[Congressional Record (Bound Edition), Volume 148 (2002), Part 4]
[Senate]
[Pages 5055-5057]
[From the U.S. Government Publishing Office, www.gpo.gov]




                        RENEWABLE FUELS STANDARD

  Mr. NELSON. Mr. President, perhaps no issue related to the energy 
debate in the Senate has suffered more as a result of misinformation 
than the renewable fuels standard agreement. This historic agreement 
was arrived at after years of careful and considerate negotiation from 
all sectors of interest; environmentalists, fanners, oil industry 
representatives, and politicians included.
  Simply stated, it directs the gradual increased production and 
integration of ethanol and other biofuels--renewable fuel sources--into 
the U.S. fuel supply. The increase in available alternative fuels such 
as ethanol and biodiesel are sure to result in a cleaner environment, 
an ease on supply, and a reduction on the U.S. dependence on foreign 
oil--a national security imperative.
  Opponents of the renewable fuels standard have raised the specter of 
an increase in gas prices as a result of increased ethanol production. 
Some claim that motorists could pay as much as 4 to 9 cents extra per 
gallon. However, in parts of the Nation where ethanol constitutes a 
significant share of the market, over the past 10 years, there has been 
essentially no difference in price between ethanol and nonethanol 
gasoline.
  According to a consulting firm working for the Oxygenated Fuels 
Association, whose members produce and market MTBE, 70 percent of which 
is imported--the defeat of the RFS will keep the MTBE market alive--it 
is 4 to 9.75 cents per gallon. According to the Department of Energy's 
Energy Information Administration it is 5 to less than 1 cent per 
gallon. The marketplace reality is: 20 years' experience in Nebraska--
$.01 less than ethanol-free gasoline at the pump; 10 years' experience 
in Minnesota--$.08 less than gasoline at the wholesale level; 1.5 
years' experience in California--no essential difference to the public; 
and 10 years' experience nationwide--no essential difference to the 
public.
  The question is which numbers do you believe. Furthermore, the 
availability of ethanol blends has been shown to drive down the price 
of all gasoline as a result of market forces.
  Another false argument against ethanol's we've heard is that 
producing ethanol consumes nearly as much nonrenewable oil as the 
ethanol replaces. The latest U.S. Department of Agriculture report 
demonstrates that ethanol production has a positive energy balance of 
1:1.34 and only 17 percent of

[[Page 5056]]

that energy comes from fossil oil. The bulk of the energy used in 
fertilizing the crops and to power ethanol production plants comes from 
natural gas or coal. Additionally, with farmers using more ethanol and 
biodiesel in their vehicles, and the advance of biorefineries using 
cellulosic biomass including agricultural and forestry crops and 
residues, as well as other biomass and animal waste with disposal 
problems, the use of fossil fuels to produce biofuels could approach 
zero.
  Where opponents really miss the point is in their failure to 
recognize the threat posed to America's national, energy, and economic 
security by our dangerous dependence on oil imports. In 1999, America 
was importing over 55 percent of its oil and petroleum products. Just 2 
years later, our dependency increased to over 59 percent--and part of 
those supplies are in jeopardy because of the unpredictability of 
Saddam Hussien and political instability in other oil-producing 
nations.
  Failure to provide an adequate market for ethanol is a major factor 
in preventing the emergence of biofuels made from cellulosic biomass. 
The renewable fuels standard is critical to advance biorefinery 
technology that will produce urgently needed refined, domestic, 
renewable, and clean burning biofuels. The biorefineries, very small 
compared to oil refineries, will be well disbursed throughout the 
country and much less prone to terrorists' attacks.
  Opponents wail about a monopoly in the ethanol industry and that only 
a small group of producers will benefit from the renewable fuels 
standard. This is inaccurate on two fronts.
  Essentially all the ethanol and biodiesel plants under construction 
and in planning phases are smaller plants owned by cooperatives and 
community enterprises. More importantly, the RFS will provide the 
impetus to launch the construction of biorefineries across the Nation.
  Some perceive the RFS as a targeted massive Federal Government 
subsidy to benefit only farm belt States. In fact, the renewable fuels 
standard will encourage technology advancements that could be located 
and employed in any region of the United States, not just the ``corn 
states.'' It will enhance the Nation's economy, surely in agriculture-
based economies, but also through support industries, new jobs, 
research and development, and opening new markets for agriculture 
products.
  This may displays existing ethanol plants, plants under construction 
and ethanol, biodiesel, and other biofuels plants under consideration. 
As you can see, with the renewable fuels standard, biorefineries will 
soon be operating in most State of the Nation.
  There is no question that the renewable fuels standard will reduce 
our dependence on foreign oil. It will slow the deterioration of the 
environment through the reduction of fossil fuel emission and spills, 
enhance national, energy and economic security, create a new industrial 
base with tens of thousands of new, high quality jobs, and strengthen 
homeland security by providing hundreds, perhaps thousands, of 
community-oriented biorefineries producing biofuels, biochemicals, and 
bioelectricity.
  There are those who believe that ethanol's current tax incentives are 
sufficient, and obviate the need for the renewable fuels standard 
calling for an expanding market for biofuels. For the past 10 years the 
price of ethanol was generally below the price of 87 octane at both the 
wholesale and the retail levels. At current capacity, there is a 
surplus of ethanol driving wholesale price of ethanol well below the 
wholesale price of gasoline.
  On April 11 of this year, the wholesale price of gasoline in New York 
was 84 cents while the national average cost of wholesale ethanol was 
55 cents. If ethanol was available in New York City gasoline today, the 
price to the consumer should be considerably less than ethanol-free 
gasoline. I say should because the ethanol industry is always at the 
pricing mercy of the gasoline marketers. Routinely, the octane value of 
the ethanol accrues to the gasoline industry not to the ethanol 
producers. Again, historically, the availability of ethanol in the 
marketplace drives down the cost of all gasoline because of market 
forces.
  According to the Society of Independent Gasoline Marketers of 
America,

