence. Thank you.
        Dr. Tyner, in your prepared statement, you stated that the
    RFS has achieved its stated objectives. Do you believe that the
    RFS rules announced in 2015 will help to restore confidence
    within the biotechnology industry to make sure new
    infrastructure investments in the renewable fuel industry?
        Mr. Tyner. Frankly, yes, I--in general, I think that's
    correct. We have to recognize that the corn ethanol industry is
    a mature industry. It's already reached the capacity to produce
    RFS level. It's not going to grow beyond where it is very much
    at least. The framework that EPA is using for cellulosic
    biofuels, basically ``build it and we will come,'' does create
    the incentive structure for new companies to enter and come
    into the business. And the same is true with biodiesel.
        Mrs. Lawrence. My last question to Dr. Grundler, right, I
    understand that both the U.S. Departments of Agriculture and
    Energy have programs supporting biofuels and biofuels
    infrastructure and that you work closely with these agencies to
    implement these statutes. Can you elaborate on what specific
    programs you collaborated with with the Department of
    Agriculture and Energy to support the biofuels and the biofuel
    infrastructure?
        Mr. Grundler. Yes. The primary cooperation is in setting
    these annual fuel volumes. We rely on expert advice with
    respect to future gasoline demand and what the potential is for
    the market to respond to different scenarios of volumes.
        We also work very closely with experts across these two
    agencies with respect to new biofuel pathways, what are the
    right assumptions we should be making about ag inputs into our
    modeling and so on, so it's a very close relationship. The
    Energy Department also sponsors quite a bit of research into
    advanced second-generation biofuels.
        Mrs. Lawrence. Thank you. I yield back.
        Mr. Gosar. I thank the gentlewoman and now recognize the
    gentleman from Ohio, Mr. Jordan.
        Mr. Jordan. Thank you, Mr. Chairman.
        Okay, Mr. Lawrence, tell me what part of the story I got
    wrong. A few years ago, politicians get together and they
    decide they are going to determine what levels of ethanol
    should be put into the market and should be mandated usage by
    the American consumer. They do this for a number of energy
    sources. We have the Department of Energy Loan Guarantee
    Program where they gave all kinds of money, billions of dollars
    to 28 different companies. Twenty-two had a credit rating of BB
    minus. A bunch of them went bankrupt, companies like Beacon
    Power and Solyndra.
        This year in the ethanol program, the mandated schedule
    that all these smart politicians decided on a few years ago,
    that they were smarter than the market, is now going to hit the
    blend wall, which means it can't really work. That is not your
    conclusion or even Dr. DeCicco's conclusion. That is the EPA's
    conclusion, as evidenced by the testimony Mr. Grundler gave
    just a few years ago.
        Now, the EPA can change, they can waive the level. They
    have to set--actually, there is a notice time, right? They have
    to notice each year what level it is going to be. And in the 8
    years this law has been in place, they have only had that
    date--they have only complied with the law three times out of 8
    years, right? So even though they can change--they couldn't
    figure it out. They could even tell us at the appropriate time
    schedule what the law lays out.
        And this year, when they did tell us what level they were
    going to use, they said, well, we are also going to tell you
    what level we were going to use in 2013 and 2014. So they went
    back retroactively. It is hard to tell you what you are going
    to use when you have already used it, right? You can't change
    the past, but that is what they did in November of 2015.
        And then to add insult to injury, as Dr. DeCicco pointed
    out, all this actually increases greenhouse gases. Now, I mean,
    this would be like a comedy, right? You couldn't make a movie--
    sometimes fact is actually stranger than fiction. And the
    clincher is this, because Mr. Grundler in answering Mr. Buck's
    question, in 2022 EPA is completely in control, right? Only
    three times in 8 years could they actually tell us what the
    level is. Now, the level is going to be too much for the market
    to even--it won't work. But now in 2022 they are completely in
    charge. Now, what part of that story do I have wrong?
        Mr. Loris. None of it. In fact, after your opening
    statement I was just going to say ditto and forgo my opening
    remarks because you're spot on. And again, this speaks to the
    government trying to force technologies into the market. Even
    when gas prices were high, were $4 a gallon, these fuels
    couldn't compete with oil. When gas prices are consistently
    high in Europe, you don't see biofuels overtaking those
    markets.
        So as much as the Federal Government wants to try and force
    alternative technologies into the market, they're just not
    cost-competitive, and it's cost us as taxpayers, as energy
    consumers, and with this policy, as food consumers.
        Mr. Jordan. Yes, so what is going to happen in 2022 when
    the EPA is totally running the show? They can decide the
    number? They can decide when they are going to tell us? What is
    going to happen?
        Mr. Loris. That is a great question, and ostensibly,
    whoever is in control of the administration at that point is
    going to continue to tell the EPA to ramp up those targets,
    which makes the opportunities to repeal the failed program now
    all that much more important.
        Mr. Jordan. Dr. DeCicco, do you want to add anything?
        Mr. DeCicco. I very much agree. Clearly, Dr. Tyner and
    myself have a difference of perspective on the success of this
    policy. You know, I wouldn't call it a comedy as much as I'd
    call it a tragedy.
        You know, I think in many ways there were some good
    intentions. I mean, after all, when EISA was passed--I don't
    remember the vote in this chamber, but it went through the
    Senate 86 to 8. A lot of people felt that that policy was going
    to be beneficial for a variety of reasons.
        But this particular part of the policy, you know, as Dr.
    Tyner said, there's kind of a three-legged stool here, rural
    economic interests--or I would be more specific--certain rural
    economic interests, I think, is as well-known. Not everybody in
    the agricultural sector is at all pleased with this policy.
    Certain parts of the sector do benefit from it, clearly,
    though. So you have a partial leg of that first leg on certain
    parts of the agricultural community.
        I think in energy security the cost of this policy,
    enormous costs, both monetary and environmental, make it an
    extremely cost-effective way. Sure, it's displaced some oil,
    but just in the last 2 years the expansion we've had, the
    market-driven expansion in domestic oil production due to
    technology advances that the oil and gas industry itself put
    into place have put in more than three times the volume of fuel
    into the market than was forced and over the last 10 years by
    the RFS. So sure, it has displaced some oil, but the market has
    done a much better job of supplying our energy needs.
        When it comes to the environment, something like greenhouse
    gas emissions, that's an externality. Government intervention
    is required. The market is not going to fix that problem on its
    own. But that intervention needs to be very judicious. Much
    more thought needs to be given about how to address the part of
    emissions associated with petroleum fuel use.
