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THE RENEWABLE FUELS STANDARD: 

ISSUES, IMPLEMENTATION, AND 

OPPORTUNITIES 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ENERGY AND AIR QUALITY 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

MAY 6, 2008 

Serial No. 110–113 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

JOHN D. DINGELL, Michigan, Chairman 

HENRY A. WAXMAN, California 

EDWARD J. MARKEY, Massachusetts 

RICK BOUCHER, Virginia 

EDOLPHUS TOWNS, New York 

FRANK PALLONE, JR., New Jersey 

BART GORDON, Tennessee 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

BART STUPAK, Michigan 

ELIOT L. ENGEL, New York 

ALBERT R. WYNN, Maryland 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

Vice Chairman 

LOIS CAPPS, California 

MIKE DOYLE, Pennsylvania 

JANE HARMAN, California 

TOM ALLEN, Maine 

JAN SCHAKOWSKY, Illinois 

HILDA L. SOLIS, California 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

DARLENE HOOLEY, Oregon 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

CHARLIE MELANCON, Louisiana 

JOHN BARROW, Georgia 

BARON P. HILL, Indiana 

JOE BARTON, Texas 

Ranking Member 

RALPH M. HALL, Texas 

J. DENNIS HASTERT, Illinois 

FRED UPTON, Michigan 

CLIFF STEARNS, Florida 

NATHAN DEAL, Georgia 

ED WHITFIELD, Kentucky 

BARBARA CUBIN, Wyoming 

JOHN SHIMKUS, Illinois 

HEATHER WILSON, New Mexico 

JOHN B. SHADEGG, Arizona 

CHARLES W. ‘‘CHIP’’ PICKERING, 

Mississippi 

VITO FOSSELLA, New York 

STEVE BUYER, Indiana 

GEORGE RADANOVICH, California 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE FERGUSON, New Jersey 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

PROFESSIONAL STAFF

DENNIS B. FITZGIBBONS, Chief of Staff 

GREGG A. ROTHSCHILD, Chief Counsel 

SHARON E. DAVIS, Chief Clerk 

BUD ALBRIGHT, Minority Staff Director 

(II) 

(III) 

SUBCOMMITTEE ON ENERGY AND AIR QUALITY

RICK BOUCHER, Virginia, Chairman 

G.K. BUTTERFIELD, North Carolina, 

Vice Chairman 

CHARLIE MELANCON, Louisiana 

JOHN BARROW, Georgia 

HENRY A. WAXMAN, California 

EDWARD J. MARKEY, Massachusetts 

ALBERT R. WYNN, Maryland 

MIKE DOYLE, Pennsylvania 

JANE HARMAN, California 

TOM ALLEN, Maine 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

DARLENE HOOLEY, Oregon 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

JOHN D. DINGELL, Michigan (ex officio) 

FRED UPTON, Michigan 

Ranking Member 

RALPH M. HALL, Texas 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOHN B. SHADEGG, Arizona 

CHARLES W. ‘‘CHIP’’ PICKERING, 

Mississippi 

ROY BLUNT, Missouri 

STEVE BUYER, Indiana 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

MICHAEL C. BURGESS, Texas 

JOE BARTON, Texas (ex officio) 

PROFESSIONAL STAFF

SUE D. SHERIDAN, Chief Counsel 

JOHN W. JIMISON, Counsel 

RACHEL BLESHMAN, Legislative Clerk 

DAVID MCCARTHY, Minority Counsel 

(V) 

C O N T E N T S 

Page 

Hon. Rick Boucher, a Representative in Congress from the Commonwealth 

of Virginia, opening statement ............................................................................ 1 

Hon. Fred Upton, a Representative in Congress from the State of Michigan, 

opening statement ................................................................................................ 3 

Hon. John Barrow, a Representative in Congress from the State of Georgia, 

opening statement ................................................................................................ 4 

Hon. Ed Whitfield, a Representative in Congress from the Commonwealth 

of Kentucky, opening statement ......................................................................... 6 

Hon. Mike Doyle, a Representative in Congress from the Commonwealth 

of Pennsylvania, opening statement ................................................................... 6 

Hon. John Shimkus, a Representative in Congress from the State of Illinois, 

opening statement ................................................................................................ 7 

Hon. Jane Harman, a Representative in Congress from the State of California, opening statement .................................................................................... 8 

Hon. Greg Walden, a Representative in Congress from the State of Oregon, 

opening statement ................................................................................................ 9 

Hon. Tammy Baldwin, a Representative in Congress from the State of Wisconsin, opening statement ................................................................................... 10 

Hon. Michael C. Burgess, a Representative in Congress from the State of 

Texas, opening statement .................................................................................... 11 

Hon. Jim Matheson, a Representative in Congress from the State of Utah, 

opening statement ................................................................................................ 12 

Hon. Marsha Blackburn, a Representative in Congress from the State of 

Tennessee, opening statement ............................................................................ 14 

Hon. Edward J. Markey, a Representative in Congress from the Commonwealth of Massachusetts, opening statement .................................................... 15 

Hon. Mike Rogers, a Representative in Congress from the Commonwealth 

of Michigan, opening statement .......................................................................... 16 

Hon. Ralph M. Hall, a Representative in Congress from the Commonwealth 

of Texas, opening statement ................................................................................ 17 

Hon. John B. Shadegg, a Representative in Congress from the State of Arizona, opening statement ...................................................................................... 18 

Hon. Lee Terry, a Representative in Congress from the Commonwealth of 

Nebraska, opening statement ............................................................................. 19 

Hon. John D. Dingell, a Representative in Congress from the State of Michigan, prepared statement ...................................................................................... 183 

Hon. Charles W. ‘‘Chip’’ Pickering, a Representative in Congress from the 

State of Mississippi, prepared statement ........................................................... 184 

WITNESSES

Hon. Stephanie Herseth Sandlin, a Representative in Congress from the 

State of South Dakota .......................................................................................... 20 

Prepared statement .......................................................................................... 22 

Robert J. Meyers, Principal Deputy Assistant Administrator, Office for Air 

and Radiation, Environmental Protection Agency ............................................ 24 

Prepared statement .......................................................................................... 26 

Answers to submitted questions ...................................................................... 193 

Nathanael Greene, senior policy analyst, Natural Resources Defense Council . 49 

Prepared statement .......................................................................................... 51 

Bob Dinneen, president, Renewable Fuels Association ........................................ 80 

Prepared statement .......................................................................................... 82 

Answers to submitted questions ...................................................................... 196 

Charles T. Drevna, president, National Petrochemical and Refiners Association ........................................................................................................................ 99

Page

VI 

Charles T. Drevna, president, National Petrochemical and Refiners Association—Continued 

Prepared statement .......................................................................................... 101 

Answers to submitted questions ...................................................................... 203 

Randy Kramer, president, KL Process Design Group, LLC ................................. 124 

Prepared statement .......................................................................................... 125 

Scott Faber, vice president, federal affairs, Grocery Manufacturers Association ........................................................................................................................ 127 

Prepared statement .......................................................................................... 129 

Answers to submitted questions ...................................................................... 206 

Rick Tolman, chief executive officer, National Corn Growers Association ......... 140 

Prepared statement .......................................................................................... 141 

Mark Stowers, vice president, research and development, POET ....................... 151 

Prepared statement .......................................................................................... 152 

Gawain Kripke, director, policy and research, Oxfam America ........................... 156 

Prepared statement .......................................................................................... 159 

SUBMITTED MATERIAL

Charts accompanying Mr. Faber’s testimony ........................................................ 132 

Charts accompanying Mr. Tolman’s testimony ..................................................... 148 

API, letter of May 6, 2008, to Hon. Fred Upton .................................................... 186 

25x’25, letter of February 25, 2008, to Messrs. Dingell and Barton ................... 190 

Society of American Foresters, letter of February 12, 2008, to Messrs. Dingell 

and Barton ............................................................................................................ 192 

(1) 

THE RENEWABLE FUELS STANDARD: ISSUES, 

IMPLEMENTATION, AND OPPORTUNITIES 

TUESDAY, MAY 6, 2008 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON ENERGY AND AIR QUALITY, 

COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 10:39 a.m., in room 

2123 of the Rayburn House Office Building, Hon. Rick Boucher 

(chairman of the subcommittee) presiding. 

Members present: Representatives Boucher, Melancon, Barrow, 

Markey, Doyle, Harman, Gonzalez, Inslee, Baldwin, Ross, Matheson, Stupak, Green, Upton, Hall, Whitfield, Shimkus, Shadegg, 

Bono Mack, Walden, Rogers, Sullivan, Burgess, Blackburn, Terry, 

and Barton (ex officio). 

Staff present: Bruce Harris, Lorie Schmidt, Laura Vaught, Chris 

Treanor, Rachel Bleshman, Alex Haurek, David McCarthy, Andrea 

Spring, and Garrett Golding. 

OPENING STATEMENT OF HON. RICK BOUCHER, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH 

OF VIRGINIA 

Mr. BOUCHER. The subcommittee will come to order. 

This morning the subcommittee is conducting its first oversight 

hearing on the Energy Independence and Security Act of 2007 

passed by the Congress last year and signed into law last December. The new law takes bold steps to increase the efficiency of energy use in commercial, industrial, and residential settings; promotes automobile fuel efficiency and reduces greenhouse gas emissions. It also substantially increases the renewable fuels mandate 

first adopted as part of the Energy Policy Act of 2005. Under the 

new law, annual increases in the volume of renewable fuels used 

in the national fuel supply are required, leading to a total renewable fuel use in 2022 of 36 billion gallons. The 2007 renewable fuel 

use was approximately 7 billion gallons, and under the new mandate, that volume must be 9 billion gallons by the end of this year 

and 11.1 billion gallons by the end of 2009. Beginning in 2009, the 

law requires that a portion of the total mandate be met by the use 

of advanced biofuels, and by 2022, advanced biofuels will account 

for the total mandate. Advanced biofuels are manufactured through 

the use of feedstocks other than cornstarch. But today cornstarch 

is the feedstock for most of the U.S. renewable fuel supply and it 

will remain the primary feedstock for years to come until advanced 

2 

biofuels such as cellulosic ethanol achieve broad market commercial deployment. 

In 2007, 24 percent of the Nation’s corn crop was devoted to 

biofuels production, and in the next several years that percentage 

may grow as the mandate of last year’s law requires ever-greater 

volumes of renewable fuel use. In recent months, there has been 

a rise in expression of concern about increasing food prices, both 

domestically and globally. There is now clear competition for the 

corn supply between biofuel uses and food and livestock feed uses, 

causing corn price increases and a resulting increase in a range of 

food and feed prices. As corn production has increased, in part because of the rising demand for its use in biofuels, farmers have converted land once used for wheat and soybean production to corn, 

causing a rise in wheat and soybean prices as well. 

Other factors beyond biofuel use are also exerting upward pressure on food and livestock feed prices such as rising costs of petroleum and the effect of those increases on the transportation costs 

for fuel and livestock food and unusual weather events that have 

caused crop losses around the world and a greater level of meat 

consumption in developing countries, resulting in an increase in 

the demand for livestock feed crops. 

Beyond those concerns, in a series of recent reports, arguments 

have been advanced that the clearing of land for corn-based ethanol production releases large quantities of CO2 into the atmosphere, resulting in life cycle greenhouse gas emissions for the 

biofuels so produced that are greater than the life cycle greenhouse 

gas emissions of the petroleum that those biofuels displace. Calls 

have been made by some for a re-examination of the biofuels mandate in light of these concerns. 

Today we will hear testimony from a range of interested parties 

regarding the appropriateness of the mandate in light of the current debates over food and feed prices and the overall effect of ethanol production on the transportation fuel life cycle greenhouse gas 

emission. We will also receive testimony from our colleague from 

South Dakota, Stephanie Herseth Sandlin, the author of H.R. 5236, 

which would amend the renewable fuels standard to enable woody 

biomass removed from Federal lands to be used as a feedstock for 

cellulosic ethanol production, which in turn would qualify under 

the biofuels mandate. Also appearing this morning is Bob Meyers, 

a former counsel to this committee and currently an administrator 

of the Air and Radiation Office at the EPA. The EPA has broad 

waiver authority under the 2007 law to suspend the biofuels mandate in whole or in part, and Mr. Meyers will advise the subcommittee this morning of the status of consideration by EPA of 

the request that the Agency to date has received, asking that it exercise that authority. 

I want to thank all of our witnesses for joining us for a timely 

discussion today, and I would note that in making the decision of 

whether or not to make opening statements, members should be 

advised that if they waive their opening statement, 3 minutes of 

questioning time will be added, not to the first witness but to the 

second witness, Mr. Meyers from the Environmental Protection 

Agency, and that slight change in our procedure is made pursuant 

to agreement with the Minority. 

3 

Mr. BOUCHER. That concludes my opening statement, and at this 

time I am pleased to recognize the ranking member of the subcommittee, the gentleman from Michigan, Mr. Upton, for his statement. 

OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN 

Mr. UPTON. Well, thank you, and I thank you, my friend, Mr. 

Chairman, for holding this important and certainly timely hearing. 

One of the major components of the recently signed Energy Independence and Security Act was an ambitious renewable fuel standard, or RFS. I have always been and remain supportive of renewable fuels. However, as we all know, Congress doesn’t always get 

things right. The laws we write are not always perfect and only require re-examination, corrections, and oversight, and certainly 

there are some legitimate concerns with using food for fuel that we 

need to continue to examine. 

I believe that the goal of that legislation was to meet the needs 

of sound energy policy, environmental policy as well as national security. Many of the provisions in this new energy package that 

President Bush signed into law in fact meet that criteria. Unfortunately, after further examination and recent economic and environmental studies, the RFS may miss the mark in a few areas. For 

example, if the goal is to increase our usage of renewable fuel, we 

should examine the impact on cutting the import tariff, which 

would certainly bring hopefully a flood of renewable fuel to the 

market. I will be asking our witnesses about that proposal. 

I want to be perfectly clear: I support the use and development 

of renewable fuels. I introduced a bill in the last Congress and 

again in January of last year along with Mr. Doyle that requires 

all gasoline sold in the United States after 2012 to contain a minimum of 10 percent renewable fuels, something that the State of 

Minnesota already has on the books. We are careful not to specify 

any one technology or source of fuel, allowing the market to fill the 

need, be it corn-based ethanol, cellulosic or fuel from algae, other 

renewable sources, perhaps even sugar. The new RFS does not 

allow our technology-neutral and feedstock-neutral model. I believe 

that this may be contributing to many of the problems with the 

RFS. 

While biofuels such as ethanol are not the silver bullet to cut fuel 

prices or increase supply, they are in fact an important part of the 

overall puzzle, along with conservation, efficient technologies, and 

increasing domestic oil supply through increased production. Under 

current law, there is no effective safety valve to allow for unforeseen difficulties in meeting the required ethanol volumes that last 

for more than a year, such as ethanol production shortfalls. Many 

proposed plants are being canceled or delayed due to the high cost 

of corn or inconsistent State laws that prevent refiners from meeting the national renewable mandate. For example, the Nation’s 

largest gasoline market, California, limits the amount of ethanol in 

gasoline to 5.7 percent until 2010, and in 2008 the Federal requirement translates to 7.7 percent, in 2009, about 9 percent. The California deficit would need to be made up in the rest of the country 

through increased blending and some refiners cannot easily meet 

4 

the California deficit with refiners in the rest of the country since 

the EPA regulations and car warranties currently prohibit blending 

above 10 percent use in conventional autos. 

Recognizing that problem, I introduced a bill with my good 

friend, Charlie Gonzalez, that would provide refiners with more 

time to meet that biofuel mandate. Our legislation would allow a 

carry forward of up to three calendar years for refiners to make up 

deficits in meeting the mandate in 2008, 2009, and 2010. For instance, refiners who do not blend in enough renewable fuel in 2008 

would have until 2011 to make up that deficit. Current law provides refiners who do not blend in enough renewable fuels a shorter 1 year window to make up that deficit. This bipartisan legislation would help avoid supply shortages and price spikes that might 

otherwise occur. 

Now, I am one that reads and signs all of my legislative mail, 

all of it, and one of the top issues that our constituents are concerned about is certainly the high cost of gasoline. The price of a 

barrel of oil is strongly entrenched above $100. Today the price is 

over $120 with no sign of retreating. Gasoline prices are on a path 

toward $4 a gallon yet America’s oil resources remain off limits to 

exploration. According to Federal government estimates, there is 

enough oil in deep waters many miles off our coast and on Federal 

lands to power more than 60 million cars for 60 years. Additionally, 

if we advance the commercialization of the Nation’s 2 trillion barrel 

shale oil resource, we will meet the U.S. oil needs for over 2 centuries. It would be ideal if we could grow all of our own fuel. However, this is not a possibility, and if we overreach we will be creating even more problems. 

Along with a strong RFS, if we were permitted to utilize our vast 

domestic energy resources, prices would fall and the United States 

would achieve a greater level of energy security. Inexpensive energy helped build our economy into the most powerful and prosperous in the world, and high energy costs obviously take us in the 

opposite direction. We can all talk about alternative energy. Well, 

the alternative to our existing policy is to achieve lower prices 

along with energy security by relying on environmentally friendly 

American energy. American energy includes renewable fuels, coalto-liquids, oil shale and the vast reserves of domestic oil and natural gas that are being blocked by shortsighted policy. We owe it 

to the working families to pursue an energy policy with a vision of 

the future. We cannot stand idly by for another year and allow gas 

to go up to even perhaps $5 a gallon. 

At this point I would like unanimous consent to put a letter in 

from API, which I have somewhere in my notes, and with that, Mr. 

Chairman, I yield back my time. Thank you. 

Mr. BOUCHER. Without objection, that letter will be made a part 

of the record. 

[The information appears at the conclusion of the hearing.] 

Mr. BOUCHER. The Chair recognizes the gentleman from Georgia, 

Mr. Barrow, for 3 minutes. 

OPENING STATEMENT OF HON. JOHN BARROW, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF GEORGIA 

Mr. BARROW. I thank the Chair. 

5 

At the outset, I want to commend Ms. Herseth Sandlin for her 

bill and her legislation, which I think tries to strike the right balance here. I agree with her that we need to sort of widen the definition of what wood waste can be for effective advanced biofuels 

policy. But at the same time, I want to make sure that we don’t 

loosen it so much that we end up deranging the market for other 

products. 

I have a huge stake in this myself. In my district, in Treutlen 

County, Georgia, Range Fuels is building the first commercially 

viable, commercial-scale cellulosic ethanol plant in the country, and 

it is our plan to try and provide added value for stuff that has no 

value right now, and I advocated very strongly for a substantial 

grant from the Energy Department to try and jump-start that operation there, and the vision that we have is, the things that have 

no value right now can be better put to advanced biofuels development, and stuff that has existing value, and that is a concern I 

have got because I have also got a stake in this, because I sat in 

the same room with folks in my party and the leadership of my 

party are writing checks on Georgia’s supply of biomass that we 

just can’t cash in our State. I have sat around with folks that basically said we got enough biomass in Georgia to do this, do that, we 

got other things going on with Georgia biomass right now like the 

pulp industry and the construction industry. We have a lot of uses 

for the stuff that we are doing right now in Georgia. 

We talk about not wanting to pick winners and losers and not 

try and play favorites with the programs that we initiate, and we 

adopt programs that ostensibly look neutral in their impact and 

will rely upon the invisible hand of the marketplace to sort of guide 

our choices but existing technology can only meet a certain mandate in a certain way and incentives geared toward providing that 

we do it by way of existing technology, we will find out that the 

invisible hand is a very heavy hand and it can derange a lot of existing markets. 

What I think we ought to be doing—I can’t help but relate to this 

problem in terms of my own experience as a local elected official. 

Perhaps we ought to be thinking about this a little bit more the 

way county commissioners or city councilmen think about zoning 

decisions because it is a zero-sum game. You change the zoning of 

a piece of land since they aren’t making any more land, you change 

the zoning and you are reducing the supply of land that can be 

used one way and you are increasing the supply of land to be used 

in another way. It is a zero-sum game. And we ought to be thinking about what we are doing with our energy feedstocks the way 

city councilmen and county commissioners have to think about zoning decisions. What is the highest and best use of this energy feedstock over here and what is the highest and best use of that energy 

feedstock over there, and let us not pretend we are being neutral 

when actually we are setting up things in an ostensibly neutral 

fashion and it is actually going to take all of the feedstocks being 

used for one purpose and apply it toward another. So if we can 

think about that, I think that will certainly guide my thinking of 

this, and I am interested in hearing what the witnesses have to say 

about how we can make more effective decisions that take advanVerDate Nov 24 2008 14:10 Jan 08, 2010 Jkt 037690 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 C:\DOCUMENTS AND SETTINGS\CWELLS1\HEARINGS\110-113 SCOM1 PsN: JIMC
6 

tage of the marketplace and are neutral in effect as well as in purpose. 

Thank you, Mr. Chairman. I yield back the balance of my time. 

Mr. BOUCHER. Thank you, Mr. Barrow. 

The gentleman from Kentucky, Mr. Whitfield, is recognized for 3 

minutes. 

OPENING STATEMENT OF HON. ED WHITFIELD, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF KENTUCKY 

Mr. WHITFIELD. Mr. Chairman, thank you very much, and we 

genuinely appreciate your holding this hearing this morning on a 

topic of great importance for the entire country. 

I might say that recently I met with a group of agriculture leaders and they made the comment that the Nation’s energy policy, 

particularly referring to this mandate on ethanol production, has 

more of an impact on agriculture than the agricultural policy. So 

I think it is imperative that we move deliberately and cautiously 

in trying to reverse a policy until we understand completely the 

ramifications on it as it relates to agriculture prices, as it relates 

to oil prices. 

And so I want to commend the chairman for the hearing. We 

look forward to some of our witnesses today, who have some expertise in this area to help us move forward in a way that is most likely to be correct for our country, and I yield back my time. 

Mr. BOUCHER. Thank you very much, Mr. Whitfield. 

The gentleman from Pennsylvania, Mr. Doyle, is recognized for 

3 minutes. 

OPENING STATEMENT OF HON. MIKE DOYLE, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA 

Mr. DOYLE. Thank you, Mr. Chairman. 

Mr. Chairman, it sometimes happens that we here in Congress 

pass policies that don’t turn out as good in the real world as they 

looked on the drafting paper, and despite our best intentions and 

due diligence, the law of unintended consequences rears its ugly 

head, forcing us to revisit our earlier policy decisions. That is what 

I believe is happening today in regard to corn-based ethanol, and 

I commend you, Mr. Chairman, for holding this hearing so that we 

can again look at the renewable fuel standards so that we can ensure that we get the results we seek without causing more problems in the future. 

I remember back when we passed the ethanol mandates back in 

the Energy Policy Act. Corn ethanol was presented almost as a 

holy grail solution to the challenges presented by our dependence 

on foreign oil. It seemed at the time that we could not only start 

to break the chains of this dependence but we could do it in a way 

that would benefit the American farmer and put us on a path to 

combating global warming. While time has proven that some benefits have resulted from this policy, most notably the increased profits in the agricultural sector, I believe its negatives today far outweighs its benefits. 

7 

I have said time and time again that there is no silver bullet to 

address the dual challenges of energy independence and global 

warming. There is no one policy we can adopt or one technology we 

can develop to meet these challenges. Unfortunately, our committee 

and our Congress essentially chose food-based ethanol and encouraged the private sector through authorizations in the tax code to 

pick this biofuel over others. We must learn from this mistake and 

roll back these policies. 

Now, don’t get me wrong: I am not advocating for a rollback of 

the entire renewable fuel standards as I believe the standard itself 

can help move us toward energy independence. What I am advocating is that we roll back the support structure that food-based 

ethanol receives and which other promising biofuels are not. We 

need to encourage all of these advances, not pick the one we can 

sell better at home. Food prices are rising. Rain forests are being 

deforested and we need to understand the real-world realities that 

this policy has caused. Any food that is used for fuel is a food that 

won’t be used to feed our Nation and to a large extent, the world. 

We have other options such as algae, municipal waste, and the 

like, which offer a path toward energy independence but don’t put 

the burden on the backs of the hungry to pay for it or pay for it 

by destroying rain forests. 

In conclusion, Mr. Chairman, we need to revisit this policy and 

back away from food-to-fuel policies and instead accelerate the development of biofuels that don’t put our energy needs ahead of the 

needs of the hungry or the environment. 

With that, Mr. Chairman, I yield back the balance of my time. 

Mr. BOUCHER. Thank you, Mr. Doyle. 

The gentleman from Illinois, Mr. Shimkus, is recognized for 3 

minutes. 

OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Mr. SHIMKUS. Thank you, Mr. Chairman. It is great to have this 

hearing, although I am really concerned how shortsighted we are. 

I want to welcome Congresswoman Herseth Sandlin and her position. 

This is the cell phone in 1986. It is a brick. This is my BlackBerry today. This whole debate on ethanol is a debate about the 

current availability versus future technology. What you all did in 

the Energy Security Act was say we have to develop corn today and 

move to cellulosic for the future. That is all your bill did. That is 

all your bill did and that is where we need to go. So this is very 

frustrating. How shortsighted we are to walk away. You know, we 

have 8.5 billion gallons in ethanol refinery. When we passed the 

Energy Policy Act in 2005, I told you all, I said OK, don’t build any 

new crude oil refineries, we will just continue to build ethanol refineries. Check the record. That is what I said. And because you 

all won’t go to other supplies of fuels, your default is renewable 

fuels. 

This is where we are today. When your Majority came in, $58 a 

barrel. Today, $120 a barrel. Two dollars and 33 cents a gallon of 

gas, $3.66 today. With climate change, 50 more cents. $4.16 is what 

we would pay. Take away the ethanol mandate, another $1.10. Do 

8 

you know how much ethanol adds to our fuel mix today? You take 

that away, you add another $1.10 to the gas at the pump. So now 

we are at $5.26 a gallon. Nobody wants to pay that. 

Why am I so frustrated? Chairman, we have had this debate. We 

had motions to recommit on the bill, alternative fuel standards, not 

just an RFS. What is an alternative fuel? It is electric vehicles put 

into the standard. It is coal-to-liquid put in the standard. It is OCS 

put in the standard. It is all these other things that we could do 

to increase supply. We are not one-trick ponies. We want more supply. You all won’t give it to us. And what we have, we are going 

to have—we continue to have escalating prices. Corn is the bridge. 

It is this cell phone. Cellulosic is here. That is why I appreciate 

your bill. And that is where we need to go but we can’t jettison the 

present and not get to the future. And we are going to send terrible 

signals to the investment community just because we are scared 

and we are not willing to handle this debate on energy prices in 

a realistic manner, we are going to send terrible signals to not only 

to corn-based ethanol but all the cellulosic technologies because we 

are haphazard, we don’t plan. We have a terrible supply debate on 

energy. We need more supply to have lower prices. 

I am glad we had this hearing, Mr. Chairman. 

Mr. BOUCHER. Well, thank you very much, Mr. Shimkus. I particularly appreciate the last sentence. And as the gentleman 

knows, I share his view with regard to the need for a broader range 

of alternative fuels, particularly coal-based. 

The gentlelady from California, Ms. Harman, is recognized for 3 

minutes. 

OPENING STATEMENT OF HON. JANE HARMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Ms. HARMAN. Thank you, Mr. Chairman. 

I do want to apologize to our first witness, Ms. Herseth Sandlin, 

for leaving the hearing after I speak. I have a competing subcommittee hearing and a full committee hearing this morning, and 

I regret that I can’t hear your testimony. 

Mr. Chairman, I think injecting partisanship is not particularly 

useful at this point. Last year members of this House and members 

of this committee on a bipartisan basis believed that an expanded 

renewable fuels mandate was a win for both climate change and a 

win for energy independence. The benefits of cellulosic ethanol and 

other advanced biofuels are extraordinary and the Federal government should encourage the development of those resources. But in 

my view, our enthusiasm for corn ethanol deserves a second look. 

That is all I am saying. It deserves a second look. Sure, the billions 

of gallons of corn ethanol that American farmers will produce this 

year can displace some billions of gallons of foreign oil, but the 

greenhouse gas reductions of corn ethanol appear to have been 

overstated, and now it looks more and more that we are robbing 

Peter to pay Paul, and judging by the skyrocketing prices of milk, 

eggs, and flour, robbing ourselves too. 

Changes in the U.S. corn market alone are not to blame for the 

climbing price of food in the United States or the scarcity of staple 

crops in places like Somalia and Haiti. We can point to poor harvests in Australia, Canada, and the Ukraine as other culprits. But 

9 

weather changes, perhaps caused by climate change, may account 

for these regions’ poor grain production this year. The 2-year 

drought in Australia, the world’s second largest wheat producer, 

has cut its production by a third. 

So what is the lesson? The lesson is that climate change is linked 

to policy debates about fuel, food, and security. We cannot afford 

to think of them as separate issues, something that I know Al Gore 

has been telling us for years. Energy independence can help us 

fight terrorism. In the long run, growing our own fuel can insulate 

us from political instability and keep American dollars from funding repressive regimes and violent causes. But if our policies promote starvation in unstable regions of the world, we may end up 

producing more terrorists no matter how we get our energy. 

So in sum, Mr. Chairman, I am glad you are holding this hearing. I am glad we have a diversity of views in our several panels. 

I will try to come back to hear some of the testimony. But I think 

we are doing the right thing by taking a second look at what we 

did last year. I think we did the right thing last year but it may 

need some fine-tuning. 

I yield back the balance of my time. 

Mr. BOUCHER. Thank you, Ms. Harman. 

The gentleman from Oregon, Mr. Walden, is recognized for 3 

minutes. 

OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OREGON 

Mr. WALDEN. Thank you, Mr. Chairman. I too appreciate this 

hearing. I know when I am at home, a lot of people are concerned 

about the rising food costs and they have a lot of questions about 

ethanol and whether or not it contributes to that, and so I think 

we will learn a lot from our witnesses today. I especially want to 

welcome our colleague, Ms. Herseth Sandlin, who I have worked 

with on numerous occasions on forest-related legislation, and I am 

pleased to be one of the original cosponsors of H.R. 5236. 

I think this committee made a mistake and this Congress made 

a mistake when it slipped in a provision that precludes the use of 

woody biomass from Federal forestlands and from anything other 

than plantation-planted forestlands on private ground from using 

any ethanol derived from that mass to count against the RFS. It 

makes no sense. There are laws on the books already that determine how you harvest forests on Federal ground, trees on Federal 

ground, how we do all that. That is already there. Those management rules are already in place. Those laws are already in place. 

What this committee did or what this Congress did was say that 

ethanol produced from woody biomass doesn’t count against the 

RFS if it comes off Federal ground. 

Now, I know we are going to hear testimony from some of the 

environmental groups that claim that preventive thinning from national forests as a biofuel source makes little economic or ecological 

sense and then they argue against thinning to control burns. I 

would like to invite these people out to my district where we see 

these incredible forest fires that burn hundreds of thousands of 

acres and leave incredible devastation behind and then some of 

these same groups litigate and stop the harvest of the burned dead 

10 

trees which the material could be used to go into various biomass 

uses. 

And so I obviously disagree with their viewpoint on this and 

agree with Representative Herseth Sandlin. I hope this bill passes 

and I hope the provision that was slipped into this energy bill will 

be repealed. It makes no sense the way it is. 

So Mr. Chairman, I yield back the balance of my time and I 

thank you for this hearing. 

Mr. BOUCHER. Thank you very much, Mr. Walden. 

The gentleman from Texas, Mr. Gonzalez, is recognized for 3 

minutes. 

Mr. GONZALEZ. I waive opening. 

Mr. BOUCHER. The gentleman waives his opening statement. 

The gentlelady from Wisconsin, Ms. Baldwin, is recognized for 3 

minutes. 

OPENING STATEMENT OF HON. TAMMY BALDWIN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WISCONSIN 

Ms. BALDWIN. Thank you, Mr. Chairman. I thank you especially 

for holding this important and timely hearing, that with rising food 

prices and soaring fuel costs is the subject of many discussions 

around the country and certainly in my home State of Wisconsin. 

In December, Congress passed the Energy Independence and Security Act, which made an historic commitment to American 

biofuels with its increase in the renewable fuels standard. It creates American jobs and provides critical environmental safeguards 

to ensure that the growth of homegrown fuels helps reduce carbon 

emissions and does not degrade water or air quality or harm our 

lands or public health. 

Since the first large-scale ethanol plants opened in Wisconsin in 

2002, my home State has increased ethanol production levels to almost half a billion gallons annually at nine plants across the State. 

Wisconsin is now in the top 10 States for overall production. Meanwhile, air quality in my home State has improved and the price of 

gas would be about 15 percent higher, according to Merrill Lynch 

analysis, if ethanol consumption were diminished. Moreover, a 

number of the producers in my State have created a food and fuel 

scenario rather than a food versus fuel scenario by using the process that separates the protein from the starch in the corn kernel, 

allowing for the production of ethanol and a dried distiller grain 

product that is used as feedstock for animals. 

Now, I can appreciate the concern that increasing corn-based 

ethanol production has some unintended consequences on the 

world’s food supply. However, the issue cannot be examined in a 

vacuum. In fact, according to one study, the cost of corn used to 

produce food is on average about 3.2 percent of the total typical 

consumer’s grocery bill. That means that 96.8 percent of the remaining cost of food depends on other factors, other food input, food 

marketing, processing, packaging, transportation to market. Adding costs to the mix are the worldwide drought, fuel costs and exploding demand elsewhere in the world, especially among developing countries, and speculation in the commodity markets. And 

given the state of our flailing economy here in the United States, 

11 

it is simply foolish to only examine one of these factors or make 

drastic decisions to undo a carefully crafted policy that we just enacted 5 months ago. 

Certainly, though, ethanol is not the only answer but it should 

be a part of a multifaceted approach as we move forward. We will 

only be able to perfect the science of lowering greenhouse gas emissions and addressing energy independence if we set the stage 

through research, technology, infrastructure, and policy advancements, all of which open the door for third-generation biofuels including cellulosic ethanol from switchgrass and other inputs. 

Last year, the Department of Energy made a commitment to 

moving forward with advanced biofuels when it awarded the University of Wisconsin, in partnership with Michigan State University, a $134 million grant to develop one of three national research 

centers aimed at converting woodchips, grasses, corn stalks, and 

other plant-based materials into biofuels. The science that will 

emerge from this center would not be possible without our commitment to corn-based ethanol. 

Mr. Chairman, I hope that today’s hearing will shed light on this 

issue. We must examine the warning signs that are out there but 

we certainly will not be able to address our country’s growing energy needs if we are to run away from this challenge. Thank you, 

Mr. Chairman. 

Mr. BOUCHER. Thank you very much, Ms. Baldwin. 

The gentleman from Texas, Mr. Burgess, is recognized for 3 minutes. Oh, I am sorry. The ranking member of the full committee 

has arrived. The gentleman from Texas, Mr. Barton. 

Mr. BARTON. That is OK, Mr. Chairman. 

Mr. BOUCHER. Mr. Burgess, would you take your 3 minutes, 

please? 

OPENING STATEMENT OF HON. MICHAEL C. BURGESS, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. BURGESS. I will be pleased to, Mr. Chairman. Thank you also 

for holding this hearing today. 

You know, just yesterday as kind of a warm-up for this hearing, 

we did a Republican House Policy Committee hearing over at the 

Library of Congress on this very issue, the food-to-fuel issue, and 

I must say, I was pleasantly surprised by the caliber of witnesses 

we had, many of the same witnesses we are going to hear from 

today, and very surprised by the turnout, at least from staff from 

member offices, and we even—Mr. Chairman, I think we even had 

a Democrat in the audience, so it became a bipartisan event, not 

just a Republican House Policy Committee event. 

So certainly we need to dig deeper into this issue, and we have 

heard some of the issues already discussed on both sides of the dais 

this morning. You know, Mr. Chairman, we are all pretty familiar 

with the renewable fuel standards from the Energy Policy Act of 

2005 because we talked about that, we debated that almost like a 

pure Athenian democracy here in this committee for hour after 

hour, but I really don’t recall that much discussion about the policy 

of 2007 because it kind of came to us, if you will recall, late in the 

game, and once again subverted the committee process, and it kind 

12 

of leads us to some of the anxiety, I think, that we are experiencing 

this morning. 

Now, my governor, Rick Perry from Texas, has submitted a letter 

to Administrator Johnson at the Environmental Protection Agency 

talking about the renewable fuels standards mandate and how it 

will negatively impact the citizens of Texas to over $3.5 billion if 

corn prices reach their estimated price threshold this year, and 

Governor Perry and the Connecticut governor have submitted requests for relief from the renewable fuels standard because they 

must face the realities of the unintended consequences of Congressional biofuel mandates. 

And we have heard a little bit about unintended consequences 

today, and you know, it used to be in Congress, unintended consequences would be visited upon you 2 decades, 3 decades later, 

and now because of the issue of compression of the timeline, we are 

seeing the unintended consequences come at us mere months after 

we make unwise policy decisions so it is important that we fully 

vet this issue and it is important that we come to the right conclusion because we are not going to outlive our unintended consequences this time, I don’t believe. 

So Mr. Chairman, thank you for taking a hard and serious look 

at the costs associated with the renewal fuel standards. What additional price should we ask our country’s citizens to pay for energy 

independence? How can we expect the developing world to react 

when their growing economies are demanding more and more food 

or facing starvation? We heard from a member on the other side 

that said growing our own fuel will insulate us from the instability 

in the world, but the reality is, growing our own fuel may in fact 

lead to some of that instability around the world if people indeed 

cannot get enough to eat. 

So here we are, the committee of jurisdiction, we are having the 

opportunity to oversee and fully vet what others thought we were 

not capable of crafting. I encourage us to proceed on this. I think 

this committee, with its long history of successful bipartisan legislation, has the right tools, right manpower, womanpower, the right 

brainpower to make the necessary changes to save this and make 

it a more workable policy in the future. 

So with that, Mr. Chairman, I will yield back my time. 

Mr. BOUCHER. Thank you very much, Mr. Burgess. 

The gentleman from Utah, Mr. Matheson, is recognized for 3 

minutes. 

OPENING STATEMENT OF HON. JIM MATHESON, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF UTAH 

Mr. MATHESON. Thank you, Mr. Chairman. 

This is a very complicated issue, and I think Members of Congress and a lot of other folks are asking a lot of questions about 

how we can navigate this issue to achieve greater energy independence and make progress on climate change as well. It is an issue 

that hit the popular press just in the last month with Time magazine asking about this policy is it doing the right thing, is it driving 

up food prices, is it making global warming actually worse. 

I would echo what Dr. Burgess said about the fact that this issue 

as it came up in the 2007 Energy Policy Act really didn’t go 

13 

through the regular order of this committee, and I think that it is 

unfortunate. This is a very substantive, capable committee. It is 

why I was so interested in joining this committee, and as a firstterm member of the committee, I think that this is the type of 

issue where this committee can really perform a good service to 

this country and I think it is unfortunate that the renewable fuels 

effort didn’t go through regular order. I am not saying we wouldn’t 

have maybe had a few things slip through that we wouldn’t have 

gotten right but already people are saying we need to revisit what 

happened in the 2007 Act. We do need to try to get this right. Just 

one quick example, we got today the legislation from Representative Herseth Sandlin pointing out one of the weaknesses in the 

2007 Act that excluded certain types of biomass fuel. Now, I think 

that is a very legitimate issue. I think that we are probably going 

to want to take action to include that in the mix. Those are the 

types of discussions we ought to be having on this issue and work 

in a bipartisan way to try to have credible policy that balances 

competing needs of energy independence, climate change, and security of our food supply. 

And so, Mr. Chairman, I want to thank you for holding this hearing and I just ask we ought to hold a number of hearings on this 

issue and really try to flesh this out. We can’t turn the clock back 

and do it before the bill was passed last December but we can certainly conduct ourselves with our oversight responsibilities and try 

to make good policy changes moving forward. 

I will yield back my time. 

Mr. BOUCHER. Thank you, Mr. Matheson. 

The gentleman from Texas, Mr. Barton, ranking member of the 

full committee, is recognized for 5 minutes. 

Mr. BARTON. Thank you, Mr. Chairman. I am going to submit my 

written statement for the record. I just want to make a few 

extemporary remarks. 

First, I appreciate you holding this hearing. I appreciate the cooperation with the Minority on witnesses, and I appreciate the willingness to take an honest and fresh look at this issue. When I was 

chairman of this committee, we passed the Energy Policy Act of 

2005. It was an open, bipartisan process in this committee, in the 

House, in the Senate, and in the conference committee. We had 

open conference committee hearings and markups in this very 

room. 

There is a renewable fuel standard in that Act. For this year, the 

renewable fuel standard is 5.4 billion gallons and it rises to an estimated 8.6 billion gallons over time. Under the legislation that was 

signed into law this past December, we have a new biofuel mandate. It is 9 billion gallons this year. It cannot be met. There is not 

enough biofuel in the country to meet it. I think that is probably 

one of the reasons we are holding this hearing. Nobody likes to see 

food prices skyrocketing like they are skyrocketing. Nobody likes to 

see our U.S. domestic fertilizer capacity cut in half, and half our 

fertilizer plants being shut down. Nobody on either side of the aisle 

likes the unintended consequences of what the proponents passed 

last December with the past of intentions. 

I am going to be introducing a piece of legislation, Mr. Chairman, 

this week to repeal section 202 of last year’s Energy Act and just 

14 

go back to the previous biofuel mandate in the 2005 Act. Now, that 

is not a perfect solution and it may not be acceptable but at least 

it is doable. There are things that can be done. We are going to 

hear about some of those things today. And one of the things that 

can be done is obviously to do nothing. If we do nothing, we are 

going to have the chaos that we have right now and it will just be 

political finger pointing. 

So Mr. Chairman, I do hope that the aftermath of this hearing 

is as positive as the lead-up to it and that we do work together, 

and if there is a solution that is acceptable to the biofuels community and to the farm community and to the food-producing community and to the consumers, all the various environmental groups 

that we can come together and find that balance point. 

With that, Mr. Chairman, I yield back. 

Mr. BOUCHER. I thank the gentleman and assure him that we 

will welcome his thoughtful contributions to our deliberations. 

The gentleman from Louisiana, Mr. Melancon, is recognized for 

3 minutes. 

Mr. MELANCON. Thank you, Mr. Chairman. I will waive my opening statement. 

Mr. BOUCHER. The gentleman waives his opening. 

The gentleman from Texas, Mr. Green, has left. The gentlelady 

from Tennessee, Ms. Blackburn, is recognized for 3 minutes. 

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TENNESSEE 

Ms. BLACKBURN. Thank you, Mr. Chairman. I join all of our colleagues in thanking you for the hearing and looking at the links 

between the RFS and food prices. 

We all know, and as you have heard this morning, that biofuels 

can and should play a part in our renewable energy development 

and our ag community wants to play a part in this as we look toward energy independence and how we best achieve energy independence, and we have all heard a lot about the unintended consequences that have come from crops that are used for food being 

used as a part of this chain. We have seen, and Mr. Burgess alluded to this, the part of the debate that we look at areas of the 

world like China and India and the increase in global income and 

then therefore the demand that is there for processed foods and for 

meats and the impact that this has on the global food market. And 

I think that as we look at this, and I am glad that we are reviewing the issue today because we do have to go in and look at what 

has happened with corn production, with prices, with the existing 

reserves and then the effect that this has had on those crops, on 

the marketplace and then on corn production, wheat production, 

and soybeans, which come from my district in rural west Tennessee. And we also are hearing from our constituents about the 

cost of meat, grocery prices, what is happening, and as they are 

rolling that cart down the aisle at the grocery store and they are 

seeing this played out across the board, they are indeed angry, they 

are discontented with some of the steps that we have taken, and 

they are realizing these unintended consequences. I am glad that 

they are ahead of Congress on this issue and that they do want to 

15 

see us take some action. Also, we are hearing from many of our 

constituents about some of the speculative activity in the futures 

market and the way this, a lack of risk management that has been 

there and the way this is having an impact. We all know that high 

energy prices are a key factor behind what is happening with food 

and food prices. We know, as has been said this morning, there are 

steps that can be taken to mitigate this. We are looking forward 

to seeing how we best move forward. 

I thank you, Mr. Chairman, and I yield the balance of my time. 

Mr. BOUCHER. Thank you very much, Ms. Blackburn. 

The gentleman from Massachusetts, Mr. Markey, is recognized 

for 3 minutes. 

OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH 

OF MASSACHUSETTS 

Mr. MARKEY. Thank you, Mr. Chairman, very much. 

Mr. Chairman, the energy bill which the Democratic Congress 

passed and was signed by President Bush is already working. A 

broad spectrum of analysts, including those working at McKinsey, 

Consumer Federation of America, and Iowa State all find that ethanol is helping to lower the price of gasoline. While $3.60-a-gallon 

gasoline is bad, it could be worse. By driving the development of 

new fuel possibilities, the energy bill is ensuring that the next generation of biofuels will also expand the opportunity for all regions 

of the country to produce the fuels that meet their needs the best. 

Massachusetts once played a critical role in the U.S. energy supply back when Melville was writing by whale-oil lamps about Captain Ahab’s pursuit of Moby Dick. With the commercialization of 

technology now being developed in the State, Massachusetts could 

once again begin to meet its own fuel needs and help other parts 

of the country to do the same. But we must be good captains of the 

biofuels ship and be aware of the challenges facing their development and the wider impacts they could have. Today we will explore 

a crucial one. Along with other factors including increasing global 

demand, rising energy costs, greater speculation in the commodities market, and bad weather, corn ethanol production is also contributing to an increase in corn prices. 

With the impact on food prices in mind, the renewable fuels 

standard was designed to drive development of biofuels from feedstocks that are also not food stocks. Some have argued that since 

Congress can only control the renewable fuels standard, we should 

reduce the mandate to control food costs. But it is unclear whether 

that would actually reduce corn prices and instead could impede 

the critical development of biofuels from non-food sources. 

Instead, we should move in the direction that the Farm Bill appears to be going: reducing the subsidies for corn ethanol, which allows ethanol producers to buy corn at a higher price and increase 

the financial incentives for using cellulosic ethanol and other advanced biofuels. Likewise, Massachusetts has eliminated the State 

gasoline excise tax on cellulosic biofuels to encourage their use, and 

we should consider, as our witness from the NRDC advocates, developing a single performance-based financial incentive for renewable fuels that will drive development of biofuels that are best for 

16 

the planet and for the pocketbook. This is the direction we should 

be heading. This, combined with the 35-mile-per-galloln standard 

that we passed after a 35-year lag in December of 2007, is the way 

we should go in order to break our dependence upon imported oil 

and at the same time protecting the planet. The standard for fuel 

economy will back out the equivalent of all the oil we import from 

the Persian Gulf. We need a smart strategy for reducing the subsidies for corn while increasing dramatically the subsidies for cellulosic fuel. If we do that, we will be on the path to backing out oil 

and protecting the planet. 

I thank you, Mr. Chairman. 

Mr. BOUCHER. Thank you very much, Mr. Markey. 

The gentleman from Michigan, Mr. Rogers, is recognized for 3 

minutes. 

OPENING STATEMENT OF HON. MIKE ROGERS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN 

Mr. ROGERS. Thank you, Mr. Chairman. 

I can’t think of a more important topic that we have today than 

this. We are funding our enemy every day we stop at the pump and 

fill up with $120-a-barrel oil, and I think what we see today is part 

of our problem. This is a national security issue, it is an environmental security issue and it is an economic security issue, and we 

tend to hear mandate in a very singular focus by trying to pick the 

winner and loser of what is next. The example of the cell phones 

was interesting. I have one exception, that the marketplace got us 

to the BlackBerry. The marketplace invested research and development and took us to the next generation. It wasn’t a government 

mandate that got us there. I think we have to be about cellulosic 

research but we should be on the R&D side and pushing it as fast 

and as furious as we can. 

I think we have got to go and say we are going to make a commitment to nuclear power. If you really want to impact prices in 

the future and have an environmental impact as well, we have to 

have a commitment to new nuclear power. We have to have substantial investments in new green auto technology and intelligent 

transportation systems so we can drive cars that use less oil and 

ride on smart roads that manage congestion with us. We have to 

invest in things like lithium ion batteries, the research and development side. We are so close, we are so close, but because we are 

so mandating and regulating here, we forgot that there are these 

other technologies out there that should be invested in all at the 

same time. We also need supplies of oil and natural gas from 

ANWR and the Outer Continental shelf. We can’t fool ourselves to 

think that it is just the price of corn that is causing this problem 

for food. Diesel trucks are paying $4.50 a gallon for diesel. That is 

raising the costs on everything that we buy and consume. 

A new commitment to helping working Americans trade in their 

older automobiles for new fuel-efficient ones—3 percent of the cars 

out there are causing a tremendous amount of pollution out of the 

tailpipe. If we come up with a program to get them off the road, 

get them into new, more efficient cars, everybody wins, including 

automobile workers all across the country. An extension of solar 

and wind production credits without new taxes. The use of fuels 

17 

like coal-to-liquids that are nearly ready for use in air travel but 

are being blocked by Congress. 

