<DOC>
[109th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:29894.wais]
VEHICLE AND FUELS TECHNOLOGY: NEXT
GENERATION
HEARING
BEFORE THE
SUBCOMMITTEE ON ENERGY AND AIR QUALITY
OF THE
COMMITTEE ON ENERGY AND
COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
MAY 24, 2006
Serial No. 109-103
Printed for the use of the Committee on Energy and Commerce
Available via the World Wide Web: http://www.access.gpo.gov/congress/house
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COMMITTEE ON ENERGY AND COMMERCE
JOE BARTON, Texas, Chairman
RALPH M. HALL, Texas JOHN D. DINGELL, Michigan
MICHAEL BILIRAKIS, Florida Ranking Member
Vice Chairman HENRY A. WAXMAN, California
FRED UPTON, Michigan EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida RICK BOUCHER, Virginia
PAUL E. GILLMOR, Ohio EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia FRANK PALLONE, JR., New Jersey
ED WHITFIELD, Kentucky SHERROD BROWN, Ohio
CHARLIE NORWOOD, Georgia BART GORDON, Tennessee
BARBARA CUBIN, Wyoming BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
HEATHER WILSON, New Mexico BART STUPAK, Michigan
JOHN B. SHADEGG, Arizona ELIOT L. ENGEL, New York
CHARLES W. "CHIP" PICKERING, Mississippi ALBERT R. WYNN, Maryland
Vice Chairman GENE GREEN, Texas
VITO FOSSELLA, New York TED STRICKLAND, Ohio
ROY BLUNT, Missouri DIANA DEGETTE, Colorado
STEVE BUYER, Indiana LOIS CAPPS, California
GEORGE RADANOVICH, California MIKE DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire TOM ALLEN, Maine
JOSEPH R. PITTS, Pennsylvania JIM DAVIS, Florida
MARY BONO, California JAN SCHAKOWSKY, Illinois
GREG WALDEN, Oregon HILDA L. SOLIS, California
LEE TERRY, Nebraska CHARLES A. GONZALEZ, Texas
MIKE FERGUSON, New Jersey JAY INSLEE, Washington
MIKE ROGERS, Michigan TAMMY BALDWIN, Wisconsin
C.L. "BUTCH" OTTER, Idaho MIKE ROSS, Arkansas
SUE MYRICK, North Carolina
JOHN SULLIVAN, Oklahoma
TIM MURPHY, Pennsylvania
MICHAEL C. BURGESS, Texas
MARSHA BLACKBURN, Tennessee
BUD ALBRIGHT, Staff Director
DAVID CAVICKE, General Counsel
REID P. F. STUNTZ, Minority Staff Director and Chief Counsel
SUBCOMMITTEE ON ENERGY AND AIR QUALITY
RALPH M. HALL, Texas, Chairman
MICHAEL BILIRAKIS, Florida RICK BOUCHER, Virginia
ED WHITFIELD, Kentucky Ranking Member
CHARLIE NORWOOD, Georgia MIKE ROSS, Arkansas
BARBARA CUBIN, Wyoming HENRY A. WAXMAN, California
JOHN SHIMKUS, Illinois EDWARD J. MARKEY, Massachusetts
HEATHER WILSON, New Mexico ELIOT L. ENGEL, New York
JOHN B. SHADEGG, Arizona ALBERT R. WYNN, Maryland
CHARLES W. "CHIP" PICKERING, Mississippi GENE GREEN, Texas
VITO FOSSELLA, New York TED STRICKLAND, Ohio
GEORGE RADANOVICH, California LOIS CAPPS, California
MARY BONO, California MIKE DOYLE, Pennsylvania
GREG WALDEN, Oregon TOM ALLEN, Maine
MIKE ROGERS, Michigan JIM DAVIS, Florida
C.L. "BUTCH" OTTER, Idaho HILDA L. SOLIS, California
JOHN SULLIVAN, Oklahoma CHARLES A. GONZALEZ, Texas
TIM MURPHY, Pennsylvania JOHN D. DINGELL, Michigan
MICHAEL C. BURGESS, Texas (EX OFFICIO)
JOE BARTON, Texas
(EX OFFICIO)
CONTENTS
Page
Testimony of:
Karsner, Hon. Alexander A., Assistant Secretary, Office
of Energy Efficiency and Renewable Energy, U.S.
Department of Energy 14
Cischke, Susan M., Vice President, Environment and
Safety Engineering, Ford Motor Company 22
Morrissett, Deborah, Vice President, Regulatory Affairs,
DaimlerChrysler Corporation 29
Reinert, William, National Manager, Advanced
Technology Group, Toyota Motor Sales, USA, Inc. 35
Lowery, Elizabeth, Vice President, Public Policy Center,
General Motors 50
Pacheco, Dr. Michael A., Director, National Bioenergy
Center, National Renewable Energy Laboratory 67
Warzel, Jon A., Vice President, Business Development
and Government Programs, Syntoleum Corporation 75
Hughes, Scott, Director of Government Affairs, National
Biodiesel Board 82
Pratt, Mitchell, Senior Vice President, Clean Energy 88
Additional material submitted for the record:
Cischke, Susan M., Vice President, Environment and
Safety Engineering, Ford Motor Company, response
for the record 106
Reinert, William, National Manager, Advanced
Technology Group, Toyota Motor Sales, USA, Inc.,
response for the record 115
Lowery, Elizabeth, Vice President, Public Policy Center,
General Motors, response for the record 120
Morrissett, Deborah, Vice President, Regulatory Affairs,
DaimlerChrysler Corporation, response for the record 126
Ramsbottom, Hunt, CEO and President, Rentech, Inc.,
submission for the record 136
VEHICLE AND FUELS TECHNOLOGY:
NEXT GENERATION
WEDNESDAY, MAY 24, 2006
HOUSE OF REPRESENTATIVES,
COMMITTEE ON ENERGY AND COMMERCE,
SUBCOMMITTEE ON ENERGY AND AIR QUALITY,
Washington, DC.
The subcommittee met, pursuant to notice, at 1:00 p.m., in
Room 2123 of the Rayburn House Office Building, Hon. Ralph M.
Hall [Chairman] presiding.
Present: Representatives Hall, Whitfield, Norwood, Shimkus,
Radanovich, Bono, Sullivan, Burgess, Ross, Green, and Dingell
(ex officio).
Staff Present: Kelly Cole, Counsel; Elizabeth Stack, Policy
Coordinator; Margaret Caravelli, Counsel; Anh Nguyen,
Legislative Clerk; Peter Kielty, Legislative Clerk; Bruce Harris,
Minority Professional Staff Member; Sue Sheridan, Minority
Senior Counsel; and Lorie Schmidt, Minority Counsel.
MR. HALL. I would like first to welcome everyone to today's
hearing entitled "Vehicle and Fuels Technology: Next
Generation," and to thank the two panels that are witnesses for
being here today to testify and educate us on this topic. You really
do us a great favor by, first, being as qualified as you are and as
recognized as you are; and, then, giving us your time today. And
that is the way we write laws here. We get people that know more
about it than we do, and we listen to them. And we thank you for
being here.
The U.S. dependence on foreign oil is a pending national
security and economic crisis. While we are working to improve oil
production, we must also work toward becoming more fuel-
efficient. The U.S. Congress can facilitate that with the production
of new technologies that will improve fuel efficiency.
Technologies that could have an impact within the next 2 to
4 years is what is really needed.
Historically, we have been focusing on long-term technologies
at our national laboratories and universities. And while that is
good, we have to consider now, due to the staggering increase in
the cost of fuel, technology that can be used in the near term.
Major automotive companies have both the financial and
manufacturing resources to do what is needed, but I think Congress
has to make the greatest difference by helping smaller companies
that don't have those vast resources at their disposal.
I am aware of several technologies being developed with just
such potential. For example, there is a new concept for a
continuously variable transmission that would reduce both the
weight and cost of present-day continuously variable transmissions
and improve the fuel efficiency of the vehicle. This same
technology also has applications in hybrid electric vehicles,
improving their already good fuel efficiency. This technology is
available now, but because of limited resources, it will not be in
full-scale production for five more years. We have an opportunity
with technologies such as this to work together with developing
technologies for exploration of oil and gas and to help ease our
dependence on foreign oil. And I think we should certainly nurture
them.
In regards to hydrogen, regardless of the number of hydrogen
fuel vehicles produced, without a reliable and adequate
infrastructure, the vehicles are going to be useless. To progress to
a hydrogen economy requires large-scale hydrogen production, and
I am aware of an effort in Texas where the automobile
manufacturers, fossil fuel industry, and the renewable energy
industry are coming together as a coalition with this goal in mind.
The effort in Texas is boosted by the abundance of domestic
resources in the State suitable for the large-scale production of
hydrogen, and these new efforts must be encouraged and expanded
across the country so that a network of infrastructure is in place to
support the vehicles of the future.
I believe we have a lot to look forward to. It is a very exciting
time in our history as we look for new ways to build and power our
vehicles. There are many promising developments, several of
which we will hear about today, not only with new next-generation
vehicle technology, but also the fuels that make them run:
cellulosic ethanol, the production of which has the potential to turn
what we call waste material into a valuable resource; biodiesel, the
replacement fuel made from renewable food stocks, including
vegetable oils and animal fats; coal to liquid, the conversion of
solid coal into liquid fuels; and chemicals and natural gas as a
transportation fuel.
Again, I thank you for being with us today, and I look forward
to your testimony.
[The prepared statement of Hon. Ralph Hall follows:]
PREPARED STATEMENT OF THE HON. RALPH HALL, CHAIRMAN,
SUBCOMMITTEE ON ENERGY AND AIR QUALITY
I'd like to welcome everyone to today's hearing entitled
"Vehicle and Fuels Technology: Next Generation", and to thank
our two panels of witnesses for being here today to testify and
educate us on this topic.
The US dependence on foreign oil is a pending national
security and economic crisis. While we are working to improve oil
production, we must also work towards becoming more fuel
efficient. The US Congress can facilitate the path to production of
new technologies that will improve fuel efficiency. Technologies
that could have an impact within the next 2 to 4 years are what is
needed. Historically, we have been focusing on long-term
technologies at our National Laboratories and Universities. While
that is good, we must consider now - due to the staggering
increases in the cost of fuel - technology that can be used in the
near term. The major automotive companies have both the
financial and manufacturing resources to do what is needed, but I
believe that Congress can make the greatest difference by helping
smaller companies that don't have those vast resources at their
disposal. I am aware of several technologies being developed with
just such potential. For example, there's a new concept for a
continuously variable transmission that would reduce both the
weight and cost of present day continuously variable
transmissions, and improve the fuel efficiency of the vehicle. This
same technology also has applications in hybrid electric vehicles--
improving their already good fuel efficiency. This technology is
available now, but because of limited resources it will not be in full
scale production for five more years. We have an opportunity with
technologies such as this to work together with developing
technologies for exploration of oil and for gas, to help ease our
dependence on foreign oil, and I think we should nurture them.
In regards to hydrogen, regardless of the number of hydrogen
fueled vehicles produced, without a reliable and adequate
infrastructure the vehicles will be useless. To progress to a
hydrogen economy requires large scale hydrogen production. I am
aware of an effort in Texas where the automobile manufacturers,
fossil fuel industry and the renewable energy industry are coming
together as a coalition with this goal in mind. The effort in Texas is
boosted by the abundance of domestic resources in the state
suitable for the large-scale production of hydrogen. These new
efforts must be encouraged and expanded across the country so
that a network of infrastructure is in place to support the vehicles
of the future.
I believe we have a lot to look forward to - it's a very exciting
time in our history as we look for new ways to build and power our
vehicles. There are many promising developments, several of
which we will hear about today. Not only with new next
generation vehicle technology, but also the fuels that make them
run . Cellulosic ethanol - the production of which has the potential
to turn "waste material" into a valuable resource. Biodiesel - a
replacement fuel made from renewable feedstocks including
vegetable oils and animal fats. Coal-to-liquids - the conversion of
solid coal into liquid fuels and chemicals, and natural gas as a
transportation fuel.
Again, thank you to our witnesses for coming today. I look
forward to your testimony.
Without objection, the Chair will proceed pursuant to
Committee Rule 4(e) and recognize Members for 3 minutes for
opening statements. If they defer, this time will be added to their
opening round of questions.
MR. HALL. Without objection, the Chair will proceed pursuant
to Committee Rule 4(e) and recognize Members for 3 minutes for
opening statements. If they defer this time it will be added to their
opening rounds of question.
The Chair now recognizes Ranking Member Mr. Ross, from
the great city of Texarkana, Arkansas, my neighbor. We both
represent Texarkana. He represents Texarkana, Arkansas and I
just represent Texarkana, Texas. I recognize you at this time.
MR. ROSS. Actually, Mr. Chairman, it is an interesting town.
You can drive south down State Line Avenue and on the right side
of the road you can vote for Ralph Hall and buy lottery tickets. On
the left side of the road you can vote for me and buy liquor. And
you can't do either one on the other side of the street. It is a
unique situation.
But, thank you. And I am glad we are holding today's hearing
to discuss vehicle and fuel technologies and what the future holds
for American consumers. As we continue to experience record
fuel prices, the demand for alternative fuels, hybrid and flex fuel
vehicles, and other energy-efficient technologies will continue to
increase. I strongly believe the substance of our discussions in this
hearing today will be a significant piece in the puzzle of meeting
our future energy needs. We all recognize that our Nation's
transportation sector is the primary contributor to the United
States' consumption of roughly 20 million barrels of oil a day.
Reducing the transportation sector's use of this commodity will
require future implementation and advancement of the many
technologies that will be discussed today.
High fuel prices have certainly increased the awareness and
interest in alternative fuels and vehicles. Even in the State of
Arkansas, where pickup trucks far exceed cars, my constituents are
talking more and more about hybrid and flex fuel vehicles. My
district spans 21,000 square miles, 29 counties, and 150 towns. It
is not uncommon for my constituents to drive 50 miles or more
each way to and from work; and in most cases, they commute
these distances for a job that pays well below the national average.
These long commutes and frequent costly stops at the gas station
are forcing not only Arkansans but all Americans to think about
alternatives. As this trend continues, it is increasingly important
for industry, government, and the consumers to engage in these
issues and work together to advance energy-efficient technologies.
As a member of this committee, we have received testimony
from the Department of Energy's Energy Information
Administration regarding their forecast indicating both fuel prices
and demand are going to remain high. With these record cost
projections, it will be cost-effective for us to make the necessary
investment and aggressively advance alternatives.
I have been pleased with the automobile industry and their
efforts toward the development of hybrid and flex fuel vehicles.
They have embraced the consumers' demand for increased energy
efficiency and are working to expand the production of their hybrid
and flex fuel models.
I am also supportive of the provisions in the Energy Policy Act
regarding hybrid vehicles. This legislation, which was passed last
August, provides tax credits to consumers who purchase hybrid
vehicles. This has been a successful incentive program and has
stimulated hybrid vehicle sales. However, I believe we can and
should do more. I hope to hear from our witnesses today on ways
and ideas to improve this tax credit, allowing more consumers to
access these technologies. I am not 100 percent convinced
eliminating the 60,000-unit cap is the answer, but I think it is an
option that should be investigated, and I look forward to receiving
input from the industry representatives here today. And the more
consumers who can access the tax credit, the more hybrid vehicles
there will be on our highways, therefore, reducing our dependence
on foreign oil.
I also look forward to hearing from our two panels about the
development of hydrogen fuel-cell vehicles. Ironically, this
morning, I test drove a hydrogen fuel-cell car and I was very
impressed. It had a lot of pick-up, or get-up, as we would say in
south Arkansas. I understand the challenges facing hydrogen
fuel-cell vehicles, especially the needed infrastructure to support
them and similar problems facing expanded use of E-85. I do
believe hydrogen fuel-cell technology will be a significant part of
our future, and I look forward to working with the industry on its
continued development.
Being from Arkansas, I am extremely excited about the
growing potential for biodiesel ethanol and biomass ethanol in this
country. The increased use of ethanol and biodiesel provides new
markets for our farm families, reduces our dependence on imported
oil, and lowers greenhouse gas emissions. Efforts are underway in
my congressional district and across the Nation on the
development of ethanol, which is derived from biomass feedstocks
such as wood chips, switchgrass, and other plant fibers. We must
make the investments to continue the development and expansion
of ethanol, including the E-85 infrastructure needed to support
flex-fuel vehicles.
And Mr. Chairman, I will conclude by simply asking that I can
submit the rest of the statement to you for the record.
[The prepared statement of Hon. Mike Ross follows:]
PREPARED STATEMENT OF THE HON. MIKE ROSS, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF ARKANSAS
Thank you Mr. Chairman. I am glad we are holding today's
hearing to discuss vehicle and fuel technologies and what the
future holds for American consumers. As we continue to
experience record fuel prices, the demand for alternative fuels,
hybrid and flex fuel vehicles, and other energy efficient
technologies will continue to increase.
I strongly believe the substance of our discussions in this
hearing today - will be a significant piece in the puzzle of meeting
our future energy needs. We all recognize that our nation's
transportation sector is the primary contributor to the U.S.
consumption of roughly 20 million barrels of oil a day. Reducing
the transportation sector's use of this commodity will require
further implementation and advancement of the many technologies
that will be discussed today.
High fuel prices have certainly increased the awareness and
interest in alternative fuels and vehicles. Even in the state of
Arkansas, where pickup trucks far exceed cars and sedans, my
constituents are talking more and more about hybrid and flex fuel
vehicles. My district spans 21,000 square miles, 29 counties, and
150 towns. It is not uncommon for my constituents to drive 50
miles or more - each way to and from work. And in most cases
they commute these distances for a job that pays well below the
national average. These long commutes and frequent, costly stops
at the gas station, are encouraging, not only Arkansans, but all
Americans to think about alternatives. As this trend continues, it is
increasingly important for industry, government, and the
consumers to engage in these issues and work together to advance
energy efficient technologies.
As members of this Committee, we have received testimony
from the Department of Energy's Energy Information Agency
regarding their forecast indicating both fuel prices and demand are
going to remain high. With these record cost projections, it will be
cost effective for us to make the necessary investments and
aggressively advance alternatives.
I have been pleased with the automobile industry and their
efforts toward the development of hybrid and flex fuel vehicles.
They have embraced the consumer's demand for increased energy
efficiency and are working to expand the production of their hybrid
and flex fuel models.
I am also supportive of the provisions in the Energy Policy Act
regarding hybrid vehicles. This legislation, which was passed last
August, provides tax credits to consumers who purchase hybrid
vehicles. This has been a successful incentive program and has
stimulated hybrid vehicle sales. However, I believe we can and
should do more. I hope to hear from our witnesses today on ways
and ideas to improve this tax credit - allowing more consumers to
access these technologies. I am not 100 percent convinced
eliminating the 60,000 unit cap is the answer, but I think it is an
option that should be investigated and I look forward to receiving
input from the industry representatives here today. The more
consumers who can access the tax credit - the more hybrid vehicles
there will be on our highways.
I also look forward to hearing from our two panels about the
development of hydrogen fuel cell vehicles. Coincidently, I test
drove a hydrogen fuel cell car this morning and was impressed. I
understand the challenges facing hydrogen fuel cell vehicles,
especially the needed infrastructure to support them- a similar
problem facing expanded use of E-85. I do believe hydrogen fuel
cell technology will be a significant part of our future hybrid
vehicle fleet and look forward to working with industry on its
continued development.
Being from Arkansas, I am extremely excited about the
growing potential for biodiesel, ethanol and cellulosic biomass
ethanol in this country. The increased use of ethanol and biodiesel
provides new markets for our farm families, reduces our
dependence on imported oil, and lowers greenhouse gas emissions.
Efforts are under way in my Congressional District and across the
nation on the development of cellulosic ethanol, which is derived
from biomass feedstocks such as wood chips, switch grass, and
other plant fibers. We must make the investments to continue the
development and expansion of ethanol, including the E-85
infrastructure needed to support flex fuel vehicles. The reality is
this: the energy bill, which I voted for, authorizes $632 million for
the next fiscal year for renewable energy research, development,
demonstration, and commercial application activities by the
Department of Energy- $213 million of which is for bio-energy
purposes--including $100 million for bio-refinery demonstration
projects. This funding is authorized, but not yet appropriated. And
yet we send $1.9 billion to Iraq every week. I want to make sure
the American people understand that while there is a lot of talk
these days about alternative and renewable fuels, over the next
fiscal year we are going to spend less than half as much money
toward research and development of alternative and renewable
energy as we will spend this week alone in Iraq. It is about
priorities, and we as a nation need to re-evaluate our priorities and
make the desperately needed investments in alterative and
renewable energy.
Coal-to-Liquid technology and natural gas are also exciting
alternative sources of transportation fuels being used and
developed. The public transportation buses here in the District of
Columbia are using natural gas technology and have proudly
printed on the side of each bus that "they are running on clean
burning natural gas."
Our future will have a strong blend of alternative fuels and
hybrid vehicles that will hopefully provide a choice to consumers
when they go to purchase a car and fill up at the pump. We must
work together toward making these technologies affordable and
reasonable for all Americans - and work to build our nation's
infrastructure to support these technologies. I thank our panel for
being here today and look forward to receiving their testimony.
MR. HALL. Without objection, so ordered.
The Chair recognizes the gentleman from Illinois, Mr.
Shimkus.
MR. SHIMKUS. Thank you Mr. Chairman. A couple of things,
real quick. We appreciate you all coming. We appreciate the auto
industry's getting on board on the flexible-fuel vehicle bandwagon.
It is a long time in coming, but now the marketing is just great.
I have been driving a flex-fuel vehicle, as a lot of people on the
committee know, for a couple of years. I am in my fourth year. I
have got a Ford Explorer. And In southern Illinois where we have
200 retail locations for E-85 pumps, in my district I have 20. So I
can really--and I represent a large rural district, from Springfield to
Metropolis, which is right across from Paducah, Kentucky, from
Collinsville, my hometown, right outside St. Louis, all the way to
the Indiana border. So that is progress, and we need to talk about
that.
Part of that progress came from the Energy Policy Act where
we sent a signal. When Ralph Hall starts talking about biofuels, I
know that the world has changed dramatically. And we welcome
that, because that is one way that we are going to decrease our
reliance on imported crude oil. And now everybody is on board
with that. And everybody is on board with biodiesel.
I am focusing now on over the horizon, the next obtainable
assistance. And I dropped a bill with Rick Boucher just yesterday.
I will encourage all my colleagues to get on board. It is H.R. 5453,
and it basically will extend the excise tax credit on refineries to
2020. And here is the premise. It is very simple. I am holding in
my hand a vial of diesel fuel, Fischer-Tropsch diesel fuel, diesel
fuel produced from coal. And some of the folks came up and
checked it out before the hearing. And you can--I will encourage
my friends in the media to come and take a whiff of it. And it is
cleaner-burning diesel fuel. But if you look here, this is the
premise: U.S. coal, on top of the coal field in southern Illinois, a
refinery; a coal to liquid refinery. You pipe that on U.S. pipes to--
the DOD has great interest in this type of fuel for diesel
applications and for aviation applications. This is an issue whose
time is right. We are all tired of the reliance on imported crude oil.
We are going to have a chance to expand our ability to get our own
resources with a vote tomorrow, Mr. Chairman, or on Friday, on
ANWR.
But this battle is a wide battle on multiple fuels. So that is why
the biofuels debate is great. We are glad to have you here. Coal to
liquid is an application already in South Africa, and we want to
continue that and do our other petroleum research that we have.
So this is a timely hearing, Mr. Chairman. Thank you for the
time.
MR. HALL. I thank the gentleman. It is well said, and you are
right about tomorrow. You could also say that we have a shot at
voting for ultra-deep today, that people are trying to back away
from what might keep our kids from having to fight a war or
something.
MR. SHIMKUS. I am with you, Mr. Chairman.
MR. HALL. At this time I recognize the Honorable Gene Green
from the great State of Texas. Mr. Green.
MR. GREEN. Thank you Mr. Chairman. Just a note; I signed
that letter you asked me about a while ago, so your staff should
have it.
MR. HALL. I thank you and the generations that follow. Thank
you for that.
MR. GREEN. Mr. Chairman, I have a statement I will put in the
record. But I really want to thank you for calling the hearing
because coming from a State that is basically hydrocarbons, but we
are producing less than we are used to, I will literally leave no
stone unturned to see how any other way we can move our
vehicles, power our factories and our homes. But I appreciate your
calling this hearing. Thank you.
[The prepared statement of Hon. Gene Green follows:]
PREPARED STATEMENT OF THE HON. GENE GREEN, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS
Mr. Chairman and Ranking Member thank you for convening
this hearing today on vehicle and fuel technology.
This hearing is another in a long string of recent hearings
focusing on the rapid rise in fuel costs.
Many working American families have budgets that are border
right on the line between financial health and serious financial
problems.
Rapid increases in the price of gasoline are causing the drive to
work, to school, or to visit family and friends to become a serious
drain on the family budget.
I am interested to hear today from the US automakers about
how their fleets are evolving to reduce gasoline consumption in the
future.
I am especially interested to know whether fuel efficiency and
fuel alternatives will bring relief to working class and middle class
Americans, or whether these new technologies will be too
expensive to afford.
Biodiesel is also an important part of our future fuel mix, and I
am pleased that at least one chemical manufacturer along the
Houston Ship Channel, which is the heart of our nation's gasoline
refining supply, is also in the biodiesel business.
I have a lot of professional truck drivers in my district and they
are hit coming and going by gas prices, as a cost of doing business
and a consumer cost just like the rest of us.
Biodiesel needs to increase rapidly if we are going to help out
on diesel prices and keep a lot of trucking operations is business.
MR. HALL. The Chair is honored to recognize the gentleman
from Georgia, Dr. Norwood.
MR. NORWOOD. Thank you, Mr. Chairman. I will simply
submit for the record, and thank you for having this hearing, and
yield to the panel. I am anxious to hear what they have to say.
MR. HALL. I am honored to recognize Mary Bono from the
great State of California.
MS. BONO. Thank you, Mr. Chairman. I also have a statement
I will submit for the record. And I welcome the witnesses. I am so
happy you are here and look forward to hearing what you have to
say. Thank you.
[The prepared statement of Hon. Mary Bono follows:]
PREPARED STATEMENT OF THE HON. MARY BONO, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Chairman,
Thank you for holding this hearing today.
I believe the subject of this hearing is not only about how we
can promote fuels and vehicles that are more environmentally
friendly but more importantly, how we can use good old fashioned
American ingenuity to wean ourselves off foreign oil.
Of course, oil, and for that matter foreign oil, will always play
some role in our economy. But as of today, the United States is
too dependent on stability in the Middle East and on various
dictators in South America. It troubles me to have foreign oil
serve as the keystone to our economic and even national security.
We must become more self sufficient.
Self sufficiency involves supporting our domestic suppliers of
oil but it also means looking beyond oil as the sole means for
fueling our economy. There are a variety of experimental fuels out
there. I believe that between private industry, our colleges and
universities as well as government, we can identify the most
promising of those alternative fuels and then focus on how to bring
them to market in an efficient manner so it they are widely
available as well as affordable.
Our country must make a concerted decision to forge ahead on
this front. We must be bold because it is, in sorts, a race. We don't
know when international incidents will slow or stop the flow of oil
to the U.S. We don't know when and if our own source of
domestic oil will be unable to keep up with demand. But we do
know that at some point, our economy could come to an abrupt
halt if we do not have an adequate supply of oil. So, we must set
out upon this course of finding and developing alternative forms of
energy right here and right now
It is my hope to work with those involved in the process to see
how government can best help. Too often, the federal government
gets in the way of good ideas. It is my hope that when it comes to
this, government can serve to facilitate a process that in the end,
makes sense for the consumer and gives greater security to our
country.
Again, thank you Mr. Chairman. I yield back the balance of my
time.
[Additional statements submitted for the record follows:]
PREPARED STATEMENT OF THE HON. JOE BARTON, CHAIRMAN,
COMMITTEE ON ENERGY AND COMMERCE
Thank you, Chairman Hall, for holding this hearing today on
the future of vehicles and fuels technology in the United States. I
would also like to thank our witnesses for appearing before us
today to tell us about their work putting the U.S. on a path towards
transportation security through innovation and diversity.
Vehicles and fuels constitute approximately 25 percent of the
energy demand in this country and they are vital to the continued
growth of the national economy.
Advanced technologies will balance supply and demand. On
the supply side, a diverse spectrum of fuels can and will reduce our
dependence on foreign oil, benefiting our economy, our
environment, and our national security.
On the demand side, innovation in vehicle design allow us to
use those fuels more efficiently, cutting both emissions and the
strain on fuel distribution networks.
A new fuel, even if it's the perfect fuel, is useless without the
vehicle that can run on it. And even of millions of cars can run on
it, the perfect fuel won't do much good if it can't reach your tank.
The Energy Policy Act of 2005, or EPACT took bold steps on
supply-side and demand-side energy issues. For example, EPACT
law directs DOE to partner with industry to enable and promote
hydrogen and fuel cell technology This law provides a virtual
roadmap to energy independence and is being used today to make
hydrogen transportation a reality.
EPACT also gives consumers tax incentives to buy fuel-saving
advanced vehicles. These incentives are technology-neutral - the
law does not favor hybrids over diesel, or fuel cells over flex fuel
vehicles. By creating vehicle and fuel diversity in our
transportation sector, we can decrease our dependency on imported
oil.
I am eager to learn today about all of the advances in vehicle
technologies. There are literally billions of dollars being invested
in research and development efforts both by government and by
industry. The goal, as we will hear today, is to move from the
petroleum-fueled vehicles we rely on today to running our
transportation infrastructure on the cleanest of fuels, hydrogen.
Moving to hydrogen is seen as the most promising long-term way
to eliminate our dependence on foreign oil.
However, most will agree that we are many years from the
commercial realization of hydrogen-powered vehicles. But we
should be creating plans and strategies for the intervening years.
The Department of Energy has a Transition Strategy which we will
hear about today that will help improve our energy security until
fuel cell hydrogen vehicles are a market reality.
I also look forward to hearing what advanced technologies
automakers are developing that will improve fuel economy,
maintain freedom of mobility, and a wide range of vehicle choices.
Today consumers have multiple options to the gasoline-powered
internal combustion engine, such as lean burn diesel, hybrids, and
flex fuel vehicles. These are the technologies that will take us from
here into the future of fuel cell hydrogen vehicles.
The Energy Policy Act of 2005 included a Renewable Fuel
Standard, requiring a significant amount of renewable fuel be part
of our national fuel supply. Beginning in 2013 we required
250,000,000 gallons of renewable fuel derived from cellulosic
biomass be incorporated in the Renewable Fuel Standard. Given
the state of the art in cellulosic, this schedule is very ambitious.
Cellulosic ethanol will diversify ethanol supply, with many
different feedstocks.
The Energy Policy Act of 2005 provided production incentives
for cellulosic biofuels, conversion assistance for cellulosic biomass
producers for the production of renewable fuels, and loan
guarantees for the construction of facilities for the production of
fuel ethanol from cellulosic biomass.
Other next generation fuels in use today include biodiesel and
natural gas. Biodiesel in a blend with petroleum diesel reduces
harmful particulate matter emissions making our air cleaner.
Natural gas as an alternative fuel is clean burning and efficient.
The production and use of coal-to-liquid fuels is appealing
given the vast coal reserves in this country. This ripe technology
can make coal-based liquid transportation fuel one of the cleanest
on the market. All these sources will move us into an era of
greater choice, greater freedom and greater security.
Beyond pushing technology development in fuels and vehicles
designs we must take other steps to win our energy security.
Unlocking America's conventional energy resources in Alaska and
offshore is crucial. And applying common sense rules to
developing energy projects especially with regard to the permitting
process is also critical. Taking all these steps, not just a few here
and there will be required to get the job done.
PREPARED STATEMENT OF THE HON. MICHAEL BURGESS, A
REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS
Mr. Chairman, thank you for convening this hearing today.
In recent months, and indeed since Hurricane Katrina reminded
us how perilously dependent and accustomed we have become, as
a nation, to cheap oil and gasoline, there have been dozens of
hearings, held in multiple committees, on both sides of the Capitol,
on the subject of high gasoline prices.
I continue to believe that the most important thing that we can
do to alleviate high gas prices in the short term is to increase
domestic supply of crude oil. We should allow, and in fact
encourage, exploration and production here at home. This includes
traditional exploration and development in the Outer Continental
Shelf and the Arctic National Wildlife Refuge, as well as non-
traditional sources like oil shale.
But in the mid to long term, we need to look at other solutions.
Since the transportation sector consumes the lion's share of oil
used in the United States, the future of transportation will play a
vital role in weaning our addition to foreign oil.
It is no secret that I am an avid supporter of hybrid vehicles,
but I am looking forward to hearing the panelists discuss the other
types of vehicle technologies as well as the other possible motor
fuels.
I'd like to thank our panelists again for giving up their time to
testify before us this morning. And with that, Mr. Chairman, I
yield back.
MR. HALL. Thank you. Don't be discouraged by the empty
seats up here. This is a terrible time for Congress, and we are
trying to right some wrongs that have been going on for 30 years
and all telescoping it into these last few weeks. But they all have
other committee meetings, and you have the main ones here. You
have the staffers that are here that tell us what you all say after you
leave. And we glean from that the legislation that we are going to
do. But it is being taken down, and I have a good court reporter
here. Everybody gets a copy, and everybody will read it. So your
testimony is not just going to four or five people. You are talking
to the most important people on this committee, other than
Chairman Barton. And please tell him I said that, how important
he is.
But we will at this time recognize the Honorable Alexander A.
Karsner, Assistant Secretary, Energy Efficiency and Renewable
Energy, U.S. Department of Energy.
The Chair recognizes you for about 5 minutes. We don't hold
you to 5 minutes, but try to give us just a brief statement of what
you are going to tell us, and then we will ask you questions about it
and let you enlarge on it. I might even ask you something you can
knock clear out of the park, by golly.
STATEMENTS OF HON. ALEXANDER A. KARSNER, ASSISTANT SECRETARY, OFFICE OF ENERGY
EFFICIENCY AND RENEWABLE ENERGY, U.S. DEPARTMENT OF ENERGY; SUSAN M. CISCHKE,
VICE PRESIDENT, ENVIRONMENT AND SAFETY ENGINEERING, FORD MOTOR COMPANY;
DEBORAH MORRISSETT, VICE PRESIDENT, REGULATORY AFFAIRS, DAIMLERCHRYSLER
CORPORATION; WILLIAM REINERT, NATIONAL MANAGER, ADVANCED TECHNOLOGY GROUP,
TOYOTA MOTOR SALES, USA, INC.; AND ELIZABETH LOWERY, VICE PRESIDENT, PUBLIC
POLICY CENTER, GENERAL MOTORS
MR. KARSNER. I want to thank you, Mr. Chairman and
members of the subcommittee. I appreciate the opportunity to
testify today on the next generation of vehicles and fuel
technology. I have submitted a fuller statement of written
testimony for the record so I will summarize during my time here.
To paraphrase President Bush in his State of the Union address
this year, breaking out of our national addiction to oil is an
imperative for our time. Today no sector of energy consumption is
more in the spotlight than vehicles, cars and trucks, and the fuels
that propel them. In the President's Advanced Energy Initiative, a
broad program for developing cleaner, cheaper, and more reliable
alternative energy sources and technologies, vehicles and fuel
initiatives hold a central place.
I would like to give you an overview of the Department of
Energy's research and development and deployment programs in
these areas, including technologies that will make a difference for
today's drivers and those that can usher in a generational change
over time. Biomass is the predominant clean renewable energy
resource that can make a short-term impact on diversifying our
liquid transportation fuels, thereby reducing our dependency on
imported oil.
The President's Biofuels Initiative aims to make cellulosic
ethanol cost competitive by 2012. If successful, this research
could lead to the production of biofuels equivalent to 30 percent of
today's gasoline consumption by 2030. The additional impetus
created by the President's Biofuels Initiative will enable program
RD&D to accelerate the development and deployment of
cost-competitive biobased liquid transportation fuels. The
Department presently addresses near, middle, and long-term
vehicle technology outcomes with two cooperative government
industry activities: the FreedomCAR and Fuel Partnership and the
21st Century Truck Partnership. The FreedomCAR and Fuel
Partnership is a collaborative effort among the U.S. Council for
Automotive Research, five energy companies and DOE, for
research on advances that may possess significant potential to
reduce oil consumption. Activities in FreedomCAR focus on the
technical challenges of advanced and high-efficiency vehicle
technologies such as fuel cells, advanced combustion engines and
enabling fuels, hybrid and plug-in hybrid vehicle systems
including high-power and high-energy batteries, power electronics
and motors, and lightweight materials. Near-term activities also
include developing and deploying biofuels to displace petroleum.