        As I said, the types of analyses on which, as Dr. Tyner
    points out, everyone has relied, I don't disagree that all the
    agencies here and abroad have been using lifecycle analysis for
    this. My academic work shows that that method is inherently
    flawed, and I think we need to go back to the drawing board on
    that score because the--not--one of the things I want to take
    issue with, you know, Wally said that this measure--this
    analysis is used to measure. It doesn't measure. It models.
    These are computer simulations, computer scenarios. They're not
    like taking a gallon of fuel, you can measure how much sulfur
    or lead are in that fuel for chemical analysis. That's not
    what's going on here. It's not measurement. It's computer
    modeling. And unfortunately, in spite of good intentions, the
    models are just plain wrong.
        Mr. Jordan. Thank you.
        Mr. Gosar. I thank the gentleman.
        I now acknowledge our colleague, Mr. Cartwright, from
    Pennsylvania. By the way, the current score is 5-0 law over
    low.
        Mr. Cartwright. Cellulosic is the correct pronunciation.
        Mr. Gosar. So we have got zero.
        [Laughter.]
        Mr. Cartwright. Well, thank you, Mr. Chairman. And you know
    what, Dr. DeCicco, I want to open up with you. I said in my
    opening statement, and I kind of parroted something that I got
    from the biotechnology innovation organization, and that was
    this: Over its 10-year lifespan, the Renewable Fuel Standard
    has reduced U.S. transportation-related carbon emissions by
    589.33 million metric tons, and that really just begs the
    question that you are raising because I see that that was done
    using a GREET 1 2013 model, which is a form of lifecycle
    analysis that you are criticizing. Have I stated that
    correctly?
        Mr. DeCicco. That's correct.
        Mr. Cartwright. Okay. And you have also gone so far as to
    say just now that the lifecycle analysis is the one generally
    employed by the Department of Energy, by the EPA, et cetera,
    correct?
        Mr. DeCicco. That's right.
        Mr. Cartwright. That is sort of the conventional wisdom?
        Mr. DeCicco. It is.
        Mr. Cartwright. And you are bucking that ----
        Mr. DeCicco. Yes.
        Mr. Cartwright.--and you are doing that based on your own
    research over how many years?
        Mr. DeCicco. Well, you know, true confession here, over --
    --
        Mr. Cartwright. We are looking for the truth generally.
        Mr. DeCicco. Right. That's right. Over 20 years ago at an
    earlier stage of my looking at transportation energy use and
    emissions, I wrote the first paper coauthored with a professor
    at Dartmouth that called for the use of lifecycle analysis to
    assess the emissions from transportation fuels, including
    biofuels. We were taken with the technique at the time. It was
    developed in the late '80s.
        Mr. Cartwright. So it is not completely crazy.
        Mr. DeCicco. So it's--it seemed to make sense at a certain
    level, and I went along with that. About 10 years ago, actually
    before EISA was passed ----
        Mr. Cartwright. Dr. DeCicco ----
        Mr. DeCicco.--I began questioning that ----
        Mr. Cartwright.--unfortunately, I only have 5 minutes ----
        Mr. DeCicco. Okay.
        Mr. Cartwright.--so we can't make short stories long around
    here.
        Mr. DeCicco. Okay. Well, the basic point is I've been
    thinking and analyzing these issues very deeply for 25 years.
        Mr. Cartwright. And please forgive me for asking this
    question, but it is something that we do around here. May I ask
    who has been funding your research?
        Mr. DeCicco. Sure. I do have currently a 1-year grant from
    the American Petroleum Institute on this. They're not the only
    funder. The work--the core work ----
        Mr. Cartwright. And let me interrupt you for a moment
    there.
        Mr. DeCicco. Sure.
        Mr. Cartwright. Is it a matter of complete indifference to
    you whether the American Petroleum Institute continues to fund
    your research into the future?
        Mr. DeCicco. Yes, it is.
        Mr. Cartwright. Okay.
        Mr. DeCicco. And my position on this issue, in fact, my,
    you know, position against the RFS predates by a good number of
    years funding from the American Petroleum Institute.
        Mr. Cartwright. Thank you, sir.
        Now, Mr. Grundler, on behalf of the EPA, can you address
    from an environmental perspective why EPA encourages the
    production and use of ethanol in biomass-based diesel by
    including them in the RFS?
        Mr. Grundler. Thank you, sir. Our job is to administer the
    statute that Congress has written. And it is the Congress who
    has established the goals in the law and set these very
    ambitious levels of advanced and total renewable fuel. Congress
    did not establish an ethanol standard. Congress established a
    total and an advanced standard and a cellulosic standard and a
    biomass-based diesel standard.
        I'd also just like to point out that Congress also directed
    EPA to utilize lifecycle analysis to understand land-use
    impacts both direct and indirect from the increased use of
    biofuels.
        Mr. Cartwright. Very good. Thank you for that, Mr.
    Grundler.
        And, Dr. Tyner, I wanted to give you a chance to weigh in
    on this. Using the GREET 1 2013 lifecycle analysis, in your
    view, is that appropriate?
        Mr. Tyner. GREET is a model that it--it's called an
    attributional analysis. It measures the direct emissions. It
    does not take into account the land-use change emissions. So it
    is the state-of-the-art for measuring direct emissions.
        Mr. Cartwright. Well, I thank you for that. And again,
    thank you to all of our witnesses for appearing today.
        And I yield back, Mr. Chairman.
        Mr. Gosar. I thank the gentleman. We are still 5-0.
        I would like to acknowledge my colleague from Oklahoma, Mr.
    Russell.
        Mr. Russell. Thank you, Mr. Chairman, and thank you to all
    of the witnesses here today. My questions would be directed
    initially to Dr. Tyner.
        We have heard today that 1.9 billion barrels of equivalent
    fuel has been produced over the last 10 years with these
    biofuels, cellulosic or -losic, whatever it might be. When we
    look at the annual consumption of fuel and barrel production,
    we consume about 7 billion barrels a year. So in other words,
    1.9 billion, while that sounds like an extraordinarily large
    number, is actually 13 weeks over a decade. So that will be
    kind of the frame up after a decade we have produced 13 weeks
    of fuel.
        My question, sir, is can you make plastic out of corn?
