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ACCELERATED BIOFUELS DIVERSITY

CONFERENCE

BEFORE THE

COMMITTEE ON 

ENERGY AND NATURAL RESOURCES 

UNITED STATES SENATE

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

TO

DISCUSS ACCELERATED BIOFUELS DIVERSITY

FEBRUARY 1, 2007

(

Printed for the use of the 

Committee on Energy and Natural Resources 

(II)

COMMITTEE ON ENERGY AND NATURAL RESOURCES 

JEFF BINGAMAN, New Mexico, Chairman

DANIEL K. AKAKA, Hawaii 

BYRON L. DORGAN, North Dakota 

RON WYDEN, Oregon 

TIM JOHNSON, South Dakota 

MARY L. LANDRIEU, Louisiana 

MARIA CANTWELL, Washington 

KEN SALAZAR, Colorado 

ROBERT MENENDEZ, New Jersey 

BLANCHE L. LINCOLN, Arkansas 

BERNARD SANDERS, Vermont 

JON TESTER, Montana 

PETE V. DOMENICI, New Mexico 

LARRY E. CRAIG, Idaho 

CRAIG THOMAS, Wyoming 

LISA MURKOWSKI, Alaska 

RICHARD BURR, North Carolina 

JIM DEMINT, South Carolina 

BOB CORKER, Tennessee 

JEFF SESSIONS, Alabama 

GORDON H. SMITH, Oregon 

JIM BUNNING, Kentucky 

MEL MARTINEZ, Florida

ROBERT M. SIMON, Staff Director 

SAM E. FOWLER, Chief Counsel 

FRANK MACCHIAROLA, Republican Staff Director 

JUDITH K. PENSABENE, Republican Chief Counsel 

TARA BILLINGSLEY, Professional Staff Member 

FRANK GLADICS, Republican Professional Staff Member 

(III)

C O N T E N T S 

STATEMENTS 

Page

Arvizo, Dr. Dan, Director, National Renewable Energy Laboratory ................... 79

Bingaman, Hon. Jeff, U.S. Senator from New Mexico .......................................... 1

Bostwick, Toby, President, New Mexico Sorghum Producers .............................. 24

Brown, Robert, Director, Vehicle Environmental Engineering, Ford Motor 

Company ............................................................................................................... 47

Burk, Lou, Manager, Alternative Energy and Programs Group, 

ConocoPhillips ...................................................................................................... 46

Burke, Edmund, Chairman, Dennis K. Burke, Inc., Representing the Coalition 

of E85 Retailers .................................................................................................... 46

Conover, David, Counsel, National Commission on Energy Policy ..................... 3

Davis, Dr. Michael, Pacific Northwest National Laboratory ............................... 80

Detchon, Reid, Executive Director, Energy Future Coalition .............................. 2

Dinneen, Bob, President and CEO, Renewable Fuels Association ...................... 4

Drevna, Charlie, Executive Vice President, National Petrochemicals and Refiners Association ................................................................................................. 61

Fitch, George, Mayor of Warrenton, VA ................................................................ 64

Foltz, Tommy, Vice President of Public Affairs, Earth Biofuels .......................... 62

Fraley, Dr. Robert, Executive Vice President and Chief Technology Officer, 

Monsanto Company ............................................................................................. 22

Hushka, Niles, CEO, KLJ Solutions ...................................................................... 37

Lehman, Jonathan, Verasun Energy ..................................................................... 66

McCauley, Ken, President, National Corn Growers Association ......................... 23

Mears, Mike, Vice President for Transportation, Magellan Midstream Partners ........................................................................................................................ 49

Melo, John, Chief Executive, Amyris Biotechnologies .......................................... 33

Michalske, Dr. Terry, Sandia National Laboratory .............................................. 81

Mitchell, Larry, CEO, American Corn Growers Association ................................ 20

Passmore, Jeff, Executive Vice President, Iogen ................................................... 35

Perine, Lori, Executive Director, Agenda 2020 Technology Alliance, American 

Forest and Paper Association .............................................................................. 38

Pershing, Dr. Jonathan, Director, World Resources Institute ............................. 6

Pierce, John, Vice President of Research and Development, DuPont ................. 34

Plaza, John, President, Imperium Renewables ..................................................... 48

Prather, Dr. Kristala, Assistant Professor of Chemical Engineering, Laboratory for Energy and Environment, MIT ............................................................. 77

Rigas, Dr. Nicholas, Director, South Carolina Institute for Energy Studies, 

Clemson University .............................................................................................. 65

Standlee, Chris, Executive Vice President, Abengoa Biotechnologies ................. 32

Taylor, Dr. Steven, Chair, Biosystems Engineering Department, Auburn University ................................................................................................................... 76

Terry, David, Governors Ethanol Coalition ........................................................... 21

Wald, General Charles F., USAF (Ret.) Representing Securing America’s Future Energy, Energy Security Leadership Council ............................................ 5

Whittington, Charles, President, Grammer Industries, Representing the 

American Trucking Association .......................................................................... 25

(1)

ACCELERATED BIOFUELS DIVERSITY 

THURSDAY, FEBRUARY 1, 2007

U.S. SENATE, COMMITTEE ON ENERGY & NATURAL RESOURCES, Washington, DC. 

The committee met, pursuant to notice, at 9:38 a.m., in room 

SDG–50, Dirksen Senate Office Building, Hon. Jeff Bingaman, 

chairman, presiding. 

OPENING STATEMENT OF HON. JEFF BINGAMAN,

U.S. SENATOR FROM NEW MEXICO 

The CHAIRMAN. Why don’t we get started? Thank you all for coming. This has been billed as a transportation biofuels conference. 

Senator Domenici is on his way, and indicated we could go ahead 

and start and he’ll be here shortly. 

Let me just say in general I think you’re going to see Senators 

coming and going during the day. We’re scheduled for 3 hours of 

discussion this morning and 3 hours again this afternoon, so we 

have about 30 people lined up to make presentations, and so we’re 

going to have to do our best to stay on schedule and keep things 

moving along. I’m sure there will be a lot of things people will still 

want to be saying after this is over with, and we’ll be open to the 

idea of doing more in the future, but thank you all very much for 

being here. 

We’re focusing today on how we can fuel more of our transportation sector with renewable biomass. These homegrown fuel 

sources are currently our best hope of reversing the trend toward 

increased dependence on imported oil. We hope to learn about both 

the current state of the biofuels market and also about any policies 

that we need to be considering here in Congress to expand use of 

biofuels. 

We have, I said 30, this says 33 experts who are going to be 

speaking in the 6 hours that we have devoted to this. We hope that 

we can keep this informal and allow people to make the main 

points they want to make. Obviously the full statements will be 

made a part of our record and we can review those, and everyone 

else can as well, since they will be on our web site for people to 

see. 

I also want to particularly recognize Mr. George Sturzinger, who 

is from Silwa Gas in Atlanta, GA. He is also providing testimony 

to us today. He was not on one of the panels because of late information we got on that, but we very much appreciate his response 

to the various questions that we have laid out here, and appreciate 

2

his being willing to come and observe what the others are saying 

as well. 

So let me go ahead with the introduction of the first panel. I’ll 

just introduce the five people on the panel and then have each of 

them take 2 or 3 minutes to describe who they are, what their involvement is, and if there’s a few points that they want to make 

in that period, please do so. And then Senator Salazar and I will 

have questions, and others may be here by then as well. 

Reid Detchon is the executive director of the Energy Future Coalition, and he is going to talk to us today about 25×25, as well as 

other issues, which we appreciate. 

David Conover is counsel to the National Commission on Energy 

Policy, which notes that EPAct 2005 support for biofuels research 

was a start, but obviously we need to do a lot more. 

Bob Dinneen, who is president and CEO of the Renewable Fuels 

Association, we very much appreciate him being here. 

General Wald was a witness here in this very room, before our 

committee, about 2 weeks ago, I believe, on a somewhat different 

issue, more of the global issues affecting our energy security. He 

is with Securing America’s Future Energy, Energy Security Leadership Council, and we appreciate him being here again. 

Dr. Jonathan Pershing is director of the World Resources Institute, and we’re very glad to have him here. 

Why don’t you each just go in that order and give us your presentations. After each of you is finished, or after all of you are finished, we’ll have some questions. 

STATEMENT OF REID DETCHON, EXECUTIVE DIRECTOR, 

ENERGY FUTURE COALITION 

Mr. DETCHON. Thank you, Mr. Chairman. Thank you for holding 

this session and inviting us to participate. I’ll summarize briefly. 

I am Reid Detchon. I’m the executive director of the Energy Future 

Coalition. 

For U.S. energy policy, two topics must be front and center—oil 

dependence and climate change. Both of these pose enormous risks 

to our economy, but if we deal with them together, the transition 

to cleaner, more secure energy technologies will create a new wave 

of economic growth and job creation, just as the computer and 

telecom revolutions did before. 

It is that promise that led the bipartisan Energy Future Coalition, together with 400 other partners, to support the 25×25 initiative, which would set a national goal of producing 25 percent of 

America’s energy from renewable resources by 2025. Senator 

Salazar is one of our champions, and we hope that Congress will 

adopt it early in this session. 

With regard to energy security, our objective should be to minimize the role of oil in the economy so that the Nation is no longer 

hostage to a single commodity in its prices and politics. Alternative 

fuels must be the centerpiece of such a strategy. 

The near-term options that address both oil dependence and climate change are biofuels and electricity, together with increased 

vehicle efficiency to make those fuels go further. Alternative fuels 

that improve energy security but make global warming worse, such 

as liquid fuels from coal, are a dead-end street. 

3

Coal can become an important source of transport energy, but 

through electricity, not liquid fuels. Plug-in hybrid vehicles, operating first on clean electricity and second on biofuels, could all but 

eliminate the need for gasoline in light-duty vehicles, while reducing their global warming emissions by 90 percent. 

We welcome the President’s leadership in proposing a greatly 

strengthened standard for renewable fuels, and ask for your support as well. It would do much to strengthen the investor confidence that’s needed to finance a new generation of biofuels technologies. 

The Energy Policy Act of 2005 authorized many programs needed 

to advance biofuels, but it must be fully funded to be effective. We 

need to encourage the private sector to build multiple pioneer conversion plants, biorefineries, to demonstrate the use of different 

technologies on different feedstocks, because the technological competition remains quite unsettled. Not all of these will succeed, but 

those that do will create a new American industry. 

To offset the cost of those investments, Congress should place tax 

incentives for both oil and alternative fuels on sliding scale, and 

phase them out as oil prices rise and Federal support is no longer 

needed. Such a step would save many billions of dollars if prices 

remain as high as EIA now forecasts. 

Mr. Chairman, investments in energy efficiency and renewable 

energy can buy us time to develop more climate-friendly technologies and an energy future that plays to America’s strengths. 

We look forward to the opportunity to work with you toward that 

end, and thank you for having us here today. 

The CHAIRMAN. Thank you very much. 

Mr. Conover. 

STATEMENT OF DAVID CONOVER, COUNSEL, NATIONAL 

COMMISSION ON ENERGY POLICY 

Mr. CONOVER. Thank you, Mr. Chairman, and thank you for 

being here as well, Senator Salazar. 

I am pleased to appear here today on behalf of the National 

Commission on Energy Policy, which is a diverse and bipartisan 

group of energy experts that first came together in 2002 with support from the Hewlitt Foundation and several other leading philanthropies. 

In December 2004, the commission released a report entitled 

‘‘Ending the Energy Stalemate: A Bipartisan Strategy to Meet 

America’s Energy Challenges.’’ Two key biofuel recommendations 

in that report are still highly relevant today. We need to increase 

funding for biofuels R&D, and we need to provide early deployment 

incentives for new biofuels technologies like cellulosic ethanol. I’m 

in agreement with Reid on this point. 

As you noted, Mr. Chairman, EPAct 2005 contained several key 

provisions on this front, and we are pleased that some of these provisions, notably the Section 932 grant program and the DOE Title 

17 loan guarantees, are contained in the joint funding resolution 

for fiscal year 2007. 

At prevailing and projected petroleum prices, as Reid already 

mentioned, there are few economic challenges to the profitability of 

conventional corn ethanol. But the upper limit for conventional 

4

corn ethanol, at most 15 billion gallons annually, is far below what 

would be a significant contribution to displacing petroleum. 

Cellulosic material, on the other hand, whether derived from agriculture or other waste or produced from dedicated energy crops, 

holds the promise of providing sufficient feedstock to make a real 

dent in petroleum dependency while avoiding the food versus fuel 

debate we are hearing today. Deployment of cellulosic ethanol and 

other emerging biofuels faces significant economic challenges. We 

support the approach taken in EPAct 2005: reducing the costs of 

biomass and waste-derived fuel production through a combination 

of targeted support for research and development and by creating 

incentives for first-mover commercial production facilities. 

Now, since the commission’s report, we have come to several additional conclusions about biofuels policy. First—and I am again 

echoing Reid here—in light of EPAct’s fuel mandates and the established nature of the corn ethanol industry, the commission believes that Congress should reevaluate and rationalize the current 

system of ethanol subsidies to direct a greater share of scarce public resources to more promising but not yet commercial options 

such as cellulosic ethanol and biobutanol. 

Second, where Federal incentives are appropriate, the commission strongly believes that Congress should seek technology neutrality. As you’ll hear later this morning, new biofuels are moving 

quickly along the research, development, and deployment continuum. Policies should be crafted that do not unintentionally exclude emerging biofuels, the very technologies most in need of Federal assistance. Incentives should be structured to encourage the 

most energy-efficient conversion technologies to produce the lowest 

carbon biofuels possible. 

Finally, Government should partner with the biofuels, automotive, and refining sectors to seek flexible solutions to growing 

the biofuels market. For example, it may be the case that ethanol 

blends greater than E10 but less than E85 can be distributed 

through existing infrastructure and used in existing engines without major modifications to either. 

I see my time is up. Thank you for your attention. I look forward 

to participating. 

The CHAIRMAN. Thank you very much. 

Mr. Dinneen. 

STATEMENT OF BOB DINNEEN, PRESIDENT AND CEO, 

RENEWABLE FUELS ASSOCIATION 

Mr. DINNEEN. Thank you, Mr. Chairman, Senator Salazar. It’s 

an honor for me to be here today on behalf of the Nation’s ethanol 

industry. 

I can tell you that Congress’s effort to provide both a production 

push and a demand pull has created a very dynamic and growing 

renewable fuels industry that is reducing our dependence on oil, increasing rural economic development opportunities, and improving 

air quality in our Nation’s cities. There are today 111 ethanol biorefineries in operation, capable of producing about 5.5 billion gallons of ethanol from almost 2 billion bushels of grain. Ethanol 

today is blended in 45 percent of our Nation’s fuel. 

5

But we’re not done yet. The industry is growing rapidly. There 

are today 78 plants that are under construction in all parts of the 

country. There are plants that are going up in California, in Arizona, in Texas, in the Northeast. The industry is changing. The industry is improving. The industry is becoming more efficient. The 

industry is looking at new technologies and new feedstocks. And I 

believe the industry will be unrecognizable 5 years from now, from 

what it is today, because of the efforts that this Congress has put 

in place to create a viable and growing renewable fuels industry. 

Eighty-five percent of Americans, however, believe the Nation 

needs to do more to reduce our dependence on imported oil and to 

break the Nation’s addiction to oil. And I would suggest that the 

industry believes the most important things to focus on is what has 

worked. Clearly, consistent and stable tax policy is going to be critical to ensuring the continued development of renewable fuels and 

ethanol, and to move the industry beyond traditional feedstocks to 

newer technologies. 

Second, I would think that as the industry grows, as we’re blended in 46 percent of the Nation’s gasoline already, and with more 

than 6 billion gallons of ethanol production capacity in construction 

today, the time when we will saturate the blend market for gasoline is rapidly approaching; and thus, incentives for flexible fuel 

technology for E85 are going to be critical to provide markets for 

cellulosic ethanol when it is commercialized. And I would encourage the Congress not just to put out incentives but to make sure 

that those incentives encourage auto manufacturers to optimize the 

vehicles for the fuel that’s going to be used, so that there isn’t a 

mileage penalty and so the economics of using ethanol in those vehicles can be addressed through technology. It’s certainly possible. 

Finally, I would suggest that additional programs to encourage 

the commercialization of cellulosic ethanol are indeed going to be 

critical. The Congress has done a lot already through EPAct. Those 

programs do need to be fully funded, but Congress should look to 

other measures as well, so that we commercialize cellulosic ethanol 

as rapidly as possible. 

I thank you, Mr. Chairman, Senator Salazar, for your leadership 

on these issues in the past, and I look forward to working with this 

Congress as we move this agenda forward. 

The CHAIRMAN. Thank you very much. 

General Wald, welcome back, and go right ahead. 

STATEMENT OF GENERAL CHARLES F. WALD, USAF (RET.) 

REPRESENTING SECURING AMERICA’S FUTURE ENERGY, 

ENERGY SECURITY LEADERSHIP COUNCIL 

General WALD. Thank you, Mr. Chairman. Nice to see you again. 

Senator Salazar, thank you. 

The previous members all mentioned security and vulnerability. 

Obviously that’s my expertise and interest, and how I got into this 

area was as the former deputy commander of the European Command, which includes 92 countries, mostly Europe, obviously; Russia; Africa; the Caucasus; as well as Israel. 

In our review of the strategic mission we had post-9/11, and obviously with NATO not having the mission to counter the Soviet 

Union, it became apparent we had to review whether we needed 

6

115,000 troops in Europe anymore. And during our review it became apparent that there are obviously threats that still exist, we 

know that: terrorism, the proliferation of WMD potentially. 

But also it became apparent that energy security is a military 

mission. That’s what we have been doing for years. In 1980, thenPresident Carter announced the Carter Doctrine that said that oil 

from the Middle East was a vital interest to the United States and 

we would use military force to ensure that flow if we needed to. 

And I think that became pretty much the standard and we made 

that acceptable. Unfortunately, that became the standard for the 

rest of the world. 

About a year ago I was in Kazakhstan discussing critical infrastructure with several oil executives, and before we started to discuss where those vulnerabilities might be, one of them stood up 

and said, ‘‘I’d like to thank you, General Wald, and the U.S. military, for ensuring the free flow of oil around the world.’’ And I 

thought that was a nice comment, but telling. 

Ninety percent of all the oil in the world is owned by nationallyowned oil companies, most of those in unstable or unfriendly countries. And much of that oil that comes to the free world, fungible 

as it is, comes through very vulnerable straits. Matter of fact, almost 50 percent of all the oil in the world travels through places 

like the Straits of Hormuz, the Malaccan Straits, et cetera. 

Now we’re starting to be the benefactors of oil from the Caspian 

Sea, which is a good place, but vulnerable, as well as the west 

coast of Africa. And predictions are within the next 15 years we’ll 

be importing 40 percent of our oil from the west coast of Africa. I’ve 

spent a lot of time there, and the west coast of Africa does not have 

the military capability to protect those assets. 

$100 billion of U.S. money from our industry will be invested in 

that area over the next 15 years. Again, the expectation I think 

will be that the U.S. military is ready and able to take up that mission of protection. I think that’s a burden-sharing issue for the rest 

of the world. 

In the interim, I believe alternatives—and reducing our addition 

has been mentioned—is critical, and I still think that will take 10 

to 20 years. So I would first of all applaud your efforts and thank 

you for your efforts in this, reducing the vulnerability, and I look 

forward to answering any questions you may have. Thank you very 

much. 

The CHAIRMAN. Thank you very much. 

Dr. Pershing, with the World Resources Institute, thank you for 

being here. 

STATEMENT OF DR. JONATHAN PERSHING, DIRECTOR, 

WORLD RESOURCES INSTITUTE 

Dr. PERSHING. Thank you very much, Senator. I appreciate very 

much the opportunity for the World Resources Institute to participate in this session. We are a research think tank which focuses 

on global environmental problems, and to that end also look for 

policy solutions that can be pragmatic and successful. 

On the issue of biofuels, we believe that the biofuels offer enormous potential, but that our policies have to be carefully designed 

7

if we are to contribute to meeting both our environmental and our 

energy security goals. I want to make just three points. 

The first one is that we are not convinced that the current set 

of biofuels policies are being entirely correctly undertaken. For example, it’s not clear we take account adequately of environmental 

damages, including water, fertilizer, soil, soil loss, erosion, diversity 

loss, in the design of the current programs. To a certain extent the 

focus on corn rather than cellulosic ethanol as a key feedstock creates some questions, but in other areas, things like our flexible 

dual fuel standards for vehicles, we create some perverse incentives 

around issues like efficiency. 

The second point I would like to make is that there are ways 

that we think we could do it right, that would be consistent with 

policy objectives that we hold closely. We should actively pursue 

the commercialization of cellulosic solutions, but we need to be 

careful. Not all cellulosic options are the same. Not all feedstocks 

are equal. 

We should invest in research to minimize the environmental impact of the crop choices. We should provide incentives for best management practice, such as conservation tillage. We should develop 

incentive policies that are based on the characteristics of the fuel 

that we want to encourage instead of the fuel itself. If we do these 

kinds of things, we would encourage what I would call good biofuel. 

We would meet both the energy and the greenhouse gas criteria 

that we hold, instead of developing a biofuel solution which meets 

neither. 

The third point, biofuels have to be part of a set of wider priorities, a portfolio that in the transport sector includes modal shifts, 

vehicle technologies, and other fuel options. The climate emissions 

and the energy security that we have all spoken to should be the 

guiding principles that give us those criteria. If we adopt those 

points and frame our solutions in that manner, we can have a significant impact in both areas and allow this to be a very successful 

policy outcome instead of one that is not as manageable. 

We look forward to participating with you and working with you 

as you work in this important area. Thank you. 

The CHAIRMAN. Thank you very much. Let me ask a few questions and then defer to Senator Salazar, and then we’ll do another 

round if others haven’t arrived. 

Let me start with this issue of too much focus on corn and not 

enough focus on cellulosic feedstocks. That seems to be a recurring 

theme in a lot of what I heard from you folks. We tried, in the 

EPAct 2005, at least at one place, to incentivize the development 

of cellulosic ethanol by saying that in reaching the goals for blending of ethanol into the fuels used in the country, we would give 

credit for cellulosic ethanol of 2.5 gallons for every gallon of grainbased ethanol. 

Now, that became sort of a dead letter because obviously the development of ethanol generally has been so substantial that it looks 

like these goals are not a real concern of anybody. We’re going to 

blow right past them. What else could be done, what else needs to 

be done to be sure we’ve got enough focus on development of these 

cellulosic feedstocks and don’t get into a circumstance where we’re 

putting all of our investment into corn-based ethanol? 

8

Now, Mr. Dinneen, I know this is an issue near and dear to your 

heart. Why don’t you give us your view? 

Mr. DINNEEN. Thank you, Mr. Chairman. First of all, I’d like to 

reject the notion that there are good biofuels and bad biofuels. I 

mean, biofuels in general are going to be better than gasoline, and 

I don’t think that there’s ever going to be a situation where cellulosic ethanol replaces corn-derived ethanol. 

Corn is going to continue to be an important domestic market for 

farmers. The corn ethanol industry today is revitalizing rural communities. When I go to an ethanol plant opening, and I have to go 

to them quite frequently these days, I look at 1,000 farmers that 

are gathered celebrating the opening of a new business, perhaps 

the first new business that has come to that community in 20 

years. And it’s a facility that they invested in, and they recognize 

that it is going to provide a tremendous economic stimulus to their 

area, that’s a very positive thing. 

That’s one of the reasons this policy has been so successful. To 

try to demonize corn-derived ethanol I think misses the bigger picture, which is that we need to be doing everything possible to promote all biofuels. Corn ethanol will certainly have a role. Corn ethanol can’t do it all, but it’s going to be a part of the future. There 

are limitations to what we’re going to be able to produce from 

grain, and that’s why there isn’t a corn ethanol producer that I represent that doesn’t have a cellulose-to-ethanol research program 

underway, because they know that that is a part of the future. 

The CHAIRMAN. To push back a little bit, I agree with you that 

there are not good biofuels and bad biofuels, but would you agree 

that there are good biofuels and better biofuels from the perspective of getting our energy needs met? 

Mr. DINNEEN. I’m not in a position to disagree with you vehemently. How’s that? 

The CHAIRMAN. All right. All right. Mr. Conover? 

Mr. CONOVER. Thank you, sir. I want to say that I would subscribe to much of what Dr. Pershing said. And I think the way to 

think about this, as you put it, is good biofuels and better biofuels. 

In addition to the ability to make a dent in our dependency issue, 

you’ve also got life cycle greenhouse gas emissions issues. 

There’s a real possibility with cellulosic ethanol that you will 

have negative emissions on a life cycle basis, given the fact that 

you could use the lignan that is a byproduct of the process to actually power the plants themselves. So there are clearly better 

biofuels from an environmental standpoint. 

The point—and I certainly don’t want to demonize corn ethanol 

because, as Mr. Dinneen points out, it is better than gasoline. 

There’s no question about that. But one of my jobs in government 

was the director of the Climate Change Technology Program, and 

the issue for—it’s sort of a philosophical issue—Federal subsidies 

really ought to be targeted at what a lot of people in the R&D community call the ‘‘valley of death.’’

And that is where you’ve got a technology that has been brought 

to the near-commercial stage through research, development, and 

demonstration, and it needs to get out into the commercial marketplace to see if it will survive or not, see if it will be able to compete. 

That’s where cellulosic ethanol is today. It can compete, but it can’t 

9

compete on a level playing field with corn ethanol. Corn ethanol 

profitability is extremely high. 

Yes, there are issues of natural gas prices, there are issues of 

corn prices, but from a fiscal conservative perspective, you ought to 

consider directing the subsidies where they are needed the most. 

And the only downside to the current system is whether the fact 

that we are providing very generous subsidies to an established, 

mature industry is preventing us from providing the assistance we 

need to give to the emerging biofuels. It’s not a matter of demonizing corn. It’s a matter of where do you need to spend the Federal 

dollars. 

The CHAIRMAN. Dr. Pershing. 

Dr. PERSHING. Just one short comment about it. I don’t at all 

mean to demonize corn. What I’m suggesting is that we’re looking 

at a significant expansion in the total market, and as we expand 

in that market, if we are to stay with corn, the question is where 

are we going to put it? Where are we going to grow it? 

Well, the place we grow it is by moving away from other crops. 

The place that we grow it is by moving away into conservation-reserved areas. The place that we grow it is moving into marginal 

lands. In all of those cases there are potential environmental consequences that we have to be careful about, we have to manage. 

It doesn’t mean that corn is bad. It means we have to think 

about designing policies that let us move forward appropriately as 

we expand the market. Cellulosic ethanol offers different choices, 

an expanded set of choices which, on balance, seem to have more 

positives than expansion, simply thinking about the corn structure 

as it exists today. 

The CHAIRMAN. Yes, Mr. Detchon. 

Mr. DETCHON. Mr. Chairman, I would just say I think that corn 

can be produced well or it could be produced badly, and cellulose 

can be produced well or it can be produced badly. We are trying 

to move toward better biofuels, but more importantly, more 

biofuels. 

And I think that if you think about how to incentivize that—you 

noted that the RFS has had little effect because the industry has 

way overshot the targets. But there is a general consensus, that I 

think Bob would agree with, that the corn industry is going to be 

limited to somewhere in the neighborhood of 15 billion gallons. 

If the Congress embraces the President’s goal of 35 billion gallons by 2017 and puts that into a predictable ramp-up, now you are 

creating the investor confidence to make the next generation of 

technologies move forward, and that’s the most important thing. 

There’s a lot of money moving into this area in the private sector, 

but the need is to have some assurances to have a market. So the 

reverse auction that was contained in EPAct was a useful tool. And 

a higher RFS, too, that would go beyond the reasonable expectations of corn supply, will also drive us toward the cellulosic future. 

The CHAIRMAN. Let me call on Senator Salazar for his questions. 

Senator SALAZAR. Thank you very much, Chairman Bingaman, 

and thank you for putting the spotlight on biofuels and the importance of biofuels with respect to our energy future. 

I also want to just say thank you to the members of the panel 

who are here, who are interested in this issue, and to the members 

10

of the audience who are here. I saw my good friend Dan Arvizo, 

the director of the National Renewable Energy Lab, who is going 

to be on a panel later on this afternoon. We very much look forward to his vision on what the possibilities are of some of the 

things that we are talking about here. 

To the Energy Future Coalition and to all of you who have been 

involved in the 25×25 effort with Senator Grassley and myself, I 

appreciate that very much. At this point we have, I think, 25 original cosponsors of that legislation, and I think it will continue to 

grow in terms of the kind of support that it has. 

I have a couple of questions for you. We probably have—I’ve not 

counted the bills, but certainly there are dozens of bills that deal 

with energy. I think there is a general recognition here in this capital that energy is one of the top two or three signature issues of 

the 21st century. 

And I guess the first question that I would ask of you is, how 

far do you think we can go? Is the expectation, as set forth in our 

vision, of producing 25 percent of our energy from renewable energy resources by the year 2025, doable? Is it too modest and insufficient a goal? Could we do better? If we could do better, how could 

we do better? So I would ask you to all respond to that question 

very briefly. 

And the second question that I would ask you to respond to is 

a continuation to the set of questions by Senator Bingaman, and 

that is that there has been a lot of focus on corn and ethanol. In 

my State I see four plants today functioning that weren’t there 2 

years ago. I very much am a supporter and the No. 1 cheerleader 

of that effort, but I also know that as we transition from corn over 

to cellulosic ethanol, that there are some challenges before we can 

make cellulosic ethanol commercially available out there in the 

market, the way that we now use corn ethanol. And I would ask 

each of you to give, in a very short way, what your top two recommendations would be, to this committee and to this Congress, as 

we move forward, to try to incentivize and to encourage bringing 

onto the menu of renewable energies cellulosic ethanol. 

So why don’t we start with you, Reid, and we’ll just go down the 

table. 

Mr. DETCHON. Thank you, Senator Salazar, and thank you again 

for your leadership on 25×25. 

With regard to the doable question, I think that 25×25 is clearly 

doable. I’m sure you are all familiar with the Oak Ridge so-called 

billion ton study that indicated that we could easily harvest more 

than a billion tons of biomass from America’s lands without 

disadvantaging food, feed, and export markets. So the biomass is 

there. 

And on the electricity side, we have a range of alternatives, including solar, wind, geothermal, and hydroelectric. Just with respect to wind, for example, as I’m sure you also know, the administration set a target of 20 percent of our electricity coming from 

wind. If you can get that much from wind, getting the next 5 percent is already a done deal. So 25×25 is not a problem. 

But when you think about this in a context—and I’ll give you the 

example on the transportation side—we’re moving, in my opinion, 

toward electricity as being the fuel of choice for vehicles. The ChevVerDate 0ct 09 2002 14:01 Apr 16, 2007 Jkt 034568 PO 11016 Frm 00014 Fmt 6633 Sfmt 6633 H:\DOCS\34568.TXT SENERGY1 PsN: RSMIT
11

rolet Volt, that concept vehicle they just had out in Detroit, is sort 

of the first edge of that. Built on an electric platform, so you don’t 

have a conventional drive train, and using liquid fuels to recharge 

the battery as you’re going along, so you have the range that you 

need. 

If you go that path, and you get clean electricity from the grid, 

supplemented by clean biofuels, petroleum is out of the picture 

completely and your greenhouse gas profile is very good. So that’s 

a very attractive package to look at incentivizing. And toward that 

end, efforts to improve battery performance for those kinds of cars, 

I think, are the highest priority. 