This year we will spend at least $3 million to provide
assistance for fueling stations to add E-85 capabilities and each
DOE dollar will be leveraged by cost share, from either the private
sector or State and local governments. Through ongoing
discussions with auto makers, the Department is encouraging
increased production of flex-fuel vehicles. The Department is also
working with the National Biodiesel Board to tighten fuel
standards and to develop real-time fuel quality tests for biodiesel to
enhance performance in advanced engines. Advanced catalysis
research at our national labs could enable more efficient diesel
engines to replace gasoline engines in light-duty vehicles without
sacrificing air quality.
Research focused on advanced batteries, power electronics,
motors, and lightweight materials is essential for improved hybrid
electric vehicles in the near and mid term as well as fuel-cell
hybrid electric vehicles in the long term. Hydrogen offers a
strategy for long-term energy security and reduced emissions. The
Department is pleased to have Congress's support of the hydrogen
program in Title VIII of the Energy Policy Act of 2005. The
requirements in this act are consistent with the Department's plans
and include important provisions for coordination of efforts across
the Federal government and for independent advice from outside
of the Department on our hydrogen efforts.
Indeed, much progress has been made since 2003, when
President Bush committed $1.2 billion over 5 years to accelerate
hydrogen research. Our hydrogen program is focused on research
to overcome the technology barriers that would be a precondition
to broad commercialization. Over 3 years our ongoing research
has contributed to reducing the high-volume costs of automotive
fuel cells from $275 per kilowatt in 2002 to $110 per kilowatt in
2005. In addition to supporting fuel-cell cost reduction, this work
will help us achieve the durability target of 5,000 hours which
equates to the vehicle lifetime required.
Hydrogen storage on board a vehicle to meet all performance
and cost requirements is one of the most technically challenging
barriers we face. The Department has a diverse portfolio through
three centers of excellence as well as independent projects both in
applied and basic science, with a total of about 40 universities, 15
companies and 10 Federal laboratories. In just 1 year, we are
starting to see promising results with some completely new
materials being developed in different areas, such as metal
hydrides, chemical hydrides, and carbon-based materials. Through
cost-shared partnerships with the automotive and energy industries,
four teams are installing hydrogen refueling stations and putting
cars on the road to test the technology and real-world conditions as
part of the Department's learning demonstration. Data collected
on vehicle performance, durability, and fuel economy is feeding
back into our research program to ensure our research is focused
on the most relevant problems.
We are working with our indispensable partners in the
economic community, at the national labs, and, as importantly, in
private industry; and we are putting our research dollars in the
most promising areas to address critical technical barriers, and I
believe, with confidence, that the next generation of vehicles and
fuels is already in sight.
This concludes my opening remarks and I would be happy to
answer any questions the committee may have.
[The prepared statement of Hon. Alexander A. Karsner
follows:]
PREPARED STATEMENT OF THE HON. ALEXANDER A. KARSNER,
ASSISTANT SECRETARY, OFFICE OF ENERGY EFFICIENCY AND
RENEWABLE ENERGY, U.S. DEPARTMENT OF ENERGY
Mr. Chairman and Members of the Subcommittee, I appreciate
the opportunity to testify today on the next generation of vehicle
and fuels technology.
To paraphrase President Bush in his State of the Union address
this year, breaking our national addiction to oil is an imperative for
our time. Today, no sector of energy consumption is more in the
spotlight than vehicles (cars and trucks), and the fuel that propels
them. In the President's Advanced Energy Initiative, a broad
program for developing cleaner, cheaper, and more reliable
alternative energy sources and technologies, vehicle and fuels
initiatives hold a central place. I would like to give you an
overview of the Department of Energy's (DOE) research and
development (R&D) programs in these areas, including
technologies that will make a difference for today's drivers, and
those that can usher in a generational change. In general, the
Department supports efforts that would reduce petroleum
consumption both through improved efficiency of use and through
substitution of domestic alternatives to petroleum, such as biomass
derived ethanol.
Biofuels
Biomass is the predominant clean, renewable energy source
that can make a short-term impact on diversifying our liquid
transportation fuels, thereby reducing our dependency on imported
oil. The President's Biofuels Initiative aims to make cellulosic
ethanol cost competitive by 2012. If successful, this research
could lead to the production of biofuels equivalent to 30 percent of
today's gasoline consumption by 2030. In FY 2007, the
Department requested $149.7 million for EERE's Biomass
program. The additional impetus created by the President's
Biofuels Initiative will enable program RD&D to accelerate the
development and deployment of costcompetitive, bio-based liquid
transportation fuels.
The program's research focus is in three areas: Feedstock
Infrastructure, for reducing the cost of collecting and preparing raw
biomass, and for the sustainable production and delivery of future
energy crops; Platforms R&D, for reducing the cost of outputs and
byproducts from biochemical and thermochemical processes; and
Utilization of Platform Outputs, for developing technologies and
processes that utilize intermediates such as sugars and syngas to
co-produce fuels, valueadded chemicals and materials, and heat
and power. The program's strategy is to integrate those
technologies and processes in biorefinery configurations that
industry will validate at an industrial scale. We ultimately envision
the development of biorefineries that will produce transportation
fuels along with value-added chemicals and materials, and/or
power from nonconventional, low-cost feedstocks such as
agricultural and forest residues and other biomass.
For the near-term, the program supports expansion of the
existing biofuels industry by helping current producers become the
early adopters of our advanced cellulosic conversion technology.
The leveraging of the technology through the use of the existing
plant and delivery infrastructure should enable earlier deployment.
The deployment is supported by our current cost-shared projects,
and we plan to continue this support.
The mid term expands the Government's focus in two
important ways. The first is meeting the President's objective of
cost competitive cellulosic ethanol by 2012. The Department is
accelerating research and development efforts to continue to
reduce the barriers to cost effectiveness. Second, we will continue
to work with industry to apply that research and reduce the capital,
operating costs, and risks associated with these future facilities.
Deployment may be initiated in the further expansion of the
existing industry and through niche opportunities ultimately
leading to sustainable biorefineries.
EERE's Biomass Program's long-term focus is on further
reducing the cost of producing domestic biofuels by continuing to
develop advanced technologies to transform the Nation's domestic
biomass resources into affordable biofuels, biopower, and high-
value bioproducts. Working with the U.S. Department of
Agriculture (USDA), the program leads a multi-agency initiative
that coordinates and accelerates all Federal bioenergy R&D in
accordance with the Biomass Research and Development Act of
2000. The long-term objectives require the development of the
feedstock and the associated infrastructure discussed by the USDA
and DOE in their jointly published "Billion Ton Study" report. It is
anticipated that feedstock development will be the culmination of
regional feedstock development efforts leading to costeffective
collection and use of agricultural and forest residues as well as
regionally indigenous energy crops, such as switchgrass in the
South Central region and willow in the Northeast. Research efforts
combined with limited, targeted demonstrations to further focus
research efforts should continue to lower conversion costs leading
to the growth of the biofuels industry.
Vehicle Technologies
The Department presently addresses near, middle and long-
term vehicle technology outcomes with two cooperative
Government/industry activities: the FreedomCAR and Fuel
Partnership (where CAR stands for Cooperative Automotive
Research) and the 21st Century Truck Partnership.
The FreedomCAR and Fuel Partnership is a collaborative effort
among the U.S. Council for Automotive Research, five energy
companies, and DOE for research on advanced automotive
technologies that may possess significant potential to reduce oil
consumption. The National Research Council of the National
Academies published a 2005 report on the research program of the
partnership, describing it as "an extremely challenging program,
whose ultimate vision involves a fundamental transformation of
automotive technologies and the supporting fuel infrastructure."
The report went on to say that "the committee believes that
research in support of this vision is justified by the potentially
enormous beneficial impact for the nation."
Activities in FreedomCAR focus on the technical challenges of
advanced and high-efficiency vehicle technologies, such as fuel
cells, advanced combustion engines and enabling fuels, hybrid and
plug-in hybrid vehicle systems (including high-power and high-
energy batteries, power electronics, and motors) and light weight
materials. Hybrid technologies can lead to near-term oil savings
when used in advanced combustion hybrid electric vehicles; they
are also the foundation for the hydrogen fuel cell hybrid vehicles
of tomorrow. The requested 2007 funding level of $166 million
for EERE's FreedomCAR and Vehicle Technologies Program
fully supports the FreedomCAR and Fuel Partnership goals.
In support of the President's Advanced Energy Initiative, the
Vehicles Technologies program requests $31 million, an increase
of 27 percent, for advanced battery technology research.
Advances in battery and other technologies can help accelerate
development of "plug-in" hybrid electric vehicles. It is anticipated
that plug-in hybrid electric vehicles should look and perform much
like regular cars, but have a high energy battery that can be
charged from an electrical outlet. Plug-ins would run on the stored
energy for much of a typical day's driving - depending on the size
of the battery--up to 40 miles per charge, satisfying the daily
commuting needs of many Americans. In fact, some analysts say
that a 40 mile battery range would allow substitution of electricity
for petroleum in up to two-thirds of all miles driven by average
Americans.
Most of the goods we consume cover part of their journey to us
by truck. The 21st Century Truck Partnership involves key
members of the commercial highway vehicle industry such as
truck equipment and engine manufacturers, along with three other
Federal agencies. The R&D centers on improving the efficiency of
large combustion engine and fuel systems, while reducing
"parasitic" losses (such as wind resistance and rolling resistance)
to decrease the overall fuel consumption of highway freight
transportation.
Other activities focus on accelerating the adoption of
alternative fuel and advanced technology vehicles, deployment of
alternative fuel infrastructure, and expansion of advanced vehicle
fleet evaluations to include plug-in hybrids. There are three
activities--regulatory and rulemaking support for the Energy Policy
Acts of 1992 and 2005, alternative fuel and fleet activities, and
Clean Cities--that work to accelerate alternative fuel infrastructure
installation. Clean Cities promotes deployment of vehicle
technologies and alternative fuels that can reduce petroleum
consumption. Advanced Vehicle Competitions provide
educational opportunities for university students to learn and use
real-world engineering skills while demonstrating the performance
of advanced vehicle technologies. We think of these competitions
as building the next generation of automotive engineers. A couple
of years ago the Department found that 60 percent of graduating
seniors that had participated in one of these competitions were
hired by an automaker or one of the major automotive suppliers.
Next week students from 17 university engineering departments
will face off in the second round of the Challenge X competition at
GM's Desert Proving Grounds, and see who has done the best job
of improving the fuel economy and emissions of a Chevy Equinox
while maintaining vehicle comfort and capabilities. GM is our
headline co-sponsor this year, but they are joined by over 30
corporate sponsors from the supplier community.
Near-term activities also include developing and deploying
bio-fuels to displace petroleum. This year, we will spend at least
$3 million to provide assistance for fueling stations to add E-85
capabilities. Depending on the results of a solicitation out right
now (closing June 8), the total committed to E-85 deployment
could reach $4.5 million. And each DOE dollar will be leveraged
by cost-share from the private sector or state and local
governments. Through ongoing discussions with automakers, the
Department is encouraging increased production of flex fuel
vehicles. The Department is also working with the National
Biodiesel Board to tighten fuel standards and to develop real-time
fuel quality tests for biodiesel to enhance performance in advanced
engines. Advanced catalysis research at our National Laboratories
could enable more efficient diesel engines to replace gasoline
engines in light duty vehicles without sacrificing air quality.
In the mid-term, advanced combustion research seeks to use
electronic controls and new fuel formulations to operate
compression ignition engines in the zone between soot formation
and nitrogen oxide formation. Research success in homogeneous
charge compression ignition (HCCI) and other low temperature
combustion regimes could result in passenger vehicles greater than
40 percent more fuel efficient than today's best gasoline cars.
Additional gains are possible since advanced combustion engines
will still generate waste heat. One of our most tantalizing research
opportunities is the direct conversion of waste heat to electricity
using solid state thermoelectric devices. Our 2007 budget request
commits over $3 million to solid state thermoelectric research.
Research on hybrid electric vehicle (HEV) technologies
(batteries, power electronics, motors), addresses reduced
component cost, improved performance, and extended lifetimes.
Efforts are being expanded to include technologies that would
enable plug-in HEVs. Materials research emphasizes new
processes to make raw carbon fiber cheaper, and allow carbon
fiber parts to be manufactured at speeds appropriate for automotive
mass production. Use of carbon fiber parts, along with magnesium,
titanium and lightweight steel alloys would enable fabrication of
lighter vehicles that use less fuel while maintaining occupant
safety and comfort. We are also examining new processes for
recycling these vehicles in our pilot recycling facility at Argonne
National Laboratory. Research focused on advanced batteries,
power electronics, motors and lightweight materials is essential for
improved hybrid electric vehicles in the near- and mid-term as well
as fuel cell hybrid electric vehicles in the long-term.
The Hydrogen Frontier
Now that I've discussed the near- and mid-term options for
reducing foreign oil dependence, I'd like to move on to hydrogen,
which offers a strategy for long-term energy security and reduced
emissions. Hydrogen is a transportation fuel that can be made
from a variety of domestically available resources, while removing
criteria pollutants and carbon from the tailpipes of vehicles. The
Department's research explores pathways to manufacture and
deliver hydrogen from fossil, nuclear and renewable resources.
The FY 2007 Budget requests $289.5 million for the
President's Hydrogen Fuel Initiative, including $195.8 within the
Office of Energy Efficiency and Renewable Energy. The balance
is requested in our basic science, fossil and nuclear offices, as well
as the Department of Transportation. We are closely coordinating
our efforts with other Federal agencies through a special task force
led by the Office of Science and Technology Policy.
The Department is pleased to have Congress' support of the
hydrogen program in Title VIII of the Energy Policy Act of 2005.
The requirements in the Act are consistent with the Department's
plans and include important provisions for coordination of efforts
across the Federal Government and for independent advice from
outside the Department on our hydrogen efforts.
Indeed, much progress has been made since 2003 when
President Bush committed $1.2 billion over five years to accelerate
hydrogen research. Since then, the Department's program has been
twice reviewed by the National Academies. In the latest review
released last summer, the chair of the review committee said the
program "is making significant headway" and that "it could have
an enormous beneficial impact on energy security and the U.S.
economy."
Our hydrogen program is focused on research to overcome the
technology barriers that would be a precondition to broad
commercialization. Over three years, our ongoing research has
contributed to reducing the high-volume cost of automotive fuel
cells from $275 per kilowatt in 2002 to $110 per kilowatt in 2005.
Further research and development are required to meet our
ultimate cost target of $30 per kilowatt. In FY 2007, the
Department will initiate new projects in several areas, including
improved fuel cell membranes, cold-weather start-up and
operation, and the effects of impurities on fuel cells. In addition to
supporting fuel cell cost reduction, this work will help us achieve
our durability target of 5,000 hours which equates to the vehicle
lifetime required.
Hydrogen storage on board a vehicle to meet all performance
and cost requirements is one of the most technically challenging
barriers we face. The Department has a diverse portfolio through
three Centers of Excellence as well as independent projects both in
applied and basic science with a total of about 40 universities, 15
companies and 10 Federal laboratories.
In just one year we are starting to see promising results with
some completely new materials being developed in different areas
such as metal hydrides, chemical hydrides, and carbon-based
materials. Some of these materials can store 6 to 9 percent by
weight of hydrogen. This is up from a maximum of 5.5 weight
percent a year ago. Another step taken is to tailor these materials
for storing and releasing hydrogen under practical temperature and
pressure conditions.
Further research breakthroughs on materials and systems
engineering is required to meet our system target to provide
consumers with a 300-mile driving range. The Department's basic
research is carefully coordinated with our applied research in
materials development for hydrogen storage.
We are also analyzing transition scenarios on how the Nation
might initiate hydrogen production and delivery infrastructure
investment during the early years of potential vehicle market
penetration and growth.
Working with our nuclear and basic science offices, we are
pursuing revolutionary approaches to hydrogen production. For
example, heat from nuclear reactors or solar energy can be used to
split water into hydrogen and oxygen. This approach involves
thermochemical cycles that are still under development. Other
high risk, high pay-off production approaches also involve
harnessing the huge potential resource of solar energy. Working
with the DOE Office of Science, we are developing
"photobiological" hydrogen production where micro-organisms
produce hydrogen and "photoelectrochemical" hydrogen
production where solid state devices use photon energy to convert
water into hydrogen and oxygen.
In our coal-based hydrogen program, we plan to scale up
membrane reactors for separating hydrogen gas and carbon dioxide
streams. This research is closely coordinated with our FutureGen
effort to create the world's first near zero-emission fossil fuel plant
by using clean coal technology and sequestering of greenhouse gas
emissions.
In our nuclear-based hydrogen program, we plan to complete
the assembly and preliminary testing of a laboratory system to
demonstrate hydrogen production by using nuclear heat to drive
chemical cycles, just discussed, that split water to produce
hydrogen and oxygen. In another approach, we plan to
demonstrate hydrogen production from a higher temperature
electrolysis system that can be more efficient than electrolyzers
used today in standard industry practice.
Through cost-shared partnerships with the automotive and
energy industries, four teams are installing hydrogen refueling
stations and putting cars on the road to test the technology in
realworld conditions as part of the Department's Learning
Demonstration. Data collected on vehicle performance, durability
and fuel economy is feeding back into our research program to
ensure our research is focused on the most relevant problems.
As mentioned, hydrogen is critical to our Nation's long-term
strategy for energy and environmental security. Developing
hydrogen technologies that can be manufactured domestically will
improve our economic competitiveness as well. Our
manufacturing research and development effort is new in FY 2007
and will address the need for high-volume manufacturing
processes for components like fuel cells that are currently hand-
built. These processes are important to lowering the costs of fuel
cells and to developing a supplier base. Establishing an early
supply base for fuel cell applications such as portable, stationary,
remote and emergency backup power lays the groundwork for
much larger supply chains needed for automotive applications. In
January, Secretary Bodman released a draft roadmap for public
comment on manufacturing research for the hydrogen economy.
This roadmap is being finalized and will be the foundation for
executing this important research.
Investments are not only occurring in the Federal Government
but also at the state and local level. From Aiken, South Carolina, to
Sacramento, California, hydrogen research facilities and
infrastructure investments show a commitment to hydrogen and
may provide the earliest catalysts for a hydrogen economy. These
diverse investments increase our probability of success in solving
technology barriers that would enable industry to make fuel cell
vehicles that consumers will want to buy and to invest in hydrogen
refueling infrastructure that is profitable. These investments can
ultimately help displace demand for oil and reduce greenhouse gas
emissions.
Conclusion
Our national pathway to a secure energy future will be
composed of a variety of invaluable components, from making
today's internal combustion engines more efficient to developing
home-grown biofuels, plugging in our cars, and harnessing the
renewable, pollution-free potential of hydrogen. Working with our
indispensable partners in the academic community, at our National
Labs, and in private industry, we are putting our research dollars in
the most promising areas to address critical technical barriers, and
I believe, with confidence, that the next generation of vehicles and
fuels is already in sight.
MR. HALL. I thank you very much. And we recognize at this
time Ms. Susan Cischke, Vice President of Environmental and
Safety engineering, Ford Motor Company. I'm honored to
recognize you.
MS. CISCHKE. Members of the committee, my name is Susan
Cischke, and I am the Vice President of Environmental and Safety
Engineering at Ford Motor Company. Energy security is a
significant issue facing our Nation and the role of the next
generation of vehicles and fuels is of great importance to the auto
industry. I appreciate the opportunity to share with you Ford
Motor Company's view on this issue.
We believe that our Nation's energy challenges can only be
properly addressed by an integrated approach; that is, a partnership
of all stakeholders, which includes the automobile industry, the
fuel industry, government, and consumers. The truth is that we
must all accept that these are long-term challenges, and we are all
part of the solution.
From our perspective, no one factor can be ignored in the
highly competitive U.S. marketplace. As a result, we are working
to accelerate the commercial application of all areas of advanced
vehicle technologies, including hybrids, flexible-fuel vehicles,
advanced clean diesel, hydrogen-powered internal combustion
engines, and fuel-cell vehicles. The diversity of customer needs
within and across the market is why we are investing in a portfolio
of solutions. At Ford we recognize that hybrids have an important
place within this portfolio of solutions. They deliver excellent
benefits in lower-speed stop/start traffic and offer many customers
significant improvements in fuel economy, up to 80 percent in city
driving without compromise.
And much of this technology is also applicable to our fuel-cell
and our ethanol vehicle development efforts. In 2004, we launched
the world's first gasoline electric full-hybrid SUV, the Escape
hybrid. In 2005, we expanded this technology to the Mercury
Mariner hybrid and have announced plans to offer this technology
on the Mazda Tribute SUV, the Ford Fusion, the Mercury Milan,
the Ford 500, and Mercury Montego sedans, plus the Ford Edge
and Lincoln Mark X crossover vehicles.
Ford's U.S. HEV volume for the 2005 model year was over
10,000 units and has almost doubled in 2006. And we have over
130 hybrid-related U.S. patents issued or pending. Expansion of
our hybrid offering is clearly an important part of our overall
innovation strategy, which embraces our recent commitment to
increase our production capacity to up to 250,000 hybrids per year
by 2010 and to offer hybrids on half of our Ford, Lincoln, and
Mercury products. Nevertheless, a key challenge facing hybrids is
the incremental costs both in terms of higher prices for components
and engineering investments that must be overcome for this
technology to transition from niche markets to high-volume
applications.
In addition to hybrids, we believe that the greater use of
renewable fuels, like ethanol, a domestically produced renewable
fuel, will help reduce reliance on foreign oil. We applaud
Congress's efforts that resulted in the Energy Policy Act of 2005,
as well as the President's recent commitment to address our
Nation's addiction to oil. Ford has been building flexible-fuel
vehicles, or FFVs, for over a decade, and we are an industry leader
in this technology. These FFVs are capable of operating on up to
85 percent ethanol or gasoline or any mixture in between, and all
of our gasoline-powered vehicles are capable of operating on
10 percent ethanol or E-10.
FFVs are a great alternative for our customers because they
provide them with an option to choose between E-85 and gasoline
as they desire. And as ethanol production increases driven by
growing availability and demand, competitive pricing will help to
lower the cost of E-85, further increasing its use as well as the
demand for FFVs. In 2006, Ford Motor Company will produce
250,000 FFVs and by the end of this year will have placed a total
of nearly 2 million FFVs on the road, including America's best
selling vehicle, the Ford F-150. As a whole, U.S. auto makers will
have produced a total of nearly 6 million vehicles. And if all these
vehicles were operated on E-85, over 3.6 billion gallons of
gasoline a year could be displaced. That is like saving a full year
of gasoline consumption in a State like Missouri or Tennessee.
And we are not stopping there. Earlier this year, we unveiled
the Ford Escape hybrid E-85 research vehicle, which marries
petroleum saving technologies, hybrid electric power and E-85
flex-fuel capability. Though there are many technical and cost
challenges to address, we believe that if just 5 percent of the U.S.
fleet were powered by E-85 HEVs, oil imports could be reduced by
about 140 million barrels a year.
Unfortunately, there is a problem. Even though the volume of
E-85 vehicles continues to grow rapidly, there are less than 700
E-85 fueling stations in the U.S. and that is out of over 170,000
retail gasoline fueling stations nationwide. For ethanol to compete
as a motor fuel in the transport sector and play an increasingly
significant role addressing our Nation's energy concerns, we need
a strong, long-term focus on policies that increase U.S. ethanol
production and accelerate E-85 infrastructure development.
Ford is also working on advanced light-duty diesel engines.
Today, clean diesels offer exceptional driveability and can improve
fuel economy by up to 20 to 25 percent. This technology is
already prevalent in many markets around the world. Nearly half
the new vehicles sold in Europe are advanced diesels and Ford
continues to accelerate our introduction of diesel applications in
these markets.
There are, however, many hurdles that inhibit wide-scale
introduction of this technology in the U.S. We are working to
overcome the technical challenges of meeting the extremely
stringent Federal and California tail pipe emission standards and to
address other issues such as fuel quality, customer acceptance, and
retail fuel availability.
Looking to the future, we are working on what we think is an
important transitional technology to sustainable transportation:
hydrogen-powered internal combustion engines. Ford is a leader
in this technology, and we think it is a bridge to the development
of a hydrogen infrastructure and ultimately fuel-cell vehicles. And
we are in the process of developing hydrogen power shuttle buses
for a fleet demonstration in North America starting later this year.
Even further down the road, hydrogen-powered fuel cells
appear to be another promising technology for delivering
sustainable transportation. Hydrogen can be derived from a wide
range of feedstocks to increase energy diversity, and fuel cells are
highly energy efficient and produce no emissions. Our Ford Focus
fuel-cell vehicle is a state-of-the-art hybridized fuel-cell system,
sharing much of the same hybrid technology we developed for our
Escape hybrid SUV. We have already placed a small fleet of these
vehicles in three U.S. cities as part of the U.S. Department of
Energy's hydrogen demonstration program collecting valuable
data.
As you can imagine, the R&D investment that goes with all
this work is a very big number, certainly in the billions, not the
millions, and it will only grow in the future. We would like to see
more R&D support for vehicle technologies and renewable fuels.
Government incentives for advanced vehicle technologies and
E-85 infrastructure can accelerate the introduction of these vehicles
and fuels into the marketplace.
Government must play a critical role to promote U.S.
innovation and can do so by approving a seamless extension of the
R&D tax credits and enhancing the level of credit for a broad range
of energy-efficient technologies and energy security initiatives.
Consistent implementation of an integrated approach will allow us
to achieve much more in a shorter time frame and at a significantly
lower cost than if each stakeholder were to pursue its own agenda
in isolation, however well-intentioned they may be.
The challenges are considerable, but not insurmountable, and
there is an enormous amount we can achieve if we act together in
an integrated manner. Thank you again for this opportunity to
address the committee.
MR. HALL. And we thank you.
[The prepared statement of Susan M. Cischke follows:]
PREPARED STATEMENT OF SUSAN M. CISCHKE, VICE PRESIDENT,
ENVIRONMENT AND SAFETY ENGINEERING, FORD MOTOR
COMPANY
My name is Susan Cischke and I am the Vice President of
Environmental and Safety Engineering at Ford Motor Company.
Energy security is a significant issue facing our nation, and the role
of the next generation of vehicles and fuels is of great importance
to the auto industry. I appreciate the opportunity to share with you
Ford Motor Company's views on this issue.
Energy is literally the fuel that powers the industrial and
manufacturing growth of the United States. The energy supply
disruptions of last summer, increases in global demand, and
geopolitical concerns with some of the oil rich regions of the world
led to significantly higher energy prices and consumer angst at the
fuel pump. It's our view that action must be taken in all sectors, if
we are to meet these challenges as a nation.
At Ford, we recognize that we have a responsibility to do
something to help address America's energy security needs, and we
are accelerating our efforts to develop innovative solutions. As
Bill Ford has said, "Ford Motor Company is absolutely committed
to making innovation a central part of everything we do." That
innovation begins with alternative fuels and vehicles. Ford
produced the first American hybrid on the road today - the Ford
Escape Hybrid. We have committed to building up to a quarter-
million hybrids a year by 2010 and to continue our leadership in
ethanol powered flexible fuel vehicles.
These new product initiatives are a strong commitment for
Ford and our customers, and they recognize a changing
marketplace. But there is a limit to what we can achieve on our
own. We believe that our nation's energy challenges can only be
properly addressed by an Integrated Approach: that is, a
partnership of all stakeholders which includes the automotive
industry, the fuel industry, government, and consumers. The truth
is that we must all accept that these are long-term challenges and
that we are all part of the solution.
So let me set out how we at Ford Motor Company believe each
stakeholder can play its part. I'll start with the automotive industry
itself, because we clearly have a central role to play. The industry
has taken significant steps in improving the fuel efficiency of our
products. At Ford Motor Company we see this not only as being
socially responsible but a business necessity, and we are moving
ahead with a range of technological solutions simultaneously -
because there is simply no single solution, no "silver bullet". We
know that when customers consider purchasing a vehicle, they are
concerned with numerous attributes including price, quality, safety,
performance, comfort and utility.
From our perspective, no one factor can be ignored in the
highly competitive U.S. marketplace. As a result, we are working
to accelerate the commercial application of all areas of advanced
vehicle technologies, including hybrids, flexible fuel vehicles,
advanced clean diesels, hydrogen-powered internal combustion
engines and fuel cell vehicles.
The portfolio approach that we are taking ensures that we are
able to offer consumers a range of products that meet their specific
needs and circumstances. And make no mistake; it will ultimately
be the consumers who decide.
This diversity of customer needs within and across markets is
why we are investing in a portfolio of solutions. The result is a
period of unprecedented technological innovation. Innovation - in
matters of the energy, renewable fuels, safety and design - is the
compass by which we are setting our direction for the future. At
Ford, we recognize that hybrids have an important place within
this portfolio of solutions. They deliver excellent benefits in lower
speed stop/start traffic and offer many customers breakthrough
improvements in fuel economy - up to 80% in city driving -
without compromise. And much of this technology is also
applicable to our fuel cell and ethanol vehicle development efforts.
In 2004, we launched the world's first gasoline-electric full
hybrid SUV, the Escape Hybrid. In 2005, we expanded this
technology to the Mercury Mariner Hybrid, and have announced
plans to offer this technology on the Mazda Tribute SUV, and the
Ford Fusion, Mercury Milan, Ford Five Hundred and Mercury
Montego sedans, plus the Ford Edge and Lincoln MKX crossover
vehicles. Ford's U.S. HEV volume for the 2005 model year was
over 10,000 units and has almost doubled in 2006, and we have
over 130 hybrid-related U.S. patents issued or pending.
Expansion of our hybrid offering is clearly an important part of
our overall innovation strategy which embraces our recent
commitment to increase our production capacity to up to 250,000
hybrids per year by 2010 and to offer hybrids on half of our Ford,
Lincoln and Mercury products. Nevertheless, a key challenge
facing hybrids is the incremental costs - both in terms of higher
prices for components and engineering investments - that must be
overcome for this technology to transition from "niche markets" to
high-volume applications.
In addition to hybrids, we believe that greater use of renewable
fuels like ethanol, a domestically produced renewable fuel, will
help reduce reliance on foreign oil. We applaud Congress' efforts
that resulted in the Energy Policy Act of 2005, as well as the
President's recent commitment to address our nation's addiction to
oil.
Ford has been building flexible fuel vehicles (FFVs) for over a
decade, and we are an industry leader in this technology. These
"FFVs" are capable of operating on up to 85% ethanol, or gasoline,
or any mixture in between. And all of our gasoline powered
vehicles are capable of operating on 10% ethanol or "E10". FFVs
are a great alternative for our customers because they provide them
with an option to choose between E-85 and gasoline as they desire.
As ethanol production increases, driven by growing availability
and demand, competitive pricing will help to lower the cost of E-
85 further, increasing its use as well as demand for FFVs.
While I'm talking about FFVs, let me clear the air about what it
takes to make an FFV. We've heard from many people that all it
takes to make a FFV is "a little tweak to the chip that runs the
engine". I really wish it was that simple - but it's not. Because
ethanol is a unique fuel with unique properties, fuel tanks with low
permeation characteristics are required. They also require a special
fuel pump and fuel lines to deliver the fuel to the engine. Unique
injectors introduce the fuel into the engine where special
calibrations programmed into the on-board computer determine
how much ethanol is in the fuel and how best to set spark timing
and fuel flow. And because there is more than one fuel calibration
within an FFV, costly development and certification testing is
doubled. Many of the FFV parts and processes are patented by
Ford and are the result of innovative ideas by our best engineers,
and we're proud of them. Nevertheless, making an FFV is a
significant investment for auto manufacturers.
In 2006, Ford Motor Company will produce 250,000 FFVs and
by the end of this year, we will have placed a total of nearly 2
million FFVs on America's roads, including America's best selling
vehicle--the (5.4L) Ford F-150.
As a whole, the U.S. automakers will have produced a total of
nearly 6 million vehicles. If all of these vehicles were operated on
E-85, over 3.6 billion gallons of gasoline a year could be displaced.
That's like saving a full year of gasoline consumption in a state like
Missouri or Tennessee.
And we are not stopping there. Earlier this year we, unveiled
the Ford Escape Hybrid E-85 research vehicle which marries two
petroleum-saving technologies - hybrid electric power and E-85
flexible-fuel capability. Though there are many technical and cost
challenges to address, we believe that if just 5% of the U.S. fleet
were powered by E-85 HEVs, oil imports could be reduced by
about 140 millions barrels a year.
Unfortunately there is a problem. Even though the volume of
E-85 vehicles continues to grow rapidly, there are less than 700 E-
85 fueling stations in the U.S. - and that's out of over 170,000
retail gasoline fueling stations nationwide. For ethanol to compete
as a motor fuel in the transport sector and play an increasingly
significant role addressing our nation's energy concerns, we need
strong, long-term focus on policies that increase U.S. ethanol
production and accelerate E-85 infrastructure development. At the
same time, as the President pointed out in the State of the Union
address, we need national research efforts to pursue producing
ethanol from more energy-efficient cellulosic materials like rice
straw, corn stover, switch grass, wood chips or forest residue.
Ford is also working on advanced light duty diesel engines.
Today's clean diesels offer exceptional driveability and can
improve fuel economy by up to 20-25%. This technology is
already prevalent in many markets around the world - nearly half
of the new vehicles sold in Europe are advanced diesels - and Ford
continues to accelerate our introduction of diesel applications in
these markets. There are, however, many hurdles that inhibit wide
scale introduction of this technology in the U.S. We are working to
overcome the technical challenges of meeting the extremely
stringent Federal and California tailpipe emissions standards, and
to address other issues such as fuel quality, customer acceptance
and retail fuel availability.
Looking to the future, we are working on what we think is an
important transitional technology to sustainable transportation -
hydrogen-powered internal combustion engines. Ford is a leader
in this technology. We think it's a "bridge" to the development of
a hydrogen infrastructure and, ultimately, fuel cell vehicles, and we
are in the process of developing hydrogen powered E450 H2ICE
shuttle buses for fleet demonstrations in North America starting
later this year.
Even further down the road, hydrogen powered fuel cells
appear to be another promising technology for delivering
sustainable transportation. Hydrogen can be derived from a wide
range of feedstocks to increase energy diversity, and fuel cells are
highly energy-efficient and produce no emissions. Our Ford Focus
Fuel Cell vehicle is a state-of-the-art, hybridized fuel cell system -
sharing much of the same hybrid technology we developed for our
Escape Hybrid SUV. We have already placed a small fleet of
these vehicles in three U.S. cities as part of the U.S. Department of
Energy's hydrogen demonstration program collecting valuable
data.
As you can imagine, the R&D investment that goes with all
this work is a very big number--certainly in the billions, not the
millions--and it will only grow in the future. Many of our
competitors and suppliers are also investing heavily. But there is
only so much we can achieve without the help of others outside our
industry. We need an integrated approach.
It is clear that the solution to the energy issues associated with
road transport will need to come from advances in fuels as well as
vehicle technology. We need the oil industry to endorse an
Integrated Approach here in the U.S., just as they are beginning to
do with automakers and government officials in Europe. We at
Ford are clearly excited about the potential role of renewable fuels.
However, the fact is that without the wholehearted involvement of
the fuel industry, we cannot move forward far enough or fast
enough. We obviously need key partners like the oil industry to
invest in developing and marketing renewable fuels like E-85 -
and we need it to do so now and rapidly. We fully support
government incentives to encourage the industry or others to
accelerate this investment.
There is a great deal that policy makers can do at all levels as
well. We would like to see more R&D support for vehicle
technologies and renewable fuels. Government incentives for
advanced technology vehicles and E-85 infrastructure can
accelerate the introduction of these vehicles and fuels into the
marketplace. Government must play a critical role to promote U.S.
innovation and can do so by approving a seamless extension of the
R&D tax credits and enhancing the level of credit for a broad range
of energy efficient technologies and energy security initiatives.
We would also like to see greater investment in improved road
traffic management infrastructure in order to reduce congestion
and save fuel. According to the American Highway Users
Alliance, about 5.7 billion gallons of fuel are wasted annually due
to congestion. Effective traffic light synchronization is a good
example of a change that could lead to big reductions.