        Mr. Tyner. I'm not a plastic corn scientist, but I have
    read that it can be done, yes.
        Mr. Russell. Okay. Can you make asphalt out of corn?
        Mr. Tyner. I do not know.
        Mr. Russell. Can you make rubber out of corn?
        Mr. Tyner. I do not know.
        Mr. Russell. Can you make frames for computer chips out of
    corn?
        Mr. Tyner. I do not know.
        Mr. Russell. Okay. How much ethanol-based fuel is used for
    jet fuel?
        Mr. Tyner. None.
        Mr. Russell. Oh, I see. Did you know that there is 25
    percent less BTUs in ethanol as opposed to petroleum-based
    fuel?
        Mr. Tyner. It's actually 33, sir.
        Mr. Russell. Okay. I will take your word on that. But do
    you also acknowledge that there is a higher smog effect also on
    the production of ethanol?
        Mr. Tyner. My understanding of the analyses that have been
    done on that is that it depends on the study that was done and
    time of year it was done, so it's still uncertain, I think.
        Mr. Russell. Well, it wasn't uncertain in the 1995 Third
    Circuit Court of Appeals in the ATI v. the EPA. It might be
    worth noting that.
        Did you know that it takes 50 acres of corn for a gallon of
    ethanol to be produced?
        Mr. Tyner. That's not true.
        Mr. Russell. It is not true? Oh, I see. Or 75 gallons of
    water per gallon of ethanol?
        Mr. Tyner. I don't know the water metric.
        Mr. Russell. So I guess, you know, for all of that and all
    of our lifestyle that we enjoy as Americans and, you know, the
    not taking into account the farm implements, the labor, the
    water, the use of food supply, the impact on our defense, the
    fact that we wouldn't have water bottles, cell phones,
    computers, computer chips, synthetic clothing, roads. I mean I
    could go on. We could look around this room and identify
    practically everything that has some basis to our quality of
    life. Are you still of the firm belief that we need to
    eliminate petroleum with biofuel?
        Mr. Tyner. I never said that we should eliminate petroleum
    with biofuel, and in fact, it's impossible to eliminate
    petroleum with biofuel.
        Mr. Russell. So now it gets back to one of efficiency and
    what is best for the environment. Do you think consuming the
    world's food supply and putting it in a gas tank is good for
    human beings?
        Mr. Tyner. I think that we have an obligation to our
    children and our grandchildren to reduce greenhouse gases. We
    have a few ----
        Mr. Russell. I have an obligation to feed them as well.
        Mr. Tyner. And we're doing a good job of it.
        Mr. Russell. Yes.
        Mr. Tyner. The United States has the most productive
    agricultural system in the world. American consumers eat for
    less than 10 percent of their disposable income, the lowest in
    the world. We're doing a very effective job of reducing both
    food and fuel.
        Mr. Russell. And wouldn't it be great if we could send
    those corn sacks, a gift from the United States of America,
    maybe to people who aren't as productive as we are?
        Now, you made a bold statement at the beginning of your
    testimony where you said that all of these biofuels have
    reduced imports on petroleum. I mean, what basis do you mount
    that on, 13 weeks of production?
        Mr. Tyner. I didn't say how large the increase was, sir. I
    said that there was a reduction in imports.
        Mr. Russell. I see. So shale energy revolution had nothing
    to do with the reduction in imports?
        Mr. Tyner. We've studied shale oil and gas and we've
    estimated the economic benefit for the country, and it is huge.
        Mr. Russell. It is a huge impact ----
        Mr. Tyner. Yes, it made--that it's ----
        Mr. Russell.--to have shale oil revolution, and it also
    bolstered our economy. I would suggest to you, sir, that the
    American way of life, the material good that we do to the
    entire world, the ability to fight disease, the ability to make
    pharmaceuticals from petroleum, there are so many good things.
        And I just, Mr. Chairman, appreciate, you know, us having
    this committee hearing today. I think we need to take a
    realistic look at all of the good that we provide the world,
    and we are not doing a bad job with the oil and gas industry.
        And with that, I yield back.
        Mr. Gosar. I thank the gentleman.
        I would like to acknowledge Mr. DeSaulnier from California.
    You are next.
        Mr. DeSaulnier. Thank you, Mr. Chairman.
        Dr. Tyner, I am struggling with coming from California and
    many years ago when I was a Republican I was actually appointed
    by Governor Wilson to the California Air Resources Board, and
    as we developed the low-carbon fuel standard, along with our
    renewable standards, and having four refineries in my district,
    I have a good relationship with the petroleum industry.
        So I am trying to figure out--and having been in many
    meetings about the low-carbon fuel standard--in California,
    although we have had issues, particularly with the refining
    process, we are getting huge investment. We have had lots of
    venture capitalists come and say they are coming to Berkeley
    Laboratory. I have been down a few times to look at these
    synthetic biofuels that they are developing, which they tell me
    they are for the DOE interventions and support. They are really
    on the cusp of being able to do some really significant things.
    This would help to cause some of the criticisms about both this
    program but low-carbon fuel standards.
        So from my perspective, although there have been challenges
    to this kind of process, both the carrot and the stick, that it
    is worth continuing to work on, knowing that it is not perfect
    in the first place.
        So, first of all, are you familiar with some of our
    struggles in California? And by the way, the low-carbon fuel
    standard was signed into law by a Republican Governor, Governor
    Schwarzenegger. So all of our hearings anticipated much of the
    conversation here today. It is different because we were
    looking at carbon reductions, which I think at the Air
    Resources Board when we did our best work, irrespective of
    whether it was a Republican administration, it was driven on
    what you got reductions either in traditional pollutants. This
    is a different approach, but it is sort of the same thing.
        So maybe you can help me with trying to understand--we are
    being pretty successful in California, and this is a process
    that is not dissimilar, and I am trying to struggle with what
    are the things we have already lived through that we could sort
    of apply to the renewable standard nationally?
        Mr. Tyner. Well, the California low-carbon fuel standard
    gives credit for every reduction ----
        Mr. DeSaulnier. Right.
        Mr. Tyner.--and that's different from the U.S. Renewable
    Fuel Standard. The Renewable Fuel Standard sets thresholds, 20
    percent for corn ethanol, 50 percent for biodiesels, 60 percent
    for cellulosic biofuels. So if you get 80 percent, you get no
    more credit. If you get 30 percent for corn, you get no more
    credit. In California, you get credit for every percentage
    reduction that your fuel achieves.