We have to have a holistic view on this, and I think we are coming at it exactly the wrong way. We are going to mandate winners 

and losers. We are going to manipulate the market price but our 

heavy regulation and mandates and what you can and can’t use 

versus us stepping up and saying we are going to invest in the 

things that are going to make a difference for our national security, 

our environmental security, and our economic security. If we invest 

in the private industry and let that intellectual capital unleash on 

these problems from every perspective, from cellulosic to lithium 

ion batteries, to nuclear power, to new generation of solar and 

wind, we are going to win the fight. But if we don’t do that, we 

will take a backseat to the rest of the world when it comes from 

leading the way on what I think can be new technology that gets 

us off of foreign oil, burns cleaner, and still protects the economy 

for working Americans. 

I appreciate the hearing, Mr. Chairman, and I hope we finally 

take a step back and say we need to do all things all at the same 

time to make a difference for the future of the country, and I yield 

back my time. 

Mr. BOUCHER. Thank you very much, Mr. Rogers. 

The gentlelady from California, Ms. Bono Mack, is recognized for 

3 minutes. She is not here. 

The gentleman from Texas, Mr. Hall, is recognized for 3 minutes. 

OPENING STATEMENT OF HON. RALPH M. HALL, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS 

Mr. HALL. Mr. Chairman, I thank you. 

Ethanol is getting a lot of attention these days as the price of 

food increases and the renewable fuels standards mandate that is 

included in the Energy Independence and Security Act is getting 

the blame. I am not opposed to biofuels but I want us to be smart 

about them and I want us to realize that biofuels can’t replace the 

gasoline and diesel that we use in our cars and planes, and I have 

mixed emotions about it. I guess I am a little like that candidate 

that didn’t want to tell exactly where he stood on alcohol. He said 

that if you are talking about alcohol that smoothes men’s tongues 

and intensifies conversations and alcohol that is in long-stemmed 

glasses that is used to toast success wherever it is found, I am certainly for it, and if you are talking about that alcohol that breaks 

up families and causes wrecks on the highway, I am against it, and 

I guess that is kind of the way I feel about corn and soybeans. 

According to environmental economic and energy costs and benefits of biodiesel and ethanol biofuels and the proceedings in the National Academy of Science’s July 12, 2006, said, ‘‘If all the current 

output of U.S. corn and soybeans were put into biofuels, it would 

replace only 12 percent of our gasoline demand and 6 percent of 

our diesel demands.’’ I think biofuels ought to be part of the fuel 

mix but not to the detriment of the food supply for our country and 

the rest of the world. 

I look forward to the witnesses’ testimony and it is folks that are 

going to come sit at those tables there that know more about it obviously than Members of Congress do. That is why we summon 

18 

them up here and listen to them and type up and put into condensed form what their testimony is and extract and glean from 

that what is what Jeremy Bentham called the greatest good for the 

greatest number, and that is the way we are supposed to legislate. 

I look forward to the witnesses’ testimony and the ongoing discussion about the important issues. 

Mr. Chairman, I thank you for having this session and I thank 

you for yielding me this time. I yield back. 

Mr. BOUCHER. Thank you very much, Mr. Hall. 

The gentleman from Arizona, Mr. Shadegg, is recognized for 3 

minutes. 

OPENING STATEMENT OF HON. JOHN B. SHADEGG, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ARIZONA 

Mr. SHADEGG. Thank you, Mr. Chairman, and I want to thank 

you for holding this hearing and welcome our witnesses. 

A little over 4 weeks ago, Time magazine published this edition 

which says on the cover ‘‘the clean energy myth,’’ and then inside, 

and I thought it was interesting, introducing the very same article 

that says ‘‘the clean energy scam.’’ I am not convinced either of 

those are fair criticisms but certainly we need to be discussing 

these policies. 

In the latest energy bill, Congress drastically expanded the renewable fuels standard. In the latest iteration of the Farm Bill, we 

may see an extension of what I would view as excessive tax credits 

for biofuels and an extension of the import tariff on ethanol. These 

policies are clearly having at least some unintended consequences 

and the American people are not aware of them and I think they 

would be justifiably upset if they were. For example, there is a tax 

credit on biodiesel enacted by this Congress that is forcing Americans to pay millions of dollars, last year some $300 million, to subsidize diesel fuel prices overseas under a phenomenon known as 

flash and dash, and that is a procedure whereby biodiesel produced 

outside the United States is shipped to the United States. One percent of petroleum diesel is added to it, so you add 1 gallon to 100 

gallons, and that fuel is then shipped back out of the United States 

with a $1-per-gallon subsidy paid by American taxpayers. So Americans are paying $1-a-gallon subsidy. It is interesting, you look at 

America exported millions of gallons of biodiesel last year more 

than we produced. How did that happen? Because under this policy, it pays to ship biodiesel to the United States, add 1 percent 

real diesel and ship it back out and get that $1-a-gallon subsidy. 

Clearly that is a policy that needs to be repealed. 

As we will hear later today, the current policies are causing an 

increase in food prices of as much as 35 percent. These hit some 

of the poorest populations in the world. Initially in my part of the 

country in Arizona, we saw a spike in tortilla prices in Mexico. Haitians are currently experiencing food prices which are 40 percent 

higher than 1 year ago. Egg prices, milk prices, bread prices have 

all gone up. I think we can avoid these mistakes by letting the 

marketplace and not the government pick winners and losers. One 

of those I think would be a technology alternative fuels mandate 

which would allow us to take advantage of natural gas and displace 

a great deal of the petroleum we are currently burning in autoVerDate Nov 24 2008 14:10 Jan 08, 2010 Jkt 037690 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 C:\DOCUMENTS AND SETTINGS\CWELLS1\HEARINGS\110-113 SCOM1 PsN: JIMC
19 

mobiles. That would also achieve a reduction in greenhouse gases 

of over 1.5 million metric tons for every billion gallons of gas not 

burned. 

I am also a cosponsor of Representative Herseth Sandlin’s bill. 

In Arizona, we have a great deal of biomass which could be used 

but unfortunately in the definition of renewable in the most recent 

energy bill, much of that biomass cannot be used. We have a huge 

resource for that fuel in Arizona and it makes sense. I believe this 

is an important hearing to look at these policies when Americans 

are suffering by what they are paying at the pump. 

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

Mr. BOUCHER. Thank you very much, Mr. Shadegg. 

The gentleman from Nebraska, Mr. Terry, has joined us here. He 

is not a member of the subcommittee. However, as a member of the 

full committee, we welcome him and would be happy to entertain 

any opening statement that he cares to make. 

OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEBRASKA 

Mr. TERRY. I do appreciate that opportunity. Under the rules, 

you don’t have to do that but I am pleased that you did. 

I appreciate that you had this hearing today because I think 

there is a lot of misinformation or exaggerations about the impact 

of biofuels upon the world as we know it today. I hope the goal 

here today, as I expect it is, is that we have our esteemed blue ribbon panel of witnesses here to put the facts before us so that the 

American public can make and we can make informed decisions on 

whether or not to alter a renewable fuels mandate. 

My perception when I have read studies from universities and 

the Federal government is that there is definitely an impact of 

using corn to create ethanol, but that it is more equivalent to the 

acorn falling and hitting us on the head than the sky is falling that 

I am reading. Or the editorial cartoons that in drought-ridden 

areas were somehow caused by the few percent more of corn used 

last year for ethanol, is somehow causing the famine and drought 

in Asia and other parts of the country. That is the type of hysteria 

that I think we need to kind of remove from our discussions about 

the biofuels mandate. 

My vision, and I think the vision shared by our first panelist, I 

think she has got the right focus here, is that biofuels are going 

to have to be part of our energy portfolio. As we look to become less 

dependent on foreign countries to fuel our economy, to make sure 

that we can grow our crops, to get to work, to generate electricity, 

that we have to have a more varied, diverse portfolio and that is 

going to include biofuels, and then within that it is going to be varied. I can envision that you use one type of biomass in the Southeast and a different one in the Midwest and another one in the 

Southwest and another one in the Northwest and maybe a different 

one in the Northeast. I think when we can really put our research 

into what would be the ideal sustainable biomass in our respective 

regions and then set up pilot plants so we go from the Shimkus 

1980s cell phone to the BlackBerry because that is what we have 

to do is get from generation one to generation two, three, four 

where the process will be efficient and affordable. 

20 

So hopefully we can keep on the track because it is necessary 

that we do, and Mr. Chairman, and I thank you for allowing me 

time to speak. 

Mr. BOUCHER. Thank you, Mr. Terry. 

We now welcome our first witness of the morning and would ask 

that she come to the witness table. Stephanie Herseth Sandlin is 

the Representative of the State of South Dakota. She is also the 

chief sponsor of H.R. 5236, which has been referenced by many 

members of the panel in their opening statements. They are serving as cosponsors of her legislation. The legislation she has introduced would qualify woody biomass taken from Federal lands as a 

feedstock that could qualify for the mandate for renewable fuels 

contained in our 2007 law. 

So Ms. Herseth Sandlin, we are delighted to have you with us 

this morning. Your prepared written statement will be made a part 

of the record, and we welcome your oral summary. 

STATEMENT OF HON. STEPHANIE HERSETH SANDLIN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF SOUTH 

DAKOTA 

Ms. HERSETH SANDLIN. Chairman Boucher, Ranking Member 

Upton, and members of the subcommittee, thank you for the opportunity to discuss the new renewable fuels standard enacted as part 

of the Energy Independence and Security Act of 2007. 

With the increase in the RFS included in the energy bill, we are 

moving aggressively to take advantage of the contribution agricultural producers across the Nation can make to our national security, our energy economy, and our environment. Through an increase in biofuels production, we can reduce our dependence on foreign oil, revitalize rural economies, and decrease our overall carbon 

emissions at the same time. 

Because we are in the beginning stages of developing biofuels as 

a reliable domestic source of energy, it is essential for Congress to 

sustain its support for ethanol production as a way of fostering the 

development of advanced biofuels. We expect these advanced 

biofuels to utilize a diversified set of cellulosic feedstocks from corncobs to prairie switchgrass to wood waste. 

While inclusion of a forward-looking RFS in the energy bill was 

great news for many renewable energy producers across the Nation, late in the process an unfortunate provision was added that 

prohibits virtually all woody biomass from national forests including the Black Hills National Forest in South Dakota from being 

counted toward the expanded renewable fuels standard. The definition also excludes all biofuels made from biomass from private 

sources unless it comes from those trees that are planted in a plantation and actively managed, which could potentially exclude most 

woody biomass on private property. 

I think this is a misguided policy that squanders what could be 

an important source of renewable homegrown energy. It is a wrongheaded disincentive to use an available cellulosic feedstock. It simply doesn’t make sense. 

That is why I have introduced a bipartisan bill, H.R. 5236, the 

Renewable Biomass Facilitation Act, which revises the definition of 

renewable biomass to allow federally sourced biomass and that 

21 

would include trees, wood, brush, thinnings, chips, and slash that 

is removed as a result of approved preventive treatments to count 

toward the renewable fuels mandate, provided it is used for the 

production of biofuels. Approved preventive treatments include reducing hazardous fuels, minimizing or containing disease or insect 

infestation, and restoring ecosystem health. 

H.R. 5236 does not alter Federal forest management policy. In 

fact, the bill, if enacted, could help foster responsible public 

forestland management by supporting efforts to reduce the incidence of destructive wildfires. The altered definition simply means 

that these forest byproducts which would otherwise not be used or 

perhaps, in the case of slash piles, simply be burned, thereby releasing more carbon in the air or allowed to rot, releasing methane 

into the air, are instead able to be counted toward the renewable 

fuels standard if used to produce biofuels. 

The bill would also allow virtually all private land biomass that 

is used as a feedstock for biofuels to count toward the mandate. 

The bill language is identical to the language included in the 

Senate version of the Farm Bill, which passed that chamber by a 

vote of 79 to 14. 

I am proud to say that the 25 x ’25 Coalition and the Society of 

American Foresters have written to Chairman Dingell and Ranking 

Member Barton expressing their concern with the energy bill’s definition and urging the committee’s consideration of H.R. 5236 as a 

remedy, and Mr. Chairman, I would ask unanimous consent to include those letters into today’s hearing record. 

Mr. BOUCHER. Without objection. 

[The information appears at the conclusion of the hearing.] 

Ms. HERSETH SANDLIN. Earlier this year I got an exciting firsthand view of the present and future of woody biomass feedstocks 

when I visited my constituent KL Process Design Group’s pioneering wood waste ethanol production facility in Upton, Wyoming, 

not far from KL’s headquarters in Rapid City, South Dakota. KL, 

also testifying today, uses woody biomass, some of which has been 

removed from federally owned forestland, to produce cellulosic ethanol, and I have discussed with KL its concerns with the renewable 

biomass definition. 

Importantly, I heard the very same concerns when I hosted a 

roundtable discussion in Rapid City, South Dakota, with a group 

including forestry product industry leaders and representatives 

from the Black Hills National Forest. I listened carefully to the 

participants because they rely and depend on the forest for their 

livelihood. Many of them were puzzled why our Nation, when it is 

supporting the development of alternative energy, would purposely 

exclude a feedstock that is a byproduct of existing forestry practices. They pointed out that leaving slash piles to rot or burning 

them leads to negative environmental effects that far outweigh any 

benefit gained when waste returns to soil. They would like to participate in the renewable energy movement the energy bill fosters 

and they have no interest in turning the Black Hills into a socalled fuel farm. It is my firm opinion that the forest planning 

process followed by the U.S. Forest Service will appropriately protect against such a development. 

22 

In conclusion, by amending the definition of renewable biomass 

in keeping with H.R. 5236, we can put sound policy support in 

place for the development of cellulosic ethanol so crucial to meeting 

the new RFS. I commend to the Committee and all observers the 

testimony and experience of KL Design Products, which speaks to 

the potential that exists here. If we fail to realize this tremendous 

potential for advanced biofuels, we could fail once again to take 

every responsible measure to wean ourselves from dependence on 

foreign oil. 

Thank you, Mr. Chairman. 

[The prepared statement of Ms. Sandlin follows:] 

STATEMENT OF HON. STEPHANIE HERSETH SANDLIN

Chairman Boucher, Ranking Member Upton, and Members of the Committee, 

thank you for the opportunity to discuss the new Renewable Fuel Standard (RFS) 

enacted as part of the Energy Independence and Security Act of 2007. 

With the increase in the RFS included in the Energy Bill, we are moving aggressively to take advantage of the contribution agricultural producers across the nation 

can make to our national security, our energy economy and our environment. 

Through an increase in biofuels production, we can reduce our dependence on foreign oil, revitalize rural economies, and decrease our overall carbon emissions at the 

same time. 

Because we are in the beginning stages of developing biofuels as a reliable domestic source of energy, it is essential for Congress to sustain its support for ethanol 

production as a way of fostering the development of advanced biofuels. We expect 

these advanced biofuels to utilize a diversified set of cellulosic feedstocks, from corn 

cobs to prairie switchgrass to wood-waste. 

While inclusion of a forward-looking RFS in the Energy Bill was great news for 

many renewable energy producers across the nation, late in the process an unfortunate provision was added that prohibits virtually all woody biomass from national 

forests, including the Black Hills National Forest in South Dakota, from being 

counted towards the expanded RFS. 

The definition also excludes all biofuels made from biomass from private sources 

unless it comes from those trees that are ‘‘planted’’ in a ‘‘plantation’’ and ‘‘actively 

managed,’’ which could potentially exclude most woody biomass on private property. 

I think this is a misguided policy that squanders what could be an important 

source of renewable, homegrown energy. It is a wrong-headed disincentive to use an 

available cellulosic feedstock. It simply doesn’t make sense. 

That’s why I’ve introduced a bipartisan bill, H.R. 5236, the Renewable Biomass 

Facilitation Act, which revises the definition of ′′renewable biomass′′ to allow federally sourced biomass - and that would include trees, wood, brush, thinnings, chips, 

and slash—that is removed as a result of approved preventive treatments—to count 

toward the renewable fuels mandate, provided it’s used for the production of 

biofuels. Approved preventive treatments include reducing hazardous fuels; minimizing or containing disease or insect infestation; and restoring ecosystem health. 

H.R. 5236 does not alter federal forest management policy. In fact, the bill, if enacted, could help foster responsible public forestland management by supporting efforts to reduce the incidence of destructive wildfires. The altered definition simply 

means that these forest byproducts, which would otherwise not be used, or perhaps, 

in the case of slash piles, simply be burned—thereby releasing more carbon in the 

air—are instead able to be counted toward the Renewable Fuels Standard if used 

to produce biofuels. 

The bill would also allow virtually all private-land biomass that is used as a feedstock for biofuels to count toward the mandate. 

The bill language is identical to the language included in the Senate version of 

the Farm Bill, which passed that chamber by a vote of 79 to 14.I’m proud to say 

the 25 by ‘25 Coalition and the Society of American Foresters have written to Chairman Dingell and Ranking Member Barton, expressing their concern with the Energy Bill’s definition and urging the Committee’s consideration of H.R. 5236 as a 

remedy. 

Earlier this year, I got an exciting first-hand view of the present and future of 

woody biomass feedstocks when I visited my constituent KL Process Design Group’s 

pioneering wood-waste ethanol production facility in Upton, Wyoming, not far from 

KL’s headquarters in Rapid City, South Dakota. KL, also testifying today, uses 

23 

woody biomass that has been removed from federally-owned forest land and I have 

discussed with KL its concerns with the renewable biomass definition. 

Importantly, I heard the very same concerns when I hosted a roundtable discussion in Rapid City, South Dakota with a group including forestry product industry 

leaders and representatives from the Black Hills National Forest. 

I listened carefully to the participants because they depend upon the forest for 

their livelihood. Many of them were puzzled why our nation—when it’s supporting 

the development of alternative energy—would purposely exclude a feedstock that is 

a byproduct of existing forestry practices. 

They pointed out that leaving slash piles to rot—or burning them—leads to negative environmental effects that far outweigh any benefit gained when waste returns 

to soil. They would like to participate in the alternative energy movement the Energy Bill fosters, and said they had no interest in turning the Black Hills into a 

‘‘fuel farm.’’ 

By amending the definition of ‘‘renewable biomass’’ in keeping with H.R. 5236, we 

can put sound policy support in place for the development of cellulosic ethanol so 

crucial to meeting the new RFS. I commend to the committee and all observers the 

testimony and experience of KL Design Products, which speaks to the potential that 

exists here. If we fail to realize this tremendous potential for advanced biofuels, we 

could fail, once again, to take every responsible measure to wean ourselves from dependence on foreign oil. Thank you. 

Mr. BOUCHER. Thank you very much, Ms. Herseth Sandlin, and 

we look forward to Mr. Kramer’s testimony on our third panel this 

afternoon. 

I just have one question of you. Could you focus for just a moment on your definition of the woody biomass that would qualify 

for the renewable fuels standard? Is there any restriction on the 

kind of biomass that can be taken out of the national forest under 

your bill for that purpose? Would it be limited, for example, to biomass that is harvested out of the forest for other purposes? 

Ms. HERSETH SANDLIN. It is consistent—it would be consistent 

with the forest plan for that particular forest, so it puts no additional restrictions other than the types of practices for addressing 

the urban-wild land interface and the thinning projects that are 

conducted by the U.S. Forest Service, the slash piles that remain 

in light of those thinning projects. Again, anything that is an approved preventive treatment again for reducing hazardous fuels, for 

addressing insect infestations would be allowed to count toward the 

RFS if used for biofuels production. 

Mr. BOUCHER. Thank you very much. Well, I personally think 

you have made a compelling case for your measure, and I thank 

you for being here to do that this morning. 

The gentleman from Michigan, Mr. Upton. 

Mr. UPTON. Well, thank you. I think you have made a compelling 

case also and I thought I would tell you particularly, even before 

you said Upton, Wyoming. You can add my name as a cosponsor 

to your bill. I look forward to working with you and obviously keeping it bipartisan. Thank you for the nice job. 

I yield back. 

Ms. HERSETH SANDLIN. Thank you. 

Mr. BOUCHER. Thank you, Mr. Upton. 

Let me just ask if anyone does have questions they would like 

to propound to Ms. Herseth Sandlin. Mr. Hall, do you have a question? 

Mr. HALL. I would like to make a brief statement and welcome 

her as a Member of Congress and giving us the intelligent thrust 

of your bill. It sounds very good to me, and I am honored to have 

24 

you as almost a Texan in that you married one of my very best 

friends, a guy I admire very much, and you are welcome. 

Mr. BOUCHER. Thank you, Mr. Hall. 

Do other members have comments or questions for our witness? 

Well, Ms. Herseth Sandlin, with the committee’s thanks, you are 

excused, and we will try to treat your measure with tender care. 

We now welcome to the subcommittee our second panel, which 

consists of one witness, and that is Mr. Bob Meyers, the principal 

deputy assistant administrator with the Office of Air and Radiation 

for EPA. Mr. Meyers is also a former committee counsel for this 

committee, who provided very distinguished service during his 

years here, and Mr. Meyers, we welcome you. Without objection, 

your prepared written statement will be made a part of the record, 

and we would welcome your oral summary. 

STATEMENT OF ROBERT J. MEYERS, PRINCIPAL DEPUTY ASSISTANT ADMINISTRATOR, OFFICE FOR AIR AND RADIATION, ENVIRONMENTAL PROTECTION AGENCY 

Mr. MEYERS. Thank you, Mr. Chairman. I appreciate the opportunity to testify today regarding issues of implementation and opportunities attendant to the renewable fuels standard. 

As you know, renewable fuels are a key element of our Nation’s 

strategy for addressing the serious challenge of global climate 

change. In his 2007 State of the Union address, the President proposed to reduce gasoline consumption by 20 percent through increased use of renewable and alternative fuels and through the 

promulgation of new vehicle efficiency standards. Although Congress did not enact all aspects of the President’s Twenty in Ten 

plan, it did approve new renewable fuel and fuel economy standards as part of the Energy Independence and Security Act of 2007. 

As the chairman noted, when Congress approved the RFS program as part of the 2005 energy bill, the Environmental Protection 

Agency was charged with drafting regulations and implementing 

the new program. This responsibility was maintained in the 2007 

energy law. Under Administrator Johnson’s direction now, we are 

conducting a broad outreach effort to discuss programmatic issues 

with multiple stakeholders regarding the implementation of the 

2001 energy law. We have had numerous meetings, starting in January, less than a month after the enactment of EISA, and we have 

talked to individual refiners, refiner organizations, biofuel producers, feedstock providers, fuel distributors, downstream marketers, technical experts, and major environmental groups, and I 

would say active discussions and informational exchanges are also 

ongoing right now. EPA is also working very closely with our Federal partners, the Department of Energy, Department of Agriculture, and others, to go beyond the direct consultative roles that 

were contained in the legislation and to take advantage of external 

expertise and analytical capability. 

In this regard, we are certainly mindful of the present discussion 

and public debate on the matter of food versus fuel. Last week the 

chief economist for the Department of Agriculture provided testimony to the Joint Economic Committee concerning the national 

and global increase of food prices and his analysis of the various 

factors involved. I am not going to provide any further illumination 

25 

on his testimony but I would note that our economic analysis to accompany the RFS rule will include an extensive review of the effects of the mandate on commodity prices, food prices, exports, cattle feed, and other factors. 

In addition, I would note, as has been noted already in this hearing, that the Agency has received several requests related to our 

waiver authority including the specific request by the governor of 

Texas for EPA to waive 50 percent of the mandate for the production of ethanol derived from grain. In response, it is our intent to 

shortly issue a Federal Register notice on this matter and establish 

a docket to receive public comments. EPA is required under the 

Clean Air Act to approve or disapprove a State petition within 90 

days of receiving it. 

Overall, as the subcommittee well appreciates, EISA made significant changes in the RFS program and developing and implementing regulations for these provisions will require careful evaluation and considerable new analysis. I will just briefly go through 

parts of the bill, but first, as already mentioned, EISA increased 

the total renewable fuel volume approximately fivefold over the 

2005 energy bill while extending the statutory schedule by 10 

years. Second, EISA extended the RFS program to include both onroad and non-road gasoline and diesel fuel volumes. This change 

may affect new parties possibly including a number of small businesses. Third, EISA increased the number of renewable fuel categories and standards to a total of four including total renewable 

fuel and three new subcategories, each with its own required minimum volumes: advanced biofuels, biomass-based diesel and cellulosic fuels. Fourth, new provisions that are included in EISA require EPA to apply life cycle greenhouse gas performance standards to each category of renewable fuel. The agency in coordination 

with DOE and USDA has done a substantial amount of work on 

life cycle analysis over the past year. However, even with the advances that we have already made, additional new and improved 

analysis will be necessary. And fifth, EISA adds a number of other 

new provisions including changing the definition of renewable fuel 

feedstocks. Developing appropriate enforceable regulations on this 

provision is also going to require extensive dialog with our interagency colleagues as well as stakeholders. 

