[Congressional Record Volume 148, Number 22 (Tuesday, March 5, 2002)]
[House]
[Pages H671-H675]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 OIL DEPENDENCE IS MAGNET FOR CONFLICT

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentlewoman from Ohio (Ms. Kaptur) is recognized for 5 minutes.
  Ms. KAPTUR. Mr. Speaker, our thoughts and prayers this evening are 
with the men and women in our Armed Forces who serve America's cause on 
the front lines in Afghanistan, fighting one front in the war against 
terrorism. We await their prompt return, and we extend our deepest 
sympathies to the families of our fallen soldiers. As we prosecute the 
war against terrorism, we must take affirmative steps as a Nation to 
drain the swamp of hatred and violence in central Asia and the Middle 
East, in Indonesia, Africa, and Central America.
  But the real dimension of our mission must be clear. Even as our 
troops carry out their dangerous assignments in the four corners of our 
world, the Bush administration is pushing a plan for $98 million in 
outlays for military equipment to protect not democratic values, but an 
oil pipeline in Colombia. This aspect of the Bush administration 
foreign policy should serve to focus our attention on the urgent need 
for the United States to wean itself from a dangerous addiction to 
foreign oil. In fact, that historic addiction to Saudi oil, to Kuwaiti 
oil, to Iraqi oil, to Colombian oil, to Nigerian oil, lies on the basis 
of the repressive regimes whose dissidents strike out now against our 
country. It is an addiction that distorts our foreign policy, that 
drains our national wealth and demands treatment.
  The treatment on the home front for that oil addiction is restoring 
fuel independence, energy independence for America again, and one of 
the most promising sources is biofuels.
  I would like to submit for the Record this evening a simply 
magnificent article in foreign affairs called ``The New Petroleum,'' 
written by a Member of the other body, Richard G. Lugar and former CIA 
Director R. James Woolsey. The first sentence of this article reads: 
``Oil is a magnet for conflict.'' And it talks about well over two-
thirds of the world's remaining oil reserves lie in the Middle East and 
becoming more and more precious as this

[[Page H672]]

century and millennium proceed. But then it talks about ethanol always 
being there as an alternative to gasoline, but never really being taken 
seriously, because until now, it has only been possible to produce 
ethanol from a tiny portion of the corn plant, the edible portions.
  But recent breakthroughs in genetic engineering and processing of new 
biocatalysts have made possible something called ``cellulosic 
biomass,'' literally using every scrap of organic material on the face 
of the Earth, including this country's waste material put into our 
landfills, to spawn an entire new industry for our country and, indeed, 
countries of the world. If the hundreds of billions of dollars that now 
flow into a few coffers of a few nations were to flow instead to the 
millions of people who till the world's fields, most countries would 
see substantial national security, economic, and environmental 
benefits.
  It talks about genetically engineered biocatalysts and advancing 
processing technologies that can make a transition from fossil fuels to 
biofuels affordable, and would not the world's security picture change 
dramatically. U.S. diplomacy and policies in the Middle East could be 
guided by a respect for democracy, rather than a need to protect oil 
supplies and accommodate oil-producing regimes, all of which are 
undemocratic.
  It talks about cellulostic ethanol, radically improving the outlook 
for rural areas around the world, and how the nearly $70 billion spent 
annually for imported oil representing nearly half of the U.S. trade 
deficit, and would it not be better to spend those dollars here at home 
producing new jobs based on new fuels production for our own people and 
the world. It talks about how renewable fuels will actually reduce 
greenhouse gases around the world, and it talks about how these 
technologies are even better than the battery-powered technologies that 
are being developed and the various nuclear technologies that are being 
promoted by the Bush administration, which have spent plutonium, for 
which there is no real safe answer.

                              {time}  1915

  It talks about ethanol's economic viability as a result of these new 
technologies coming online with biocatalysts and new genetic 
engineering and the tremendous difference it will make in the price per 
gallon. The current efficiency of ethanol processing is somewhat 
analogous to that of petroleum refining in the early part of the 20th 
century, when after the invention of thermal cracking, it made possible 
a major share of the petroleum molecule for gasoline production. We are 
at the dawn, at the dawn of the biofuels age. We only need to see it.
  Dartmouth engineering professor Lee Lynd talks about using only some 
of our Nation's agricultural and forest residues to produce a minimum 
of 8 percent of replacement for gasoline. And then take a look at much 
of the land idled across the country, and many of the forests, where 
there is residue on the ground, harvesting that, using that, using all 
the corn stalks that are being thrown away, all of the cotton hulls 
that are being thrown away, using those organics to produce fuel, and 
replacing a minimum of 25 percent additional.
  So we would add the 8 percent, add the 25 percent, and we are moving 
to well over nearly 40 percent already of replacing what we currently 
are required to fuel with gasoline.
  I include for the Record this really incredible article; again, ``The 
New Petroleum in Foreign Affairs,'' by Senator Lugar and R. James 
Woolsey. It is the future. Please take a look at it.
  The article referred to is as follows:

                           The New Petroleum

               (By Richard G. Lugar and R. James Woolsey)


                              why change?

