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EXPANDING THE ROLE OF 

BIOFUELS FOR AMERICA 

FIELD HEARING 

BEFORE THE

COMMITTEE ON AGRICULTURE, 

NUTRITION, AND FORESTRY 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

SEPTEMBER 1, 2009 

Printed for the use of the 

Committee on Agriculture, Nutrition, and Forestry 

( 

Available via the World Wide Web: http://www.agriculture.senate.gov 

COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY 

TOM HARKIN, Iowa, Chairman 

PATRICK J. LEAHY, Vermont 

KENT CONRAD, North Dakota 

MAX BAUCUS, Montana 

BLANCHE L. LINCOLN, Arkansas 

DEBBIE A. STABENOW, Michigan 

E. BENJAMIN NELSON, Nebraska 

SHERROD BROWN, Ohio 

ROBERT P. CASEY, Jr., Pennsylvania 

AMY KLOBUCHAR, Minnesota 

KIRSTEN GILLIBRAND, New York 

MICHAEL BENNET, Colorado 

SAXBY CHAMBLISS, Georgia 

RICHARD G. LUGAR, Indiana 

THAD COCHRAN, Mississippi 

MITCH MCCONNELL, Kentucky 

PAT ROBERTS, Kansas 

MIKE JOHANNS, Nebraska 

CHARLES E. GRASSLEY, Iowa 

JOHN THUNE, South Dakota 

MARK HALVERSON, Majority Staff Director 

JESSICA L. WILLIAMS, Chief Clerk 

MARTHA SCOTT POINDEXTER, Minority Staff Director 

VERNIE HUBERT, Minority Chief Counsel 

(II) 

(III) 

C O N T E N T S 

Page 

FIELD HEARING(S): 

Expanding the Role of Biofuels for America .......................................................... 1 

Tuesday, September 1, 2009 

STATEMENTS PRESENTED BY SENATORS 

Harkin, Hon. Tom, U.S. Senator from the State of Iowa, Chairman, Committee on Agriculture, Nutrition, and Forestry ................................................. 1 

Thune, Hon. John, U.S. Senator from the State of South Dakota ...................... 3 

WITNESSES 

Corcoran, Steve, Chief Executive Officer, KL Energy Corporation ..................... 14 

Couser, Bill, Couser Cattle Company .................................................................... 8 

Olthoff, Ed, Cedar Falls Utilities ........................................................................... 19 

Rath, Anna, Director of Business Development, Ceres ........................................ 11 

Sheehan, John, Scientific Program Coordinator for Biofuels and the Global 

Environment, Institute on the Environment, University of Minnesota .......... 16 

Stowers, Mark, Vice President for Research and Development, POET .............. 6 

APPENDIX 

PREPARED STATEMENTS: 

Corcoran, Steve ................................................................................................. 42 

Couser, Bill ....................................................................................................... 49 

Olthoff, Ed (with attachments) ........................................................................ 53 

Rath, Anna ........................................................................................................ 79 

Sheehan, John .................................................................................................. 85 

Stowers, Mark ................................................................................................... 94 

QUESTION AND ANSWER: 

Harkin, Hon. Tom: 

Written questions for John Sheehan .............................................................. 104 

Stowers, Mark: 

Written response to questions from Hon. Tom Harkin and Hon. John 

Thune ............................................................................................................. 105 

(1) 

EXPANDING THE ROLE OF 

BIOFUELS FOR AMERICA 

Tuesday, September 1, 2009 

U.S. SENATE, COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY, Sioux City, Iowa 

The Committee met, pursuant to notice, at 1:10 p.m., at Western 

Iowa Tech Community College, Sioux City, Iowa, Hon. Tom Harkin, Chairman of the Committee, presiding. 

Present: Senators Harkin and Thune. 

STATEMENT OF HON. TOM HARKIN, U.S. SENATOR FROM THE 

STATE OF IOWA, CHAIRMAN, COMMITTEE ON AGRICULTURE, 

NUTRITION, AND FORESTRY 

Chairman HARKIN The Senate Committee on Agriculture, Nutrition and Forestry will come to order. Good afternoon and welcome 

everybody to this committee field hearing, and I want to thank 

Western Iowa Tech Community College for hosting us here today. 

Senator Thune, I want to thank you for being here today and for 

your contributions to our 2008 farm bill, especially your work on 

the biofuels program and other energy provisions that we put in 

that bill. The 2002 Farm Bill is something that we have worked 

very closely together on. Senator Thune is a very valued member 

of our Senate Agriculture Committee and, as I said, one of our 

leaders on biofuels. 

Well, rural America is rapidly increasing the production of renewable energy, including biofuels, and that is one of the bright 

spots in our rural economy. Equally important, producing and 

using more biofuels is one of our major strategies for reducing dependence on foreign oil. 

Congress recognizes this. Last year, our Country produced over 

nine billion gallons of ethanol. That reduced oil imports by 321 million barrels. This year, we will produce over 10 billion gallons of 

ethanol, and that is quite a success compared to just 30 years ago 

when we put out only 175 million gallons. 

Under the Renewable Fuel Standard that we passed in 2007, our 

Nation is on exactly the kind of expansion trajectory I believe we 

need, growing to 36 billion gallons of renewable fuel used by the 

year 2022. The Food, Conservation and Energy Act, or what we call 

the Farm Bill, that we passed last year will boost and maintain 

that trajectory. 

Building on our base of corn ethanol, the new Farm Bill has payments, grants and loan guarantees to help farmers and biorefineries develop advanced biofuels, grow biomass crops, process them 

2 

and market biofuels. It does so, as I said, with grants and loan 

guarantees, payments for biomass crops, payments to farmers to 

begin to grow energy crops, and payments for feedstock harvesting 

and delivery to user facilities. 

There are two pieces of legislation that I introduced this year, 

aimed at improving distribution and marketing. The first authorizes loan guarantees for renewable biofuels pipelines to provide 

critical infrastructure for transporting our fuel from the Midwest to 

places of high population centers. And, Senator Thune, again, we 

have worked together on that, as co-sponsors of that legislation. 

The second bill I introduced is one that I have had in previous 

Congresses, a bill that Senator Lugar and I have worked on. Actually, he started it I think when he was Chairman of the Agriculture 

Committee as a matter of fact. That bill requires that 90 percent 

of the vehicles manufactured in the U.S. are to be flex-fuel by 2013. 

I am convinced that we can do that if we just have the will to do 

it. Brazil does it right now. I do not know why we could not. 

It would also require increasing the number of blender pumps, 

pumps that can dispense ethanol blends ranging from 0 to 85 percent, and would authorize grants to support their installation. 

Another important action we have got to take is relief from the 

blend wall. John and I have discussed that a lot in the Senate. I 

want to thank Growth Energy and all of the biofuels firms that 

supported the application to the EPA for the waiver to allow E–15 

to be used, and, hopefully, that is going to be done before the end 

of this year. 

Actually, to tell you the truth, it could be higher than E–15. We 

know that. POET knows that. We all know that, but we will settle 

for E–15. It could be E–20. It could be even as high as that without 

any problems whatsoever, but we will take E–15. 

Let me also mention that recently Senator Thune and I sent a 

letter to EPA Administrator Lisa Jackson, asking her to refrain 

from including international indirect land use changes in the rulemaking for the Renewable Fuel Standard. While I think we can all 

agree that we need to make sure our expansion of biofuels does not 

come at the expense of our environment or climate, we clearly do 

not have any data or analytic tools to link deforestation overseas 

to biofuels production here in the Midwest with any credibility 

whatsoever. 

So, again, to fulfill the potential of biofuels, we have to understand the obstacles and challenges and devise practical solutions, 

and that is why we are here today, to explore the current situation, 

including prospects from promising research and trials, market 

barriers, opportunities, and finally, the impact on the farm level 

and what farmers are doing out there at that level. 

So, again, this emerging industry, biofuels, is important to all of 

us in the Nation but really important to Iowa and South Dakota, 

and that is why you see us working very collaboratively here to 

move ahead in this whole area. 

So, with that, I would yield to my good friend and colleague, Senator Thune. 

3 

STATEMENT OF HON. JOHN THUNE, U.S. SENATOR FROM THE 

STATE OF SOUTH DAKOTA 

Senator THUNE. Thank you, Mr. Chairman. I want to thank you 

for holding today’s hearing, and I want to thank our panelists too 

for joining us today. 

This is an extremely timely subject, timely hearing. And, as the 

Chairman mentioned, we did work very closely in the last Farm 

Bill on a lot of these issues that relate to the future of the biofuels 

industry, and that is why I think we need to make sure that we 

continue the forward momentum and continue to put policies in 

place that will encourage greater expansion and growth in that industry. 

I would say that I think today that our biofuels industry is at 

a crossroads. Traditional ethanol production has greatly expanded 

over the past few years, has already helped to reduce our dependence on foreign oil. However, existing ethanol plants are facing significant economic challenges, and the future widespread commercialization of advanced biofuels remains uncertain. 

A lot of this uncertainty can be attributed to what I call the Dr. 

Jekyll and Mr. Hyde national biofuels policy. The Federal Government has made biofuel production the cornerstone of our energy 

policy. However, at the same time, we have erected barriers that 

are having a negative impact on the profitability of existing ethanol 

plants and private sector investment in future advanced biorefineries. 

Over the past several years, we have invested billions of taxpayer dollars in growing our ethanol industry. We have enacted a 

per gallon volume metric excise tax credit. We have put in place 

a tariff that protects that American taxpayers from subsidizing foreign biofuel. We have incentivized the installation of E–85 pumps, 

and we have invested hundreds of millions in research and development of traditional and cellulosic ethanol production. 

In 2007, Congress took the boldest step toward energy independence by expanding the Renewable Fuel Standard to 36 billion gallons by the year 2022. If this goal is achieved, almost one of every 

four gallons of motor fuel sold in the United States will come from 

clean, renewable biofuels. However, the Federal Government simultaneously hamstringed the future growth of biofuels in the United 

States. Perhaps the most prominent example of these barriers is 

the issue of indirect land use that the Chairman mentioned and 

the carbon footprint of renewable fuel. 

We all know that homegrown renewable fuel made from corn and 

other renewable sources is better for our environment than petroleum-based gasoline. However, the Environmental Protection Agency recently released draft regulations that would penalize domestic 

ethanol producers for land use decisions that are made around the 

world. Final analysis actually shows that corn-based ethanol production would unbelievably result in more carbon emissions relative to petroleum-based gasoline. If finalized, these regulations 

would prohibit soy-based biodiesel and efficient corn-based ethanol 

production methods from counting toward the new Renewable Fuel 

Standard. 

Another significant barrier is the overly narrow definition of renewable biomass. The new Renewable Fuel Standard requires the 

4 

production of 21 billion gallons of cellulosic ethanol by 2022. This 

is a tremendous vote of confidence in the ingenuity of our biofuels 

industry. However, a significant amount of this fuel is expected to 

come from woody biomass. 

Although woody biomass is abundant throughout the United 

States, the expanded RFS places all Federal lands and most of the 

private forestlands off limits. If we do not change this definition in 

the very near future, meeting the 2010, 2011, 2012 goals of the 

new RFS will be difficult, if not impossible. 

We also have a 90 percent petroleum mandate within our fuel 

supply due to regulations in the Clear Air Act, only a blend of 10 

percent of ethanol can be used in non flex-fuel vehicles. Approval 

of E–13 or E–15 or, as the Chairman said, we could go much higher than that, but at a minimum we need to increase the blend wall 

to E–15 in the near future. That will increase the market for ethanol by up to 50 percent virtually overnight. In the long run, it will 

create thousands of jobs in rural America and greatly displace imported foreign oil. 

Recently, a group of 54 ethanol producers submitted a waiver to 

the EPA, requesting approval of up to E–15 for use in non flex-fuel 

vehicles. I would like to thank Dr. Stowers and POET for their 

leadership in this waiver. I am hopeful that EPA will follow the 

science that supports this waiver and approve an intermediate 

blend in the near future. 

In essence, Mr. Chairman, we are asking our biofuels industry 

to run a long marathon while hopping on one leg. And, breaking 

a century-old oil monopoly is enough of a challenge. We do not need 

the government adding additional roadblocks. 

Beyond removing the artificial barriers of the ethanol industry, 

Congress must keep moving forward effective and targeted biofuels 

policies. We must invest in the infrastructure that will break oil’s 

monopoly on our fuel supply. 

We must continue to incentivize the installation of E-85 and 

blender pumps. We currently have a little over 1,900 I–85 pumps 

in the United States. That is simply not enough. If consumers are 

going to have a real choice for their fuel source, we must greatly 

expand access to E–85 and blender pumps across the Nation. 

Additionally, we must encourage our automakers to ramp up production of flex-fuel vehicles. Six million flex-fuel vehicles may seem 

like a high number but only until it is compared to the over two 

hundred and forty million vehicles that are on the road today. 

Intermediate blends of ethanol will provide much needed shortterm relief, but the long-term growth of our biofuels industry depends on access to more flex-fuel vehicles and greater access to E– 

85. 

In addition to more access at the retail level, the government 

should work with ethanol producers and pipeline companies to construct a network of ethanol-dedicated pipelines that will reduce the 

cost of shipping ethanol from the Midwest to the East and West 

Coast. I am proud to be a co-sponsor of Senator Harkin’s legislation 

that will expand the existing loan guarantee program with the Department of Energy to include loan guarantees for ethanol-dedicated pipelines. 

