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

                          THE RENEWABLE FUEL STANDARD:
                    A TEN	YEAR REVIEW OF COSTS AND BENEFITS

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

                                 JOINT HEARING

                                   BEFORE THE

                         SUBCOMMITTEE ON ENVIRONMENT &
                           SUBCOMMITTEE ON OVERSIGHT

                  COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                                November 3, 2015

                                   __________

                               Serial No. 114-47

                                   __________

     Printed for the use of the Committee on Science, Space, and Technology

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

           Available via the World Wide Web: http://science.house.gov

                                      ______

                             U.S. GOVERNMENT PUBLISHING OFFICE

    97-766PDF                     WASHINGTON : 2017
    -----------------------------------------------------------------------
      For sale by the Superintendent of Documents, U.S. Government Publishing
      Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800;
             DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC,
                              Washington, DC 20402-0001

                  COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY

                       HON. LAMAR S. SMITH, Texas, Chair
    FRANK D. LUCAS, Oklahoma             EDDIE BERNICE JOHNSON, Texas
    F. JAMES SENSENBRENNER, JR.,         ZOE LOFGREN, California
        Wisconsin                        DANIEL LIPINSKI, Illinois
    DANA ROHRABACHER, California         DONNA F. EDWARDS, Maryland
    RANDY NEUGEBAUER, Texas              SUZANNE BONAMICI, Oregon
    MICHAEL T. McCAUL, Texas             ERIC SWALWELL, California
    MO BROOKS, Alabama                   ALAN GRAYSON, Florida
    RANDY HULTGREN, Illinois             AMI BERA, California
    BILL POSEY, Florida                  ELIZABETH H. ESTY, Connecticut
    THOMAS MASSIE, Kentucky              MARC A. VEASEY, Texas
    JIM BRIDENSTINE, Oklahoma            KATHERINE M. CLARK, Massachusetts
    RANDY K. WEBER, Texas                DON S. BEYER, JR., Virginia
    BILL JOHNSON, Ohio                   ED PERLMUTTER, Colorado
    JOHN R. MOOLENAAR, Michigan          PAUL TONKO, New York
    STEVE KNIGHT, California             MARK TAKANO, California
    BRIAN BABIN, Texas                   BILL FOSTER, Illinois
    BRUCE WESTERMAN, Arkansas
    BARBARA COMSTOCK, Virginia
    DAN NEWHOUSE, Washington
    GARY PALMER, Alabama
    BARRY LOUDERMILK, Georgia
    RALPH LEE ABRAHAM, Louisiana
                                     ------

                          Subcommittee on Environment

                     HON. JIM BRIDENSTINE, Oklahoma, Chair
    F. JAMES SENSENBRENNER, JR.          SUZANNE BONAMICI, Oregon
    RANDY NEUGEBAUER, Texas              DONNA F. EDWARDS, Maryland
    RANDY WEBER, Texas                   ALAN GRAYSON, Florida
    JOHN MOOLENAAR, Michigan             AMI BERA, California
    BRIAN BABIN, Texas                   MARK TAKANO, California
    BRUCE WESTERMAN, Arkansas            BILL FOSTER, Illinois
    GARY PALMER, Alabama                 EDDIE BERNICE JOHNSON, Texas
    RALPH LEE ABRAHAM, Louisiana
                                     ------

                           Subcommittee on Oversight

                     HON. BARRY LOUDERMILK, Georgia, Chair
    F. JAMES SENSENBRENNER, JR.,         DON BEYER, Virginia
        Wisconsin                        ALAN GRAYSON, Florida
    BILL POSEY, Florida                  ZOE LOFGREN, California
    THOMAS MASSIE, Kentucky              EDDIE BERNICE JOHNSON, Texas
    BILL JOHNSON, Ohio
    DAN NEWHOUSE, Washington
    LAMAR S. SMITH, Texas

                                C O N T E N T S

                                November 3, 2015

                                                                       Page
    Witness List.....................................................     2

    Hearing Charter..................................................     3

                               Opening Statements

    Statement by Representative Jim Bridenstine, Chairman,
      Subcommittee on Environment, Committee on Science, Space, and
      Technology, U.S. House of Representatives......................    10
        Written Statement............................................    11

    Statement by Representative Suzanne Bonamici, Ranking Minority
      Member, Subcommittee on Enviorment, Committee on Science,
      Space, and Technology, U.S. House of Representatives...........    13
        Written Statement............................................    14

    Statement by Representative Barry Loudermilk, Chairman,
      Subcommittee on Oversight, Committee on Science, Space, and
      Technology, U.S. House of Representatives......................    15
        Written Statement............................................    16

    Statement by Representative Donald S. Beyer, Jr., Ranking
      Minority Member, Subcommittee on Oversight, Committee on
      Science, Space, and Technology, U.S. House of Representatives..    17
        Written Statement............................................    18

                                   Witnesses:

    Dr. Terry Dinan, Senior Advisor, Congressional Budget Office
        Oral Statement...............................................    19
        Written Statement............................................    21

    Mr. Ed Anderson, CEO and President of WEN-GAP, LLC
        Oral Statement...............................................    45
        Written Statement............................................    47

    Dr. John DeCicco, Research Professor, University of Michigan
      Energy Institute
        Oral Statement...............................................    50
        Written Statement............................................    55

    Mr. Brooke Coleman, Executive Director, Advanced Biofuels
      Business Council
        Oral Statement...............................................    73
        Written Statement............................................    75

    Mr. Charles Drevna, Distinguished Senior Fellow, Institute for
      Energy Research
        Oral Statement...............................................    99
        Written Statement............................................   101
    Discussion.......................................................   101

                 Appendix I: Answers to Post-Hearing Questions

    Dr. Terry Dinan, Senior Advisor, Congressional Budget Office.....   132

    Dr. John DeCicco, Research Professor, University of Michigan
      Energy Institute...............................................   136

    Mr. Brooke Coleman, Executive Director, Advanced Biofuels
      Business Council...............................................   146

    Mr. Charles Drevna, Distinguished Senior Fellow, Institute for
      Energy Research................................................   153

                Appendix II: Additional Material for the Record

    Documents submitted by Representative Suzanne Bonamici, Ranking
      Minority Member, Subcommittee on Enviorment, Committee on
      Science, Space, and Technology, U.S. House of Representatives..   162

    Documents submitted by Representative Jim Bridenstine, Chairman,
      Subcommittee on Enviorment, Committee on Science, Space, and
      Technology, U.S. House of Representatives......................   171

    Statement submitted by Representative Eddie Bernice Johnson,
      Committee on Science, Space, and Technology, U.S. House of
      Representatives................................................    10
        Written Statement............................................   177

                          THE RENEWABLE FUEL STANDARD:
                              A TEN-YEAR REVIEW OF
                               COSTS AND BENEFITS

                                  ----------

                           TUESDAY, NOVEMBER 3, 2015

                      House of Representatives,
                Subcommittee on Environment and
                      Subcommittee on Oversight
                   Committee on Science, Space, and Technology,
                                                       Washington, D.C.

        The Subcommittees met, pursuant to call, at 10:05 a.m., in
    Room 2318 of the Rayburn House Office Building, Hon. Jim
    Bridenstine [Chairman of the Subcommittee on Environment]
    presiding.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Chairman Bridenstine. The Subcommittee on Environment and
    Oversight will come to order.
        Without objection, the Chair is authorized to declare
    recesses of the Subcommittee at any time.
        Welcome to today's hearing entitled the ``Renewable Fuel
    Standard: A Ten-Year Review of Costs and Benefits.'' I
    recognize myself for five minutes for an opening statement.
        Good morning, and welcome to today's joint hearing of the
    Environment and Oversight Subcommittees examining the Renewable
    Fuel Standard. Today, we will hear from witnesses on the cost
    and environmental impact of this complex and misguided mandate,
    as well as the future consequences if Congress does not take
    action.
        The RFS is an example of the federal government picking
    winners and losers by forcing the use of renewables in
    transportation fuels. The mandate was supported by a bipartisan
    coalition, the ethanol industry, and environmental
    organizations; and justified by claims of environmental
    benefits and enhanced U.S. energy security.
        Unfortunately, but not surprisingly, eight years after the
    current RFS was expanded by Congress as part of the Energy
    Independence and Security Act of 2007, these promises have yet
    to materialize. Congress designed the RFS using flawed
    projections about gasoline consumption, availability of
    renewable fuel infrastructure, bio-refinery technology, and the
    market demand for renewable fuels. In almost every category,
    these projections do not reflect today's energy market.
        Today, demand for gasoline is significantly lower than was
    forecast when the RFS became law. A sluggish economy and
    improvements in vehicle energy efficiency continue to hold down
    gasoline consumption. And technology advancements have unlocked
    our domestic resources of oil and gas to an extent that was not
    anticipated when the RFS was designed.
        Incorporating renewable fuels was supposed to deliver
    environmental benefits. But time and again, researchers,
    including one of our witnesses today, have found that corn
    ethanol produced to meet the RFS makes air quality worse, and
    has higher lifecycle emissions than gasoline. And while corn-
    based fuel ethanol production, supported by the requirements of
    this standard, has grown substantially since EISA became law,
    the advanced biofuels and cellulosic ethanol industries
    expected under the RFS still aren't ready for primetime.
        The RFS is an egregious perversion of the free market.
    Instead of a transportation fuel market driven by consumer
    demand, we are stuck with a complex mandate based on outdated
    assumptions about gasoline demand, environmental impact, and
    technological readiness. Each year, the RFS requires still
    higher volumes of renewable fuel, which now exceed the volumes
    that can be accommodated given current gasoline demand.
        The RFS mandate is unworkable even with EPA's dubious
    assertion that E15 can safely be used in select vehicles, even
    though most vehicles were designed to use E10, gasoline
    containing not more than ten percent ethanol. This is on top of
    the simple fact that consumers do not want these fuels. Just .5
    percent of what HollyFrontier--a merchant refiner with
    facilities in my district--sells are products greater than E10,
    one-half of one percent.
        And because the ethanol blending volumes required under law
    are impossible to meet with the current production levels of
    E10, E15, and other higher level ethanol blends, including E85,
    refiners are left at the mercy of uncertain annual waivers from
    the EPA. I'm going to repeat that. Refiners are left at the
    mercy of uncertain annual waivers from the EPA to keep the
    mandatory blending volumes at achievable levels. When EPA even
    bothers to follow the law and announce annual requirements--and
    that is when EPA bothers to follow the law and announce annual
    requirements on time.
        Refiners have had to file lawsuits to get the EPA to do
    their job and announce the annual blend levels, which is
    absurd. Congress cannot continue to sit back and leave the EPA
    to manage the consequences of an unrealistic and poorly crafted
    law.
        So what is the end result of this confusing mandate?
    American consumers are stuck with higher prices across the
    economy. The mandate has already increased prices at the pump,
    and if the RFS is enforced as enacted, the Congressional Budget
    Office estimates that E10 fuel prices could increase by 15
    percent or more by 2017.
        By increasing demand for corn, the RFS also distorts
    commodity prices, raising the cost of food for American
    families. We will hear testimony that the RFS costs the chain
    restaurant industry $3.2 billion a year in higher food prices,
    which must be passed on to consumers, our constituents.
        The federal government's RFS mandate has led to multiple
    negative consequences, propelled by willful disregard for
    consumer preferences and flawed economic and environmental
    assumptions. Demand for fuels with blends of ethanol greater
    than E10 is very limited, even with the most favorable market
    conditions. And more corn ethanol hasn't helped the
    environment. It hasn't reduced costs or encouraged the
    development of commercial-scale advanced biofuels.
        Federal mandates are the wrong approach to fuel innovation,
    and the RFS is a prime example of the elites in Washington,
    D.C., believing they know best, imposing a misguided standard,
    then standing back while it damages our economy.
        I want to thank our witnesses today for testifying on the
    challenges of the RFS--testifying on the challenges the RFS has
    created in today's energy market, and I look forward to a
    discussion about the consequences caused by the federal
    government's intervention in the American energy market.
        It's time for Congress to fix the problems caused by this
    outdated and ill-conceived law and pass legislation to repeal
    the RFS.
        [The prepared statement of Chairman Bridenstine follows:]

               Prepared Statement of Subcommittee on Environment
                            Chairman Jim Bridenstine