With regard to what we need to do, I think that the loan guarantees providing in EPAct are a very important first start. As Dave 

said, it’s very important that that got covered in the CR, and we’re 

very pleased about that. We think the reverse auction is a very attractive mechanism for early entry fuels, and again, EPAct authorized that but we don’t have appropriations to it. 

And then, last—and I think a lot of you have been thinking 

about this—probably the slowest-moving piece of this puzzle is the 

availability of fuel to consumers. It would be natural for the existing petroleum-based infrastructure to be less than enthusiastic 

about marketing an alternative product on their sites, but this is 

a problem that needs further attention. 

How do we get high-blend ethanol and other biofuels more available in the market to consumers? We now have more than 6 million flexible-fuel vehicles out on the road today. Where are they 

going to get fueled? That’s an important problem for further review. 

Senator SALAZAR. So you would say that one of the things that 

we could do in this Congress is to move forward to incentivize a 

change of the infrastructure so that these alternative fuels are in 

fact available to consumers all across the country, moving from a 

limited availability now to a much broader availability? 

Mr. DETCHON. Yes, sir. 

Senator SALAZAR. OK. David. 

Mr. CONOVER. Thank you, sir. I again agree with much of what 

Reid said. The commission doesn’t take a position on what a specific goal should be in terms of the use of renewable fuels, and in 

fact the commission is perhaps more concerned with the issue of 

zero-emitting sources of energy. And so, as Reid talks about plugin hybrids, if a plug-in hybrid is being fueled by an IGCC coal 

plant that’s fully sequestered and there are no emissions associated 

with it, that addresses the climate change and the international dependency issue as well as some of these other questions. 

So with respect to the most important things that this Congress 

can do, and staff hates to hear this, but yes, fund the things that 

this committee authorized. This committee did an outstanding job 

in crafting energy legislation that was signed into law in 2005. The 

Appropriations Committee needs to follow suit, and they need to 

fund those programs that you authorize. That will perhaps make 

the largest difference of all. 

I think an issue that maybe you won’t hear a lot about today, 

that will also be important as we grow the ethanol industry, is consumer preference. Due to the lower energy density that ethanol has 

12

as opposed to gasoline, you will end up taking more trips to the gas 

station if our vehicle efficiency stays stable. And so one of the important things that this Congress can do is pass, reform, and 

strengthen a CAFE system that will in turn make ethanol fuel 

more attractive to consumers by increasing the range of the vehicles that are fueled by it. 

Senator SALAZAR. Bob. 

Mr. DINNEEN. Thank you, Senator. I would say that if you go the 

route of looking at an additional standard, don’t be shy about giving a big, bold number. When we had the debate over the renewable fuels standard 2 years ago, there were a lot of people that 

said, ‘‘7.5 billion gallons, that’s an awful lot of ethanol. How are we 

doing to get there?’’ And there were a lot of doubters that the industry would be able to respond by 2012. 

Well, responding to the marketplace signal that was given, we’re 

going to have 7.5 billion gallons by July 4 of this year, not 2012, 

and we’re looking at a time when we will have 14 or 15 billion gallons of ethanol from grain, but we do need to go beyond that. 

And indeed what the President established when he gave his 

State of the Union speech and he talked about a 35 billion gallon 

goal, that’s a very aggressive goal, but one that would be eminently 

achievable if the right tools are in place to assure that the marketplace can respond. It is a goal that will indeed incentivize cellulosic 

ethanol and make sure that the marketplace responds with the 

necessary R&D——

Senator SALAZAR. Is that goal high enough, Bob, or would 50 billion be something that would be achievable? Would 60 billion? 

What’s the right goal? 

Mr. DINNEEN. I’m not sure that I’ve seen a goal yet that I would 

say isn’t high enough. 

Senator SALAZAR. So your point is, be bold with our goals? 

Mr. DINNEEN. Yes. 

Senator SALAZAR. Be bold, then. 

General Wald. 

General WALD. Senator, I’m not a scientist and I’m not an expert 

on biofuels, other than I know we need energy. And I would say 

that a couple things come to my mind as I hear—the solutions I 

think are all admirable but, as was mentioned earlier, it’s going to 

be multifaceted. 

But the thing that strikes me most of all is that even if we were 

to have an epiphany of commitment today by all the different types 

of alternate fuels, it would take us—as you point out in your support of the 25×25 initiative—until 2025 to get there, and then it’s 

only 25 percent of what we use. 

So we’re always going to have some dependency on oil, it appears. In my time in Europe or overseas, which was 15 years, I 

went to 125 countries and I’ve seen many things, but it’s striking 

how vulnerable some of the places that much of the energy that 

we’re dependent upon are to disruption or lack of security—in 

Georgia, in Azerbaijan, off the coast of Africa. 

I am encouraged by the fact that we have a commitment by Senators like yourself, and this country is mobilized now to address 

the problem, but it’s going to be multifaceted. It’s going to take 

huge national leadership, and I think we need to do this in the 

13

very near future, because what oil has become to this country is 

basically an asymmetric threat somewhat similar to terrorism. I 

don’t want to be alarmist or overembellish this, but the fact that 

countries can now direct or drive what our foreign policy is is something we’re not necessarily used to, and we’re going to become more 

and more vulnerable to that in the future unless we take broad and 

immediate action. 

So thank you. 

Senator SALAZAR. Thank you, General Wald. 

Seeing that my colleagues are here and we only have about 15 

minutes left on the panel, I’ll take your answer privately, Dr. Pershing, later on. 

I’ll go ahead and yield, Mr. Chairman. 

The CHAIRMAN. Let me call on Senator Corker to ask his questions. He was the next here. 

Senator CORKER. I’ll yield to more senior members. 

The CHAIRMAN. Let me then call on Senator Domenici. He was 

right after you. 

Senator DOMENICI. Thank you very much, and thank you, Senator. You don’t have to do that. There is no precedent here. If you 

have questions, you should go ahead and take them, but I’m most 

appreciative. 

I want to explain to my chairman and to all of you why I was 

late. I think what I say will apply to Senator Craig. We both were 

at the National Prayer Breakfast over here at the Hilton Hotel 

on—what is it? 

Senator CRAIG. Florida and Connecticut. 

Senator DOMENICI. Yes, Florida and Connecticut. And we got 

caught in traffic, I got caught in local traffic down here, and we 

apologize for being late, but not for where we went. It was a very 

outstanding place. We even had a gigantic scientist of our day 

speak as a believer, which was rather interesting. Usually you 

can’t get anybody in the science community to talk as a believer, 

but he was the speaker and was very glad to do it. 

And he’s a geneticist besides, one who works on genes and how 

it affects us, which is good. 

I’m going to try to be brief. I don’t know what has gone on so 

far, or what is more appropriate elsewhere. You can tell me, Senator. How quickly could flex-fuel vehicles be introduced into the 

Nation’s fleet of automobiles? 

And I’ll just piggyback on that, the CAFE standards, as written, 

allow automobile manufacturers to receive credit for flex-fuel vehicles toward their CAFE obligations even if these vehicles never actually ran on biofuels. Should we eliminate this flex-fuel loophole, 

or is it a useful way to encourage the manufacturing of flex-fuel 

automobiles? I don’t know, whomever is best at it. 

Mr. DETCHON. Senator Domenici, one thing you missed by being 

absent was a fair amount of praise for the Appropriations Committee for including the loan guarantees in the continuing resolution, and I want to particularly recognize your leadership on that. 

It is much appreciated and it’s going to be very important. 

Senator DOMENICI. You mean in the CR? 

Mr. DETCHON. In the CR. 

14

Senator DOMENICI. We got $4 billion. Senator Bingaman and I 

have looked it over and we have seen how broad its application is, 

and we think they missed a zero. We think it should be $40 billion. 

We’ll be working on that. 

[Laughter.] 

Mr. DETCHON. That’s what I would call an aspirational target. 

Senator DOMENICI. We’ll get a lot more than $4 billion before the 

year is out. 

Mr. DINNEEN. Needs more prayer. 

[Laughter.] 

Senator DOMENICI. We’ll get that, too. Dr. Pershing should answer my question. 

Dr. PERSHING. Thank you, Senator. I would like to echo the comments made about the importance of the work you’ve been doing 

historically to move all of these issues forward. It makes a great 

deal of difference. 

The question you have asked strikes me as a critical one, and it 

comes down to the issue about where standards are set and how 

to make sure that we don’t create loopholes that are unintentional. 

In this particular circumstance, what has ended up happening is 

that a trivial, small fraction of the vehicles that are labeled as flexfuel vehicles use any form of biofuel. The vast majority are in areas 

where there is no gasoline station that sells ethanol. 

The consequence of that is that we have in fact lowered the 

standards, because those vehicles do not get the kind of efficiency 

that a gasoline vehicle would get. It seems to us, as we look at 

that, that as you develop your policy you want to create incentives 

that avoid that kind of perverse outcome, and there are ways to do 

it: Set up standards that are manageable across the board; think 

about things that move you to incentives that are life-cycle-based, 

not just ones that are exclusive to one technology; open up the 

doors so that when you look at these life-cycle questions, those 

issues don’t contradict areas in other policy that we’re seeking to 

move. 

I would highlight narrowly the question of efficiency. I think all 

the people on the panel have spoken about this being one part of 

our solution. Clearly we can get to a much higher level, to answer 

Senator Bingaman’s question, a much higher level than a 25 percent share. We can much more easily do it if we have cut the total 

consumption in half through efficiency programs. Then it’s actually 

a matter merely of moving the technologies we’ve all spoken to into 

the market, and those are the policies you’re working on. 

Senator DOMENICI. Very good. 

Mr. DINNEEN. Senator, if I could just briefly add to that. I agree 

with much of what Dr. Pershing just said, but I do think some 

credit needs to be given to the domestic auto manufacturers for the 

commitments that they have made in the production of flexible-fuel 

vehicles. A couple of months ago they made a commitment in the 

White House to produce as much as 50 percent of their vehicles, 

beginning in 2012, as flexible fuel. 

There are 6 million FFVs on the road today. That’s a small fraction of the total number of vehicles that are on the road. There are 

only about 1,000 E85 refueling stations across the country, a small 

fraction of the number of gasoline stations that there are. 

15

But you need three components to make the E85 market work: 

You need more vehicles, you need more infrastructure, and you 

need more ethanol. If you’re going to be able to satisfy that market, 

you really do have to be able to produce significantly more volumes 

of ethanol that can be used to satisfy the blend market today, so 

you need to crack the code to be able to produce ethanol from cellulose. 

All of this is happening, but it really doesn’t serve much of a purpose to criticize how little is happening today, because the marketplace is evolving, there are more vehicles coming on-line, and there 

are more stations all the time. We are working as hard as we possibly can to crack the code to produce ethanol from cellulose. It’s 

not going to happen tomorrow, it’s not going to happen next year, 

but in 7 years, in 10 years, you can indeed have a meaningful E85 

market and be making a real dent in this. 

Mr. CONOVER. Senator, if I could on this, I agree with much of 

what Bob has said. The vehicle issue is less of a challenge. It’s only 

roughly $100 to modify engines to be flex-fuel cells. Obviously when 

you multiply that by the number of vehicles out there, that’s a big 

number, but it is not a big burden. 

The infrastructure issue is a bigger challenge, and one of the recommendations that we are making today is that we not be wedded 

to E85 as the next step. We don’t have to go from E10 to E85 to 

grow this market. If we can go from E10 to E20, and if there are 

fewer impacts on existing infrastructure and delivery systems, then 

that will more quickly grow this market at a lower cost to consumers, at a much greater ease of technological sophistication. So 

we would urge this committee to examine that issue. What will it 

take to get us from E10 to E20 in a very near time? 

Mr. DETCHON. A brief word in support of the existing CAFE credit. If you think about the problem of trying to introduce a highblend ethanol into the market, it would be foolhardy to develop a 

major production industry and have no cars that can run on it. 

This has been an effective tool to get ahead of that problem, since 

we do have 6 million cars on the road and the automakers are willing to ramp up production very rapidly. What they feel constrained 

by is lack of demand for ethanol, just as everybody is concerned 

here. Let’s address that problem by dealing with the infrastructure 

issues, and not figure out ways to penalize the automakers for 

doing the right thing. 

Senator DOMENICI. Thank you very much. 

Senator Bingaman, I might be prepared to yield, and you can go 

with whoever you think is next, but I was going to say to all of the 

Senators, but in particular you, if we are going to be continuously 

burdened by having a low level of numbers for our loans, for our 

guaranteed loans, and things like $4 billion get eaten up like nothing but they go to the wrong places, and it seems to be even $10 

billion or $12 billion would go to the wrong places, it does make 

sense, it would seem, for some of us to ask the Secretary to work 

on the supply that he has so as to have dual purpose, so as to develop the technology but also put the technology that’s most needed 

in the infrastructure arena, but that first. Otherwise, we could dot 

all over the place and still not do maximum infrastructure development with a short supply of loan guarantees. 

16

I talked to Larry, and I don’t speak for him, but I think he 

agrees that the Government doesn’t understand what we’re talking 

about. The Government doesn’t get hurt by these loans. They don’t 

even lose any money. Why they can’t just have a giant portfolio of 

them and watch them carefully, I don’t quite understand. So we’ll 

have to work. And if you agree with me, we just have to work on 

that. 

Thank you very much. 

The CHAIRMAN. Well, thank you very much. Let me just alert everybody. We’re within 4 or 5 minutes of having to finish this panel, 

unfortunately, if we’re going to stay somewhat on time. We have 

two other Senators who indicated they have questions. Let me call 

on each of them, and they can ask a question or two, and if we 

could get quick answers, that would sure help us a lot. 

Senator Cantwell. 

Senator CANTWELL. Well, thank you, Mr. Chairman. I think Senator Craig walked in before I did. 

The CHAIRMAN. Oh, did he? OK. 

Senator Craig. 

Senator CRAIG. Well, all right. 

The CHAIRMAN. It makes no difference if we——

Senator CRAIG. I will be brief. I have one question. Prior to asking that, General Wald, thank you for your message on the sense 

of urgency as it relates to security and energy. I started speaking 

out about petronationalism early last year, trying, at least to my 

audience, to say we have a very real problem here and it’s getting 

worse, not better, and it will change the character of our foreign 

policy and our Nation if we’re not helpful. Thank you for your message. I hope it’s getting out. I think it is. I think people are beginning to listen. 

My question is for all of you, and you can answer it quickly and 

individually. DOE, because of its failure in coal to liquids, is scared 

to death of loan guarantees, and they are nitpicking and doing 

something that is frustrating to all of us, and I think Pete just referenced that. So is USDA a better place for this than DOE? They 

have been in that business for a long while. They seem to be able 

to handle it. 

We have a farm bill coming up, and we have an opportunity. 

Should we move exclusively or substantially in that direction, and 

away from an agency which has not done this well or is fearful? 

I don’t see any losers here, but I will tell you we’re missing windows of opportunity and at a time, in my opinion, that is critical 

to our country. 

Anyone want to respond to that observation? 

Mr. CONOVER. Well, sir, as a relatively recent refugee from DOE, 

I am going to say that there are a lot of folks over in that building 

that want to make that program work. And I think that there is 

room in this—as Senator Domenici pointed out, there is room in 

this market for a proliferation of loan guarantee programs, so I 

would very much encourage the Congress to beef up USDA abilities 

in this regard, as well as DOE’s abilities in this regard. 

Senator CRAIG. General. 

General WALD. Senator, first of all, I am not an expert on bureaucracy, so whether it’s in USDA or DOE, I would——

17

Senator CRAIG. Neither am I, but I don’t want to be a victim of 

it, either. 

General WALD. I agree, but I will say that I think you’ve asked 

the right question. That is one of the serious issues I think our 

country needs to face, how are we going to take advantage of coal. 

And I know it’s a serious issue on climate, and I understand that, 

but from a security aspect, we have a huge opportunity to take advantage of coal. 

I had the opportunity to briefly discuss this with Senator Cantwell the other day by the train, and I mentioned that she asked 

during the last hearing why we don’t help China with coal technology, from a climate aspect, and I think there’s some benefit 

there. 

But my point would be that I think—as Senator Domenici mentioned, I think it becomes a governmental issue now on how are we 

going to assure that we can produce clean coal. The benefit of that 

asset would be hugely important to getting off this dependency on 

imported oil, and I think when the standards and regulations are 

established that say this is what the standard for that coal is, we’re 

going to make a huge step forward in getting off that dependency. 

So thank you for that. 

Mr. DINNEEN. Senator, if I could just add really quickly, DOE 

has had some reluctance, it seems, to move forward with their loan 

guarantee authority. I do think that that attitude is changing, and 

I do think they are certainly capable of doing it and they seem to 

have a new commitment to it. But I believe that USDA has had 

some expertise in this. They are enthusiastic about building a renewable fuels industry, and from my perspective, all the better. 

There are companies that have been waiting for years, literally, 

for a loan guarantee program to finally hit the streets, because 

they are ready with technology. All they need, as a first supplier 

of this new technology, is a loan guarantee from the Federal Government. So as soon as somebody hits the street with it, you are 

going to see commercial cellulosic ethanol facilities built, and it 

can’t happen fast enough. 

Senator CRAIG. Thank you. I concur. 

The CHAIRMAN. Dr. Pershing, why don’t you give us your view, 

and then we’ll call on Senator Cantwell. 

Dr. PERSHING. Just two very brief points. It strikes me—as you 

design your loan guarantee program, I personally believe that this 

will become a commercial technology. The loan guarantee program 

does not have to be permanent. It can be phased down over time. 

The second point is, with regard to the comment made by General Wald, I agree that we have to think about how we do a clean 

coal system. I do not believe that coal-to-liquids needs to be part 

of the transport infrastructure to do that. The effectiveness of a 

capture and storage program under the liquids solution is not very 

promising. We can use alternative technologies like the ethanol 

structure, like cellulose, like efficiency, like plug-in hybrids, which 

would allow us perhaps to use coal on the electricity side. 

The CHAIRMAN. OK. Thank you. 

Senator Cantwell. 

Senator CANTWELL. Thank you, Mr. Chairman, and thank you, 

gentlemen, for the discussion this morning on what at times seems 

18

to be the chicken-or-egg discussion of which to do first to jump 

start this market to a full run. 

In the Northwest we certainly have developed a great deal of use 

for biodiesel—that is, public school buses, military vehicles, our 

ferry fleet, more cars per capita than just about anyplace else—so 

it’s no surprise that we also sold out of all the biodiesel that we 

had, and that the largest biodiesel facility in the country didn’t 

produce 100 million gallons all last year, and this facility will now 

produce that, because that market was there and demonstrating 

that capacity. 

So my question is on infrastructure. What should we either 

incent or mandate as it relates to the distribution of alternative 

fuels? And, second, do any of you think, given what you have already said this morning on the cap-out of U.S. production of ethanol, that we need to do something to further establish that market 

by getting other sources of ethanol? 

Mr. DETCHON. Senator Cantwell, I think with regard to infrastructure, the——

Senator CANTWELL. And specifically mandates or incentives, if 

you could. 

Mr. DETCHON. Yes. I think probably it’s a combination. I would 

rather not make that choice. I think that I would recommend a dialog with the auto manufacturers who would like to partner up and 

identify areas where they have already sold substantial numbers of 

flexible-fuel vehicles. And maybe, once you reach a certain trigger 

level, there would be a mandate in that region for a certain percentage of refueling stations to be present. I think that there are 

flexible ways to do this. 

And I think that, in terms of biodiesel, the only thing I wanted 

to suggest there is that I think that the infrastructure for using 

and producing biodiesel from vegetable and animal fats is pretty 

well established, but there is a very large opportunity to use a wide 

range of organic material through gasification and conversion to 

liquid fuels, and I think that’s an area we have underinvested in 

historically. 

Senator CANTWELL. Thank you. 

Mr. CONOVER. Let me just quickly add, because I don’t believe 

you were able to be here when I made the point earlier, the biggest 

mandate that’s missing—and it was part of the commission’s 2004 

report—is fuel economy for vehicles. Given the lower energy density of ethanol, there’s going to be consumer reaction, the more we 

grow this market, to the reduced range that they get in driving 

their vehicles with greater blends of ethanol. So increasing the Corporate Average Fuel Economy standards is one of the single most 

important steps this Congress can take to reducing our dependency 

on foreign oil. 

Senator CANTWELL. I actually did catch that part of your comments. So do you support mandates or incentives for other infrastructure, or do you think we should just pass on that and focus 

on CAFE? 

Mr. CONOVER. Both have a place, mandates and incentives, but 

you’ve got strong elements of each of those in the Energy Policy Act 

of 2005, and the greater challenge there is ensuring that the ApVerDate 0ct 09 2002 14:01 Apr 16, 2007 Jkt 034568 PO 11016 Frm 00022 Fmt 6633 Sfmt 6633 H:\DOCS\34568.TXT SENERGY1 PsN: RSMIT
19

propriations Committees on both sides of the Hill fund the programs you have authorized. 

Senator CANTWELL. What mandates on infrastructure do you 

think are there, that say this is how many alternative fuel stations 

and infrastructure should be built? 

Mr. CONOVER. I think—this is not a commission policy, but I 

think it’s instructive to look at Security America’s Future Energy 

and their Energy Security Leadership Council’s recommendations 

that came out recently, where they call for mandates on a growing 

percentage of fueling infrastructure at stations that are part of the 

branded family of stations. You don’t want to put a mandate on the 

small mom-and-pop gas station, but for the larger businesses, a 

mandate may be an appropriate way to go. 

Senator CANTWELL. Thank you. 

Mr. DINNEEN. Senator, I think I have just a couple of quick 

points. One, I think the infrastructure that exists today is certainly 

capable of handling the market that is there today in terms of ethanol and biodiesel as a blend component in gasoline and diesel fuel. 

Ethanol today is blended in 46 percent of the Nation’s fuel, and we 

are shipping coast to coast and border to border, and that infrastructure is there. 

When you start talking about much greater volumes of ethanol 

or other biofuels, if you’re meeting a vision of 35 or 60 billion gallons, then different infrastructure challenges certainly develop. But 

I think we’re going to be a lot smarter because I think that we may 

not know as yet just what those infrastructure challenges are. 

As the ethanol industry is building, we’re building far beyond the 

Grain Belt. We’re building plants in Washington, in California, in 

the Southwest and the Southeast and the Northeast. Our industry 

is developing with smaller production centers all across the country. It’s going to be a much different infrastructure challenge than 

what you have today, where much of our petroleum infrastructure 

is based off of a production center in the Gulf Coast. 

Senator CANTWELL. So just to be clear—because I want to move 

on, because I want to get, Mr. Chairman, to have the next panel 

called—you are agnostic about mandates or incentives, or you’re 

just wait and see what happens? 

Mr. DINNEEN. There are different elements of this question. Are 

you talking about pumps——

Senator CANTWELL. I’m talking about infrastructure. I’m talking 

about the delivery system. I’m talking about ensuring for the producers that the delivery system exists. 

Mr. DINNEEN. I think we need to understand how the market is 

going to develop, to understand what the needs are, to get the 

product from the production facility to the marketplace. There are 

incentives in place at the gasoline retail level that I think are sufficient and will develop further as the marketplace develops. 

Senator CANTWELL. Dr. Pershing. 

The CHAIRMAN. Yes, Dr. Pershing, why don’t you give us the 

final word, and then we’ll go on to the next panel. Thank you. 

Dr. PERSHING. Thank you very much, Senator. I wanted to only 

answer briefly the last of your questions about the international 

part of the community. It strikes me, as we look at the developVerDate 0ct 09 2002 14:01 Apr 16, 2007 Jkt 034568 PO 11016 Frm 00023 Fmt 6633 Sfmt 6633 H:\DOCS\34568.TXT SENERGY1 PsN: RSMIT
20

ment of both cellulosic and corn and other forms of starch-based 

ethanol, we have significant environmental questions. 

As Brazil moves into expanding its reach, it’s mostly doing so by 

moving into rain forest. As Indonesia moves into detropha, it mostly does so by cutting down the rain forest. As we look at China, 

which has proposed not to have any additional starch-based ethanol because it runs into food problems, they’re looking now at cellulosic. If we could develop that technology, we could be an exporter of the technology and an importer of a much cleaner source 

of fuel without getting into these other environmental constraints 

that we should worry about. 

Senator CANTWELL. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, and thanks to this panel. I think it’s 

been very useful testimony. 

Why don’t we have the second panel come forward. Could the 

witnesses please be seated, and we’ll put the signs where you sit. 

Let me go ahead and introduce the panel, and then we’ll have 

each of them take 2 to 3 minutes and give us the main points they 

think we need to understand, and then we’ll go to some questions. 

First, we have Larry Mitchell, who is the CEO of the American 

Corn Growers Association. Second, Richard Moskowitz of the American Trucking Association. We appreciate both of them being here. 

David Terry, with the Governors Ethanol Coalition. Dr. Robert 

Fraley, who is the executive vice president and chief technology officer with Monsanto Company. Toby Bostwick, who is president of 

New Mexico Sorghum Producers. And Ken McCauley, who is president of the National Corn Growers Association. 

So we’re glad to have all of you here. Why don’t we just go across 

the table from our left to our right, please. 

STATEMENT OF LARRY MITCHELL, CEO, AMERICAN CORN 

GROWERS ASSOCIATION 

Mr. MITCHELL. Thank you, Chairman, members of the committee. My name is Larry Mitchell. I’m with the American Corn 

Growers Association, but I’ll tell you right off the bat, representing 

the corn producers, we will be the first to tell you that we think 

that ethanol must be much bigger than just corn and much bigger 

than just Midwestern. We believe that we can make ethanol out of 

just about anything in every State, and the key to this entire process is to decentralize and get diversity in the field stocks that we 

use. And to see where we’re going, we need to sort of do a quick 

review of where we came from. 

I’m a fifth generation farmer from Texas, but I’m only the second 

generation to start out farming using petroleum as my energy 

source. A hundred years ago most U.S. farms used half of what 

they produced to fuel that farm, because we had a huge use of people power and, more importantly, horsepower. Also, a large percentage of the other half of what we produced also went for the 

local economy. So going to a local-based, farm-based renewable energy system certainly isn’t something new. It’s something that 

we’re finally returning to after 100 years of the petroleum age, an 

age that may well be half over. 

21

Also, a review. It was mentioned this morning about national security and international security, we are about to start our fifth 

year of a war in Iraq that is a war and we are there for many, 

many reasons. And one of those reasons of course is the liberty of 

the Iraqi people, but the other is the liberty of Americans and the 

liberty of our lifestyle and our energy systems. 

And so if we look back at previous conflicts, and realize that 

when FDR was building his arsenal of democracy to defeat the evil 

people at that time, he reached out to some very, very good people, 

his dollar-a-year men as he called them, and other folks such as 

Henry Kaiser, who figured out how to float a Liberty ship on a 

pretty regular basis. In fact, in 1943 he floated three of them a day. 

Now, any nation that can launch three Liberty ships a day surely 

can figure out how to launch a liberty fuel refinery each week. 

You see, if we work to expand our 100 ethanol plants to 1,000 

ethanol plants scattered all across the Nation, each of them producing about 60 million gallons apiece, we’re at that 60 billion gallon level, which doesn’t alleviate our need for importing petroleum 

but it does alleviate our need to import petroleum from the Middle 

East. I think that that is a noble endeavor that we should pursue. 

A couple of things while I’ve got just another moment here, 

things to look at in the farm bill to help us get there. We need a 

national strategic grain reserve, just as we have a national strategic petroleum reserve. That reserve should be not only for national food security but now national energy security, and for international famine relief. We need a national cellulosic reserve similar 

to, but apart from, the Conservation Reserve Program, to help 

farmers have the incentive to move to those new energy crops that 

we’re going to need in the future. And we need to retain and expand the energy title of the farm bill. 

Some other areas we need to look at. The tax incentives that are 

in place are very critical. We need some longer-term extensions of 

those so that we have more continuity for the people that are financing this new industry, and that would be for ethanol, biodiesel, 

and on a side issue, wind. The American Corn Growers has worked 

very hard for 6 or 7 years now on expanding wind understanding 

and application for farmers, because it’s also a part of this overall 

goal. 

We need to expand and extend the renewable fuel standard. I 

was very pleased to find yesterday that the President has abandoned his move to eliminate the ethanol import tariff. I think that 

he has made a good decision in abandoning that course of action. 

And we need to extend the ethanol import tariff because, if for no 

other reason, that tariff pays for the ethanol splash blend incentive 

that we have. 

Given that, I will yield the rest of my time to my friends down 

the table. 

The CHAIRMAN. All right. 

Mr. Terry, welcome. 

STATEMENT OF DAVID TERRY, GOVERNORS ETHANOL 

COALITION 

Mr. TERRY. Thank you, Mr. Chairman, Senators. I appreciate, on 

behalf of the Governors Ethanol Coalition, the opportunity to be 

22

here this morning. The coalition includes 37 Governors across the 

country, in all regions, from the coasts, and obviously, the center 

of the country as well. We focus on expanding ethanol production 

and use policies in the States to achieve those goals, to bring the 

benefits of ethanol from an environmental, economic, and security 

perspective to all regions of the Nation. 

I just want to take a few moments to summarize the Governors’ 

policy recommendations that were recently adopted by the Governors and released. The first among those is an expansion of the 

Renewable Fuels Standard to 12 billion gallons beginning in 2010, 

expanding on a Btu basis to 15 percent at 2015 and 25 percent of 

the transportation fuel base in 2025, equal to about 60 billion gallons. 

The second policy recommendation the Governors have adopted 

is establishing a timetable for infrastructure, E85 infrastructure, 

focusing in particular on regional approaches, perhaps providing 

competitive cost-shared incentives to the private sector and State 

and local governments, focused on metropolitan areas, expanding 

infrastructure in particular regions or metro areas that it makes 

the most sense. Also providing incentives for ethanol production, 

particularly cellulosic ethanol production, monetizing the current 

Renewable Fuels Standard cellulosic ethanol credit in particular. 

And, finally, providing elevated and stable funding for research 

and development and demonstration programs. In particular we 

cite the Department of Energy’s biomass R&D program; the 

genomics effort, also at the Department of Energy; the USDA program, the biomass research and development program. And expanded funding for infrastructure, some of the infrastructure policies that we have highlighted, we feel that’s a particularly important area. 

I would just like to thank, on behalf of the coalition, the Senators 

for support of these issues, both in the Energy Policy Act, but more 

recently in the CR as well, with regard to the loan guarantees, as 

was previously mentioned. Thank you. 

The CHAIRMAN. Thank you very much. 

Dr. Fraley, thank you for being here. 

STATEMENT OF DR. ROBERT FRALEY, EXECUTIVE VICE PRESIDENT AND CHIEF TECHNOLOGY OFFICER, MONSANTO COMPANY 

Dr. FRALEY. Mr. Chairman and the committee, it’s a great pleasure. 

As I sit here today, I just remind you that we are probably in 

the midst of the most remarkable technology revolution in the history of agriculture. Biotechnology will have the same impact on 

crop production, food production, as what we saw in the 1960’s 

with computers and electronics that have changed our world today. 

This technology promises to increase yields and productivity in 

very remarkable ways. 

Many of the crops across the United States are benefiting from 

these tools, but I think the advances, particularly in corn, have 

been very remarkable. We’re seeing tremendous yield gains that I 

think assure us of meeting both the opportunities that we see with 

corn for feed, for food, and for fuel. 