5 

Finally, we must fully implement the energy title of the 2008 

Farm Bill. I want to thank Chairman Harkin and our Ranking 

Member, Senator Chambliss from Georgia, for their leadership and 

dedication to strong energy titles in the 2008 Farm Bill. I am particularly pleased to have worked with the leadership of the Ag 

Committee to include and create the Biomass Crop Assistance Program which the Chairman mentioned, which provides per ton and 

per acre incentives for collecting biomass and growing energy-dedicated crops for cellulosic ethanol production. As of July of 2009, the 

first half of this program is now available to our ethanol plants and 

agriculture producers. 

In closing, the combination of removing artificial regulatory barriers and enacting innovative policies that invest in infrastructure 

and advance biofuel production will lead to a consistent long-term 

biofuel policy. The result will be a growing and sustainable biofuels 

industry that will create jobs in rural communities, expand markets for agriculture and forestry biomass and reduce the dangerous 

dependence that we have on foreign oil. 

I also want to thank Chairman Harkin for holding this hearing 

over the August recess, and I want to thank the witnesses for joining us today. I look forward to your testimony. 

I look forward to working with you, Mr. Chairman, as we pursue 

these policies that are so important to the growth of this industry 

that is critical not only to the Midwest but to our entire Country. 

Thank you. 

Chairman HARKIN. Thank you very much, Senator Thune. 

Before we start with the panel, I want to thank Bob Rasmus who 

is the Chairman of our Board out here at Western Iowa Tech and 

also our President, Dr. Bob Dunker, who is the President of Western Iowa Tech Community College, for hosting us today. 

I always like to introduce our elected people who are here. The 

only one I see is State Representative Roger Wendt who is in the 

State Legislature. Is there anyone I have missed? 

Is there anyone in the South Dakota Legislature here? I do not 

know. Anybody want to run for office? 

[Laughter.] 

Senator THUNE. I think Dr. Bob should run for office, do you not? 

Rasmus needs another job. 

Chairman HARKIN. All right. Well, thank you again for being 

here. 

We have all your statements. I read them over last night. They 

are very good statements. They will be made a part of the record 

in their entirety. 

We will just start at our left with Mr. Stowers, and we will just 

go down the aisle. I would like to ask if you could sum it up. 

Do you have these timers in front of you or do you not? You have 

one there. 

Well, maybe five to 8 minutes, somewhere in there, if you could 

just sum it up, I would sure appreciate it, and then we can kind 

of get into a good exchange that way. So, with that then, we will 

start with you, Dr. Stowers, Vice President for Research and Development, POET, Sioux Falls, South Dakota. 

Mr. Stowers, welcome and please proceed. 

6 

STATEMENT OF MARK STOWERS, VICE PRESIDENT FOR 

RESEARCH AND DEVELOPMENT, POET 

Mr. STOWERS. Chairman Harkin and Senator Thune, thank you 

very much for the opportunity to be here with you. I would like to 

talk to you about our company’s efforts in cellulosic ethanol, the opportunities and challenges that presents. 

POET, headquartered in Sioux Falls, South Dakota, is the largest ethanol producer in the world. Our 21–year-old company has 

built and manages 26 ethanol plants principally in the Corn Belt 

while marketing 1.5 billion gallons and 4 million tons of distillers’ 

grains, returning protein back into the animal feed diet and to 

human consumption. 

Our one-time capital investment since 2000 exceeds over a billion 

dollars to the farm economy. And, through its corn purchases, corporate and plant operations, we contribute over $3 billion annually 

to rural America. In addition, POET has encouraged farmer investment in its operations and now has over 11,000 farmer investors. 

As a way of some background, according to a recent U.S. Department of Commerce International Trade Administration study, there 

is enough cellulosic ethanol available in the United States to 

produce nearly 50 billion gallons. There are other studies that even 

show that a greater amount of cellulosic ethanol could be produced. 

At 50 billion gallons, over 1.2 million barrels per day of crude oil 

could be displaced, creating over 54,000 jobs in U.S. agriculture. In 

practical terms, at this level, ethanol production in the United 

States could eliminate all oil purchases from OPEC in the Middle 

East, eliminating $840 million per day in oil export of dollars to 

overseas producers. That is on a $72 per barrel price. 

Notwithstanding the economic benefit of cellulosic ethanol, there 

are also significant environmental benefits. Gasoline produces 

about two pounds of carbon dioxide equivalent in greenhouse gases. 

By comparison, cellulosic ethanol reduces greenhouse gases by a 

little more than 21 pounds. That is an 85 percent reduction in the 

amount of greenhouse gas. 

The impact of ethanol in relieving our dependence on foreign oil 

is profound. I would like to share with you some work done by 

Adam Liska and Richard Perrin at the University of Nebraska 

where they published a well-reasoned study that showed the costs 

associated with foreign oil and the impact on the environment. 

In 1997, it was estimated that the U.S. military spent between 

5 and 15 percent of all U.S. materials consumed and used up to 40 

percent of the greenhouse gas equivalent materials. That resulted 

in, if you look at the overall military impact of greenhouse gas, 

about 10 percent of all the greenhouse emissions could be attributed to the military. 

The estimated expenditures related to Middle East oil security 

alone was about $138 billion annually out of $526 billion spent on 

U.S. defense. That did not include the Iraq or Afghanistan operations. 

So, if you kind of go through the math, 10 percent of the total 

U.S. greenhouse emissions were due to the regular ongoing military activity in the Middle East and only 26 percent of those operations were for the protection of oil supplies. The total indirect 

7 

military emissions would be somewhere in the neighborhood of 187 

teragrams of CO2 equivalent per year. 

What that translates into is about two times the amount of what 

California and EPA estimate as the impact of gasoline on CO2 

emissions. Put that in comparison, cellulosic ethanol will be fivefold 

less. So we are spending a lot of money as well as carbon dioxide 

equivalents or greenhouse gases to maintain our oil supply when 

we have a domestic source of renewable fuels to meet that demand. 

We believe that at this stage the value of cellulosic ethanol is 

profound at the economic, environmental and national security 

level. 

The technology is available for cellulosic ethanol. We have developed a strategy to bolt on cellulosic ethanol production into our 26 

ethanol plants. Actually, our first plant is here in Iowa at 

Emmetsburg. It is currently a 50 million gallon corn-to-ethanol 

plant which will double in capacity to 100 million and then bolt on 

25 million gallons of cellulosic ethanol produced from corncobs. In 

addition, that will produce 80,000 tons of Dakota Gold corn germ 

as well as over 100,000 tons of Dakota Gold HP animal feed product. 

What I would like to do in closing here is walk you through three 

of the key elements that are going to be necessary to meeting the 

cellulosic ethanol challenge. 

The first is with the feedstock. POET has selected corncobs as its 

first cellulosic feedstock. Corncobs offer a significant advantage 

over other feedstocks based on technical, environmental and economic reasons. Corncobs are typically left on the field as corn stover after the harvest of corn grain. Corncobs are rich in carbohydrates, sugars that we can use in fermentation. They are heavier 

than the cornstalks, so we can separate them, and they can be removed from the field with little environmental impact as they contain little fertilizer value. And, last, they could be collected by the 

same farmers that provide grain to our plants in a similar kind of 

format. 

In 2007 and 2008, POET harvested nearly 13,000 acres of corn 

to supply over 7,000 tons of corncobs in Iowa, South Dakota and 

Texas. We worked with 13 different equipment companies, using 2 

different cob harvest concepts: a corncob mix with the grain and 

the cobs are collected simultaneously, then separated at farm edge, 

and a towable corn stover separator that could be attached to a 

combine. The stover that would be jettisoned out of the combine 

could be collected and separated into corncobs. 

As we move into 2009, we have just completed our planning process. As we move into the harvest season, we will be harvesting over 

25,000 acres of corn in Iowa and South Dakota with 15 equipment 

manufacturers, and we will evaluate 4 different cob harvest methods. 

This really tees us up for 2012 where we will be harvesting over 

250,000 tons of cobs, over across approximately 300,000 acres involving 400 farmers. 

I would like to thank the Chairman and the Committee and Senator Thune for their efforts to promote biomass collection. These 

are critically important as we move forward. 

8 

Our investment in cellulosic ethanol technology is another critical factor in the success of bringing this technology to market. 

POET has invested over $25 million in the past 2 years in cellulosic ethanol technology including an additional $10 million of capital for a pilot plant that is operating in Scotland, South Dakota, 

where we process 1 to 2 tons lignocellulosic biomass per day. 

Some of the highlights that I can share with you is we have 

achieved lab-scale performance in our pilot plant within 30 days of 

operating the facility. We have launched 24–7 operation of that facility 2 months after commissioning. The process was completely 

debugged in 3 months, and then we began a process of optimization 

that led us to a place where we are about $2.50 per gallon for the 

production of cellulosic ethanol. 

I would like to just conclude with one additional supporting 

statement to the remarks made earlier about the blend wall. E–15 

is a critical factor in the success of cellulosic ethanol. The addition 

of six billion additional gallons that would be afforded by moving 

from E–10 to E–15 is critical to our success. 

There is absolutely no critical scientific or technical information 

that would show that E–15 or, for that matter, E–20 would harm 

engines. This is a real reasonable request, and we are hoping that 

EPA acts on this request very, very quickly. 

One final statement I would just like to share with the Committee is that cellulosic ethanol is not a magical solution. It is not 

another shiny silver ball to detract or distract our attention from 

the critical issue of clean domestic fuel for today. 

The technology to achieve cellulosic ethanol is here. It is real. We 

are making it every day as we speak. 

We need market access to ensure that cellulosic ethanol becomes 

a reality. It is time to break big oil’s monopoly on gasoline as our 

only liquid transportation fuel. 

We can make a difference in the economy, the environment and 

national security by supporting ready to go right now domestic, 

clean-burning, agriculture-based ethanol. 

Thank you very much for the opportunity to be here today. 

[The prepared statement of Mr. Stowers can be found on page 94 

in the appendix.] 

Chairman HARKIN. Thank you very much, Dr. Stowers. 

Now we will go to Mr. Bill Couser, Couser Cattle Company in 

Nevada—not Nevada—Nevada, Iowa. 

Bill, welcome to the Committee. 

STATEMENT OF BILL COUSER, COUSER CATTLE COMPANY 

Mr. COUSER. Well, thank you, Mr. Chairman Harkin and Senator 

Thune. It is a real privilege for a farmer and a cattle feeder, I 

guess, to sit in a group like this and be able to discuss some of the 

issues that present us today. 

A little bit of my background, we do live in Nevada. My wife and 

I have a feedlot there. We finish about 5,000 head of cattle a year, 

and we are very involved in the biomasses that come off of some 

of these fields just for the simple fact that we have need them for 

bedding and feed. When you look at the rest of our operation, we 

are very involved in seed corn with Monsanto, commercial corn and 

9 

all the other seed crops that go on with some hay—so, a little bit 

of that background. 

When we first started this, started farming, the fellow who had 

my farm before was an open door policy, Elmer Paul, to Iowa State 

students come out and practice and learn real knowledge and 

hands-on experience. So we have left that policy on right now, and 

today we have about 15 different projects going on with different 

kids. Whether it is the feedlot, whether it is the ethanol side of it, 

whether it is the environmental side or whether it is the farming 

practices, it is open door. If they want to try a project, we try to 

assist them any way possible. 

So, through that, we have been very involved with the collection 

of biomasses that have happened over the last few years. And, 

working with John Deere and Vermeer and a few of those companies, we are trying to figure out as a farmer-feeder, how can we 

utilize those crops the best. 

The transportation issues, the gathering issues, the time window 

that we have to collect those products in the last few years has 

been very narrow. We have had two to 3 weeks to gather them in 

a timely fashion to where they will actually keep for the rest of the 

season. 

I think one of the issues there we have is storage. I know when 

we look at 300–bushel corn in the future. You know I started farming in 1977. I think I had a 125–bushel to the acre—well, in 1978. 

I had a drought in 1977, but in 1978 we had about a 125–bushel 

to the acre average. This year, our farms are going to make 250 

plus. 

Chairman HARKIN. That is amazing. 

Mr. COUSER. What are we going to do with 300–bushel corn in 

the future? And, I know this is going to happen because working 

very closely with Monsanto in seed production we have got it all 

here. When we look at what has happened there, just the increase 

in bushels that we need to grind, they are already there. We have 

already manufactured them. So this food to fuel issue really is a 

no-brainer to us that are out in the country. 

When you address the biomasses or the cellulose that comes off 

of these acres, last year, we went from actually a project pilot with 

Monsanto. We went from 30–inch corn to 20–inch corn and raised 

the populations. We have seen an increase in stover that we take 

off of those farms from 20 to 40 percent in volume that we can get 

off of these fields. 

I guess I am a little disappointed when an individual in the 

White House mentioned switchgrass 1 day. We can do it all as 

Iowa corn farmers here. It is all right here. We can have the starch 

ethanol, and we can have the cellulose ethanol together. 

I see some interesting challenges in the future when it comes to 

the stover that we collect and just the education and the mindset 

of the farmer. Right now today, when we go to the field, you do not 

want to let that grain buggy get in front of anything because we 

have to get the corn out. So we have got an education process. 

