know this is the first hearing of the subcommittee on energy and environment like to take the opportunity to welcome our new members represented in chris i look forward to working with you over the next two years and i will call this meeting to order and  tell you that our hearing this afternoon is on h r five for seven events fuels infrastructure research and development act introduced by chairman garden energy is on everyone's mind at least days the price of fuel says been rising and awareness of the extent to which we are dependent on foreign sources of oil has grown at the same time in an effort to reduce emissions of air pollution we are also trends transitioning to cleaner burning fuels the good news is that we have developed  are continuing to develop alternative fuels and cleaner burning versions of our current petroleum based fuels but it's not enough simply to develop these new alternatives we also must ensure the availability of infrastructure and equipment for transporting distributing and utilizing these new fuels at a reasonable cost and that's where each offer forty seven comes in this bill authorizes research programs to address two specific issues the first will see cost effective methods for i understand from recent reports that transition to a new ultra low sulfur diesel fuel mandated by the environmental protection agency is going well i believe several of our witnesses will speak that to that effort let's all hold on to that and at this time i'd like to recognize our distinguished ranking member mr inglis of south carolina for his opening statement thank you send and thank you to the witnesses for appearing since this is my first time to to speak is the ranking member of the energy subcommittee i would say this i am very grateful for the opportunity to be at this subcommittee there are  in any event i'm grateful for the option to be here and tournaments and i would say to you that was a remarkable opportunity we have i think as republicans and democrats to work together to accomplish good things for the country the president says he's for alternative energy he called on us to take action in the state of the union democrats are clearly for alternative energy good number republicans are concerned about this and so there's no reason not to take action and so i'm very excited about serving with you and i think that the other members of on our side of the panel also vitally interested in this topic it's we have opportunities in alternative going to be to win the triple play to create jobs with new technolog to clean the air and third and more general most general application for everybody in the country to improve the national security the united states so it really is the triple play opportunity for us in this sources of energy in this bill before certainly fits that bill and so i'm very happy that we're having this hearing and join in support of this bill put forward by the chairman and there are some interesting questions for our panelists today and i look forward to those and i look forward to working with you in making this a very productive congress thank you very much  inglis and i totally agree i think there's a magnificent opportunity for us here and i look forward to working with all of you and ashton awfully bright people on the subcommittee so i hope that neither of us is intimidated by their knowledge but i think it will be good it will grow because of what they bring to this to this committee i will at this time of the interest of time ask unanimous consent that all additional opening statements with the exception of mr gordon when he comes submitted by subcommittee members be included in the record without objection so ordered it's my pleasure to introduce the excellent panel of witnesses that we have with us this afternoon mr john aykroyd or is the vice president of the national association of convenience stores  this afternoon he is also testifying on behalf of the society of independent gasoline marketers of america mr richard cassell is the senior attorney and director of the clean fuels and vehicles project at the national resources defense have five minutes for your spoken testimony your written testimony will be included in the record if you choose to submit anything in the record for the hearing and when all three of you have completed your testimony will begin with questions each member will have five minutes to question the panel mr berger would you please mr chairman or ranking member english's members of the committee thank you very much for inviting me here to testify my name is john i program vice president government relations for the national an appropriate time today the motor fuels industry is experiencing a significant transition to the next generation of fuels and as congress contemplates policies to accelerate this transition h r five forty seven represents a welcome effort to address to the many challenges facing  retailers with regard to alternative fuels let me be clear but surely retailers don't really care what fuels they sell provided there are sufficient supply and consumer demand for this product however converting thing if you will it can present challenges to many retailers for some converting to fuel like e g five or b one hundred can be relatively simple if they're fortunate all the equipment at their facility is already certified as compatible with these fuels and all they need to do is simply  sure begin the transition to the new fuels other retailers however are not as fortunate much of the equipment commonly found at a retail location is not certified for use of these fuels typically because of concerns with corrosion and material degradation such equipment must be replaced in some cases significant costs sample invoices and a department of energy's web site ran for about seventeen thousand dollars to sixty thousand dollars per location but next members inform us that if they have to replace the entire tank system cost can be significantly higher to put this in perspective in two thousand and five the convenience stores reported an average pretax profit only forty two thousand dollars per location compounding this issue is the fact that underwriters laboratories last fall suspended certification