23

In fact, I fully expect that corn grain itself can provide 10 percent 

of the Nation’s gasoline requirements by 2015 and 40 percent of the 

Nation’s gasoline requirements by 2030. And I remind you that in 

addition to the grain, that corn is also, through its stems and 

leaves, the stover, an excellent source of biomass for cellulosic ethanol production. 

And to put this in context, when my dad was farming 40 years 

ago, the average yield for corn in this country was 75 bushels per 

acre. In 40 years, we’ve doubled that. The average today is 150 

bushels per acre. With these new technologies, based on knowledge 

of the corn genome and using molecular breeding tools, using biotechnology to introduce new genes into corn that can allow the corn 

plant to literally resist insects, resist weeds, provide drought tolerance, better fertilizer efficiency, we see the opportunity to double 

corn yields in the next 20 years, going from an average today of 

150 bushels per acre to as much as 300 bushels per acre by 2030. 

I think it’s important that there are lots of tools and technologies 

involved. There’s lots of research going on in companies and government labs. We work with institutions like Sandia and others to 

bring these tools together in an integrated way. And I remind you 

that it’s the knowledge, the sophistication, and the dedication of 

our farmers that make all of this possible as we bring these tools 

to the farm. 

We think these tools can not only increase yields, but they can 

allow for agriculture to have an even more benign effect in terms 

of its environmental impact by reducing the amounts of fuels and 

fertilizers and pesticides that are used for production. And of 

course by increasing farm productivity, we are increasing farmer 

profitability, and that is absolutely key. 

This country has had a great history of improving crop yield, as 

I said, having doubled corn yields in the last 40 years. Using these 

new tools that are available, I fully expect that we will double that 

again in the next 20. Thank you very much. 

The CHAIRMAN. Thank you very much. 

Mr. McCauley, we welcome you. Thank you. 

STATEMENT OF KEN McCAULEY, PRESIDENT, NATIONAL

CORN GROWERS ASSOCIATION 

Mr. MCCAULEY. Thank you, Mr. Chairman, members of the committee. It’s a privilege to be here today speaking for the National 

Corn Growers. 

I’m a farmer from White Cloud, KS. I represent the National 

Corn Growers Association as their president. It’s truly a privilege 

to be here today. 

I represent the producers who produce the feedstock for the ethanol industry today and the future. At NCGA we have a mission 

statement that says ‘‘to create and increase opportunities for corn 

growers.’’ That’s what we’re doing with the ethanol industry. I represent 33,000 dues-paying members and I represent 300,000 corn 

growers across the country. 

At NCGA, over 2 years ago, we had a vision of 15 billion bushels 

of corn produced going into 15 billion gallons of ethanol. Also, when 

we get through with the ethanol production, we still have 10 billion 

24

bushels of corn left to do the things we’re doing today, to satisfy 

our markets of food and feed in the livestock industry. 

NCGA would like to see the continuation of the ethanol incentives that we have today and also the ethanol tariff, just because 

we don’t feel like we’re mainstream yet. We feel like we will be. 

Also, research into potential cellulose feedstocks, such as corn stover and fiber, will be very vital to increasing the ethanol production in the future. 

Specifically, NCGA sees incremental acreage shifts from the 

cropland we have today and the advances in biotechnology, looking 

at the yield curves that we have today and in the future. These will 

all be key components in getting to the 15 billion bushels that 

we’re projecting. The National Corn Growers Association believes 

that we can continue to satisfy the markets we have today of food 

and feed, and look forward to the tremendous opportunities that we 

have for rural development, new farm income, and opportunities 

for young people in the addition of fuel to our mix of products that 

we produce for. 

I look forward to answering any questions that you have, and 

thank you for the opportunity to be here today. 

The CHAIRMAN. Thank you very much. 

Next is Toby Bostwick, who is the president of New Mexico Sorghum Producers. Thank you for being here. We’re glad to have 

New Mexico represented on this panel. 

STATEMENT OF TOBY BOSTWICK, PRESIDENT, NEW MEXICO 

SORGHUM PRODUCERS 

Mr. BOSTWICK. Thank you, Mr. Chairman and Senator Domenici, 

especially for all your work in the past in renewable energy. 

We typically raise 3,000 acres of sorghum on our family farming 

operation. I plant sorghum because New Mexico, like most of the 

Sorghum Belt, is in the semi-arid region of the United States. That 

means we receive less than 21 inches of rainfall a year. Sorghum 

is one of the most drought-tolerant crops in the country, and is an 

integral part of our farming system. 

The sorghum industry believes that New Mexico can be a leader 

in the renewable fuels industry despite its semi-arid climate. Because of its diverse plant genetics, sorghum can play an important 

role in the renewable fuels industry and the farming operations. 

There are several ways in which ethanol can be produced from 

sorghum: from starch sources, such as grain sorghum or corn; from 

sugar produced from sweet sorghum or sugarcane; or from new 

technologies like cellulosic ethanol, which uses biomass from many 

sources. Sorghum is truly unique in that it can play a role in all 

three of these different ethanol schemes, which distinguishes it 

from any other crop being researched for ethanol production. 

Regarding the starch industry, the Abengoa plant in Portales has 

used sorghum solely as its feedstock for the past 18 years. In fact, 

one bushel of sorghum is equivalent to one bushel of corn in ethanol production. Sweet sorghums are a crop that we could be using 

now, along with grain, to produce ethanol. 

China and India have robust programs that convert the highsugar juices extracted from sweet sorghum into ethanol. Though 

most people grow these specialty crops in sorghums for molasses, 

25

sweet sorghum can be grown from Florida to Virginia and would 

also grow well in New Mexico. 

Forage sorghums and sorghum-sudan grasses have the potential 

to produce a tremendous amount of biomass. Sorghums with the 

brown midrib trait could potentially convert more biomass to ethanol per acre, but more importantly, forage sorghums make good 

use of the limited natural resources—for instance water—while 

still producing high yields. 

DOE has stated that the ideal crop for ethanol would be droughttolerant, have low lignan, high cellulosic composition, require limited inputs, have a seed industry that can supply the needed seed, 

have known agronomics, and have a genome that will be 

sequenced. We raise that crop, Mr. Chairman. It’s sorghum. It 

meets these requirements and needs little modification to work in 

a robust, diverse ethanol industry. We just need a stronger commitment to research. 

In conclusion, my neighbors and I want to make sure that the 

renewable fuels industry does not pass by the semi-arid regions 

like New Mexico and the Sorghum Belt. We see the potential economic development that goes with the local ethanol plant with local 

feedstock. We want to be a part of the solution, and produce local 

ethanol that will benefit the State and give us real security for my 

family, my country, and for generations to come. Thank you. 

The CHAIRMAN. Thank you very much. 

Our final witness on this panel is Charles ‘‘Shorty’’ Whittington, 

who is with Integrity Biofuels, representing the American Trucking 

Association. Thank you for being here. 

STATEMENT OF CHARLES WHITTINGTON, PRESIDENT, 

GRAMMER INDUSTRIES, REPRESENTING THE AMERICAN 

TRUCKING ASSOCIATION 

Mr. WHITTINGTON. Thank you very much, Mr. Chairman and 

members of the committee, and thank you for inviting me to share 

the information on the subject of transportation of biofuels. My 

name is Charles ‘‘Shorty’’ Whittington. I’m the president of 

Grammer Industries, a for-hire trucking company headquartered in 

Grammer, IN, which is in central Indiana. I also own Integrity 

Biofuels, a 10 million gallon per year biodiesel production facility 

located in Morristown, IN. 

I’m here today as the vice-chairman of the American Trucking 

Association, and past chairman of the Agricultural and Food Transporters Conference, a component of the ATA. My remarks are directed to the production, distribution, and use of biodiesel, which 

may be used as an additive to extend our supply of diesel fuel. 

As the owner of both a biodiesel plant and a trucking company, 

I’m interested in promoting the use of biodiesel while making sure 

biodiesel does not create operational problems for the end user. The 

increased voluntary use of biodiesel is an acceptable means to extend the supply of diesel fuel, reduce diesel particulate emissions, 

and lessen our dependence on foreign sources of oil. 

As the largest consumer of diesel fuel, however, the trucking industry is concerned over the absence of federally-enforced biodiesel 

quality standards. I can tell you firsthand that while biodiesel is 

relatively simple to manufacture, high quality biodiesel is very difVerDate 0ct 09 2002 14:01 Apr 16, 2007 Jkt 034568 PO 11016 Frm 00029 Fmt 6633 Sfmt 6633 H:\DOCS\34568.TXT SENERGY1 PsN: RSMIT
26

ficult to produce consistently. States are not doing an adequate job 

of ensuring biodiesel quality. For this reason, any program to expand the use of biodiesel must include a Federal component that 

ensures that only high-quality fuel enters the marketplace. 

The trucking industry is also concerned with the growing proliferation of State-implemented renewable fuel mandates which distort the market, limit competition, and result in higher cost to consumers. A Federal approach to increased biodiesel use is far superior to a patchwork quilt of State boutique biodiesel mandates. 

While the trucking industry supports the use of biodiesel as a 

means to extend the diesel supply, we remain concerned over the 

higher costs associated with biodiesel use and operational challenges that biodiesel blends of more than 5 percent create for the 

trucking industry. These include cold weather performance and 

lower fuel economy. 

In summary, we believe that the Federal Government has a role 

to play in ensuring the growth of the biodiesel industry: first, to ensure that all biodiesel entering the marketplace meets acceptable 

minimal quality standards; second, ensure that biodiesel is used as 

part of a single national fuel standard, preempting State boutique 

biodiesel mandates; third, enact appropriate financial incentives to 

ensure that the cost of using biodiesel is comparable to the cost of 

using petroleum-based diesel, and that these incentives not reduce 

the amount of money needed to support and expand the Nation’s 

highway infrastructure; and, last, ensure that biodiesel blends are 

appropriately labeled so that the end user may make an informed 

decision on usage. 

Thank you again for the invitation to attend today’s conference 

and I’ll be happy to respond to any questions. Thank you very 

much. 

The CHAIRMAN. Thank you very much. Let me go ahead with 

Senator Domenici and then Senator Craig, and we’ll take as many 

questions as people have here. 

Senator DOMENICI. Thank you, Mr. Chairman. I’ll try to be brief. 

Mr. Whittington. 

Mr. WHITTINGTON. Yes, sir. 

Senator DOMENICI. How does the choice of an energy crop, 

whether it’s corn or switchgrass or wood chips, for example, affect 

the environmental impact of ethanol production? 

Mr. WHITTINGTON. The new technology that’s in the marketplace 

today is going to change that, the results of that question, on a 

daily basis, I believe. If you look at the technology in the ethanol 

industry today versus 5 years ago, it has changed rapidly, and the 

conversion tables are much greater now than what they used to be. 

The use of cellulose and switchgrass and all those things I think 

is a good possibility as we move forward in the future. But once 

again, the cost compared to—it’s sad to say, the American people 

are interested in what the cost of the products that they use on a 

daily basis might be, and until we come up with some new energy 

efficiency conversions of some of these things, it will be some time 

before we get to that degree. 

Senator DOMENICI. It seems that there is a real need for greater 

quality control in biodiesel. 

27

Mr. WHITTINGTON. Very much so. That’s a real problem in the industry that we have today. The biodiesel industry is the small baby 

in this equation today. Ethanol has approximately 18 to 20 years 

on the biodiesel industry. Up until a year ago we didn’t have a Federal standard. 

In 2004 there was only 25 million gallons produced on a yearly 

basis, with about 50 producers. Today, in 2006, that number has 

jumped to almost 175 to 200 million, depending on what you look 

at, and the capability out there to produce biodiesel today has already reached 800 million gallons. But we don’t have anybody 

checking what the quality standards are in certain locations, which 

is a real problem to a trucking industry that can consume over 700 

million gallons of biodiesel. But if the trucks won’t run on it, why 

buy it? 

Senator DOMENICI. Are loan guarantees more appropriate for the 

cellulose ethanol refineries? 

Mr. WHITTINGTON. I would say that loan guarantees are important, but we in this country have been very competitive and very, 

very active in gathering money to make products that make other 

people money. I think that we have to be careful of how we spend 

the money. Your group in the Senate has been very good in appropriating money, but as we take that money and put it down the 

line, having different agencies to distribute that money in the way 

that they see that you want it spent has been a real problem in 

the biodiesel, industry as we look at it today. 

Senator DOMENICI. Could I ask our New Mexico witness these 

questions, if he has answers, and then I’ll yield to Senator Craig. 

Some analysts predict a glut in the ethanol market, saying that 

we have increased biorefinery capacity too quickly. Do you believe 

this is the case? 

Mr. BOSTWICK. No, sir, I don’t I think there will be demand 

throughout the next 10 years. I know they’re saying in 2008, 2009 

that glut will happen, but I don’t believe that the production will 

meet the demands. 

Senator DOMENICI. If we are headed for a glut in the ethanol 

market, could we alleviate the problem by increasing the percent 

of the ethanol blended into gasoline? 

Mr. BOSTWICK. You bet. I truly believe if we went to an E15 or 

even an E20 mark, I don’t think infrastructure-wise or elsewhere 

there would be any problems. 

Senator DOMENICI. Is this projected glut truly national, or is it 

regional? In other words, could we address this problem by building 

infrastructure to serve additional regions of the country rather 

than considering it to be national? 

Mr. BOSTWICK. Yes, sir, I think we could increase our infrastructure to supply additional regions with ethanol, and that would be 

a big bonus to the problem. 

Senator DOMENICI. Well, I want to say to you, from a New Mexico standpoint, because we have a drought kind of climate, your 

sorghum development is much welcomed. We hope to work with 

you, and we hope that it can do all the things you are hoping it 

will do, because of its condition, which has changed drastically. 

That is, the product has changed by working with the university 

and others who are working in that field. I thank you for that. 

28

Mr. BOSTWICK. Thank you, Senator Domenici. 

Senator DOMENICI. I think you wanted to go, Senator Craig. 

Senator CRAIG. Gentlemen, thank you all for participating, and 

the insight and thoughts you bring to this committee. So we have gone from $2.06 corn to, let’s see, $4.08 now a bushel? And my cowboys are screaming, but Monsanto is going to fix 

that. 

And how long will it take, and what is our trade deficit going to 

be when we diminish the export of our No. 1 export commodity, 

corn, and blend it all or consume it largely in the domestic market 

of both ethanol and the human food chain? Corn producers, talk to 

us about that. We’re about to write a farm bill, and there’s going 

to be great pressure from other interests to limit your use of corn 

in the ethanol market. 

Mr. MITCHELL. It’s an excellent question, Senator. Corn drives 

the price of almost all of the other commodities. Corn has been 

underpriced for way too long. Corn farmers have been losing money 

on every bushel they have produced for the last decade. 

In the area that we’re in now it’s getting close to our cost of production. Prior to this crop year, which saw a 26 percent increase 

in the farmer’s expense just for energy, prior to that, the cost of 

raising corn was around $3.20, so we’re in the cost of production 

area. This is going to present some challenges for the livestock industry. 

That’s why in this next farm bill we should probably work toward establishing a floor price at about the levels we’re looking at 

now, to help us on the downside of prices for corn farmers and 

other farmers, but also establish a national strategic grain reserve, 

to have the reserve in place to help damper what could be $8, $9, 

and $10 corn. But the other silver lining here is, as I mentioned, 

corn has been dramatically underpriced for way too long, and I 

think at $3.50 and $4 corn there’s still profitability in the ethanol 

industry for corn-based ethanol, but it also gives more incentive to 

move toward cellulosic ethanol production. 

Senator CRAIG. Good points. Ken. 

Dr. FRALEY. I’d just like to make the point that the United States 

enjoys this position because of many years of investments by universities and the Government in the basic technology that is now 

opening the door for tremendous and vast improvements in crop 

productivity. We are certainly sensitive to the pricing issues that 

you talked about, and I think the key is to be able to drive yields, 

as we both are selective, as we expand the acreage of the crop, but 

also take full advantage of the technology that is now possible, that 

is driving and fueling the productivity of our production acres. 

Senator CRAIG. Thank you. 

Mr. MCCAULEY. Thank you, Senator. We at National Corn Growers feel that the market prices will prevail if we let the market 

work. The livestock industry understands cycles. They understand 

the way this high-priced corn will usually lead to low-priced corn, 

and how the corn prices, feed prices, fit into their cycles. But one 

thing that we really have looked at hard is the trend line yields 

and the accelerated trend line yields that we have today, due to the 

seed companies and the biotechnology, that have really improved 

our yields. 

29

One other thing that we really feel you can’t measure is the profitability out there on the farm, how that gets your attention. If the 

farmer, looking at $1.50 corn and higher government payments, 

just really didn’t get with it, buy the high quality seed, get out of 

bed in the morning, really get after it. I guarantee you the wives 

of the country are looking at this price and saying, ‘‘Let’s get 

going,’’ because it’s a real factor when you start looking at the profitability of the farm. 

So we think those factors really will make a difference and we 

can produce enough corn for the export market as well. Because if 

you look at the 5 billion bushel number going into 15 billion gallons, you still have more corn than we had to deal with even a year 

ago. So that’s really important to remember when you hear the 

livestock industry talking. 

And one thing that’s really important at this stage of the game 

is, we now do something to affect the producer’s decision for this 

year’s crop, because the prices are calling and showing the profit 

potential for corn to be grown. We think that’s very important. 

Senator CRAIG. Yes? 

Mr. WHITTINGTON. Senator, I grew up on a farm. We do farm 

also, besides having a trucking company. And I think that one of 

the things, as we look at value added for an agricultural commodity, is we build wealth throughout the United States on value 

added from a production crop. The other thing is that some of the 

offal of the ethanol plant can be used to produce biodiesel. Some 

of the offal of an ethanol plant can be used to cheapen the ration 

for a cattle feed operation. 

And as we look at other opportunities of some of the waste products coming off of these renewable energy places, it certainly enhances and reduces some costs. In the pharmaceutical industry, the 

glycerine price alone has dropped from 90 cents a pound down to 

20 cents a pound because of the availability of the waste coming 

out of these things. So we have a really neat circle going on out 

here if it’s handled in the right way. 

Senator CRAIG. Well, I don’t disagree with any of you. I grew up 

farming and ranching, although cattle was our dominant income. 

And I do agree markets level out and profitability is a phenomenal 

incentive out on the farm or ranch to do things better, differently, 

and even get greater levels of production. So I do believe it will 

level out and adjust accordingly, and we ought not get too busy 

about fouling up the marketplace. Some would argue we already 

have by the incentives we’re creating that are making these 

changes. At the same time, that kind of diversity is important. 

Thank you all. 

Senator DOMENICI. Mr. Chairman, what is your pleasure regarding the schedule? 

The CHAIRMAN. Well, I was going to ask these folks two or three 

questions and then bring on the third and final panel for this 

morning, and hear from them and ask questions to the extent we 

have questions, and then adjourn for lunch and come back at 

maybe 2:15 or so. So we’re going to have one more panel right now 

after I ask this panel some questions, and then have three panels 

this afternoon. 

30

Senator DOMENICI. Well, Mr. Chairman, I want to try to be with 

you on all of them, so I would like to ask you if I could make an 

observation and then leave for the rest of this panel and come back 

for the next one. 

The CHAIRMAN. Go right ahead. 

Senator DOMENICI. I want to say to all of you, starting back 

about 5 or 6 years ago, when we started a little tiny bit of a move 

toward ethanol, and then it grew each year and it got pretty much 

a big, big swell, it seemed to me that for one Senator and a number 

of Governors that I read about, they had focused their attention on 

trying to build back some life, economic life, into their rural communities. 

If you know my State, you have Albuquerque and the Rio Grande 

Valley with another couple of cities, and you have the State split 

by that, and the rest of it is rural New Mexico like you’ve never 

seen it, long distances between cities. You can’t get industry started, and you just work like the devil to get one or two new job-producing companies. 

But it’s quite obvious that while we’re not the best agricultural 

State, one of the solutions is that this rural part of my State, much 

less every rural State, has a chance of capitalizing on the new economic regeneration that’s going to come from ethanol and related 

products being grown out on the rural plains and in the rural areas 

in my State and other rural areas. I believe it is the second crop 

which will revitalize rural America, if those looking at it and 

watching it will get with it and watch it and participate. 

I don’t want to waste your time. Our chairman is moving rapidly, 

and I share his concern. But I am quite sure from listening to your 

testimony that subject to your own conditions, you would agree 

with what I have said, that ethanol, methanol, diesel, and bio can 

be the regeneration of rural America in ways we could never do by 

economic development, EDA, and farm programs that tried to generate economic life into rural America. 

That’s what I think of it, and I think we need to help, at the origin, with loan guarantees to get technology and new plants built, 

and we’ll see within 10 years a rather dramatic change. Thank you 

for giving me this time, and thank you for letting me bore you. 

Dr. FRALEY. Senator, I would very much echo your comments. 

I’ve been in the ag industry for 26 years, and I travel extensively 

across the country, speaking with farmers, and I would tell you 

that this has probably been the best input to ag policy that these 

growers have ever seen. 

The CHAIRMAN. Let me just follow up on that one and ask one 

question. Then we’ll move to the next panel. 

But, Dr. Fraley, obviously we have a lot of people out there growing corn. We have now finally come to the realization that we can 

use this corn to produce fuel, that as a feedstock it is very valuable, 

and you have indicated your company is in the process of substantially improving the productivity per acre of corn, and that’s all 

very positive. 

It strikes me, though, that long-term there may be other crops 

that are more productive from the perspective of being a feedstock 

for biofuels, and that the productivity per acre of those other crops 

will exceed the productivity per acre of corn, even if your company 

31

is able to double the productivity of corn per acre. Do you agree 

with that, or disagree, or what are your thoughts? 

Dr. FRALEY. I think all of us in the industry share the view that 

the more biofuels that are available, the better this country and all 

of our consumers are served. 

What I believe as a scientist is that we will see, ultimately, the 

advances in the enzymes that enable the cellulosic sources. We will 

put in place the types of transportation, distribution, and storage 

infrastructure to take advantage of those other alternative sources 

of cellulose. 

I think realistically, though, we all see that in the next 10 to 15 

years the bulk of that need and opportunity will need to be addressed by corn and grain sorghums and other crops. And so I 

think we see this as being the start, the priming of the pump that 

enables the renewable fuel industry to really get off the ground and 

bring with it the necessary changes of infrastructure. 

You know, my view is that we will reach the 10 percent ethanol 

goal with the capabilities that are in place today. The real question 

becomes, where do we go beyond that, both in terms of the next 

generation of cellulosics, but also the infrastructural investments 

that it will take to ensure that we have the automotive engines 

that can take advantage of these renewable fuels, as well as the 

systems of tanks and pumps and distribution to ensure that we 

have access across the country. 

The CHAIRMAN. Well, thank you all very much. We have been informed that there are going to be three votes starting at 11:45, 

which means that we need to go ahead and move to the next panel 

and hear from them, and then hopefully we will have some time 

for a few questions of them before we have to leave for those votes. 

So thank you all very much. 

Thank you all for being here. Let me introduce this panel, and 

then we’ll go ahead and hear from each of you. 

Chris Standlee, thank you for being here. He is vice president of 

Abengoa Biotechnologies, which has a plant in our State—we’re 

very glad to have them there—and I understand also has a demonstration cellulosic ethanol plant under construction in Spain. So 

we’re glad to have you here. 

Mr. STANDLEE. Thank you, Senator. 

The CHAIRMAN. John Melo of Amyris, thank you for being here, 

another industry leader in cellulosic ethanol production. Mr. John 

Pierce with DuPont. Of course DuPont has been working in partnership with our Department of Energy to do a great many things 

in this area. We appreciate your willingness to testify. Jeff 

Passmore is the executive vice president of Iogen. Thank you for 

being here. Mr. Niles Hushka is with KLJ Solutions, which plans 

and develops renewable fuels plants in North Dakota. Thank you 

for being here. And Lori Perine is with the American Forest and 

Paper Association, which supports private-public investments in 

forest product biorefineries. Thank you very much. 

Why don’t each of you give us 2 or 3 minutes of your views as 

to what we need to be doing by way of Federal policy in this area. 

We appreciate your willingness to testify. 

32

STATEMENT OF CHRIS STANDLEE, EXECUTIVE VICE 

PRESIDENT, ABENGOA BIOTECHNOLOGIES 

Mr. STANDLEE. Thank you very much, Mr. Chairman. My name 

is Chris Standlee. As you indicated, I am the executive vice president of Abengoa Bioenergy. We appreciate the opportunity to be 

here today. 

We are one of the world’s largest producers of ethanol, with six 

operating grain ethanol facilities in both the United States and Europe, two more under construction, and several more in a development stage. Our Portales plant has been producing starch-based 

ethanol for 18 years, and we’re very proud of our renewable fuels 

economic footprint in the State of New Mexico. 

More importantly for the purposes of this committee, Abengoa 

Bioenergy is a world leader in research and development related to 

renewable fuels, and particularly ethanol. For example, the company has two ongoing cost share projects with the Department of 

Energy, which were competitively awarded projects and have resulted in our company committing to spend over $150 million on 

research and development of ethanol technologies, particularly focusing on cellulosic ethanol technologies. 

We have almost completed construction of a cellulosic pilot plant 

in Nebraska, as well as simultaneously working on and almost 

completing construction of the world’s first commercial demonstration cellulosic plant in Salamanca, Spain. Those completions are 

expected by midyear. Actually the plant in Nebraska should be finished within the next 2 months. 

Additionally, we have submitted an application most recently in 

response to the Department of Energy’s demonstration cellulosic 

plant solicitation. We have high hopes for that grant, and believe 

that the funding of those grants is one of the most important steps 

that Congress can take to support this cellulosic effort within the 

States. 

We’ve heard a lot of talk about loan guarantees, and we certainly 

appreciate the efforts of this committee and of the Congress on loan 

guarantees. We think they’re an excellent tool to expand the implementation of technology after some level of development. But we 

believe that the funding of the grants such as the DOE’s cellulosic 

demonstration plant projects are critical initial steps to establish 

that technology. 

Additionally, our company encourages this committee to ensure 

funding for the programs that this committee has already authorized, such as the prior Energy Policy Act; certainly, as I mentioned, 

the DOE’s cellulosic demonstration plants and loan guarantee programs. I think, also, a key priority has to be extending the existing 

ethanol tax credits, and providing independent incentives to develop both ethanol from the standpoint of promoting the development of cellulosic feedstocks and promoting the development of cellulosic production. 

Thanks for the opportunity. 

The CHAIRMAN. Thank you very much. 

Mr. Melo. 

33

STATEMENT OF JOHN MELO, CHIEF EXECUTIVE, AMYRIS 

BIOTECHNOLOGIES 

Mr. MELO. Good morning, Mr. Chairman, and thank you for the 

opportunity. My name is John Melo, and I am the chief executive 

of Amyris Biotechnologies. Climate change and energy security are 

two of the most important issues facing our country and the world. 

We believe that innovation can help to address these problems and 

that our company can play a role in these efforts. 

Innovation often comes from very unpredictable places. Until recently, Amyris was completely dedicated to solving another significant global problem, the malaria problem that plagues many of the 

children in the world today. With funds from the Bill and Melinda 

Gates Foundation, we have spent the past several years developing 

technology to reduce the cost of the world’s most effective malaria 

drug by an order of magnitude, so that it can be made available 

and affordable to those in the developing world that need it the 

most. Based on our success to date, we expect this drug will be 

available to these individuals in 2010. 

The same innovation which enables this low-cost antimalarial is 

now being applied to create high-performance, low-cost biofuels 

that could significantly reduce our petroleum consumption. While 

corn ethanol and conventional biodiesel have provided an important and necessary start for biofuels in the United States, neither 

is sufficient to adequately address climate change and energy security. The global supply and demand challenges that must be overcome to meaningfully impact climate change and energy security 

must and can be addressed through innovation in two areas. 

Feedstock innovation will increase the potential scale, decrease 

the cost, and improve the greenhouse gas benefit of biofuels. Product innovation that results in improved biofuel properties will increase customer demand and largely eliminate the need for infrastructure investments that are necessitated by ethanol and conventional biodiesel. Innovation in both areas can dramatically and synergistically decrease soil, water, and air pollution while improving 

energy security. 

Amyris is developing a gasoline substitute that contains more energy than ethanol, will result in lower-cost-and-less-pollution 

biofuel blends, and is fully compatible with today’s infrastructure 

in our petroleum system and also with today’s vehicles. We are also 

developing a diesel substitute that can achieve lower costs and 

much greater scale than vegetable-oil-based biodiesels. Our next 

generation biodiesel is inherently stable in cold temperatures and 

does not break down during storage and transport. 

Both our gasoline substitute and our diesel substitute will be 

made from the same feedstocks and production plants that are 

used today to make ethanol, and thus add value to the investments 

that have been made by America’s farm community. I was so 

struck by the potential of Amyris’s technology that I left an executive position in the oil industry, where I was leader of one of the 

world’s largest petroleum marketing, trading, and transport businesses. 

The cost and risk for America to achieve any penetration target 

for renewables beyond 2010 will be significantly reduced if alternative biodiesels and feedstocks are allowed to compete fairly with 

34

corn ethanol and conventional biodiesel. Existing incentives, such 

as State mandates and Federal tax credits, unfairly advantage ethanol and conventional biodiesel solely because they happen to be 

first to market. As such, existing incentives actually make it more 

difficult for better alternatives to emerge in a timely manner. 

In order to realize the potential benefits of new biofuels technologies, Congress must ensure that mandates or financial incentives follow the model that EPA established in their RFS rulemaking by focusing on desired attributes and performance standards as opposed to chemical formulas. Furthermore, it’s critical 

that mandates or incentives established by Congress be of sufficient duration to encourage private sector investment into research 

and development. 

Finally, we recommend that incentives be inversely proportional 

to global oil prices. In such an environment, we are confident that 

the innovations in feedstock and product being carried out in our 

labs and many others will help America achieve energy security. 

My last thought for you is, remember that looking at cellulosic 

ethanol and calling it under the same name is like calling a computer the Microsoft computer. We have feedstocks and we have 

products, and we have a significant opportunity in the next 2 to 3 

years to have significantly new products that actually use all the 

current farm infrastructure, ethanol infrastructure, and petroleum 

infrastructure to really make a difference in the environment and 

the adoption of biofuels throughout our country and the world. 

The CHAIRMAN. Thank you very much. 

Mr. Pierce. 

STATEMENT OF JOHN PIERCE, VICE PRESIDENT OF 

RESEARCH AND DEVELOPMENT, DUPONT 

Mr. PIERCE. Thank you, Mr. Chairman. My name is John Pierce, 

and I lead the group of researchers at DuPont who are actively engaged in bringing high-performance biofuels technology to the marketplace. We are leveraging our technology and science across the 

entire biofuels value chains, from almost 150 pioneer high fermentable starch corn varieties that are sold into ethanol production 

markets, to advanced cellulosic technology primarily focused on 

corn stover presently, as well as next generation biofuels such as 

biobutanol. 

We had the pleasure of hosting the President in Wilmington last 

week, and I would like to share a few thoughts I told him while 

he was there. We first demonstrated and developed our biotechnology capabilities and know-how by commercializing a highend polymer called Sorona from cost-competitive corn-based feedstock, and we won the Presidential Green Chemistry Award for 

that effort. There are many similarities to this type of effort in the 

production of biofuels, and we are taking that metabolic engineering expertise gained from developing this feedstock and applying it 

to biofuels. 