I understand the importance of the products that are left in the 

field for food and bedding and the importance of them. But the 

question I go back to ask the consumer of tomorrow is in what form 

do you want that product? Do you want it in a pellet? Do you want 

10 

it in a cube? Do you want it in a corncob or do you want it in a 

corn stock? Because I really feel that if we can figure out the most 

efficient way to get this out of the field, in a timely fashion, it is 

going to be imperative to new business that is coming down the 

road. 

I think we will be working with Green Products out of Green 

Mountain, Iowa. We had them come down last fall when we were 

doing some experiment with John Deere, and they made a comment to me that you know if we can figure out what the end consumer needs as far as what it looks like, the new business to come 

around the corner is incredible. 

Cellulose ethanol is just a part of it, but we look at what can 

happen in the future. And, when you look at job creation through 

that, it is just amazing. So I am very excited, working with these 

different companies, so is POET, when you look at what it can do 

for the livestock industry, the ethanol industry and the new industries to come down the road. 

Three-hundred bushel corn is not a challenge to us as farmers. 

We are very good at what we do, and I am bragging as an American farmer her, not as Couser Cattle Company. We are very good 

at what we do. We are environmentally sound when we look at 

some of those issues coming down the road. 

Senator Harkin, I would like to thank you for sending out one 

of your staffers 2 weeks ago. With Iowa Renewable Fuels, we put 

on a tour and Carla was able to go around with us. I think we were 

able to show people from Washington exactly what happens and exactly how a community and a family and a country can live together in Nevada, Iowa. There are all these little communities all 

over our State, and that is why we are so rich here. 

So, when you look at what is going to happen with 300– bushel 

corn, we are all talking about expenses. And, the farmer today, we 

are always trying to cut back on expenses. 

We are very heavily involved with manure management plans in 

our feedlot. We are very heavily involved with a new project called 

GreenSeeker that is an instrument that we put on our applicators 

to go out and apply nitrogen, and it can read that leaf tissue and 

tell exactly what it needs. 

We are very interested in Lincolnway Energy because it is a coalfired ethanol plant that we can, with our fluidized beds, we can use 

this source of cellulose for energy. And, what is it going to take to 

bolt on to at least try it and get started? 

When you look at the ethanol plants and the biodiesel plants 

that are all around Iowa here, they are very strategically located. 

We do not need any more today. As he stated, we can bolt this on 

to the side. We do not need to build any more. 

I think we just need the help to educate the farmer. I see a huge 

challenge there on what is the value of that product and how do 

you stay out of the way of the chisel plow behind the combine because a farmer has basically two goals when it comes to harvest: 

get the corn out and get it black or get it tilled under. 

I guess in closing I would like to say we all remember where we 

were at 9/11, and we were in the middle of a seedfield picking 

seedcorn when the news came over the radio. My dad walked up 

to me, and he is one of the men from the Great Generation. He 

11 

opened the door of the cab, and he said: Son, you are going to be 

asked to do great things now. You are going to be asked to do 

things that you have never been asked to before because your 

Country is going to ask it. 

We stepped up to the plate. The families, the communities, we 

built the ethanol plants. We have raised local investment, and we 

are very proud of what has happened. When I look up and down 

this table, that is the reason this Country is so strong, because of 

our families and our communities. 

I guess when you look at what is going on, whether it is the 

RFS2 debate, the E–15, cellulosic feedstock, I just want you to 

know that we as farmers, we are out there doing our job. We are 

protecting the environment. We are raising livestock in a very safe 

manner. We are helping feed the world. 

You know we have strong communities. We are going to have a 

strong Country. So I just want to give you that promise from the 

farmers. 

Thank you to both of you. 

[The prepared statement of Mr. Couser can be found on page 49 

in the appendix.] 

Chairman HARKIN. Mr. Couser, thank you very much for a very 

poignant and timely statement. Thank you. I have some things I 

want to ask you about when we get into our questions and discussion. 

Now we go to Ms. Anna Rath, Director of Business Development 

for Ceres, Thousand Oaks, California. 

STATEMENT OF ANNA RATH, DIRECTOR OF BUSINESS 

DEVELOPMENT, CERES 

Ms. RATH. Thank you, Mr. Chairman and Senator Thune. 

I am here representing Ceres. We worked very closely with this 

Committee in the development of 2008 Farm Bill and look forward 

to continuing to work with you on the Climate Bill and other future 

endeavors. 

Ceres is a leading, dedicated energy crop seed company. We develop and market crops such as switchgrass and high-biomass sorghum for biofuels and biopower under our Blade Energy Crop 

brand. 

Our 2008 field trials were very successful. We had over three 

dozen trials nationwide and demonstrated that academics and policymakers have often been too conservative when it comes to forecasting grower economics and bioenergy economics and perhaps too 

aggressive when estimating a land use change that could result 

from biofuels and biopower. 

Our average across all of our field trials for our Blade 

switchgrass varieties were 10 tons per acre, and our yields for 

high-biomass sorghum today are roughly 12 to 15 tons per acre, depending on the location. 

As the Committee knows, higher yields per acre have a significant impact on farm and conversion economics and can dramatically reduce harvest and delivery costs per ton, the largest single 

expense in providing raw materials to bioenergy facilities. Higher 

yields mean greater above and below ground carbon sequestration 

as well. So similar benefits would be seen in calculating greenhouse 

12 

gas reduction by displacing petroleum with biofuels made from 

dedicated energy crops. 

We all understand the role of biofuels is threefold: First, to improve U.S. energy security as the demand for transportation fuels 

worldwide continues to increase; second, to reduce greenhouse gas 

emission; and, third, to provide agricultural producers new and expanded revenue opportunities. 

With this in mind, I would suggest the Committee should have 

two objectives in mind for the continued development of the U.S. 

biofuels industry in the short term. The first is continuing to improve the starch ethanol industry’s environmental profile and 

amount of fossil fuel displacement, and the second is facilitating 

the commercial scale-up of cellulosic and advanced biofuels. 

To bring both of these two together, I am going to talk for a little 

bit about repowering. A simple, relatively low cost opportunity 

using available technology exists today to help starch ethanol facilities further improve their environmental profile and increase their 

displacement of fossil fuels. This is the opportunity to transition 

from natural gas or coal to biomass as their onsite source of heat 

and power. Existing coal boilers can be used as is or can be retrofitted or replaced. Small-scale gasifiers can be used to create a biomass-based syn gas that will work in natural gas boilers. Several 

facilities are either already using or have at least experimented 

with use of biomass in their boilers. 

The combination of the Repowering Assistance Program and the 

Biomass Crop Assistance Program, both included in the Food, Conservation and Energy Act of 2008, provide good support for this 

transition. 

Adoption of biomass as a heat and power source by the starch 

ethanol industry will not only provide benefits to the starch ethanol 

but will also provide benefits in helping the commercial scale-up of 

the cellulosic biofuels industry. 

Two critical elements of the cellulosic biofuels industry achieving 

scale are growers gaining experience with growing dedicated energy crops and facilities gaining experience dealing with the logistics of biomass harvest, transport and storage at large scale. Often, 

these elements of successful cellulosic scale-up are overlooked relative to the need to generate large-scale facilities. 

Use of dedicated energy crops for repowering would provide the 

necessary market for agricultural producers to begin growing dedicated energy crops. The experience gained with biomass handling 

by the companies using this biomass would provide useful knowledge and serve as a stepping stone to commercial-scale handling of 

biomass for cellulosic biofuels production. 

So what I would like to do now is share with you just a few policy priorities that we believe will help support these objectives. 

The first is expanded funding of the Repowering Assistance Program. When used in conjunction with the BCAP, the Repowering 

Assistance Program provides an attractive opportunity for starchto-ethanol facilities to transition from coal and natural gas to biomass as their source of heat and power. Given the benefits of establishing a market for dedicated energy markets, the program 

should be expanded to accommodate this increasing demand. 

13 

Second is planning appropriately for the funding requirements of 

BCAP. Because the Repowering Assistance Program creates an immediate market opportunity for biomass, it could lead to considerable early market demand for the BCAP program. We encourage 

the Committee to work with the USDA and the Office of Management and Budget on such matters to ensure adequate funding for 

2010 success. Ceres will provide assistance wherever possible. 

The third priority would be extension of the BCAP matching payments for collection, harvest, transport and storage. As USDA implements this important BCAP provision, Congress should help ensure that facilities have the right incentives to make the transition 

from coal and natural gas to biomass. It is important that 2–year 

time line on matching payments for collection, harvest, transport 

and storage costs under BCAP be extended. 

The fourth is inclusion of high-biomass sorghums under BCAP. 

High-biomass sorghums are the only one of the primary dedicated 

energy crops that is an annual and that achieves a full yield in its 

first year. Having an annual dedicated energy crop will be critical 

for allowing rotation with other crops and for enabling immediate 

implementation of biomass as an alternative to coal and natural 

gas. It is, therefore, important that high-biomass sorghums are encompassed by BCAP. 

Ceres is working with the USDA to ensure that such sorghums, 

importantly, those designed for production south of Interstate 20, 

are not trapped in a no man’s land between Title I crops and 

BCAP. We will keep the Committee advised of this work. 

Next would be limitation on BCAP establishment assistance. So, 

while we are supportive of rapid implementation of the establishment assistance that is due to be in place in time for the 2010 

growing season, we would suggest caution regarding the magnitude 

of support that would be offered on a per acre basis. If the United 

States wishes to encourage energy crop production on the largest 

number of acres possible, it may want to carefully consider the 

high establishment costs associated with vegetatively propagated 

crops and avoid the experiences of the United Kingdom wherein 

they may have actually hampered biofuels expansion by dedicating 

too many resources to support the establishment of more costly 

crops that would not be able to stand on their own without the support program. 

Finally would be carbon offsets for below ground biomass. Biomass and, in particular, dedicated energy crops are the only source 

of renewable transportation fuels or power that has the potential 

to be not just carbon-neutral but, in fact, carbon-negative. If farmers are to profit in a carbon-constrained world, we need to have a 

good handle on the amount of carbon sequestration that is provided 

by perennial dedicated energy crops root-based carbon sequestration. We would encourage the Committee to encourage the USDA 

to pursue public-private research to measure how much carbon is 

sequestered in the roots of dedicated energy crops and how this accumulates over time. 

Together, we believe these policy priorities will help achieve the 

dual objectives of continuing to improve the environmental profile 

and fossil fuel displacement of the starch ethanol industry and faVerDate Nov 24 2008 14:06 Jan 20, 2011 Jkt 000000 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 C:\DOCS\62714 MICHA
14 

cilitating the commercial scale-up of cellulosic and advanced 

biofuels. 

Thank you again for providing me with the opportunity to discuss our efforts and policy priorities. We look forward to working 

with you to help continue the rapid and successful development of 

these industries. I look forward to your questions. 

[The prepared statement of Ms. Rath can be found on page 79 

in the appendix.] 

Chairman HARKIN. Thank you, Ms. Rath. I just learned something I never knew before, the difference between seedcrop propagated and vegetatively propagated, and I still do not know if I understand it. 

Ms. RATH. I can talk more about it. 

Chairman HARKIN. We will get into that. 

Mr. Steve Corcoran, Chief Executive Officer, KL Energy Corporation, Rapid City, South Dakota, thank you for coming over. 

STATEMENT OF STEVE CORCORAN, CHIEF EXECUTIVE 

OFFICER, KL ENERGY CORPORATION 

Mr. CORCORAN. Thank you. Mr. Chairman, Senator Thune, thank 

you for the opportunity to provide testimony on the expanding role 

of biofuels in America. 

I am Steve Corcoran, the President and CEO of KL Energy Corporation, a biofuels energy company located in Rapid City, South 

Dakota. I am accompanied today by Dave Litzen, our Chief Technical Officer and Vice President of Engineering. 

Over the last several years, KL Energy has transformed from a 

first generation biofuels company to an organization which today is 

focused on providing second generation technology for the conversion of lignocellulosic feedstock to ethanol. Our experience from deploying and using first generation biofuels is being transferred to 

support and guide our second generation biofuels development. 

While there are several technological pathways to second generation biofuels, KL Energy has focused its research and development 

on a unique thermal mechanical pretreatment process to make ethanol from biomass feedstock. 

The use of wood waste, biomass for transportation fuels and 

power is increasingly being viewed as an opportunity to enhance 

energy security, provide environmental benefits and increase economic development particularly in the rural areas. Beyond the current accepted benefits of biomass-derived ethanol, our Nation’s car 

manufacturers and fuel suppliers have a unique opportunity to leverage the elevated octane that ethanol in gasoline provides. The 

current energy policy identifies specific targets for increasing automotive fuel economy by 2020 and represents a great challenge to 

our car manufacturers. 

KL energy would also encourage that the industry take advantage of the increased octane of higher ethanol blends. The octane 

rating of an automotive fuel is frequently misunderstood or misapplied by the general public, but, in general, the higher fuel octane rating enables higher energy compression, resulting in improved mileage efficiency without losing power. We need only to 

look at the engines used in the fuel design laboratories of the racing industry to prove that point. 

15 

Since 2001, KL Energy Corporation made significant investments 

in research and development predominantly from private sources 

and self-funded efforts. Beginning at the laboratory and pilot scale, 

our R&D efforts have been focused on pretreatment. The purpose 

of pretreatment is to alter the structure of the biomass so that cellulose, which is entrapped in the lignin and hemicellulose matrix, 

can become more amenable to the enzymatic process. 