for all the spencers to sell eighty five due to concerns about corrosion eighty five retailers continued to operate under the agreement of local officials this does not absolve them from any potential liability associated with a release from one of these non certified dispensers until you are decide to certify dispensary to five sales the number of retailers an arrest and converting the five will be greatly diminished clearly equipment compatibility is a serious issue the research in h r five forty seven and successful will hopefully address these challenges in a more cost effective way and mitigate the significant barrier to entry but i must caution this committee and the congress that resolving issues in compatibility alone will not result in automatic widespread availability of alternative fuels retailers must assess the impact of alternative fuel on their overall business model for example is there sufficient demand to justify replacing a gasoline or diesel fuel dispenser with an alternative fuel does well switching to an alternative fuel increase or decrease customer traffic inside the store with the retailer makes most of their money mr chairman in a real issues yes h r five forty seven because it is angela improve the economic calculation for retailers but installation decisions will be based upon a balancing of various market forces involved and congress to be sensitive to these issues with regard to ultra low sulfur diesel next strongly supports research to develop an accurate affordable so for test so far the transition to u s d has gone relatively smoothly much more so than anybody could vent dissipated however consistent compliance is critical drivers must be able to rely upon the integrity of u s d and retailers and face fines up to thirty two thousand five hundred dollars if they're found violate the fifteen par for standard if the retailer is bound by a little fifteen p p m the regulations provide them a three part defense one they must demonstrate that the u s d delivered to their location was certified by their distributor as compliant they must demonstrate that the contamination was not caused by their actions and third they must demonstrate that they've implemented a credible quality assurance program to ensure continued compliance this is their defense of the primary challenge the only way to completely ensure continued compliance is to test every batch however there's no accurate no accurate way to measure sulfur and get prompt results right now you have to take a sample send it to a lab and wait forty eight hours for a response is impractical to hold a load diesel aside until it results come back therefore currently quality assurance programs are are based upon a specific process of inventory management supported by evidence very testing results to figure out what they need to do to manage them and to wait and test early on to see that working in they continue that process throughout the system while this is a defensible method to ensure compliance it is not perfect h r five forty seven seeks to develop an acronym for the silver test in successful retailers and others throughout the distribution carter and i will go to mr castle thank you mister berman ranking member ingress and members of the committee my name is richard castle and i'm very pleased to testify today on h r five forty seven i'm a senior attorney at resources defense council where i direct our clean fuels and vehicles project i also advise e p a is a member of its clean air act advisory committee and its mobile source technical review subcommittee some familiar with all the issues that are at hand here and  c is a national environment nonprofit environmental organization we represent more than one point two million members and online activists nationwide it's no secret our continuing reliance on gasoline and diesel for our transportation needs contributes to a wide range of important environmental and energy concerns including air pollution a wide range of public health impacts oil dependency and of course global warming h r five forty seven can help improve the transition to that affects all americans but luckily it's a solvable problem and thanks to e p a s groundbreaking highway diesel rule in its upcoming honor of diesel rule we actually have the regulatory structure in place now to solve the problem and over time as today's diesel to replace buy the new engines that meet the standards more than twenty thousand premature deaths will be eliminated every year nationwide more than one hundred forty billion dollars in annual health costs as well you  is the key to achieving these pollution benefits just as there's an analogy here just as it was critical to remove lead from gasoline to get cleaner cars two decades ago is now critical to remove sulfur from diesel fuel to get cleaner trucks buses farm equipment industrial equipment and so on today h r five forty seven is going help improve the transition to us lasting to paraphrase mr gordon written comments that were in the back of the room it's a good idea worthy of consensus but it's important also to note that the transition is already has been mentioned going smoothly just this month the u p a reported that ninety percent or more of the  is already her low sulfur diesel that's why engine makers and car manufacturers are jumping over each other chen ounce their new product offerings that will meet the new pollution standards they wouldn't do this if they thought that fuel  really would be a serious issue that would last of course that doesn't mean that there are no bumps whatsoever over the past few years many stakeholders raise concerns about possible sulfur contamination in the pipeline system e p a listen to those concerns  in response last year for example raise the software tolerance limits to give industry a little bit more breathing room during this transition phase it was a good step here's what appears to be happening now because of concerns about ms fielding  at the retail level service stations are not putting the appropriate ul s t label on the pumps and indeed e p a reported last week that seventy six percent of the pumps they surveyed did not have labels but we know from the same report that ninety percent