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SUBCOMMITTEE HEARING ON

SECOND GENERATION BIOFUELS:

THE NEW FRONTIER FOR SMALL

BUSINESSES

SUBCOMMITTEE ON RURAL AND URBAN 

ENTREPRENEURSHIP 

COMMITTEE ON SMALL BUSINESS 

UNITED STATES HOUSE OF 

REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

SECOND SESSION

JUNE 11, 2008

Serial Number 110-98

Printed for the use of the Committee on Small Business

(

Available via the World Wide Web: http://www.access.gpo.gov/congress/house 

HOUSE COMMITTEE ON SMALL BUSINESS 

NYDIA M. VELA ́ ZQUEZ, New York, Chairwoman 

HEATH SHULER, North Carolina 

CHARLIE GONZALEZ, Texas 

RICK LARSEN, Washington 

RAUL GRIJALVA, Arizona 

MICHAEL MICHAUD, Maine 

MELISSA BEAN, Illinois 

HENRY CUELLAR, Texas 

DAN LIPINSKI, Illinois 

GWEN MOORE, Wisconsin 

JASON ALTMIRE, Pennsylvania 

BRUCE BRALEY, Iowa 

YVETTE CLARKE, New York 

BRAD ELLSWORTH, Indiana 

HANK JOHNSON, Georgia 

JOE SESTAK, Pennsylvania 

BRIAN HIGGINS, New York 

MAZIE HIRONO, Hawaii 

STEVE CHABOT, Ohio, Ranking Member 

ROSCOE BARTLETT, Maryland 

SAM GRAVES, Missouri 

TODD AKIN, Missouri 

BILL SHUSTER, Pennsylvania 

MARILYN MUSGRAVE, Colorado 

STEVE KING, Iowa 

JEFF FORTENBERRY, Nebraska 

LYNN WESTMORELAND, Georgia 

LOUIE GOHMERT, Texas 

DAVID DAVIS, Tennessee 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida

MICHAEL DAY, Majority Staff Director 

ADAM MINEHARDT, Deputy Staff Director 

TIM SLATTERY, Chief Counsel 

KEVIN FITZPATRICK, Minority Staff Director

Subcommittee on Rural and Urban Entrepreneurship

HEATH SHULER, North Carolina, Chairman 

RICK LARSEN, Washington 

MICHAEL MICHAUD, Maine 

GWEN MOORE, Wisconsin 

YVETTE CLARKE, New York 

BRAD ELLSWORTH, Indiana 

HANK JOHNSON, Georgia 

JEFF FORTENBERRY, Nebraska, Ranking 

ROSCOE BARTLETT, Maryland 

MARILYN MUSGRAVE, Colorado 

DAVID DAVIS, Tennessee

(II) 

C O N T E N T S 

OPENING STATEMENTS 

Page

Shuler, Hon. Heath .................................................................................................. 1

Fortenberry, Hon. Jeff ............................................................................................. 2

Chabot, Hon. Steve .................................................................................................. 3

Bsrtlett, Hon. Roscoe ............................................................................................... 5

WITNESSES

Wooley, Dr. Robert J., Director, Process Engineering, Abengoa Bioenergy 

New Technology, Lakewood, CO ......................................................................... 7

Barnwell, Mr. Scott, General Manager, Blue Ridge Biofuels, Asheville, NC, 

On behalf of the National Biodiesel Board ........................................................ 9

Todaro, Mr. Tom, CEO, Targeted Growth and Sustainable Oils, Seattle, WA .. 10

Trucksess, Mr. Jeffrey M., Executive Vice President, Green Earth Fuels, 

LLC, Houston, TX ................................................................................................ 12

Byrnes, Mr. Robert, Nebraska Renewable Energy Systems, Oakland, NE ........ 10

APPENDIX 

Prepared Statements: 

Shuler, Hon. Heath .................................................................................................. 34

Fortenberry, Hon. Jeff ............................................................................................. 36

Chabot, Hon. Steve .................................................................................................. 37

Wooley, Dr. Robert J., Director, Process Engineering, Abengoa Bioenergy 

New Technology, Lakewood, CO ......................................................................... 38

Barnwell, Mr. Scott, General Manager, Blue Ridge Biofuels, Asheville, NC, 

On behalf of the National Biodiesel Board ........................................................ 43

Todaro, Mr. Tom, CEO, Targeted Growth and Sustainable Oils, Seattle, WA .. 47

Trucksess, Mr. Jeffrey M., Executive Vice President, Green Earth Fuels, 

LLC, Houston, TX ................................................................................................ 51

Byrnes, Mr. Robert, Nebraska Renewable Energy Systems, Oakland, NE ........ 60

Statements for the Record: 

The American Agriculture Movement, Inc. ........................................................... 60

(III) 

(1)

SUBCOMMITTEE HEARING ON 

SECOND GENERATION BIOFUELS: 

THE NEW FRONTIER FOR SMALL 

BUSINESSES 

Wednesday, June 11, 2008

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON SMALL BUSINESS, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:00 a.m., in Room 

1539 Longworth House Office Building, Hon. Heath Shuler [chairman of the Subcommittee] presiding. 

Present: Representatives Shuler, Ellsworth, and Bartlett. 

Also Present: Representatives Fortenberry and Chabot (ex officio). 

OPENING STATEMENT OF CHAIRMAN SHULER 

Chairman SHULER. I will call the Subcommittee hearing to order. 

I would like to first welcome all of our folks here today to this very 

important hearing. 

We have a lot to discuss. We will try to keep it from the member 

standpoint as brief as we possibly can because of our expert witnesses that we have today. And we look forward to your testimony. 

I again thank you for your travels here today and your safe travel 

home tomorrow. 

We are here to examine the issues of second generation renewable fuels and the opportunities for small businesses. At a time 

when our country is paying $4 a gallon for gasoline, it is critical 

that we continue the development of alternative energy supplies to 

help reduce prices and our independence on foreign oil. 

While this may not be the only answer to our challenges, entrepreneurs have been instrumental in developing these new and affordable energies. Renewable energies hold the potential to have an 

enormous impact on domestic fuel supplies, rural economics, and 

small businesses. 

In an industry driven by small businesses, growth in renewable 

fuels has been a win-win for the U.S. economy. Today’s hearing will 

focus on the next generation of biofuels. 

The advancement of corn-based ethanol is a step in the right direction. But it carries a great consequence, mostly due to its low 

efficiency. Because of this, we must continue to produce more advanced and sustainable models for biofuels production. 

Currently, renewable energy producers are investing in research 

in new technologies that will enable production of both cellulosic 

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ethanol as well as biodiesel from alternative sources. This means 

that ethanol will be produced not only from corn but from wood 

chips, corn cobs and biomass inputs, like grasses. 

Diversifying the sources of production will mean that farmers 

and small businesses, in areas like Asheville, North Carolina, will 

play a role in developing these clean energies. 

While the growth in these industries has been advanced, challenges remain. Cellulosic ethanol producers face high capital investments with no guarantees of return. By addressing these barriers, small firms will be able to make large-scale productions a reality in the near future. 

It is critical that policies encourage the development of these new 

innovations to expand the sources of energy. This ranges from tax 

incentives and trade policies to usage requirements and financial 

assistance. Our energy policy must not only work in the short-term 

but also the long-term energy security of our nation. 

Recognizing obstacles to growth, the House recently passed the 

Energy and Tax Extending Act of 2008. This step was important 

because it includes a variety of renewable energy tax provisions 

and specifically extends the biodiesel tax incentives for one year, 

through December 31st, 2009. But, perhaps more importantly, it 

provides a dollar per gallon incentive for all biodiesel. 

Though renewable fuels have grown exponentially over the past 

decade, it still makes up less than one percent of the current U.S. 

production. This hearing will provide us with a better understanding of the current state of the next generation of the renewable fuels industry and what it needs to grow. In the end, we need 

to do what it takes to ensure that small businesses will continue 

to have the resources to enable them to develop new fuels. 

I appreciate the witnesses here today to talk about this important issue. And I look forward to today’s discussion. At this time, 

I will yield to my good friend Mr. Fortenberry, the Ranking Member, for his opening statement. 

OPENING STATEMENT OF MR. FORTENBERRY 

Mr. FORTENBERRY. Thank you, Mr. Chairman, for calling this 

very timely hearing. And I want to thank our panel as well for joining us today. 

This hearing is about the second generation of biofuels and the 

role of small businesses in renewable energy production. And we 

are also privileged to have our Ranking Member Chabot join us 

here today. 

We are here to examine possible new technologies that can 

bridge the transition to a sustainable energy future and how small 

businesses can participate in these ventures. Geopolitical instability and high energy costs make clear that our nation needs to 

chart a new path that can lead to lower, more predictable energy 

costs for communities, small businesses, and families. 

The causes of recent high energy prices are numerous, including 

geopolitical instability, commodity speculation, supply restrictions, 

boutique fuels, the strategic petroleum reserve, lack of sustainable 

alternatives, and the oligopolistic leverage of OPEC. 

3

While Congress toils with policy responses, grain ethanol and soy 

biodiesel are components of a portfolio of renewable energy sources 

that will help us build a more sustainable future. 

There is a long history of grain-based fuels in our country. While 

ethanol was considered viable by many pioneers of industry, including Henry Ford, it was the rising energy cost of the 1970s that hastened the advent of the current biofuels age. Additional concerns 

about the safety of the additive MTBE, methyl tertiary butyl ether, 

in gasoline in recent years led toward a consensus in favor of further development of grain-based ethanol as a safer alternative. 

In 2005, Congress passed a new energy bill in order to foster 

greater energy independence as a result of rising concerns over 

global tensions and the security of our energy sources. A centerpiece of this legislation was a renewable fuels standard mandating 

that a minimum level of renewable fuels be produced annually. 

Given its relative infancy, questions have arisen about the efficiency of grain-based ethanol and biodiesel. New synergistic developments and rapid improvements in efficiency, however, are continuing to prove the usefulness of these technologies. 

One example of this can be found in Jackson, Nebraska, in my 

district, where an ethanol plant is powered in part by methane gas 

that is produced by a local landfill greatly increasing energy output 

efficiencies. 

Researchers in small firms must now consider the next step in 

this evolution, such as the second generation of biofuels, from 

sources such as switchgrass, corn stover, and biomass. 

Small-scale production utilizing partnerships between government, small business, and communities can be realized as a result 

of public policy and business opportunity. Whether it is from improvements in cellulosic ethanol technology or utilizing combinations of different renewable resources, new biofuels can alleviate 

some of the pressures placed on existing energy supplies. 

During this hearing, we will hear from a diverse group of witnesses, including an innovative Nebraskan, who is a leader in 

small-scale progressive renewable energy production. 

Mr. Chairman, thank you again for holding this hearing. And I 

yield back to you.

Chairman SHULER. Thank you, Mr. Fortenberry. 

I now yield to the Ranking Member of the Committee, Mr. 

Chabot, for his opening remarks. 