Some of the desired characteristics of our pretreatment are enabling the high conversion of all biomass carbohydrates to ethanol 

and minimizing the sugar degradation during the pretreatment, all 

in an environmentally friendly and cost-effective manner. Our 

pretreatment is effective on soft woods, hard woods and other herbaceous forms of biomass because the process retains these characteristics. 

The research at the laboratory and pilot level resulted in the construction of our commercial demonstration facility in 2007. Capable 

of commercial operation using wood waste from the Black Hills National Forest to produce ethanol, the facility, Western Biomass Energy, is located in Upton, Wyoming and includes pretreatment, hydrolysis, fermentation, distillation and co-product recovery stages, 

allowing us to evaluate our process for making ethanol at scale and 

validate the cost and performance assumptions to prepare for the 

deployment of commercial plants. 

Our business model for the commercialization of our technology 

is referred to as Community Energy Centers which will produce 

cellulosic ethanol and a co-product called lignin. Our model focuses 

on the economic development of our rural economy and is guided 

by three basic principles: 

First, to understand the locally available biomass feedstock. The 

economic competitiveness of cellulosic ethanol production is highly 

dependent on feedstock cost. Consequently, as the deployment of 

Energy Centers approaches, feedstock cost and availability are the 

driving factors that influence locations. KL Energy believes that 

providing flexible plant designs on the basis of feedstock availability, rather than ethanol production, will result in low-cost niche 

feedstock opportunities, minimizing the ethanol production cost. 

The recent provisions of the BCAP program, which provides 

matching payments for the collection, harvest, storage and transportation will encourage sustainable feedstock availability for the 

ethanol production. 

Second, to work with local economic developers. We want to keep 

the footprint of our operation small and in close proximity to the 

feedstock source. Our modular, decentralized design also offers better access to the synergistic opportunities such as locating with 

wood pellet production plants, existing cogeneration facilities and 

sawmills. The small Energy Center concept will create local jobs 

and energy alternatives in many communities that might not normally have that opportunity. 

Third, to optimize and leverage the value of the lignin co-product. Our technology has the ability to take lignin, which is the 

outer layer that binds and protects the biomass fiber, and creates 

and a pellet. Lignin pellets yield up to 20 percent higher energy 

content over conventional wood pellets since most of the lower energy cellulosic sugars were removed during the ethanol process. As 

16 

a natural consequence of KL Energy’s process, the lignin co-product 

can be compressed into a highly durable pellet having a bulk density that is 20 percent higher than a typical wood pellet. Consistent 

with recent EPA studies, KL Energy’s process will achieve at least 

85 percent reduction in greenhouse gas emissions as compared with 

gasoline. 

In utilizing waste generated continuously by the forest products 

industry and the forest itself, we see the impact of strategically 

placed small Energy Centers as a win for locally produced, locally 

consumed energy and a win for the forest management by providing a destination for slash piles that are currently being burned 

or simply left to rot. The positive impact of turning forest waste 

into usable fuels and other products benefit the environment by reducing or eliminating the prescribed burning of the waste, eliminating the generation of particulate matters during the burn and 

the cost of soil remediation after the burn. 

The current energy policy restricts the use of waste from public 

lands, a restriction that must be reversed to help facilitate the implementation of all the positive benefits of a biomass utilization. If 

the government continues to aggressively pursue second generation 

biofuels research and development, enact investor-friendly tax incentives for the production and blending and enable the use of 

waste material from public land, the prospects for achieving sustainable biofuels markets will become a reality. Cellulosic ethanol 

represents a new way to pursue goals and increase energy security 

and economic development, especially for the rural areas, while 

protecting the quality of our environment. 

Mr. Chairman, thank you for the opportunity. 

[The prepared statement of Mr. Corcoran can be found on page 

42 in the appendix.] 

Chairman HARKIN. Thank you very much, Mr. Corcoran. The 

question is about fermentation. 

Now, Mr. John Sheehan, Scientific Program Coordinator for 

Biofuels and the Global Environment, Institute on the Environment, University of Minnesota, Mr. Sheehan, welcome. 

STATEMENT OF JOHN SHEEHAN, SCIENTIFIC PROGRAM COORDINATOR FOR BIOFUELS AND THE GLOBAL ENVIRONMENT, INSTITUTE ON THE ENVIRONMENT, UNIVERSITY OF 

MINNESOTA 

Mr. SHEEHAN. Chairman Harkin, Senator Thune, thank you very 

much for having me here. 

I am going to attempt to talk from my PowerPoint and stay within my time limit here. So let me jump right in. 

I was asked to talk about the promise of advanced biofuels technology, but in my subtitle for my talk I want to make a point of 

saying this is not just about advances in the technology for making 

biofuels. It is also about ongoing advances in agriculture, not unlike what Anna talked about in terms of breeding new energy crops 

for farmers, not unlike the kind of astoundingly high yield improvements that we heard about that are possible just for corn, and it 

is really the combination of those advances that are going to lead 

us to real sustainable production of fuel down the road and not just 

one or the other. 

17 

A lot of what I am talking about here actually was just recently 

published. They devoted an entire issue of the journal Biofuels, 

Bioprocessing to a series of studies that I was a part of with folks 

from Michigan State, Dartmouth College, Princeton University, the 

Natural Resources Defense Council, who, by the way, were a major 

part of making this study happen and for whom I think this was 

a great learning experience because I think this was an opportunity for the NRDC and other environmental groups to learn that 

there are some real positive elements to what agriculture can do 

in the role of not only producing fuels like ethanol but also being 

positive contributors to environmental sustainability. If there was 

actually an outcome from that study that I think was the most important, that might have been it. 

So, advanced technology, I am helped a lot by some of the comments that have already been made here about the technology of 

producing fuels from biomass. I generally talk about these technologies in two different flavors. 

One is biological, biochemical processing, otherwise known as fermentation. Take something like starch from corn or cellulose from 

a plant, break it down to its sugar which is something that you can 

feed to a yeast or a bacterium, and they can convert it into ethanol. 

Actually, given the explosion in biotechnology that is going on 

today, there is an awful lot more these bugs can do than just make 

ethanol. If you want them to, they will make a renewable gasoline. 

They will make a renewable diesel for you. These are longer-term 

technologies, but they are options that are being considered down 

the road. 

Then there is thermo-chemical processing. Typically, what people 

are talking about is using a lot of high pressure, high temperature 

conditions, heat and pressure to bust biomass apart into really 

small chemical compounds that can then be converted into virtually 

anything you want, anything from ethanol to a diesel or a gasoline 

substitute or something that is indistinguishable from gasoline or 

diesel fuel. 

So those are sort of the two big technology camps. One of my 

frustrations, and this is a running theme for my testimony here, 

is that there are too many opposing camps, whether technologists 

or environmentalists or for the farm community or others who are 

battling with each other about who has the right or the wrong answer. The thermo-chemical technologists, who have things like gasification technology, are just as important to the fermentation folks 

as part of the solution. In fact, the ultimate advanced technology 

is going to be the run that brings those two pieces of technology 

together to give us the greatest, most efficient use of the biomass 

that we are trying to make. 

In fact, that fractionation step that is in the center block here of 

this integrated scheme I am showing is the kind of thing like the 

pretreatment technology we have been hearing about, where we 

can get the sugars away to do what the bugs like to do with them 

and we can take the rest of it, the lignin and the other things that 

bugs cannot eat, and use them for heat power and fuels themselves. That is what makes ultimately a really effective, sustainable technology. 

18 

Again, new versus old technology, I wish we could throw this 

away. What we are really seeing is that the existing corn ethanol 

industry is going to be the industry that begins to adapt a lot of 

these new technologies. So it is not about old technology or old industries being replaced by a new industry. 

In this case, touching a little bit on what Anna said, and we did 

not talk about this in advance, in Minnesota at the Chippewa Valley Ethanol Facility, they have put in a demonstration scale gasifier where they are taking all sorts of biomass and most recently 

collecting corncobs and gasifying it for heat and power and replacing 25 percent of their natural gas demand with that biomass. 

What are they doing besides saving the cost of natural gas? They 

are reducing their carbon footprint. So what is viewed as a typical 

corn ethanol plant is not a typical corn ethanol plant, and I do not 

think that there are a lot of those out there. 

Continuing along those lines, the POET facility in Emmetsburg 

is a case where both cellulosic and corn ethanol technology are 

being put together, and that is the kind of thing that is going to 

succeed, building on what is effectively—I do not know—it must be 

somewhere between ten and twenty billion dollars in invested and 

in-the-ground capital in the existing corn ethanol industry. 

Economics, I am not going to spend a whole lot of time here except to say that when you look at where this technology can get 

to, between prices of say $75 and $125 a barrel oil, there is a huge 

amount of room for all sorts of thermal or biological or combined 

thermal and biological processes to compete with oil for fuel production. 

I want to point out one of the problems you will often see in the 

economics that are developed by DOE and other places is one of the 

ways they sort of get themselves down to a low-cost fuel is to assume a low-cost feedstock. 

Well, guess what, folks? That is the profit margin of a farmer you are talking about. So, at typical numbers of $35, $40 a ton, which 

you will quite often see as the basis for projecting costs of a technology, you will see farmers perhaps getting $175 to $300 per acre 

depending on the yield of the biomass they are collecting. And, 

after transport costs, that is not enough to convince them to become a biomass producer rather than some other crop producer. 

What we have seen is that even up to prices of $100 a ton, where 

the revenue to the farmer I think becomes serious, you can have 

cost-effective technology. 

The numbers are like the numbers we have already heard about. 

For 14 different permutations of biological and thermal processing 

that we looked at, all of them have an extremely high capability 

for reducing carbon emissions and for reducing dependence on petroleum. 

I want to touch very briefly, because my clock is running out, on 

the issue of indirect land use change which is something we can 

come back to. I have done a little bit of simple modeling which actually suggests that even if all we do as a globe, as a planet, is to 

continue to improve agriculture at the rate that we have been 

doing it over the last 40 or 50 years, we could be coming to a place 

where we could feed our planet on less land. Well, if we are feeding 

our planet on less land, we are not causing land clearing in the 

19 

rainforests of Brazil, and that changes the so-called indirect land 

use and food versus fuel issue into a completely different matter. 

I am actually going to stop here. 

I am very glad to hear Senator Harkin talk about the policy 

issues that are related all along the supply chain because there is 

a lot of chicken and egg problems going on now with the development of this industry. 

I have done modeling of looking at what it takes to make that 

whole supply chain grow into a successful industry, and not to get 

into the details, but among the findings we have seen is at the kind 

of oil prices we are seeing and have seen in the last year or two, 

certainly by 2050, probably even without policy help, there is a potential for somewhere between—let me get my numbers right—100 

billion and 200 billion gallons, that is with a B, production of cellulosic and corn ethanol down the road. But that might not be until 

2050. What we need are policies that make that happen faster 

today. 

So, with that, I will stop. 

[The prepared statement of Mr. Sheehan can be found on page 

85 in the appendix.] 

Chairman HARKIN. Very interesting and thought provoking. 

Thank you very much. 

Now we will finish off with Mr. Ed Olthoff, Cedar Falls Utilities, 

Cedar Falls, Iowa, who is going to talk about different processes 

that they are using. 

STATEMENT OF ED OLTHOFF, CEDAR FALLS UTILITIES 

Mr. OLTHOFF. Thank you, Mr. Chairman and Senator Thune. 

My name is Edward Olthoff, and I am representing Cedar Falls 

Utilities. It is my privilege to share with this Committee the ideas 

proposed and experiences gained in our Cedar Falls Utilities’ 

biofuel project. 

Cedar Falls Utilities, or CFU, is a municipal utility located in 

Cedar Falls, Iowa. CFU provides electricity and three other utility 

services to the city of Cedar Falls. The electric utility owns coalfired baseload generation at three remote locations, backup coalfired generation at Streeter Station in Cedar Falls and emergency 

natural gas-fired generation at West 27th Street in Cedar Falls. 

The electric utility also owns shares of two existing wind farms 

and is a partner in developing a new wind farm project. CFU anticipates generating 15 to 20 percent of its electric needs with wind 

in 5 years. 

CFU is also investigating the potential to generate baseload electricity from biofuels at Streeter Station in Cedar Falls. Streeter 

Station has two electric generation units which have been operating 3,000 to 5,000 hours annually. Unit 6 is a stoker coal-fired 

boiler. Unit 7 is a pulverized coal-fired boiler. 

Unit 6 was designed to burn stoker coal, but the stoker has the 

flexibility to handle most solid fuels. In 2004, CFU began short duration biofuel test burns in Unit 6. In the next 2 years, CFU was 

able to complete a series of test burns using five potential biomass 

feedstocks densified into two solid fuel configurations: pellets and 

cubes. Fuels for these test burns included corncob pellets, hardVerDate Nov 24 2008 14:06 Jan 20, 2011 Jkt 000000 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 C:\DOCS\62714 MICHA
20 

wood pellets, cornstalk pellets, corn stock cubes, switchgrass cubes 

and oat hull pellets. 

These short test burns demonstrated technical feasibility of the 

project. Future plans for longer duration test burns and continuous 

generation point to several significant challenges. All of the economic modeling shows biofuel-based electric generation to be significantly more costly than coal-fired generation. 