        So it's, again, a market--more market-oriented system
    that--and we've worked with the California Air Resources Board.
    We've worked with them in getting the induced land use change
    estimates that go into their standard. It's a standard that's
    being considered by other States around the country, as you
    probably know. And its advantage is that it does give credit
    for all the reductions achieved and not just surmounting a
    threshold.
        Mr. DeSaulnier. But it is more market-based ----
        Mr. Tyner. It's market-based.
        Mr. DeSaulnier.--than doing so ----
        Mr. Tyner. Right.
        Mr. DeSaulnier. In the context of that it was an evolution,
    and I am, like all of us, parochial in my own experience, but
    we did learn from going through these, including the
    drivability index when we talk to the car manufacturers. We
    want to be able to pass the standards so that the fuel doesn't
    constrain or inhibit the sale of automobiles and their
    drivability.
        So it strikes me in the context of this hearing, and again,
    from my perspective, this is an iterative process, and why
    wouldn't we continue? And maybe, Mr. Grundler, you could put
    your two cents' worth in. Probably this law needs to be
    modified, but how can we learn from other experiences both in
    States and around the world to make it work better, including
    for the marketplace?
        Mr. Grundler. My office works very, very closely with the
    California Air Resources Board across a wide variety of
    different work, trucks, cars, lawnmowers, fuels. We're very
    familiar with the California low-carbon fuel standard. It is a
    very different approach in that it is a performance standard-
    based approach, whereas the Congress chose to decide very
    specific volume targets every year, which change over time and,
    as Dr. Tyner mentioned, as these thresholds.
        I think we are learning a lot from the California
    experience, and there have been some bumps along the road, but
    I think by and large it's been successful for some of the
    reasons that Dr. Tyner suggested. But it is very different from
    the law as Congress wrote it, and I'll just leave it at that.
        Mr. DeSaulnier. And I will just leave it at this as well.
    It is not--and I apologize for showing my prejudice over
    California, not if anybody is watching at home, but it seems to
    me that this is a process, and I agree with my Republican
    colleagues that we should probably look at it and revisit it to
    make it work better, including for the marketplace. But there
    are other iterations around the country and the world that seem
    to be working through, so maybe less prescriptive and more
    market-based but with the ultimate goal being the same.
        Thank you, Mr. Chairman.
        Mr. Gosar. I thank the gentleman.
        I would like to acknowledge now the gentleman from Florida,
    Mr. DeSantis.
        Mr. DeSantis. Thank you, Mr. Chairman.
        Mr. Grundler, why have the EPA's estimates of cellulosic
    ethanol production been so poor? I mean, if you go from 2010,
    2011, just is way off the base. So why is that?
        Mr. Grundler. Thank you for that question. We work very
    closely with individual producers, individual plants to--having
    made those estimates over the past few years, and we relied on
    estimates that we got directly from the producers and what
    their schedules were and what their production volumes were.
    And it turned out that those producers and that information
    that they provided us was too optimistic. We've changed ----
        Mr. DeSantis. Yes. Well, I mean, I think it is difficult to
    centrally plan this stuff. Now, you revised the definition, and
    now in 2014 there was 140 million cellulosic biofuel RINs
    generated. However, Congress had mandated 3 billion gallons, so
    is there any way that--does EPA believe there is any way that
    they will be able to generate the billions that are called for?
        Mr. Grundler. Not between now and the end of 2016.
        Mr. DeSantis. Yes. No, I think that that is right. Dr.
    DeCicco, when this was created, environment was one of the main
    things, and so, you know, it causes problems with food, energy
    price, all that, but it is, okay, you are going to get
    environmental benefit. But I think you make an effective case.
    I mean, it is actually not good for the environment, is it?
        Mr. DeCicco. That's correct. The environmental premises of
    this have turned out to be incorrect.
        Mr. DeSantis. And, Ms. Stone, you point out, I think very
    correctly, that when you are raising food prices artificially,
    you know, that has an effect. You know, someone, a blue-collar
    person in America, they are going to have to stretch their
    family budget, but you point out some of these people around
    the world, you know, if food prices go up, I don't know, 5, 10
    percent, what does that mean for someone in a really destitute
    part of the world?
        Ms. Stone. It's a significant impact. In sub-Saharan Africa
    and Asia, people spend, as I said, between 60 and 80 percent of
    their income on food, and so even small increases can mean that
    they don't have enough to feed their families.
        And I also want to emphasize what not--what that really
    means. Children who do not receive food--enough nutritious food
    before their second birthday can be permanently physically and
    mentally stunted.
        Mr. DeSantis. And it ----
        Ms. Stone. Food is ----
        Mr. DeSantis. Well, Dr. Tyner pointed out, hey, you know,
    in some of these poor areas, you know, you may have people who
    are in agriculture and they may benefit from this. And let's
    just assume that is true. In your experience, what is the
    number of people that would benefit from producing versus the
    number of consumers who would be harmed? I mean, it seems like
    you are harming way, way, way more poor people than you are
    helping poor farmers, correct?
        Ms. Stone. Yes. And in our experience, if prices of inputs
    go up for these small-holder farmers, then that outweighs any
    cost benefits they may receive. But also, many of these farmers
    are sustenance farmers. They eat most of what they grow.
        Mr. DeSantis. Mr. Loris, the price that people pay at the
    pump is higher as a result of the ethanol mandate, correct?
        Mr. Loris. Yes, that's correct.
        Mr. DeSantis. And so, you know, you are getting hit
    environmentally, you are getting hit at the grocery store, you
    are getting hit there. The quality of the gasoline, though, is
    also, I think, something interesting. What is your opinion on
    whether the fuel with the ethanol in it is better for car and
    boat engines than the purer blend?
        Mr. Loris. Well, we've seen obvious failures with some of
    these smaller engines with boats. You know, if they can bear
    higher ethanol contents, then that's fine, but we shouldn't try
    to rush and increase the allowable content of ethanol because
    of this blend wall or because we're trying to force more
    biofuels on the market. That's another unintended consequence
    of this mandate.
        Mr. DeSantis. Yes, I mean as somebody that represents a
    coastline, you know, our boaters, our fishermen, it hurts their
    engines. I mean, there is just no doubt about it, so that
    imposes costs on them if they have to replace it or do repairs.