OPENING STATEMENT OF MR. CHABOT 

Mr. CHABOT. I thank the Chairman for yielding. And I want to 

thank you for holding this important hearing and for allowing me 

just a couple of minutes to speak. I will be brief. 

Disturbingly, each time I talk about the energy and gas prices, 

when we are doing the statement, we have to revise it to reflect 

another increase. Now, hopefully it is not cause and effect. 

I hope the prices aren’t going up because I keep giving these 

speeches, but last weekend we surpassed the unfortunate $4 a gallon milestone. And it seems that every day brings a new record 

high. And my constituents and I am sure the constituents of all the 

members who are here today are rightfully outraged and are deVerDate 0ct 09 2002 16:15 Jul 16, 2008 Jkt 033615 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 G:\CLERK SB-LD\HEARINGS\TRANSCRIPTS\42525.TXT LEANN
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manding answers. They want to know why, for example, we aren’t 

drilling in the United States, in ANWR, and in the outer continental shelf especially and why we aren’t building more refineries—we haven’t built one in over 30 years, the last one being 

1976, in this country, virtually made it impossible to build another 

one—and why we aren’t doing more to promote alternative energy 

sources. 

In response, this Congress and, unfortunately, gives them legislation that purports to fix our energy problem simply by raising 

taxes, by billions of dollars on domestic energy companies, and hoping for the best. That is not an energy policy. That is a tax increase. 

And it is on every American family because let’s face it. When 

you raise taxes on the energy companies, whether you call it a 

windfall profits tax, whatever the heck you call it, they pass it on. 

And people just pay more at the pump. That is what happens. 

Critics of domestic drilling point out that even if we drilled in 

ANWR and in the outer continental shelf, we wouldn’t have oil 

available for that for another five years or another ten years. Well, 

that is one reason we should have done this five years or ten years 

ago, but it was blocked by Congress. I know many of us are waiting 

to hear what Congress is going to do about this. 

Over time we have improved the technology mitigating the environmental impact of oil and gas development. For instance, rather 

than having several stations drilling straight down, horizontal, and 

directional drilling can reach oil and gas deposits as far as ten 

miles away. But instead of taking immediate steps to reduce our 

dependence on oil-rich but unstable foreign governments, members 

of this Congress have focused on placing our nation’s sources of oil 

off limits, hamstring the construction of new refineries, and requiring the production of boutique fuels that drive up prices on consumers, as the gentleman from Nebraska just mentioned. 

Just as the nation has never taxed itself into prosperity, it is 

simply not plausible to believe that we can tax and regulate our 

way to energy independence and lower gas prices. 

I have and will continue to support efforts to encourage investment in biofuels and other renewable energy technologies. I think 

that is appropriate. I think we ought to be doing it and doing more 

of it. I have every hope that we will discover energy alternatives 

that will change the world. 

But I want to thank our witnesses for being here today. And this 

is part of the overall solution, but it is not the entire solution. 

There are a number of other things that we could be doing, we 

should be doing, that we should have done a long time ago. And 

ANWR and the outer continental shelf are at the top of my list, as 

are nuclear power plants. 

The fact that we haven’t built one here in the United States in 

over 20 years is ridiculous when you consider that France, for example, has 80 percent of their power now produced by nuclear 

power plants. They are being built in China, being built in Russia, 

being built in India, all around the world except here. We have 

over 100 of them, but we haven’t built one in 20 years. 

And all of these things together, it has to be a comprehensive 

strategy to deal with our energy problems. And one of them is 

5

clearly biofuels, but part of it is also going after oil that we have 

control over that is within the United States or in our borders. 

And to think that Cuba and China are going to be drilling off the 

coast of the Florida Keys and going after that energy, both oil and 

natural gas, trillions of cubic feet of natural gas—they are going to 

get it, and we have put it off limits to American consumers—just 

baffles the mind. 

And I thank the gentleman for yielding and thank him for holding this hearing and yield back the balance of my time.

Chairman SHULER. Thank you, Ranking Member. 

At this time I would like to yield to Dr. Bartlett for his opening 

statement. 

OPENING STATEMENT OF MR. BARTLETT 

Mr. BARTLETT. Thank you, very much for yield. And thank you 

for holding this hearing. 

Fifty-one years ago the 14th of this last May, Hyman Rickover, 

the father of our nuclear submarine, gave what I think was the 

most insightful speech of the last century to a group of physicians 

in St. Paul, Minnesota. In that speech, he noted that at that time 

we were about 100 years into the age of oil, which he noted as the 

golden age. He said that the age of oil would be but a blip in the 

8,000-year history of man. 

And he had no idea how long the age of oil would last. Today we 

know fairly precisely how long the age of oil will last, but 50 years 

ago, 51 years ago, he didn’t know. But he said how long it lasted 

was important in only one regard, that the longer it lasted, the 

more time we would have to plan an orderly transition to renewable sources of energy. 

Mr. Chairman, Hyman Rickover would tell you that this hearing 

is 51 years too late. It is at least two decades too late. We have 

known of an absolute certainty for 28 years to now that this day 

would come because 28 years ago was 10 years after the United 

States reached its maximum oil production, which was predicted by 

M. King Hubbert 14 years earlier, in 1956. 

When you look back in 1980, it was really obvious that he was 

right because we had peaked in 1970. And you pull up the Google 

for ‘‘Hubbert’s peak’’ and pull up that peak and look. We were obviously well down the other side in 1980. 

So what have we done for the last 28 years? With no more responsibilities than the kids who found the cookie jar or the hog 

who found the feed room door open, we just have been pigging out. 

We have behaved as if oil is absolutely forever, in total denial of 

the reality that it is a finite resource. And today we now have oil 

at $130-some a barrel and gasoline at $4 a gallon. 

And the President’s proposal to do something about this will do 

nothing, Mr. Chairman, but make the price of oil go up. If you drill, 

it takes energy to drill. For the moment, that will drive the price 

of oil up. If you invest in alternatives, that takes energy to invest 

in alternatives. For the moment, that will drive the price of oil up. 

As I said, this hearing would have been very productive 20 years 

ago. My wife has a great observation on where we are. She used 

that old country Western it is too late now to do the right thing. 

6

So here we are today. And I am really pleased to be here. We 

will transition. Geology will mandate that we transition to renewables. It is just incredible the innocence, the ignorance, and the denial of people in both of our parties about this energy situation. 

I think that the American people would gladly follow someone 

who was honest with them. Drilling is not going to bring down the 

price of oil. Not a drop will flow for five years. So for five years, 

you will be investing in drilling and driving up the price of oil. 

Investing in alternatives will not bring down the price of oil 

today. There is only one thing, Mr. Chairman, that will bring down 

the price of oil today. And that is to use less of it. 

Two things will accomplish that. One, the price will go so high 

we are going to have a global economic depression. And that will 

bring down the price of oil. Tragic if that is what we let happen. 

The only other thing that will bring down the price of oil is a 

conscious, purposeful program of conservation. If we use less, I will 

guarantee to you that the price of oil will drop. 

I think, Matt Simmons thinks that we can buy two decades of 

time with an aggressive conservation. I am just going to make one 

little anecdote. I was driving to work the other day. In the two 

lanes in front of me, in one lane was an SUV with one person in 

it. In the car beside that was a Prius with two people in it. The 

people in that Prius were getting six times the miles per gallon per 

person as compared to the person in the SUV. We have enormous 

opportunities for conservation. It is the only thing that will momentarily bring down the price of oil so that we can now invest in alternatives. 

Hyman Rickover, by the way, would be pleased we have had 

some of our oil reserves held because now we at least have some 

energy that we can use to invest in alternatives for the future. Had 

we been able to drill everywhere, there would be no surplus energy 

to invest. And so our investment made at least two decades too late 

will do nothing more for the moment to drive up the price of oil. 

I have a lot of people in my district. I have a big, long district. 

And my people can’t afford to live near where they work because 

it is too darn expensive to live there. They live 50, 60, 70, 80 miles 

away. They can’t even afford to buy a new car. They are driving 

that old clunker, which is inefficient. 

This is really, really tough. And the American people have every 

right to be furious with their leadership because their leadership 

in both of our parties have systematically failed us for at least the 

last three different presidencies in our country. 

So thank you very much for holding this very important hearing. 

I look forward to the testimony and the discussion. Thank you.

Chairman SHULER. Dr. Bartlett, thank you so much. And I 

couldn’t agree with you more. We do have so much work to do. 

At this time I would like to introduce our first witness. Dr. 

Wooley is Director of Engineering with Abengoa Bioenergy New 

Technology in Lakewood, Colorado. Dr. Wooley, you are recognized 

for five minutes. 

7

STATEMENT OF MR. ROBERT J. WOOLEY, DIRECTOR, PROCESS 

ENGINEERING, ABENGOA BIOENERGY NEW TECHNOLOGY 

Mr. WOOLEY. Thank you, Mr. Chairman, members of the Subcommittee. 

As mentioned, my name is Robert Wooley. I am the Director of 

Process Engineering at Abengoa Bioenergy. I appreciate the opportunity to participate in today’s hearing to discuss second-generation 

biofuels. After briefly introducing my company, I will focus my remarks on some of the challenges facing second generation or cellulosic ethanol. 

First, I would like to say that Abengoa Bioenergy is committed 

to the renewable fuels industry. Our corporate leadership believes 

the existing energy model, based on fossil sources, is showing clear 

signs of exhaustion, as we have heard from the distinguished people already. 

Because of that, our company will have invested almost $500 

million in research to advance cellulosic ethanol and signed an 

agreement with the City of Phoenix to provide them with greenhouse gas-free solar power. Extending the 30 percent investment 

tax credit for solar, as the House has done, is very important to our 

parent company. 

Personally I have spent the last 12 years developing and engineering the cellulose to ethanol process, first as the Biofuels Technology Manager at the National Renewable Energy Lab, then as 

the biomass technology development leader at Cargill’s 

NatureWorks, and now at Abengoa Bioenergy. 

I would like to provide the Subcommittee with some background 

on Abengoa Bioenergy. We entered the U.S. market when we purchased High Plains Corporation in 2002. Abengoa produces starchbased ethanol in York, Nebraska, where we also have a pilot plant 

for the development of the cellulosic ethanol technology. We have 

starch-based ethanol also in Ravenna, Nebraska; Colwich, Kansas; 

and Portales, New Mexico. And we are in the process of building 

two new plants: one in Illinois and the second one in Evansville, 

Indiana, in Mr. Ellsworth’s district. 

We are designing a hybrid facility to be built in Hugoton, Kansas. This hybrid facility will produce 88 million gallons per year of 

starch-based ethanol and 12 million gallons a year of cellulosicbased ethanol. The launching of the second generation cellulosic industry is only possible through the use of this first generation technology basis, cash flows from that first generation, the know-how, 

and the infrastructure. 

Our pilot cellulosic plant in York, Nebraska is the proving 

grounds for the technology that we are incorporating in the 

Hugoton plant. In fact, cellulosic ethanol can be produced today. 

However, the main concern is how much it costs to produce that 

gallon. We are working as quickly as we can to figure out how to 

produce that lower cost of production. 