Finally, as required also by Congress, we will be assessing the 

impacts of EISA on vehicle emissions, air quality, greenhouse 

gases, water quality, land use and energy security. We believe 

these analyses will provide important information to the public and 

Congress on the effectiveness of the new legislation. 

I will stop there and be available for any questions. 

[The prepared statement of Mr. Meyers follows:] 

26 

27 

28 

29 

30 

31 

32 

33 

34 

35 

Mr. BOUCHER. Thank you very much, Mr. Meyers. You probably 

heard the testimony of our previous witness, Representative 

Herseth Sandlin, concerning her legislation which would qualify 

woody biomass taken from Federal lands for the renewable fuel 

standard, and I have just a couple of questions for you concerning 

that. Do you believe that EPA has the flexibility under current law 

to provide for the permissibility for the use of woody biomass coming from Federal lands under the renewable fuel standard? 

Mr. MEYERS. Mr. Chairman, that is an issue in front of us in 

terms of the implementation of the legislative language but the legislative language refers directly to non-Federal. 

Mr. BOUCHER. Well, so what is your conclusion from that? 

Mr. MEYERS. The face of the language would prove difficult to 

not obey. 

Mr. BOUCHER. So if I can paraphrase that, you haven’t made a 

final decision yet but you would say that it may pose difficulty for 

you to qualify woody biomass coming from Federal lands, given 

the—— 

Mr. MEYERS. It would certainly be challenging. 

Mr. BOUCHER. Given the statutory language. OK. You have a 

number of requests for waivers of the mandate for a certain use of 

renewable fuels in the Nation’s transportation fuel supply, one 

prominent one coming from the governor of Texas, I think, and the 

statute says that you have 90 days from the receipt of that request 

for a waiver to either grant or deny the waiver. You received that, 

I think, at some point in April, did you not? 

Mr. MEYERS. Just recently within about the last week. 

Mr. BOUCHER. So toward the end of April you would have received that? 

Mr. MEYERS. Yes. 

Mr. BOUCHER. Will you be able to act within that 90-day period? 

Will you make that deadline? 

Mr. MEYERS. Well, we are certainly making every attempt to 

comply with the dictate of the statute. As I mentioned, we will be 

going out very soon with a notice to offer up the public comment 

period. That is also required in the legislation. The legislation says 

we should approve or deny within 90 days, therefore, contemplation 

is to have a 30-day public comment period attendant to the request 

from the State of Texas. 

Mr. BOUCHER. And so you are moving rapidly to put that public 

comment into effect. Is that correct? 

Mr. MEYERS. Yes, we are. There are certain delays in terms of 

getting things published in the Federal Register and certainly we 

need to have the statutory public comment period to comply with 

the statute but we are moving very quickly. 

Mr. BOUCHER. OK. Well, we will watch with interest your deliberations on that question and would encourage you to meet that 

90-day deadline for making a decision. 

Under the 2007 law, there is a new life cycle greenhouse gas 

emissions standard that applies to biofuels, and specifically what 

it says is that for facilities for which the construction begins after 

the effective date of the law, meaning after December of last year, 

the life cycle greenhouse gas emissions for the fuels from that facility would have to be more beneficial than the life cycle greenhouse 

36 

gas emissions that come from the petroleum that that biofuel displaces. Now, obviously the way that is structured, that better-thanpetroleum carbon footprint would not apply to the corn-based ethanol refineries that either were in operation or under construction 

as of December of last year, and my question to you is, let us suppose that an owner of one of those refineries wanted to expand its 

size. Would that expansion be subject to the life cycle greenhouse 

gas emission requirements of the 2007 law? 

Mr. MEYERS. That is one of the questions, sir, that we are looking at in the road ahead in looking at the provisions of the statute 

and implementation. I think basically the question is, if a facility 

had a major modification, would that still count, and I think that 

is one of the issues we have not decided on. We have been talking 

to a lot of stakeholders and certainly would be part of our discussion on the proposed rule. 

Mr. BOUCHER. And so you have that issue under consideration. 

All right, Mr. Meyers. That concludes my questions. 

The gentleman from Michigan, Mr. Upton. 

Mr. UPTON. Thank you again, Mr. Chairman. 

I want to follow up on the chairman’s question as it related to 

biomass. I know that the President in 2007, January, wanted to include an expansion of the RFS to include alternative fuels such as 

coal-to-liquid, something that Mr. Shimkus and Mr. Boucher have 

authored and I have cosponsored, compressed natural gas. Would 

the Administration, do you think, be open now to an expansion of 

the RFS to include those two in addition perhaps to the woody biomass? It just seems to me that they would be a good thing, at least 

from my perspective, to move forward. 

Mr. MEYERS. Well, you are correct in terms of what the Administration’s bill included. It did include alternative fuels as otherwise 

defined in existing EPAct legislation. So that was the policy of the 

Administration. I would say as a general matter, the policy of the 

Administration with respect to specific new legislation is something 

we would decide on a case-by-case basis through the interagency 

process, so I wouldn’t be able to speculate but certainly it was part 

of the Administration’s previous position. 

Mr. UPTON. Would there be—as you study this issue including 

the woody biomass, it is something that you might be likely to 

come to a decision on within the next number of months? 

Mr. MEYERS. I am sure that the Administration would consider 

any legislation moving through Congress and be involved with the 

discussion with the committees of jurisdiction on this. 

Mr. UPTON. Now, EPA just reduced the ozone national ambient 

air quality standards. What are the ozone air quality impacts of 

large increases of ethanol and biodiesel consumption? Was that 

taken into consideration? 

Mr. MEYERS. Well, our last analysis of that occurred when we 

promulgated the 2005 regulations based on the 2005 statute. What 

we showed was a mixture of effects based on the 7.5 billion gallons 

and some limited air quality modeling that we did to judge those 

effects. We saw some pollutants like particulates go down. We did 

see some increases in nitrous oxides, which are a precursor to 

ozone. They were not large on a great scale but there were some 

increases in NOx from that modeling. 

37 

Mr. UPTON. So it is somewhat of a negative reaction as it related 

to ozone? 

Mr. MEYERS. We will be doing—we will be refining our analysis 

on the new bill, on the basis of the new bill analyzing that on a 

going forward basis so that is one of the things we are looking at. 

Again, some other pollutants, some air toxics go down as well as 

particulate matter, and other emissions like CO are also decreased. 

It depends. One thing to remember is that we have different fuels. 

We have ethanol and we also have biodiesel, which have different 

effects, and this bill also incentivizes directly biodiesel that the previous bill did not. 

Mr. UPTON. Now, has the EPA studied the requirements in the 

RFS in the context of the real-world fuel availability, particularly 

as it relates to what the situation is today and what is coming 

forth in the legislation that the President signed? 

Mr. MEYERS. We will be looking at things such as the energy security impact of the legislation on the United States, which does 

involve an assessment of the global oil environment. 

Mr. UPTON. Thank you, Mr. Chairman. 

Mr. BOUCHER. Thank you very much, Mr. Upton. 

The gentlelady from Wisconsin, Ms. Baldwin, is recognized for 5 

minutes. 

Ms. BALDWIN. Thank you for your testimony today. I wanted to 

start by inquiring a little bit more about the process that EPA will 

be engaging in as you consider the waivers. Specifically, it is my 

understanding that EPA is going to evaluate whether full implementation of the RFS would severely harm the economy or environment of the State or region of the United States in terms of your 

statutory directive under the Clean Air Act or whether there is an 

adequate domestic supply, and I am kind of interested how you 

think you are going to define severe economic harm, and I know 

I am asking you to anticipate the future and you will have a lot 

of assessments and analysis but what sort of factors will you be 

looking at? Will it be beyond the energy markets to the food price 

issues, et cetera? Please elaborate a little bit for me. 

Mr. MEYERS. Sure. I first would want to clarify that we would 

not be looking at full implementation of the RFS. Full implementation of the RFS generically would be in the year 2022. The waiver 

request we have right now is for essentially the current year and 

has been filed under the previous 2005 law since the new waiver 

authorities are not now effective under the law. So we would be 

looking at the more immediate effects, the effects cited in the governor’s letter to the EPA. 

As for the standard of severe economic or environmental harm, 

that is a new standard that was first placed into the Clean Air Act 

in 2005 as part of that legislation. This would be a case of first impression for the Agency. We do not have comparable standards 

within the Act for severe economic or environmental harm so as far 

as I know, we have never interpreted that statutory standard before. 

Ms. BALDWIN. Well, I guess I am looking ahead at how you think 

you will be approaching that case of first impression in terms of 

those definitions. 

38 

Mr. MEYERS. Well, that would be part—we will be soliciting comment, public comment on whether or not the information submitted 

to the Agency would constitute severe economic harm, which the 

basis of the letter in front of us was mostly economic. It was not— 

we did not receive information so far from the State of Texas regarding environmental issues directly. But we will have to essentially give full faith and credit to the statute as written and make 

a reasonable determination based on that language. Again, with 

cases of first impression, I am very hesitant to project how the 

Agency would interpret those terms. 

Ms. BALDWIN. Switching to a different topic, I would really like 

to hear your assessment of the ability of advanced biofuel technologies to meet the timing and production volumes of the RFS 

mandate, and as we move to third-generation technologies, I wonder what you see as the primary feedstocks for these technologies. 

Mr. MEYERS. Well, our work on this issue has been done by the 

Department of Energy so I am not as familiar with the research 

but I think a lot of different feedstocks are being used and looked 

at in terms of cellulosic development, including things you hear 

quite a bit about switchgrass and the aforementioned forest 

thinnings, different feedstocks would be readily available and essentially fit the profile for production where you need to move a lot 

of mass to the facility. Most corn-based ethanol facilities now get 

most of their feedstocks within about 30 miles or so from the facility so you need to have the feedstock available in the immediate 

vicinity and have transportation infrastructure to get it there. So 

I think our impression too is that obviously things the private marketplace is looking at right now is using the other parts of the corn, 

the husk and the stalk and other things, and that may be the first 

penetration for non-kernel-based ethanol. But we would be happy 

to provide more information for the record. We have the Office of 

Research and Development working on these issues and I would 

greatly like to provide information from that office also. 

Ms. BALDWIN. Great. I see I am almost out of time. You mentioned in answer to that question a concern about how far the feedstocks travel to the point of production. I have a real interest in— 

we had an amendment to the Energy Independence and Security 

Act relating to the adequacy of our transportation infrastructure to 

get the product to market after production, and I don’t think I have 

time to ask a question on that but that is something that we really 

have to be vigilant about. 

Mr. MEYERS. Clearly, Congresswoman, if I have the opportunity, 

we are looking at those issues. It is one thing to look at the production and capacity of the ethanol industry. It is quite another thing 

to look at the ability to blend it in all markets through the current 

transportation system and with the current economics of that. 

Mr. BOUCHER. Thank you very much, Ms. Baldwin. 

The gentleman from Texas, Mr. Barton, is recognized for 5 minutes. 

Mr. BARTON. Thank you. 

It is good to have you back, Mr. Meyers. Can a 9-billion-gallon 

mandate in current law for renewable fuels be met this year? 

Mr. MEYERS. Well, information from the Agency would indicate 

that there is sufficient capacity to produce more than the 9 billion. 

39 

The issue, I think I referenced in the last question was, is transportation and blending. We are monitoring the situation right now. 

We don’t have any information that would indicate that it will not 

be able to be met for this current year. 

Mr. BARTON. So you say it will be met? 

Mr. MEYERS. I can’t say definitively it will be met. I say we don’t 

have the information now in front of the Agency that would indicate—— 

Mr. BARTON. If it is not met, do you have sufficient authority 

under law to grant waivers to alleviate the situation? 

Mr. MEYERS. There are certainly a number of waivers. The 2005 

energy law which you were very instrumental in provided waivers 

and additionally the new law provides additional waiver authority. 

There are also waiver authorities outside of the Clean Air Act that 

are applicable. Section 1541 of the energy bill passed in 2005—— 

Mr. BARTON. So the answer is yes? 

Mr. MEYERS. Yes. 

Mr. BARTON. What is the definition that the EPA is using for 

greenhouse gas to implement this bill? 

Mr. MEYERS. The statute itself provides the definition of greenhouse gases as the six Kyoto gases plus the additional ones that 

the administrator finds would meet the—— 

Mr. BARTON. What are the six Kyoto gases? 

Mr. MEYERS. Well, broadly, carbon dioxide, methane, nitrous oxides, and then we have the fluorinated gases, perfluorocarbons—— 

Mr. BARTON. But water is not one of them, even though it is the 

most prevailing greenhouse gas? 

Mr. MEYERS. Water is not currently defined in the Kyoto Protocol 

or the statute. 

Mr. BARTON. So you don’t have to consider water vapor? 

Mr. MEYERS. No, we don’t have to. We have the discretion under 

law to include other gases. 

Mr. BARTON. But water vapor is the most prevailing greenhouse 

gas? 

Mr. MEYERS. Water vapor certainly has an effect on climate. 

That has been documented by the IPCC and our own analysis, yes. 

Mr. BARTON. How does the EPA intend to model requirements 

for life cycle greenhouse gas reductions? That is an artful term. 

Mr. MEYERS. We have been working on this for some time and 

most intensely in the last year. We have used a model developed 

initially by the Department of Energy, the GREET model. Essentially we look at direct inputs into production of the fuel, you know, 

through transportation system and the different processes involved 

in the production of the fuel and the infrastructure that is made. 

So it is a fairly complex model. It has been under development and 

revision for several years. 

Mr. BARTON. Will the EPA eventually create a mathematical 

model that is replicable? 

Mr. MEYERS. Well, I believe the GREET model is replicable now 

and I think it may be available publicly—I could check on that— 

to be used by others so the model itself is—— 

Mr. BARTON. But my point is, at some point in time to implement 

the Act, you have to have a way for ordinary people who are trying 

to conform to the Act, comply with it, to plug in production numVerDate Nov 24 2008 14:10 Jan 08, 2010 Jkt 037690 PO 00000 Frm 00045 Fmt 6633 Sfmt 6633 C:\DOCUMENTS AND SETTINGS\CWELLS1\HEARINGS\110-113 SCOM1 PsN: JIMC
40 

bers and output numbers and compare apples to apples, in this 

case, emissions to emissions. 

Mr. MEYERS. That is true, and I think transparency is a part of 

the process we should keep in mind as we go forward so our results 

are replicable. But the Act essentially contemplates that the Agency will do the calculations and establish them through the regulations. Once they are established, then the law then further says 

they should be stable until there is essentially new methodology 

available. So we need to follow the provisions—— 

Mr. BARTON. Well, let me ask you a hypothetical. Under your 

definition of a greenhouse gas, you included methane. Cows emit 

methane. 

Mr. MEYERS. Correct. 

Mr. BARTON. If rising corn prices result in fewer cows, that is a 

net reduction in methane. In your life cycle analysis then, would 

that be considered a net reduction in greenhouse gas emissions? 

Mr. MEYERS. Well—— 

Mr. BARTON. Would it have the perverse effect of higher prices 

resulting in fewer cattle produced, which would on paper have the 

benefit of less methane being—so it would be mathematically a net 

improvement in greenhouse gas emissions. 

Mr. MEYERS. There will be some challenges interpreting the statute. I tried to make those available. But essentially, Congressman, 

we are—— 

Mr. BARTON. I mean, it is not a frivolous question. 

Mr. MEYERS. No, it is not at all, and we are charged with looking 

at both direct and indirect emissions, so—— 

Mr. BARTON. My time is expired. I have got one final question. 

In the letter that Governor Perry sent to the EPA on April 25, he 

says that based on an expected average cost per bushel of corn in 

the Texas market in 2008 of $8 a bushel, that is going to have a 

negative impact to Texas cattle producers of almost $4 billion. Do 

you consider that to be severe economic harm? 

Mr. MEYERS. Mr. Barton, that would be tantamount to my deciding the issue before we receive public comment so I would respectfully demur on the question. We will certainly take all the information that Texas has provided us and analyze it and ask for comment. Again, the standard itself is entirely new in the Clean Air 

Act and we need to be respectful that we have interpreted—— 

Mr. BARTON. Thank you, Mr. Chairman. Thank you, Mr. Meyers. 

Mr. BOUCHER. Thank you very much, Mr. Barton. 

The gentleman from Texas, Mr. Gonzalez, is recognized for a 

total of 8 minutes. 

Mr. GONZALEZ. Thank you very much, Mr. Chairman. 

Welcome, Mr. Meyers. Quickly, I am going to reference what the 

ranking member was talking about. That is Governor Perry’s letter. When it first came out, it was an article in the San Antonio 

paper so I tried to figure out what exactly he is asking, what is the 

application. So the question comes down to, how realistic a request 

it is. On page 2 of his letter he says, ‘‘My request is for a waiver 

of 50 percent of the mandate for the production of ethanol derived 

from grain,’’ but this is not Texas specific. You can’t take this one 

State, segregate it from the others in reference to the nationwide 

mandate. I asked the question of my staff and I believe the answer 

41 

he got from someone, I am not sure if it was with the department 

or agency, was that no, you don’t segregate Texas. It is a 50 percent request across the board mandate applicable to the United 

States. Is that the way you interpret it? I am trying to figure out 

what he is asking. 

Mr. MEYERS. The face of the request asks for 50 percent reduction, I think, in grain produced part of the mandate. I am paraphrasing. Most of it is now satisfied by grain, although some of the 

biodiesel might not fit in that category. But the waiver mechanism 

we are talking about refers back to the applicable volume, which 

is the national standard. 

Mr. GONZALEZ. So what he is asking is basically maybe Texas 

specific as to the economic condition that it may wrought but the 

solution is a 50-State solution if applied. Would that be correct? 

Mr. MEYERS. That is something we will be also examining and 

looking for comment on. The Act is not entirely clear as to—although the effect can be at a sub-national level, the way it was 

written in 2005, the governors can request it based on State, region, or the United States. Congress retained that in the 2007 law 

while allowing further parties to also bring such a petition. But the 

effect can be more localized but I guess the remedy refers back to 

the national standard. 

Mr. GONZALEZ. That is going to be tough. Now, you heard Mr. 

Upton make reference to a piece of legislation that I have joined 

him in sponsoring, and that is doing something about the mandate 

situation that occurs or is occurring and specifically, let us say 

California that has a certain percentage limitation on the use of 

the ethanol blend. We are talking about now the refiners, the blend 

and such, not necessarily the transportation issue, which you have 

mentioned, which is huge, but nevertheless, you have waivers and 

such but if you—I am not asking you to endorse and promote the 

piece of legislation but really, it has to deal with the carry-over provision. You still will meet the targets at the end but when you extend the carry-overs, because the way they are written presently, 

it makes it almost impossible for the refiners to meet the mandate 

regarding the restrictions from certain States that are already in 

place, even though they may be increasing the amounts of the ethanol blend, it still will not be in the way of timeliness in meeting 

the mandates. Is a legislative remedy one of those avenues rather 

than just what might be available in the way of waiver? 

Mr. MEYERS. Well, as mentioned, there are other waivers other 

than the one that was specifically the subject of the governor for 

the State of Texas request. But referencing the availability of credits, the language from the 2005 Act, which limited credit life essentially to 12 months, remained in 2007 so we interpreted that in our 

2005 regulations and we are looking at it again but it is the same 

statutory language so it is not an infinite credit life under the statute, so there are limitations in the statute as to how long the credit 

can be used between years. 

Mr. GONZALEZ. And maybe I have to even look at the legislation 

more carefully because I am really thinking in terms of how specific we are when it comes over to the deficits only, not necessarily 

the credit scheme. What we are doing is, we are extending the time 

to accumulate obviously deficits but making them up toward the 

42 

tail end when we are able to when we have increased percentages 

that are allowed by States and they have figured out the consequences of increasing the blends themselves, availability and so 

on. But we look forward to some input from the Agency. 

Mr. MEYERS. We are aware of certain individual situations, I 

think. With reference to California, we have talked to a refiner in 

California and we will continue to talk to individual refiners and 

others who find themselves in difficult situations under the statute. 

Mr. GONZALEZ. I was looking at your testimony because I think 

it was interesting that you are going to be taking into consideration 

emissions, air quality, greenhouse gases, water quality, land use, 

the economy, energy security, and all of that, which is an ongoing 

process, I guess, and it is one that I think some members of this 

committee and other Members of Congress would agree that maybe 

we should have done a more careful analysis ourselves before we 

adopted the certain mandates. It seems to me that the President 

made mention of ethanol and the use of it in the State of the Union 

and somehow we just adopted it as gospel and we find ourselves 

where we are today without clearly looking at availability, consequences and such, but again, thank you for your service, and I 

yield back. 

Mr. BOUCHER. Thank you very much, Mr. Gonzalez. 

The gentleman from Illinois, Mr. Shimkus, for 5 minutes. 

Mr. SHIMKUS. Thank you, Mr. Chairman. I will try to be a little 

bit calmer in this round. 

Bob, welcome. I have got a couple questions, and you may not 

know this answer but it will lead to other questions. How many 

gallons of refined product do we import in this country each day? 

Do you know? 

Mr. MEYERS. How many gallons? I am not sure. Those numbers 

are usually in barrels. I think about—it is over half of our oil is 

imported at this stage. 

Mr. SHIMKUS. Well, yes. The numbers I have is about 3 million 

barrels of refined product, product that has been already refined 

overseas. Of that 3 million barrels of refined product at some refinery not on the continental United States, how much involvement 

does the U.S. EPA have on the air quality of those refineries? 

Mr. MEYERS. The refineries themselves, our jurisdiction obviously doesn’t extend to Europe and other countries from where the 

gasoline comes from but as to the product itself, it must meet U.S. 

specifications. 

Mr. SHIMKUS. So the refineries that are producing product for 

our market being shipped here at 3 million barrels per day, there 

is no environmental standard on how that refined product meets 

the end standard for us to receive that product? 

Mr. MEYERS. We currently don’t attempt to enforce stationary 

source standards against non-U.S. refineries. There are certain 

baselines applicable to foreign refineries with regard to their product but, again, it is a product focus. 

Mr. SHIMKUS. Now, right now there are 147 ethanol plants with 

a capacity of 8.5 billion gallons. Do those currently have to meet 

air quality standards? 

Mr. MEYERS. Yes. If they meet our major source definitions 

under the Act, they would need to meet PSD requirements. 

43 

Mr. SHIMKUS. So the ethanol refineries that we built because of 

the absence to build petroleum refineries here in this country are 

meeting a standard but the imported product in the refinery process is not meeting any standard, because you have no jurisdiction 

overseas, correct? 

Mr. MEYERS. Well, I would say that would be correct for traditional criteria air pollutants. There is an open issue going forward 

in the new statute as to the greenhouse gas standards and how—— 

Mr. SHIMKUS. Well, we are going to go there, so just hold on. 

There are 55 new plants under construction as well as 6 expansions underway. These expansions are already being built. These 

new ethanol refineries had to meet air quality standards and permitting for construction to move forward. Is that correct? 

Mr. MEYERS. Yes, they would need to meet applicable standards. 

Again, any particular standard or refinery may vary, depending on 

how it is constructed, what it is fired with. 

Mr. SHIMKUS. So hopefully between the next 9 to 12 months 

when we have 13.6 billion gallons of refined product of ethanol 

base to add to our fuel mix, they will be under refinery standards 

that we support. 

Let me move real quick. It is very curious that this debate is revolving around severe economic harm. You were here a couple 

weeks ago. We talked about carbon dioxide and that based upon 

the Massachusetts case, yours will be whatever the legal terminology is, habitat and all this other stuff, but it will not be involved 

with economic harm. 

Mr. MEYERS. That is correct. I think—— 

Mr. SHIMKUS. So we are going to debate economic harm for a 

product grown, produced, refined in this country and discourage 

the production of that but we are not going to be involved through 

your process of economic harm and carbon dioxide. 

Mr. MEYERS. The endangerment language that was the subject 

of Massachusetts v. EPA talked about endangerment to public 

health or welfare. 

Mr. SHIMKUS. And I think that is USA Today from May 1, China 

leaves United States in dust as the number one carbon dioxide offender. National Journal from 3 May on India NVES green no. 

That is this whole carbon debate. You know, they are not going to 

comply. We are going to have all this pain and no gain. I will end 

up with again the debate that the chairman supports is the alternative fuel standard. What the President announced in his State 

of the Union was an alternative fuel standard, not an RFS. RFS 

was part of the alternative fuel standard. If we had moved to an 

alternative fuel standard with some air regulatory guidelines, if we 

had built a coal-to-liquid refinery, would they have had to be permitted and blessed by you all as having met the environmental air 

standards? 