Working with the DOE and others, we have developed a cellulosic ethanol technology that employs corn stover, using the corn 

plant rather than the grain to produce ethanol, and we hope to 

demonstrate that technology at commercial scale soon, with the 

Broin Companies, under a cellulosic biorefinery grant from DOE. 

35

With this Broin partnership and assistance from the DOE, we plan 

to build and operate an economical commercial-scale cellulosic ethanol facility in a few short years. 

We’re also developing a next generation, high-performance 

biofuel in partnership with BP, called biobutanol. Biobutanol is one 

of what I believe, as the previous speaker mentioned, are a number 

of future fuels that will come to bear that are renewable and have 

interesting properties for use. 

Biobutanol itself is fully compatible with ethanol, comes from the 

same feedstocks, has some significant performance benefits either 

as a cold blend with ethanol or on its own. It has a higher energy 

density, better mileage, keeps fuel volatility low, and butanol-gasoline blends can be distributed using existing gasoline infrastructure, including pipelines. It improves the properties of ethanol-gasoline blends. 

Now, to ensure companies like DuPont and Amyris continue to 

dedicate the resources to bring these technologies and products to 

market, I’d like to echo the comments of the previous speaker and 

encourage that incentives be scaled to desired performance, such as 

lower carbon footprint or higher energy density, and that you also 

keep in mind that this matter of innovation and bringing multiple 

technologies and integrated science to bear is not some linear process that stops with research and then moves to development and 

then moves to commercialization. These occur all the time, right up 

to the end. There is continuing innovation right at the start of this 

biotechnology revolution, and R&D funds need to continue to be 

made available on a matching grant basis to develop those technologies to commercial reality. 

With that, I would like to thank you for the opportunity to participate, and look forward to discussion. 

The CHAIRMAN. Thank you very much. 

Mr. Passmore, thank you for being here. 

STATEMENT OF JEFF PASSMORE, EXECUTIVE VICE 

PRESIDENT, IOGEN 

Mr. PASSMORE. Thank you, Mr. Chairman, and thank you so 

much for the invitation. It’s a privilege to be here. 

As I was thinking, looking over the panel this morning at all of 

the distinguished supporters of cellulose ethanol, I was wondering 

what I might be able to say that would be useful, and I thought 

I would just tell a little bit of the Iogen story, starting with the fact 

that yesterday, when I drove to the airport, I drove in my Chevy 

Impala, cellulose-powered, E85. We have a whole fleet of 12 cellulose E85 vehicles. We also power two Government of Canada 

fleets, the Natural Resources and the Agriculture Departments. 

The reason I’m telling you this story, Chairman, is that we have 

been producing cellulose ethanol from our demonstration plant for 

the last 3 years, started in the spring of 2004. We have spent about 

$40 million on that demo plant, and we’re ready to go. We’re ready 

to go commercial. We’ve got 320-some farmers signed up for straw 

contracts for a facility in southeast Idaho, and in fact we have 

taken the options on the land there. 

So what’s the problem? Why aren’t we just getting going, if we’re 

that close to getting going? Well, there’s three legs to this stool. 

36

One of course is the technology leg. The other two legs are financing and government. 

So the technology leg, in our estimation, is ready to go. The financing leg, you cannot get lenders, if you’re imagining doing a 

conventional project finance with a combination of equity and debt. 

We have the equity players at the table. You probably know that 

our partners are Shell and Goldman Sachs. But if you’re going to 

do debt financing, lenders will not take the technology risk. Lenders simply do not lend to technology that has not been built at that 

scale before, unless that debt is guaranteed by a strong credit rating, such as the Government. And that’s where the Government 

role comes in. 

So you have the technology leg, the financing leg. You’re going 

to do the equity, you’re going to do the debt. Well, the Government’s role is to guarantee the debt financing, and indeed, in 

EPAct 2005, this committee recognized that was a role for government. You recognized that market failure and put in place loan 

guarantees for emerging technologies, not just cellulose ethanol 

but, the next generation of nuclear and coal-to-liquids and so on. 

And so as part of that process, the DOE issued, in addition to the 

grant applications that the previous speakers have talked about, 

the loan guarantee preapplications. 

And what I would urge this committee, going forward, is not to 

lose that momentum. You have an important oversight role to play 

to make sure that commercialization doesn’t get delayed. 

The other comment I would make in terms of a possible role for 

this committee is that beyond initial commercialization there needs 

to be assurances in the market, some type of market signal that 

there’s going to be a significant market share there or a market for 

cellulose ethanol. 

Let me explain what I mean by that. I think we’ve heard from 

previous speakers that there’s a huge potential for corn; and indeed, corn could potentially meet the E10 market. You could get 15 

billion gallons from corn, and 15 billion gallons would be 100 percent market penetration of E10 across the United States. So the 

committee needs to be thinking about increasing the RFS too, 

whether it’s an E20 or an E30, or if all vehicles can take E85, and 

you gradually, gradually ratchet it up. But the market is going to 

want to know that there’s going to be an opportunity there to 

achieve that, whether it’s a 30 billion or 35 billion gallon target of 

the President’s or some other target. 

And I guess my last comment would be, please, Chairman, there 

are three flights a day from Dulles to Ottawa. If your committee 

wants to come up and tour a functioning demonstration plant and 

see these 1,000-pound square bales of wheat straw coming in 

through the facility, we invite you to come for a tour. 

I would agree with the previous two speakers. Abengoa commented on funds that the committee has already authorized. I certainly echo that. And I also want to echo the comment from DuPont that this is not a linear process. People say, ‘‘Well, how much 

more research needs to be done?’’ We’re ready to go commercial 

now, but we’ll never stop doing research. Research is—listen, we’ve 

all been driving cars since the early 1900’s but we still are improving vehicle technology, so it’s not a linear process. 

37

The CHAIRMAN. Thank you very much. 

Mr. Hushka. 

STATEMENT OF NILES HUSHKA, CEO, KLJ SOLUTIONS 

Mr. HUSHKA. I thank you. I lead a regional firm that envisions, 

engineers, and constructs conventional alternative-energy projects, 

facilities that provide financial returns acceptable to investors. We 

also design sustainable-value chains to produce biofuels. Today’s 

emerging biofuels technologies can spur energy independence, but 

parallel system improvements at the macro level of the value chain 

are required. 

Development processes require 12 to 18 months of narrowing options as we customize input streams and output markets. Investors 

require that risks be tolerable, and we create investor security 

through production guarantees. A 50 million gallon a year plant 

must produce 50 million gallons. Each new process integration 

needs a guarantor, an entity that will invest continuously until 

guaranteed delivery rates are met. Underwriting risk is required. 

Ensuring input streams is difficult today because farmers have 

many options. Our average farmer is near 60, and does not see the 

same opportunity that I do to change his business model, to begin 

again to pay off the new equipment for the new crops. High-energy 

grasses require 2 to 3 years to mature, which is a long time to expect no revenue in a very hot farm market. It is difficult to build 

processing plants with no assurance of input crops. Farmers will 

require emerging technology to supply input markets. 

In the heartland, our transportation systems are historically focused on moving low-priced, bulky commodities. These systems 

were designed to move raw commodities whenever the railroad had 

capacity. Products are not processed here generally, just grown. 

Today we are in the midst of a crisis, and the bulk commodities are 

now locally converted to high-dollar consumables requiring just-intime delivery. We are asking overloaded transportation systems to 

double their output, to first ship the liquid portion, the biofuels, 

and then the solids, the animal feed. New transportation corridors 

using emerging technologies are essential. 

Our public focus is primarily product output, but project feasibility always lies with secondary product utilization. We are presented with the opportunity to create a very new system of both 

efficient food and a biofuel production model—America’s energy island, where livestock are fed oilseed meals, adjacent to vertically 

integrated crushing and biofuels plants. Manure from livestock will 

be biodigested, creating methane, firing boilers to firm wind energy 

and produce heat for the biofuels utilization. 

Utilizing waste, heat, and captured CO2, we can grow oil-producing algae and send that back through our crushers to produce 

biodiesel. Revenue streams from secondary plant outputs ensure 

sustainable biofuel markets. Emphasis must be placed on emerging 

technologies for the secondary product market, also. 

Emerging technologies at the primary plant level create significant stresses within existing markets. Groups that utilize existing 

technologies are today working to eliminate emerging technologies 

from the market through legislative controls. The Government 

should not select winning technologies, but rather encourage innoVerDate 0ct 09 2002 14:01 Apr 16, 2007 Jkt 034568 PO 11016 Frm 00041 Fmt 6633 Sfmt 6633 H:\DOCS\34568.TXT SENERGY1 PsN: RSMIT
38

vation. Moving forward, we must revamp inefficient systems as we 

integrate emerging technologies into America’s energy island. 

Thank you. 

The CHAIRMAN. Thank you very much. 

Ms. Perine, you’re the final witness on this panel. Please go 

ahead. 

STATEMENT OF LORI PERINE, EXECUTIVE DIRECTOR, AGENDA 2020 TECHNOLOGY ALLIANCE, AMERICAN FOREST AND 

PAPER ASSOCIATION 

Ms. PERINE. Thank you very much, Mr. Chairman, and thank 

you to the other members of the committee as well. As you know, 

I’m Lori Perine. I’m the executive director of the Agenda 2020 

Technology Alliance with the forest products industry. This is an 

alliance of government and academia with the industry for collaborative and precompetitive research and development. 

I am here because the forest products industry has an economic 

and strategic commitment to playing a strong role in establishing 

a domestic production capacity for renewable fuels. We can do this 

by transforming our existing manufacturing infrastructure into 

what we like to call integrated forest products biorefineries. 

These integrated biorefineries are created by incorporating new 

emerging technologies into our existing infrastructure, thereby establishing geographically distributed facilities that can process both 

forest and agricultural materials and produce green liquid transportation fuels, as well as other bioenergy, such as renewable 

power, and has the potential to produce chemicals and other bioproducts as well. If these technologies are fully realized, there are 

significant energy and environmental benefits as well as economic 

benefits for the industry and for the Nation as a whole. 

We are conservatively estimating at the moment that the industry has the potential to produce up to 2 billion gallons of cellulosic 

ethanol each year, another 10 billion gallons of other renewable 

transportation fuels, and some coproduction of 20,000 megawatts of 

renewable power. This is possible using the wood that we already 

use in production of our pulp and paper products and our wood 

products, so it’s not inconceivable to think that the actual production capacity of this industry could be double or even triple the estimates that I’ve given you here today. 

Now, the technologies that we have been using are a combination 

of some of the technologies that you have heard from some of the 

previous speakers on the panel. Like our colleagues, who are looking at corn stover and switchgrass, we have a fermentation platform or a fermentation pathway that we are pursuing as well. 

This involves us taking the wood chips that would normally go 

into pulp and paper manufacturing, actually processing those first 

to pull out a material called hemicellulose. That is a complex sugar 

that can then be fermented into fuel-grade ethanol. But what that 

does is it then allows us to take those extracted chips and put 

those back into the manufacturing process, and so we’re getting 

two very good products for the price of one, ethanol and pulp and 

paper out of the same batch of chips. 

That’s a technology set that we are actually developing along 

with CleanTech Partners in Wisconsin, a couple of enzyme compaVerDate 0ct 09 2002 14:01 Apr 16, 2007 Jkt 034568 PO 11016 Frm 00042 Fmt 6633 Sfmt 6633 H:\DOCS\34568.TXT SENERGY1 PsN: RSMIT
39

nies, the national labs, with support from the Department of Energy. We would like to see more of those types of technologies in 

development, because they will help not only the forest products industry but our agricultural colleagues as well. 

A second technology area that we’re very strong in is gasification. 

And you’ve heard quite a bit about gasification from some of the 

other panels, I’m sure. In our case we’re looking at gasifying both 

residuals and waste materials from our mills, the idea being that 

we’re trying to create new value out of materials that previously 

have had no economic value. 

In doing that, we’re finding that we have a synthetic gas that 

can provide a variety of products, some of them in use in transportation markets, such as converting the syngas through a FischerTropsch process to motor gasoline, distillate fuel, or waxes. We can 

also be using techniques to create ethanol, methanol, dimethyl 

ether, that can be used to produce diesel or LPG, or going into production of synthetic natural gas and supporting other applications 

as well. 

What is key for us is making sure that there is continued and 

sustained funding for the research and development, and demonstration, in particular, that is needed to make sure that these 

technologies actually come into use. But also important for us is 

the fact that we need to understand—and it’s important to understand—that the biomass resources that we’re all talking about here 

today actually have competing uses. 

That is all the more true in the forest products industry, where 

the very wood that we’re looking at for renewable fuel production 

is going into production of our pulp and paper, wood and composite 

products. Thus, we are hoping that Congress will work with us to 

find market-based ways to promote biofuels and biofuel conversion, 

but at the same time make sure that wood and other biomass materials are not drawn into biofuel markets at the disadvantage of 

the existing manufacturing industry. It’s actually rather ironic, because this potential that I have outlined for you today is not possible unless we’ve got the existing manufacturing infrastructure in 

place. 

So I thank you, Mr. Chairman, for this opportunity to speak. 

The CHAIRMAN. Thank you. Thank you very much. 

We unfortunately have three votes starting up, we’re told, pretty 

much right away. So let me just call first on Senator Tester, if he 

has a question to put to the group. And if we have time, we’ll have 

every Senator ask a question. 

Senator TESTER. I apologize for not being here earlier to hear the 

first two speakers speak, so I’ll just direct this to anybody who 

wants to answer it. 

There has been some debate on ethanol using some grain products and energy out of the net, sometimes even a net loss in energy. Cellulosic ethanol, is it a net energy gain in the end? 

Mr. PIERCE. Senator, let me take a stab at that. There has been 

a lot of debate about that. In my opinion the debate is settled, however, and all forms of grain-based and cellulosic-based energy production are positive. And if you compare them to fossil fuel energy 

inputs, if you compare them to petroleum inputs, they’re dramatiVerDate 0ct 09 2002 14:01 Apr 16, 2007 Jkt 034568 PO 11016 Frm 00043 Fmt 6633 Sfmt 6633 H:\DOCS\34568.TXT SENERGY1 PsN: RSMIT
40

cally positive. Cellulosics, based on petroleum inputs, is off the 

charts. 

Senator TESTER. The byproduct from the cellulosic ethanol, does 

it have a value as a feedstuff, or is there some other value? 

Mr. PIERCE. There’s a joke about lignan, which is some of the 

glue that holds all the plants together, helps them stand up. 

There’s a joke that says you can make anything from lignan—except money. But one thing you really can do with lignan, it’s very 

high energy content, and very much of the cellulosic-based processes depend on having the lignan as a separate component which 

is then burned—you make steam. That drives the energy to make 

the plant run. 

Mr. PASSMORE. If you would construct a biorefinery, Senator, 

that would have a whole host of associated coproducts, so you 

would have ethanol, power, heat and steam from the lignan, other 

associated coproducts, fertilizer, CO2, acetic acid. 

Senator TESTER. Good, good. It wouldn’t be associated—at least 

in my mind, it seemed like some of the stuff from the grain ethanol 

is used as animal feedstuff. The cellulosic is not in that same line, 

though. It’s more of a direct energy for steam or whatever. 

Mr. PASSMORE. Correct. 

Senator TESTER. In my neck of the woods in Montana we’ve got 

an incredible amount of acreage of CRP that has all sorts of different grasses in it, none of which is to my knowledge called 

switchgrass, unless switchgrass is generic to all grasses. I mean 

you’ve got wheatgrass, you’ve got all sorts, with a little alfalfa 

mixed in some of it. I hear a lot about cellulosic ethanol made from 

switchgrass. Is it cost-effective to make cellulosic ethanol from 

grass of all sorts of different varieties that might be in a CRP mix? 

Mr. PASSMORE. As long as it’s high in cellulose content, then you 

can make cellulose ethanol out of it. I mean, switchgrass is a native prairie grass that used to grow back in the days when the buffalo roamed. And I think what’s going to happen is that farmers 

are going to be more comfortable initially—rather than planting a 

bunch of switchgrass or even going with a CRP, they’re going to 

want to see ag residues used first. Then, once they’re comfortable 

with the technology and everybody is convinced that it works and 

there’s a market there for the product, then they might start 

switching over to switchgrass. 

Senator TESTER. OK. And the cellulose residue is just—it’s a 

fiber product, right? So it’s basically dry biomass, this cellulosic 

product, right? 

Mr. PASSMORE. I mean, what’s in wheat and barley after you 

harvest the grain, the straw is cellulose. 

Senator TESTER. Right. 

Mr. PASSMORE. Or cobs and stalks and leaves, commonly referred 

to as corn stover, that’s cellulose. And somebody referred earlier to 

hemicellulose. I mean, both of those are in fiber. 

Senator TESTER. The last question, and I think it was Mr, 

Passmore that talked about marketing the product once you get it 

done. Are you talking about a market that is a market that has our 

automobiles capable of accepting the product, or are you talking 

about a market that’s driven more at the pump, where we have an 

energy portfolio perspective—anybody can answer this, by the 

41

way—an energy portfolio perspective where we’re going to require 

a certain percentage of renewable energy in our petroleum energy? 

Mr. PASSMORE. I was talking about increasing the RFS so, if you 

can get—different numbers are out there, but you will hear that 

you could get possibly 15 billion gallons from corn, you could get 

another 15 billion gallons from ag residues and another 15 billion 

gallons from switchgrass. And I’m not even talking about the forest 

residues that Lori spoke about. So the question is, where is all that 

ethanol going to go? And I think the market pool needs to be created through a more aggressive RFS. 

Senator TESTER. And what’s RFS? 

Mr. PASSMORE. Sorry. Renewable Fuels Standard. Right now it’s 

set at 7.5 billion gallons, and I think that’s—I mean, people argue 

that’s a floor, not a ceiling, but the investors, before they invest in 

a plant, want to know that there’s going to be a market there for 

the product. 

Senator TESTER. OK. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Senator Domenici. 

Senator DOMENICI. I pass. 

The CHAIRMAN. Let me call on Senator Dorgan—who came first? 

Bob? Bob, why don’t you go ahead. I think you were here before 

Senator Dorgan. 

Senator MENENDEZ. Thank you, Mr. Chairman. 

I want to thank the panel. 

I want to ask Mr. Pierce, I think you talked a little bit about butanol, and that there are some advantages to butanol over ethanol. 

Could you give us a sense of what those are? 

Mr. PIERCE. Right. Butanol is an alcohol-like ethanol. It’s got 

four carbons instead of two carbons. It has a higher energy density, 

so you get more energy per gallon. That means for a certain gallon 

you can drive more miles. It doesn’t absorb water as well as ethanol, so it’s more compatible with existing infrastructures. And 

there are a variety of other differences. 

But the point I wanted to make is that this thing with ethanol 

and butanol, sometimes it gets framed as an either/or type of thing. 

It’s absolutely not. I mean, ethanol is there today because it could 

be made by yeast, that we have known to make bread and beer for 

years and years. New biotechnologies will bring newer fuels that 

are also useful, and all of these fuels will coexist and find their 

place in the right niches of our fuel infrastructure. 

Senator MENENDEZ. Is there a downside to butanol? 

Mr. PIERCE. The downside right now is that we can’t make it 

cost-competitively with ethanol because we don’t have the kind of 

experience that we have with the ethanol game, so we’re pushing 

very hard to get to that point. 

Senator MENENDEZ. Is it the experience or the incentives, the 

way in which we treat incentives for ethanol? 

Mr. PIERCE. Well, I frankly am not as up to speed on all the various policies and incentives as many people in this room. I would 

say, however, that it seems logical to me that however you structure incentives, they ought to be structured on what you want. 

So, for instance, if you have a very highly energetic fuel that gets 

you further miles per gallon, having incentives on a gallon basis is 

42

a little bit odd, because if you get further on a gallon then that 

ought to count. So again I would suggest that incentives be structured on what Congress and the country is looking for, that is to 

say, low carbon and replacement of various petroleum fuels. 

Senator MENENDEZ. If that’s the case, if you’re saying we’ll meet 

the goals that we want and this particular energy source has higher output, then it seems to me that we should be looking at how 

we incentivize this within a mix. 

Mr. PIERCE. I agree with you, and I would say that butanol is 

the example we’re talking about now. I tell you there will be others. We are on the opening gambit of biofuels. So if you do it on 

an energy basis, in the case of butanol, I can’t remember the numbers, maybe 12 percent or 15 percent more energetic than ethanol. 

If you did it on an energy basis, it would attract an incentive approximately that much higher. 

Senator MENENDEZ. Thank you, Mr. Chairman. 

The CHAIRMAN. Senator Dorgan hasn’t had a chance to ask questions. Why don’t you go ahead, and then we’ll probably have to adjourn after that to go make these three votes. 

Senator DORGAN. Mr. Chairman, thank you very much. I regret 

I have not been able to listen to the presentations. I’ve been over 

in the Commerce Committee, and was just able to leave there. 

But let me thank Mr. Hushka, Niles Hushka from North Dakota, 

for coming and participating. He has a vast knowledge of all of 

these issues and is involved in virtually every facet of them. 

I want to ask a question that I raised in North Dakota with 

those that are interested in biofuels. I was involved in the 7.5 billion gallon renewable fuels standard that we now have. We created 

a 7.5 billion gallon standard by 2012. It looks like we’ll be producing 10 billion gallons by 2010. Just guessing, but that’s where 

it looks like we’re headed. People talk about 35 billion gallons or 

more. 

We use 140 billion gallons of fuel in this country. If you blend 

10 percent ethanol or biofuels with every gallon, you’ve got a market for 14 billion gallons. It seems to me that unless you find ways 

to put E85 in gas tanks or have blend pumps at 20, 30, 40, 50 percent, we’re going to build a bunch of biofuels plants and then we’re 

going to find at some point we’re going to have a supply that far 

exceeds demand, unless we find a way to require those fuels to go 

in at a much greater rate than 10 percent. 

In my State, for example, we have 16,000 flex-fuel vehicles and 

24 pumps. In a State 10 times the size of Massachusetts, 24 pumps 

where you can pump E85. Think of it, 16,000 vehicles, 24 places, 

in a State 10 times the size of Massachusetts, where you can get 

E85. Well, clearly that’s not working, is it? 

And so I’m wondering if any of you have the same concerns I do. 

Are we going to produce and produce—and nobody is a bigger fan 

of producing biofuels than I am—but are we going to produce and 

produce and produce, only to discover that because there are no 

E85 pumps out there, there’s no incentive, in fact there’s a disincentive for the major branded stations to put them in, and there’s 

no blend pumps. Are we going to find we’ve got a real problem? 

Who wants to tackle that? Niles, do you want to? 

43

Mr. HUSHKA. Senator, I think that you are hitting on something 

that’s extremely important, not only at that level but at other infrastructure levels. As you know, today in our State we have one 

source to get our fuel to the market, and that’s a single railroad, 

and they are already overloaded. 

As we produce more and more fuels in the heartland, we have 

to put infrastructure systems in place that allow for the adequate 

distribution of those fuels into the population markets, and I think 

that that will become one of the major criteria for how we can easily and readily make access with fungible fuels. 

There are also new technologies that I believe are important, especially in our cold technologies, cold locations. There are generation-two biodiesels that are coming out. Neste Oil, for instance, in 

Finland will begin producing 55 million gallons a day of the product which has cold flow capabilities down into the negative 30 degree range instead of negative 5. 

Those are the types of technologies that can be integrated more 

readily. This is a fungible fuel, so it can be used in existing pumps. 

It can be used in existing vehicles without any modifications. I 

think our emphasis should be placed on fungibility, and I do not 

believe that we will have to worry about levels at that point. 

Senator DORGAN. Just on that point, I ran into a young man 

about 20, 22 years old, in Valley City, ND. He said he had been 

living on the West Coast. He said, ‘‘I just came back to North Dakota driving a pickup truck with vegetable oil, using vegetable oil 

as fuel.’’ He’s a young man very interested in alternative fuels. I 

said, ‘‘Well, how did it go?’’ He said, ‘‘It was fine until I reached 

Montana. Then it was too cold.’’ The vegetable oil coagulated, I 

guess. Does that happen? So there are a lot of people out there 

looking at alternative fuels, and vegetable oil is a portion of it, but 

it’s the issue you raised with respect to at what temperature can 

you use it. 

Mr. PASSMORE. Senator, you touched on a question that I raised 

in my opening remarks, and I think it’s a very real one. I think 

the committee should look at it from two perspectives, low-level 

blends and then flex-fuel E85s. So how high can we push the lowlevel blends? In Brazil they run, apparently, cars that run on up 

to E24 in the low-level blends, so you need to talk to the car companies about that and find out how much protest you would get. 

But imagine a situation where all the vehicles gradually were 

flex fuel. Then you would have vehicles that could take E15, E20, 

E30, E40, because they can take up to E85. But definitely our investors want to be assured that there’s going to be a market for 

ethanol beyond 15 billion gallons. 

Senator DORGAN. Thank you very much. 

The CHAIRMAN. Thank you very much. 

Senator Craig, you have a final question, I was told? 

Senator CRAIG. Well, thank you very much, because I’m not 

going to be able to return after the vote, and I did want to ask Jeff 

Passmore of Iogen a couple of questions, because from what we’ve 

heard from other panels this morning, ethanol, corn-based, is moving very rapidly now into production, the competitive nature and 

the importance of cellulosic, and of course the research and the 

work that Iogen has done. 

44

Jeff, I understand you have applied for a loan with DOE? 

Mr. PASSMORE. Yes. There are two programs. There was the 

grant application process and then the loan guarantee pre-app. We 

have submitted under both of those with DOE. 

Senator CRAIG. And that occurred when? 

Mr. PASSMORE. Well, the closing for the loan guarantee pre-app 

was December 31, and the grant application was back in the summer of 2006. 

Senator CRAIG. OK. The reason I’m establishing this timeframe 

for the committee is, we passed EPAct in August 2005. If you had 

a loan guarantee today, how soon would it take you to build a commercial production facility? 

Mr. PASSMORE. We had hoped to get the shovel in the ground on 

the facility in the spring or fall of this year, so starting in 2007. 

There has been a slight delay in the appropriations for the loan 

guarantee authorization, so it appears that—though I was encouraged by the fact that the House passed the bill yesterday, and 

we’re certainly looking forward to being able to charge forward, 

Senator, I’m not sure how many months we’ve lost. We may not be 

able to go with the fall of 2007 but slip to the spring of 2008. 

We’ll see how fast this—when you were out of the room, Senator, 

my encouragement to the Chairman was that this committee make 

sure that we don’t lose any momentum with the DOE with respect 

to the implementation of the intent of Congress. 

Senator CRAIG. What were you going to build, sir? 

Mr. PASSMORE. We’re going to build a cellulose ethanol plant 

based on barley straw and wheat straw. Again, in my opening remarks I mentioned that we already have 320 farmers signed up for 

straw supply for a facility in southeast Idaho, and we’re ready to 

go. We’ve taken options on land and just want to get going. 

Mr. STANDLEE. Senator, Chris Standlee with Abengoa. I would 

like to point out that our company also, as with Iogen and others, 

is one of the companies that has submitted a response and a proposal in connection with the DOE solicitation. Again, we’re in pretty much the same boat. We have demonstration facilities under 

construction now, pilot plant facilities in operation, and our estimation is that once the grants are funded, as we certainly hope 

that they will be soon, we certainly could have cellulose production 

in effect by 2008 for sure. 

Senator CRAIG. It’s also my understanding that once the money 

is made available, we’re still looking at potentially a 6-month window in DOE to get their process refined and ready. Are you hearing 

that? 

Mr. PASSMORE. Well, we understand they’re going to go to regulations, which is apparently—according to the bill in the House yesterday, they have been told to get that in place within 6 months. 

But, Senator, if concurrent with that they were reviewing the loan 

guarantee pre-apps that have already been submitted, then if those 

could move forward concurrently—as I understand the DOE process, they are then going to review the pre-apps and invite actual 

applications for loan guarantees, and those actual applications 

could be submitted while they’re developing the regs. 

Senator CRAIG. For both of you, to bring plants into production, 

what type——

45

The CHAIRMAN. Let me just interrupt to say I think I’m going to 

go to make these three votes. 

Senator CRAIG. I think we should. 

The CHAIRMAN. If you wanted to stay and ask——

Senator CRAIG. I’ll ask one last question, and then I’ll shut the 

committee down, if you want me to. 

The CHAIRMAN. OK. Why don’t we do that. Let me thank all of 

you for testifying, and Senator Craig can close the hearing. We’ll 

start again about 2:15. 

Senator CRAIG [presiding]. Thank you. In relation to the capacity 

that we’re offering through this CR—and Senator Domenici 

prompted me to ask a question I think appropriate—in relation to 

the loan guarantees we’re looking at, what size are you looking for 

in guarantee? I’m asking that of both of you. If you were awarded 

this kind of guarantee, based on what we have provided, are we 

building enough capacity into the system to assure these kinds of 

new production facilities coming on line in both commercial and experimental——

Mr. PASSMORE. As I understand it, the proposed cap is $4 billion, 

and certainly that has enough room in it for several cellulose ethanol plants. I mean, we might be looking for something in the $350 

million range. 

Mr. STANDLEE. Senator, I think the loan guarantee program, as 

I mentioned in my opening remarks, is an excellent program to 

help further the implementation of the technology after development, but frankly I think the initial step that’s even more sorely 

needed is the funding of the grants for the biomass demonstration 

facilities that the DOE has proposed and solicited. So I think that’s 

probably the most important first step. 

Senator CRAIG. Thank you. 

To all of you, again, thank you very much. I’m going to miss a 

vote. They’re not holding them these days, so they’re prompting us 

to be a little more attentive. Gentlemen, thank you all, and Lori, 

thank you for your testimony. 

The committee will stand in recess. 

[Recess.] 

The CHAIRMAN. OK, I think we’ll startup. As I understand it, 

Senator Domenici is delayed with another meeting, but Senator 

Cantwell and I will go ahead. 

This is the fourth panel, and we have six witnesses. Let me just 

briefly introduce them, and then we’ll just go from our left to our 

right and hear your points of view. Again, if you could do that in 

about 3 minutes, we would sure appreciate it. 

Edmund Burke is representing the Coalition of E85 Retailers, 

and we appreciate you being here. Lou Burk, who manages alternative fuels for ConocoPhillips, is here, and we appreciate your 

presence. I think they’re getting you a name tag. Robert Brown is 

the director of vehicle environmental engineering for Ford Motor 

Company. Thank you for coming. John Plaza of Imperium, this is 

the Nation’s largest biodiesel refinery. Thank you very much for 

being here. Mike Mears, who is the vice president of transportation 

at Magellan Midstream, thank you very much. And Charles 

Drevna, Charles is the executive vice president of the National PeVerDate 0ct 09 2002 14:01 Apr 16, 2007 Jkt 034568 PO 11016 Frm 00049 Fmt 6633 Sfmt 6633 H:\DOCS\34568.TXT SENERGY1 PsN: RSMIT
46

trochemical and Refiners Association. We very much appreciate you 

being here. 

Why don’t you start, Mr. Burke, and we’ll be glad to hear from 

all of you. 

STATEMENT OF EDMUND BURKE, CHAIRMAN, DENNIS K. 