of the fuel is in fact you l s d so there's no availability issue but there is clearly a labeling issue it's a serious issue and it needs to be addressed and addressed swiftly now that said it it makes sense to create a faster and simpler way of accurately monitoring and verifying the sulfur level of fuel that's being sold so we support h r five forty seven but we also strongly urge the subcommittee to make one change to add e p a as part of the governmental team that will implement this bill after all e p a is the agency that is charged with overseeing the implementation of sense another good idea worthy of consensus biofuels will never replace petroleum at the level we need to get an energy independence and address global warming if the biofuels have to be trucked from their b refinery to the retail outlet there's also addressing that issues important but there's another issue here as well not alternative fuels are like some offer significant lifecycle emissions reductions in global warming pollutants for example saudi loss of gas and all others can be worse then or in the best case roughly equivalent to gasoline cars or liquid fuels would be the example there so it's critical that we pursue biofuels in a way that not only helps on energy security but also reduces global warming pollution and likewise it's critical that the future of bio fuel strategy is address other environmental issues that will come up forestry issues land use issues and so on now h r five forty seven can't solve all of the challenges or address all of the challenges of our future by our economy but it can help it can help in two ways first by adding e p a to the alternative fuel provisions as well and second b clearly defining the various fields provisions in the bills right now there are four different definitions fuels provisions in it and clearly defining the wall so that the research is moving towards fuels that are sustainable not just for energy security for to special my strong support for h r five forty seven the advanced fuels infrastructure research and development act this bill and this committee's continued commitment to expanding the technical foundation for a more robust  energy industry in this country will be critical to breaking this nation's addiction to oil already in the u s ethanol industry is making great strides in dramatically reducing our dependence on imported petroleum there are today a hundred and eleven bio refineries in operation across the country that are processing more than one point eight billion bushels of grain into approximately five point four billion gallons of high quality high octane renewable  indeed become a ubiquitous component of the us motor fuel market today it's blended in forty six percent of our nation's fuel it's blended literally from coast to coast and border to border every single gallon of gasoline sold in california is done without them every single gallon of gasoline sold in the great city of new york has been with up in all it is no longer just a niche midwest market it is a national fuel and it is continuing to grow indeed ethanol is providing perhaps the most significant tool that we have today to reduce our dependence on imported at all just since the year two thousand and thirty percent of the increase in gasoline demand in this country has been met by ethanol if you take a shorter timeframe look just last year when gasoline demand increased about a billion gallons ethanol production in use in this country increased well more than a billion gallons we satisfied about one hundred ten hundred fifty percent of our gas increase in gasoline consumption last year that's gasoline that we don't have to import that's helping to break that addiction to oil already hundred sixty thousand jobs contribute two point seven billion dollars in increased tax revenue to the federal government and we do strongly imports by one hundred seventy million barrels of value of some eleven billion dollars but the  five in the great state of texas indeed there is many plants under construction in texas as there are in illinois plants are going up outside the traditional midwest there are plants under construction in arizona in new mexico  are plants in the northeast the southeast we are becoming a national production center as well which is important to understand as we look to some of these infrastructure issues yes today ethanol is not shipped by pipeline that has not been a hindrance at all to ethanol marketing because we've created a virtual pipeline not just by trucks most not today is ship by rail and by barge and we're able to get ethanol anywhere in the country where it needs to be cheaper than if we were to put up product on a on a barge send it down the river to houston where we loaded up on the pipeline where then it would go we get there faster and quicker and when you think about homeland a point though is that the ethanol industry which is today largely a blend component with gasoline as we grow we're going to saturate that blend market we have one hundred forty billion gallon gasoline market in this country we will saturate ten percent ethanol blends in that market probably sometime in two thousand and eight or two thousand and nine but we're going to grow beyond that we're going to grow with new features talks as well and once you have cellulosic ethanol production and there's not enough in a company that i represent that doesn't have a very aggressive sales to ethanol research program the opportunities for ethanol are going to expand exponentially will need markets beyond just the additive market eighty five represents a tremendous opportunity but that he eighty five market is not yet mature it's not yet there there are some six million five vehicles on the road today and that's terrific but there needs to be a lot more to encourage them to write programs members to put in the necessary to create the refueling infrastructure the commitments by ford and general motors to produce as much as fifty percent of their vehicles as flexible fuel vehicles that could utilize e eighty five by two thousand and twelve is terrific that would get you about four million additional eighty five vehicles beginning in that year perhaps as many as thirty