[Congressional Record (Bound Edition), Volume 157 (2011), Part 7]
[Senate]
[Pages 8965-8968]
[From the U.S. Government Publishing Office, www.gpo.gov]




                                ETHANOL

  Mr. THUNE. Mr. President, tomorrow the Senate will vote on a cloture 
motion that deals with an amendment that would do away with a tax 
provision that was enacted many years back by Congress but was extended 
just this last December. In fact, there were a whole series of tax 
extenders that were passed by the Congress in December of last year, 
but this particular one, the volumetric ethanol excise tax credit, was 
also extended. It was extended until the end of the year 2011. December 
31 of this year is when it would expire with the amendment we will be 
voting on tomorrow--or at least the cloture motion we will be voting on 
is with regard to an amendment that would eliminate that and end it 
now. There are a number of problems associated with that approach, one 
of which is this issue of economic certainty. We have lots of people 
across this country who have made investments. We have lots of jobs 
that are impacted by this industry. In fact, if you look, there are 204 
plants, ethanol plants, in America today, spread across 29 States and 
on the order of about half a million jobs--all of which, I might add, 
are American jobs--you have half a million American jobs impacted by 
this industry. The ironic thing, too, is coming on the heels of an 
announcement last week that Venezuela, Libya, and Iran will block OPEC 
from producing more oil to relieve gasoline prices, we continue to be 
held more and more hostage every single day by our addiction to foreign 
oil.
  We send $1 billion a day outside the United States to purchase 
foreign oil--$1 billion every single day to purchase foreign oil. The 
ethanol industry, which now represents about 10 percent of the fuel mix 
in this country, displaces 445 million barrels of oil every single 
year. That is the equivalent of $34 billion that we don't send 
overseas--445 million barrels of oil displaced every single year, $34 
billion that we don't have to spend purchasing foreign oil. So this is 
an issue that has a direct bearing on the issue of energy independence, 
the issue of continuing what I think is a very dangerous dependence on 
foreign sources of energy, foreign oil, and has a direct bearing as 
well on the price consumers pay at the pump. Clearly, if you took 10 
percent of the fuel mix out of production or out of that mix, you would 
put an additional pressure on the price that currently is being paid by 
consumers.
  In fact, there was a study done by Iowa State University that said, 
in

