<DOC>
[110th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:35999.wais]
A PATH TOWARD THE BROADER USE OF
BIOFUELS: ENHANCING THE FEDERAL
COMMITMENT TO RESEARCH AND DEVELOPMENT
TO MEET THE GROWING NEED
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY AND
ENVIRONMENT
COMMITTEE ON SCIENCE AND TECHNOLOGY
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
JUNE 14, 2007
__________
Serial No. 110-40
__________
Printed for the use of the Committee on Science and Technology
Available via the World Wide Web: http://www.science.house.gov
______
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COMMITTEE ON SCIENCE AND TECHNOLOGY
HON. BART GORDON, Tennessee, Chairman
JERRY F. COSTELLO, Illinois RALPH M. HALL, Texas
EDDIE BERNICE JOHNSON, Texas F. JAMES SENSENBRENNER JR.,
LYNN C. WOOLSEY, California Wisconsin
MARK UDALL, Colorado LAMAR S. SMITH, Texas
DAVID WU, Oregon DANA ROHRABACHER, California
BRIAN BAIRD, Washington ROSCOE G. BARTLETT, Maryland
BRAD MILLER, North Carolina VERNON J. EHLERS, Michigan
DANIEL LIPINSKI, Illinois FRANK D. LUCAS, Oklahoma
NICK LAMPSON, Texas JUDY BIGGERT, Illinois
GABRIELLE GIFFORDS, Arizona W. TODD AKIN, Missouri
JERRY MCNERNEY, California JO BONNER, Alabama
PAUL KANJORSKI, Pennsylvania TOM FEENEY, Florida
DARLENE HOOLEY, Oregon RANDY NEUGEBAUER, Texas
STEVEN R. ROTHMAN, New Jersey BOB INGLIS, South Carolina
MICHAEL M. HONDA, California DAVID G. REICHERT, Washington
JIM MATHESON, Utah MICHAEL T. MCCAUL, Texas
MIKE ROSS, Arkansas MARIO DIAZ-BALART, Florida
BEN CHANDLER, Kentucky PHIL GINGREY, Georgia
RUSS CARNAHAN, Missouri BRIAN P. BILBRAY, California
CHARLIE MELANCON, Louisiana ADRIAN SMITH, Nebraska
BARON P. HILL, Indiana VACANCY
HARRY E. MITCHELL, Arizona
CHARLES A. WILSON, Ohio
------
Subcommittee on Energy and Environment
HON. NICK LAMPSON, Texas, Chairman
JERRY F. COSTELLO, Illinois BOB INGLIS, South Carolina
LYNN C. WOOLSEY, California ROSCOE G. BARTLETT, Maryland
DANIEL LIPINSKI, Illinois JUDY BIGGERT, Illinois
GABRIELLE GIFFORDS, Arizona W. TODD AKIN, Missouri
JERRY MCNERNEY, California RANDY NEUGEBAUER, Texas
MARK UDALL, Colorado MICHAEL T. MCCAUL, Texas
BRIAN BAIRD, Washington MARIO DIAZ-BALART, Florida
PAUL KANJORSKI, Pennsylvania
BART GORDON, Tennessee RALPH M. HALL, Texas
JEAN FRUCI Democratic Staff Director
CHRIS KING Democratic Professional Staff Member
MICHELLE DALLAFIOR Democratic Professional Staff Member
SHIMERE WILLIAMS Democratic Professional Staff Member
ELAINE PAULIONIS Democratic Professional Staff Member
ADAM ROSENBERG Democratic Professional Staff Member
ELIZABETH STACK Republican Professional Staff Member
STACEY STEEP Research Assistant
C O N T E N T S
June 14, 2007
Page
Witness List..................................................... 2
Hearing Charter.................................................. 3
Opening Statements
Statement by Representative Nick Lampson, Chairman, Subcommittee
on Energy and Environment, Committee on Science and Technology,
U.S. House of Representatives.................................. 6
Written Statement............................................ 7
Statement by Representative Bob Inglis, Ranking Minority Member,
Subcommittee on Energy and Environment, Committee on Science
and Technology, U.S. House of Representatives.................. 8
Written Statement............................................ 9
Prepared Statement by Representative Jerry F. Costello, Member,
Subcommittee on Energy and Environment, Committee on Science
and Technology, U.S. House of Representatives.................. 9
Witnesses:
Dr. Thomas D. Foust, Biomass Technology Manager, National
Renewable Energy Laboratory
Oral Statement............................................... 11
Written Statement............................................ 13
Biography.................................................... 17
Mr. John Berger, President and CEO, Standard Renewable Energy;
CEO of BioSelect
Oral Statement............................................... 18
Written Statement............................................ 20
Biography.................................................... 23
Mr. Robert Dinneen, President and CEO, Renewable Fuels
Association
Oral Statement............................................... 23
Written Statement............................................ 25
Biography.................................................... 28
Mr. Michael J. McAdams, Executive Director, Advanced Biofuels
Coalition
Oral Statement............................................... 28
Written Statement............................................ 34
Biography.................................................... 40
Mr. David Waskow, International Program Director, Friends of the
Earth, U.S.
Oral Statement............................................... 40
Written Statement............................................ 42
Discussion
Biofuels Infrastructure........................................ 46
Biorefinery Technologies....................................... 48
Managing Biofuel Feedstocks.................................... 48
The Renewable Fuels Standard................................... 49
Environmental and Food Supply Concerns......................... 49
Bioenergy Research Centers..................................... 51
Cellulosic Ethanol............................................. 52
Environmental Concerns......................................... 53
Does Research Need to Be Feedstock Specific?................... 54
More on Bioenergy Research Centers............................. 55
Biorefinery Energy Efficiency.................................. 56
Biofuel Feedstocks: Research, Development, and Establishing
Standards.................................................... 56
More on Environmental and Food Supply Concerns................. 59
Pure Ethanol................................................... 62
Appendix 1: Answers to Post-Hearing Questions
Dr. Thomas D. Foust, Biomass Technology Manager, National
Renewable Energy Laboratory.................................... 66
Mr. John Berger, President and CEO, Standard Renewable Energy;
CEO of BioSelect............................................... 71
Mr. Robert Dinneen, President and CEO, Renewable Fuels
Association.................................................... 73
Appendix 2: Additional Material for the Record
Section-by-Section Analysis of Biofuels Research and Development
Enhancement Act ``Discussion Draft''........................... 78
Biofuels Research and Development Enhancement Act [Discussion
Draft]......................................................... 79
A PATH TOWARD THE BROADER USE OF BIOFUELS: ENHANCING THE FEDERAL
COMMITMENT TO RESEARCH AND DEVELOPMENT TO MEET THE GROWING NEED
----------
THURSDAY, JUNE 14, 2007
House of Representatives,
Subcommittee on Energy and Environment,
Committee on Science and Technology,
Washington, DC.
The Subcommittee met, pursuant to call, at 2:30 p.m., in
Room 2318 of the Rayburn House Office Building, Hon. Nick
Lampson [Chairman of the Subcommittee] presiding.
<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>
hearing charter
SUBCOMMITTEE ON ENERGY AND ENVIRONMENT
COMMITTEE ON SCIENCE AND TECHNOLOGY
U.S. HOUSE OF REPRESENTATIVES
A Path Toward the Broader Use of
Biofuels: Enhancing the Federal
Commitment to Research and Development
to Meet the Growing Need
thursday, june 14, 2007
2:30 p.m.-4:00 p.m.
2318 rayburn house office building
Purpose
The House Committee on Science and Technology Subcommittee on
Energy and Environment will hold a hearing entitled ``A Path Toward the
Broader Use of Biofuels: Enhancing the Federal Commitment to Research
and Development to Meet the Growing Need'' on June 14, 2007, at 2:30
p.m. in Room 2318, Rayburn House Office Building.
The purpose of this hearing is to examine the federal efforts on
research, development and demonstration of technologies related to the
production of biofuels, the development of biorefineries and
demonstrations of those technologies. The hearing will further focus on
legislative proposals to restructure and enhance the biofuels research
and development programs of the Department of Energy and the Department
of Agriculture under consideration in the House and Senate and how the
provisions will help to enhance ongoing research in areas related to
biofuels and promote a greater degree of coordination of research
materials related to biofuels.
Background
High gasoline prices, a desire to reduce our dependence on foreign
sources of energy, and concerns over climate change have greatly
increased interest in bio-based fuels as an alternative to petroleum
for transportation fuel. Over the last several years, in part as a
result of the Renewable Fuel Standard included in the Energy Policy Act
of 2005, the use of biofuels--most notably corn-based ethanol--has
grown significantly. Ethanol is most commonly blended with gasoline at
a level of 10 percent or less. And, this still only represents a small
portion (less than five percent) of the total gasoline sold.
Recent proposals in Congress and by the Administration have called
for significant increases in the use of biofuels over the next ten
years. Currently biofuel supply relies almost exclusively on corn-based
ethanol. Concerns have been raised about further expansion of corn-
based ethanol to meet the targets set for biofuel production.
Competition with food and feed supply, water and nutrient demand
associated with corn production, and continued questions about the
energy balance of corn-based ethanol production all suggest that
biomass sources for biofuel production must be diversified The majority
of this focus has been development of fuels from cellulosic materials
including grasses, wood, and waste materials. However, current
technologies for the development of fuel from these sources continue to
be expensive and not cost-competitive with corn-based ethanol.
If we are going to move toward broader use of biofuels, technology
will be necessary to create reasonably priced fuels from cellulosic
materials. The Agricultural Risk Protection Act of 2000 (Title III),
the Farm Security and Rural Investment Act of 2002, and the Energy
Policy Act of 2005 created bioenergy research and development programs
to focus federal research funding on the development of biofuels
derived from cellulosic materials. This research is ongoing and
operates under a Memorandum of Understanding between the Department of
Energy and the Department of Agriculture.
Legislative Proposals/Discussion Draft
The Committee on Agriculture marked up a title on Energy at the end
of May. Their proposal amends the Sections of the 2002 Farm Bill that
authorize joint USDA and DOE research and development programs on
biofuels and amends the Biomass Research and Development Act of 2000,
the other primary authorization for joint DOE and USDA biomass research
and development programs.
The Senate Energy and Natural Resources Committee reported energy
legislation to amend and expand authorization for research and
development programs on biofuels at the Department of Energy (S. 1419).
Earlier today, Subcommittee Chairman Lampson released a
``Discussion Draft'' of legislation entitled The Biofuels Research and
Development Enhancement Act. The witnesses have been provided a copy of
the draft and are being asked to include thoughts on the draft in their
testimony. A copy of the draft and a section-by-section are attached.
To quickly summarize, the draft would do the following:
<bullet> As it relates to Section 932 (Bioenergy Programs) of
the Energy Policy Act of 2005, discussion draft does several
things:
1) Creates a new research component to focus on
biofuels infrastructure.
2) Creates a new research component to focus on energy
efficiency in biorefinery facilities to reduce energy
consumption in the development of biofuels.
3) Increases the authorization levels for the
Bioenergy program. Specifically:
FY08--$377 million
FY09--$398 million
FY10--$419 million
<bullet> Creates an ``Information Center'' at the Department
of Energy to serve as a clearinghouse of information about
biofuels research and development.
<bullet> Creates a grant program for states with low levels of
biofuels production to work toward higher levels of production.
<bullet> The draft also conducts several studies:
Increasing consumption of mid-level (10-40 percent)
ethanol-blended gasoline
Optimization of Flex Fuel Vehicles while running on
E-85
Engine durability at differing blend levels of
biodiesel.
Witnesses
Robert Dinneen, President, Renewable Fuels Association. RFA is a
national trade association for the domestic ethanol industry. RFA's
membership includes a broad cross-section of businesses, individuals
and organizations dedicated to the expansion of the U.S. fuel ethanol
industry. Mr. Dinneen has presented testimony before the Congress and
federal agencies on numerous occasions, and represented the ethanol
industry's interests at State, national and international forums.
Thomas Foust, Biofuels Research Director, National Renewable Energy
Laboratory. The National Renewable Energy Laboratory is the Nation's
primary laboratory for renewable energy research and development. The
Biomass Program supports NREL R&D focused on biomass characterization,
thermochemical and biochemical biomass conversion technologies, bio-
based products development, and biomass process engineering and
analysis. Dr. Foust manages these programs.
John Berger, Chairman and CEO, Standard Renewable Energy and the CEO of
BioSelect. Standard Renewable Energy is a leader in renewable energy,
serving commercial and residential customers with clean, renewable
energy and energy efficiency technologies. BioSelect, a division of
Standard Renewable Energy, is a developer and operator of biodiesel
production facilities.
David Waskow, Friends of the Earth, U.S. Friends of the Earth, U.S. is
part of a network of international groups in 70 countries. David Waskow
is an international policy analyst and works on the environment, trade
policy, and corporate accountability.
Michael J. McAdams, Executive Director, Advanced Biofuels Coalition.
The Advanced Biofuels Coalition is a collection of companies who
utilize advanced technologies or provide renewable-based feedstocks to
produce renewable fuels--both biodiesel and gasoline compatible
components.
Chairman Lampson. I would like to extend a warm welcome to
all five of our witnesses. Thank you for being here today and
for testifying before the Subcommittee on Energy and
Environment on the subject of biofuels and more specifically on
the status of our biofuels research and development, and what
steps we can take to enhance the efforts toward better
commercialization of new technologies. I still say our old
technologies. We are just dusting them off and using them
again.
I would like to make specific mention that we are joined
today by Mr. John Berger, Chairman and CEO of Standard
Renewable Energy. I recently joined Mr. Berger at the opening
of his company's large scale biodiesel facility in Galveston,
Texas, and I look forward to hearing more from him today about
his experiences and continuing research and development
challenges facing the industry.
For sometime now, it has been clear to me and many of my
colleagues that our nation's energy needs can no longer be met
with fossil fuels, fully met at least. Our reliance on fossil
fuels, and more specifically foreign sources of energy,
jeopardizes our economy, our foreign policy, our national
security, and most importantly our environment.
The scale and complexity of addressing our energy and
climate challenges cannot be overstated.
And though I believe that fossil fuels still remain an
important part of any viable, balanced energy strategy, we must
continue and in many cases enhance our efforts to develop
alternative energy sources, namely biofuels.
All of the country ventures like Galveston Bay Biodiesel
are emerging that demonstrate our country's strong commitment
to producing reliable energy through the use of exciting and
cutting-edge technologies. These projects are shining examples
of the American innovative spirit.
Further, they demonstrate how a strong federal commitment
to research and development can spur our economic growth and
result in real solutions to our energy problems.
Though we have seen amazing growth in our country's
biofuels development, mostly in the forms of corn-based ethanol
and soy-based biodiesel, ethanol still represents only five
percent of the total gasoline sold, and biodiesel is an even
smaller portion of the total diesel market.
Currently, biofuel supply relies almost exclusively on
corn-based ethanol. Surely, we wouldn't be where we are today
without the efforts of those who pioneered the development of
our ethanol industry. Recognition of these efforts to build the
ethanol industry and make current supplies of ethanol available
is well deserved.
However, concerns have been raised about further expansion
of corn-based ethanol and its impact on food and feed supply
and costs. And to meet some of the biofuels mandates that have
been proposed, it would require nearly half of the current corn
crop produced annually. Clearly this all suggests that biomass
sources for biofuel production must be diversified.
The majority of this focus to diversify feedstocks has been
on cellulosic materials including grasses, wood, and waste
materials. However, current technologies for the development of
fuel from these sources continue to be expensive and not cost
competitive with corn-based ethanol. If we are going to move
toward broader use of biofuels, technology will be necessary to
create reasonably-priced fuels from cellulosic materials.
To realize this needed ``technological bump,'' we must
increase our investment in research and development, focus our
research on the most promising technologies, and ensure that
the latest research information is readily available for those
looking to either expand their biofuels production or embark
upon the development of new facilities.
Earlier this week the Committee staff released a discussion
draft of a bill that I will author and the Committee plans to
consider in coming weeks. The draft attempts to better
coordinate and compile information from federal biofuels
research programs, focus some of the biofuels research on
infrastructure needs and efficiency of biorefineries, study
some of the continuing challenges facing broader use of
biofuels, and increase the funding levels for biofuels
research.
This draft will serve as a starting point to discuss what
legislative efforts are needed to ensure that we maximize the
federal funding spent on biofuels research and development. I
am eager to hear from colleagues on the challenges that they
see ahead and to, and I look forward to working with the
Members of the Subcommittee as we move forward toward
consideration of that bill.
It is my hope that our witnesses today will share with the
Subcommittee their thoughts on the state of biofuels research
and development, the technological challenges that we continue
to face, the efforts underway to commercialize the new
technologies for biofuels development, and what steps can be
taken to ensure that there is strong continued federal support
for biofuels research, development, and commercialization of
technologies.
Their testimony will surely help guide us toward crafting
sensible legislation that will help us realize the benefits of
biofuels in years to come.
[The prepared statement of Chairman Lampson follows:]
Prepared Statement of Chairman Nick Lampson
I would like to extend a warm welcome to all five witnesses. Thank
you for being here today and testifying before the Subcommittee on
Energy and Environment on the subject of biofuels, and more
specifically on the status of our biofuels research and development,
and what steps we can take to enhance those efforts toward better
commercialization of new technologies.
I would like to make specific mention that we are joined today by
Mr. John Berger, Chairman and CEO of Standard Renewable Energy. I
recently joined Mr. Berger at the opening of his company's large-scale
biodiesel facility in Galveston, Texas and look forward to hearing more
from him today about his experiences and the continuing research and
development challenges facing the industry.
For sometime now, it has been clear to me and many of my colleagues
that our nation's energy needs can no longer be fully met with fossil
fuels. Our reliance on fossil fuels, and more specifically foreign
sources of energy, jeopardizes our economy, foreign policy, national
security, and most importantly our environment.
The scale and complexity of addressing our energy and climate
challenges cannot be overstated.
And, though I believe that fossil fuels still remain an important
part of any viable, balanced energy strategy, we must continue, and in
many cases enhance, our efforts to develop alternative energy sources--
namely biofuels.
All over the country, ventures like Galveston Bay Biodiesel are
emerging that demonstrate our country's strong commitment to producing
reliable energy through the use of exciting and cutting edge
technologies. These projects are shining examples of the American
innovative spirit.
Further, they demonstrate how a strong federal commitment to
research and development can spur our economic growth and result in
real solutions to our energy problems.
Though we have seen amazing growth in our country's biofuels
development, mostly in the forms of corn-based ethanol and soy-based
biodiesel, ethanol still represents only five percent of the total
gasoline sold, and biodiesel is an even smaller portion of the total
diesel market.
Currently, biofuel supply relies almost exclusively on corn-based
ethanol. Surely, we would not be where we are today without the efforts
of those who pioneered the development of our ethanol industry.
Recognition of there efforts to build the ethanol industry and make the
current supplies of ethanol available is well deserved.
However, concerns have been raised about further expansion of corn-
based ethanol and its impact on food and feed supply and costs. And, to
meet some of the biofuels mandates that have been proposed, it would
require nearly half of the current corn crop produced annually.
Clearly, this all suggests that biomass sources for biofuel production
must be diversified.
The majority of this focus to diversify the feedstocks has been on
cellulosic materials including grasses, wood, and waste materials.
However, current technologies for the development of fuel from these
sources continue to be expensive and not cost-competitive with corn-
based ethanol. If we are going to move toward broader use of biofuels,
technology will be necessary to create reasonably priced fuels from
cellulosic materials.
To realize this needed ``technological bump,'' we must increase our
investment in research and development, focus our research on the most
promising technologies, and ensure that the latest research information
is readily available for those looking to either expand their biofuels
production or embark upon the development of new facilities.
Earlier this week, the Committee staff released a discussion draft
of a bill that I will author and the Committee plans to consider in the
coming weeks. The draft attempts to better coordinate and compile
information from federal biofuels research programs, focus some of the
biofuels research on infrastructure needs and efficiency of
biorefineries, study some of the continuing challenges facing broader
use of biofuels, and increase the funding levels for biofuels research.
This draft will serve as a starting point to discuss what
legislative efforts are needed to ensure we maximize the federal
funding spent on biofuels research and development. I am eager to hear
from colleagues on the challenges they see ahead, and look forward to
working with the Members of the Subcommittee as we move forward toward
consideration of this bill.
It is my hope that our witnesses today will share with the
Subcommittee their thoughts on the state of biofuels research and
development, the technological challenges we continue to face, the
efforts underway to commercialize new technologies for biofuels
development, and what steps can be taken to ensure that there is strong
continued federal support for biofuels research, development and
commercialization of technologies.
Their testimony will surely help guide us toward crafting sensible
legislation that will help us realize the benefits of biofuels in years
to come.
Chairman Lampson. At this time I am pleased to recognize
the distinguished Ranking Member from South Carolina, Mr. Bob
Inglis, for his opening statement.
Mr. Inglis. Thank you, Mr. Chairman. Appreciate the hearing
this afternoon on how the Federal Government can encourage
research and development of biofuels, a promising alternative
energy source.
One of the great advantages of biofuels is the regional
diversity of feedstocks. Different parts of the country can
``customize'' production based on their energy sources that
make the most sense for their area. So while pines or sugar
cane might make sense for ethanol production in South Carolina,
the Chairman's State of Texas might benefit more from soybean
or vegetable oils for biodiesel production. The advantage then
is that every part of the Nation can take part in developing
biofuels that will make economic and agricultural sense and, in
turn, will yield commercial benefits.
However, that versatility will also present a challenge
when it comes to infrastructure development. While oil tankers
and massive pipelines support our national gasoline industry
and have the potential to support our biofuels industry, the
regional availability of feedstocks may demand additional
models for production and distribution. I hope that any biofuel
legislation we discuss considers and accommodates this regional
component.
We are only in the beginning phases of what I hope will be
a very profitable biofuel energy economy, promoting energy
security, protecting the environment, and creating jobs for
American workers. It is important that we not only encourage
current technologies and methods of production but also
facilitate the development of next generation systems that will
make biofuels even more efficient and affordable.
Thank you, again, Mr. Chairman, for holding this hearing. I
look forward to hearing from our witnesses and welcome any
suggestions they may have for how we can improve this proposed
legislation.
[The prepared statement of Mr. Inglis follows:]
Prepared Statement of Representative Bob Inglis
Good afternoon. Thank you, Mr. Chairman, for holding this hearing
on how the Federal Government can encourage research and development of
biofuels, a promising alternative energy source.
One of the great advantages of biofuels is the regional diversity
of feedstocks. Different parts of the country can ``customize''
production based on the energy sources that make the most sense for
their area. So, while pines or sugar cane might make sense for ethanol
production in South Carolina, the Chairman's State of Texas might
benefit more from soybean and vegetable oils for biodiesel production.
The advantage then is that every part of the Nation can take part in
developing biofuels that will make economic and agricultural sense,
and, in turn, will yield commercial benefits.
However, that versatility will also present a challenge when it
comes to infrastructure development. While oil tankers and massive
pipelines support our national gasoline industry, and have the
potential to support our biofuels industry, the regional availability
of feedstocks may demand additional models for production and
distribution. I hope that any biofuel legislation we discuss considers
and accommodates this regional component.
We are only in the beginning stages of what I hope will be a very
profitable biofuel energy economy, promoting energy security,
protecting the environment, and creating jobs for American workers. It
is important that we not only encourage current technologies and
methods of production, but also facilitate the development of next
generation systems that will make biofuels even more efficient and
affordable.
Thank you again, Mr. Chairman. I look forward to hearing from our
witnesses, and welcome any suggestions they might have for how we can
improve this proposed legislation.
Chairman Lampson. Thank you, Mr. Inglis. I ask unanimous
consent that all additional opening statements submitted to the
Subcommittee, submitted by Subcommittee Members be included in
the record. Without objection it is so ordered.
[The prepared statement of Mr. Costello follows:]
Prepared Statement of Representative Jerry F. Costello
Good afternoon. Mr. Chairman, thank you for calling today's hearing
to receive testimony on the discussion draft of the Biofuels Research
and Development Act.
I support expanded use of biofuels to diversify America's energy
mix. With the passage of H.R. 6, the Energy Policy Act of 2005, a major
milestone in the development of a national market for renewable energy
was achieved through a Renewable Fuels Standard (RFS). Further, the
2002 Farm bill has awarded $58.1 million in grants to 55 projects in 27
states and the District of Columbia under the Biomass Research and
Development Initiative. Since the beginning of 2007, the Department of
Energy (DOE) has announced nearly $1 billion in funding for biofuels
R&D. On Tuesday, the U.S. Department of Agriculture (USDA) and the U.S.
