[Congressional Record Volume 151, Number 37 (Tuesday, April 5, 2005)]
[House]
[Pages H1763-H1769]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            RENEWABLE FUELS

  The SPEAKER pro tempore (Mr. Fitzpatrick of Pennsylvania). Under the 
Speaker's announced policy of January 4, 2005, the gentlewoman from 
South Dakota (Ms. Herseth) is recognized for 60 minutes as the designee 
of the minority leader.
  Ms. HERSETH. Mr. Speaker, I rise today to engage in a dialogue with 
my colleagues about the policy choices that we must make in the coming 
weeks and months to address the energy needs and challenges that our 
country will face in the years and decades to come.
  I believe that renewable fuels must play a central role in this 
debate and in the policy decisions that we in Congress will make this 
year. I have a strong interest in renewable fuels for several reasons. 
My home State of South Dakota is a major corn-producing State and one 
of the top five ethanol-producing States in the Nation. South Dakota 
alone has the capacity to produce more than 450 million gallons of 
clean renewable ethanol every year. This fact, of course, gives me a 
natural interest in renewable fuel production. That, however, is not 
the only reason I care about ethanol. And each of us who serves in 
Congress should care about renewable fuels as well.
  Renewable fuels provide benefits to the economy, especially those in 
economically challenged rural years. They benefit the environment, and 
they enhance our national security. For all of these reasons, Congress 
should care about renewable fuels, and renewable fuels should be a 
major component in our Nation's long-term energy policy.
  I sought this opportunity to address the House tonight to share with 
my colleagues important information about renewable fuels and to dispel 
some myths about ethanol along the way. Ethyl alcohol, or ethanol, is 
essentially pure grain ethanol that man has been making for centuries 
by fermenting and distilling simple sugars.
  Today, ethanol is a fuel produced from crops such as corn, grain 
sorghum, wheat, sugar, and other agricultural feedstocks. Most fuel 
ethanol produced in the United States is derived from corn, and the 
industry uses a lot of it. The latest figures indicate that more than 
10 percent of the U.S. corn crop is utilized to produce ethanol. 
Because ethanol is produced from crops or plants that harness the power 
of the sun, it is truly a renewable fuel. We have consistently 
increased our use of corn to produce ethanol every year in the United 
States. We are doing so because the demand for ethanol is growing and 
consumers are realizing its value.
  The ethanol industry is growing despite the many myths that have 
intervened at various points in the historical development of ethanol 
that misrepresent the technological advancements and the state of the 
industry today. Some of this misinformation, or disinformation, has 
been promoted by opponents of the ethanol industry, and some myths have 
even been propagated by those in academia.
  One of the most persistent ethanol myths refers to its energy 
balance. This myth suggests that the process used to create a gallon of 
ethanol consumes more energy than that gallon of ethanol contains. And 
despite overwhelming and irrefutable evidence to

[[Page H1764]]

the contrary, this unfortunate fallacy persists. But the facts are 
clear, whether produced from corn or other grains or from biomass 
materials like wood waste, ethanol production has become an extremely 
energy-efficient process. Remarkable technological advances have 
occurred in both agriculture and ethanol production in recent years 
that have made this possible.
  Farming practices today are vastly improved from what they were just 
a few decades ago. Gasoline-powered farm machinery has been entirely 
replaced by more efficient diesel engines, and the machinery has become 
larger. This means that farmers can produce more grain with less fuel. 
Some farmers today utilize global positioning satellites and no-till 
farming methods that also greatly increase yields and reduce the 
fertilizer and chemical use on fields.
  The industry also has developed corn varieties that enable farmers to 
produce significantly larger yields on the same piece of ground. 
Ethanol plants are located in predominantly rural areas, close to the 
cornfields, and the trucks and trains that move the corn from the farm 
to the marketplace also become more efficient.
  The technology used in ethanol plants also has greatly advanced in 
recent years. The industry itself has developed advanced enzymes that 
break down the starches in corn much more efficiently than in the past. 
Ethanol plants now employ molecular sieves that remove moisture from 
ethanol much more efficiently than old methods. They also utilize 
efficient natural gas burners to fuel the fermentation process.
  All of these developments have significantly improved the efficiency 
of both corn and ethanol production and the net energy balance of the 
process. This efficiency is confirmed by a 2004 analysis completed by 
the U.S. Department of Agriculture and the Argonne National Laboratory, 
a U.S. Department of Energy laboratory operated by the University of 
Chicago.