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2010, if you took away the contribution ethanol makes to the fuel mix 
in the country today, you would see gasoline prices increase by 89 
cents per gallon. When you are already facing $4 gasoline prices in 
this country, which I think is having a profound impact on our economy 
and particularly on consumers who, day in and day out, are having to 
deal with these high prices, it seems ironic that we would be looking 
at legislation and policy that would further drive up the cost of 
gasoline. We ought to look at ways we can reduce it, and this clearly 
would have the opposite effect.
  A few weeks ago there was a proposal to put additional taxes on oil 
and gas or at least to change some gas policy with regard to oil and 
gas which many of us argued would add to the cost of gasoline in this 
country. It would essentially, in effect, be raising taxes on gasoline.
  This proposal would have the same effect. It would increase the cost 
of energy and obviously impact many of the jobs to which I just 
alluded. It would also break faith with the commitment made by this 
Congress last December when we extended the VEETC, the volumetric 
ethanol excise credit, for another year. We have a lot of folks who 
made investments, you have people across the country whose livelihoods 
and jobs depend upon this, and I think it makes sense, when we put 
policy in place and we say it is going to be in place for a certain 
period of time, that that be honored.
  Having said that, I have been working closely with my colleague from 
Nebraska and others of our colleagues on both sides of the aisle, 
Republicans and Democrats, on a proposal that would reform the VEETC 
and move us in a direction that puts us on a pathway or a trajectory 
into the future that will take greater advantage of this contribution 
that is being made by biofuels to our country's energy independence and 
also phase out the VEETC tax credit but that does it in a way that does 
not impact and disrupt in a way that this would, where you say you are 
going to end this today. As I said, you have lots of people who made 
investment decisions based on current policy. You would change that 
policy immediately and abruptly, but that is not the right way or 
correct way to go about this. There is a better way. That is what my 
colleague from Nebraska and I have been working on. I hope my 
colleagues in the Senate will vote tomorrow against this attempt to end 
this abruptly and to disrupt this market and do tremendous harm to an 
industry that is contributing, in a significant way, to America's move 
toward energy independence and is helping to keep gas prices lower than 
they would otherwise be were it not for the 10-percent contribution 
ethanol makes year in and year out to our energy.
  So there are lots of reasons why we think it is a bad idea to move 
forward with the amendment that will be offered tomorrow and the 
cloture motion that would get on that amendment. I hope my colleagues 
will defeat that cloture motion so we can work on a more responsible, 
reasonable way that phases out the VEETC and, in a responsible way, 
that would allow those who have made investments to be able to plan 
accordingly.
  I would simply say, as we get into that debate tomorrow, this is an 
issue which has ramifications for our economy because of the price of 
fuel and the impact ethanol has on the price of fuel in this country. 
It has an impact on the old issue of energy independence and whether we 
are going to continue to be held hostage and over a barrel by oil we 
have to import from other places around the world. Of course, it has 
implications as well for just the jobs that are created here at home, 
American jobs that could very well be lost if we move down a path that, 
in my view, would be very harmful for this industry and its ability to 
create jobs.
  I have my colleague from Nebraska here as well this afternoon and I 
would welcome his thoughts on this subject and would like to enter into 
a dialog with him about the impact this industry has on his State of 
Nebraska--and not just the impact it has on Nebraska or South Dakota 
but the impact it has on this country by creating jobs, by lessening 
the dependence we have on foreign sources of energy, and by keeping gas 
prices at a more reasonable level than we would otherwise see if it 
were not for the contribution ethanol makes to our fuel mix.
  I am going to yield to the Senator from Nebraska for his observations 
about this subject.
  The ACTING PRESIDENT pro tempore. The Senator from Nebraska.
  Mr. JOHANNS. I wish to start out thanking my colleague from South 
Dakota. He has been a very reasoned voice on this issue, and he has 
brought forward some ideas that I believe are the right approach to 
dealing with ethanol. If you think about it, about 50 percent of our 
oil is now imported from another part of the world. The more dramatic 
piece of that is that oftentimes the importation of that oil comes from 
parts of the world that do not share our philosophy, do not share our 
view of the world, are not democracies, and do everything they can to, 
in effect, fight against what we believe in. So not only are we 
dependent on foreign oil, we are dependent on a source of foreign oil 
that oftentimes is contrary to the values and beliefs of American 
citizens.
  One of these days, I think we are going to learn the lesson of that 
dependency, and we are going to alter our course. We are going to do a 
whole host of things that make sense: more drilling, more exploration, 
more nuclear power plants, as Senator Lamar Alexander has advocated 
for, and just everything on the list. It is all a piece of the puzzle.
  A piece of that puzzle is also renewable fuels. It could be 
biodiesel, it could be ethanol, it could be cellulosic ethanol, which I 
championed when I was Secretary of Agriculture. Again, I think it is 
going to be a whole host of things.
  Ten or twenty years ago, if I were on the Senate floor making those 
statements, many would have looked at me and said: Well, Mike, that is 
just a pipedream. But as the Senator from South Dakota points out, 10 
percent of our fuel in the United States is now ethanol--10 percent. It 
did displace 445 million barrels of oil last year. There is nothing 
else going on out there that has had that kind of impact. We can report 
that $34 billion was kept in the U.S. economy. We often hear about this 
massive transfer of wealth that is occurring by us sending our hard-
earned dollars to other parts of the world--again, parts of the world 
that do not share our values. In this case, with this product, we kept 
$34 billion here. At least one study indicates the average family saved 
$800 a year because of this. Our gas prices are about 89 cents lower 
per gallon than they otherwise would have been. Those are real savings 
to people who are out there trying to figure out how to pay for filling 
the tank.
  Many years ago, when I was Governor of Nebraska, we took a long, hard 
look at our State. We wanted to know how we might best diversify our 
economy. Some of the things we did worked. I am very pleased to report 
our unemployment rate during this time never got over 5 percent. Today 
it is about 4.2 percent. I am also pleased to tell you we balanced the 
budget. We did not borrow money to do it. One of the things we did was 
we said: Look, ethanol is a piece of this puzzle in Nebraska, and so we 
actually created State programs to try to encourage the construction of 
ethanol plants.
  I will tell you, at the time I was Governor, I thought maybe two 
plants would be built. Well, the marketplace responded and we built a 
number of plants. Today, Nebraska is the second largest producer of 
ethanol. We have 24 plants in the State. Those 24 plants produce 2 
billion gallons per year, $4 billion of capital investment. It directly 
employs 1,300 Nebraskans in high-quality jobs. It also does some great 
things for our livestock sector because our cattle industry--well, they 
buy the distiller grains. They have real value if you are feeding 
cattle, which we do a lot in our State.
  We have recognized in Nebraska, and I think across the country, that 
it is time to move to the next step when it comes to ethanol 
production. That is