five total thirty five million total on the road by tooth thousand and seventeen it's a great start but we need to do more than that  with a greater demand for eighty five the infrastructure will follow bills like this five forty seven that will allow that infrastructure to grow and to understand the issues associated with that growth will be a critical important step in finally breaking that addiction to oil and again i appreciate the opportunity thank you very much all of you for coming so initially interesting subject and one that hopefully will be able to move quickly enough to to make a difference for all of us let me start with the questioning at this at this time and i'd like to first ask mr didn't you mention that because etha can't be shipped the standard pipeline like conventional feels the industry is developing a virtual pipeline that consists of rail barge and truck shipping which is considerably more expensive what proportion of the market price for ethanol is attributable to transportation and distribution and how does this compare to traditional fuels which general i'm not sure i'd agree with a couple the promises to the question first of all it's true ethanol is not shipped by pipeline today but it's not true that it cannot be shipped by pipeline etha all over brazil via pipeline in multiple products pipelines it has been shipped in this country as well and dedicated pipelines in will be again if the marketplace demanding in brazil forty percent of their motor fuel is ethanol and so there's a tremendous need for pipeline shipments in this country while five billion gallons of ethanol produced last year is a tremendous amount it's still less than three percent of the total motor fuels in this country the midwest to either coast the the but the cost of shipping that same product via pipeline would be drawn close to that anyway so there really isn't an increased cost associated with that in the marketplace would figure those issues out the real issue is is the market going to develop such that a pipeline is necessary there have been bills that have been introduced to study that issue and determine whether or not it would make sense but quite frankly if you've got significant ethanol production in all regions of the country which it looks like you're going to have because there are plants in the northeast there are plants in the northwest then you may have the products close enough to the markets where significant any chemical tank can accommodate fuel that ok what's the industry wide cost estimate for producing or procuring this type of virtual pipeline and why is this more cost effective than a conventional pipeline system  said i mean that the marketplace i think is going to develop as as we see where the production is and maybe a an actual pipeline will be useful but if you've got plants located all across the country where's the pipeline going to be  and how do you how do you get it on to the pipeline on the situations you've got with the orange tree where you have concentration in the gulf coast and you know ready access to the pipeline system  were there currently some hundred fifty thousand fuel retailers in the us well approximately one thousand are less than one percent selling eighty five how effective are current subsidies and tax incentives and helping retailers transition to alternative fuels and one of the shortcomings and the current subsidies are helpful a lot of each of us who have been started by that done so with the help of the tax credits that are in the system right now anything that's going to help offset the cost of insulation is going to be helpful however as i mention my testimony there are so many other factors involved in that you don't even mention what is the level of demand how many vehicles can run on these on this this if you will and how many drivers of the course know they can there are other bills that have been considered in congress to take cafe credits and make those into some sort of grant program to the clean cities and then we've been supportive of that as well this legislation i think it's successful will make all those incentive programs perhaps obsolete demand supply and cost competitiveness one of the things that i have been looking at and trying to consider within the language of this particular bill has to do with  that adequately addressed within the language of this bill because most of it speaks to ultra low or low self will sell for diesel which is petrol diesel anybody or i don't have an answer for that conventional diesel so it's the safra level of that of that piece of it that eighty to ninety eight percent that is really critical if the goal is to make sure the package of the blended feel is low enough and s be compatible with the new mission controls i think the bigger issue that is that has come up on on this issue of bio diesel and sulfur levels and the new and the new technologies new standards is the extent to which the blended bio diesel itself is creating other issues that may i'm not going to say impaired but perhaps create challenges or for some of the new technologies some of the engine companies have been saying that they that they're concerned about warranty issues with bio diesel blends that are over a say a b twenty now if you had a four hundred percent bio diesel fuel the self a level would have to be low enough that there'd be other fuel quality issues that would come about it's not particularly a big issue nobody's running be one hundred in any significant way and i don't think anybody's projecting it although i have a feeling mr dean refract me if i'm wrong about that but i there is any software content whatsoever in bio diesel and in fact one of the reasons bio diesel is being used in a in blends today is to help refiners meet the low sulfur diesel requirements so i think if you move forward and you to higher level blends eighty five whether or not there are some corrosive issues there because of alcohol however i should note that there are a thousand five pumps across the country many of which have been there for been out there for close to ten years or more now and there's never once been an incident of failure and wow underwriter's laboratory has recently indicated