                              {time}  2115

  These entities analyzed ethanol's entire production cycle and 
concluded that ethanol yields 167 percent of the fossil energy that is 
used to grow, harvest and refine the grain and transport the ethanol to 
gasoline terminals for distribution. Ethanol also can be produced from 
cellulose feedstocks, such as rice straw, corn stover and sugarcane 
residue. As we improve the technology necessary to utilize these 
feedstocks, ethanol will achieve an even more favorable net energy 
balance.
  Some have, unfortunately, propagated the myth that ethanol increases 
the cost of gasoline. But when you examine the facts, you see that the 
exact opposite is true. Ethanol expands U.S. fuel supplies, competes 
with fossil fuels in the marketplace, and reduces the overall gasoline 
prices paid by the driving public.
  Like many of you, I was back in my home district over the Easter work 
period talking to South Dakotans. We are all well aware of what the 
price of gasoline has done in the past few months and how it affects 
our constituents. The price of ethanol, however, is largely unaffected 
by world oil prices, and it has not experienced the increases in price 
that petroleum has.
  Today the net cost of ethanol to refiners is below the average 
wholesale price of gasoline in the United States. This means that 
blending ethanol into the gasoline supply actually reduces the cost of 
gasoline by displacing high-octane petroleum components. In fact, 
earlier today I checked on the gas prices in my hometown of Brookings, 
South Dakota. Premium gasoline at the BP gas station along Interstate 
29 in Brookings is selling for $2.45 a gallon. Regular gas is going for 
$2.35. By contrast, E-85, which is a blend of 85 percent ethanol and 15 
percent gasoline, is selling for $1.88, 57 cents per gallon cheaper 
than premium petroleum.
  American auto companies are beginning to recognize the value of 
ethanol as well. General Motors recently provided an E-85-capable 
Chevrolet vehicle to the Governor of South Dakota as part of a campaign 
to promote ethanol and E-85-capable vehicles. This is part of a 
campaign by GM and the Governor's Ethanol Coalition designed to 
increase awareness of ethanol and flexible fuel vehicles and to promote 
the increased use of E-85 as a renewable alternative transportation 
fuel.
  U.S. ethanol plants have produced record amounts of ethanol over the 
last 6 years to meet the increased demand. Without ethanol our country 
would be even more reliant on foreign imports of oil, and the pain at 
the pump would be much more severe.
  In the end the ethanol industry is not resting. Over the last 25 
years, 81 new ethanol plants have been built, and 16 additional plants 
are under construction today. In that same time period, not a single 
new U.S. refinery has been built, and scores have been closed. While we 
must address refining capacity issues as part of a balanced national 
energy policy as well, ethanol can play an increasing role in meeting 
growing demand.
  The chart I put up now reflects the historic development within the 
United States of fuel ethanol production beginning in 1980 through 
2004, reflecting the point that I mentioned about how the ethanol 
industry is growing to meet demand in large measure based upon other 
policies passed by this body to promote the use of this renewable 
energy, and, again, in light of the technology advancements that I 
mentioned previously.
  A recent economic analysis entitled Ethanol and Gasoline Prices, by 
economist John Urbanchuk, found that ethanol production adds critical 
supply to the U.S. gasoline market. Without ethanol, gasoline demand 
would further outpace domestic supply and result in a major price 
spike.
  Specifically, the report found if gasoline is at $2 per gallon, 
gasoline prices would increase 14.6 percent, or 29.2 cents per gallon, 
without ethanol in the short term. Without ethanol, gasoline prices 
would increase 3.7 percent, or 7.6 cents per gallon, in the long term 
once refiners build new capacity or secure alternative sources of 
supply.
  Ethanol use will boost U.S. gasoline supplies by more than 3.3 
billion gallons in 2005, as they did in 2004. Without ethanol, refiners 
would be forced to import an additional 217,000 barrels per day of high 
octane, clean-burning, gasoline-blending components.
  There is a reason that these numbers are so large. We already use a 
lot of ethanol in this country. It would probably surprise many in this 
body to know that today more than 30 percent of all gasoline sold in 
this country is blended with ethanol. Even more surprising to many, 
ethanol has already been seamlessly incorporated into the vehicle fuel 
markets in States like California, New York and Connecticut. This is 
because these States have to add oxygenates to their fuel to meet clean 
air standards, but have banned the use of a popular oxygenate called 
methyl tertiary butyl ether, or MTBE, because it is a known pollutant. 
And California is not alone. MTBE is already banned or being phased out 
in at least 20 States, and many more States are considering such a ban. 
This has forced these States to adopt the use of an alternative 
oxygenate, ethanol.
  The California Energy Commission has repeatedly confirmed that 
ethanol used in that State actually costs refiners less than the 
gasoline with which it is blended. The U.S. Energy Information 
Administration has found no price impact from the recent switch from 
MTBE to ethanol. Even the chief economist of the American Petroleum 
Institute stated last year that his organization has not seen a major 
price impact from State MTBE bans and the resulting switch to ethanol.
  As you can see, ethanol has the potential to become a more 
significant portion of our energy portfolio in this country today, and 
Congress should enact policies that recognize its value and promote 
even greater use in the future.
  Renewable fuels benefit more than just fuel supplies and gasoline 
prices. The increased use of ethanol has bolstered struggling rural 
economies across the Plains States. A 2002 study of the ethanol 
industry found that with an approximate cost of $60 million for 1 year 
of construction, an ethanol plant expands the local economic base by 
$110 million each year. Ethanol production generates an additional 
$19.6 million in household income annually. Tax revenue for local and 
State governments increases by at least $1.2 million per year. The 
ethanol industry operations and spending for new construction added 
$1.3 billion of tax revenue

[[Page H1765]]

for the Federal Government and $1.2 billion for State and local 
governments during 2004.