There is also a role for government in educating the public on
how to drive in an energy efficient manner. In the end, it will
ultimately be the size of the car park, and consumers' choices of
vehicles, how many miles they drive, and driving behaviors that
will determine how much motor fuel we consume. A person who
drives in an energyconscious way - by avoiding excessive idling,
unnecessary bursts of acceleration and anticipating braking - can
enjoy much better fuel consumption today. And government can
play a key role to raise public awareness. We believe that
awareness is a simple and effective early step which is why we
have introduced driver training programs in Europe and recently
developed on-line training for all Ford Motor Company
employees.
Consistent implementation of an Integrated Approach will
allow us to achieve much more in a shorter timeframe and at a
significantly lower cost than if each stakeholder were to pursue its
own agenda in isolation, however well-intentioned they might be.
The challenges are considerable but not insurmountable, and there
is an enormous amount we can achieve if we act together in an
integrated manner.
We have to ensure that our business is sustainable by making
vehicles that continue to meet the changing needs of the 21st
century. That's a responsibility we owe to our customers,
shareholders and our employees. But at another level, all of us
have the opportunity to do something about energy independence -
and that's a responsibility we owe future generations.
Thank you again for the opportunity to address the Committee.
One Page Summary of Major Points
<bullet> Ford believes that our nation's energy challenges can only
be properly addressed by an Integrated Approach: that is, a
partnership of all stakeholders which includes the automotive
industry, the fuel industry, government, and consumers. The
truth is that we must all accept that these are long-term
challenges and that we are all part of the solution.
<bullet> Ford is working to accelerate the commercial application of
all areas of advanced vehicle technologies, including hybrids,
flexible fuel vehicles, advanced clean diesels, hydrogen-
powered internal combustion engines and fuel cell vehicles.
<bullet> Ford is the only American auto company with full hybrid
vehicles on the road today and we plan to increase our
production capacity to up to 250,000 hybrids per year by the
end of the decade.
<bullet> Ford is also leading the way in vehicles operating on
renewable ethanol - putting up to 250,000 ethanol-capable
vehicles on the road this year and working to develop ethanol
infrastructure.
<bullet> Ford Escape Hybrid E-85 is the world's first ethanol-fueled
hybrid, a research project that combines hybrid and FFV
technology to provide an innovative solution to U.S. national
energy concerns.
<bullet> If the nearly 6 million FFVs that will be on the roads by the
end of this year were operated on E-85, over 3.6 billion gallons
of gasoline could be displaced.
<bullet> For ethanol to compete as a motor fuel in the transport
sector and play an increasingly significant role addressing our
nation's energy concerns, we need a strong, long-term focus on
policies that increase U.S. ethanol production and accelerate E-
85 infrastructure development.
<bullet> We think hydrogen internal combustion engines are a "bridge"
to the development of a hydrogen infrastructure and,
ultimately, fuel cell vehicles, and we are in the process of
developing hydrogen powered E450 H2ICE shuttle buses for
fleet demonstrations in North America starting later this year.
<bullet> Further down the road, hydrogen powered fuel cells appear to
be another promising technology. Ford has placed a small fleet
of hydrogen fuel cell vehicles in three U.S. cities as part of the
U.S. Department of Energy's hydrogen demonstration program
collecting valuable data.
<bullet> Government must play a critical role to promote U.S.
innovation and can do so by approving a seamless extension of
the R&D tax credits and enhancing the level of credit for a
broad range of energy efficient technologies and energy
security initiatives.
MR. HALL. The Chair at this time recognizes Mrs. Deborah
Morrissett, Vice President, Regulatory Affairs, DaimlerChrysler
Corporation.
MS. MORRISSETT. Good afternoon. I am Deb Morrissett, Vice
President for Regulatory Affairs for DamilerChrysler. I want to
thank you for providing this opportunity to appear today to discuss
DaimlerChrysler's involvement in the development of advanced
power trains and to tell you what we are doing to advance to the
next generation of vehicles and fuels for America.
At the Chrysler Group we are committed to producing products
that customers want to buy and for continuing to innovate in all
aspects of our business. Reducing fuel consumption is an
important part of that innovation. We are developing a broad
range of advanced propulsion technology, including more efficient
gasoline engines, clean diesels, hybrids, biofuel-capable systems,
and, in the longer term, fuel cells.
We are focused on providing the market with the ability to
select the propulsion technology that best fits the needs of the
individual consumer.
Today, hydrogen appears to be the eventual successor to fossil
fuels and a long-term energy solution for our Nation.
DaimlerChrysler has been working on fuel-cell technology for over
10 years. We have the largest worldwide fleet of fuel-cell
vehicles, more than a hundred, including small passenger cars,
delivery vans, and mass transit buses in use, and demonstration
projects in the United States, Europe, and Asia.
On the strength of government and industry partnerships, we
have made good progress in advancing hydrogen fuel-cell
technology. These partnerships are absolutely vital to providing
the significant investment necessary to further develop fuel-cell
technology and a hydrogen infrastructure.
DaimlerChrysler Commercial Buses North America. The
Orion brand is the leading manufacturer of diesel electric hybrid
buses worldwide. Compared to standard diesel buses, the hybrid
units provide significantly better fuel economy while greatly
reducing emissions. Drivers enjoy faster acceleration and
passengers experience a quieter, smoother ride compared to
conventional buses.
I would like to focus the remainder of my comments on diesel
engines and biofuels. Advanced diesel technology offers up to
30 percent better fuel economy and 20 percent lower CO2
emissions when compared to equivalent gasoline engines. The
modern clean diesel is a technology that is available today and can
help reduce our Nation's consumption of petroleum.
Last year the Chrysler Group became the first North
American-based manufacturer to offer a modern diesel engine in a
light-duty vehicle market with our Jeep Liberty. Currently,
DaimlerChrysler offers three models with diesel engines: Jeep
Liberty, the Dodge Ram Pickup, and the Mercedes-Benz E-320.
This fall we will introduce diesels in the Mercedes M and R
classes. And in the next few weeks we will announce another
diesel product for the Chrysler Group.
Also in the 2006 calendar year, DaimlerChrysler will introduce
the cleanest and most efficient diesel technology in the world,
called Blue Tech. To give you a benchmark for performance, the
Mercedes E-320 full-size sedan, powered by a 6-cylinder engine,
will be the cleanest diesel in the world. It delivers the torque of an
8 cylinder, the fuel economy of 35 miles per gallon in real-world
driving, and has the potential to meet emission standards in all 50
States. To meet these fuel economy and stringent emission goals,
it is essential that the introduction of low-sulfur diesel fuel later
this year continue on schedule and not be delayed.
While diesel technology and improved gasoline engines can
make big strides towards helping us to meet our Nation's energy,
environment, and security objectives, biofuels represent a huge
opportunity to further reduce our consumption of petroleum.
Every Jeep Liberty diesel leaves the assembly plant in Toledo,
Ohio, fueled with B-5, a 5 percent biodiesel mix derived from
locally grown soybeans. Beginning with our 2007 Dodge Ram, we
endorse the use of B-20, a 20 percent biodiesel mix, for use in our
military, government, and commercial fleet customers. We believe
that allowing our fleet customers to use fuel made to the current
military specification will help accelerate the development and
adoption of a strong national B-20 standard, a standard that OEMs
and engine manufacturers can endorse for all of their vehicles,
including the millions of diesel vehicles on the road today.
Biofuels, including ethanol, reduce life cycle greenhouse gas
emissions. Biodiesel reduces tail pipe emissions of particulates,
carbon monoxide, and hydrocarbons compared with conventional
diesel fuel. Biofuels are proof that at least part of the solution for
our energy, environment, and national security issues can be home
grown. Biofuels support the American agricultural economy.
Incentives for the introduction of biodiesel and E-85 flex-fuel
vehicles should continue in order to help us reach the critical mass
of vehicles on the road required to spur fuel infrastructure
development.
At DaimlerChrysler, and all of the other manufacturers
represented here today, we are doing our part to improve existing
technology, to accelerate the introduction of new technologies, to
encourage the use of renewable fuels, and to invest in the research
necessary to deliver the long-term future technologies that America
needs. We stand ready to do our part, but to achieve our ambitious
goals we need action from government policymakers, the fuels
industry, and ultimately the American consumer. Thank you.
MR. HALL. Thank you.
[The prepared statement of Deborah Morrissett follows:]
PREPARED STATEMENT OF DEBORAH MORRISSETT, VICE
PRESIDENT, REGULATORY AFFAIRS, DAIMLERCHRYSLER
CORPORATION
Good afternoon. I'm Deb Morrissett, Vice President for
Regulatory Affairs for DaimlerChrysler. I want to thank the chairs
and distinguished Members of the Subcommittee on Energy and
Air Quality for this opportunity to appear today.
I am coming before you today to describe our involvement in
the development of advanced technologies for vehicles to reduce
petroleum consumption and what DaimlerChrysler is doing to
advance the transition to the next generation of vehicles and fuels
for America.
Speaking for the Chrysler Group only, we have the most
aggressive product plan in the history of our company. In 2004 we
set a company record for new vehicle launches in one year with
nine. This year we'll break that record by introducing 10 all-new
vehicles, among which will be some of the most fuel-efficient
vehicles we've ever built. Over the next five years we plan to
invest $30 billion in our product program. Over the past four years
we've committed $7.0 billion in total program investments to
upgrade the flexibility and competitiveness of our manufacturing
facilities to world-class levels.
These investments and our product development are essential
to ensure that our company and our people can compete against
global competition. We are responsible for producing products that
customers want to buy and for continuing to innovate in all aspects
of our business. Reducing fuel consumption is an important part of
that innovation.
There are several forces shaping energy policy at a national
level including "acts of God" such as hurricanes Katrina and Rita
last year that exposed the fragile state of domestic oil refinement
capability. Ultimately, an effective response to all of the concerns
about petroleum usage includes 1) use less oil; 2) more cleanly and
efficiently burn the petroleum-based fuels we do use; and, 3) find
alternatives. We must do all three without adversely affecting the
economy or employment in the auto and related industries.
Clearly, the federal government and auto manufacturers have
leading roles to play in achieving those goals. We stand our best
chance of success when we work hand-in-hand to achieve them.
Take the example of fuel cell technology. Today, hydrogen
appears to be the eventual successor to fossil fuels and a long-term
energy solution for our Nation. On the strength of government and
industry partnerships, we've made good progress in advancing
hydrogen fuel-cell technology.
DaimlerChrysler has been working on fuel cell technology for
transportation utilizing hydrogen for over ten years. We have
invested more than $1 Billion in R&D and have developed five
generations of vehicles (NECAR1, 2, 3, and 4, and the F-Cell). Of
all manufacturers, we have the largest worldwide fleet of fuel cell
vehicles-more than 100-participating in several international
demonstration projects in the United States, Europe, and Asia with
over 1.2 million miles of accumulated real world experience. As
part of these projects, we are demonstrating the viability of the fuel
cell in the entire fleet of vehicles-from small passenger cars to
delivery vans to large mass transit buses.
Government-industry fuel cell partnerships are working. These
partnerships will continue to be absolutely vital to providing a
jumpstart to the significant investment necessary to develop fuel
cell technology and a hydrogen infrastructure. It is clear that we
can work together toward solving our long-term energy,
environmental and national security needs. We need to expand this
cooperation to find solutions to the problem of petroleum
consumption in the near term as well.
DaimlerChrysler is engaged in a broad range of advanced
propulsion technologies. Fuel cell vehicles are one long term focus
of this technology portfolio, which also includes more efficient
gasoline engines, advanced diesels, and hybrid powertrain systems.
DaimlerChrysler is focused on providing the market with the
ability to select the advanced propulsion technology that best fits
the needs of the individual customer.
In October of 2005, DaimlerChrysler Commercial Buses North
America received a contract for 500 Orion VII diesel hybrid-
electric buses from New York City transport services. This is the
largest order for hybrid buses in history. Orion, DaimlerChrysler's
North American city bus brand, will begin deliveries in the second
quarter of 2006. This is the third hybrid order in New York City
for Orion complementing the prior orders of 200 units and 125
units respectively.
Orion, along with partner BAE Systems, producer of the
HybriDriver series hybrid propulsion system, is the leading brand
of hybrid buses worldwide with more than 300 units in revenue
service and 700 more units on order for the Toronto Transit
Commission, San Francisco MUNI and now New York City
Transit and MTA Bus. Trusted for their significant emissions
reductions and fuel savings compared to standard diesel buses,
Orion Hybrid buses also outperform conventionally powered
vehicles.
Compared to standard diesel buses, the hybrid units will
provide significantly better fuel economy while greatly reducing
emissions: 90 percent less particulate matter, 40 percent less NOx,
and 30 percent fewer greenhouse gases. Drivers will enjoy faster
acceleration and customers will experience a quieter, smoother ride
free of the frequent transmission shifts encountered in conventional
buses.
Regarding hybrids for light duty vehicles, DaimlerChrysler,
GM and BMW have recently combined efforts to develop a two-
mode hybrid drive system that surpasses the efficiency of today's
hybrids. The partnership will cut development and system costs
while giving customers an affordable hybrid alternative that
improves fuel economy. Our first use of the system will be in early
2008 with the Dodge Durango.
DaimlerChrysler has developed and implemented technologies
that improve the efficiency of the current gasoline propulsion
system. We must continue to enhance the gasoline combustion
propulsion system since it will be the dominant choice in the
market for many years to come. We offer the Multi-Displacement
System (MDS) available in the HEMI in seven Chrysler Group
vehicles. MDS seamlessly alternates between smooth, high fuel
economy four-cylinder mode when less power is needed and V-8
mode when more power from the 5.7L HEMI engine is in demand.
The system yields up to 20 percent improved fuel economy. We
also recently launched a new world engine coupled with a
continuously variable transmission (CVT) to further improve fuel
economy and reduce emissions of the all new Dodge Caliber. We
will expand the application of this technology to several additional
new products starting later this year. We are also working on
further development of gasoline direct-injection which
considerably enhances fuel economy by closely monitoring fuel
atomization.
Yet another alternative, and the one I wish to focus on in the
remainder of my testimony, is the diesel engine. Modern diesels
are only beginning to make inroads in the light duty fleet in the
U.S. Meanwhile, diesels account for nearly 50 percent of the new
car market in Europe and about two-thirds of the Chrysler and
Jeepr vehicles sold in Europe in 2005. Advanced diesel
technology offers up to 30 percent better fuel economy and 20
percent lower CO2 emissions when compared to equivalent
gasoline engines. Modern, clean diesels are a technology that is
available today and can help reduce our nation's consumption of
petroleum based fuels.
According to the EPA, if we had a light-duty vehicle
population that was one-third diesel, we'd save up to 1.4 million
barrels of oil per day in the U.S. That's the amount of oil the U.S.
currently imports from Saudi Arabia. If Chrysler Group's diesel
mix in the U.S. were the same as it is in Europe, our CAFE would
improve by three miles per gallon!
Last year the Chrysler Group became the first North American-
based manufacturer to offer a modern diesel engine in the light
duty vehicle market with our Jeep Liberty. By the way, customer
demand for the diesel Liberty exceeded our expectations. Sales are
almost twice our initial target.
Our sister company, Mercedes-Benz, and our competitor,
Volkswagen, also offer diesels here. We expect to see other
manufacturers offering diesels in the U.S. in the not too distant
future as well. For 2006, DaimlerChrysler currently offers 5
models with diesel engines-the Jeep Liberty, Dodge Ram 2500
and 3500 pickups, and Mercedes-Benz E-320, ML-320, and R-320.
In the next few weeks we will announce yet another diesel product
for the Chrysler Group.
Also in the 2006 calendar year, DaimlerChrysler will bring to
this market the cleanest and most fuel-efficient diesel technology
in the world, called BLUETEC. We introduced it in a Mercedes E-
Class at the North American International Auto Show in Detroit in
January.
To give you a benchmark for performance, the Mercedes E320
full-size sedan, powered by a six-cylinder diesel engine, will be the
cleanest diesel in the world. It delivers the torque of an eight-
cylinder, 35 miles-per-gallon in real-world driving, and has the
potential to meet emissions standards in all 50 states. To meet
these fuel economy and stringent emission goals, it is essential that
the low sulfur requirements for diesel fuel set to become effective
later this year, be maintained and not delayed.
While diesel technology alone can make big strides toward
helping us meet our national energy, environment, and security
objectives, when you add biodiesel and other biofuels, it gets really
interesting. Biofuels represent a huge opportunity to reduce our
consumption of conventional petroleum-based fuel.
Designing more engines to run on biodiesel is a current
objective at DaimlerChrysler. Biodiesel fuel reduces emissions of
diesel vehicles and lowers petroleum consumption. Every Jeep
Liberty diesel we build leaves the assembly plant in Toledo, Ohio,
fueled with B5 - a renewable fuel with a 5 percent biodiesel mix
derived from locally-grown soy beans. Beginning with our 2007
model year Dodge Ram, we will endorse the use of B20-a 20
percent biodiesel mix-for use by our military, government and
commercial fleet customers. We believe that allowing our fleet
customers to use fuel made to the current military specification
will help accelerate the development and adoption of a national
B20 specification for general use.
Biofuels reduce lifecycle greenhouse gas emissions, because
the plants from which they're derived absorb carbon dioxide from
the atmosphere during growth. Biofuels also reduce tailpipe
emissions of particulates, carbon monoxide and hydrocarbons
compared with conventional diesel fuel. Biofuels also support the
American agricultural economy.
To support this effort, we have teamed up with the Detroit-
based nonprofit NextEnergy, the nation's largest chain of biodiesel
refiners, industry-leading suppliers, and local universities to
conduct much needed research and field testing. We even plan to
study the use of biodiesel crops as possible tools to remediate old
brownfield sites.
One of the key enablers to broad acceptance of biodiesel is the
establishment of a national high quality B20 fuel specification. In
order for manufacturers to produce, sell, and warranty diesel
vehicles for operation on biodiesel, we feel a national B20 standard
is critical to us and our customers. This standard is needed, and
must be designed, to allow manufacturers to endorse B20 for all of
their vehicles, including the millions of diesel vehicles already on
the road as well as the ones that will be built in the future.
Gas-ethanol flex-fuel is another option we need to revisit.
Since 1998 the Chrysler Group has provided to customers about
1.5 million minivans, cars, SUVs and pickup trucks that are E-85
flex-fuel (a gas-ethanol mix) capable. Unfortunately, in the past,
virtually all of those vehicles ran on pure gasoline, due to the lack
of an E-85 fuel infrastructure. But flex-fuels can work, when
government policy gets behind them and encourages infrastructure
development.
Our current product plan commits us to producing, by the 2008
model year, just under 500,000 flexible fuel vehicles annually for
our U.S. fleet. That's roughly 25 percent of our production. If all of
them operated on E-85 instead of gasoline, it would save 250
million gallons of petroleum per year-roughly the amount of oil
we import from Libya each year. In the same timeframe we will
produce over 150 thousand diesels annually that could operate on
biodiesel if we have a suitable national B20 specification.
Incentives for the introduction of biofuels and E-85 FFVs
should continue to help reach the "critical mass" of vehicles on the
road required to help spur the necessary fuel infrastructure
development. Biofuels are proof that at least part of the solution to
our energy, environment and national security issues can be
homegrown.
We at DaimlerChrysler, and all of the other manufacturers
represented here today, are doing our part to improve existing
technology, to accelerate the introduction of new technologies, and
to invest in the research necessary to deliver the long-term future
technologies America needs. However, the solution rests not just
with auto industry action. We need action from government policy
makers, the fuels industry and ultimately the American consumer.
According to our computer models, full deployment of FFVs
operating on E-85, 10 percent ethanol in all conventional gasoline
vehicles and full penetration of 20 percent biodiesel, in both the
light and heavy duty diesel fleets, would lead to a reduction in U.S.
demand for petroleum of 3.6 million barrels per day. We stand
ready to do our part.
Thank you for your attention; I would be pleased to answer any
questions the Subcommittee has.
MR. HALL. The Chair recognizes Mr. William Reinert,
National Manager, Advanced Technology Group, Toyota Motor
Sales, USA.
MR. REINERT. Mr. Chairman, members of the committee, my
name is Bill Reinert, and I am National Manager, Advanced
Technology for Toyota. I want to thank you for inviting Toyota to
participate in this hearing and to provide our perspective on future
technological advancements for automobiles. Today, I will
emphasize hybrid electric and plug-in hybrid power trains.
Toyota recognizes that the competing priorities of energy
security, environmental concerns, and emerging fuels may reshape
the transportation and fuels market and may one day change
customer perspectives on vehicle choice. As you can see from the
slide above, today, we are seeing the emerging markets for
biodiesel and tremendous expansion of corn-based ethanol
production. We are also beginning to see previously overlooked
hydrocarbon supplies such as tar sands and very heavy crude
products making significant impacts in the market. In the coming
years, our tremendous natural gas and coal reserve can be brought
to the market from the Fischer-Tropsch process providing zero
sulfur diesel or gasoline.
We feel that our investments in hybrid development give us the
opportunity to use these new fuels and maximize their benefits.
Toyota believes there is no single fuel or technology that can solve
all of transportation's needs. Simply put, there is no single silver
bullet. That is why we are pursuing multiple technology paths in
our continuing quest to reduce the impact of the automobile on
society.
Key to our efforts is the ability to apply hybrid systems to any
type of power train without constraint from the type of fuel or
propulsion technology used. In other words, hybrids are a core
technology for Toyota. By combining battery energy storage with
conventional power trains, Toyota hybrid systems have the ability
to greatly increase and in some cases double the efficiency of any
propulsion system, while significantly reducing smog-forming
emissions.
Some have characterized hybrid technology as an interim
approach, a bridge to fuel cells. In our view, this underestimates
the value of the hybrid system. The fuel cells we are now testing
in the United States are hybrid designs and in fact use many of the
same components that are found in today's Prius. Since our
introduction of the Prius in 1997, Toyota's cumulative global
hybrid sales have exceeded 600,000 units. Of this total, over
300,000 have been sold in the United States. Clearly the American
market is a key to our plans to expand our hybrid technology.
Currently, we offer five different hybrid models for sale in the
United States, with one additional model scheduled for launch in
2007. All auto manufacturers try to find the right combination of
features such as fuel economy, emissions, and power at the
customer's value. But no matter how brilliant or appealing a
product may be, it will not succeed in the marketplace unless it is
better in every respect than the product it seeks to replace. That is
why Toyota hybrid products reflect customers' preferences in each
market segment in which they compete.
For instance, the Prius maximizes fuel economy while
achieving class average performance. The Lexus LS 600h will
provide 12-cylinder performance and class leading V8 fuel
economy. And the 4-cylinder Camry hybrid offers a combined
EPA fuel economy value of 39 MPG, while at the same time
achieving V-6 performance. Importantly, hybrids are saving fuel
today using infrastructure. The application of hybrid technology
takes on different forms, and not all offer the same range of
benefits. Toyota designs are known as full or strong hybrid. This
means the battery and power electronic components of our design
are the primary influences on system efficiency and provide the
benefits of motor-assist and an all-electric EV range.
We believe that as future technologies are developed, the
benefits of a strong hybrid approach will become even more
pronounced. Evidence of Toyota's continuous development
philosophy is the improvement in Prius performance. During the
6 years since it was launched, fuel economy has increased by over
30 percent. Our 0-to-60 mile-per-hour acceleration time has
dropped by 4.4 seconds, and already low emissions were reduced
even lower. These enhancements were primarily the result of
weight and size reductions in electrical components and steady
improvement in battery technology. We can foresee a time when
we offer a hybrid in every segment in which we compete. Over
time the cost and complexity of hybrid systems will be improved
to the point that a hybrid becomes a normal check-the-box power
train option, just like 4, 6, and 8 cylinders are today. It is
reasonable to expect that Toyota's global hybrid production could
exceed 1 million units per year sometime in the next decade.
Particularly interesting is the continuation of the lithium ion
battery technology. We hope that this will lead to low-cost
lightweight batteries with high-energy densities increasing the all
electric range and the efficiency of hybrid products even further.
We are aware of the enthusiasm in some quarters for plug-in
hybrid technology, and Toyota is investigating the idea of plug-in
hybrid designs because this type of approach may have merit in the
future. We believe that plug-in hybrids' ability to successfully
compete in the marketplace to a large extent depends on the
development of battery technology that is lightweight, inexpensive,
and durable. Many current plug-in hybrid designs use deep-charge
discharge cycles to improve their all electric range. The data
demonstrate that battery life is adversely impacted by large swings
in the state of charge. Battery management systems in the Prius
restrict state-of-charge swings to a carefully defined level that is
consistent with its long battery life. Successful plug-in hybrid
designs must carefully balance the desire for longer all-electric
range with cost and weight targets and the need to extend the
lifetime of the battery systems. And ultimately, as I said earlier,
customers must want the vehicle.
Mr. Chairman, I would be happy to answer any questions.
MR. HALL. All right. Thank you sir.
[The prepared statement of William Reinert follows:]
PREPARED STATEMENT OF WILLIAM REINERT, NATIONAL
MANAGER, ADVANCED TECHNOLOGY GROUP, TOYOTA MOTOR
SALES, USA, INC.
<GRAPHICS NOT AVAILABLE IN TIFF FORMAT>
MR. HALL. The Chair now recognizes Elizabeth Lowery, Vice
President, Public Policy Center, General Motors. You are
recognized you for 5 minutes.
MS. LOWERY. Thank you, Mr. Chairman. Good afternoon, my
name is Elizabeth Lowery and I am Vice President for
Environment and Energy for General Motors. I am pleased to be
able to speak to you today regarding GM'S near and longer-term
plans for development and implementation of advanced
technologies into our future vehicles.
GM has always been a leader in the development and use of
technologies in vehicles. From the move away from hand-cranked
starters, to the highly successful catalytic controls for vehicle
emissions, to efforts to produce an innovative electric vehicle in
the 1990s, GM has been instrumental in implementation of
advanced technologies. Today, we are continuing to focus on
ways to advance vehicle fuel economy, safety, and emissions. And
GM is leading in all of these activities. We have a plan to address
both the needs of our customers and the critical public policy
issues facing us. This plan includes near-term steps, such as
continuing to make improvements to today's internal combustion
engines and transmissions and increased E-85 flex-fuel capability;
mid-term steps, such as more affordable and flexible hybridization
of vehicles; and long-term steps such as fuel cells powered by
hydrogen.
The answer to today's energy issues is not simple. And we
believe that all of these technologies play an important role in
America's energy future.
Today I am here to speak about our work in two particular
areas, E-85 capable vehicles and hydrogen fuel cells. GM is
leading the effort on flex-fuel vehicles capable of running on
gasoline or E-85 ethanol. These vehicles offer a choice to
consumers, a choice that has significant energy and economic
benefits. Ethanol is renewable and, in high concentration blends,
helps reduce greenhouse gas emissions. As E-85 it helps reduce
U.S. dependence on petroleum, diversifies our sources of
transportation fuel, and reduces smog-forming emissions.
Ethanol usage provides great opportunity for the domestic
agriculture industry and should help spur new job growth in other
areas. Until last fall, there was limited interest in the development
of ethanol as an alternative fuel, but when gasoline prices spiked in
the aftermath of the hurricanes that devastated the Gulf Coast,
ethanol became more visible, and GM recognized an opportunity
to become part of the solution.
Earlier this year, General Motors launched a national
advertising campaign beginning with the very visible 2006 Super
Bowl hosted in our own home city of Detroit. After the Super
Bowl we continued through the 2006 Winter Olympics, including
launching our "Live Green, Go Yellow" Web site. Traffic to that
Web site quickly rose to the millions as consumers wanted to know
more about E-85, GM flex-fuel vehicles, and station location. But
that was just the beginning.
With nearly 2 million E-85 capable vehicles already on the
road and a plan to offer 14 separate E-85 capable models in 2007,
we wanted to make sure our customers knew when they were
getting this flex-fuel capability. So GM launched a labeling effort
that included an external badge on the vehicle, noting its flex-fuel
capability and a yellow gas cap to remind customers that their
vehicle is capable of running on E-85 ethanol. We have also
embarked upon several significant partnerships to increase the
availability of the ethanol fueling infrastructure.
Most recently, GM partnered with Meijer, Clean Fuel USA, the
State of Michigan, and the State of Indiana to work toward
approximately 40 new retail outlets. We have previously
announced similar partnerships in California, Illinois, Minnesota,
and Texas, working with a variety of energy companies, State
agencies, and distribution outlets. For the U.S., the growth of the
ethanol industry raises enormous potential for displacing gasoline
consumption in the transportation sector. If all of the 5 to 6 million
flex-fuel vehicles on the road today were fueled using E-85, the
U.S. could offset the need for 3.6 billion gallons of gasoline
annually. And for the individual consumer, regularly filling a 2007
Chevrolet Tahoe with E-85 would displace the use of over 600
gallons of gasoline each year. These are impressive numbers so
they need to find ways to increase availability of E-85 in the
marketplace.
Looking to the long term, General Motors has placed very high
priority on fuel cells and hydrogen as a power source and energy
carrier for automobiles. To accomplish this, GM's fuel-cell
program has focused on lowering costs, and increasing reliability
of the fuel-cell stacks. Demonstrating the promise of the
technology through validation programs and collaborating with
other parties on the infrastructure issues that need to be addressed.
We have made significant progress in several of these areas.
In the last 6 years, we have improved fuel-cell power density
by a factor of 7, while enhancing efficiency and reducing the size
of our fuel-cell stack. We have significantly increased fuel-cell
durability, reliability, and cold-start capability. We have
developed safe hydrogen storage systems that approach the range
of today's vehicles. We have made significant progress on cost
reductions through technology improvements and system
simplification. With respect to collaboration, we are working with
key partners on virtually every aspect of fuel-cell and
infrastructure technology.
The FreedomCAR and Fuel Partnership, managed through the
U.S. Department of Energy, has proven to be an important forum
for addressing these issues and challenges. Clearly, huge
challenges remain. Reliability of the fuel-cell stacks and storage of
the hydrogen on board the vehicle must be resolved to draw
American consumers to these vehicles. And the fueling
infrastructure must be available so the owners of these vehicles
have no concerns about where to get the hydrogen.
In conclusion, there is no one single solution to the challenges
we face. We are concentrating our energies on a number of
different fronts and believe that many of these technologies will
coexist in the marketplace. General Motors has a rational
advanced technology plan that goes from near term, focused on
alternative fuels like E-85 ethanol, to long-term hydrogen-powered
fuel cells. We are executing that plan. All of these will help to
simultaneously reduce U.S. energy dependence, remove the
automobile from the environmental debate and stimulate economic
and jobs growth.
Thank you for your attention and I am happy to answer
questions.
MR. HALL. Thank you Ms. Lowery.
[The prepared statement of Elizabeth Lowery follows:]
PREPARED STATEMENT OF ELIZABETH LOWERY, VICE PRESIDENT,
PUBLIC POLICY CENTER, GENERAL MOTORS
Good afternoon. My name is Elizabeth Lowery and I am Vice
President for Environment and Energy in the GM Public Policy
Center. I am pleased to be able to speak to you today regarding
GM's near and longer term plans for development and
implementation of advanced technologies into our future vehicles.
GM has always been a leader in the development and use of
technologies in vehicles. From the move away from hand-cranked
starters--to the highly successful catalytic control technology for
vehicle emissions--to efforts to produce an innovative electric
vehicle in the 1990s, GM has been instrumental in the
implementation of advanced technologies.
Today, we are continuing to focus on ways to advance vehicle
fuel economy, safety and emissions. And GM is leading in all of
these activities. We have a plan to address both the needs of our
customers and the critical public policy issues facing us. This plan
includes near term steps, such as continuing to make improvements
to today's internal combustion engines and transmissions and
increased E-85 flexfuel capability; mid-term steps, such as more
affordable and flexible hybridization of vehicles; and long-term
steps, such as fuel cells powered by hydrogen. The answer to
today's energy issues is not simple, and we believe that all of these
technologies will play an important role in America's energy
future.
Today, I am here to speak about our work in two particular
areas - E-85 capable vehicles and hydrogen fuel cells.
GM is leading the effort on flexfueled vehicles capable of
running on gasoline or E-85 ethanol. These vehicles offer a choice
to consumers--a choice that has significant energy and economic
benefits. Ethanol is renewable and, in high concentration blends,
helps reduce greenhouse gas emissions; as E-85 it helps reduce
U.S. dependence on petroleum, diversifies our sources of
transportation fuel, and reduces smog-forming emissions. Ethanol
usage provides great opportunities for the domestic agriculture
industry and should help spur new job growth in other areas.
Until last fall there was limited interest in the development of
ethanol as an alternative fuel. But when gasoline prices spiked in
the aftermath of the hurricanes that devastated the Gulf Coast,
ethanol became more visible and GM recognized an opportunity to
become part of the solution. Earlier this year, General Motors
launched a national advertising campaign, beginning with the very
visible 2006 Super Bowl, hosted in our own home city of Detroit.
After the Super Bowl, we continued through the 2006 Winter
Olympics, including launching our "Live Green, Go Yellow"
website. Traffic to that website quickly rose to the millions--as
consumers wanted to know more about E-85, GM flexfuel vehicles
and station locations.
But that was just the beginning. With nearly two million E-85
capable vehicles already on the road and a plan to offer 14 separate
E-85 capable models in 2007, we wanted to make sure our
customers knew when they were getting this flexfuel capability.
So, GM launched a labeling effort that included an external badge
on the vehicle noting its flexfuel capability and a yellow gas cap to
remind customers that their vehicle is capable of running on E-85.
We have also embarked upon several significant partnerships
to increase the availability of the ethanol fueling infrastructure.
Most recently, GM partnered with Meijer, CleanFuelUSA, the
State of Michigan and the State of Indiana to work toward
approximately forty new retail outlets. We have previously
announced similar partnerships in California, Illinois, Minnesota
and Texas--working with a variety of energy companies, state
agencies, and distribution outlets.
For the U.S., the growth of the ethanol industry raises
enormous potential for displacing gasoline consumption in the
transportation sector. If all of the 5 million flexfueled vehicles on
the road today were fueled using E-85, the U.S. could offset the
need for 3.6 billion gallons of gasoline annually. And for the
individual consumer, regularly filling a 2007 Chevrolet Tahoe with
E-85 would displace the use of over 600 gallons of gasoline each
year. These are impressive numbers, so we need to find ways to
increase availability of E-85 in the marketplace.
Looking to the long-term, General Motors has placed very high
priority on fuel cells and hydrogen as the power source and energy
carrier for automobiles. To accomplish this, GM's fuel cell
program is focused on lowering cost and increasing reliability of
the fuel cell stacks, demonstrating the promise of the technology
through validation programs and collaborating with other parties
on the infrastructure issues that need to be addressed. We have
made significant progress in several of these areas:
<bullet> In the last six years, we have improved fuel cell power
density by a factor of seven, while enhancing the efficiency
and reducing the size of our fuel cell stack.
<bullet> We have significantly increased fuel cell durability,
reliability, and cold start capability.
<bullet> We have developed safe hydrogen storage systems that
approach the range of today's vehicles.
<bullet> We have made significant progress on cost reduction
through technology improvements and system
simplification.
With respect to collaboration, we are working with key partners
on virtually every aspect of fuel cell and infrastructure technology.
The FreedomCAR and Fuel Partnership, managed through the U.S.
Department of Energy, has proven to be an important forum for
addressing these issues and challenges.
Clearly huge challenges remain. Reliability of the fuel cell
stacks and storage of the hydrogen on board the vehicle must be
resolved to draw American consumers to these vehicles. And the
fueling infrastructure must be available so that owners of these
vehicles have no concerns about where to get the hydrogen.
In conclusion, there is no one single solution to the challenges
we face. We are concentrating our energies on a number of
different fronts, and believe that many of these technologies will
coexist in the marketplace. General Motors has a rational
advanced technology plan that goes from near term, focused on
alternative fuels like E-85 ethanol, to the long term hydrogen-
powered fuel cells. We are executing that plan. All of these will
help to simultaneously reduce U.S. energy dependence, remove the
automobile from the environmental debate, and stimulate
economic and jobs growth.
MR. HALL. The Chair recognizes the presence of a long-time
Chairman of the Committee on Energy and Commerce, Mr.
Dingell. Would you care to make an opening statement, or do you
want to put one in the record?
MR. DINGELL. Mr. Chair, you are most gracious. Thank you.