       Oil is a magnet for conflict. The problem is simple--
     everyone needs energy, but the sources of the world's 
     transportation fuel are concentrated in relatively few 
     countries. Well over two-thirds of the world's remaining oil 
     reserves lie in the Middle East (including the Caspian 
     basin), leaving the rest of the world dependent on the 
     region's collection of predators and vulnerable autocrats. 
     This unwelcome dependence keeps U.S. military forces tied to 
     the Persian Gulf, forces foreign policy compromises, and 
     sinks many developing nations into staggering debt as they 
     struggle to pay for expensive dollar-denominated oil with 
     lower-priced commodities and agricultural products. In 
     addition, oil causes environmental conflict. The possibility 
     that greenhouse gases will lead to catastrophic climate 
     change is substantially increased by the 40 million barrels 
     of oil burned every day by vehicles.
       Ethanol has always provided an alternative to gasoline. In 
     terms of environmental impact and fuel efficiency, its 
     advantages over gasoline substantially outweigh its few 
     disadvantages. But until now it has only been practical to 
     produce ethanol from a tiny portion of plant life--the edible 
     parts of corn or other feed grains. Corn prices have 
     fluctuated around $100 a ton in the last few years, ranging 
     from half to double that amount. Ethanol has thus been too 
     expensive to represent anything but a small, subsidized niche 
     of the transportation fuel market. In spite of recent 
     reductions in the expense of ethanol processing, the final 
     product still costs roughly a dollar a gallon, or about 
     double today's wholesale price of gasoline.
       Recent and prospective breakthroughts in genetic 
     engineering and processing, however, are radically changing 
     the viability of ethanol as a transportation fuel. New 
     biocatalysts--genetically engineered enzymes, yeasts, and 
     bacteria--are making it possible to use virtually any plant 
     or plant product (known as cellulosic biomass) to produce 
     ethanol. This may decisively reduce cost--to the point where 
     petroleum products would face vigorous competition.
       The best analogy to this potential cost reduction is the 
     cracking of the petroleum molecule in the early twentieth 
     century. This let an increasingly large share of petroleum be 
     used in producing high-performance gasoline, thus reducing 
     waste and lowering cost enough that gasoline could fuel this 
     century's automotive revolution. Genetically engineered 
     biocatalysts and new processing techniques can similarly make 
     it possible to utilize most plant matter, rather than a tiny 
     fraction thereof, as fuel. Cellulosic biomass is extremely 
     plentiful. As it comes to be used to produce competitively 
     priced ethanol, it will democratize the world's fuel market. 
     If the hundreds of billions of dollars that now flow into a 
     few coffers in a few nations were to flow instead to the 
     millions of people who till the world's fields, most 
     countries would see substantial national security, economic, 
     and environmental benefits.


                           paying for rogues

       Energy is vital to a country's security and material well-
     being. A state unable to provide its people with adequate 
     energy supplies or desiring added leverage over other people 
     often resort to force. Consider Saddam Hussein's 1990 
     invasion of Kuwait, driven by his desire to control more of 
     the world's oil reserves, and the international response to 
     this threat. The underlying goal of the U.N. force, which 
     included 500,000 American troops, was to ensure continued and 
     unfettered access to petroleum.
       Oil permeates every aspect of our lives, so even minor 
     price increases have devastating impacts. The most difficult 
     challenge for planners, policymakers, and alternative-energy 
     advocates is the transportation sector, which accounts for 
     over 60 percent of U.S. oil demand. The massive 
     infrastructure developed to support gasoline-powered cars is 
     particularly resistant to modifications. It precludes rapid 
     change to alternative transportation systems and makes 
     America highly vulnerable to a break in oil supplies. During 
     a war or embargo, moving quickly to mass transit or to fuel-
     cell or battery-powered automobiles would be impossible.
       For most countries, excluding only those few that will be 
     the next century's oil suppliers, the future portends growing 
     indebtedness, driven by increasingly expensive oil imports. 
     New demand for oil will be filled largely by the Middle East, 
     meaning a transfer of more than $1 trillion over the next 15 
     years to the unstable states of the Persian Gulf alone--on 
     top of the $90 billion they received in 1996.
       Dependence on the Middle East entails the risk of a repeat 
     of the international crises of 1973, 1979, and 1990--or 
     worse. This growing reliance on Middle Eastern oil not only 
     adds to that region's disproportionate leverage but provides 
     the resources with which rogue nations support international 
     terrorism and develop weapons of mass destruction and the 
     ballistic missiles to carry them. Iraqi vx nerve gas and 
     Iranian medium-range missiles show how such regimes can 
     convert oil revenues into extensive and sophisticated 
     armament programs.