BURKE, INC., REPRESENTING THE COALITION OF E85 RETAILERS 

Mr. BURKE. Good afternoon. Thank you very much for inviting 

me, Senator. I appreciate it. My name is Ed Burke. I’m chairman 

of the board of Dennis K. Burke, Inc. We’re a very large, familyowned distributor in New England, just outside of Boston—Chelsea, MA. We have distributed biodiesel for 10 years now, and we 

are just starting up on E85 and trying to retail it, but I do have 

the capability of loading it on trucks, and along with General Motors, I’ve filled a lot of vehicles that are going to various fairs, demonstrating the vehicles. 

The Coalition of E85 Retailers is relatively new, just formed to 

try to solve some of the issues involved. Some of them are fire safety—and don’t get me wrong, some of my problems are not really 

complaints. Health and safety is certainly a priority, and we need 

the UL certification or similar on some of the equipment. 

But I wanted to address, we have some conflicts, like EPA has 

recommended that States give waivers for Stage II, which is a 

vapor recovery phenomenon, but all the flex-fuel vehicles are 

equipped to handle vapors. It’s $20,000 and a lot of time for one 

little pump. I’m 1⁄10 the size of North Dakota, which was referenced 

earlier. Massachusetts is 1⁄10 the size of North Dakota, and to my 

knowledge I’ll be the first retail outlet running in the Northeast, 

never mind just Massachusetts. 

And I own an E85 Chevy Impala. We have an Avalanche on loan 

from General Motors. So there’s a lot of frustration. Again, it’s a 

harder turnkey operation than was biodiesel because we’re dealing 

with a much more flammable product that has various mechanical 

issues as well as the health and safety issues. 

Mostly I would be pro some kind of incentives. I liked the discussion earlier on the loan guarantee kinds of things, as opposed to 

individual mandates. I’ve had peers that want to have one standard for biodiesel blends across the country, and it’s just fundamentally crazy, because south of the Mason-Dixon Line, cold weather 

is much less of an issue that it is in half the States that are represented in this room. 

And I would save the rest of the time for questions and dialog. 

Thank you very much again. 

The CHAIRMAN. Thank you very much. 

Mr. Burk, go ahead. 

STATEMENT OF LOU BURK, MANAGER, ALTERNATIVE ENERGY 

AND PROGRAMS GROUP, CONOCOPHILLIPS 

Mr. BURK. Thank you, Mr. Chairman and committee members. 

My name is Lou Burk. I run the Alternative Energy and Programs 

Group at ConocoPhillips. My group focuses on all forms of future 

energy and also biofuels. 

47

Most of our work on biofuels is actually on technologies to look 

at ways to utilize existing infrastructure to better facilitate introduction of biofuels into the marketplace. We are one of the largest 

blenders of biofuels. We are a developer of biofuels technology, and 

we are a biofuels manufacturer in Europe with a technology called 

renewable diesel which we would like to introduce into the United 

States. 

We are also extremely active in the industry groups that work 

on setting the standards that Mr. Burke next to me was talking 

about, working with UL on pump standards, working with ASTM 

on quality standards, and all the things that we need to do to make 

sure the fuels that are in the marketplace, whether or not they 

have renewable content, meet the customers’ expectations. 

We’re looking at two general tracks for biofuels development. The 

first one is, are there ways that we can broaden the feedstocks we 

use in our existing infrastructure to make gasoline and diesel fuel 

that are renewable in their contents. Some of this is 

thermochemical conversion, some of this is using different feedstocks into existing equipment, and those are very interesting and 

exciting opportunities for us. 

The other thing we look at are novel, out-of-the-box technologies, 

whether that be cellulosic ethanol, whether that be biomass-to-liquids, and those sorts of technologies as well. We think that modifying existing refineries to process a variety of renewable feedstocks that will utilize the existing infrastructure, because it will 

make gasoline and diesel fuel, will facilitate biofuels penetration 

much quicker. 

As you contemplate how to create an environment that will encourage continued growth of renewable fuels, you have to make 

sure we don’t pick winners and losers. With the aspirational goals 

that have been set and discussed, we don’t know what the fuels 

will look like that best fit those. So we would, we say, let all flowers bloom. Make sure you don’t pick winners and losers, and let the 

technologies go forward. 

And, finally, we have to make sure that as we introduce these 

fuels, we do not backslide on the different environmental standards 

and climate goals that we have set or are setting. Backsliding in 

these areas should not be tolerated. 

Again, I thank you for your invitation and look forward to your 

questions. 

The CHAIRMAN. Thank you very much. 

Mr. Brown, we’re glad to have you here. 

STATEMENT OF ROBERT BROWN, DIRECTOR, VEHICLE 

ENVIRONMENTAL ENGINEERING, FORD MOTOR COMPANY 

Mr. BROWN. Thank you. Good afternoon, and thank you for providing me the opportunity to participate in this conference. 

Diversifying our transportation energy supplies, and in particular expanding America’s use of biofuels, is an important issue 

to Ford and the American people. The instability of the world’s oil 

supply, the growing worldwide demand for oil, the fragility of our 

domestic infrastructure, and increasing political pressure on climate change, are all leading to renewed interest in finding alterVerDate 0ct 09 2002 14:01 Apr 16, 2007 Jkt 034568 PO 11016 Frm 00051 Fmt 6633 Sfmt 6633 H:\DOCS\34568.TXT SENERGY1 PsN: RSMIT
48

natives to oil and in finding more efficient ways to use the oil we 

have. 

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. We are 

bringing to the marketplace a range of advanced vehicle technologies that are increasing fuel efficiency and diversifying our vehicle fuels away from petroleum. 

Ford Motor Company has been building flexible-fuel vehicles, or 

FFVs, for over a decade, and we are an industry leader in this 

technology. FFVs are a great alternative for our customers, because 

they provide an option to choose between E85 and gasoline, as desired. Last summer, Ford, along with GM and DaimlerChrysler, 

voluntarily committed to double the production of FFVs by 2010. 

In November, we expanded that commitment to include half of our 

vehicles produced each year, beginning in 2012, provided there are 

sufficient amounts of fuel and retail facilities to support customers. 

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, a partnership of all stakeholders, which includes the automotive industry, the fuel industry, 

government, and consumers. There is no silver bullet that will diversify our transportation fuels, and this is not a short-term problem. 

Longer term, Ford has endorsed the 25×25 campaign, which sets 

the goal of getting 25 percent of U.S. energy needs from renewable 

sources by 2025. To achieve this level of biofuels in transportation, 

we need, first of all, to expand the ethanol feedstock diversity; second, increase ethanol production; and third, accelerate infrastructure development on a national scale. These are all critical building 

blocks that will lead to competitive E85 pricing and customer convenience. 

The challenges are considerable, but not insurmountable, and 

there is an enormous amount we can achieve at a lower cost and 

in a shorter timeframe if we act together in an integrated manner. 

All of us have the opportunity to do something about energy diversity and independence. 

Thank you again for the opportunity to participate. 

The CHAIRMAN. Thank you very much. 

Mr. Plaza, please go right ahead. 

STATEMENT OF JOHN PLAZA, PRESIDENT, IMPERIUM 

RENEWABLES 

Mr. PLAZA. Mr. Chairman, I first want to convey my appreciation 

for the invitation to speak at this. This is a tremendous opportunity for a new industry such as ours. And then I have to give 

credit to Senator Cantwell, who has been just a tremendous leader 

in our State and in our Nation for renewable fuels, but biodiesel 

especially. 

My name is John Plaza. I’m the president and founder of a company called Imperium Renewables. We’re building the Nation’s 

largest biodiesel plant in a pulp and paper town that’s sort of decimated by the old timber industry, looking for new industry. We’re 

building a 100 million gallon a year facility. It’s about 6 months 

49

into construction. It will be done in about 4 months. Using vegetable oil from around the world. 

We started out in Seattle, with the recognition that Seattle has 

the highest per capita consumption of biodiesel. It’s one of the easiest forms of alternative fuel to integrate in. It has a very good life 

cycle analysis balance, from the EPA point of view, of 3.2 to 1 unit 

of energy. It’s one of the best renewable fuels, very low carbon. It’s 

got a lot of benefits and integrates in quickly. 

As recognized, the Pacific Northwest has huge demand. We decided to go forward with our business plan, mimic the petroleum 

industry to locate facilities that give us operational flexibility for logistics, transportation in and out, not be dependent on rail alone. 

We use marine logistics, barge logistics. We’re extremely well-funded. We’ve received more than $100 million in equity into the company. We’ve had no direct subsidies or 

funding to the company from the Federal Government. We of 

course enjoy the tax credit of $1 a gallon for biodiesel and methyl 

esters, which is critical to the long-term success of this industry. 

As we have developed our company, we’ve seen a lot of interest 

in biodiesel, so we’re excited about the opportunity. We think it can 

be a tremendous amount of renewable energy, due to the fact that 

20 percent of America’s petroleum usage is in diesel. Ninety-four 

percent of our goods that travel by truck, travel by diesel. It’s a 5.4 

billion gallon home heating oil market. There are a variety of different uses for diesel, and biodiesel integrates immediately and effectively right into that existing infrastructure, we believe. 

We certainly think that the opportunity to grow this industry is 

tremendous. We have opportunity in alternate feedstocks other 

than soy. We can look at any different oil seed. Today we’re just 

announcing the first and largest oil seed contract in the State of 

Washington, for about a million gallons of canola oil. Although it’s 

only 1 percent of our facility, it’s a tremendous sort of show of what 

direction this industry can take and bring new agricultural commodity business to the farming community that’s solely dependent 

on wheat in the Pacific Northwest. 

There’s just a tremendous sort of path forward. There’s a version 

of a crop that we can grow that’s the equivalent of cellulosic, called 

algae. It has carbon sequestration, energy production, ethanol production, and biodiesel production available to us. So it’s a tremendous opportunity, and I appreciate the chance to be here. 

The CHAIRMAN. Thank you very much. 

Mr. Mears. 

STATEMENT OF MIKE MEARS, VICE PRESIDENT FOR 

TRANSPORTATION, MAGELLAN MIDSTREAM PARTNERS 

Mr. MEARS. Well, thank you, Mr. Chairman and members of the 

committee, for the opportunity to speak to you today. My name is 

Mike Mears. I’m vice president of transportation for Magellan Midstream Partners, headquartered in Tulsa, OK. I also currently 

serve as the chairman of the Association of Oil Pipelines, but I’m 

testifying today in my capacity as an officer of Magellan. 

Magellan owns and operates the Nation’s longest refined products pipeline system, as well as 81 refined products terminals. Our 

pipeline system stretches through the heart of the country, from 

50

the Texas Gulf coast to Minnesota. In several Midwestern States 

we provide transportation and distribution services for the majority 

of gasoline and diesel fuel consumed. 

We do not currently transport ethanol or ethanol blends in our 

pipeline system today, and in general, the industry has very limited experience in this area. We do have ethanol storage and blending capabilities at 26 of our terminals, and we have four more 

under construction in the State of Missouri. We have provided 

these ethanol blending services for customers since the early 

1980’s, and we have also recently, within the past year, invested 

in biodiesel blending infrastructure in many of our terminals in 

Minnesota, North Dakota, and Iowa. 

I am here today to address the potential transportation of ethanol in our multiproducts or dedicated pipeline system. Pipeline is 

an efficient, safe, economic, and reliable way to transport large volumes of liquid fuels. However, there are a number of operational, 

technical, and economic issues associated with the potential transportation of ethanol in pipeline systems. These include the practices and equipment to minimize water content and impurities, 

compatibility of existing seals and gaskets used in the valves and 

pumps and the other equipment on the system, and the potential 

for stress corrosion cracking of pipelines and tanks. 

Substantial research into the causes of and solutions for these 

items, particularly the stress corrosion cracking issue, is needed. It 

is our responsibility to prevent pipeline leaks and protect the environment, so a complete understanding of this issue will be necessary before we are comfortable in considering ethanol transportation by pipeline. Targeted industry research on this matter is already underway, and we have left some materials on that research 

on the table outside. 

It is conceivable that limited opportunities to transport 10-percent ethanol blends in existing pipelines may prove to be technically feasible due to the low concentration of ethanol in the product. However, we believe the most likely opportunity to transport 

fuel-grade ethanol will be in a dedicated pipeline built for that specific purpose. This position is based on the assumption that the solutions to the operational and technical issues described earlier 

may be unachievable or cost-prohibitive on an existing multiproducts pipeline. 

We face a number of economic and commercial variables when 

considering a dedicated pipeline for the transportation of ethanol. 

For example, a line from the Midwest to the East Coast could be 

a $2 billion or more project. Key variables in a project of this nature would include the ability to develop secure long-term throughput commitments from ethanol producers or end users; the development of aggregation systems within the producing region, since it 

could take up to dozens of individual plants to baseload a pipeline; 

the development of distribution systems at the terminus of the 

pipeline; and the definition of regulatory authority associated with 

ethanol pipeline oversight. Since we have not conducted a study on 

these issues, we don’t have the answers to all of these questions 

yet. 

In closing, to address the major issues associated with ethanol 

and pipelines, we believe Congress should provide funding to study 

51

the technical concerns related to pipelining ethanol. Second, Congress should pass the Ethanol Infrastructure Expansion Act of 

2006. This bill focuses attention on existing barriers, market risks, 

regulatory issues, and financial incentives, using a range of ethanol 

production levels. 

Thanks again for the opportunity to speak here today, and I look 

forward to your questions. 

The CHAIRMAN. Thank you very much. 

Mr. Drevna, go right ahead. 

STATEMENT OF CHARLIE DREVNA, EXECUTIVE VICE PRESIDENT, NATIONAL PETROCHEMICALS AND REFINERS ASSOCIATION 

Mr. DREVNA. Chairman Bingaman, Senator Cantwell, Senator 

Thomas, good afternoon. I am Charlie Drevna, executive vice president of NPRA, the National Petrochemical and Refiners Association. We are a national trade association with over 450 members, 

including those who own or operate virtually all U.S. refining capacity, as well as most of the Nation’s petrochemical manufacturers 

with processes similar to those of refiners. 

There is no doubt that biofuels is a growing—and will be a growing—component of the Nation’s transportation fuel mix. And let me 

unequivocally state that NPRA does not oppose the use of biofuels. 

What we do oppose, however, is the mandated use of biofuels. And 

in saying that, what we do support is the sensible and workable 

integration of biofuels into the marketplace based upon market demands. 

So during my time today, I would like to walk you through some 

of the challenges that we face as refiners using biofuels. First, as 

relatively new biofuels enter the market, increased transportation 

and logistical issues are likely to arise, and some of the folks here 

on the panel have already gone through some of those. 

As Mr. Mears said, ethanol is not distributed through pipelines 

because of problems with water contamination and corrosion. So 

because of this, ethanol must be blended with gasoline or the appropriate blendstock at the terminal or as close to the final consumer as possible. This makes the delivery and distribution of ethanol expensive because it requires more expensive transportation 

modes such as truck, rail car, barge, or even ship. 

Ultimately, mandating biofuels costs consumers. One example 

is—I want to talk about E85 for a second. E85 has a substantially 

lower energy content per gallon than gasoline, only about approximately 70 percent of the gasoline’s energy content, which translates into a significant fuel economy penalty. 

So in order for the retail customer to cover the same distance 

they would get using gasoline at the same cost, the retail price of 

E85 would need to be approximately 25 to 30 percent less than 

that of gasoline. As reported by the EIA, similar results for biodiesel show that they have a lower fuel economy than regular petroleum diesel. 

Now, mandates will not cure that. Mandates will exacerbate that 

problem—not the technical problem but the cost problem—because 

if every drop that is produced is mandated, there is no reason for 

the marketplace to decide how best to use the product. 

52

Second, we believe that Congress should preempt State biofuel 

mandates. The present enthusiasm for renewable fuels has resulted in several States and even municipalities adopting mandates. Local mandates will impose additional requirements on the 

ethanol distribution system and increase costs for shipping and 

storage. The existing Renewable Fuels Standard, or RFS, mandate, 

with its credit-trading provisions, contains a degree of freedom that 

allows the distribution system to operate at a low-cost optimum by 

avoiding infrastructure bottlenecks such as lack of storage or rail 

capacity. Mandating ethanol or other biofuel usage in specific areas 

will force a distribution pattern that is less flexible and therefore 

has less capability to minimize cost. Again, these additional costs 

will be borne by the consumers. 

Third, biofuels should be developed with the full realization of 

their impact on air quality. Congress should defer any support for 

an additional renewable fuel mandate until it completes an analysis of the ozone impacts of ethanol’s additional summer volatile 

organic compound, or VOC, emissions and the potential impacts on 

maintaining attainment with the 8-hour ozone national ambient air 

quality standards, or the NAAQS. 

If, however, Congress decides to continue its support for a renewable fuels mandate after completion of these additional studies, the 

EPA should, one, announce the list of ground-level ozone insensitive areas to the country, where the increased use of gasohol would 

be environmentally safe, and two, for such areas, list how additional gasohol could be used without causing additional respiratory 

problems or contributing to other ozone-related kind of problems. 

In closing, NPRA recommends that Congress avoid mandating 

increased volumes of biofuels or a hastened implementation schedule for biofuels beyond that of the existing Federal RFS. The goals 

of the biofuels industry, including corn-based and/or cellulosic or 

biodiesel, should be economic parity or better with that of refined 

products, while not adversely contributing to air quality or the 

manifestation of other unintended consequences. 

Again, thank you for the opportunity to appear today, and I look 

forward to hopefully answering any questions you may have. 

The CHAIRMAN. Well, thank you all very much for your testimony. Let me ask a few questions, and then I’ll defer to Senator 

Thomas and then to Senator Cantwell here. Senator Domenici just 

came in. We’ll defer to him first, before the other two. 

Let me just ask, on this issue of standards for biodiesel, some of 

the earlier testimony, as I understood it this morning, was that one 

of the advantages of ethanol is that there’s a consistent standard 

that is present for ethanol. And there’s no question as to performance and that sort of thing. Nothing similar exists with regard to 

biodiesel at this point. I took the testimony to suggest that the 

Government needed to step in and do something to bring that 

about. 

Now I gather, Mr. Burke, you said that obviously you have concerns because of different weather in different parts of the country. 

You don’t think one size fits all. I guess the other question, though, 

is even if that is true, should there be a standard in your region 

of the country, perhaps a somewhat different standard somewhere 

else, or should we just let it go the way it is? 

53

Mr. BURKE. It’s very much a matter of experience and common 

sense. The previous speaker, when he alluded to economics, said 

don’t forget the cooking grease phenomenon. There are a lot of 

places across this country that are converting cooking grease, and 

the cost—people can do it their back yard for 70 cents a gallon. 

But to answer your question, in May, ASTM revised 6751. They 

revised it again in August. It’s getting there. There’s a few funky 

things, without getting into the chemistry of it, monoglycerides, 

triglycerides. It’s kind of like you going to the doctor. But the 

issues are being solved. 

My point is that if you’re south of the Mason-Dixon Line, in January, you may be very successful using a B10 or even a B20, but 

if you’re up in Minnesota or Wyoming or somewhere where it’s 

cold, you drop down to a lower percentage. In my case, my company, we avoid B20, with a few exceptions where some grant deals 

are involved. We sell B5 from Halloween to St. Patrick’s Day, but 

we won’t do B20. The people who are on B20, we drop them down 

to B5, which is 5 percent biodiesel. 

But the specs are being—it’s not fair to put people’s feet to the 

fire on the specs. They are evolving and they’re learning as they 

go. It’s a very new business. In Hawaii, you would be interested to 

know, they had a problem with the Maui landfill catching on fire, 

and a guy with an electric generator company—they asked people 

to solve it. No one did. He went online. He took the name. He’s the 

same fellow that’s building plants worldwide, including the one 

President Bush visited last May in Virginia. 

So the market will take care of a lot of things. I’m generally a 

market guy and an incentive guy, but believe me, thank God we’re 

sitting here. Thank God we had 1992 EPAct. That was when Federal, State, and utilities had to buy a certain percentage of alternatively-fueled vehicles. That’s where the whole biodiesel thing 

began. 

Costs are coming down. We have bigger quantities being shipped. 

The economies of scale in oil are very large. When I was first selling biodiesel, the rule of thumb was a penny a gallon upcharge for 

each percent of biodiesel, so you’re selling stuff for 20 cents a gallon more than the equivalent. That’s a pretty hard sell. 

But the alternative fuel credits made it such that somebody could 

spend that 20 cents and trade the credit in for the alternative fuel. 

You could use half your requirement by using the fuel. So maybe 

you need a declining subsidy or a declining incentive, but as the 

scale kicks in—I mean, you see every day the amount of plants 

being announced. It’s getting to be a real win. 

The CHAIRMAN. Let me see if anyone else wants to comment on 

that. Mr. Brown, did you have a comment? 

Mr. BURKE. Yes. First of all, Ford products are designed to operate on B5, or 5 percent biodiesel. There is a joint effort underway 

that includes the Government, the OEMs, auto manufacturers, and 

the fuel industry, to come up with a specification for biodiesel, because there is a problem in both warm and cold weather. In warm 

weather, it’s a stability problem that can cause acid to form and 

corrode the system and affect the fuel filters. And in cold weather, 

you get wax particles that form, which again plug the system. So 

54

we recognize there are challenges, but there is an effort underway 

hopefully to resolve those challenges. 

The CHAIRMAN. Mr. Plaza, did you have a comment? 

Mr. PLAZA. Yes. I think it’s important, Mr. Chairman, to recognize that there actually is an American Society for Testing and Materials specification for biodiesel. It has been in place since the 

dawn of biodiesel. It certainly is being refined as we grow as an 

industry. In 2004 we produced 30 million gallons. In 2005 it was 

about 50. Last year it was about 150 million gallons. So it’s still 

small, but there is a standard in place. 

And we can look to others for examples of how to grow and learn. 

The petroleum industry certainly had problems with quality, and 

they figured those out a long time ago. We are blessed to not have 

as many quality issues with petroleum. 

Europe also uses a billion gallons of biodiesel a year without 

issue, so it’s not as if there are not standards. The standards are 

there. They’re improving. What it really takes is large-scale, quality production, at a larger scale, similar to the petroleum industry, 

and I think that’s what we’re starting to see in the industry. 

The CHAIRMAN. Mr. Mears and then Mr. Drevna, and then I’ll 

call on Senator Domenici if he has questions. 

Mr. MEARS. Just briefly, our experience I think coincides with 

what Mr. Plaza had to say. We started blending biodiesel in the 

State of Minnesota in the fall of 2005. They have a 2 percent biodiesel mandate. Our standards for accepting biodiesel, our quality 

control standards were being developed at that time, and our first 

winter up there was not a success. We had a lot of problems with 

biodiesel blending in the State of Minnesota. Over the course of 

last year we refined our product quality specifications, and this 

winter we’ve had no problems whatsoever with biodiesel blending 

in Minnesota. So I think it’s a process of trial and error, and it’s 

still early on in the process, but I think it’s progressing well. 

The CHAIRMAN. Mr. Drevna. 

Mr. DREVNA. Senator, we, as the refining industry, are one of the 

most heavily regulated industries in the country, in the world, and 

our specifications are very, very, very tight and very, very, very 

strict. Unfortunately, as an industry we don’t have the luxury of 

saying, ‘‘OK, we can give you some time. We’re going to blend some 

stuff into our product, but if it doesn’t work, well, it will work next 

week, or their new standard will be developed.’’

My point is, again, we support biodiesel, it’s fine, but as I think 

maybe the first Mr. Burke down there said, people can make this 

stuff out of their garage and sell it. I don’t know if those folks are 

going ASTM anything, but somehow or another, that stuff’s going 

to end up in the product stream. So my industry is very, very concerned that before we mandate any significant levels of this stuff, 

we understand the full ramifications of this before we mandate it. 

That’s the only thing we’re asking. 

The CHAIRMAN. All right. Thank you. 

Senator Domenici. 

Senator DOMENICI. Senator Thomas was first. 

The CHAIRMAN. Senator Thomas, then. 

Senator THOMAS. Thank you. I’m glad we’re having this hearing 

and appreciate your being here. This is obviously a very important 

55

issue. Everyone agrees that we need a change and we’re going to 

have to have a change, but all we hear basically are ideas and fairly small amounts of change, 5 percent. We’re talking about the year 

2025 before we can really get there. We’re going to have to emphasize the production of our current products pretty strongly in order 

to fill this gap, it seems to me. 

Whoever would like to respond, what do you think is necessary 

to reach this goal of alternative fuels, with respect to the market, 

with respect to the Government, with respect to the refiners and 

the requirements and so on? Very simply, what should be done besides talk about it? 

Mr. BURKE. I think—and I’m not going to get into incentives and 

mandates because I think Mr. Drevna represented our position 

fairly well, but I would say that as we look at how—because we 

have the blending obligation. We’re the second largest refiner in 

the United States. The blending obligation to comply with the RFS 

and then comply with all the different State mandates lies with us. 

And we look at how we are going to hit targets, and we have run 

scenarios since the State of the Union, saying how would we possibly hit these targets and what sorts of things would happen. And 

what we find out is that the only way to get to those sorts of volumes are to make sure that we leave the doors open to multiple 

technologies. This is not a silver bullet, which I think Mr. Brown 

talked about. There isn’t one. 

It’s the idea that we will have to build this. There’s going to be 

a corn-based ethanol piece. There will be a cellulosic ethanol piece. 

There will be a biodiesel piece, a biomass-to-liquids piece. And public policy should make sure that no one pathway gets blocked now 

while we’re trying to find out what’s going to be the most cost-effective way to bring fuels to the marketplace and not overly burden 

the consumer. 

Senator THOMAS. Yes, but you mention you’re reaching the mandates. That implies that what’s going to happen is rules or laws; 

is that right? 

Mr. BURKE. Well, we are blending to meet the mandates today, 

yes. Because right now——

Senator THOMAS. But I hear others of you saying, ‘‘We don’t want 

any restrictions. We don’t want any requirements.’’ And yet that 

seems to be what you’re doing, is meeting requirements. 

Mr. BURKE. We’re meeting the requirements because we have to, 

to sell the fuel, because the basic economics do not——

Senator THOMAS. What would you do if we didn’t have requirements? 

Mr. BURKE. We would make the products that the marketplace 

would want to pay for. 

Senator THOMAS. OK. Then you’re saying the marketplace would 

do this. Anyone else want to comment on that? 

Mr. DREVNA. Yes, sir, Senator. If you look at what’s going on 

right now, we’re not only meeting the mandate that Congress 

passed in 2005, in EPAct, we’re exceeding it. And we will be exceeding that, those target numbers, all the way through the period. 

And the reason is, in all deference, we are supply short. There’s no 

question we’re supply short in the country. We see ethanol and bioVerDate 0ct 09 2002 14:01 Apr 16, 2007 Jkt 034568 PO 11016 Frm 00059 Fmt 6633 Sfmt 6633 H:\DOCS\34568.TXT SENERGY1 PsN: RSMIT
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diesel—as a refining industry, we see it as a valuable blendstock. 

It keeps additional volumes coming in. 

So what we’re saying is, the marketplace is a pretty good thing. 

It dictates where and when and how best to use these things. And 

we’re very confident, as our counterparts in the renewal fuels industry should be confident, that this is going to be a growing thing. 

And just to expand upon what Mr. Burke from ConocoPhillips 

said there a minute ago, when you focus your attention on one aspect or one particular element of the biofuels in a mandate, it really inhibits innovation. The box that we work in, the innovation box, 

so to speak, shrinks, because there are constraints. 

Now I’m not saying that my industry—we always reserve the 

right to be a little smarter tomorrow than we are today, but it inhibits us in what we can do and what we should do if we’re facing 

something in costs that——

Senator THOMAS. What I keep hearing is that maybe we can get 

to 25 percent alternative use by 2025. 

Mr. DREVNA. Senator, it’s——

Senator THOMAS. That’s a long time. 

Mr. DREVNA. That’s a long time, but unfortunately for refiners, 

we have to make business plans for 2025 today. 

Senator THOMAS. But we may have to make plans for something 

different before that. I think that’s the issue. 

Mr. DREVNA. But the thing is, we have this ever-changing target. 

We had a target set in 2005 of 7.5 billion gallons. Not 2 years later, 

we’re talking about moving that target. We have to make business 

plans. 

Senator THOMAS. I appreciate it, and I understand. My time has 

run out, but my point is, I guess, we all want alternatives. I think 

we know we’re going to get there, but we talk about them a lot. 

We’re not really making a lot of progress in terms of the percentage 

change, or even in our prognosis for the percentage change. 

And so we either have to decide what we do to innovate that a 

little more quickly, or else make sure we continue to support the 

needs through our traditional sources. And sometimes we forget 

about the traditional sources when we keep talking about alternatives, but alternatives are not going to take over for quite a 

while. My time is up. 

The CHAIRMAN. Senator Cantwell. 

Senator CANTWELL. Thank you, Mr. Chairman. 

Mr. Plaza, do you want to comment on that, since you’ve seen a 

five-fold increase in what the United States produced last year just 

in your facility? And what else do you need, from an infrastructure 

perspective, that would help in the delivery and growth of your 

particular product? 

Mr. PLAZA. Absolutely. Thanks for the chance. 

First of all, Senator Cantwell, I appreciate your asking the question, because I actually do believe as a new industry we can address these supply sort of concerns with new crops. For example, 

we have 60 million acres of fallow land that we don’t grow on in 

the United States. We have existing land that we don’t grow energy crops in. Washington alone could grow 100 million gallons of 

canola oil, rotating it in with wheat. 

57

There are next generation feedstocks. There are studies that 

show that with algae, we could grow all the world’s liquid transportation needs on .2 percent of the world’s land mass. All of this data 

is out there. Companies like ours that are new, small, innovative, 

and looking to break into the energy market, are having vision to 

that, and are going there quickly and making the investment from 

the venture capital world, the hedge funds of the Nation investing 

in us, looking to that next generation, not being focused on cornbased ethanol or soy-based biodiesel. 

But what are the next steps? Those are out there. They’re identified. There’s investment going into this industry to meet that, so 

it’s not impossible. It’s actually quite achievable. What makes it 

work, we believe, is a long-term, stable environment that takes into 

account we have to help support these new industries, just like 

we’ve done with petroleum, nuclear power. All the energy sources 

that we’ve seen, all have received support from the Federal Government, so we’re asking for the same level of support as we grow this 

new industry. We’re bringing jobs to communities that are decimated by the old timber industry. 

We’re supposed to be talking about infrastructure, and I want to 

address that, because we’ve heard a lot about ethanol, but we 

haven’t heard much about biodiesel. Twenty percent of the Nation’s 

petroleum usage is diesel. Biodiesel is a one-for-one replacement for 

diesel, and most studies show it’s about a 2 percent loss of overall 

energy, versus the 11 percent we’ve heard. That’s with soy-based. 

With canola-based, it’s actually an increase in efficiency over petroleum diesel. 

The other component is, it works in the existing infrastructure 

with no change. We can go into a terminal operation with biodiesel, 

100 percent, through pipelines, through barge economics, which we 

have at our facility. We’ll be able to take a 83,000-barrel barge 

from our facility, load it, and transport it to California, to western 

Washington, into the existing infrastructure. The only thing that’s 

preventing us from entering into that infrastructure is really acceptance from that terminal operator. 

So we see it as not a barrier of actual technology but a barrier 

of acceptance. We don’t feel that there really are a lot of problems 

in taking this industry where it needs to go, other than education, 

awareness, and acceptance as a Nation, and as bigger industries 

accept a smaller sort of up-and-coming opportunity. We think 

there’s a tremendous opportunity and very little actually blocking 

the implementation of it, other than knowledge. 

Thanks. 