I would just like to welcome the distinguished panel here. Thank
you for being here. This is very helpful to us. It is a privilege to
see you. I have a number of friends down there in the well and I
am delighted that they are here with us. Thank you Mr. Chairman.
MR. HALL. All right. The Chair notes that there is a vote on
the floor, we have two votes. What do you think?
MR. SHIMKUS. We can get two people done.
MR. HALL. Okay. All right.
With that, I will ask some questions then. Thank you.
I, along with Chairman Barton, am interested in this question,
and I am sure Gene Green, if he is here--most of us from Texas--
and the Ranking Member here, Mr. Ross, who has great interest in
Texas as his neighbor from Arkansas. But Texas has a unique
confluence of automobile manufacturers, petrochemical industry
infrastructure, oil and natural gas reserves, recoverable oil
reserves, with the potential for carbon sequestration, nuclear power
production, windfalls, and, importantly, 1,000 miles of existing
hydrogen pipeline. And I understand that there is a coalition
working toward the goal of large-scale hydrogen production, but
there are no DOE hydrogen products that I am aware of in the
State of Texas.
So, Secretary Karsner, can you tell me why DOE has not
chosen to take advantage of the natural resources and infrastructure
we have got in Texas? Doesn't it make sense to focus R&D efforts
in the areas that can best support them? It is kind of a pro-Texas
question.
MR. KARSNER. Mr. Chairman, as someone who has spent most
of his life growing up in Texas, I don't have the answer to that, but
I can assure you I will find out ambitiously.
MR. HALL. Thank you. Talk to Mr. Bodman about it. He is a
great Secretary of Energy, and just sensible and kind and generous.
I know he is probably going to put one in Texas, and we want one
there.
MR. KARSNER. I know that would make my folks happy. I
will do that.
MR. HALL. All right. Let's see. Again, to Mr. Karsner. I
know that DOE is involved in pushing flex-fuel vehicles and the
rollout of fuels that can run those vehicles, including E-85. Are
you getting the support you need from the automakers on the
rollout of the flex-fuel vehicles?
MR. KARSNER. Mr. Chairman, I have only been in this job for
about 6 weeks and I can tell you that very few things occupy my
time more than dialoguing with the automakers on that question.
Secretary Bodman has tasked me quite deliberately on that issue,
and, in fact, my first trip within 24 hours of joining DOE was to
Detroit to put out that message and call for cooperation. I am
happy to report that for the most part, we are receiving good
response from the automakers, particularly the members of the
U.S. Car and FreedomCAR Coalition. We received that
cooperation in varying degrees at various levels at various times,
but it is proceeding forward and we do believe on a voluntary basis
the automakers are taking their responsibilities quite seriously and
engaging the Administration on ways that they could accelerate the
rate of market penetration for flex fuel.
MR. HALL. And you are encouraging them.
MR. KARSNER. We are encouraging them.
MR. HALL. You are pushing them.
MR. KARSNER. I think that would be accurate to characterize it
that way, sir.
MR. HALL. All right. Ms. Lowery, what is the future for
fuel-cell vehicles? How do you see them evolving over the next
5 years, and the next 10 years?
MS. LOWERY. Well, I think there is a bright future for fuel-cell
vehicles. There is a lot of work that needs to be done with respect
to the hydrogen infrastructure, as well as the work that is being
done through FreedomCAR and Freedom Fuel. We have an
aggressive goal at General Motors to get the fuel-cell stack
competitive with the internal combustion engine with respect to
durability and reliability and all the important features of today's
engines. And we have that in the 2010 time frame. And then in
the next decade after that, we will look at production and the
volume, with the development of the hydrogen economy.
MR. HALL. I thank you. At this time I will let the Ranking
Member ask questions, if you like, Mr. Ross.
MR. ROSS. I have got quite a few, so you may want to tell me
when we need to go vote, Mr. Chairman.
MR. HALL. When I go like that.
MR. ROSS. We will be back, I take it, after votes, Mr. Karsner,
is that right?
MR. KARSNER. Yes, sir.
MR. ROSS. At the beginning of your testimony today, you
mentioned the President's biofuels initiative and its goal to make
cellulosic ethanol cost competitive by--what? 2012?
MR. KARSNER. Correct, sir.
MR. ROSS. Can you elaborate on the specific details within
this initiative and how you plan to achieve that goal?
MR. KARSNER. Right now, cellulosic ethanol at today's prices,
some could argue at the point of production, might be competitive.
It is $2.25 and some odd cents. The program itself is designed to
bring that number down by more than half, and it has a targeted
goal of $1.07. In fact, arguably, depending on the work that is
done with the various feed stocks, it could be brought down more
than that.
What really needs to occur between now and 2012 and what
we are seeking to do at the fastest possible rate is to put up
commercial-scale facilities and to measure how these interactions
will work in real time. To that end, a solicitation for a cost share,
as stipulated in the EPACT, has been put out by the Department;
and the office has received in excess of 60 responses by
private-sector participants and consortia seeking to be involved in
putting up a commercial-scale facility based on different feed
stocks in different geographic locations.
We are also seeking to work with those partners to see what
their eligibility might be for financially structuring loan guarantee
programs for those commercial facilities.
So that is what needs to occur in order to bring down the cost
by 2012.
MR. ROSS. The Energy Policy Act of 2005 established an
integrated biorefinery demonstration grant program.
MR. KARSNER. Correct.
MR. ROSS. I believe for the next 12 months for all of America,
there is going to be a hundred million dollars in grant money
available.
MR. KARSNER. That is right.
MR. ROSS. Roughly a third of what we spend in the next 24
hours in Iraq.
MR. KARSNER. I don't know about that.
MR. ROSS. Yeah, well it is $279 million a day that goes to
Iraq, and we are going to spend a hundred million over the next
365 days basically for, you know, basically to fund a biorefinery
demonstration grant program. So, basically, what we spend in Iraq
in 8 hours is what we are going to spend in the next 365 days,
trying to advance biorefinery. So we do a lot of talk in this town
about alternative renewable fuels, but we really don't put our
money where our mouth is.
My deal is this, that the program was created, as I understand
it, to spur the development and implementation of a
multifunctional commercial scale biorefinery. Legislation didn't
specifically state that it needed to be built in Arkansas, but it does.
I understand that the Department of Energy has released a notice of
public interest in OPI and begun receiving applications from
interested parties, such as Potlatch.
Can you tell me the status of this program, what other
programs or initiatives is DOE pursuing to develop biorefineries in
the United States?
MR. KARSNER. The status of that program is, as I referred to in
an earlier answer, that we have received in excess of 60 responses
that are currently being evaluated and that I believe the next
significant milestone is August 10, which is the deadline for
submissions.
I could report back with fuller details of what would happen
procedurally after those initial submissions on August 10, but what
I can tell you in the short time since I have been aboard is that we
are also looking with those same partners who have made
submissions to see whether we could save them from having to
create the same workload twice and expand our efforts to reach
them with the loan guarantee programs that are also available in
the EPACT.
MR. ROSS. I would be very interested in personally following
up with you after the August--
MR. KARSNER. Happy to do that.
MR. ROSS. --date that you mentioned, and I appreciate you
doing that.
MR. KARSNER. Thank you so much, sir.
MR. ROSS. Mr. Chairman, I have 31 seconds left. Do we need
to go vote or what do you want me to do here?
MR. HALL. I think we might recess for 15 minutes. You think
we can be back in that time?
All right. At ease for 15 minutes. We will be back.
You know, used to be a store in my hometown that had--during
the Depression, when he couldn't afford to miss a sale, he had a
sign on his door when he would go for coffee, said "Going across
to the cafe for a coffee, be back in 5 minutes. Been gone 3." That
is one way of doing it.
[Recess.]
MR. SHIMKUS. [Presiding.] If I can have folks take their seats.
And for their time and our time, we will get started.
Really, it is in the best interest of all of us that we move
expeditiously, because you never know votes around here, never
know how long they will keep you waiting. So Members can get
their questions when everybody is around. We appreciate your
patience, and I will begin to recognize myself for 5 minutes or
until someone else comes back. Maybe I will have longer, pretty
good deal.
Mr. Karsner, my understanding is that your office has
conducted important research showing that vehicles burning
biodiesel fuel blends generate lower levels of the other pollutant
NOx, nitrous oxide--nitrogen oxide, excuse me--than vehicles
burning exclusively petroleum diesel. You mentioned this in your
testimony. Have you discussed the research with EPA
policymakers?
MR. KARSNER. I am sorry. Have we discussed the--forgive
me.
MR. SHIMKUS. This research and your numbers with our
friends at the Environmental Protection Agency.
MR. KARSNER. Yes, sir, we have. In fact, we are collaborating
with the EPA now to clarify the differences with the respective
findings.
Fundamentally, we believe that the differences are related to
differences in testing protocols; and, thus far, our conversations
had led us and the EPA to believe that the future certification
testing ought to be done more in the fashion that is being
conducted in our national laboratories in real time, with the
engines inside the trucks themselves, as opposed to outside of them
on the bed.
MR. SHIMKUS. So it is your impression the two agencies will
come to some agreement on how we do this testing and what is
really the base?
MR. KARSNER. Yes, sir. I believe the collaboration is moving
that way.
MR. SHIMKUS. Also, on the Office of Energy Efficiency and
Renewable Energy, I know that is your arena, but I would be
interested to hear your thoughts on coal-to-liquids--as I said in my
opening statement--technology and what the Department might be
doing for the advancement of its use.
MR. KARSNER. I appreciate that, sir.
As you mentioned, it actually belongs to my colleague, Jeff
Jarrett, in the Office of Fossil Energy, but personally I can tell you
that we in the Department--across the Department encourage the
use of coal-to-liquids use and, in fact, anything that can cleanly
accelerate the domestic installation of alternative fuel production
capacity.
Specifically in my office, Energy Efficiency and Renewable
Energy, we conduct testing of how those fuels might burn and burn
well into the engines and into the fleet. So that is very promising;
and it is a promising fuel that, in fact, enhances the cetane, is sulfur
free, and can blend readily with conventional diesel. So we are
encouraging its use and its acceleration as an alternative domestic
fuel.
MR. SHIMKUS. Thank you.
And the great thing about the technology--and technology, as
you all know in your business, can increase over the years, but the
basic premise of this refinery technique was developed in the late
1920s, and so you have workable refineries out there now. So it is
building on that. It is not inventing a whole new process from the
bench top all the way up, and that is why I am very excited about it
with our great coal reserves in this country.
For the car manufacturer folks, I am pleased with where we
have progressed on the flexible fuel vehicles from--and now the
major marketing campaigns that you all are involved with I think is
great.
I do drive a Ford Explorer in my district. We do have 20
fueling stations in my district alone; and, of course, Illinois is a big
ethanol State, as Iowa and those were their first showing, showing
up.
Can you tell me what you are trying to do and encouraging and
maybe investing on the facilities? I know, Ms. Cischke, you
mentioned fueling stations, fueling stations and inability in a lot of
parts of the country to have it. Is there any focus you all are doing
to try to encourage retail locations?
MS. CISCHKE. Yes. We have partnered with VeraSun Energy,
which is the number two ethanol producer in the country, and we
are working on developing a corridor in the Midwest to increase
the number of fueling stations so somebody could drive from
Chicago to St. Louis and on without having to do anything but fuel
with E-85.
So we think that there is a real focus on putting it in the
Midwest where there is a lot of the corn and other things. So we
can heighten people's awareness as we are working with our
partners, BP and other oil companies, to encourage them to also
invest. We do think this is going to take the oil industry's support
as well as the ethanol producers.
MR. SHIMKUS. Thank you.
Does anyone else want to add? Ms. Lowery?
MS. LOWERY. Sure. We have what is called the West-East
Coast strategy, working on different State initiatives to encourage
more fueling stations in different locations. So we have a project
in California, we have a project in Illinois with Gas City and
VeraSun, and we have decided that each of the States, if we can
get some competition and grow the gas stations beyond just in the
Midwest, E-85 ethanol will have a lot more success. So we are
doing our part to encourage that with marketing efforts and
bringing people to the stable.
MR. SHIMKUS. Thank you.
We have been tricked. So they just called me back to vote. I
am going to ask a few more of my questions and then I will--unless
someone jumps in back, we will recess and--I told you. You have
to get it when you can.
I want to just make this point clear, and there is a lot of debate
about the cost of E-85 refueling stations, and I know that people
are looking for a lot of investment credits or help from the Federal
government. I am telling you, the stations that we have employed
in my district are mostly independent stations, and you know what
the cost is? Zero.
Because what they do is they take the low-selling tank that they
have in place right now, and most of that is 10 percent ethanol, and
they drain it. They fill it with E-85, and they slap a sticker on the
pump, and, voila, they are selling E-85 fuel out of a retail location.
So I get a little frustrated with some of the folks--especially the
major energy refinery companies--that are moaning and groaning
about the cost of--actually, the retail location. I personally say it is
a bunch of hogwash, and they need to step up to the plate because
of all the great benefits that you are doing now and what is being
done on the refinery end.
So, with that, if I hope to make this vote, I had better start
walking over, so I recess this hearing.
[Recess.]
MR. HALL. [Presiding.] They had a little mix-up. They didn't
just have one vote over there. They had two votes.
I am watching the floor right now to see what they are doing
and what they are going to do. They start making speeches again,
and as soon as we get someone else in here, there will be others
that will probably want to ask you something. I hate to hold you,
but give them about another 10 minutes, and I think they will
amble in here.
[Recess.]
MR. HALL. Okay. I know the questions that a lot of the others
are going to ask. When they get in here, I will yield them time,
and then I will take it away from them.
Mr. Reinert, what is the breakthrough technology we have been
waiting for when it comes to batteries?
MR. REINERT. Well, I certainly hope, Mr. Chairman, that it is
lithium ion batteries. They have the ability to be very lightweight.
Obviously, we have a materials problem with nickel. It is very
high on the commodity markets. So we hope lithium ion
technology is going to be a near and a mid-term solution. There
are obviously some issues with lithium. It is a substance of
concern, and we are not quite there with our cost targets and our
PHEV targets, but we are fairly confident this will be very rapidly
developed.
MR. HALL. I thank you.
Ms. Morrissett, what is the future for diesel and lean-burned
diesel machines in vehicles? How do you see them evolving over
the next 5 years or maybe the next 10 years?
MS. MORRISSETT. DaimlerChrysler, we see large growth in
diesels and, in particular, biodiesels in the next 5 to 10 years. I
announced to you today a few of the additional vehicles that we are
adding, with some announcements coming in the next few weeks,
but we see the growth over years.
Today, almost 50 percent of the market in Europe is diesel, and
Chrysler products are two-thirds diesels in Europe. As you see
fuel prices increasing, as you see customer demands for smaller
engines, like you have in Europe, the things that you see are diesels
that offer good performance in small packages. They have the
torque and the towing capabilities in a smaller engine than you
would see in gasoline.
If you look at J.D. Power numbers, J.D. Power predicts that we
are going to go from about 4 percent of the products you see today
to 7 to 15 percent in 2015.
That is just, you know, somebody else's thoughts. I really
can't predict beyond that.
MR. HALL. Okay. I can't tell you who wants these questions
asked, but they are questions that various members of the group
had marked to ask, and I have got the gauge here.
So, Ms. Lowery, this is a very interesting question, and I don't
know why I didn't think of it. I used to be in the aluminum
business that sold parts for aviation. The goal was to have stronger
material with less weight for the vehicle. If you could knock off
some weight, well, you had really a breakthrough. So utilizing
some materials such as carbon fiber seems to be an excellent way
to reduce the weight of a car without compromising safety.
Ms. Lowery, how expensive is it to create a car from carbon fiber
materials, and how would that translate to the cost of the vehicle?
MS. LOWERY. Well, your reference to aviation is a legitimate
one, given that a lot of the lightweight materials are in the aviation
business. The automobile business is a little more robust with
respect to all the different requirements and all the vehicles on the
roads with respect to safety issues. So GM is looking at a lot of the
lightweight materials. We have some of the leading experts in the
business, and we are also working with a lot of the research
institutes on lightweight materials.
I don't know the specifics with respect to the costs. I just know
those materials are more expensive, but we are all looking at those
kinds of materials in order to be able to get better fuel economy
and not do anything with respect to safety issues.
MR. HALL. That is a real good subject for them to be
upgrading, though, because it makes so much sense.
Mr. Karsner, do you think legislation is necessary to direct the
Secretary of Energy to carry out a program of research
development demonstration and commercial application for
plug-in hybrid electric vehicles and electric drive transportation
technology?
MR. KARSNER. I am not sure about the content of any new
legislation. I think we have sufficient legislation on the books to
move us that way, and it is integral to the President's Advanced
Energy Initiative and the programming currently under way at the
Department of Energy.
So plug-in hybrids are at the center of our agenda of research
and development as was alluded to in the earlier answer,
particularly with the focus on enhancing and bringing to market at
a more rapid rate lithium ion technology.
MR. HALL. Well, what is the soonest we will have the
infrastructure in place to support large fleets of hydrogen-powered
vehicles?
MR. KARSNER. I am sorry. Did your earlier question ask about
hydrogen or plug-in--
MR. HALL. If it wasn't, I didn't know it.
MR. KARSNER. What is the soonest we will have in place a
fleet of--forgive me.
MR. HALL. Go ahead.
MR. KARSNER. I don't think, from the Federal standpoint, we
are prepared to talk in terms of when we would have a fleet of
hydrogen vehicles in place, depending on what you would
characterize that fleet to be. We tend to leave the idea, dates, and
timings of commercialization, i.e., the timing in which production
would be economically and technically feasible, to the automotive
companies.
So, under present planning, dates have been thrown around in
the time range between 2015 and 2020 as to when initial
production might be ready, based on technology readiness. We
feel that it is really the automotive companies that would have to
talk about what manufacturing transformation might be necessary
for them to manufacture en masse to provide fleets.
MR. HALL. I notice in your testimony that the cost of fuel cells
has diminished over the last 3 years. How much further does the
price of fuel cells need to drop before they can be manufactured for
commercialization?
MR. KARSNER. Well, that is, again, I think a subject for much
debate and speculation. I have heard really on an order of
magnitude of 10 times as much as where the total price
adjustments need to fall. I would think that the auto manufacturers
have different calculations themselves internally as to where that
needs to be for them to put the capital costs into a manufacturing
facility that would allow them to produce them en masse, but,
fundamentally, all the research towards technology readiness is
really about driving down that cost, and I think right now the price
point we use is getting to a tenth of the current cost.
MR. HALL. Mr. Ross, would you like to ask questions, or
would you like to get under way with the next panel?
MR. ROSS. I have a few questions.
MR. HALL. The Chair recognizes Mr. Ross for anywhere
between 3 to 5 minutes, somewhere in there. Whatever you want.
MR. ROSS. That is better.
For, I guess, any of you that are automobile manufacturers on
the panel, as I mentioned in my opening statement, I would like to
discuss the hybrid, the vehicle tax credit as it relates to each of the
manufacturers here today in an effort to continue and possibly
provide additional incentives to consumers who purchase hybrid
vehicles. Do you believe--and I would like to get an answer, I
guess a short answer--from each of you. Do you believe waiving
the--or increasing the 60,000-unit cap is a viable option to
consider?
And the reason I ask that, as we all know, the cost for a hybrid
is somewhat more than for a nonhybrid vehicle. But, with the tax
credit, it pretty much gets the hybrid on a level playing field. And
until we are able to get the price of hybrid technology down, do
you believe this tax credit is important to encourage people,
consumers to buy these hybrid cars? And should we waive or raise
the 60,000-unit cap in order to accomplish that?
MS. CISCHKE. I would like to just comment that we do know
that incentives like that do help pull advanced technology. There
are certain people that buy these advanced-technology vehicles
without a lot of encouragement, but the vast majority of people are
influenced by cost savings there.
I know that there is a limit on the resources for the Government
in terms of being able to do this type of thing, but we would
support increasing that. Maybe even doubling it would be
appropriate.
MR. ROSS. Again, let me just point out that you mention that
there is a limit to what the Government can do on this. Again, it is
about priorities.
MS. CISCHKE. Sure.
MR. ROSS. It is about are we going to spend $279 million a
day in Iraq, $57 million a day in Afghanistan, pass another $90
billion in tax cuts primarily for those earning over $500,000 a year,
or are we going to invest in biorefineries and alternative renewable
energy to reduce our dependence on foreign oil? So it is really
about priorities.
I would like to get a response to the original question, before
my little tirade there, from the rest of you that are in the car
business.
MS. LOWERY. Incentives are important for the uptakers of
advanced technology. There is no doubt about it.
I think with respect to the prioritization through the Energy
Policy Act, there was a decision made with respect to prioritization
and figuring out the economics of the entire bill. So I think it has
to be looked at as a whole, and I also think that we have spent a lot
of time now really looking at incentives for biofuels, which is an
immediate response to some of the issues we are facing. So I think
it has to be looked at in the whole package, not one piece.
MR. ROSS. And Toyota.
MR. REINERT. The situation is, we have had the Prius, which is
probably the most popular hybrid on the road, for 6 years, and we
are selling about a little over a hundred thousand cars per year in a
17 million-car market. Obviously, we are doing the best we can at
preparing society for these cars. I believe that the tax credit does
help people become aware of the options under the hybrids and
does help the market penetration greatly.
MR. ROSS. When I was out driving this hydrogen fuel cell car
this morning--I won't mention the brand since none of you all are
representing that one--but the point they made was this is a million
and a half dollar car, and in 3, 4 years from now it may be a car
that is affordable. So I think we are going to see a lot of changes
in the technology and in the mass production that allows the cost of
these things to come down, that really can reduce our dependence
on foreign oil.
One of the things noted to me this morning was, with the
hydrogen fuel cell if you do the math on it, it comes out to what we
would know as about $2.75 a gallon for the fuel, and that would
run you about 25 miles. So it is not that we are going to see that
much savings in terms of what consumers are paying today, at least
early on in some of these technologies, but it seems to me that
these technologies could go a long way to reducing our
dependence on foreign oil; and, hopefully, as we mass produce and
end up with, hopefully, millions of these things on the road
someday then that will, in fact, lower the price we pay at the pump,
or whatever they call it for a hydrogen fuel-cell car.
I am still learning some of this, but I was really impressed with
the technology and all the components that I have read about and
studied. But actually to experience it this morning was quite
fascinating.
Mr. Chairman, if you could indulge me, I have one other thing
that I think is really important I would like to ask.
MR. HALL. Only if you tell us what kind of car it was in.
MR. ROSS. It was Honda. It was a Honda hydrogen fuel-cell
car. And I don't know, some of y'all may be doing that now, too.
Are you?
MS. LOWERY. Yes.
MR. ROSS. I want to give equal representation. I would love to
ride in y'all's, too. Get it on up here, and I will ride in y'all's, too.
It was pretty impressive. I guess I was kind of expecting
something to go like a golf car goes, but it doesn't. It gets up and
goes.
But, thank you, Mr. Chairman, for indulging me for this
question.
The formula--because I think this is something that we do need
to revisit--that is found in the energy policy that passed last year,
the formula used to calculate the amount of the tax credit for
hybrid cars applies a city fuel economy metric. Now it is my
understanding that different hybrid technologies perform
differently in city versus highway situations. So would changing
this formula to use a combined city and highway fuel economy
metric to calculate the credit provide a significant increase in the
credit that consumers receive? And depending on which
manufacturer you are with may depend on how you answer that
because of the technology and what you have invested in up until
now.
The other part of that is, should Congress try to stay away from
specifying city and highway and even the word hybrid and just
leave it open for any alternative renewable energy forms out there
to try to encourage development rather than limiting it to what we
actually get specific with in the law?
I would like to get your thought on that as, I guess, a second
part or follow-up to that question. I would love to get y'all's
thoughts on that.
MS. CISCHKE. I would like to just comment a bit on the hybrid
comment regarding the metric that you use for the benefit.
One of the challenges we all have in the industry is that we use
hybrid technology to describe a lot of different things. So there are
full hybrids, there are mid hybrids, there are hybrids that can run
totally on electric engine, and there are others that coexist. That is
why in the Energy Policy Act there was a metric that tried to
define and classify the degree of hybridization, so to speak. So I
think you do have to have some kind of measure. Otherwise, if
they are all the same, I think you are not really pushing the
technology along as far.
So that would just be one comment I would like to share.
MR. REINERT. I agree 100 percent with my colleague from
Ford that there are a wide variety of approaches to hybrid
technologies, and some of them have more and some of them have
less benefit overall. So I do think we need to take a look, and I
think we are addressing that or attempting to in the Energy Policy
Act and do take a look at the performance of the cars.
MR. ROSS. Any thoughts on whether we ought to get away
from the city and go to a combined city and highway fuel economy
metric?
MS. MORRISSETT. If we go to a combined city and highway
metric, what we do is we become more technology neutral. If you
look at city, it favors certain types of technologies. If you look at
highway, it favors others. So if you did a combination, it is more
technology neutral.
MR. ROSS. Would you agree that we need to stay away from
specifying technologies in laws and allow the private sector to
compete with those technologies to get the most fuel economy and
to reduce our dependence the most on foreign oil or do we, in the
future, need to be specifying things like hybrid or hydrogen or
leave the technology to y'all and put the incentives in for whatever
fits within a broader scope?
MS. MORRISSETT. My position would be I just as soon that you
did not dictate to us what the technology is. There are new
emerging technologies every day, and you really don't want to
limit that. Our customers are telling us what they require and what
they need.
Back to your question on credits with hybrids before, my
response would be I would prefer to have credits for any advanced
technologies if we started talking about the biofuels, biodiesels,
things that also accomplish some of the things that we are trying to
do with energy security.
MR. ROSS. Mr. Chairman, I appreciate your indulgence; and
next time I am introducing you in Texarkana, I will give you a
favorable introduction.
MR. HALL. Okay. All right. You have been an informative
and affable group. Thank you very much. We are going to release
you at this time. We will have the second panel. Thank you for
the time you have given us and the time preparing, the time of
travel. Have a good, safe trip back to your office, and we thank all
of you.
Okay. We are going to get under way. We don't have a full
group, but they are on their way.
STATEMENTS OF MICHAEL A. PACHECO, DIRECTOR, NATIONAL BIOENERGY CENTER,
NATIONAL RENEWABLE ENERGY LABORATORY; JON A. WARZEL, VICE PRESIDENT, BUSINESS
DEVELOPMENT AND GOVERNMENT PROGRAMS, SYNTROLEUM CORPORATION; SCOTT HUGHES,
DIRECTOR OF GOVERNMENT AFFAIRS, NATIONAL BIODIESEL BOARD; AND MITCHELL PRATT,
SENIOR VICE PRESIDENT, CLEAN ENERGY
MR. HALL. At this time, I recognize Mr. Pacheco, Director of
the National Bioenergy Center, National Renewable Energy
Laboratory, and ask you to kindly just give us a synopsis of your
testimony, and then we will ask you questions about it. Try to stay
as close to 5 minutes as you can. You have been so patient and
tolerant, go over if you need to, and I recognize you at this time.
MR. PACHECO. Thank you, Mr. Chairman.
Mr. Chairman, thank you for this opportunity to discuss how
biofuels can provide our Nation with an abundant and renewable
source of energy and, in particular, to help us reduce our
dependence on imported oil.
I am the Director of the National Bioenergy Center at the
National Renewable Energy Laboratory in Golden, Colorado.
NREL is the U.S. Department of Energy's primary laboratory for
renewable energy and energy efficiency. I am honored to be here
today and to be able to speak with you.
The committee is to be commended on your hearings on new
technologies. The director of NREL, Dr. Dan Arvizu, came before
you last week to address the entire range of renewable energy
technologies. Given the seriousness of our energy challenges,
there is a lengthy list of renewable and conventional energy
options that must be pursued.
If we narrow our focus to just those things that can reduce our
addiction to oil, then our choices become more limited.
Developing an industry to produce biofuels like ethanol and
biodiesel must be a priority, because biomass is the only renewable
option that we have for liquid transportation fuels.
The biomass resource in this country is huge. A recent study
by USDA and DOE found that the U.S. could annually produce 1.3
billion tons of biomass for fuels. This amount of biomass holds as
much energy as 3 � billion barrels of oil. This equals the energy
in 60 percent of all the oil that we consume in a year. It also
equates to the most oil the United States has ever produced in a
year. We envision that every State in the Nation can benefit
economically from an expanding biofuels industry.
The U.S. currently produces more than 4 billion gallons a year
of ethanol almost exclusively from corn grain, and this industry is
growing 30 percent annually. To move the ethanol industry where
we need it to be, we have to go beyond corn grain as the primary
resource.
One of the most abundant potential resources we have is corn
stover, the nonfood parts of the corn plant, includes the stalks, the
leaves, and the husks. Other resources include forest thinnings to
reduce fire hazards, residues from the forestry and agricultural
operations, and eventually even energy crops like fast-growing
trees and hardy grasses, like switchgrass.
Given this full range of resources, biofuels could supply at
least 30 percent of what we use today. However, to use all of these
resources and to maximize the impact ethanol can have, we need to
perfect the technologies that convert cellulosic biomass. We need
to reduce the cost of the technology and we need to improve its
conversion efficiency.
With the President's biofuels initiative, we are on course to do
just that. Our goal, as Mr. Karsner has said, is to make cellulosic
ethanol as cheap as corn ethanol in the next 6 years. We have
made very good progress over the past 4 years; and with the
President's initiative we have established detailed R&D plans to
reach the goal of $1.07 by 2012, while still shooting for the
longer-term cost target of about 60 cents a gallon.
Inviting me here today, you asked me to talk about the energy
efficiency of ethanol. The ethanol industry is much more efficient
today than it was 20 years ago. Today, the energy benefits of fuel
ethanol are clear and considerable. Corn ethanol delivers about
60 percent of the total energy that we use in order to make that
ethanol. Most of the energy that we use is renewable energy in the
form of the corn itself. The energy actually delivered to the
customer in the fuel ethanol is about 1.4 times greater than the
fossil energy put into the process, and it is about 10 times greater
than the petroleum energy input. Cellulosic ethanol will yield
45 percent of the total energy used to make it, and nearly all of the
energy input can come in the form of biomass itself.
The take-away message is that ethanol can replace about 10
times the amount of petroleum that we use to make the ethanol.
This is true for both corn and cellulosic ethanol.
In conclusion, biomass is our only renewable option for liquid
transportation fuels. U.S. resources can supply a large portion of
the transportation fuel that we need, and the energy balance is
actually very good for such a young technology. Biofuels can
come from resources in every region in the country and can
stimulate rural economies. Ongoing research will reveal ways to
expand our resource base, improve the conversion efficiency and
create new fuels that go beyond ethanol and biodiesel.
As the Director of this Nation's National Bioenergy Center, I
can assure you that a sustained high-level investment for basic
biofuels research will provide sustainable benefits for all future
generations. Biofuels are an environmentally and economically
beneficial way for us to bridge the gap between rising energy
demand and peaking oil production, while reducing U.S.
dependence on imported oil.
Thank you, Mr. Chairman.
MR. HALL. Thank you.
[The prepared statement of Dr. Michael A. Pacheco follows:]
PREPARED STATEMENT OF DR. MICHAEL A. PACHECO, DIRECTOR,
NATIONAL BIOENERGY CENTER, NATIONAL RENEWABLE ENERGY
LABORATORY
<GRAPHICS NOT AVAILABLE IN TIFF FORMAT>
MR. HALL. The Chair recognizes Mr. Jon A. Warzel, Vice
President, Business Development Government Programs,
Syntroleum Corporation, for 5 minutes or whatever it takes you to
give it.
MR. WARZEL. Thank you, Mr. Chairman, committee
members, and guests. My name is Jon Warzel, and I am the Vice
President of Business Development and Government Programs for
Syntroleum Corporation. Syntroleum is a publicly held company
based in Tulsa, Oklahoma, focused on the application of its
proprietary Fischer-Tropsch technology for the conversion of
natural gas and coal to liquid hydrocarbon transportation fuels.
We would like to recognize the efforts of Congressmen John
Sullivan and Don Young and Senators Jim Inhofe and Conrad
Burns as champions for domestic alternative fuels in the use by our
Nation's military.
Syntroleum has over 20 years of comprehensive technology
development. Currently, Syntroleum has the only fully integrated
Fischer-Tropsch plant capable of producing a finished
transportation fuel in North America and will be providing the
Department of Defense with a hundred thousand gallons of product
for their Assured Fuels Initiative later this summer. This program
aimed at certifying Fischer-Tropsch product for military use is a
critical step in reducing our Nation's dependence on crude oil and
providing alternative energy resources.
As part of the military's program, a flight test in a B-52 will
take place later this year using Syntroleum's alternative fuel.
Currently, military operations consume in excess of 350,000
barrels a day of jet fuel, predominantly derived from crude oil.
My objective today is to provide you with a background and
understanding of Fischer-Tropsch's history, technology, and the
products produced by this process.
Syntroleum was founded by our current chairman, Mr. Ken
Agee, in the mid-1980s. By the mid-1990s, the company was in a
position to expand from a research lab to construction of a pilot
plant for further testing.
In 2002, Syntroleum, in conjunction with the participation of
Integrated Concepts Research Corporation, ICRC, and Marathon
Oil Company, built the demonstration plant at the Port of Catoosa
near Tulsa, Oklahoma. This effort was partially funded by the
Department of Energy's Ultra Clean Fuels Program under a
subcontract with ICRC. Finished fuels production for the nominal
70-barrel-per-day demonstration plant occurred in March of 2004.
Based on information from the Air Force, Syntroleum is the
only company to date that has delivered sufficient quantities of
100 percent FT product to the U.S. military to perform extensive
tests, including jet engine emissions testing.
The Fischer-Tropsch's chemistry and process was developed
by two German scientists, Franz Fischer and Hans Tropsch, in the
1920s. The basic reaction chemistry is the combining of carbon
monoxide and hydrogen to form long chain hydrocarbon
molecules. The initial German efforts were to provide the country,
which lacked indigenous oil resources, a means of supporting
chemical feedstock and military operation requirements. Due to
the oil price collapse of the 1950s, synthetic fuel development
essentially halted for the next 20 years or so, except for the
development efforts in South Africa.
In 1950, the South African Coal, Oil Gas, and Gas Corporation,
known as Sasol, was formed. First FT production by Sasol in 1955
was based on coal-driven synthesis gas at their Sasolburg facility.
The Government-funded efforts continued, culminating in the
start-up of additional plants in the 1980s. Currently, Sasol
produces 150 to 160,000 gallons a day--or barrels a day--of FT
products from coal.
From a chemistry standpoint, Fischer-Tropsch is the reaction of
carbon monoxide and hydrogen in the presence of a catalyst,
typically iron or cobalt. The carbon monoxide and hydrogen split
and formed together to make a hydrogen product and a water
product. The reaction requires a specific
hydrogen-to-carbon-monoxide ratio and produces approximately a
barrel of water for each barrel of FT product, essentially reducing
water consumption requirements in the coal gasification process.
The key concept for FT is that the synthesis gas can be produced
from almost any carbon-bearing substance, the most abundant
source being natural gas and coal.
In CTL, or coal to liquids, the application requires a number of
steps required to convert the solid coal into carbon monoxide and
hydrogen. The coal is mined, prepared for gasification, gasified,
adjusted for the hydrogen-to-carbon-monoxide ratio and, finally,
cleaned prior to the delivery to the Fischer-Tropsch's reactor. The
component of the synthesis gas is to remove the carbon dioxide,
which allows for sequestration or enhanced oil recovery
opportunities. Upon final cleanup, the synthesis gas enters the
reactors for conversion of the hydrocarbon product. Due to the
size and complexity of these processes, there are only a few
companies worldwide that have the experience of building these
type of plants.
The Air Force results of the testing of Syntroleum's fuels have
shown 90 percent reduction in particulate matter emissions, in
excess of 50 percent reduction compared to low sulfur diesel fuel
for hydrocarbon emissions and particulate matter and diesel
running machines.
As far as industry status, there are a limited number of
companies that have developed Fischer-Tropsch's technologies to
the point of constructing commercial-scale plants. The FT industry
is predominantly focused on natural-gas-based plants. In Qatar, at
the moment, this effort is being led by the likes of Sasol,
ExxonMobil, Shell, ConocoPhillips, and Marathon Oil, which have
all announced in excess of hundred-thousand-barrel-per-day plants.