        Good morning and welcome to today's joint hearing of the
    Environment and Oversight subcommittees, examining the Renewable Fuel
    Standard. Today, we will hear from witnesses on the cost and
    environmental impact of this complex and misguided mandate, as well as
    the future consequences if Congress does not take action.
        The RFS is an example of the federal government picking winners and
    losers by forcing the use of renewables in transportation fuels. The
    mandate was supported by a bipartisan coalition, the ethanol industry,
    and environmental organizations, and justified by claims of
    environmental benefits and enhanced U.S. energy security.
        Unfortunately, but not surprisingly, eight years after the current
    RFS was expanded by Congress as part of the Energy Independence and
    Security Act of 2007, these promises have yet to materialize. Congress
    designed the RFS using flawed projections about gasoline consumption,
    availability of renewable fuel infrastructure, bio-refinery technology,
    and the market demand for renewable fuels. In almost every category,
    these projections do not reflect today's energy market.
        Today, demand for gasoline is significantly lower than was forecast
    when the RFS became law. A sluggish economy and improvements in vehicle
    energy efficiency continue to hold down gasoline consumption. And
    technology advancements have unlocked our domestic resources of oil and
    gas to an extent that was not anticipated when the RFS was designed.
        Incorporating renewable fuels was supposed to deliver environmental
    benefits. But time and again, researchers--including one of our
    witnesses today - have found that corn ethanol produced to meet the RFS
    makes air quality worse, and has higher life cycle emissions than
    gasoline.
        And while corn-based fuel ethanol production, supported by the
    requirements of this standard, has grown substantially since EISA
    became law, the advanced biofuels and cellulosic ethanol industries
    expected under the RFS still aren't ready for primetime.
        The RFS is an egregious perversion of the free market. Instead of a
    transportation fuel market driven by consumer demand, we are stuck with
    a complex mandate based on outdated assumptions about gasoline demand,
    environmental impact, and technological readiness. Each year, the RFS
    requires still higher volumes of renewable fuel which now exceed the
    volumes that can be accommodated given current gasoline demand.
        The RFS mandate is unworkable even with EPA's dubious assertion
    that E15 can safely be used in select vehicles, even though most
    vehicles were designed to use E10, gasoline containing not more than 10
    percent fuel ethanol. This is on top of the simple fact that consumers
    do not want these fuels. Just 0.5 percent of what HollyFrontier, a
    merchant refiner with facilities in my district, sells are products
    greater than E10. One half of one percent!
        And because the ethanol blending volumes required under law are
    impossible to meet with the current production levels of E10, E15, and
    other higher level ethanol blends, including E85, refiners are left at
    the mercy of uncertain annual waivers from the EPA to keep the
    mandatory blending volumes at achievable levels--when EPA even bothers
    to follow the law and announce annual requirements on time. Refiners
    have had to file lawsuits to get the EPA to do their job and announce
    the annual blend levels, which is patently absurd. Congress cannot
    continue to sit back and leave the EPA to manage the consequences of an
    unrealistic and poorly crafted law.
        So what is the end result of this confusing mandate? American
    consumers are stuck with higher prices across the economy. The mandate
    has already increased prices at the pump, and if the RFS is enforced as
    enacted, the Congressional Budget Office estimates that E10 fuel prices
    could increase by 15 percent or more by 2017.
        By increasing demand for corn, the RFS also distorts commodity
    prices, raising the cost of food for American families. We will hear
    testimony that the RFS costs the chain restaurant industry $3.2 billion
    a year in higher food prices, which must be passed on to consumers, our
    constituents.
        The federal government's RFS mandate has led to multiple negative
    consequences, propelled by willful disregard for consumer preferences
    and flawed economic and environmental assumptions. Demand for fuels
    with blends of ethanol greater than E10 is very limited, even in the
    most favorable market conditions. And more corn ethanol hasn't helped
    the environment, reduced costs, or encouraged the development of
    commercial scale advanced biofuels.
        Federal mandates are the wrong approach to fueling innovation, and
    the RFS is a prime example of the elites Washington, DC believing they
    know best, imposing a misguided standard, then standing back while it
    damages our economy.
        I want to thank our witnesses today for testifying on the
    challenges the RFS has created in today's energy market, and I look
    forward to a discussion about the consequences caused by the federal
    government's intervention in the American energy market.
        It's time for Congress to fix the problems caused by this outdated
    and ill-conceived law, and pass legislation to repeal the RFS.

        Chairman Bridenstine. I now recognize the Ranking Member,
    the gentlewoman from Oregon, for an opening statement.
        Ms. Bonamici. Thank you very much, Mr. Chairman, and thank
    you to our witnesses for being here today to discuss the
    history and future of the Renewable Fuel Standard.
        In 2005, Congress established the Renewable Fuel Standard
    as a way to both reduce our dependence on foreign oil and
    reduce greenhouse gas emissions. The RFS policy also had the
    added benefit of advancing rural economic development. In 2007,
    Congress expanded the RFS to drive additional innovation and
    investment in the biofuels industry. And now, ten years later,
    the original goals and motivation for the Renewable Fuel
    Standard still remain valid.
        Despite this fact, we will hear today from some who will
    assert that the RFS is a failed policy and that it should be
    repealed. I respectfully disagree. Our nation's long-term
    economic and energy security is tied to our ability to
    diversify our energy portfolio and to transition to lower
    carbon energy sources.
        Biofuels have an important part to play in this energy
    future. It would be better if we were further along, but the
    Renewable Fuel Standard has been, and should continue to be, a
    critical mechanism for fostering the development of this
    emerging industry.
        In my home State of Oregon, we've recognized the
    significant opportunities in biofuels, especially with our
    State's strong agriculture and forestry industries. For
    example, Red Rock Biofuels is investing about $200 million to
    build a biorefinery facility in southern Oregon where they will
    transform waste biomass from forests and sawmills into jet
    fuel. Now, that's a place that really needs the jobs, down
    there in southern Oregon. Red Rock plans to sell 6 million
    gallons of its renewable jet fuel each year to Southwest
    Airlines and FedEx Express. This type of innovation will
    greatly reduce the carbon footprint of our airlines and create
    jobs in an area that needs them.
        Additionally, in my Congressional district, Summit Natural
    Energy converts food processing and agricultural wastes into
    bioethanol for racecars. And I've spoken with the racecar
    drivers. They rave about this product.
        The potential of biofuels, especially advanced biofuels, in
    addressing climate change is real and it is something that we
    should be encouraging, not trying to undermine. Reducing carbon
    pollution from the transportation sector is critical in our
    fight against climate change, and the economic costs of not
    acting are catastrophic.
        In fact, a recent report by Citigroup GPS shows that the
    costs of climate inaction could be up to $44 trillion by 2060.
    We need to use a variety of mechanisms to curb greenhouse
    gases, and the RFS is one of these tools. Most recent estimates
    of the Argonne National Laboratory's Greenhouse Gases,
    Regulated Emissions, and Energy Use in Transportation model
    have shown that corn ethanol can produce up to 48 percent less
    greenhouse gases than gasoline across the entire lifecycle.
        Investments in first-generation biofuels are serving as an
    important bridge to the development of advanced biofuels,
    including cellulosic biofuels. Just last week, DuPont opened
    the world's largest cellulosic ethanol plant in Iowa. If done
    correctly in a sustainable and thoughtful manner, we can
    produce biofuels that will lower carbon emissions of our
    transportation sector.
        A viable competitive advanced biofuels industry relies on
    the infrastructure developed for the first-generation
    conventional biofuels. The RFS was designed to provide market
    certainty to drive the production of domestically produced
    biofuels. We have seen what an industry can do when given a
    strong market signal, a signal that the RFS can provide.
        Overreliance on a limited range of technologies and finite
    resources is unreasonable. Our nation cannot drill our way to
    energy security and a thriving economy. We must continue to
    take steps to mitigate climate change. We need to unleash the
    creativity of our scientists, engineers, and entrepreneurs, and
    the Renewable Fuel Standard is an important tool in spurring
    innovation and unlocking our energy potential.
        Thank you very much, Mr. Chairman. I look forward to
    hearing from the witnesses, and I yield back the balance of my
    time.
        [The prepared statement of Ms. Bonamici follows:]

               Prepared Statement of Subcommittee on Environment
                    Minority Ranking Member Suzanne Bonamici

        Thank you, Mr. Chairman, and thank you to our witnesses for being
    here today to discuss the history and future of the renewable fuel
    standard.
        In 2005, Congress established the renewable fuel standard as a way
    to both reduce our dependence on foreign oil and reduce greenhouse gas
    emissions. The RFS policy also had the added benefit of advancing rural
    economic development. In 2007, Congress expanded the RFS to drive
    additional innovation and investment in the biofuels industry. And now
    ten years later, the original goals and motivation for the renewable
    fuel standard still remain valid.
        Despite this fact, we will likely hear from some today who will
    assert that the RFS is a failed policy and that it should be repealed.
    I respectfully disagree.
        Our nation's long-term economic and energy security is tied to our
    ability to diversify our energy portfolio and to transition to lower
    carbon energy sources. Biofuels have an important part to play in this
    energy future. It would be better if we were further along, but the
    renewable fuel standard has been and should continue to be a critical
    mechanism for fostering the development of this emerging industry.
        In my home state of Oregon, we have recognized the significant
    opportunities in biofuels, especially with our state's strong
    agriculture and forestry industries. For example, Red Rock Biofuels is
    investing about $200 million to build a biorefinery facility in
    Southern Oregon, where they will transform waste biomass from forests
    and sawmills into jet fuel. Red Rock plans to sell 6 million gallons of
    its renewable jet fuel each year to Southwest Airlines and FedEx
    Express. This type of innovation will greatly reduce the carbon
    footprint of our airlines, and create jobs in areas that need them.
    Additionally, in my Congressional district, Summit Natural Energy
    converts food processing and agricultural wastes into bioethanol for
    race cars--and the drivers rave about it!
        The potential of biofuels, especially, advanced biofuels, in
    addressing climate change is real and it is something that we should be
    encouraging, not trying to undermine. Reducing carbon pollution from
    the transportation sector is critical in our fight against climate
    change and the economic costs of not acting are catastrophic. In fact,
    a recent report by Citigroup GPS shows that the costs of climate
    inaction could be up to $44 trillion by 2060. We need to use a variety
    of mechanisms to curb greenhouse gases--and the RFS is one of those
    tools. Most recent estimates of the Argonne National Laboratory's GREET
    (Greenhouse Gases, Regulated Emissions, and Energy Use in
    Transportation) model have shown that corn ethanol can produce up to 48
    percent less greenhouse gases than gasoline across the entire
    lifecycle.
        Investments in first generation biofuels are serving as an
    important bridge to the development of advanced biofuels, including
    cellulosic biofuels. Just last week DuPont opened the world's largest
    cellulosic ethanol plant in Iowa. If done correctly--in a sustainable
    and thoughtful manner--we can produce biofuels that will lower the
    carbon emissions of our transportation sector.
        A viable, competitive advanced biofuels industry relies on the
    infrastructure developed for the first generation conventional
    biofuels. The RFS was designed to provide market certainty to drive the
    production of domestically produced biofuels. We have seen what
    industry can do when given a strong market signal--a signal that the
    RFS can provide.
        Overreliance on a limited range of technologies and finite
    resources is unreasonable. Our nation cannot drill our way to energy
    security and a thriving economy. We must continue to take steps to
    mitigate climate change. We need to unleash the creativity of our
    scientists, engineers, and entrepreneurs and the renewable fuel
    standard is an important tool in spurring innovation and unlocking our
    energy potential.
        Thank you, Mr. Chairman, and again thank you to our witnesses for
    being here this morning. I yield back the balance of my time.

        Chairman Bridenstine. I'd like to thank the Ranking Member.
        I now recognize the Chairman of the Subcommittee on
    Oversight, Mr. Loudermilk, for his opening statement.
        Mr. Loudermilk. Well, thank you, Mr. Chairman, and
    witnesses for being here with us today.
        I'd like to thank you for taking your time to come here and
    discuss this extremely important matter that we're facing.
        Today, we're here to examine the big-picture challenge of
    the Renewable Fuel Standard and its impact on our country and
    the American people. Ten years ago, supporters of the RFS
    promised to put our country on a path to being cleaner,
    greener, and more energy independent in a time of heavy
    dependence on foreign oil and high gas prices. Back then,
    gasoline consumption was on the rise, America relied on foreign
    oil, and renewable fuels were just starting to become an option
    for consumers.
        Fast-forward to today where the demand for gasoline is
    decreasing, our country is now considering exporting crude oil,
    and we know that ethanol and biofuels are not as clean as we
    once thought.
        In the Committee's hearing on the RFS this summer, we heard
    testimony from Dr. Jason Hill from the University of Minnesota,
    who debunked the misnomer that corn ethanol is cleaner than
    regular gasoline. Dr. Hill acknowledged that while ethanol
    fuels generally burn cleaner than gasoline at the tailpipe, if
    you look at the lifecycle emissions of ethanol, you can see
    that the process of growing and fermenting grain, and
    distilling, distributing, and combusting ethanol releases far
    more of the five particulate pollutants that contribute to
    increased particulate matter 2.5 and ozone levels than
    gasoline. In short, corn-based ethanol is simply not cleaner
    than gasoline.
        Dr. DeCicco, who joins us today, has conducted careful
    analysis of more than 100 related studies concluding that
    serious flaws exist in the government-sponsored modeling used
    to justify the RFS. It comes as no surprise that the Office of
    Inspector General for the EPA announced this month that they
    are planning to investigate whether the EPA complied with the
    reporting requirements associated with the RFS. The IG will
    also be examining whether the EPA appropriately updated the
    lifecycle analysis supporting the RFS with findings from
    studies mandated in the statute on the environmental impacts of
    biofuels. We look forward to their findings.
        It is also clear that the demand today for biofuels is far
    less than the EPA anticipated it would be. In our last hearing
    we heard from CountryMark, a farmer-owned integrated oil
    company that sells E10, E15, and E85 fuel at its stations. This
    farmer-owned small business refiner cannot sell E85 to the very
    farmers who grow the corn used for the ethanol it's blended
    because there is no demand for this fuel.
        It is also becoming clear that Americans are ill- equipped
    to make smart decisions about gasoline choices entering the
    marketplace. According to a recent study conducted by the
    Outdoor Power Equipment Institute, Americans choose to purchase
    gasoline based on price and simply don't pay attention to the
    warning labels placed at the pump. This results in consumers
    using fuels with higher blends of ethanol in lawnmowers,
    chainsaws, generators, and other small engine equipment that
    are not certified to use those fuels. This can cause damage or
    permanently destroy those products.
        And with that, Mr. Chairman, I would like to enter into the
    record a letter from Todd Teske, President of Briggs &
    Stratton, which outlines these points in further detail.
        Chairman Bridenstine. Without objection, so ordered.
        [The information appears in Appendix II]
        Mr. Loudermilk. Finally, I want to thank our witnesses
    today for testifying on the impact that the RFS has on the
    American people. It's time for Congress to make a change. When
    existing law is unworkable, Congress must listen to experts and
    adjust the law as it is needed. I hope that this hearing will
    bring to light some of the unintended consequences of the RFS,
    and provide guidance to lawmakers as we decide the future of
    this law.
        And with that, Mr. Chairman, I yield back balance of my
    time.
        [The prepared statement of Mr. Loudermilk follows:]

                  Prepared Statement of Oversight Subcommittee
                           Chairman Barry Loudermilk