that it wants to certify those pumps and do some research to do and we're working with us all and other stakeholders to to get them the the comfort level that they need to again certify those are those pumps the manufacturers of the pumps themselves are willing to sort of fi each of the individual you run the risk of corrosion or nano items possibly degrading and cracking and swelling and losing a fittings and that's that's the that's the issue because there's something maybe mr butler can explain this to me later is why it  at the gasoline terminal so for this area for example the newington is a gasoline terminal it services virtually all of the washington metropolitan area and they will be tanks filled with the gasoline  he's drawing fuel from both tanks and in in line blending systems that was the truckers then films at that point and the blending occurs at that point gasoline comes to term about pipeline and the ethanol comes by truck or barge or some way to pipeline certain cuts are made where what's called transmission of the two products actually blend together that's pulled out and put into whatever fuel is allowed to the six except that that's how it was traded so the reason there was so much concern about contamination of rise in the price of corn which is had quite an effect a huge effect actually on the local family dairy in my area they can't afford to feed i mean and they are really feeling it so demeaning ethanol can't be the only advanced fuel technology so what other fields are we looking at that you would jack will be in our future to comments i think first of all with respect to the price of corn the marketplace just recently got the signal to dramatically expand corn acres and i believe that most analysts expect eight to ten million acres planted in corn this year which will have a beneficial impact on corn prices when you produce ethanol from grain today will be using the starch and what is left behind is a very high value high protein feed grain that is then used for gary markets poultry markets and and other feed uses but the industry certainly understands that we can grow to levels that people want us to grow in that we variety of different feedstocks and if the energy bills loan guarantee programs are authorized and appropriated in this continuing resolution i think you will see a couple of companies begin to construct commercial scale so i also get some plants were on the cusp of seeing that technology commercialized and it's a very exciting time in the industry it was thank you for that and so then mr wanted to make two brief points one is with respect to the corn question that you raised i think it's a there's an analogy that i think is useful and that has to happen in the effen on  happen and it's starting to happen in the biofuels world where the research is going into some of the logic ethanol and how to increase the crop yields and to use more of the plant so you can use the full plant the non food part of the plant because ultimately if we're going to meet in a way that's environmentally sustainable we don't want to replace concerns about petroleum with concerns about how we're using land are we taking taking products from the food chain and putting into the fuel chain are we taking the amazon rain forest becoming biofuels we don't want to need that to happen that's why the type of research that mr dineen is talking about is so important and i think it's so exciting is well the second point that i want to make goes to the driver in a few years driving across the country it's congress and the president put into place an energy savings and global warming package that really gets us off our current pathway and there are different proposals  going around of course to start to do that and if we if we merge that into what's coming out of detroit and japan germany and the other car producing countries we can start to see a future where people are driving different kind of cars based on what their needs are and there will be people who drive long distances on the highway or seventy mile commute on an interstate to get to work in the next who's a very clean high a high efficiency diesel car somebody else who drives in an urban setting stop and go driving who's also concerned about price is also concerned about global warming will choose a hybrid somebody else will will choose a flexible fuel vehicle and they'll be driving with the eighty five  think if we forecast out ten or fifteen years from now it will be like either a consumer products that we use that there be much more of a mix of much more of a marriage if i may between the type of driving we're doing the type of car and fuel we choosing and that will create synergies that will address the different issues that you've raised in that that are really underlie why why this bill makes it makes sense thank you very much ladies time's expired the my friend and to chairman and chairman lamson with whom i've known a long long time and worked with him before we were both democrats together a long time ago and i have high regard for him and have have a gripe about garden and for the provisions that we really wanted in this bill but this is mr garden's bill and this is mr lampson this bail and they're in control of this committee and they're in control of the house and and it's good legislation but and we didn't say this and i didn't come up here with a bunch of amendments to send to cause them to vote no on some things that they really would want to vote yes on but they don't want to slow this bill down and i'm not going to be a part  purpose is going to be to pass legislation not to get even with anybody as a ranking member for the republican party i want to make that statement here and i think it's something that we can all live with later on down the road so  down we think it's important to do the kind of research and development that's in this bill we just offer that suggestion is the way to make it a smoother implementation going forward e p a is the agency which legislation for the future well i'll be honest in stab at admitting i don't remember the specifics of h r six two or three and exactly what was in it but that certainly n r d c is extremely involved in advancing your opinion