In conclusion, the technology to convert the Nation's vast coal
resources to ultra-clean fuels via the Fischer-Tropsch process
exists today. I believe it is accurate to say Sasol, based on the
development under a government program, has demonstrated
large-scale Fischer-Tropsch plants using coal as a feedstock.
Based upon 2003 Energy Information Administration data, the
U.S. has a demonstrated coal reserve base of 496 billion tons. At a
conservative conversion rate of 1.5 barrels of Fischer-Tropsch's
product for each ton of coal, the potential for domestically
produced CTL is approximately 750 billion barrels of product,
greater than the estimated crude oil reserves of the Middle East.
It is our view that funding of loan guarantees specific to the
CTL initiative and long-term offtake agreements by the
Department of Defense are critical to moving forward with the
domestic initiative, specifically for those smaller companies that
do not have the balance sheets of the super major integrated energy
companies at this time.
Finally, thank you for the opportunity to address the
subcommittee on this important issue as industry and government
work towards making CTL a reality in the United States.
MR. HALL. We thank you.
[The prepared statement of Jon A. Warzel follows:]
PREPARED STATEMENT OF JON A. WARZEL, VICE PRESIDENT,
BUSINESS DEVELOPMENT AND GOVERNMENT PROGRAMS,
SYNTROLEUM CORPORATION
Thank you Mr. Chairman, Distinguished Representatives, and
guests, my name is Jon Warzel and I am the Vice President of
Business Development and Government Programs for Syntroleum
Corporation. Syntroleum is a publicly held company based in
Tulsa, Oklahoma focused on the application of its proprietary
Fischer-Tropsch ("FT") technology for the conversion of natural
gas and coal to liquid hydrocarbon transportation fuels and other
specialty products, such as lubricating oils. Syntroleum has over
20 years of comprehensive technology development, with a
combined 127 US and foreign patent applications pending and
issued. Currently, Syntroleum has the only fully integrated FT
plant capable of producing a finished transportation fuel in North
America. My objective today is to provide you with a background
and understanding of Fischer-Tropsch history, technology, and the
products produced by this process.
Syntroleum Background
Syntroleum was founded by our current Chairman, Mr. Ken
Agee in the mid 1980's. Mr. Agee focused on the application of
the FT chemistry for conversion of natural gas. Initial efforts were
directed at the research and development of a suitable catalyst. By
the mid 1990's the company was in a position to expand from the
research lab to construction of a pilot plant for further testing of its
proprietary cobalt catalyst and begin developing plant design
details. By 2002, Syntroleum had advanced its technology to the
next development stage, construction and operation of a
demonstration scale plant.
In early 2000, Syntroleum in conjunction with Atlantic
Richfield Company (ARCO) operated a demonstration plant at
ARCO's Cherry Point refinery. In 2002 upon British Petroleum's
acquisition of ARCO, Syntroleum, in conjunction the participation
of Integrated Concepts Research Corporation (ICRC) and
Marathon Oil Company, moved this demonstration plant from
Cherry Point, Washington to the Port of Catoosa near Tulsa,
Oklahoma. This effort was partially funded by the Department of
Energy Ultra Clean Fuels Program under a subcontract with ICRC,
allowing for the expansion of the demonstration plant to a fully
integrated plant capable of producing a finished transportation
fuels. Groundbreaking for the Catoosa Demonstration Facility
("CDF") took place in August 2002 and first finished fuels
production for the nominal 70 barrel per day plant occurred in
March of 2004.
Syntroleum continues to own and operate its facilities for the
development of a commercial scale FT plant. Syntroleum's fully
integrated plant has over 18,000 hours of runtime and has
produced over 300,000 gallons of FT product. These fuels have
been extensively tested by transit fleets, engine testing labs,
product testing labs, universities, and specifically the Air Force
and Army.
Based on information from the Air Force, Syntroleum is the
only company to date that has delivered sufficient quantities of
100% FT product to the U.S. military to perform extensive tests,
including turbine emissions testing. Recently, our plant was
chosen to produce the initial fuels for the Department of Defense
Assured Fuels Initiative. As part of the Assured Fuels Initiative,
the Air Force is scheduled to test Syntroleum's product in a B-52
flight test this fall.
The History of Fischer-Tropsch
The Fischer-Tropsch chemistry and process was developed by
two German scientists, Franz Fischer and Hans Tropsch in the
1920's, with the first German patent being issued in 1925. The
basic reaction chemistry is known as a hydro-polymerization of
carbon monoxide. Essentially, this is the combining of carbon
monoxide ("CO") and hydrogen ("H2") to form a long chain
hydrocarbon molecule. The initial German efforts were to provide
the country, which lacked indigenous oil resources, a means of
supporting chemical feedstock requirements and military
operations. Germany's first two FT plants, approximately 1,500
barrels per day of capacity, utilized cobalt based FT catalyst and
generated the required feedstock (synthesis gas), a mixture of CO
and H2, from coal and coke. History reflect that the initial startup
of these plants occurred in the 1935 - 1936 timeframe.
During the World War II years, a total of 13 FT plants were
constructed, nine of which were located in Germany. All plants
utilized cobalt catalyst in a fixed bed reactor system with coal or
coke derived synthesis gas. Germany reached a maximum
production of approximately 16,000 barrels per day in 1944; all
based on their cobalt catalyst FT process. Significant research and
development efforts were initiated on iron based FT catalyst due to
the scarcity of cobalt in Germany and the desire to produce a high
octane gasoline. The efforts on iron based FT catalyst research
were not commercialized by the Germans. Additionally,
development of large scale slurry reactors capable of producing
more FT product were initiated, but never completed due to war
related problems. Copies of the original German documents and
their translation are available at the www.fischer-tropsch.org
website.
Post World War II, extensive FT catalyst and process patents
were issue primarily to US companies. Under the US Synthetic
Fuels Act (1944 - 1955) the US Bureau of Mines constructed a
nominal 50 barrel per day iron based FT plant located in Louisiana,
Missouri. This plant produced approximately 1.5 million gallons
of gasoline which was fleet tested by the Armed Services. A
second US plant was constructed and operated in the 1947 to 1957
timeframe in Brownsville, Texas. This approximately 8,000 barrel
per day plant employed iron based catalyst and utilized natural gas
as the feedstock, making it the first "gas-to-liquids" plant in the
world. Technical difficulties and the oil price collapse in the mid
1950's rendered the plant uneconomic.
Due to the oil price collapse of the 1950's, synthetic fuel
development essentially halted for the next 20 years or so except
for development efforts in South Africa and German plants which
were moved into Russia or areas controlled by Russia. Three
plants were located within the Russian security zone (2 in East
Germany and 1 in current day Poland). At least 1 and maybe 2nd
German FT plants were relocated to the USSR and in operation
during the 1952 - 1954 timeframe. Little is known about these
plants, but Russian technical teams were active post WWII.
In 1950, the South African Coal, Oil Gas and Gas Corporation
(Sasol) was formed. First FT production by Sasol in 1955 was
based on coal derived synthesis gas ("CTL") utilizing iron based
catalyst at their Sasolburg facility. The plant was built to operate
both low and high temperature reactors initially producing gasoline
and later switching to chemicals production. Capacity for the
initial plant was approximately 8,000 barrels per day. The
government funded efforts continued, culminating in startup of
Sasol Two and Three at their Secunda facility in the 1980's.
Currently, Sasol produces 150,000 to 160,000 barrels per day of
FT product from coal derived synthesis gas with an iron based
catalyst. Additional facilities are operated to provide required
research and development activities for their natural gas and cobalt
catalyst based FT applications.
Since 1990, three large scale FT plants have been constructed
all utilizing natural gas as a feedstock. Mossgas, now PetroSA,
built as part of a government project, operates a 30,000 barrel per
day facility built in 1992 to produce bulk fuel by licensing the
Sasol technology. In 1993, Shell completed a nominal 12,000
barrel per day facility utilizing Shell's fixed bed process (Shell
"Middle Distillate Synthesis" - MDS). Currently in start-up is the
Sasol Oryx plant located in Qatar. This nominal 34,000 barrel per
day plant utilizes a cobalt based FT catalyst for the primary
purpose of producing diesel fuel and possibly synthetic lubricants
with the primary market being Europe.
Industry Status
Sasol clearly has the most experience in FT technology and
operations, in part to the early efforts of the South African
government program. Public information indicates Sasol is
currently working to expand the Oryx (Qatar) project by 66,000
barrels per day and develop an additional fully integrated GTL
project in Qatar with their partner, Chevron, of 130,000 barrels per
day. Additional work is proceeding on their 34,000 barrel per day
GTL plant in Nigeria and a significant expansion (30-40%) of their
South African facilities. Additional business development efforts
include feasibility studies for two nominal 80,000 barrel per day
coal to liquids plants in China and reported interest in Indian
projects with India Oil Company. Sasol has recently discussed
their potential interest in US based CTL projects in addition to the
announced WMPI project in Pennsylvania.
Syntroleum continues to operate their nominal 70 barrel per
day facility located near Tulsa, Oklahoma in support of technology
enhancement and to provide FT product to the US Department of
Defense. Business development efforts are focused on deploying
Syntroleum's marine and land based FT technology and the
potential development of several domestic CTL projects.
Shell continues operation of their GTL plant in Malaysia
providing FT diesel to the Far East and European markets focused
on reduction of air emissions. Shell has announced a 70,000 -
140,000 barrel per day GTL plant in Qatar, but the current project
status is unknown. To date, Shell has not announced any
additional projects.
Statoil-PetroSA continues to operate the 1,000 barrel per day
GTL demonstration plant located at Mossel Bay, South Africa. To
date, no definitive commercial projects have been announced.
ExxonMobil has announced a 150,000 barrel per day GTL
plant to be located in Qatar. The current status of the project is
unknown, but it appears this project will not be delayed by the
Qatar government upon completion of commercial arrangements.
ExxonMobil technology is based on cobalt catalyst and associated
operating experience from their 200 barrel per day demonstration
plant in Baton Rouge, Louisiana which was operated in the 1990 -
1993 timeframe. ExxonMobil would appear to be the leader in FT
patents with over 3,500 patents assigned to it. In 2004, Syntroleum
signed a worldwide license with ExxonMobil for access to their
Gas to Liquids (GTL) patents to produce and sell fuels from
natural gas or other carbonaceous substances such as coal.
ConocoPhillips also utilizes a cobalt based FT process and
operated a 400 barrel per day demonstration plant at their Ponca
City, Oklahoma facility from 2003 to 2005. Their announced
80,000 to 160,000 barrel per day GTL plant in Qatar has been put
on hold by the Qatar government. BP and Institut Francais du
Petrole (IFP) / Agip continue the development of their respective
technologies with no known announcements of commercial
projects. BP continues to operate their FT demonstration plant in
Nikiski, Alaska which is not currently capable of producing a
finished product. Rentech continues development of their
proposed conversion of a natural gas based fertilizer plant in
Illinois to a nominal 5,800 barrel per day CTL plant. Additional
proposed projects that have been announced are a 10,000 barrel per
day CTL plant in Natchez, Mississippi and a license for DKRW's
proposed 40,000 barrel per day plant in Wyoming and construction
of a 10 barrel per day demonstration plant in Colorado.
Fischer-Tropsch Technology and Products
From a chemistry standpoint, the Fischer-Tropsch reaction is
the hydro-polymerization of carbon monoxide. In essence, a
synthesis gas stream consisting predominantly of carbon monoxide
(CO) and Hydrogen (H2) is reacted in the presence of a FT
catalyst. The CO molecule splits into carbon and oxygen and a
hydrogen molecule attaches to each resulting in production of a
stream containing hydrocarbon compounds and water. The
reaction requires a H2/CO ratio of in the range of 2.1 - 2.15 for
production of transportation fuels and produces approximately 1.1
barrels of water for each barrel of FT product. The hydrocarbons
produced by the FT reaction prior to product upgrading, range in
carbon number from C1 (methane) to C100+ . The typical carbon
number range for a diesel fuel is C8 thru C20.
The key concept for FT is that the synthesis gas can be
produced from almost any carbon containing substance, the most
abundant sources being natural gas and coal. Additional carbon
sources such as petroleum coke or biomass (wood, farming waste,
grasses, sewage) could also be utilized as a feedstock with the
appropriate technology for conversion to a synthesis gas. In a CTL
application a number of steps are required to convert the solid coal
into a CO and H2 synthesis gas stream. The coal is mined,
prepared for gasification, gasified, water-gas shifted to adjust the
H2/CO ratio, and finally cleaned prior to delivery to a FT reactor
for conversion to a hydrocarbon product. A component of the
synthesis gas clean-up process is to remove the carbon dioxide
prior to the FT reactor. Removal and capture of the CO2 allows for
sequestration or enhanced oil recovery opportunities.
Individual companies have developed specific FT catalysts, but
iron and cobalt based catalyst are the predominate formulations
utilized currently. Each catalyst type has specific attributes, but
the current commercial project developments in Qatar all utilize a
cobalt based catalyst. Cobalt based FT catalysts have been shown
to be more selective towards the production of mid-distillate range
hydrocarbon product, which is the range for diesel and aviation
finished fuels. Additionally, cobalt catalysts are more active, and
as a result produce more barrels of FT product per lb of FT
catalyst, which equates to smaller FT reactors for equivalent FT
production. Iron based FT catalyst is more suited to the production
of chemical feedstock due to their inherent selectivity towards
producing olefins and aromatics at high temperature operation.
The primary issue with using a cobalt based FT catalyst in a
CTL plant is the ability to clean the synthesis gas to acceptable
impurity levels. It is believed that through the use of Lurgi's
Rectisol process and subsequent synthesis gas clean-up processes,
such as charcoal beds, levels required for economic use of a cobalt
catalyst can be achieved. For example, Eastman Chemical
Company has been producing methanol from a coal derived
synthesis gas for approximately 20 years. Although the catalyst is
different, the methanol stream Eastman produces is utilized for a
variety of end products and healthcare feedstock where high
quality synthesis gas is a requirement.
Upon final clean-up, the synthesis gas enters the FT reactor for
conversion to a raw hydrocarbon product. For a commercial scale
GTL facility, 17,000 to 20,000 barrel per day, a single FT reactor
is approximately 34 feet in diameter and 180 feet tall. These
vessels can weigh in the range of 2,000 tons each. As a reference
point, the new MIA2 tank weighs about 68 tons, so a single GTL
FT reactor can approximate the weight of 30 MIA2 tanks. The FT
reaction is a vigorous reaction which produces significant heat
which must be removed. In addition to the basic reactor shell, the
FT reactor internals are essentially a piping system to evenly
distribute the synthesis gas within the reactor and a set of heat
transfer tubes to remove excess heat. Due to the size and
complexity of these reactors, only a limited number of companies
can construct FT reactors. For CTL projects, due to the potential
transportation, logistical, and safety issues associated with moving
a vessel of this size, on-site construction may be required.
The raw hydrocarbon product is further processed / upgraded
to enhance the properties of the finished fuels, chemical feedstock,
or waxes. For the transportation market, typical FT finished diesel
contains non-detectable levels of sulfur, aromatics and has a cetane
index of 74+. Syntroleum has been working with and supplied the
Air Force, Army, and Navy FT product. Based on our
understanding from discussions with the Air Force, Syntroleum's
FT product is the only fuel that has been extensively tested to date
with respect to emissions reduction. The Air Force results,
dependent upon equipment and operating conditions, have shown
in excess of 90% reduction in particulate matter emissions.
Testing performed by the Army - National Automotive Center, has
shown particulate matter and hydrocarbon emission reductions of
50+% and 60+% respectively compared with low sulfur diesel
fuel.
The testing performed on Syntroleum's FT fuels by the Air
Force, Army, and Navy has shown that FT fuels also provide a
number of other performance benefits, such as increased thermal
stability and cold performance properties. Currently, FT fuels are
not fully certified for use in aircraft. Our understanding based on
meetings with the Department of Defense, is that a component of
the Assured Fuels Initiative is to certify the use of FT fuels for
turbine applications which would eventually crossover to the
commercial sector.
In conclusion, the technology to convert the nation's vast coal
resources to ultra-clean fuels via the Fischer-Tropsch process
exists today. The capital cost associated with a CTL plant have
been estimated in the $80,000 to $100,000 per barrel range with
70% to 75% associated with the gasification and clean-up process
required to produce a synthesis gas. As an example, a 20,000
barrel per day plant is estimated to cost between $1.6 and $2.0
billion. Based upon 2003 Energy Information Agency data, the US
has a demonstrated coal reserve base of 496 billion tons. At a
conservative conversion rate of 1.5 barrels of FT product for each
ton of coal the potential for domestically produced CTL is 744
Billion barrels of product, essentially equal to the crude oil
reserves of the Middle East.
Finally, thank you for the opportunity to address the
Subcommittee on this important issue as industry and government
work towards making CTL a reality in the United States.
MR. HALL. The Chair recognizes the Director of Government
Affairs, National Biodiesel Board, Mr. Scott Hughes, for 5
minutes.
MR. HUGHES. Good afternoon. Thank you, Mr. Chairman.
Thank you, Mr. Chairman, committee members. We
appreciate the opportunity to be here and come before you today
on this important issue.
I would like to focus my comments today on providing you
with some background about biodiesel, our industry, as well as an
overview of the collaborative work between the biodiesel industry,
engine and automakers, and the role that we see biodiesel having in
the national energy pool.
Biodiesel is the name of a cleaner burning, alternative fuel
produced from renewable resources such as animal fats and
cooking oils. Biodiesel contains no petroleum, but it can be
blended at any level with petroleum diesel to create a biodiesel
blend. Biodiesel blends can be used in any compression, ignition
engine or i.e., a diesel engine with no major modifications.
Biodiesel in its pure form is simple to use, readily biodegradable,
nontoxic, and essentially free of sulfur and aromatics.
In chemical terms, biodiesel has a composition similar to that
of conventional diesel fuel. It is what is called an alkyl ester,
where conventional diesel fuel is a hydrocarbon, the difference
being that biodiesel alkyl ester contains oxygen in addition to
carbon and hydrogen, about 11 percent by weight, where
conventional diesel fuel contains no oxygen.
Biodiesel is produced using a chemical reaction. A fat or an oil
is reacted with an alcohol such as methanol and the presence of a
catalyst to produce two products, glycerin or methyl esters or
biodiesel. The glycerin is removed in the production process, and
it is then further refined and marketed as a value-added product.
Everything that goes into the production process of biodiesel
comes out.
Soybeans are the largest oilseed crop grown in the U.S., and, as
a result, soybean oil makes up about half the raw material available
to make biodiesel. The other half consists of all other vegetable
oils, recycled cooking oils, and animal fats. But approximately
90 percent of the biodiesel that is produced today in the U.S. is
made from soybean oil.
As the industry has developed, we have made it a priority to
work with automakers, engine makers, and the petroleum industry
to develop a fuel specification for biodiesel, just as they have for
diesel and gasoline. This collaborative effort has resulted in the
adoption of an ASTM standard for biodiesel.
Additionally, we recognize the importance of fuel quality to the
consumer and our stakeholders. As a result, industry has
developed a comprehensive QAQC program called BQ9000. This
program is aimed at assuring that biodiesel fuel is produced and
maintained at the industry standard, which is ASTM D6751.
The biodiesel industry has shown slow but steady growth since
the early 1990s. However, in the past 2 years, its growth has gone
up exponentially. A critical contributing element to the strong
growth has been the implementation of the volumetric biodiesel
fuels tax credit that you passed in 2004.
Back in 2004, there were approximately 25 million gallons of
biodiesel sales. That increased to 75 million gallons in 2005, and
we are currently on track to exceed 150 million gallons this year.
Likewise, capacity has also increased significantly. The
industry went from 22 biodiesel plants in 2004 to more than 60
biodiesel plants in operation today, and there are over 40 more
plants currently under construction. Production facilities are
located and being located in just about every region of the country
from coast to coast.
Biodiesel is primarily marketed as a blended product with
conventional diesel fuel typically in concentrations up to
20 percent. It is distributed utilizing the existing fuel distribution
infrastructure with blending most commonly occurring with what
we call "below the rack" by fuel jobbers. Biodiesel is beginning to
be distributed through the petroleum terminal system. To date,
biodiesel has positions in approximately 25 terminals around the
country, and we anticipate this trend to increase.
Historically, biodiesel's primary markets have been regulated
fleets for EPAct or various other Executive Order requirements for
petroleum reduction, as well as the agricultural industry. However,
biodiesel is increasingly being introduced into private-sector fleets,
home heating oil, light duty diesel vehicles, marine applications,
and even some electrical generation. All of these markets
represent significant volume opportunities for our industry.
The American Trucking Associations has endorsed the use of
B5--it is the 5 percent blend--as a way to supplement our Nation's
energy supply. Likewise, Sysco Corporation, the largest private
truck fleet in the Nation, has begun using B5 in its trucks. So,
today, the biodiesel industry has worked diligently through the
development of a national fuel standard, interaction with
stakeholders, and a focus on fuel quality to establish a solid
foundation to support our industry's future growth.
Looking ahead, recent regulatory changes aimed at improving
the emission profile of diesel engines and improving air quality
require significant advancement in engine and emission control
technologies. Auto and engine makers are stepping up to meet the
challenges presented by these standards which will take effect in
model years 2007 to 2010.
A critical element in meeting these standards will be the fuel
that is used. Biodiesel will be used in these engines, and
consumers are ever increasing their demand for biodiesel both in
fleet applications and light duty markets.
The biodiesel and OAM industries are working collaboratively
in this area. The biodiesel industry has spent about $1.4 million to
date, with an additional $700,000 committed for fiscal year 2007.
Automakers and engine makers are also committing significant
time and resources towards this effort.
We foresee strong growth for biodiesel and it becoming further
integrated into the national fuel distribution system and energy
pool.
The President has laid out a vision of significantly reducing our
Nation's dependence on foreign sources of oil. Biodiesel can be
one of the first tools used to begin reaching that goal, because it is
a liquid renewable fuel that is available right now, ready for
blending into our existing fuel supply and use in existing vehicles.
So, in short, biodiesel has many benefits for the consumer
Nation as a whole. It is a viable tool in our toolbox of available
options to enhance our Nation's energy security as it, one, adds to
the distillate fuel pool; two, adds to U.S. refining capacity; three,
directly replaces imported finished diesel fuel; and, finally, utilizes
domestic agricultural products.
With that, Mr. Chairman, I will conclude welcome my
remarks.
MR. HALL. Mr. Hughes, thank you very much.
[The prepared statement of Scott Hughes follows:]
PREPARED STATEMENT OF SCOTT HUGHES, DIRECTOR OF
GOVERNMENT AFFAIRS, NATIONAL BIODIESEL BOARD
Good afternoon Mr. Chairman, Ranking Member Boucher, and
committee members. It is a pleasure to be here today. We
appreciate the committee holding this hearing and providing the
opportunity to examine this important issue.
My name is Scott Hughes, Director-Governmental Affairs,
with the National Biodiesel Board (NBB). The NBB is the
national not-for-profit trade association representing the
commercial biodiesel industry as the coordinating body for
research and development in the US. State soybean commodity
groups who were funding biodiesel research and development
programs, founded NBB in 1992. Since that time, the NBB has
developed into a comprehensive industry association, which
coordinates and interacts with a broad range of stakeholders
including industry, government, and academia. NBB's
membership is comprised of state, national, and international
feedstock and feedstock processor organizations, biodiesel
suppliers, fuel marketers and distributors, and technology
providers.
In examining vehicle and fuels technology with a focus on the
future, I would like to focus my comments on providing
background about biodiesel, the industry, as well as an overview of
the collaborative work between the biodiesel and
engine/automakers, and the role we see biodiesel having in the
national energy pool.
Biodiesel
Biodiesel is a cleaner burning, renewable diesel fuel
replacement made from agricultural fats and oils meeting a specific
commercial fuel definition and specification. Soybeans are the
primary oilseed crop grown in the United States, and soybean oil
makes up about half of the raw material available to make
biodiesel. The other half consists of all other vegetable oils and
animal fats. Biodiesel is made utilizing a chemical reaction
process where the oil/fat is reacted with an alcohol to remove the
glycerin in order to meet specifications set forth by the American
Society for Testing and Materials (ASTM). Biodiesel is one of the
best-tested alternative fuels in the country and the only alternative
fuel to meet all of the testing requirements of the 1990
amendments to the Clean Air act.
Industry Background & Overview
In the early 1990's, soybean farmers struggled to maintain
profitability because of high energy prices and low commodity
prices. Investment in the development of a biodiesel industry was
a priority to farmers eager to contribute to our energy supply, while
finding ways to add value to their crops. Farmers have invested
more than $50 million of their check-off dollars to date to conduct
research and development on biodiesel. Much of that effort has
focused on the testing of biodiesel to ensure performance, establish
quality standards, and gain acceptance by engine and equipment
manufacturers.
The biodiesel industry has shown slow but steady growth since
the early 90's, however, in the past two years, it has grown
exponentially. In 2004 there was approximately 25 million gallons
of biodiesel sales. That increased to 75 million gallons in 2005.
We are currently on track to exceed 150 million gallons in 2006.
Likewise, we went from 22 biodiesel plants in 2004 to more than
60 biodiesel plants currently (395 million gallons of production
capacity). There are over 40 more plants currently under
construction (estimated additional 713 million gallons of
production capacity), with another 30 projects in pre-construction.
Biodiesel is primarily marketed as a blended product with
conventional diesel fuel typically in concentrations up to 20%. It
is distributed utilizing the existing fuel distribution infrastructure
with blending most commonly occurring "below the rack" by fuel
jobbers. Biodiesel is beginning to be distributed through the
petroleum terminal system. To date, biodiesel has positions in
approximately 25 terminals. We anticipate this trend to increase.
Three major factors are contributing to the industry's current
strong growth: relatively stable feedstock prices, crude oil prices,
and public policy (federal and state). The combination of these
drivers has made biodiesel priced more competitive in the market.
As a result, we are starting to see biodiesel entering several new
price sensitive markets.
Historically biodiesel's primary markets have been regulated
fleets (alternative fuel use/petroleum reduction-EPAct, Executive
Order 13149) and the agricultural industry. However, biodiesel is
increasingly being introduced into private sector fleets, home
heating oil, light duty diesel vehicles, marine applications, and
even some electrical generation. These markets all represent
significant volume opportunities for industry.
The industry's early investment in technical research; pursuit
of an ASTM standard; public education efforts; outreach to
automakers, engine and component makers, and the petroleum
industry are allowing us to maximize our growth potential under
current market dynamics.
Regulatory and Policy Impacts
The need for increased use of biofuels has never been more
pressing with diesel fuel prices at an all-time high. As crude oil
prices continue to rise, America's trade deficit continues to
balloon. America relies on imports for 60 percent of its petroleum
needs. Imported petroleum makes up the single largest component
of our national trade deficit amounting to approximately one third
of the total. Every gallon of domestic, renewable biodiesel that is
used to replace diesel fuel refined from imported crude reduces the
need for imported crude and finished fuel, extends the diesel
supply, and expands domestic refining capacity. Even a small
reduction in demand has a positive effect on straining price
pressures.
The majority of diesel fuel in this country is used in over-the-
road trucks. The trucking industry serves as a critical part of our
economy, and impacts every industry, business, and consumer in
America. Virtually every product that we use everyday is brought
to us by a diesel-powered truck. Fuel is the single largest
operational cost in the trucking industry. Average diesel fuel
prices have nearly doubled over the past four years. This dramatic
increase in operational cost offers enormous challenges to the
trucking industry, and will be felt throughout our entire economy.
The American Trucking Association (ATA) has endorsed the
use of B5 as a way to supplement our nation's energy supply.
Likewise, Sysco Corporation, the largest private truck fleet in the
nation has begun using B5 it its trucks. Truckers often become
interested in biodiesel because they would rather rely more on
farmers for their fuel and less on the Middle East. However, after
they begin using it, they are most often impressed by its premium
fuel characteristics. Biodiesel contains oxygen so it burns cleaner,
reduces smoke and smell, increases cetane, and improves lubricity.
As ultra-low sulfur diesel (USLD) fuel gets phased in beginning in
June of this year through June of 2007, biodiesel is well positioned
to replace the lubricity that will be lost in ULSD. Diesel fuel
injection systems rely on the lubricating characteristic of fuel to
keep them functioning properly. Just 2 percent biodiesel can
improve lubricity by as much as 65 percent.
Recent regulatory changes aimed at improving the emission
profile of diesel engines and improving air quality requires
significant advancement in engine and emission control
technologies. Auto and engine-makers are stepping up to meet the
challenges presented by these regulatory standards which take
effect in model years 2007/2010.
A critical element in meeting these standards will be the fuel
that is used in advanced engine and emission control technologies.
Biodiesel will be a fuel used in these engines and consumers are
ever increasing their demand for biodiesel both in fleet
applications and light-duty passenger markets. It is therefore
imperative the necessary research is conducted to demonstrate
biodiesel's compatibility with new engine technologies to meet this
growing demand.
The biodiesel and OEM industries are committing significant
resources toward this effort. The biodiesel industry has spent $1.4
million dollars to date with an additional $700,000 committed for
fiscal year 2007. Automakers and engine makers are also
committing significant time and resources toward this effort.
Additionally, three federal policy measures have been
extraordinarily effective in stimulating biodiesel's increased
production and use. Because of these three policy measures,
biodiesel is beginning to make a small but significant impact on
our nation's energy supply. These three measures are all working
extraordinarily well, but are soon scheduled to expire, and must be
continued in order to keep the growth in biodiesel going strong.
First, the biodiesel blenders tax credit, which was part of the
restructured Volumetric Ethanol Excise Tax credit or "VEETC"
legislation in the JOBS Act of 2004. The new blender's tax credit
for biodiesel went into effect in January of 2005. It functions
similarly to the ethanol tax credit, and it has been extraordinarily
effective incenting the blending of biodiesel into the nation's diesel
fuel supply. It has been the primary stimulant in 2005 for the
dramatic increase in new plants, jobs, and local investment in
biodiesel, bringing economic opportunity to both rural and urban
areas.
The second policy measure that has been very effective in
energizing biodiesel's growth is the Bioenergy Program. The
program was initiated by the USDA in 2000 to stimulate the use of
crop surpluses for energy needs. It was memorialized as part of
the 2002 Farm Bill. However, the program is set to expire in July
of this year. This program provides a production incentive which
has been highly effective in the growth of the biodiesel industry.
A 2005 OMB Program Assessment Rating Tool or "PART"
evaluation reported that the program did an excellent job of
stimulating biodiesel growth, and indicated that the program could
continue to be effective for the emerging biodiesel industry. The
report stated, "Increases in the production of biodiesel indicate a
rise in the supply of domestically produced renewable fuels. It's
also an indicator of the viability of the biodiesel industry and its
expanded consumption of agricultural commodities."
The third program that has greatly contributed to biodiesel's
success is the USDA's Biodiesel Fuel Education Program. This
program was a part of the energy title of the 2002 Farm Bill. The
program provides educational funding to support increased fuel
quality measures, increased acceptance of biodiesel by engine and
equipment manufacturers, petroleum partners, users, and the
general public. The USDA has done a superb job in implementing
this program and it has been a key ingredient to biodiesel's recent
growth. A recent survey done to benchmark the program's
progress showed that the public's awareness of biodiesel rose from
27 percent in August 2004 to 41 percent in December of 2005. To
impact the American public's awareness that significantly on any
given issue is remarkable. In addition to greater awareness from
the general public, market research shows familiarity among
trucking executives increased from 27 in 2004 to 53 in 2005. Also
of note:
<bullet> Four-in-five consumers continue to support a tax incentive
that would make biodiesel cost-competitive with regular
diesel fuel.
<bullet> 88 percent of environmental group leaders and 84 percent
of health organization leaders support biodiesel as a
transitional fuel, because biodiesel can make an immediate
impact on reducing emissions until zero emissions
technology is developed.
Looking Ahead
We foresee strong growth for biodiesel and it becoming further
integrated into the national fuel distribution system and energy
pool.
During the 2006 State of the Union speech, President Bush
outlined his Advanced Energy Initiative, which stated the goal of
reducing petroleum imports from the Middle East by 75 percent by
the year 2025. Biodiesel and ethanol can be the first tools used to
begin reaching that goal, because they are liquid renewable fuels
that are available right now, ready for blending into our existing
fuel supply and used in our existing vehicles. As an illustration of
how biodiesel can play a role in that effort, please note that Iraq is
the second largest provider of crude oil into the United States from
the Persian Gulf region. Of the crude that comes from Iraq,
approximately 1.85 billion gallons of diesel fuel is refined for the
US market. If long-term, America was to replace just 5 percent of
its 37 billion gallons of on-road diesel fuel with biodiesel, it would
equal 1.85 billion gallons - the same amount of diesel fuel that we
get from Iraq.
In addition to the significant benefits that biodiesel offers to
increase our domestic refining capacity and overall energy supply,
biodiesel offers enormous benefits to our agricultural sector.
Biodiesel does much more than just utilize surplus agricultural
commodities; it adds multiple layers of value to agricultural
economics. There have been 5 major comprehensive economic
studies evaluating biodiesel in the last 4 years. All of these studies,
using different economic models, had similar conclusions: that
increased utilization of fats and oils for biodiesel increases the
value that farmers receive for their crops, while making protein
meal cheaper as a feed for our domestic livestock producers and
more competitive in international protein markets for food and
feed. Not only does this allow farmers to more profitably supply
global food markets, it may have the effect of increasing
agricultural processing in the United States. Additional biodiesel
production further increases domestic chemical processing from
renewable by-products.
Conclusion
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. Biofuels are a viable option to begin re-taking control of
our energy future. There are many market dynamics that are
working in favor of the biofuels industry today and which if
continue into the future, as anticipated, will provide a bright future
not only for the industry but the nation overall.
Biodiesel is and will continue to be a strong player and partner
in the growth of the biofuels industry. Biodiesel can be a
substantial tool in the nation's overall move toward energy security
as it:
<bullet> Adds to the distillate fuel pool;
<bullet> Adds to U.S. "refining" capacity;
<bullet> Directly replaces imported finished diesel fuel;
<bullet> Utilizes domestic agricultural products;
<bullet> Stimulates rural and urban economies and creates jobs; and
<bullet> Helps potentially create new chemical industry jobs and
activity.
Mr. Chairman, members, we appreciate the opportunity to
come before you today on this most critical issue. On behalf of the
biodiesel industry, I want to thank you for all of the support you
have given not only to the biodiesel industry, but the development
of the biofuels industry overall. We look forward to continue
working with you in this important endeavor. I would be happy to
answer any questions you may have.
MR. HALL. Mr. Pratt.
MR. PRATT. Good afternoon, Chairman Hall and members of
the committee.
My name is Mitchell Pratt. I am before you today representing
Clean Energy, North America's leader in clean transportation, and
as the company's Senior Vice President of Operations in
Governmental Affairs.
Clean Energy provides fueling daily for over 30,000 vehicles
with clean, affordable, and domestically produced natural gas. Our
company has over 160 fueling stations and is on track to sell 73
million gallons of natural gas this year. We at Clean Energy
strongly believe that natural gas has an important role to play in
providing an immediate solution to help combat our rising fuel
prices, foreign oil dependency, urban air pollution challenges, and
offers the purest and cleanest bridge to a hydrogen future. Natural
gas as a transportation fuel is the best untold story and is a solution
today that will remain so well into the future.
I would like to quickly highlight several main points to
demonstrate the immediate feasibility of launching a natural gas
national program.
First, fuel supply. We have over 70 years of current reserves,
30 more than oil, with no accounting for biomethane or other new
sources and supplies, including the long-range hope of methane
hydrates.
Next, price. How would you like to pay substantially less
today for the fuel you are burning? With all the costs rolled in,
capital recovery and placed on an energy equivalent cost per gallon
of natural gas today, it is approximately $1.82 per gasoline gallon
or $2.02 per diesel gallon equivalent, a substantial savings that is
critical for the fleets that we serve and those that are serving the
backbone of our economy in moving goods and services today.
On to emissions. Natural gas is and will remain substantially
cleaner than gasoline and diesel. In 2007, while diesel engines
struggled to achieve the new standards, natural gas will be at the
2010 emissions standard, over 80 percent cleaner.
On to the critical piece you all have talked about and heard
about today. The critical component of launching any new
alternative fuel is infrastructure. We have found through an anchor
tenant cost model and through public-private partnerships that we
can and will cost-effectively finance and build the infrastructure
necessary to rapidly expand the market. Also, with a newly
introduced home refueling appliance that simply plugs in at your
house, this will allow consumers greater convenience to fill up at
home overnight, and it is helping to provide confidence as the
public station network grows.