       The federal benefits afforded ethanol-blended fuels have 
     been an important, pro-competitive influence on the nation's 
     gasoline markets. By enhancing the ability of independent 
     marketers to price compete with their integrated oil company 
     competitors, this program has increased independent 
     marketers' economic viability and reduced consumers' costs of 
     gasoline.
  Then there is the issue of the overall cost of the ethanol industry. 
Opponents claim that the cost of the program exceeds the benefits. This 
is refuted by a recent study: the Economic Analysis of Legislation for 
a Renewable Fuels Requirement for Highway Motor Fuels, conducted by AUS 
Consultants.
  It will displace 1.6 billion barrels of oil over the next decade; 
reduce our trade deficit by $34.1 billion; increase new investment in 
rural communities by more than $5.3 billion; boost the demand for feed 
grains and soybeans by more than 1.5 billion bushels over the next 
decade; create more than 214,000 new jobs throughout the U.S. economy; 
and expand household income by an additional $51.7 billion over the 
next decade.
  The RFS in this bill represents a continuation of sound public policy 
supporting the biofuels industry that has brought benefits to the 
Nation over the past quarter a century.
  Two States are showing us the way--Minnesota and Nebraska. We can 
also look to the major advances being made in Europe and Brazil.
  I am unabashedly proud of what my home State has accomplished. The 
formation of the National Governors' Ethanol Coalition was one of the 
important steps. Nebraska and several other Midwestern States created 
this coalition that now consists of 26 States and one U.S. territory, 
as well as Brazil, Canada, Mexico, and Sweden. Since its formation in 
1991, the Governors' Ethanol Coalition has worked to expand national 
and international markets for biofuels. American firms are working with 
India, Thailand, Colombia, and other countries to help them establish 
biofuels industries.
  Within the State of Nebraska, during the period from 1991-2001, seven 
ethanol plants were constructed and several of these facilities were 
expanded more than once during the decade. Specific benefits of the 
ethanol program in Nebraska include:
  $1.15 billion in new capital investment in ethanol processing plants.
  1,005 permanent jobs at the ethanol facilities and 5,115 induced jobs 
directly related to plant construction, operation, and maintenance. 
Average salaries at the ethanol processing facilities range from 
$38,000-$56,000 depending on geographic location. The permanent jobs 
generate an annual payroll of $44 million.
  More than 210 million bushels of corn and grain sorghum is processed 
at the plants annually. Economists at Purdue University and the USDA 
estimate that the price of corn increases from 9.9 cents-10 cents per 
bushel for every 100 million bushels of new demand. Local price basis 
increases in Nebraska range from 5-15 cents.
  The trend of marketing wet distillers grains for cattle feeding 
generates at least $41 million in increased economic activity annually 
according to a 1999 report by the University of Nebraska. Of the $41 
million increase, 85 percent accrues to cattle feeders in the form of 
reduced costs and increased gains, and 15 percent accrues to the 
plants.
  Local tax bases are more diversified in areas where plants are 
located. Several smaller communities have experienced increases in 
housing construction and new business start-ups associated with 
services related to plant operations.
  Jobs among the skilled trades have increased. Pipe fitters, 
steamfitters, steel workers, and construction engineering trades are 
involved in plant construction.
  Value is added to grain processed at ethanol plants. Today, a $2.00 
bushel of corn is processed into products worth at least $5.00. 
Gasoline purchased from refineries outside Nebraska is displaced by 
ethanol produced in the State, thereby retaining energy dollars in the 
local economy.

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  These economic benefits have increased each year during the past 
decade due to plant expansion, employment increases, and additional 
capital investment.
  If each State followed the Minnesota and Nebraska models, which are 
different in several respects, and produced 10 percent of its own 
domestic, renewable fuels, America will have turned the corner and that 
noose of oil-import dependency and climate change will begin to loosen.
  I know there is doubt among my colleagues from States without farm 
crops about the ability to provide the needed starch, sugar, or oil 
seed crops to produce biofuels and other biorefinery products. There 
are more than adequate supplies of cellulosic biomass in each State to 
meet the 10 percent goal: agricultural and forestry crops and residues; 
rights-of-way, parks, yard and garden trimmings; and the clean portion 
of the biomass fraction of our municipal waste.
  A major resource commitment is needed in this country to ensure that, 
10 years from now, we have established the commercial technology base 
to produce many billions of gallons per year of renewable fuels, in 
dispersed and decentralized installations around the nation. The 
feedstocks must be diversified with the end uses ranging from gasoline 
to diesel to aviation fuels. We also need to quantify the ``externality 
costs'' of our current imported oil dependence, in order to ensure we 
are not paying those costs 10 years form now.
  Over the past few days, we have learned that we cannot drill our way 
out of our dangerous oil dependency. We have decided to support a 
renewable energy portfolio standard that will increase our use of 
renewable resources like solar, wind, geothermal, hydro, and biomass to 
produce electricity.
  We sue very little oil to produce electricity. We use oil to power 
our transportation sector. That is where we are most vulnerable.
  The renewable fuels standard is absolutely necessary in order to 
expand the biofuels industry into the use of cellulosic biomass, which 
is in great abundance throughout the United States.
  The PRESIDING OFFICER. The Senator from Nevada.

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