Fuel production from biomass is currently offering considerable 

savings in greenhouse gas emissions from transportation fuel and 

has the potential for more. The current technology has a life cycle 

reduction in greenhouse gas as compared to fossil fuels, such as 

gasoline, of about 28 percent. 

8

In some of our plants, we are starting to introduce biomass as 

the energy source for converting that corn ethanol. That increases 

the reduction in greenhouse gas to 52 percent. By using cellulose 

as the feedstock, rather than corn, to make the ethanol, we can reduce the greenhouse gas by 90 percent compared to gasoline. 

What are the barriers to the cost of production? First, the rapid 

increase in the price of feedstocks, has caused banks and Wall 

Street to be concerned over the profitability of the industry. Financing for new ethanol-based plants is difficult to obtain and 

nearly impossible for new, unproven technology, such as the cellulose ethanol. 

To obtain a financing package, financial institutions will require 

the cellulosic industry to line up long-term contracts with feedstock 

suppliers. Feedstock collection, harvesting, storage, and transportation will be significant challenges to the industry we will have to 

address. 

As an example, in this plant in Hugoton, Kansas, we will be requiring 700 to 1,100 tons of biomass daily to operate the cellulosic 

ethanol and the steam facility to supply steam to both plants. We 

will also need 90,000 bushels a day of corn to operate the starch 

facility. To do this, we need 100 trucks per day delivering biomass 

to the plant, this biomass in the corn of corn stover, sorghum stover, or wheat straw. In addition, another 100 trucks per day will 

be delivering corn or milo starch to the processing. 

Significant resources are needed to be dedicated to this issue 

over the next year to make the system work. There are still areas 

of technology development that can help reduce the cost of converting cellulosic material to ethanol, freeing up more of the cost 

of production to enable the farmer to produce the feed material. 

These include the cost of enzymes to convert cellulose to sugar. 

Currently starch conversion to ethanol spends a few cents per 

gallon of ethanol, while the initial cellulosic processes will probably 

spend 50 cents to a dollar per gallon. With further research, we feel 

that this can be reduced to 10 cents per gallon. It will always be 

a little bit more expensive than starch because of the complexity 

of the conversion). 

In conclusion, Abengoa is committed to the renewable fuels industry. Unfortunately, a well-coordinated attack from those who 

defend the status quo is raising doubts on our capability to increase our energy independence. We will have to show that we understand the advantages of renewable energy sources, confident in 

knowledge of renewable fuels, and continue to devote significant financial resources to research and deploying these new technologies. 

Thank you. 

[The prepared statement of Mr. Wooley may be found in the Appendix on page 38.]

Chairman SHULER. Thank you, sir. 

At this time our next witness is Scott Barnwell. Mr. Barnwell is 

the General Manager of Blue Ridge Biofuels in Asheville, North 

Carolina. I don’t think there is a company in our region that has 

had a greater impact on the awareness of this issue and truly making a difference in not only the discussions but actually in proving 

a point than this company has - Blue Ridge Biofuels. 

9

So, Mr. Barnwell, thank you. And you will be recognized for five 

minutes. 

STATEMENT OF MR. SCOTT BARNWELL, GENERAL MANAGER, 

BLUE RIDGE BIOFUELS 

Mr. BARNWELL. Mr. Chairman, Ranking Member 

Fortenberry,and members of the Subcommittee, I really appreciate 

the opportunity to come and talk to you today and testify on this 

very important topic. 

I am General Manager of Blue Ridge Biofuels, located in Asheville, North Carolina. And I am also here speaking on behalf of the 

National Biodiesel Board, the trade association for the U.S. biodiesel industry. 

Just to give you a little bit of background, Blue Ridge Biofuels 

started in 2004 building our plant in Asheville. Two years later we 

actually began supplying biodiesel to the first publicly available 

biodiesel station in that part of the state, actually one of the first 

in the Southeast, and started continuing construction of the plant 

beyond that. 

A big component of our operation has been education. We have 

tried to educate the public about the importance of alternative fuels 

and biodiesel, in particular. And in many ways, Blue Ridge Biofuels 

I think was ahead of our time because while we are now here today 

in 2008 talking about second generation biofuels, that really for us 

was our beginning. 

We were somewhat nontraditional in our approach. We really focused on recycled waste vegetable oils as our base feedstock from 

the very beginning and have been growing that ever since. 

And every drop of fuel that we have produced has come from recycled waste vegetable oils, and we are currently involved in research and development to actually expand that feedstock base. 

This fuel has been used by countless residents of western North 

Carolina for personal vehicles, for construction fleets. The Asheville 

Regional Airport uses our fuel. A number of municipalities, including the City of Asheville, City of Hendersonville, City of Black 

Mountain, throughout western North Carolina use of fuel. 

And we have been expanding, in addition to universities. And 

also we are one of the pioneers in developing what is called bioheat 

or home heating oil, that has a biodiesel component, again all with 

fuel that is made from recycled waste vegetable oils that are one 

of the most sustainable fuel sources and feedstock sources available. 

So in many ways, our business model has been we were founded 

and based our ideas with a strong environmental ethic, but, quite 

frankly, the economics is coming full circle now. And that is why 

we are starting to see many others in the industry looking at these 

recycled oils as a potential feedstock, taking what was once considered a waste product and actually turning that into a very effective 

fuel, a very clean-burning, high-quality fuel that meets all ASTM 

specifications. 

I would like to applaud the leadership, both the Chairman and 

others in the House, for your leadership in expanding the use of 

domestic renewable fuels. And, in particular, with H.R. 6049, the 

Renewable Energy and Job Creation Act, that was passed by the 

10

House prior to Memorial Day, has a few critical provisions for our 

business, in particular, and for the national biodiesel industry. 

Most importantly is the extension of the biodiesel tax incentive 

for another year. That is a critical element as we have to spend a 

great deal of resources in research and development. That is an 

element that has actually allowed us to remain viable. And without 

that, I probably wouldn’t be here talking to you today had that tax 

incentive not been enacted in the first place. 

Also, a very important part of that legislation is increasing the 

tax incentive to make it equal among all feedstocks because, as you 

know, until now and including now, the fuel that we make, we receive 50 percent of the tax incentive that producers that use virgin 

feedstocks receive. And when we talk about sustainability and promoting sustainable feedstocks and sustainable fuel and promoting 

energy security, that is absolutely critical for the long-term growth 

of the industry. 

I would also like to express our pleasure with the expanded renewable fuel standards that was included in the Renewable Energy 

and Job Creation Act enacted last December. That is going to create a much broader base of production for biodiesel and help make 

this a more important component of our expanded renewable energy development here in the U.S. 

Increased biodiesel production is very important for the environment. It is good for consumers, and it is good for our country as 

a whole. 

We are working in partnership right now with the University of 

North Carolina to develop actually new innovative approaches to be 

able to expand these recycled feedstocks to use very low-quality oils 

that have historically not been used in biodiesel production. And 

that type of research and development is going to be actually promoted and enhanced by the renewable fuel standard that was enacted. 

So, again, I would like to thank you for this opportunity to come 

here and speak to you. Research into these new feedstocks into 

these second generation biofuels over the next four to five years 

will be critical for the long-term success of the biodiesel industry 

in this country. And we look forward to working with you. And 

thank you, Mr. Chairman, for the opportunity to come speak to 

you. 

[The prepared statement of Mr. Barnwell may be found in the 

Appendix on page 43.]

Chairman SHULER. Thank you, Mr. Barnwell. 

Our next witness is Tom Todaro, the CEO of Targeted Growth 

and Sustainable Oils in Seattle, Washington. You will be recognized for five minutes. 

STATEMENT OF MR. TOM TODARO, CEO, TARGETED GROWTH 

AND SUSTAINABLE OILS 

Mr. TODARO. Thank you. 

Good morning. As the Congressman said, my name is Tom 

Todaro. I run an agricultural biotechnology company based in Seattle, Washington but with field stations in many of our districts, 

actually, all of the Midwest. 

11

The company is almost ten years old, making us sort of the old 

man of the industry we are talking about today. These problems 

take a long time in terms of the biology necessary to create plant 

life that can provide a remarkably different energy source than the 

ones you are seeing today. So while the other members around the 

table use machines to produce it, we use plants to produce what 

they need to put into their machines. 

So I will talk briefly about us and then we basically serve as a 

footprint for what the industry will likely look like over the next 

couple of years. 

So the company works both on biodiesel and on ethanol, both in 

next generation or generation and a half. So the biodiesel crop we 

use is a crop similar to canola. It is called camelina. It is a mustard 

seed. 

We chose it because it has very, very good energy qualities. It is 

not a great food oil, but it grows in marginal lands, so in eastern 

Washington, Oregon, Montana, the Dakotas. The work we have 

done on it non-transgenically has allowed really substantial yield 

increases through some very clever technologies that we have developed using marker-assisted breeding and some science words I 

won’t bore you with today. 

But the net result is we think we are achieving a cost per gallon 

savings of about 50 percent over soybeans. It rides up and down. 

Soybean oil today is trading at about six cents a pound. 

And that pricing, both on soybean oil and on corn, is what is creating all of these problems with financing being available for the 

physical plants that are in the Midwest. 

So generally the goal is to do 100 million gallons. By the end of 

2010, 2011 probably, we will be the largest dedicated second generation feedstock in the country. 

On the ethanol side, we looked back in time, rather than forward 

in time. A thousand years ago, 3,000 years ago, the Mayans were 

using sugar to create alcohols. Alcohol is all ethanol is. 

We started looking at ways to convert traditional corn into a 

sugar-based product. Rather than going through the starch process, 

we basically are able to turn corn into sugar cane. So this corn has 

no cob. It has no ear. It has no kernels. What it has is an awful 

lot of sugar in its stalk. 

And if our last year’s tests prove out this year, we will be getting 

1,000 gallons an acre on corn that we can grow in the Midwest, in 

the Farm Belt. And if this proves out to be true, it helps relieve 

the food versus fuel debate in a counterintuitive way, which is let’s 

take a small area around the ethanol facility, grow very high energy corn stovers there, and allow that to be the product that feeds 

the ethanol industry for a certain period of the year. Well, you can’t 

do it all year for some reasons, but it will work three, four, five, 

six months of the year depending on growing seasons. 

The third and I think the most esoteric but the one that requires 

the long-term investment that Dr. Bartlett was talking about, is 

prokaryotic algae. All the oil you are getting today out of the 

ground, almost all of it, comes from algae. Some of it is from old 

trees, but it is all biomass that has had a long time to digest. 

We believe that Targeted Growth is able to take that second generation, this algae, use a whole bunch of photosynthesis, the energy 

12

from the sun, and create something that grows at five to ten thousand gallons an acre, so many fold over what we think we can do 

in corn. 

That will take us several more years to develop. And I am unable 

to say what Congress can do to help because I don’t understand the 

legislative process, but I can tell you what we can do and what others like us should be able to do. 