Senator CANTWELL. Mr. Brown, thank you for the flex-fuel initiative in Brazil. We heard yesterday—I think it was yesterday—from 

Honda, who branded themselves at the hearing as the technology 

leader in the automobile industry. How is Ford looking at diesel 

cars and the potential for looking at a variety of sources of biofuels, 

including that one? 

Mr. BROWN. Well, let me say, first of all, that we do have a portfolio approach that will deal with, from our perspective, energy security as well as climate change as well as air quality, and clean 

diesel is part of our portfolio. So we are not only researching techVerDate 0ct 09 2002 14:01 Apr 16, 2007 Jkt 034568 PO 11016 Frm 00061 Fmt 6633 Sfmt 6633 H:\DOCS\34568.TXT SENERGY1 PsN: RSMIT
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nologies that lead to the use of advanced diesel in the field, but 

also the type of fuel that’s required. 

Just recently EPA, working with the fuel industry as well as the 

OEMs on the auto side, issued rules for ultra-low-sulfur diesel. And 

we have begun that roll-out. We have technology that will coincide 

with the delivery of that fuel. And we expect there will be air quality benefits, as well as fuel-efficiency benefits, but clean diesel is 

only one of the products in our portfolio. 

Senator CANTWELL. Are you seeing a play—because the Europeans, with this 1 billion biodiesel—they’re at 80 times what we 

are, I think. Anyway, they have established that, and so some of 

their European auto manufacturers are making big plays in diesel. 

Do you see that competition? 

Mr. BROWN. Well, of course there’s competition, but in Europe 

the air quality standards allow greater use of diesel. And we have 

been working with the Environmental Protection Agency here in 

the United States to resolve some of those near-term challenges, as 

well. So, yes, diesel offers an immediate CO2 benefit. The challenge 

has been, where do you set the air quality standards, from a tailpipe perspective? 

Senator CANTWELL. Thank you. 

The CHAIRMAN. Senator Domenici. 

Senator DOMENICI. Mr. Chairman, Senator DeMint arrived, and 

he has been delayed most of the day. I would yield my time to him. 

I know we don’t want to——

Senator DEMINT. Senator, I’m actually introducing someone in 

the next panel, so I would rather listen to you and the gentlemen 

here. 

Senator DOMENICI. Well, you might have to wait a long time, 

then. 

Senator DEMINT. OK. 

[Laughter.] 

Senator DOMENICI. In fact, we have a lot more to do before him. 

The Chairman has a half hour, I have 30 minutes. That would be 

an hour. I don’t know, what do you have, Senator, 20 minutes? 

Come back in an hour and 20 minutes. 

[Laughter.] 

Senator DOMENICI. Anyhow, I’m going to be very quick, but I 

wish I knew a little bit more about the history of the automobile 

and the fuel that fuels our engines that have been part of the evolution of the automobiles taking us around with the combustion engine. But I would assume that we just didn’t bust into, all of a sudden, nationwide, using an internal combustion engine, six or eight 

cylinders, that all used one kind of gasoline. That didn’t happen 

just overnight, all at once, did it? Any of you enough of a historian 

to say that it came in in bits and pieces, and arrived at parts of 

the country and then other parts? Is that a fair assessment? Who 

knows? 

Mr. BROWN. Yes, that’s a very fair assessment. 

Senator DOMENICI. OK. 

Mr. BROWN. But, Senator, I would point you to just the experience with, let’s just say, unleaded fuel and the catalyst-equipped 

vehicle. That took about 21⁄2 decades to——

Senator DOMENICI. Just for that? 

59

Mr. BROWN. Just for that. 

Senator DOMENICI. Well, it seems to me that we have to be careful here when we’re talking about the system that had imposed 

upon it—this national system. There were some impositions, but it 

was still a national system. Except for California, for the most part, 

I guess. All of a sudden we know so much, we have some big news 

about what might work better in terms of conservation, right? A 

new way to produce the product that will run the engines or that 

will be different, so we will save a lot of petroleum product as we 

move our vehicles. And we’re going through the stretches of ‘‘How 

do we go from where we are to the next and the next?’’ Is that correct? 

Mr. PLAZA. I’d like to just sort of tell an anecdotal story that got 

me interested in this as an entrepreneur. 

Senator DOMENICI. Go ahead. 

Mr. PLAZA. If you look at the automotive industry, because I am 

somewhat of a fan of history, the original Ford, the Model A, was 

designed, if I understand correctly, to run on alcohol, ethanol. The 

original diesel motor was designed by Rudolf Diesel to run on peanut oil, vegetable oil. 

Senator DOMENICI. On what? 

Mr. PLAZA. On peanut oil. It was modified to use petroleum. So 

we’re almost coming full circle back to the original source of our energy. So for us to dismiss these as inconsequential or minor is foolish, and it also prevents America from being leaders in the world 

and using our land mass to grow our energy. There’s tremendous 

potential there. We need the support, long-term, of the Federal 

Government, such as the extension of the tax credit and others. 

Senator DOMENICI. OK, that just gets me to the question. All of 

you are important, so if one of you said this, it’s important. I can’t 

remember which one talked about the fact that we ought to get on 

with using one regulation and one system, and not have—not be 

imposing multiples on the industry or the people that make the liquid we call petroleum. Who said that? 

Mr. BURKE. Actually, I think Charlie was the one who talked 

about a single national standard, but when you market in multiple 

States, and we distribute, it gets difficult when different States 

have different standards or mandates. The State of Washington is 

implementing a new Renewable Fuels Standard that is different 

than the State of Oregon’s in their timing and their implementation. We have a terminal in Portland that serves the greater Portland area, both sides of the Columbia River. It’s difficult for us to 

have a fuel that works on both sides when there is discontinuity 

between the States. 

Senator DOMENICI. Let’s get back to this issue, and then I’ll quit. 

We’re not talking about the difference in two States choosing. 

We’re talking now about how we are going to implement a variety 

of new products into the system that are going to be imposed on 

the system because they—say there are conservation issues or 

something like that, and we’ve got to get them into the system. 

Now, we’re going to have to ask the system to adjust to that, right, 

and do it in an orderly manner. That isn’t going to be done by one 

overpowering regulation, when we see all these different new prodVerDate 0ct 09 2002 14:01 Apr 16, 2007 Jkt 034568 PO 11016 Frm 00063 Fmt 6633 Sfmt 6633 H:\DOCS\34568.TXT SENERGY1 PsN: RSMIT
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ucts coming on. Am I correct in that assessment, or am I looking 

out the wrong kind of windows? 

Mr. DREVNA. Senator, I think I know what I said. What I meant 

to say is—and I apologize for any confusion, but I was referring to 

the biodiesel side of the equation. 

Senator DOMENICI. OK. 

Mr. DREVNA. But if you look at ethanol, it’s distilled. It’s ethanol, 

and it’s pretty much a singular product. In the biodiesel end of the 

business, there are so many different kinds of potential feedstocks 

for it. It goes from oils to animal fats to anything in between. 

So the point I was making was, until the time where there are 

actual standards set, a biodiesel standard, it must contain X, Y and 

Z, before we, as refiners, feel comfortable in blending it into our 

diesel, that’s what we are looking for. And I think they’re saying 

we are on our way and we’re doing it, and we have some bugs to 

maybe get out of the system. Well, that’s all fair and well, but we, 

as an industry, as the refining industry, we can’t afford to have 

things put into our product that we don’t know if they will pass the 

test. That’s all I was saying. We’re going to use biodiesel, but let’s 

make sure we’re using the component that will operate the best 

through the system. 

Senator DOMENICI. Thank you, Mr. Chairman. I think by coincidence it has some application to what we’ll be doing, nonetheless. 

Thank you. 

The CHAIRMAN. OK. Well, thank you, and let me thank this 

panel very much for your testimony. I think it’s been very useful. 

And we will bring forward the next panel. 

OK, if everyone could take their seat, we’ll go ahead and get 

started with this panel. Let me just introduce each of the panel 

members. Senator DeMint, you wish to introduce one of panel 

members yourself. Why don’t we call on you right now to do that, 

and then I’ll introduce the other four. 

Senator DEMINT. Thank you, Mr. Chairman. I do want to thank 

you—really, all the members—for holding this conference today 

and extending an invitation to Dr. Nicholas Rigas to participate. 

It’s a privilege to introduce Dr. Rigas, a fellow South Carolinian, 

at this conference, but it shouldn’t be a surprise. South Carolina 

has been leading the way in the development of alternative energy 

technologies, whether it’s hydrogen, wind power, biofuels, and then 

integrating them into our everyday lives. 

As director of the South Carolina Institute for Energy Studies, he 

has been a key advocate for new ways of meeting our Nation’s energy needs and helping diversify our energy portfolio. I look forward to hearing his testimony. Dr. Rigas, I appreciate you being 

here, along with all the other panelists. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Well, thank you very much. 

Welcome, Dr. Rigas. We’re glad to have you here. Also we have 

Don Paul, who is the vice president and chief technology officer for 

Chevron. Don, thank you for being here. 

Mr. PAUL. Thank you, Senator. 

The CHAIRMAN. I remember seeing you out there in Idaho, as I 

remember. 

61

Tommy Foltz is with Earth Biofuels. Thank you very much for 

being here. George Fitch is the mayor of Warrenton, VA. Thank 

you for coming today. And Jonathan Lehman is with VeraSun, 

which is the Nation’s second largest ethanol producer. Thank you 

for being here. 

Why don’t we start with Mr. Paul and just go across from left 

to right, and then we’ll have some questions. 

STATEMENT OF DON PAUL, VICE PRESIDENT AND CHIEF 

TECHNOLOGY OFFICER, CHEVRON 

Mr. PAUL. Thank you, Mr. Chairman, and members of the Senate 

Energy Committee. Chevron appreciates the opportunity to participate in this conference. We believe that it’s essential to U.S. energy 

security to diversify our fuel supply system, and biofuels are integral to that diversification. 

I’ll briefly make a few points regarding biofuel infrastructure 

growth and its integration in the fuel system. First off, as we expand and integrate biofuels into the fuel supply system, we believe 

it is essential to do so in such a way that it continues to provide 

the same quality, reliability, and efficiency of the fuel supply system that we all count on every day. 

Second, to achieve this objective, we believe that the infrastructure required to support increased use of biofuels needs to incorporate three key principles that I call the three S’s: scale, standards, and sustainability. Let me comment briefly about these. 

Scale. As we heard in the last panel, one of the challenges that 

we’re facing is, the fuel system is enormous. The one we have took 

the better part of a century to build, and today, to give you a point 

of reference, basically half a gallon is used for every human on 

Earth, in the global system, every day. This is an enormous system. And this requires, to meet where we’re going, a robustness 

and a diversity of feedstocks to meet this scale as we grow the 

biofuels systems, including, in our own efforts, cellulosic sources 

that we focus a lot of effort and R&D on. 

Standards. We have heard about standards, critical not just for 

the fuel standards themselves but standards in the equipment to 

build out the supply chains themselves. This is a new industry 

with respect to biofuels, and the standards are yet being developed. 

Standards are required to induce customer confidence that the fuel 

they’re going to have is going to meet their expectations every time 

they show up to fill up. And then, third, standards are required to 

ensure that the environmental performance of the fuel, not just the 

fuel in use, but the infrastructure that supplies it, that the plants 

themselves meet the environmental standards and safety standards we’ve come to expect from the fuel system. 

Third, sustainability. And what I mean by this is that energy infrastructures, once in place, live not just for years or decades but 

generations. In fact, some part of our current system is 100 years 

old. So when we make choices and we grow this infrastructure, and 

we’re talking about growing it significantly to meet the envisions 

that have been discussed, we’re going to live with it a very long 

time. And I think the key that we would say is, let’s make the right 

choices. Let’s evolve the standards. Let’s recognize the scale where 

62

we need to get to, so that we can go down the road and build this 

diverse, robust, and secure energy system we all need. 

Thank you again for the opportunity to contribute to this biofuels 

conference. Chevron is committed to being involved in the biofuels 

business through a number of activities in research as well as infrastructure, construction such as we’re doing in Galveston Bay. 

Thank you for the opportunity. I would be glad to respond to any 

questions you have. 

The CHAIRMAN. Thank you very much. 

Mr. Foltz, why don’t you go ahead. 

STATEMENT OF TOMMY FOLTZ, VICE PRESIDENT OF PUBLIC 

AFFAIRS, EARTH BIOFUELS 

Mr. FOLTZ. Thank you, Chairman Bingaman. I want to thank the 

committee for recognizing the importance of this issue and holding 

this conference. I’d also like to thank my home State senator, Senator Lincoln, for all that she has done on this issue. She has been 

out front and unwavering in her support and we appreciate that. 

For all of us who have children or grandchildren, it’s almost impossible not to think about the future. And that’s obviously what 

this conference is about, the future: our future environment, our future economic well-being, and our future security. I think we all 

agree with that or we wouldn’t be sitting here today. But there are 

some lessons from the past that I think that we can use as well. 

I have been in this business for about 14 years now. I started at 

the Energy Department in the Clinton administration as the co-director of the Clean Cities Program. I was the vice president of a 

company called Blue Energy that sold compressed and liquified 

natural gas to the vehicle market. And I’m a co-founder and shareholder of Patriot Biofuels in Stuttgart, AK, which is a biodiesel 

plant. So I’ve seen this industry from a lot of different angles. 

Right now I am the vice president of public affairs at Earth 

Biofuels. Earth is a publicly traded company that currently has an 

operational biodiesel plant in Durant, OK, that’s got a capacity of 

about 10 million gallons per year. We’re also the largest supplier 

of transportation-grade LNG in Southern California, which we 

liquify at Earth LNG in Topock, AZ. And that’s about a 31 million 

gallon per year plant. And we recently announced acquisition and 

upgrades to an ethanol plant in Moses Lake, WA, which should 

have the capacity to produce 36 million gallons by the first quarter 

of 2008. I look forward to working with Senator Cantwell on that. 

I want to get into a specific issue and try to keep it brief, but 

I want to just make three broad comments, and that is that for the 

most part we would rather see incentives than mandates in a policy, going forward. We saw very well last summer that when the 

economics are right on alternative fuels, there are plenty of buyers 

out there. There were a lot of biodiesel plants out there that literally could not make enough biodiesel to supply the market last 

summer. That’s because the economics were there. 

So if we’re going to push incentives, they need to be sustainable. 

They need to be much more long-term. They basically need to be 

able to outlast a bank loan, in terms of creating investor confidence 

in the industry. And I think that obviously, for those of us in the 

biofuel business, President Bush’s comments in the State of the 

63

Union about 35 billion gallons a year of biofuels was a great boost 

to everyone who frankly are in the middle of a struggling industry 

right now. We’re kind of almost polar opposite from where we were 

last summer. 

But what I would say in terms of setting a goal is, we obviously 

have to have goals and we have to be shooting for something, but 

let’s not let the goal get in the way of good public policy. And what 

I mean by that is that in the past—the Energy Policy Act of 1992 

comes to mind, and that is where essentially the Department of 

Energy was allowed the flexibility to either impose or not impose 

the private and local fleet mandate based on whether or not imposing that or implementing that fleet mandate would get to the goals 

of the Energy Policy Act of 1992. When it was determined that 

going with those mandates would not achieve the goal, then they 

did not impose the mandate. 

Again, we’re not really for mandates, but I would say that on incentives, in any way, I think that what we might see from the detractors out there is that they say, ‘‘We can’t ever get to 35 billion 

gallons, so why try?’’ And you have a hard time convincing me that 

if we made it to 28 million gallons or 30 million gallons—or billion 

gallons—that the country would be a worse off place. So Rome 

wasn’t built in a day, and neither will the widespread alternative 

fuels market be. 

On regional infrastructure, I think we heard in the previous 

panel that it’s pretty unlikely that biofuels are going to be transported by pipeline in any big amount anytime real soon. So I think 

that the biggest thing that can be done on regional infrastructure 

is to increase the amount of biodiesel storage and blending at the 

pipeline terminals. 

I’m echoing what was said in the earlier panel, but just to give 

you an idea of not what it is but what it is not, the Little Rock, 

AK, school district was a B20 user, and they will be again, but as 

they got into their plan, their diesel distributor had to go through 

North Little Rock, pick up 6,000 gallons of straight diesel, drive 35 

miles to the closest bulk plant that had B100, splash in 1,500 gallons of B100, close the lid, drive 35 miles back to Little Rock, just 

to supply B20 to the school district. That added about 20 cents a 

gallon to the overall process. It works perfectly fine as a fuel to do 

it that way, but the logistics, and therefore the economics, are not 

viable with that. 

When you have pipeline terminal blending, the jobber is able to 

pull up, put unleaded gasoline in one compartment, straight diesel 

in one compartment, B20 in one compartment, B5 in one compartment, then go on about his business without spending 1 extra 

minute of labor or 1 extra mile of transportation. 

The CHAIRMAN. Could you summarize the remainder of your remarks? 

Mr. FOLTZ. That is the remainder of my remarks. 

The CHAIRMAN. OK. Well, thank you very much. We’ll have some 

questions. 

Mayor Fitch. 

64

STATEMENT OF GEORGE FITCH, MAYOR OF WARRENTON, VA 

Mr. FITCH. Thank you, Mr. Chairman. I am the mayor of 

Warrenton, the seat of Fauquier County, about 50 miles west of 

here. We are dedicated to becoming self-sufficient in renewable energy. Toward that end, we have embarked on a plan for an integrated biorefinery at our landfill that will use different types of 

waste: our municipal waste at our landfill; construction and demolition waste, broken pieces of drywall, broken kitchen cabinets, tops 

and bottoms of wood posts. We will also use agricultural residue, 

primarily corn stover, a bit of wheat straw, and some soybean stubble. 

Woody biomass, forest residue—40 times a year, thinners go into 

the woods, private and public, in Fauquier County, and thin them 

out. They don’t really take them anywhere. In addition to that, you 

have all the tree thinnings by the private contractors, the leaves. 

There’s a lot of woody biomass material right in our back yard. 

We’re horse country, so we have horse manure in addition to cow 

manure that’s been composted. We also operate a sewage treatment 

plant. We have 2,000 tons of sewer sludge. We pay $40,000 a year 

for someone to come in, pick that up, take it out of the county and 

drop it on somebody’s farm, I’m sure much to the chagrin of the 

neighbors. We could get paid $40,000 by selling it to a biorefinery 

plant. 

So we’re using a multitude—at least the plan is to use a multitude of different types of waste. We have sized this, at this particular stage, for about a 350 to 400 ton per day facility that would 

then produce about 8 megawatts of electricity, of which about 3 or 

31⁄2 megawatts would be used internally for process heat and 

steam. The balance we would put on the grid, and in so doing, electrify every single household in Warrenton. 

Now, I didn’t come here to shine the light on Warrenton, but I’d 

like to point out to the committee what I think is an overlooked 

stakeholder in this whole debate, in trying to reach this very laudable goal of using renewable energy, and that is local governments 

like mine. There must be hundreds if not thousands of Warrentons 

across the country with a lot of different types of waste in their 

back yard, that should be encouraged to use that in a biomass facility. Even though the ledger says that small scale biorefineries are 

not economical, we believe we can show that they are. 

I think what’s fascinating is that in this case a local government 

can actually be efficient, and in so doing, shatter that oxymoron 

where local governments are ineffective. Because, just like Chevron 

and the major integrated oil companies, we can control or certainly 

influence the stream of the product, the downstream, the midstream, and the upstream. We, as a local government, in conjunction with the private sector—I’m not proposing the local government should be in this business, but just to facilitate the development, to take it to a stage that will attract the private sector to 

come in under a public-private partnership. 

We influence the permits. We can enter into PPAs with a utility 

company. We can work best with our farmers. We can work best 

with the forest residue. So we are uniquely positioned to facilitate 

the development of what I believe is an untapped resource, and 

that is local communities contributing on a very large scale. For exVerDate 0ct 09 2002 14:01 Apr 16, 2007 Jkt 034568 PO 11016 Frm 00068 Fmt 6633 Sfmt 6633 H:\DOCS\34568.TXT SENERGY1 PsN: RSMIT
65

ample, the numbers I gave you, 10 million gallons for a small area 

like Warrenton, 55,000 people in our county, times hundreds and 

thousands of communities like that, can really make a valuable 

contribution toward not only ethanol, but renewable diesel, as well 

as green electricity. 

Now, I have had a chance to talk to farmers in my community 

and throughout Virginia and colleagues of mine in other counties, 

and based on those discussions and finding out what is holding 

them back, I have come up with two specific suggestions that I 

would like to make to your committee that would really provide a 

big, important kick start to get local governments and the stakeholders in the community to get motivated, to get involved in what 

we’re doing. First is to provide an incentive production payment of $20 per 

ton for agriculture and forest residue used in a biorefinery. Congress has a Section 210 to provide a $20 payment, but that is 

strictly for forest residue on tribal land and at-risk forest land. Extend that to any forest land, and extend that for agricultural residue. Farm land in Virginia is basically idled. Half of our farm 

land, half of 8 million acres of Virginia farm land is idled. It is not 

being used. It is marginal. We have farmers that are prepared to 

try switchgrass. 

Quickly, my second point would be the whole area of infrastructure—the collection, the gathering, the harvesting, the storage—

needs a lot of help according to the farmers that I’ve talked about. 

Those are two of my suggestions. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you very, very much. 

Dr. Rigas. 

STATEMENT OF DR. NICHOLAS RIGAS, DIRECTOR, SOUTH 

CAROLINA INSTITUTE FOR ENERGY STUDIES, CLEMSON 

UNIVERSITY 

Dr. RIGAS. Yes. Thank you, Senators, for this opportunity to discuss biofuels and regional infrastructure integration. My name is 

Nick Rigas, and I am the director of the South Carolina Institute 

for Energy Studies at Clemson University. I serve as the chairman 

of the newly formed South Carolina Biomass Council, and lead a 

commission focused on promoting alternative transportation fuels 

sponsored by the South Carolina General Assembly. 

Many organizations, including Clemson University, the Savannah River National Laboratory, the Palmetto State Clean Fuels Coalition, the South Carolina Biomass Council, and others, have been 

working together to develop statewide programs to promote a sustainable biofuels industry in South Carolina. My comments today 

are a result of this collaborative effort, and represent the thoughts 

and ideas of many of the individuals throughout the State. 

Development of the biofuels industry has been based on the successful corn and soybean model that capitalized on the existing regional infrastructure in the Midwest. Although the model has been 

very successful where grain yields are high, this model would be 

less successful where grain yields are lower, and in many cases, a 

grain deficit exists. 

Most of the biomass potential in South Carolina and the Southeast resides in the form of cellulosic materials which will require 

66

a different regional model in order to develop a viable and sustainable biofuels industry. First, the diverse nature of the cellulosic 

feedstocks will require a regional infrastructure to support the 

growing, harvesting, collection, processing, and delivering of these 

feedstocks. 

Studies are needed to, a, identify the regions and the feedstocks 

that will support a sustainable and competitive industry; b, examine the synergies within the existing regional infrastructure, including agriculture, forestry, and other industries; and c, identify 

the infrastructure and methodology gaps that exist to efficiently 

grow, harvest, process, and deliver these feedstocks. 

Second, the biofuels industry will require a large regional distribution network. The industry, due to the nature of the feedstocks, will be decentralized, and therefore, cannot be developed on 

a centralized distribution model as exists for petroleum fuels. 

Biofuels will require a regional model that reliable and cost-competitive services demand. 

Incompatibility with the existing petroleum fuel infrastructure 

will add to the complexity of the supporting infrastructure. Studies 

should focus on developing distribution systems that service this 

regional demand and capitalize on the respective regions’ 

strengths. 

And, third, the technology to produce the cellulosic biofuels will 

require a regional focus, due again to the diversity of these feedstocks. The capacity of these units and the technology that these 

facilities utilize will be dependent on the regional feedstock. Research will be required to identify and develop the best feedstocks 

and technologies to convert these regional feedstocks into biofuels. 

Projects should be wholistic, funded through regional centers, and 

should address the entire supply chain from growing the biomass 

through delivering the fuel to the customer. 

Thank you, Senator, and I look forward to your questions. 

The CHAIRMAN. Thank you very much. 

Jonathan, we’re glad to have you here. Go right ahead. 

STATEMENT OF JONATHAN LEHMAN, VERASUN ENERGY 

Mr. LEHMAN. Thank you very much, Mr. Chairman and members 

of the committee. I really appreciate the opportunity to participate 

today in this very important hearing. 

We’re very fortunate, because of your hard work and the Energy 

Policy Act of 2005, to be looking at what we do next. For several 

years we were looking at pushing a renewable fuels standard to get 

to 7.5 billion gallons of ethanol. Because of your hard work, we’re 

going to be surpassing that in the not-too-distant future. 

As you heard this morning, there are 70-plus ethanol plants 

under development and construction which will add 6 billion gallons of ethanol into the United States. That allows us to look at 

where we go next. We’re going to easily meet the near-term demand of the 10 percent blend market, and it allows us the opportunity to see where we go next to spur renewable fuels. To that 

end, we really appreciate the President’s statement during the 

State of the Union setting the goal of 35 billion gallons of ethanol, 

and we believe that is eminently reasonable. 

67

VeraSun Energy is one of the Nation’s leading producers of ethanol. We have two operating facilities, three under construction, 

and one under development. When complete, we’ll have 670 million 

gallons of ethanol capacity each year. In addition, VeraSun has 

spent the last 24 months on an aggressive E85 strategy. We have 

partnered with Ford and GM to spur additional E85 locations 

across the country. To date, we have more than 80 locations offering VeraSun E85 in eight States. 

VeraSun believes that the long-term outlook for renewable fuels 

includes a robust E85 market as well as additional lower blends 

such as E20. From our experience, there are several key steps that 

are necessary to achieve large-scale E85 and a robust cellulosic ethanol market. 

First, in the near term, we need to maintain the E10 demand. 

And to do that, we should look at increasing the RFS as well as 

extending the existing ethanol tax credits. This gives us the opportunity to springboard to higher blends. 

In the mid-term, we believe that E20 is the catalyst to move to 

an E85 infrastructure in the United States. E20 provides the nearterm demand driver necessary to continue to move to E85. It will 

double the amount of ethanol demand in the current blend market, 

and this is important because it provides incentives for the ethanol 

industry to continue to grow as well as to work to develop E85. It 

ensures a continued investment in research and early stage development of cellulosic ethanol. 

Finally, in the long-term our experiences indicate in order to 

spur additional investment in E85, we need to do several things to 

change the economics of E85. Today E85 is sold at a discount because current FFVs are not designed to take advantage of E85’s 

high octane. This results in fewer miles per gallon run on E85 

versus conventional blends, and it has to be priced accordingly. 

Additionally, refiners take advantage of ethanol’s high octane to 

increase refinery output, so ethanol is valued more highly as a 

blend component than a move to E85. These two factors mean that 

currently ethanol is blended in E10 versus E85. We need to change 

those economics today to start spurring an additional E85 infrastructure across the country. 

Second, we should provide incentives for the automakers to increase the production of advanced fuel-efficient vehicles. We truly 

appreciate their commitment to increase the number of FFVs on 

the road. We believe that we should work to decrease the mileage 

penalty and create FFVs that have comparable fuel efficiency 

standards as existing automobiles. 

And, finally, our experience indicates that we should increase the 

incentives for retailers to offer E85 from 30 percent to 50 percent, 

to try to spur additional E85 stations across the country. 

With that, I’m happy to take your questions. 

The CHAIRMAN. Thank you very much. 

Senator Lincoln has arrived, and she has not had a chance to ask 

questions during today’s conference. Let me defer to her. She can 

take my place in this round of questions. 

Senator LINCOLN. Well, thank you, Mr. Chairman. I appreciate 

that, and certainly knowing that chivalry is not dead around here. 

I’m very grateful to you for that. 

68

And I want to say how proud we are to welcome Tommy Foltz 

here today in the committee. Tommy is an Arkansasan, and has 

done tremendous legwork in bringing about the reality of renewable fuels in our home State of Arkansas. So we’re very grateful 

to him and grateful that he is spending time with the committee, 

and we look forward to working with you. 

Mr. FOLTZ. Thank you. I appreciate that. 

Senator LINCOLN. Just a couple questions, if I may, Mr. Chairman. One of the things that I have focused on, that I think is really 

important for us as a legislative body to recognize when we look 

for incentives that are really going to jump start the industry of renewable and alternative fuels, is to ensure that we get them out 

to the consumer as quickly as we can. 

And for me, in looking at this process, one of the things that has 

been most relevant has been making sure that rural communities 

have the tools that are necessary. They are the likely place where 

this has to occur, obviously, and they need the tools to build the 

infrastructure to produce and distribute the fuels. It makes all the 

sense in the world. Obviously we’re not going to jump start an industry if it costs them more to use an 1-wheeler burning petroleum 

diesel to haul their feedstock from one place to another and it becomes cost-ineffective. 

It has long been recognized that one of the most efficient models 

for getting this industry off the ground is small facilities serving 

a local area. And the industry represents an opportunity, I think, 

also, from my standpoint representing a rural State, to revitalize 

many of our rural communities. I think we must all work hard to 

ensure that we can take advantage of that. 

My hope is that Mr. Foltz, who was a real pioneer in Arkansas, 

could help us in that conversation. I know the multiple different 

entities that we worked with Mr. Foltz and the others in bringing 

about the partners to make this happen. It also took time. And if 

there are ways that we here in the legislative body can jump start 

some of those or even reinforce some of those areas, I know it was 

patching together grants, working with wonderful nonprofits like 

Winrock International and different types of groups to put together 

what was necessary to actually start a facility. 

Maybe you might expand on that, in terms of those different 

components that really brought us to the reality of having Patriot 

Fuels in Stuttgart, AR. I think that would be enormously helpful. 

And then my second question—and certainly this is to the entire 

panel, any of you who would like to jump in on that question and 

the next one—is really looking at diesel vehicles. They are so common in Europe, as we know, and in many cases preferred, but here 

in the United States, consumers are not as assured of a diesel vehicle product. They’re still wary of whether a diesel car is going to 

be as clean, despite the rapid advancements that we’ve seen in diesel technology and certainly much better fuel mileage. 

So maybe in discussions here we can look at how we encourage 

Americans to give a second look to diesel automobiles, because I 

think that really has an effect on the market. Or maybe perhaps 

you might want to talk about what effect that would have on the 

market for biodiesel and other types of diesel fuel. 

69

So, Mr. Chairman, those would be my two questions, for starters, 

if I may. Thank you. 

Mr. FOLTZ. I think I would like to take the second question first, 

because I think I can explain it more quickly. 

From my personal experience, when I was with Patriot Biofuels, 

we had a company car. And essentially we were relegated to a 

Volkswagen Jetta, which is a very good car. We would have rather 

had an American-made car, but they don’t—American automakers 

don’t really make passenger diesel vehicles. 

But the thing that strikes you the most with the Volkswagen 

Jetta, at least, is when you walk on the lot there, if you want the 

gasoline version, it gets 32 miles to the gallon, which is excellent, 

but if you want the diesel version, it gets 41 miles to the gallon. 

So we talk a lot about hybrids, which are very positive for the marketplace and on a number of different levels, but without even trying, diesel is more efficient than gasoline. 

I don’t think that we’re going to replace all the gasoline with diesel, but Europe made a transition primarily for greenhouse gas reduction strategies. I believe that in 1991 or 1992, about 10 percent 

of the new vehicle registrations were diesel, and now it’s about 50 

percent. So if you combine the inherently better fuel efficiency that 

you get with a diesel vehicle with biodiesel, which according to the 

Department of Energy and the Department of Agriculture gets 

about a 78 percent reduction in greenhouse gases on a life cycle 

basis, that’s a good place to be. 