                          is oil running out?

       Optimists about world oil reserves, such as the Department 
     of Energy, are getting increasingly lonely. The International 
     Energy Agency now says that world production outside the 
     Middle Eastern Organization of Petroleum Exporting Countries 
     (OPEC) will peak in 1999 and world production overall will 
     peak between 2010 and 2020. This projection is supported by 
     influential recent articles in Science and Scientific 
     American. Some knowledgeable academic and industry voices put 
     the date that world production will peak even sooner--within 
     the next five or six years.
       The optimists who project large reserve quantities of over 
     one trillion barrels tend to base their numbers on one of 
     three things: inclusion of heavy oil and tar sands, the 
     exploitation of which will entail huge economic and 
     environmental costs; puffery by OPEC nations lobbying for 
     higher production quotas within the cartel; or assumptions 
     about new drilling technologies that may accelerate 
     production but are unlikely to expand reserves.

[[Page H673]]

       Once production peaks, even though exhaustion of world 
     reserves will still be many years away, prices will begin to 
     rise sharply. This trend will be exacerbated by increased 
     demand in the developing world. As Daniel Yergin, Dennis 
     Eklof, and Jefferson Edwards pointed out in these pages 
     (``Fueling Asia's Recovery,'' March/April 1998), even 
     assuming a substantial recession, increased Asian needs alone 
     will add enough demand by 2010 (9 million barrels per day) to 
     more than equal Saudi Arabia's current daily production.
       The nations of the Middle East will be ready to exploit the 
     trend of rising demand and shrinking supply. The Gulf states 
     control nearly two-thirds of the world's reserves; the states 
     bordering the Caspian Sea have another several percent. 
     Barring some unforeseen discoveries, the Middle East will 
     control something approaching three-quarters of the world's 
     oil in the coming century.


                           a whole new world

       If genetically engineered biocatalyst and advanced 
     processing technologies can make a transition from fossil 
     fuels to biofuels affordable, the world's security picture 
     could be different in many ways. It would be impossible to 
     form a cartel that would control the production, 
     manufacturing, and marketing of ethanol fuel. U.S. diplomacy 
     and policies in the Middle East could be guided more by a 
     respect for democracy than by a need to protect oil supplies 
     and accommodate oil-producing regimes. Our intrusive military 
     presence in the region could be reduced, both ameliorating 
     anti-American tensions and making U.S. involvement in a 
     Middle Eastern war less likely. Other states would also reap 
     benefits. Ukraine, rich in fertile land, would be less likely 
     to be dominated over time by oil-rich Russia. China would 
     feel less pressure to befriend Iran and Iraq or build a big 
     navy to secure the oil of the South China Sea. The ability of 
     oil-exporting countries to shape events would be increasingly 
     limited.
       The recent report by the President's Committee of Advisers 
     on Science and Technology (PCAST) predicted that U.S. oil 
     imports will approximately double between 1996 and 2030, from 
     8.5 million barrels per day, at a cost of $64 billion, to 
     nearly 16 million barrels per day, at a cost of $120 billion. 
     They estimated, however, that with concentrated efforts in 
     fundamental energy research and investment in renewable fuel 
     technologies, this could be reduced to 6 million barrels per 
     day in 2030. The report concluded, ``A plausible argument can 
     be made that the security of the United States is at least as 
     likely to be imperiled in the first half of the next century 
     by the consequences of inadequacies in the energy options 
     available to the world as by inadequacies in the capabilities 
     of U.S. weapons systems. It is striking that the Federal 
     government spends about 20 times more B&D money on the latter 
     problem than on the former.''