  As you can see by the next map, ethanol production facilities today 
are located in many regions of the country, but they are concentrated 
throughout the Midwest and the Great Plains, and the Midwest and the 
Great Plains constitute a region of the country that has faced many 
economic challenges in recent years.
  It is important to note that many of these facilities have been 
funded or are owned by local farmers, who use them to increase the 
value of their corn and profit from the sale of the ethanol and allow 
them to get a greater percentage of the processing part of the chain of 
production, rather than just the cost of the commodity, of the corn, 
that is brought to the facilities.
  As I mentioned, increased ethanol use and the corresponding increase 
in the localized demand for corn raises the prices that family farmers 
receive for their crop. This in turn lowers Federal farm program costs 
and saves taxpayers money.
  In 2004, USDA estimated that ethanol production reduced farm program 
costs by $3.2 billion. The combination of spending for ethanol plant 
production and capital spending for new plants under construction added 
more than $25.1 billion to gross output in the United States economy in 
2004.
  As you can see from the following chart, we are utilizing an ever-
increasing amount of corn to produce ethanol in the country. This 
increasing amount of corn utilization also reflects an increase in the 
percentage of corn going to ethanol production, as the following chart 
demonstrates.
  Rather than spending billions of dollars in oil revenues to 
politically unstable foreign countries around the world, we should be 
promoting the increased use of this home-grown fuel source that 
benefits farmers, families and small communities across South Dakota, 
and clearly this chart here that demonstrates the impact on corn-
producing States like South Dakota and throughout the Great Plains and 
the Midwest, the economic impact, as earlier charts have shown, is 
evident.
  Ethanol is one of the best tools we have to combat pollution caused 
by motor vehicle emissions. Ethanol contains 35 percent oxygen. Adding 
oxygen to fuel greatly enhances its combustion, which in turn reduces 
harmful tailpipe emissions.
  Adding ethanol also displaces high toxic gasoline components, such as 
benzene, a known carcinogen. Ethanol is nontoxic, water-soluble and 
quickly biodegradable. It will not cause the groundwater pollution 
problems that have been linked to MTBEs.
  Ethanol reduces particulate emissions, especially fine particulates 
that pose health risks to susceptible populations, including children, 
seniors and those with respiratory ailments.
  Importantly, ethanol is a renewable fuel. The ethanol production 
process represents a carbon cycle, where plants absorb carbon dioxide 
during growth, recycling the carbon released during fuel combustion.
  The use of ethanol-blended fuels reduces greenhouse gas emissions by 
12 to 19 percent compared with conventional gasoline, according to the 
Argonne National Laboratory. In fact, Argonne states that ethanol use 
in the United States in 2004 reduced greenhouse gas emissions by more 
than 7 million tons, equivalent to removing the annual emissions of 
more than 1 million automobiles from the road.
  Ethanol is widely used in Federal clean fuel programs required by the 
Clean Air Act, including winter oxygenated fuels and reformulated 
gasoline, or RFG programs, in cities that exceed public health 
standards for carbon monoxide and ozone pollution. The American Lung 
Association of Metropolitan Chicago credits ethanol-blended RFG with 
reducing smog-forming emissions by an amazing 25 percent since 1990.
  It should be noted that when ethanol is blended with gasoline, it 
slightly raises the volatility of the fuel, which can lead to increased 
evaporation for certain emissions, particularly in warmer weather. But 
as is often the case, that is only half of the story. Blending ethanol 
and gasoline also dramatically reduces carbon monoxide tailpipe 
emissions. According to the National Research Council, carbon monoxide 
emissions are responsible for as much as 20 percent of smog formation.
  Additionally, ethanol-blended fuels reduce the tailpipe emissions of 
volatile organic compounds which also can pollute the atmosphere. Thus, 
the use of ethanol plays an important role in smog reduction, and on 
balance is considerably friendlier to the environment than petroleum.
  A recent study found that fuel blended with just 10 percent ethanol 
greatly reduces vehicle emissions. The use of E-10 results in a 50 
percent reduction in tailpipe fine particulate matter emissions, up to 
a 30 percent reduction in carbon monoxide emissions, a 13 percent 
reduction in the amount of toxins emitted, and a 21 percent reduction 
in the potency of these toxins. Because of its demonstrated benefits to 
our water and air quality in this country, Congress should enact 
policies that promote the increased use of clean-burning ethanol as 
part of a broad national energy policy.
  Ethanol also can provide significant benefits in the area of energy 
security. Over the past several years, we have become increasingly 
dependent on imported petroleum to meet our energy needs. The U.S. 
imports about two-thirds of its oil, and some experts predict our 
dependence upon foreign crude oil could climb to 70 percent in the 
years to come. Much of this oil will come from the Middle East. Fears 
of additional terrorist attacks have added a risk premium to world oil 
prices. At the same time, developing nations such as China and India 
have increased their demand for oil. As a result, world oil prices are 
on the rise.
  Just last week a study released by investment bank Goldman Sachs 
declared that markets have entered what they describe as a ``superspike 
period'' that could enact 1970s-style price surges that drive oil 
prices as high as $105 a barrel. If this occurs, it will have an even 
more devastating impact on farmers and ranchers, small business owners, 
working families, commuters, transportation companies and airlines, and 
the overall impacts on the national economy will worsen.
  As a domestic renewable source of energy, ethanol can reduce our 
dependence on foreign oil and increase the United States' ability to 
control its own security and economic future by increasing the 
availability of domestic fuel supplies.
  As I just noted, the U.S. imports 64 percent of its petroleum needs 
today. By 2025, the Energy Information Administration predicts the U.S. 
will import 77 percent of its petroleum.
  World demand for oil will continue to increase, particularly in 
response to the emerging economies in China, India and Brazil. If, as 
predicted, U.S. domestic oil production fails to keep pace, petroleum 
could become so expensive that we will be forced to look for other 
sources of energy and new technologies to deal with these challenges.