        Good morning everyone. I would like to welcome and thank all of our
    witnesses for being here today.
        Today, we are here to examine the big picture challenge of the
    Renewable Fuel Standard and its impact on our country and the American
    people. Ten years ago, the RFS promised to put our country on a path to
    being cleaner, greener and more energy independent in a time of heavy
    dependence on foreign oil and high gas prices. Back then gasoline
    consumption was on the rise, America relied on foreign oil, and
    renewable fuels were just starting to become an option for consumers.
        Fast forward to today where the demand for gasoline is decreasing,
    our country is now considering exporting crude oil, and we now know
    ethanol and biofuels are not as clean as we once thought.
        In the Committee's hearing on the RFS this summer, we heard
    testimony from Dr. Jason Hill from the University of Minnesota, who
    debunked the misnomer that corn ethanol is cleaner than regular
    gasoline. Dr. Hill's work showed us that while ethanol fuels generally
    burn cleaner than gasoline at the tailpipe, if you look at the
    lifecycle emissions of ethanol you can see that growing and fermenting
    grain, and distilling, distributing, and combusting ethanol releases
    far more of the five major pollutants that contribute to increased PM
    2.5 and ozone levels than gasoline. Corn-based ethanol is simply not
    cleaner than gasoline.
        Dr. DeCicco who joins us today, has conducted careful analysis of
    more than 100 related studies concluding that serious flaws exist in
    the government-sponsored modeling used to justify the RFS. It comes as
    no surprise that the Office of Inspector General for the EPA announced
    this month they are planning to investigate whether the EPA complied
    with the reporting requirements associated with the RFS and whether the
    EPA appropriately updated the lifecycle analysis supporting the RFS
    with findings from statutorily mandated studies on the environmental
    impacts of biofuels. We look forward to their findings.
        It is also clear that the demand today for biofuels is far less
    than the EPA anticipated they would be. In our last hearing we heard
    from CountryMark, a farmer-owned integrated oil company that sells E10,
    E15, and E85 fuel at its stations. This farmer-owned small business
    refiner cannot sell E85 to the very farmers who grow the corn used for
    the ethanol it's blended with because there is just no demand for this
    fuel.
        It is also becoming clear that Americans are ill--equipped to make
    smart decisions about new gasoline choices entering the market place.
    According to a recent study conducted by the Outdoor Power Equipment
    Institute, Americans choose to purchase gasoline based on price, and
    simply don't pay attention to the warning labels placed at the pump.
    This results in consumers using fuels with higher blends of ethanol in
    lawnmowers, chainsaws, generators and other small engine equipment that
    are not certified to use those fuels. This can cause damage or
    permanently destroy those products. And with that, I would like to
    enter into the record a letter from Todd Teske, President of Briggs &
    Stratton, which outlines these points in further detail.
        Finally, I want to thank our witnesses today for testifying on the
    impact that the RFS has on the American people. It's time for Congress
    to make a change. When existing law is unworkable, Congress must listen
    to experts, and adjust the law as it is needed. I hope that this
    hearing will bring to light some of the unintended consequences of the
    RFS, and provide guidance to lawmakers as we decide the future of this
    law.

        Chairman Bridenstine. Thank you, Chairman Loudermilk.
        I now recognize the Ranking Member of the Subcommittee on
    Oversight, Mr. Beyer, for his opening statement.
        Mr. Beyer. Thank you, Mr. Chairman.
        And thank you, Chairmen Bridenstine and Loudermilk, for
    holding today's hearing, and thank you to the witnesses for
    testifying.
        The greatest challenge of this generation--climate change--
    requires innovative solutions if we ever hope to make a
    meaningful difference. It requires us to look at every aspect
    of our energy production and consumption. We must find ways to
    end our dependence on fossil fuels and reduce our greenhouse
    gas emissions.
        The Renewable Fuel Standard has helped us push the
    technological limits and the capacity of industry to innovate
    our transportation fuels. In the past ten years, we've seen
    increasing production of biofuels from both corn ethanol and
    advanced biofuels. And this increase has come with considerable
    advancements in how corn ethanol is produced, improving
    production efficiencies, while decreasing both the costs and
    the greenhouse gas emissions.
        The Renewable Fuel Standard was designed to integrate all
    biofuels into our fuel supply and lay the groundwork for growth
    and development of advanced biofuels with a 50 percent
    reduction in greenhouse gas emissions compared to that of
    conventional gasoline. And I'm interested in learning more
    about the advancements in this area and where we can expect
    biofuels to be in the next ten years.
        We realize there have been challenges. The EPA is prepared
    to finalize the volumetric requirements for 2014, 2015, 2016
    next month while missing--or later this month--after missing
    the statutory deadline two years in a row. And while they're
    inundated with public comments during the proposal process,
    that doesn't excuse the lengthy delay.
        The Agency has issued waivers for the required cellulosic
    biofuels and plans to do so again, but I hope that the proposed
    biometric obligations can be finalized by November 30 deadline,
    provide market certainty, and signals to investors that the
    United States intends to be a world leader in the development
    and production of these advanced fuels.
        With a wide-ranging body of research looking at every
    aspect of production and a range of stakeholders that have
    advocated for almost every different scenario available, we as
    lawmakers are left with difficult decisions to make. And I want
    to thank the witnesses again for providing expert testimony on
    this pressing topic.
        Mr. Chairman, I yield back.
        [The prepared statement of Mr. Beyer follows:]

                Prepared Statement of Subcommittee on Oversight
                       Minority Ranking Member Don Beyer

        Thank you Chairmen Bridenstine and Loudermilk for holding today's
    hearing and thank you to the witnesses for testifying.
        The greatest challenge of this generation--climate change--requires
    innovative solutions if we ever hope to make a meaningful difference.
    It requires us to look at every aspect of our energy production and
    consumption. We must find ways to end our dependence on fossil fuels
    and reduce our greenhouse gas emissions.
        The Renewable Fuel Standard has helped to push the technological
    limits and the capacity of industry to innovate our transportation
    fuels. In the past ten years we have seen increasing production of
    biofuels from both corn ethanol and advanced biofuels. This increase
    has come with considerable advancements in how corn ethanol is
    produced, improving production efficiencies while decreasing both costs
    and greenhouse gas emissions.
        The Renewable Fuel Standard was designed to integrate all biofuels
    into our fuel supply and lay the groundwork for the growth and
    development of advanced biofuels with at least a 50% reduction in
    greenhouse gas emissions compared to that of conventional gasoline. I
    am interested in hearing more about the advancements in this area and
    where we can expect biofuels to be in the next ten years.
        All of this does not go without saying that there have been
    challenges. The Environmental Protection Agency is prepared to finalize
    the volumetric requirements for 2014, 2015, and 2016 next month, after
    missing the statutory deadline two years in a row. While inundated with
    public comments during the proposal process, it does not excuse this
    lengthy delay. The agency has issued waivers for the required
    cellulosic biofuels and plans to do so again. I hope the proposed
    volumetric obligations can be finalized by the November 30th deadline
    to provide market certainty and signal to investors that the U.S.
    intends to be a world leader in the development and production of these
    advanced fuels.
        With a wide ranging body of research looking at every aspect of
    production and a range of stakeholders that have advocated for almost
    every different scenario available, we as lawmakers are left with
    difficult decisions to make. Thank you again to the witnesses for
    providing expert testimony on this pressing topic.
        Thank you Mr. Chairman.

        Chairman Bridenstine. Thank you, Mr. Beyer.
        Let me introduce our witnesses. Our first witness today is
    Dr. Terry Dinan, Senior Adviser at the Congressional Budget
    Office. Dr. Dinan received her bachelor's degree from John
    Carroll University and her Ph.D. in economics from Iowa State
    University.
        Our next witness is Mr. Ed Anderson, President and CEO of
    WEN-GAP, LLC. Mr. Anderson received his bachelor's degree from
    Guilford College and currently owns 11 Wendy's franchises.
        Our third witness today is Dr. John DeCicco, Research
    Professor at the University of Michigan Energy Institute. Dr.
    DeCicco received his bachelor's degree in mathematics from
    Catholic University, his master's degree in mechanical
    engineering from North Carolina State University, and his Ph.D.
    in mechanical engineering from Princeton University.
        Our fourth witness today is Mr. Brooke Coleman, Executive
    Director of the Advanced Biofuels Business Council. Mr. Coleman
    received his bachelor's degree from Wesleyan University and his
    law degree from Northeastern.
        Our final witness today is Mr. Charles Drevna,
    Distinguished Senior Fellow at the Institute for Energy
    Research. Mr. Drevna has over 40 years of extensive experience
    in legislative, regulatory, public policy, and marketplace
    issues involving energy and the environment. Prior to joining
    IER, he served as President of the American Fuel and
    Petrochemical Manufacturers. Mr. Drevna received his bachelor's
    degree in chemistry from Washington and Jefferson College.
        I now recognize Dr. Dinan for five minutes to present her
    testimony.

                     TESTIMONY OF DR. TERRY DINAN,

              SENIOR ADVISOR, CONGRESSIONAL BUDGET OFFICE

        Dr. Dinan. Good morning, Chairmen Bridenstine, Chairman
    Loudermilk, Ranking Member Bonamici, Ranking Member Beyer, and
    members of the committee. Thank you for the opportunity to
    testify about the Renewable Fuel Standard. This testimony
    updates a Congressional Budget Office's report on the RFS,
    which was published in June 2014.
        The RFS establishes minimum volumes of various types of
    renewable fuels that suppliers must blend into the U.S.
    transportation fuel supply. Those volumes, as defined by the
    Energy Independence and Security Act of 2007, or EISA, are
    intended to grow each year through 2022. To date, the
    requirements of the RFS have been met largely by blending
    gasoline with ethanol made from cornstarch. In the future, EISA
    requires use of increasingly large amounts of advanced
    biofuels, which include diesel made from biomass, ethanol made
    from sugarcane, and cellulosic biofuels.
        CBO concludes that the rising requirements of EISA would be
    very hard to meet in the future because of two main obstacles.
    First, making cellulosic biofuels is complex and costly.
    Second, the increasing requirement for the total gallons of
    renewable fuels would push the average concentration of ethanol
    and gasoline to well above ten percent, the maximum
    concentration that is feasible in order to avoid corrosion
    damage in older vehicles.
        Because of those challenges, EPA has been scaling back the
    requirements of EISA. That strategy decreases compliance costs
    in the short run, but it also reduces incentives for companies
    to invest in the production capacity for advanced biofuels and
    to expand the availability of high ethanol blends.
        CBO also examined how prices for food and fuel would vary
    in an illustrative year, 2017, based on three scenarios. The
    first, the 2016 volume scenario, is one in which the EPA would
    keep the RFS requirements for 2017 at the same amounts it has
    proposed for 2016. The second, the EISA volume scenario, is one
    in which fuel suppliers would have to meet the total
    requirements for renewable fuels and for advanced biofuels that
    are stated in EISA for 2017 but not the requirement for
    cellulosic biofuels. The final scenario was one in which
    lawmakers would immediately abolish the RFS.
        CBO found that food prices would be similar under the three
    scenarios. To the extent that the RFS increased the demand for
    corn ethanol, it would raise corn prices and put upward
    pressure on prices of foods made with corn.
        Under the EISA volume scenario, CBO estimated--sorry. Under
    the EISA volume scenario, CBO estimated that the resulting
    increase in the demand for corn would raise the average price
    of corn by about three percent relative to the 2016 volume
    scenario. However, because corn and food made with corn account
    for only a small fraction of total U.S. spending on food, that
    total spending would only increase by about 1/10 of 1 percent.
        The effect that repealing the RFS would have on the price
    of corn is limited because suppliers would probably find it
    cost-effective to use a roughly ten percent blend of corn
    ethanol in gasoline in 2017 even in the absence of the RFS. As
    a result, CBO estimates that, in comparison with the 2016
    volume scenario, repealing the RFS would cause food prices to
    fall by less than 1/10 of 1 percent.
        In contrast, CBO found that the prices of transportation
    fuels would vary significantly under the three scenarios.
    Compared with the 2016 volume scenario, we found that complying
    with the EISA volume scenario would increase the price of
    petroleum-based diesel by 25 cents to 45 cents per gallon. We
    also estimated that the price of E10, a blend of fuel that
    contains up to ten percent ethanol and which is currently the
    most commonly used transportation fuel in the United States,
    would rise by 15 cents to 30 cents.
        CBO found that complying with the EISA volume scenario
    would reduce the price of E85, a blend containing up to 85
    percent ethanol, by roughly 80 cents to $1.20.
        Finally, compared with the 2016 volume scenario, CBO
    estimates that repealing the RFS would have only small effects
    on fuel prices. Specifically, we estimate that repealing the
    RFS would have essentially no effect on the 2017 price of E10,
    would lower the price of petroleum-based diesel by roughly 5
    cents, and would increase the price of E85 by about 15 cents.
        Thank you again for this opportunity to testify, and I will
    be happy to answer any questions that you might have on CBO's
    analysis.
        [The prepared statement of Dr. Dinan follows:]

      [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Chairman Bridenstine. Thank you, Dr. Dinan.
        I now recognize Mr. Anderson for five minutes to present
    his testimony.