        Look, I think the proper solution is just recognize that
    this policy was a mistake. Let's repeal the mandate. But here
    is the thing. Let's repeal all of these energy mandates. We
    will do solar, oil/gas, ethanol, everything, and let's actually
    let people compete in the marketplace. Let's give relief to
    consumers. Let's get out of this business of where people in
    Washington are picking winners and losers, dictating from on
    high. We don't do a good job of it. And let's let people make
    the decisions. But I would be fine getting rid of all of this
    in the energy market and let's just return to a free market. I
    think, ultimately, that will be better for consumers. I think
    it will be ultimately be better for the environment because I
    think it will allow innovation to really take hold.
        And with that, I yield back.
        Mr. Gosar. I thank the gentleman.
        I now acknowledge Mr. Walker from North Carolina.
        Mr. Walker. I want to pick up from where Congressman
    DeSantis left off. I want to come back to you, Mr. Loris, a
    two-part question. With RFS, it did not lower the fuel prices
    from 2010 to 2012. I would like for you to explain why you
    believe that is, and then after 2013 why it has been
    ineffective as far as reducing oil prices there. Would you mind
    addressing both of those?
        Mr. Loris. Sure. Well, the fact that ethanol is less
    energy-dense contributes to higher prices. You have to pay more
    to drive the same amount effectively, so that's contributing to
    the higher fuel prices that we pay at the pump.
        And, again, this ripples throughout the economy. You know,
    this is something that, when you pay more at the pump, you
    can't have disposable income into other parts of the economy.
    So this has tremendous ripple effects that hits consumers again
    and again.
        Mr. Walker. Sure. Ms. Stone, again, what we were just
    talking about as far as poverty and some of the needs, I have
    worked in some of the refugee camps in Europe and have seen it
    firsthand. In your testimony you describe some of the more
    unfamiliar effects of RFS. Could you explain the effects on the
    efforts to combat hunger? I know you just mentioned that, but
    could you get a little bit more background?
        Ms. Stone. I'm sorry. On the effects to combat--how the RFS
    is impacting hunger broadly?
        Mr. Walker. Correct.
        Ms. Stone. So one of the things that--in addition to food
    price, as I mentioned earlier, many people--many poor people in
    the developing world are sustenance farmers, and they rely on
    land and having secure ownership of that land to grow that
    food. Biofuels mandates for food-based biofuels incentivize
    large plantations of one crop of biofuels. And so what happens
    is these small family farmers are forced off of their land to
    make way for these large plantations. And so that directly
    impacts their ability to grow food for themselves and their
    family but also the community at large.
        Mr. Walker. Would you say that is the same or could you
    expand a little bit when it comes to clean drinking water?
        Ms. Stone. Yes. When it comes to drinking water, it does
    depend on the type of biofuel feedstock, but what we have found
    is that expanding biofuel production requires more water, and
    so less water is available to the community to grow their own
    food. It also means that there's less available for them to use
    for other basic needs such as drinking and hygiene.
        Mr. Walker. Mr. DeCicco, I have got a lengthy question
    here, about four or five lines, but I want to get it out to you
    before my time expires. In your testimony you state that corn
    ethanol lifecycle analysis claiming a 40 percent reduction in
    greenhouse gas emissions compared to gasoline was not accurate.
    Rather, your research found that corn ethanol results in no
    significant reduction of emissions. Can you take a minute and
    elaborate on that? Is that correct?
        Mr. DeCicco. That's correct.
        Mr. Walker. Okay.
        Mr. DeCicco. Yes, that's correct. The basic principle to
    look about this correctly is to realize that when biofuels are
    burned in a car, that has very little effect on how much carbon
    dioxide comes out of the tailpipe. It's a--that's just basic
    chemistry. You burn a liquid fuel, you get about the same
    amount of CO2 from the tailpipe for unit of useful energy.
        My shorthand way to, you know, have people remember that is
    that if biofuels have a benefit for climate, it's not when
    they're burned. So you can set that aside, say, okay, the
    action isn't happening at the car. In oil industry parlance,
    any potential benefit is not happening downstream.
        So you have to ask the question, okay, if there is a net
    reduction of carbon in the atmosphere, where might that happen?
    And the only place that can happen is on the land where
    feedstocks are grown. If a cornfield this year is growing corn
    that's being used for the food and feed market, it's removing a
    certain amount of carbon from the air. Now, if you take that
    corn harvest and next year shift it to make ethanol, other
    things being equal, that cornfield hasn't pulled more carbon
    out of the air. So you say where's the benefit?
        Mr. Walker. Yes.
        Mr. DeCicco. If there is a benefit, you can only find it
    with Mr. Tyner's models that try to look at these commodity
    shifts all around the world that introduces very large
    uncertainties, but at the other end of that chain, there's also
    some deforestation.
        Mr. Walker. Sure.
        Mr. DeCicco. So the bottom line is there is no direct
    emissions benefit ----
        Mr. Walker. Okay.
        Mr. DeCicco.--within the United States.
        Mr. Walker. Well, it is amazing when common sense and
    science kind of fuses together like that.
        I have one question. Dr. Tyner, do you refute the testimony
    of Dr. DeCicco, Ms. Stone, Mr. Loris? Do you disagree with
    that? And I guess if you want to expand on that as my time
    expires here, even with the right intentions, do you believe
    these programs are now flawed?
        Mr. Tyner. I do disagree with them. I think that there are
    greenhouse gas emissions savings. I think the land grab and
    things like that have not been largely attributable to
    biofuels. I've worked in 15 different developing countries and
    I've never seen that kind of action in the 15 countries that
    I've worked in. So I think there are greenhouse gas emissions
    savings. I think it's about greenhouse gas emissions.
        I think there have been food price increases, and that has
    adversely affected urban consumers, as I said, but there've
    also been positive implications. We've seen substantial supply
    response in the developing world, in sub-Saharan Africa and in
    South America, where poor farmers in those regions are growing
    more crops and getting higher incomes. There's two sides to
    that story. There's the urban side and the rural side, and we
    have to look at both sides.
        Mr. Gosar. I thank the gentleman.
        I now acknowledge the gentleman from Georgia, Mr. Carter.
        Mr. Carter. Thank you, Mr. Chairman, and thank all of you
    for being here today.
        I want to change the subject for just a second, or not the
    subject but kind of the focus. We have been focused on
    automobiles and we have been focused on the agriculture part of
    it, but I represent the coast of Georgia. I represent over 100
    miles of coastal area in Georgia. Therefore, as you can
    imagine, boating is very popular in my district. And as one who
    grew up in the district, I have spent a lot of my life on the
    water.