Mr. MEYERS. Any new facility built in the United States is subject to permitting on the construction if it reaches major source 

thresholds and would need an operational Title V permit. 

Mr. SHIMKUS. Thank you. 

Mr. Chairman, thank you for your indulgence. I yield back. 

Mr. BOUCHER. Thank you very much, Mr. Shimkus. 

44 

The gentleman from Arkansas, Mr. Ross, is recognized for 5 minutes. 

Mr. ROSS. Thank you, Mr. Chairman. 

Mr. Meyers, thank you for being here with us today. I want to 

discuss biodiesel. The biodiesel industry tells me that we already 

produce 500 million gallons of biodiesel, and that they know how 

to keep track of it under EPA’s current tracking system. With that 

said, can you explain the reason why the diesel fuel requirement 

of 500 million gallons of biomass-based diesel cannot be required 

in 2009 as directed by Congress? 

Mr. MEYERS. That is one of the issues we had had discussions 

with the industry on. What we are dealing with right now is a 

transition between the 2005 law and the new 2007 requirements. 

For 2008, the current year, there was a provision that allowed us 

to effectively change just the applicable volume, raising it to 9 billion gallons but retained the current regulatory program. We need 

to make a transition to a new regulatory program to implement the 

new law. We are moving on that but 2009 is a year which is very 

tight for us to meet to have all the regulations in place. 

Mr. ROSS. So it is not that they can’t produce it, it is that you 

all can’t do the paperwork by then? 

Mr. MEYERS. Well, we are trying to look at ways we can accommodate the interests of the industry and certainly we are paying 

attention to the statute and the regulatory schedule that Congress 

laid out for us. I would just reference, after 2005 law, we moved 

very aggressively. It still took us 18 months to put together both 

proposed and final regulations. So the law was passed last December and having it all in final form before January 1, 2009, is an 

extremely short time period. 

Mr. ROSS. So Congress has mandated 500 million gallons of biomass-based diesel fuel. The industry says they are already producing it and that they know how to keep track of it under your 

current EPA tracking system and yet we can pass a law and the 

folks in the industry can figure out how to make 500 million gallons of biomass-based diesel and yet you all can’t figure out how 

to track it and do the paperwork on it by the time prescribed by 

Congress? 

Mr. MEYERS. Well, it is not a matter of us just deciding. We will 

need to propose that as part of our regulations, take public comment, and then go final. It makes most sense to do as much as we 

can as fast as we can but we have to do it in a manner given the 

enormity of the mandate and given the importance of the economic 

issues. We have to do that in a very thoughtful manner. So one of 

the directives the administrator tried to implement was a massive—I don’t want to say massive—a very robust outreach program. 

We are talking to a lot of stakeholders including the National Biodiesel Board and others to try and look at these issues and try to 

see if there is flexibility to address them. I would say we are working in faith and we will continue to do that but it is a very tight 

time frame to get final regulations. 

Mr. ROSS. Well, I would hope that the EPA would respect the 

wishes and the legislation passed by Congress and be able to figure 

out how to do the paperwork and the rules and regs, given the fact 

that the industry has certainly adhered to the legislation and they 

45 

have got the ability to meet the new requirements. I would hate 

to see us see even higher diesel prices and see us continue to increase our dependence on foreign oil simply because a Federal 

agency couldn’t put in place a tracking system, the rules and regs, 

in the timeframe that was prescribed by Congress, and I just want 

to bring that to your attention and urge that you work with us so 

that we can—we have a lot of challenges with ethanol right now 

and there has been a lot said about that, but with biomass-based 

diesel we don’t have nearly the controversy we have over ethanol. 

It can reduce our dependence on foreign oil. It can reduce the price 

that my truckers and farmers pay at the pump, and I think it is 

very critical that the EPA be able to figure out how to do their part 

of this equation just as the folks in the biodiesel industry have figured out how to do theirs, and I appreciate your time. 

Mr. MEYERS. Thank you. 

Mr. BOUCHER. Thank you, Mr. Ross. 

The gentleman from Oklahoma, Mr. Sullivan, is recognized for 5 

minutes. 

Mr. SULLIVAN. Thank you, Mr. Chairman, Mr. Meyers. 

The Energy Independence and Security Act allows the EPA to 

make assessments on cellulosic production and adjust the mandate’s volumes downward if it makes a determination there won’t 

be enough production to meet the requirements of the bill. However, EPA has until 30 days before the year a required volume of 

cellulosic is supposed to start before making this determination. 

This doesn’t give refiners much lead time. Is the EPA considering 

making this production determination sooner to help ease the potential supply problems? 

Mr. MEYERS. We are willing to look at any permissible constructions. One thing that the statute provides, however, is that we rely 

on the estimates of EIA, the Energy Information Administration, in 

looking at the projections. They are required under law to make 

those projections at a certain time period so—and we need to look 

at those under the statute. So it is the timing that was contemplated by the statute, would be my response, but we will be 

happy to look at any flexibilities there might be. 

Mr. SULLIVAN. So you would be willing to look at flexibilities? 

Mr. MEYERS. I would be happy to look at the matter. Again, we 

are required on an annual basis to look at EIA’s projections. The 

EIA’s projections are essentially done in the fall for the next coming year so that is where the time frame came from. 

Mr. SULLIVAN. And also following up on Congressman Barton’s 

question, could biofuels increase greenhouse gas emissions on a life 

cycle basis including indirect factors and land-use change? 

Mr. MEYERS. Could any particular biofuels? 

Mr. SULLIVAN. Yes. 

Mr. MEYERS. I think it is theoretically possible. 

Mr. SULLIVAN. Thank you. 

Mr. BOUCHER. Thank you very much, Mr. Sullivan. 

We have two members on the Democratic side who are members 

of the full committee, not members of the subcommittee, who have 

joined us here and we will welcome questions from them. We also 

have a recorded vote pending on the Floor, and our goal will be to 

try to fit in both sets of questions prior to recessing for that vote. 

46 

First I will recognize the gentleman from Texas, Mr. Green, for 

5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman, and thank you for allowing me to waive on the subcommittee for this hearing because renewable fuels is important to where I come from in Houston, 

Texas, and fuel itself. 

Section 1505 of the Energy Policy Act of 2005 directed the EPA 

to perform a study and provide Congress with a report on public 

health, air quality and water resource impacts of fuel additive substitutes for MTBE, which today is almost exclusively made by ethanol, and has this report been completed? 

Mr. MEYERS. The 1505 report has not presently been completed. 

I think we are scheduled to do that fairly soon and have that report available. 

Mr. GREEN. Do you have any kind of idea when we might be able 

to see that? I think that would help us in making some of the decisions? 

Mr. MEYERS. I will be happy to follow up. I was under the impression we may have that as early as next month. 

Mr. GREEN. Do you think it is wise for Congress and the Administration to support a vast increase in renewable fuel standard before the basic public health, air quality, and water quality impact 

studies of ethanol are completed? 

Mr. MEYERS. If the question was whether it was wise for Congress to—— 

Mr. GREEN. To do something before we see the results of your report. 

Mr. MEYERS. Congressman, I worked here for 23 years so I respectfully would respect the judgment of Congress. 

Mr. GREEN. OK. Well, we appreciate that. At least as one Member, I would like to see what the report says before we increase the 

standards. Do you have any idea what the report might conclude? 

Mr. MEYERS. No, I do not. I would be happy to follow up for the 

record and verify our timing, but we certainly are mindful of the 

studies that were passed in 2005, as well as the new requirements 

in the 2007 law. 

Mr. GREEN. The RFS includes requirements of studies of various 

aspects of biofuels. These studies included assessing the RFS impacts on feed grains, livestock food, forest products and the energy 

industry and its environmental and resource conservation impacts. 

If the results of these studies were found negative and harmful impacts on the industries or to the environment, does the bill require 

the EPA administrator to adjust the mandate to prevent these unintended consequences? 

Mr. MEYERS. I do not believe the bill would require the administrator. The administrator on his own motion is able under the 2007 

statute to initiate a waiver process. 

Mr. GREEN. OK. Do you believe it would be beneficial for the 

EPA to have the authority to alter the mandated RFS levels in 

order to prevent any unintended consequences if the results of 

these or other studies are found negative impacts on our public 

health, environment or the economy? 

47 

Mr. MEYERS. I would demur on any legislative changes to the 

current statute since the Administration has not taken a position 

on any bill yet. 

Mr. GREEN. Mr. Chairman, thank you again for your time and 

for allowing me to waive on, and appreciate the courtesy. 

Mr. BOUCHER. Thank you very much, Mr. Green. 

The gentleman from Michigan, Mr. Stupak, is recognized for 5 

minutes. 

Mr. STUPAK. Thank you, Mr. Chairman, and thanks for holding 

this hearing. I have been pestering you to have this hearing because I am really concerned about the renewable biomass definition 

as the trees and residues from tree plantations on non-Federal 

lands cleared prior to enactment, so I have a number of questions 

along those lines, if I may. 

Regarding the renewable biomass definition in the bill, what are 

the roadblocks you see in enforcement? How are you going to enforce this to make sure that it does not come from Federal lands? 

Mr. MEYERS. That is something that we are currently examining 

and we are aware of situations where the mill or facility might not 

know exactly where one tree came from and another tree came 

from. But in situations where the statute would pose difficulties, 

we would have to exercise some judgment and rule of reason and 

interpret the statute in a way that we thought could be workable. 

Mr. STUPAK. But as on the 2005 energy conference report having 

timber and trees be part of our ethanol solution here, we never 

dreamed we would be sitting here saying, did this log come from 

a State forest or Federal land or private land? That is insane. How 

about, have you had any discussions how this would be enforced? 

Would the requirement of enforcement be on the production facilities, cellulosic production facility, or on the logger? The only one 

who is going to know where the wood came from is the logger, and 

when they are going down the road, we don’t know if they are 

State, Federal, where they are coming from. 

Mr. MEYERS. We have not reached a determination on those 

issues. Since we are at the proposal stage that will afford us the 

opportunity to take comment with regard to various compliance options. But we need to deal with the statute we have and interpret 

it the best we can. 

Mr. STUPAK. Well, I have a couple of entrepreneurs looking at my 

district right now to make significant improvements in developing 

ethanol from cellulosic from timber. Can you give us any time 

frame in which you might clarify this so we know how it is going 

to be enforced, or what is the enforcement mechanism, so I want 

to make sure they can move ahead with their investment, private 

investment that they are trying to make and in areas such as 

mine. 

Mr. MEYERS. We are moving ahead. Again, we have been talking 

to a lot of stakeholders and doing the type of analysis we need to 

do, and our intent is to have the proposed rule out and available 

obviously in the Federal Register this fall, early this fall is our projection right now. 

Mr. STUPAK. Well, let me ask you this. You mentioned in your 

testimony there will be important work with the U.S. Trade Representative so that you are meeting your international obligations. 

48 

Explain that in more detail, could you? What are the international 

concerns here? 

Mr. MEYERS. Well, in application of the language of the statute, 

we are dealing with both domestically produced and imported product so the standards are applicable to the product and its life cycle 

direct, indirect inputs. So we would need to look and consult with 

the USTR and others as to any regulations to implement that to 

make sure they were consistent with U.S. treaty requirements. 

Mr. STUPAK. OK. Well, in my district, we border Canada, and we 

move timber all the time back and forth for production of paper 

and other things. How would you enforce this provision here on 

trees or residues from tree plantations on non-Federal lands if the 

wood came from Canada? 

Mr. MEYERS. I have not thought of that question, sir, and I 

would be happy to provide it for the record. 

Mr. STUPAK. All right. I have no further questions, Mr. Chairman. I hope we can pass the Herseth bill and get this thing resolved. You can see all the nightmares this provision would provide, especially for those of us who have timber-based economy, 

and as we try to move cellulosic properties of timber to make it 

into ethanol, it is impossible to enforce the provisions set forth. 

So with that, I would yield back the balance of my time. I thank 

the gentleman for his time and for his forthright answers. 

Mr. BOUCHER. I thank the gentleman from Michigan, and Mr. 

Meyers, you are excused with the committee’s thanks. We appreciate your testimony today. 

We are going to recess pending the votes that are now on the 

Floor, probably for 45 minutes to 1 hour, and so those who would 

like to obtain lunch can do so, and we will reconvene as soon as 

the last vote is concluded. It is going to be at least 45 minutes before that happens. So we will welcome our third panel at that time 

and until then, the committee is in recess. 

[Recess.] 

Mr. BOUCHER. The subcommittee will come to order. 

We welcome now our third panel of witnesses. Mr. Nathanael 

Greene, the senior policy analyst for the National Resources Defense Council; Mr. Bob Dinneen, president of the Renewable Fuels 

Association; Mr. Charles Drevna, president of the National Petrochemical and Refiners Association; Mr. Randy Kramer, president of 

KL Process Design Group in South Dakota, which has developed a 

wood waste ethanol demonstration plant; Mr. Scott Faber, vice 

president of Federal affairs for the Grocery Manufacturers Association; Mr. Rick Tolman, chief executive officer of the National Corn 

Growers Association; Dr. Mark Stowers, vice president of research 

and development of POET; and Mr. Gawain Kripke, director of policy and research for Oxfam America. We welcome each of our witnesses. 

Without objection, your prepared written statements will be 

made a part of the record. We will welcome your oral presentations 

and ask that each witness please limit the presentation to approximately 5 minutes. 

Mr. Greene, we will be happy to begin with you. 

49 

STATEMENT OF NATHANAEL GREENE, SENIOR POLICY 

ANALYST, NATURAL RESOURCES DEFENSE COUNCIL 

Mr. GREENE. Thank you very much, Mr. Chairman, Ranking 

Member, members of the committee. Thank you for this chance to 

share my views on the opportunities and challenges of implementing the renewable fuels standard. My name is Nathanael 

Greene. I am a senior policy analyst with the Natural Resources 

Defense Council and one of our main experts on renewable energy 

technologies. 

At NRDC, we believe that biofuels from biomass produced following environmental safeguards processed efficiently and used in 

efficient vehicles can reduce our dependence on oil, reduce emissions of global warming pollution, contribute significantly to a vibrant farm economy, and avoid impacting food prices. However, 

pursued without adequate safeguards and standards, large-scale 

biofuel production carries grave risks to our lands, forests, water, 

wildlife, public health, and climate. 

The new renewable fuels standard was a major step forward for 

our biofuels policy, a step away from the ‘‘more is better’’ approach 

that has dominated our policies toward a ‘‘better is better’’ approach. The latest research confirms Congress’s foresight in 

crafting the renewable fuel standard to do the following four 

things: Firstly, to set minimum life cycle greenhouse gas emissions 

standards for all biofuels from new facilities; secondly and importantly, to define the life cycle greenhouse gas emissions to include 

all of the emissions from the full life cycle; from cultivation, production through to combustion and specifically to include both the direct and indirect emissions from land-use change. Accounting for 

emissions from land-use change is the most important step to producing low-carbon biofuels and taking biofuels out of the food price 

equation. It is through increasing the competition for arable land 

that biofuels face the greatest risk of increasing global warming 

pollution and driving up food prices. 

The third important part in the renewable fuel standard is encouraging the production of plentiful biofuel feedstocks, including 

woody biomass while ensuring that the renewable fuel standard 

mandate does not drive up the destruction of old-growth forests, 

native grasslands or imperiled ecosystems or the degradation of our 

Federal forests. These lands and wildlife safeguards are critical to 

getting biofuels right. Proposals like H.R. 5236 to remove the protections not just from our Federal lands but from all of our lands 

would turn biofuels done right into biofuels done wrong. 

The fourth and most important part of the renewable fuel standard is that it requires the vast majority of new biofuels required 

under the law to be advanced biofuels derived from renewable cellulosic biomass, providing a life cycle greenhouse gas emissions reduction of at least 60 percent compared to the fossil fuels they replace. 

The efficacy of the renewable fuel standard depends entirely on 

EPA’s implementation of these critical provisions. EPA has good 

momentum from the work they have been doing implementing the 

President’s Twenty in Ten Executive Order but aggressive and effective implementation will require resources and monitoring. Congress should make sure that EPA is fully funded to do this impleVerDate Nov 24 2008 14:10 Jan 08, 2010 Jkt 037690 PO 00000 Frm 00055 Fmt 6633 Sfmt 6633 C:\DOCUMENTS AND SETTINGS\CWELLS1\HEARINGS\110-113 SCOM1 PsN: JIMC
50 

mentation and monitor EPA’s progress to ensure that science rather than politics drives the resulting regulations. 

New crops and conversion technologies are developing rapidly 

and would make it easier to produce lots of biofuels with a smaller 

environmental footprint and without impacting food prices, but 

technologies are not guarantees of good environmental performance. Just because we can do it right doesn’t mean that we will. 

We need to maintain the environmental safeguards and performance standards in the renewable fuel standard and build on them, 

guiding the market so that innovation and competition will drive 

biofuels to provide the greatest benefits. 

Looking beyond the renewable fuel standard, Congress should 

adopt a low-carbon-fuel standard, as California and Massachusetts 

are planning to do. I believe this builds on a lot of ideas that were 

mentioned in the opening statements about really letting the market and innovation thrive. Congress should also pass comprehensive climate legislation built around a mandatory economy-wide 

carbon cap-and-credit trading system, and finally, Congress should 

reform the various existing biofuels tax credits and import tariffs 

to be a single technology-neutral performance-based credit to encourage water efficiency, reduced water pollution, better soil management and enhanced wildlife management. 

Thank you very much for your time. 

[The prepared statement of Mr. Greene follows:] 

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Mr. BOUCHER. Thank you very much, Mr. Greene. 

Mr. Dinneen. 

STATEMENT OF BOB DINNEEN, PRESIDENT, RENEWABLE 

FUELS ASSOCIATION 

Mr. DINNEEN. Thank you, Mr. Chairman, Ranking Member 

Upton, members of the committee. I really appreciate the fact that 

you are holding this hearing today, Mr. Chairman. It gives us an 

opportunity to address some of the overblown hyperbole about this 

issue. 

Mr. Chairman, the RFS made sense when you passed it in December and gasoline prices were $90 a barrel. It makes more sense 

today with gasoline prices or crude oil prices at $120 a barrel. 

When I said $120, I am sorry. Just while this hearing has been 

going on, the market has increased. We are now looking at $122- 

a-barrel oil. Ethanol is the only tool that we have today that can 

address the Nation’s most serious economic issue: our dependence 

on imported oil and the rising price of gasoline and crude oil. A 

Merrill Lynch analyst recently had concluded that ethanol today 

reduced gasoline prices 15 percent. They would be 15 percent higher were it not for ethanol. An Iowa State University study said that 

consumers were saving between 29 and 40 cents a gallon, depending on where you were in the country, as a result of the use of ethanol. 

Ethanol reduces gasoline costs for two reasons. One, it is cheaper 

than gasoline today. Today gasoline is trading at about $3.07. Ethanol is trading for about $2.50. It is also adding supply to a tight 

market. Ethanol today represents 7 percent of the U.S. motor fuel 

market. Ethanol is also the only tool that we have today to begin 

to address global warming. An analysis using the GREET model 

that DOE has developed demonstrated that the ethanol produced 

last year, some 6 billion gallons of high-quality motor fuel, reduced 

greenhouse gas emissions by somewhat 14 million tons. That is the 

equivalent of taking 2.5 million vehicles completely off the road. 

Ethanol today is also the best tool that we have to create economic opportunities across rural America. Indeed, ethanol is revitalizing small towns across this country. There are 147 ethanol 

plants in operation today that are producing some 8.5 billion gallons of ethanol and 14 million metric tons of distillers feed. Ethanol 

has become a critical component of both the fuel and the feed markets. That is something that some critics of the ethanol industry 

don’t recognize today, that we are just utilizing the starch, and 

what is left behind in ethanol product is a very high-value, highprotein feed product that is sold to dairy and cattle and poultry 

markets. We produce feed and fuel. 

The causes of food price inflation today, as has been discussed, 

are complicated. They include rising demand, changing dietary 

habits, weather, droughts in Australia, in Europe, and floods in Indonesia that have devastated the rice crops, speculation in the 

market that is driving all commodities, and most certainly, the cost 

of oil. You can’t produce $2.50 corn with $4.50 diesel fuel. Energy 

prices are driving agriculture commodity markets today. They are 

driving food markets today. 

81 

Take this in perspective. People want to say that this is about 

corn-derived ethanol, and indeed, ethanol has been growing. Corn 

farmers took the market signal a year ago. They planted more 

acres than they ever have, 93 million acres. They produced more 

corn than ever, 2.7 billion bushels more than the previous year. 

The increased demand for ethanol for that corn was just 600 million bushels. That means that there was 2.1 billion bushels grown 

last year over and above the increased demand for corn-derived 

ethanol. The increased ethanol demand or corn used for ethanol 

production last year was just 2 percent of the world corn supply. 

We are not driving that market. USDA suggests that their analysis 

concludes 3 percent of the total world food inflation is caused by 

ethanol, maybe. I think it might be overstated but I will accept 

that, but that means 97 percent is caused by other things. 

Now, Scott Faber is going to tell you that well, that is true, there 

are these other things, but the only thing that we can do anything 

about is ethanol. Wrong. The single most important factor driving 

food price inflation today is oil and you are doing something about 

that. The RFS is doing something about that. We are reducing 

crude oil costs. We are reducing gasoline costs. Governor Perry 

from Texas, as has been discussed, has submitted a waiver request 

from this program. Our analysis suggests that if he is successful 

and he waives half of the renewable fuels standard so that 4.5 billion gallons of ethanol has to come out of the marketplace, gasoline 

prices will increase $1.14 from $3.68 to $4.79. That is severe economic harm. 

You will not have food security in this country unless and until 

you have energy security in this country. Ethanol is not the only 

answer. It is not the silver bullet but it is an extraordinarily important first step. The first-generation ethanol plants that are in production today are setting the foundation for the second generation 

of ethanol production. You need to make sure that we continue the 

investment that we have made toward domestic renewable fuels. 

We cannot allow the manufacturer hysteria about corn biofuels to 

derail the important progress that we are making toward a more 

energy-secure nation. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Dinneen follows:] 

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Mr. BOUCHER. Thank you, Mr. Dinneen. 

Mr. Drevna, we will be happy to hear from you. 

STATEMENT OF CHARLES T. DREVNA, PRESIDENT, NATIONAL 

PETROCHEMICAL AND REFINERS ASSOCIATION 

Mr. DREVNA. Thank you, Chairman Boucher, Ranking Member 

Upton and members of the subcommittee. 

Twenty years ago this week, NPRA testified at a hearing of three 

House subcommittees and the hearings were entitled ‘‘The Role of 

Ethanol in the 1990s.’’ In that testimony, NPRA cautioned, and I 

quote, ‘‘Broad national mandates of ethanol use represent poor public policy. Such mandates will impose significant costs on consumers and on the Nation.’’ NPRA’s statement 20 years ago went 

on to warn of the potential of increased costs of both food and fuel 

under a national ethanol mandate. The testimony also raised concerns regarding distribution, pointing out that our Nation lacked 

the transportation infrastructure to move large volumes of ethanol. 

And finally, the statement referenced consumers’ concerns about 

the possible harmful effects of ethanol-blended fuels on their motor 

vehicles. 

Twenty years later, the concerns about ethanol mandates remain. Today we are faced with a massive biofuel mandate that in 

our opinion is unsustainable, untenable and unworkable for all the 

reasons pointed out 20 years ago and then some. 

Mr. Dinneen just mentioned that corn took the market signal. 

There was no market signal. It was a direct signal from Congress 

mandating how much ethanol was to be used. A free market would 

have done otherwise. Mr. Dinneen also mentioned the fact that ethanol is cheaper than gasoline. Well, it may be cheaper at the pump 

to put it in but the American taxpayer pays for it again every April 

15. That has to be taken into consideration too. 

These issues and concerns are described in detail in our written 

testimony so I won’t address all of them here, but the topic we are 

hearing most about today is the impact of biofuels on food prices. 

Not even 5 months after the enactment of the new biofuels mandate, the chickens are coming home to roost and we literally can’t 

afford to feed them. The price of corn, the source of 97 percent of 

ethanol in the United States, and also the main ingredient in 

chicken feed, has tripled over the past 2 years. The other primary 

ingredient in chicken feed, soybeans, has nearly doubled in cost 

just the past year. So in fact, we can’t afford eggs either. According 

to the U.S. Bureau of Labor Statistics, the price of eggs has gone 

up 35 percent since March 2007. 