                     TESTIMONY OF MR. ED ANDERSON,

                   CEO AND PRESIDENT OF WEN-GAP, LLC

        Mr. Anderson. Good morning, Chairman Bridenstine, Chairman
    Loudermilk, Ranking Members Bonamici and Beyer, and members of
    the subcommittees.
        My name is Ed Anderson. My wife Judy and I, with our sons
    Eddie and Jeff, own a small Wendy's franchise with 11
    restaurants in Virginia. We have 385 employees. I am also on
    the board of Wendy's Quality Supply Chain Co-op, QSCC, a not-
    for-profit purchasing co-op owned by Wendy's restaurant
    operators like me. QSCC purchases the food for Wendy's and is
    staffed by experts who understand and help us interpret
    commodity markets.
        The National Council of Chain Restaurants asked me to
    testify on behalf of the local small business chain restaurant
    community.
        In July 2013, I testified at a similar hearing on the RFS
    before the House Energy and Commerce Committee. Until then, I
    had never done anything like this and never imagined that I
    would. I run restaurants, but I have a responsibility to my
    family, employees, fellow franchisees, customers, and our
    industry to explain to policymakers that the well-intended RFS
    has turned out to be a very serious problem.
        Judy and I are the face of American small business men and
    women. We've worked for decades to build our business, but when
    Congress passed the Renewable Fuel Standard, it created a new
    burden for businesses like ours. Now restaurant owners and
    employers like us are being hurt at a time when our country
    can't afford it.
        The last time I was here I doubted many restaurant
    operators, let alone our customers, knew that a federal
    government mandate called the RFS is at the root of food cost
    increases. But more and more of us in the food business
    understand the RFS is a big mistake, and the average consumer
    is starting to catch on, too.
        There have been several studies of the RFS impact on food
    commodity volatility and costs. A study from
    PricewaterhouseCoopers in late 2012 found that the RFS is
    costing the chain restaurant segment of the restaurant
    industry, which is the segment I and thousands of small
    business franchisees are in, up to $3.2 billion in higher food
    commodity costs every year.
        My own analysis is that the RFS is costing my small company
    up to $34,000 more in higher food costs per restaurant each and
    every year. For our family, that's up to $374,000 a year in
    additional costs. That might not be a lot of money in
    Washington, D.C., but for me and many others in the restaurant
    business that's a lot of money.
        If Congress repealed the RFS, it would level the playing
    field and over time return normalcy to the commodities market
    so everyone competes fairly and food becomes more affordable.
    It's the RFS that distorts the market so much that restaurants,
    our suppliers, and consumers are forced to pay more than we
    would under normal market conditions.
        Please understand we're not anti-ethanol. We know if it
    wasn't for American farmers and ranchers, we wouldn't be here.
    We get all our beef and chicken from the United States and
    Canada. But this mandate is making food so expensive that it's
    harder to continue investing in new or remodeled restaurants,
    which would create badly needed construction and restaurant
    jobs.
        I believe with all my heart that we live in the greatest
    country in the world. It was built on the hard work and the
    ingenuity of those willing to risk it all to build something,
    creating jobs and opportunity for others along the way.
    Removing the mandate for ethanol allows that industry to stand
    on its own, like Judy and I do, like our sons who work for us
    do.
        Capitalism allows us all to adjust and be successful. Let
    the market, not a mandate, dictate the cost of corn. We can't
    pass these costs on to our customers. They're already
    struggling in this economy, and their own food costs at grocery
    stores have also gone up because of the RFS.
        We're appealing to Congress to provide relief from this
    policy which distorts food commodity markets and harms
    consumers and everyone in the food chain. Congress created the
    RFS, so it's up to Congress to repeal it.
        Thoughtful lawmakers in both the House and Senate
    introduced legislation to repeal or significantly reform the
    RFS. H.R. 703 and 704 would repeal the entire RFS or repeal the
    worst part of it, the corn ethanol mandate. Both bills enjoy
    growing bipartisan support.
        The RFS was a big mistake and it's broken beyond repair. We
    came here today to respectfully ask Congress to repeal it. Judy
    and I are here as small business owners, as employers, and as a
    family to bring attention to the real-life impact the RFS has
    had and to ask Congress to take action for all of us, because
    without your action, this situation will only get worse.
        Thank you.
        [The prepared statement of Mr. Anderson follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Chairman Bridenstine. Thank you, Mr. Anderson.
        Dr. DeCicco, you are recognized for five minutes.

                     TESTIMONY OF DR. JOHN DECICCO,

                          RESEARCH PROFESSOR,

                UNIVERSITY OF MICHIGAN ENERGY INSTITUTE

        Dr. DeCicco. Thank you. And I wish to thank the Chairman--
    --
        Chairman Bridenstine. Could you turn on your microphone?
        Dr. DeCicco. Yes. I wish to thank the Chairmen and Ranking
    Members, as well as other members of the subcommittee and full
    committee for inviting me to today's hearing.
        My name is John DeCicco, and I hold a doctorate in
    engineering from Princeton. Before joining the University of
    Michigan faculty in 2009, I worked professionally on energy
    issues since 1977, including 21 years at major environmental
    organizations. However, the findings I'm presenting today are
    my own professional views as an independent academic and do not
    reflect those of the University of Michigan, my past
    affiliations, or funders.
        My research shows that the Renewable Fuel Standard, or RFS,
    has been harmful to the environment from its inception. Now,
    ten years after the 2005 Energy Policy Act, the program has
    resulted in higher CO2 emissions than would have
    otherwise incurred. It also harms the environment in other
    ways. Sadly, the adverse impacts of the RFS have grown worse
    since it was expanded by the Energy Independence and Security
    Act of 2007.
        The notion that renewable fuels readily reduce CO2
    is based on a scientifically incorrect understanding of carbon
    neutrality. Only under certain conditions does substituting a
    biofuel for a fossil fuel neutralize the CO2 leaving
    a tailpipe. For that to occur, harvesting the feedstock must
    significantly increase how rapidly cropland absorbs CO2
    from the atmosphere on a net basis. That condition is not met
    for corn ethanol mandated by the RFS. It might be satisfied for
    cellulosic feedstocks, but once properly evaluated, the gains
    may not be as great as advocates assume.
        The lifecycle models used to calculate fuel carbon
    footprints, including EPA's RFS model and the DOE-sponsored
    GREET model, automatically credit all biofuels with complete
    carbon neutrality without checking whether that assumption is
    valid. My studies, which rely on crop data instead of computer
    modeling, find that the carbon neutrality condition is not
    being met.
        We evaluated corn ethanol for which lifecycle analysis
    claim to a 40 percent reduction in greenhouse gas emissions
    compared to gasoline. But examining data for the croplands
    actually supplying the facility finds no significant reduction
    in emissions. Under some circumstances, the emissions could be
    as much as 70 percent higher than those of gasoline. And these
    results do not even include the indirect land-use change, which
    would increase biofuel-related emissions even more.
        The key problem is that diverting harvest from existing
    productive land does not remove more carbon from the air than
    was already being removed during prior crop growth. All it does
    is it shuffle carbon around. In effect, it robs Peter to pay
    Paul.
        Our ongoing research involves a detailed carbon balance
    analysis of U.S. renewable fuel production since 2005.
    Preliminary results show that no significant direct CO2
    reduction can be claimed for the RFS. Once indirect land-use
    change is considered, the result is substantially higher
    CO2 emissions overall.
        Excess CO2 is not the only environmental harm
    caused by this policy. Fellow University of Michigan
    researchers have documented how ethanol production has
    destroyed habitat for waterfowl and other wildlife. Expanding
    corn ethanol production is worsening water pollution,
    contributing to algae blooms in the Gulf of Mexico and Lake
    Erie. And as for other air pollution, recent research found
    that the country's third-largest corn ethanol refinery emits 30
    times more air pollution than was assumed for the RFS
    regulatory analysis.
        Ethanol's corrosive properties are also incompatible with
    cars already on the road and degrade the operation of
    lawnmowers, motorboats, and other gasoline-powered equipment
    used by homeowners and businesses alike.
        In summary, a careful look at the data shows that the
    studies used to justify the RFS were flawed. Scientifically
    speaking, lifecycle analysis is an inappropriate method for
    specifying public policy. Inserting lifecycle requirements into
    the law has proven to be a mistake. Only a direct year-at-a-
    time accounting provides a scientifically sound way to evaluate
    the CO2 impact of fuels. Once that is done, it is
    clear that the production and use of biofuels, as mandated by
    the RFS, has increased CO2 emissions to date.
        Thank you again for allowing me to share my findings, and
    I'll look forward to any questions you may have.
        [The prepared statement of Dr. DeCicco follows:]

      [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

            Chairman Bridenstine. Thank you, Dr. DeCicco.
        Mr. Coleman, you're recognized for five minutes.

                    TESTIMONY OF MR. BROOKE COLEMAN,

                          EXECUTIVE DIRECTOR,

                   ADVANCED BIOFUELS BUSINESS COUNCIL

        Mr. Coleman. Thank you. Good morning, Chairman Bridenstine,
    Chairman Loudermilk, Ranking Members Bonamici and Beyer, and
    Members of the Subcommittee. My name is Brooke Coleman. I run
    something called the Advanced Biofuels Business Council.
        The council represents worldwide leaders in the efforts to
    develop and commercialize next-generation advanced and
    cellulosic biofuels ranging from cellulosic ethanol made from
    switchgrass, which is an agricultural waste, to advanced
    biofuels made from sustainable energy crops, municipal solid
    waste, and algae. We are honored to be here today to help
    accurately assess the impacts of the federal Renewable Fuel
    Standard.
        When I was thinking about my testimony today, it was quite
    clear that I would be giving a counter-perspective, and I want
    to give it. The RFS in my opinion is one of the most effective
    energy policies ever passed by Congress. Its notoriety stems
    not from its failures and unforeseen costs, as alleged, but
    instead its effectiveness in breaking the oil monopoly that
    leaves our economy and our environment at risk.
        So if we're going to assess the RFS from a ten-year
    perspective, let's look a little bit back at what we--where we
    were ten years ago. We were in the middle of an MTBE crisis
    where the oil industry used a gasoline additive to avoid
    ethanol that polluted drinking water. The political deal in
    essence that happened on RFS1 was a way to facilitate getting
    MTBE out of gasoline and out of our families' drinking water,
    and it happened in less than a year because Congress sent a
    clear market signal that ethanol, a homegrown American
    renewable product, would replace MTBE in the marketplace.
        A couple years later, Congress decided to pass a stronger
    RFS, and RFS2 passed in December 2007, built upon those
    successes and now supports more than 800,000 American jobs in
    29 States, producing homegrown renewable fuels as an
    alternative to foreign oil.
        This industry now displaces the foreign oil equivalent
    almost of Saudi Arabia and approximately Ecuador, and now we
    are innovating. I just returned from Nevada, Iowa, where DuPont
    just opened the largest cellulosic ethanol plant in the world.
    The plant will produce biofuel from corn silver, the unused
    part of the corn plant collected from local farms within 100
    miles of the facility.
        Quad County Syngenta was one of the first if not the first
    to produce commercial volumes of cellulosic biofuels. Their
    Cellerate technology produces cellulosic ethanol that is 129
    percent better than gasoline on carbon emissions, reduces
    energy inputs, and increases the quality and quantity of
    production co-products like corn oil and cattle feed.
        Abengoa and POET/DSM are deploying similar technologies
    using agricultural waste to make the lowest carbon, most
    innovative fuel in the world.
        One more example, a member of mine, Fulcrum BioEnergy, just
    signed a $60 million deal with United Airlines to make
    intermediate biocrude and bioJet.
        Unfortunately, the program's clear record of success is
    often lost in the cloud of misinformation kicked up by the oil
    industry and the so-called researchers, fellows, and experts
    funded by them. Just as the oil industry has been able to
    finance doubt about climate change, they are doing a heck of a
    job financing doubt about their primary competitor in biofuels.
        I want to touch on a couple of these examples, and I hope
    that we can touch on some of the reports and positions that we
    have mentioned during Q&A. The first is this notion that we are
    in a free market. It has been mentioned--it was mentioned by
    the Chairman; it was mentioned by multiple experts up here
    today. This is not a free market. The oil markets are
    controlled at the top by OPEC. They are controlled here in the
    United States by vertically integrated, highly consolidated oil
    companies.
        We need the RFS because we can't get shelf space. We have
    to sell to our primary competitors who want to see us fail in
    order to gain market access. The problem is we are experiencing
    what it is like to be in a market-controlled environment as we
    speak. We don't have low gasoline prices because we have
    efficiency, we don't have low gasoline prices because suddenly
    our economy is doing something different. We have low gasoline
    prices because OPEC made a decision one year ago to drive down
    the price of fuel to put the U.S. oil boom on its heels and to
    kill oil rig counts in this country.
        So OPEC is killing the very thing that the oil industry
    says we don't--is the reason we don't need the RFS anymore. In
    essence, the RFS is a hedge against this market power and
    allows our industry to grow and innovate over time with an
    expectation of market. If you give us a true free market, we
    will give you the RFS.
        Finally, with my last 25 seconds, I'd like to say one of
    the most incredible arguments made against us is the food price
    argument. I have compassion, of course, for franchise owners,
    but the problem is that corn prices today are lower than they
    were when President Bush signed this law in 2007. It is hard
    for me to believe that the RFS is increasing food costs when
    the primary reason that the restaurants claim while they pull
    in record profits over the last ten years, this year, is that
    corn prices are increasing when they're actually decreasing.
        So one of the things I would like to do and have the
    opportunity to do as we move forward in Q&A is discuss some of
    these issues, and I look forward to that very much. But I'm
    confident that the facts will prevail on the RFS discussion,
    and I appreciate the opportunity to speak today.
        Thank you, Mr. Chairman.
        [The prepared statement of Mr. Coleman follows:]

       [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Chairman Bridenstine. Thank you, Mr. Coleman.
        Mr. Drevna, you're recognized for five minutes.