        And let me start with you, Mr. Loris, and ask you, you are
    aware, Mr. Loris, of the unique challenges that ethanol-blended
    fuels can present to marine engines, particularly overheating
    and engine failure, correct?
        Mr. Loris. Absolutely.
        Mr. Carter. So you are also aware that while some of the
    marine engines can--that are on the market today, they can
    utilize the E10 fuel, but if you get above that, I am not aware
    of any that would be able to utilize a blend more than E10.
        Mr. Loris. None that I know of.
        Mr. Carter. So there is a risk that is associated, and I
    hope you all understand where I am coming from. There is really
    a very serious risk that is associated with using fuels with
    ethanol in marine engines and particularly outboard engines,
    which a lot of people have outboard engines even up here, but
    particularly on the coast of Georgia, particularly when you are
    talking about being out in the ocean.
        And, you know, when you are in a boat and you have engine
    trouble, it is different than when you are in a car and you
    have engine trouble. I mean, when you are stranded out on the
    water and you have engine trouble that, you know, the weather
    can change suddenly, a number of things could happen. It is a
    serious, serious problem.
        And this is what we are running into here. So this is where
    my focus is at right now is the impact this--the real impact
    that this is having on marine engines, and it is having that
    impact now. We are having overheating. We are having engine
    failure as a result of having to use this fuel.
        Mr. Grundler, would you agree that the EPA is bound by the
    Renewable Fuel Standards to keep increasing the amount of
    ethanol that is in our fuel stocks?
        Mr. Grundler. I would disagree with that, sir.
        Mr. Carter. You would disagree that the EPA is bound to--do
    you think that the EPA is going to be attempting to increase
    the amount?
        Mr. Grundler. The job that Congress gave us was to increase
    the total amount of renewable fuels. The marketplace will
    choose ----
        Mr. Carter. That is not what I asked you. What I asked you
    was specifically do you think that EPA is going to continue to
    attempt to increase the amount of ethanol in our fuels?
        Mr. Grundler. It is not a question of ethanol. We do not
    set an ethanol entered, sir.
        Mr. Carter. Then, what is the--that is what we talked about
    all day is the fact that the Renewable Fuel Standards, that you
    are going to continually try to increase that. Now, I want you
    to understand what a dire strait this is going to put marine
    engines in and particularly people who utilize outboard engines
    and the impact that this is going to have.
        Mr. Grundler. No, I ----
        Mr. Carter. If we continue to breach the blend wall and it
    is no longer economically feasible for producers to use the
    RINs that you referred to earlier today, earlier in this
    testimony, then we are not going to have any more ethanol-free
    fuel, and boaters are just going to simply be out of luck here.
    They are not going to be able to use their outboard engines,
    and if they do, they are going to be in danger of being broke
    down out on the water. This is a serious, serious threat.
        So this is more than just the economic impact. Obviously,
    we all understand the economic impact this is going to have it.
    But this is putting people's safety at risk here.
        Mr. Grundler. I'm very sensitive to those concerns, sir. I
    come from Michigan. We do a lot of boating. I'm a boater. I'm
    aware of the risks of using high ethanol blends in outboard
    motors. That's not permitted. All boat engines today are
    designed and calibrated to use E10. And as we consider these
    standards, we do look at what the marine environment needs and
    what the marine market needs for lower ethanol blends.
        Mr. Carter. Well, you know, as you move forward, I hope
    that you will keep in mind that you have an impact. When you
    increase this, you impact the marketplace. I mean, the
    producers are not going to continue to produce the ethanol-free
    fuels if there is not a market for it, if they are being
    required to produce the blended fuels. And this is going to
    have a big impact on boaters all across the country, whether it
    be in Michigan or especially whether it be on the coast of
    Georgia.
        And this is of concern to me because, again, I reiterate,
    it is different when you get broke down in a boat than when you
    get broke down in a car.
        Mr. Grundler. I ----
        Mr. Carter. It is a big, big difference.
        Mr. Grundler. I completely get that. I've been stuck out in
    the middle of Lake Michigan.
        Mr. Carter. Well, and you ought to be stuck out in the
    middle of the Atlantic Ocean.
        Mr. Grundler. I've been there, too, sir, but not stuck
    fortunately. But I want to ----
        Mr. Carter. Well, I have been, and I can tell you, it is
    not a good feeling.
        Mr. Grundler. Thank goodness for the Coast Guard.
        But what I'd like to just point out is that the marketplace
    does have choices, and obligated parties can choose to ----
        Mr. Carter. But ----
        Mr. Grundler.--blend biodiesel rather than ----
        Mr. Carter.--with all due respect, Mr. Grundler, you have
    an impact on it. The EPA and your rules and your regulations
    have a big impact on it, and I hope you keep that in
    consideration.
        And, Mr. Chairman, I appreciate your indulgence and I yield
    back.
        Mr. Gosar. I think it would only benefit you if you ----
        Mr. Grundler. Thank you for your comments.
        Mr. Gosar.--if you worked in the Bermuda Triangle. That
    might be trouble for you.
        I would like to acknowledge the gentleman from Georgia, Mr.
    Hice.
        Mr. Hice. Thank you, Mr. Chairman, and I appreciate this
    hearing.
        Mr. Grundler, I would like to continue with you in a
    similar train of thought dealing with the likely breach of the
    blend wall. As you know, the EPA has approved E15 for vehicle
    manufacturers from 2001 to the present. However, most of the
    manufacturers are clear that they do not recommend E15 for the
    vast majority of vehicles. In fact, I have got a chart that I
    wanted to see if we could put up here that indicates just the
    number of vehicles that cannot use E15 versus those that can.
        [Slide.]
        Mr. Hice. And as you can see, it is just a handful,
    literally a handful of vehicles that could utilize E15.
    Certainly no vehicle that I have according to this chart could
    utilize E15.
        You also testified in front of the Senate Environment and
    Public Works Committee in 2013 that the blend wall had been
    reached and that, according to your testimony, ``It is not
    feasible for the system to absorb that much ethanol.'' Well,
    this fear certainly has become true now with the 2016 rule
    breaching that blend wall. And of course that raises concern.
        But here is the thing that I want to ask you specifically.