                              fuel farmers

       Cellulosic ethanol would radically improve the outlook for 
     rural areas all over the world. Farmers could produce a cash 
     crop by simply collecting agricultural wastes or harvesting 
     grasses or crops natural to their region. Agricultural 
     nations with little to no petroleum reserves would begin to 
     see economic stability and prosperity as they steadily 
     reduced massive payments for oil imports. Even more striking 
     would be redistribution of resources that would occur if 
     farmers and foresters produced much of the world's 
     transportation fuel. We know from the positive results of 
     micro-credit institutions and other such programs that even 
     small increases in income can be a major boost to a 
     subsistence-level family's prospects. If family income is a 
     few hundred dollars a year, earning an extra $50-$100 by 
     gathering and selling agricultural residues to a cellulosic 
     ethanol plant could mean a much improved life. Such added 
     income can buy a few used sewing machines to start a business 
     or a few animals to breed and sell. It can begin to replace 
     despondency with hope.
       There are likely to be even larger effects on rural 
     development if biomass ethanol production can lead a shift 
     toward using plant matter of other products as well, such as 
     biochemicals and electrical energy. The cleanliness of 
     renewable fuel technologies makes them particularly 
     attractive to countries that lack a sophisticated 
     infrastructure or network of regulatory controls. At least 
     some facilities that process carbohydrates should lend 
     themselves to being simplified and sized to meet the needs 
     of remote communities. If such towns can produce their own 
     fuel, some of their fertilizers, and electricity, they 
     will be far better positioned to make their way out of 
     poverty and to move toward democracy and free enterprise. 
     Local economic development can promote political stability 
     and security where poverty now produces hopelessness and 
     conflict.
       A major strength of the new technologies for fermenting 
     cellulosic biomass is the prospect that almost any type of 
     plant, tree, or agricultural waste can be used as a source of 
     fuel. This high degree of flexibility allows for the use of 
     local crops that will enrich the soil, prevent erosion, and 
     improve local environmental conditions.
       Finally, as recession and devaluations overseas move the 
     American balance-of-payments deficit from the 1998 level--$1 
     billion every two days--toward nearly $1 billion every day, 
     there will be increased calls for protectionism. The best way 
     to avoid the mistakes of the 1930s is to have a solid 
     economic reason for increasing U.S. production of commodities 
     new bought abroad. The nearly $70 billion spent annually for 
     imported oil represents about 40 percent of the current U.S. 
     trade deficit, and every $1 billion of oil imports that is 
     replaced by domestically produced ethanol creates 10,000--
     20,000 American jobs.


                            easy being green

       To be politically and economically acceptable, changes in 
     fuel must be understood by the American public to be 
     affordable and not disruptive. Most other countries require 
     the same tough criteria--U.S. difficulties in convincing 
     developing nations to reduce greenhouse gas emissions are 
     directly related to the cost and the damage this would have 
     on their development plans. But if one of the most effective 
     ways to reduce greenhouse emissions also produced an improved 
     balance-of-payments deficit and opportunities for rural 
     development, economic benefits would suddenly far exceed the 
     costs. The political acceptability of reducing emissions 
     changes substantially when the economics change. A shift to 
     biomass fuels stands out as an excellent way to introduce an 
     environmentally friendly energy technology that has a chance 
     of both enjoying widespread political and economic support 
     and having a decisive impact on the risk of climate change.
       Renewable fuels produced from plants are an outstanding way 
     to substantially reduce greenhouse gases. Although burning 
     ethanol releases carbon dioxide into the atmosphere, it is 
     essentially the same carbon dioxide that was fixed by 
     photosynthesis when the plants grew. Burning fossil fuels, on 
     the other hand, releases carbon dioxide that otherwise would 
     have stayed trapped beneath the earth.
       If one looks at the complete life cycle of the production 
     and use of ethanol derived from feed gains, the only addition 
     of carbon dioxide to the atmosphere results from the use of 
     fossil fuel products in planting, chemical fertilizing, 
     harvesting, and processing. But this fossil fuel use can be 
     substantial--up to seven gallons of oil may be needed to 
     produce eight gallons of ethanol. When ethanol is produced 
     from cellulosic biomass, however, relatively little tilling 
     or cultivation is required, reducing the energy inputs. It 
     takes only about one gallon of oil to produce seven of 
     ethanol. There is a virtual consensus among scientists: when 
     considered as part of a complete cycle of growth, 
     fermentation, and combustion, the use of cellulosic ethanol 
     as a fuel, once optimized, will contribute essentially no net 
     carbon dioxide to the atmosphere.
       According to a 1997 study done by five laboratories of the 
     U.S. Department of Energy, a vehicle powered by biomass 
     ethanol emits well under one percent of the carbon dioxide 
     emitted by one powered by gasoline. More surprising, however, 
     is that ethanol produced from biomass emits only about one 
     percent of the carbon dioxide emitted by battery-powered 
     vehicles, since the electricity for those is commonly 
     produced by burning fossil fuels at another location. 
     Although local air quality is improved, total carbon dioxide 
     emissions are not curtailed; they are merely exported--for 
     example, from Los Angeles to the Four Corners. Unless the 
     electricity to charge the car's batteries is produced by 
     renewable fuels or nuclear power, electric vehicles are only 
     20 to 40 percent better as carbon dioxide emitters than 
     gasoline-powered cars. Biomass ethanol beats both by a factor 
     of about 100, fundamentally changing the global-warming 
     debate.