                              {time}  2130

  Renewable fuels such as ethanol and biodiesel can be part of meeting 
these goals. They are grown here at home and are virtually infinite 
renewable sources. Increasing production here at home, especially from 
renewable sources, will make us a safer and more secure Nation.
  Creating a viable renewable fuels industry in the United States must 
be a central component of our comprehensive national energy policy. The 
ethanol industry has shown that it is capable of providing a 
significant contribution to our Nation's energy needs. It is incumbent 
upon Congress to implement policies that promote the development and 
production of ethanol and other renewable fuels.
  The ethanol industry is growing, as I have mentioned, to meet the 
demands of the marketplace for clean renewable fuels. And as this table 
shows, many States have responded to that call, as other States look to 
ethanol production as an increasing component of economic development. 
This table indicates current ethanol production capability and 
facilities and also reflects those currently under construction, and 
the overall amount of production capacity that the ethanol can 
withstand with current facilities and those that are in the planning 
stages and under construction today.
  So in addition to the over-3.6 billion gallons of current production 
capacity,

[[Page H1766]]

existing ethanol plants undergoing expansion and the 16 new plants 
under construction will add an additional nearly 750 million gallons of 
production capacity.
  This continued expansion in ethanol production is necessary to meet 
the growing demand for alternatives to MTBE. The Federal ethanol 
program is providing economic stimulus to rural America, adding jobs, 
reducing the United States dependence on imported energy, reducing our 
bloated trade imbalance, and lowering auto emissions in our Nation's 
cities. All of these benefits accrue while consumers realize lower fuel 
prices at the pump for gasoline blended with ethanol.
  In the coming weeks, this body will be debating and hopefully passing 
a comprehensive energy policy that will address the long-term energy 
needs of the country. Because of the obvious and proven benefits that 
domestically produced ethanol and biodiesel provide, our national 
energy policy should encourage the increased production of renewable 
fuels across the country.
  Although the energy bill that the House passed last year did contain 
a renewable fuels standard, it was not adequate to meet the needs of 
the growing industry and adequately incentivize renewable fuels 
production. For that reason, in the upcoming days, I will be joining 
with a bipartisan group of colleagues in introducing the Fuels Security 
Act of 2005. This legislation, identical to a bill introduced in the 
Senate a few weeks ago, recognizes the benefits of ethanol and 
biodiesel and would promote their production in a realistic and 
economically viable way. It would provide benefits to rural America, 
benefits to our national energy security, and benefits to the 
environment without disrupting fuel supplies or increasing the cost of 
motor vehicle fuel.
  Specifically, our bill will accomplish several things. It sets forth 
a phase-in for renewable fuel volumes over 7 years, beginning with a 4 
billion gallon requirement in 2006 and ending with 8 billion gallons in 
2012. It contains an escalation clause that would allow for increases 
in the renewable fuels requirement beyond 2012. It creates a credit 
program for refiners, blenders, or importers who exceed minimum 
obligations, thus allowing them to trade these credits with other 
refiners and minimize market disruptions.
  Importantly, our approach does this in a way that would not enable 
excess credits to overhang the market and enable refiners to stymie the 
goals of the renewable fuels standard. It promotes the production of 
non-corn ethanol by crediting 1 gallon of cellulosis biomass ethanol to 
be equal to 2.5 gallons of corn-derived ethanol. It authorizes the EPA, 
in consultation with the Secretary of Agriculture and the Secretary of 
Energy, to waive the renewable fuels mandate for any State that would 
experience severe economic or environmental harm from the mandate, or 
where there is inadequate domestic supply to meet the requirement. And 
it eliminates the 2 percent oxygenate requirement for reformulated 
gasoline under the Clean Air Act and ensures that fuel performance 
standards and toxic emissions limits under the Clean Air Act continue 
to be met.
  Mr. Speaker, this is a reasonable approach to promoting these fuels, 
and it will provide benefits to our country for years to come.
  I now want to turn time over to my distinguished colleague, the 
gentleman from the State of Nebraska, who serves with me on the 
Committee on Agriculture who has been a leading proponent of ethanol 
production in the State of Nebraska and throughout the Great Plains to 
the benefit of the country. So I yield to the gentleman from Nebraska 
(Mr. Osborne).
  Mr. OSBORNE. Mr. Speaker, I thank the gentlewoman. She has done an 
excellent job of describing some of the benefits of the ethanol 
industry. I wish to join her and the gentleman from Iowa (Mr. King) and 
others in introducing the Fuels Security Act, which will be introduced 
in the House next week.
  Mr. Speaker, in 2004, the United States produced 3.6 billion gallons 
of ethanol. A couple, 3 years ago, that would have been an unheard of 
amount. At that time we were producing less than 2 billion gallons of 
ethanol per year. Yet this year, 1 year later, in 2005, that 3.6 
billion will go to 4.5 billion gallons. So the ethanol industry is 
really ramping up. There are a lot of new ethanol plants out there and 
a tremendous amount of product that is being produced. Roughly one-
third of the fuels in the United States today are blended with ethanol. 
So we have gone from maybe 5 or 10 percent, roughly 30 percent, a 
tremendous increase.
  There are currently 20 States that are now producing ethanol. At one 
time, it was assumed that ethanol was the product of only two or three 
or four corn-producing States. Now we see ethanol plants in places like 
California, Kentucky, and other States around the country. Eventually, 
I would hazard a guess that probably all 50 States at some point will 
produce ethanol.
  The thing that we need to realize is that ethanol can be produced 
from almost any type of biomass. It does not have to be corn; it does 
not have to be sorghum. It can be switch grass, in some cases it can be 
garbage, it can be a lot of things that we are trying to get rid of. So 
we think that the industry is something that can definitely be a 
tremendous benefit to the Nation as time goes on.
  As the gentlewoman from South Dakota mentioned, the ethanol industry 
significantly reduces the price of gasoline. I think almost every 
American today is feeling the impact of high fuel prices. So based on 
$2 a gallon, and almost all of us realize that it is more like $2.22, 
but if it is based on $2 per gallon, if you took the ethanol industry 
out of the picture, gasoline would go up 29 cents. So a $2 gallon of 
gas would be $2.29. So if you are paying $2.20 in your home community, 
that means that if ethanol went away, you would be paying roughly 
$2.51, $2.52 a gallon; something like that. So ethanol produces a 
benefit for everyone; whether you burn ethanol in your tank or not, it 
is important to the economy.
  As was mentioned earlier, refiners would have to import an additional 
217,000 barrels of high-grade fuel per day if ethanol disappeared. That 
would be very, very expensive. As my colleagues know, just normal 
petroleum is $56, $57 a barrel, and high-grade would be even higher 
than that. Currently, imports of petroleum are a major drag on our 
economy. Probably the number one thing holding our economy back is the 
amount of money that we are spending on petroleum from other nations. 
We are importing roughly 55 percent of our petroleum, and so ethanol 
moves us away from that. It is not the whole answer, but it certainly 
is a very significant part of improving the economy.
  Currently, ethanol uses roughly 11 or 12 percent of the U.S. corn 
crop. Last year, we had a record crop of 12 billion bushels. Now, if we 
had not had ethanol using up about 11 or 12 percent, we would have had 
a tremendous hit in our prices. As it was, corn went from $2.60, to 
$2.70 a bushel down to about $1.85, $1.90 at the low. But if it was not 
for ethanol, we would have seen that down around $1.50, $1.40, because 
ethanol adds about 25 cents to 50 cents per bushel for the farmer, and 
we think this is tremendously important to the farm economy. As we will 
see here in a minute, this has an impact on the farm payments that are 
laid out by the average taxpayer. So as the corn price goes down, farm 
payments go up. And when farm payments go up, the taxpayer is hit 
harder. So again, ethanol certainly is good for the taxpayer.