And to the extent you can help companies like Targeted Growth 

and the others of this panel, I am pretty confident that sort of help 

is on the way and well within the time before oil depletes and we 

are back to alternative sources that would be more problematic to 

use. Biofuels really can make a significant impact in the amount 

of fossil fuels that are consumed today. 

Thank you. 

[The prepared statement of Mr. Todaro may be found in the Appendix on page 47.]

Chairman SHULER. Thank you, sir. 

Our next witness is Jeffrey Trucksess, the Executive Vice President of Green Earth Fuels LLC, which is based in Houston, Texas. 

Mr. Trucksess, you will have five minutes for your testimony. 

STATEMENT OF MR. JEFFREY TRUCKSESS, EXECUTIVE VICE 

PRESIDENT, GREEN EARTH FUELS, LLC 

Mr. TRUCKSESS. Mr. Chairman, Committee members, thank you 

for this opportunity to speak with you today. I am the Executive 

Vice President of Green Earth Fuels and one of the founders. 

We are one of the largest biodiesel producers in the country. I 

guess that is an honor to be here as one of the largest. Three years 

ago we called ourselves five guys and a fax machine. So small businesses can transcend. And I think this country is going to need 

that sort of innovation because we have got some challenges ahead, 

as you all have pointed out. 

One of the differences about our biodiesel company is we are 

making significant investments in second generation or generation 

and a half feedstocks. We actually have a joint venture with Targeted Growth to commercialize this crop, camelina. We are investing enough capital to do about a million acres, hopefully by 2011. 

We are also building a model palm plantation in Guatemala. I 

call it a model palm plantation because we are preserving all the 

primary rainforests, providing about 4,000 jobs to the region, developing an independent growers’ program. So it brings jobs to the region, and it is a highly productive crop. And it can be done environmentally sensitively. 

The most interesting thing, thanks to Congress, we have gone as 

an industry from about 25 million gallons a year in 2004. You guys 

have passed a renewable fuel standard tax package. We are up to 

about 500 million gallons a year now. And the renewable fuel 

standard will take us to a billion. 

I think that is just a start, but it creates the marketplace that 

drives the investment. To get to some of these next generation 

crops, I appreciate your support. And I think we have a lot to do. 

And one of the most important pieces here is stability of policy. 

And that is something that is in grave question right now, tax 

13

credits expiring, fuel standard being questioned. And I can tell you 

from sort of the financial community and the business community 

it is devastating. 

And so we certainly look to you to provide the sort of leadership 

that is going to be long-term and appreciate what the House has 

done on the proposed extension, but we will get to that in a bit. 

A little bit about camelina. Tom has given you a brief overview. 

One of the interesting things is it is a non-food crop, in part because it doesn’t taste very good, but it grows best in marginal areas 

or as a rotation crop for wheat. So typically every third year you 

would leave your acre of wheat fallow to let the soil regenerate. 

This fits in well nicely, kind of like the corn-soybean rotation 

that has worked over time. So it fits in well. You are not competing 

for the wheat acres because it is not that profitable, but instead of 

leaving it fallow, you are using it or it is very low-input, low water, 

low fertilizer needs. So you can put marginal acres into use. 

There is another crop: jatropha. We are planning about 50 trial 

acres of that. We did a study in Texas to see how would this work 

in Texas, how could you do it, you know, again, utilizing marginal 

acres that we are not taking advantage of. 

Ironically, we found about a million acres of triangles on center 

pivots of land currently in production, where the center pivot 

doesn’t actually reach the corners. There are a million acres of 

that, camelina or jatrophic, that grow great in an area like that. 

Again, you are not competing with food crops. It is a low-input 

crop, doesn’t need the water, huge potential there. 

Texas looked at, you know, if we could do 500 million gallons in Texas, it would be about a $22 billion industry and create 100,000 

jobs in the state. So it is huge jobs. It is going to farmers. It is 

going to small businesses, small crushers because biodiesel and a 

lot of these other technologies are great regional businesses. You 

have Blue Ridge here. You see them pop up everywhere. 

We just recently spoke at a conference in Albuquerque, New and 

had the national labs there, a lot of leading experts in agriculture. 

Kind of the consensus of the day was there is a significant opportunity to do sustainable biofuels. Is it the complete answer? No, it 

is not he complete answer, but it certainly offers potential five percent, ten percent. Algae comes along, maybe greater than that. So 

the leading experts think we can do it. And we just need sort of 

the commitment from our nation so we can continue to make these 

sorts of investments. 

And I guess I have referred to it a lot, but it is critical: stability 

of policy. It really is what drives investments. The renewable fuel 

standard I know has been questioned recently. I urge you. The 

linkage you question that. You question the marketplace. You scare 

investors. They pull out. They pull back their money. And it stops 

investments for ten years. 

So when I started this business, we went to the investment community. And they are like, oh, we have been burned on ethanol before. We don’t even want to look at it. It was a huge hurdle to get 

over because policies had changed over time. 

So, even though there are questions, I think Congress has done 

a great job in setting the policies. Stick with them because it is 

what really drives the next generator. 

14

Tax incentive package. Again I applaud the House action on this. 

We are working with the Senate as hard as we can to try and get 

them to pass it, but already banks started pulling money out of my 

business because they are concerned it won’t get extended. 

A retroactive fix doesn’t work for the fuels industry. It has 

worked for wind. It won’t work for us. So banks get scared. They 

pull their money back, which means I can’t invest in camelina. I 

can’t invest in Tom’s science. 

So it is critical that we get these things done and move early—

you know, even if it doesn’t expire until December, we have problems now—and invest in the research and development. 

I appreciate the time and look forward to your questions. 

[The prepared statement of Mr. Trucksess may be found in the 

Appendix on page 51.]

Chairman SHULER. Thank you, Mr. Trucksess. 

At this time I yield to the Ranking Member, Mr. Fortenberry, for 

introduction of our next witness. 

Mr. FORTENBERRY. Thank you, Mr. Chairman. 

I would like to introduce Mr. Robert Byrnes from Oakland, Nebraska. Mr. Byrnes is a producer of beef and pork and worked for 

many years as a chemical engineer. He runs Nebraska Renewable 

Energy Systems and is President of the Nebraska Renewable Energy Association. At his business, he works with a wide variety of 

renewable energy sources and runs an off-the-grid farm as a demonstration of what renewable fuels can achieve. 

Mr. Byrnes came all the way from Nebraska to Washington in 

a vehicle powered entirely by biodiesel. And we appreciate your 

willingness to come out and look forward to your testimony. 

STATEMENT OF MR. ROBERT BYRNES, NEBRASKA 

RENEWABLE ENERGY SYSTEMS 

Mr. BYRNES. Thank you, Congressman Fortenberry and Chairman Shuler for the opportunity to visit with you. I hope my testimony will be of some value to the Committee in their considerations. 

As the first registered producer of biodiesel in Nebraska, I have 

been involved with developments in my state from the ground floor 

and just recently commissioned the largest operating biodiesel facility in the state. The Energy Farm in northeast Nebraska that I 

own is energy self-sufficient and is currently in use as an energy 

training facility. 

I co-founded the Nebraska Renewable Energy Association in 

2006 and am currently focused on the needed processing of the materials that will supply these second generation oils to the market. 

Travel to and from this hearing will be petroleum-free, using 100 

percent Nebraska-made biodiesel. 

When we started building the biodiesel facility two years ago, 

soybean oil was 23 cents a pound, which reflected the 10-year average. Soybean oil now is trading at 67 cents a pound, reflecting its 

historically strong correlation with petroleum crude oil. 

Biodiesel production cost is heavily dependent on feedstock price. 

An additional dollar a gallon is required to convert this oil to meet 

ASTM requirements for biodiesel. 

15

As a result of this surge in costs, almost half of the biodiesel production capacity built in the last three years is currently offline. 

Similar price surges have also been seen in animal fats and used 

vegetable oil markets. It is clear that the first generation of feedstocks available for biodiesel have run their course. 

To meet these short-term needs, industry has turned to waste 

and low-value streams to substitute for first use oils. Removal of 

the oil-rich fraction of corn prior to ethanol production is an excellent opportunity since the oil actually inhibits ethanol fermentation. 

This oil is also a limiting factor of the DDG, the dried distiller’s 

grain, that comes out of the process as animal feed. The average 

40 million-gallon ethanol plant can realistically supply 2 to 3 million gallons of high value corn oil. 

In terms of regulatory requirements, biodiesel facilities are characterized as chemical processing facilities. While environmental 

and personal safety must always be ensured, current regulatory requirements are a tremendous cost for the renewable small business 

owner. 

Nationally an exponential expansion of the feedstock pool is required to make a significant impact on petroleum diesel consumption levels. If all of the fats and oils currently grown in the U.S., 

over 950 million acres of agriculture, were used, all of them, we 

would supplant 10 to 12 percent of our petroleum diesel consumption across our country. And that is not possible to do. 

I will only mention two of the most promising examples of future 

feedstocks that offer this exponential increase of the available pool; 

first, biomass and waste-fed gasification. This can be used to create 

the building block of organic chemistry known as syngas. 

This syngas can then be reformed to a liquid using 100-year-old 

German chemistry techniques back to a liquid, which is how they 

were able to make liquid fuel from coal for two world wars. With 

this technology, waste and low-grade materials can be recovered 

into renewable diesel or renewable ethanol. The efficiencies of 

small business research efforts are needed here. 

Second, algae production is a tremendous growth area with small 

businesses leading the way in innovative applications. Algae has 

been shown to provide over 50 times the productivity per acre as 

soybean and will actually expand the available food stream by adding a completely new and protein-rich food and feed supplement. 

Nebraska has had its first algae project announced this week in 

a rural area owned by small business. This project is being developed by a renewable energy firm that grew out of my original work 

within the broad spectrum of available technologies. 

This algae project will recycle process waste heat from an oil 

seed-crushing facility and biomass combustion emissions to boost 

photosynthetic production of these oils and process them in-house 

to close the loop. 

Decentralized growth of algae and production of oil could be done 

most quickly through municipal waste facilities where treatment, 

capacity and food are currently available. Large facilities and processing infrastructure will take time to construct. Small business innovation is once again in the best position to develop this technology in the short term. 

16

A tremendous boost for decentralized utilization and small business production of alternative biofuels would be to exempt all 

biofuel producers from state and federal road taxes up to 5,000 gallons per year. These producers would need to show verification of 

biofuel gallons used and not necessarily ASTM certification of fuel 

quality. 

Significant expansion of the successful grant programs currently 

in place are essential in supporting small business in meeting the 

challenges of supplying these second generation feedstocks. 

Biodiesel itself is a trademark term and is defined by the industry ASTM standards. Non-ASTM renewable diesel or stray vegetable oils can also run diesel motors. But to gain access to the dollar gallon tax credit, ASTM standards must be met. And these oftentimes represent a significant burden to the small producer. 

While any fuel in general distribution must meet strict criteria, 

small businesses that produce and use these materials for themselves or convert the motors to allow their use cannot gain access 

to this tax credit, even though the use directly replaces petroleum 

diesel consumption. 