                            fringe benefits

       Cellulosic ethanol is the only alternative fuel that 
     requires, at most, very modest changes to vehicles and the 
     transportation infrastructure. One need not spend money 
     retooling Detroit, nor spend years awaiting the gradual 
     replacement of older vehicles by those with new technology. 
     Nor does one need to modify or construct pipelines and 
     storage tanks to hold hydrogen as an alternate to petroleum. 
     This compatibility with today's infrastructure saves billions 
     of dollars and not just years, but decades. Moreover, there 
     is nothing incompatible between using ethanol now in internal 
     combustion engines and using it later in more efficient power 
     systems, such as hybrids or fuel cells.
       Essentially all automobiles currently on the road can use 
     fuel containing up to ten percent ethanol. But strict fuel 
     economy standards have encouraged the development and 
     production of flexible fuel vehicles (FFVS) that can use up 
     to 85 percent ethanol. FFVS are already in dealers' 
     showrooms, containing (at no added cost to the consumer) the 
     minor engine modifications--a computer chip in the fuel 
     system and a fuel line made out of slightly different 
     material--that make large-scale ethanol use possible. Even 
     pure ethanol vehicles are quite practical. Brazil has 3.6 
     million on the road.
       Corn ethanol will continue to serve an important role as 
     ethanol production shifts to cellulosic biomass. 
     Commercialization of corn ethanol has provided a base of 
     industrial experience, talented people, and infrastructure 
     from which a much larger cellulosic ethanol industry may be 
     launched. For corn farmers, biomass is no threat; it will 
     probably be a boon. Indeed, there is likely to be a 
     continuing, perhaps even an expanding, market for corn 
     ethanol because of the value of its byproducts, such as 
     animal feed. In general, the transition from corn to 
     cellulosic biomass and from a few producers to many is likely 
     to expand opportunities for American farmers.

[[Page H674]]

                           bioengineered bugs

       Ethanol's economic viability depends on making it cheaper 
     to produce. This can be achieved by making it out of 
     cellulosic biomass, which includes essentially anything that 
     grows or has grown: agricultural and forest residues, prairie 
     grass, kudzu, waste wood, used paper products, even much of 
     urban waste. Last year, about 95 percent of the ethanol 
     produced in the United States came from corn. But 
     agricultural residues and other wastes have low or even 
     negative cost--some you are paid to haul away--while crops 
     like prairie grass cost only a few tens of dollars a ton. 
     This represents a substantial savings in the raw material 
     used in ethanol and puts it within the range of oil, even 
     inexpensive Persian Gulf oil.
       Only recently have scientists developed the means to 
     convert cellulosic biomass efficiently into ethanol. The 
     edible portions of corn and other grains easily ferment into 
     ethanol because of their chemical make-up. Most biomass, 
     however, consists of more recalcitrant hemicellulose and 
     cellulose, requiring both the breaking up of these two fibers 
     as well as the fermenting of both five- and six-carbon 
     sugars. This all happens in nature, but two parts of it--
     fermenting five-carbon sugars and breaking up cellulose 
     quickly--are technically challenging. The first is now done 
     by genetically engineered microorganisms; this tool and other 
     new techniques are now being brought to bear on the second 
     problem.
       How far along are these developments? The current 
     efficiency of ethanol processing is somewhat analogous to 
     that of petroleum refining in the early 1900s: after the 
     invention of thermal cracking made it possible to use a major 
     share of the petroleum molecule for gasoline production but 
     before the invention of catalytic cracking opened up an even 
     larger share of petroleum to exploitation. In short, we have 
     come a long way, but still have some inventing to do. The 
     new, genetically engineered microorganisms have already taken 
     us far toward the fermentation of ethanol from a wide range 
     of plant material, laying the groundwork for reductions in 
     processing costs as well.
       The new microorganisms, combined with other improvements in 
     processing, fundamentally change the equation for considering 
     ethanol a major transportation fuel. According to a recent 
     study by Dartmouth engineering professor Lee Lynd, utilizing 
     only some of the nation's agricultural and forest residues, 
     with no additional land use, could supply over 15 billion 
     gallons of ethanol a year--more than ten times the amount now 
     produced from corn, and enough to replace around eight 
     percent of the nation's gasoline. (Not all residues would be 
     used, of course, since some must be left for long-term 
     fertility.) Lynd also calculated that taking a little over 
     half of the 60 million acres of cropland historically 
     idled by federal programs for conservation and other 
     purposes, and using for ethanol production the mown 
     grasses with which much of this acreage is ordinarily 
     planted, would produce enough ethanol to fulfill around 25 
     percent of the country's annual gasoline needs. These 
     calculations use current automobile mileage. Lynd notes 
     that further mileage improvements, achieved through a 
     shift to hybrids or fuel cells, could obviate the need for 
     gasoline entirely, without taking land from food crops or 
     nonagricultural uses. The coproduction of animal feed and 
     biomass residues from alfalfa and witchgrass is especially 
     promising. There is, in short, no basis for the argument 
     that America does not have the land to produce enough 
     ethanol to make a very large dent in U.S. gasoline 
     consumption.
       Biofuels must be produced in ways that enhance overall 
     environmental quality. Sound land-use policies certainly must 
     be followed, to protect wildlife habitat and address other 
     environmental concerns. But professional land-use techniques 
     should readily accomplish this. Alternative fuels are often 
     seen as an unpalatable necessity representing a retrenched 
     standard of living, forced upon us in an age of limits. The 
     opposite may be true. Utilization of renewable fuels will 
     make it possible for us to continue enjoying the freedom 
     afforded by private cars, even as the production of petroleum 
     begins to decline.