  As has been mentioned previously by the gentlewoman from South 
Dakota, the environment certainly benefits from the ethanol industry. I 
believe that she did mention that tailpipe emissions are decreased by 
roughly 50 percent. Carbon dioxide emissions, which are very harmful to 
the ozone and the environment, are reduced by roughly 30 percent; and 
it is estimated that greenhouse gases are reduced by something like 7 
million tons, so 7 million tons come out of the atmosphere because of 
ethanol; and we think that is a tremendous benefit.
  As was mentioned earlier, at one point, we had a 2 percent oxygenate 
requirement for our fuel. So the oxygenate requirement was met by two 
different fuels. MTBE provided a little bit more than 1 percent of that 
2 percent, and ethanol provided about eight-tenths of 1 percent. MTBE 
has been proven to pollute ground water, so roughly 20 States have now 
outlawed MTBE; and as a result, something has to fill that void and 
that is where ethanol has come in to play.

[[Page H1767]]

  At the outset, many people said ethanol will never be able to produce 
enough gallons to fill that void, but there has been a ripple. We have 
found that ethanol has been transported to California, to New York, 
other places where it was assumed that it could never be adequate to 
fill the demand, and we have seen that supply filled very adequately.
  As was mentioned, the legislation we are proposing removes the 2 
percent oxygenate requirement, which has been very burdensome in some 
areas, and we think that that flexibility will be very helpful to them. 
The economy, of course, benefits. We would assume that something like 
150,000 new jobs will be added each year because of the ethanol 
industry; and over the course of this bill, between 2005 and 2012, 
roughly 243,000 new jobs would be created. It will add roughly $200 
billion to the gross domestic product between 2004 and 2012, and the 
biggest thing that I see right now as far as trade is the thing that is 
causing a huge trade deficit is basically our imports of petroleum 
products.
  So the ethanol industry reduces that trade deficit by about $5 
billion a year and between 2004 and 2012, it will cut that trade 
deficit about $64 billion. So that is a huge impact on our economy.
  So we are doing better with ethanol. But we can do better yet, 
because Brazil currently mandates 25 percent of their petroleum come 
from ethanol. Of course, Brazil also is a major exporter to other 
countries of ethanol. As was mentioned earlier, we currently, I think 
in Nebraska, which I represent a big part of that State, we have 5 E-85 
stations which are stations that pump 85 percent ethanol. And those 
gallons are roughly 40 to 50 percent, or 40 to 50 cents cheaper per 
gallon than standard gasoline. As time goes on, we are going to see 
more and more of this occurring.
  The other thing that I might mention is that the ethanol industry has 
a by-product. Besides ethanol, you are producing usually feed for 
animals from the by-product, but the thing that many people do not 
realize is the spinoffs from the ethanol industry are going to be huge. 
Some of the by-products that we are going to have, Creatine, which is a 
muscle-building substance which is safe, can be used, can be made from 
some of the residue. Biodegradable plastic in the wet milling plants 
are being created. So I think as time goes on, biotechnology is going 
to be important, and we will see a huge benefit from the overall 
ethanol industry.
  I might also mention that biodiesel is going to be a major part of 
the legislation that we are introducing. And, of course, that usually 
uses soybeans in production. But biodiesel is going to make diesel fuel 
cheaper, more efficient, and will cause much less wear and tear on 
diesel engines. So we think these things are all very important.