Existing policies and proposed policies have potential to equalize 

the cost just as policy has encouraged the development of wind energy. These policies include tax credits to benefit municipal utilities, renewable energy production incentive funding, Department of 

Agriculture policies, Department of Energy grants, green credits 

and carbon taxes. CFU has investigated the impact of these policies 

on the cost of biofuel and has advocated policy changes that would 

equalize the costs. 

Another significant challenge is the development of a supply 

chain for the biofuel. Electric production consumes large quantities 

of these biomass fuels. Preliminary calculations indicate the need 

for 200 tons of biofuel daily to operate Unit 6 at half of its rated 

capacity. Until fuel production capacities are increased, there is not 

sufficient supply to perform extended test burns, much less continuous generation. 

Links in the supply chain are the producers of the raw material, 

a transportation infrastructure to move the material from production sites to a processing facility, space to store the raw material, 

a processing facility to densify the material to the specifications 

needed for electric generation and a transportation system to move 

the densified material from the production site to Streeter Station. 

These links need to be developed or strengthened before a robust 

supply chain can emerge with a sustainable production capacity 

needed for continuous generation of biofuel-based electricity at 

Streeter Station. 

A third significant unknown is the effect of the biofuel combustion on the boiler. A thorough study of the performance of the boiler during biofuel combustion is needed. Impacts of mineral deposition and mechanical abrasion on the boiler tubes from biofuel combustion must be determined. The simplest way to determine these 

effects is to perform extended test burns, monitor the boiler during 

the burn and inspect the boiler after the burn. 

CFU has sought assistance for this project at the local, State and 

Federal levels. A Congressionally directed grant is now pending to 

advance the project. 

Three test burns are planned using three new feedstock and 

densification combinations. These are mixed native prairie grasses 

in a cube, mixed agriculture residue in a pellet and sugar cane bagasse in a bripell configuration. 

Following completion of the three short test burns, one test burn 

of a 10–day duration is planned. The choice of fuel for the 10–day 

burn will be guided by our assessment of the best densification configuration, the most available feedstock and the capacity of a producer to manufacture the quantity of densified material needed for 

the test. 

Additional long duration test burns are needed before any longterm commitments or contracts can be made. Further advance of 

21 

the project will be dependent on development of a supply chain of 

sufficient quantity to initially support long duration test burns and, 

ultimately, continuous generation at a cost equivalent to the fossil 

fuels. 

Capital is needed to develop the supply chain required for sustainable production of the biofuel supply and dedicated energy 

crops grown on conservation reserve land will be needed to augment and satisfy the need for additional raw material. Public policy 

or funding favorable to biofuel-based electric generation will be 

critical to continue the development of this project. 

That is all I have. Thank you for the opportunity to present my 

ideas. 

[The prepared statement of Mr. Olthoff can be found on page 53 

in the appendix.] 

Chairman HARKIN. Thank you very much, Mr. Olthoff, and thank 

you all for stimulating statements and also the written prepared 

statements you had. 

I think what I will do, John, is I will just start. I will take five 

or 6 minutes, you take five or 6 minutes and then we will just kind 

of open it up for a general free for all. 

Senator THUNE. Sounds good. 

Chairman HARKIN. OK. I think, first, I have a lot of things I 

want to talk about here. Productions, though you talked about that, 

I had a hearing about a year ago in Omaha, and Pioneer—I can 

say that, can I not, Pioneer? 

Senator THUNE. Quietly. 

Chairman HARKIN. Quietly, OK. One of your competitors there 

said that they anticipated a 40 percent increase—no, I will correct 

my words. They are going to have a 40 percent increase in yields 

with both corn and soybeans within a decade. 

I asked the question of the CEO at the time. I said, well, is this 

sort of what you are thinking about? 

He said, no, this is based on results already confirmed in their 

experimental plots. 

So, just think about that, in a decade, buttressing what you said, 

a 40 percent increase. 

Mr. COUSER. Can I add one thing to that, Senator. 

Chairman HARKIN. Yes, yes. 

Mr. COUSER. We pick a lot of the small seed plots around the 

community there too for the research plots. Last year, we picked 

one seed plot that every stalk had 11 shanks on it. Five out of 

those eleven shanks had kernels on them. Can you imagine what 

happens if we get two big ears? 

Chairman HARKIN. Instead of one per stalk, you mean get two. 

Well, we have 20 now on some stalks, but they are always small. 

Mr. COUSER. But two big ears, it is coming very fast. 

Chairman HARKIN. Will stalks stand? You have to have more cellulose. 

Mr. COUSER. Well, that is one of the problems we have in the 

seed business is developing the machinery just to harvest the seed 

corn because of the size of the stalk and some of those new hybrids 

are so wide and the ear is small. 

Chairman HARKIN. I heard it in a different context, and that was 

if you just added—I forget what it was—four kernels per ear, you 

22 

would increase your production per acre by a lot. I forget the figures, if you just put a few more kernels on an ear, and you know 

ears are getting bigger. 

Mr. COUSER. If we could just educate every farmer in the United 

States how to set a combine correctly, we would not have a food 

problem here. 

Chairman HARKIN. Thanks. I am not going there. 

Mr. COUSER. I said that. You did not. 

[Laughter.] 

Chairman HARKIN. Dangerous, dangerous territory for a politician. 

But the other thing is, and I want to pursue this a little bit because we just have got to put to rest this whole thing about food 

or fuel. 

The other thing that is happening is through genetics at Monsanto and Pioneer and others, and this is being done in universities 

also, that they now are finding out how to grow corn in areas 

where before they could not. For example, right now, we know that 

there are certain plants that use photosynthesis, just like corn, but 

utilize saltwater. They have the genetic capability of separating the 

salt out and taking the water out, and they can grow fruit. 

The most prominent ones being coconuts, of course. Coconuts 

grow in seawater. We know about other plants too. I can get the 

names of them. 

So they are now looking at changing the structure of corn using 

genetics. If you can find the gene that does that, and you can put 

that in corn, you can now start growing corn in brackish water 

areas. Places they have never grown corn before in the world can 

now start growing corn. 

This is not pie in the sky. This is research that is happening 

right now. 

So there are a lot of things underway. That is why when they 

say, well, if you are going to go to fuel, then you are going to cut 

down forests and stuff, that is nonsense. That is just nonsense. The 

way to keep a forest from being cut down is through land use policies that are international in scope. 

Well, I did not mean to get off on that, but some of the things 

you said just brought that to my attention, and I think that is just 

something that we have really got to pay attention to because we 

are getting sidetracked on this. The indirect land use issue is at 

the heart of that, that whole thing of food or fuel. 

Mr. Corcoran, you talked about removing CO2 in your testimony. 

Let me see if I can find that right here. Oh, yes. By applying the 

fermentation process to convert biomass, the potential exists to actually remove atmospheric carbon dioxide, the only industrial process we know of that can make this claim. 

Well, now what about algae? Algae takes CO2 out of the atmosphere. That is one of the feedstocks for algae. 

Mr. Sheehan, you have done a lot of research in this area. So 

would not algae also be an area where we can actually remove carbon dioxide out of the atmosphere during the production of fuels? 

Mr. Sheehan? 

Mr. SHEEHAN. Well, I will comment on the algae. I was actually 

the program manager for algae at a point when the Department of 

23 

Energy had made the decision to shut it down, and it has been 

really gratifying to watch the level of interest, certainly coming 

from the private sector and now from Congress and from the public 

sector in this area. 

But algae are really not that different from other crops. In my 

view, they are really carbon recyclers. They are capable, particularly in the case of a coal-fired power plant, of reusing the carbon 

dioxide that is coming from that coal and reprocessing it. That is 

perhaps their biggest advantage, that they can actually help the 

coal industry bring down its carbon footprint while we are contributing to secure production of fuels. 

Chairman HARKIN. I just wanted to make that point because I 

have seen some test results on algae which look very promising for 

liquids. 

Mr. CORCORAN. My statement, sir, was as we are biochemical 

process, unlike a thermal chemical process, and as a biochemical 

process we can isolate the CO2 during the fermentation process 

and therefore remove that atmospheric CO2 unlike a thermo-chemical process that does not isolate the CO2 because it gasifies the 

CO2. 

Mr. SHEEHAN. I would like to build onto that just briefly. One of 

the fascinating ideas that is being pursued by some ethanol companies is that biological process from a fermentation produces absolutely clean CO2. It is the cleanest, richest source of CO2 you could 

ask for. 

Chairman HARKIN. From where? 

Mr. SHEEHAN. From the fermentation process of making ethanol 

from starch or any sugar, there is this wonderfully clean CO2 

stream at just goes right out the top. You can do two things with 

it. You can do, I think, what Mr. Corcoran was suggesting, and you 

can sequester it. You can bury it underground. Or, you can feed it 

to algae. 

Chairman HARKIN. Feed it to algae. 

Mr. SHEEHAN. And, algae will reuse that carbon dioxide and improve the overall footprint of the ethanol facility itself. 

Chairman HARKIN. I never thought about that. That is interesting. 

Mr. Corcoran, before I turn it over to Senator Thune, you mentioned the fact that the public needs more info on the benefits of 

increased octane. Do you have some more on that you could give 

to us about the benefits of higher octane, what it means in terms 

of more efficiency, in terms of compression ratios? 

That was the first reason for using ethanol a long time ago. We 

first put lead in gasoline, right, and then we found out lead was 

a no-no. 

So then the oil companies decided, well, we have this new blend 

that we can put in to increase octane. It was polylene and benzene 

and something else, and then we found out that was really carcinogenic. 

So they said, how are we going to keep the octane up? Well, ethanol was the way to keep the octane up. I think we could use some 

more information. I never thought about that until you just mentioned it here. 

24 

Mr. CORCORAN. Chairman, I can provide that as part of my addendum. 

Chairman HARKIN. Yes, any additional information you have got 

on how we might use that as a selling point. 

Mr. CORCORAN. Yes. 

Chairman HARKIN. Well, I have got a lot more, but I will turn 

it over to Senator Thune. 

Senator THUNE. Yes, it has prompted a lot of questions, Mr. 

Chairman. I think we could probably keep this discussion for a long 

time. 

Mr. Stowers, what are the infrastructure restraints to approving 

E–15 today? 

Is it a fuel that can be used in existing gas station pumps? Could 

it be used in existing on-road vehicles? What is the infrastructure 

restraints that might get in the way of that? 

Mr. STOWERS. Today, there are really no infrastructure constraints that would need to be alleviated to bring E–15 forward. 

As early as the late eighties and through 1993, the automotive 

industry worked on standards that set forth a test fuel that all engine components and emissions systems would have to go through. 

It actually set up a synthetic fuel that included 15 percent methanol, and methanol is much more aggressive than ethanol. And so, 

all of our engines, should all of the automakers adhere to their own 

standards, al the materials, compatibility and emissions would be 

acceptable within the cars that are produced today. 

Second would be the issue of the pumps and tank and so forth. 

The UL has actually stated that the existing pumps and dispensers 

would be acceptable up to E–15. That is part of the reason why we 

chose E–15, to fit within that infrastructure requirement. 

Other minor details that we would have to go through, should 

the EPA approve the waiver, would be to go through an ASTM certification of that fuel which is something that we can do very simply. We are only adding a very small amount of additional oxygen 

to the overall fuel. 

So, in a real sense, though, the automotive should be able it. The 

pumps should be able to handle it. There are some mechanical 

issues relative to certification that we would need to go through. 

I might add that whereas there is a lot of public statements 

against using ethanol in general, and E–15 in particular, in small 

engines or marine applications, there is no information, no studies 

that have been done to date that would support the degradation of 

engine components in those equipment or a failure related to emissions. 

Senator THUNE. So, if you went to an E–15 in a filling station, 

would the small engine users that come in to get fuel for their 

lawnmowers or whatever, because that has been one of the arguments that has been raised, that that would be a problem, would 

they still have to access that type of fuel even if EPA approves E– 

15 or do you think that E–15 would burn? You just said that you 

thought it would burn in there, but one of the arguments that is 

raised consistently by those who oppose moving to a higher blend 

is the small engine issue. 

Mr. STOWERS. Yes. I mean from a strictly science and technological perspective, there should be no issues whatsoever. RecogVerDate Nov 24 2008 14:06 Jan 20, 2011 Jkt 000000 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 C:\DOCS\62714 MICHA
25 

nizing that the public and choice may be an important factor in 

getting E–15 approved, as part of the waiver request we allowed 

for the opportunity of blends up to 15 percent. So there actually 

could be lower level blends in particular regions or application 

areas that would afford a small engine user, a snowmobiler or a 

boater, to actually have E–0 if that made more sense to them in 

that application. 

Senator THUNE. What are the environmental impacts of using, of 

approving E–15? 

Mr. STOWERS. Well, with the use of ethanol in general and the 

increased use of ethanol, you have a reduction in the nonmethane 

organic gases. You have all the hydrocarbons are reduced. The 

overall regulated emissions are reduced relative to even E–10. 

Senator THUNE. Is there, to your knowledge, any scientifically 

sound way to measure U.S. ethanol production’s impact on land use 

decisions that are made in countries like Brazil? I would ask you 

that, and then maybe, Mr. Sheehan, if you would like to comment 

on that too. 