                            THE RIGHT STUFF?

       Early this century, Henry Ford expected that ethanol, not 
     gasoline, would be the fuel of choice for automobiles. His 
     reasons are evident. The two fuels can be compared by 
     examining three basic parameters--energy content, octane, and 
     vapor pressure. Pure ethanol contains 69 percent of the 
     energy of gasoline. A lower energy content translates into 
     fewer miles to the gallon; in order to travel the same range, 
     about a 30 percent larger fuel tank is needed (as is used in 
     Brazil). Many scientists believe that optimizing engines for 
     ethanol use will largely compensate for this difference, in 
     part because ethanol is a simple combination of carbon, 
     hydrogen, and oxygen. It is vastly less complex than 
     gasoline, which means that fine-tuning an engine to squeeze 
     very last drop of energy from ethanol is potentially easier.
       Octane is the measure of a fuel's ability to oxidize 
     hydrogen and carbon molecules within a fraction of a second. 
     When the reaction is not simultaneous, ``engine knock'' and 
     inefficient combustion result. Ethanol has an octane rating 
     15 percent higher than gasoline's. In the 1920s ethanol was 
     briefly considered as a large-scale additive to gasoline to 
     stop the knocking of the new higher compression engines. 
     However, to the detriment of public health, ethanol lost out 
     to highly toxic tetraethyl lead, for three reasons: in 
     contrast to ethanol, only a small amount of lead was needed 
     as an additive; some were concerned that corn-derived ethanol 
     would compete for land and threaten the feed grains market; 
     and since Prohibition was in effect, many were also worried 
     about the security problems associated with maintaining large 
     volumes of what is essentially 200-proof vodka. Ethanol's 
     ability to be an effective fuel, however, was never an issue.
       A third important fuel measurement is vapor pressure, or 
     how readily a liquid evaporates. A fuel's vapor pressure is 
     directly lined to the quantity of vehicle emissions, since 
     over 40 percent of automobile emissions result from 
     evaporation, not tailpipe emissions. Substituting ethanol for 
     gasoline in any amount reduces tailpipe emissions and thus 
     reduces urban smog. Pure ethanol, and any gasoline-ethanol 
     mixture that is more than 22 percent ethanol, has a lower 
     vapor pressure than gasoline and would therefore reduce the 
     amount of evaporative emissions.
       Somewhat confusingly, however, blends of ethanol and 
     current gasoline have a slightly higher vapor pressure than 
     pure gasoline when the mixture contains less than 22 percent 
     ethanol, because of the unique mixing properties of the 
     liquids. Some studies show that low-level blends of ethanol 
     and gasoline (like gasohol, which is ten percent ethanol) can 
     actually worsen local air pollution, especially the formation 
     of low-level ozone. Consequently, in cities in the Northeast 
     and California, proposals to encourage the use of ethanol 
     blends have often fallen on deaf ears. Some environmentalists 
     see them as camouflaged subsidies for Midwestern corn growers 
     at the expense of the cities.
       But although low-level ethanol blends present complex 
     issues, blends with more than 22 percent ethanol--which can 
     be used in FFVs--do not have the vaporization problem. 
     Moreover, with different approaches to refining and blending 
     gasoline, a solution to the vaporization problem may well 
     exist even at mixtures below 22 percent. Finally, ETBE--an 
     oxygenate made from ethanol that improves gasoline 
     combustion--improves air quality both in tailpipe 
     emissions and vaporization, although its use means the 
     fuel contains five to ten percent ethanol.
       Choosing to use cellulosic ethanol is not a choice to 
     forsake more advanced automobile propulsion technologies, 
     such as hybrids and fuel cells. Ethanol is compatible with 
     both. Jeffrey Bentley, vice president of Arthur D. Little, 
     Inc., a company recently honored by the U.S. government for 