    The 2007 Energy Independence and Security does allow the EPA to
    have authority to waive the RFS requirements if--and this is a
    direct quote from the statute--``if implementation of a
    requirement would severely harm the economy or environment of a
    State, region, or the United States.''
        Now, based on the chart that we just looked at and all
    these other things that have been discussed, how can it not be
    recognized that the 2016 rule is going to have a negative
    impact on the economy?
        Mr. Grundler. We have exercised the tools that Congress
    provided to adjust the numbers in the law substantially
    downward but only to the extent that we thought was necessary.
    We put a lot of effort in--which is all described in the final
    rule. So while the final standards we believe do go above this
    blend wall, the marketplace will have choices on how to achieve
    those standards. We think they are achievable. We think we've
    done it in a responsible way.
        Mr. Hice. Well, according to the chart that we put up, you
    are going to create an enormous economic problem for the vast
    majority of vehicle owners in this country.
        Let me just ask you, Mr. Loris, a similar question just to
    get your input. What would you consider would be the economic
    impact of breaching the blend wall?
        Mr. Loris. It'll be significant. As we've seen in the past
    when we have a drought, too, you know, if these RIN prices are
    driven up, that just exacerbates all of the cost we talked
    about throughout this hearing in terms of higher prices. So not
    only will gas prices be more expensive, but you'll be paying
    more as these RIN prices increase, which we've seen in the
    past. And it speaks to the need to revise these standards and
    mandates down to zero.
        Getting rid of just the corn part of the mandate is a bad
    idea, too, because you're getting rid of the most economically
    competitive part of the mandate. As Dr. Tyner pointed out, this
    is the most mature part of the industry. So if we just leave it
    up to the mandate for cellulosic ethanol, that's the stuff that
    has difficulty becoming commercially viable and is going to be
    very prohibitive in terms of costs to meet any potential
    targets that the EPA sets.
        Mr. Hice. So say on a scale of 1 to 10, 10 being extremely
    severe, what kind of impact would you rate the breaching of the
    blend wall?
        Mr. Loris. I would say it was as high as a 10. You know,
    you never know what the market will bear. You know, and
    fortunately, we've been blessed with the shale revolution to
    have lower gas prices, so that's tampered some of the effects
    of this--the adverse effects of this mandate.
        That said, if we continue to breach the blend wall, if
    refiners are fined for not meeting any type of cellulosic
    requirements, it gets worse and worse as the targets go higher
    and higher.
        Mr. Hice. Back to you, Mr. Grundler. You testified last
    month at the Senate Environment and Public Works Committee that
    you indicated that there may be a shift of the point of
    obligation from the refiner to the blender. Do you intended to
    address this as part of the 2017 rule?
        Mr. Grundler. I believe you're referring to my boss's
    testimony in front of the Senate. We have received that as part
    of our comments to our--the rule we just finalized. People--a
    number of people have come in and suggested that we consider
    that. We decided that that is outside the scope of these annual
    rulemakings. We're considering it, but we believe such a major
    change in the regulation and the law should not be part of this
    annual rulemaking process.
        Mr. Hice. So you have no intention of addressing that
    question at all?
        Mr. Grundler. We are talking to people. We are analyzing
    the question. If we were to address it, it would be not through
    an annual RBO standard-setting process.
        Mr. Hice. Thank you, Mr. Chairman.
        Mr. Gosar. I thank the gentleman.
        I now recognize the gentleman from Vermont, Mr. Welch.
        Mr. Welch. Thank you very much, Mr. Chairman.
        I am delighted that you are having this hearing, and I
    really appreciate you waving me on. I have listened to the
    testimony that I was here for, which is quite a bit, read your
    comments, and I want to thank the witnesses for focusing on
    this. I just want to make a couple of comments.
        You know, I think that the ethanol situation has been good
    for the corn farmers who produce ethanol, and I like farmers. I
    come from a dairy State. But it is an astonishing development
    where you had this market that was created by A) a tax subsidy,
    54 cents a gallon. That has since been repealed; B)
    essentially, a tariff barrier that kept out competition from
    Brazil worth 45 cents a gallon; and then finally, a very
    unusual thing, a requirement by government that consumers
    purchase this product, the mandate.
        And it is a bit of a head-scratcher for me and developed
    with the best of intentions to try to use our agricultural
    sector presumably to cut down on greenhouse gas emissions. My
    view is that after we have seen this operate as long as we
    have, it is time to acknowledge it is a well-intended flop.
        Environmentally, I think the evidence is pretty compelling
    that at least with respect to the U.S.--I don't know about
    world markets, Dr. Tyner, and all the modeling that you are
    talking about. It is really complicated, so it makes it tough
    to be compelling. But there is a lot of water inputs that go
    into it, there is a lot of energy inputs that go into it, and
    at the end of the day, the best evidence I have seen it that
    there is more greenhouse gas that is created rather than saved.
        And then, secondly, this is good if you are a corn farmer.
    It is not good if you are a dairy farmer. You are paying higher
    feed costs. And one of the things that brought my attention to
    this was when I was traveling around northern Vermont where we
    have a lot of dairy farmers, and they were getting hammered a
    few years ago with low dairy prices and high grain prices. And
    it is just beyond, I think, comprehension to argue that with 40
    percent of the corn product is going into ethanol that the
    mandate doesn't have an impact on prices, whatever the price of
    corn is, and that fluctuates. It was up to $8. It is down quite
    a bit from that now.
        And then the next thing--so you have got the environmental
    issue that has not been achieved, the goal, you have got the
    impact on farmers. You have anybody who buys food, whether it
    is going to a grocery store or going to a chain restaurant,
    those food costs are a good deal higher, and studies I have
    seen say that our chains spend about $18,000 to $28,000 more
    per unit. And that is real money for the consumers.
        And then finally, Mr. Carter was talking about the small
    engines, and it is wrecking our chainsaws, and I am kind of
    upset about that because I had a pretty good chainsaw until
    ethanol wrecked it.
        And so, you know, I was hearing from my farmers and it got
    me concerned, I was hearing from our consumers, it got me
    concerned, and when they wrecked my chainsaw, I had to get
    involved.
        [Laughter.]
        Mr. Welch. And here I am. So my hope is that we will be
    able to build on the foundation of the work of this committee,
    and I think Congress should have a debate on this. You know,
    there is the Goodlatte-Womack-Welch-Costa bill that would
    repeal the corn-based ethanol mandate. And let's have a debate
    and see what the will of the House is.