Now to vehicles. We have targeted the introduction of natural
gases, viable fuel through fleet applications, systematically
building infrastructure to support that and the growing product
line. With thousands of NGVs in operation, they have proven to
be safe and reliable, with many success stories like Los Angeles'
MTA, the transit property with over 2,000 natural gas buses in
operation daily. In fact, there are nearly 9,000 transit buses
running on natural gas. Nearly one in four new transit buses on
order are specified to run on natural gas. More than 25 airports
around the country are using buses, shuttles, runway sweepers,
dump plows, security, and maintenance vehicles that also run on
natural gas.
Refuse is one of the fastest-growing areas for NGVs, with
more than 2,500 vehicles in use today and more than 500 being
added each year.
More than 140 school districts across the country are using
natural gas buses and shuttles as well as deploying light-duty
NGVs in white fleets for maintenance personnel. And there are
dozens of short haul and port application fleets that make great
sense. Just think of all the vehicles that pull into a 7-Eleven each
morning. Snack foods, bakeries, soda and water, dairy distributors,
etc., all great applications for natural gas.
Unfortunately, the growth in the U.S. has been slow. Globally,
between August 2003, and January 2006, NGVs grew by more
than 65 percent, to more than 4.6 million vehicles, and stations
grew by more than 40 percent. Many automakers offer
tremendous selection of fully integrated natural gas vehicle
products throughout Europe and other countries but have pulled
back here at home. More action is required to have these bio fuel
and dedicated natural gas vehicles made available to U.S.
consumers.
Finally, natural gas is the best bridge to a hydrogen future. The
road to a hydrogen future has many challenges, and the greatest is
creating an infrastructure that enables society to utilize gaseous
fuels. Natural gas provides this critical experience for society, and
the stations can be modified to sell natural gas, blended natural
gas, hydrogen, and pure hydrogen. With these blends, near zero
emissions can be achieved much more cost effectively than with
pure hydrogen.
So, in conclusion, as you can see, natural gas vehicles have had
a wide experience of applications, truly successful applications,
and are the best untold story, ready for immediate and tremendous
growth in all light, medium, and heavy-duty vehicle applications.
Federal and State fleet NGV purchase priority directives and DOE
RD&D funding are needed to encourage new product development
and introduce those foreign available OEM, NGV products here at
home.
As we scan and consider all the feasible alternative fuels that
are out there, natural gas makes the most sense commercially for
all types of vehicles. With greater support, NGVs can provide an
immediate and important solution to our urban air pollution issues.
Foreign oil security challenges create a bridge to a hydrogen
future, all in an excellent fuel price, thereby preventing the
economic train wreck which can be caused from spiraling oil
prices.
Thank you.
[The prepared statement of Michael Pratt follows:]
THE PREPARED STATEMENT OF MICHAEL PRATT, SENIOR VICE
PRESIDENT, CLEAN ENERGY
Natural Gas is an Immediate Solution
<bullet> Natural gas provides an immediate solution to our foreign
oil dependency, urban air pollution challenges, and serves
as the clearest bridge to a hydrogen future.
<bullet> World demand-production gap could be as high as 30
million barrels/day by 2020.
<bullet> Natural gas is a domestic energy source (over 97 percent of
current U.S. use comes from North America) today with
over 70 years of additional supply.
<bullet> 11,000,000 light-duty vehicles, or 5 percent of the existing
U.S. light-duty fleet, if powered by natural gas, would only
account for 4 percent of the country's current natural gas
usage.
Natural Gas is Clean
<bullet> Natural gas vehicles meet near-zero emissions levels for
light-duty applications, already meet or exceed 2007 heavy-
duty emission standards, and are targeted to certify to the
2010 heavy-duty standards for the 2007 model year.
Natural Gas is Economic
<bullet> Natural gas is priced very competitively at a $1.82 gasoline
gallon equivalent or a $2.02 diesel gallon equivalent versus
today's national average price of a gasoline gallon at $2.88
and a diesel gallon at $2.89.
<bullet> Clean Energy can guarantee a long term fixed price for
vehicle fleets for up to 5 years under today's gasoline and
diesel prices.
Natural Gas Infrastructure
<bullet> Natural gas, unlike other alternative fuels, enjoys the
advantage of a vast nationwide network of existing
pipelines capable of delivering natural gas product to nearly
every American community.
<bullet> Strategic use of public-private partnerships has lead to an
extensive network of natural gas fueling stations in key
national markets.
Natural Gas Vehicles
<bullet> Natural gas vehicles are currently used in transit, refuse,
shuttle, taxi, police, airport, and municipal fleet
applications throughout the United States.
<bullet> American and foreign auto manufacturers produce a wide
range of natural gas vehicle offerings in Europe and
elsewhere to combat high oil prices at the pump.
Natural Gas is the Bridge to Hydrogen
<bullet> Natural gas as a transportation fuel introduces gaseous fuel
vehicles, fueling stations, and the societal experience
necessary to make hydrogen fuel a reality.
Conclusion
<bullet> The country needs more national policies to help natural
gas and other alternative fuels penetrate the marketplace
and provide consumers with real options beyond oil.
Introduction
Good afternoon Chairman Hall and Honorable Members of the
Subcommittee on Energy and Air Quality. My name is Mitchell
W. Pratt and I am before you today representing Clean Energy,
North America's leading clean transportation fuel provider, as the
company's Senior Vice President of Operations and Government
Affairs. Clean Energy provides fueling daily for over thirty
thousand vehicles nationwide with clean, affordable, and
domestically produced natural gas. Our company has over 160
fueling stations and is on track to sell approximately 73 million
gallons of natural gas this year. We, at Clean Energy, strongly
believe that natural gas has an important role to play in providing
an immediate solution to our foreign oil dependency, urban air
pollution challenges, and the clearest bridge to a hydrogen future.
Natural gas as a transportation fuel is a solution today and will
remain so well into the future.
Global Oil Supply
Some believe that the current run up in oil prices is a blip and
that by 2010 we will be awash in oil. We are in the opposite camp.
We believe we are looking at a looming supply-demand problem.
Oil is a finite and dwindling resource and the world's demand for it
keeps growing. That is why we believe that the world will
continue to face stubbornly high prices for the long term.
Let's take a look at the facts. In the Arab embargo back in the
70s, we were importing approximately 25 percent of our oil. In the
first Gulf War, we were importing 42 percent of our oil. Today we
are importing 57 percent. By 2010, we will be over 60 percent oil
imports. We've been pumping oil out of the ground since 1859.
The last time a world class oil field was found was in the Caspian
Sea in the late 1990s. The easy oil has been found. There are no
surprises out there. We've either peaked as far as oil production
goes, or it's right around the corner.
Demand is growing globally. For example, ten years ago
China used 3.4 million barrels of oil per day. Today they are using
6.5 million barrels per day. There are forecasts showing them
using 11 million barrels per day a decade from now. Wait until
they really start buying automobiles. We are using more than 30
billion barrels of oil a year worldwide. The last time we found as
much oil in a year as we consumed was about 1985. Production
worldwide is 84-85 million barrels a day. Current demand is about
85 million barrels a day and demand projections for 2007 are
easily north of that given China and India's increasing demand.
The treadmill is getting faster and faster. The decline curve for
oil production is steady. Saudis say they can produce 10.5 million
barrels per day, but they're only producing 9.5 million barrels per
day. We all heard talk two years ago of Iraq production reaching 3
million barrels per day. They are producing less than 2 million
barrels. To make matters worse, we've also got some serious
geopolitical problems: Iran, Venezuela, Nigeria, and Russia. They
are all wild cards. The Alaskan pipeline used to be full, running at
2 million barrels per day. It now carries less than half of that or
800,000 barrels per day. Further, because there are pipeline
constraints, opening up ANWAR will not solve the problem
because almost half the pipeline's capacity is already in use.
Alternatives to Oil
We must look at all solutions and we need to get serious about
fuel diversity. We have known an oil shortage was coming for
some time. Clean Energy believes that ethanol, biodiesel, and
natural gas - as transportation fuels - each have a role to play. In
fact, even if you assume biofuels achieve their greatest forecasted
production targets, we believe demand will still outstrip supply by
3 million barrels per day by 2020. Over time, we believe that
natural gas will be moved out of the power generation business by
coal and nuclear, increasing the availability of domestic natural gas
supplies for our country's transportation needs. Even assuming
optimistic new production sources coming on line, balanced with
estimated production decline curves, the demand-production gap
could be as high as 30 million barrels per day in 2020. This gap
requires federal actions supporting alternatives today.
Natural Gas is Domestic
Natural gas is a domestic source of transportation fuel with an
estimated 77 years of additional supply or 30 years extra supply
over oil. Over 97 percent of our current use of natural gas is
produced in North America, which helps protect us from unstable
international political situations which increases our energy
independence by not importing as much foreign oil. To put natural
gas and transportation fuel use into perspective, if we powered
11,000,000 light-duty vehicles or 5 percent of the U.S. light-duty
fleet with natural gas today, it would only account for 4 percent of
the country's current natural gas fuel usage.
Natural Gas is Clean
Natural gas is a clean and efficient fuel. Natural gas vehicles
(light duty, medium and heavy duty trucks) are all cleaner than
gasoline or diesel vehicles. Natural gas vehicles meet near-zero
emission levels for light-duty applications and already meet or
exceed 2007 heavy-duty emission standards with some engines
targeted to certify to the 2010 standard as early as next year
(2007). Natural gas is inherently cleaner than gasoline or diesel
and will continue to offer this benefit well into the future.
Natural Gas is Economic
Natural gas is economic. The price for natural gas as a
transportation fuel is very competitive with today's gasoline or
diesel fuels. In fact, natural gas was very competitive with oil at
$30 a barrel, let alone at the market's current price of $70 a barrel.
Clean Energy views natural gas as a commodity tracking at a
discount to oil, especially when compared to diesel. For example,
if you assume a natural gas price at $7.20 per million cubic feet
and 92 cents to cover transport, compression, taxes, and capital
recovery costs, you can achieve a very competitive $1.82 gasoline
gallon equivalent or a $2.02 diesel gallon equivalent. Today diesel
ranges between $2.90 to $3.24 per gallon.
We further believe that when ultra low sulfur diesel fuel hits
the market later this year, it will be an additional 25 to 30 cents,
putting it in the $3.50 range. This assumes the overall oil market
stays stable even though, historically, the market has suffered over
a dozen global oil supply disruptions over the past half century
lasting 1 to 44 months in duration with supply shortfalls of one to
14 percent of world demand. Despite the reality of volatile oil
prices and unlike any energy provider we know, our company is
able to guarantee a fixed price per gallon of natural gas to light,
medium and heavy-duty fleet customers below today's gasoline
and diesel prices for up to five years on a energy equivalent gallon
basis.
In addition to the comparatively low cost of natural gas as a
transportation fuel, Congress took an important step in passing the
energy and highway bills last year. As the cost of uncertain diesel
technology increases in an effort to meet new federal clean air
emission standards, the energy bill provides up to a $32,000 tax
credit for a class 8 natural gas truck. This will certainly help
narrow the incremental cost differential between diesel and natural
gas vehicles. When fuel price and operational maintenance
savings are factored in, natural gas vehicles become even more
cost-effective than their diesel counterparts. Because some of the
incentives put in place are going to take awhile to have a real
impact, we need Congress to continue to provide long-range
policies that promote alternative fuels in the marketplace.
Natural Gas Infrastructure
Perhaps the greatest challenge for any alternative to oil is the
ability to distribute product to the end user. Natural gas, unlike
other alternative fuels, enjoys the advantage of possessing a vast
nationwide network of existing gas pipelines capable of delivering
natural gas product to nearly every American community. Clean
Energy has developed a strategic business model enabling the cost-
effective development of a natural gas station network. This
revolutionary approach creates on secondary station infrastructure
to gasoline and diesel by leveraging private and public-private
partnerships to create an extensive network. These turn-key
partnerships enable high-volume fleet users to benefit from
privately financed refueling stations while providing smaller
volume users with public access at these stations. Further,
consumers can immediately take advantage of natural gas as a
transportation fuel with the simple installation of a low cost home
refueling system that is currently on the market. Moreover, natural
gas stations can provide an early introduction of hydrogen by using
a 10 to 30 percent blend, reducing the immediate need for high-
cost fuel cells to achieve near-zero air emissions.
Natural Gas Vehicle Availability
Natural gas vehicles are currently available, proven, and tested
in transit, refuse, shuttle, taxi, police, airport and municipal fleet
applications throughout the United States. These applications were
primarily driven by the clean air benefits inherently derived from
the use of natural gas. However, for years American and foreign
auto manufacturers have produced an ever increasing selection of
natural gas vehicle products in Europe, and elsewhere, - both
dedicated and bi fuel - for natural gas vehicles to address concerns
over high oil prices. These OEM produced vehicles are fully
integrated providing consumers the mileage range and
conveniences of gasoline vehicles. Congress should follow
Europe's lead by strongly encouraging auto manufacturers through
incentives or mandates to produce a greater range of natural gas
vehicles for the American consumer.
Natural Gas Bridge to Hydrogen
Natural gas is also viewed as a bridge fuel to hydrogen as it
continues to be the most cost-effective way to produce hydrogen,
provides invaluable experience and knowledge to users on how to
handle gaseous fuels, and natural gas infrastructure can be
leveraged to provide hydrogen as well as blended hydrogen/natural
gas dispersing. In fact, the blending of hydrogen and natural gas
provide even lower near zero emission performance. With fully
integrated OEM produced natural gas vehicles, these vehicles can
be enabled to operate natural gas, hydrogen, and blended
hydrogen/natural gas fuels.
Conclusions
Natural gas vehicles offer a proven solution in light, medium,
and heavy duty vehicles that are ready for wide-scale
implementation today. Our resources of natural gas can play a
critical role in diversifying our nation's transportation fuel needs.
Natural gas is clean, inexpensive and domestically produced, and
excellent fuel formula. In leveraging natural gas as a transfer fuel
we not only support the creation of a secondary infrastructure but
also foster more vehicle production. The societal experience of
operating a natural gas vehicle is likely the only realistic approach
to achieving a hydrogen future. That being said, we need more
national policies like the 2005 energy and highway bills to help
natural gas and other alternative fuels penetrate the marketplace
and be available to the public. Without the firm support of the
Congress, our nation's ability to free itself from it's current oil
dependence will most certainly put our nation's economy, security,
and overall public health at risk.
MR. HALL. Thank you. We will ask some questions here now,
Mr. Pratt, on natural gas. I have been a great believer in natural
gas. That may be the fuel of the future. It may be accidental that
we have an abundance of it in my State, my area, but, in the late
1970s the President passed some terrible legislation, Fuel Use Act,
a lot of that stuff. It took us 2 or 3 years to get them off the books
by the time we got here. And I have a school district that adjoins
my hometown school district that uses natural gas completely for
their school buses. And they have saved maybe 30 percent over
the years. And one of the questions that was always asked
initially, because that is our school children was how dangerous
was it. Have there been any accidents or fatalities associated with
natural gas refueling stations or consumers filling up on their own
tanks or on the school buses or anything that you know of?
MR. PRATT. Not that I know of.
MR. HALL. That really speaks well because it has been at least
20 years that they have been doing that; 15 that I know of right
there close to me. How much energy is in a gallon of natural gas
as compared with a gallon of gasoline?
MR. PRATT. The prices that I quoted in my testimony are all
on an energy equivalent basis. So the $1.82 is on a gasoline gallon
energy equivalent basis, and the $2.02 is on a diesel equivalent
gallon basis.
MR. HALL. How long does it take to install natural gas
refueling stations?
MR. PRATT. Depending on the size of the station, it can take
anywhere from 6 months to a year.
MR. HALL. How long does the permitting cycle take?
MR. PRATT. That is included in that same timeframe.
MR. HALL. You know, Chairman Barton and his energy bill
that we passed some several months ago had provisions there
where if a Federal entity didn't answer the way, a lot of times the
way they would hold it up is just not give you an answer. And you
can't appeal unless you have a final answer from an entity. He set
a provision in there that I think is just simply great to anybody that
wants to build and be productive in solving our energy problem.
That if they make an application to them and in 60 days it is not
either denied or granted, it is granted. And I think that is a boon to
those that want to build. Along that line, I would ask you, what
permits are required for a natural gas refueling station or pump?
MR. PRATT. We have local city permits. All the building and
safety inspection requirements, fire department inspections are
required for constructing a station. Much like building anything at
your home or a home addition, you have to go through all those
standard permits. For natural gas there is nothing unique. And as
there are so many stations that have been built, there is a lot of
experience and our Fire Department officials are usually the most
challenged in coming up to speed on it, but they have grown
tremendously comfortable with natural gas stations.
MR. HALL. About what does it cost to install a natural gas
pump?
MR. PRATT. Natural gas stations, again, it depends on size. A
home refueling unit that you can install in your garage wall and fill
up overnight is a little over $1,000 dollars. To a transit property
that can handle hundreds of buses every night in a 6 to 8-hour
window can be upwards between $1.5 and $3 million. Our typical
station that we build for a gasoline station is in the neighborhood
of about $750,000. We compare this, the ability to deliver natural
gas just like you would a gasoline station, vehicle after vehicle
with multiple dispensers for $750,000 investment, versus a
hydrogen station, today that, with one reformer producing only 100
gallons is over a million, $1.2 million.
The economics and feasibility of natural gas is there today, and
these stations can be equipped for that hydrogen future.
MR. HALL. I thank you very much. Quickly, Dr. Pacheco,
could you tell me, what are the best types of plant material to make
cellulosic biomass ethanol? Can you give me that answer in about
30 seconds?
MR. PACHECO. Mr. Chairman, many forms of biomass can be
used to make ethanol. Switchgrass and corn stover and hardwoods
are among some of the easiest feed stocks to use.
MR. HALL. Gosh. I have got 18 seconds left. I have heard that
the energy balance for ethanol from corn is about 1.4 units of
energy output for each unit of energy input. But for cellulosic
biomass the ratio is much better, on the order of five or six times
the units of output for each unit of input. Why is cellulosic
biomass so much higher than ethanol from corn?
MR. PACHECO. The main reason for that is that in cellulosic
biomass there is a component referred to as a lignin that doesn't
exist in the corn feedstock. That lignin some people refer to
sometimes as like a young coal. It is actually used for heat and
power within the biorefinery so that the coal and natural gas that is
currently used to provide heat and power for a corn ethanol mill is
not required. And that is shown in the third figure in my written
testimony.
MR. HALL. All right. I thank you. My time is expired, and I
recognize the gentleman from Arkansas.
MR. ROSS. I appreciate the gentleman from Texas. Thank you
all for being here today. And my first question is for Mr. Hughes.
I am impressed by the amount of growth in your industry from 22
biodiesel plants in 2004 to 60 plants now. Hopefully soon, two
more, one in McGee and one in Pine Bluff, Arkansas, and over 40
plants currently under construction. I don't believe my area is
unique in the talk about moving toward this technology and the
jobs that it creates. We are seeing it all over the country. Is there
any reason to believe that these plants are not meeting current
environmental requirements?
MR. HUGHES. No, sir, there is not. We have not run into any
kind of calls or situations that I am aware of in that respect.
MR. ROSS. So I would be correct in assuming that State and
local permitting authorities are issuing these plants whatever air
and other environmental permits they need.
MR. HUGHES. That is my understanding.
MR. ROSS. There haven't been any governmental regulations
at the local State or Federal level that it have served as an obstacle
or slowed the development of these type plants?
MR. HUGHES. Not that I am aware of, and I have actually had
some conversations with a few plants in that regard, and they have
not indicated that is an issue.
MR. ROSS. Good. My next two questions are targeted for Mr.
Warzel. You mentioned in your testimony that Fischer-Tropsch
fuels are not fully certified for use in aircraft. I know there is a
great deal of interest by both the Department of Defense and the
private aircraft industry in the use of coal to liquids as a source of
jet fuel. Can you speak to the current status of this certification?
And if so, what needs to be done before these fuels are ready for
aircraft use?
MR. WARZEL. Okay. Yes. Currently it is not certified. Diesel
fuel that you can also make from the Fischer-Tropsch process
meets all the ASTM guidelines and requirements. So it is fully
fungible in today's market. On the jet fuel, it really becomes an
issue of OEM certification because of the amount of money spent
on the infrastructure. The Air Force has a very detailed plan put in
place for certification which, depending on the best mechanism
and blending that they look at, could be anywhere from a 3 to a
6-year process.
To give you an idea, the last time they certified a new fuel or
an additive to a new fuel, they have not certified a new fuel in
decades, it took about 8 years. The main component is going to be
having supply of fuel for them to begin their work.
MR. ROSS. Follow up to that. It has been widely discussed
that while the coal-to-liquids technology has been proven
throughout the world, that its intense capital cost and lack of
deployment in the United States are still barriers that must be
addressed in order to gain the financing necessary to make the
facilities more commercially viable for widespread use
domestically. What do you think is needed in order to further the
use of coal, CTL technologies?
MR. WARZEL. Let's kind of rephrase that. There is a lot of
coal gasification to different types of liquids. There is only one
plan as such now, Sasol, that does coal to liquid via
Fischer-Tropsch. What is needed in our opinion is from a U.S.
perspective, let's move the military away from crude oil-based
fuels, and move them in off-take agreements for the military. That
alone will provide a major impetus to the commercial sector to
bring funding with long-term off-take agreements for the plants.
MR. ROSS. Let me ask a question, probably for Mr. Pratt, but
any of you that feel qualified can answer it. I know there is some
movement toward, and this is not really anything new, but
automobiles that are operating today off of natural gas, and I guess
the new component would be the fact that more people are now
able to refuel at home in the evening while they sleep. I think one
of the challenges, especially for a rural district like mine, it is my
understanding a typical car with natural gas can go like 225 miles,
is that pretty accurate?
MR. PRATT. That is for the product that is available today.
MR. ROSS. And so in a district like mine I can get halfway to
where I am going, but I can't get the rest of the way, and I can't get
back home unless, and so it is the same issue that we run into with
a lot of other things. I applaud the efforts to get it to where you
can refuel it at home at night. But yet we still have the challenge
when we move away from home, especially in rural areas to be
able to have the infrastructure in place to be able to refuel, number
one. Number two, do we really want to go in this direction given
that this is just another fossil fuel? And then finally, given the cost
of natural gas today, has it really become somewhat cost
prohibitive compared to back when natural gas was running $2 to
$4. Now it is $10 to $14 or $15, or whatever it may be today.
MR. PRATT. Sure. The first question on vehicle types. In
Europe, they make over, I think it is, 22 different OEMs are
making something in the magnitude of over 100 different vehicle
types, maybe a little bit off on that, but it is a wide selection of
natural gas vehicles. And they make both dedicated and bifuel.
And in those vehicles, both dedicated and bifuel, they get much
greater range than what we have experienced, the 200 miles, 225
that you talked about. The bifuel vehicle allows you to operate
both on gasoline and natural gas, so that you can fill in the gap of
the infrastructure. The infrastructure development for any
alternative fuel here in the U.S., we believe we have figured out
the right model to do that. And that is focusing on the large fleets
that allow you to expand rapidly the infrastructure, all your trash
haulers, your transit bus fleets, your school bus fleets, your
municipalities, all can create an infrastructure to help you get
around your State and manage your transportation on a dedicated
fuel, let alone a bifuel vehicle.
I think, of the other questions, the most important was fuel
price. And let me just walk you through that. Now, today, natural
gas is below $7 an MCF. But even using $7.50 MCF, total rolled
in capital cost recovery, profit, and operations is less than $2 a
gallon. So when you talk about fuel price supply, natural gas can
be offered to you at less than $2 a gallon. I think that is pretty
price competitive, even as you talk about peaking, the last
summers or last winters or winter before last, the peaking natural
gas prices, we were still selling our customers fuel at $2 and a little
bit more because we buy long-term contracts to manage that fuel
supply.
MR. ROSS. But 6 years ago, that would have been more equal
to what, 50 cents a gallon.
MR. PRATT. It would have been equal to probably less than
that. But today's reality is that the price of natural gas provides
you, even including building the stations, provides you a
tremendous economic opportunity on fuel price, over and above
anything else that we have and better than gasoline. And for fuel
supply, we have over 70 years of supply here. We have renewable
sources that they are doing in Europe that we haven't begun to tap
here in biomethane well recovery and capturing, and then looking
at methane hydrates as a long-term fuel supply that has more
energy in it than all of the energy sources combined.
MR. ROSS. Well, I want to thank you and I want to thank you
all for what you do. I mean, I have a strong conviction and believe
that if we can put a man on the moon, if we can shoot a four
wheeler on a rocket to Mars and control it from NASA in Houston,
I mean, this is America, and I know we have got the technology
and the people here that can help us develop alternative and
renewable fuels that can really let us become self-sufficient and
reduce our dependence, hopefully totally someday on this foreign
oil. So I want to thank you for all of the things that you are doing
to try and see that dream become a reality, and certainly want to
continue to work with you. And again, Mr. Chairman, thank you
for your gracious indulgence.
MR. HALL. I thank you sir. Mr. Shimkus, the gentleman from
Illinois.
MR. SHIMKUS. Thank you, Mr. Chairman. It is great to have
you here. I am sorry that I have been bouncing in and out. But let
me ask a question to the entire panel. It may not apply, and it may,
I don't know, to the natural gas side. But in SAFETEA-LU we
passed an alternate fuels excise tax credit that expires in 2009,
which I think is, I personally think is an important provision. We
dropped--hopefully, again, I will use this opportunity to encourage
my colleagues to get on the bill--yesterday, with Rick Boucher and
myself and eight other members from five different committees, an
extension of that to 2020. Would that be helpful and why? Why
don't we go to Mr. Warzel first because this is really an industry
question.
MR. WARZEL. With regard to coal to liquids, there are specific
coal to liquids, yes. The move is incredibly helpful due to the
plain and simple fact that if you look at the gas to liquids plant,
which is an easier process to build and construct and operate than a
coal to liquids plant in Qatar, which is much more favorable to
construction because of regulatory issues, took about 7 years from
the start of project till the time it starts operating. That is the best
that you could expect to do from now, if you had the money to,
say, start building a plant would be 7 to 8 years.
MR. SHIMKUS. And the money is about, what is the capital?
MR. WARZEL. Right now, because there have been very few of
them built, our best estimates for coal to liquids, and this has also
been reiterated by Sasol, is about $80,000 to $100,000 depending
on location per barrel. So a nominal 20,000 barrel-a-day plant is
about $1.6 billion. We have looked at DOE work on lignite coal in
particular, and some of the sub bituminous coals. That achieves at
$35 to $40 barrel crude, not looking at all the tax incentives, about
a 15 to 18 percent rate of return project.
MR. SHIMKUS. So if you are about an 80,000 barrel facility,
you are talking about $7 billion and a 7-year delivery. So if the
current excise tax credit expires in 2009, you are not going to take
advantage of it. There is no incentive.
MR. WARZEL. There is no incentive.
MR. SHIMKUS. So if some incredibly smart Members of
Congress decided to extend that to 2020, do you think that would
provide some incentives for industry to deploy coal to liquid and
other technologies?
MR. WARZEL. It is helpful, but the real constraint is the
companies that have the monies, i.e., the ExxonMobils and Shells
that have announced their $7, $8 billion plants in Qatar are not
coming to the U.S. right now for CTL. What we view as being a
smaller, small business is that for us to do it, we need an off-take
agreement, and that is why we pushed so hard for the military.
That is an after-the-fact incentive. It doesn't allow me--
MR. SHIMKUS. I think my colleague from Arkansas addressed
some of the DOD issues and the research, and I think that is step
two. I have been trying to follow this debate a lot, and I concur
that there are two things that we need to do, one is extension of the
excise tax credit and the other one is to look at a long-term
purchasing agreement with a buyer. The interesting thing we had
about the slide, and if you notice what we did, but this is really,
why does South Africa have coal to liquid technology? Because
the Government invested to help take on the risk because of the
cost of doing this.
And at today's price per barrel, it is now doable. But if you
look at the slide, you have got the coal and it goes, look at there,
you have got the military base for aviation fuel. You are not
constrained by the sea traffic of oil tankers that could be shut
down. We do have a strategic petroleum reserve to help address
our national security concerns, but that is really small. But if you
are able to use our great coal reserves, then you have a current feed
stock for in my case the war machines. That is why we were very
successful in getting Ike Skelton, the Ranking Member of the
Armed Services Committee on our extension bill, and Duncan
Hunter.
We hope to have continuing discussions about this process of
long-term contracts by which will be the second step in ensuring
deployment of coal to liquid. Yes, sir. Mr. Pratt.
MR. PRATT. I would just like to add that if you are looking at
extending the excise tax, and last August that was expanded to--for
the fuel tax credits that were available--include natural gas. And I
would welcome that being extended for a longer period of time. In
doing so, we hopefully can encourage the automakers to bring
those foreign available natural gas vehicles here to the U.S., be
invested in the technology they are exporting and not bringing
here. I would welcome them to bring that back, and we can create
the longer term proposition for them, for transit properties or
refuse fleets to all go with cleaner fuels.
MR. SHIMKUS. And I appreciate that. And I will be honest
with you. Natural gas is always a confusing thing for a lot of us,
because it is defined as an alternate fuel. I mean, we know it is a
fossil fuel. We know it is above a lot of the crude oil, so
sometimes a lot of us have trouble defining what that is especially
as an alternate fuel. I do know that we do have great concerns with
additional users and the escalating price of natural gas, my farmers
in the field, and that is a concern. Manufacturers have grave
concerns about the escalating cost of natural gas. I believe in the
market. Everybody gets to the table, everybody competes,
competition brings lower prices.
So with that, Mr. Chairman, my time has long expired. I yield
back.
MR. HALL. I thank the gentleman. The Chair recognizes the
gentleman from Oklahoma, Mr. Sullivan.
MR. SULLIVAN. Thank you, Mr. Chairman. And I like what I
have been hearing today. It is very important when we are going
to talk about energy policy and the future of energy in this country
it is great to see people like you exploring different alternatives
like we need to be doing. And it is good to see John Warzel with
Syantroleum, which is based in my district, the heart of my district,
Tulsa, Oklahoma. And Mr. Pratt, I don't know if you know it, but
we have some of yours in our district too, Tom Sewell, I don't
know if you know who he is or not. But this it great.
And you know what is interesting is I always show people, and
Congressman Shimkus has one too, bigger than mine, a thing like
this, I mean. You have got to be careful when you say things like
that. But this fuel is pretty interesting looking. It looks like water.
I was telling the girls back here, you could probably drink it and it
wouldn't kill you. And it doesn't smell like anything. It is running
in some buses even here in Washington, D.C., and it is very
interesting.
And I was just going to ask you, John, if you could kind of
explain the process of this and how you make the gasoline diesel
jet fuel out of it and maybe the Department of Defense application
of a one battle field fuel that has been talked about, a fuel that
could be used actually in a tank as well as a jet.
MR. WARZEL. In essence, as previously discussed, you are just
reacting a carbon monoxide hydrogen stream to create a fuel. The
fuel is very similar to candle wax. It is what they call a normal
paraffin. You then upgrade it and convert that a little bit to get the
coal properties that the military is interested in. Why we have
focused so much attention on military applications is they have
tested this fuel, and this is a quote from the senior researcher at the
Air Force, and he has made it publicly and said, it is by far the best
fuel they have ever tested in the military.
And he has been doing this for 20-plus years. The reason is
simply the fact that it has gotten phenomenal cold properties,
meaning that when airplanes go up to the higher and higher
altitudes such as the former SR-71, it doesn't freeze. Conventional
crude oil-based fuel will actually solidify, and that is never a good
thing when you are 100,000 feet off the ground. Second, it burns
cleaner. So therefore, you have less temperature in your exhaust,
which reduces the maintenance cost to the military. When they
start looking at long-term impact, maintenance costs of their
engines is one of the biggest cash drains. Third to that is it reduces
pollutants: 90-plus percent reduction in particulate matter. Two
aspects of that particulate matter is becoming one of the larger
long-term health problems in congested cities such as L.A. or New
York or Chicago.
Also, and they didn't go into much detail, and I guess I
understand why, is that particulate matter is a carbon material. It is
soot like you see come off a candle. That is what retains heat.
Heat is what planes have, or radars detect the planes by. So they
didn't go into much detail, but it is being looked at for something
like the F-35 joint strike fighter. They have contacted us. We
have had the Navy come in to Tulsa and a lot of Air Force and
Army for those specific military applications.
MR. SULLIVAN. I think that is really--can you imagine, so on a
battlefield, for example, we could some day have a mobile
refinery, let's say, out on the battlefield. Could that happen?
MR. WARZEL. Depending on the location and how quickly.
There is still work moving in that area.
MR. SULLIVAN. And it could be used to fuel a jet or a tank?
MR. WARZEL. Yes.
MR. SULLIVAN. I think that is amazing. And also, Mr. Pratt,
compressed natural gas in vehicles, I used to sell gasoline and
diesel fuel, and we were talking about getting an infrastructure in
place for that, and it was in Oklahoma and a lot of people, the
consumer would think, well, it kind of went like that when they
pulled it off. It scared them. They thought they would blow up.
But isn't it true that you--let's say an accident occurred with a gas
vehicle, it occurred with a natural gas vehicle, wouldn't it be less
dangerous because it would dissipate and wouldn't pool on the
ground?
MR. PRATT. Yes, sir. That is the case. The State of New York
has some great anecdotal stories of a Honda Civic GX that was
rear ended by none other than a gasoline tanker and drove the back
tanks all the way up into the back seat. And the safety investigator
said if it wasn't for the natural gas tanks and the construction of
that vehicle, the passengers would have been dead. The safety
protocols around natural gas are very high, well proven, and very
safe. I don't know if I could take a moment to address the fuel
supply just one second.
MR. SULLIVAN. Sure.
MR. PRATT. Thank you. Just to put it in perspective for
everyone, if you took 11 million vehicles today, which is about
5 percent of our vehicle fleet, that would only equate to about
4 percent of the natural gas sent out annually. It is a very small
percentage to have a very big impact. And as we look at electric
generation today, natural gas is being market driven out of natural
gas generation because it is the highest priced fuel over coal and
nuclear, and so we look at that supply long term as potentially
displacing up to 20 percent of both the gasoline and diesel
available in the marketplace. Thank you.
MR. SULLIVAN. Thank you very much.
MR. HALL. The gentleman from California, Mr. Radanovich.
MR. RADANOVICH. Thank you, Mr. Chairman. I think my
question is going to be for you, Mr. Pacheco, but anybody else
who wants to answer it. I am from California and represent a large
farming area. It is about $35 billion, largest industry in California
is specialty agriculture. And in California, we have got about three
ethanol plants that are starting to go in, which I think is good news,
and even though there is limited amounts of corn grown in
California the costs of production are so high, we are getting it
from the Midwest to be brought in to fuel these ethanol plants,
which is good news for my friend John over here.
But to tell you a story about California agriculture, about
5 years ago, the price of grapes that are grown quite extensively in
the valley went in the tank. And usually, there is a place to sell, if
you grow grapes you can sell it in the wine market, you can sell it
in the juice concentrate market, or you can sell it as raisins. And
all three of them were just flat as a pancake. And it would have
been nice to have that other alternative to be able to sell it for some
type of fuel afterwards.
So I am wondering, I guess my question is, and I think this is a
methanol, as much as I know about this. When are we going to be
able to, in California have the option of selling some of these 250
crops or byproducts from crops to be able to have that fuel option
for the California ag industry? And is it methanol? And maybe
you can educate me on that.
MR. PACHECO. No, you would be referring to ethanol in that
case.
MR. RADANOVICH. It would be ethanol?
MR. PACHECO. Yes. And most of those food products, the
sugar that is in them is fermentable directly. So it could be a lot
like what the Brazilians are doing with sugar cane, and what we do
with corn so it doesn't face the hurdles that the cellulosic ethanol
faces. Also, in your State, you have a big rice industry, and the
rice straw faces the same challenges that corn stover faces and that
wood resources face, the cost of the technology to go from that
cellulosic material. A good way to separate it is if you can eat the
biomass, then it is probably fermentable and would be cost
effective. And there are companies today that are taking waste
from the food industry and producing fuel ethanol from them.