                    TESTIMONY OF MR. CHARLES DREVNA,

                      DISTINGUISHED SENIOR FELLOW,

                     INSTITUTE FOR ENERGY RESEARCH

        Mr. Drevna. Chairmen Bridenstine and Loudermilk, Ranking
    Members Bonamici and Beyer, I am Charlie Drevna, Senior Fellow
    at the Institute for Energy Research.
        You know, once Milton Friedman famously posited that one of
    the great mistakes is to judge policies and programs by their
    intentions rather than their results. If he were alive today,
    Friedman would point to the RFS as a prime example of his
    belief.
        In the mid-2000s and even before, so-called industry
    analysts and renowned economists predicted ever-increasing
    gasoline demand as they simultaneously declared the United
    States to be energy-scarce. The Nation was on a path according
    to the self-anointed experts to reliance on ever-increasing
    foreign sources of energy, much of which came from potentially
    unstable regions of the world.
        Congress and the Administration accepted the reviews, and
    in 2005 adopted the Energy Policy Act, which required refiners
    to blend 7.5 billion gallons of ethanol into the gasoline pool
    by 2012. In less than two years, this nuisance of free market
    interference became a full-blown anti-consumer, anti-free
    market debacle as EISA '07 mandated 36 billion gallons of
    renewable fuels, some of which actually existed, be blended
    into domestic transportation fuels by 2022.
        In essence, the predictions of 2007 and earlier are the
    polar opposite of the realities of 2015. Confounding the
    problem is the undeniable fact that advanced biofuels
    production, the anticipated linchpin of the RFS, has fallen
    woefully short of the numerous promises made since 2007.
        I'm sure the Committee is familiar with such names as Range
    Fuels, KiOR, Blue Sugars, Absolute Fuels, New Energy Fuels,
    Green Diesel, and a host of others, most of whom have
    squandered taxpayer dollars or committed fraud, or both, and
    yet today we continue to hear that the economic production of
    cellulosic fuels is ``right around the corner.'' It's a big
    corner.
        What's clear is that neither Congress nor EPA can mandate
    innovation or favorable economics, try as they may. The hard
    sciences of chemistry and physics remain immune to political
    science, and they remain formidable obstacles to economic
    production of commercial-scale cellulosic fuels. However, one
    should not discount the innovation provided by EPA to assist in
    this effort. EPA stipulates that ethanol produced from
    sugarcane qualifies in advanced biofuel. That's helping to meet
    the statutory volume requirements. What's ironic about this
    news is that ethanol produced from sugarcane is imported mostly
    from Brazil. So much for that homegrown stuff. And the intent--
    and what was the intent of the RFS to limit imported fuels?
    Okay.
        So what State virtually imports all of this biofuel? Well,
    that would be California. And why California? The State's low
    carbon fuel standard requires refiners to use millions of
    gallons of advanced biofuel, and imported sugarcane is the only
    available product that fits that definition, as unscientific as
    that definition is. Yes, that's correct. California prohibits
    ethanol from U.S. producers and imports it from Brazil. This
    allows California legislators and regulators to promote
    themselves as pioneers in the green movement.
        So what happens to the ethanol from the U.S. producers that
    would've otherwise gone and been delivered to California? The
    Brazilians don't care if their ethanol comes from sugar or
    corn, so California and Brazil swap their ethanol, literally
    two ships passing in the night. The net outcome, higher
    shipping costs, and ironically, increases in GHG emissions.
        Not satisfied with the overall results, EPA then decided to
    enhance the total production of cellulosic fuels not via
    scientific breakthrough. Rather, it would be much simpler to
    change the definition of cellulosic fuels to include a portion
    of biogas produced from landfills. If you look at the volume
    increases in cellulosic production 2014 through '15, it's
    nearly all attributable to EPA semantics. Why let pesky little
    details such as chemical structure and definition get in the
    way of a predetermined outcome?
        If one were to be intellectually honest, the RFS was never
    about energy security, the environment, or national security.
    It's been accurately described as crony capitalism, although
    the use of the term capitalism in reference to the RFS is a
    basic non sequitur. It may be much more accurate to label the
    RFS and other anti-free market mandates, subsidies, and
    giveaways for what they really are: government attempting to
    pick the winners and losers in the marketplace. And the
    government's track record is most illustrative as its penchant
    for picking losers is quite outstanding.
        Even if the intentions of the RFS were noble, the program
    must be judged on its results. It's past time for Congress to
    admit that the RFS has not delivered and will not deliver
    anticipated results. The law should be repealed and allow for
    American ingenuity, entrepreneurship, and free-market
    enterprise to do what it does best. They haven't failed the
    nation yet.
        Thank you very much.

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        [The prepared statement of Mr. Drevna follows:]