Mr. STOWERS. Well, the first observation I would make is that as 

ethanol has increased in the United States over the past 5 years 

there has been a steady increase, as we have noted, 9 billion, 10 

billion this year. Rainforest deforestation in Brazil has decreased 

on an almost equal decreasing slope. So first order is I cannot see 

any relationship between what we do here in Iowa versus what 

happens in Brazil, and I think that hardwoods, Brazilian hardwoods or Amazonian hardwoods are being used for another purpose 

and can be regulated by other means. 

The thesis that one acre of corn use for ethanol in again Iowa 

corresponds to one acre of deforestation just holds no validity. The 

models that the EPA is using and the ones that the Air Resources 

Board in California are using are flawed at many levels, and we 

have made public comment to both agencies in that regard. 

Senator THUNE. Do you want to add any to that, Mr. Sheehan? 

Mr. SHEEHAN. Well, here is a hornet’s nest. I guess a couple of 

comments. 

I have been heavily engaged in the discussions with the analysts 

in California as well as at EPA on the modeling that they have 

done. My general response is that they have done the best modeling that can be done right now, but certainly by the modelers’ 

own admission, and again the folks in California, the folks at Purdue and elsewhere who have looked at this, they will tell you that 

we are in very early days with this kind of analysis. And, trying 

to make a direct cause and effect linkage between a farmer’s decision in Iowa and a farmer’s decision in Brazil is really, really problematic. 

In fact, I have shared some of this initial modeling work that I 

have done, which does not even try to do cause and effect. It just 

says: We have so much land. We know how yields have been improving, and we know, we think, how much new demand for food 

there is going to be. If I add all those up, can I construct scenarios 

where land demand does not have to rise globally for food production. The answer, I believe, is yes, there are scenarios where that 

can happen. 

26 

What I think the analysts in California and at EPA are doing is 

taking a conservative, from an environmental point of view, worse 

case perspective on the question. They are basically saying let’s assume that land demand must continue growing globally. If you 

make that assumption, the conclusion you will come to is that you 

will cause land-clearing if you take land in the U.S. away from food 

production. 

But that is a circular answer. It is saying I think we have a land 

demand problem. Therefore, if I add to the land demand, I am 

going to create a worse problem. The answer to that will be that 

is true. 

But are there things that we can do to mitigate? The Brazilians 

have talked a lot about the idea of one of the big issues for Brazil 

being how inefficient at raising cattle, and cattle is the really, really big land footprint item for food production. So, if you can address 

issues in more efficient cattle production in Brazil, and they are 

trying to do that, that will do more to solve, to eliminate a potential problem than not allowing biofuels. 

So that is a little bit of a roundabout answer. 

Senator THUNE. Has anybody done any modeling on what happens if you get to 300–bushel corn or if you are at 250 already, how 

that impacts land use not only here but around the house? I mean 

how that bears on this whole question of international indirect land 

use and its impact in the calculation of the carbon footprint of 

biofuels. 

Mr. SHEEHAN. In effect, I will say quickly the numbers I showed 

here, that showed that somewhere around 2020 land demand starts 

declining. It starts declining because average agricultural yields, 

even if they just continue at that lower rate, are already going to 

cause that land demand to go down. 

I have not had the nerve yet to put a number like 300 bushels 

per acre in there, but it would be very interesting to see how that 

plays out. 

Senator THUNE. But would not EPA be factoring that in too? 

Mr. SHEEHAN. They are not doing that very effectively. Their 

models are static models that are not good at accounting for the future improvements that could occur. 

Plus, you also have a lot of environmentalists who will argue 

that we hit the peak for future yield improvement. So, if you believe that, then it becomes a moot point. 

You mean if you hold corn acreage constant today out to 2030, 

and you hit these 300–bushel break or yield targets. So we are fixing land and not putting any more land into corn production. Run 

through the math, and you can adjust the numbers how you want, 

but you can look at a way in which you can increase food production from corn by 40 percent and ethanol production by 400 percent 

on the same land. 

There is no change in land use. You are using the same amount 

of land that was envisioned after the enactment of ASIA, 2007. So 

I do not see where we need more land to produce food and fuel in 

this Country. 

Ms. RATH. The single largest, most important factor, variable, in 

almost all of these models is in fact the yield assumptions. They 

tend to make very conservative yield assumptions in terms of imVerDate Nov 24 2008 14:06 Jan 20, 2011 Jkt 000000 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 C:\DOCS\62714 MICHA
27 

provements in corn, and, for energy crops, they tend to hold them 

absolutely constant and absolutely constant at a level that is typically less than half of the yields we are already achieving. 

So, when you put together the yields that we are currently getting in energy crops plus the potential for yield improvement in energy crops, which have not had the benefit of all for the breeding 

that a lot of our major row crops have had, plus the potential for 

yield improvements in row crops, a lot of these models start predicting that in fact we are going to have lots of excess land. So that 

is the key assumption underlying all of these models. 

Senator THUNE. Just one, and then I will yield back, Tom. Just 

a follow-up on that point then, and this bears on the question of 

corn-based versus advanced cellulosic. We are at a 15 billion gallon 

cap on corn-based and 21 billion on cellulosic. 

I guess the question for people who are involved with trying to 

scale-up cellulosic ethanol production and get it on a commercial 

level is can we hit those targets and/or should we be adjusting the 

15 billion gallon cap that we have today attributable to corn-based 

ethanol, assuming that we are going to see higher yields going forward, because it seems like right now the cellulosic thing has not 

caught on yet quite to where it is going to ramp up quickly enough 

to meet the targets. 

I hate to see us go backwards and allow waivers of the RFS because we are not getting to where we need to be in terms of the 

goal. So anybody want to comment on the balance between cornbased versus cellulosic and whether or not we are going to be able 

to achieve the targets for cellulosic in the time lines that are called 

for in the RFS? 

I think the first point that I would make with regard to corn ethanol production is there is tremendous capacity. There is tremendous capacity to produce that at a very low greenhouse gas impact. 

To say it another way, we can reduce greenhouse gases compared 

to gasoline by greater than 50 percent. If we add in indirect land 

use, it is just a crazy calculation. So, in order to get to the next 

level, we need to have E–15 or E–20 or another, to get past the 

blend wall. 

So there is a real opportunity from environmentally sound corn 

ethanol, and that technology is going to continue to improve not 

only at the farm gate level but also at the plant by improved efficiencies. 

The same thing is happening at the cellulosic side. It is behind 

corn ethanol. It is rapidly catching up. Our cost structure for cellulosic ethanol is decreasing almost at an inverse hockey stick in 

terms of lowering our overall costs. 

I think the point I would make is we are going to need both, and 

we have the potential to release all of our foreign oil requirements 

and produce all of our liquid transportation fuels from corn and cellulose. We have run the numbers, and, by 2030, we could get close 

to 140 billion gallons liquid transportation fuel. That is what we 

are using in gasoline. So I think you need both. 

Cellulose is lagging corn ethanol. We started a little bit later, but 

it is rapidly catching up. 

Senator THUNE. Thank you. 

Thank you, Mr. Chairman. 

28 

Chairman HARKIN. Anybody else want to comment? 

Mr. COUSER. Well, I would just like from a farmer’s perspective. 

The last few years, it has been a real privilege to grow a corn crop 

and sell it on the open market for a profit and not burden the taxpayer. LDP payments, I am sorry. I mean it was a great program 

while it lasted, and we are very proud of what has happened there. 

Hopefully, we can continue that. 

Just to go off of his thoughts, we need to increase this. Now do 

we need to raise the corn from starch cap even higher yet? I think 

we have to. I think that is a number that is a moving target, and 

it has to go up. But it would sure be great to be able to market 

this corn on the open market. 

Mr. SHEEHAN. I would like to touch on Anna’s notion of 

repowering the ethanol industry as an important part of the 

failsafe step of allowing corn ethanol to increase more in order to 

maintain meeting the goals of the RFS. 

Even if we take the indirect land use issues aside, the amount 

of fossil energy that is consumed in a conventional corn ethanol 

plant is now so high that it offers some but not a whole lot of 

greenhouse gas reduction capacity. Clearly, one of the targets of 

the RFS and the low carbon fuel standard in California is to reduce 

carbon emissions. So, if we could do things to encourage the existing industry to expand and utilize biomass and renewable energy 

for its heat and power, its carbon footprint comes down so much, 

but that would be a very, very nice middle road to take while we 

are waiting for dedicated cellulosic ethanol technology to take hold. 

Chairman HARKIN. If you are talking about dedicated cellulosic 

crops, now, Bill, in your area, that Story County land in central 

Iowa is so productive that it would not make much sense to grow 

a dedicated cellulose crop. I would think you would want to use 

residue from corn. 

Mr. COUSER. We have it both. We have the corn, and we have 

the residue in Story County. 

Chairman HARKIN. Yes, both. But there might be some areas, 

southern Iowa and places like that, where row crop production is 

both environmentally not very good but production-wise, where you 

might be able then to do dedicated kinds of crops. I am sure that 

is true in South Dakota and probably every other State. There are 

areas that would be more amenable to growing a dedicated cellulosic type of a crop. 

Now what that kind of leads me to is this. The other thing that 

is coming at us here is the Climate Bill, and what are we going 

to provide for offsets for farmers and what role agriculture can play 

in reducing our carbon footprint—is that the right word—or reducing the CO2 emissions. 

Right now, the data I have seem to say that agriculture is responsible for about 12 percent of the reductions. We grow crops. We 

take CO2 out of the air. Some of it, we do not put back. Some of 

it is sequestered. So it is about 12 percent. 

I have seen figures that say we could double that easily. In other 

words, agriculture could be responsible for removing 25 percent of 

the carbon emissions, but that has to be sequestered. Now that is 

where you get into things like switchgrass, and I do not understand 

this vegetative seed propagation. 

29 

But someone came into my office, John, about 2 weeks ago or 3 

weeks ago. Who was that? He came in from Tennessee and had 

that picture of the root structure. 

Unidentified Staff. Wes Jackson from the Land Institute of Kansas. 

Chairman HARKIN. Wes Jackson from the Land Institute in Kansas, and he had a picture of a cutaway of the root structure of 

switchgrass, and the roots go down almost 20 feet. He had a 20– 

foot long picture in my office. Well, that is a lot of carbon sequestration. You know. 

So I am thinking to myself, wait a minute, maybe we can have 

our cake and eat it too. We can grow a dedicated kind of crop in 

certain areas, like switchgrass which is perennial, and harvest 

that, and yet you get these 20–foot deep root structures that are 

going to be there for a long time. 

So is that a part of what we ought to be thinking about in terms 

of cellulosic ethanol, not just for the ethanol itself but for what we 

can do to provide the offsets? 

Ms. RATH. This is why I mentioned earlier that the amazing 

thing about using perennial dedicated energy crops to create 

biofuels or biopower is that they have the potential to not just be 

carbon-neutral as you cycle that above ground biomass into the facility, but in fact be carbon-negative because of that below ground 

sequestration. And so, switchgrass is a great example of a crop that 

provides for a lot of below ground carbon sequestration in the form 

of that root biomass. 

What has not been done is enough study to show how that sequestration takes place over time. Does it taper off? If you use notill and plant a new crop, do you get to add yet more? And so, one 

of the things that needs to happen is for there to be a better understanding of how much sequestration is taking place so that growers 

would be able to get proper credit for that below ground carbon sequestration that their crops are providing. 

Chairman HARKIN. Anybody have any other views on that? 

Mr. SHEEHAN. There is actually another huge benefit outside the 

world of carbon reductions, which, by the way, I think we spend 

obsessively too much time on because there are a lot more issues 

than just carbon out there in terms of sustainable fuels. But the 

issue I am thinking of is those root structures actually are the reason why land in the Midwest was as productive as it was when the 

pioneers first came and broke the soil. That is because of the 

grasses that were there for I do not know how many thousands of 

years, that built up the organic matter in the soil, that really created soil that is the healthy soil that was so productive. So, for sustainable agriculture, for maintaining that stewardship of the land, 

the value of rotating in these kinds of crops is tremendous. 

Ms. RATH. I thought you were going to say yet another one which 

is switchgrass requires a lot less fertilizer. One of the things that 

happens when you put down fertilizer is you get NOx emissions 

back into the atmosphere. NOx is a very potent greenhouse gas. So, 

by reducing your fertilizer usage per acre, by growing a crop like 

switchgrass, you also reduce your greenhouse gas emissions from 

the agricultural piece of it, as will all the nitrogen use efficiency 

30 

technologies that are coming down the pipelines for corn and other 

crops. 

Senator THUNE. Do you see any potential for sort of blending 

CRP program and energy-dedicated crops? We are seeing a lot of 

acreage taken out of CRP in South Dakota and being put back into 

production because the economic incentives are to plant as opposed 

to keep it in CRP. 

We saw a demonstration up at South Dakota State University a 

couple of weeks ago, not of switchgrass—we have switchgrass there 

planted too in plots—but also of cordgrass which can be grown in 

areas that will not grow anything else. You eliminate the food 

versus fuel argument because it grows in areas where you flat just 

would not be able to plant another crop, and it grows well, and it 

could be an energy-dedicated crop. 

But I am just trying to think if there is a way, and this comes 

back. I know it is partly the way our Farm Bill is done. We had 

a great conservation title in that. But what I am concerned about 

is seeing the reduction, significant reduction in CRP acreage in our 

State, a lot of it coming out and being put back into production, 

and that has implications not just for conservation but wildlife production and other things that are important to our economy. 