                              {time}  2145

  I am going to now turn to just a couple of visuals. As was mentioned 
earlier, one thing that so often people do not understand about ethanol 
is the assumption that it takes a lot of energy to produce ethanol. But 
what we see here is that for every unit of energy that goes into the 
manufacture of ethanol, you get 1.4 units of energy out.
  And so what that means is that in order to run a tractor to plant the 
crop, to run a combine to harvest the crop, to run the refinery to make 
the ethanol, if you are going to pump some water out of the ground to 
irrigate, these are all of those energy costs which are usually 
petroleum fuels, which we would have to do with gasoline, or diesel or 
propane or whatever.
  So you get a net gain of four-tenths of a Btu. And in contrast, if 
you look at a gallon of gasoline, for every unit of energy that you 
use, you use 1 Btu, you get eight-tenths of a Btu back after you have 
processed and refined the gasoline. So you lose energy. It is a net 
loss instead of a net gain.
  If it is MTBE that you are after, you get actually only .67 Btus back 
from 1 Btu of energy. So the reason for that, again, as was mentioned 
earlier, is that here we are harnessing the sun, it is renewable fuel, 
and so that gain that you get is from solar energy that is converted 
into fuel. And we think that is an interesting thing, it is an economy, 
and it certainly benefits the environment as well.
  Just a few other facts and I will point out here before I yield back. 
The ethanol energy will add roughly $51 billion to farm income over 10 
years. And Mr. King and Ms. Herseth and I all come from ag States, and 
the farm economy is struggling in most cases. Some people are doing 
pretty well, but a lot of people are marginal. In the State of Nebraska 
at one time we had 135 million farmers. Today we have roughly 48 
million. And so all of those people have gone out of business because 
it is simply not very profitable. So when you find a value-added 
product that will add $51 billion to farm economy, this is something 
that we think is very, very important.
  We mentioned that it will reduce government farm payments. Many 
people in urban areas do not like to see some parts of the farm bill. 
They do not like to see the price supports. Well, what has happened 
here is because the ethanol industry raises the cost of corn, the price 
of corn, by 25 to 50 cents a bushel, that means that as those prices 
get higher, there is less farm payments, because you do not have to 
make up the loan deficiency payments. So as a result there is the 
benefit of about $5.9 billion in less tax dollars in the farm bill over 
the course of 10 years.
  We mentioned that it reduces the trade deficit by roughly $34 
billion, and that is over a period of time, and significantly reduces 
air pollution. As we mentioned, 7 million tons of greenhouse gases 
would be reduced each year. So some of this is a little redundant, but 
it does not hurt to repeat it.
  I am sure that Mr. King will say a few of these things over. But we 
feel that we have a good piece of legislation here. And I would like to 
thank the gentlelady for being part of this, for hosting this this 
evening, and for her part in introducing the legislation.
  Mr. King also has been certainly a very strong proponent of renewable 
fuels. And so we hope to work together, and we hope to convince enough 
of our colleagues, many of whom are from urban areas, and many of whom 
have been imbued with the idea that ethanol is sort of a giveaway to 
the rural States, that this really is a win-win, this is something that 
is good for all of us, and it is certainly good for the country.
  Ms. HERSETH. Mr. Speaker, I wanted to thank the gentleman from 
Nebraska for sharing his insights as it relates to the state of the 
ethanol industry today, its capacity to meet our national energy needs, 
particularly in pointing out not only the use and the importance of the 
byproducts generated from ethanol production, and making specific note 
of how the legislation we intend to introduce affects biodiesel 
production as well, and encouraging our colleagues from urban areas to 
take a renewed look at ethanol.
  I now would like to yield as much as 18 minutes or as much as he 
would like to consume to the gentleman from Iowa (Mr. King), who 
clearly has been a leading advocate as well as introduced other 
important legislation in this Congress and in prior terms important to 
renewable energy and to ethanol.
  Mr. KING of Iowa. Mr. Speaker, I thank the gentlelady from South 
Dakota especially for asking for this floor time tonight and bringing 
us together to talk about this important issue of ethanol.
  And while I have the opportunity to say a few words here, while my 
esteemed colleague from Nebraska is in the Chamber this evening, I 
wanted to take the opportunity to point out that one of the byproducts 
in biodiesel is a glycerin product, and the closest thing I can 
identify on the market is Cornhusker's hand lotion. We will have 
millions of gallons of that as we produce our biodiesel, and we will be 
looking for some more markets, because I am not sure that there are 
enough hands to consume all of that Cornhusker's lotion.
  But I think that expresses some of the bipartisan nature that we have 
in this. It is a regional issue very much as well. Us in the Corn Belt 
have led on renewable fuels, and the ethanol industry had to go through 
a lot of growing pains to establish an industry.
  I happen to have yesterday shaken the hand of the individual, and he 
is in the Iowa Senate, his name is State Senator Thurman Gaskill. It 
was his birthday yesterday; he turned 70 years

[[Page H1768]]