Now, again, I will agree with Mr. Dinneen that all this cannot 

be attributed to biofuels but a Purdue University study released in 

September of 2007 found that of the estimated $22 billion in additional food costs in the United States in 2007, about two-thirds of 

the increase, or about $15 billion, is directly related to biofuels. Yet 

as a May 1st article in the Washington Post points out, the pain 

that American consumers are feeling due to high grocery prices 

‘‘pales when compared with the challenges faced by those in the developing world.’’ Studies by the Organization of Economic and Cooperation Development found out that ‘‘the rush to energy crops 

threatens to cause food shortages and damage to the biodiversity.’’ 

100 

World Bank President Robert Zoellick stated recently that biofuels 

is a significant contributor to rising fuel costs. The list goes on. 

Mr. Chairman, these are just a few of the things that have been 

said recently regarding biofuels and food prices, and while the relationship between the two is significant and not receiving the necessary scrutiny, we should also consider the negative effects on 

both water quality and quantity as well as the land-use issue including greenhouse gas emissions that scientists, including a Nobel 

laureate, have expressed concerns with. 

Now here in the United States, more and more members of this 

body from both sides of the aisle across the Nation are beginning 

to speak out against new biofuels mandates. The governors of the 

State of Texas, and also, not mentioned yet today, the State of Connecticut, have already requested waivers from the RFS, so this is 

not a southwestern oil-producing kind of concern. There are no refineries in Connecticut. 

Last December, despite warnings from scientists, economists, environmentalists, food producers, and others, Congress passed a new 

renewable fuels standard. We along with many others from a broad 

range of interests hope that Congress is now willing to heed those 

warnings and repeal a well-intentioned but clearly misguided policy. 

I want to take my remaining 15 seconds again to say, as the refining industry, we support the use of ethanol, we support the use 

of advanced biofuels, but what we have done since December with 

the mandate is so frontload, these requirements, and we are basing 

a lot on the advent of technology for cellulosic, which is fine, but 

there is a gap. There is a huge gap between what we can and what 

can’t be done in producing ethanol from any source, let alone cellulosic or advanced fuels. Now, at a hearing that Mr. Dinneen and 

I were at on the Senate side on February 7, he continually mentioned ‘‘we look forward to’’, ‘‘we hope to’’, ‘‘we have faith that we 

will get cellulosic.’’ Well, I guess this is some new faith-based initiative. Unfortunately, we in the refining industry have to comply 

with this or we face $32,000-a-day penalties. 

So we ask that Congress take a long, hard look at this and I appreciate it, and I am sorry for running over time, Mr. Chairman, 

but again, thanks for letting me state what we think the current 

situation is. 

[The prepared statement of Mr. Drevna follows:] 

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Mr. BOUCHER. Thank you very much, Mr. Drevna. 

Mr. Kramer. 

STATEMENT OF RANDY KRAMER, PRESIDENT, KL PROCESS 

DESIGN GROUP, LLC 

Mr. KRAMER. Mr. Chairman, ranking members, members of the 

committee, thank you for the opportunity to provide testimony on 

the implementation of the 2007 renewable fuels standard. I am 

Randy Kramer, president and cofounder of KL Process Design 

Group, a biofuels engineering and project development firm located 

in Rapid City, South Dakota. Our cofounder, Dave Litzen, is also 

here with me today. 

Since 2001, KL has collaborated with researchers at the South 

Dakota School of Mines and Technology to privately fund and develop a thermal-mechanical process to make ethanol from ponderosa pine, which is found in abundance in the Black Hills. The 

research resulted in what we believe to be the first wood waste ethanol demonstration plant capable of commercial operations. With 

the Black Hills National Forest supervisor, our research is dedicated to forest stewardship that includes finding better uses for 

gathered forest and mill waste that otherwise provides added fuel 

to forest fires. 

KL is uniquely qualified to discuss the implications and effects 

of cellulosic ethanol provisions legislated in the 2007 energy bill. 

Beyond our experience in corn- and cellulose-based ethanol plant 

designs, our engineers are veterans of oil exploration and refining 

and our project managers are veterans of combat operations in oilrich areas of the world. Conversely, here in the United States, KL’s 

technology has resulted in the construction of ethanol plants where 

farmers are paid market prices for their corn, which offset or eliminate farm subsidies. Our cellulosic technology also helps reduce 

particulate emissions resulting from controlled and uncontrolled 

fires in our national forest, costing the Federal government millions of dollars to manage. 

Corn-based ethanol is the only large-volume biofuels bridge to 

the 2022 cellulosic ethanol goal. We must protect this bridge as a 

strategic component to allow companies like ours to improve cellulose technology and we take exception to the misrepresentations 

being touted by the media, special interest groups and United Nations, who cling to the baseless notion that ethanol is somehow displacing agricultural resources and linking the displacement of corn 

from food to fuel. 

According to USDA statistics, in 2007 field corn used to produce 

ethanol increased by about 1 billion bushels but corn production 

also increased by 3 billion bushels. Specifically, between March 

2007 and March 2008, there was a 13 percent increase in stored, 

uncommitted surplus corn, both on and off the farm. Today in 

South Dakota, there is still corn on the ground not being used for 

ethanol or export. We need corn-based ethanol as a bridging strategy, it is not the primary cause for rising food prices or shortages, 

and will always be an integral part of our energy policy, even as 

cellulose and other technologies advance. Incentives for both cornand cellulose-based ethanol should be maintained just as incentives 

for oil discovery were put in place and maintained since 1925. 

125 

Last week President Bush stated that the United States has not 

built a refinery since 1976. KL takes a different approach. In the 

biofuels vernacular, there were in fact 84 new biorefineries built 

over the last 10 years that have effectively replaced the need for 

approximately eight new average-sized oil refineries. 

To meet the requirements of the RFS, we know there will be a 

need to continue improving efficiencies in grain and cellulose-based 

designs to move us quickly to what we believe we call the glucose 

economy where starch or cellulose provide the sugars used to 

produce chemicals in biofuels. To sustain the momentum of building additional biorefineries that meet the intent and aggressive 

mandates of the RFS, administrative rules must allow for all forms 

of biomass without regard to its source. 

As we plan to co-locate our second plant with a sawmill in the 

Black Hills, one specific clause of the 2007 energy bill inserted by 

special interests must be corrected. Specifically, credits intended 

for cellulosic ethanol produced from biomass harvested from our 

national forests through federal programs already in existence 

must be restored. The intent of this last-minute provision was to 

discourage the harvesting of material from the national forests for 

biofuels production. However, the drafters failed to understand that 

existing timber harvest and thinning programs already allow for 

the removal of material from the national forests. In the case of 

thinnings, any reasonable person would understand that processing 

this waste into a clean-burning fuel is less destructive to the environment than burning it in place. In the case of commercial timber 

harvested through this Federal programs, mill waste from these 

operations fit perfectly with our business model but the burden of 

segregating non-credit-qualifying bits of national forest mill waste 

from private or State timberland mill waste that do qualify is as 

impractical as it sounds. Our desire is not to clear-cut the forest 

to produce biofuels, but given existing harvest programs, credits 

from these operations are critical to the near-term success of cellulosic ethanol and the process improvements we make during this 

development period enable us to keep pace with the 2022 goals. 

This concludes my testimony. Thank you for the opportunity. 

[The prepared statement of Mr. Kramer follows:] 

STATEMENT OF RANDY KRAMER

Testimony Outline: 

Background: KL’s Cellulose-Based Ethanol Technology and Operating Plant 

Importance of All Forms of Bio-fuels Technology 

Redefining United States Motor Fuels Refining Capacity 

Defining the new ‘‘Glucose Economy’’ 

Correcting RFS Cellulosic Credit Language Regarding our National Forests 

Addressing other Bill Provisions: Mandated Studies on E85 Efficiency Improvements and Ethanol Pipeline Transport 

Mr. Chairman, Ranking Members, Members of the Committee, thank you for the 

opportunity to provide testimony on the implementation of the 2007 Renewable Fuel 

Standard. I am Randy Kramer, President and co-founder of KL Process Design 

Group (KL), a biofuels engineering and project development firm located in Rapid 

City, South Dakota. Our co-founder, Dave Litzen is also here with me today. Since 

2001, KL has collaborated with researchers at the South Dakota School of Mines 

and Technology to develop a thermal-mechanical process to make ethanol from ponderosa pine, which is found in abundance in the Black Hills. The research resulted 

in what we believe to be the first wood waste ethanol demonstration plant capable 

of commercial operations. With the Black Hills National Forest Supervisor our reVerDate Nov 24 2008 14:10 Jan 08, 2010 Jkt 037690 PO 00000 Frm 00131 Fmt 6633 Sfmt 6633 C:\DOCUMENTS AND SETTINGS\CWELLS1\HEARINGS\110-113 SCOM1 PsN: JIMC
126 

search is dedicated to forest stewardship that includes finding better uses for gathered forest and mill waste that otherwise provides added fuel to forest fires. 

KL is uniquely qualified to discuss the implications and effects of cellulosic ethanol provisions legislated in the 2007 Energy Bill. Beyond our experience in corn 

and cellulose-based ethanol plant designs, our engineers are veterans of oil exploration and refining and our project managers are veterans of combat operations in 

oil-rich areas of the world. Conversely, here in the United States, KL’s technology 

has resulted in the construction of ethanol plants where farmers are paid market 

prices for their corn which offset or eliminate farm subsidies. Our cellulosic technology also helps reduce particulate emissions resulting from controlled and uncontrolled fires in our national forests, costing the Federal Government millions of dollars to manage. 

Corn-based ethanol is the only large volume, biofuels bridge to the 2012 cellulose 

ethanol goal. We must protect this bridge as a strategic component to allow companies like ours to improve cellulose technology; and we take exception to the misrepresentations being touted by the media, special interest groups and the United 

Nations who cling to the baseless notion that ethanol is somehow displacing agricultural resources and linking the displacement of corn from food to fuel. According to 

USDA statistics, in 2007 field corn used to produce ethanol increased by about 1 

billion bushels but corn production also increased by 3 billion bushels. Specifically, 

between March 2007 and March 2008 there was a 13% increase in stored, uncommitted surplus corn-both on and off the farm. Today, in South Dakota, there is still 

corn on the ground not being used for ethanol or export. We need corn-based ethanol 

as a bridging strategy, it is not the primary cause for rising food prices or shortages, 

and it will always be an integral part of our energy policy even as cellulose and 

other technologies advance. Incentives for both corn and cellulose based ethanol 

should be maintained just as incentives for oil discovery were put in place and 

maintained since 1925. Last week, President Bush stated that the United States 

has not built a refinery since 1976. KL takes a different approach. In the biofuels 

vernacular there were, in fact, 84 new bio-refineries built over the last 10 years that 

have effectively replaced the need for approximately eight new averaged-size oil refineries. This assumes 115,000 barrels per day of crude feed with 50% of the crude 

converted to gasoline. The difference is crude oil will only be extracted once where 

bio-refining feedstocks replenish every year. This new RFS is the only responsible 

energy plan that requires even more bio-refineries by 2012. As cellulose-based ethanol technology improves, our business model departs from the current paradigm of 

large grain-based ethanol plants in the Midwest. While grain-based plants are an 

important part of the future bio-refining strategy, cellulosic ethanol plants will be 

smaller and decentralized throughout the US; co-locating with or close to biomass 

sources that are immune to the geo-agricultural constraints needed for grain based 

ethanol production, thereby eliminating or reducing the cost of transporting biomass 

material and in close proximity to populated biofuels demand. This design disarms 

critics who believe ethanol is too far from the end user and makes use of biomass 

that is either burned or land-filled. 

To meet the requirements of the RFS, we know there will be a need to continue 

improving efficiencies in grain and cellulose based designs to move us quickly to 

what we call the ‘‘glucose economy’’ where starch or cellulose provide the sugars 

used to produce chemicals and bio-fuels. The United States possesses the biomass 

to meet the needs of a glucose economy and is well-documented in the Department 

of Energy’s own ‘‘Billion Ton Study’’ conducted at the Oak Ridge Laboratory in April 

2005. As noted in the study, much of this biomass is located on federal lands to include our national forests. To sustain the momentum of building additional bio-refineries that meets the intent and aggressive mandates of the RFS, administrative 

rules must allow for all forms of biomass without regard to its source. As we plan 

to co-locate our second plant with a sawmill in the Black Hills, one specific clause 

in the 2007 Energy Bill, inserted by special interests after lawmakers reviewed 

what they thought to be the final language, must be corrected. Specifically, credits 

intended for cellulosic ethanol produced from biomass harvested from our national 

forests through federal programs already in existence, must be restored. The intent 

of this last minute provision was to discourage the harvesting of material from the 

national forests for bio-fuels production. However, the drafters failed to understand 

that existing timber harvest and thinning programs already allow for the removal 

of material from the national forests. In the case of thinnings, any reasonable person would understand that processing this waste into a clean burning fuel is less 

destructive to the environment than burning it in place. In the case of commercial 

timber harvested through these federal programs, mill waste from these operations 

fit perfectly with our business model but the burden of segregating non-credit qualifying bits of national forest mill waste from private or state timberland mill waste 

127 

that do qualify is as impractical as it sounds. Imagine the complexity of separating 

mill waste for the sake of recovering valuable cellulosic ethanol credits. The cost 

would likely outweigh the credit. We live near a national forest and consider ourselves active stewards of the environment. Our desire is not to clear-cut the forest 

to produce biofuels but given existing harvest programs, credits from these operations are critical to the near term success of cellulosic ethanol; and the process improvements we make during this development period enable us to keep pace with 

the 2012 goals. 

Whether ethanol comes from corn or cellulose, it is the near-term answer as it 

can fuel most combustion engines today. While 10 and 85 percent blends are standard, we have experience with a variety of blends and it is our conclusion that a 

blend between 20 and 30 percent would be the near-term answer for all gasolinefueled vehicles. My point is simple. We do not expect ethanol to replace all fossil 

fuels in America, but complement them. Like Brazil, most all of our automobiles can 

operate with at least a 30% blend without modification. The EPA could allow these 

blends with the stroke of a pen. Related to this discussion, the 2007 Energy Bill 

calls for a study to improve the efficiency of flex fuel vehicles. As a start point, I 

would like to offer a recommendation. We know that ethanol burns cleaner and cooler than gasoline. What isn’t well known is that ethanol has the potential to burn 

more efficiently than gasoline because of its high octane rating. Our experience 

through test trials with the American Lemans Racing Series and Harley-Davidson 

motorcycles shows E85 not only burns cooler and cleaner but also provides more 

horsepower and increased mileage over regular gasoline when burned in high compression, fuel-injected engines. There is no need to commit further federal dollars 

to a study that would likely result in directing the automobile industry to revive 

its design of high-compression engines that fell victim when leaded gasoline was 

banned. Simply put, ethanol is the modern day octane booster but burning ethanol 

in modern day low-compression engines results in lower gas mileage because the 

high octane is not used to its advantage and potential. Reverting to this simple engine design change will likely help the automobile industry meet CAFE standards 

without sacrificing performance. Finally, I also note that the 2007 Energy Bill calls 

for a study on pipeline transportation of ethanol. In the interest of saving costs and 

time, we have the results of a successful 1981 study conducted by Williams Pipeline 

Company and can provide that study to this Committee. This concludes my testimony. Thank you for this opportunity. 

Mr. BOUCHER. Thank you very much, Mr. Kramer. 

Mr. Faber. 

STATEMENT OF SCOTT FABER, VICE PRESIDENT, FEDERAL 

AFFAIRS, GROCERY MANUFACTURERS ASSOCIATION 

Mr. FABER. Thank you, Mr. Chairman. Let me just start by saying that I agree that there are many factors that are contributing 

to record food inflation that we are all seeing in the grocery aisles 

right now, including global demand, export restrictions, poor 

weather, the value of the dollar, but there is only one significant 

new factor that Congress can change and that is our decision last 

year to divert this year 25 percent of our corn into our fuel supplies, and in the coming years, 40 percent of our corn and about 

30 percent of our vegetable oils to our fuel supplies, and in general, 

we think Congress should revisit these mandates and begin to reduce our reliance on food as an energy feedstock and instead accelerate the development of fuels that do not pit our energy needs 

against the needs of the hungry or the needs of the environment. 

Let me just lay some of the groundwork. I am sure you have seen 

this in the grocery store. Food prices are now rising about twice as 

fast as the rate of inflation. They increased almost 5 percent in 

2007, the largest increase that we have seen in 17 years, and more 

importantly, the price of basic staples—milk, meat, and eggs—has 

grown much more dramatically. In the case of eggs, for example, 

it has increased about 70 percent just in the last 3 years. This obviVerDate Nov 24 2008 14:10 Jan 08, 2010 Jkt 037690 PO 00000 Frm 00133 Fmt 6633 Sfmt 6633 C:\DOCUMENTS AND SETTINGS\CWELLS1\HEARINGS\110-113 SCOM1 PsN: JIMC
128 

ously poses a problem for all consumers but it really poses a particular challenge to the lowest 20 percent of Americans, who spend 

about a third of their after-tax income on food. Sudden increases 

in the price of basic staples are much harder for poor Americans 

to struggle through and certainly even more significant for people 

in the developing world, where they spend up to 70 percent of their 

income on food. 

It is also important to note that for every farmer who is doing 

better as a result of these high commodity prices, and no one can 

blame farmers for trying to benefit from these high commodity 

prices, there are many more farmers who are losing money: our 

livestock producers. Many of these livestock producers are facing 

unprecedented losses and it is important to be fair. Many more jobs 

are being lost in rural communities because of the high price of 

feed than are being created as a result of these mandates. That is 

why we are hopeful that the Administration will act quickly to reduce the impact of these food-to-fuel mandates on our food prices, 

but this isn’t merely a question of what we can do today to address 

the problems consumers are seeing in the grocery store. It is also 

a question of what we can do today to address the risk of even 

higher food prices in the next few years as again 40 percent of our 

corn and 30 percent of our vegetable oils are diverted to our food 

supplies. Let me just draw your attention to three charts. 

[Chart shown.] 

The first chart shows how much of our corn and how much of our 

soy oils will be diverted from our food supplies to our fuel supplies. 

This is a fairly simple calculation to do based on projected yields 

and projected acres. This is something even I could do on the back 

of an envelope. 

[Chart shown.] 

And then you can also see something that doesn’t get nearly as 

much attention is the amount of our vegetable oils, which are also 

used throughout our food production systems, how much of our vegetable oils will be diverted in the next few years. These increases 

in the amount of food that is being diverted to our fuel supplies are 

certainly going to make today’s prices look good by comparison. 

[Chart shown.] 

And then the last chart I just want to draw your attention to is 

what we are forecasting food price inflation will be in the next few 

years. We are forecasting—as you can see, it was 4.9 percent last 

year. We are forecasting it will be 7.5 to 8 percent in the next few 

years, and those are conservative numbers. Because of the delayed 

plantings that we have seen in the Midwest and the risk of 

drought, these numbers could actually look quite good by comparison. 

Let me just close by saying I am the first to say that these mandates that are driving higher food prices might make sense if they 

were serving other goals, but the simple fact of the matter is that 

these mandates have very little impact on energy imports or prices. 

For example, diverting 25 percent of our corn crop this year has 

displaced about 7 billion of the Nation’s 140-billion-gallon gasoline 

supply. What is more, we have heard food-to-fuel mandates are 

also increasing greenhouse gas emissions and pose other environmental challenges, including poor air and water quality and water 

129 

1The Energy Independence and Security Act of 2007 increased the federal corn ethanol mandate from 5.4 billion gallons in 2008 to 9 billion gallons in 2008, 10.5 billion gallons in 2009, 

12 billion gallons in 2010. In subsequent years, the mandate annually increases by 600 million 

gallons to 15 billion gallons in 2015. The Act also creates a 1 billion gallon bio-diesel mandate 

by 2012. 2 Consumer Price Index data, Bureau of Labor Statistics 

3 C. Forde Runge and Benjamin Senauer. How Biofuels Could Starve the Poor. Foreign Affairs, May/June 2007. 4 Bob Davis and Douglas Belkin, Food Inflation, Riots Spark Worries for World Leaders,’’ Wall 

Street Journal, April 14, 2008. A1. 

shortages in parts of the country where drought is a significant 

problem. 

Let me just close by saying that at a time when thousands of 

Americans are losing their jobs or losing their homes, we don’t 

think it makes much sense for Congress to artificially increase the 

price of food, and while certainly many Americans are worried 

about filling their gas tanks, many more are worried about filling 

their stomachs and so we urge the Committee to revisit these mandates and revisit the use of food as a feedstock and to accelerate 

the development of fuels that do not pit our energy needs against 

the needs of the hungry and the environment. Thank you. 

[The prepared statement of Mr. Faber follows:] 

STATEMENT OF SCOTT FABER

My name is Scott Faber and I am Vice President for Federal Affairs for the Grocery Manufacturers Association. 

In light of dramatic increases in food prices and new questions about the environmental costs of fuels derived from food crops, we urge the Committee to revisit the 

food-to-fuel mandates included in the Energy Independence and Security Act of 

2007. 1 Although there are many factors contributing to the sharp increase in US 

and global food prices—including increasing global food demand, export and other 

restrictions, adverse weather in some countries, commodity speculation, and higher 

energy prices—a significant new factor and the only factor affecting food and feed 

prices that is under the control of Congress is the food-to-fuel mandates and subsidies diverting food into fuel production. 

Food prices are now rising at twice the overall rate of inflation. According to the 

Bureau of Labor Statistics, domestic food prices rose by 4.9 percent during 2007— 

the largest increase in 17 years. But the domestic price of basic staples such as eggs, 

milk, and meat have increased even more dramatically in the last 3 years. Egg 

prices have increased 69 percent, milk prices have increased 22 percent, and chicken 

prices have increased 12 percent. 2 The cost of feed grains and oilseed crops used 

to produce these animal products has increased at an alarming rate. Since the 2005 

and 2006 crop years, farm-level corn prices have increased more than 150 percent, 

and farm-level soybean prices have increased more than 100 percent. Although 

other factors are affecting domestic food prices, growing demand for corn and soybeans has also contributed to tightening supplies of other major commodities, creating a ripple effect that has driven up the costs of food production. 

Soaring food prices pose significant challenges for the poorest 20 percent of Americans, who spend roughly one-third of their after-tax income on food. Soaring food 

prices have contributed to a rising demand at food banks and a record number of 

Americans seeking food stamps. At a time when thousands of Americans are losing 

their homes and jobs, it makes no sense to artificially increase the price of food with 

policies that will divert food into our fuel supplies. 

Rising food prices also pose significant challenges to the hungry in developing 

countries, where roughly 800 million 3 people are hungry and consumers spend as 

much as 70 percent of their income on food. Rising commodity prices have pushed 

global food prices up 83 percent over the last 3 years 4—and by 57 percent in the 

last year alone—pushing millions of people into poverty. UN Secretary General Ban 

Ki-moon and World Bank President Robert Zoellick have both characterized rising 

food prices as ‘‘seven lost years in the fight against global poverty.’’ In combination, 

rising prices and declining commodity stocks have forced global food aid programs 

to ration food and have contributed to food riots and protests in more than 30 countries. Rising food inflation in the developing world is not merely a food security 

130 

5 ‘‘The World Food Crisis,’’ New York Times, Editorial, April 10, 2008. 

6 Elam, Thomas, ‘‘Biofuels Support Policy Costs to the U.S. Economy,’’ FarmEcon LLC, March 

24, 2008. 7Lapp, Bill, ‘‘Back To The ’70s? How Higher Commodity Prices Are Leading to the Return 

of Food Price Inflation,’’ Advanced Economic Solutions, December 2007. 8Derived from USDA and EIA data 

9 derived from Energy Information Administration projections 

10 Ryan, Missy, ‘‘Commodity Boom Eats into Aid for World’s Hungry,’’ Reuters, September 5, 

issue but is a national security issue. The World Bank warns that 33 nations are 

at risk of social unrest because of the rising price of food and energy. 5

Rising feed prices pose significant challenges for livestock producers, which have 

contributed to the rising price of milk, meat and eggs. Although many crop farmers 

have benefited from high corn and soybean prices, many more livestock producers 

are facing unprecedented losses. Food-to-fuel mandates will increase the cost of livestock production by $17.7 billion in 2008–2009 6, and have already contributed to 

the loss of hundreds of jobs. 