The original diesel engine designed by Rudolf Diesel 100 years 

ago was designed to run on these straight oils. I provided power 

to my Energy Farm for years using a renewable diesel from animal 

fats, waste, and alternative seed oils that could not technically be 

called biodiesel although, it replaces petroleum diesel. 

Future feedstocks will also challenge the strict soy-driven ASTM 

standard requirements. The tax credit of a dollar a gallon should 

be extended to any renewable biodiesel or biofuel that is used to 

directly displace the consumption of petroleum-based diesel or gasoline. 

In closing, small business will remain a leading and cost-effective 

innovator in this critical area. The decentralized energy production 

systems being developed in many cases could be of significant value 

to U.S. military, Homeland Security, or FEMA. These agencies 

could greatly benefit from the creation of a streamlined process to 

partner with small businesses that can support the goals of these 

agencies for continued operations without requiring vulnerable energy logistical support. 

I thank you for your invitation to address this body and your interest in this area. And I would be glad to provide any answers to 

questions. 

[The prepared statement of Mr. Byrnes may be found in the Appendix on page 54.]

Chairman SHULER. Thank you. 

Mr. Todaro, I guess explain to us more. I mean, I was very interested when you said that it was from almost 5 to 20 thousand gallons per acre on this algae production. Explain a little bit more to 

me, if you can, the process, how that works. And probably the most 

important thing, how do we get there quickly? 

Mr. TODARO. The easiest way to think about algae or any single 

cell organism is it can only do one thing at a time. So algae just 

divides. Its sole focus is to keep dividing to maintain life. It is not 

wasting any energy making roots or leaves or growing vertical, creVerDate 0ct 09 2002 16:15 Jul 16, 2008 Jkt 033615 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 G:\CLERK SB-LD\HEARINGS\TRANSCRIPTS\42525.TXT LEANN
17

ating high-density cellulose, which the cellulosic people need to remove. So all it does is grow. 

It can take a much, much higher percentage of the photons, the 

energy from the sun, than any traditional land-based crop. And so 

all earlier calculations, done by NREL and by others, show that 

there is a solid theoretical basis that says if you just take sunlight, 

you shoot it onto things and all they do is divide, you will get so 

much biomass with so much lipids. 

The problem has been traditionally that because they can only do 

one thing, they either divide and you get lots of green stuff or they 

make oil and they don’t divide very well. 

And so companies like Targeted Growth, us, and others have 

said, well, how do we crack this fundamental problem? And the 

way you do that is you put in what are called inducible promoters. 

You tell the thing, ‘‘Okay. In the beginning of your life, just divide. 

And then when you have a high enough density, in an outdoor 

probably facility, please change. And then spend the rest of your 

life just making oil. And then we can process you.’’

The problem is this is pretty complicated. This is a multi-gene 

system. You know, I have got a dozen molecular biologists who do 

nothing but try to figure this out. And my big fear is that because 

there is one thing I can guarantee, which is that 15 years from 

now, it will be an algae that is the biofuel that everybody is using, 

its inherent advantages are just too great, the problem is there is 

no guarantee that is going to be a U.S.-based solution. 

There is a lot of good work going on in Asia, some pretty good 

work going on in Europe. And this can be a game change. Whether 

it is us or somebody else or a combination of companies, one of my 

big fears is the investments made abroad are so much greater than 

the investments made here that if somebody really cracks the nut, 

they are going to have extraordinary, extraordinarily valuable technology for generation. It becomes an operating system. It becomes 

the next Microsoft. Because once you have figured out how to do 

it, it is deployable everywhere. 

Chairman SHULER. How far away are we? Do you think it will 

take 15 years? 

Mr. TODARO. Yes. Well, it depends on what you mean by ‘‘how 

far away.’’ We can do it in a really cool-looking flask right now. 

Come out. You are welcome to visit our labs. 

Nobody else has been able to do it in a cool-looking flask. So that 

is exciting. There are certainly companies that are trying to 

produce algae right now. And with some limited success, I think 

the first generation algae fuels are almost ready, but the game 

changer is being able to do what I am suggesting. 

We have a letter of intent from a major utility. We will like try 

to do a 20 or 25-acre trial with them over the next year to 18 

months. There are others that are trying things of about that scale. 

But this involves biotechnology. So this is genetically engineered. 

And there is no point in avoiding the question because these pathways are so complicated we need to put them in. 

And so depending on legislative issues, Food and Drug Administration, government oversight, we will have a marketable useful 

product in five, six years realistically. And then if it works, the expansion rates are exponential, just like algae itself. 

18

Chairman SHULER. So the long term is that it is almost like I 

guess growing up in the mountains of North Carolina when the 

first cars were produced and the first person to have a car, fuel was 

pretty easy because they had moonshine. I mean, they actually produced ethanol. 

Mr. TODARO. Absolutely. 

Chairman SHULER. And that was part of the old process, that 

you could actually produce it at home. So could a mini farm 

produce enough with this algae production to be able to almost 

have a stand-alone fuel station, if you will, if this becomes process? 

Mr. TODARO. You certainly could. I mean, I think there will be 

huge rural implications. Like all things, there is efficiency with 

scale. 

So I think realistically the first generation of these is likely to 

be collocated with utilities or CO2 sources so that you can do them 

on tens of thousands of acres. 

But even second generation algae, which is actually much easier 

to do because we can produce a new strain of algae in four and a 

half hours, it is quite realistic to see a solution where the alkanes, 

the actual molecule, almost to ASTM spec, you can simply create 

right there in a pond. 

So is it unrealistic to assume that ten years from now a farmer 

could take an acre of their land, grow material like ours, have it 

excrete number two diesel, and use that farmer to power vehicles? 

I think that is quite likely. I think that it is probabilistically where 

this thing ends up, yes. 

Chairman SHULER. Mr. Byrnes, you are off the grid or do you sell 

back to the utility company? 

Mr. BYRNES. The Energy Farm is an off-grid facility focused on 

bringing out the technology and practicality of the energy loop that 

exists on the farm, as you had alluded to. I think there is a lot of 

synergy in bringing the technologies together. And smaller, diversified farms, as farms have classically been, have a lot more potential to utilize that energy loop than specialized larger facilities. 

But the farm I have is off grid over four years. The power lines 

run by—we have wind and solar, biodiesel, crushing, and renewable energy in terms of working on our digester this summer. 

Chairman SHULER. What do you feel like your savings have been 

over that four years? 

Mr. BYRNES. Self-reliance is my savings. I have never quantified 

it. But the fact that we can do it and show other people how it may 

or may not fit for them or one aspect of it, the satisfaction that it 

brings I think in showing people that it can be done as a demonstration project is the value. 

Chairman SHULER. Mr. Barnwell, tell me and other members of 

the Committee about the education process that you have gone 

through, whether it be in the schools or just educating the public 

or even from the bumper stickers. 

Mr. BARNWELL. Right. Well, a big challenge for us is getting people to understand that these fuels that we are talking about don’t 

require any special equipment. People assume that when you start 

talking biofuels or biodiesel that they need to go out and buy some 

new equipment, some kind of new engine, they have to have their 

car modified or truck modified or so on. 

19

So a big part of it is just getting the word out there through—

we do a lot of talks at conferences and festivals and so on in the 

western North Carolina region, in particular, and in the schools, 

the universities, going in and just talking about both the value of 

biodiesel in terms of the net energy output that comes from it. And 

it is very high. It is about 3.5 units of energy for every energy unit 

input but also the fact that you can simply put this straight into 

your existing diesel vehicles. 

So whether they are truck drivers or folks with a Mercedes or 

Volkswagen diesel car—like I said, we have fire trucks and landscaping equipment at the actual airport running our fuel—but just 

educating these folks and these fleet managers so that they understand not only can they just run this fuel in their existing equipment, but it is actually better for their equipment. It is a higherquality fuel in terms of its lubricity and other properties. 

So the bottom line comes down to price almost always. And if we 

can provide a product comparable to petroleum diesel, which we 

have been able to do over the long haul, in some cases we are actually slightly under petroleum prices in western North Carolina, 

some of the lowest-priced biodiesel in the country. People are very 

willing to accept that and adopt that. 

We find that people do it for a number of reasons. Some it is 

purely environmental. They want to have cleaner emissions and 

cleaner air in the mountains. Other people it is more a question of 

national security and patriotism. They would rather put fuel in 

their tank that is produced right there near their home from people 

that they know and keeping that money right there in their local 

economy, as opposed to shipping those dollars off to the Middle 

East. So it is a number of reasons. 

Chairman SHULER. What is the cost right now per gallon at the 

pumps? 

Mr. BARNWELL. Well, we sell everything from B-2, 2 percent biodiesel, up to B-99, essentially pure biodiesel. And it ranges. In the 

lower blends, it is very comparable with petroleum, obviously, because it is mostly petroleum. 

Our B-99 right now is selling in the Asheville area anywhere from 4.80 to $5 a gallon, which is right on par with petroleum diesel. 

Chairman SHULER. Dr. Wooley, you talk about the transformation of cellulosic ethanol production and some of the problems 

and issues. I note that wood chips have always been mentioned in 

many different ways. We have seen how the production of corn has 

increased, and we had a hearing. Bakeries, for example, are experiencing higher wheat prices as a result of higher corn production. 

Will using wood chips increase lumber prices and cost of homes 

if that goes into production or is it a lower quality of wood that is 

being used? 

Mr. WOOLEY. Well, first, to help everyone understand the feedstock, so wood is, believe it or not, very similar in composition and 

structure to things like the corn stover and the grasses that we 

talk about. So as far as the conversion technology, it is very similar. And you just have to grind it a little bit differently. 

Part of the challenge around wood and grass is that it is sort of 

the chicken and egg. How do I get somebody to commit to a large 

20

tract of land for wood to supply to me? How do I get somebody to 

commit to a large tract of grass to commit to me? 

So I am getting around to your answer. One way to look at it is 

using the agricultural residues, which are already there—they are 

not used for very much else—gets us so that we can develop the 

technology. Then we can move to wood feedstocks. Wood feedstocks 

are actually in some ways better. They are much more dense. You 

can haul them much more efficiently down the roads in trucks. 

And to answer your question about how will that affect the lumber industry, it depends on what sort of the economic position is 

of who is producing it. And this is sort of secondhand information 

from myself. There are some areas of the country that have been 

traditionally producing wood pulp. There is less demand for wood 

pulp. So those stands of lumber or trees are under-utilized right 

now. And so converting those and using those for feedstocks for cellulosic ethanol would have little, if any, impact on anything else. 

And so there is also the ability to use more of the second—and 

I am not a lumber guy. So I don’t fully understand it, but there 

is certainly prime wood, the wood that you would like to have for 

two by fours, and then there is secondary wood that is not as useful 

for that industry, which can be used in the cellulosic ethanol industry. So, again, sort of that secondary wood that is not as useful for 

the prime industry. 

Chairman SHULER. Mr. Trucksess, if you looked at one area, 

whether it be funding, policy, R&D, if you could have your wish 

list, what would it be for Congress to help incentivize companies 

such as yours to be able to grow and give us the independence that 

we need, the efficiencies that we need, and the technologies that 

can be and are available? 