        So I thank all the witnesses. This was tremendous
    testimony. And those consequences on food-insecure countries, I
    am so glad you are bringing attention to that. It is a couple
    of billion dollars in Guatemala. They don't have money to throw
    around. So that is a tough aspect here, too.
        So would this be one of those strange convergences of
    Democrats and Republicans, Mr. Gosar, it takes you to bring us
    together on?
        Mr. Gosar. You know what, whatever harmonics it takes.
        I have just got one question for you. And what kind of
    chainsaw do you have?
        Mr. Welch. I have a Jonsered.
        Mr. Gosar. I was just going to say that. Okay.
        Mr. Welch. Yes.
        Mr. Gosar. Well, I am going to go last.
        So, Mr. Grundler, after 2022 the RFS mandates set by
    Congress and the EISA stop increasing and discretion of the
    program with few limitations is handed over to EPA. We are only
    now a few years away from this. What plans does the Agency have
    to deal with this, and what has EPA come up with to manage
    this?
        Mr. Grundler. Sir, 2022 is quite a ways off.
        Mr. Gosar. Whoa, not really.
        Mr. Grundler. We've had a hard enough time setting
    standards, you know, one year in the future. Setting them in--
    figuring out what the world is going to look like in 2022 is
    pretty challenging. So the honest answer is we have no plans on
    what the standard should look like post-2022.
        I would quibble with your characterization, though, that
    the Congress didn't provide us any direction on how to do so.
    You did. There's a long list of factors, as well as deadlines
    associated with when we need to set those standards.
        Mr. Gosar. Well, I find it interesting that, you know, in
    other committee hearings we hear about this forecasting 5, 10
    years out, and I am a businessman, I am a dentist impersonating
    a politician, so, you know, I hear this forecasting, and yet I
    turned to your testimony and yet we are not forecasting. So
    that is kind of odd to me.
        Dr. DeCicco, you are not the average person, are you?
        Mr. DeCicco. I'll leave that to others to judge.
        Mr. Gosar. No, no, no, no, no. Can you tell me a little
    bit--you were a senior fellow for what?
        Mr. DeCicco. Well, I was a senior fellow for automotive
    strategies at the Environmental Defense Fund from 2001 through
    2009.
        Mr. Gosar. So you are an actual scientist?
        Mr. DeCicco. I am, yes.
        Mr. Gosar. Dr. Tyner, are you a scientist?
        Mr. Tyner. I'm an economist.
        Mr. Gosar. So we are refereeing a match here on science
    that you are not the referee, he is, right?
        Mr. Tyner. It's not a referee on science, sir, it's a
    referee on market-mediated changes ----
        Mr. Gosar. No, no, no, no, no, no, no, because you are
    talking about models, and in the science world we take models
    and we compare them against facts to see--I mean, this is in my
    ballpark now, too. So we actually look at these modeling for
    outcomes, but then we come back to correct them based upon
    factual bases. Is that not true?
        Mr. Tyner. That's correct, and we do that all the time.
        Mr. Gosar. Well, I think economics--and I want to come back
    to the actual facts about what is happening on the ground, Dr.
    DeCicco.
        So when you come to this point, you have seen it from the
    very infancy of standards all the way to today, so you are very
    well-rounded. You don't have a bias one way or another. You
    have actually pinpointed this based on the facts, right?
        Mr. DeCicco. That's correct.
        Mr. Gosar. So let me ask you another question. You know, I
    have seen some rumors. I mean, we have kind of hedged it here.
    When we have combustion of these alternative fuels, is there
    anything that occurs that is alarming, that there is something
    else that it goes into combination that is a byproduct?
        Mr. DeCicco. Well, combustion produces a variety of
    pollutants that we need to clean up. There is traditional
    pollutants or ones that cause smog, create fine particles, and
    EPA has done really an outstanding job over the years of
    tightening the standards, you know, down so that those
    pollutants are with the best vehicles now running on
    reformulated gasoline, have standards many orders of magnitude
    of what cars were, you know, when we were kids.
        Mr. Gosar. Well, I understand, but, you know, when we look
    at the combustion of these alternative fuels, some of the
    chemistry is not exactly good, is it?
        Mr. DeCicco. Well, it's--let me put it this way. It's more
    challenging. You take a fuel like ethanol, it has some
    combustion benefits. It is a very high octane fuel, but it
    doesn't--it has less energy per gallon ----
        Mr. Gosar. Right.
        Mr. DeCicco.--so that's another issue. Environmentally
    speaking, there's no compelling reason, no reason to force an
    alternative fuel such as ethanol into the market to burn
    instead of gasoline. Reformulated gasoline today is an
    extremely clean fuel at the tailpipe. So, yes, different fuels
    have different properties, but I think the main point is that
    there's no compelling environmental reason to put ethanol at
    the point of combustion. And again, there's no CO2 benefit at
    the point of combustion. So I'll leave it at that.
        Mr. Gosar. Sounds good. Well, I am going to summarize. It
    is important for Congress and the administration to use a
    commonsense approach when dealing with these biofuels. Congress
    shouldn't be in the business of helping some industries at the
    expense of others. Causing unnecessary harm to domestic
    shipping, agriculture, food production, and other industries
    that are affected by these regulations defies common sense. The
    RFS ultimately hurts American consumers by increasing prices
    and decreasing the quality of fuel used by American consumers
    and by the majority of gas-powered equipment across America.
        Ultimately, I am an adamant supporter of free market
    principles, and I am philosophically opposed to picking winners
    and losers in the American energy sectors. I will continue to
    fight for the repeal of RFS and for the production of market-
    based solutions in relation to biofuels.
        I also have biofuels from algae in my world in Yuma,
    believe it or not.
        Mr. Grundler, one last question. You understand why so many
    people have a negative image of the EPA, and I am going to
    leave you with this. Trust is a series of promises kept. Tell
    me why we should trust the EPA when we look at Flint, when we
    look at Durango, Colorado? Over and over again we see distrust
    because we see an overreaching and overbearing agency. So go
    back and look in the mirror, and I hope that you will come up
    with a whole different attitude because I am looking forward to
    seeing your boss tomorrow.
        With that, with no further conversation or questions, I
    would like to thank the witnesses for taking time today to
    appear before us. If there is no further business, without
    objection, the subcommittee stands adjourned.
        [Whereupon, at 3:48 p.m., the subcommittees were
    adjourned.]

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