Food prices will continue to rise as more and more corn and soy oils are diverted 

to our fuel supplies. In particular, we estimate that food inflation will rise by 7 to 

8 percent 7 over the next few years, as up to 40 percent of our corn and 30 percent 

of our vegetable oils are diverted from our food supplies to our fuel supplies. 8 The 

Producer Price Index for food has risen at an annualized rate of 10 percent over 

the past three months. Rising demand for basic commodities is also reducing fruit 

and vegetable production. Because stocks of basic commodities have fallen to low 

levels, a poor corn or soybean harvest in 2008 could result in even more dramatic 

increases in food prices. We are particularly concerned by reports that poor weather 

has delayed corn plantings in the Midwest. 

Unfortunately, food-to-fuel mandates have little impact on energy import or 

prices. Diverting 25 percent of the US corn crop has displaced roughly 7 billion gallons of the Nation’s 140 billion gallon gasoline supply—or less than 4 percent of our 

gasoline supplies, when relative energy values are considered. 9 Diverting 40 percent 

of our corn crop to produce 15 billion gallons of corn ethanol would replace less than 

7 percent of our gasoline supplies, when relative energy values are considered. 9

When the global petroleum market is considered, ethanol consumption in 2007 represented only 1 percent of global oil consumption. In the United States, the Energy 

Information Administration reports that ethanol consumption accounted for only 2 

percent of total US petroleum consumption. Ethanol’s small share of petroleum markets, its significant transportation, blending, and storage costs, and its reduced energy content compared with gasoline reduce the likelihood that food-to-fuel mandates will affect gasoline prices and may even result in higher gasoline prices in 

some regions. 

What’s more, food-to-fuel mandates increase greenhouse gas emissions and pose 

other environmental challenges. Diverting food crops to our fuel supplies has artificially increased the price of commodities, accelerating the conversion of pasture and 

forest lands to crop production at home and around the globe. Current and expected 

conversion of pasture and forest lands will release carbon into the atmosphere and 

reduce the availability of carbon ‘‘sinks’’ that help sequester carbon. In addition, 

food-to-fuel mandates increase water and air pollution, compound water shortages, 

and contribute to the loss of habitat for wildlife. Increases in fertilizer use associated with expanded corn and soybean production will increase the amount of nitrogen and phosphorous being washed into rivers and bays, including the Chesapeake 

Bay, and will increase ground-level ozone at a time when more than 300 counties 

are struggling to meet Clean Air Act limits. Increasing the use of distillers grain— 

a byproduct of ethanol production that is fed to animals but has less nutritional 

value—increases the amount of phosphorous reaching our waterways like the 

Chesapeake. 

Congress should revisit food-to-fuel mandate schedules and subsidies and accelerate the development of other bio-fuels. High crude oil prices are providing sufficient market incentives to produce corn ethanol, making government intervention 

unwarranted. We believe Congress should revisit and reform food-to-fuel mandate 

schedules and subsidies to gradually reduce our reliance on food as an energy feedstock and to accelerate the development of bio-fuels that do not pit our energy needs 

against the needs of the hungry or the environment. In particular, we believe that 

Congress should accelerate the development of cellulosic ethanol derived from crop 

wastes, grasses and other materials that do not increase food prices, hold significantly greater promise to displace traditional sources of gasoline, and could have 

less impact on the environment. 

131 

10 Ryan, Missy, ‘‘Commodity Boom Eats into Aid for World’s Hungry,’’ Reuters, September 5, 

2007. 

Congress should also take steps to address the needs of the hungry and to accelerate global agricultural development. At the same time that the number of hungry 

across the globe is increasing, donations to the world’s hungry have fallen to the 

lowest level in 35 years. 10 Congress should take steps to expand domestic and international hunger assistance programs to help address the impacts of food inflation 

at home and abroad, including emergency assistance that can be immediately used 

to make regional purchases of commodities. And, Congress should also provide new 

funds to increase the productivity and sustainability of agricultural lands in the developing world. Between 2003 and 2007, global usage of coarse grains like corn grew 

by 3.4 percent, compared with a long-run rise in yields of just 1.5 percent, according 

to USDA. 

In conclusion, we urge the Committee to revisit the food-to-fuel mandates in light 

of dramatic increases in food prices and new questions about the environmental 

costs of fuels derived from food crops. Although there are many factors contributing 

to record food inflation—including increasing global demand, export restrictions, 

changing weather patterns, commodity speculation, and higher energy prices—a significant new factor and the only factor affecting food and feed prices that is under 

the control of Congress is food-to-fuel mandates and subsidies diverting food into 

our fuel supplies. 

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135 

136 

137 

138 

139 

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Mr. BOUCHER. Thank you very much, Mr. Faber. 

Mr. Tolman. 

STATEMENT OF RICK TOLMAN, CEO, NATIONAL CORN 

GROWERS ASSOCIATION 

Mr. TOLMAN. Thank you, Mr. Chairman, Ranking Member Upton 

and members of the Committee. I appreciate the opportunity to discuss the implementation of the newly enacted renewable fuels 

standard and the opportunities it has brought to rural economies 

and farmers across the Nation and to dispel some of the false assumptions about the role of corn in biofuels production. 

My name is Rick Tolman. I am the CEO of the National Corn 

Growers Association, NCGA. We represent more than 32,000 duespaying farmers from across 48 States as well as 300,000 farmers 

who contribute to corn check-off programs through our affiliated 

State organizations. 

NCGA thanks Congress for their support and inclusion of the renewable fuels standard in the Energy Independence and Security 

Act of 2007, or EISA. This policy has been critical to the growth 

and economic development of rural America and has added value 

to our product, which for so long has been priced below the cost of 

production. EISA is sound energy policy that will encourage a diversification of our renewable resources and further reduce our dependence on foreign oil. 

Biofuels have created investment and spurred economic development in many small towns that have suffered from depressed grain 

prices and flat demand. According to a recent study by a consulting 

firm, small and rural communities with ethanol facilities nearby 

see a dramatic economic boost. In 2007, an average 100-million-gallon-per-year ethanol biorefinery added $367 million to the local 

GDP and created more than 2,400 new jobs across various sectors 

of the economy in that community. 

Recently many critics have questioned the value and consequences of the renewable fuels standard. They are quick to point 

to biofuels as the primary reason for global food price increases. A 

look at the facts surrounding food prices simply doesn’t support 

that logic. The effects of $120-a-barrel oil have far more reaching 

effects on consumer prices for food. Petroleum is used in virtually 

every step of the food supply chain that begins with the farmer and 

ends at the consumer’s table. In fact, just 19 cents of every consumer dollar can be attributed to the actual cost of farm products. 

Even when corn is priced at $5 a bushel, a box of Corn Flakes contains less than 8 cents worth of corn. According to USDA, a 50 percent increase in the price of corn translates to an overall increase 

of retail food prices of less than 1 percent. In addition, a recent 

study by Texas A&M University stated, ‘‘Relaxing the renewable 

fuels standard does not result in significantly lower corn prices.’’ 

The study went further to say, ‘‘The underlying force driving 

changes in the agricultural industry, along with the economy as a 

whole, is higher energy costs evidenced by $100-a-barrel oil.’’ Ethanol is not the primary factor in food price increases. It saves consumers at the pump, reduces greenhouse gas emissions and is 

being produced more efficiently, more economically and more 

sustainably every day. 

141 

In terms of global supply, contrary to the media, it is not a choice 

of food or fuel. USDA is projecting the corn industry to have a 

record export number this year for 2008 to satisfy growing demand 

for corn around the world, a record amount. We are exporting more 

this year than we have ever exported before so it is not a choice. 

It is disingenuous to say that ethanol is not a factor in heightened 

corn demand but how much of a factor is it? If we look purely at 

supply and demand numbers, we see that the corn supply has 

grown large enough to accommodate both food and feed and ethanol demand, and Bob and others have gone through those numbers with you. 

I will set Mr. Faber’s mind at ease. We in our analysis do not 

ever see the ethanol taking more than 27 percent of our corn supply, even out to 2015 when the corn portion hits its peak. That is 

because farmers are very productive. Meeting the needs of growing 

world population requires cutting-edge technology innovation. Last 

year farmers produced an average of 151 bushels of corn to the 

acre. Our corn yields have doubled in less than the last 40 years 

and they are projected to double again in the next 25 years. We are 

on the cusp of a very significant increase in technology and productivity. That means we don’t have to significantly increase acres and 

we don’t have to choose between food and fuel. We can do both in 

a reasonable and rational way. 

Additionally, there is much misinformation being circulated 

today on agricultural land use and crop allocation. We hear misleading statements in the press that corn displaces wheat and soybeans and other acres. In fact, corn acres will be down in 2008, 

wheat and soybean acres will be up, and wheat acres have increased each of the last 3 years. 

Congress directed EPA to examine the role of direct and indirect 

land-use changes in connection with the legislation. In that consideration, the impacts and interplays of numerous global, economic, 

social, political factors on land also need to be considered. In particular, it is imperative that the impact of global energy markets 

on agriculture, specifically land use, be understood and modeled. 

Further, the effects of population growth. According to USDA, the 

conversion of farmland in the United States to urban use is on the 

rise. Over the last 10 years we have lost an average of 2.2 million 

acres of farmland going to urban use. 

In conclusion, NCGA sees the renewable fuels standard as a critical part of domestic energy security. Its inclusion has strengthened 

our energy policy and further diversified our Nation’s fuel supply 

in a time of global volatility and increasing demand for energy. 

Corn growers will continue to meet the growing demands of food, 

feed, and fuel in an economic, rational, and environmentally responsible manner. 

Thank you. 

[The prepared statement of Mr. Tolman follows:] 

STATEMENT OF RICK TOLMAN

Mr. Chairman, Ranking Member Upton and Members of the Committee, on behalf 

of the National Corn Growers Association (NCGA), I appreciate this opportunity to 

discuss the implementation of the newly enacted Renewable Fuels Standard and the 

142 

opportunities it has brought to rural economies and farmers across the Nation and 

to dispel certain assumptions about the role of corn in biofuel production. 

My name is Rick Tolman; I am the CEO of the National Corn Growers Association. The National Corn Growers Association represents more than 32,000 corn 

farmers from 48 states as well as more than 300,000 farmers who contribute to corn 

check-off programs and 26 affiliated state corn organizations across the country. 

NCGA continues to be committed to creating new opportunities and markets for 

corn in the US and around the globe. 

The National Corn Growers Association thanks the Committee for their support 

and inclusion of the Renewable Fuels Standard in the Energy Independence and Security Act of 2007 (EISA). This policy has been critical to the growth and economic 

development of rural America and has added value to our product, which for so long 

has been priced below the cost of production. EISA was sound energy policy that 

encouraged a diversification of renewable resources and further reduced our reliance 

on foreign oil. 

Recently, many critics have been quick to point to biofuels as the primary reason 

for global food price increases as well as questioning biofuels ability to reduce greenhouse gas emissions and be produced in a sustainable manner on a world stage. Evidence strongly shows that ethanol is not the primary factor in modest food price increases, saves the American consumer at the pump, reduces greenhouse gas emissions and is being produced more efficiently, more economically and more 

sustainably everyday. 

Agriculture has been the backbone of the American economy since the birth of the 

nation. US producers have consistently answered the call to provide feed, food and 

now fuel to the global marketplace. We have seen dramatic increases in corn yields 

on existing farmland due to advances in technologies, more environmentally efficient practices being utilized by farmers, and increases in demand across the globe 

continue to be met. 

RURAL DEVELOPMENT 

Renewable fuels policy has been instrumental in the rejuvenation of rural economies throughout the world. Biofuels has created investment and spurred economic 

development in many small towns that have suffered from depressed grain prices 

and flat demand. According to a study by consulting firm LECG, LLC, small and 

rural communities with ethanol facilities nearby see a much more dramatic economic boost. In 2007, an average 100 million gallon per year ethanol biorefinery 

added $367 million to the local GDP, created more than 2,400 new jobs across all 

sectors of the economy including 50 at the biorefinery itself and more than 1,300 

in the agricultural sector, and has boosted local household incomes by more than 

$100 million. 

Additionally, higher global grain prices and development of world biofuels trade 

are allowing small farmers in many parts of the world to earn a profit on their crops 

for the first time in years. For example, a $115 million ethanol project in Nigeria 

is expected to empower 5,000 local peasant farmers, bring new investment and jobs 

to the area, and stimulate agricultural production. The project’s coordinator, Mr. 

Tunji Awoniyi, says ethanol and crop production is ‘‘a huge weapon to fight deprivation, either financially or otherwise’’ in Nigeria, which currently imports ethanol 

from Brazil to satisfy its biofuels requirements . 

The strong renewable fuels policies in the United States have not only created 

local, rural economic growth, but have increasingly promoted development and prosperity among third world farmers. The Renewable Fuels Standard and other biofuel 

programs have created opportunities for rural communities and subsistence farmers 

across the globe. 

FOOD PRICES 

Recently, the media and ethanol critics have demonized corn ethanol and attempted to solely blame higher commodity costs and government policies promoting 

renewable fuel on rising food costs. 

In attempting to justify their opposition to the RFS and ethanol expansion, opponents continue to make the claim that higher corn prices are causing higher retail 

food prices. A look at the facts surrounding food prices simply doesn’t support that 

logic. More so, the effects of $120 barrel oil have far reaching effects on the consumer price for food. A recent study by the Oregon Department of Agriculture details the factors affecting food price: a growing middle class in Latin America and 

Asia, drought in Australia, low worldwide wheat stocks, increases in labor costs, a 

declining U.S. dollar, regional pests, diseases, droughts and frosts, and marginal impacts from ethanol demand for corn and sugarcane. 

143 

Again, numerous cost factors contribute to retail food prices. According to USDA, 

labor costs account for 38 cents of every dollar a consumer spends on food. Packaging, transportation, energy, advertising, profits and other costs account for 43 

cents of the consumer food dollar. Petroleum is used in virtually every step of the 

food supply chain that begins at the farm and ends at the consumer’s table. One 

recent study found that a $1-per-gallon increase in the price of gas has three times 

the impact on food prices as does a $1-per-bushel increase in the price of corn. Certainly the recent increase in diesel prices may have a more pronounced effect. 

In fact, just 19 cents of every consumer dollar can be attributed to the actual cost 

of farm products like grains, oilseeds and meat. Retail food products such as cereals, 

snack foods, and beverages sweetened with corn sweeteners contain very little corn. 

Consider that even when corn is priced at $5 per bushel, a standard box of corn 

flakes contains less than 8 cents worth of corn. 

Corn is a more significant ingredient for meat, dairy, and egg production. Still, 

corn represents a relatively small share of these products from a retail price perspective. As an example, according to the National Cattlemen’s Beef Association, it 

takes about 3 pounds of corn to produce one pound of beef . This equates to 27 cents 

worth of corn in a pound of beef when corn is $5 per bushel. Similarly, there’s about 

16 cents worth of corn in a gallon of milk when corn is $5 per bushel. 

Because corn and other grains constitute such a small portion of retail food products, higher grains prices are unlikely to have any significant impact on overall food 

inflation, according to a number of experts. According to USDA economist Ephraim 

Liebtag, a 50% increase in corn prices translates to an overall increase of retail food 

prices of less than 1 percent. Similarly, a recent analysis by Informa Economics 

found that higher corn prices ‘‘explain’’ only 4 percent of the increase in retail food 

prices. This is corroborated by a fact sheet released by the White House last week 

that says, ‘‘Increased production of corn-based biofuels is estimated to account for 

only three percent of the 43 percent increase in global food prices.’’ 

And though we’re hearing lots of news about ‘‘skyrocketing higher food prices,’’ 

very few reporters have taken the time to see just how much higher food prices really are. According to the Bureau of Labor Statistics, the 25-year average annual inflation rate for food is 2.9%. That means $100 worth of groceries in 2006 should 

have cost $102.90 in 2007 under normal food inflation circumstances. But, as the 

news has widely reported, food inflation was above the 25-year average in 2007— 

but how high above normal? USDA estimates food inflation averaged 4% in 2007. 

So that means in 2007 the consumer spent $104 on groceries that would have cost 

$100 in 2006 instead of the $102.90 that would have occurred under normal circumstances. So the net increase was really about $1.10 for every $100 worth of groceries, or 1 penny per dollar spent. According to USDA, projected food inflation for 

2008 is likely to register between 4 and 5%. Let’s compare that to gasoline. In May 2006, $100 would have bought you 37 gallons of regular unleaded gasoline. You would have had to spend $116 to buy the 

same 37 gallons in May 2007; and this week, 37 gallons will cost you $133.20. That’s 

a 33% increase since 2006. And gasoline prices would be even higher without ethanol. A working paper released last week by Iowa State University says ethanol 

‘‘has caused retail gasoline prices to be $0.29 to $0.40 per gallon lower than would 

otherwise have been the case. ‘‘ This conclusion is consistent with the findings of 

a recent Merrill Lynch analysis that determined gas prices would be 15 percent 

higher without ethanol. 

A recent study by the Agricultural Food and Policy Center at Texas A&M University stated, ‘‘Relaxing the RFS does not result in significantly lower corn prices.’’ 

The study went further to say, ‘‘the underlying force driving changes in the agriculture industry, along with the economy as a whole, is overall higher energy costs, 

evidenced by $100 barrel oil.’’ 

More so, if policymakers are truly interested in determining the cause of higher 

corn prices, our suggestion would be that they start not with the ethanol industry, 

but with speculative investors in the commodity markets. As the stock market and 

other traditional investments began to stagnate in mid- to late-2007 and the credit 

crunch hit financial markets, index funds and ‘‘commodity pools’’ began to pour unprecedented amounts of capital into commodities. According to the March 31 edition 

of the financial publication Barron’s, ‘‘The speculators’ bullishness may be way 

overdone, in the process lifting prices far above fair value.’’ According to Bloomberg, 

‘‘commodity-index funds control a record 4.51 billion bushels of corn, wheat and soybeans through Chicago Board of Trade futures, equal to half the amount held in 

U.S. silos on March 1. The holdings jumped 29 percent in the past year as investors 

bought grain contracts seeking better returns than stocks or bonds. The buying sent 

crop prices and volatility to records and boosted the cost for growers and processors 

to manage risk.’’ 

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Anecdotal reports from commodity analysts suggest that as much as one-quarter 

of the current price of nearby corn futures is due to speculative investment-primarily large index funds and commodity pools. This means if you take the speculators out of the market, corn futures would likely be in the $4 to $4.50 per bushel 

range. 

Again, we know there are several other factors driving corn demand and price 

that are frequently overlooked. Consumers in nations like China and India are demanding more protein and more calories. Just as China and India are driving global 

energy markets, they are also a major demand driver in agricultural markets. Increased meat consumption is most significant in China where it has tripled in the 

last two decades and continues to grow at 4% to 5% per year. Globally, per capita 

meat consumption has grown from 30 kilograms in 1980 to an estimated 43 kilograms today. 

In addition to increased meat exports to China, India and elsewhere, USDA is 

projecting the corn industry will export more corn than ever before in 2008 to satisfy 

increased feed demand in Central America, Asia and other regions. 

Certainly, currency valuations play a role in surging exports. The relative weakness of the dollar is encouraging stronger exports and is making U.S. ag products 

a good buy on the world market. In 2007, the dollar weakened against the currencies of our largest trade competitors. The biggest reduction was versus Brazil, 

at over 17 percent, but the dollar also declined versus the euro (10 percent) and the 

Chinese yuan (5 percent). 

And despite higher feed costs and tighter margins, the amount of corn demanded 

by the U.S. livestock and poultry sector will be 10 percent higher this year than 

last. This proves the livestock industry has not yet contracted and that meat demand is strong. 

It would be disingenuous to say that ethanol is not a factor in heightened corn 

demand. But how much of a factor is it? If we look purely at supply and demand 

numbers, we see that the corn supply has grown large enough to accommodate increases in ethanol demand. 

For example, in 2006, corn growers produced 10.5 billion bushels and used 2.2 billion bushels for ethanol, meaning 8.3 billion bushels were available for other uses. 

Additionally, the equivalent of 600 million bushels of corn was returned to the feed 

supply in the form of distillers grains. In 2007, corn farmers grew a record crop of 

13.1 billion bushels and are expected to use 3.1 billion bushels for ethanol, meaning 

10 billion bushels are available for other uses. Nearly 900 million bushels of corn 

equivalent feed will be returned to the feed market in the form of distillers grains 

this year. So, yes, the amount of corn used for ethanol is growing, but so is the 

amount of corn available for other markets and so is the amount of distillers grainsone of the major benefits of using corn as a feedstock in ethanol production. 

TECHNOLOGY ADVANCES 

Furthermore, meeting the food and energy needs of a growing world population 

requires cutting-edge technology and innovation. New technologies are allowing U.S. 

corn farmers to produce substantially more corn per acre of land in a sustainable 

way, and with more countries adopting biotechnology, yields globally will be substantially higher, further helping to meet growing demand for food and fuel. 

Today’s corn seeds are produced using the latest advances in plant biotechnology 

and plant breeding. The best traits from one corn variety are combined with complementary traits from other varieties to produce more productive and stronger corn 

plants. Last year, corn farmers produced an average of 151.1 bushels of corn per 

acre. Consider that 10 years ago in 1998, the average production pr acre was 134.4, 

and 20 years ago in 1988, the average was 84.6 bu./acre. 

Corn productivity per acre is increasing at an accelerated rate because of new advances in marker-assisted breeding, biotechnology and improved farming practices. 

Increased yield per acre allow growers to harvest considerably more corn without 

significantly increasing acreage. Based on past performance, average production per 

acre is projected to hit 175 bu./acre by 2015. However, if productivity gains continue 

to increase at the rate of recent years, average yield per acre could easily reach 180 

bu./acre by 2015. Seed technology providers have stated corn production could reach 

250 to 300 bushels per acre by 2030. Improved management practices also play an 

important role in increased productivity, and the increased adoption of tools like 

GPS yield mapping and precision nutrient application are helping farmers grow 

more corn per acre while conserving inputs. 

145 

INPUT COSTS 

Another factor that is often overlooked in this debate is the soaring price of energy on farmers. Due to surging energy prices, the cost of producing corn has increased tremendously in recent years. Though our energy efficiency is constantly improving, a considerable amount of fossil fuel energy is required to produce our bountiful grain harvests. 

According to the Energy Information Administration, the cost of diesel fuel aver- aged $4.18 last week, an increase of 48.6% over the same time last year and more 

than double the price from April 2004. 

Undoubtedly, the main factor driving production costs to unprecedented levels is 

skyrocketing fertilizer costs. The farm price for nitrogen fertilizers—most of which 

are derived from natural gas—has increased more than 60 percent just since 2006. 

Additionally, between January 2007 and February of this year, the price of two 

other important fertilizers—potash and diammonium phosphate—increased 139 percent and 155 percent respectively. 

In fact, the Center for Farm Financial Management forecasts fertilizer costs per 

acre in 2008 will be double 2002 costs. And because fertilizer costs represent about 

40 percent of a farmer’s variable production costs, these price increases are having 

a tremendous effect on profit margins and risk. 

Higher natural gas prices also increase the farmer’s cost of drying grain and, in 

some cases, irrigation. Land prices and cash rent prices have also increased tremendously due to the heightened value of agriculture products. Additionally, seed prices 

have nearly doubled in the last 4 years. 

These sharply higher input costs make growing corn in 2008 a costly proposition. 

Though the farm price for corn is indeed higher than in the past, the farmer’s profit 

margins are not all that much different than they’ve been historically. 

ACREAGE TRENDS 

Additionally, there is much misinformation being circulated today on agricultural 

land use and crop allocation. We hear blatantly misleading statements in the press 

about corn acres displacing wheat, soybeans, and other crop acreage. We also hear 

the false rhetoric that increased demand for corn is leading to cultivation of grassland and other non-agricultural lands. 

The truth is, farmers respond to signals from the marketplace when they make 

their planting decisions—they always have and they always will. In 2007, the market sent a clear signal to farmers to plant more corn and they did. Farmers planted 

93.6 million acres of corn—the highest level since 1944—and produced a record crop 

of 13.1 billion bushels. In 2008, the market is calling for more wheat and soybeans, 

so farmers are expected to plant more of those crops and less corn. 

It is notable that U.S. wheat acres are up for the third consecutive season and 

will be at their highest level in 10 years. U.S. soybean acres are likely to be 18 percent higher than last year. USDA’s projection of 74.8 million soybean acres in 2008 

would be the third-highest level of soybean acres in history. Additionally, barley 

acres are expected to be at their highest level in the last 4 years. 

Corn acres will be down in 2008, but still at historically high levels. Given normal 

weather conditions during the growing season, it seems very likely that farmers will 

produce the second largest corn crop on record even with a reduction in corn acres. 

Despite strong demand for U.S. crops, the number of acres enrolled in the Conservation Reserve Program has not departed from the norm. An estimated 34.6 million acres of land is currently enrolled in the CRP program. That is actually above 

the 10-year average of 33.6 million acres. It does seem likely that some of those 

acres will be brought back into production incrementally as 10-year contracts expire, 

but this transition is not something that will happen overnight. 