Mr. TRUCKSESS. Good question. I think it is two parts to that answer. One step you already took. The renewable fuel standard has 

sort of a carve-out for advanced biofuels. I think everyone here at 

the table qualifies under the advanced biofuels. It is a small sector 

of the policy right now, but I commend you for doing that because 

it has stimulated a lot of investment sitting here at the table. Make 

sure that stays in place because if it goes away, I think we all probably go away. 

And, two, it is the, at least for my industry, extension of the biodiesel excise tax credit, broadly speaking, for these guys, whether 

it is the cellulosic credit or ethanol credit. It is absolutely critical 

because everyone really relies on private equity, banks to fund this 

technology. And you start giving unstable policies. And they just 

pull back their money. And they don’t start up again next year 

when you change the policy. 

I was just at an event for Representative Ciro Rodriguez. And 

one of the guys that attended started the Biodiesel Coalition of 

Texas. He was one of the major recipients of the CCC Bioenergy 

program, which has been re-funded, started the whole industry, 

really, in Texas. 

And he is now out of business because some Texas policies 

changed, some government policies changed, disappeared, came 

back. He expanded, policies went away. He had overextended himself because of the disappearing policies. And now he is out of business. 

21

So, again, the sooner you can act to extend the excise tax credit 

for us and when you go towards perhaps the next Congress, look 

at long-term extensions. Give investors the certainty to create new 

technologies. 

And let us make partnerships with his company. He needs me 

behind him so he can go to a farmer and say, ‘‘Well, I am going 

to buy the product from you.’’ If it is camelina, a farmer needs to 

know who is going to buy it if I grow it. We have got to create 

these partnerships. I can only partner. I can write the contract if 

you tell me, ‘‘Yes. Here is what’’ I am going to have in a year or 

two years. 

So I appreciate it. 

Chairman SHULER. One last question. Mr. Byrnes, the Ranking 

Member and I were wondering, how did you get that through security? 

[Laughter.] 

Chairman SHULER. I don’t want to know the answer. At this time 

I will—

Mr. FORTENBERRY. We will erase that gap. 

Chairman SHULER. Yes, we will erase that. 

Recognize Mr. Fortenberry for his questions for the witnesses. 

Mr. FORTENBERRY. Thank you, Mr. Chairman. 

All of you have provided very engaging testimony in particular 

areas of expertise that you have. And, of course, that is very helpful. But for us as policy-makers, it is always helpful to take a step 

back and look at things from the high altitude. 

And Congressman Bartlett said it quite well. I think we need an 

orderly transition to a more sustainable energy future. And you all 

have a role to play in that. 

Now, the question is, how big is that role going to be? What 

chapter of a very large energy portfolio can you provide? If you will 

using your expertise about the variety of technologies that you all 

are using to make money and if you had a best case scenario as 

to the potential expansion of all of these opportunities that are obviously going to have to be done, integrated in an environmentally 

sensitive fashion—but talk about how big the potential here for 

this chapter of our overall energy portfolio. Will you potentially 

meet 10 percent, 20 percent of our overall energy needs in the 

country? 

Mr. TODARO. You know, I can tell you from our point of view that 

for a company like Targeted Growth, it is actually quite quantifiable. So if you look at camelina, which is this canola derivative, we 

should be doing 100 million gallons in 2011-ish. That will grow to 

maybe 200 million gallons, basically a drop in the proverbial energy bucket. 

The sugar-based corn ethanol I was speaking about, which really 

is a next generation technology, where you are doubling or tripling 

the amount of energy per acre that a corn farmer can get, that is 

a billion, so a billion to a billion and a half. So you are starting 

to make a dent, still reasonably small but a billion here, a billion 

there. It starts to add up. 

The third generation technologies, the algal systems, we are talking about are limitless. You know, there are all of these great studVerDate 0ct 09 2002 16:15 Jul 16, 2008 Jkt 033615 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 G:\CLERK SB-LD\HEARINGS\TRANSCRIPTS\42525.TXT LEANN
22

ies. If you took X number of square miles in just New Mexico, you 

could fuel the whole country. 

You know, those sorts of scale-ups aren’t really the right way to 

think about it, but the right way to think about it is it is massive. 

I am very comfortable say that. All terrestrial based oils that go 

away, if they are replaced by a biofuel, it will be a single cell organism. 

So I would think of that as 100 million, billion. Infinite is the 

way to think about it. 

Mr. FORTENBERRY. Okay. If everybody would respond to that, 

please? And when you say, ‘‘infinite,’’ again, trying to quantify this 

for us in terms of a ten-year, five/ten-year horizon, it would be better if it were a six-month horizon because—

Mr. TODARO. Right. 

Mr. FORTENBERRY. Yes. People are—

Mr. TODARO. Unfortunately, you know—

Mr. FORTENBERRY. But, again, in terms of the overall energy 

portfolio, how this potential—and if all of you could add to this, the 

percentage that it would make up of our overall energy portfolio, 

I think it would be helpful to know, just your best estimates, best 

case scenarios on continued development, sustainable policies that 

promote it, exceptions perhaps for regulations that adversely impact small businesses, ongoing development of small-scale distributed generation, new technologies that are coming online that will 

integrate even more types of biomass. 

Mr. WOOLEY. If I could respond, in the ethanol industry, we certainly believe in what others have predicted as well, about 15 billion gallons easily from corn and other starch sources in the United 

States. And that is certainly technology that is there and can be 

expanded quickly. And we are doing our share to do that. 

As far as the cellulosic industry, just from the corn stover and 

the wheat straw that is out there, we have got probably another 

15-plus billion gallons. Now, that is going to take a little bit longer. 

And we really have to have a progression. 

We are going to build a pioneer plant, really, in Hugoton, Kansas, as I mentioned earlier. And that is 12 million gallons. That is 

not very big, but that is a spot where we can prove the technology. 

We probably have to build one more that is more full-scale, maybe 

the 50 to 100 million gallons. 

And then at that point—so now we are talking we are up into 

the 2015 time frame. At that point, if the financial markets are 

there and the proper marketing incentives are there to ensure that 

we can get that financing, then you can start to really expand that 

industry. So now you can start to see that 15-plus billion gallons 

coming from things like agricultural residues. 

After that, we start to get into and we believe at the same time 

we need to continue to develop things like the energy crops, so 

whether it is wood energy crops in the case of hardwoods or whether it is grass crops, that can then go again to marginal lands. 

And even with switchgrass, the current strains—and we are 

working with small business partners, too, to develop some of those 

strains. We are talking on the order of 1,000 gallons of ethanol 

from an acre of switchgrass. 

23

So those start to open up new lands that are not necessarily useable for other purposes. And now my best guess personally would 

be another 15 billion gallons or so from those sorts of resources. So 

at the end of what I have just added up, it is 45 billion gallons. 

That is on the order of a third of our current gasoline usage and 

maybe in the 2025 time frame or so. 

Mr. FORTENBERRY. Okay. 

Mr. BARNWELL. With the current renewable fuel standard, we 

are looking at increasing to one billion gallons of biodiesel production. That represents almost two percent of all biodiesel that is 

used in a 60 billion-gallon market. 

So that is the starting point just in the next couple of years. 

Going beyond that, we know that there is enough feedstock out 

there if it is tapped. And there is a lot of untapped feedstocks, like 

even in these second generation feedstocks, such as recycled waste 

oils and waste greases. 

If we can have the right technology in place that we could tap 

into all of those and we can have an efficient collection system to 

bring all of this into the biodiesel market, we could see that number easily increase to five, six billion gallons a year. So right there 

you are getting close to ten percent. And I think that is feasible in 

the five to ten-year time frame. 

And then going beyond that, the kind of work that some of the 

other folks here on the panel are describing in terms of increased 

feedstock, that is really the bottom line when it comes to biodiesel, 

availability of feedstock. 

We can produce fuel as long as there is a feedstock to produce 

it from. And the new technologies with algae, in particular, are 

very exciting. I think infinite is a big number, but when you think 

about it, as long as we can produce enough on these marginal lands 

to meet demand and at the same time address the points that Dr. 

Bartlett raised with conservation and actually trying to keep that 

demand in check through other technologies, things like hybrid vehicles, even hybrid diesel vehicles, which are now coming on the 

market. And even buses driving around this city are using those 

technologies now. 

By reducing those demands, it is sort of a—you know, we can get 

this balance. Let’s get this scale into a better balance. 

Mr. FORTENBERRY. Anybody else care to respond? Yes, sir? 

Mr. TRUCKSESS. Several people have done a good job. DOE did 

a study a few years ago that said, you know, based on sort of current technology, you could do about 5 percent or 5 billion gallons 

of biodiesel from sort of current crops, you know, look at sort of the 

emerging technologies if we really get to sort of that is the bridge 

for the five or ten years that you need to get to the second generation technologies. Does that make a huge difference? 

I have talked to API. And they said petroleum demand growth 

was growing six percent, supply was growing three percent. So at 

a three percent differential, you are now at $140 a barrel oil. 

So does a percent or two make a difference? In the global scheme 

of things, it makes a huge difference in the short term because, you 

know, Goldman is predicting $200 a barrel oil or I have seen several different estimates. It is T. Boone Pickens. It is going up. And 

24

so small percentages make a difference until you can get to some 

sort of—

Mr. FORTENBERRY. Well, I am asking a very hard question because it has to be a convergence of a lot of things, but we see a 

convergence of a lot of things. We see the high price of oil, the demand for new technologies, the policies that are lining up to promote that increased emphasis, appropriately so, on conservation 

that turn to looking at environmental stewardship as an integral 

part of managing our energy production. 

But, again, all of this is helpful. And don’t get me wrong, but if 

one of you could venture out and predict how big of a sector that 

the biofuels, these types of renewable energy processes can play in 

terms of replacement of overall energy or meeting overall energy 

needs in the country in a fairly short horizon, it would just be helpful. 

Now, that is difficult, I know. But you are out there. You are on 

the front line. You are making money at it. You see the potential 

of this. 

Mr. TODARO. I mean, you need to define your horizon. I would 

probably bet that no—

Mr. FORTENBERRY. You go ahead and—

Mr. TODARO. Yes. I would bet that probably nobody here is making money on it. I mean, seriously most of us are doing this because we believe. There are probably all alternatives we could do 

to get a bigger paycheck. But the issue is so enormous. 

What there is a radical under-investment in is basic research 

and development. It is companies like my own. I am not tooting our 

horn. There are lots of other good companies and universities that 

should be promoted. 

But if you think about the Manhattan Projects or times when the 

government really said, ‘‘This is a fundamental issue of national security. And we are going to devote resources necessary to win,’’ we 

can absolutely do it. In five years, we will be able to show you that 

we are going to be done. 

With engineering and process engineering done within ten years, 

can we be replacing just through a photosynthetic solution and a 

cellulosic based solution 20, 25 percent of currently useable fuels? 

Absolutely. 