        Chairman Bridenstine. Thank you, Mr. Drevna.
        I now recognize myself for five minutes of questions.
        I just wanted to go back for a second to Dr. DeCicco,
    looking at your bio, Research Professor at the University of
    Michigan Energy Institute, bachelor's degree in mathematics
    from Catholic University, master's degree in mechanical
    engineering from North Carolina State University, Ph.D. in
    mechanical engineering from Princeton University. You've been
    involved in research on energy and environment issues for a
    long time. Correct me if I'm wrong. You worked for the
    Environmental Defense Fund. Is that correct?
        Dr. DeCicco. That's right, for nine years.
        Chairman Bridenstine. Would you be characterized as a
    conservative witness in general? Would you characterize
    yourself as that or somebody that's a hack for the oil industry
    or anything like that?
        Dr. DeCicco. I certainly would not so----
        Chairman Bridenstine. Reading your bio and looking at your
    background, I think that is fairly safe to assume. In fact,
    when I read your bio, I was a little bit interested in why
    Republicans were bringing you to testify. But hearing your
    testimony, being somebody who's very concerned about the
    environment, somebody who's very concerned about carbon
    emissions, your testimony today--I heard you say 70 percent
    higher carbon emissions in some circumstances because of the
    Renewable Fuel Standard. Is that correct?
        Dr. DeCicco. That's correct, Mr. Chairman.
        Chairman Bridenstine. How do you get to 70 percent higher
    with the Renewable Fuel Standard? Can you share with us how
    that happens?
        Dr. DeCicco. Sure. The thing to keep in mind is that all of
    the claims for reduction on biofuels depend on this carbon-
    neutrality assumption. When that's not met, you start with
    essentially a wash when you're comparing, say, ethanol to
    gasoline or biodiesel to petroleum diesel. And then you have to
    look at the process emissions from that basis. And it's not
    nearly as efficient to process corn ethanol from biomass as it
    is to process gasoline from petroleum.
        In fact, from a carbon-efficiency point of view, basic
    chemistry tells us that when you ferment the fuel--and this
    goes for any fermentation based ethanol, whether it comes from
    a cellulosic feedstock or starch like corn or sugarcane--for
    every molecule of ethanol that you produce, 1 molecule of
    CO2 gets produced as beer bubbles. You know, when
    you ferment, you have a frothy thing. It creates
    CO2.
        So if you can no longer assume that that's free
    CO2, free carbon enough fuel, which is false by my
    analysis of cropland data, then right there you lose a lot of
    carbon back to the atmosphere during processing. So when you
    add that back in, when you add in the emissions to make
    fertilizer, when you add in the emissions to run the bio
    refineries even for natural gas in a dry mill, which is a
    pretty efficient form of biorefinery, and take away this
    automatic credit that the lifecycle models assume, you can end
    up with 70 percent higher emissions.
        And that's not the end of the story. I mean that's not the
    upper limit on the damage when you begin to look at the ripple
    effects.
        Chairman Bridenstine. So in your testimony I have heard you
    mentioned harmful to the environment. I just heard you use the
    word damage to the environment, higher CO2
    emissions, in some cases 70 percent higher. You mentioned water
    pollution, you mentioned algae bloom. Did you mention--I think
    yesterday when I talked to you, you mentioned deforestation.
    Can you talk to that for a second?
        Dr. DeCicco. Sure. When you divert crops from the food and
    feed market, and what's going on in the country now, around 40
    percent of our corn harvest is going into ethanol production.
    Now, some of that comes back as co-product, but it nets out to
    about 30 percent. Well, does that mean people are eating 30
    percent less food or that we're having 30 percent less cattle?
    No.
        We have a global commodity market, and what happens is that
    when grains are diverted into the fuel market, that grain that
    would otherwise be used for food has to get made up somewhere
    else. And if you trace that, as a number of scientific analyses
    have done in the past several years, and look at the ripple
    effect, the loss of grain from American field due to the
    biofuel mandate results, for example, in additional
    deforestation in Brazil and sub-Saharan Africa as the food
    markets try to compensate and have to put more land into
    production.
        This is a highly uncertain effect, but there's no doubt
    because of the coupling of global commodity markets that this
    effect, which is known as indirect land-use change, is
    occurring.
        Chairman Bridenstine. Thank you, Dr. DeCicco. I am out of
    time, but it is important to note that if it's damaging to the
    environment, if it's putting more CO2 emissions into
    the atmosphere, if it's adding to prices for both food and
    fuel, it leaves us wondering what are the reasons that we still
    have the Renewable Fuel Standard.
        I'd like to recognize the Ranking Member, Ms. Bonamici, for
    five minutes.
        Ms. Bonamici. Thank you very much, Mr. Chairman, and what
    an interesting discussion this morning. I really appreciate the
    conversation.
        Mr. Coleman, in his testimony, Dr. DeCicco states that the
    RFS has been harmful to the environment--I'm following up on
    the Chairman's question--and that only under limited conditions
    does substituting a biofuel for a fossil fuel neutralize
    tailpipe CO2 emissions.
        Now, it's my understanding that a number of analyses,
    including from the U.S. Department of Energy, indicate that
    most biofuels do reduce greenhouse gas emissions. We're getting
    ready for the Climate Change Conference in Paris and we need to
    do more, not less, to mitigate climate change.
        So scientists at the Argonne National Laboratory, Purdue
    University, and the Federal Aviation Administration have
    responded to some of the criticisms Dr. DeCicco has raised in
    writing regarding the ability of biofuels to reduce greenhouse
    gas emissions. And, Mr. Chairman, I would like to enter this
    paper into the record.
        Chairman Bridenstine. Without objection, so ordered.
        [The information appears in Appendix II]
        Ms. Bonamici. Thank you.
        Mr. Coleman, one of the conclusions reached in this paper
    is that Dr. DeCicco does not take into account the carbon
    emissions that are avoided when a biofuel displaces the use of
    fossil fuels. This displacement seems fairly important. So can
    you please respond to the assertion that the RFS does not
    reduce carbon emissions and that it's broadly caused more harm
    than good for the environment, particularly focusing on the
    need to consider displacement of fossil fuels? And I do want to
    save time for another question.
        Mr. Coleman. Sure. I'll go quickly. So we obviously don't
    agree with Dr. DeCicco, but I think it's important to
    understand who doesn't agree with him is EPA, the Department of
    Energy, U.S. Department of Agriculture, the national labs and
    Oak Ridge and Argonne National Laboratory, the California Air
    Resources Board, which is hardly pro-bio fuels.
        What Dr. DeCicco does is he actually does something that's
    quite provocative in the carbon accounting world, so it may be
    different and might get your attention but it's not well
    supported. And it's called additionality. So he doesn't
    really--when you grow a plant, whether it's corn or switchgrass
    or whatever, it absorbs sunlight and CO2 while it's
    growing, and that's one of the benefits of using bioenergy.
    Instead of having a solar panel to absorb the sunlight, you're
    transferring it into gasoline.
        He wants to take that credit away under the assumption that
    the farmer would have done it anyway. And the problem with
    doing that is it removes the whole notion of supply chain
    emissions, and you can't account for it. So if you have a
    State--or you want to put solar panels on your roof and you
    have the government saying, oh, well, sorry, Ms. Bonamici, you
    would have done that anyway so we're not going to give you
    credit to do that, it's suspends reality with regard to carbon
    accounting. And that's why responsible regulatory agencies
    don't do it that way. It's an interesting academic exercise.
        So I think we have to rely on the body of the evidence to
    support what's going on in this space, and biofuels are carbon
    reductive.
        Ms. Bonamici. Thank you. And then I have a two-part
    question. There's been some criticism of the EPA on its
    implementation of the RFS. Some of it is certainly well placed.
    The EPA has delayed the release of the volumetric obligations
    for the past couple of years, and I want to note that the
    proposed biometric obligations to be finalized this month were
    actually proposed in part in 2013. The Agency received more
    than 340,000 comments on the proposed rule that year, and
    evaluation of the comments led to a delay. It's unfortunate,
    but I still don't think it's acceptable that the program has
    experienced such delays.
        And I want you to discuss how that has affected the
    biofuels industry. Do you agree that the consecutive delays
    have hurt investments in the industry and innovative technology
    and development?
        And then I also want you to talk about--we've had a lot of
    conversations here about corn, but obviously, based on the work
    that your organization does, there's so much potential out
    there in this second generation. So if the RFS is repealed, as
    some are suggesting, what would that do to the advancement of
    all the alternative second-generation biofuels and particularly
    all the small businesses and businesses across the country that
    are working to innovate and come up with new alternatives?
        Mr. Coleman. Well, I appreciate the question. I spoke to
    this a little bit when I talked about the market. So we need
    policy because the market isn't free. And so when the policy is
    suspended or not enacted, we're in a tough situation because we
    don't know if the oil companies are going to buy our product.
    And if we don't know if the oil companies are going to buy our
    product, it's pretty hard to get financing to build those
    projects.
        And so what happened in 2013 and what has happened for two
    years is a failure to finalize the rule has basically suspended
    investment in advanced biofuels. And we are confident that we
    can get back on track. The courts have actually required EPA to
    get the final rule out by November 30 of this year. The key,
    however, will be that EPA gets a good rule out and not just a
    timely rule out.
        And so while we expect the timeliness problem to be fixed,
    EPA is also still proposing to have a waiver, a new waiver in
    there that would allow the program to be waived if the oil
    companies fail to distribute our fuel. And the whole purpose of
    the RFS is to force the oil companies to do it because they
    would not otherwise do it based on price because of the
    subsidies and the protections they have overseas that protect
    this industry.
        And so if the RFS, to speak to your last question, were
    repealed, we would basically lose our place on the shelf if you
    will and would not have access to the consumer that would allow
    these financing mechanisms to go, and we would lose these
    projects overseas. DuPont, Enerchem, Abengoa, some of the
    companies that I mentioned, have all built their second plant
    overseas in places like China, Brazil, and France over the last
    six months. So we've already lost second plants. I think the
    goal now is to get the third, fourth, fifth plants back in the
    United States.
        Ms. Bonamici. Thank you. And my time is expired. I yield
    back. Thank you, Mr. Chairman.
        Chairman Bridenstine. I'd like to thank the Ranking Member.
        And Chairman Loudermilk is recognized for five minutes.
        Mr. Loudermilk. Thank you, Mr. Chairman.
        Real quickly, Mr. Coleman, what your profession? What's
    your education and your profession?
        Mr. Coleman. I'm educated at Wesleyan University. I was
    educated in Northeastern School of Law. I run the Advanced
    Biofuels Business Council and represent the lowest carbon fuel
    companies in the world.
        Mr. Loudermilk. Okay. And so you're an attorney?
        Mr. Coleman. Yes.
        Mr. Loudermilk. Is that--okay. And you work for--can you--
    --
        Mr. Coleman. Advanced Biofuels Business Council.
        Mr. Loudermilk. Okay, the business council?
        Mr. Coleman. Yes.
        Mr. Loudermilk. Okay. Thank you.
        Dr. DeCicco, your profession?
        Dr. DeCicco. I'm a mechanical engineer.
        Mr. Loudermilk. You're a mechanical engineer. And who do
    you work for?
        Dr. DeCicco. I work for the University of Michigan at the
    Energy Institute.
        Mr. Loudermilk. Before I go into questions, is there
    anything you would like to respond to to the claims that Mr.
    Coleman has said?
        Dr. DeCicco. Sure. Thanks for the opportunity.
        You know, there's--science is never static. It moves. We
    learn things as time goes on. I hate to admit this, but in the
    mid-1990s I was the author of the first paper, first academic
    paper to call for the use of lifecycle analysis and regulation
    as an incentive to produce advanced biofuels, cellulosic fuels
    in particular. And it was based on the early studies that are
    the precursors and set the template for all the government
    models now in use.
        I didn't know then what I have since learned about the
    realities of the carbon cycle, and what I realized several
    years ago as I began picking apart the models and trying to
    understand, okay, why is there so much controversy here that
    never seems to get resolved? It's that the government models,
    the GREET model, which has been the basis for so many of these
    claims, effectively violate the law of conservation of mass.
    They effectively, in the computer, create carbon for the sake
    of offsetting the carbon out of the tailpipe without bothering
    to check whether additional carbon has been removed from the
    atmosphere.
        Now, Mr. Coleman says, well, I'm raising some unproven
    theory about additionality. Additionality, you know, the need
    for additional carbon is just another word for conservation of
    mass. There's no such thing as free carbon. Carbon is the fuel
    of life. You know, we have to be careful when we say willy-
    nilly we need to de-carbonize the economy. I personally don't
    want to be de-carbonized, and I don't think any of us do. Our
    whole food chain and the whole carbon cycle by which plants at
    the base of the food chain take carbon from the air and utilize
    it to feed everything else is what's going on here. And if you
    take that, that's what I meant by you can't rob Peter to pay
    Paul. If you just take that carbon, it has to be made up
    somewhere else.
        So I am in a situation of someone kind of saying, well, the
    emperor has no clothes because the emperor in this case is the
    Department of Energy and its models that became the template
    for the RFS, and EPA's models, which did its own modeling using
    a similar format, the same with the California Air Resources
    Board. And here I am coming along and saying, oops, you guys
    got it wrong. Your models violate conservation of mass. You
    haven't checked whether that carbon that you're crediting
    automatically against the tailpipe was actually additional
    carbon in the sense that it came out of the air without
    stealing from the food or feed system.
        So I certainly realize that my criticism of these biofuel
    policies does fly in the face of piles of publications, but
    unfortunately, those publications got it wrong.
        Mr. Loudermilk. One quick question, I'm trying to get my
    hands around this carbon neutrality theory. And in layman's
    terms, the idea the model was based on is we're going to grow
    more corn plants, plants absorb carbon output, so therefore,
    the increased output by burning ethanol or producing ethanol
    would be absorbed by the increased production of corn plants.
    Is that a fair summary of the idea----
        Dr. DeCicco. Oh----
        Mr. Loudermilk. --and have we--are we growing more plants
    to absorb?
        Dr. DeCicco. We are growing a bit more. The keyword that
    you said here is more. You know, in other words, if we had a
    barren piece of desert and then irrigated it, fertilized it,
    grew corn on it, then that piece of desert would be growing
    more corn in a way that takes more carbon out of the air than
    was previously being taken out. And then you could legitimately
    claim that that carbon in that corn feedstock offsets the
    emissions when the ethanol is burned. But I'm not aware that
    we're getting most of our corn from land that used to be barren
    deserts.
        Mr. Loudermilk. So it was used for other purposes? Okay.
        Dr. DeCicco. That's right.
        Mr. Loudermilk. I see I'm out of time, Mr. Chairman. I
    think the world is turned upside down when we have the business
    community advocating for more government regulation and the
    environmental community advocating for not. So this is very
    interesting. Thank you, Mr. Chairman.
        Chairman Bridenstine. And real quick, just a point of
    privilege here if you'll allow me, Mr. Beyer.
        The question I guess we're--I'm trying to understand is if
    you're replacing other crops with corn, then the carbon
    accounting that Dr. DeCicco is talking about would actually be
    more accurate than if you don't account for that, correct, Mr.
    Coleman?
        Mr. Coleman. No. So this is--I mean the way carbon
    accounting works and the way the Clean Air Act works or the way
    that any regulation works is pollute or pay. You're accountable
    for what you do, right? And if you grow a plant to use in
    bioenergy that absorbs carbon more or less, a little bit, not
    very much, you get credit for doing that. Whether----
        Chairman Bridenstine. But if you're producing that plant,
    which in this case would be corn, and you're replacing another
    plant, then you really haven't done anything to change the
    accounting of the carbon removal. Am I incorrect on that?
        Mr. Coleman. You are incorrect because the way that--the
    way agricultural markets work is you have demand--put it this
    way, agriculture they produce for price, okay? They don't say
    I'm going to grow this--I'm going to grow this corn for
    ethanol. They produce for price. And so you have--when you have
    regulations that are changing the behavior amongst farmers, you
    have--what you want in that industry is accountability for what
    you do, right? And so if you have acres where you want to do
    more corn this year and more wheat next year and your--that
    corn gets used for a certain product, that's the product you
    should be accountable for. That is it.
        Chairman Bridenstine. Okay. I'm taking time that I don't
    have. So, Mr. Beyer, you are recognized as the Ranking Member
    for five minutes.
        Mr. Beyer. Thank you, Mr. Chairman.
        Mr. Anderson, thank you for coming up to talk to us. And
    I'm sure I've eaten at many of your Wendy's over the years.
        Dr. Dinan talked about with the existing fuel standard that
    corn price or overall food prices will only rise about 1/10 of
    one percent, and if repealed would fall less than 1/10 of one
    percent. With some excellent research we found that the price
    of corn per bushel was $3.77 when President Bush signed the law
    in December of '07. It's $3.68 per bushel right now, 9 cents
    cheaper. So how do you get $34,000 in increased food prices
    directly related to RFS in your stores?
        Mr. Anderson. PricewaterhouseCoopers did the study in 2012,
    and then based on that process determined that the impact was
    the $34,000.
        Mr. Beyer. But if you look at the USDA, you also see that
    the price is up to $6.60 or something in 2012 when they did
    that study. So now we're back to $3.68, so my guess is if PwC
    did the study again, you'd find literally no impact on your
    business.
        Mr. Anderson. Literally no impact would be incorrect. Our
    prices are still up, and I would say also that we had two
    record corn crops, and this year we're going to be followed by
    an almost record corn crop. I think it's highly unlikely that
    we will continue to have record corn crops to keep the price of
    corn at that.
        Mr. Beyer. And, Mr. Anderson, not to disagree with you at
    all, it may well be true, but I think we need to isolate
    increase in your food costs from the price of corn. They may