An energy-dedicated crop, in many cases it might be a 

switchgrass or something like that could serve or fulfill a function, 

deliver a conservation value, continue to promote wildlife production and be harvested at the right time a year as an energy-dedicated crop. We might be able to marry up some things. I think we 

have several objectives obviously in this part of the Country with 

the CRP program, but it might tie into the planting of an energydedicated crop that could be used for biofuel production. 

I mean do you see the potential for that? 

Ms. RATH. Absolutely. There are many different reasons why 

acres have gone into the CRP program, and so many of them have 

gone in because of issues of soil erosion. Well, that same deep root 

structure we have been talking about as a source of carbon sequestration is wonderful for preventing soil erosion. So there are many 

acres in CRP that would be perfectly appropriate for the growing 

of switchgrass. 

Mr. SHEEHAN. I will just add to that. You know I spent 17 years 

at the National Renewable Energy Lab, and we eyed CRP acres. 

We drooled over those acres for years because of their potential, if 

done sustainably, to become a source of harvested energy and still 

deliver the benefits that the CRP program delivers for those lands. 

Chairman HARKIN. If I may, Mr. Olthoff? 

Mr. OLTHOFF. Yes, I would like to address that question as well. 

We are kind of on the edge of technology. We do not use enzymes 

or those kinds of things to produce our product. We just direct 

burn. 

But we found that something like a switchgrass or mixed prairie 

type of planting, on conservation property or roadsides have several 

advantages for us. Since we are not particular about single species, 

we do not care whether they are mixed species or mono-cultures. 

They can be harvested at a different time, and they offset the 

corn harvest which is a small window of opportunity in the fall. 

31 

Our experience shows that a spring harvest of grasses is probably 

the most appropriate time to harvest them for energy production. 

There are a lot less minerals left in spring. The biomass is less, 

granted that, but we are happy to sacrifice a little bit of biomass 

for the reduction in minerals which are problematic for us in combustion. 

Chairman HARKIN. Are you familiar with the Chariton Valley 

Project? 

Mr. OLTHOFF. Yes. 

Chairman HARKIN. Some of you are familiar with that. We started that back in the nineties. 

We were always told that you could not really crop CRP ground 

because it would erode, leading to runoff and that kind of stuff. So 

we had this project in Chariton Valley to grow switchgrass on CRP 

ground, harvest the switchgrass and burn it in a coal-fired plant. 

Alliant Energy was doing it, and they went through several years, 

and they experimented with different processes and everything. 

But I think what finally came out of it was, one, they had absolutely no erosion on the CRP ground whatsoever. They could harvest the grass. And, they experimented with different kinds of pellets and other approaches to packaging and compressing it. The 

last thing I saw was a bale of hay that weighed a thousand pounds. 

Senator THUNE. One of their stages was they just chopped the 

material and blew it in. 

Chairman HARKIN. Just blew it in, just chopped it and blew it 

in off those big bales. 

The only reason I say that again is not to belabor the point but 

that it seems to me that following up on what John was just saying, that we have to, we want to produce a lot of fuel in this Country, a lot of liquid fuel. Corn is always going to be the leader. It 

is always going to be out in front because it is an established technology, we are improving it all the time, we know the conversion 

ratios. So it is going to be out in front. 

But I am safe in saying it cannot do it all. We are going to have 

to have something else, and that is where the cellulose comes in 

and why we worked so hard on the cellulose part of it in the Farm 

Bill. 

John is right. We are going to have to think about how all this 

CRP ground in South Dakota. 

Now there is probably some of it coming out of CRP. As you 

know in the old CRP, in the old formula, every county had to have 

an allotment of CRP ground. There are probably some counties in 

Iowa, up in your area, that do not really need CRP ground. So, as 

that land will come out, and it will. It is just too productive to be 

not used for high-yield production, for crops, row crops. 

But then in other CRP areas, where you probably do not go to 

your crops. A farmer needs income. It can be productive. We want 

to protect wildlife, as you said, and address the conservation issues, 

but we can grow a cellulosic crop on those lands. 

Then, one of the arguments that we are making for the Climate 

Bill that came out of the House, that has come over now, is what 

I call stackability. It is to allow farmers to stack benefits. 

In other words, if you have got CRP ground, you get your CRP 

payment. If you want to grow switchgrass on that in a conserving 

32 

manner and use that for electricity or for fuel production, whatever, you can do that. If you then are also sequestering carbon, you 

should be able to get an offset on that also, to stack these benefits 

one on top of the other. That way, a very nonproductive piece of 

land becomes highly productive, and you can actually make money 

on it, and at the same time have the benefits of conservation and 

carbon sequestration. 

So I just think there can be some real benefits for agriculture. 

Senator THUNE. And raise pheasants. 

Chairman HARKIN. What? 

Senator THUNE. And raise pheasants. 

Chairman HARKIN. And raise a lot of pheasants, that is right. 

[Laughter.] 

Chairman HARKIN. And bring all those hunters out. They can 

come out in the fall and spend money and everything. 

I just think that there is a lot of promise there that we can move 

ahead on. 

I was going to ask some questions about algae here, but, no, I 

do not want to get into algae. I guess I could get into algae, but 

I am not. 

There is another thing I want to get into with you. Could you address yourselves to this? We are talking about liquid fuels. We are 

talking about taking cellulose or corn, making liquid fuels. Now we 

also are doing work on pipelines and getting dedicated pipelines 

going. Hopefully, that is going to happen pretty soon, but there’s 

also the idea of using biomass for electric generation. 

Now I do not know how soon this is going to happen, but I think, 

looking ahead, I really think that we are going to be moving more 

and more to electric vehicles in this country, especially in heavy 

urban areas. I just think there is going to be more and more push 

to go to electric vehicles. 

Well, you have to produce electricity. You do not want to use coal 

to produce electricity. But, if we can use biomass to produce electricity, then again I know you are still putting CO2 in the atmosphere, but it is taking it out. So you have no net gain in greenhouse gases by doing that. 

There has been a lot of talk and thought about using biomass 

also as a feedstock. Now that is where you come in, Mr. Olthoff. 

You have been experimenting with how to use pellets or cubes or 

however you do this. We did this. That is what the Chariton Valley 

Project was about. 

You are all experts on this. What about the idea of using biomass 

as a boiler fuel for producing electricity, any thoughts on that? 

Mr. OLTHOFF. Well, I mean today we use biomass wood chips to 

power our boiler at Chancellor, South Dakota, a 100 million gallon 

facility, along the use of landfill gas that we have piped to the facility. We can offset about 60 percent of our natural gas utilization. 

Chairman HARKIN. That is interesting. 

Mr. STOWERS. Those are technologies that are ready and raring 

to go and can be deployed at all of the existing corn ethanol plants 

to reduce their overall carbon footprint. 

I guess I would highlight maybe a contrarian view on electric vehicles. Whereas I think electric vehicles have potentially a significant opportunity in dense urban areas as you indicated, one of the 

33 

things that troubles me a little bit is the overall conversion to an 

electric economy for transportation, personal transportation in particular. There have been estimates that, for example, it would require extensive rewiring of charging stations in order to get a 

charge completed overnight, for example, to 20/40–amp lines and so 

forth, and an increase of the overall grid by 2–fold. 

So I think that is an interesting opportunity, but I think it needs 

to be thought through very carefully to see why one would do that 

when you have a clean-burning liquid fuel that is already in the 

distribution channel. 

Mr. COUSER. I guess I will touch real quick. I think that is one 

reason that in Lincolnway when we decided to put on the fluidized 

bed we spent an extra $12 million instead of putting a gas pipe 

into it with the hopes in the future that we would burn a corncob, 

a cornstalk, clean construction waste out of Des Moines. 

There are recyclables and renewables that we are very excited 

about, and we have started testing with some of the wood chips, 

and now this next fall we are going to be getting set up to do the 

corncobs and whatever else we can do. We have got to get some 

tests in because I think the DNR is a little troubled right now. 

They really do not know what is going to come out the stack. So 

I think we are going to have to help prove to the regulators too 

that this is a viable situation. 

Mr. CORCORAN. In the Black Hills, we are working with a small 

community to develop a project. This community runs on propane. 

Its small clinic, its schools, its administrative buildings run on propane, and they are interested in putting in a biomass boiler and 

using the lignin as our co-product from our cellulosic-based ethanol 

plant and taking that lignin and burning it into a biomass boiler 

and then utilizing that to power their facilities—so lots of different 

avenues with regards to using woody biomass. 

Chairman HARKIN. I do not know if you wanted to comment? 

Mr. OLTHOFF. Yes, I would like to say a couple things just from 

the electric utility industry perspective. We do not start with a 

value-added product like ethanol and say, ‘‘well, now can we add 

another stream and maybe fuel our boiler or something to that effect, with a pulp product or another fuel.’’ 

In the electric industry, the challenge is to try and come up with 

a fuel that can generate the electricity we can sell onto the wholesale market or generate locally to replace wholesale market price 

electricity. The electric industry is very good at making low-cost 

electricity. When we compare what it costs to generate electricity 

with biofuels, in whatever form will work, it cannot compete. We 

do not run biofuel because we know that it will be either a loss to 

the company or an extra charge to the community. It is an extra 

expense that we cannot pass on or will not pass on. 

Being a municipal, the board looks at us and says, no, we are not 

going to pay extra for electricity just because it is biofuel generated. We cannot sell that to the board. So that is one of the challenges for the electric industry to jump into biofuels, not only the 

whole problem of supply lines and transportation and all that but 

just the very fact that we cannot find the fuel at a price that actually make electricity compete on the market. 

34 

Mr. SHEEHAN. I would just add a little bit to that. Again, I think 

part of what this comes down to is there will be no single use for 

biofuels. It will not be just one form. It will not be one single source 

of energy that we rely on. 

There was a recent Science paper that came out that suggested 

that because electric engines or electric motors are so efficient they 

will actually give you more miles per acre or per ton of that biomass than taking that biomass through a liquid fuel. The one 

weakness in that analysis is it requires us to have battery technology that we currently do not have. So that is one issue. 

But the other is I think we have to break transportation down 

into two big categories. One is personal transportation that you alluded to, but the other is in some ways more strategic, and that 

is freight transportation and air transportation. They are never 

going to run on electricity. They will always require liquid fuels, 

and they will always require high density in terms of energy content for that liquid fuel. 

So this is where in some ways I take the food versus fuel argument and say, OK, when it comes to some of those strategic uses 

for our land, there is a food and fuel requirement societally to deliver, but we need to be able to send our freight around and to get 

from Point A to Point B in a plane. 

Ms. RATH. There are two really good reasons to turn biomass into 

power. The first is what I have touched on before, which is not only 

is it carbon-neutral but because of the below ground sequestration 

with perennial energy crops it can actually be a carbon-negative 

source of power. The other is that it is, other than geothermal 

which is limited in scope, it is the only one of the renewables that 

offers baseload supply of power. 

So solar is on during the day, not on at night and not on, on 

cloudy days. Also, we do not have enough solar to do solar in all 

places in the Country. 

Wind actually peaks in the middle of the night when energy demand is at its lowest, causing in some places in the Country energy 

prices to drop to zero overnight because the supply is not coming 

when the demand is coming. 

So biomass, either as something used to co-fire with coal or in 

dedicated facilities, offers you that opportunity to have baseload 

power. 

We are actually talking to a lot of major utilities who are interested in biomass. Most of them are interested for one of two reasons. One is that they have a high renewable portfolio standard in 

their State and they have as much wind and solar as they can handle. The need baseload in their renewable portfolio, and so they are 

looking at biomass to supply that. 

The other is large utilities who have major coal footprints who 

are in areas where maybe wind and solar are not as plausible and 

see this as a really easy way to start co-firing 10, 15 percent biomass in their existing coal facilities and, as a result, meet some of 

their renewable obligations. 

So, it does depend on renewable energy credits or mandates or 

things like that until you get a price of carbon that makes biomass 

competitive with coal. But where you have those things, like in EuVerDate Nov 24 2008 14:06 Jan 20, 2011 Jkt 000000 PO 00000 Frm 00038 Fmt 6633 Sfmt 6633 C:\DOCS\62714 MICHA
35 

rope, you do see rapid adoption of use of biomass for power both 

in dedicated and in co-firing situations. 

Chairman HARKIN. I think that certainly the challenge for us in 

agriculture is that. We are going to need liquid fuels for a long 

time, and so we have to make sure that we use biomass for liquid 

fuels but then also for baseload electricity production. 

The battles are going to be ferocious over the next few years on 

coal. It is cheap. It is abundant, and certain States produce a lot 

of coal. But we know the environmental impacts of that. 

So if the environment is not free—if the environment is free, 

what the heck, go ahead and do it. If the environment is not free, 

well, then you have to start calculating the cost of that. Once you 

start calculating it, then I think biomass is going to be looked upon 

as a valuable source of feedstock for baseloading for electricity. 

I have often thought about that as we proceed on our agricultural bills, not pushing just for ethanol but for biomass production 

for making electricity, and there are a lot of things I think that 

lend itself to that. I mean I have seen everything from willows, 

fast-growing willows out in the West to trees in the Northeast, fastgrowing pines in Saxby Chambliss’s area where they grow fast. 

They can be used for that kind of baseload power and harvested 

in a very conserving manner. 

So it seems to me that I still come back to the same thing, that 

anything you can get from a barrel of oil we can get from a bushel 

of corn or other crops out there. 