I don’t know if you have children. By the time my children, who 

are four and six, go to college, I would venture to bet that half of 

what they do will be based on biofuels. And from there, it is a tipping point because at some point, what happens, of course, is you 

drive down the price of oil enough that it winds up being a commodity-based threat. 

And once you get to $50 oil—but you know what? We get to 

there, and we are directly competing with oil after massive R&D 

done here in the U.S. I think all of us are going to be very, very 

pleased with that. 

Mr. FORTENBERRY. Well, you make some excellent points about 

the need for a focused energy movement that builds rapidly toward 

a sustainable energy vision that meets important environmental 

goals, that untangles the question of particularly foreign oil from 

foreign policy considerations and creates a dependence on homegrown fuels that give us a real sustainable future. 

25

You probably wouldn’t find a Congress member around here who 

doesn’t want to do that. Yet, the dynamics of our system, for whatever reason, have not created a breakthrough moment in which we 

can coalesce around a vision that is grand and meaningful and doable. 

And I think that is one of the important reasons that we are 

doing this today, and I really appreciate the leadership of the 

Chairman in holding this hearing. And to the degree that we can 

make a contribution in that regard, here we sit. 

One more question, Mr. Byrnes. You talked about some exemptions for the development of small-scale distributed generation of 

energy systems. That might be helpful to small business because, 

again, whether it is the old technology that used to take place in 

the mountains or innovative ideas that are taking place in the garage shops that tweak engines and put new things in them, to 

allow the innovation, to not inhibit the innovation of those opportunities may be the way in which we create an important component 

of this large energy breakthrough that we are looking for. So why 

don’t you review some of those key points that you made earlier in 

that regard? 

Mr. BYRNES. As a registered small producer, the first producer 

in Nebraska with a license, I did work with Motor Fuels. And they 

were very helpful in creating classifications for different production 

categories based on capacity, based on numbers of gallons per year. 

And I think Nebraska has a pretty good model there, but they don’t 

have an exemption. 

And at the small scale, if you are producing 5,000 gallons a year 

or less and that is a number that is a very significant number because that is average fuel consumption for a farm over an annual 

basis. That is a common number I hear from folks. 

If they can avoid some of the red tape and just do it and get it 

done in a safe and environmentally responsible manner, that is a 

huge benefit. The reporting, the potential fines, the time and investiture and the paperwork and the bonding and the insurance and 

licensures and all of that stuff, that oftentimes costs more than the 

potential savings of doing it to begin with. 

I think the amount of innovation that I see, I talk to people all 

day long, I mean, just citizens doing stuff and floating ideas by me 

and stuff. The amount of innovation is just staggering, what people 

are doing out there. And it is increasing. 

Necessity is the mother of invention. And we are approaching 

that cusp where it is going to have to be. Hopefully we can get 

ahead of it with a little foresight before it smacks us with a two 

by four. 

We don’t have time to respond, but I think we will most efficiently and certainly most quickly respond with the little guy who 

has this equipment in the wood line or already doing it. Half is already in place. And the amount of dollars that is spent in that kind 

of research and the take-away from that kind of research far outweighs any other way of doing it. 

You learn a lot more by doing it. I mean, on wind systems, I read 

about wind systems for two years, burned-out printer cartridges 

printing and reading. And I learned more in two days of installing 

26

my system than I did in two years of reading about it. We need 

you to just do it. 

And I echo the gentleman’s comments here about the Manhattan 

Project type of necessity and focus. There is nothing this nation 

cannot overcome if we put our mind to it. I don’t know that we 

have put our mind to it yet. 

Mr. FORTENBERRY. Thank you, Mr. Chair. 

Chairman SHULER. Couldn’t agree more. Couldn’t agree more. 

At this time the gentleman from Indiana, Mr. Ellsworth, will be 

recognized. 

Mr. ELLSWORTH. Thank you, Mr. Chairman. Thank you, gentlemen. I can’t imagine a more important hearing that you could have 

held and five better guests and witnesses. 

Mr. Byrnes, I get hit with a two by four every time I go home from people that want to do something about $4 gasoline. When I 

don’t go home, then they hit me on the e-mail with that. So I think 

we are all getting hit with that two by four. 

Mr. Todaro, you said earlier you don’t understand the legislative 

process. I have got to tell you that sometimes people on this side 

of the table don’t fully understand it either. 

I would like to associate my comments with Mr. Bartlett first. 

And I have got to tell you when I start reading about this stuff I 

go to his Web site and look at his energy speeches. And thank you 

for all you do in your research. It helps us young-ins down here. 

And I appreciate everything that you do and your comments on 

this. Just a couple of questions. 

And, besides that, Mr. Wooley, thank you for what you are doing 

in my area. And if you want to locate those other two plants in 

Evansville, we will try to roll out the red carpet for you. We sure 

wouldn’t be opposed to that. 

Tell me the difficulty of retrofitting as we move into the second 

phase or the second generation fuels. Are we going to be able to 

retrofit or is it all new technology? Are we going to be able to retrofit some of the phase one plants into the phase two, where we 

are going to save some costs there or is it a whole new process? 

We may have touched on it with the wood earlier, but is that going 

to be a difficult switch? 

Mr. WOOLEY. We plan to follow the concept that we are doing in 

Kansas right now, and we will go back to what at that point will 

be an existing plant in Indiana and retrofit a hybrid facility. So we 

will have both to start out with. 

And so the first challenge in an area is the feedstock availability. 

So it is very local. It is not like corn. I mean, we could pretty much 

site a corn plant anywhere in the country with delivering corn by 

rail and that sort of thing or barges. But sourcing the biomass feedstock in the area of the plant. So that is challenge number one. 

As far as there is a synergy. There is a good synergy between the 

two facilities. There is a lot of infrastructure, a lot of power, steam, 

and waste water and all of those sorts of facilities that can be 

shared between the two. 

And then longer term as the cellulosic technology really proves 

itself out, then there is a very good likelihood that we could start 

to retrofit and move away from the corn in that plant. And when 

we do that, we still maintain much of the fermentation. 

27

Those very large tanks that you see, those are all very much the 

same. In some of the front end, how we process that, the corn 

stalks, into sugar, turning the corn into sugar would have to 

change. 

But that is kind of our progression. We go back and we retrofit 

our current starch with the cellulose technology, take advantage of 

everything that we have already got there, the know-how, the people, the technology, and the expertise, and really start to really understand the cellulose. 

And I agree with the gentleman earlier about doing it. I mean, 

that is a key thing. I mean, I personally have been involved in cellulosic ethanol research for the last 12 or 15 years. And I have sat 

around and read about it and studied it in labs and things like 

that. 

And actually going out and building this plant, building this pilot 

plant first and building this plant in Kansas, we are going to learn 

a lot. And that is going to really enable us to make those steps. 

And the key thing is along with us knowing how to do it, getting 

the risks down to the financial community. They have to see that 

we know what we are doing, too. And by actually doing those, we 

will demonstrate that. And then it becomes any incentives that you 

all can provide for us of loan guarantees or making sure that we 

have got a place to sell the ethanol. 

That just continues to force that financial community to see, 

‘‘Yes, we have got a viable business here. And we understand technology.’’ And that will come back to the gentleman’s issue about 

how fast we can do this. A lot of it has to do with how fast the 

money can come after we have proven the technology. 

Mr. ELLSWORTH. I think that leads into my second. It is not a 

question, it is a comment, but if you have a comment on it, I would 

appreciate it. When we approved the incentives on—we always talk 

about unintended consequence. And I think that is one of the big 

fears of Congress, one of the unintended consequences. 

I think we need your help because Congress—I think Mr. 

Fortenberry was talking about this—that we try to look at the big 

picture. And we don’t have a crystal ball on what that is going to 

be. 

So as you go through your process with the plants, that we look 

ahead and we try to fight those unintended consequences so we 

don’t end up with egg on our face. And we want to supply those 

incentives and do exactly what you are doing. Thank you, but help 

us find those. And if you see them, let us know. 

If anybody wants to comment, that is fine. But if not, Mr. Chairman, thank you all very much. It has been a great hearing. 

Chairman SHULER. Thank you. 

I now recognize a person who knows as much about this energy 

policy as anyone in Congress. Dr. Bartlett, thank you. Have as 

much time as you would like. 

Mr. BARTLETT. Thank you very much. Thank you all very much 

for your testimony. 

I would like to start out by kind of putting in context where we 

are. We use 21-22 million barrel of oil a day in our country. We 

use 70 percent of that in transportation for liquid fuels. What we 

have been doing for 150 years now is harvesting what nature has 

28

stored away in the ancient past over a very long time period. We 

are now mining that resource very, very quickly. 

The National Academy of Sciences has said that if we turned all 

of our corn into ethanol, every bit of it, and discounted it for fossil 

fuel input, which is very high, at least 80 percent, that it would 

displace 2.4 percent of our gasoline. They noted that we could save 

as much gasoline by tuning up our cars and putting air in the tires. 

And that is all of our corn crop. 

The relatively trifling contribution that corn ethanol has made 

has doubled the price of corn. Farmers have diverted land from 

soybeans and wheat to corn. So soybeans and wheat prices have 

gone up. 

Drought in rice-producing areas around the world has driven the 

price of rice up. So we now have a food shortage worldwide and 

food riots in several countries. And our corn ethanol at least is 

partly responsible for that. 

Mr. Wooley, you mentioned the difficulty in getting financing, 

which is the reason I am a very strong proponent of ARPA-E. Much 

of the really cutting-edge technology in our military today is there 

because of DARPA. And what DARPA does is to fund technologies 

that are so out there that you can’t ask your stockholders in your 

company to finance that. And that is a legitimate role of government. 

And so I am a strong supporter of ARPA-E. It is now the law. 

But this administration is not supporting that. I hope we pass another law that punishes them if they don’t support it. 

There are two bubbles that have broken, Mr. Chairman. The first 

was the hydrogen bubble, the hydrogen economy. It was supposed 

to solve all of our problems. I think people finally figured out that 

hydrogen is not an energy source. Hydrogen is simply a carrier of 

energy. 

Think of it as a battery, and you have got it right. And it will 

be very useful by and by when we have an economically supportable fuel cell, probably two decades off because a fuel cell is at least 

twice as efficient as the reciprocating engine. And when you burn 

hydrogen, you get water. 

By the way, for those who tell you that they have got some new 

technique for getting energy out of water. They probably also believed that they were going to get energy out of the ashes and no 

furnace because water is the oxide of hydrogen. Water is what you 

get when you burn hydrogen. There ain’t no energy in water, but 

a lot of people believe that there is. 

The second bubble that broke was a corn ethanol bubble. And the 

third bubble that will break is the cellulosic ethanol bubble. We 

will get something from cellulosic ethanol. 

I, among other things in a life of 82 years, have been a farmer. 

And it is hard for me to imagine if we are going to get a whole lot 

more from our wasteland, not good enough to grow anything on, 

than we could get from all of our corn and all of our soybeans. 