Department of Energy (DOE) announced a combined total of up to $18
million will be available for research and development of biomass-based
products, biofuels, bioenergy and related processes. These grants will
fund essential research leading to the creation of new, sustainable
energy sources, in addition to creating new uses and markets for
agricultural products. Through the passage of critical energy
legislation, biofuels production has exploded and will jump from the
roughly four billion gallons produced in 2005 to 12 billion gallons by
the end of this year.
My home state of Illinois is already experiencing considerable
growth in biofuels production. Currently in Illinois, there are 47
proposed ethanol plants, eight in my district alone. Of those 47
proposed plants, 19 have filed for air permits. Further, Illinois is
operating four biodiesel facilities and three more are under
construction. Illinois is perfectly located to build and operate
ethanol and biodiesel facilities because of its access corn and soybean
production and to transportation ranging from rail, barges, highways,
and pipelines.
In addition to helping satisfy our nation's growing appetite for
energy, biofuels can assist greatly in rural development. Each ethanol
plant represents the investment of tens of millions of dollars into
local economies, construction jobs and permanent employment
opportunities, new markets for grain producers, and an expanded tax
base for local governments.
While I support research into developing an efficient process for
turning biomass into fuel, it is unclear why additional funding it is
need to provide money to states with low rates of ethanol production,
including low rates of production of cellulosic biomass ethanol, as
stated in Section 6 of the discussion draft legislation.
I look forward to hearing from our witness panel on this issue.
Chairman Lampson. At this time I would like to introduce
our distinguished panel of witnesses. Dr. Thomas Foust is the
Biomass Technology Manager for the Department of Energy's
National Renewable Energy Laboratory in Golden, Colorado. John
Berger is the Founder of Contango Capital Management, a Venture
Capital firm, focused on renewable energy and CEO of Standard
Renewable Energy. Mr. Berger also served as an advisor to the
Federal Energy Regulatory Commission in 2002 and 2003. Mr. Bob
Dinneen is the President and CEO of the Renewable Fuels
Association, the National Trade Association for the U.S.
ethanol industry. Mr. David Waskow is an International Policy
Analyst with Friends of the Earth, U.S., and works on
environment trade and corporate accountability issues. And at
this time I would yield to our distinguished Ranking Member of
the Full Committee, Representative Hall, to introduce our final
witness, Mr. Michael McAdams.
Mr. Hall. Thank you, Mr. Chairman, and I am honored to
introduce Mike McAdams. He is presently Executive Director of
Government Affairs of Hart Downstream Energy Services. He has
been involved, he doesn't look old enough, I know, to say this,
but he has been involved in every major federal energy and
environmental initiative over the last 25 years.
I came here in 1981, and Mike, to the best of my
recollection, was the very first employee that I had. I
inherited him from Rayburn, Sam Rayburn's organization through
Ray Roberts, who was the Congressman then at that time, and he
actually took care of Ray Roberts' boat, and I had bought Ray
Roberts' boat. It is a 52 footer. I was going to live on it
until my wife told me that that wasn't going to happen. I asked
him if he would stay on and work with me. I really wanted him
to run the boat for me. He said, well, he did want to stay, but
he believed he was worth more as an energy advisor, and I don't
know, he was 19 or 20 years old then, something like that. He
would be better as an energy advisor than he would as a boat
boy, and he was a great energy advisor and has really done me
great service since that time. In his current capacity he
spearheads governmental advocacy efforts for Hart's clients
including the Advanced Biofuels Coalition. Prior to joining the
firm he spent 14 years with British Petroleum acting as Vice
President of Federal Affairs and Environment and Associate
Group Policy Advisor while there. Before joining BP, of course,
Mr. McAdams served on staffs of several Members of Congress,
and I was honored that he worked with me for a lot of years. He
holds a B.A. in political science from Virginia Tech. I think
he played quarterback for that football team. He has a J.D.
from the Washington College of Law. His father was the first
Governor's Rep as Texas was one of the early states to have a
Washington office, and his father was the man for the Governor
of Texas at that time and represented him here. He grew up on a
Texas ranch, and was educated at Virginia Tech. He is a bright
young man, good friend of mine. I am honored that he is going
to testify before this committee.
I thank you, Mr. Chairman, my fellow Texan, for allowing me
this long, extended introduction that Mike helped me write.
Chairman Lampson. I was going to ask. You didn't, I wasn't
sure you knew all of that on your own.
Well, we are proud to have him and thank you for that
introduction.
Mr. Inglis.
Mr. Inglis. Mr. Chairman, speaking of Mr. McAdams, may I
have unanimous consent to substitute two slides that were
previously submitted that need to be replaced with two new
slides in his presentation?
Chairman Lampson. Is there any objection? Seeing none, it
is so ordered.
Okay. You will each have five minutes to present your
spoken testimony. Your testimony, your written testimony will
be included in the record for the hearing, and when all five of
you have completed your testimony, we will begin with
questions. Each Member will have five minutes to question the
panel, and Dr. Foust, would you please begin?
STATEMENT OF DR. THOMAS D. FOUST, BIOMASS TECHNOLOGY MANAGER,
NATIONAL RENEWABLE ENERGY LABORATORY
Dr. Foust. Thank you, Mr. Chairman. Thank you for this
opportunity to discuss important issues related to our nation's
energy policies as we move to reduce our dependence on foreign
oil, maintain a healthy environment, and fully meet the energy
demands of the future.
I am the Biomass Research Director of the National
Renewable Energy Laboratory (NREL) in Golden, Colorado. NREL is
the U.S. Department of Energy's primary laboratory for research
and development of renewable energy as well as energy
efficiency technologies.
Biomass, as you know, is very abundant in the U.S. and the
production potential is quite large. One recent study estimated
that the U.S. has the potential to produce 1.3 billion tons of
biomass annually without impacting food production. That amount
of biomass converted to biofuels could potentially supply over
50 percent of our nation's fuel needs.
However, to use these and other resources we need to
perfect new technologies that convert this material into fuels
economically. Clearly this is an area that has great promise,
but it must be done correctly.
Let me start with ethanol. To move the ethanol industry to
where we need it to be we would have to move corn grain as a
primary feedstock resource, and we have to move into biomass.
Production of ethanol from corn grain is a well-established
technology. It is a good technology, but corn grain is also an
important food and feed commodity in the U.S., and most believe
that we cannot produce more than about 12 to 15 billion gallons
a year from corn without having significant impacts on the
economics of other critical corn grain products.
Ethanol from plant biomass, or bioethanol as it is commonly
referred to, promises to meet these ethanol capacity hurdles by
utilizing feedstocks as biomass which are abundant and do not
compete with other needs.
However, the technology is relatively immature and not yet
competitive with corn ethanol or gasoline. At NREL our biofuels
focus is almost entirely on advancing this bioethanol
technology to enable competitively-priced ethanol from a
variety of feedstocks. The current goal is to attain $1.31
production cost via 2012 via both a biochemical and a
thermochemical route in order to make this bioethanol
competitive with corn ethanol and, more importantly, gasoline.
Based on current and expected future progress we believe
that there is significant growth potential for ethanol beyond
the 2012, timeframe. Given the high-expected future demands for
biofuels as a major component of our nation's fuel supply, we
believe that bioethanol will not replace today's corn ethanol
industry. Rather, it will evolve and grow from it, making the
potential for ethanol encouraging from both an economic and
large-volume perspective.
Now, let me switch gears and talk about diesel fuels,
specifically biodiesel and renewable diesel, which can be made
from either plant oils or animal fats, as well as biomass
itself.
Biodiesel production is a currently commercial technology
which takes oil or fatty feedstocks and converts them into a
diesel fuel through a fairly straightforward process called
transesterification.
Another process that shows a lot of promise for producing
renewable diesel use is a process referred to, hydrogenation,
to convert the same oil or fatty feedstock into a diesel fuel.
Although these processes are straightforward, the problem
with these approaches is the general consensus that the
production volumes can only ultimately reach two to four
billion gallons a year because of the very limited ability to
produce these feedstocks in the U.S. Approaches for producing
renewable diesel at volumes capable of supplying a significant
portion of our diesel demand will require technologies that can
utilize more available feedstocks, specifically biomass.
Fortunately, two such approaches do exist. The first
approach is biomass gasification, followed by a process called
Fischer-Tropsch synthesis to produce a renewable diesel.
Another longer-term approach is to develop an entirely new
feedstock source for producing oils at large volumes. Algae
shows considerable promise in this regard and is potentially
capable of producing oils at rates up to 10,000 times soybeans.
Although this is very encouraging and should be pursued,
this technology needs significant work before achieving
commercial viability. Together these two approaches for
producing renewable diesel, combined with the current biodiesel
production show considerable promise for producing renewable
diesel economically and large volumes, similar to ethanol.
Finally, let me address the need for biofuels
infrastructure. Specifically the Department of Energy has
sponsored studies on infrastructure needs for large-scale
production and utilization of biofuels. These studies have
specifically looked at two key components of infrastructure;
distribution from the biorefinery to the refueling station, and
then equally as important vehicle needs.
These results have shown that the current biofuel
distribution infrastructure is inadequate to handle large
volumes of biofuels. To reach our goals of producing these
fuels at a significant scale of gasoline and diesel, these
areas need to be addressed.
Additionally, the same issues hold for vehicles. Although
current generation flex-fuel vehicles are capable of utilizing
up to 85 percent ethanol, they suffer from significantly
reduced fuel economy when utilizing the E-85 compared to
conventional gasoline. Vehicles specifically developed to take
advantage of the high octane and other desirable fuel
properties of E-85 could potentially not suffer from this
decreased fuel economy and allow us to utilize the ethanol more
efficiently.
Thank you for the opportunity to address this committee on
these important issues.
[The prepared statement of Dr. Foust follows:]
Prepared Statement of Thomas D. Foust
Mr. Chairman, thank you for this opportunity to discuss important
issues related to the Nation's energy policies as we move to reduce our
dependence on foreign oil, maintain a healthy environment and fully
meet the energy demands of the future. I am the Biomass Technology
Manager of the National Renewable Energy Laboratory (NREL) in Golden,
Colorado. NREL is the U.S. Department of Energy's primary laboratory
for research and development of renewable energy and energy efficiency
technologies. I am honored to be here, and to speak with you today.
We applaud the Committee for its examination of alternative
transportation fuels to reduce our dependence on imported petroleum.
Researchers at NREL have been working on biofuel technologies since our
laboratory was founded in 1977. However, it only has been recently that
public policy has looked to biofuels as a way to reduce our dependence
on petroleum use in the near-term.
Recent studies have shown that there is sufficient biomass
potential in the U.S., and worldwide, to produce significant amounts of
transportation fuels without impacting food production--enough to
displace a major portion of the petroleum we use today. Clearly, this
is an area that has great promise; but it must be done correctly.
The Committee has asked what our nation's R&D focus should be in
addressing the technical barriers to developing biofuels from diverse
feedstocks. Let me address this question first.
Biomass: A Plentiful Resource
While much remains to be done, we as a nation start with some
significant strength. The biomass resource in the country is huge, and
the potential for it to grow is significant.
The Department of Agriculture and the Department of Energy looked
at the question of whether the Nation's biomass resource could foster a
biofuels industry large enough to meet a significant portion of our
nation's future fuel needs. The report, now commonly referred to as
``The Billion Ton Study,'' for the first time confirmed that the U.S.
could yield more than a billion tons of biomass annually for energy
needs. And, importantly, we could do this without negatively affecting
the Nation's ongoing needs for food or fiber. This is significant
because the 1.3 billion tons of biomass that was forecasted contains as
much energy as 3.5 billion barrels of oil.
I should emphasize that such a transition to biofuels will not
happen overnight. It will take a significant and sustained national
effort to get us there. Still, ``The Billion Ton Study'' clearly
demonstrates the biomass resource is real, and large enough to
ultimately replace a large fraction of the petroleum-derived fuels we
depend on today. DOE is in the midst of developing a vision for
replacing 30 percent of current motor gasoline with ethanol by 2030 and
this should help guide us in realizing the potential of biofuels.
Moreover, the resource is regionally diverse. We envision that
every state in the Nation could produce biomass and could benefit
economically from an expanding biofuels industry.
We also are encouraged by the fact that there already exists a
strong and growing ethanol fuels industry in this country. The U.S.
currently produces more than five billion gallons a year of ethanol,
almost exclusively from corn grain, and the industry is growing 30
percent annually.
To understand where we are today and where we need to go, we need
to see ethanol technology issues and biomass resource issues as
interrelated. To move the ethanol industry to where we need it to be,
we have to move beyond corn grain as the primary biomass resource. One
of the most abundant potential resources we have is corn stover, the
non-food parts of the corn plant, including the stalks, leaves and
husks. Other resources are forest thinnings, hardy grasses like
switchgrass, and fast growing trees.
To use these and other resources we need to perfect new
technologies that convert the cellulosic materials of the plants into
fuel.
Current and Future Biofuels
First, let's start with ethanol. Production of this alcohol fuel
from the starches of corn grain is a well established technology, and
accounts for almost all of the current 5.5 billion gallons per year
(bgy) U.S. capacity. Additional plants that are planned or currently
under construction are estimated to put our capacity close to 12 bgy
within a couple years. The limiting factor is, of course, the feedstock
itself--corn grain. It is an important food and feed commodity in the
U.S., and most believe that we cannot produce more than 12-15 bgy of
ethanol from corn grain without having significant, unacceptable
impacts on the economics of the other critical corn grain products.
There are no other realistic starch or sugar-based crops in the
U.S. from which to ferment alcohol in quantity. The Brazilians use
sugar cane and in other parts of the world, sugar beets are used as a
feedstock, but these sugar crops can probably never be widely grown in
the U.S. because of climate differences. One or two bgy in the U.S. is
possible from sugar crops in the next decade, but significant growth
beyond this amount from this resource will likely never be a major
factor for us.
Cellulosic ethanol promises to leap these ethanol capacity hurdles
by utilizing feedstocks which are abundant and do not compete with
other needs. However, the technology is relatively immature and we have
little more than a few pilot plants on the ground. At the National
Renewable Energy Laboratory, our biofuels focus is almost entirely on
advancing the cellulosic ethanol technologies to enable competitively
priced ethanol from a variety of feedstocks. The current goal is to
attain a $1.31/gallon production cost by 2012 in order to make this
ethanol pathway competitive with the corn grain pathway. However, to
get the production ball rolling, DOE has recently awarded cost-shared
contracts with industry to establish six cellulosic ethanol
biorefineries which can each process approximately 700 tons/day of
feedstock, each plant potentially producing 15-20 million gallons per
year (mgy) of ethanol.
But, we still need to significantly improve the technology and
reduce the costs for industry to begin major cellulosic biorefinery
construction efforts. For that reason, our projections--even with
significant incentives for the ethanol refiners and the feedstock
growers--puts our national capacity at 2-5 bgy in 10 years. By 2022 or
2023, however, the cellulosic biorefinery construction rate will be on
a steep upward slope, with a significant growth potential for
cellulosic biofuels beyond 2017. This, then, is undoubtedly our most
promising pathway to meet an aggressive national alternative fuels
standard.
Integration of Biorefineries into Existing Industries: The R&D Role
Another exciting area of work is in the development of
``biorefineries.'' Our scientists at NREL, together with those at other
DOE national laboratories, universities and corporations, are leading
the development of fully integrated refineries that use biomass,
instead of petroleum, to produce fuels, chemicals, synthetic
materials--virtually all of the products we use from a conventional oil
refinery today. It is envisioned that biorefineries will utilize a
complex array of processing technologies to break down, convert and
recombine a wide range of biomass components into fuels and chemicals,
in a manner similar to how petroleum refineries convert petroleum crude
oil. We envision that future biorefineries will utilize a wealth of
resources that we currently either underutilize or don't use at all
today. That includes agricultural residues, forestry residues,
dedicated energy crops, municipal solid waste, algae and byproducts of
the food and grain industry.
A range of biorefinery R&D is underway in partnership with
industry. DOE's biomass program is partnering with a number of the
major ethanol technology providers and ethanol producers, including
Abengoa, ADM, Broin and Cargill, to increase the yield of ethanol from
existing corn ethanol facilities and expand the slate of feedstocks. In
many ways, a cellulosic biorefinery can be viewed as an expansion of a
corn ethanol facility. That's why we believe tomorrow's cellulosic
ethanol industry will not replace today's corn grain ethanol industry,
it will evolve from it.
At the same time, DOE is partnering with chemical industry leaders,
such as DuPont, to develop new opportunities for producing both fuels
and chemicals from biomass. DOE is partnering with the forest products
industry to explore and develop biorefinery concepts that can integrate
into existing forestry operations. And, most recently, NREL is
partnering with oil industry technology developers to explore novel
options for integrating biomass streams into existing petroleum
refineries. These and other partnerships are speeding the progress of
new technologies to the marketplace, and may uncover new options for
producing fuels from biomass.
Thermal technologies such as gasification, pyrolysis and
hydrothermal systems are all worthy of further research and development
to determine how these technologies and the respective biofuel products
impact the cost, efficiency and integration into existing fuels
infrastructure.
Before we leave the alcohol fuels family, let me mention at least
one other of these potential fuels--butanol. This higher alcohol has
certain advantages over ethanol. In particular, its energy content is
significantly higher than ethanol (but still not that of gasoline) and
it is has fewer water miscibility challenges than ethanol. However, it
is more difficult to ferment, and the economics and technology are well
behind that of ethanol. You have probably heard that BP and DuPont are
beginning a bio-butanol program in the United Kingdom. However, at
least in the nearer-term in the U.S., butanol is not out of the
starting gate and will assuredly be a minor contributor compared to
ethanol. In addition, the challenges of establishing a fuel
infrastructure for one new major fuel, and the vehicle and engine
implications, are daunting enough. To throw a second alcohol fuel into
that challenge, I would propose, is not a good decision or investment
in terms of moving up the alternative fuel path as quickly as possible.
Biodiesel and Green Diesel Fuels
Diesel-like fuels--biodiesel and green (or renewable) diesel--can
be made from plant oils or animal fats and greases as well as biomass
itself. For biodiesel, the oil or fatty feedstock is chemically reacted
with methanol in a process called transesterification, which splits the
fuel portion of the feedstock from the non-fuel, glycerol co-product.
This is a fairly straightforward process and the technology is proven
and mature. Essentially this process is used to produce the entire non-
petroleum diesel in the U.S. today. The problem is that our current
capacity is only around 500 mgy, primarily due to feedstock
limitations. If we would, for example, use every acre of the annual
U.S. soybean crop to produce soy oil and then use that to make
biodiesel, our capacity would be only around three bgy. Remember that
on-road we burn 40 bgy in the U.S. today.
Green or renewable diesel is an emerging technology which uses the
same oil or fats feedstock, but instead of the transesterification
process, subjects the plant oils or fats to hydrotreating, as is done
in the hydrocrackers of a petroleum refinery. The advantages are that
we can potentially utilize existing refinery assets and not have to
build new transesterification plants, and that the green diesel is
essentially identical to petroleum diesel and does not require a unique
or new fuel handling infrastructure, nor vehicle or engine
modifications. Another process that shows considerable promise for
producing renewable diesel is biomass gasification followed by Fischer
tropsch synthesis to produce a renewable diesel. This process has
considerable long-term promise since it utilizes biomass as a feedstock
and is not subject to the feedstock limitations of plant oils or animal
fats of the other processes. I will say that, from a technical
standpoint, all of these pathways produce a diesel fuel which is not
petroleum dependent and reduces CO<INF>2</INF> emissions.
Another longer-term approach for producing a renewable or green
diesel that gets considerable press is to develop an entirely new
feedstock source which has a higher gallons-of-oil-per-acre yield and
can be produced on otherwise non-arable lands. Algae shows considerable
promise in the long-term--beyond 2017. Whereas soybeans can only
produce about 50 gallons of oil/acre, micro-algae might produce
significantly higher yields on a per acre basis. Unfortunately, this
technology needs significant work and will not contribute materially to
the alternative fuels standards under discussion, but in the longer-
term may be a dominant component of our alternative diesel and jet fuel
markets.
Biofuels Infrastructure: Research Needs
The Committee has also asked the panel to address the need for
research in the area of biofuels infrastructure.
DOE has sponsored studies that have examined infrastructure needs
for large-scale production and utilization of biofuels (i.e., 20 bgy
and greater). These studies have specifically looked at the two key
components of the infrastructure; distribution of the biofuel from the
biorefinery to the refueling station, and vehicle needs. The results
have shown that the current biofuel distribution infrastructure is
inadequate to handle large volumes of biofuels, thus an improved
distribution infrastructure is needed.
Two options are available for accomplishing this; utilizing the
existing gasoline and diesel distribution infrastructure for the
distribution of biofuels, or developing a dedicated biofuels
distribution infrastructure. Although utilization of the existing
gasoline and diesel distribution infrastructure would theoretically
facilitate a quicker, less costly approach toward addressing this
issue, technical challenges exist--such as the miscibility of
corrosiveness of ethanol. These challenges could be addressed by a
dedicated infrastructure; however the triggering mechanism to drive
investment in this dedicated infrastructure in not clear.
The vehicle issue is more easily addressed. Currently, all U.S.
cars are capable of utilizing 10 percent ethanol and studies are
underway to see if these vehicles can handle higher ethanol blends up
to 20 percent. Flexible Fuel Vehicles (FFVs), in contrast, are capable
of utilizing up to 85 percent ethanol. FFV sales are growing rapidly
and this growth rate is expected to increase in the future. Current
projections show that the vehicle infrastructure will be more than
adequate to utilize all the ethanol being produced.
Fuel Fungibility
The Committee has asked whether standardization of biofuels,
whether ethanol or biodiesel, is needed to ensure fuel fungibility, and
whether the standard should focus on blended stock optimization.
When a fuel is produced, either fossil fuel or biofuel, it must
meet standards established for its sale for it to be truly fungible.
Ethanol and biodiesel already have fuel quality standards established
through the American Society for Testing and Materials (ASTM). These
standards have been created to partially match the current production
methods from corn starch and vegetable oil respectively. They help to
establish what will and will not be compatible with the gasoline to
which they will be blended. If the predominant process for making
ethanol changes (i.e., to lignocellulosic conversion from starch
conversion), an ASTM committee will likely want to examine the
``typical'' fuel produced to determine if there are any minor
components that could potentially be present that wouldn't be otherwise
using today's technology, especially if they might be harmful to the
engine performance.
The standard in question should also focus on gasoline blend stock
optimization. For the example of E-10, the Reformulated Blendstock for
Oxygenate Blending (RBOB) must have certain properties so that the
blend does not exceed Reed Vapor Pressure (RVP) maximums. For E-85
there may be an opportunity for refiners to blend in low octane, high
RVP gasoline materials and still comply with the overall
specifications.
Workforce Requirements for Biofuels Technology Innovation
The Committee has asked the panel to comment on the need for
trained personnel to form the biofuels workforce of the future. Others
on the panel may comment on that, but let me address the topic from a
research and development standpoint.
You are all aware that, in general, the U.S. is not producing the
numbers of scientists and engineers that we need to stay at the
forefront of global technology innovation. This is especially true in
the energy field, as well as in the particular area of biofuels and
bioenergy.
The National Renewable Energy Laboratory partners with many
universities and colleges, and we bring their undergraduate and
graduate students and their post-doctoral students to NREL to support
our research and to influence them towards a career in this important
field. But that is not enough. We need a concerted national effort to
encourage and stimulate our young men and women to become energy
scientists and engineers. Just as a national space goal dramatically
grew the numbers of aeronautics and space scientists in the 1960's, we
need to elevate our energy challenge to that level such that our young
people acknowledge and respond to the call. There is, perhaps, no more
important undertaking we face as we move into the 21st century--
ensuring that we have skilled and motivated energy researchers to meet
the Nation's challenges.
Making Biofuels Information Available to the Public
The Department of Energy's Office of Energy Efficiency and
Renewable Energy is funding NREL in late FY07 to create an on-line
Biomass Data Center, which will provide current, relevant data about
ethanol and other biomass-derived fuels to support informed decisions
by industry, policy-makers, researchers, and the public. The Data
Center will be an extension of the widely recognized Alternative Fuels
Data Center (www.eere.energy.gov/afdc) managed by NREL for DOE since
1991, which provides information about availability and utilization of
biofuels and other alternative fuels.