of the proposal that made the strawman our focus on the bill is can the research be successful to provide these bridges for retailers and its e t s involved we have no problem with that yes so i'm really thrilled to see us move to the ultra low sulfur diesel and i am concerned about the mixing of diesel with low sulfur diesel with higher forms of diesel particularly in our area but you sort of addressed those questions already and i'm wondering what is the what are we going to see in terms of cost effect for the consumer for the ultra low diesel the long run as opposed to the the higher forms of diesel right now they the incremental cost is running a little higher than expected comparing to there's a report that just came out in last week or so that did a comparison of ultra low sulfur compared to say regular gasoline i suppose  the the authors of that report were looking at a future car market that would be bifurcated between gasoline and diesel showed about a twenty to thirty cent gap between regular diesel and ultra low sulfur and i don't know that that's really the right comparison because it's a little bit of apples and oranges when they are really was first promulgated by e p a they suggest cost incrementally bad forty five cents a gallon between standard five hundred parts per million software and ultra low sulfur diesel over time my guess is that's probably right we'll see you know when you look at fuel prices the incremental cost of the d suffers a sions a small piece the real issue is the price of a barrel of missions in terms of performance they get more maybe thirty percent more performance per per gallon than gasoline so you see this is something that's going to sort of ice private vehicles to be using these technology diesel fuel so absolutely there's no question about it there because you had a chance to go to the washington auto show last week their car companies that were many car companies pushing and pushing their diesel vehicles dimer had a huge announcement where they announce yes so then the question is will people buy a diesel car and i think the answer to that is that for the driver who's concerned about fuel prices and who wants to do what they can ahead of time when they buy their car to reduce the hit of higher fuel prices in the future they're going to look at these diesel cars they're also going to look at hybrids they're going to look at a range of vehicles but and that's all good news we're really entering a new era of cleaner higher fuel economy with a diesel engine and you start putting then in your fleet you've just improved your ability to comply to cafe standards so i would suspect that as you will s t becomes more prevalent and all the kinks are rocked out you're going to see a lot more auto makers  if you're there any other issues regarding diesel promoting do so in this bill that we should be aware of or and then once that you would recommend i don't know then i said i reckon when i read a comment that and now mr roscoe bartlett from maryland five minutes thank you very much jim said dr bartlett well obviously three reasons for being interested in alternatives one is the environment which has been a major focus here second as a national security interest of getting far too much of our fuels from the present so some people don't even like us and the third one which i think is the most dominant one that is  just may not be here if you believe in peak oil and we buddy who is rushing to any of my twenty one now full hour speeches on the floor of the congress knows that there's no bigger supporter of alternatives in the country than roscoe but just but just  september to know to december it's almost doubled in price and then you said gee that's an easy fix we'll just plant more acres of corn so all the land that should be planted in corn is now planted in corn what's going to happen is that land is going to be taken out of agricultural preserves and it's going to be and it's going to be farm and corn is one of the greediest crops we have is one of the worst for erosions is certainly one of the worst for sucking up nutrients out of the soil and for the relatively small improvement in air quality and land quality if you plant more of our grand land then quit and by the way almost half the energy producing a bushel of corn comes from the natural gas and enorm important feedstock for a big petrochemical industry and all of our nitrogen fertilizer today comes from natural gas and almost half of the energy goes into producing corn comes in the natural gas i just want to be realistic with the american people the people here in a bunch others around the world in terms of energy and energy out we may have one of the least cultures in the world because we have an incredible amount of energy that goes into it for some crops ten calories in and one calorie out american people that and i was the answer it is part of the answer and we need to do a lot more we've not said that ethanol can replace all of gasoline we've not said that you're going to use all of the nation's corn crop to produce  which said that there are limitations to what you can produce from grain going to national congress i think you can get as much as fifteen billion gallons beyond that you would have a detrimental impact on feed prices and they don't want to go there neither does our industry that's why our industry is working so hard on a range of technologies new processes and new feature stocks and i think the great thing about what's happening today congressman is that you've got a lot of new capital coming into the industry in a lot of new intellect ethanol facilities yet the dots that are feeding the distilling dry grains directly to the cattle on the lawn capturing the methane from the feed lot to run the facility it's a very integrated process that's the future of this industry and it's it's not just grain it's not just today's technology but if you want doing everything that you possibly can to make sure that there are markets for these alternative fuels you're not going to get to a future where you've got say you want to get them on you've got more sustainable processes and nobody has done more than you congressman and i commend you for all that you've done