Mr. Barnwell, the General Accounting Office has said if we 

turned all of our soybeans into soy diesel, all of it, every bit of it, 

that that would displace 2.9 percent of our diesel, again trifling. If 

we just took our trucks off the road except for the last mile and 

29

put that cargo on trains, trains are at least five times as efficient 

as trucks than hauling cargo. 

Aren’t we straining at a nut and swallowing a camel? And 

shouldn’t we really be looking at the big picture? We can drastically reduce our use of gasoline if we had HOV-3 and HOV-2. We 

could drastically reduce our use of diesel if we simply put that 

cargo in the train except for the last mile. 

By the way, if you could move it by water, that is at least five 

times as efficient as moving it by train. So you need to move it by 

water as far as you can and then by train and trucks only the last 

mile. 

Mr. Todaro, you mentioned algae. We are now exploiting algae, 

which is probably algae that grew—you are right—in these ancient 

subtropical seasons. By the way, our Earth was at one time very 

much warmer because we had subtropical seeds in the north slope 

and in the seed beds. They weren’t seed beds then. The land was 

higher north on England. 

So what we are now trying to do is to explore the technology 

which nature used over a very long time period. And they 

squirreled the product away in these gas and oil reserves. 

When you are looking at how much gasoline we will displace, I 

suspect that we are not really using energy-profit ratio, that we are 

not discounting it in the fossil fuel input. 

And isn’t it a little silly to pretend that you displaced gasoline, 

oil when 80 percent of the energy that you get out of ethanol came 

from the fossil fuels that helped grow the corn and produce the ethanol. 

Mr. Byrnes, you mentioned syngas. Would you tell us a little bit 

about the efficiencies of syngas as compared to cellulosic ethanol 

with steam reforming? Can’t you take about any biomass and get 

syngas from it? And can’t the chemists, starting with that hydrocarbon, make about anything he wishes from it, just as we do from 

oil today? 

And why isn’t syngas a better place to start, which is, what, a 

century-old technology? Why isn’t that a better place to start than 

cellulosic ethanol, about which we know very little and it is hugely 

challenging? 

Mr. BYRNES. I would be glad to respond, sir. I have often felt 

that one of the challenges to cellulose ethanol is that getting the 

cellulose, you have kind of a gold rush of cellulose at the end of 

the growing season and you’ve got to get it to the plant and preserve it and keep it in a certain condition to undergo a fermentation process. I think with gasification, burn it. It will burn. 

Any time of the year whenever it is available—and I think that 

there is a wider variety of feedstocks available from trash, all kinds 

of things. Whether old or new carbon, they are going somewhere. 

I think it is something to consider. 

And I think gasification in the reforming process through an adjustment of catalysts and pressure and temperature, you could 

make any carbon link chain that you want from 2 carbon ethanol 

to 4 carbon butanol to 16 carbon diesel or whatever you need almost with a dial, you know, with these kind of inputs going in. 

That is a solid technology. 

30

I am uncertain what the efficiency is, the energy efficiency is. I 

know in a gasification process, the energy input is a match and oxygen and then waste heat is evolved in the process, which can be 

recovered for something else. But other than that, the energy 

comes from the material itself. 

The ethanol facilities in Brazil, they don’t have a DDG feed. They 

burn that. And that biomass goes back to feed their ethanol process. Those BTUs go back to their ethanol production. So they have 

a different system there. 

But I don’t see why we don’t use that. I think in 1932, you know, 

it was at its height. And it was replaced with electricity that took 

its place once Tesla figured out how to transport that. I think that 

should be considered. 

I know there is a pilot plant going up in Germany. Korn Industries is doing that. I don’t know that that is happening here except 

on a very small scale. 

Mr. BARTLETT. Syngas is what, hydrogen and carbon monoxide? 

Mr. BYRNES. Yes, sir. Syngas is any carbonaceous material in an 

oxygen-starved environment. So it is C plus one-half O2 is H2 and 

CO. 

Mr. BARTLETT. Yes. Isn’t this fundamentally the process that is 

used in getting gas and liquids from coal? 

Mr. BYRNES. That is correct. The technology grew up on old carbon. That same technology can be utilized with new carbon inputs 

with the same chemistry. The gasification process does not care 

where the C comes from, whether it is old or new carbon. 

And the Fischer-Tropsch reaction reforms it under different temperature and catalysts and pressure into the liquid, but it is a fairly—the reforming process does have some energy input because of 

the compression that is required to get from a gaseous dispersed 

state into a concentrated liquid state. So that is where your energy 

input is, not on the actual gasification itself. 

Mr. BARTLETT. How would you suggest that we make these decisions? Clearly you start with a biomass. I would like to caution, by 

the way, that we don’t really know what is sustainable in biomass. 

I grew up during the Depression. And I remember farmers then 

who would brag that they had worn out their third farm. There 

weren’t many others, then, and a lot of land. And they just moved 

from one farm to another. And they wore it out. That is because 

they didn’t return the fertility they took off the land. 

We now just pour fertilizer onto the land. Almost half the energy 

that goes into producing corn comes from natural gas, with which 

we make the nitrogen fertilizer. Before that, the only nitrogen fertilizer available was barnyard manures and guano. And the guano 

that took tens of thousands of years to farm is now gone. If we wait 

another 10-20 thousand years, there will be some more guano. And 

we can mine that. 

Guano, by the way, is the droppings of birds and bats that accumulated in bat caves and in tropical islands over tens of thousands 

of years. 

I don’t know what is sustainable in biomass. I look out there, and 

there is a lot of biomass, all of those weeds. To at least some extent, this year’s weeds grow because last year’s weeds died and are 

31

fertilizing them. And I don’t know what that extent is. I just don’t 

know what the sustainability is. 

I know that switchgrass is quite unique in that it pushes most 

of the nutrients back in the roots. It is very deep-rooted. So it is 

pulling nutrients up from the subsoils. And so switchgrass is really 

kind of unique. 

Don’t you think we need some experiments in sustainability before we leave? Go back to the words of Alan Greenspan when the 

market was just going way out of control and he talked about what 

was irrational exuberance. Was that the term he used? I think that 

we have a lot of irrational exuberance relative to these alternatives. 

The amount of oil that we use is just incredible. Every barrel of 

oil has the energy equivalent of 12 people working all year. And 

25,000 man-hours of effort, when I first read that, I said, ‘‘Gee, it 

can’t be true.’’

And then I thought I drive a Prius. And I thought, ‘‘Gee, one gal- lon of gas at $4, still about the price of water in the grocery store, 

by the way, not all that expensive.’’

It takes my car 48 miles. Now, I could pull my Prius 48 miles 

with a come-along and chains and stuff, with a guard rail. But it 

took me a long time to pull my Prius 48 miles. When oil was $12 a barrel, what that meant was that you could 

buy the equivalent of one person working all year for you for one 

dollar. Wow. That is what has established the incredibly high 

standard of living that we have. 

And please go and read Hyman Rickover’s article, great, great 

article, literally a speech that he gave. It was found a few years 

ago and put on the Web. There is a link on our Web site, too. Just 

Google for ‘‘Rickover’’ and ‘‘energy speech,’’ and it will pop up. And 

it will pop up there. 

I am a farmer, the biggest industry in my district. And I am very 

high on biofuels. But, you know, I am really concerned about unrealistic expectations. And the down side of realization, when these 

unrealistic expectations are not met, there were enormous unrealistic expectations relative to corn ethanol. 

The chairman of our Agriculture Committee has spent a lot of 

time thinking about this. Collin Peterson believes that at the end 

of the day, when we finally have transitioned to renewables, that 

we will be able to produce about a third of the liquid fuels that we 

use today. That is fine. I think we can live very well on a third of 

the liquid fuels that we are using today. 

We need to transition there. The opportunities for conservation 

are absolutely enormous. And, Mr. Chairman, one of the things 

that really disturbs me is that neither of our parties is emphasizing 

the only thing that will bring down the price of oil now. And that 

is conservation. 

You know, the things that we are proposing for the moment, 

more drilling, it takes energy to drill. That will simply compete for 

oil and drive up the price of oil. Am I right? And it takes energy. 

Every one of you use energy in developing these biofuels. And that 

simply will now drive up the price of oil. 

We tragically have run out of time and run out of energy. We 

never run out of dollars. We simply borrow that from our kids and 

32

our grandkids without their permission. But we have run out of 

time, and we have run out of energy. 

With an aggressive conservation program, one of the great giants 

in this area, Matt Simmons, believes that we can buy two decades 

of time. 

One of you mentioned the Manhattan Project. We need more 

than that, Mr. Chairman. We need a program in our country that 

has the total commitment of World War II. I lived through that 

war. Everybody had a big—we had Daylight Savings Time so you 

could work in your victory garden. There was no legislation that 

said you had to have this. It is just what you did if you were a patriotic American. We saved our household grease. Not a single 

automobile was made in ’43, ’44, and ’45. We need a total commitment of World War II. 

The American people are the most creative and innovative society in the world. But we are deceiving our constituents. They believe that the oil prices are high because the oil companies are 

gouging us or the Arabs are holding back on it. Neither one of 

those is true. 

The oil companies are the beneficiaries of a supply/demand side, 

where they are getting enormously rich. I hope they use their profits in a better way than they have used them so far. 

We also need a technology focus of putting a man on the moon. 

And I can remember that. I remember that cartoon that really said 

it. It was a buck-toothed redhead kid that said, ‘‘Gee, six months 

ago I couldn’t even spell engineer and now I are one.’’ Everybody, 

everybody wanted to be an engineer. 

Today the best and brightest of our kids are going into potentially destructive pursuits. They are becoming lawyers and political 

scientists. 

[Laughter.] 

Mr. BARTLETT. And this year China will graduate six times as 

many engineers as we graduate. And half of our engineers are Chinese and Indian students. And we really do need a program that 

has the urgency of the Manhattan Project. 

Now, I lived through the Manhattan Project. And the professor 

in the college I was going to came home with the Manhattan 

Project and wanted me to major in physics. He was a physicist. But 

that was a secret squirreled away. But what it did was to cut all 

of the roadblocks so you could proceed very quickly. 

So we need a program that has the total commitment of World 

War II, the technology focus of putting a man on the moon, and the 

urgency of the Manhattan Project. 

I am excited about this. You know, our young kids spend far too 

much time watching dirty movies and smoking pot. They need 

something that really captures their imagination and challenges 

them. Mr. Chairman, this could do it, but we need leadership. 

And, you know, our presidential candidate is running away from 

the White House. I think he needs to run away from the Republican party, too, if he is going to win. We really need leadership in 

this area. 

And although I am a very optimistic person, I tend some days 

to be a little down because I just don’t see knowledgeable leadership in either of our parties. I am sorry. 

33

I thank you very much for yielding more time than my share. 

Chairman SHULER. No. Thank you, sir. 

I want to thank all of the witnesses for their time, their commitment to come here and give their testimony today. I ask unanimous 

consent that members have five legislative days to enter statements into the record. Without objection, so ordered. 

This hearing is now adjourned. 

[Whereupon, at 11:51 a.m., the subcommittee was adjourned.]

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