The new Biomass Data Center will gather and provide centralized
access to information on biofuels resources, production, and
infrastructure issues, and will link to existing information from DOE
and other agencies to minimize costs and duplication of effort. The
project to develop the Biomass Data Center will begin in FY07, will
proceed in phases, and will entail ongoing maintenance and enhancements
in future years. The Data Center will provide easy access to
information from both government and the private sector on feedstocks,
production technologies and facilities, incentives and regulations,
infrastructure and fuel retailing, and market opportunities.
Summary
Significant potential exists in the next decade and a half to
reduce petroleum use in the transportation sector under an aggressive
scenario for technology development and public policies to encourage
deployment. The biofuels potential for a maximum petroleum reduction
scenario in the next decade is large and, if fully realized, will
position biofuels for accelerated growth beyond 2017, putting our
nation on the path towards energy security with reduced CO<INF>2</INF>
emissions.
Biography for Thomas D. Foust
Dr. Thomas Foust is the Research Director of the Biofuels Research
Program at the National Renewable Energy Laboratory (NREL). In this
role he guides and directs NREL's research efforts to develop biomass
conversion technology to fuels via both biochemical and thermochemical
conversion routes. This research is focused on developing the necessary
science and technology for converting biomass to biofuels in an
economical manner and covers the gamut of fundamental to applied. NREL
is recognized as a world leader in developing biomass conversion
technologies and has won many prestigious awards recognizing our
accomplishments.
Dr. Foust recently led an effort as the lead author of a team of
biomass experts to perform a detailed assessment of a scenario in which
30 percent of the United States demand for light vehicle transportation
fuels are met by biofuels by 2030. This landmark study investigated all
aspects of the supply chain from feedstock growth to vehicle needs and
is in process of being published.
Dr. Foust's research has focused on complex fluid flow and heat and
mass transfer processes it relates to fundamental biomass conversion
issues for both biochemical and thermochemical processes. The focus of
this research has been on identifying areas for process improvement
that are heat and mass transfer limited. Prior to joining NREL, he
spent seven years with the Idaho National Laboratory (INL) where he was
the research lead for the biomass feedstocks program. His primary area
of research was in complex multi-phase flow analysis as it related to
physical fractionation of biomass. Dr. Foust has over 20 years of
research and research management experience specializing in biomass
feedstocks and conversion research. He has over 100 publications in the
biomass field covering all aspects of biofuels technology.
He has a Ph.D. in Mechanical Engineering from the University of
Idaho, a M.S. in Mechanical Engineering from the Johns Hopkins
University, and a B.S. in Mechanical Engineering from the Pennsylvania
State University. He also is a licensed Professional Engineer.
Chairman Lampson. Thank you, Dr. Foust.
Mr. Berger.
STATEMENT OF MR. JOHN BERGER, PRESIDENT AND CEO, STANDARD
RENEWABLE ENERGY; CEO OF BIOSELECT
Mr. Berger. Chairman Lampson, Members of the Subcommittee,
my name is John Berger, and I am President and CEO of Standard
Renewable Energy. We are a global leader in renewable energy,
serving commercial and residential customers with clean,
renewable energy and energy efficiency technologies. Standard
provides one-stop shopping for solar, wind, biofuels, hydrogen
fuel cells, and energy conservation devices on a nationwide
scale. We are headquartered in the global energy city of
Houston, Texas.
BioSelect Fuels is a division of Standard Renewable Energy
and is a developer and operator of biodiesel production
facilities, offering the highest quality biodiesel fuel to the
global marketplace. The initial BioSelect plant is located in
Galveston, Texas, as the Chairman recently just pointed out in
the introduction, and began operations the last few weeks in
May of 2007. BioSelect Galveston currently produces over 20
million gallons annually; however, expansion is already
underway to take the site to over 190 million gallons by the
first quarter of 2009.
Mr. Chairman, I am pleased to be here to discuss the future
of our nation's biodiesel industry and how the Biofuels
Research and Development Enhancement Act can help our country
achieve its energy security goals, protect our environment, and
foster economic development through the expansion of renewable
fuels.
America relies on imports for 60 percent of its petroleum
needs. Rising crude oil prices and political uncertainties in
strategically-sensitive regions of the world are focusing the
public's attention on the need to enhance our nation's energy
security. U.S. produced biodiesel expands domestic refining
capacity. Every gallon of domestic, renewable biodiesel reduces
the need for imported oil because it replaces diesel fuel
refined from imported crude oil.
The biodiesel industry is made up of small businesses and
has shown steady growth over the last 15 years. In 2006, the
industry produced 250 million gallons of biodiesel. Today there
are 142 plants in operation with more than 50 new plants under
construction or expansion, which will add an estimated new
capacity of 1.7 billion gallons. The industry is on track to
create at least 40,000 new jobs and add 24 billion at least to
the U.S. economy.
Biodiesel is and will continue to be a strong partner in
the growth of the biofuels industry and can be a substantial
tool in the Nation's overall move towards energy security as
it: directly replaces crude oil that is imported to produce
diesel fuel, opens up much needed U.S. refining capacity,
decreased greenhouse gas emissions, contributes to cleaner
burning diesel fuel, and creates jobs and stimulates rural and
urban economies.
Standard applauds the Subcommittee for its comprehensive
approach to policies that will lead to increased education and
exchange of information on research, development, and
demonstration of technologies related to the production of
biofuels, the development of biorefineries and the
demonstration of these technologies. The Subcommittee's
Discussion Draft emphasizes the importance of active research,
communication, and development of a solid infrastructure
towards building a strong biodiesel industry.
Our industry is witnessing a period of dramatic change in
how Americans create and consume energy. The overlapping public
concerns of national security, increased domestic energy
independence, global climate change, and rural economic
development have led to dramatically increased production of
renewable fuels.
BioSelect believes it is imperative for the biodiesel
industry to secure a targeted fuel standard that sets an
ambitious, yet achievable goal for the future production of
biodiesel in this country. Standards should be designed to
support existing biodiesel capacity and be progressive to
encourage continued capacity growth. A biodiesel standard will
aid to ensure short-term growth and long-term development of a
sustainable domestic biodiesel market. We are confident that a
federal biodiesel fuel standard that seeks to displace five
percent of current domestic diesel consumption within the
decade should be a principle policy objective for current
legislative action. Such a goal will stimulate the demand for
soybean oil and other oils, will help spur the development of
new domestically-produced feedstocks, will promote the
development of production facilities in all regions of the
country, and will encourage automakers to increase production
of diesel-powered passenger cars for the U.S. car market.
BioSelect Fuels provides safe and superior renewable energy
to consumers in a clean and efficient manner. We are led by a
seasoned team and supported by strong partnerships with
companies such as Chevron Corporation and highly-regarded
academic institutions like Texas A&M University. The future of
biofuels, however, and the means by which to create a viable
source is highly dependent on the continuous innovation,
research and development in both private and public sectors.
Support for longer-term clean energy goals will come by
focusing on and funding a portfolio of research, development,
and commercialization activities. Standard would like to see
Congress focus on solving technical problems to overcome
barriers to biofuels growth, including infrastructure, through
forgoing or forging strategic cost-shared partnerships with
private industry, collaboration among relevant federal
agencies, and working with partnerships in the different
regions of the country to bring the promise of biofuels to
fruition. In addition, we believe that the next generation of
feedstocks and production technologies should receive
particular attention as they are the foundation of the future
of the biofuel industry.
With feedstocks accounting for approximately 60 to 80
percent of the entire cost to produce biodiesel, BioSelect and
our allied entities are focused on moving away from traditional
edible oils and existing arable land currently used for the
cultivation of food crops such as corn and soybeans. Together,
with the Engineering and Agricultural expertise of our partners
at Texas A&M, we are actively pursuing the development of
biofuel specific crops and lesser-known seeds that can be grown
in arid lands that currently lie in idle in regions of West
Texas. Specific areas of research that would benefit our
industry include harvesting techniques for new feedstocks where
manual labor costs are problematic and on longer-term feedstock
envelopment projects such as oil-rich strain of algae and other
new sources that have been long recognized as abundant possible
feedstock sources for biodiesel.
Several barriers exist before existing biofuels can be
realized from these diverse new feedstocks, but there is a lot
of work enabled to be done including looking at how to, you
know, form these arid lands.
I think I have--have I run out of time?
Chairman Lampson. You have.
Mr. Berger. Okay.
[The prepared statement of Mr. Berger follows:]
Prepared Statement of John Berger
Good morning, Chairman Lampson and Members of the Subcommittee. My
name is John Berger and I am President and CEO of Standard Renewable
Energy, (``Standard''). We are a global leader in renewable energy,
serving commercial and residential customers with clean, renewable
energy and energy efficiency technologies. Standard provides one-stop
shopping for solar, wind, biofuels, hydrogen fuel cells and energy
conservation devices on a nationwide scale. We are headquartered in
Houston, Texas.
BioSelect Fuels is a division of Standard Renewable Energy and is a
developer and operator of biodiesel production facilities, offering the
highest quality biodiesel fuel to the global marketplace. The initial
BioSelect plant is located on Galveston Island, Texas, and began
operations in May 2007. BioSelect Galveston currently produces 20M
gallons annually; however expansion is already underway to take the
site to over 190M gallons by the first quarter of 2009.
Mr. Chairman, I am pleased to be here to discuss the future of our
nation's biodiesel industry and how the ``Biofuels Research and
Development Enhancement Act'' can help our country achieve its energy
security goals, protect our environment and foster economic development
through the expansion of renewable fuels.
Background
America relies on imports for 60 percent of its petroleum needs.
Rising crude oil prices and political uncertainties in strategically
sensitive regions of the world are focusing the public's attention on
the need to enhance our nation's energy security. U.S. produced
biodiesel expands domestic refining capacity. Every gallon of domestic,
renewable biodiesel reduces the need for imported oil because it
replaces diesel fuel refined from imported crude.
The biodiesel industry is made up of small businesses and has shown
steady growth over the last 15 years. In 2006, the industry produced
250 million gallons of biodiesel. Today, there are 142 plants in
operation with more than 50 new plants under construction or expansion,
which will add an estimated new capacity of 1.7 billion gallons. The
industry is on track to create at least 40,000 new jobs and add $24
billion to the U.S. economy.
Biodiesel is and will continue to be a strong partner in the growth
of the biofuels industry and can be a substantial tool in the Nation's
overall move toward energy security as it:
<bullet> Directly replaces crude oil that is imported to
produce diesel fuel;
<bullet> Opens up much needed U.S. ``refining'' capacity;
<bullet> Decreases greenhouse gas emissions;
<bullet> Contributes to cleaner burning diesel fuel; and
<bullet> Creates jobs and stimulates rural and urban
economies.
Standard applauds the Subcommittee for its comprehensive approach
to policies that will lead to increased education and exchange of
information on research, development and demonstration of technologies
related to the production of biofuels, the development of biorefineries
and demonstrations of those technologies. The Subcommittee's Discussion
Draft emphasizes the importance of active research, communication and
development of a solid infrastructure toward building a strong
biodiesel industry.
Our industry is witnessing a period of dramatic change in how
Americans create and consume energy. The overlapping public concerns of
national security, increased domestic energy independence, global
climate change and rural economic development have led to the need to
dramatically increase domestic production of renewable fuels.
BioSelect believes that it is imperative for the biodiesel industry
to secure a targeted fuel standard that sets an ambitious, yet
achievable, goal for the future production of biodiesel in this
country. Standards should be designed to support existing biodiesel
capacity and be progressive to encourage continued capacity growth. A
biodiesel standard will aid to ensure short-term growth and long-term
development of a sustainable domestic biodiesel market .We are
confident that a federal Biodiesel Fuel Standard (BFS) that seeks to
displace five percent of current domestic diesel consumption within the
decade should be a principal policy objective for current legislative
action. Such a goal will stimulate the demand for soybean oil and other
oils, will help spur the development of new domestically produced
feedstocks, will promote the development of production facilities in
all regions of the country, and will encourage automakers to increase
production of diesel-powered passenger cars for the U.S. market.
Biofuel feedstock research
BioSelect Fuels provides safe and superior renewable energy to
consumers in a clean and efficient manner. We are led by a seasoned
team and supported by strong partnerships with companies such as
Chevron Corporation, and highly regarded academic institutions like
Texas A&M University. The future of biofuels however, and the means by
which to create a viable fuel source, is highly dependent on the
continuous innovation, research and development in both private and
public sectors.
Support for longer-term clean energy goals will come by focusing on
and funding a portfolio of research, development, and commercialization
activities. Standard would like to see Congress focus on solving
technical problems to overcome barriers to biofuels growth, including
infrastructure, through forging strategic cost-shared partnerships with
private industry, collaboration among relevant federal agencies, and
working with the different regions of our country to bring the promise
of biofuels to fruition. In addition, we believe that next generation
feedstocks and production technologies should receive particular
attention as they are the foundation of the future of the biofuel
industry.
With feedstocks accounting for approximately 60 to 80 percent of
the entire cost to produce biodiesel, BioSelect and our allied entities
are focused on moving away from traditional edible oil feedstocks and
existing arable land currently used for the cultivation of food crops
like corn and soybeans. Together with the Engineering and Agricultural
expertise of our partners at Texas A&M, we are actively pursuing the
development of biofuel specific crops and lesser known seeds that can
be grown in arid lands that are currently idle in regions such as West
Texas. Specific areas of research that would benefit our industry
include harvesting techniques for new feedstocks where manual labor
costs are problematic and on longer-term feedstock development projects
such as oil-rich strains of algae which have long been recognized as a
potentially abundant source of feedstock for biodiesel production.
Several barriers exist before realizing biofuels from diverse
feedstocks, including but not limited to; access to more exotic seed
crops, laboratory and equipment availability, open land and amenable
farmers, length of time to conduct research and development and overall
cost of implementation.
Information and data sharing
Although the public market is becoming more aware of biodiesel as a
fuel, additional education is still necessary for business leaders to
invest capital and advocate for future biodiesel production facilities
and distribution infrastructure. A great deal of ambiguity exists in
the renewable fuel marketplace today due to the fact that there is very
little concrete factual data assigned to specific individual fuels;
i.e., ethanol, biodiesel and renewable diesel.
Although we as an industry are diligently working towards uniform
testing and standardized fuel criteria, federal monitoring could help
avoid inconsistencies. To date, uncertainty in the industry, negatively
impacted biodiesel sales and the integration of biodiesel fuel
strategies in public and private fleets, and inhibited progress towards
meeting national renewable fuel goals.
The EPA is currently developing a complete emissions profile for
biodiesel. As leaders in the renewable energy sector however, we ask
that the Federal Government do more with the creation of a centralized
database benchmarking and comparing all renewable fuels independently
to a baseline conventional diesel fuel. We as an industry will benefit
tremendously from factual data which compares biodiesel to conventional
diesel. In addition, we believe it would be useful to have a scientific
and factual description of renewable diesel and a comparison of
biodiesel to renewable diesel and a comparison of renewable diesel to
conventional diesel.
Federal coordination and cataloging of information from federal
research on biofuels development processes as well as other aspects of
the industry and related industries will be essential to the longer-
term goal of creating mainstream renewable fuel. Demystifying the fuels
themselves will not only provide the general public with more
information and confidence about utilizing renewables but also assist
both federal and State bodies in defining credit structures, future
industry incentives, and other programs to promote renewable fuels.
Research in Infrastructure
Standard Renewable Energy's mission is to make it easy to use
renewable energy, and for BioSelect, infrastructure is essential. We
have located our first facility in the refining center of the United
States because we believe in the logistical and distribution advantages
that come along with our regional location. Our vision for BioSelect
fuel is that of a low concentration blend of quality biodiesel into
conventional fuel to be distributed on a nationwide scale. In support
of this goal, Standard would like to see a number of infrastructure
activities pursued on a federal level, most likely through coordinated
work from government agencies such as Department of Energy, the
Department of Transportation, the Federal Regulatory Energy Commission,
and the Environmental Protection Agency. Our primary focus at this time
is the continued research and development of low blend biodiesel
pipeline batch movements. Successful pipeline analysis testing has
already been done, on several different pipelines, on several different
occasions, yet we as an industry ought to be more involved in the
process. BioSelect is eager to assist with this exciting project and
offer assistance to the Committee and relevant federal agencies to
advance this type of necessary testing. Additional specific research
needs currently facing the industry include but are not limited to:
feasibility studies on tankage, pipe and pump options, cold flow
properties, water issues, stability testing of fuel samples and
advanced vehicle technologies. In addition, we believe there is a clear
need for an overall general economic study of capital requirements to
bring biodiesel to local retail pumps nationwide.
The goal of this extensive research is to produce the data
necessary to gain the acceptance and approval from environmental
agencies, engine manufacturers, public and private sectors and most
importantly develop consumer confidence from the refinery to the retail
level where you and I buy our fuel each day.
Standardization
Standardization of all biofuels, is imperative to ensure
fungibility into conventional fuel pool and towards longer-term
acceptance as mainstream fuel. Biodiesel producers and marketers are
primarily concerned with two American Society for Testing and Materials
Standards (ASTM) International standards, ASTM D-975, which covers
diesel fuels and may soon include biodiesel blends up to B5, and ASTM
D-6751, which sets the minimum standards for B100.
Implementation of these standards and continued growth of the
industry requires top engineers, the same individuals that we must
compete against high paying large Oil and Gas companies to recruit. In
our Galveston facility we have been fortunate to find strong talent
that were instrumental in taking us from construction to start-up but
we are already finding more difficulty in identifying qualified workers
for our expansion. BioSelect views market stability, and targeted
education and outreach about biodiesel as keys to attracting good
talent.
As the biodiesel industry develops, the demand for highly skilled
trained labor is on the rise. Industry professionals have observed that
safety concerns have been raised when smaller start-up plants have
shortcuts out of ignorance or to cut time and cost. In October 2006,
the National Renewable Energy Laboratory (NREL) released a report
showing that out of 32 biodiesel samples collected nationally, half
failed to meet ASTM quality requirements. BioSelect believes that each
and every U.S. biodiesel manufacturer is responsible for knowing what
can go wrong in their manufacturing processes and how that can lead to
impurities in the finished product. As a large-scale producer however,
we at BioSelect know that compliance costs money, and we have focused
substantial time, energy and a great deal of capital on the
implementation of first-class safety and quality assurance on all
aspects of our facility, from the people all the way through the
process. In addition to the training of operators and other industry
personnel, BioSelect enforces compliance with our own codes and have an
internal team that act as a forum for exchanging safety suggestions,
violations, remediation and investigative reports, as exists in the
chemical industry. With over 300 years of experience in the
petrochemical and refining industries, BioSelect knows that a unified
approach to train workers while also adopting best safety practices is
nothing more than being on par with similar industries. This process
has prepared both our facility and operators to meet the industry
standards set forth by ASTM. BioSelect is currently in the process of
obtaining our BQ9000 certification from the National Biodiesel
Accreditation Commission (NBAC.)
According to the National Biodiesel Board, there are currently 17
accredited biodiesel producers and six certified biodiesel marketers,
which account for 40 percent of the biodiesel production capacity in
the United States. In addition, half of the states in the country have
implemented the ASTM D-6751 specification as part of their fuel quality
regulations, and an additional 13 states are either planning to accept
the specification or studying it. Ten states now proactively test
biodiesel or biodiesel-blended fuels.
Conclusion
Thank you for the opportunity to speak with you today and for your
continued commitment to expand the use of renewable fuels. Promoting
innovation and proactive leadership to create new energy sources, like
the added domestic refining capacity at BioSelect Galveston, is
critical to meet the growing energy demand of the future and in
securing our nation's energy security. Standard Renewable Energy looks
forward to working with you to further develop this important
legislation.
Biography for John Berger
Four years ago, at a time of extremely low energy prices, Mr.
Berger foresaw the looming global shortage of traditional energy
sources and knew that the country would inevitably be forced to turn to
renewable sources of energy to serve our vast energy needs. Given his
background in the traditional energy sector, he recognized that the way
to turn renewable energy into a successful enterprise was to build an
integrated platform that could readily be built to scale. As a result,
he created Standard Renewable Energy.
Prior to Standard, Mr. Berger founded Contango Capital Management,
a venture capital firm focused on renewable energy. In addition to
Standard, Berger is currently Chairman of Trulite Inc, a portable fuel
cell company that is majority-owned by Standard. He has more than
eleven years of experience in the energy industry.
In 2002 and 2003, Mr. Berger served as an advisor to the Federal
Energy Regulatory Commission (FERC) on distributed generation, demand
response, information gathering and application issues, investigations
and trade clearing/credit issues in the North American energy markets.
Mr. Berger graduated cum laude from Texas A&M University with a BS
in Civil Engineering and earned an MBA from Harvard Business School.
Chairman Lampson. And we will get back with you and you can
put some more of that stuff in, and certainly you can submit
all of your written testimony for the record.
Mr. Berger. Thank you, Chairman Lampson.
Chairman Lampson. You are welcome, Mr. Berger, and Mr.
Dinneen.
STATEMENT OF MR. ROBERT DINNEEN, PRESIDENT AND CEO, RENEWABLE
FUELS ASSOCIATION
Mr. Dinneen. Good afternoon, Mr. Chairman and Members of
the Committee. Thank you for the privilege of being here again
today.
I want to thank you for the opportunity to discuss the
growth in the domestic ethanol industry, the increasingly
important role of continued research and development for our
nation's biofuels industry, and the Committee's Discussion
Draft legislation, the Biofuels Research and Development
Enhancement Act.
The ethanol industry today is on the cutting edge of
technology, pursuing new processes, new energy sources, and new
feedstocks that will make tomorrow's ethanol industry
unrecognizable from today's. Ethanol companies are already
utilizing cold start fermentation, corn fractionation, and corn
oil extraction. Companies are pursuing more sustainable energy
sources, including biomass gasification and methane digesters.
And there is not an ethanol company that I represent that
doesn't have a very aggressive cellulose-to-ethanol research
program underway.
The Science and Technology Committee, the Energy and
Environment Subcommittee in particular, can play an important
role in accelerating these efforts by promoting and targeting
research and development funds and resources appropriately.
Support through research and development to promote the
commercialization of cellulosic ethanol and to continue to
build upon the existing industry's advancements in technologies
will be critical to the future growth of the biofuels industry.
The Discussion Draft clearly reflects a concerted effort to
identify the research needs that must be addressed to
facilitate the rapid expansion of domestically-produced
renewable fuels such as ethanol, bio-butanol, and biodiesel. It
recognizes that challenges remain, not just in biofuel
production, but in developing biofuel markets as well. The
Committee is to be commended for its commitment to meeting the
challenge of imported energy, recognizing the potential
benefits of biofuels, and motivating the research community
through this bill to provide a pathway that will provide a more
stable and sustainable energy future for all Americans. The RFA
supports this effort but would offer the following suggestions
to enhance the bill's effectiveness, particularly given the
unfortunate budgetary constraints this effort will likely face.
With respect to the Biofuels and Biorefinery Information
Center, if the center is intended just to be a clearing house
for technical and commercial information about biofuels
development, I would suggest that there may already be federal
and private resources for that mission. If you envision the
Center's role to coordinate multiple, and at times conflicting,
federal research efforts on renewable energy, it could well
serve a very useful purpose in streamlining federal efforts.
Clearly, many of the concerns raised in the Discussion
Draft as issues with the transportation and storage of biofuels
do not apply to ethanol when used as a blend component in
today's gasoline. Other biofuels that do not have the record of
successful use and experience that ethanol enjoys will
certainly want to evaluate their physical and chemical
properties and how they will fare in the transportation
network.
And as ethanol moves beyond just being a blend component in
gasoline and into E-85 markets where far more than today's
ethanol is being used, there will be other transportation
issues that will likely arise as well.
These analyses should be focused on the physical transport
of the products and provisions requiring an access of
environmental impacts should rightfully be left to the U.S.
Environmental Protection Agency.
The RFA supports the Draft Bill's Biofuels Grant Program,
and we would recommend expanding funding in this area if at all
possible. As Dr. Foust mentioned earlier, we need to move
beyond grain and the production of ethanol. The industry is
working hard to do so, but more work clearly needs to be done.
Federal efforts to help that would be very, very useful.
The RFA also strongly supports amending Section 932 of the
Energy Policy Act of 2005, to create a biorefinery energy
efficiency program. This will be particularly important as
State and federal fuel policy gravitates towards a carbon
matrix for fuel policy.