     its novel fuel-cell technology, stated that ``ethanol 
     provides higher efficiencies, fewer emissions, and better 
     performance than other fuel sources, including gasoline. . . 
     . Where ethanol is available, it will be the fuel of choice 
     by consumers.'' As both hybrids and fuel cells continue to 
     improve, automobiles powered by them may dramatically reduce 
     air pollution. Ethanol's compatibility with both makes moving 
     toward cellulosic ethanol as a transportation fuel much more 
     desirable.
       If government policies promote FFVS, moreover, a large 
     fleet of ethanol-compatible vehicles will be available much 
     earlier than would otherwise have been feasible. This is 
     because FFVS can burn gasoline now but can use cellulosic 
     ethanol as it becomes available. Introducing FFVS into the 
     national fleet differs radically in timing from other changes 
     in transportation. Even if an ideal hybrid or fuel-cell 
     vehicle came on the market, the slow rate of turnover in the 
     nation's cars would mean that it would be many years before 
     its introduction would make a dent in overall fuel use. But 
     moving now to substantially increase the number of FFVS being 
     produced would create the capability to shift to cellulosic 
     ethanol as soon as it is available at attractive prices.
       In addition, insofar as U.S. security and environmental 
     concerns are more with the consumption of problem-causing 
     petroleum fuel than with fuel in general, substituting 
     cellulosic ethanol for gasoline improves relevant ``mileage'' 
     radically, even in internal combustion engines. For example, 
     an average automobile gets approximately 17 miles per gallon 
     and is driven approximately 14,000 miles per year, thus using 
     825 gallons of gasoline annually. Suppose that same 
     automobile were an FFV using a mixed fuel containing 85 
     percent cellulosic ethanol. Because of ethanol's lower energy 
     content, it would use about 1,105 gallons of fuel, but only 
     165 would be gasoline. Such a vehicle could be said to be 
     getting, in a sense, over 80 miles per gallon--of national-
     security-risk-increasing, carbon-dioxide-producing gasoline.
       The one remaining barrier to widespread replacement of 
     gasoline with ethanol is production cost. Relying on feed 
     grains makes this cost comparatively high and volatile, since 
     corn is subject to the caroming behavior of feed markets. In 
     1995, its price of $100 a ton nearly doubled, forcing a sharp 
     curtailment in ethanol production. A partial shift to biomass 
     should circumvent such instabilities. Over the past 15 years, 
     the cost of producing a gallon of ethanol has been cut in 
     half, to just over $1 a gallon wholesale. If, as predicted, 
     the new biocatalysts, low and steady raw material costs, and 
     improved processing let costs fall another 50 percent or so, 
     ethanol could compete with gasoline at today's prices. If oil 
     prices rise in the next century, gasoline could actually be 
     at a substantial price disadvantage.

[[Page H675]]

       Such a reduction of ethanol cost is entirely plausible for 
     two reasons. First, a simple comparison of energy content 
     reveals that a dry ton of biomass crops--$40 is a reasonable 
     current average cost--is comparable to oil at $10-13 a 
     barrel. Agricultural wastes, in many cases, are considerably 
     cheaper than either: many are free or have negative cost. So 
     the overall costs of cellulosic biomass are likely to at 
     least be in the same ballpark as those of crude oil Second, 
     further reductions in the cost of processing seem quite 
     achievable. The current cost of processing ethanol is 
     significantly higher than the equivalent price per barrel for 
     oil. But this discrepancy reflects the maturity and 
     sophistication of the petroleum industry, developed over the 
     past century, as compared to the fledgling biofuels effort. 
     Producing ethanol is not inherently more complex than 
     refining petroleum--in fact, just the contrary. The world has 
     simply invested far more effort in the latter.