MR. RADANOVICH. So for grapes, for the actual grape product
you could, you are not too far away from, in the technology, being
able to make ethanol from grapes, but it would be prunings and
things out of the orchards or vineyards that are cellulose or lignin
based, cellulose, those are the tougher ones to get energy out of,
right?
MR. PACHECO. Exactly. In fact, I understand Europeans face
the same issue, and some years when the wine is in true excess, the
same technology that is used to make wine is, in fact, the
technology that is used to make fuel ethanol, things like corn grain
or potatoes or waste grapes.
MR. RADANOVICH. That is interesting. Thank you. Mr. Pratt,
real quick question. You had mentioned the natural gas
infrastructure is more suitable, or would be a step toward a
hydrogen-based economy. Is that because you can mix the fuels in
the same tank, or why is that for natural gas and not for anything
else?
MR. PRATT. Good question. There are several layers to that.
First, building the infrastructure is very similar to building a pure
hydrogen station infrastructure. So it gets all of our city officials
and fire departments with longstanding experience in natural gas
familiar with permitting natural gas stations and then that carries
over to hydrogen. Second, for societal experiences, as we heard
from Mr. Sullivan, the experience on filling a vehicle up or filling
a bus or refuse truck up on natural gas is handling a gaseous fuel.
Now, it is all very safe. It is a quick connect type of connection on
to your vehicle. But that is a different fueling experience than
gasoline. In fact, some people who fill with natural gas for a long
period of time, I drive a natural gas vehicle every day and have
been since 1998, after you go to a gasoline station, the most
notable thing is you can smell the gasoline. You don't smell
anything with natural gas. That experience carries over into all the
rest of the societal experiences of body mechanics, auto parts
maintenance, all of that has to become familiar with gaseous fuels
to get to a hydrogen future.
And finally, on the station itself, the stations can be
accommodated with booster compressors to include delivery of
blended natural gas, a 20 percent blend of hydrogen into natural
gas by volume will reduce emissions by 50 percent. So it takes
any car, or bus, or truck and makes it even cleaner. And then you
can also sell pure hydrogen as well. So the stations have multi-
level societal experiences that are important to continuing over,
carrying over the hydrogen experience.
MR. RADANOVICH. Thank you. And real quickly if I might,
just one more brief question. You had mentioned that it takes
about what, 9 months to a year to convert a station or to add
natural gas to a regular facility, petroleum facility. Is that just
because it is the normal course of constructing, probably take just
as long to add a gasoline station to a particular site, right?
MR. PRATT. That is correct. And when we have compressors
in stock, and we have some of our pre-packaged skids in stock, we
can install it in 6 months. And that is pretty much the permitting
process and getting out the contracts all agreed to.
MR. RADANOVICH. I see. Okay. Thank you.
MR. PRATT. Thank you.
MR. HALL. Well, thank you. The Chair recognizes the
gentleman from Kentucky, Mr. Whitfield.
MR. WHITFIELD. Mr. Chairman, thank you very much. And I
know you all have had quite an interesting and informative
hearing, and I apologize very much for not being here earlier. But
I did have a few questions I would like to ask certainly, Mr.
Hughes, with the National Biodiesel Board. Certainly, at this time,
with the energy prices being what they are, all of us are focusing
on alternative fuel sources and certainly biodiesel is one of those.
But Mr. Hughes, does the President appoint the members of the
National Biodiesel Board? How is it determined who sits on that
board?
MR. HUGHES. The National Biodiesel Board is a membership
organization, so anybody who is a dues-paying member is a
member of the National Biodiesel Board. And then they have an
election process for their governing board which is voted on by the
full membership.
MR. WHITFIELD. Okay. Now it is my understanding that the
ASTM standards became effective because of the American Job
Creation Act of 2004. Is that correct? Or is that not correct?
MR. HUGHES. No, the ASTM process, we actually started back
in the late 1990s working with the engine makers, automakers who
saw biodiesel starting to grow and becoming more prevalent in the
marketplace, and they wanted to make sure that there was a
national standard in place for kind of uniformity for a product.
And that started, like I said, in the late 1990s. They put in a
provisional spec, I believe it was in 1999. December of 2001, I
believe, that was when the ASTM standard D 6751 was actually
adopted and put into place. It was in 2001.
MR. WHITFIELD. It was adopted by the board or was it adopted
by--
MR. HUGHES. No, the National Biodiesel Board does not
develop the ASTM standard. That is the American Society of
Testing and Materials that does the ASTM standard. They
developed that. We work with stakeholders, and ASTM for
development of a standard.
MR. WHITFIELD. But is it a part of Federal statute today?
MR. HUGHES. It is, yes, sir.
MR. WHITFIELD. And that was adopted in which Act?
MR. HUGHES. That was included in the Jobs Act.
MR. WHITFIELD. So it became a Federal statute, those
standards, in the Job Creation Act of 2004?
MR. HUGHES. It became, it was included, it has actually been
included, I believe, in other places, but that was the one that comes
to mind. It was in the Jobs Act as one of the requirements that
must be met in order for a fuel biodiesel to be eligible for the fuels
tax credit, the blenders tax credit.
MR. WHITFIELD. And of course the board, which I certainly
understand, will support only those technologies that meet those
standards, the ASTM 6751 standard, of course, but there are, I am
aware of more than one biodiesel producer who has come up with
a fuel that, from at least the scientific evidence that I have seen, is
actually cleaner burning with more BTUs, but because it doesn't
meet that standard, cannot be approved. And it seems to me that at
a time when we are trying to do everything possible to encourage
more development, that being very rigid on this standard can be
counterproductive at times. Would you agree with that or not
agree with that?
MR. HUGHES. Well, the National Biodiesel Board absolutely,
100 percent supports domestic fuels, renewable, and other
domestic fuels. The automakers and engine makers and
components manufacturers, when it comes to biodiesel, they
wanted to have a very specific standard for what is biodiesel, so
when people are selling biodiesel, there is uniformity in the
marketplace about what this is. We absolutely support any kind of
a domestic fuel that has gone through the health effects testing, that
has gone through an ASTM process and those kind of things,
absolutely, sir.
MR. WHITFIELD. Well, Mr. Chairman, I will yield back the
balance of my time. I do think that this matter is so important that,
while this legislation that has formalized the standard was adopted
in the Job Creation Act, I do think that may be something that
maybe our Energy Committee could look at as well, because I
think we have a vested interest in this issue. And I want to thank
all of you for your testimony today and the great leadership you are
providing. Thank you.
MR. HALL. Thank you. The gentleman said it all. We
appreciate you. We thank you for your time and thank you for
your ability to give us information on which to base good
legislation. You are dismissed. The subcommittee is adjourned.
[Whereupon, at 3:58 p.m., the subcommittee was adjourned.]
RESPONSE FOR THE RECORD BY SUSAN M. CISCHKE, VICE
PRESIDENT, ENVIRONMENT AND SAFETY ENGINEERING, FORD
MOTOR COMPANY
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Questions for the Record
To Susan M. Cischke
From The Honorable Henry A. Waxman
1. On June 7, 2005, eleven national science academies issued a
joint statement entitled "Joint science academies' statement:
Global response to climate change." The joint statement was
issued by the science academies of the United States, Brazil,
Canada, China, France, Germany, India, Italy, Japan, Russia
and the United Kingdom. It can be reviewed online at the
National Academy of Sciences website:
http://www.nationalacademies.org/onpi/06072005.pdf. The
statement begins:
Climate change is real
There will always be uncertainty in understanding a
system as complex as the world's climate. However, there
is now strong evidence that significant global warming is
occurring. The evidence comes from direct measurements
of rising surface air temperatures and subsurface ocean
temperatures and from phenomena such as increases in
average global sea levels, retreating glaciers, and changes
to many physical and biological systems. It is likely that
most of the warming in recent decades can be attributed to
human activities (IPCC 2001). This warming has already
led to changes in the Earth's climate.
The statement proceeds to state:
We urge all nations . to take prompt action to reduce the
causes of climate change, adapt to its impacts and ensure
that the issue is included in all relevant national and
international strategies.
As the joint statement makes clear, climate change is clearly
an issue of great importance to every nation on the planet.
Given the substantial greenhouse gas emissions attributable to
the transportation sector, climate change should clearly be a
major factor in any discussion about the next generation of
vehicles and fuels. Unfortunately, climate change was not
meaningfully discussed at the May 24, 2006 hearing.
Accordingly, please provide answers to the following
questions:
a. Does Ford Motor Company agree that the joint statement
represents the prevailing scientific views on climate
change?
Ford Motor Company has publicly stated and published in
our Climate Change Report our view on climate change.
We recognize that some key conclusions have earned
widespread support by scientists, policy makers and
business leaders and therefore define the assumptions
underpinning our approach to climate change. These
conclusions are compelling enough to serve as a framework
for our analysis and planning. For example:
<bullet> The growing weight of evidence holds that man-made
greenhouse gas emissions are starting to influence
significantly the world's climate in ways that affect all
parts of the globe.
<bullet> Many scientists, businesses and governmental agencies
have concluded that stabilizing the atmospheric CO2
concentration at around 550 parts per million may help
forestall or substantially delay the most disruptive
aspects of global climate change.
It is in the interest of society and business to reduce the
uncertainty and increase the predictability of policy
frameworks and market conditions around the issue of
climate change. Ford Motor Company is committed to
participating in a dialogue on energy policy and
greenhouse gas emissions that promotes more energy
security and lower GHG emissions across the entire
economy, while ensuring stable economic growth and the
viability of our business.
b. Does Ford Motor Company agree that it is the prevailing
scientific view that "the threat of climate change is clear
and increasing"?
See answer to 1a.
c. Does Ford Motor Company agree that it is the prevailing
scientific view that "there is now strong evidence that
significant global warming is occurring"?
See answer to 1a.
d. Does Ford Motor Company agree that it is the prevailing
scientific view that "most of the warming . can be
attributed to human activities"?
See answer to 1a.
e. If Ford Motor Company disagrees with the joint statement,
or a portion of the joint statement, based on a scientific
disagreement, please identify the portion of the statement
with which Ford Motor Company disagrees and explain
the scientific basis for the disagreement. Please provide
references to any published, peer-reviewed studies that
form the basis for Ford Motor Company's disagreement.
See answer to 1a.
2. The joint statement referenced in question 1 also recommends
taking action to reduce the causes of climate change. It states:
The scientific understanding of climate change is
sufficiently clear to justify nations taking prompt action. It
is vital that all nations identify cost-effective steps that
they can take now, to contribute to substantial and long-
term reduction in net global greenhouse gas emissions.
It goes on to state:
Action taken now to reduce significantly the build-up of
greenhouse gases in the atmosphere will lessen the
magnitude and rate of climate change. As the United
Nations Framework Convention on Climate Change
(UNFCCC) recognizes, a lack of full scientific certainty
about some aspects of climate change is not a reason for
delaying an immediate response that will, at a reasonable
cost, prevent dangerous anthropogenic interference with
the climate system.
Fortunately, the scientific academies report that "there are
many potentially cost-effective technological options that
could contribute to stabilizing greenhouse gas concentrations."
They also warn that "failure to implement significant
reductions in net greenhouse gas emissions now, will make the
job much harder in the future."
In order to understand Ford Motor Company's views on
reducing the causes of climate change, please provide answers
to the following questions.
a. Does Ford Motor Company agree that current scientific
understanding of climate change justifies nations "taking
prompt action"?
In June 2005, Ford Motor Company participated in the G8
Climate Change Roundtable. Among other assertions, this
group stated "We agree that science is sufficiently
compelling to warrant action by both the private and
public sector, and we acknowledge that, because of the
cumulative nature and long residence time of greenhouse
gases in the atmosphere, action must be initiated now."
Ford Motor Company published the industry's first report
dedicated to the issue of climate change and its effect on
our business as well as the automotive industry as a whole.
The report can be found at
www.ford.com/en/company/about/sustainability). In this
report, we describe our approach to GHG stabilization,
which is based on four key principles:
<bullet> First, technical, economic and policy approaches to
climate change need to recognize that all CO2 molecules
(or GHG equivalents) produced by human activity make
the same contribution to the atmosphere's concentration
of greenhouse gases. The cost of mitigating those
emissions, however, varies significantly depending on
their source, and economically efficient decisions about
how to reduce emissions depend on transparent cost
signals.
The relatively high costs of emission reduction make it
important that control policies be as efficient as possible,
which implies that the marginal costs of compliance be
equalized across all sectors. A pure pro-rata assignment
of burden for reducing GHG emissions across individual
sectors without the ability to trade-off costs and benefits
may not be the most appropriate response.
<bullet> Second, the auto industry represents a closely
interdependent system, characterized by the equation:
fuel + vehicle + driver = GHG emissions. Each link in
this chain depends on the other. Automakers can
produce a range of products to use fuels with varying
carbon content; however, operating those vehicles on
alternative fuels will require energy providers to bring
the fuels to market and consumers to demand the vehicle
and fuel. In a system in which no single player controls
all inputs, changes in output - in this case GHG
emissions - will require unprecedented coordination
across all sectors.
<bullet> Third, the future developments of technologies, markets
and political expectations are all uncertain. Accordingly,
the business strategies we implement - and the public
policies that we encourage - must be based on the
flexibility to meet a range of potential scenarios. We
know that almost any scenario will call for reduced GHG
emissions, but inside that broad directional expectation
lie a host of conflicting possibilities. For example, will
hydrogen, bio-fuels, battery electricity, diesel or some
combination emerge as the powertrain technology of
choice? Will the emerging markets of China and India
pursue a unique path toward lower GHG emissions in
their road transport sectors?
<bullet> Finally, Ford supports taking early affordable steps to
reduce GHG emissions. Lack of agreement on long-term
solutions cannot be used as an excuse to avoid reasonable
near term actions that provide the flexibility to account
for a range of potential technological, market and
political outcomes.
b. Does Ford Motor Company agree that it is "vital" that all
nations "identify cost-effective steps that they can take
now, to contribute to substantial and long-term reduction
in net global greenhouse gas emissions"?
Yes, see response to 2a.
c. Does Ford Motor Company agree that "a lack of full
scientific certainty about some aspects of climate change is
not a reason for delaying an immediate response that will,
at a reasonable cost, prevent dangerous anthropogenic
interference with the climate system"?
Yes, see response to 2a.
d. Does Ford Motor Company agree that "failure to
implement significant reductions in net greenhouse gas
emissions now, will make the job much harder in the
future"?
Yes, see response to 2a.
e. What actions can be taken now "to contribute to
substantial and long-term reduction in net global
greenhouse gas emissions"? What actions does Ford
Motor Company anticipate can be taken in 5 years? How
about 10 years?
Ford Motor Company is participating fully in the larger
public dialogue on actions required by governments,
businesses and individuals to address climate change.
We believe that policies that put constraints on carbon
need to focus on all sectors of the economy. They should
encourage conservation and the introduction of lower-
carbon and renewable-carbon fuels and energy sources,
while increasing the demand for more energy efficient
products across all sectors at the lowest possible social cost
and at a pace consistent with technology maturation,
consumer demand and economic viability. These policies
need to be implemented in ways that mitigate any related
transitions to avoid economic disruptions and unnecessary
costs, with incentives playing a key role.
Future reduction programs should be based on upstream
carbon trading systems that gradually reduce the limits on
carbon introduced into the economy. In addition, they
must include a safety valve that is based on
economic/energy indicators that would allow for the
release of additional emission allowances at reasonable
prices to avoid unintended constraints on economic
growth, maintain price stability and protect vital economic
growth and social development needed to help spur
demand for more efficient products and support long-term
investment, research and innovation.
f. What actions can be taken now in the transportation sector
"to contribute to substantial and long-term reduction in net
global greenhouse gas emissions"? What actions does
Ford Motor Company anticipate can be taken in that sector
in 5 years? How about 10 years?
Within the transportation sector, vehicle, fuels and fuel-use
must be addressed as a system. Policies need to encourage
the use of lower-carbon and renewable-carbon fuels and
energy (e.g., bio-ethanol fuels and blends) through
favorable market signals and incentives, as well as
encourage energy efficiency, carbon sequestration
initiatives, offsets, and credits across all phases of the
energy value chain.
A properly structured, upstream system would allow all
sectors of the economy to respond to the market signals
and pursue the most cost-effective solutions to improve
energy conservation and energy efficiency. From a
transportation point of view, an effective system would
require gradual but substantial changes in our product
and technology mix to remain consistent with shifting
consumer demand for more efficient products.
Initial policies can provide a foundation to help reduce
GHGs. For example, educating consumers on their role -
through programs like eco-driving training - will be a very
important part of a comprehensive and consistent market-
based solution. A person who drives in an energy-
conscious way - by avoiding excessive idling, unnecessary
bursts of acceleration and anticipating braking - can enjoy
much better fuel consumption today. Government can
play a key role in raising public awareness. Public
awareness is a simple and effective early step to reduce
GHGs, which is why we have introduced driver training
programs in Europe and developed on-line training for all
Ford Motor Company employees.
We also must focus on vehicle performance through
advanced technology research and development, as well as
manufacturing incentives and investments that reach to
suppliers and OEMs. Finally, we must continue to pursue
policies that improve road transport and infrastructure
(e.g. mass transit) by reducing congestion and fuel
consumption through improved traffic flow. An early step
that can be taken already by municipal governments is
traffic light synchronization to reduce overall vehicle idle
time.
g. What actions can be taken now by Ford Motor Company
"to contribute to substantial and long-term reduction in net
global greenhouse gas emissions"? What actions does
Ford Motor Company anticipate can be taken in 5 years?
How about 10 years?
There are no simple solutions, and open debate among all
the diverse stakeholders is necessary. A long-term solution
will take time to evolve, but we also believe that early
foundational policies can help reduce GHGs.
Ford Motor Company has announced publicly several
product actions that will increase the number of higher
fuel economy, lower GHG emissions vehicles available to
our customers. For example, we have announced plans to
continue our leadership in ethanol powered flexible fuel
vehicles.
We are also expanding the application of existing
technologies that deliver fuel economy benefits including
variable valve timing, fuel shut off, direct injection gasoline
engines, clean diesel and six-speed transmissions.
Additionally, we are increasing our investment in a
portfolio of technologies that deliver improved fuel
economy and lower GHG emissions, including:
<bullet> Weight stabilization and reduction
<bullet> Expanded FFV vehicles and partnerships with fuel
providers to increase infrastructure
<bullet> Gasoline engine downsizing, combined with Direct
Injection Spark Ignition (DISI) and pressure charging
<bullet> Hybrid gasoline powerpacks, shared among the
brands
<bullet> Clean diesels and the technology to allow them to run
on bio-diesel above 5% blends
<bullet> Hydrogen Internal Combustion Engine (ICE)
demonstration fleets
<bullet> Hydrogen fuel cell research and demonstration fleets.
h. As an international business entity, please explain how
your approach to climate change varies by the nation in
which you are operating? For example, compare your
approach in the European Union to the United States, and
the United State to China.
The issue of climate change is closely related to the equally
pressing issues of energy security and fuel prices (which
drive market behavior). GHG emissions are a common
currency for all of these issues; however, international
approaches to customer and policy priorities differ around
the world.
Ford Motor Company recognizes these differing customer
and policy priorities and varies our approaches
accordingly. For example, our voluntary agreement as
part of ACEA in Europe has been focused directly on CO2
reduction. Our aggressive investment in hybrid
production in the U.S. has been driven, in part, by
consumer demand for more fuel efficient vehicle choices
and innovative technologies. Our support for an expanded
bio-ethanol infrastructure in the U.S. is underpinned by
the call for less dependence on imported oil. China has
adopted weight-based fuel consumption standards for 2005
with more stringent requirements set for 2008 vehicles.
Each of these initiatives results in lower CO2 emissions,
but emerges from different market and policy priorities.
3.About 20% of the United States' greenhouse gas emissions are
emitted by light duty vehicles.
a. Does Ford Motor Company believe that the United States
government should act to require a reduction of
greenhouse gas emissions from light duty vehicles?
Ford Motor Company believes that government support is
needed with near-term actions, such as consumer
education on eco-driving and incentives to increase E-85
infrastructure.
Longer-term, government action on GHGs must include
all sectors of the economy, including the other 80% of the
contributors. Even a substantial reduction of GHGs from
the gasoline sector would have minimal impact on GHGs
without including emissions from other fuel sources.
Beyond the auto industry, producers of natural gas, coal
and even other petroleum products must be part of the
solution.
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Further, a simple pro-rata assignment of burden for
reducing GHG emissions may not be the most appropriate
response and will likely result in economic waste. All CO2
molecules produced by human activity contribute equally
to the atmospheric concentration of CO2; however, the
cost of mitigating those emissions can vary significantly
across sectors of the economy.
b. If so, please discuss what requirements Ford Motor
Company would consider reasonable to reduce greenhouse
gas emissions while providing adequate time for
adaptation by the auto industry. What is an appropriate
timeframe for a requirement? What substantive
requirements would Ford Motor Company suggest?
Reduction programs should be based on upstream, carbon
trading systems that gradually reduce the limits on carbon
introduced into the economy. This approach will most cost
effectively involve all sectors of the economy and eliminate
the need to regulate and enforce each sector/industry
uniquely. The upstream system must include a safety valve
that is based on economic/energy indicators that would
allow for the release of additional emission allowances at
reasonable prices to avoid unintended constraints on the
economy, maintain price stability and protect vital
economic growth and social development needed to help
spur demand for more efficient products and support long-
term investment, research and innovation.
c. If Ford Motor Company does not believe that the United
States government should act to require a reduction of
greenhouse gas emissions from light duty vehicles, please
explain what alternative approach Ford Motor Company
suggests for reducing greenhouse gas emissions.
See answers to 3a and 3b.
RESPONSE FOR THE RECORD BY WILLIAM REINERT, NATIONAL
MANAGER, ADVANCED TECHNOLOGY GROUP, TOYOTA MOTOR
SALES, USA, INC.
July 21, 2006
The Honorable Henry A. Waxman
Committee on Energy and Commerce
U.S. House of Representatives
c/o Mr. Peter Kielty
Legislative Clerk
2323 Rayburn House Office Building
Washington, DC 20515-6115
Dear Representative Waxman:
Thank you for your thoughtful questions and your committee's
interest in Toyota's views on climate change. We are pleased to
have this opportunity to share our understanding and some of our
current thinking on this important issue.
Toyota recognizes the broad and growing scientific consensus that
climate change is occurring. Although some uncertainties remain,
we also understand that the majority scientific opinion links
anthropogenic activities to increases in Earth surface temperatures,
and that these activities, considered in total, appear to be having a
significant impact on global climate. Toyota also observes that the
majority of the scientific community believes that both immediate
and long term strategies and policies to reduce the impacts of
climate change must be considered.
Although there appears to be growing alignment in the scientific
community about the problem, there appears to be much less
consensus on solutions. The prioritization of mitigation and
adaptation options and objectives, the relationship between short-
term and long-term greenhouse gas reduction activities, the design
and viability of a global response - these are just a few of the key
questions that are open to significant public debate.
Toyota Action
Although these types of critical questions and considerations
remain, Toyota has long considered it prudent to look for ways to
help reduce the impact of greenhouse gas emissions from our
products and from our business operations.
The greenhouse gas impact from motor vehicles is inexorably
linked to their fuel economy. As to Toyota's fleet in the United
States, we have exceeded the Corporate Average Fuel Economy
(CAFE) standards since their inception in 1978. In 2005 (the latest
year for which complete public data are available), our combined
car and truck CAFE was 28.9 MPG, exceeding the combined
average of the rest of industry by 4.1 MPG, or nearly 17%.
Further, we support the National Highway Traffic Safety
Administration (NHTSA) raising future CAFE requirements for
both cars and trucks and, indeed, in our comments on the recently
promulgated light truck rule encouraged NHTSA to immediately
undertake another multiyear rulemaking for trucks.
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Our commitment to reducing the greenhouse gas footprint of our
products does not stop there, however--energy conservation and
energy efficiency are core considerations in the full life cycle of
our business. To this end, we also participate in the Department of
Energy's 1605(b) program, and have been reporting our
greenhouse gas emissions from our U.S. manufacturing operations
since 2003. In addition, we set an internal target to reduce energy
consumption, and thus CO2, from our North American
manufacturing operations by 15% per unit of production by
FY2005 compared to a baseline year of 2000. We achieved our
15% reduction target two years ahead of schedule and are in the
process of developing a new, even more challenging target.
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We also have set targets to reduce energy use and track greenhouse
gas emissions generated during the sales and distribution of our
products. In March 2005, we achieved our goal to reduce energy
use from this part of our business by 15%, and we set a new target
of 20% reduction (compared to 2000 base year). In addition, we
have developed a greenhouse gas inventory using a protocol
developed by the World Business Council for Sustainable
Development (WBCSD).
All of the goals and targets for Toyota's North American
operations are contained in our 5-Year Environmental Action plan,
which is published annually in our North American Environmental
Report. This year's report, scheduled to be published in November
2006, will contain an all new set of goals and targets that we will
work to achieve over the next 5-year period.
Advanced Vehicle Technology and Alternative Fuels
As we work with these federal and voluntary programs and exceed
federal fuel economy requirements, Toyota is also committed to
developing and marketing advanced vehicle technology to address
global climate change and the growing demand for fossil fuels.
With these concerns in mind, the Prius and Toyota hybrid
technology were launched in 1997 in Japan and in the U.S. market
in 2000 (and at a time when gasoline hovered around $1 a gallon).
Toyota sees hybrid technology as a core technology for the future
that will increase the fuel efficiency and reduce the environmental
impact of gasoline powered vehicles, as well as an essential and
enabling element of future powertrains. Toyota pioneered the
market development for hybrid vehicles and has sold over 600,000
hybrids globally with more that 300,000 of them being sold in the
United States. We have previously announced the goal of hybrid
sales in excess of 1,000,000 each year, starting in the early part of
the next decade. We also have announced our intention to advance
our research and development of plug-in hybrid vehicles.
We also continue to explore the use of alternative fuels, including
biofuels (ethanol) and hydrogen. We have hydrogen fuel cell
demonstration programs in place in California, and are considering
introducing flex-fuel vehicles in an effort to promote bioethanol
fuels. Further into the future, we also continue to look to hydrogen
fuel cells to one day replace traditional combustion engines.
Other Sectors and Other Markets
Our primary business falls within the transportation sector;
therefore, we do not have a formed opinion over how other sectors
should be addressed. Toyota does, however, recognize that there
may be serious challenges ahead in shifting away from fossil fuels.
In this sense, we encourage the move to more renewable fuel
sources and practices in the production of electricity, hydrogen,
biofuels or gasoline. How fuels are produced and distributed is
perhaps the key factor in determining the life cycle greenhouse gas
impact of specific vehicle powertrain options.
As an automaker, Toyota believes its primary responsibility is to
optimize the fuel efficiency of our products. We must accomplish
this, however, while also keeping our customers' needs and local
markets in mind. Toyota responds to the regulatory climate and
market forces in each market where we do business. In every case
we meet, and most times exceed, all applicable regulatory
requirements. We believe that some markets, like the European
Union and Japan, have long been shaped by regulatory and tax
policies that favor carbon-equivalent reduction strategies based
upon high fuel taxes. Many economists believe that these policies
have led to market conditions that favor smaller, more fuel
efficient vehicles, and Toyota products in these regions reflect
these preferences.
Similar conditions do not currently exist within the United States.
In-use conditions and fuel prices are much different and reflect a
different set of customer priorities. Market conditions in the
United States have historically favored larger, gasoline-fueled
vehicles and a full line of vehicle offerings. Again, Toyota's
products within the United States reflect these conditions.
However, Toyota strives to provide class-leading fuel economy in
each market segment in which we compete.
Reducing In-Use Impacts and Fostering Technology
Development
While we certainly have control over our product offerings,
automakers' have little control over fuel supply, distribution and
pricing. In addition, although we can (and do) play a role in
fostering consumer interest in fuel economy, we also cannot dictate
how - and how much - consumers use our vehicles. Toyota
considers it worthwhile, therefore, for society to look for additional
ways to influence how automobiles are used by the American
public. As examples, in-use impacts might be reduced through
smarter land use planning, increased reliance on mass transit and
the greater use of so-called "intelligent transportation systems" to
reduce traffic congestion and gridlock. There may also be merit in
additional government policy designed to foster consumer interest
in advanced technology and fuel efficient vehicles, such as tax
credits for hybrids.
We also encourage the federal government to continue to play a
leadership role in the development of alternatives to the internal
combustion engine and conventional fuels. Hybrids, "clean"
diesel, biofuels, hydrogen - these are just a few possible pathways
that show promise for addressing both climate change and energy
diversity. The federal government can continue to help these
nascent technologies find their way into the mainstream.
Addressing climate change will require some fundamental changes
in how we view and use energy. There are certainly ways that
energy conservation and energy efficiency can have positive
economic effects for businesses and consumers, but it is critical
that any mandatory requirements on business or on our society be
viewed with the additional prism of economic impact. We believe
it critical that any government requirements be designed to
distribute the burden for climate change impacts across multiple
sectors, while also recognizing prior and voluntary action. We
therefore generally support energy intensity and performance
based standards (such as the existing CAFE standards), as opposed
to absolute caps or other limits that may penalize growing
companies or companies that have taken early voluntary action to
reduce their greenhouse gas impacts.
Continued Collaboration and Innovation
Toyota also strongly believes that addressing climate change and
energy diversity in a meaningful way will require collaboration.
Toyota is investing time, funding and know-how to joint efforts
designed to respond to climate change and help diversify energy.
These cooperative efforts include joint research projects with
universities on climate change reduction technologies and
participation in global and U.S. policymaking organizations, but
we are also engaged in strategic alliances with energy providers to
explore advanced technologies and alternative fuels. We are also
sharing our advanced hybrid technology with other automakers.
Tackling climate change and fostering energy diversity calls for
careful deliberation and balancing with other priorities, but it also
demands innovation, unconventional thinking and most of all,
action. Toyota is committed to continued action to do its share to
help solve these challenges, and to exploring multiple pathways to
achieving sustainable mobility. Toyota continues its search for
cost-effective, mass market solutions, and we encourage the U.S.
government to continue to foster the flexibility and innovation that
our industry - and our society--will need to reduce the greenhouse
gas impact of the automobile.
Thank you again for your interest in our views, and this
opportunity to share some of our current thinking with you.
Sincerely yours,
Bill Reinert
National Manager
Toyota Motor Sales, U.S.A.
RESPONSE FOR THE RECORD BY ELIZABETH LOWERY, VICE
PRESIDENT, PUBLIC POLICY CENTER, GENERAL MOTORS
June 28, 2006
Congressman Ralph M. Hall
FE-6313
Chairman, Subcommittee on Energy and Air Quality
Committee on Energy and Commerce
U.S. House of Representatives
2323 Rayburn House Office Building
Washington, DC 20515-6115
Dear Congressman Hall:
Thank you for the opportunity to appear before the Subcommittee
on Energy and Air Quality on Wednesday, May 24, 2006 at the
hearing entitled "Vehicle and Fuels Technology: Next
Generation."
General Motors Corporation is pleased to provide the attached
responses to the follow-up questions that you sent us in your letter
of June 9, 2006.
If you have any questions regarding this material, please let me
know.
Sincerely,
Attachment
c: Peter Kielty, Legislative Clerk (Fax 202-225-2899)
The Honorable Henry A. Waxman
1. On June 7, 2005, eleven national science academies issued a
joint statement entitled, "Joint science academies' statement:
Global response to climate change." The joint statement was
issued by the science academies of the United States, Brazil,
Canada, China, France, Germany, India, Italy, Japan, Russia,
and the United Kingdom. It can be reviewed online at the
National Academy of Sciences website:
http://www.nationalacademies.org/onpi/06072005.pdf. The
statement begins:
Climate change is real
There will always be uncertainty in understanding a system
as complex as the world's climate. However there is now
strong evidence that significant global warming is
occurring. The evidence comes from direct measurements
of rising surface air temperatures and subsurface ocean
temperatures and from phenomena such as increases in
average global sea levels, retreating glaciers, and changes
to many physical and biological systems. It is likely that
most of the warming in recent decades can be attributed to
human activities (IPCC 2001). This warming has already
led to changes in the Earth's climate.
The statement proceeds to state:
We urge all nations . . . to take prompt action to reduce the
causes of climate change, adapt to its impacts and ensure
that the issue is included in all relevant national and
international strategies.
As the joint statement makes clear, climate change is clearly an
issue of great importance to every nation on the planet. Given
the substantial greenhouse gas emissions attributable to the
transportation sector, climate change should clearly be a major
factor in any discussion about the next generation of vehicles
and fuels. Unfortunately, climate change was not meaningfully
discussed at the May 24, 2006, hearing. Accordingly, please
provide answers to the following questions:
a. Does General Motors agree that the joint statement
represents the prevailing scientific views on climate
change?
We are not experts in climate science, and thus are not
in a position to judge the accuracy of the joint
statement. However, we are aware that the
concentration of greenhouse gases in the atmosphere is
increasing. For this and other reasons, we are taking
appropriate steps to reduce energy use and greenhouse
gas emissions from our facilities and products.
Development of advanced technologies for vehicles
and manufacturing and alternative fuels are critical
parts of this process.
b. Does General Motors agree that it is the prevailing
scientific view that "the threat of climate change is clear
and increasing"?
See response to question 1a.
c. Does General Motors agree that it is the prevailing
scientific view that "there is now strong evidence that
significant global warming is occurring"?
See response to question 1a.
d. Does General Motors agree that it is the prevailing
scientific view that "most of the warming . . . can be
attributed to human activities"?
See response to question 1a.
e. If General Motors disagrees with the joint statement, or a
portion of the joint statement, based on a scientific
disagreement, please identify the portion of the statement
with which General Motors disagrees and explain the
scientific basis for the disagreement. Please provide
references to any published, peer-reviewed studies that
form the basis for General Motors's disagreement.
See response to question 1a.
2. The joint statement referenced in question 1 also recommends
taking action to reduce the causes of climate change. It states:
The scientific understanding of climate change is
sufficiently clear to justify nations taking prompt action. It
is vital that all nations identify cost-effective steps that they
can take now, to contribute to substantial and long-term
reduction in net global greenhouse gas emissions.
It goes on to state:
Action taken now to reduce significantly the build-up of
greenhouse gases in the atmosphere will lessen the
magnitude and rate of climate change. As the United
Nations Framework Convention on Climate Change
(UNFCCC) recognises, a lack of full scientific certainly
about some aspects of climate change is not a reason for
delaying an immediate response that will, at a reasonable
cost, prevent dangerous anthropogenic interference with the
climate system.
Fortunately, the scientific academies report that "there are many
potentially cost-effective technological options that could
contribute to stabilising greenhouse gas concentrations." They
also warn that "failure to implement significant reductions in
net greenhouse gas emissions now, will make the job much
harder in the future."
In order to understand General Motors's views on reducing the
causes of climate change, please provide answers to the
following questions.
a. Does General Motors agree that current scientific
understanding of climate change justifies nations "taking
prompt action"?
See response to question 1a above.
b. Does General Motors agree that it is "vital" that all nations
"identify cost-effective steps that they can take now, to
contribute to substantial and long-term reduction in net
global greenhouse gas emissions"?
Climate change is a global issue. Appropriately
addressing concerns about climate change will require
global involvement.
c. Does General Motors agree that "a lack of full scientific
certainty about some aspects of climate change is not a
reason for delaying an immediate response that will, at a
reasonable cost, prevent dangerous anthropogenic
interference with the climate system"?
See response to question 1a.
d. Does General Motors agree that "failure to implement
significant reductions in net greenhouse gas emissions now,
will make the job much harder in the future"?
GM believes the most effective way to improve energy
efficiency and reduce greenhouse gas emissions is the
development and global implementation of cost-
effective energy technologies in all sectors. We are
working hard to accomplish this in the products that we
make and sell worldwide and in the facilities that we
operate.
e. What actions can be taken now "to contribute to substantial
and long-term reduction in net global greenhouse gas
emissions"? What actions does General Motors anticipate
can be taken in 5 years? How about 10 years?
The basic challenge is to meet the world's growing
demands for energy and mobility necessary to sustain
economic growth while also addressing long-term
concerns about the environment. GM believes the most
effective way to improve energy efficiency and reduce
greenhouse gas emissions is the development and
global implementation of cost-effective energy
technologies in all sectors.
f. What actions can be taken now in the transportation sector
"to contribute to substantial and long-term reduction in net
global greenhouse gas emissions"? What actions does
General Motors anticipate can be taken in that sector in 5
years? How about 10 years?