With respect to higher levels of ethanol blends, EPA has
already largely defined the scope of the analysis necessary to
approve such new fuels for commercial use. EPA's testing needs
are focused on the drivability, durability, materials
compatibility, and emissions of these blends. The study
envisioned in the draft bill goes beyond what EPA would require
to approve new fuels, creating a new and higher standard for
ethanol fuel blends than other fuels that may enter the market
soon. The RFA would suggest, therefore, that the bill track EPA
protocols for a review of higher ethanol blends and provide
sufficient funding to expedite such a test.
Mr. Chairman, increasing America's energy and national
security by reducing our dependence on foreign oil and
continuing to expand domestic renewable fuels is among the most
important challenges facing our country today. We at the RFA
look forward to working with you and this Congress to develop
the appropriate federal policies that will help us achieve
those goals.
Thank you.
[The prepared statement of Mr. Dinneen follows:]
Prepared Statement of Robert Dinneen
Good afternoon, Mr. Chairman and Members of the Subcommittee. My
name is Bob Dinneen and I am President of the Renewable Fuels
Association (RFA), the national trade association representing the U.S.
ethanol industry.
This is an important and timely hearing, and I am pleased to be
here to discuss the growth in the domestic ethanol industry, the
increasingly important role of continued research and development for
our nation's biofuels industry, and the Committee's Discussion Draft
legislation, the ``Biofuels Research and Development Enhancement Act.''
The ethanol industry today is on the cutting edge of technology,
pursuing new processes, new energy sources and new feedstocks that will
make tomorrow's ethanol industry unrecognizable from today's. Ethanol
companies are already utilizing cold starch fermentation, corn
fractionation, and corn oil extraction. Companies are pursuing more
sustainable energy sources, including biomass gasification and methane
digesters. And there is not an ethanol company represented by the RFA
that does not have a cellulose-to-ethanol research program.
The Science and Technology Committee, the Energy and Environment
Subcommittee in particular, can play an important role in accelerating
these efforts by promoting and targeting research and development funds
and resources appropriately. Support through research and development
to promote the commercialization of cellulosic ethanol and to continue
to build upon the existing industry's advancements in technologies will
be critical to the future growth of the biofuels industry.
Background
Today's ethanol industry consists of 120 biorefineries located in
19 different states with the capacity to process 2.2 billion bushels of
grain into 6.2 billion gallons of high octane, clean burning motor
fuel, and more than 12 million metric tons of livestock and poultry
feed. It is a dynamic and growing industry that is revitalizing rural
America, reducing emissions in our nation's cities, and lowering our
dependence on imported petroleum.
Ethanol has become an essential component of the U.S. motor fuel
market. Today, ethanol is blended in 50 percent of the Nation's fuel,
and is sold virtually from coast to coast and border to border. The
almost five billion gallons of ethanol produced and sold in the U.S.
last year contributed significantly to the Nation's economic,
environmental and energy security. According to an analysis completed
for the RFA\1\, the approximately five billion gallons of ethanol
produced in 2006 resulted in the following impacts:
---------------------------------------------------------------------------
\1\ Contribution of the Ethanol Industry to the Economy of the
United States, Dr. John Urbanchuk, Director, LECG, LLC, December, 2006.
---------------------------------------------------------------------------
<bullet> Added $41.9 billion to gross output;
<bullet> Created 163,034 jobs in all sectors of the economy;
<bullet> Increased economic activity and new jobs from ethanol
increased household income by $6.7 billion, money that flows
directly into consumers' pockets;
<bullet> Contributed $2.7 billion of tax revenue for the
Federal Government and $2.2 billion for State and local
governments; and,
<bullet> Reduced oil imports by 206 million barrels of oil,
valued at $11.2 billion.
There are currently 77 biorefineries under construction. With eight
existing biorefineries expanding, the industry expects more than 6.4
billion gallons of new production capacity to be in operation by the
end of 2009.
Biofuels Research and Development Enhancement
The Discussion Draft clearly reflects a concerted effort to
identify the research needs that must be addressed to facilitate the
rapid expansion of domestically produced renewable fuels such as
ethanol, bio-butanol and biodiesel. It recognizes that challenges
remain, not just in biofuels production, but in developing biofuels
markets as well. The Committee is to be commended for its commitment to
meeting the challenge of imported energy, recognizing the potential of
biofuels, and motivating the research community, through this bill, to
provide a pathway that will provide a more stable and sustainable
energy future for all Americans. The RFA supports this effort, but
would offer the following suggestions to enhance the bill's
effectiveness, particularly given the unfortunate budgetary constraints
this effort will likely face.
Section 1--Biofuels and Biorefinery Information Center
While we certainly agree Biorefinery Information needs to be more
widely available, we believe this function is more appropriately met by
private industry, and that limited federal dollars can be better
utilized in other areas. Trade associations and industry-led promotion
councils have traditionally fulfilled the role of clearinghouses for
information related to the research and development, and the
commercialization and deployment of technologies. Certainly, with
respect to ethanol, numerous organizations offer information related to
the technology, financing, permitting and construction of ethanol
plants.\2\ In addition, careful consideration should be given as to how
to best coordinate and consolidate the work already being done by
various federal agencies on biofuels research and development before
creating additional layers of bureaucracy. The RFA recommends a
thorough review by the Secretary of Energy of the existing public and
private resources before determining the need for a new information
center.
---------------------------------------------------------------------------
\2\ For example, BBI International publishes an ``Ethanol
Development Handbook'' that has proven to be an invaluable resource to
companies and individuals looking to invest in ethanol production
technology.
---------------------------------------------------------------------------
Section 2--Biofuels and Advanced Biofuels Infrastructure
The U.S. transportation fuel market has been blending ethanol into
our fuel supply for more than 30 years. Ethanol is now blended in 50
percent of gasoline nationwide. Indeed, over the past several years the
ethanol industry has worked to expand a ``Virtual Pipeline'' through
aggressive use of the rail system, barge and truck traffic. As a
result, we can move product quickly to those areas where it is needed.
Many ethanol plants have the capability to load unit trains of ethanol
for shipment to ethanol terminals in key markets. Unit trains are
quickly becoming the norm, not the exception, which was not the case
just a few years ago. Railroad companies are working with our industry
to develop infrastructure to meet future demand for ethanol. The
biofuels industry is working closely with terminal operators and
refiners to identify ethanol storage facilities and install blending
equipment. We will continue to grow the necessary infrastructure to
make sure that in any market we need to ship ethanol there is rail
access at gasoline terminals, and that those terminals are able to take
unit trains.
Clearly, many of the concerns raised in the Discussion Draft as
issues with the transportation and storage of biofuels do not apply to
ethanol when used as a blend component in today's gasoline. Other
biofuels that do not have the record of successful use and experience
that ethanol enjoys will certainly want to evaluate their physical and
chemical properties and how they will fair in the transportation
network, however. These analyses should be focused on the physical
transport of the products and provisions requiring an assessment of
environmental impacts should rightfully be left to the U.S.
Environmental Protection Agency if necessary and appropriate.
With respect to ethanol, the most significant infrastructure-
related research and development need to advance cellulose and other
bioenergy feedstocks for biofuels production is on improved collection,
storage and handling systems for those feedstocks. The RFA would
encourage the Committee to expand this provision to include research,
development and demonstration of the transportation and distribution
needs of the emerging cellulosic ethanol industry.
Section 4--Bioresearch Centers for Systems Biology Program
As mentioned previously, there is, and will be for the foreseeable
future, limited available funding, so an increase in the number of
Bioresearch Centers to 11 from the Energy Policy Act of 2005's three is
unnecessary. Perhaps five Bioresearch Centers--one for every Petroleum
Administration for Defense Districts--would be more appropriate. There
is already a great amount of regionally-focused research being
conducted at universities, federal laboratories and other public and
private institutions nationwide. Increasing the pool of research
entities that would compete for limited funds may further dilute
efforts to commercialize and deploy these new and emerging
technologies.
Section 5--Grants for Biofuels Production Research and Development in
Certain States
The RFA strongly supports the Draft bill's biofuels grant program,
and we would recommend expanding funding in this area if at all
possible. A wide variety of energy crops and agricultural waste
products such as switchgrass, myscanthis, wood chips and corn stover
from many regions of the country must all be researched, developed and
commercialized as additional ethanol feedstocks to realize the annual
production levels envisioned in the many proposals already introduced
by this Congress. New biorefineries are being built in new regions of
the country everyday--the East Coast, the Gulf Coast, the Pacific
Northwest and even Hawaii. Grant programs that promote geographical
dispersion, such as those included in the Discussion Draft, will help
to commercialize cellulosic ethanol quickly and continue the trend just
beginning to expand ethanol production beyond the traditional corn
belt.
Section 6--Biorefinery Energy Efficiency
The RFA also strongly supports amending Section 932 of the Energy
Policy Act of 2005 to create a Biorefinery Energy Efficiency program.
This will be particularly important as State and federal fuels policy
gravitates toward a carbon matrix for compliance. Opportunities for
both grain and cellulosic ethanol production will be enhanced by
technologies that allow biorefineries to decrease energy costs by
diversifying energy sources. Advances in research on the development of
processes to produce alternative energy at biorefineries such as
biomass co-generation and biomass gasification, and methane production
through anaerobic digestors, will be critical to increase energy
efficiency and reduce the energy consumption of biorefineries.
Section 7--Study of Higher Levels of Ethanol Blends
Ethanol today is largely a blend component with gasoline, adding
octane, displacing toxics and helping refiners meet Clean Air Act
specifications. But the time when ethanol will saturate the blend
market is on the horizon, and the industry is looking forward to new
market opportunities. As rapidly as ethanol production is expanding, it
is possible the industry will saturate the existing blend market before
a meaningful E-85 market develops. In such a case, it would be most
beneficial to allow refiners to blend ethanol in greater volumes, e.g.,
15 percent. The ethanol industry today is engaged in testing of higher
blend levels of ethanol, beyond E-10. There is evidence to suggest that
today's vehicle fleet could use higher blends. An initial round of
testing is underway, but more test programs will be needed. It should
be noted, however, that EPA has already largely defined the scope of
the analysis necessary to approve such new fuels for commercial use.
EPA's testing needs are focused on the drive-ability, durability,
materials compatibility and emissions. The study envisioned in the
Draft bill goes beyond what EPA would require to approve new fuels,
creating a new and higher standard for ethanol fuel blends than for
other fuels that may soon enter the market. The RFA would suggest,
therefore, that the bill track EPA protocols for a review of higher
level ethanol blends and provide sufficient funding to expedite such a
test.
Higher blend levels would have a significant positive impact on the
U.S. ethanol market, without needing to install new fuel pumps and wait
for a vehicle fleet to turn over in the next few decades. It would also
allow for a smoother transition to E-85 by growing the infrastructure
more steadily.
Section 8--Study of Optimization of Flexible Fuel Vehicles
As flexible fuel vehicle (FFV) production is ramped up, it is
important to encourage the use of the most efficient technologies. Some
FFVs today experience a reduction in mileage when ethanol is used
because of the differences in BTU content compared to gasoline. But the
debit can be easily addressed through continued research and
development. For example, General Motors has introduced a turbo-charged
SAAB that experiences no reduction in fuel efficiency when E-85 is
used. There is also technology being developed that utilizes ``variable
compression ratio engines'' that would adjust the compression ratio
depending on the fuel used. Thus, if the car's computer system
recognized E-85 was being used, it would adjust the compression ratio
to take full advantage of ethanol's properties. The RFA supports the
further study of how best to optimize technologies of alternative
fueled vehicles to use E-85 fuel as included in the Discussion Draft.
The study of new technologies could dramatically improve E-85 economics
by eliminating or substantially reducing the mileage penalty associated
with existing FFV technology.
Conclusion
Increasing America's energy and national security by reducing our
dependence on foreign oil and continuing to expand our domestic
renewable fuels industry is among the most important challenges facing
our country. We look forward to working with you in the 110th Congress
to develop the appropriate federal policies that will achieve those
goals.
Thank you.
Biograph for Robert Dinneen
Bob Dinneen is the President and CEO of the Renewable Fuels
Association (RFA), the national trade association for the U.S. ethanol
industry. As such, he is the ethanol industry's lead lobbyist before
the Congress and Administration.
Mr. Dinneen joined the RFA in 1988 as Legislative Director, and
became President in July of 2001. In this capacity he has led the
Association's effort to build coalitions with the industry's petroleum
customers as well as transportation and environmental groups in order
to provide for marketplace growth for the industry. These coalitions
have resulted in an historic Renewable Fuels Standard (RFS) fuels
agreement and passage of the Volumetric Ethanol Excise Tax Credit
(VEETC).
Mr. Dinneen has presented testimony before the Congress and federal
agencies on numerous occasions, and represented the ethanol industry's
interests at State, national and international forums.
Prior to joining the RFA, Mr. Dinneen worked on Capitol Hill for
various Members of Congress and Congressional committees. Mr. Dinneen
graduated from the Catholic University of America with a Bachelor's
Degree in Political Science.
Chairman Lampson. Thank you, Dr. Dinneen, Mr. Dinneen.
Mr. McAdams.
STATEMENT OF MR. MICHAEL J. MCADAMS, EXECUTIVE DIRECTOR,
ADVANCED BIOFUELS COALITION
Mr. McAdams. Thank you, Mr. Chairman. Chairman Lampson,
Ranking Member Inglis, Members of the Committee, my name is
Michael McAdams. I serve as Executive Director of Hart Energy
Government Affairs Group. I am testifying on behalf of the
Advanced Biofuels Coalition.
It is a great privilege and responsibility to appear before
you today and to share how the members of the Advanced Biofuels
Coalition are contributing to meeting our energy and
environmental goals. I am delighted to join such a
distinguished panel, some of whom I have worked with for years
in the area of fuels policy.
The Advanced Biofuels Coalition is a group of companies
whose second and third generation technologies hold great
promise. The companies, working with the Federal Government,
have the potential to provide the American public with abundant
values, volumes of high-quality, no-compromise renewable fuels.
The fundamental objective of the coalition is to educate
policy-makers on the ability of these technologies to deliver
significant volumes of lower carbon fuels today and in the near
future. For these companies to be able to achieve this goal
they need your support in adopting policies at the federal
level which are technology and feedstock neutral.
We applaud your efforts to provide a path to broaden the
use of advanced biofuels. The legislation before us today we
believe can make a significant contribution to America's fuels
marketplace. Our members recognize the tremendous contribution
and the path traveled which first generation fuels have already
made and will play in the future of this effort. But we believe
that the future of energy policy will require contributions
from many sources. As one Governmental official recently
suggested, this is a matter of ``silver buckshot, not a silver
bullet.''
Members of the coalition have reviewed your legislation and
agree that many of the provisions would be helpful in moving
the marketplace forward. Specifically, we are most interested
in your section regarding infrastructure and would encourage
that you consider the benefits that second-generation fuels
would have in terms of reducing the overall infrastructure
costs to the country and to consumers.
If a picture is worth a thousand words, then with the
remaining portion of my five minutes I want to present the
Committee several slides that illustrate the potential of
second and third-generation technologies which use existing
biofuel feedstocks.
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The first slide depicts various technology pathways and
potential fuels which they can produce. This is the slide
version of the oral version that Dr. Foust gave.
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The second slide presents a suite of technologies currently
available or under development. As you can see, there are a
range of different technologies on the slide, all of which are
renewable.
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The third slide briefly depicts where many of these
technologies are currently being deployed around the world. To
the extent we do not make technology-neutral policy choices in
the current energy legislation, many of these technologies may
never find their way to the United States.
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The fourth slide is a comparison of biodiesel product
quality as it compares to several different technologies. You
can see from this slide that there are significant quality
differences, not to mention fungibility benefits associated
with second and third-generation technologies. The fact that
the basic chemistry of these products is fundamentally
different from first-generation biodiesel provides the
opportunity that jet fuels may actually be produced from these
new processes in the future.
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The fifth slide attempts to show the potential of
scalability of the various technologies. As you can see, the
second-generation fuels which are sugar-based and biomass-based
give the country significant opportunity for large volumes.
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The last slide depicts several second-generation alcohol
products as they compare on energy density, volatility, and
octane with the current first-generation ethanol.
The last point I would wish to make to the Committee
concerns the desire by many in Congress to develop a Low Carbon
Fuel Standard. Depending on its specific process, feedstocks,
and products, an individual biorefinery may have a wide range
of life cycle carbon emissions. Should the Congress seek to
mandate a specific biofuels target, it should provide
sufficient flexibility to allow both the objective of hitting a
renewable gallon target and the objective of having a low
carbon fuel supply to both be achieved and not be in conflict
with each other. To do so would put the consumer at risk.
In conclusion, we appreciate the opportunity to testify
before you today, and we stand ready to work with the Committee
on the legislation before us.
Thank you.
[The prepared tatement of Mr. McAdams follows:]
Prepared Statement of Michael J. McAdams
Mr. Chairman, Ranking Member, and Members of the Committee, my name
is Michael McAdams, and I serve as Executive Director of Hart Energy's
Government Affairs Group. I am testifying on behalf of the Advanced
Biofuels Coalition.
It is a great privilege and responsibility to appear before you
today to share how the members of the Advanced Biofuels Coalition are
contributing to meeting our energy and environmental improvement goals.
I am delighted to join such a distinguished panel, some of whom I have
worked with for years in the area of fuels policy.
The Advanced Biofuels Coalition is a group of companies whose
second and third generation technologies hold great promise. These
companies, working with the Federal Government, have the potential to
provide the American public with abundant volumes of high quality, no-
compromise renewable fuels. The fundamental objective of the coalition
is to educate policy-makers on the ability of these technologies to
deliver significant volumes of lower carbon fuels today and in the near
future. For these companies to be able to achieve this goal, they need
your support in adopting policies at the federal level which are
technology and feedstock neutral.
We applaud your efforts to provide a path to broaden the use of
``advanced biofuels.'' The legislation before us today we believe can
make a significant contribution to America's fuels market place. Our
members recognize the tremendous contribution and the path traveled
which first generation fuels have made already and will play in the
future of this effort. But we believe that the future of energy policy
will require contributions from many sources. As one Governmental
official recently suggested this is a matter of ``silver buckshot not a
silver bullet.''
Members of the Coalition have reviewed your legislation and agree
that many of the provisions would be helpful in moving the market
forward. Specifically, we are most interested in your section regarding
infrastructure, and would encourage that you consider the benefits that
second generation fuels would have in terms of reducing overall
infrastructure cost to the county.
If a picture is worth a thousand words, then with the remaining
portion of my five minutes I want to present to the Committee several
slides that illustrate the potential of second and third generation
technologies which use existing biofuel feedstocks. The first slide
depicts various technology pathways and the potential fuels which they
could produce.
The second slide presents the suite of technologies currently
available or under development. As you can see, there are a range of
different technologies on the slide, all of which are renewable.
The third slide briefly depicts where many of these technologies
are currently being deployed around the world. To the extent we do not
make technology neutral policy choices, many of these technologies may
not find their way to the United States.
The fourth slide is a comparison of biodiesel product quality as it
compares to several technologies. You can see from this slide that
there are significant quality differences, not to mention the
fungibility benefits, associated with the second and third generation
technologies. The fact that the basic chemistry of these products is
fundamentally different from first generation biodiesel provides the
opportunity that jet fuels may be produced in the near future from some
of these renewable based processes.
The fifth slide attempts to show the potential of scalability of
the various technologies. As you can see, the second generation fuels
which are sugar-based and biomass-based give the country significant
opportunity for large volumes.
The last slide depicts several second generation alcohol products,
as they compare on energy density, volatility and octane with ethanol.
The last point I would wish to make to the committee concerns the
desire by many in this Congress to develop a Low Carbon Fuel Standard.
Depending on its specific process, feedstocks, and products, an
individual biorefinery may have a wide range of life cycle carbon
emissions. Should the Congress seek to mandate a specified biofuels
target, it should provide sufficient flexibility to allow both the
objective of hitting a renewable gallon target and the objective of
having a lower carbon fuel supply to both be achieved and not be in
conflict.
In conclusion we appreciate the opportunity to testify before you
today and stand ready to work with the Committee on the legislation
before us.
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APPENDIX
Questions from the Committee:
1. Is a greater federal investment needed in biofuels research? Are
there specific areas that are in need of greater research focus? What
feedstocks are presenting the greatest long-term potential for
development of biofuels? What are the technical barriers to realizing
biofuels from diverse feedstocks?
Answer: Currently many of the new second and third generation
technologies have begun in the laboratories from colleges and
universities around the country. We would encourage the Committee to
continue to encourage and foster public private-partnerships with
industry and governments to make the new discoveries in this area.
The type of technology and choices of feedstocks utilized by a
specific processes determine their specific interest in any given
research focus. In addition, the types of process will have a direct
bearing on the view of which feedstocks may hold the greatest long-term
potential for the development of fuels. Clearly for a company like
Amyris, which leverages sugar containing feedstocks to create
hydrocarbon fuels, the ability to utilize forms of low cost sugars from
cellulosic processes may hold great promise. As for a company such as
Velocys, which is developing a Fischer-Tropsch process, woody biomass
or slash from trees provides a great opportunity forward.
Your last question inquires as to the technical barriers to
realizing biofuels from diverse feedstocks. In most cases, whether it
is gasification or biotechnology, scaling up the technology is one of
the primary challenges. The government's ability to provide support for
the demonstration of technology and the assistance in the testing of
fuels to meet the specification for different engines could be
particularly helpful to the smaller companies involved in this space.
Additionally, food oils have a distinct tendency to make different
products from different process applications and have different quality
aspects even within the same process. This creates technical barriers
to transportation and engine use of various technological applications
and feedstocks for biofuels.
2. How will the business community benefit from better federal
coordination and cataloging of information from federal research on the
biofuels development process? Should databases and a centralized
clearinghouse be created to make this information readily available?
Answer: To the extent the Federal Government is conducting its own
research and development, and it would catalogue and provide
transparent access to a wide variety of stakeholders, this could
potentially lead to partnerships and shared technology developments
that might not otherwise be forthcoming. Putting this information into
the marketplace at a time of high investment in these types of areas
does provide for the potential that new technologies may be picked up,
combined and moved forward in a more expeditious fashion.
3. Can you comment on the need for research in the area of biofuels
infrastructure? What should be included in such research?
Answer: There are many new technologies that hold the promise to
bring fungible high quality diesel and gasoline components to the
market on a cost effective basis. The legislation should explore the
timeframes for these alternatives and include these fuel options in the
studies for infrastructure requirements. It might be in the Nation's
best interest to sequence the requirements for certain volumes of
renewable fuels until after the completion of these studies to afford
the potential of significantly lowering any large investments which
could be required to move massive volumes of first generation fuels.
4. Is standardization of biofuels, whether ethanol or biodiesel,
needed to ensure fuel fungibility? Should this standard focus on blend
stock optimization?
Answer: Various technologies make differing qualities of biofuels
and as a result require different infrastructure. As a result of the
biofuels' properties, the quantity of renewable fuel that can be added
as a component to either diesel or gasoline also varies. This is
further magnified by the warranty requirements of various engine
manufacturers.
In the past we have seen certain technologies utilize standard
requirements at state levels to attempt to block advanced biofuels with
great potential from entering the marketplace.
The Committee should be very cautious to not preclude the
development of newer higher quality options for consumers in the market
place. We appreciate the interest to creating a standard to optimize
blend stock for those fuels with highly variable quality. However,
depending on the technology and the product involved, the level and
requirements needed to create a fluid system to deliver consistent
finished product to an end point are extremely complicated and could
have unintended consequences. For example, requiring U.S. refining in
the system to make changes to their blends could require significant
changes to the base stock and lower the optimization of the current
refining system.
5. Is the current workforce adequate to meet the growing needs for
trained personnel to develop and operate biofuels facilities? Is a
comprehensive workforce training program needed?
Answer: Depending on the technology involved governs the type of
workforce required. For most of our members, the existing personnel
from either the ethanol or refining industries have provided adequate
personnel requirements. However, support in working training programs
is something we would welcome as a way to increase the supply of
workers in the future with the knowledge to operate these new
technologies.