Unfortunately, and this is where the right hand doesn’t know 

what the left hand is doing, that Volkswagen Jetta is not available 

in diesel in the 2007 model year because it’s slightly over the NOX

requirement. So from a ground-level ozone perspective, it’s worse 

than a gasoline-powered Jetta, but from a greenhouse gas production strategy, it’s far better, and from an energy security standpoint, it’s far better. I think that we would do well to look from a 

very comprehensive approach to our policy, in that it’s not just 

about air quality, it’s not just about greenhouse gas reduction, it’s 

not just about energy security. 

I said I would make it short, but I didn’t, so I apologize. 

Senator LINCOLN. That’s OK. 

Mr. FOLTZ. In terms of the teamwork to put together Patriot 

Biofuels, I think that we were fortunate to find some pretty enlightened investors. Those don’t exist everywhere, but I think that 

one of the reasons that our investors were willing to invest is because they didn’t see the biodiesel tax credit going away. We felt 

like, in the post-9/11 world, it’s more likely that that gets extended 

than gets sunsetted. And we hope that that’s the case, because the 

biodiesel industry needs that $1 blender’s credit in a very, very big 

way. 

As I said in my opening statement, having long-term, sustainable 

incentives that are out there, that create investor confidence, if 

what we’re trying to do is build a biofuels industry, we need investors and so we’ve got to create that investor confidence. But downstream you’ve got people like Winrock and the Arkansas Oil Marketers, et cetera, that are very helpful to the process. 

You know, we talk about the Arkansas Oil Marketers or the 

Texas Oil Marketers or Oklahoma, and you think they’re going to 

70

be against us. They’re not. They move really all of our product into 

the marketplace. They are interested in selling liquid fuel, and it 

doesn’t really matter exactly what it’s made out of. 

The CHAIRMAN. Why don’t we go ahead and ask Senator Domenici to ask questions, and then I know Senator DeMint also had 

some questions. 

Senator DOMENICI. Senator, I want to tell you as Chairman how 

good this symposium has been and how good the record will be to 

help us. I’m sorry that more Senators didn’t come and spend more 

time, but that’s the way it is here. I did my best to find time, and 

I’m hopeful that I have been constructive. I think having one of our 

new Senators here, I want to let him ask a couple of questions and 

then I’ll go about and do something else. 

I want to thank all of you particularly for the good testimony you 

gave us, and just ask this one question. As new kinds of fuels and 

new kinds of engines requiring in many instances, different infrastructure and different service, as they start entering this gigantic 

market, how do you see this melding together? Is there going to be 

a problem? Have we created any problems by pushing when we 

shouldn’t or pulling when we shouldn’t, and therefore we have 

automobiles trying to get into the market or the things that feed 

them trying to get space when it doesn’t fit anywhere else? Do you 

understand what I’m talking about? Would somebody just answer 

for us as to how things are going out there in that regard? 

Mr. LEHMAN. Senator Domenici, VeraSun’s perspective is that 

E85 is a long-term goal and flexible-fuel vehicles will meet the 

needs of our transportation fuel system. That’s going to take some 

time in order to change the fleet from the conventional vehicle to 

a fuel-efficient FFV. And our belief is, in order to get there you 

have to sequence the items. 

Today we have E10, and we’re going to meet that demand from 

the 10 percent blend in the not-too-distant future. We need a stepping stone and a catalyst to get from E10 to an E85 structure in 

a robust, nationwide system. It’s our belief that an E20 system that 

can run in our conventional automobiles can be that catalyst to get 

us to the next generation flexible fuel vehicle. 

Senator DOMENICI. Dr. Rigas. 

Dr. RIGAS. Yes, Senator. If you look at biofuels, we’re talking 

about a liquid fuel here, similar to our petroleum fuel infrastructure, which is one of the beauties of biofuel. I don’t view biofuel as 

competing with the new plug-in or hybrid technology. They’re actually complementary technologies. One really promotes energy efficiency in terms of getting more miles per gallon out of that fuel, 

whether it’s a gasoline, a biodiesel, or a bioethanol. 

I think that is one of the things we’re talking about here, is diversifying our liquid fuel resources, not just being strictly reliant 

on one, which we have been for many, many decades, which is petroleum. And so I think with the right resources and the right 

focus, the integration will be fairly smooth, because we are still 

talking about a similar type of a fuel. We’re talking about a liquid 

fuel here, again, whether it’s bioethanol, biodiesel, gasoline, or diesel. 

Mr. PAUL. I see this diversification as an essential part of 

strengthening our energy security. We are early in the beginning 

71

of this, so there will be adjustment factors and there will be learning as we go along, but I think the diversification of the fuel mix 

to include blends, to include traditional petroleum products, to include pure bio products, as well as vehicles that take advantage of 

them, I think we are in a more diversified area. 

There are some key things that we all need to work together—

government, private sectors, local, national, and State governments 

together—so that the standards can be put together to let this infrastructure evolve efficiently. Because you are going to need to leverage the existing infrastructure, as opposed to building an entirely new one alongside it. That would probably be the one thing 

that would create problems in the long run. But I think we can do 

that. 

Mr. FOLTZ. And I think also, just from a diversity standpoint, 

again, Earth Biofuels, we’re in the ethanol, biodiesel, and LNG 

business. Now, Southern California needs the emission reductions 

badly, so LNG works. It’s one of the few places that it really works 

in as robust a way. 

And I think what we need to understand is that it may make 

more sense to make biodiesel out of cottonseed oil in the South 

rather than soybean oil, and I think we need to be open to the idea 

that different feedstocks, as long as they spit out a biodiesel that 

meets the standards—there was a lot of discussion about that in 

the previous panel. There is a standard, it’s ASTM. I can’t think 

of the number, but you’ve got to meet that standard. It doesn’t 

matter what you’re making it out of. And I think we need to understand that we can’t get where you all want us to get and where 

the President wants us to get based on one feedstock. It’s just not 

real possible. 

The CHAIRMAN. All right. Senator DeMint, why don’t you go 

ahead with any questions you have. 

Senator DEMINT. Thank you, Mr. Chairman. 

Mayor Fitch, you kind of stimulated my thinking here. I know 

when you were talking about local fuel production you were primarily talking about fuel for the generation of electricity, but it did 

make me think. We’re looking at a major paradigm shift in fuels 

in the country, and it seems that we are assuming that we are 

going to send these new fuels through the same infrastructure. 

Before we put new wine in old wineskins, or assume that maybe 

we do need this infrastructure that Dr. Paul was talking about, I 

would just like to question the panel on the idea, as we look at 

biofuels, we’re looking at really a decentralization of the production 

of the fuel source itself, the raw material. In effect, it would become 

very much a cottage industry. And as I think was just said, maybe 

in different parts of the country, different fuel sources—cottonseed 

may be better, and sawgrass in another, sugar beets in another. It 

could become very diversified. 

And I think it seems like we’re assuming that we’re going to take 

all this feedstock to some central distribution center, we’re going to 

use all the fuel to get it there, we’re going to use all the fuel to 

distribute it like we’re doing now with petroleum. And I just wonder, as we think about what Mayor Fitch was talking about, I 

know from years of working with our local communities, the infrastructure for roads, we’ve got sewer plants that serve multiple 

72

counties, we’ve got reservoirs of water that may serve a small region. Electricity, you’ve got this regional area. You’ve got cable that 

is—I just wonder, as you think about this, should we assume that 

we need major centralized refining and distribution, or can we possibly look at more and more localized actual refining capability and 

distribution that may not require the dependency on a major infrastructure in a centralized system? 

Obviously, the ability for our country to sustain some kind of 

major terrorist attack that could destroy a large part of our fuel 

production, if we have hundreds of mini biofuel refineries and the 

ability for local communities to cooperate, share fuel, it just seems 

like maybe we should be talking about that paradigm, or at least 

exploring if that may be possible, because that would create a 

whole lot more energy security and may take a whole lot of trucks 

off the road. 

Dr. Rigas. 

Well, Mayor, I’ll yield to you, since I have referenced you here. 

Mr. FITCH. You did a much better job of selling what I came here 

to sell, which is that local communities like ours are the answer, 

the decentralization, the cottage industry. When we use basically 

what’s in our back yard, that nobody else is using—the waste, the 

urban waste, the sludge, the municipal waste, the corn stover, the 

soybean stubble—we’re small, and hopefully the economic modeling 

will show that we will not lose money, that you can have a small 

scale biorefinery. 

We will make 10 million gallons of ethanol. We will lean on a 

couple service stations to have a dedicated underground ethanol 

tank, to make it available to our local residents. If not, we don’t 

have to go too far, to Arlington County, which has a mandate to 

use renewable fuel, to sell it. And of course, as I said earlier, the 

electricity generated will go on the local grid. 

This is exactly why I came here, Senator, was to present this 

idea of, ‘‘Don’t forget about local communities as being a major 

player and contributor in the effort to generate more renewable energy.’’ What I didn’t think about was your idea of the security aspects of it, too, so I’ll have to use that next time I make a presentation. 

Senator DEMINT. Thank you. We’ve helped you cover it. 

Dr. Rigas. 

Dr. RIGAS. Yes, Senator, you’re absolutely correct. And I agree 

with Mayor Fitch, it is going to be a distributive system that we’re 

talking about in the future, for several reasons. First of all, the 

feedstocks are now decentralized, so therefore they don’t come out 

of the ground from large reserves, similar to our petroleum industry. Therefore, locating small plants to produce the biofuels near 

the feedstocks is going to be the way it’s going to be done, similar 

to the way it has been done in the Midwest. That’s how the ethanol 

industry and the biodiesel industry came out of the Midwest, which 

was a very successful model. 

Second is that the markets are regional, too. We’re not making 

a product here that we have to take to the coast to export or do 

whatever. There is a regional demand in the local area for that 

product, therefore, local production and the local regional demand 

73

feeds exactly into what you’re saying, into a distributive, decentralized type of infrastructure. 

Senator DEMINT. Any other comments? 

Mr. PAUL. I would agree. I think our view is that it’s going to 

take—this will be the hybrid. They’ll be distributed. Biomanufacturing, I think that’s the nature of it, combined with the existing 

underlay of the larger petroleum system that can also serve the 

very dense urban areas. 

Mr. FOLTZ. I mean, one thing that I would add to that as well, 

it’s not that we have to take it to the coast, it’s that we can’t take 

it to the coast. Typically, your economies of scale that you get from 

going big are outweighed by the freight that it costs to get it to a 

much bigger market. At some point you saturate your local area, 

and so you really need to size—you want your plant close to feedstock, but you also want it sized appropriately to the market because the freight is going to kill you. 

Mr. LEHMAN. You’re seeing that today in the new ethanol plants 

that are under construction. They are coast-to-coast. They’re not 

just centralized in the upper Midwest, where they were 10 years 

ago. So you’re seeing this regional diversity come into play already. 

Senator DEMINT. Right. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Senator Cantwell. 

Senator CANTWELL. Thank you, Mr. Chairman. Thank you, gentlemen, for your discussion of biofuels and the distribution of 

biofuels. I wonder if you could comment on the current energy language that allows for $30,000 of tax incentives for those facilities 

to actually have alternative fuel pumps on their site, and whether 

you’re finding that a success. Or Chevron, I don’t know if you are 

motivated to install lots of alternative pumps at that particular 

point or what else we need to do. So maybe Mr. Lehman, and then 

Mr. Paul, if you could address that. 

Mr. PAUL. Yes, Senator, I would be glad to give our perspective. 

Since we blend more than 300 million gallons a year at such large 

volume, especially in major urban markets such as California, we 

basically consume all of the ethanol that we can get in the blending 

of gasoline at the volumes that we do. So I think that over time, 

where you have more production, and especially distributed production that may come from cellulosic ethanol, which will allow you to 

distribute the feedstocks, I think that would shift. 

So I think, from our perspective, where we’re managing a very 

large fuel system, we may have a different perspective on it than 

local retailers may have, and I think my colleagues here might 

have other comments on that. 

Senator CANTWELL. So basically you’re saying that isn’t motivation? 

Mr. PAUL. For us, no. For us it’s not a motivation. 

Senator CANTWELL. Mr. Lehman. 

Mr. LEHMAN. Our experience has shown that it’s kind of threefold. You need to have E85 and you need to have FFVs in order 

to spur the retailer to put in the E85 pump. So it’s a combination 

of the incentive of the 30 percent—we would say increase that level 

to give the retailers a little bit more incentive to do it, while we 

74

increase the number of FFVs and the amount of E85 that’s available. You need all three components in order to spur the siting of 

new E85 stations. 

Senator CANTWELL. So have you had a lot of interest from people? 

Mr. LEHMAN. We’ve been at this for 24 months, and we have locations in 8 States. Over 80 stations have put in these facilities. 

And it has taken a public awareness campaign. We work very 

closely with Ford and GM in different roll-outs in order to make 

consumers aware that they may actually own an FFV or they can 

go out and purchase an FFV. And once we get to a critical mass, 

the retailer makes a decision: ‘‘OK, I’ll knock out a premium or a 

midgrade and put in E85 capacity.’’ So you need those three pieces. 

Senator CANTWELL. Mr. Rigas, I noted you wanted to comment 

on this. 

Dr. RIGAS. Yes, Senator Cantwell. I just want to give you an example of a local retailer, a very large local retailer, Spinx Corporation, in upstate South Carolina, in the Greenville area, who have 

taken advantage of what you talked about. They have really led the 

State in introducing bioethanol, E85, biodiesel, to their stations in 

the upstate. Now, he is concentrated in the upstate, but it is again 

an example of local, regional people taking advantage of the incentives being offered. 

Unfortunately, he has to import all his bioethanol and biodiesel 

from the Midwest. He is still waiting for bioethanol facilities and 

biodiesel facilities. Even though there are some biodiesel facilities 

going up in South Carolina, there are no bioethanol facilities currently. 

Senator CANTWELL. What kind of dealer is he? 

Dr. RIGAS. He’s a retailer of—a local retailer. He has I think it’s 

over 40 or 50 stations in the upstate, and he has introduced bioethanol and biodiesel to his service stations in the upstate. 

Senator CANTWELL. But is he, in those 40 stations, a specific 

dealer of Chevron——

Dr. RIGAS. No, no, no. 

Senator CANTWELL. What? 

Dr. RIGAS. He’s an independent. He’s an independent, Senator. 

Mr. PAUL. Senator, I would like to comment on—we’re involved 

in a very important demonstration project with the State of California having E85 facilities. These are demonstration facilities with 

General Motors, in order to validate the key issues with respect to 

specific emission requirements that exist in California, E85. So we 

are involved in that, but as your question was for specific conventional retailing, no. 

Senator CANTWELL. Mr. Chairman, I see my time is almost up, 

but I think this is an interesting point, and that is that the one 

person who has taken advantage of this is an independent dealer 

with 40 stations. Given what has transpired in the challenges of individual retailers versus company-owned stores at the retail level, 

I think that poses a particular challenge for us as we try to roll 

out things that are incentives that might be usable. So I think it’s 

something that we should look at further. 

The CHAIRMAN. I agree. I think that’s a very good point. 

75

We have one other panel. Let me just ask if either Senator 

DeMint or Senator Sessions wish to ask some additional questions 

of this panel, or should we dismiss them and go on to the next 

panel? 

[No response.] 

The CHAIRMAN. Well, thank you all then very much, we appreciate your good testimony. 

And we will ask that the sixth panel come forward, please. If the 

witnesses would go ahead and take their seats, I’ll go ahead and 

introduce the panel and then we’ll go to their statements. First, on 

my left, is Dr. Steven Taylor with Auburn University, which, as I 

understand it, will have demonstration biorefineries running 

throughout Alabama later this year, and we’re anxious to hear 

about that. Maybe Senator Sessions wishes to say something else 

in introduction of Dr. Taylor before I introduce the remainder of 

the panel. 

Senator SESSIONS. Well, thank you, Senator Bingaman. Thank 

you for your leadership and the time that you have committed to 

this, this year. I think this is the kind of attention that’s required, 

and I thank you for it. 

Dr. Taylor and his team at Auburn have an alternative fuel initiative. He is the chair of Auburn’s Biosystems Engineering Department. Auburn has had a tremendous reputation as a land grant institution, that has been its heritage, with decades of experience in 

agriculture, forestry, and engineering. I visited their switchgrass 

program over a decade—I guess a decade ago. They have studied 

it intensively and have seen its possibilities before the product became as well known as it is. 

Dr. Richardson, Auburn’s president, saw that Auburn could play 

a role in helping meet the important issues facing our Nation regarding alternative energy. He launched the alternative fuels initiative. He has committed $3 million, at least, already to developing a center there, using university money to help augment our 

Nation’s energy supplies. 

We in the Southeast have an abundant growing season and a 

great deal of rainfall, and properly utilized, I think we have some 

special capabilities to contribute to our Nation’s energy system. Mr. 

Chairman, the more I read and I understand from the hearing 

today, there’s a growing understanding that corn cannot meet all 

our needs for ethanol, and the cellulosic breakthrough is what’s 

needed to take us to a higher level, and I think that’s what Auburn 

in working on. I’ve been pleased to work with them. 

Thank you for letting me have those few minutes. 

The CHAIRMAN. Thank you very much. Let me introduce the rest 

of the panel. We have four of our Nation’s excellent laboratories 

represented. Dr. Kristala Prather with MIT’s Laboratory for Energy and Environment, welcome to you. Dr. Dan Arvizo, who is the 

head of the National Renewable Energy Laboratory. He used to be 

in our State of New Mexico, and we are glad to have you here, Dan. 

Dr. Michael Davis with the Pacific Northwest National Laboratory, 

from the part of the country Senator Cantwell hails from. And Dr. 

Terry Michalske, who is of course from Sandia National Laboratory, where Senator Domenici and I hail from. 

76

So we’re glad to have all of you here, and look forward to hearing 

your views, particularly focused on what we need to be doing in the 

research area to get to the goals we’ve been talking about today. 

Dr. Taylor, why don’t you start and give us about 21⁄2 or 3 minutes 

of your views, and then we’ll go across the panel. 

STATEMENT OF DR. STEVEN TAYLOR, CHAIR, BIOSYSTEMS 

ENGINEERING DEPARTMENT, AUBURN UNIVERSITY 

Dr. TAYLOR. Thank you, Mr. Chairman, and special thanks to 

Senator Sessions for his longstanding support of Auburn University. 

I am here representing Auburn University’s alternative energy 

program, and as such, I really speak for a diverse group of scientists and researchers. For example, among our faculty is a researcher with decades of experience in growing energy crops like 

switchgrass, other scientists are world leaders in the technologies 

for producing and harvesting forest biomass, and we have nationally recognized experts in the conversion of synthesis gases to liquid fuels. 

To build on our intellectual wealth, Auburn University is investing significant resources, our own resources, into research and education on bioenergy and bioproducts that can be created from our 

abundant natural resources. We’re here today with two primary 

messages. First, a sustainable biofuels industry must be based on 

a balanced portfolio of regionally appropriate biomass feedstocks 

and biofuel conversion technologies. And, second, the creation of a 

successful biofuels industry will only be possible through significant and sustained funding of research and development that identifies technologies to make biofuels cost-competitive with petroleum 

fuels. 

We recognize the significant strides that the corn-based ethanol 

and soy-based biodiesel industries have made for acceptance of 

biofuels. We believe, however, that to achieve U.S. energy security 

goals, we’ll need additional biomass feedstocks and fuel conversion 

technologies. Like many others, we believe various forms of cellulosic and ligno-cellulosic material hold great promise for expanding our biofuels industry and should therefore be emphasized in 

our national R&E funding priorities. 

For example, in the Southeast United States, abundant woody 

biomass, energy crops, and agricultural waste like poultry litter 

should be major sources of our feedstocks. In other regions of the 

United States, different biomass feedstocks are going to be more 

appropriate and more cost-effective. 

In a similar fashion, we believe it’s critical to fund the development of a balanced portfolio of fuel conversion technologies, not just 

ethanol production. Auburn’s energy initiative is currently emphasizing the thermochemical approaches and gas-to-liquids technologies that will make synthetic diesel fuel, aviation fuel, and gasoline directly from biomass. 

For our Nation to create a sustainable biofuels industry, we recommend emphasizing the following four principles in research and 

development funding: First, utilize this diverse suite of biomass 

feedstocks and fuel conversion technologies. Second, use a systems 

approach from the farm or forest all the way to the fuel pump. YesVerDate 0ct 09 2002 14:01 Apr 16, 2007 Jkt 034568 PO 11016 Frm 00080 Fmt 6633 Sfmt 6633 H:\DOCS\34568.TXT SENERGY1 PsN: RSMIT
77

terday in a meeting with Energy Assistant Secretary Karsner, he 

commended Auburn’s approach using systems approaches to solving problems. Third, we must ensure long-term sustainability of 

the production systems. And, fourth, we must demand cost-competitiveness with petroleum fuels. 

With focused R&D, these technologies will be ready for commercialization in 2 to 5 years, by using Auburn’s partnership approach 

with industry and government agencies. You know, regardless of 

our actions, we’re all leaving a legacy for our children and grandchildren. At Auburn University, we hope that part of our legacy 

will be a secure, sustainable energy supply for America. 

Thank you again, Mr. Chairman, for inviting us, and thank you, 

Senator Sessions. 

The CHAIRMAN. Dr. Prather, go ahead, please. 

STATEMENT OF DR. KRISTALA PRATHER, ASSISTANT PROFESSOR OF CHEMICAL ENGINEERING, LABORATORY FOR 

ENERGY AND ENVIRONMENT, MIT 

Dr. PRATHER. My name is Kristala Jones Prather. I’m an assistant professor of chemical engineering at MIT, and I’d like to start 

by thanking Chairman Bingaman and the rest of the committee for 

this invitation to speak to you on behalf of MIT on the topic of 

R&D for transportation biofuels. 

You may or may not be aware of a major initiative we do have 

at MIT in the area of energy. We have a major energy initiative, 

which was launched by our new president almost 2 years ago. And 

at the same time that she announced a major effort in energy, she 

also announced that we should spend time working toward the further integration of life sciences and engineering. And so it’s particularly appropriate to talk about transportation biofuels, because 

we do believe that it combines both of those areas very nicely. 

Let me start by saying we do think of this as a grand challenge 

in technology. I heard one of the panelists earlier say that he 

doesn’t think there’s a single silver bullet in terms of identifying 

one biofuel, and we also believe there’s not a single technological 

hurdle that can be overcome in order to make all of this a reality. 

Instead, as Dr. Taylor has already said, this is certainly a systems problem. It requires integration, from planting of the crops, 

identifying what those crops are in the first place, all the way 

through toward separation and end use of the fuel. And so while 

it’s helpful to think about specific technological hurdles, we don’t 

want to forget about the fact that each individual decision we make 

is going to impact both what’s happening upstream and what’s 

happening downstream. 

I would like to highlight a couple of areas where I think biotechnology, this integration of life sciences and engineering, can 

play a role, and the first one is on the side of biomass production. 

You’ve heard lots of talk about corn-based ethanol, and you are, I’m 

sure, very aware by now of a lot of the debate regarding the energy 

balance associated with it. A recent MIT study concluded that it 

was essentially too close to call, that it really depends on what your 

inputs are and the system boundaries. 

On the other hand, cellulosic ethanol is generally agreed to be 

very positive in terms of the energy balance. The problem, from a 

78

technological perspective, is that it’s more difficult to convert into 

useful biofuels. So where we think biotechnology can play a role is 

in helping to develop crops that are easier to grow, requiring less 

energy input, and easier to convert into the biofuels that we’re interested in. 

Second, on this conversion scale, we want a process that’s going 

to have very high yields and have high productivities, and we’re 

limited in that capacity currently by our ability to really convert 

all of the sugars that are available to us and to deal with the toxicity issues. Again, we have work at MIT in this area. A recent 

paper from a research group in Science showed increased tolerance 

of both bacteria and yeast to ethanol, which would presumably give 

us higher productivities. 

I’ve been talking about biotechnology because we again are interested in that, and it’s my own area of expertise, but I do want to 

also emphasize what Dr. Taylor has said, in that there are chemical methods as well that should be examined in terms of how you 

can convert biomass-derived carbons into biofuels. Likewise, we can 

take advantage of chemistry and chemical engineering for the separations part of this process, and that tends to be typically very energy-intensive and also cost-intensive as well. So if we can have 

some novel chemistry and chemical engineering methods to help us 

to purify the fuels that we get, usually in fairly dilute solutions, 

this can help in the economic balance. 

I want to end by making two points. First of all, I don’t think 

we should confuse biofuel with ethanol or biodiesel. I think that 

point has been made, but I want to emphasize it again, that we 

need to be considering lots of different options. 

Certainly ethanol is the most advanced, and biodiesel as well, 

from a commercial perspective, but there are lots of challenges associated with them, including the low energy density relative to 

gasoline and the infrastructure issues which you’ve already heard 

about. So we should be thinking longer term about alternatives, 

some of which I believe you heard about this morning; and as well, 

not forgetting about this systems problem, we should think about 

how new fuels or alternative fuels would integrate into both our existing vehicle infrastructure and distribution infrastructure. 

Let me end by saying that I think this is a big problem. I think 

it’s a problem we can solve. We can do it as scientists. We can do 

it as a country, if our government shows the will and puts the full 

support of our country behind it. I like to think of the Manhattan 

Project and the Apollo Program as examples of great technological 

challenges which we met, as long as we had the support for it. 

What we don’t need is the up and down, on again, off again investment in the R&D for alternative energy. Instead, we need a sustained commitment for it. 

As far as a timeline, I think we’ll see cellulosic ethanol at a commercial scale within 10 years. Alternative fuels are going to take 

longer, but it can certainly be done. 

Thanks very much for the time, and I look forward to questions. 

The CHAIRMAN. Thank you very much. 

Dr. Arvizo, welcome. 

79

STATEMENT OF DR. DAN ARVIZO, DIRECTOR, NATIONAL 

RENEWABLE ENERGY LABORATORY 

Dr. ARVIZO. Thank you, Mr. Chairman. It’s great to be here, and 

I do appreciate the leadership that’s exhibited by this committee. 

It is clearly a very robust topic and we’ve had a great day already 

in terms of informing, I think, the discussion and debate. 

I’m the director of the National Renewable Energy Laboratory, 

and I want to acknowledge the faithful and tenacious commitment 

that Senator Salazar has provided to our laboratory and to this 

topic in general. I commend him for that. We are the home of a 

number of technology opportunities, one of which is the National 

Bioenergy Center, and it is, in fact, the Nation’s only pilot-scale cellulosic ethanol laboratory. I had the opportunity and the privilege 

to brief the President while he toured that facility last year. 

I think this is a unique point in time and we have great opportunities in front of us. What was striking about the discussion today 

thus far is the enormity of the task. And while the technology research, certainly from our perspective, is required, so is resource 

development and utilization research, ensuring that the integrity 

and the fuel supply have validity to them, vehicle and transportation system integration with fuels, impacts on water and environment, and infrastructure requirements, among a number of other 

things that are necessary and in play to get to where we need to 

be. 

So what we need first and foremost is a comprehensive, integrated program for biofuels development that takes into account 

the critical factors both individually and collectively. And to do 

this, I propose that we have a national needs assessment to be undertaken with haste and that it be comprehensive, a report and 

study that would analyze our long-term needs and take into account the full range of needs, on the demand side, on the supply 

side, on the infrastructure supply, on what is required to meet the 

goals that we have set out for ourselves. 

Second, we need to look beyond today’s research. We have a robust research program, but much more needs to be done. We need 

to carefully plan to embark on the broadest portfolio. We’ve heard 

that recurring theme today. And we need to work, as we have 

worked with the producers and people who have pioneered these 

areas and the scientific and technologic community and providers 

in the energy business. It’s very clear that we need a multifaceted 

approach to biofuels development, and that will serve the country 

well. We need to do that in close collaboration with industry. We 

manage, at the national laboratories and certainly at NRL, portfolios that are very much hand-in-glove with industry, so that the 

technologies that emerge are market-relevant. 

Third, we need to make necessary investments in our research 

capabilities. I think having adequate research capabilities is important. The Nation’s world class laboratory system and leading academic institutions need to be retooled for this mission, and I think 

we can do that. We need to draw on the regional research and educational capabilities. 

And while we are confident that the current focus on developing 

technology to quickly enable the development of cellulosic ethanol 

in this country is a correct and prudent first step, I think we need 

80

to go much beyond that. History has shown that by setting out the 

broadest research courses, we can best guarantee that we’re going 

to get to the place we need to be as the market evolves, as the technologies evolve, and provide choices from which policymakers, industry, and the marketplace can make wise decisions to have sustainable industries, going forward, and maintain U.S. leadership in 

what I consider to be an area that’s going to have fierce global competition. 

I’ll be happy to take questions at the appropriate time. Thank 

you. 

The CHAIRMAN. Thank you very much. 

Dr. Davis. 

STATEMENT OF DR. MICHAEL DAVIS, PACIFIC NORTHWEST 

NATIONAL LABORATORY 

Dr. DAVIS. Thank you, Mr. Chairman, members of the committee. 

Also, Senator Cantwell, who actively engages the full resources of 

the Northwest in terms of these important issues, we thank you for 

that. 

I like to keep in mind the two big challenges. One is energy security, the other is climate change. Energy security is much more of 

a domestic issue. Climate change is much more of a global issue. 

We have got to get our policy right domestically to meet both challenges. There is no question about it. 

We also have heard a lot about infrastructure today. We really 

need to get clear on our point of departure. We’re in an 85 percent 

dependent situation on hydrocarbons, domestically and globally. 

That is an incredible infrastructure and dependency, and that fundamentally is a hydrocarbon dependency. Biomass is just another 

form of hydrocarbon. It might be very young, but it’s another hydrocarbon. 

So I think we need a much greater focus on conversion efficiency 

across the whole board. Anything we convert, we’ve got to convert 

more efficiently. As long as we’re dealing with hydrocarbons, we 

need a much more aggressive program on carbon capture and management, and I don’t think we’ve done near enough yet on end-use 

efficiency. If we save a gallon there, do the math, it’s two or more 

gallons of production. 

So with respect to biofuels, it’s still a hydrocarbon. I think there 

is sufficient focus on corn and bioconversion technology. I think we 

need much greater focus on broadening the feedstock base, and certainly municipal waste is an example. We have not aggregated a 

lot of the biomass waste. We certainly have aggregated a lot of municipal waste. We put a lot of money into aggregating it. We ought 

to be thinking about how to better convert it. And we need more 

work on conversion technology, particularly in the thermochemical 

conversions base. 

I think there is sufficient focus on ethanol, and I think ethanol 

remains a very substantial infrastructure challenge. While I think 

the overall goal is right, I think we ought to think very carefully 

about how much of that goal we actually try and meet with ethanol. 

I think we need much greater focus on other products. Certainly 

biodiesel is one; DME; there’s others. We should be much more 

81

careful, I think, about what products we actually can derive, what 

their price points are, and what their market entry points are. 

There’s an awful lot we can do with biomass besides going directly 

to commodity fuels. I think we should anticipate more electricity 

into the transportation sector, and be equally as enthusiastic as we 

are with ethanol in terms of electricity. 