    not be 1 to 1.
        Mr. Anderson. I would respectfully disagree with that.
        Mr. Beyer. Mr. Coleman, what about Brazil? Mr. Drevna
    talked all about shipping ethanol from California there and
    bringing sugarcane back.
        Mr. Coleman. Yes, so there--he--Mr. Drevna is talking about
    a different program when he talks about the low carbon fuel
    standard in California. That program drives the lowest carbon
    fuel. It does not have respect for State or country borders,
    and if you have a low carbon fuel, California was to show that
    there's a market for it. So Brazil is shipping sugar ethanol to
    the marketplace.
        In terms of the RFS, again, so Brazilian ethanol does hit
    the advanced biofuel requirement. Ninety plus percent of the
    fuel used under this program, however, has been U.S.-produced.
    So the point of the RFS is to drive plant production and new
    industries in this country. We have 210 ethanol plants alone.
    We have another 60,000 jobs and hundreds of biodiesel plants in
    this country alone, and now we're getting that first wave of
    cellulosic plants that creates value-added agriculture. And so
    we're really seeing tremendous benefit inside the United
    States.
        Mr. Beyer. Great. Thank you.
        Dr. DeCicco, I want to give you one more chance to try to
    out me explain this carbon neutrality. When we look at fossil
    fuels, that was carbon taken out of the air millions and
    millions of years ago and now burned. So we're taking carbon
    that's been stored for these millions of years and putting it
    back into the atmosphere, putting it into the ocean.
        When you talk to cellulosics, you're taking carbon that was
    taken out of the atmosphere last year or this year and putting
    it back in. Why isn't that just on the surface of it--by the
    way, if I recall my physics, the first law of thermodynamics is
    the conservation of mass and energy there--because they're
    interchangeable, E equals MC squared. So if we're taking carbon
    out of the atmosphere now to burn to put back in, why is that
    just on the surface of it not much less net carbon, then
    burning something that was taken out millions of years ago?
        Dr. DeCicco. Well, the thing to keep in mind is to
    neutralize those emissions the way you're saying is that you
    need to come up with more carbon that was already being taken
    out of the air. Now, that can happen. So let me turn to an
    example. I think, you know, this DuPont--new DuPont facility
    that was--
        Mr. Beyer. Can I interrupt for one second?
        Dr. DeCicco. Yes.
        Mr. Beyer. Why more carbon if you just take the same carbon
    that was coming out anyway, so get rid of this alternative land
    use----
        Dr. DeCicco. Sure.
        Mr. Beyer. --theory. It was going to come out in soy crops
    or forest or whatever, no--leave the desert. You're still not--
    you're still adding--putting carbon back into the atmosphere
    that was coming out naturally rather than carbon that's been
    stored.
        Dr. DeCicco. Well, that's the rub here. In other words, if
    you have corn that already removed carbon from the atmosphere,
    it's quite true that that corn was already, you know, being
    digested and, you know, calories burned results in CO2
    being exhaled. If you take it and use it for fuel, that carbon
    still comes out of the air in the tailpipe. So the question
    then becomes, as I said before, does that mean that that
    calorie consumption, the corn that was being consumed by people
    and livestock, has disappeared? And the answer is no, it's
    certainly not disappeared.
        And this is again why it is, you know, the conservation of
    mass. And yes, mass and energy were--we are fortunately dealing
    with non-relativistic velocities in the commodity markets, that
    you can't just assume that because the carbon was recently
    grown that it's sufficient to balance out the system, which is
    using huge volumes of carbon already for food and feed. And
    that's the--you know, the essence of how I, you know, have
    essentially picked apart and found the flaws in the lifecycle
    models.
        Mr. Beyer. Thank you, Mr. Chairman. I yield back.
        Chairman Bridenstine. I'd like to thank the Ranking Member.
        I recognize Mr. Weber from Texas for five minutes.
        Mr. Weber. Thank you, Mr. Chairman.
        And Dr.--is it Dinan?
        Dr. Dinan. It's Dinan.
        Mr. Weber. Dinan. They've been ignoring you, and so I just
    wanted to come to you. I'm going to have a question for all
    five of you, and it's a simple yes or no. And I don't want you
    to give away the answer. Just do you know the answer? MTBE, do
    you know what that is?
        Dr. Dinan. Yes.
        Mr. Weber. Mr. Anderson, since you run some Wendy's
    franchises, you may or may not know what that is.
        Mr. Anderson. No, sir.
        Mr. Weber. Okay. And is it Dr. DeCicco?
        Dr. DeCicco. [Nonverbal response.]
        Mr. Weber. Okay.
        Dr. DeCicco. Yes, I know what MTBE is.
        Mr. Weber. All right. Mr. Coleman?
        Mr. Coleman. Yes. I think I mentioned it. Yes, I know.
        Mr. Weber. Okay. Dr. Drevna?
        Mr. Drevna. Absolutely.
        Mr. Weber. Okay. So this is a push to do away with MTBE,
    a.k.a. methyl tertiary butyl ether, as I understand it,
    ostensibly because MTBE was found in groundwater, is that
    right, any of y'all? Dr. Drevna?
        Mr. Drevna. MTBE was found in groundwater because we had a
    leaking underground storage tank debacle in the country, and
    EPA passed a bill--I mean passed a regulation that gave
    underground storage tanks ten years to comply but then the RFG2
    came into play and we had to put more oxygenate into the
    gasoline.
        Mr. Weber. Okay. Do we know what affect ethanol has in the
    groundwater?
        Mr. Drevna. If you have a leaking underground storage tank,
    by what I've seen in the studies would indicate that the
    ethanol will separate out first from the water and then it--
    as--whereas the bacteria would go after the BTEX compounds--
    benzene, toluene, xylene--in the underground water and the MTBE
    would traverse further, the bacteria likes their cocktails
    before dinner so they have the--they go for the ethanol first.
    But in essence, you know, I think we've fixed the underground
    storage tank problem in the country, which was the root of the
    problem.
        Mr. Weber. So according to Wikipedia--standby, Mr. Coleman,
    I'll come to you----
        Mr. Coleman. Okay.
        Mr. Weber. --MTBE was not very soluble in water.
        Mr. Drevna. Okay, it was very soluble in water.
        Mr. Weber. It's very soluble in water?
        Mr. Drevna. Yes. Yes.
        Mr. Weber. Okay.
        Mr. Drevna. So is ethanol.
        Mr. Weber. And so ethanol is but you said it separates out
    quicker.
        Mr. Drevna. No, what happens--ethanol has an affinity for
    water.
        Mr. Weber. Okay.
        Mr. Drevna. That's why when one of the previous witnesses
    talked or maybe Mr. Chairman talked about the outdoor power
    equipment and the marine people. The marine folks don't like a
    lot of ethanol, if it all----
        Mr. Weber. So----
        Mr. Drevna. --in--to use in marine equipment because the
    ethanol will separate out and marine----
        Mr. Weber. That's because it's corrosive to the inside of a
    steel engine, is that correct?
        Mr. Drevna. Well, you know, it's corrosive to certain pumps
    and flanges and hoses and things----
        Mr. Weber. Okay.
        Mr. Drevna. --but, you know, again, the reason for the
    marine folks who don't want it is because ethanol has an
    affinity for water.
        Mr. Weber. Okay. Mr. Coleman, you wanted to weigh in.
        Mr. Coleman. Yeah, just a quick thought. When ethanol--when
    MTBE went in gasoline, we had a massive drinking water problem
    because MTBE was highly soluble in water, and it actually
    extended the plume into drinking water aquifers. When we
    replace MTBE with ethanol, we no longer had that problem, and--
    --
        Mr. Weber. Okay.
        Mr. Coleman. --and Mr. Drevna's view is that all of a
    sudden the underground storage tanks are fixed, our view is
    that it's a better biodegradable product.
        Mr. Weber. Okay.
        Mr. Coleman. And then I'll yield on the second part.
        Mr. Weber. Mr. Drevna, you had another--or Dr.----
        Mr. Drevna. Yes, I have a comment on that, and--some of the
    things that my colleague here Mr. Coleman has been talking
    about, a free market, MTBE, the RFG2 was a free market. The
    ethanol folks clamored because the consumer didn't want
    ethanol. The consumer still doesn't want it in massive
    quantities.
        Mr. Weber. Well, we've had another--in the committee that I
    chair, the Energy Subcommittee, we've had a group of--a gas
    station owned by farmers in Ohio area, I think, or maybe it was
    Iowa--I'd have to go back and look--who actually couldn't sell
    enough of this stuff in the very heart of corn country. So from
    an economic standpoint, it just wasn't really flying.
        Mr. Coleman. Mr. Weber, could I just add one quick comment
    DD
        Mr. Weber. Sure.
        Mr. Coleman. --if he is attacking our industry? So I know
    DD
        Mr. Weber. Well, if we have a difference of opinion, that's
    not an attack, right?
        Mr. Coleman. No, no, no. Yes, yes, yes. But----
        Mr. Weber. Okay.
        Mr. Coleman. --the record is open for two weeks. We would
    be happy to provide further information about this.
        Mr. Weber. So you'd be happy to counterattack?
        Mr. Coleman. Perhaps counter-argue.
        Mr. Weber. Okay. All right. Well, I'm going to leave it at
    that. Mr. Chairman, I'm going to yield back.
        Chairman Bridenstine. Thank you. I guess we are out of
    witnesses on that end, so we'll go with Mr. Babin also from
    Texas.
        Mr. Babin. Yes, sir. Thank you, Mr. Chairman, and thank
    you, witnesses, for being here.
        I--maybe I missed this a while ago but, Dr. DeCicco, can
    you tell me a little more about why corn ethanol is worse for
    air quality the gasoline? That may have already been asked and
    hashed but----
        Dr. DeCicco. Sure. I would be happy to explain that. In
    particular, the part of air quality that I'm focusing on is the
    CO2 emissions because that's the emissions that the
    ethanol proponents claim that would be reduced by the use of
    ethanol.
        When it comes right down to it, it's a matter of chemistry
    for the fuel. Carbon, as I said, is the fuel of life and it
    provides energy both to people through calories and we can also
    use carbon-based fuels to provide energy for cars and trucks
    and airplanes. And it's a great energy carrier. So ethanol is a
    carbon-based fuel, and that is somewhat compatible with
    gasoline although, as we've heard, there's limits and problems
    associated with putting too much of it into the gasoline.
        But when you burn ethanol, the combustion still creates a
    CO2 coming out of the tailpipe, same for biodiesel.
    And so a short way of thinking about it is that if biofuels
    were to have a benefit for CO2, it's not when
    they're burned. I mean when you burn it, you have to burn that
    carbon, CO2 comes out of the tailpipe.
        So then you have to ask, okay, well, if the reduction of
    CO2 does not occur at the tailpipe, where might it
    occur? And this is where you have to go back and say, well, did
    we remove more CO2 when we harvested the feedstock
    than the plants were already absorbing from the air? And if you
    haven't done that--and the vast majority of biofuel that we
    grow--we are growing it on existing cropland, sourcing the corn
    and soybeans from existing cropland--you've not removed more
    CO2 from the air.
        Now, yields have gone up a little bit. My analysis accounts
    for that. But that's just a small increase in the removal. But
    the bottom line is, because there's no benefit to the
    atmosphere when the biofuel is burned, unless you pull more
    CO2 out of the air, which you might do by harvesting
    stover, corn stover, residues, so there's a potential there to
    get a benefit that way, but unless you do something like that,
    if all you do is divert existing crop production into the fuel
    market, then right off the bat there's no benefit. And as I
    said before, then you have to add in all those excess emissions
    associated with processing the fuel, and the picture starts to
    look very bad very soon.
        Mr. Babin. Okay. Thank you.
        And should corn ethanol be classified as a green fuel then,
    given this environmental impact?
        Dr. DeCicco. Absolutely not.
        Mr. Babin. Yes. Okay. And now the Administration has
    proposed lowering the ozone standard, ambient air quality, to
    70 parts per billion. In your opinion, would the RFS complicate
    efforts to attain a more stringent standard if that's the case?
        Dr. DeCicco. Yes, it could. As you move into sort of the
    various parts of the low-blend realm, you can worsen
    evaporative emissions from ethanol. It's--I wouldn't want to
    say that it's a large effect, but it's an aggravating effect.
        Mr. Babin. But if you couple that with higher food prices
    and the other negatives of the ethanol industry, it certainly
    could have a detrimental effect, right?
        Dr. DeCicco. Well, I'm sticking kind of myself on the
    environmental side here. I know there's different views on
    the----
        Mr. Babin. Well, okay.
        Dr. DeCicco. --food price impacts.
        Mr. Babin. Okay. I was just thinking.
        And, Dr. Dinan, what is your assessment of the impact of
    the RFS on blending of biofuels into the transportation fuel
    supply? And has the use of biofuels increased the cost of the
    RFS, or would we have seen ethanol production grow without a
    federal mandate? It's a three-part question.
        Dr. Dinan. Okay. Well, we really don't actually answer the
    question did corn ethanol use grow because of the RFS. Our
    analysis is really about looking forward. So what we do look at
    is whether or not the use of corn ethanol would decline very
    much if we had a repeal of the law. And we indicate that we
    don't think it would decline that much because there are other
    benefits that blenders received by blending in the corn
    ethanol. It helps them with octane requirements and with
    meeting carbon monoxide emission reductions requirements. So
    that's why we don't find a big drop in corn ethanol use.
        But if the law was to push the amount of corn ethanol--of
    total ethanol, total renewable fuels up to the levels required
    under the law, EISA rather than the amount proposed by EPA,
    then there would be a significant problem with the blend law.
        Mr. Babin. Okay. Thank you. My time is expired. Thank you,
    Mr. Chairman.
        Chairman Bridenstine. Thank you, Mr. Babin. So if we're
    blending ten percent now, if we were to repeal the RFS, we
    would still be blending what according to your study?
        Dr. Dinan. We think it would stay at roughly ten percent
    for at least----
        Chairman Bridenstine. So the idea that we're going to ruin
    all these jobs and destroy these markets, that's incorrect?
        Dr. Dinan. Well, what we say is that there's a tension
    between keeping the costs down and pushing the technology. So
    if you were to repeal the RFS, you would reduce incentives to
    create more E85 stations and also for production facilities for
    more advanced biofuels.
        Chairman Bridenstine. Okay. The gentleman, Mr. Abraham, is
    recognized from Louisiana.
        Mr. Abraham. Mr. Coleman, I see you on the button. Give me
    your opinion if we repealed the RFS. What would that do to
    general farm prices right now? They're low already, the
    commodity prices. What would the total repeal of the RFS do to
    the----
        Mr. Coleman. That's a question for----
        Mr. Abraham. Yes, sir.
        Mr. Coleman. --myself?
        Mr. Abraham. I saw you wanted to answer.
        Mr. Coleman. Yes, sure. The--well, if you repeal the RFS,
    you're taking away a value-added agriculture market for the
    agricultural community. And so I think the fundamental premise
    of the RFS is that we have enough corn and we have as many
    farms and as much agricultural product to do more than just one
    thing, and that's to feed animals, that we can make bioplastics
    out of them, we can make fuel, we can make a number of
    different things.
        If you ask the agricultural community, they don't feel like
    they should be in a box of only producing food. And I think low
    corn prices today bear that out. And so what you would have is
    a situation where repealing the RFS would create more economic
    pain in the heartland, and that is not something that we want
    to see.
        In terms of clarifying the jobs part of this, I represent
    the advanced biofuels industry, and I think what's at stake
    here, even though the debate that the oil industry tries to
    have this conversation around is about corn ethanol, what's at
    stake is the advanced biofuels part of the RFS.
        And so if the thesis is that we're not going to lose corn
    ethanol by repealing the RFS, my feeling is isn't that what
    we're talking about? We're talking about innovation here.
        Mr. Abraham. All right. Let me go back to you first, Mr.
    Coleman. In view that we have RFS standards now, what's your
    opinion? Why are our corn prices so low now?
        Mr. Coleman. A couple of reasons. The first is, is that we
    have plenty of supply against demand, and so we've come back to
    a situation where after a couple years of drought, which drove
    corn prices up, we are now in a healthy corn market and even an
    oversupplied corn market where we have so much supply that it's
    driving prices down.
        The second reason is, is if you look at the correlation
    analysis of corn prices and oil prices, you will see very, very
    strong correlation because oil is a primary input for
    agricultural commodity production, and also it is a huge driver
    in terms of futures trading, et cetera. So you see corn and oil
    matching together, and any time you have corn--oil prices
    coming down, you almost always have agricultural commodity
    prices coming down. And so with lower oil prices, you have
    lower corn prices.
        Mr. Abraham. And Dr. Dinan had said in her testimony that
    the CBO report mentioned that fuel and food prices depend on a
    number of factors outside of the RFS. Do you agree with that
    statement, Mr. Coleman?
        Mr. Coleman. Yes. I mean oil is the primary driver, and I
    should note about the CBO report--and I believe that the doctor
    did not set the program confines--but it did not analyze the
    economic benefits of reducing petroleum dependence in that
    report, and that's a little bit like looking at the economic
    benefits of a jobs program and not looking at the economic
    benefits of jobs creation.
        And so we have a problem with that report and we think that
    needs to be fixed. So I think if you look at the actual central
    point of the RFS, which is to reduce petroleum dependence, if
    we add that into the equation, the economic benefits of the RFS
    would be astounding.
        Mr. Abraham. Thank you, Mr. Chairman. I yield back.
        Chairman Bridenstine. Mr. Westerman from Arkansas is
    recognized for five minutes.
        Mr. Westerman. Thank you, Mr. Chairman, and thank the
    witnesses for being here today. These are some fascinating
    subjects, and I'm struggling a little bit on which one to
    address here. We've got land use and a clean environment. With
    got the law of conservation of mass and energy and energy
    conservation or net energy gain or the carbon cycle and
    economics versus of real versus inflationary food costs. These
    are all things that I like to talk about.
        But let's start off with the carbon cycle and land use.
    And, Dr. DeCicco, if I understand your argument that there's--
    and getting back to the law of conservation of mass and energy,
    there's only so much carbon in the world, and the question is
    where's that carbon going to be located? It's either going to
    be in the atmosphere or is going to be sequestered somewhere
    under the ground or in biomass here on the earth. And if we
    create a new crop source to make ethanol or corn, then you're
    going to be clearing more land to produce this corn. So you're
    changing land-use and putting a crop there that's going to be
    planted and harvested every year.
        I remember being at a conference on renewable energy where
    they were showing in South America where they had cleared this
    highly productive land to grow--I don't remember if it was
    sugar beets or corn, but in the photo there was timber from a
    rainforest stacked up in a perimeter around the land. It was
    used to keep animals out of the crop.