Biography for Michael J. McAdams
Michael McAdams, Executive Director, Government Affairs of Hart
Downstream Energy Services, has been involved in every major federal
energy and environmental initiative over the last 20 years. In his
current capacity, he spearheads governmental advocacy efforts for Hart
clients including the Advanced Biofuels Coalition. Prior to joining the
firm, he spent 14 years with British Petroleum (BP), acting as Vice
President, Federal Affairs and the Environment, and the Associate Group
Policy Advisor while there. Before joining BP, Mr. McAdams served on
the staffs of several Members of Congress, including the current
Ranking Minority Member of the House Science and Technology Committee,
the Honorable Ralph Hall. He holds a BA in political science from
Virginia Tech and a JD from the Washington College of Law.
Chairman Lampson. Thank you very much, Mr. McAdams.
Mr. Waskow.
STATEMENT OF MR. DAVID WASKOW, INTERNATIONAL PROGRAM DIRECTOR,
FRIENDS OF THE EARTH, U.S.
Mr. Waskow. Chairman Lampson and Members of the Committee,
thank you very much for the opportunity to appear today to
discuss research and development priorities related to the
environmental impacts of biofuels production. My name is David
Waskow, and I am the International Program Director at Friends
of the Earth, which is a national environmental advocacy
organization and also the U.S. arm of an international
federation, Friends of the Earth International, that has groups
in 70 countries around the world.
In the U.S. and abroad, as you know, biofuels are often
viewed as an essential solution to the linked challenges of
global warming and our dependence on oil. If done right and at
the appropriate scale, biofuels can indeed make an important
contribution to reducing greenhouse gas emissions, while also
improving agricultural sustainability, protecting natural
resources, and strengthening rural economies. However, these
results are by no means guaranteed, and we must be vigilant in
ensuring that the potential of biofuels is, in fact, achieved.
Without a serious consideration of environmental impacts,
increased biomass production could have unintended consequences
for water, air, and soil quality, water availability, and
sensitive ecosystems and potentially could provide only minimal
benefits or even negative outcomes in terms of greenhouse gas
emissions.
As biofuel production and use rapidly increases, a robust
research and development program addressing environmental
impacts is urgently needed. Perhaps the most important task for
research in coming years is to more thoroughly understand the
environmental impacts of biofuels production on a life cycle
basis. Particularly, to determine the actual greenhouse gas
emissions associated with production. Life cycle analyses
should estimate the greenhouse gas emissions associated with
the entire chain of production and end use of a fuel, including
impacts associated with land use, feedstock production, fuel
processing facilities, transport, consumer end use, and more.
This research need is even more critical now given that pending
legislative proposals create greenhouse gas performance
standards for renewable and alternative fuels. Indeed, getting
these analyses wrong could end up, upend the entire policy
framework and fundamentally undermine greenhouse gas reduction
goals.
Unfortunately, however, the current generation of life
cycle analyses including the well-known GREET model out of
Argonne National Laboratory, contain important uncertainties
and land use-related impacts in particular are poorly
characterized in these life cycle analyses. The land use
impacts of expanded biofuels production will include shifting
marginal, unused, or ecologically-sensitive land into biofuels
production. These impacts could change fundamental assumptions
about greenhouse gas emissions for biofuels both domestically
and internationally.
Indeed, the recent surge in corn ethanol production in the
United States underscores the importance of examining these
greenhouse gas issues closely. Based on estimates from the
Argonne National Lab, the per acre greenhouse gas benefits from
corn ethanol production compared to conventional gasoline
amount to 0.6 metric tons of carbon dioxide equivalent.
By contrast, clearing an acre of grassland would produce 45
to 80 tons of carbon dioxide equivalent and converting an acre
of forest will commonly release 200 to 300 metric tons. The
implications are substantial. In essence, to make back all the
greenhouse gas emissions from an acre of land converted from
grasslands, one would have to grow corn on that acre for
approximately 100 years.
Careful analysis of the greenhouse gas impacts of land
conversion is also relevant for biofuels feedstocks other than
corn, including biofuels production outside the United States,
partly intended for export. In southeast Asia, for example, the
palm oil industry which has devastated rainforests and
wetlands, is increasingly shifting production to biofuels for
export. Similarly, in Brazil rapidly-expanded production of
biofuels is likely to increase land use pressures in ways that
could influence the greenhouse gas profiles of those fuels.
In addition to the critical task of analyzing greenhouse
gas emissions, life cycle analyses should also be expanded to
address a full range of potential environment impacts,
including some of the issues I described earlier, soil quality,
water use, water quality, and so forth. Broader research on
these issues is especially needed for feedstocks other than
corn.
In addition, if we hope to continue the growth of a
sustainable biofuels industry in the United States, we must
also find ways to steer the sector in directions that will be
more compatible with our environmental goals. Research into
best practices for the cultivation and harvesting of feedstocks
will be especially important, and the research agenda should
permanently include issues involving crop diversification,
including mixed perennial grasses.
Sustainable practices for biofuel processing facilities and
research into the impacts of biofuel processing facilities,
particularly involving energy use and water use, should be a
priority. And research and development for production
alternatives is also vital, especially for small-scale
production and local and on-farm use of biofuels.
Let me conclude by saying that we appreciate this
opportunity to address the Subcommittee and look forward to
working with you to address the critical research and
development agenda needed to deal with the environmental
impacts of biofuels. An intensive research program can help
insure that biofuels provide the benefits we want while also
avoiding the environmental harm that would undermine our
fundamental objectives.
Thank you.
[The prepared statement of Mr. Waskow follows:]
Prepared Statement of David Waskow
Chairman Lampson and Congressman Inglis, thank you for the
opportunity to appear today before the House Science and Technology
Subcommittee on Energy and Environment to discuss research and
development opportunities and priorities related to the environmental
impacts of biofuels expansion. My name is David Waskow, and I am the
International Program Director at Friends of the Earth. Friends of the
Earth is a national advocacy organization in the United States founded
in 1969 and the U.S. arm of Friends of the Earth International, the
world's largest environmental federation, with groups in more than 70
countries worldwide.
In the United States and abroad, biofuels are often viewed as an
essential solution to the linked challenges of global warming and our
dependence on oil. If done right and at the appropriate scale, biofuels
can indeed make an important contribution to reducing greenhouse gas
emissions, improving agricultural sustainability and protection of
natural resources, and strengthening rural economies. However, these
results are by no means guaranteed, and we must be vigilant in ensuring
that the potential of biofuels is in fact achieved. Without serious
consideration of environmental impacts, increased biomass production
could harm water, air and soil quality, decrease water availability,
and increase loss of biodiversity, wildlife habitat, and sensitive
ecosystems, while providing only minimal benefits or even negative
outcomes in terms of greenhouse gas reductions.
Recent data regarding increases in the scale of biofuels
production, as well as current policy proposals aimed at significantly
increasing the levels of biofuels production, make the consideration of
environmental benefits even more of a pressing concern. According to
Department of Energy data, U.S. ethanol production increased from 3.4
billion gallons in 2004 to an annual rate of six billion gallons at the
beginning of 2007, and annual biodiesel production expanded from 28
million gallons to approximately 287 million gallons from 2004 to 2006.
Meanwhile, annual imports of biofuels have also steadily increased.
More than 10 percent of fuel-grade ethanol came from abroad in 2006,
despite the current 54-cent per gallon tariff on ethanol, and there has
been an upswing in the construction of plants, such as a 100-million
gallon per year facility in Washington State, designed to import palm
oil for biodiesel. Legislative proposals to dramatically increase the
use of biofuels in the United States to more than 30 billion gallons
annually would accelerate these already existing trends both for
domestic production and imports.
As biofuel production and use rapidly increases, a robust research
and development program is urgently needed to ensure that we understand
the full scope of the environmental implications of biofuel production
and that investment in promising technologies results in significant
greenhouse gas reductions and the best environmental outcomes possible.
Greenhouse gas emissions and environmental impacts vary enormously by
feedstock and the full life cycle of the production process. Moreover,
the increased scale of biofuels production itself raises important
questions of environmental sustainability, especially in terms of land
use impacts. Research and development efforts should consider these
impacts thoroughly and help steer future biofuels production in a way
that can maximize benefits and minimize environmental harm.
Life Cycle Analysis
Perhaps the most important task for research in coming years is to
more thoroughly examine the environmental impacts of biofuels
production on a life cycle basis, particularly to determine the actual
greenhouse gas emissions associated with biofuel production. At their
best, life cycle analyses for greenhouse gas emissions estimate the
emissions associated with the entire chain of production and end-use of
a particular biofuel, including impacts associated with land use,
feedstock production, fuel processing facilities, transport, and
consumer end-use. The greenhouse gas evaluation of renewable fuels on a
life cycle basis can help provide the underlying technical foundation
for policy options, particularly when the life cycle emissions are
compared to the life cycle emissions from conventional fossil fuel-
based fuel. Particularly given recent legislative proposals that would
base renewable fuel mandates and other fuel policies on the greenhouse
gas profile of specific fuels, it is imperative that life cycle
analyses are comprehensive and accurate. Indeed, getting these analyses
wrong could upend the entire policy framework.
The current generation of life cycle analyses, including the well-
known GREET model developed at Argonne National Laboratory, examine a
wide range of life cycle contributors to greenhouse gas emissions
(including not only carbon emissions, but also gases such as methane
and nitrous oxide). Unfortunately, however, even the GREET model, which
is considered the pace-setter for greenhouse gas modeling, is
inadequate and contains important uncertainties that must be addressed.
Many in the scientific community have echoed our concern that life
cycle analyses must be improved to address the full scope of greenhouse
gas emissions related to biofuels production.
Land use-related impacts, in particular, are poorly characterized
in current life cycle analyses, and broader and deeper research is
needed to quantify the full range of parameters affecting greenhouse
gas emissions. In their recent technical analysis of California's Low
Carbon Fuel Standard for the California Air Resources Board, University
of California professors Alexander Farrell and Daniel Sperling noted
the limitations of the GREET model in terms of land use change. The
land use impacts of expanded biofuels production will include shifting
marginal, unused or ecologically sensitive land into biofuels
production, potentially changing the underlying assumptions about
greenhouse gas emissions for biofuels produced both domestically and
internationally. The scale of land use conversion for biofuels
production, the types of land being converted, and the land intensity
of various biofuel feedstocks will likely have significant impacts on
greenhouse gas outcomes in ways that current models do not fully
account for.
The recent surge in corn ethanol production in the United States
underscores the importance of examining these greenhouse gas issues
closely. USDA estimated that corn acreage in the United States would
increase by 15 percent, or 12 million acres, during the spring 2007
planting season. Legislative proposals currently under consideration
would further increase pressure on land, expanding corn ethanol
production to as much as 15 billion gallons annually, an amount that
would require using land equivalent to half the current corn acreage in
the country, or 45 million acres.
The greenhouse gas implications of this land use will depend on the
types of land that are used for such biofuels production, including
whether protected lands such as those in the Conservation Reserve
Program are retired from that program and placed into ethanol
production. Yet even if the land put into biofuels production is
currently farmed with other crops, the use of that land is likely to
displace some level of existing agricultural production, including to
production on vulnerable lands outside the United States. Other,
indirect impacts that might occur due to the use of corn for ethanol
could also be considered in a comprehensive life cycle analysis. For
example, when an acre of corn is diverted for ethanol, livestock
operations around the world will replace most of the corn in some other
way, which on a worldwide basis could result in the conversion of
additional land to agricultural production.
The greenhouse gas emissions related to the increased use of land
for corn ethanol production could be quite substantial. Based on
estimates by the Argonne National Laboratory, the per-acre greenhouse
gas benefits from corn ethanol production compared to conventional
gasoline amount to 0.6 metric tons of carbon dioxide equivalent. By
contrast, the Intergovernmental Panel on Climate Change estimates that
clearing an acre of grassland would produce 45 to 80 tons of carbon
dioxide equivalent greenhouse gases and converting an acre of forest
will commonly release 200 to 300 metric tons of carbon dioxide
equivalent greenhouse gases. The implications of these data are
substantial. Even small increases in the use of land converted from
grasslands or forests would undo the greenhouse gas benefits from corn
ethanol production on an acre of land. While it would be reasonable to
amortize the greenhouse gas impacts from land conversion over a limited
number of years, doing so would not limit the quite significant
immediate impacts of the land conversion.
Careful analysis of the greenhouse gas impacts of land use
conversion is also relevant for biofuel feedstocks other than corn,
including for production outside the United States. In Southeast Asia,
for example, palm oil production is increasingly shifting from a focus
on food inputs to production as a biodiesel input. Unfortunately,
despite palm oil's high energy content, the production of palm oil is a
major source of destructive land use patterns, particularly due to
deforestation and wetland conversion. Nearly 50 percent of currently
productive palm oil plantations in Southeast Asian countries is planted
on land that was recently converted from forest, releasing substantial
quantities of greenhouse gases. Meanwhile, a quarter of all palm oil
plantations in Indonesia are established over converted peatlands,
which have been drained and often then burned to make way for palm
production. Wetlands International estimates that peatland drainage and
burning in Indonesia contribute two billion tons of carbon dioxide
emissions annually, or eight percent of worldwide carbon emissions.
Similarly, in Brazil, rapidly expanded production of biofuels is
likely to increase land use pressure in ways that could influence the
greenhouse gas profiles of those fuels. In the case of sugar cane
production for ethanol, which already occupies 13 million acres in
Brazil, expanded sugar cane production could take place on the
country's significant quantity of degraded and fallow land. However,
many observers believe it is likely that expanded production will also
increasingly move into the Brazilian cerrado, the biodiverse tropical
savanna. In addition, sugar cane production in Brazil frequently
encroaches on previously occupied lands, which often results in crop
and livestock production relocating to land converted from savanna or
rainforest. Meanwhile, although soybean cultivation for biodiesel
production in Brazil is still relatively undeveloped, the potential for
pressure on sensitive lands is significant. Soybean production
currently occupies more than 22 million acres and frequently drives
widespread deforestation.
In addition to conducting more comprehensive analysis of the
greenhouse gas impacts of land use changes, other elements of
greenhouse gas life cycle analyses should also be strengthened. For
example, one of the most significant remaining uncertainties in life
cycle analysis is the impact of nitrous oxide emissions, an important
greenhouse gas related to agricultural production. Several potential
sources of nitrous oxide emissions, including the use of crop residues,
are not included in any major life cycle analysis. In addition,
greenhouse gases emissions related to energy use for irrigation are not
included in the GREET life cycle analysis.
Beyond the critical task of analyzing the greenhouse gas emissions
associated with renewable fuels, life cycle analyses should also be
expanded to address a full range of potential environmental impacts
from biofuels production. This will be especially important in order to
compare the impacts of various biofuels in terms of their relative
impacts on soil quality, water use, water quality (including such
critical issues as nitrogen and pesticide run-off), air quality, and
protection of native ecosystems, habitats and biodiversity. As next-
generation renewable fuels, such as cellulosic ethanol, become
increasingly viable both technologically and commercially, it will be
critically important to be able to compare the entire range of impacts
of those fuels with conventional biofuels. In addition, analysis of the
aggregate and cumulative environmental impacts related to the growth of
the entire biofuels sector, both domestically and internationally,
should be developed.
Finally, one of the most significant gaps in research on the
environmental impacts of biofuels is the extremely limited set of
feedstocks that have been analyzed in any detail. Broader research on
environmental impacts and the development of comprehensive life cycle
analyses are needed for a number of feedstocks other than corn--
including soy, sugar cane, palm oil, canola, native grasses, various
wood sources, straight vegetable oil (including waste vegetable oil),
and crop residues. In some instances, greenhouse gas life cycle
analyses have been conducted for those feedstocks, but broader and
deeper analysis would add significantly to the understanding of the
greenhouse gas and other environmental impacts from those fuel sources.
In addition, most studies of biofuel production use broad averages for
analyzing impacts and land-use intensity, rather than geographically-
specific data. Variability across regions of the United States and the
world can be significant and should be included in these analyses.
Research and Development for Best Practices and Advanced Biofuels
It is increasingly clear that our domestic demand for biofuels far
exceeds our supply of corn for conversion to corn-based ethanol,
currently our major source of biofuels in the United States.
Meanwhile, the recent rapid expansion of corn-based ethanol
production has helped stir increased concern about the environmental
sustainability of biofuels production more broadly. If we hope to
continue the growth of a sustainable biofuels industry in the United
States, we must find ways to steer the sector in directions that will
be most compatible with our fundamental environmental goals. Research
and development must tackle the challenge of promoting best practices
for biofuel production and facilitating the development of improved,
advanced biofuels sources.
Research into best practices for the cultivation and harvesting of
feedstocks will be especially critical to the environmental
sustainability of biofuels production. Examples of the issues that
research need to address include harvest timing and quantities; crop
rotations; fertilizer requirements; use of appropriate and safe
chemicals for cellulosic crops; impacts of crop residue utilization;
potential integration of no-till and organic farming to provide the
greatest possible greenhouse gas and soil benefits; use of single-pass
harvesting; and feedstock processing and handling methods for woody
biomass and perennial grasses. The research agenda for best practices
should also prominently include issues involving crop diversification
and appropriate mixes (including cultivation techniques for mixed
perennial crops). A recent University of Minnesota study showed that
diverse perennial grass mixes are more beneficial in reducing
greenhouse gas emissions and other environmental impacts than is the
case with other approaches, including monocropping of switchgrass.
In addition, a research and development program for conventional
plant breeding of cellulosic and other feedstocks could help develop
biofuels that are less land-intensive and promote environmental
sustainability in other ways. Pursuing conventional breeding, rather
than using an approach involving transgenic engineering, would avoid
significant controversy and trade-related disputes and would avoid
contamination of the food supply from genetically engineered biofuel
feedstocks.
Sustainable practices for biofuel processing facilities,
particularly for energy and water use, should also be a research and
development priority. Research on the most effective ways to use
biomass for powering biofuel processing facilities could be
particularly important to creating greenhouse gas and air quality
benefits. In addition, research on minimizing water use by ethanol
processing plants, which currently use more than four gallons of water
to every gallon of ethanol produced, will be critical to limiting the
potentially intense pressure that biofuels production could place on
water resources.
Research and development for improved fuel types is also critical.
Potential alternative biofuel sources such as straight vegetable oil
and algae have received too little attention and should be made more
central to a research and development strategy. Straight vegetable oil
(including waste vegetable oil) can be used in modified diesel engines
without processing into biodiesel, thereby reducing the life cycle
greenhouse gas emissions that would otherwise come from a biodiesel
production process. However, in order to make straight vegetable oil
technologically and commercially viable, research and development will
be needed for vehicle engine modifications. Another promising fuel
source is algae, which can likely be produced in substantial quantities
for biodiesel with significant greenhouse gas reduction benefits and
limited environmental impacts. It would be valuable to support a
research and development program to facilitate production of
environmentally-sound and commercially viable algae biodiesel.
Finally, it will be vital to support a research and development
agenda for small-scale production and local and on-farm use of
biofuels. Distributed technologies that can be used to provide local
co-generation of electricity and heat and to produce biofuels,
particularly biodiesel, for on-farm use, should be priorities of this
research and development program. Small-scale gasification technologies
for conversion of cellulosic biomass also offer significant
opportunities that should be explored. These approaches are important
not only in the United States, but can also be developed for use in
developing countries so that local communities in those countries can
produce biofuels for their own consumption and economic benefit.
Discussion
Chairman Lampson. Thank you, Mr. Waskow. I will now move
into our first round of questions, and the Chairman will
recognize himself for five minutes.
Biofuels Infrastructure
Mr. Dinneen, surely the ethanol industry should be
commended for insuring adequate supply of ethanol available to
all parts of the country. The virtual pipeline through multiple
modes of transport has done an exceptional job in quickly
moving product.
However, the discussion of significant growth in the use of
biofuels generally, I am concerned that we will reach a point
when the virtual pipeline will meet capacity. With the
introduction of larger quantities of biofuels wouldn't it be
more economical for the producers, the blenders, and consumers
to move the product through pipelines if we know it is safe and
effective?
Mr. Dinneen. Potentially. Let me first say that I think
analyses have been done by CSX Railroad as to how much
additional rail traffic it would take to move as much as 35
billion gallons of ethanol, and their assessment is that that
is 14,000 unit trains a year that would be necessary. That
certainly looks like a really big number until you put it in
some context. It is actually less than four percent of the
total number of trains in this country. So if moving more
biofuels into the motor fuel market is going to be a national
priority, I think finding four additional percent, you know,
rail traffic is certainly feasible.
But your question was more on the economics than on, you
know, the logistics. And certainly it could potentially be far
more economic to move product by pipeline. The question will be
how is the ethanol industry going to develop. Is it going to
develop as the oil industry has been, where much of the
production is highly centralized in one region? Because now the
pipeline system has been built to accommodate gasoline
production in the Gulf Coast, and the pipelines flow from there
out to the population centers. Well, already you have seen the
ethanol industry expanding beyond just the traditional Midwest.
We have got plants today that are being built in California.
They are actually in operation, four plants in operation in
California. There are more plants under construction in Texas
today than are under construction in Illinois, and as our
industry develops, you will see, I think, expanding production
capacity in all regions of the country. So you might not have a
concentration of production that would make pipeline shipments,
you know, feasible or more economic. I think you are just going
to have to see.
Chairman Lampson. If we are ultimately planning to displace
a large amount of petroleum-based products with biobased
products, shouldn't we explore using some of that petroleum
infrastructure that becomes less utilized in order to move
ethanol?
Mr. Dinneen. Absolutely, Mr. Chairman. We should explore
that and indeed, it is feasible to do. It has been a
marketplace issue thus far. There may be some technical issues
that need to be addressed, and this bill I think will help to
identify those.
Chairman Lampson. You were nodding your head, Mr. McAdams.
Do you want to make a comment about it, and then I would like
for Dr. Foust to comment on it.
Mr. McAdams. Yes, Mr. Chairman. I think it is a very
intuitive question, because as you move forward and you look at
the bills in both the House and the Senate that are currently
proposed, the Congress is trying to change the fundamental
balance of where the energy comes from in the future, and so we
are looking at 36 billion gallons of renewable fuels in the
Senate, somewhere around 30 billion, 35 billion in the House.
And those bills sequence the time in which the renewable fuels
come into the marketplace. If you look at the second slide that
I laid down on the right hand of the slide you would have seen
all the timeframes that these second and third-generation
technologies could come into play. They are totally fungible in
the existing pipeline system. They are totally fungible with
existing fuels. Some of the fuels, the gasoline slide I showed,
some of those fuels could actually work in conjunction with
ethanol and be blended with ethanol.
So I think it is a very intuitive question, and I think
your legislation and the section in your legislation that talks
about how you would blend these fuels and what the properties
are and what the benefits of those properties are, is
particularly on target and timed to show the benefits of those
fuels being merged.
Chairman Lampson. These aren't cost competitive yet just
because they are available?
Mr. McAdams. Some of them if, some of them would be very
cost competitive. Yes, sir.
Chairman Lampson. Dr. Foust.
Dr. Foust. I would highly agree with what my colleagues
say. I think it depends on if the ethanol industry develops
more decentralized than the petroleum industry, it does
complicate the petroleum model for ethanol. However, with that
said, I think there, clearly economic studies show it is a
fraction of the cost to move fuel via pipeline than it is by
rail or truck, and that is significant, and I think it needs to
be investigated.
As Mr. Dinneen said, there are technical challenges with
putting ethanol in existing pipelines, but those are
predominantly due to practices. Currently hydrocarbon fuels are
separated by a water slug within the pipelines, which works
well for hydrocarbon fuels, gasoline, diesel, jet fuel, et
cetera, but ethanol has a high affinity for water, so it will
absorb the water, so that doesn't work. That would have to be
investigated. Corrosivity would have to be investigated, but I
think those issues are solved and the economics do justify it.
As far as the vehicles go, I commend the section in the
bill for looking at optimizing vehicles on E-85. I think really
to, that there is one vehicle out there made by Saab, it is
marketed in Europe, it is not available in the United States,
but actually gives higher performance on ethanol. And there is
a lot of data that shows----
Chairman Lampson. Ethanol blend?
Dr. Foust. E-85. Actually, E-85. So predominantly ethanol.
And there is a lot of data out there that shows that we would
not have to pay the one-third penalty on current gas mileage
penalties on fuel-flexible vehicles that are optimized to run
on gasoline octane in the high 80s, if we did specifically look
at these vehicles and how to develop them and what the public
incentive, policy incentives would be to automobile
manufacturers to make these vehicles.
Chairman Lampson. Thank you very much. The Chairman's time
has expired, and at the request of the Subcommittee Ranking
Member, I will recognize the Full Committee Ranking Member for
five minutes. Mr. Hall.
Biorefinery Technologies
Mr. Hall. Thank you, Mr. Chairman. That is me, isn't it?