to raise awareness about the dangers of our dependence on imported oil and the risks that we as a nation face when we're looking at peak oil i'm not sure i've seen all twenty one but i've seen you know fifteen or sixteen of them and they're not just entertaining they're educational and i try to get my teenagers to come and sit down to look at this guy he's talking about the future  what are some of the environmental issues that brazil has found with with creating ethanol from sugar number one number two is are those issues that can be dealt with here and number two is where are we as far as cost for developing ethanol from sugar in united states versus corn and is that something that could as a market for grasses could improve their progress to help solve the issue  something that we've heard about corn brazil has built a tremendous ethanol industry through thirty years of tax incentives government mandates infrastructure development  oil production brazil is energy independent and i think that that's terrific we can't replicate the brazilian model here for a whole host of reasons some of them having to do with our labor markets some of them having to do with our climate some of them having to do with op population and our industry but i think it is a model to look at to see what can be done in terms of real commitment to renewable fuels into alternative might be some issues they don't have some of the labor standards that we certainly have and but i say that terms of what's going on at the plant  heck of an industry in part because they have incentivized consumers to purchase flexible fuel vehicles and about fifty percent of vehicles today off flexible fuel vehicles that can run on e eighty five the other fifty percent of those vehicles are running on a blend of between twenty and twenty five percent of all a level that changes in the government sets it but it has been a very successful model yeah i can just add a couple of thoughts i think what we can learn from the brazilian experience is two things first of all setting a goal for energy independence is something that's achievable with the country actually gets to work to actually do it and they set that call and the combination of of their domestic production and their ethanol production has has allowed them to achieve that didn't happen overnight but it did happen the second thing that we can learn the brazilian expect experience is the importance of the infrastructure if you go to a service station in sao paulo you see gasoline and you see ethanol you also see diesel but you see the gasoline you see the ethanol consumers make a choice if they have t based on the price which one of they are going to buy today and the prices fluctuate and the consumption patterns fluctuate but the key thing is that the infrastructure is there so we can sell all the eighty five vehicles we want but if it's not eighty five tanks first time i looked at the brazilian situation somebody said to me oh there's no rain forest issue there there's no rain forest look at the map and this is not a map of brazil but i'll use it they said the rain forest is over here in the sugar production is over here well that sounds pretty good but then i asked where's the cattle cattle so over here next to the rain forest what's actually happening the sugar is pushing the cattle north the cattle is moving into the rainforest so that so without adequate controls valuable rain fores can learn from them is they had one goal it was energy independence they secured it it's great but now the road as we know is much more complicated and achieving energy independence if we don't also tackle global warming is going to be a half independence by pushing and pushing and pushing on corn but we don't get to the cellulosic we don't advance the sugar we don't move forward on vehicle efficiency we don't move forward on transit smart growth and so on we want to actually achieve those goals so i think we ultimate cost of the consumer moving to new generation makes a lot of sense for a lot of reasons but keep in mind you all receive a lot of letters and calls your constituents in gas prices go up keep that knowledge and start thinking about alternative fuel programs thank you very what is the cost of putting in eighty five my testament to accommodate the cost can range from pretty simple all your equipment is certified as compatible with the with the fuel pretty expensive if it's not so you need to make a decision on going best one of the capital fuel is an attraction that's what generates traffic to the store so all those things combined and illinois supply is probably not going to be an issue and i'm that money that's not going to be a number one issue each is going to be what's my competitive angle if i do this can i sell at a competitive price will my customers continue to come and run continue to generate the bottom line sales i mean to just stay in my business if all the economics add up and i can afford the investment to bring in eighty five and my station chances are has value in that market to be a meaningful part of the alternative fuel market for eighty five you need more vehicles there are six million or five million vehicles on the road today capable of running on  big number no question but it's still less than three percent of the total vehicle caught park in this country and to convince john's members mistry quarters members to put in the infrastructure necessary to refuel that when you tell them that's less than three percent of this potential consumers and only a fraction of those realize that they have the vehicles it's awfully hard with more vehicles and with the commitment of ford and general motors and chrysler to dramatically increase their shabelle fuel production i think that there will be more vehicles coming in over time and more meaningful market will develop the second thing you need is wider infrastructure i do believe that the infrastructure will follow the marketplace there are a thousand there today and and that's a good one we ought to concentrate on those stations where there is going to be a significant market we can where we can build the eighty five the market significantly in minnesota there are about five hundred eighty five