Ms. RATH. A ton of biomass, yes. 

Chairman HARKIN. We can do it here in this country, and we can 

provide a lot of jobs, a lot of jobs, and it clean up our environment. 

So it seems like we can have our cake and eat it too with this 

whole approach of using biomass for both liquid fuels and for the 

production of electricity. 

I think all we have to do is just make sure we have policies in 

place, and that is why we need to hear from you about those kinds 

of policies and how we move ahead. 

Well, that is my 50–cent speech. John, do you have anything 

else. 

Senator THUNE. Well, just a couple quick questions, and this will 

not take long. By the way, this was not focused on wind, but I do 

not understand why Iowa has more wind energy production when 

we are up there breaking the wind for you all the time in South 

Dakota. We should be having it. 

Chairman HARKIN. Well, I have something on that, but I cannot 

say it in public. 

[Laughter.] 

Senator THUNE. I was setting you up there, Mr. Chairman, but, 

no. 

I am curious in knowing. Somebody, I cannot remember, Mark, 

if it was you or, Ms. Rath, if it was you, talked about the cost, the 

current cost of production for cellulosic ethanol. About $2.50 a gallon, is that what you said? 

Mr. STOWERS. Right. 

Senator THUNE. So how soon are we going to be competitive in 

cost of production with corn-based ethanol and, beyond that, with 

petroleum-based gasoline? 

36 

Mr. STOWERS. By the time we Project Liberty in Emmetsburg, we 

expect to be about 50 cents per gallon higher than corn ethanol, 

and within 5 years we expect to be competitive with corn ethanol. 

Corn ethanol is a moving target of lower and lower cost. So I think 

that we are going to be very competitive. I mean even today ethanol is sold at a discount compared to gasoline based on the current Iraq prices. 

Senator THUNE. And, Mr. Corcoran, just for purposes of what you 

all do in terms of trying to commercialize cellulosic ethanol from 

biomass in places like the national forests, the Black Hills, how important is getting that biomass definition changed for you, for you 

to be able to take that to the next level? 

Mr. CORCORAN. It is absolutely imperative. I will just give you 

an example, in the Black Hills, roughly 1.2 million in forestland. 

Today, in slash piles alone, there is about 760,000 tons of slash 

piles that today get burnt or it just rots away. 

Senator THUNE. Convert that. What would that be in terms of 

gallons of fuels if you were able, say, 760,000 tons? That is probably not fair to ask. 

Mr. CORCORAN. Thirty million gallons. 

Senator THUNE. Thirty million gallons, OK. So it is an equivalent 

of a 30–million gallon ethanol plant every year. Right? 

Mr. CORCORAN. Right. 

Senator THUNE. I mean that is something that is going to be an 

annual amount. 

Mr. CORCORAN. Right, and the selection of the site is determined 

as we go through our analysis as the availability of public land. If 

that public land is not available, we would evaluate that and 

maybe not select a site because the public land cannot be used in 

order to take advantage of some of the incentives. 

Senator THUNE. If I might, Mr. Couser, this is for you. One of 

the probably biggest opponents of biofuels has been the livestock 

industry. I mean maybe not as much in the Midwest as it is in 

other parts of the Country, but it is kind of the oil companies, the 

people who feed livestock, some of the food marketers, some of the 

environmental groups. They have really put together a coalition of 

groups out there that have really, I think, misinformed. I am not 

saying livestock groups, but I am talking a lot of folks out there 

have misinformed the public about this whole food versus fuel 

thing and if there is not enough grain out there to do all these various things, which I think has set us back a lot in terms of the public relations argument that we have on this. 

But I am interested from your perspective, what impact has the 

availability of DDGs had on cattle feeders in Iowa and across the 

Midwest and is there enough DDGs? Is there a shortage or a surplus? 

Mr. COUSER. Do I get an hour to talk about this? 

[Laughter.] 

Mr. COUSER. You know that has been one of the greatest things 

that has happened to Iowa in the cattle industry are the coal products that come out of the soy diesel and the ethanol plants. When 

you look at 5 years ago, it used to take 75 bushels of corn to finish 

out a 500–pound steer to 1,350 pounds. Today, when you look at 

that at our feedlot, we are using from 11 to 16 bushels of corn. 

37 

Everything else is coal products, from bean straw to distiller 

grains to syrup. There is an array of products that we use. Basically, what we do is we have about 10 different additives or feed 

co-products that we put into a computer every Monday and get a 

least cost ration. 

We look at what it is going to do for the livestock industry and 

especially as the ethanol industry grows and these co-products are 

changing so we can get the inclusion rates higher in the feathers 

and the pigs because right now we are limited to certain amounts 

that we can put in the feed. And, I really think there is going to 

be a driving force here to change those co-products. I think you 

would agree with that, so that we can get the inclusion higher in 

these feed rations. 

We look at Iowa and the Midwest here and what we can do with 

agriculture in both the animals and growing crops. It is just we do 

not see the end of the rainbow yet. We have still got a tremendous 

future. 

Chairman HARKIN. Can I just ask one thing? How about pork 

production? You are cattle. It is more adaptable for cattle feeding, 

but Iowa State has been trying to do a lot of research in how to 

adapt this to hogs. 

Mr. COUSER. And, it is coming too. I mean, like I say, it is going 

to be driven. When we look at what has happened to the hog market here in the past 12 months, we are going to find cheaper feed 

sources. Do we need to pull more oil out of the back side of that 

ethanol plant so it makes the co-product a little different, so the 

inclusion rate can be higher so that the feed costs can compete with 

corn or whatever other feed ingredient? 

I mean the whole variable just goes up and down. So we are very 

excited about what is going to happen. 

Senator THUNE. I guess my broader point was, Mr. Chairman— 

and I think that we have to obviously do a better job of communicating this—that there is, with the higher yield and with the 

DDGs and with the future of advanced biofuels, this whole notion 

that we cannot accomplish, that we cannot feed the U.S. and continue to feed the world and lessen our dependence upon, our dangerous dependence upon foreign sources of energy. It is a misnomer. I think we have to debunk and dispel that out there. 

The other side, those who oppose the biofuels industry have 

made it very challenging, I think, economically in some ways and 

probably more so politically for us because they have tried very 

hard to convince the American public and thereby people who make 

policy decisions in Washington that we cannot accomplish all these 

objectives at the same time. I happen to believe that we can, and 

I think we have to do a much better job of communicating that 

with the American people. 

Chairman HARKIN. Bill, I have one more question on your testimony, sort of along that line. You said here, and I put a big question mark because I do not understand it. You said corn oil extraction should give us a carbon credit as a co-product. 

Of course, I circled that because you know we have this coming 

at us, this whole Climate Change Bill. And so, anything I am looking at, anytime I see something where we can give credits to farmVerDate Nov 24 2008 14:06 Jan 20, 2011 Jkt 000000 PO 00000 Frm 00041 Fmt 6633 Sfmt 6633 C:\DOCS\62714 MICHA
38 

ers for something, a light bulb goes off. But I never heard about 

this. 

Mr. COUSER. I think you can answer that. I would talk in farmer’s terms. This is science. 

Chairman HARKIN. But I do not understand that. Well, I mean 

I would like to be able to promote it. I just need to know what it 

is about. 

Mr. COUSER. Well, I am not sure I can explain it all that way. 

We are evaluating this approach. We see that there is a great deal 

of opportunity to reduce the overall carbon footprint by separating 

out the corn oil and using that as a separate source for diesel application. The resulting overall footprint left in your ethanol plant is 

carbon-favorable by doing so. Perhaps offline, we can go into a little 

more of the details of how that actually works. 

Chairman HARKIN. Since this is coming at us pretty fast, can you 

give us, give my staff something? 

Mr. COUSER. Absolutely. 

Chairman HARKIN. That way, we can talk about this. 

Mr. COUSER. We would be happy to do so. 

Chairman HARKIN. I am looking for every little item I can get in 

there. OK? 

Mr. COUSER. You bet. 

Chairman HARKIN. So I just do not understand it, but if you just 

help me understand it and how we might weave that into our Climate Change Bill, assuming it is coming at us sometime this fall. 

Mr. COUSER. The reason I think that is such an important statement is we look at the value of what we can do with these ethanol 

plants. Just about all these plants are going to be spinning oil off 

some place in that plant. So it is very important. 

Chairman HARKIN. Yes. I guess I just do not understand how it 

reduces the carbon footprint, but you are going to help me. 

Mr. COUSER. We will give you the background. 

Chairman HARKIN. Yes, you will do. 

Well, this has been great. This has been a great exchange. 

Anything else that any of you wanted to bring up that we have 

not asked? Any questions, anything that you would like to have us 

ask that either one of us did not ask, that you would like to bring 

out here for us to think about? 

Senator THUNE. How soon will we be competitive making biomass into electricity? 

I mean you said the reason is your board and the people, your 

customers obviously are not going to tolerate higher cost associated 

with some other source of electricity. Are we going to be competitive cost-wise out there in the not too distant future? 

Mr. OLTHOFF. Without any changes to any of the present policies, 

actually, I cannot say that it ever would be. I will just cite a couple 

numbers for you. 

We did a small project this spring. We harvested some mixed 

species prairie grass plantings on Black Hawk County conservation 

land. It cost the utility about $$1,000 to harvest the material. We 

got 22 tons of material. It cost about $1,000 to harvest it, about 

$1,000 to densify it. It cost $3,000 to ship it to Indiana and back 

to get it densified. So, for $5,000, this will produce about $440 

worth of electricity. 

39 

Now there is a lot of fat in this thing. We know that if we can 

eliminate the transportation by doing it locally we are going to 

eliminate three-fifths of the cost. 

Chairman HARKIN. We did that it Chariton Valley. 

Mr. OLTHOFF. Pardon? 

Chairman HARKIN. In Chariton Valley, it just went from there to 

a tumbler. 

Mr. OLTHOFF. Right, right. For Cedar Falls Utilities, we are looking at a very local collection system. Just north along the Iowa 

Northern Railroad would be our model, where we would work with 

the railroad for short-line transportation of the material but have 

the collection sites located along the rail line so they can gather the 

material locally, densify it and then just have it short-run. But that 

is still leaves about $2000 for the material. 

We are looking at ways to minimize the cost, and that is a challenge with the remaining cost. The densification process, if you 

could optimize that, would be $20 per ton instead of $50 per ton. You do not want to cut the $50 per ton production cost. That is the $40 per ton farmer share basically. We do not want to dig into 

that very much, but we still end up with about a $70 per ton product, $70 per ton for fuel to produce $20 of electricity. 

Further to the detriment of the biofuels, it only has half the energy. So we almost need twice as much quantity to produce the 

same amount of electricity. 

Chairman HARKIN. Is it also true that there are more BTUs per 

pound of switchgrass than in a pound of coal? More BTUs for a 

pound of switchgrass than for a pound of coal? 

Mr. OLTHOFF. Well, not for us. 

Chairman HARKIN. That is just fact, yes, except that a pound of 

coal is this big and a pound of switchgrass is this big. That is the 

problem. But per pound—per pound—there are more BTUs in 

switchgrass than there is in coal per pound. 

Ms. RATH. Switchgrass BTUs per pound range. Actually, the 

grasses are over a pretty wide range. Switchgrass is typically about 

8,300 BTUs per pound which makes it about the same as PRB coal 

but less BTUs per pound than bituminous coal. And so, it depends 

on for a given coal facility where they typically get their coal as to 

whether something like switchgrass can slot in very easily or 

whether it creates this issue for them of being less energy-dense. 

There are technologies being developed to try to improve the energy density of biomass by getting rid of some of the volatiles, but 

these all need to come down on the cost curve. 

So, just to sort of build on some of the points that you were making, the big difference between biomass to power and cellulosic ethanol is that biomass to power does not need to come down any, it 

does not need to improve its technology. The technology is there. 

You just burn the stuff. Right? 

There may be some improvements that can be made in 

densification technology, but you are not going to take costs out of 

through technology improvement the way you are in cellulosic ethanol. 

The sources where you are going to fix your cost problem are increasing the yields of dedicated energy crops because the higher 

your yield are the more revenue goes to the farmer, the lower your 

40 

harvest and transport costs are, the lower your delivered price, the 

ton of feedstock can be. So yield is one. 

The second one is improving the efficiency of the supply chain, 

improving our densification technologies, improving our harvest 

and transport methodologies. 

Then, the third is putting a price on carbon because fundamentally as long as coal is not burdened by that, then biomass just will 

not measure up because biomass takes work to generate whereas 

coal, that work happened over the course of a million years. It is 

all plant material. It is just over a different time scale. 

Senator THUNE. It has been very helpful, Mr. Chairman. I appreciate this. Thank you for calling the hearing. 

Chairman HARKIN. Well, good, I thought this was great. Some of 

you came a great distance, and I appreciate it very, very much. 

We will leave the record open for a week for additional inputs 

and other things that people might want to put into the hearing 

record. 

Again, John, thank you very much for your leadership on this 

issue and it is great working with you and thank you again for 

coming here today to Sioux City. 

Bob, thank you again for hosting us here. 

Mr. Rasmus, thank you for hosting us here today. 

With that, the Committee will stand adjourned until we do not 

know when. Sometime in the future. 

Senator THUNE. Whenever you call the next hearing, Mr. Chairman. 

[Whereupon, at 3:40 p.m., the Committee was adjourned.] 

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