Mr. McAdams, your slide, I was fascinated, I guess, with
your first slide, and we all look for production dates and
facts about them and time and what is the time certain, and of
course, you may not be able to give that, but could you give me
a couple of examples of actual companies and the timeframes
which they are going to be able to produce these new higher-
quality fuels?
Mr. McAdams. Yes, Mr. Hall. And coming back to Chairman
Lampson's point, let me name two companies that are very
fascinating. The first company would be Amyris Biotechnologies,
which was a company originally founded by Bill Gates, a grant,
to try to solve the world malaria problem. They created a yeast
molecule that has made a quantum collapse in the price of
making artemisinin, which is the drug that kills malaria in
eight hours. They took it from a price of about $2.50 a pill
down to 24 cents. Well, the technology they developed is the
same technology that is, frankly, used in my colleague's, Mr.
Dinneen's, ethanol plants every day. And so instead of using a
yeast molecule that he would use today, you would simply plug
and play, pardon the phrase, like a new software in a computer.
You would simply put their new and improved yeast molecule in
one of Mr. Dinneen's plants, and it will make a diesel fuel
with all of the characteristics of the second-generation fuels
down to 30 degrees below. It will make a jet fuel, or it will
make a gasoline additive.
It would, therefore, give all of Mr. Dinneen's clients an
opportunity to have a complete product slate rather than just
one product slate going forward. And they believe that they
will be able to bring it fully to market in three years.
Real quickly, one other company, Neste, out of Finland, on
May 31 introduced a 60 million gallon stand-alone hydro-
processing summarization plant that is, that can take 100
percent tallow and turn it into 99 cetane, no sulfur diesel,
high-quality diesel. They are doing it today. They are looking
in the United States to see whether there might be a place,
Texas, Louisiana, or a place where it might fit with the
products.
Managing Biofuel Feedstocks
Mr. Hall. Thank you. And I go to Dr. Foust at this time.
Doctor, in your testimony you mentioned the forest products
industry, and I have a lot of that in the northeast part of the
State of Texas and my district. I understand that they have a
concern with sustainability. If, when a biomass is extradited
from forests that are not sustainably managed, they feel that
it is not carbon neutral, it adds to the atmospheric carbon and
it is, therefore, not renewable energy. So I guess I would have
to ask you, would you agree that forest lands should be managed
in a sustainable way to ensure forestry replacement, forest
health, and adequate supply for existing and future generations
and uses in order to be considered renewable?
Dr. Foust. I would absolutely agree with that statement. I
think Mr. Waskow summed up that very well, that that, for this
whole, I would extend your comment even beyond forestry into
agriculture and all sources of biomass. In order for this to be
sustainable, the feedstock has to be managed in a sustainable
manner. Carbon, storage, the health of the soils, the health of
the forest, that all has to be considered.
I think on the positive side as many studies have shown,
that can be done, and we can have sustainable biofuels with
carbon neutrality, but it is a challenge, and public policy, I
think, has to guide that towards carbon neutrality.
The Renewable Fuels Standard
Mr. Hall. Thank you. My last question is to Mr. Berger. I
noticed in your testimony that you suggest a mandatory
biodiesel standard of five percent be instituted so as to
insure a sustainable domestic biodiesel market. Is the type of
biodiesel BioSelect Fuels produces not eligible under the
current renewable fuel standards as included in the Energy
Policy Act we passed in 2005?
Mr. Berger. Mr. Hall, no, it is not. Most of the renewable
fuel that is being standardized under that Act is ethanol, and
biodiesel or at least the market participants who sell the
petroleum products, whether they would be unleaded or diesel,
are not forced to blend or do not blend biodiesel by mandate
into the petroleum diesel currently.
Mr. Hall. Then can you tell me how much biodiesel has
contributed to meeting the required volumes under the renewable
fuel standard?
Mr. Berger. I can't give you that exact number, but you can
see through the small amount of consumption that is actually
consumed in the United States and reported by the National
Biodiesel Board, that it is quite a small amount of the
petroleum diesel consumed in the United States, which is about
60 billion gallons.
Mr. Hall. I may have follow-up questions, but I see the red
light on, and I am, Mr. Chairman, will be allowed to submit
questions with some expectation of getting back----
Chairman Lampson. Well, and if you have----
Mr. Hall.--in a reasonable time?
Chairman Lampson. Yes, and if you have time to hang on, we
are, I am sure, going to have more than one round.
Mr. Hall. Thank you, sir.
Chairman Lampson. Thank you. The gentlelady from
California, Ms. Woolsey.
Environmental and Food Supply Concerns
Ms. Woolsey. Thank you, Mr. Chairman. As we are here, I am
here listening, I can't help but comment that as we get started
on this really huge, huge endeavor to become independent of
petroleum-based products, products in an economy that we are
learning has been disastered for our national security, and for
our environment, while we address this and going to biodiesels
and all the other alternatives we have for generating energy in
this country, I have to ask a question. Is carbon neutral
enough? I mean, don't we want to make improvements? Because the
measurements we are comparing with have not been very healthy.
So I think we should be addressing that because the tradeoffs
are big here, and as long as this effort is going to be so
gigantic, and it is going to be. Let us not leave out some very
important steps and some standards and measurements that we are
going to need to be addressing down the line anyway, so we
might as well do it up front.
So my first question is to Mr. Waskow. Thank you for being
here, and I am particularly concerned when we talk about
ethanol and corn ethanol about the land use issues. I have, you
see, everything becomes personal when we start talking about
anything around here. It starts being part of what does it mean
to our districts. But what does, this is going to mean, is
meaning already? We are subsidizing corn on all these acres all
over the Nation for ethanol, and my dairy farmers can't afford
to feed the cows, and we know that the Mexicans can't afford to
make their tortillas.
Well, would you comment on that? I mean, are we finding
alternatives? Is this a tradeoff that is even worth it? The
corn part of it.
Mr. Waskow. Let me first take the question about carbon
neutrality, and my answer would be that absolutely we have to
do better than carbon neutrality. If we are, in fact, going to
tackle the very serious challenge of global warming, we have to
do much better than carbon neutrality. I think that low carbon
fuel standard that California has adopted, in fact, points in
the direction of tackling that challenge in a serious way in
terms of moving past carbon neutrality.
I would just, with apologies for referring to the other
chamber, I would just note that the bill that is on the Senate
Floor this week has some helpful language on this question. It
requires that renewable fuels would have to reduce greenhouse
gas emissions compared to conventional fuels by 20 percent. We
have been pushing for an even higher target for the fuels
referred to in the Senate Energy Bill as advanced biofuels. We
think that those should have to meet a target of 50 percent
greenhouse gas reductions.
So in sum, yes, we need to push the envelope on this
question, especially given that renewable fuels will only be
limited percentage of the overall fuel supply. If we are going
to make good on their promise, they need to have substantial
reductions.
On the land use question I think it is going to continue to
be a growing dilemma, and I would just note that in addition to
the kinds of dynamics you have pointed to and that I mentioned
earlier, we are concerned about some of the indirect effects,
some of the ripple effects. For instance, if corn continues to
be used for biofuels, the world supply of corn for feed will
diminish as you noted. It is likely that that will stimulate
soybean production in Brazil, and soybean plantations in Brazil
have been closely linked to rainforest destruction. They have
put incredible pressure on the rainforest in Brazil, and so
although obviously there are some uncertainties about whether
this dynamic that I just described would play out, I think we
do need to keep our eyes very closely on these questions. And I
think it points to the need to think about biofuels options
that, in fact, are less land intensive. I think perennial
grasses, for example, are an important example of that and also
I think sources such as algae could be particularly useful in
this regard.
Ms. Woolsey. Thank you. I have, yes, Mr. Dinneen.
Mr. Dinneen. As a representative of the existing corn
ethanol industry, let me assure you that I agree that carbon
neutrality is not adequate, and indeed, I would suggest to you
that the renewable fuel standard that was passed in the 2005
Energy Bill created, in effect, a surrogate low carbon program,
because according to the GREET model that Mr. Waskow referred
to earlier, the ethanol industry that is producing today
realizes about a 20 to 25 percent reduction in carbon. And I
would suggest that probably underestimates the carbon benefits
of the existing industry because it was based off of an energy
survey that was done on the industry in 2002. The industry's
getting better all the time, but I think absolutely we need to
do a lot more, and we are.
With respect to the land use issues, again, those are
critical issues. The industry itself recognizes there are
limits to what we are going to be able to do from grain, which
is why we are pursuing a cellulosic industry as hard. Corn is,
indeed, being driven up today because of the expanded market
opportunities for ethanol, and markets are, indeed, having to
adjust. The fact that farmers responded to the marketplace and
planted 90 million acres of corn this year suggests we are
going to see the largest corn crop in history. And I believe
that there is certainly going to be adequate supplies of grain
to satisfy the demand in this country for feed, for fiber, and
for fuel.
Ms. Woolsey. Thank you.
Chairman Lampson. Thank you, Ms. Woolsey. I now recognize
for five minutes the Ranking Member, Mr. Inglis.
Bioenergy Research Centers
Mr. Inglis. Thank you, Mr. Chairman. Perhaps Dr. Foust or
Mr. Dinneen could answer this and others if they want to take a
shot. As I understand it we have three bioenergy research
centers established under EPACT. The Draft Bill contemplates
the addition of 11 centers as I understand it. I am wondering
what would be the focus of those centers, or what would they
add to the mix of the three. And do they at some point get too
many, or is it the more the merrier? From three to 11 makes
more the merrier or we start losing, becoming then, creating
then a coordination challenge between three to, actually, I
guess it would be 14.
Mr. Dinneen. Congressman, I sort of wish Dr. Foust would
take this, but I will jump into it, what the heck. I noted in
my testimony that, you know, there is value to these
facilities. I do sort of agree with the premise of your
question that 11 may be a bit overkill, and I think our
testimony suggests that one in each petroleum district might
satisfy the needs. There are going to be different feedstocks
in different parts of the country. The northeast, northwest is
largely going to be a woody biomass opportunity. There would be
other feedstocks perhaps for other fuels as Mr. Berger had
referenced with respect to some biodiesel feedstocks that might
be available in Texas. So there are benefits to some regional
centers like that, but 11 might be more than what the current
budget situation would suggest might be feasible.
Dr. Foust. I think Mr. Dinneen summed it up quite well. I
also agree that three going to 14 does seem excessive. I think
Mr. Dinneen's point is well taken that there is all, as the old
saying goes, all biomass is regional but expandable to
national, or whatever the statement is. I forget. But as far as
different feedstocks in different regions and different
technologies are suitable for different feedstocks and enzymes
have to be tailored to different feedstocks, there is, market
conditions are different. I would agree with Mr. Dinneen's
point that geographically locating these per petroleum district
makes sense or geographical region. Fourteen does seem
excessive.
Mr. Inglis. How many petroleum districts are there?
Mr. Dinneen. Five.
Mr. Inglis. What is a petroleum district? I don't know.
Mr. Dinneen. Now there is a good question. It was
determined by the Department of Energy many years ago. It was
just typically the way that motor fuels travel in a given
region, and it is a term that is used an awful lot by the
refining industry because each petroleum district will have
perhaps separate and distinct fuel quality standards. Mike is
probably actually a better person----
Mr. Inglis. And I guess it has to do with pipelines, too.
Mr. McAdams. Within a specific region.
Mr. Inglis. All right. So what would the centers do?
Somebody want to tackle that? Are they into commercialization,
are they into the scientific breakthroughs needed for, say
cellulosic ethanol development? What is their focus? Is it
basic research, or is it more applied?
Dr. Foust. I will take a stab at that, answering that. I
think it is more applied. I think the existing national
laboratories, universities that are focused on the basic
research, understanding the fundamental challenges to
economical production of cellulosic biofuels, whether that be
ethanol, biodiesel, or these higher alcohols, is done in,
currently done, probably more resources are needed, but
currently done better in a focused effort where there is a
group of consolidated scientists. But as far as the applied,
applying, understanding the market factors, understanding the
feedstock diversity, understanding the regional issues, citing
issues, the density and the logistics, those issues could
appropriately be addressed by these regional centers. And that
would be a good usage of those centers to take the macro
technology and apply it regionally.
Cellulosic Ethanol
Mr. Inglis. And my time is almost up, but I wonder we are
going to have the breakthroughs in cellulosic ethanol. Is that
what we are, we got a high degree of confidence in that?
Mr. Dinneen. Congressman, absolutely. I had the privilege
of visiting a cellulosic ethanol plant that is currently under
construction just a few weeks ago. It is being built in Spain,
but the company operates four ethanol facilities here in the
United States today and is building a similar facility here in
Nebraska as well that is likely going to be open before the end
of the year. I can report to you that commercial cellulosic
ethanol production is closer than conventional wisdom would
suggest. There are a lot of companies that are looking at this.
As our industry has grown and as new capital has come into the
industry, new intellectual capital has come into the industry
as well, and there are more companies that are looking at this
today from a different point of view than ever before. And
there are a range of technologies, whether it is enzymatic
conversion, which is what we are most familiar with, or
gasification, which is what they have been doing a lot of in
Europe, and we are just starting to get behind now, or some
other technology. I can assure you that cellulosic ethanol
production is very close.
Chairman Lampson. You are welcome. And Dr. Bartlett, five
minutes.
Environmental Concerns
Mr. Bartlett. Thank you very much. I bought the first Prius
car in Maryland. I bought the first Prius car in the Congress.
I have an off-the-grid home. Its only energy comes from solar
and wind. So please accept what I am going to say in that
light. I am an enormous fan of renewables. But having said that
I think that unrealistic expectations are really hurting us,
and they are permitting those who don't believe what we believe
to relegate us to the lunatic fringe.
Let me, for example, talk just for a moment about corn
ethanol. I am sure you all saw the article in the Washington
Post about three weeks ago. I had done those back of the
envelope calculations a long time ago, and I didn't sign onto a
single corn ethanol bill, because it was, I was afraid going to
be a cruel hoax as it turned out to be. If we used all of our
corn for ethanol, all of it, and discounted it for fossil fuel
input, it would displace 2.4 percent of our gasoline. And they
noted correctly, if you tuned up your car and put air in the
tires you would save that much. So we have made essentially no
contribution to relieving our dependence on fossil fuels.
And I would submit that maybe we have gone backwards
environmentally, because what we are going to do is to take
land out of agriculture reserves that shouldn't be farmed, and
we are going to put it into farming because there is a
potential profit to be made by growing corn. Remember, there is
an 80 percent of all the energy you get out of corn is
represented by fossil fuels you put into growing the corn. So
we may have gone backwards environmentally while we are making
essentially no contribution to displacing our reliance on
fossil fuels.
And I am concerned that we are going to be in this same
place on biomass. And our first testimony was said that we
could do this, that is get this more than a billion tons
without negatively affecting the Nation's ongoing needs for
food or fiber. I would like to see those analyses.
Our top soils are not increasing in quantity and quality,
and there is such a thing as tilth and the need for organic
material in soil, because it doesn't have that, it isn't top
soil, it won't hold water, it won't hold nutrients. And I am
very concerned that that switchgrass that we salivate over is
growing this year because last year it died. Now, maybe
switchgrass is kind of unique, because I think most of the
nutrients are transported back into the roots, but most other
crops are not that way. And this year's crop that is growing,
of weeds is growing because last year's crop of weeds died and
is fertilizing it. So I think that what we are going to get out
of biomass is going to be considerably less than we anticipate.
And I am just concerned that these exaggerated expectations
make us look silly, and I don't want to go there.
Our first presenter noted that if we took all of our
soybeans and converted it into biodiesel, it would displace
less then eight percent, and I am sure that is gross and net,
maybe that shrinks to four percent. Am I right? So if we took
all of our soybeans and made biodiesel out it, we would
displace four percent of the diesel fuel that our across-the-
road trucks use.
I am just, am I wrong, Mr. Waskow, that we may, in fact, be
going backwards environmentally? You know, we are very much
like the pioneer in our country who worried about the worm
eating the tassels on his corn, while the wolf was eating all
of his cows. There is nothing you shouldn't worry about, about
fertilizing his corn, but he really should worry about that
wolf eating the cows, shouldn't he? And I just think that we
are focusing on the wrong thing here. We need to do it, but it
is just have you done enough to have left the other undone. Am
I wrong?
Mr. Waskow. Well, I think we certainly have the potential
to go backwards. I think we are at a critical moment where we
have to decide, in fact, how we are going to pursue the
biofuels sector and industry, and I think we do have an
opportunity now to place environmental safeguards on the sector
in such a way that it can propel us forward. But I think our
concern is that some of the legislative mandates may be running
out ahead right now of some of the science and also almost all
of the safeguards that we are going to need to insure that this
does bring us to the potential we are hoping it will.
I would just add that establishing targets like a five
percent of all diesel requirements, one of the concerns we have
actually has to do with imports. If you establish targets that
can't be met with productive inside the United States, the
likelihood is that we will start importing significant
quantities of feedstock and biofuels themselves, and in many
cases the ways in which those feedstocks are produced is quite
damaging. Indonesia and Malaysia with palm oil is the most
extreme example, but I think other instances are going to be
problematic as well. And so I think when setting very high
targets for use we need to think about not only where it is
going to come from in the United States but where it may come
from on a global level.
Mr. Bartlett. Thank you. I yield back, Mr. Chairman.
Chairman Lampson. Thank you, Dr. Bartlett. I will now yield
five minutes to Ms. Biggert.
Ms. Biggert. Thank you, Mr. Chairman, and I am sorry I
missed the testimony, but I do have a couple of questions.
Does Research Need to Be Feedstock Specific?
First of all, does our research on the efficient production
of ethanol from the cellulosic material need to be feedstock
specific?
Dr. Foust. Yes, that is true to a degree, however, you can,
you don't have to go through feedstock by feedstock. You can
group them. For the enzymatic conversion fermentation, yes, the
enzymes themselves are feedstock specific. However, agriculture
grasses, corn, wheat, switchgrass tend to behave very
similarly, as do the wood. So it is not as onerous as it might
sound that you have to develop the technology feedstock by
feedstock. And once those enzymes are developed, they are
fairly easily tailored. For the gasification approaches, no.
Those are not feedstock specific. Those are general
technologies that work across the feedstock resource base.
Ms. Biggert. Well, once we figure that out then will it
take a markedly different or marginal, different process to
make the cellulosic ethanol from other feedstocks? I mean, will
it be so necessary that we would have to have a different
center do that?
Dr. Foust. I don't think, I would say as far as tailoring
the enzymes to the specific feedstock and the mix of those
enzymes, that would be the companies' proprietary advantage
that deployed that technology. So as far as centers developing
that and under government funding, no, I don't think that would
be necessary.
More on Bioenergy Research Centers
Ms. Biggert. Well, the DOE is currently evaluating
proposals to spend 250 million over five years to establish and
operate two new bioenergy research centers to accelerate the
basic research of, and development of cellulosic materials and
ethanol and other biofuels.
So if the cellulosic ethanol is really feedstock neutral,
do we really, and I know it was discussed about whether five
should be or 11 was too many, couldn't we just do it in those
two research centers that the Department of Energy is
developing?
Dr. Foust. Those research centers are actually looking at
very fundamental biological breakthroughs, what they refer to
as systems biology, where you take the current three-step
process that we are talking about that Mr. Dinneen talked about
as near-term commercially ready to a single-step process that
produces the ethanol at rates two to three times what current
processes are, about half the cost. And what they are really
looking at is advanced technologies to get down to processes as
simple as corn or even sugar-based ethanol.
So they are really far-reaching basic research, which I
think is good. They are not specifically looking at tailoring
specific enzymes to regional feedstocks. They are not near that
applied type of research.
Ms. Biggert. Well, it sounds like you are saying that the
research that Mr. Dinneen was talking about is more advanced
in, as long as it is specific feedstock, but the, what the DOE
is looking at is making feedstock neutral but more advanced
basic research which will lead to be able to do probably the
same thing at different centers? Am I simplifying that too
much, or is that----
Dr. Foust. I think in general that is a true statement. I
mean, there is, I guess the best way to put that in context is
what Mr. Dinneen and what I were, what I was talking about in
my testimony is this cellulosic ethanol technology, the first
generation is competitive with crude oil prices at about
gasoline, crude oil prices about $55 a barrel. If you look at
projections, Department of Energy's as well as the National
Petroleum Refinery's projection, crude oil prices are expected
to drop into, if you truly believe those projections, into the
$40 range. And what that, those advanced technologies really
enable the cellulosic ethanol not to go uncompetitive as crude
oil prices would drop into that range, as well as higher
yields, higher efficiencies with reduced environmental impacts.
I think that is a long-winded answer to your question, but
I guess what I was trying to differentiate is there is a near-
termness and long-termness to those different----
Biorefinery Energy Efficiency
Ms. Biggert. Then my other question would be does it make
sense to create the stand alone biorefinery energy efficiency
program rather than to incorporate it into the research, this
research into the integrated biorefinery demonstration projects
that were authorized in EPACT? It seems like we are trying to
do the same thing when we have already authorized this in 2005.
Dr. Foust. The way I understood it is the EPACT 2005,
especially the Section 932 provisions.
Ms. Biggert. 932D.
Dr. Foust. Okay. We're to incentivize near-term deployment
to address the risk of capital and investor ease and cellulosic
ethanol. However, those plants that are being, that were
selected by DOE, although they are good technologies as past
peer review, they are really, you know, sub-optimal as far as
competing long-term competitiveness with gasoline.
So all sections of the EPACT, the 932 and all sections
address both issues; the commercialization, the need to
development to risk, to overcome the risk hurdle for financial,
as well as the research needed to make the technology
competitive in the long run. So I would think based on the
economic analysis that my lab has done and others, that both
aspects are necessary to really move this industry to long-term
potential.
Ms. Biggert. Thank you, Mr. Chairman.
Biofuel Feedstocks: Research, Development, and Establishing
Standards
Chairman Lampson. You are welcome, Ms. Biggert. I now
recognize myself for five minutes as we start our second round
of questioning.
For Dr. Foust, there has been a great deal of discussion
both in Congress and in the research community about other
possible feedstocks with a growing focus on algae biomass. You
noted that algae shows considerable promise long-term, but the
technology still needs considerable work, and I was hoping that
you would elaborate on this point to help give the Committee a
better idea of what technological barrier exists and where
research should be focused to see the greatest improvement in
the algae-related technologies.
Dr. Foust. Thank you, Mr. Chairman. That was actually a
good question. I look forward to answering that.
I think the real challenge is developing these algae
strains. The strains that have been developed are native
strains, and they are biological organisms, which to get them
to express oils, which is basically fats, you have to starve
them. They will only express oils when they are starved, and
they will only grow when they have plenty of nutrients. And the
challenge to get this to be economically viable is to get them
to do both. So you have to get them to express oils, fats,
while they are also growing. And that is a significant
biological challenge. The scientific, the microbiology
community of which a lot of those people are at my laboratory,
believe that can be done and believe that we can get these
yields, 1,000, 10,000 times of the soybeans or other oilseed
crops.
However, they realistically put that at about a five to
ten-year effort, and then once that is done, then they are
grown in these shallow-water ponds, and you have to develop, it
is an easier challenge but it is an engineering challenge--ways
to harvest them and crush them so you can get the oil out at
pennies per gallon to compete with diesel fuels at the $1,
$1.50 gallon range.
Chairman Lampson. You noted that there are already fuel
quality standards in place for ethanol and biodiesel and these
standards have been created to match the current production
methods. Once we get past the technological hurdles to the
broad use of cellulosic ethanol, surely we will be producing
ethanol from a variety of feedstocks. How will we insure that
fuels derived from diversed feedstocks are fungible? Will we
need a better system for establishing standards since we will
no longer be able to rely on production methods of one item,
corn starch, and how will we be able to insure conformance with
the standard, when multiple feedstocks are use for fuel
development?
Mr. Dinneen. Dr. Foust may want to jump in.
Chairman Lampson. Okay.
Mr. Dinneen. But just with respect to ethanol, ethanol is
ethanol no matter what the feedstock is. There may be some
feedstock-related issues with some of the other renewable
fuels, but you can produce ethanol from corn. It is the same
product as if it is produced from sugar or from cellulosic
material or from, you know, whatever. And the specifications
that has been developed have been developed for its performance
characteristics along, you know, through a process with the
refineries and the automakers through the American Society for
Testing and Materials (ASTM). So there really aren't standards
issues with respect to ethanol, but Dr. Foust or Mr. McAdams
may want to comment on some of the other renewables.