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why I was pleased to sign on to Senator Grassley's bill when he 
introduced it. I was also pleased to work with Senator Thune who has 
provided such excellent leadership in this area. Basically, what this 
plan does is it says: Let us take a thoughtful, measured approach. 
Let's not jeopardize someone's situation and cause them to pay higher 
fuel prices at the pump because we did something in a rash and hasty 
sort of way. It also helps to pay off some of the deficit. We are 
literally saying: OK, if we are going to make some changes, we will 
make a contribution to deficit reduction.
  Well, let me wrap up my comments and say: Senator Thune's approach is 
the right approach. It is an approach that says: Look, we are not going 
to take this industry, which has become such an important part of our 
energy strategy, and walk it off the cliff and just see how it lands. 
Instead, what we are going to do is, we are going to take a measured 
approach. We are going to build the infrastructure necessary. We are 
going to add some money to reduce the deficit, and we are not going to 
jeopardize somebody's price at the pump. It is already expensive 
enough. I am very pleased to support that approach. My hope is that our 
colleagues will listen to this approach, get behind it, and support it 
because it is the right approach. It is the right approach for 
Nebraska, but it is the right approach for the country.
  With that, I thank the Senator from South Dakota for his help.
  I yield the floor to him.
  Mr. THUNE. Mr. President, if I might just say to the Senator from 
Nebraska, because I am wondering if perhaps in his discussions with 
farmers and ranchers in his State--I am sure the issue which he alluded 
to, which I think is an important one, comes out--I wonder if other 
people around the country realize, when we make a gallon of ethanol, we 
take a bushel of corn--which is a remarkable thing that we have gotten 
to, where the technology enables us to do that--we produce 2.7 gallons 
of ethanol from a bushel of corn. We have almost 3 gallons of ethanol 
from a bushel of corn which goes into our fuel supply and represents 
about 10 percent of all the fuel we use. I wonder if a lot of people 
realize that one of the byproducts of that, as the Senator from 
Nebraska has mentioned, is something called dried distillers grain. The 
DDGs, as we refer to it, is something that is then used to feed 
livestock.
  Now, a lot of people think there is this whole corn debate about food 
versus fuel, but I don't think most Americans realize that only about 
12 percent of our corn crop in this country actually ends up in foods. 
It is either consumed directly, such as corn chips, or indirectly, such 
as high fructose corn syrup. But one-third of the grain that goes into 
ethanol production comes out as dried distillers grain, these DDGs, and 
for each bushel of corn used in the ethanol-making process--as I said, 
the 2.7 gallons of ethanol--18 pounds of DDGs and 18 pounds of carbon 
dioxide.
  If we took, let's just say, for example, 5 billion bushels of corn 
used for ethanol production in a year, the feed product equivalent of 
about 1.7 billion bushels of corn is returned to the livestock food 
chain as an ethanol byproduct. So we take about one-third of all of the 
grain that is put into the process to make ethanol, and that comes back 
in the form of something we feed to livestock and something that has 
been a great source of protein for livestock producers in this country. 
I don't think most Americans even realize we are not just talking about 
the fuel component; we are not just talking about that liquid we use to 
blend with petroleum products and get ethanol in this country; but 
there is also this other byproduct which is essential for livestock 
producers to feed their livestock.
  I am wondering if, in the conversations the Senator from Nebraska, I 
assume, has with his farmers and ranchers--of course, they are very 
familiar with this--the average person around this country understands 
this.
  Mr. JOHANNS. Mr. President, that is an excellent point. When I was 
Secretary of Agriculture, this whole debate started about food versus 
fuel. It was almost like there was this impression that you took that 
bushel of corn, you somehow burned it up to create ethanol, and that is 
all you got out of it. Then there was this big debate about whether 
that was worth it. As the Senator from South Dakota points out, a whole 
different process is occurring.
  So in our State, it is not just the dried distiller grains because to 
dry them down takes some energy. We have the cattle yards in close 
proximity to the ethanol plants. So they buy the wet mash, which is 