I think we need to use existing infrastructure to the maximum 

extent possible. We’ve got 1,000 biomass stations—or ethanol stations, if you will. We’ve got 170,000 fueling stations. We’ve got 

something like 5 million flex-fuel vehicles. We need something like 

55 million if you wanted to consume all the ethanol that you’re 

talking about producing. We also need much more focus, as I said 

earlier, on vehicle efficiency. 

I would echo what Dan said. He was the first guy all day, I 

think, that mentioned water. We need to pay much more attention 

to water, both for processing and also realize that these feedstocks 

are hydrogen-deficient. The hydrogen has got to come from somewhere. 

I would be very careful with incentives and subsidies, and avoid 

biasing either the conversion technology or the product. Then, finally, I would say that we should do everything we can to encourage public and private R&D partnerships, because all the R&D 

we’re doing, we should really work hard to have the best market 

channel we can to get that research to the marketplace as quickly 

as possible. So please reinforce the public-private partnerships and 

research. 

Thank you. 

The CHAIRMAN. Thank you very much. 

Dr. Michalske is the clean-up hitter here on this whole conference. Go ahead. 

STATEMENT OF DR. TERRY MICHALSKE, SANDIA NATIONAL 

LABORATORY 

Dr. MICHALSKE. Thank you. It’s a great honor for me to be here 

representing Sandia National Laboratory. Sandia is managed and 

operated by the National Nuclear Security Administration of the 

Department of Energy, and the Sandia Corporation, which is a subsidiary of Lockheed Martin. 

On behalf of Sandia, I’d like to begin by thanking Chairman 

Bingaman and the members of the committee for organizing this 

conference, and I’d also like to thank both Senators Domenici and 

Bingaman for their leadership in passage of the Energy Act, which 

provides important new policies in the biofuels area. 

Now, I think everything we’ve heard in the course of the day 

would confirm the potential for biofuels to have an important impact on reducing our Nation’s dependence on foreign oil, and also 

reducing the level of greenhouse gas emissions, which makes this 

an important and high-priority area for government investment. 

And we think the Government investment ought to be focused in 

a number of areas: first, in supporting long-term and sustained 

fundamental research—there are difficult challenges here that will 

need to be addressed over the long haul; providing key incentives 

that speed the development of infrastructure for production, distribution, and the utilization of biofuels as they come into the marVerDate 0ct 09 2002 14:01 Apr 16, 2007 Jkt 034568 PO 11016 Frm 00085 Fmt 6633 Sfmt 6633 H:\DOCS\34568.TXT SENERGY1 PsN: RSMIT
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ket; we also think the Government needs to play a role in establishing innovative mechanisms that promote public and private 

partnerships in the research, development, and deployment; and, 

finally, in assessing and enacting policies that will ensure the protection of our environment, land and water resources. 

So the challenges that lie before us really sit at the intersection 

of science, technology, economics, and social and political interest 

and support. And these challenges have to be met in a world of 

fluctuating oil prices, where free market principles don’t necessarily apply, and our environmental constraints are frequently 

changing. There is no question that success is going to depend on 

the development and deployment of some advanced technologies 

and engineering systems that simply don’t exist today. 

To meet these challenges, the investment should be systematic, 

with a focus on driving critical, fundamental science, understandings that are directed at achieving dramatic cost reductions 

and efficiency gains. In this regard, I think it’s going to be very important that we look at innovative ways to focus together the 

strengths of industry, academia, and the Government laboratories, 

to bring those talents together to focus on these critical problems. 

Just as SEMATECH demonstrated the value of public-private partnerships in advancing our competitive advantage in the semiconductor industry, I think those same kind of models will be very important as we go forward here. 

We believe that in the near-term the focus on ethanol moving toward the technologies for cellulosic biomass conversion are going to 

be very important, but in the longer-term, we need to evaluate the 

broader range of biofuels and biocrude as it may be produced from 

novel biomass sources such as algae or microorganisms. And again 

we’re going to have to focus on the entire energy system, including 

the distribution, the utilization, and that’s going to mean investments in materials, engineering, and combustion and engine design. 

But as we move forward, we must be mindful of the water resources. Because biomass-based fuel production requires water 

both for growth and for processing, biofuels will have significant 

impacts on our water resources. For this reason, investments in 

technologies to address those challenges must be prioritized in the 

context of these interdependencies. 

So thank you again for the opportunity, and I look forward to 

questions. 

The CHAIRMAN. Thank you very much. Let me just ask one question. I’ll start with Dr. Arvizo, and any of the rest of you who want 

to comment can do so. 

You talked about the need for a comprehensive plan. I think you 

stated we need a national needs assessment in this area. I recall 

when the semiconductor industry came up with—I think working 

with some of our Federal laboratories participating, came up with 

a road map for the development of the semiconductor technology 

that they thought was needed to move ahead. Is that what you’re 

talking about, a road map for where we need to make breakthroughs and where we need to concentrate resources in the research field and the development field? Is that what you’re describing? 

83

Dr. ARVIZO. Yes, sir. In fact, it has a lot of the flavors of that 

old SEMATECH that you’re talking about, which is really a private 

sector road map and partnership that would go forward. In the 

2002 Biomass R&D Act—I’m sorry, in the 2000 R&D Act, there 

was a biomass R&D board that was formulated to coordinate activities across agencies, and I think that maybe is the start of where 

we can plug a national needs assessment type of thing into it. 

But we need an architecture, we need a framework around the 

entire—as my colleagues have said, a systems approach to the entire fuel-to-transportation chain—a value chain, if you will. And 

what I envision would happen would be something of a network 

that is coordinated centrally, but it is very regionally distributed in 

terms of trying to get at the regional specifics of some basic tenets 

regarding what are the attributes we need out of a future energy 

economy that has a much more robust acceptance of biofuels. 

Biofuels touch so many different things. We’ve got to worry about 

everything from sustainability to the way financial markets work, 

the way the players work, the way the infrastructure is all formulated, and it does inform an R&D agenda in that process. 

The CHAIRMAN. All right. Let me defer to Senator Domenici. Why 

don’t you start, Senator Domenici, and then I’ll come back to this 

side over here. 

Senator DOMENICI. Thank you very much. And I’ll be brief, because it is late. 

I at least want to thank you, all of you, especially for waiting so 

long. By the time you get up here, not only are you tired, but it’s 

quite obvious everybody up here is tired. We just hope you had a 

fine afternoon in spite of all that. 

We’re glad to have you, and we know a couple of you pretty well. 

You’ve been at this kind of thing for quite some time, and we’re 

very proud of you. Some not so long, only because you aren’t very 

old; some a long time, because you are very old, like me. No aspersions. I’m old, too, and I still think I know what I’m doing, but you 

know that’s questionable. In any event, let me thank you all. 

But let me ask Dr. Arvizo just one follow-up on Senator Bingaman’s question. I don’t quite get it. Why is it more important that 

we do a road map for this when we have so many other alternative 

energy sources that are entering the arena that are going to be—

in terms of quantity, that are going to be just as big as this, and 

we’re not doing road maps on them? Is this something special here, 

or am I misstating the question? 

Dr. ARVIZO. You’re not misstating it. I would offer that we need 

road maps in a much broader and more comprehensive way. You 

know, in our laboratory we look at the renewable areas, renewable 

fuels, renewable electricity. I think you need road maps on both. 

The kind of impacts that are required, the kind of investments in 

the private sector that are going to be required, are in the trillions 

of dollars, and to do that, I think government has a role to play 

that can help facilitate market mobilization of capital. And that’s 

really what is I think at the origin of this. 

Senator DOMENICI. Let me ask one for you, Dr. Prather, and then 

I’ll yield to the chairman. You stated that cellulosic ethanol is 10 

years away from commercialization; did I read that right? Didn’t 

you say that? 

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Dr. PRATHER. Yes. The estimate of that is actually less an estimate of the demonstration of technical feasibility, and includes actually bringing up biofuels-dedicated crops, so that includes the entire process timeline. The demonstration of actually being able to 

convert cellulosic materials to ethanol, that is already happening, 

but in terms of getting something up to scale, where we would actually see competition with corn-based ethanol and actually having 

the appropriate agricultural infrastructure in place in order to do 

that, I do think is closer to a 10-year timeline. 

Senator DOMENICI. Well, the President is asking for 35 billion 

gallons by 2017 from this particular fuel. Is the President’s goal attainable, given the state of research, if alternate fuels were limited 

to cellulosic ethanol? 

Dr. PRATHER. Let me make sure I understand the question. Are 

you saying, if we are only looking at cellulosic ethanol, is it possible 

to do that in 10 years? 

Senator DOMENICI. Right. 

Dr. PRATHER. If we’re looking at cellulosic, if we look at it in combination with corn-based ethanol, I think that’s realizable. I’m less 

confident that we’re going to go completely from a corn-based ethanol system to a cellulosic-ethanol-based system, and we’re going 

to stop making ethanol out of corn, in a 10-year timeframe. 

I do think what we’ll see—and I will also say again this is not 

my area of expertise, but I think what we’ll see is a gradual introduction of cellulosic-based ethanol into the market. The benefit to 

that is, as the cost of that comes down to be competitive with corn 

or better than corn, you may see some displacement of what is 

made from corn, but I think you’ll see a combination of both of 

those for some time before you actually get the net benefits that 

are available from cellulosic. 

Senator DOMENICI. OK. Thank you very much. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Senator Cantwell. 

Senator CANTWELL. Thank you, Mr. Chairman. 

I want to follow up on Senator Domenici’s question, because I 

think there is a bit of irony here. Obviously my two colleagues from 

New Mexico and the lab that is there and the Pacific Northwest 

lab remember the history of our country, when we had a mandate 

from a President who said in a very short period of time he wanted 

us to, I think, go from about $2,000 of research into becoming a 

plutonium-producing Nation, and we did that in about 3 of 4 years. 

I can’t believe the challenge of cellulosic is more daunting than 

that. 

And so my question is, in this process—and maybe, Mr. Taylor, 

your 6 years on switchgrass can give us some insight as to this 

issue, enzymes versus gasification of materials—what really is the 

focus of what we need to do on breaking through on cost-effective 

production of cellulosic material so that we can expedite this time 

period? Anyone who wants to answer. 

Dr. DAVIS. I’d like to comment on that, because I think there are 

technologies today, particularly gasification, where we can break 

down any hydrocarbon and we can synthesize what we break it 

down into, into the molecules we want, and we can actually do that 

85

at a massive scale. It’s back to focus. We’ve focused for 20 years 

on bioconversion. I think we’ve made progress. I think we need to 

continue to work. 

I think we forgot about the thermochemical conversions, and 

that’s our world today, and we do it because we can do them at 

very large scale and they’re quick conversions. So thermochemical 

conversions open up the market substantially. 

I’ll say again that I don’t think the only product we ought to be 

trying to produce is ethanol. I think we ought to let the market 

sort out the product, and I think we ought to broaden the technology base we’re using to produce them. And I only want to, at 

some risk, chide Senator Domenici because, if he remembers, in a 

prior life he actually confirmed me for a position in DOE, so you’re 

partly to blame, sir. 

Senator DOMENICI. Somebody did tell me that recently. I 

wouldn’t have remembered, but now I do. It’s a long time ago. 

Dr. DAVIS. Right. 

Senator CANTWELL. So, Dr. Davis, just to clarify, you’re saying 

we could go faster with the focus? It’s not the science that’s prohibiting us; Is that what you’re saying? 

Dr. DAVIS. I think we can go much faster than what’s conventional wisdom. 

Dr. TAYLOR. Can I add to that, Senator Cantwell? 

Senator CANTWELL. Yes, go ahead. 

Dr. TAYLOR. We both talked about thermochemical conversion. 

The technologies are there. The oil industry is investing very heavily in that to take natural gas to liquid fuels. The technologies are 

there, and they’re fairly well known. There are some small process 

control variables that we’ve got to work out. 

Take an example: If you’re feeding poultry litter into that, as 

your feedstock, into that gasifier, you know there are some things 

we’ve got to work out there. If you’re feeding wood chips from 

Washington State versus Alabama, there’s probably differences in 

how we control that process. So the things that we need to know, 

the technologies, are there, and we think there’s a fairly quick horizon to be able to commercialize those and produce a significant 

amount of fuel. 

I guess our message is: Have a balanced portfolio, don’t just put 

all your eggs in one basket. Let’s look at cellulosic ethanol. That’s 

fine, but let’s also broaden that to bring in other technologies that 

are——

Senator CANTWELL. Well, I’m definitely not for picking technology winners and losers, but at the same time, I’m not so sure 

that the security threat is any less than it was during this previous 

decade in there where the United States wanted to shift strategy 

in investment. We have a very big challenge and we’re very dependent, and it could be a lot more drastic scenario than just trying to talk the Chinese into putting more pressure on Iran for nuclear proliferation. So, to me, expediting this is a national security 

issue. 

Dr. ARVIZO. Senator, if I may comment on that, we frequently get 

asked that question: ‘‘So what can you do in what kind of timeframe?’’ And it really is about the timeframe. We have run some 

models. And I’ll grant that the models for predictions in these 

86

areas are very inadequate, but the best models that we have suggest that over the course of the next 10 years the upper limit for 

cellulosic ethanol is on the order of 6 billion gallons. Now, that’s 

a small fraction of what the President’s goal is, maybe a sizable 

fraction from some circles, but it doesn’t meet the whole goal. And 

part of what——

Senator DOMENICI. How many was that, Doctor? How many? 

Dr. ARVIZO. Up to 6 billion. In fact, we’ve run models, a very aggressive scenario, assuming a variety of things in terms of how you 

mobilize capital, and it’s 5 to 6 billion gallons by 2017. Now, the 

way you accelerate that is, you make assumptions about more aggressive public policy. Now, we’re not modeling anything, but some 

of what we’ve considered to be more basic kinds of instruments, the 

mechanisms for—we don’t have the first cellulosic ethanol plant in 

production yet, and it’s not because—as we heard earlier today, it’s 

not because we don’t have the technology to actually begin the pilot 

testing program. We simply don’t have investors willing to take the 

financial risk to make that happen. Loan guarantees, as you offered earlier, are a way in which we can accelerate. 

So there is a technology component, there is a market component, and there is a policy component, and I think it is a matter 

of national will as to how quickly we want to get to those goals. 

Dr. MICHALSKE. If I could add to that. This challenge, it is quite 

a large challenge, but I think what’s inspiring is that there are a 

set of tools now in the world of biosciences that give us a completely new way to go about this. These tools have the ability to 

learn how to genetically modify plants so that they actually are 

easier to break down, to develop through nanotechnology and biotechnology better ways to extract the energy and then convert it 

into a useable fuel. 

And one of the things that’s very difficult now is that there are 

many process steps along the way. This is a very intensive process 

of conversion. The opportunities are to really gain great efficiency 

advantages by combining those steps, and using these technologies 

to have single process steps that do multiple functions and really 

streamline the cost-effectiveness. So I think we can do the processing now, but the potential to be able to do it in a much more 

cost-effective way is what the science and technology investments 

really need to focus on. 

Senator CANTWELL. And that’s a U.S. economic advantage? 

Dr. MICHALSKE. Absolutely. 

Senator CANTWELL. I mean that what you just said about 

nanotechnology and other things is an advantage we have in the 

production of these biofuels that the Europeans or Chinese or other 

people don’t have; right? 

Dr. MICHALSKE. It’s an advantage that we need to capitalize on. 

Senator CANTWELL. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you very much. 

Senator Sessions. 

Senator SESSIONS. Thank you. If you would just, Dr. Taylor, clarify for us. You take a product like switchgrass, Dr. Bransby’s 

field—I’ve seen it—and we talk about how many gallons per acre, 

if you had a good conversion system. But what I really am curious 

87

about is, how do you take this dry cellulose, this cornstalk, and 

convert that to a fuel that we can utilize? 

And I understand there are two ways to do it, through biochemistry and hydrolysis and through heat or a thermal process. 

Can you explain the differences? And then I know you’re going to 

be building some bio plants this year, Auburn University is; are 

they going to emphasize these technologies? 

Dr. TAYLOR. Yes. You’ve got two or three questions there. I’ve got 

to remember all of them. 

Senator SESSIONS. Yes, I do. 

Dr. TAYLOR. The investment that Auburn is making this year is 

really emphasizing that thermochemical approach, so we’re putting 

in larger laboratory-scale gasification, gas-to-liquids equipment. 

Auburn has had a longstanding history of gas-to-liquids technology 

research at a fairly small laboratory scale to work out some really 

neat new breakthroughs in the gas-to-liquids technologies. And so 

we’re going to a larger scale that will let industry come in and 

partner with us and take the results and scale that up to an industrial process. 

Senator SESSIONS. Now that you have concluded, I think it’s fair 

to say, from what I understand, that the prospect for 

thermoconversion gasification is better at this point than the——

Dr. TAYLOR. We think so. Both approaches, the biochemical approach versus thermochemical approach, I guess if you look at the 

billion ton report, the assumption that’s in there is a ton of biomass 

might make 60 gallons of ethanol or 60 gallons of fuel. We think 

those are fairly conservative estimates. By really increasing our efficiency, increasing the technology there, maybe you double that. 

Theoretically, if you look at the carbon that’s there, theoretically 

we might be able to produce 200 gallons per ton, we think. So let’s 

say you take that 60 gallons per ton and you double it. That’s a 

significant increase in the amount of fuel that we might be able to 

produce. 

Those are the kind of things that we need to answer in both the 

biochemical and thermochemical approaches. The thermochemical 

approach gives us some other advantages. 

Senator SESSIONS. Can you say basically, just for the layman, 

how the heat will convert a dry cellulosic product to become a fuel? 

Dr. TAYLOR. In those thermochemical approaches, typically you 

would gasify the material, and that’s an incomplete combustion 

process that gives you—it takes that cellulose, lignon, all the hemicellulose, and you get a synthesis gas that has primarily carbon 

monoxide and hydrogen molecules in it. And then you can take 

those into the gas-to-liquids technologies or other catalytic conversion technologies and re-form those or put them into a new molecule that might be a diesel fuel, gasoline, or other paraffins, 

olefins, other higher value chemicals that come out of that stream 

at the end of that. 

Senator SESSIONS. And you will test that this year? 

Dr. TAYLOR. Yes. 

Senator SESSIONS. And one more thing. How much, and how 

many kinds of switchgrass cellulose can be produced in an acre of 

land? 

88

Dr. TAYLOR. If I remember right, Dr. Bransby, your good friend, 

I think his record is about 15 tons per year, per acre. Does that 

sound right? 

Senator SESSIONS. So at 60 gallons per ton, 15 tons an acre, 

that’s a good bit of fuel. 

Dr. TAYLOR. Several gallons per acre, that’s right. 

Senator SESSIONS. If you can make the conversion process work, 

you should be able to have a pretty good source of energy. Now, the 

thing about switchgrass is, everybody is talking about it, but the 

advantage, if you see it, is you just cut it like you do regular grass. 

It grows up to 10 feet tall. And you can go in and cut it, but you 

don’t have to replant it. I believe Dr. Bransby has cut the same 

fields for 10 or more years, never had to replant, don’t have to 

break the soil up, and does not fertilize at all or very little. So it’s 

a pretty tough, hardy-growing product, if you could make the conversion work. 

Dr. DAVIS. Senator Sessions, if I might add a comment, I think 

we’re not trying to put thermochemistry or biochemistry against 

each other. Keep in mind that we need conversion technology that 

both scales up to massive scale and scales down to a distributed 

scale, that works for a wide variety of feedstocks. That’s pretty 

challenging. 

We just got back from 10 days in China, and they are building 

gasification technology on a massive scale, but they’re not producing it to make ethanol. They’re basically building it to make fertilizer and to make methanol as an intermediate for chemical activities. And, in fact, we have agreements now to work with them 

to campaign some of our technology on their gasifier, because I’m 

not ready to ask the committee for enough money to build a new 

gasifier at PNL, but I’d like to do that. So with that cooperation, 

we’ll be able to campaign a number of important technologies on 

large gasification systems this year. 

Dr. TAYLOR. If I can just tack onto it, I guess our approach is, 

let’s keep our slate open. Let’s consider a balanced portfolio of 

those fuel conversion technologies. Thermochemical just happens to 

be one of those that we have some expertise in, and that’s what 

we’re emphasizing. 

Senator DOMENICI. Mr. Chairman? 

The CHAIRMAN. Yes, Senator Domenici. 

Senator DOMENICI. I know we don’t have a DOE official here. I 

guess maybe you come closest, being from Sandia. Or I guess a couple of you do, three of you do. Anyway, I want to lay this before 

you, because I know about it and I think you would be interested 

in getting the facts for us. 

It would seem kind of strange that the President of the United 

States would be giving a State of the Union address and be talking 

about such a large quantity of ethanol in the future, when you are 

sitting before us today talking about the fact that we don’t know 

how to make it yet, we don’t know how to make that second breakthrough which will create big quantities. 

But the Department of Energy has let three contracts or loans or whatever the instrument is, Senator Bingaman, $160 million 

each. That’s out there, and I don’t know where they are in status, 

but I think it would be good, if you would think so, that we write 

89

DOE and ask them. Because it would seem that our committee, we 

started it by authorizing it in our bill, and then they took it and 

they found the money for it. They didn’t find the money for some 

of the other things, which I’m glad for, but I think it would be good 

for us to know where it is. It seems rather important that we pursue it with some degree of vigor. 

The CHAIRMAN. I agree. I think we should inquire from the department how we get from here to 35 billion. 

Senator DOMENICI. It’s a good point. 

The CHAIRMAN. Yes. 

Senator DOMENICI. Very simple. 

The CHAIRMAN. Since that’s what we’re supposed to be doing. 

Let me call on Senator Salazar. 

Senator SALAZAR. Thank you very much, Senator Bingaman. And 

I know it’s late in the day, so I will be short. 

Let me just first say that I congratulate each of you and your institutions for all that you do in the laboratories. I am particularly 

fond of NRL, and thank you for greeting the President and Secretary Bodman and myself and others, Senator Allard, over the last 

year and a half. 

I have a question that I’d like each of you to just take a quick 

minute and a half to answer. I heard Dr. Arvizo’s response to several of the questions here: that we are limited perhaps in even 

reaching the President’s renewable fuels goal here at 35 billion gallons by 2017. And I thought I heard Dr. Arvizo say we have the 

technology issues and the market issues and then the public policy 

issues that we deal with. And I think your concluding statement 

was that an aggressive public policy might make a difference in 

terms of your modeling how much alternative fuel we can produce 

by 2017, 10 years out. So my question to all of you—and I would 

like you to spend less than 2 minutes on this each, 1 minute 

maybe, because otherwise the chairman will get mad at me. So at 

the end, he said an aggressive public policy could accelerate us 

achieving these goals, an aggressive public policy. What would be 

the two things that we could do in this U.S. Capitol on that aggressive public policy, to accelerate what we are doing now so that we 

can achieve and perhaps surpass the President’s goals? Terry, we’ll 

start with you and go down the table. 

Dr. MICHALSKE. I think that currently we are investing a 

shockingly small amount of our resources to achieve this goal, and 

that if we’re going to take on a challenge like that, I believe we can 

make it. But we can’t make it on a shoestring. We’re going to have 

to take that challenge seriously in how we support the research all 

the way through the development that will allow this to go forward. 

Senator SALAZAR. Do you have a quantum of what that would be? 

I mean what kind of money we’re talking about. When you say it’s 

on a shoestring now, how much more do we need to get the acceleration done that you’re talking about? 

Dr. MICHALSKE. Senator, I don’t have a good quantitative estimate for that. 

Senator SALAZAR. But your conclusion is, right now we’re operating on a shoestring budget to essentially reach this goal that is 

a visionary goal. 

90

Michael, let’s go to you. 

Dr. DAVIS. I’d like to do a ‘‘don’t’’ along with a couple ‘‘dos’’. Don’t 

require the 35 billion gallons to be all ethanol. I don’t think that’s 

a good solution. Do more on vehicle efficiency. The math is for you. 

You save a gallon on the consumption side, you’re saving more 

than two on the production side. Allow for some electricity to be a 

part of this solution. 

We’re spending—the whole DOE research budget on energy is 

$2.5 billion. We spend $1 billion on oil every day. If I was buying 

insurance, I’d spend a hell of a lot more than $2.5 billion on energy 

research in this country, period. So I don’t think we’ve even begun 

to understand the challenge, relative to the total budget. 

And then we fracture that budget pretty substantially because 

all these issues have some merit. We don’t set priorities well 

enough to manage the resources we do, and I think we can make 

the case that we’re underinvested, aside from the wishes of the 

committee. We certainly appreciate your support. 

Senator SALAZAR. Thank you, Dr. Davis. 

Dr. Arvizo. 

Dr. ARVIZO. Yes, I think first of all we’re talking about all the 

wrong scale here. I think we need to have—earlier in the presentation or during the day, Senator Domenici said we got the zeros 

wrong. I think we’ve got the zeros wrong here. I agree with Dr. 

Davis regarding underinvestment in our energy future. Our future 

energy economy requires a lot more investment than we’ve had to 

date. 

If I just focus on this one area, biofuels, the one thing I will say 

is that right now, under Ray Orbach’s program for bioscience centers, we have scheduled two essentially bioscience centers that will 

be funded at something on the order of $50 million a year for 5 

years. These are formidable efforts. There are actually five major 

bioregions of the country where you have feedstocks that are similar in nature. We ought to have five bioscience centers, not two. 

That would be a huge step forward in getting regionalization and 

getting an infrastructure. 

I think there is some science to be done. Clearly it can be aided 

by public policy. I think in this case, looking at more robust feedstocks that are for the purpose of energy production, we have to get 

out of this quandary that we have that we’re affecting food prices 

because we’re trying to develop energy, liquid fuels. 

Again, taking a holistic approach back to this road map that I 

was talking about earlier, we really do need to look at this thing 

in its broadest perspective. I think we’ll find more than enough 

challenges to spend an enormous amount of money on, only a little 

bit of which will be really, really effective in terms of meeting the 

needs. 

The difference between this and the Manhattan and the Apollo 

programs is that we’ve got to do this at an achievable and sustainable market price. We didn’t have that particular dynamic overlaid 

on those other grand challenges. This is a grand challenge of unprecedented proportion, so it needs that kind of attention. 

Senator SALAZAR. Thank you, Dr. Arvizo. 

Dr. Prather. 

91

Dr. PRATHER. I think I’ll kind of piggyback exactly on that point, 

that I think there’s a difference between ‘‘can we do it’’ and ‘‘can 

we do it at a price that makes it realistic.’’ So I’ll leave it at that. 

I apologize for not remembering the writer’s name, but there was 

a professor at the University of California at Berkeley who did an 

analysis in terms of economic investment in R&D and concluded 

that what we need is a ten-fold increase in investment, governmental investment, in the energy area. And this included renewable energy altogether, it wasn’t specific to transportation, biofuels. 

But his analysis concluded that it was a factor of 10, and that 

through historical analysis you could do that ten-fold increase in 

investment without significantly affecting the R&D efforts of other 

major initiatives. One of the concerns is always if you overfund in 

one area, you’re going to underfund significantly someplace else. 

And he also argued in this analysis that historically what we’ve 

seen is when the Government does ramp up its investment in 

major R&D issues, the private sector follows, so a ten-fold increase 

from the Government actually ends up being more than that because private industry steps in as well. So I’ll try to give that number. 

The second point I’ll make in terms of what to do is diversification, to really get the conversation going beyond ‘‘Can we make 30 

billion gallons of ethanol?’’ to ‘‘What does it really mean to have renewable, sustainable energy?’’ And think about going much broader 

than that. 

Senator SALAZAR. If you can find that article, I’d appreciate it if 

you could get it to us. 

Dr. PRATHER. Sure. I have it in my backpack back there. 

Senator SALAZAR. Thank you, Doctor. 

Dr. Taylor. 

Dr. TAYLOR. Dr. Kammen, I think, at UC-Berkeley, is who you’re 

thinking about. 

Dr. PRATHER. Yes. 

Dr. TAYLOR. A couple of things. I guess maybe our goals—we 

could rethink our goals a little bit. Instead of saying so many gallons, let’s say that our goal is to create a biofuels industry that’s 

cost-competitive with petroleum. If it’s competitive, consumers will 

buy it. You know, if it’s the right price, we’re going to buy that and 

put it in our cars and trucks. So let’s fund the R&D that will make 

the technology that will make the industry cost-competitive and 

sustainable at the same time. You’ve got to have both of those. 

Long-term environmental sustainability is what we want, but if 

it’s cost-competitive, we’re OK. The money, I don’t know how much 

we spent on the Apollo missions or other things like that, but if we 

elevate it to a level of a national priority, let’s really look at how 

much money was invested in those and that will give us some perspective on how much we should invest here. 

I know the farm bill has a bioenergy, bioproducts research initiative in it, proposed. That’s wonderful, but I’m not sure that that’s 

enough. 

Senator SALAZAR. Thank you very much. 

And thank you very much, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Senator Cantwell. 

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Senator CANTWELL. Thank you, Mr. Chairman. I just want to 

thank you for today’s various panels. And the organization of the 

committee into this biofuels day I think has been very helpful to 

the committee and to the Senate, so I thank you for your leadership on this issue. 

I wanted to follow up with Dr. Davis. 

You mentioned electricity a couple of times, and the notion that 

electricity, in and of itself, is a fuel. I know that the lab just came 

out with an analysis that 70 percent, I believe, of the cars, trucks, 

and other vehicles could be powered off of our current electricity 

grid capacity. That is, if we had plug-in cars, with that plug-in capacity, batteries could be recharged with the current supply of today’s grid. 

Dr. DAVIS. That’s correct. 

Senator CANTWELL. If that’s the case, what do we do to enhance 

the use of current energy that’s already available? 

Dr. DAVIS. There are a couple of important aspects to that. We 

looked at the 150 control regions of the country, and we looked very 

carefully at the installed electric-generating infrastructure, transmission and distribution. If you look at the amount of energy that 

could be produced off-peak, that’s available, largely from coal 

plants, then it gets very specific in terms of different regions, but 

it does look, in aggregate, like something on the order of 70 percent 

of the entire fleet, on an energy-equivalent basis, could be powered 

with electricity. 

The infrastructure is there to generate it and deliver it. You’re 

going to use more fuel. You’ve got to use that electricity off-peak, 

because you can’t compete with peak demands, where we’re essentially using the infrastructure for delivery. What’s going to require 

that to be unlocked is the right kind of technology on board vehicles, electric vehicles, plug-in hybrid vehicles, battery technology. 

Those are challenges as well, but those challenges might be a 

shorter path to victory than some of the other challenges. 

As to Dan’s point, I think I would look at a study that gets at 

how we move things, not just biomass in particular, but what are 

the options for us to gain energy security and address climate 

change issues in terms of how we move things? And I think you 

come up with a broader suite of answers, and some of them get you 

there faster than what we’re talking about with just ethanol. 

Senator CANTWELL. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Senator Sessions, did you have additional questions? 

Senator SESSIONS. I would just add, I believe Auburn is looking 

also at garbage, waste-to-ethanol. Is waste and newspaper and traditional garbage also potentially a source of ethanol? 

Dr. TAYLOR. It is another one of those cellulosic forms of material, yes. I think that we have some partnership agreements with 

an industry partner and we are working together there. 

Senator SESSIONS. Thank you.

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The CHAIRMAN. Well, I thank this panel very much. I think it 

has been very useful testimony, and we appreciate everyone who 

has participated in today’s conference. The hearing is adjourned. 

[Whereupon, at 4:55 p.m., the conference was adjourned.]

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