Mr. McAdams. I would say, Mr. Chairman, that if you look at
the second and third generation, particularly renewable diesel
technologies, that the standard they hit is D975, which is the
standard currently for diesel. It is one of the real confusing
nomenclature problems we have in this debate between a
biodiesel which is a coined term that comes out of the tax law,
and now you have a new term renewable diesel, which is another
coined term coming out of the tax law, and then their third
term is green diesel.
But most of the second, third, and fourth-generation
processes that make diesel whether it is Fischer-Tropsch or
whether it is the Amyris technology or whether it is Neste,
they make a D975 diesel spec, which is through the tier one
process of EPA, and they are very comfortable with going
through that process.
Dr. Foust. I would agree with what my colleagues said. Mr.
Dinneen is right. One of the beauties of ethanol is that it is
a single molecule fuel, so whether you make it from corn,
sugar, or cellulose, it will be the same. However, there will
be trace contaminants that when it is distilled and standards
to control the contaminant levels, the water levels, pipeline
issues would be desirable, especially for blending as one
section of the Bill specifically addresses, the lower ethanol
blends greater than E-10 but less than E-40. As those blends
come into play, the gasoline standards and the ethanol
standards for those various different blends will need to be
controlled. It will be more of an issue.
Chairman Lampson. Thank you very much. I now call on Mr.
Inglis for his five, extra five minutes.
Mr. Inglis. Thank you, Mr. Chairman. Dr. Foust, it is very
exciting what you were just talking about, about an organism
that may create or express oils at a faster rate. That is
pretty exciting. What is the best thing government can do to
help facilitate that, or is it going to happen because the
marketplace is pushing us to that? Which would be a fine
answer. We are from the government. We are here to help, but
if, you know, if we can help by not helping so much, maybe that
is what we need to do.
Dr. Foust. No. Thank you. That was a good question. I think
because that is far from being a commercially-viable technology
unlike corn ethanol or biodiesel where there really isn't a
rule for the government beyond standards, it is commercially
viable so it is appropriate rule for industry to develop and
deploy those technologies as they are currently doing. Right
now it clearly would be economically unfeasible to deploy this
algae technology without these improved strains.
So I think the government's role would be kind of, again,
as was accentuated in this bill, to increase the funding for
the field of biofuels in general of a significant portion of
this to go in these high-potential, high-risk, high-payoff, but
not near commercially viable type technologies.
Mr. Inglis. Mr. Berger.
Mr. Berger. I would echo those sentiments, and I think, you
know, one thing to really sit back and kind of think about here
is that you got to start someplace, and I think you have heard
that consistently across the panel. And moving, just speaking
from a for-profit company such as Standard Renewable, we are
starting in what is economically feasible right now, at least,
you know, with the existing tax credits, and then we are more
than happy to invest our profits in these new technologies and
be able to move them into the marketplace. Nothing would please
us more and our shareholders to have the kind of numbers that
Dr. Foust spoke about. Those are the kind of numbers where, you
know, people in the oil business would get a little bit nervous
to say the least.
But at the end of the day what is that really going to
require from companies like ours to the government? We want
consistent policy. We want to know that over the next few years
that biodiesel in whatever form it is or ethanol, whatever form
it comes in, is going to have a place here to stay so that we
can go in and take those profits and put them into these new
technologies and deploy those new technologies.
Mr. Inglis. I suppose that the fluctuation in the price of
gas, is that a larger determinant of that question than what we
are talking about there, that research or, I mean, in other
words, if gas is $3 a gallon, you have got a business. Right?
If gas is $1.80 a gallon, I guess you don't have a business.
Right? I mean, don't answer that question. It might upset your
shareholders but----
Mr. Berger. No, no. I am very happy to answer that.
Actually, you know, from, speaking from the biodiesel business,
and I will let the other, Mr. McAdams and others talk about
their respective battlefields, it really depends upon just as
it does in the crude oil business. You know, what is the
profitability from taking a barrel of oil, whether it is
vegetable oil, whether it is crude oil, and converting that
into a product, and what is that product trading for. So as
soybean oil, for instance, is a very-well traded commodity, and
I would also like to point out that the U.S. is one of the
largest exporters and in some cases the largest exporter in the
world for soybean oil. The world. And so what we are talking
about here is we are going to keep more of our bean oil here at
home. We are not the importation of oils back into this country
in a massive way. At least we don't anticipate that to be the
case any time soon. So from our standpoint as long as it is
fluctuating with that bean oil price and in looking at the
product price, it doesn't necessarily mean that crude oil has
to be, you know, or crude oil-based products have to be $3, a
buck 80, two bucks, four bucks, whatever it is. It is really
more of a market-based approach to profitability.
Mr. McAdams. I would say across the whole fleet of the
technologies I represent whether it is Fischer-Tropsch or
Invomatic, these people are trying to, they look at the price
of crude, and they are trying to develop a range of
technologies that can compete across $40, $50, $60 crude
ranges. And a $60 crude solves a lot of technology problems
because it gives them some headroom.
In terms of your specific question about what not to do if
the Congress chooses a standard and says, okay. To hit the RFS
target, you have got to be ASTM D-6751, then that means all
those companies that make a D-975 fuel don't count against that
standard, and you remove the certainty and the investment that
all those companies want to put in the marketplace to develop
these fuels. And that is why my coalition was formed to just
try to request technology neutrality across all of these
frames, either the RFS and others.
Mr. Inglis. Thank you, Mr. Chairman.
Chairman Lampson. Ms. Woolsey.
More on Environmental and Food Supply Concerns
Ms. Woolsey. Thank you for the second round, Mr. Chairman.
Mr. Waskow, in your testimony you point out that we need to
improve the model for evaluating the impact of biofuels on the
environment. How much funding do you think Congress would need
to dedicate to improve this model and get the results, get good
results? I mean, real results. And do you know if there is any
work being done anywhere? I am creating a new model.
Mr. Waskow. That is an excellent question. I don't know
what would be required in terms of funding to address those
needs. There are a number of researchers around the country,
not only at Argonne but at other institutions and I am sure
with federal funding backing many of them doing some of this
work. But it is clear that we have to step up the pace. We need
to be able to do this work not only for corn, which has been
analyzed in some detail now but also for a number of other
feedstocks to be able to make adequate comparisons, and we need
to be able to look better, as I was saying, at sections such as
land use changes.
I am happy after this to explore with colleagues and others
what the cost would be. I am sure it is not extravagant.
Ms. Woolsey. You know, I had a thought for any and all of
you if you wanted to. As we talk about the different forms of
biofuels, what happens when a farmer invests in say, I will use
corn because that is where I am today, and all of the sudden
there is a much better way to make ethanol, and this, what
happens to that corn production? I mean, it is a real gamble,
isn't it?
Mr. Dinneen. Well, the marketplace is going to do what the
marketplace is going to do, and if, indeed, farmers can make
more money producing miscanthus grass than corn, I mean, that
is what the, you know, they will do. It is a risk certainly
but, you know, I think the marketplace hasn't yet figured out
what the next generation of renewable fuels is going to be.
There is a lot of talk about bio-butanol and bio-butanol could
be produced from agricultural feedstocks as well, and that
might be something that farmers would grow their feedstocks
for.
Ms. Woolsey. But, I mean, we cut down forests, we put
berries out of business, we make it impossible for the Mexicans
to have corn tortillas, and then we decide corn is not it or
one of these other feedstocks you had talked about. Risks?
Mr. Dinneen. You mentioned the tortilla issue a couple of
times, and I appreciate that that has----
Ms. Woolsey. I worry about that obviously.
Mr. Dinneen.--been one of those things that has been in the
media, but it is, there is a lot of analysis out there that
would suggest a three-cent per pound increase in the price of
yellow corn is not responsible for an 80-cent increase in the
price of white corn in Mexico. There are lots of reasons why
the Mexican market is doing the things that it is doing and the
relationship to the increased demand for ethanol from corn
production is not a really strong relationship. But I
understand your point that, you know, we are putting a lot of
stock right now in ethanol from grain, but I would say to you
and to Congressman Bartlett as well that corn ethanol, the
existing ethanol industry is not the end of this road. It is
the beginning. This industry is providing the foundation upon
which we can grow a more sustainable and more economic
renewable industry in the future.
And I appreciate that there are concerns with the existing
industry today, but don't lose sight of the fact that it is
just the beginning, and it is not a cruel hoax. It is the
foundation upon which this nation is going to become more
energy secure.
Ms. Woolsey. Mr. Berger.
Mr. Berger. I would like to echo. Here are some numbers to
think about, and they are quite scary. If you look at the
energy issues that we face, they are more grave than the
potential issues, and I think than anything that can come about
in the agricultural space at this point in time. There are
about a million and a half barrels per day of biofuels produced
in the world, and there is about two and a half million barrels
a day of crude oil spare capacity estimated because the people
who love us so dearly produce much of the oil in this world,
and I mean that sarcastically, do not give us data on that. But
that is probably pretty close to that. If you were to basically
eradicate biofuel usage and the U.S. is a big producer of those
biofuels, you would take about a million and a half barrels of
capacity off the market. Even if you did it over a slow few
month's period of time.
Crude oil, I don't know where it is going to trade, but it
is not going to trade $66 a barrel. It is going to trade north
of 100 and quite a bit north, and the reason is is that
commodities are priced on the margin, and when you take that
kind of, what may even seem to be four percent or five percent,
it is just small, I can tell you from experience you will see
exponential moves in commodity prices such as crude oil,
natural gas, et cetera.
So the energy problem is very dire, and what we are
representing here today is, it is not the silver bullet. It is
not the end all, be all. It certainly has problems. But it is a
start, and it is an American start to solve this problem.
Ms. Woolsey. Well, thank you. You are preaching to the
choir with this one. Don't think for a minute I am sitting here
trying to defend the fossil fuel abusers of the world. Believe
me. But I want to do it right. I mean, we have a chance. This
is new. We don't have to, you know, shortcut and then later
say, oh, it is going to cost 100 times more because we didn't
do it right in the first place. That is my point.
Thank you, Mr. Chairman.
Chairman Lampson. You are welcome. Mr. Bartlett.
Mr. Bartlett. Thank you. You mentioned our biofuels
contribution. You need to discount that by the fossil fuel
contribution to the production of those biofuels, and if we
hadn't turned the corn into ethanol, we would have four-fifths
as much fossil fuel. So the real biofuels contribution is
fairly trifling.
You are exactly right that we are on the verge of not
having enough oil. One of you mentioned that the Energy
Information Agency is suggesting crude oil prices will drop to
$40 a barrel. I think you are far, far more likely to see $100
a barrel oil than you are $40 a barrel oil.
I would take the prognostications of the Energy Information
Agency with a lot of caution. They are basing their
prognostications on a series of computer simulations that USGS
has run. They did these in about 2000. They have been tracking
since then, and the actual data points don't begin to follow
what they said was the main, there is a very strange transition
from F, which is frequency in the USGS slides, to P, which I
guess is probability. I have no idea what has happened in those
two agencies. And I have talked with the chief statistician
from the Congressional Research Service because I thought I was
losing my mind, and he assured me that I wasn't, but there is
just another rational explanation of the way statistics are
used or misused by these two agencies. So I would be very
jaundiced as to how much reliance I placed on, by the way, EIA
does a really credible job of tracking what has happened. They
have a bunch of economists who do a very poor job of
predicting, in my view, what will happen.
And, you know, they are, they believe like many of my
colleagues, I am a very conservative Member of the Congress,
but I try not to behave so that I might be considered an idiot.
And many of my colleagues worship the market. They believe that
it is both omniscient and omnipotent, that it will take care of
everything. Where are resources infinite? I might tend to agree
with them.
I talked to you on this analogy, worrying about the worm
that ate the silks on your corn while ignoring the wolf that
was eating your cows, and I need to explain who the wolf and
the cows are. We use 21 million barrels of oil a day. All of
these biofuels you are talking, and I am a huge proponent of
these things. I am the greenest guy in the Congress probably.
But, you know, we use 21 million barrels of oil a day, 70
percent of that in transportation. We are making really quite
insignificant contributions with these biofuels, and if you are
wildly optimistic about the productivity from these are going
to, in the future, make trifling contributions. What we really
need to be focused on is a lot of conservation and a lot of
efficiency. I wish I could show you a slide that shows our oil
consumption up through the Carter years. Every decade we use as
much oil as had been used in all of previous history. Boy, have
we changed that since then. Have that exponential occurred when
extrapolated, we would be through the--what that means, of
course, is that when you are half out, when you have used half
the world's oil, you have ten years remaining at the current
use rates.
Now, we were about halfway through the age of oil. We have
been 150 years in the age of oil. We got about another 150
years to go. We are not running out. We are running out of our
ability to get oil as quickly as we would like it, and it is
going to be more expensive and harder to get in the future.
When I said we were nibbling at the margins, what I meant
was we have an enormous problem, and we need to begin with an
aggressive conservation program.
I led a group of nine people to China over the Christmas
holidays. I spent New Year's Eve in Shanghai, and they begin
their discussion of energy by talking about post-oil. Wow. I
wish our guys got it. They are talking about post-oil with a
great five-point program. Conservation is where it begins.
Diversify. Do as much of that at home as you can. Be kind to
the environment. That may shock you. That is the number four
point. They recognize they have a problem, and the fifth one is
international cooperation. I don't see us reaching out.
I want to thank you all very much for what you are doing,
but I think we need a huge wake-up call in America, and if you
are counting on $40 oil, you are probably counting on winning
the lottery to solve your personal economic problems. I think
the odds are about the same.
Thank you.
Chairman Lampson. Wow. Thank you, Roscoe. Interesting
thoughts and I have to agree with some of what you said.
I am not sure we have got time to go----
Mr. Bartlett. Some of it? What don't you agree with?
Pure Ethanol
Chairman Lampson. I am not sure I can repeat it all.
I am curious about one thing, and I am not sure, unless Mr.
Inglis wants to go for another round of questioning, but would
any of you or all of you, however you want to do it, comment on
when, if we will, when will we reach the point of not blending
fuels, but actually using 100 percent of a biofuel for either
transportation or the generation of electricity?
Mr. Dinneen. Well, it is going to take some time. I mean,
we have a fleet of vehicles on the road today that will take a
fair amount of time to turn over. Ford, General Motors,
Chrysler have already committed to producing 50 percent of
their vehicle fleet that they will produce as flex-fuel
vehicles in 2012.
So, I mean, we have about 17 million vehicles a year that
we purchase, about 45 percent of those are from the domestic
market. That suggests about four and a half to five million in
flexible-fuel vehicles coming on the road----
Chairman Lampson. It is flex-fuel. That is a blend.
Mr. Dinneen.--by 2012.
Chairman Lampson. What is it going to take to get past
that?
Mr. Dinneen. It is a blend of 85 percent ethanol. So, I
mean, it is a good amount of petroleum displacement.
Mr. McAdams. Price.
Chairman Lampson. Price?
Mr. McAdams. Price. And the reason I say that, if you just
take the current economic model, there are a number of
technologies that could make, let us take the diesel fuel. That
could make 100 percent diesel fuel that could run in and
existing engine so you don't have to have a new infrastructure,
go through the current pipelines. They could make that kind of
fuel 100 percent renewable, but it wouldn't be at today's
current price.
Chairman Lampson. I was just curious. Anybody else wanted
to make the comment. I believe that has got to be one of our
goals as well.
Does anyone want to--Roscoe, you want to make----
Mr. Bartlett. Mr. Chairman, I would like to note that a day
will come when we are not blending. Geology will assure that.
We are going to transition from fossil fuels to renewables. My
concern is it is not going to be on our terms but on the terms
of geology, and I think that is going to be a really rough
ride.
Chairman Lampson. Thank you very much. I have more
questions, and I am sure some of you do as well, so if you all
will allow us to, we will submit these questions in writing and
get them over to you, and if you wouldn't mind getting back to
us, we would appreciate it.
I want to thank all of you for appearing before our
subcommittee this afternoon. Your testimony has been very
helpful. I believe that the legislation we have discussed today
moves us forward in our effort to develop a more diverse supply
of energy.
And under the rules of the Committee the record will be
held open for two weeks for Members to submit additional
statements and any questions, additional questions that they
might have for the witnesses, and this hearing is now
adjourned. Thank you very much.
[Whereupon, at 4:16 p.m., the Subcommittee was adjourned.]
Appendix 1:
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Answers to Post-Hearing Questions
<SKIP PAGES = 000>
Answers to Post-Hearing Questions
Responses by Thomas D. Foust, Biomass Technology Manager, National
Renewable Energy Laboratory
Questions submitted by Chairman Nick Lampson
Q1. You mentioned that the technology for the development of
cellulosic ethanol is ``relatively immature.'' You went on to say that
the goal for the production cost price point on a gallon of cellulosic
ethanol is $1.31. If the price of corn continues to rise, how will this
affect this target price point? And more importantly, what are the
major technological barriers to realizing a cellulosic based fuel that
is competitive with corn-based ethanol?
A1. The $1.31 production cost price point on a gallon of ethanol is
based on competitiveness with corn ethanol at historical corn prices of
$2.50/bushel. Since corn costs represent almost 50 percent of the total
costs for corn ethanol production, corn ethanol production costs will
increase significantly with the rising costs of corn. Equally, if not
more important for long-term economic viability of ethanol as a
transportation fuel, the $1.31/gal production cost price point is also
based on competitiveness with gasoline on an energy adjusted basis at a
crude oil price of $55/barrel. Therefore, both corn prices and crude
oil prices will directly affect the economic viability of cellulosic
ethanol at the production price point of $1.31/gal. As corn prices and/
or crude oil prices increase above historical levels, the
competitiveness of cellulosic ethanol will increase and accelerate its
deployment in the marketplace.
The National Renewable Energy Laboratory (NREL), DOE, and the
biofuels research community at large have had numerous discussions
about whether we should periodically adjust our cellulosic ethanol
price point targets based on current market realities. The collective
decision was to update on an annual basis the $1.31/gal production cost
price point target to reflect the latest inputs such as cost of steel,
feedstock costs, and labor costs. NREL has spent considerable effort in
developing rigorous technical and economic models that allow us to
directly relate technical and scientific targets to production cost
targets. This allows us to give our scientists and engineers technical
targets to achieve and allows us to track and report progress and
research spending towards the targets accurately to DOE.
Q2. There seems to be universal recognition that the current
distribution system and infrastructure for biofuels is inadequate to
handle large volumes of fuel. Noting that you mentioned two options--
either using the existing petroleum infrastructure or developing an
alternative infrastructure--I wanted to focus on the existing
infrastructure. What research is still needed to determine if this is a
viable option? What changes, modifications, treatments or even
cleansing would be needed to use this infrastructure to carry biofuels?
Do you believe it would be possible to use some of the pipelines for
multiple uses, carrying both biofuels and petroleum based products at
different times?
A2. Distribution of fuels is accomplished by several methods, including
barge, tanker truck, rail, and especially pipeline. Infrastructure
refers to the larger set of equipment and processes, including storage
capacity necessary to utilize the fuel, tanks, pumps at filling
stations, etc.
Research is needed to determine if utilization of the existing
distribution system is a viable option. The issues of concern for
ethanol in pipelines are 1) corrosion, 2) water miscibility and phase
separation, and 3) solvency of ethanol. Ethanol-related corrosion
problems can result from the particular attributes of the fuel and how
it behaves in pipelines. There is evidence that ethanol in high
concentrations can lead to various forms of corrosion including
internal stress corrosion cracking that is difficult to detect. Fuels
in pipelines tends to pick up water along the way, and ethanol
accentuates that problem because it is hydrophilic and low-
concentration ethanol blends have a tendency to phase separate with
gasoline in the presence of a small amount of water. Because ethanol
acts as a solvent, it will tend to clean out the existing pipelines of
tars, gums, and other impurities that can degrade the quality of the
fuel product. Although some research is currently being conducted to
find solutions to these issues and to help determine what changes need
to take place in order to leverage the existing systems, it is
minimally supported. To truly address this important issue critically
important to the ultimate success of the biofuels industry, a
comprehensive research and testing program to address these issues need
to be initiated. This research program needs to involve pipeline owners
and current users to ensure that rigorous testing programs are put into
place to address these issues so that this area moves forward. We
understand that in Brazil ethanol is shipped via pipelines and we need
to better understand how the technical issues have been resolved there.
Q3. Addressing issues related to readily available information on
biofuels technologies, you noted that the Department plans to fund the
creation of a Biomass Data Center later this fiscal year. I have
several questions related to this effort:
Q3a. When was the announcement made that the Department would pursue
this effort?
A3a. An announcement has not yet been made because the Biomass Data
Center (BDC) concept was just recently developed. DOE decided to
initiate and fund the BDC following a February 2007 visit to NREL,
during which we reviewed the existing information on the use of
biofuels already contained in DOE's Alternative Fuels Data Center
(AFDC) (www.eere.energy.gov/afdc), which is produced and maintained by
NREL. The AFDC is one of the most extensive alternative fuel databases
and a widely-used website by stakeholders across the country. It
currently contains extensive information on fuel availability,
retailing, nationwide station locations, federal and State incentives
and laws, and available vehicles with information from across
government and industry. The new BDC is envisioned as an extension of
the AFDC that will capture similar information related to feedstocks,
fuel production, distribution infrastructure, and relevant federal and
State programs. The focus will be on supporting the decisions within
the private sector and State and local governments that are required to
accelerate the production and use of biofuels in the near-term. The
R&D-related data sets which are proposed in Section 2 of the
Committee's bill would be of significant value to the BDC and could
readily be included in the current planning.
Q3b. You stated this would be done in phases. Can you give us more
detail about time period for development of the Center and when the
information will begin to be available?
A3b. We expect the site to be available with links to existing
information in the fall of 2007. Initial activities will focus on a
comprehensive inventory of available data and information from
government and industry sources, and providing a central clearinghouse
for these resources. Gaps identified during the inventory will be the
focus of the next stage over the remainder of FY08 with targeted data-
gathering activities where appropriate. Maintenance and updating of the
data, along with development of data mining and analytical tools, will
be the focus of subsequent years.
Q3c. What will be the process of getting information from the private
sector?
A3c. Existing methods of working with industry representatives and
associations for the AFDC will be replicated and expanded. NREL has a
long and successful history in forming and capitalizing on these
interfaces. The focus will be on publicly available data and
information, and information provided voluntarily by the private
sector. We put significant effort into gathering accurate information
and updating it regularly. We verify data independently so that the
data center contains unbiased, factual information that can provide the
basis for sound decisions by individuals and businesses in the private
sector. The biofuels R&D information that the Committee proposes could
readily be included because NREL is the home of the National Bioenergy
Center and the focal point for significant biofuels R&D; knowledge of
other laboratory, industry, and academia progress; and technology
transfer to the marketplace.
Questions submitted by Representative Ralph M. Hall
Q1. In regard to the six cellulosic ethanol biorefineries,
a. Where are they to be located?
b. When will they be operational?
c. **Do we need the technology before the biorefinery or is
the biorefinery part of the research?
d. What feedstock will they be using? Will it be different at
each one?
A1. Below is the list of the awardees from the EPACT 2005 Section 932
solicitation, there location, the feedstock they will be using and when
they will be operational. **In all cases additional research is needed
as part of the overall effort. Each of these companies is using its
existing technology in order to demonstrate, at this point in time, the
viability of their approach and to advance the overall understanding of
the opportunities and issues in terms of cellulosic ethanol. Much work
still needs to be done to advance the overall technology available to
the Nation in order to improve efficiencies, lower costs, and
accommodate a wide range of feedstocks.
BlueFire Ethanol
a. Southern California
b. Construction start: 2008. Completion: End of CY 2009
d. Sorted green waste and wood waste from landfills
Poet (Broin)
a. Emmetsburg, Iowa
b. Construction start: CY 2007. Completion: 30 month timeline.
d. Wheat straw, barley, corn stover, rice straw, switchgrass
Iogen
a. Shelley, Idaho
b. Construction start: 2008. Completion: End of CY 2010
d. Wheat straw, barley, corn stover, rice straw, switchgrass
RangeFuels
a. Treulten County, Georgia
b. Construction start: CY 2007. Completion: CY 2011
d. Wood residue and wood energy crops
Abengoa Bioenergy
a. Colwich, Kansas
b. Construction start: Late 2008. Completion Late CY 2011
d. Corn stover, wheat straw, milo (sorghum)
Alico Inc.
a. LaBelle, Florida
b. Construction start: CY2008. Completion Late CY 2010
d. Wood, ag residues
Q2. In talking about infrastructure, you say that ``the current
biofuel distribution infrastructure is inadequate to handle large
volumes of biofuels.'' Please explain the inadequacies.