what we call it. They ship it over, they feed it immediately, and it is 
a wonderful product to feed to cattle.
  When we think about the approach the Senator from South Dakota has 
come up with, we realize it hits on all cylinders. It does reform the 
ethanol tax credit. Again, I believe the industry has come to the 
conclusion that is a thoughtful, reasonable step.
  No. 2, it invests in the blender pumps. One of the challenges I had 
for a long time was with the flex-fuel vehicle. I am in the State that 
is the second largest producer of ethanol. Yet I could not get the E-85 
unless we really went out and searched for it. What if we had a pump 
where I could literally pull up to it and dial it up to E-85 and put 
that in my vehicle? So it invests in the blender pumps.
  It extends cellulosic tax credits for the small producers. Here is 
what I would say: The next generation is not going to be just corn-
based ethanol. That will be a part of the picture, but I believe we 
will see the day--and we are already seeing the day--where we will have 
a cellulosic product converted into ethanol.
  Then, finally, $1 billion is added to deficit reduction. The ethanol 
industry is saying: Look, we agree we need to do our share. We agree we 
need to start on this process of phasing this out.
  So I think the Senator from South Dakota has hit all the right 
points. It does not take this industry and drop it off the cliff. It is 
a thoughtful, measured approach to dealing with this issue.
  Again, I thank the Senator from South Dakota for his leadership, and 
I yield to him.
  Mr. THUNE. Mr. President, in closing, I wish to, first of all, thank 
the Senator from Nebraska for joining us. He has a great wealth of 
experience, not only having grown up on a family farm in his early 
years but representing his State as a mayor, as a Governor, and then 
representing our Nation as the Secretary of Agriculture. I recall 
working with him when he was the Secretary of Agriculture on a lot of 
these issues.
  One of the things that strikes me about where we are today relative 
to where we were then is the prosperity that has returned to the 
agricultural sector in our economy, to rural America. We can't say the 
biofuels industry has been solely responsible for that, but certainly a 
contributing factor. We have seen growth in the economy in the Midwest.
  Again, what I would point out about this, which is so important for 
people to realize is that these are American jobs. This is our home-
grown industry. We are either going to get fuel in the United States or 
we are going to buy it from some foreign country. That is what we have 
been doing, and that is what we continue to do to the tune of $1 
billion every single day. So to the degree we can promote domestic 
energy production in this country and add to the supply in this 
country, which is what biofuels does, it is for the American consumer 
and, obviously, good for America's economy and America's dangerous 
dependence we currently have on foreign energy.
  So the proposal the Senator from Nebraska is a cosponsor of and that 
he and I have worked together on and that we will file as a bill today 
will present an alternative to the approach that will be advanced, or 
that they will attempt to advance tomorrow, which is to just right now, 
in a very disruptive way, abruptly end something that we just voted on 
in December to put in place. We have people who have made investments 
in it, and it has made a tremendous impact on jobs in this country.

[[Page 8968]]

  The approach the Senator from Nebraska and I are advocating I believe 
is a reasoned approach. It is forward looking in the sense that it 
promotes the next generation of biofuels, advanced biofuels, and 
cellulosic ethanol. In the same way the Senator from Nebraska 
mentioned, it gets us to where we have more choices for American 
consumers when they come into a filling station by investing in some of 
the pumps out there and giving consumers more choices.
  Then, finally, as the Senator from Nebraska said, it also puts money 
toward the debt, toward deficit reduction, and phases out the tax 
credit that is available today to ethanol producers in this country. It 
is a reasonable, responsible and, as the Senator said, measured way of 
dealing with this, not the way that is being proposed by the vote we 
are going to have tomorrow.
  So I hope our colleagues will join us in working in a constructive 
way to continue to grow this industry and do it in a way that creates 
jobs for Americans and lessens our dependence on foreign nations.
  I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Arizona.

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