In the near term, the deployment of flex fuel vehicle
technology and a biofuel fueling infrastructure holds
great potential to begin to move us away from current
U.S. dependence on fossil fuels in the transportation
sector. We believe investment in FFVs and biofuels
will pay even greater dividends if cellulosic ethanol
becomes a significant player in the marketplace.
In the longer term, fuel cells powered by hydrogen
offer a sustainable energy pathway to decouple
economic growth and personal transportation from CO2
emissions. It is important that the research being
undertaken by automakers to develop the capability of
fuel cell vehicles be complemented by research into
ways to better and more economically use renewable
and other non-carbon emitting energy pathways so that
as 'zero emission' vehicles are commercialized, 'zero
emission' fuels are also made commercially available,
resulting in a substantial reduction or elimination of
CO2 emissions on a well-to-wheels basis.
For developed countries, hydrogen fuel cells offer the
opportunity for cleaner, more fuel efficient vehicles,
enhanced energy security and reduced vulnerability to
oil supply disruptions from unstable sources. For
developing countries, hydrogen fuel cells offer the
opportunity for enhanced mobility, which is a key
enabler of economic growth, with very limited or no
environmental issues and from, in many cases, locally
available energy sources. However, as with any
'leapfrog' technology, there are many technical and
transitional issues still to be addressed before the
benefits of hydrogen fuel cell vehicles can be widely
realized.
g. What actions can be taken now by General Motors "to
contribute to substantial and long-term reduction in net
global greenhouse gas emissions"? What actions does
General Motors anticipate that General Motors can take in 5
years? How about 10 years?
Products: GM is implementing advanced technologies
in its internal combustion engines (such as Active Fuel
Management, flex fuel systems capable of running on
renewable ethanol E-85, and clean diesels), in its
hybrid vehicles (which include GM's hybrid bus
transmission systems and SUV and car hybrid systems
that will be rolled out over the next few years) and in
its hydrogen powered fuel cell vehicles that emit only
water (moving us toward the ultimate goal of removing
the automobile from the environmental equation). GM
believes the pursuit of a hydrogen economy ultimately
provides the best opportunity not only to reduce
greenhouse gas emissions from the automotive sector,
but also to diversify away from dependence on
petroleum.
Processes: GM continues to set targets and monitor
greenhouse gas emissions from its facilities and is
taking steps to achieve near-term reductions. In 2004,
GM's global facilities achieved a 12.5 percent
reduction in CO2 emissions compared to 2000.
h. As an international business entity, please explain how your
approach to climate change varies by the nation in which
you are operating? For example, compare your approach in
the European Union to the United States, and the United
States to China.
General Motors operates as one company around the
world - looking for opportunities to maximize the use
of advanced technologies in products and processes in
all regions in which it operates.
3. About 20% of the United States' greenhouse gas emissions are
emitted by light duty vehicles.
a. Does General Motors believe that the United States
government should act to require a reduction of greenhouse
gas emissions from light duty vehicles?
No. The most effective thing the US government can
do is to assist in the development and implementation
of the advanced vehicle technologies and alternative
fuels described above through a balanced program of
incentives for vehicle manufactures, consumers, and
fuel providers.
b. If so, please discuss what requirements General Motors
would consider reasonable to reduce greenhouse gas
emissions while providing adequate time for adaptation by
the auto industry. What is an appropriate timeframe for a
requirement? What substantive requirements would
General Motors suggest?
c. If General Motors does not believe that the Untied States
government should act to require a reduction of greenhouse
gas emissions from light duty vehicles, please explain what
alternative approach General Motors suggests for reducing
greenhouse gas emissions.
See General Motors' response to question 3a.
RESPONSE FOR THE RECORD BY DEBEROH MORRISSETT, VICE
PRESIDENT, REGULATORY AFFAIRS, DAIMLERCHRYSLER
CORPORATION
<GRAPHICS NOT AVAILABLE IN TIFF FORMAT>
The Honorable Henry Waxman
1. On June 7, 2005, eleven national science academies
issued a joint statement entitled, "Joint science
academies' statement: Global response to climate
change." The joint statement was issued by the science
academies of the United States, Brazil, Canada, China,
France, Germany, India, Italy, Japan, Russia, and the
United Kingdom. It can be reviewed online at the
National Academy of Sciences website:
http://www.nationalacademies.org/onpi/06072005.pdf.
The statement begins:
Climate change is real
There will always be uncertainty in
understanding a system as complex as the
world's climate. However, there is now strong
evidence that significant global warming is
occurring. The evidence comes from direct
measurements of rising surface air temperatures
and subsurface ocean temperatures and from
phenomenon such as increases in average global
sea levels, retreating glaciers, and changes to
many physical and biological systems. It is likely
that most of the warming in recent decades can
be attributed to human activities (IPCC 2001).
This warming has already led to changes in the
Earth's climate.
The statement proceeds to state:
We urge all nations.to take prompt action to
reduce the causes of climate change, adapt to its
impacts and ensure that the issue is included in
all relevant national and international strategies.
As the joint statement makes clear, climate change is
clearly an issue of great importance to every nation on
the planet. Given the substantial greenhouse gas
emissions attributable to the transportation sector,
climate change should clearly be a major factor in any
discussion about the next generation of vehicles and
fuels. Unfortunately, climate change was not
meaningfully discussed at the May 24, 2006 hearing.
Accordingly, please provide answers to the following
questions.
1a. Does DaimlerChrysler Corporation agree that the joint
statement represents the prevailing scientific view on
climate change?
DaimlerChrysler supports the on-going climate change
research and dialogue to ensure a fuller understanding of
the controversies surrounding this issue and to avoid
inappropriate responses by government or the private
sector. An example of controversy was highlighted by the
U.S. NAS president when he expressed concern to the UK
Royal Society President on the process that produced the
joint statement. Senator Craig entered this correspondence
into the Congressional Record during the Energy Policy
debate of 2005.
While DaimlerChrysler cannot assess whether this joint
statement "represents the prevailing scientific view," we do
share the concern expressed by many, that global climate
change could affect future generations.
Vehicle manufacturers such as DaimlerChrysler are only
one stakeholder in the energy/greenhouse gas equation and
can only influence vehicle technology and manufacturing
processes - other pertinent stakeholders include
governments, consumers, interested NGOs and other
industry sectors (e.g., energy industry) and their suppliers.
DaimlerChrysler is developing and implementing new
advanced technologies now to minimize any potential
impact our vehicles and processes might have on global
climate or the environment in general. Our objective is to
achieve a sustainable road transportation system by
focusing on technological advances in energy efficiency
and innovation.
We believe that the competitive marketplace is the best
solution to this challenge and we expect to be a leader in
developing and introducing advanced technologies
designed to reduce greenhouse gas emissions.
DaimlerChrysler is taking action on two of the conclusions
in the joint statement now:
<bullet> "Identifying cost effective steps that can be taken now
to contribute to substantial and long term reductions in
net global greenhouse gas emissions." One example I
included in my testimony is DaimlerChrysler's offering
of MDS (Multiple Displacement System) technology on
seven Chrysler Group vehicles. MDS seamlessly
alternates between smooth, high fuel economy four-
cylinder mode when less power is needed and V-8
mode when more power is demanded from the engine.
<bullet> "Show leadership in developing and deploying clean
energy technologies and approaches to energy
efficiency." One example I included in my testimony
is DaimlerChrysler efforts to design more engines to
run on biofuels with lower lifecycle greenhouse gas
emissions, because the plants they are derived from
absorb carbon dioxide from the atmosphere during
growth. We have teamed up with the Detroit-based
nonprofit NextEnergy, the nation's largest chain of
biodiesel refiners, industry-leading suppliers, and local
universities to conduct much-needed research and field
testing. I ask that Congress support funding requests
for this and similar research programs.
DaimlerChrysler also continues to work cooperatively with
government labs, suppliers and other companies in the
industry to achieve breakthroughs in technology.
Programs, such as FreedomCAR and the hydrogen
initiative in the United States, and the Fuel Cell Partnership
and Hydrogen Highways effort in California can have a
long-term effect in reducing CO2 emissions from vehicles.
1b. Does DaimlerChrysler Corporation agree that it is the
prevailing scientific view that "the threat of climate
change is clear and increasing"?
See answer to 1a.
1c. Does DaimlerChrysler Corporation agree that it is the
prevailing scientific view that "there is now strong
evidence that significant global warming is occurring"?
See answer to 1a.
1d. Does DaimlerChrysler Corporation agree that it is the
prevailing scientific view that "most of the warming .
can be attributed to human activities"?
See answer to 1a.
1e. If DaimlerChrysler Corporation disagrees with the joint
statement, or a portion of the joint statement, based on
a scientific disagreement, please identify the portion of
the statement with which DaimlerChrysler Corporation
disagrees and explain the scientific basis for the
disagreement. Please provide references to any
published, peer-reviewed studies that form the basis for
DaimlerChrysler Corporation's disagreement.
See answer to 1a.
2. The joint statement referenced in question 1. also
recommends taking action to reduce the causes of
climate change. It states:
The scientific understanding of climate change is
sufficiently clear to justify nations taking prompt
action. It is vital that all nations identify cost-
effective steps that they can take now, to
contribute to substantial and long-term
reduction in net global greenhouse gas emissions.
It goes on to state:
Action taken now to reduce significantly the
build-up of greenhouse gases in the atmosphere
will lessen the magnitude and rate of climate
change. As the United Nations Framework
Convention on Climate Change (UNFCCC)
recognizes, a lack of full scientific certainty
about some aspects of climate change is not a
reason for delaying an immediate response that
will, at a reasonable cost, prevent dangerous
anthropogenic interference with the climate
system.
Fortunately, the scientific academies report that "there
are many potentially cost-effective technological options
that could contribute to stabilizing greenhouse gas
concentrations." They also warn that "failure to
implement significant reductions in net greenhouse gas
emissions now, will make the job much harder in the
future."
In order to understand, DaimlerChrysler Corporation's
views on reducing the causes of climate change, please
provide answers to the following questions.
2a. Does DaimlerChrysler Corporation agree that current
scientific understanding of climate change justifies
nations "taking prompt action"?
NGOs routinely point to the corporate average fuel
economy (or CAFE) program as the policy for reducing
greenhouse gases through improved vehicle fuel economy.
DaimlerChrysler has supported the National Highway
Traffic Safety Administration's (NHTSA) national fuel
economy standard setting process. In March of 2006,
NHTSA finalized a second round of rulemakings that has
led to higher truck fuel economy standards for seven
straight model years (2005-2011 MY).
DaimlerChrysler also participates in voluntary initiatives
such as the DOE Climate VISION program to lower
greenhouse gases from our facilities and reports its
greenhouse gas emissions to the DOE 1605(b) program.
The United States government has committed billions of
dollars to mobilize the science and technology community
to enhance research and development efforts which will
better inform climate change decisions. In fact, the
Administration has initiated a Climate Change Science
Program Strategic Plan that the National Academy has
reviewed and endorsed. The United States is also engaged
in extensive international efforts on climate change, both
through multilateral and bilateral activities. The United
States is by far the largest funder of activities under the
United Framework Convention on Climate Change and the
Intergovernmental Panel on Climate Change.
DaimlerChrysler supports these efforts to avoid
inappropriate responses by government or the private
sector.
2b. Does DaimlerChrysler Corporation agree that it is
"vital" that all nations "identify cost-effective steps that
they can take now, to contribute to substantial and
long-term reduction in net global greenhouse gas
emissions"?
Ambient greenhouse gases are global in nature. Efforts to
mitigate greenhouse gas emissions must be embraced by all
sectors in developed and developing countries alike.
Without a global commitment to reducing greenhouse gas
emissions, little or no environmental benefit will be
realized and economic disruption will result.
The U.S. Department of Energy's Energy Information
Agency projects that developing country greenhouse gas
emissions will exceed developed country greenhouse gas
emissions within a decade, primarily due to the rapidly
growing economies of China and India. Efforts that seek
to include these countries, such as the Asia-Pacific
Partnership on Clean Development and Climate, with its
focus on technological development and deployment, have
the potential to reduce global greenhouse gas emissions.
2c. Does DaimlerChrysler Corporation agree that "a lack
of full scientific certainty about some aspects of climate
change is not a reason for delaying an immediate
response that will, at a reasonable cost, prevent
dangerous anthropogenic interference with the climate
system"?
While there are many unanswered questions,
DaimlerChrysler continues to develop and implement
advanced technology in its product line-up. We continue to
support NHTSA and their charge from Congress to set
national fuel economy standards for light duty vehicles at
the "maximum feasible" level.
2d. Does DaimlerChrysler Corporation agree that "failure
to implement significant reductions in net greenhouse
emissions now, will make the job much harder in the
future"?
See answer to 2c.
2e. What actions can be taken now "to contribute to
substantial and long-term reduction in net global
greenhouse gas emissions"? What actions does
DaimlerChrysler Corporation anticipate can be taken
in 5 years? How about 10 years?
There are three fundamental actions available to reduce
fossil fuel energy use/greenhouse gas emissions:
<bullet> Conserve energy through behavior changes
<bullet> Improve energy efficiency
<bullet> Switch to a lower carbon energy source
Many economists have noted that the most efficient way to
lower greenhouse gas emissions is to implement carbon
controls on all fossil fuels at their upstream production
point (i.e., the mine-mouth or well head). Controls that
operate "upstream" on fuel producers versus "downstream"
on fuel users hold the greatest promise for large greenhouse
gas reductions at the lowest cost by educating the market
regarding the overall value of all forms of energy.
While setting fuel economy standards will only impact new
vehicles, upstream controls on fossil fuel carbon content
will cause all energy end users, including owners of older
vehicles, to value energy.
As I highlighted in my original testimony (attached),
DaimlerChrysler continues to work on a broad portfolio of
technologies to improve the energy efficiency and reduce
greenhouse gas emissions of transportation through the
implementation of advanced technology and increasing the
use of renewable biofuels.
Advanced Technology
For the near-term, we continue to improve advanced
gasoline and diesel internal combustion engines (ICE) with
the development and implementation of technologies
(including many noted by National Academies of Science
"Effectiveness and Impact of Corporate Average Fuel
Economy (CAFE) Standards" in 2002).
<bullet> DaimlerChrysler currently has seven models (The
Chrysler 300, Dodge Magnum, Dodge Charger, Jeepr
Grand Cherokee, Dodge Durango, Dodge Ram, and the
Jeepr Commander) that feature the Multiple
Displacement System (or MDS) fuel saving technology.
By 2007, MDS is estimated to save over 60 million
gallons of gasoline per year.
<bullet> The new Dodge Caliber and soon to arrive Jeepr
Compass and Jeepr Patriot, feature the all new, more
fuel-efficient World Engine and continuously variable
transmission (CVT). This inline 4 cylinder engine
comes in three displacements and features dual-cam
Variable Valve Timing (VVT) and electronic throttle
control (ETC).
<bullet> On June 13, 2006, we announced a new 3.0-liter turbo
Common Rail Diesel (CRD) will debut in the 2007
Jeepr Grand Cherokee. The engine will have more
torque than most eight-cylinder engines, equal
acceleration and the fuel economy of a small six-
cylinder gasoline engine. The Mercedes built 3.0-liter
CRD is one of the most advanced powerplants available
in the marketplace today. New clean diesel vehicles
improve fuel economy by up to 30 percent in all driving
conditions, when compared to an equivalent gasoline
engine, while providing durable and smooth
performance. DaimlerChrysler also offers a Mercedes-
Benz E320 diesel, which provides the highest fuel
economy of any gasoline or diesel-powered mid-size
car as well as diesel versions of its larger Dodge Ram
pickup trucks. Later this year the company will
continue its expansion of diesel offerings.
For the mid-term, we are developing a state-of-the-art full
hybrid system, whose components are being co-developed
by General Motors Corp., DaimlerChrysler and the BMW
Group, utilizing electric drive systems, integrated power
modules and advanced batteries initially to be used in the
2008 MY Dodge Durango.
In the long term, fuel cell vehicles with on-board hydrogen
storage, fueled by hydrogen from a national hydrogen
infrastructure will emerge.
Biofuels
Biofuels also have a key role in reducing petroleum use and
greenhouse gas emissions. A recent study by Argonne
National Laboratory's Center for Transportation Research
compares gasoline to corn ethanol and cellulosic ethanol
(ethanol made from plant stalks, agricultural byproducts,
grasses or garbage). On a per-gallon basis, corn-based
ethanol reduces greenhouse gases by 18%-29%, and
cellulosic ethanol reduces greenhouse gases by 85%, the
study found.
On April 25, 2006, our CEO, Tom LaSorda, had the honor
of following President Bush to the podium of the
Renewable Fuels Association conference and announced
that, beginning in the 2007 model year, our Jeepr Grand
Cherokee and the new Jeepr Commander with the 4.7 liter
engine option will be capable of running on E-85 fuel
(blend of 85% ethanol and 15% gasoline). This is in
addition to DaimlerChrysler's other current flexible fuel
vehicle (or FFV) offerings: the Chrysler Sebring, Chrysler
and Dodge minivans, Dodge Dakota and Dodge Ram
pickups, and the Dodge Durango SUV.
Our commitment to renewable fuels extends beyond
ethanol use in FFV engines. Diesel fuel can also be
blended with renewable fuels known as biodiesel.
DaimlerChrysler is the only manufacturer to offer a diesel
vehicle that leaves the factory fueled with bio-diesel. We
have also announced that beginning this Fall, we will
endorse the use of B20 diesel fuel, for use by our military,
government and commercial fleet Dodge Ram customers.
As the President said in his visit of May 16, 2005, to
Virginia BioDiesel Refinery, "Biodiesel is one of our
nation's most promising alternative fuel sources."
In May, Mr. LaSorda made a new commitment to
renewable fuels when he met with Congressional leaders
along with Ford CEO, Bill Ford and General Motors CEO,
Rick Wagoner and committed to the "25 x '25" campaign -
an effort by the Energy Future Coalition to aim to get 25
percent of the country's transportation energy needs from
renewable sources by 2025.
On June 28, 2006, DaimlerChrysler, General Motors and
Ford reaffirmed work towards this commitment and
pledged to double the annual production of vehicles
capable of running on renewable fuels to two million cars
and trucks by 2010. This production increase represents
the single largest commitment to renewable fuels in the
nation's history. The pledge toward more flex fuel vehicles
that can use E-85 ethanol or biodiesel came in a letter to all
Members of Congress from Mr. LaSorda and the other
CEOs.
For DaimlerChrysler specifically, this translates to
manufacturing nearly 500,000 E-85 FFVs annually by the
2008 MY building upon the 1.5 million FFVs
manufactured since the 1998 model year. These 1.5
million vehicles represent about 10 percent of our total
production since 1998, and the 500,000 figure is nearly 25
percent of our expected annual production. Both
percentages are the highest for any manufacturer, a fact of
which our company is very proud.
Today, there are more than 5 million flex fuel vehicles on
the road and the three domestic automotive companies will
add an additional million cars and trucks this year alone. If
all of these vehicles were running on E-85, they would
displace more than 3.5 billion gallons of gasoline a year, an
amount comparable to the yearly gasoline consumption of
Tennessee.
"We need business and government to work together to
enhance the production, distribution and use of renewable
biofuels," the CEOs said. "Our hope is that with this
commitment, fuel providers will have even more incentive
to produce ethanol and other biofuels and install pumps to
distribute them."
As President Bush noted in his State of the Union Address
regarding the Advanced Energy Initiative, additional
research/invention on ethanol production methods from
both corn and cellulosic biomass (e.g., wood chips, stalks
or switch grass) is still needed to make ethanol a "practical
and competitive" fuel to gasoline.
The CEOs noted that, "vehicles alone will not get the job
done. To capitalize on this commitment, Congress and the
Administration need to continue to promote the production
of biofuels, increase incentives for refueling infrastructure,
and continue incentives for automakers to produce biofuel
vehicles." "Eventually, we need to get to the point where
most Americans have reasonable access to these fuels at a
price that is competitive with gasoline," they said. "Without
this alternative fuel infrastructure, the U.S. could miss the
opportunity to displace gasoline with homegrown and
produced biofuels." Currently, there are only about 700 E-
85 pumps among the nation's 170,000 gas stations.
DaimlerChrysler's renewable fuel commitments, coupled
with our continuing efforts to improve the efficiency of
gasoline-powered vehicles, increase our use of diesel
engines, and our leadership in fuel cell vehicles (with more
than 100 vehicles, ranging from small cars to transit buses,
in operation around the world today) are testimony to our
commitment to reducing petroleum consumption and
greenhouse gases.
2f. What actions can be taken now in the transportation
sector "to contribute to substantial and long-term
reduction in net global greenhouse gas emissions"?
What actions does DaimlerChrysler Corporation
anticipate can be taken in that sector in 5 years? How
about 10 years?
See answer to 2e.
2g. What actions can be taken now by DaimlerChrysler
Corporation "to contribute to substantial and long-term
reduction in net global greenhouse gas emissions"?
What actions does DaimlerChrysler Corporation
anticipate that DaimlerChrysler Corporation can take
in 5 years? How about 10 years?
See answer to 2e.
2h. As an international business entity, please explain how
your approach to climate change varies by the nation in
which you are operating? For example, compare your
approach in the European Union to United States, and
the Unites States to China.
DaimlerChrysler is one company operating in many
markets. For any vehicle technology to be successful, it
must be accepted by the marketplace and accommodate
regional market differences such as differing: regulatory
requirements, fuel taxation, engine size taxation, fuel
quality, average distances driven, vehicle utility (size,
towing, 4WD, etc.).
In the EU, where fuel prices are considerably higher than in
the U.S., almost 50% of the new vehicle market (60% of
Chrysler and Jeepr vehicles) is powered by advanced
diesel engines compared to about 3% in the U.S. Diesel
can improve fuel economy by an average of 30% and lower
CO2 emissions when compared to an equivalent gasoline
engine.
The EPA has also noted that if the U.S. had a light duty
fleet that was one-third diesel it would save up to 1.4
million barrels of oil per day. If Chrysler Group's diesel
mix in the U.S. were the same as in Europe, its Corporate
Average Fuel Economy (or CAFE) would improve by three
miles per gallon. J. D. Power and Associates estimate that
light-duty diesels could grow from a 3% market share in
2004 to 12% in 2012.
3. About 20% of the United States' greenhouse gas
emissions are emitted by light duty vehicles.
3a. Does DaimlerChrysler Corporation believe that the
United States government should act to require a
reduction of greenhouse gas emissions from light duty
vehicles?
Carbon dioxide (CO2) accounts for 97% of vehicle
greenhouse gases and is a direct result of fuel combustion.
Controlling CO2 emissions is therefore akin to controlling
fuel economy. DaimlerChrysler is committed to develop
new advanced technologies to minimize any potential
impact our vehicles might have on global climate and
continues to work with NHTSA, which was charged by
Congress, to set maximum feasible national fuel economy
standards.
The United States, specifically NHTSA, is acting now to
reduce petroleum consumption by light-duty vehicles.
DaimlerChrysler supported NHTSA's efforts for its two
light-duty truck rules that defined new fuel economy
standards for the 2005-2011 MY vehicles. NHTSA's
environmental analysis estimated the effect of these rules
will be to lower greenhouse gas emissions by nearly five
billon metric tons of CO2 over the lifetime of these
vehicles. President Bush has also recently asked Congress
to authorize NHTSA to also reform fuel economy standards
for passenger automobiles. DaimlerChrysler supports this
effort.
While actions being taken by NHTSA address new vehicle
fuel economy, upstream carbon controls would impact all
vehicles on the road today.
3b. If so, please discuss what requirements
DaimlerChrysler Corporation would consider
reasonable to reduce greenhouse gas emissions while
providing adequate time for adaptation by the auto
industry. What is an appropriate time frame for a
requirement? What substantive requirements would
DaimlerChrysler Corporation suggest?
See answer to 3a.
3c. If DaimlerChrysler Corporation does not believe that
the United States government should act to require a
reduction of greenhouse gas emissions from light duty
vehicles, please explain what alternative approach
DaimlerChrysler Corporation suggests for reducing
greenhouse gas emissions.
See answer to 3a.
SUBMISSION FOR THE RECORD BY HUNT RAMSBOTTOM, CEO AND
PRESIDENT, RENTECH, INC.
Rentech is a publicly held, Denver-based firm listed on the
American Stock Exchange. For 25 years, Rentech has engaged in
research and development, focusing on enhancing the production
of ultra-clean fuels made from coal, petroleum coke and natural
gas.
Rentech's Clean Diesel
It is very different from petroleum diesel. It is clear, refined to
a high degree of purity and extremely low in both particulates and
sulfur. The familiar belching cloud you see when a diesel truck or
bus starts to accelerate is caused by particulates, and recent studies
have shown that they potentially have long-term harm to human
and environmental health - but our fuel eliminates most of that
concern. When the Air Force tested our fuels and similar fuels
made by competitors, the tests showed reductions in particulates of
up to and over 80%. The Rentech fuel is also extremely low in
sulfur - less than 1 part per million, far under the new EPA
standard of 15 ppm.
Rentech's fuel doesn't require any engine modifications. It can
be used as is as the operating fuel for trucks, buses and barges. It
can also be blended with petroleum diesel or alternative fuels such
as biodiesel. It can even be processed into jet fuel.
The basic chemistry behind our fuel products has been known
for 7 decades. The basic technology has been developed and used
extensively in other countries. Rentech currently holds 20 US and
4 foreign patents making the process more efficient and effective.
We have tested our innovations in six pilot plants over the past 20
years.
This technology is now being deployed in the US. The 7th pilot,
our Process Demonstration Unit (PDU), is scheduled to be
operating by the first half of 2007. It will produce 10 barrels per
day (bpd) for demonstration, analysis and training by potential end
users. And it will allow us to optimize our technology for
variations in coal and other site-specific factors. We now have
developed our technology extensively around Coal-to-Liquids - or
CTL - gasification, and for Rentech, the future of CTL in the
United States is no longer a theoretical, what-if, conversation. We
plan to have a fully commercial, fully operational CTL plant up
and running by 2010.
Our focus as a company is now on making clean transportation
fuels in the US, from US resources for US consumption. We are
targeting our commercial investments to production based on coal
and petroleum coke (a byproduct of oil refining) feedstocks. We
can locate plants anywhere with sufficient access to these
resources, from coal-producing states to Hawaii (which has
petroleum coke from its refinery).
Environmental Benefits
The product has none of the typical odor of diesel. There are
two other critical differences between this and typical diesel. Our
fuel has a shelf-life of at least 8 years, rather than 3-4 months for
petroleum diesel - meaning that for the strategic reserve, for
emergency first-responders, and the military, our fuel has
incredible advantages. Next, our fuel is biodegradable. If it spills,
it does not cause extensive or irreparable damage to waterways or
wells.
Rentech is committed to being environmentally friendly - and
both our production and fuels have environmental benefits.
As we manufacture our fuel, we remove most of the harmful
regulated pollutants in the gasification stage. Sulfur and mercury
come out as elements - they do not go up a smokestack to be
scrubbed out, and do not leak into the environment. We are also
working to reduce unregulated emissions, such as greenhouse
gases. Our proposal for a second plant, to be located in Natchez,
Mississippi, offers the opportunity for 100% carbon capture and
storage. Our carbon dioxide output would be pumped into nearby
older oil well fields, both helping to produce additional oil by
forcing out additional supplies and trapping the carbon
underground.
Additionally, our fuel runs cleaner than petroleum diesel.
Diesel itself has significant advantages over gasoline, providing
greater power with fewer emissions - and using Rentech's diesel
keeps the power advantage and reduces emissions even further.
Economic Challenges
At the moment, a number of trends are converging to jump-
start the clean fuels industry in the United States--the soaring price
of gas, the very real concerns about America's energy dependence
and energy security, and the challenges posed by both the
geopolitical and global environmental situations. Our fuel is part
of the solution for each of these concerns.
With oil prices at historic highs, our fuel is also economically
competitive. Including the financing and development costs, we
can produce finished fuels for $36 to $42 per barrel, the equivalent
of buying raw crude at $30 to $35 per barrel.
To start this industry however, you need to open the first plant
in the US. Each successive plant will build on the economies of
scale, improve on the lessons learned at previous plants, and
expand the market. It is very capital intensive to build the
industry, and one plant is only the start. You have to build second,
third, fourth, and then successive plants. But, as the Governor of
Montana likes to note, everyone wants to build the second plant.
Nobody wants to finance the first in the US, even though these
plants exist in several other countries.
Rentech has developed a five-point strategy for
commercialization, designed specifically to overcome the financial
hurdles of getting started in the US. First, we are jump-starting the
deployment of our proprietary Rentech process by pairing off-the-
shelf gasification and finishing plant technologies with our
Rentech Reactor using our low temperature, iron-based catalyst.
Second, we are aggressively pursuing multiple strategic projects in
the US, with the goal of getting plants up and running at several
sites very quickly.
Third, we are developing a repeatable and scalable design that
allows for expansion of production up to 50,000 bpd per plant that
will provide for a very rapid expansion of the industry once the
first plants are operational and proved out. Fourth, we are
continuing to invest heavily in research and development, to push
the optimization of our technologies even farther. And fifth, we
are examining selected licensing opportunities to expand use of our
process and our proprietary technologies.
East Dubuque, Illinois: The First Clean Fuels Production
Plant in the U.S.
Our first clean fuels plant is underway right now. In April
2006, Rentech purchased the fertilizer plant in East Dubuque,
Illinois, and we plan to convert it in phases to CTL poly-generation
over the next 3 to 4 years. By polygeneration, I mean that we will
ultimately produce 3 core products: ultra-clean transportation
fuels, ammonia fertilizer and electricity. When the conversion is
complete, the overall plant emissions of criteria pollutants will
decrease (as shown on the attached chart), while the plant
production increases.
The plant currently makes ammonia fertilizer from natural gas,
and it already incorporates basic technologies that are critical to
successfully implementing CTL. The conversion will include
changing the feedstock from expensive natural gas to affordable
Illinois coal. In phase one, we will add a coal gasification unit to
the fertilizer production line, generating syngas which is the first
step in each of the products that will ultimately be generated.
Fertilizer will still be made in large quantities. Domestic
fertilizer plants are shutting down rapidly because of high natural
gas prices--the current primary feedstock for fertilizer. Since
1999, the US has switched from producing all its own fertilizer to
becoming a net importer. We will demonstrate that fertilizer
production can still be a thriving domestic industry using clean
coal technologies.
Electricity will also be produced, primarily for the plant's own
use. A small surplus, however, will be provided to the local grid.
But our primary focus is the production of our fuels. So in later
stages, we will add a Rentech Reactor and a finishing plant,
allowing production of 1,800 bpd of our diesel. Those additions
will be on-line and producing in 2010.
Later, in phase two of our East Dubuque build-out, we will add
a second gasifier. That will allow us to raise fuel production up to
6,800 bpd. Under our timeline, the East
Dubuque plant will be first commercial plant in the U.S. to
produce marketable quantities of clean fuels from CTL.
Looking Ahead
Rentech is also pursuing a second larger scale plant in Natchez,
Mississippi - the Natchez Adams Strategic Fuels Center - which
would produce up to 11,000 bpd in phase one. We were invited by
the local community to consider the possibility after Hurricane
Katrina when Mississippi ran disastrously low on diesel. At
Natchez, we can use two feedstocks--coal and petroleum coke, a
byproduct of the local petroleum industry. And , there is the very
real possibility of capturing and storing 100% of the carbon
dioxide emissions through enhanced oil recovery in nearby oil
fields. To our knowledge, this would be the first large-scale U.S.
commercial capture and storage of man-made carbon emissions.
Carbon dioxide injection is already being used in this oil-
producing basin, but additional supplies are needed.
Looking even further ahead, we are considering several
development opportunities in various regions of the US, including
discussions with coal companies to utilize a replicable, iterative
plant model at the mouths of mines. There, we would size a basic
plant model that could be expanded. For twenty years, Rentech
has researched and optimized its technology. We have refined our
process to make it more effective and more environmentally-
friendly. Now we are commercializing it.
Today, the US produces and consumes over 2 million barrels
per day of diesel, and many experts project demand to double in
the next twenty years. A thriving clean fuels industry is vital to
our nation's future, both for our energy security and our
environmental sustainability.
This is doable. Rentech (and Sasol) use a low temperature iron
based catalyst and its use has been used commercial for years.
Other industry vendors which use a cobalt catalyst have claimed
that 34 foot reactors are needed, making transport and fabrication
difficult. This is not the case for low temperature, iron-based
catalyst as you can make smaller reactors so transport and
fabrication is not an issue. The reactors will be 14 feet in diameter
in the East and 20 feet in the West. The height of the reactors is not
the 180 feet claimed, but rather 120 feet. The US has fabricated
and built the most advanced processes in use so while initial plants,
like any first, will be challenging, it will be done. Using low
temperature, iron based catalyst, about 2.2 barrels of Fischer-
Tropsch liquids will be produced from one ton of Illinois coal.
What the Government Can Do
As we launch this industry, we are planning to make full use of
the EPACT 2005 incentives that the Congress designed to jump-
start clean fuels. The States are also lending their assistance. The
State of Illinois has been extraordinarily helpful - they helped us to
complete feasibility studies, engineering studies and provided
grants to assist with conversion to coal. The State of Mississippi
has also been exceptionally supportive of the possibility of our
second plant being located in Natchez, and just passed a $15
million bond bill for the proposal.
We are not asking the government to subsidize clean fuels. We
need your help to create a climate where we can use private-sector
funding to establish a fully commercial industry. There are four
ways than you can help us jump-start the industry.
A Four-Point Plan to Jump-Start the Clean Fuels Industry
1) Support Appropriate Investment Tax Credits. To meet
our aggressive timeline, we will apply for the industrial
gasification investment tax credit provided by the Energy Bill.
Recent initiatives to raise the current $350 million cap to $850
million would help even more. If Congress is serious about trying
to reduce our dependence on foreign oil import then allow me to
offer two observations. First, maintaining the current cap of
$350M could slow the rollout of industrial gasification using coal
to the point where the US winds up losing more industry. Even an
$850M cap will assist the development and deployment of only 3
to 4 more plants - hardly the creation of a full-fledged industry. At
$75 per barrel, the price of oil last week, the U.S. is paying $850
million to foreign countries for oil every two days. To create a real
incentive, it might be better to lift the caps altogether. The second
proposal is an additional investment tax credit specific to clean
fuels to accelerate production
2) Make the Fuel Excise Tax Credit Available to Clean
Fuels. Make the 50 cent-per-gallon fuel excise tax credit provided
in the Highway Bill available to CTL fuels. To do that, you could
extend the expiration of the current credit from 2009, when no
CTL plants will yet be operational in the U.S., to 2020.
3) Fully Fund and Implement the Federal Loan
Guarantees. We will also apply for the self-pay guarantees that
the Congress initiated at the Department of Energy (DOE). This
program is absolutely vital to our efforts. We understand that
DOE's implementation has begun and we commend the
Department for quickly moving to implement the authorized
programs. We appreciate and hope you will continue your efforts
to ensure that both of the DOE loan programs are fully funded and
implemented expeditiously. And,
4) Support Military Consideration of Clean Fuels. The
final idea for the government to help catalyze commercial
deployment of the CTL industry is to examine usage of clean fuels
for military applications. Long-term contracts for military use of
diesel and jet fuel would assist greatly with private-sector
financing of the first plants.
The Energy Information Administration's AEO 2006 projected
long-term oil costs at $50 and above. The same forecast shows
CTL production growing to 700,000 barrels per day by 2030. To
get there, the first plants must be financed and built, paving the
way for the industry to flourish. This 4-point combination of
incentives and contracts would provide the initial climate and
stability needed to propel private investment.
Conclusion
The great potential of clean fuels, especially using CTL, is that
American resources, American know-how, and American
innovation will help create environmentally-friendly energy and
sustain American jobs. A robust clean-fuels sector can help us
meet the challenge of our national energy needs, foster greater
energy independence, and preserve a full measure of our energy
security. At Rentech, we are moving today to produce clean fuels
for America's future.
Thank you for all that you have already done to allow a jump-
start of CTL and clean fuels in the Energy Policy Act of 2005. We
intend to make use of your help to do just that - jump-start full
scale utilization of CTL, and jump-start a new clean fuel
manufacturing industry.
Cost Analysis of PEM Fuel Cell Systems for Transportation, September 30,
2005, Carlson, E.J., et.al., Tiax, LLC