old. He is the man that actually pumped the first gallon of ethanol in 
this country. And it was a unique circumstance to be there to eat a 
treat, to celebrate his birthday, and shake the hand that pumped that 
first gallon of ethanol in the United States of America. It has been a 
long, hard slog to get here, where with the industry in ethanol. They 
have blazed the trail for biodiesel.
  As I have watched this come together, and I have watched the leaders 
in the industry have this vision that said we can take this corn 
product, and we can turn it into a fuel product that is clean, and it 
is safe, and it is kind to our air and our water, and it is kind to our 
engines. And as I listened to many of the stories that come out when 
people were concerned about the impact on their motors, and there was 
some old motors that had rubber products in there that did break down 
with ethanol, that is essentially a thing of the past. And those 
objections and complaints pretty much drifted past the wayside.
  But I have some things that I would like to go through to address 
some of this, and as the coach said, most has been said; I will 
probably say a few over again. But it does pay to repeat some of them.
  In the past 20 years, Iowa has led the biofuels industry to become 
one of the most important players in the search for renewable, home-
grown energy resources. And if I described the district that I 
represent, it is roughly the western third of Iowa. And if you would 
draw a line there from, say, go to the South Dakota-Iowa border, and 
then go through counties over to the east, and from there on that 
Minnesota border draw a line straight down to Missouri, that roughly 
western third of Iowa would get most of the district that I represent.
  In that district there are 32 counties, and those 32 counties, among 
them are six operating, functional ethanol plants, most of them with 
40-million-gallon-a-year annual capacity or above. Some have grown up 
more than that.
  And in addition to that, we have at least one other ethanol plant 
that is under construction in Denison, Iowa, which is right within 
about 2 miles of where I grew up. That product will be up--that plant 
will be up and on line fairly soon. We have three others that are on 
the drawing board.
  And while I have this opportunity to say so, I think that the plant 
in Denison is unique in its character. It sits just down the river a 
little ways from the original Iowa Beef Packer's plant that is still up 
and running, and that was built in 1961. And there they will be 
producing ethanol. They will be able to ship it by rail or by truck. 
There is already a grain facility there that the producers are used to 
bringing grain to with large storage capacity. And the unique nature of 
this plant is it has gas, it has water, it has rail. It has an airport 
there within just a little over a mile of the ethanol plant.
  I pointed out on the day that we did the ground-breaking ceremony to 
the amazing energy plant there in Denison, as I looked at the board of 
directors all sitting there under the tent, and I explained to them 
that they had made a good business decision, and I was not sure that 
they realized how good that business decision actually was, because you 
have the corn there, and you have all of the things that I have 
described, it is all of the components that you would want for an ideal 
location as well as plenty of corn around the region, but additionally 
they are going to be producing a dry distiller's grain that some used 
to think was a byproduct, but certainly it is a very, very valuable 
animal feed product. And I advised them that they didn't need to load 
that dry distiller's grain out on trucks and haul it off and market it 
somewhere to some of the other feeders. I suggested that they just set 
up an auger and put in a row of feed bunks, and line those bunks up on 
up river, and within about a half a mile they could bring those calves 
in, and they could start feeding those preconditioned calves right 
there at the ethanol plant, and they could just kind of walk sideways a 
little ways, and the more they gained, the further away they would get 
from the plant. And eventually they would fatten out at about 1,200 
pounds, and they could walk across the road right into the beef plant. 
The best place in the world that you can put an ethanol plant.
  And I would add, though, that when you go into those plants that are 
up and running, and the efficiency is there, the cleanliness, the 
state-of-the-art technology, that art technology that used to belong, 
that technology that used to belong in the hands of ADM and Cargill, 
and they certainly have that technology as well, But it is being 
developed by good engineering companies in the Midwest, companies that 
are working with farmers and producers and keeping that capital and 
invest it back into the hands of the people that have to make a living 
off of the land.
  But the efficiency that is there, as the energy efficiency, and it 
used to be the argument made that we would burn more energy producing 
ethanol than we actually produced, and that equation went the other way 
a long time ago. And we are up to about 2\3/4\ gallons of ethanol out 
of every bushel of corn, and then take the dry distiller's grain, and 
then ship that out and feed that to livestock without really a net loss 
in that feed value.
  It is really something to see when you see a line-up of trucks coming 
into an up-and-running ethanol plant, and they are coming in dumping 
grain, and they dump that grain in the pit, it goes up, and it goes on 
up to be produced into ethanol. And there are other trucks lined up in 
the other lane loading out dry distiller's grain, corn coming in, 
turned into ethanol, ethanol out on the rail, dried distiller's grain 
going out sitting right beside it, some coming in with corn, others 
hauling dried distiller's grain out. It is efficient. It is almost the 
perfect symbiotic relationship for a corn producer to see that kind of 
production go on.
  And so there in the district, the day that I went up to do the 
ground-breaking ceremony in Sioux County at the Little Sioux Corn 
Processors, it was a chilly day, and we went up there and turned over a 
spade of dirt and celebrated the beginning of a new value-added 
operation up there.
  And when I left I drove south, down through Buffalo Ridge. And there, 
in Buena Vista County, there were, at that time, there were 259 wind 
chargers standing there on the ridge. Today there are at least 359 in 
that same region. And then just a little further south, there is the 
ethanol plant at Galva. And as the crow flies, I believe it is 18 
miles, two ethanol plants, 359 wind chargers.
  We have become, in western Iowa and in much of the Corn Belt, an 
energy export center, something that was not conceived of 10 years ago, 
not visualized 6 or 7 years ago, but today is a reality. And, in fact, 
in the district that I represent, these 32 counties, those six up-and-
running plants, the one more under construction, and it looks like 
three more likely can go, we will be, within 2 years, to that position 
where we can say we have built all of the ethanol production that we 
have the corn to supply, another astonishing accomplishment.
  And as I watch the biodiesel come behind this, the biodiesel that has 
looked at the trail that is blazed by the ethanol producers, those 
people like Thurman Gaskill that pumped that first gallon of ethanol, 
and they see that pattern, that path that has been set by ethanol, and 
because of that, biodiesel is stepping in that path and they are 
following it.
  And, in fact, here just a few weeks ago, I had the privilege to be at 
the kick-off ceremony for the fund-raising drive to build the biodiesel 
plant at Wall Lake, Iowa, and that happens to be about 8 or 9 miles 
from where I live as the crow flies. And there were maybe 100 to 150 
people, and I thought they all came to have a little lunch and hear a 
presentation. And I was asked to give a speech, and I gave one. Had I 
known how much investors were sitting in the room ready to invest in 
the capital fund drive, I would have shortened my speech up and gotten 
out of the way.
  They began their capital fund drive that day with a significant 
response, and in 9 days raised the capital necessary to get the 
biodiesel plant off the ground and get it rolling. And it will be 
producing biodiesel out of soybeans and off of animal fat. And that is 
a byproduct that can be put to better use.
  So the biodiesel, remember, has a lot of versatility in it as well. 
We all know

[[Page H1769]]

that America can no longer afford to depend on oil that flows from 
unstable sources and unreliable partners. Oil has reached almost $60 a 
barrel, and with world demand for oil increasing at an explosive rate, 
it is likely we may never see low oil prices again.