A2. Ethanol is currently distributed by rail, tanker truck, and barge.
Several studies have shown the inadequacies of the existing
distribution system to handle larger volumes of biofuels. For example,
at issue with barge transportation is inter-coastal waterways traffic.
Locks along the major rivers are advanced in age and undersized for
even current transportation load. This already causes long delays
during peak months.
Regarding rail transport, equipment capacity has been tight for
several years, and additional rail cars and rail lines are necessary to
handle the increased biofuels production. Tanker trucks for gasoline
and diesel are only typically used for short leg distribution,
typically from pipeline terminal to local refueling station. For
ethanol tanker trucks are commonly used for longer leg distributions.
Although the additional truck traffic on highways is not necessarily
problematic for the current 5 billion gallons per year of ethanol
shipped, the additional tanker truck traffic for large ethanol volumes
(> 20 billion gallons per year) would put significantly higher truck
traffic on highways.
Additionally, pipelines are a much more energy efficient and cost
effective way to ship fuels so hence significantly less energy is used
and cost added in transport as opposed to the current ethanol method of
barge, rail and truck.
Q3. You mention the NREL is creating an on-line Biomass Data Center.
Based on this and the function of the Data Center, do you feel that
Sec. 2 of the discussion draft, ``Biofuels and Biorefinery Information
Center,'' is needed? Do you have any other thoughts or suggestions
about the discussion draft?
A3. The Biofuels and Biorefinery Information Center section is still
needed. This section puts a focus on the inclusion of biofuels R&D and
technology transfer information into the center, which is an important
and value-added concept. This needs to be fully integrated with the
Biomass Data Center (BDC) that we discussed, although the exact
architecture is still being planned. In addition, this section of the
bill would ensure that the Congressional appropriators recognize the
importance of this provision and provide funding to enable its full
development and maintenance.
The Biofuels and Biorefinery Information Center will allow DOE and
NREL to present accurate and up-to-date information about the status of
various biorefinery and biofuels production technologies. Providing
credible, unbiased information on these technologies will enable
informed analysis by technology companies as well as energy and
environmental policy-makers. The focus of the BDC and the Biofuels and
Biorefinery Information Center will be complementary, and together will
provide reliable information about the present and future biofuels
industry.
In addition, the toll-free telephone assistance included in the
bill will complement the on-line resources. NREL has extensive
experience providing this sort of assistance. We operated the National
Alternative Fuels Hotline for a decade with consistently outstanding
customer feedback. For the last two years, this service has taken a
more narrow focus as the Technical Response Service, which fields the
more detailed technical questions on alternative fuels and advanced
vehicles that enter through the central DOE/EERE Information Center.
With additional funding associated with the Biofuels and Biorefinery
Information Center, this existing Technical Response Service could be
extended to biofuels and biorefinery topics. Past experience has shown
that this sort of personal assistance can be extremely valuable to key
stakeholders and technology implementers in the private sector.
Questions submitted by Representative Bob Inglis
Q1. Section 3 of the draft legislation seems to limit infrastructure
research, development, and demonstration to existing fuel distribution
infrastructure. Since biofuels will vary by region, should we also be
promoting research, development and demonstration in alternative
infrastructure solutions that could prove to be cheaper and more
efficient?
A1. Yes, biofuels production will be regionally specific primarily due
to the regional nature of biomass and local fuel needs. For example due
to the large feedstock production potential of the Midwest, it is
likely that this region could be a net ethanol exporter beyond what
could be used locally. Whereas for the east and west coasts it is
unlikely that they would have enough biomass production potential to
supply their high fuel demand needs. Hence dedicated pipelines or rail
lines from the Midwest to the coasts might prove to be a feasible cost
effective approach.
This would contrast to areas such as the Southeast where the
biomass production potential aligns well with fuel demand needs. Hence
in this case more localized distribution infrastructures might be a
better option.
Q2. Does this draft legislation encourage a departure from food
related feedstocks and toward high-yielding non-food related
feedstocks?
A2. Yes this legislation by supporting the rapid and focused
development of cellulosic ethanol that is price competitive with corn
ethanol does support departure from food related feedstocks towards
high-yielding non-food related feedstocks. The market will naturally
favor the lower cost production route and currently that is corn
ethanol. Unfortunately corn ethanol is inherently limited in potential
with most experts estimating that the ultimate potential for corn
ethanol being 12-15 billion gallons before serious impacts on other
uses of corn for food and feed occur. Cellulosic ethanol and other
biomass derived fuels can leapfrog this limitation by significantly
increasing the ultimate potential by utilizing the much more plentiful
biomass feedstock. Cellulosic ethanol technology has the long-term
potential to be significantly lower in cost than corn ethanol because
it can utilize the much lower cost biomass than corn for its feedstock.
However, because of its immature state it is currently higher cost
than corn ethanol and not proven at the commercial scale. This
legislation, by supporting ongoing DOE supported research at NREL and
other institutions to develop and demonstrate cost competitive
cellulosic ethanol by 2012 will facilitate the market place switch form
corn to cellulosic ethanol. This transition will stop if not greatly
slow the growth of corn based ethanol and reduce the upward pressure on
corn and food prices while still affording our nation the opportunity
to increase our energy security via domestic production of ethanol.
Question submitted by Representative Jerry F. Costello
Q1. On Tuesday, the U.S. Department of Agriculture (USDA) and the U.S.
Department of Energy (DOE) announced a combined total of up to $18
million will be available for research and development of biomass-based
products, biofuels, bioenergy and related processes. They will fund
essential research that not only will lead to the creation of new,
sustainable energy sources, but also will create new uses and markets
for agricultural products. Clearly money is being allocated to look at
R&D of biomass. What will this legislation accomplish from an R&D
prospective that is not already being done?
A1. The combined USDA and DOE program for the research and development
of biomass-based products, biofuels, bioenergy and related processes
has been a very successful program since its inception in FY02. Many
good projects over the years have been awarded to universities,
national laboratories and industrial companies that have addressed many
aspects of biofuels and bioproducts technology development. With the
many significant challenges that still face the biofuels and
bioproducts industry, this funding can be wisely administered by the
USDA and DOE to fund meritorious projects to develop needed technology
and to address important issues as well as educate scientists and
engineers in the biomass area.
Although this is a good cross agency program, it is by no means
adequate by itself to address the daunting challenges that face the
biofuels industry. The projects awarded by this program tend to be
small and limited in duration to three years. Hence, these projects
tend to address very specific regional challenges or small individual
aspects of the feedstock or environmental issue. These projects are
also good at building local support and interest in biofuels but do not
address national biomass issues.
The legislation in this bill expands upon this existing individual
project effort by supporting comprehensive research and analysis in
many areas critical to the ultimate success of biofuels. For example
this legislation will accomplish the following key aspects that need
support: facilitate a critical investigation of the infrastructure
issues associated with large-scale deployment of biofuels; support core
research programs at NREL, Oak Ridge National Laboratory (ORNL),
Argonne National Laboratory (ANL), Pacific Northwest National
Laboratory (PNNL) and Idaho National Laboratory (INL), industry, and
universities to develop all aspects of cellulosic ethanol technology
from feedstocks through biochemical and thermochemical conversion; and
allow comprehensive analysis of critical biofuels issues such as
sustainability, greenhouse gas emissions, water use impacts and food
price impacts. Additionally this legislation will stimulate the
development of a much needed biofuels information clearing house that
will be invaluable in delivering the latest accurate information on
biofuels technology and other critical issues.
Answers to Post-Hearing Questions
Responses by John Berger, President and CEO, Standard Renewable Energy;
CEO of BioSelect
Questions submitted by Chairman Nick Lampson
Q1. In your testimony, you noted that there is ``A great deal of
ambiguity. . .in the renewable fuel marketplace'' because ``there is
very little concrete factual data assigned to specific individual
fuels.'' Do you have a solution to this problem? Is there a need for
better coordination of information and materials about the fuels and
the process for developing fuels? Would a central federal clearinghouse
help remedy this problem?
A1. The EPA is currently working closely with the National Biodiesel
Board as well as many government agencies such as the Department of
Energy's National Renewable Energy Lab, to create a complete emissions
profile for biodiesel. As leaders in the renewable energy sector
however, we ask that the Federal Government do more with the creation
of a centralized database benchmarking all renewable fuels
independently to a baseline conventional diesel fuel. We as an industry
will benefit tremendously from factual data outlining what is biodiesel
and why is it superior to conventional diesel? In addition, we would
like to see information explaining what is renewable diesel and how
does it compare to biodiesel and separately how does it compare to
conventional diesel? These are the types of questions that need to be
researched.
Federal coordination and cataloging of information from federal
research on biofuels development processes as well as other aspects of
the industry and related industries will be essential to the longer-
term goal of creating mainstream renewable fuel. Demystifying the fuels
themselves will not only provide the general public with more
information and confidence about utilizing renewables but also assist
both federal and State bodies in defining credit structures, future
industry incentives, etc.
Q2. You mentioned the need for federal coordination of information and
cataloging of research as essential to the long-term goal of creating
mainstream biofuels. Without such efforts, do you envision a climate
where the industry can consistently grow and develop a fungible biofuel
supply?
A2. In order for the industry to grow and develop, the marketplace will
need to focus and work together towards creating a fungible and quality
biodiesel supply. In addition, federal coordination is key in order to
foster such an effort, create standards, assist with phase by phase
implementation, and lastly to support with necessary funding.
Specifically, Standard would like to see a number of infrastructure
activities pursued on a federal level, most likely through coordinated
work from government agencies such as Department of Energy, the
Department of Transportation and the Environmental Protection Agency.
Our primary focus at this time is the continued research and
development of low blend biodiesel pipeline batch movements. Successful
pipeline analysis testing has already been done, on several different
pipelines, on several different occasions, yet we as an industry have
been removed from the progress. BioSelect is eager to assist with this
exciting project and offer assistance to your committee and/or all
government agencies interested in working on moving the testing
forward. Additional specific research needs currently facing the
industry include but are not limited to; feasibility studies on
tankage, pipe and pump options, cold flow properties, water issues,
stability testing of fuel samples and advanced vehicle technologies. In
addition, we believe there is a clear need for an overall general
economic study of capital requirements to bring biodiesel to local
retail pumps nationwide.
Q3. In your testimony, you mentioned that one of the barriers to
realizing biofuels from diverse feedstocks was laboratory and equipment
availability. I was hoping that you would clarify a bit. Is the problem
better collaboration among corporate entities with research capability,
better access to federal research facilities, better access to
university research facilities, or the need for a better understanding
of where research is taking place and on what specific subject matters?
A3. The issues you have outlined are all contributors to the research
and development of the biofuel industry. There are very few private
laboratories available that are deemed acceptable by both federal and
State environmental agencies which have already caused our industry a
great deal of backlogging for new testing. Universities nationwide have
extensive capability but are either understaffed or under funded, which
causes research and development with great promise to be defeated.
Q4. Currently, what are your fuel transport plans? What is the cost of
transport and how does it impact the price of your products? Is this
the most efficient and economical way to transport your fuel? If there
is a significant increase the in the use of biofuels, what will be the
impact on the cost of transporting the fuel if we continue to use the
same mode of transport we are currently using? Is it important that we
find other ways, including the use of pipelines, to transport biofuels?
A4. Given the reality of constrained railroads and high cost truck
movements, BioSelect will be moving the majority of both inbound and
outbound movements via barge transport. Accessibility to water is an
advantage we possess over the interior U.S. facilities, however barges
and ships are increasingly in high demand themselves and corresponding
costs are also on the rise. As broad biofuels use increases, these
already existent issues will escalate. Finding other modes of
transportation, i.e., national pipelines, is imperative in order for
biofuels to become mainstream fuel.
Q5. You mentioned that standardization of all biofuels is imperative
to ensure fungibility. If we do not have clear standards that provide
for homogeneous fuel that is fungible, what do you believe will be the
impact on our long-term biofuel supply?
A5. Without clear standards the result would be off-spec, low quality
fuel entering the marketplace. Bad fuel could cause damage to engines
in all sectors and would seriously hinder customer confidence.
Q6. You briefly mention that as the biodiesel industry develops, the
demand for highly skilled trained labor will rise. Are you already
finding that there is a shortage of trained skilled workers to meet
your needs? And, do we need a specialized workforce training program
geared to biofuels production?
A6. Education is key. Training and instruction focused on biofuels must
find its way into academic curriculum for America's youth nationwide.
Offering a tailored chemical engineering skill set to young potential
operators would help create a specialized workforce and make the
transition into biofuels a streamlined process universally.
Answers to Post-Hearing Questions
Responses by Robert Dinneen, President and CEO, Renewable Fuels
Association
Questions submitted by Chairman Nick Lampson
Q1. Clearly, there is agreement from many stakeholders that there is a
need for better coordination and centralization of biofuels research
materials. In your testimony, you noted that it would be more
appropriate for industry to serve as a clearinghouse of this
information than the Federal Government. And though I understand the
value in having industry very involved in this process, with so much
research going on with the Federal Government, it seems only logical
that the government would coordinate a centralize systems for
organizing all these materials. And, a reasonable use of federal funds.
So, would an industry advisory group be a good part of an information
center to ensure strong industry participation?
A1. An industry advisory group to assist in the coordination of
research activities is a good idea and would certainly help to ensure
there is as little redundancy in research and development efforts of
both the public and private sectors as possible.
Q2. As you noted in your testimony, the discussion draft creates a new
Biorefinery Energy Efficiency program. With significant resources
already being dedicated to general research, we thought it appropriate
to enhance the existing programs with some more focused mission
specific efforts. With that in mind, are there other focused research
areas that the Committee should consider as we move toward
consideration of the bill?
A2. As I stated in my testimony, advances in research on the
development of processes to produce alternative energy at biorefineries
such as biomass co-generation and biomass gasification, and methane
production through anaerobic digestors and waste gasifiers, will be
critical to increase energy efficiency and reduce the energy
consumption of biorefineries. Encouraging alternative energy sources is
an important step toward enacting policies for a more diverse, domestic
energy resource portfolio. Other areas where additional research could
prove quite helpful would be in co-products, enhancing the feed value
of distiller's dried grains and identifying new uses for the proteins,
minerals and oils that remain after the starch is converted into fuel
at ethanol plants. Finally, research into future market opportunities
for ethanol, such as fuel cells, will be important to continued growth.
Questions submitted by Representative Ralph M. Hall
Q1. I am curious about a statement in your testimony. You state, ``And
there is not an ethanol company represented by RFA that does not have a
cellulose to ethanol research program.'' Are these research programs
supported with federal dollars? Are these research programs done
independently by the companies? If every ethanol company you represent
has a program how many programs are there? If every ethanol company you
represent has a program, whether it be privately or publicly funded, do
we need more?
A1. It is certainly true that virtually every ethanol company in the
country is looking into the possibilities of producing ethanol from
cellulosic feedstocks. First, all of these plants already have
cellulosic feedstocks coming into the plant in the form of corn fiber.
But, more importantly, every company recognizes that the future of
ethanol lies in the ability to convert non-grain feedstocks into fuel.
Certainly, some of these research efforts have received government
support. Recently, the U.S. Department of Energy awarded six grants
totaling $385 million to six different companies spread across the
country and using a variety of feedstocks and technologies. Federal
efforts such as this are invaluable to moving the commercialization of
cellulosic ethanol technology further as quickly as possible. Other
research is clearly occurring without Federal Government support, and
is supported by state grants, foundations, academic institutions or
private funds. It all will help. We ought not limit any of these
important efforts.
Q2. It is my understanding that, as you mention in your testimony one
of the challenges of using more ethanol is a lack of storage capacity.
Is the same true if we are to use cellulosic ethanol as a feedstock? If
the cellulosic ethanol is not transportable via pipeline, what storage
challenges do you foresee? Is it tankage? What are the challenges to
collection, storage, and handling of feedstocks other than corn
ethanol?
A2. Actually, I do not believe storage capacity will be a major barrier
to expanded ethanol production and use. I believe the market will
respond with expanded infrastructure as needed, including potentially
shipping ethanol via pipeline if the marketplace demand supports it.
There will be new challenges as ethanol is produced from new
feedstocks, however; none are insurmountable. Because there will be new
feedstocks needed for many of these new cellulosic ethanol facilities,
growers will need an opportunity to experiment with what will likely be
new crops for many of them. Programs to familiarize growers with all
aspects of new cellulosic crops will be essential. These programs
should include research and development, management, harvest,
transport, and storage techniques, and collection of data relevant to
new cellulosic feedstocks. Such programs will allow growers to
experiment with other crops, and incentivize farmers to plant cellulose
crops, and continue U.S. agriculture's investment in our domestic
biofuels industry.
Q3. Mr. Dinneen, you mention in your testimony that the ethanol
industry has worked to expand a virtual pipeline. That virtual pipeline
consists of rail, barge and truck traffic. Are you saying the ethanol
industry does not believe there is a need to study the impact of
ethanol on pipeline infrastructure? Are you not supportive of research
and development that would enable ethanol, or for that matter the
finished motor fuel containing ethanol, to be shipped via pipeline?
Q3. As I stated in my testimony, the ethanol industry has worked to
expand a ``Virtual Pipeline'' through aggressive use of the rail
system, barge and truck traffic. As a result, we can move product
quickly to those areas where it is needed. Many ethanol plants have the
capability to load unit trains of ethanol for shipment to ethanol
terminals in key markets. Unit trains are quickly becoming the norm,
not the exception, which was not the case just a few years ago.
Railroad companies are working with our industry to develop
infrastructure to meet future demand for ethanol. We are also working
closely with terminal operators and refiners to identify ethanol
storage facilities and install blending equipment. We will continue to
grow the necessary infrastructure to make sure that in any market we
need to ship ethanol there is rail access at gasoline terminals, and
that those terminals are able to take unit trains.
That said, many stakeholders in the biofuels industry are beginning
to look at the practical issues involved with shipping ethanol via a
dedicated pipeline. Shipping ethanol in pipelines is done today in
Brazil, and it has been done at times in the U.S., as well, in
dedicated pipelines. If the marketplace demands it, as it does in
Brazil, and there is enough ethanol demand to warrant the investment in
the infrastructure for dedicated pipelines, such a system will develop
in the U.S. Studying the feasibility of transporting ethanol by
pipeline from the Midwest to the East and West coasts will be very
helpful.
Questions submitted by Representative Bob Inglis
Q1. Section 3 of the draft legislation seems to limit infrastructure
research, development and demonstration to existing fuel distribution
infrastructure. Since biofuels will vary by region, should we also be
promoting research, development, and demonstration in alternative
infrastructure solutions that could prove to be cheaper and more
efficient?
A1. In my testimony, I noted that programs that promote geographical
dispersion will help to commercialize cellulosic ethanol quickly and
continue the trend just beginning to expand ethanol production beyond
the traditional corn belt. A wide variety of energy crops and
agricultural waste products such as switchgrass, myscanthis, wood chips
and corn stover from many regions of the country must all be
researched, developed and commercialized as additional ethanol
feedstocks to realize the annual production levels envisioned by
Congress.
Q2. Does this draft legislation encourage a departure from food
related feedstocks and toward high-yielding non-food related
feedstocks?
A2. To date, the U.S. ethanol industry has grown almost exclusively
from grain processing. As a result of steadily increasing yields and
improving technology, the National Corn Growers Association (NCGA)
projects that by 2015, corn growers will produce 15 billion bushels of
grain. According to the NCGA analysis, this will allow a portion of
that crop to be processed into 15 billion gallons of ethanol without
significantly disrupting other markets for corn. Ethanol also
represents a growing market for other grains, such as grain sorghum.
Ethanol production consumed approximately 26 percent of the Nation's
sorghum crop in 2006 (domestic use). Research is also underway on the
use of sweet and forage sorghum for ethanol production. In fact, the
National Sorghum Producers believe that as new generation ethanol
processes are studied and improved, sorghum's role will continue to
expand.
In the future, however, ethanol will be produced from other
feedstocks, such as cellulose. Ethanol from cellulose will dramatically
expand the types and amount of available material for ethanol
production, and ultimately dramatically expand ethanol supplies.
Further, biotechnology will play a significant role in meeting our
nation's future ethanol needs. Average yield per acre is not static and
will increase incrementally, especially with the introduction of new
biotech hybrid varieties. According to NCGA, corn yields have
consistently increased an average of about 3.5 bushels per year over
the last decade. Based on the 10-year historical trend, corn yield per
acre could reach 180 bushels by 2015. For comparison, the average yield
in 1970 was about 72 bushels per acre. Agricultural companies like
Monsanto believe we can achieve corn yields of up to 300 bushels per
acre by 2030. It is not necessary to limit the potential of any
feedstock--existing or prospective.
Ultimately, the marketplace will determine which feedstocks are the
most economically and environmentally feasible. While there are indeed
limits to what we will be able to produce from grain, cellulose ethanol
production will augment, not replace, grain-based ethanol. The
conversion of feedstocks like corn stover, corn fiber and corn cobs
will be the ``bridge technology'' that leads the industry to the
conversion of other cellulosic feedstocks and energy crops such as
wheat straw, switchgrass, and fast-growing trees. Even the garbage, or
municipal solid waste, Americans throw away today will be a future
source of ethanol.
To continue this technological revolution in cellulosic ethanol,
the biomass, bioresearch, and biorefinery research and development
programs included in H.R. 2773 will be essential to developing these
new technologies and bringing them to commercialization.
Appendix 2:
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Material for the Record
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Section-by-Section Analysis of
Biofuels Research and Development
Enhancement Act ``Discussion Draft''
June 12, 2007
Section 2--Biofuels and Biorefinery Information Center
Directs the Secretary of Energy, in cooperation with the Secretary
of Agriculture, to establish an information center to serve as a
clearinghouse of information related to the research, development, and
commercial applications of technologies related to biofuels and
biorefinery technologies. This section will help make readily available
to interested parties the latest information on methods for biofuels
development to help support the rapid growth and deployment of
biofuels.
Section 3--Biofuels and Advanced Biofuels Infrastructure
Recognizing the inherent problems with transporting and storing
biofuels in the existing petroleum fuels infrastructure, this section
establishes and program of research, development, and demonstration for
modifications and treatments to existing infrastructure and development
of new infrastructure.
Section 4--Biodiesel
The Secretary is directed to submit a report to Congress on any
research and development challenges in increasing to five percent the
amount of biodiesel, as compared to the current level, the amount of
all diesels sold nationally.
Section 5--Bioresearch Centers for Systems Biology Program
The Bioresearch Center program created in the Energy Policy Act of
2005 is amended to establish at least 11 regionally located centers.
Section 6--Grants for Biofuels Production Research and Development in
Certain States
Establishes a research and development grant program in states with
low rates of Biofuels production, as is determined by the Secretary of
Energy.
Section 7--Biorefinery Energy Efficiency
Adds a new subsection the Section 932 of the Energy Policy Act of
2005 (Bioenergy Program) to establish a program of research,
development, demonstration and commercial application of technologies
to increase the energy efficiency and reduce the energy consumption of
biorefinery facilities.
Section 8--Study of Increase Consumption of Ethanol-Blended Gasoline
with Higher Levels
Directs the Secretary of Energy to conduct a study, in cooperation
with the Secretaries of Agriculture and Transportation and EPA, on the
feasibility of increasing the consumption of ethanol-blended gasoline
at blend levels between 10 and 40 percent.
Section 9--Study of Optimization of Flexible Fueled Vehicles to Use E-
85
Directs the Secretary of Energy to conduct a study to determine if
optimizing flexible fuel vehicles to operate using E-85 would increase
the fuel efficiency while using E-85.
Section 10--Study of Engine Durability Associated with the Use of
Biodiesel
Directs the Secretary of Energy to conduct a study on the effects
of the use of biodiesel, at varying blend levels, on engine durability.
Section 11--Authorization for Appropriation
This section makes the following authorizing changes:
<bullet> Extends the authorization of Section 931 (Renewable
Energy) Energy Policy Act of 2005 through 2010 (currently
expires in 2009) and funds the programs at $963 million.
<bullet> Increases the authorization levels for Section 932
(Bioenergy Programs) of the Energy Policy Act of 2005 to:
FY08--$377 million
FY09--$398 million
FY10--$419 million
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