        But as we look at that, something we haven't talked about
    is the energy gained from corn ethanol. And the research that
    I've looked at show that somewhere between 1 to 1.3, maybe even
    as high as 1.6 on the energy put into producing corn ethanol
    versus the energy that you get out. We've been talking more
    about the carbon balance on it. But if we look at other forms
    of cellulosic ethanol or biomass, even though the processes
    haven't been refined, the numbers on the net energy gain are
    much higher than what we see on corn ethanol.
        So are you saying we should totally abandon all renewable
    fuels, or is there room for more research to develop some of
    these cellulosic ethanol technologies maybe from woody biomass
    that do have even a bigger carbon cycle effect?
        Dr. DeCicco. Sure. I take issue with the mandating of the
    fuels from an environmental point of view. I think it's
    important to support the research side. In other words, as I've
    pointed out, there is a potential if it's done right, if
    technology materializes in an economically viable way at
    commercial scale for forms of cellulosic production in a way
    that has failed to materialize for nearly 40 years now--I mean,
    this is not a new area of research--then, you know, that could
    be a good thing provided the land use is properly managed and
    that there are guarantees that the actual production of
    whatever biomass is going to be going into the cellulosic fuel
    is done in such a way that it increases the rate at which
    carbon is removed from the atmosphere without depriving the
    food and feed system of carbon.
        So there's two big ifs that have not been met, are not in
    my estimation close to being met for the commercial viability
    of so-called advanced biofuels. So, yes, you know, in terms of
    this committee's role in advising the research programs, we
    should continue research in this area and maybe make, you know,
    progress through that. But when it comes to intervening in the
    marketplace and trying to force fuels in that are not
    commercially viable that have a dubious carbon pedigree anyway
    because the analyses backing them were done incorrectly, I
    think that, you know, is very questionable----
        Mr. Westerman. And if we look at----
        Dr. DeCicco. --due to mandated----
        Mr. Westerman. --in our forests across the country right
    now, we've seen hundreds of millions of tons of carbon going up
    in smoke every year from forests that are mismanaged. And if
    that carbon were captured and used for energy, it seems to me
    like there would be a net benefit from energy and the carbon
    cycle to do that.
        Dr. DeCicco. That's correct. I mean, that's an example
    where if you're capturing carbon, harvesting carbon say from
    forest residues that are at risk of causing a fire and burning
    up anyway or corn stover to the extent you can do that without
    overly degrading your soils, that would decay anyway, release
    its carbon, those are examples of what I mean by additional
    carbon. You know, you're getting additional carbon because
    you're taking carbon that otherwise would either burn or decay
    without being put to commercial use.
        So those are potentially legitimate sources of carbon, but
    I don't think that that then justifies some kind of mandatory
    use. I think that you need to look at that situation carefully,
    and then I would go back to we need to have the right market
    signals here involved, and that's not something you get through
    a technology winner-picking mandate.
        Mr. Westerman. And I think I'm out of time, Mr. Chairman,
    but if you'll oblige me just a few minutes, or are we going to
    get a second round of questions?
        Chairman Bridenstine. I'll give you another minute.
        Mr. Westerman. All right. Thank you.
        So if we look at where we're at on the cellulosic fuels, it
    seems to me it would make sense that while conventional energy
    prices are low, that we put more money into research to make
    these cellulosic fuels competitive in a free market so that
    when conventional fuel costs go up, we could use these
    renewable fuels in a market-based economy so that we're not
    subsidizing or mandating the use of them. But we just don't
    have the technology yet to make them cost-effectively to do
    that. Would you agree with that? Mr. Coleman, your finger is on
    the button.
        Mr. Coleman. Yes. That's the industry I represent. And so,
    you know, I think I've made myself clear on this whole idea of
    a price-driven marketplace that we don't have. If you look at
    the history of ethanol use in this country, about 90 percent of
    the last ten years ethanol has been vastly cheaper than
    gasoline and the oil industry hasn't used more than it has been
    required by the government to use. If we had a price-driven
    marketplace, we would already have the things that we're
    talking about wanting now, consumer choice at the pump, an
    alternative to gasoline hedges against pump price spikes
    associated with petroleum, et cetera.
        The second thing I would take issue with is this cost
    component of cellulosic. If you look at how much--we're at the
    end of the era of light sweet crude that just squirts out of
    the ground. We are at the deepwater, fracking, tight oil part
    of the evolution of crude oil that is infinitely more expensive
    than light sweet crude. And if you look at the costs of
    cellulosic biofuel versus the marginal oil gallon such as the
    money that was spent in the Bakken, we are cost-competitive
    with those oil plays.
        And so what we need to drive competition in the marketplace
    is access to the marketplace that we are not going to get
    unless we have either the RFS or we break up the oil companies,
    which I don't think is very politically popular.
        Mr. Westerman. Yes. And, you know, most consumers, I think,
    care about what the price is on the gas pump, however it gets
    there.
        Mr. Drevna, would you like to address that?
        Mr. Drevna. I don't know where to start. I just can't
    believe what I just heard in this hearing room. First of all,
    the--there still is--as the doctor said at the end of the table
    said, there's still a ten percent maximum blend wall you can't
    meet. And that automobile or that lawnmower or that chainsaw
    doesn't give anything about where that ethanol comes from,
    whether it's cellulosic or whether it's corn or whether it's
    some still in West Virginia. It's ethanol. And we have blend
    wall. Even EPA, who I very rarely agree with, says there's a
    blend wall problem, and it will be for the distant future.
        Number two, Mr. Coleman keeps on talking about this grand
    conspiracy of the big oil trying to stop penetration into the
    market. Well, the reality of the situation is big oil, little
    oil, independent refiner in, you know, in the middle of the
    corn belt, they do not control anything to do with the market.
    Ninety-five percent of the retail market is controlled by
    independent operators, just as my colleague down here, Mr.
    Anderson, is an independent operator for a franchise. It's the
    same thing. If those franchisees want to sell more ethanol or
    want to put in E85 pumps, have at it.
        If my friends from the advanced biofuel or the corn ethanol
    folks want to invest rather than sup at the government trough
    year in and year out, they can put the money--they could talk
    to the owners of these--of the gas stations and say, hey, we're
    going to invest with you because it's got to be--it's not oil
    versus advanced.
        Chairman Bridenstine. I would like to----
        Mr. Drevna. It's what the consumer wants.
        Chairman Bridenstine. I would like to say how much I've
    enjoyed this exchange between Mr. Coleman and Mr. Drevna, but
    in the interest of the folks on the committee, we're going to
    go to our next questioner.
        Mr. Westerman. Thank you for that extended minute, Mr.
    Chairman.
        Chairman Bridenstine. You bet.
        Mr. LaHood, you're recognized for five minutes.
        Mr. LaHood. Thank you, Mr. Chairman. And, Mr. Chairman and
    Chairman Loudermilk, I look forward to working with you on this
    issue, and appreciate the testimony of the witnesses here
    today.
        I'm brand new, come from Illinois, Ag is the number one
    industry in our state. And in hearing the testimony
    particularly from Dr. DeCicco and Mr. Drevna, I mean, it really
    seems incongruent when you look at the genesis of the law and
    going back and looking at the Energy Policy Act of 2005 and the
    EISA law of 2007. And at the signing ceremony there, the
    emphasis on why that was put in place, the RFS, you know,
    President Bush talked about protecting the environment,
    strengthening our energy security, supporting American farmers.
        And you listen to that and also the Secretary of Energy at
    the time Samuel Bodman and Secretary Johanns, who's now a U.S.
    Senator, and you listen to what they said then and how that's
    played out and then you hear the testimony here today, they're
    in conflict. And I'm trying to rationalize that and figure out
    where the truth lies.
        And I guess in looking at my own district, I have a very
    rural district in central and west central Illinois. And I
    think in my district--ag is the number one industry in the
    State of Illinois. We have--you know, we have some of the most
    fertile farmland in the entire world. And I look at what it
    does in Illinois in terms of what it's done for our consumers.
        I don't--to be honest with you, Mr. Anderson, I don't hear
    much complaints about food prices going up in my district. We
    have some big livestock operations there, you know, we have
    some of the highest yields we've had, energy prices and
    gasoline prices have been low in Illinois, and then you--our
    air pollution has gone down almost every year in Illinois.
        So I look at those tangible benefits and I also look at the
    jobs that are created in Illinois through agriculture, whether
    that's John Deere or ADM or Caterpillar. There are lots of
    small and medium-sized businesses that have benefited from this
    law.
        And I guess in looking at, Dr. DeCicco, the flaws that you
    laid out--and I have to admit I don't know much about carbon
    neutrality or violation of carbon mass--some of these flaws,
    but I guess in looking at the genesis of this bill and what was
    put forward and the rationale and how that's playing out, I
    guess I have not heard from--whether that's Secretary Bodman or
    Secretary Johanns--on acknowledging these flaws or making
    statements that the law somehow was incorrect and we need to
    amend that or revise that. Can you comment on that?
        Dr. DeCicco. Sure. I think, as you pointed out, at the time
    that the law was passed and especially when EISA greatly
    expanded the renewable fuel mandate, there were really sort of
    three public policy rationales. You can kind of think of them
    as a three-legged stool that propped up this expansive
    requirement for renewable fuels. And as you point out, one is
    rural economy. And, you know, I'm certainly not going to
    question that. I mean there's--I don't think there's a doubt
    that creating additional demand for grains and other farm
    commodities is going to help those economies.
        Then there's the energy security rationale. Well, I think
    that these commodity markets respond slowly, especially the oil
    market. And I think we've seen a lot more energy security come
    from increased petroleum than we have from relatively small and
    relatively costly biofuel. So I'm not so sure about that second
    leg.
        The environmental lag, in spite of, I think, good
    intentions and Department of Energy-sponsored analyses and so
    on, that has not stood the test of time scientifically. I mean
    I would have to say, you know, the way I look at my analyses is
    I've essentially cut off that environmental leg.
        So whether the RFS can stand on, you know, a rural economic
    development leg and perhaps an energy security leg--and I'll
    kind of let others debate it--there's certainly no longer an
    environmental rationale for a mandate like this.
        Mr. LaHood. I would just follow up on that. So in looking
    at those flaws that you laid out and what you mentioned, I
    mean, can--are you aware of--you know, for instance, Secretary
    Bodman, who was a chemical engineer from MIT, that he has
    acknowledged those flaws or put anything on record to say that
    this was done inappropriately or the wrong way?
        Dr. DeCicco. I'm not aware of that. I mean I do acknowledge
    that the criticism--environmental criticisms that have come to
    the fore in this policy in terms of the scientific literature
    are relatively recent. We know more now than we did some time
    ago.
        I would say--and I'm happy to put this in the record--in
    2002 I was at the Environmental Defense Fund and co-authored a
    brief position statement on the prospect of a mandate. And
    myself and the other colleague there, Tim Searchinger, now at
    Princeton University, we raised red flags. Not all the science
    was in place for me at that time to be able to give as strong a
    criticism on the environment as I'm able to do today, but we
    were certainly concerned and wary of the risks at that time.
        Unfortunately, you know, it's taking some time for that to
    be assimilated, digested by a lot of people, the Department of
    Energy and elsewhere, who have been guided by analyses that we
    now know were incorrect.
        Mr. LaHood. And the last thing I would say, Mr. Chairman,
    is, you know, I've tried to find evidence either from, you
    know, Secretary Bodman or the EPA Director at the time Stephen
    Johnson or from President Bush that somehow this was a flawed
    law and was not done the right way, and I've had difficulty
    finding that evidence.
        Thank you very much, Mr. Chairman.
        Chairman Bridenstine. Thank you.
        Mr. Beyer has been listening patiently to my side of the
    aisle for the better half of probably 30 minutes, so I'd like
    to recognize you for five minutes and then I'll close it out.
        Mr. Beyer. Thank you, Mr. Chairman.
        And with due deference to the Chairman of the Subcommittee
    on the Environment being from Oklahoma, I'd like to study--cite
    a study from the University of Tulsa National Energy Policy
    Institute that estimated that the United States has spent $8
    trillion from 1976 to 2010 defending access to oil supplies in
    the Persian Gulf.
        So, Mr. Coleman, a rhetorical question, is the massive cost
    that U.S. taxpayers pay every year to defend these shipping
    lanes included in the price of oil?
        Mr. Coleman. No, it's not and it's because we pay for it as
    taxpayers. And so this is part of the reason that this whole
    notion of let the market decide, which is probably the proper
    notion to have in 90 percent of the markets in this country,
    doesn't work for motor fuels. And so if the oil industry had to
    pay for getting itself through the Straits of Hormuz, the cost
    of gasoline would be much higher. But right now, the taxpayer
    pays for it.
        And the oil industry also--and I will point out with regard
    to the Bakken and tight oil, one of the biggest lease-holders
    in the Bakken testified before Senate Finance in 2012 that the
    only reason that they were successful there is because of the
    tax subsidies that allowed them to keep their money and
    reinvest it.
        And so when it comes to energy security, I think the
    government is properly engaged because it matters that we have
    enough energy to get to work and go to the grocery store, and
    we should--and the government should stay engaged. But this
    idea that the RFS is somehow distorting a free market is just
    not a serious allegation.
        Mr. Beyer. And as we talked about, the great promise of
    advanced biofuels rather than simple corn ethanol, if we do
    away with the Renewable Fuel Standard and that first-generation
    ethanol plants goes away, what implication does not have for
    being able to develop an advanced biofuels market?
        Mr. Coleman. Well, if you look at renewables writ large, so
    whether it's wind, solar, or any innovation product, you will
    find that revenues created by first gen get poured into
    innovation in second-generation. So first, the windmill
    companies that built the big windmills are the ones financing
    smaller windmills and distributed energy, same for solar, same
    for geothermal, et cetera, et cetera.
        In our industry that is starkly clear. So if you look at
    the first movers in cellulosic ethanol, you will see Abengoa,
    you will see POET/DSM, you will see DuPont, you will see Quad
    County. Those are all first-gen corn ethanol companies who are
    taking revenue streams from the selling of corn ethanol, and
    because the RFS sends a clear signal to diversify feedstock and
    innovate, they are doing that.
        And so a lot of this discussion about corn ethanol is
    really a distraction. The RFS stops requiring corn ethanol this
    year. It flatlines over time. It is a stalking horse for
    incumbents to come after the advanced biofuels industry, and
    that is the largest part of the RFS going forward, 90 plus
    percent of the RFS going forward. So if you repeal it or even
    change of law, which scares investors, we will be in a
    situation where we continue to build these next-generation
    plants overseas, and that would be a huge opportunity lost.
        Mr. Beyer. Great. Great. Mr. Chairman, I yield back. Thank
    you very much.
        Chairman Bridenstine. You bet. So you mentioned Tulsa
    University, and you mentioned what we do in the United States
    Navy, of which I spent many years of my life. I would just like
    to let the record show that if terrorists or rogue nations
    wanted to take control of the corn market, we would defend the
    corn market as well.
        Mr. Drevna, did you have a thought on that issue? I saw
    you----
        Mr. Drevna. Yes, I appreciate it, Mr. Chairman. This whole
    thing, you know--and Mr. Coleman is right. The--and he used the
    right term, too. He said the corn ethanol flatlines after this
    year, 15, you know, some billion gallons. The problem is is
    that the EISA '07 calls for 36 billion gallons of phantom
    fuel--or 22 billion of which are phantom fuels by 2022. What
    are we going to do? What's the refining industry--what are the
    obligated parties going to do between now and 2022 when, you
    know, if you look at the success/failure rate of these advanced
    biofuels, there's--you know, as I said in my testimony, if it
    weren't for EPA to change the--a scientific definition and you
    look at the testimony, the production from these facilities is
    minuscule, and it's going to be minuscule.
        So are we supposed to say, well, it's right around the
    corner so you obligated parties keep sending money to the
    federal government and buying tax credit--or credits to keep
    this industry going, or do you want to let investors invest in
    this stuff just like every other entrepreneur in this country
    has done forever and make a better product and take the risk
    rather than have them being propped up by the government and
    then having the taxpayer end up paying for it? That's the
    choice you have to make. I appreciate the ability to respond.
        Chairman Bridenstine. Absolutely. So in summary what I
    learned, the Renewable Fuel Standard is damaging to the
    environment, which was new to me, by the way, in this hearing
    and it actually increases carbon emissions. Food prices have
    been increased, although there's some debate about that, but I
    think on average it will go up a little bit, which makes the
    standard of living for all Americans a little bit harder to
    achieve. And repealing the Renewable Fuel Standard would not,
    you know, get rid of jobs.
        I do believe that there may be a place for the government
    to be involved in research and development for advanced
    biofuels, but creating a mandate is not the right solution.
        With that, I thank the witnesses for their valuable
    testimony and the Members for their questions. The record will
    remain open for two weeks for additional comments and written
    questions from Members.
        This hearing is adjourned. Thank you.
        [Whereupon, at 11:55 a.m., the Subcommittees were
    adjourned.]

                                   Appendix I

                                  ----------

                       Answers to Post-Hearing Questions

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                 Appendix II

                                  ----------

                       Additional Material for the Record

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                     [all]