stations and it's the most to meaningfully eighty five market in the entire country but the third thing that you also need you need more ethanol and you can get to a meaningful eighty five market with grain derived ethanol you've got to have silence a gap and also you can be talking about the kind of volumes that could actually satisfy the demand for ethanol coming from twenty to thirty or forty million vehicles that could be on the road in five or ten years i mean you need all three of those i might also add however that the five technology that's out there today is not really taking advantage of the properties o ethanol there's a mileage penalty that impacts the economics of mistry kroger's members or so what is the mileage penalty for the numbers of twenty to twenty five percent i mean it's certainly significant and with the technology that the automakers are using today you're always going to have that but there are on the horizon some technology on the motors has the saab nine five that is a tribal charged engine that realizes no mileage penalty when ethanol is used and that would and fuel economy issues because it impacts ultimately the economics of the fuel that will build the bigger market thank you thank you jim and now we're calling on the former chairman of this com producing ethanol from the fiber the child really coming into the plant and they believe that if they're able to convert that fiber which is a shameless material they could increase their yields by fifteen percent another one of my member companies the brewing compan has announced that they are going to build a facility an image for gaia one that will produce ethanol from corn stover there's another ethanol company i represent abengoa they've got plants in nebraska and new mexico and kansas and  future of that's in all is going to be founded on grain because it's done building the industry but the structure is going to be different technologies different feature tox and it's a very exciting future so much of what's been promise for some of these others over over other ones or is that still in the research it takes thirteen pounds of sugar to produce a gallon of ethanol and it to us should a price of twenty two cents a pound the economics of that just aren't very attractive but there are opportunities with sugar processing because you have by products from the sugar processed that the gas it could also be utilized in processing about and on there is actually a company so you are sick ethanol require less water to produce than from corn and i'm not sure anybody knows yet because the technology is varied and yet not proven but that the important i'm sure in under their canopy because first of all their suppliers don't make it and don't care and you think that's a factor and that then is an issue think about this if you sign a contract keep in mind ninety five percent of all retail locations are and depend only on an operated not affiliated with the refining company if you sign a contract with a supplier to sell their brand and they put their canopies up you have to honor that brand it's just like if you are a fast food restaurant on account of coke you can't sell pepsi through a coke dispenser so you a lot of retailers can go to the supplier and get special consideration to put in the dispenser but really the primary factor that comes into the retailers decision is what will do my bottom line take an expiration  cost of investment consideration what's it going to do to my customer traffic well how do we overcome this factor that the marketplace factor well i know i think with the distributors not wanting to put it under the canopy in the first place because we don't have to they want to put in the eighty five they can talk to their supplier and possibly going to hear the contract to allow to happen and that's the reason there's a thousand retailers out there that have the eighty five branded brand of the supplier but there is some room to work with your supplier to do this but you have to  i want to be a part of that hope but the promise of cellulosic ethanol looks to me like something that we're not really that close to yet and what i'm hoping is that h r force five forty seven will help us get there now in your opinion how far does this give us i mean is it true that in so you are suggesting all you need specific technology for each kind of crop or i mean there's a lot of questions in my mind about how viable this is in a sort of a ten year time frame or we actually closer than i'm afraid it were i don't think we'll lock los or to having shamelessly gefen all commercializing anybody realizes and it may types technologies and there are a number of companies looking at all three different approaches and we don't know who's going to be the first to crack the code but i it's inconceivable to me with the amount of government and private effort that's going into this that it will not happen very soon thank for the cellulosic ethanol you're going to be competing with the requirement to return organic material to soils i top sales are today not increasing in quantity and quality so i'm having a little trouble understanding how we're going to rob our top exponent so this indicate we will get those are sort of the issues that we are indeed looking at those people that have talked about corn stover for example i'm talking about taking the entire plant they're talking about taking a third of the stove could ultimately be converted would be municipal solid waste so i mean there are opportunities in the marketplace will ultimately determine what makes the most sense but i believe that ethanol is not the total answer but it is a part of the answer and i want to thank all of you for appearing before the subcommittee this afternoon based upon the testimony of this hearing and the letters of endorsement for this legislation i believe that subcommittee is comfortable with this legislation moving to consideration by full committee tomorrow morning i understand a bill is likely to be scheduled for consideration by the house during the week of february fifth under a rule so at this time i would also ask unanimous consent to have letters of unbrushed money and other extraneous materials related to h r five forty