                               Jump-Start

       While the private sector will provide the capital and 
     motivation to move toward ethanol, the federal government has 
     a vital role to play. Market forces seldom reflect national 
     security risks, environmental issues, or other social 
     concerns. The private sector often cannot fund long-term 
     research, despite its demonstrated potential for dramatic 
     innovation. Hence, the federal government must increase its 
     investment in renewable energy research, particularly in 
     innovative programs such as genetic engineering of 
     biocatalysts, development of dedicated energy crops, and 
     improved processing. The very small sums previously 
     invested by the Departments of Energy and Agriculture have 
     already spawned dramatic advances. Every effort should be 
     made to expand competitive, merit-based, and peer-reviewed 
     science and to encourage research that cuts across 
     scientific disciplines.
       Research is essential to produce the innovations and 
     technical improvements that will lower the production costs 
     of ethanol and other renewable fuels and let them compete 
     directly with gasoline. At present, the United States is not 
     funding a vigorous program in renewable technologies. The 
     Department of Energy spends under two percent of its budget 
     on renewable fuels; its overall work on renewable 
     technologies is at its lowest level in 30 years. Because 
     private investment often follows federal commitment, 
     industrial research and development has also reached new 
     lows. These disturbing trends occur at a time of national 
     economic prosperity when America has both time and resources 
     for investing in biofuels. The United States cannot afford to 
     wait for the next energy crisis to marshal its intellectual 
     and industrial resources.
       Research alone will not suffice to realize cellulosic 
     ethanol's promise. The federal government should also modify 
     the tax code to spur private investment. The existing 
     renewable alcohol tax credits have recently been extended by 
     Congress through 2007--which will help the growth for the new 
     biofuels industry and offer some protection in the transition 
     from grain to cellulosic biomass. But the tax credit 
     structure should facilitate the gradual adoption of 
     cellulosic ethanol--in time, it should not need subsidies. 
     Government incentives to produce FFVs should also be 
     increased.
       Finally, there must be a coordinated effort across the many 
     different federal agencies that oversee government 
     laboratories and regulatory agencies. The analogy to the 
     semiconductor industry is instructive. In 1987, Congress 
     authorized the creation of a government-industry partnership, 
     the Semiconductor Manufacturing Technology Association 
     (SEMATECH). Under the direction of the Department of 
     Defense's Advanced Research Projects Agency, SEMATECH pursued 
     fundamental research in semiconductor components and 
     manufacturing processes. Private firms with innovative ideas 
     were encouraged to devote research dollars to transform the 
     idea into a commercial reality. The few domestic 
     semiconductor manufacturers were brought together in forums 
     where the companies could discuss technical hurdles without 
     sacrificing competitive advantage. Today, the success of 
     SEMATECH is evident, as the high-technology sector 
     demonstrates. Biofuels offer a similar opportunity.
       Cellulosic ethanol is a first-class transportation fuel, 
     able to power the cars of today as well as tomorrow, use the 
     vast infrastructure already built for gasoline, and enter 
     quickly and easily into the transportation system. It can be 
     shipped in standard rail cars and tank trucks and is easily 
     mixed with gasoline. Although somewhat lower in energy 
     content, it has a substantially higher octane rating than 
     gasoline, allowing for more efficient combustion. It can 
     radically reduce the emission of global warming gases, help 
     reduce the choking smog of our cities, and improve air 
     quality. It is far less toxic than petroleum, far less likely 
     to explode and burn accidentally, and far simpler physically 
     and chemically, making possible simpler refining procedures. 
     If a second Exxon Valdez filled with ethanol ran aground off 
     Alaska, it would produce a lot of evaporation and some drunk 
     seals.
       Our growing dependence on increasingly scarce Middle 
     Eastern oil is a fool's game--there is no way for the rest of 
     the world to win. Our losses may come suddenly through war, 
     steadily through price increases, agonizingly through 
     developing-nation poverty, relentlessly through climate 
     change--or through all of the above. It would be extremely 
     short-sighted not to take advantage of the scientific 
     breakthroughs that have occurred and that are in the offing, 
     accelerate them, and move smartly toward ameliorating all of 
     these risks by beginning to substitute carbohydrates for 
     hydrocarbons. If we do, we will make life far less dangerous 
     and far more prosperous for future generations. If we do not, 
     those generations will look back in angry wonder at the 
     remarkable opportunity that we missed.

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