                              {time}  2200

  Clearly, this Nation is too dependent on foreign sources of oil, and 
even a brief rundown of the facts is a sobering exercise.
  Two-thirds of the world's known oil reserves are located in the 
volatile and increasingly violent Middle East, while America's domestic 
oil reserves have declined 20 percent over the past 15 years.
  American taxpayers today spend more than $50 billion a year just to 
protect Middle Eastern oil supplies. This is the cost of our energy, 
too.
  Today, the U.S. is importing more than 62 percent of its oil, and 
that number is expected to hit 77 percent in the next 20 years.
  Yet there has not been a major new refinery built in the U.S. since 
the Bicentennial.
  So, recently, the Renewable Fuels Association announced that 
January's ethanol production set an all-time record high in production. 
U.S. fuel ethanol reached 320 million gallons in the month of January. 
The previous high was 312 million, just the month before in December.
  U.S. ethanol industry set an all-time monthly production record this 
last January now of 241,000 barrels a day, and that is an astonishing 
amount of production. We have a long ways to go before we get our 
production up to the point where we can meet the demand in this 
country, not just at the 10 percent rate or the 30 percent rate.
  As the gentlewoman from South Dakota pointed out, we have a market 
out there for E-85, and E-85 uses a lot more renewable fuel; and it 
takes a lot more pressure off our imported oils from overseas. It is a 
lot better for our environment, for our air and our water; and it is 
something that has been my life's work in soil conservation work, water 
quality and air quality in preserving our resources. This is something 
that is good for all of us. It is good for all Americans.
  It is one of those issues that when you first pick it up and look at 
it, it looks good, and you hear some criticism, you find the answers to 
that and it looks better. Each time you turn this ethanol and 
biodiesel, the renewable fuels package around, you can see it does more 
and more for us.
  By the way, the balance of trade, we watched our balance of trade, 
that deficit number get larger in the red over the last several years. 
A year ago, we were looking at a minus $503 billion of balance of 
trade, red ink. That is how much product we purchased overseas greater 
than the amount we exported.
  Last February 10, we got our new numbers for the balance of trade. It 
is now a minus $617.7 billion of more goods that we imported than we 
exported.
  But the ethanol industry, the renewable fuels industry, but ethanol 
itself will change that balance of trade to the tune of $5.1 billion 
that will reduce the amount of foreign oil that we will have to 
purchase.
  So this fits in very well with our economics. It fits in very well 
with our taxes. It fits in very well with our air and our water and our 
environment. It is something that is good for rural America, good for 
the Corn Belt, and good for the cities, especially for their air 
quality. It is a replacement for MTBEs.
  That is something I wish we had done a long time ago. It would save 
this Congress a lot of grief that we will be facing in how to deal with 
the MTBE issues.
  It is time to move forward and solve this problem. I ask for support 
on this bill. We will be rolling it out here next week, and I am glad 
to be a part of it. It is something I have a lot of energy and passion 
for.
  I thank the gentlewoman from South Dakota for her efforts.
  Ms. HERSETH. Mr. Speaker, I thank the gentleman from Iowa (Mr. King) 
very much for sharing his perspectives based on historical development 
of the industry, the challenges that we faced in the past and clearly 
the opportunities that we have today and in the future to utilize 
ethanol and other renewable fuels as part of a national energy policy. 
I appreciate as well his thoughtful insights as it relates to the 
investment in rural America, the impact in a positive way on rural 
communities, how rural America has stepped up as well to provide 
capital for investment in the technologies that are necessary to begin 
and expand and construct the ethanol facilities.
  Also, the points made about the potential impact, the positive impact 
that ethanol production and increasingly utilizing renewable energies 
and our national energy policy and increasing the blend that can have 
on our trade balance, as well as clearly the positive environmental 
impact of ethanol and renewable energy.
  So I want to thank again both my distinguished colleague, the 
gentleman from Iowa (Mr. King), as well as the gentleman from Nebraska 
(Mr. Osborne) for their prior work and their commitment to ensuring 
that renewable energy is a core component of our national energy 
policy, demonstrating not only the regional support but the bipartisan 
support for the legislation that we will be introducing.
  Renewable fuels such as ethanol already constitute, as we have shown, 
a significant portion of our Nation's energy portfolio. They reduce the 
cost of petroleum and are home grown, clean, efficient, and 
economically beneficial to rural America.
  Mr. Speaker, I ask my colleagues not to believe the myths and 
misinformation of the past, and to fairly evaluate or reevaluate the 
role of ethanol and other renewable fuels as a core component of our 
national energy policy.
  I firmly believe that Congress must enact policies that will 
facilitate the positive impact of the renewable fuels industry because 
it will, in turn, benefit the entire country.
  We will be introducing this legislation in the coming days, and I 
urge my colleagues to join me in supporting this important initiative, 
to join their colleagues such as the gentleman from Iowa (Mr. King) and 
the gentleman from Nebraska (Mr. Osborne) and a number of others who 
will introduce this legislation.

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