The total area planted for all wheat, feed grains, oilseeds, and cotton is projected 

to be 252 million acres in 2008, just 1 percent above 2007 levels. This disproves the 

notion that increased demand for grains and oilseeds is driving significant expansion of cultivated land in the United States. For some additional perspective, consider that the annual area planted to wheat, feed grains, oilseeds, and cotton in the 

early 1980s was approximately 290 million acres, 15 percent more land than is used 

today for those crops. 

LAND USE CHANGES 

Looking specifically at land use changes in relation to the increased RFS, Congress directed EPA to examine the role of direct and indirect land use changes in 

connection with expanded biofuels production. NCGA believes direct land use 

change as a result of biofuel production is a legitimate subject for environmental 

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analysis. In contrast, global indirect land use change caused by U.S. biofuel production is uncertain and speculative. 

Recent papers in Science by Searchinger, et al., and by Farigone, et al., purport 

to connect increased demand for corn for biofuel production with large, indirect land 

use changes to satisfy the demand for animal feed left unfilled because of the increased demand for corn. These indirect land use changes are in turn linked to large 

emissions of greenhouse gases, thereby incurring a ‘‘carbon debt’’ that the authors 

believe may take many years to repay. Unfortunately, there is much that is speculative and uncertain about these claims. The simple fact that U.S. corn acres will be 

reduced and soybean acres will be increased significantly in 2008 demonstrates the 

flawed logic of these papers; that is, there are significant physical constraints on 

land use and expansion of agricultural area. It seems much of the current thinking 

on land use assumes land is readily convertible. Also, the role of the potential to 

increase corn yields on existing farmland, while at the same time increasing efficiency of fertilizer and water use and protecting water and soil quality must also 

be considered. 

Land use changes cannot be looked at in the singular context of increased biofuel 

production. The impacts and interplay of numerous global economic, social and political factors on land use also need to be considered. In particular, it is imperative 

that the impact of global energy markets on agricultural markets (and specifically 

land use) are understood and properly modeled. 

Even if there were such data connecting increased corn demand for ethanol with 

land use changes, ethanol produced in the United States would be responsible, in 

a strict lifecycle analysis sense, for anything but its own environmental profile. 

‘‘New’’ corn produced in Brazil by clearing savannah to satisfy animal feed demand 

is responsible for its environmental profile as an animal feed, not as an ethanol 

feedstock. 

For example, plastic bottles are made from ethylene. Ethylene can also be used 

to make carpets. If demand for ethylene to make plastic bottles grows, then more 

ethylene will be needed to satisfy the unfilled demand for ethylene carpets. But we 

do not make plastic bottle producers responsible for the environmental profile of carpet manufacturers. Likewise, it is unfair and unreasonable to make corn producers 

who are producing feedstock for biofuel production responsible for the speculative 

land use decisions of individuals tens of thousands of miles away who are producing 

corn or soy for animal feed. 

More so, the debate appears to suffer from a lack of understanding of current tillage practices and crop yield growth. Further, the value, carbon intensity, and usage 

of biofuel coproducts (like distillers grains) needs more thorough analysis in the context of land use change. Additionally, continuous corn systems store more carbon 

than corn/soy rotation systems, a fact that seems to be lost on many academics considering these issues. 

Further, the effects of population growth on physical land use changes (such as 

increased urban and suburban development and the associated loss of land for other 

uses) need to be considered in any analysis. According to USDA-ERS, conversion of 

farmland to urban uses—including residential, commercial, and industrial development is on the rise. On average, 2.2 million acres per year of farmland were converted to urban uses between 1992–2001, versus 1.1 million acres per year during 

previous decades. Developed area-which includes urban areas plus large lot development, development in rural areas, and rural roads and transportation-made up 

about 6 percent of US land in 2002. As illustrated, many factors need to be considered in a larger context when looking at land use changes dealing with biofuels and 

agriculture. 

In conclusion, NCGA sees the Renewable Fuels Standard as a critical part of domestic energy security. Its inclusion has strengthened our energy policy and further 

diversified our Nation’s fuel supply in a time of global volatility and increasing demand for energy. Corn growers will continue to meet the growing demands of food, 

feed, and fuel in an economical and environmentally responsible manner. 

SUMMARY OF TESTIMONY

The newly enacted Renewable Fuels Standard has created much needed economic 

opportunities in rural communities and to farmers across the Nation. Also, the National Corn Growers Association (NCGA) is here to dispel certain assumptions about 

the role of corn in biofuel production. Recently, many critics have been quick to 

blame biofuels for a host of supply and demand issues. Global food price increases 

coupled with the recent expansion of the Renewable Fuels Standard have been at 

the forefront of this biofuel debate. There are numerous factors that must be considVerDate Nov 24 2008 14:10 Jan 08, 2010 Jkt 037690 PO 00000 Frm 00152 Fmt 6633 Sfmt 6633 C:\DOCUMENTS AND SETTINGS\CWELLS1\HEARINGS\110-113 SCOM1 PsN: JIMC
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ered when weighing the value and consequences of the RFS. NCGA believes the 

RFS is a critical component of US energy policy. 

Though many opponents claim that corn-based ethanol is the primary cause of increased food price, the logic simply does not add up. In fact, just 19 cents of every 

consumer dollar can be attributed to the actual cost of farm products like grain. 

More so, relaxing the RFS will have little impact on the price of corn and high energy cost play a far more reaching role. In addition, Congress must look at dramatic 

increases in demand world wide for grain, a weak dollar, and drought in Australia. 

During this debate on the merits of biofuels, it is important to look at agriculture 

in more than a singular context. Looking specifically at advances in biotechnology, 

dramatic increases in input costs on farmers, acreage trends, and increased yields, 

and land use changes in relation to biofuels will provide a holistic view of the role 

corn plays in biofuel production. 

148 

149 

150 

151 

Mr. BOUCHER. Thank you very much, Mr. Tolman. 

Dr. Stowers. 

STATEMENT OF MARK STOWERS, VICE PRESIDENT, 

RESEARCH AND DEVELOPMENT, POET 

Mr. STOWERS. Mr. Chairman, Ranking Member Upton, and distinguished committee members, thank you for the opportunity to 

visit with you today. My name is Mark Stowers. I am vice president of research and development at POET. I would like to talk to 

you about our company’s commitment to cellulosic ethanol as well 

as the challenges and opportunities presented by that endeavor. 

POET headquarters in Sioux Falls, South Dakota, is the largest 

dry mill ethanol producer in the United States. POET is an established leader in the biorefining industry and has built 29 ethanol 

production facilities and currently manages 23 plants in the United 

States, while marketing 1.3 billion gallons of ethanol and 3.3 million tons of distillers grain. POET’s strategy in the cellulosic ethanol production involves the utilization of existing corn-to-ethanol 

plants. We are doing this in order to capitalize on the existing infrastructure, utilities, roads, rail lines, material handling, and so 

forth. Our focus is on corncobs as the primary cellulosic feedstock 

using corn ethanol plant’s existing farmer and often investor network to collect cobs. 

We are also looking to eliminate the use of fossil fuels by processing waste streams from cellulosic ethanol process to energy for 

the entire plant, both the corn-to-ethanol and the cellulosic portions. This approach would allow rapid deployment of the cellulosic 

ethanol process across an expansive corn ethanol base through a 

bolt-on approach. POET is implementing this strategy through 

what is called Project LIBERTY, an integrated corn cellulose biorefinery. Project LIBERTY will transform POET BiorefiningEmmetsburg, an existing dry mill ethanol plant located in northwest Iowa, into an integrated corn-to-ethanol and cellulose-to-ethanol biorefinery. Once complete, this facility will produce 125 million gallons of ethanol, 25 of which will come from the feedstock of 

corn fiber and corncobs. The impact of Project LIBERTY in terms 

of ethanol production will be 11 percent more ethanol per bushel 

of corn and 27 percent more ethanol per acre of corn produced by 

using corncobs. Project LIBERTY will require almost no fossil fuels 

to operate. The total cost of the project will be in excess of $200 

million and will create at least 30 new jobs at the facility. POET 

is partnered with the Department of Energy and Project LIBERTY 

whereby DOE, the Department of Energy, will contribute up to 40 

percent, or $80 million, in project costs. Project LIBERTY is expected to be operational in 2011. 

There are three aspects of cellulosic ethanol production that are 

integral to Project LIBERTY: the cellulosic feedstocks, the process 

to make cellulosic ethanol, and then the use of alternative energy. 

I am not going to focus on alternative energy. They are in my remarks to the committee in written form. POET has selected corncobs as the first feedstock for the production of cellulosic ethanol 

because they offer significant technical, environmental, and economic advantages. Cobs are typically left on the field after corn 

harvest with low fertilizer value and can be removed with very litVerDate Nov 24 2008 14:10 Jan 08, 2010 Jkt 037690 PO 00000 Frm 00157 Fmt 6633 Sfmt 6633 C:\DOCUMENTS AND SETTINGS\CWELLS1\HEARINGS\110-113 SCOM1 PsN: JIMC
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tle environmental impact. Corncobs are rich in sugars and are 

heavier than corn stalks, allowing them to be easily separated, and 

lastly, they can be collected relatively easily by the same farmers 

that provide the corn grain. Although the cob market or cob production is small, we have projected that over 5 billion gallons of 

cellulosic ethanol could be produced from corncobs in the United 

States. 

In 2007, POET collaborated with John Deere, Case IH, and a 

number of major farm equipment manufacturers to collect corncobs 

from 4,000 acres in southeastern South Dakota. We have developed 

our 2008 harvest plan for collecting cobs in South Dakota and Iowa 

to increase our understanding of the cob production process, educate growers, and continue our collaboration with farm machinery 

companies to ensure that the best technology is available. 

In order to develop and validate the necessary process technology 

to convert these corncobs to cellulose, we have restructured our research effort in cellulosic ethanol, expanded our collaborations 

across major corporations and universities and research institutes. 

Our own research and development activities within the company 

have increased in terms of our lab capability by six-fold, and we 

constructing our cellulose ethanol pilot plant as we speak that will 

be capable of processing corn fiber, corncob, corn stover, and other 

cellulosic feedstocks. Recent technological advances give us great 

confidence that we are able to produce cellulosic ethanol economically with great advances in the key technologies of pre-treatment, 

enzyme hydrolysis and fermentation. While these are very important breakthroughs, we will continue to evaluate and develop new 

technologies to further reduce the cost of cellulosic ethanol to that 

which is corn-based economics today. There are many companies 

that are also making significant investments in cellulosic ethanol. 

If the development and commercialization of cellulosic ethanol is 

to continue, there are several things that need to happen. One is 

strong corn-to-ethanol business and infrastructure is crucial to the 

development of the cellulosic ethanol industry. Without it, cellulosic 

ethanol will be delayed. The next piece would be the RFS continues 

to provide an important target for cellulosic ethanol. It is a real 

and attainable target. We believe we can meet the RFS standards. 

Increased usage of ethanol and greater numbers of flexible vehicles 

will be required. Recent research indicates that inclusion of greater 

concentrations of ethanol as a gasoline replacement beyond its rule 

as a historical fuel oxygenate represents significant opportunity. 

We see also continued government support, especially in the early 

stages for farmer-level support in collecting cellulosic feedstocks, 

loan guarantees, and lastly, the importance of continued research 

and development is a critical factor. 

I would like to thank you for allowing us to speak here. 

[The prepared statement of Mr. Stowers follows:] 

STATEMENT OF MARK STOWERS

‘‘POET’S COMMITMENT TO CELLULOSIC ETHANOL’’ 

PREAMBLE: 

Mr. Chairman and distinguished committee members, thank you for the opportunity to visit with you today. My name is Dr. Mark Stowers. I am Vice President, 

153 

Research and Development for POET. I would like to talk with you today about our 

company’s commitment to cellulosic ethanol as well as the challenges and opportunities presented by that endeavor. 

POET—INTRODUCTION 

POET, headquartered in Sioux Falls, South Dakota, is the largest dry mill ethanol 

producer in the United States. POET is an established leader in the biorefining industry through project development, design and construction, research and development, plant management, ownership, and product marketing. The 20-year old company has built twenty-nine (29) ethanol production facilities and currently manages 

twenty-three (23) plants in the United States while marketing more than 1.3 billion 

gallons of ethanol and 3.5 million tons of distillers grains annually. 

Since 2000, POET has constructed twenty-one (21) green field ethanol plants in 

seven (7) states and completed six (6) major expansions of existing facilities. The 

value of our design build contracts since 2000 has exceeded $1,000,000,000. Additionally, three (3) green field projects of similar size and scope are currently under 

construction with several others in development. Each project has been successfully 

designed, built and managed by POET. These projects have resulted in the addition 

of more than one billion gallons per year (BGPY) of new fuel ethanol capacity. 

The POET development model is unique. It started on the Broin family farm in 

Minnesota and has been spurred by the investment of thousands of farmers and individual main street investors. POET’s business model is to invest in, develop, design, construct, and manage ethanol production facilities. However, the facilities are 

independent limited liability companies (LLC) owned primarily by individuals and 

local farmers that provide the corn feedstock. POET employs the facility’s general 

manager and on-site technical engineer. All other employees are employed by the 

LLC. POET also has Board of Director representation at each plant. 

By leveraging business size and position, POET has created the most successful 

ethanol facilities in the industry. POET has achieved breakthrough progress beyond 

ethanol processing, extracting extraordinary new value from each kernel of corn and 

is focused on meeting the nation’s needs for domestic transportation fuels through 

cellulosic ethanol. 

IMPORTANCE OF CELLULOSIC ETHANOL 

According to the recent U.S. Department of Commerce International Trade Administration Study, ‘‘Energy in 2020: Assessing the Economic Effects of Commercialization of Cellulosic Ethanol’’ there is enough cellulosic feedstock available in the 

United States to produce nearly 50 billion gallons of cellulosic ethanol by 2020. At 

this production rate over 1.2 million barrels per day of crude oil could be displaced 

while creating over 54,000 jobs in U.S. agriculture. In more practical terms at this 

level of ethanol production the U.S. could eliminate all oil purchases from OPEC 

and the Middle East—eliminating the $1.4 billion per day export of U.S. dollars 

based on $120 per barrel oil to overseas producers. 

In addition to the economic benefits, there are significant environmental benefits 

to cellulosic ethanol. Gasoline produces 25 pounds of carbon dioxide equivalent 

greenhouse gas (GHG) emissions. By comparison cellulosic ethanol reduces GHG 

emissions by a little more than 21 pounds of carbon dioxide on per gallon of gasoline 

equivalent—an 85% reduction. In order to monetize that benefit we can assign a 

value of $20 per ton of carbon dioxide equivalent based on current European futures 

prices for carbon dioxide equivalents. On that basis the GHG emission reductions 

resulting from the use of cellulosic ethanol would be worth about $0.19 per gallon 

or about $2.5 billion per year by using a little more than 20 billion gallons of cellulosic ethanol. 

The value of cellulosic ethanol to the U.S. economy, the environmental benefits 

and ability to mitigate national security risks are substantial. At POET we believe 

that cellulosic ethanol is real and achievable and something worth pursuing. 

COMMITMENT TO CELLULOSIC ETHANOL 

POET’s commitment to cellulosic ethanol started 8 years ago when our company 

developed proprietary fractionation and raw hydrolysis technologies for corn grain. 

These technologies allow POET to process corn starch more efficiently and economically. Corn fractionation technology or BFRACT is a POET proprietary process that 

separates the corn starch from the corn germ and corn fiber, the cellulosic casing 

that protects the corn kernel. 

154 

The corn germ can be processed to produce crude or refined corn oil which has 

multiple end uses ranging from cooking to biodiesel. The corn fiber, due to its high 

sugar content can be processed to ethanol. 

The corn starch is processed without cooking using another proprietary process 

called BPXT, resulting in an 8–12% reduction in BTU consumption, greater conversion of corn starch to ethanol, and a high nutrient density animal feed product 

which we label Dakota Goldr. This technology is important in that it allows us to 

use less fossil fuel, get better yields of ethanol per acre of corn and provide an animal feed product that the animal agricultural sector can use to replace corn in livestock, dairy, swine, and poultry rations. 

As you can see, corn ethanol plants are highly efficient, they produce more than 

just ethanol, and they serve as sources for cellulosic feedstocks. Integrating cellulosic ethanol plants with corn ethanol plants has some significant advantages, which 

will be addressed later. 

The next step toward cellulosic ethanol production was to incorporate BFRACT 

and BPX into an existing biorefinery. In 2002, POET partnered with the U.S. Department of Energy to construct a ‘‘Second Generation Dry Mill Biorefinery.’’ This 

effort sought to incorporate corn fractionation into a dry mill ethanol plant, processing the cellulosic corn fiber into ethanol and producing higher protein animal 

feed products. POET was able to incorporate a corn fractionation system in to a dry 

mill ethanol plant and to produce a higher protein animal feed product, but the ability to process corn fiber to ethanol proved to be more difficult due to limitations in 

the ability breakdown the corn fiber into usable sugars and for the sugars to be fermented to ethanol by known microorganisms. • In 2006 a new strategy for cellulosic ethanol production was developed at POET 

involving the utilization of existing corn ethanol plants to: • Capitalize on existing infrastructure (utilities, roads, rail lines, materials handling and so forth); •Focus on corn cobs as the primary cellulosic feedstock using the corn ethanol 

plant’s existing farmer and often investor network to collect cobs; • Eliminate the use of fossil fuels by processing waste streams from the cellulosic 

ethanol process to provide energy for the entire plant, the corn to ethanol and cellulose to ethanol portions. 

This approach would enable rapid deployment of the cellulosic ethanol process as 

across an expansive corn ethanol base through a ‘‘bolt-on’’ approach. POET is implementing this strategy through what it called Project LIBERTY, an integrated corn 

cellulose biorefinery. 

Project LIBERTY will transform POET Biorefining—Emmetsburg, an existing 

corn dry mill ethanol plant located in Northwest Iowa, into an integrated corn-toethanol and cellulose-to-ethanol biorefinery. Once complete, the facility will produce 

125 million gallons of ethanol per year (mgpy), 25 of which will come from a feedstock of corn fiber and corn cobs. Also, the facility will annually produce 80,000 tons 

of Dakota Gold Corn Germ Dehydrated and 100,000 tons of Dakota Gold HP animal 

feed. The impact of Project LIBERTY in terms of ethanol production will be 11% 

more ethanol from a bushel of corn through the corn fractionation process and 27% 

more ethanol from an acre of corn through the use of corn cobs. In addition, Project 

LIBERTY will require almost no energy from fossil fuels. The total cost of the 

project will be in excess of $200 million and create at least 30 new jobs at the facility. 

The primary project goal is to design, construct, and operate the commercial-scale, 

integrated cellulosic ethanol biorefinery. Technologies will be replicable. POET’s 

longer-term plans are to roll out the technologies to other existing dry mills or new 

biorefineries. POET is partnered with the Department of Energy in Project LIBERTY whereby DOE will contribute up to 40% or $80 million in project costs. 

Project LIBERTY is expected to be operational in late 2011. 

There are three aspects of cellulosic ethanol production that are integral to Project 

LIBERTY—cellulosic feedstocks, cellulosic ethanol process technology, and the importance of alternative energy generation at a cellulosic ethanol plant. 

POET has established a leadership position in the collection of cellulosic feedstocks. These feedstocks can be agricultural residues such as corn cobs, rice straw, 

or corn stover. They can also be wood fibers such as forestry wastes or wood wastes 

or energy crops such as switchgrass or Miscanthus. Municipal waste can also be a 

cellulosic feedstock. 

POET has selected corn cobs as the first feedstock for the production of cellulosic 

ethanol because they offer significant technical, environmental, and economic advantages. Cobs are typically left in the field after the corn harvest and, with low fertilizer value, can be removed with little environmental impact. Corn cobs are also 

rich in sugars and are heavier that the corn stalk, allowing them to be easily sepaVerDate Nov 24 2008 14:10 Jan 08, 2010 Jkt 037690 PO 00000 Frm 00160 Fmt 6633 Sfmt 6633 C:\DOCUMENTS AND SETTINGS\CWELLS1\HEARINGS\110-113 SCOM1 PsN: JIMC
155 

rated. And lastly they can be collected relatively easily by the same farmers that 

provide the ethanol plant the corn grain. Although the cob is small, we have projected that over 5 billion gallons of cellulosic ethanol could be produced from U.S. 

corn cobs. 

In 2007 POET collaborated with John Deere, Case IH, and a number of major 

farm equipment manufacturers to collect corn cobs from 4,000 acres in Southeastern 

South Dakota. It was a very exciting time. For example, one of our collaborators created over 6 different generations of equipment design while in the field—there was 

a great deal of excitement indeed. Corn farmers began to see the possibility of harvesting corn cobs and the potential to generate new farm income through the sale 

of corn cobs to the ethanol plant. Today, in our labs, we are analyzing the cobs that 

we collected. We are sampling the over 60 cob piles located at the farm to determine 

the cob quality: the rate of decomposition and the performance of stored cobs in the 

production ethanol. We have developed our 2008 cob research plan and expect to 

collect cobs in South Dakota and Iowa to increase our understanding of the cob production process, educate growers, and continue our collaboration with farm machinery companies to ensure that the best technology is available. 

In order to develop and validate the necessary process technology for Project LIBERTY, POET restructured its research effort in cellulosic ethanol and expanded its 

collaborations across major corporations, universities, and research institutes. We 

expanded our internal research and development effort, are nearing the completion 

of a 6 fold increase in laboratory space in Sioux Falls, South Dakota, and will soon 

begin construction of a cellulosic ethanol pilot plant capable of processing multiple 

corn based cellulosic feedstocks such as corn fiber, corn cobs, and corn stover. So 

what has changed about the processing of cellulose to ethanol since 2002 to increase 

our confidence that cellulosic ethanol is achievable? 

Through our collaborations, especially with enzyme companies, we have been able 

to continually improve the process. Recently we devised a process to break down 

corn cobs into simple sugars resulting in a 60% increase in the yield of ethanol from 

cobs compared to just 3 months ago. By using physical and chemical treatments, we 

have been able to make corn cobs more digestible by enzymes without creating toxic 

by-products. We are now able to produce significant amounts of sugars for fermentation to ethanol. 

We have also made significant progress in producing ethanol from simple sugars 

through better microorganisms and a better fermentation process. And lastly, 

through our own cutting-edge process engineering expertise we have devised a synergistic concept for the integration of a corn ethanol plant with one using only cellulosic feedstock. 

While these are very important breakthroughs we expect to be able to further optimize this process over the next few months to achieve the necessary economics to 

make the process profitable. Over time, we will continually improve the process, 

similar to what we are currently doing with the corn ethanol process. 

Alternative energy plays an important role in the cellulosic ethanol process. The 

low value of cellulosic ethanol waste streams as animal feed products makes their 

most favorable use a feedstock for solid waste fuel boilers or anaerobic digestion. 

POET is currently installing a solid waste fuel boiler at POET Biorefining—Chancellor. This boiler at our Chancellor, South Dakota plant will process up to 350 tons 

of dried wood chips from a waste pallet processor to produce steam for the plant. 

POET Biorefining—Chancellor has also reached agreement with the City of Sioux 

Falls to purchase landfill gas for the boiler. By using wood waste and landfill gas, 

the Chancellor plant can eliminate 100 percent of its need for fossil fuels. 

POET’s Project LIBERTY will also incorporate a solid waste fuel boiler in its design. The feedstock for the LIBERTY boiler will be solid wastes from the cellulosic 

ethanol operation and additional corn cobs collected as part of the cellulosic feedstock. When coupled to an anaerobic digestion system to process the liquid wastes 

from the cellulosic process nearly all of the energy needs for the cellulosic- and 

starch-based operations can be met. 

There are many other companies that are also making significant investments in 

cellulosic ethanol. If the development and commercialization of cellulosic ethanol is 

to continue, there are several things that need to happen: 

1. A strong corn-to-ethanol business and infrastructure is crucial to the development of cellulosic ethanol. Without it, cellulosic ethanol will be delayed. The cornto-ethanol industry can provide existing grower networks, production knowledge, 

product, market, and logistics knowledge to emerging cellulose producers and a distribution infrastructure. Financial lenders will support cellulosic ethanol provided 

there is a strong corn to ethanol industry. 

2. The importance of the Renewable Fuel Standard (RFS). The RFS provides an 

important target for cellulosic ethanol—a real and attainable target. Continued supVerDate Nov 24 2008 14:10 Jan 08, 2010 Jkt 037690 PO 00000 Frm 00161 Fmt 6633 Sfmt 6633 C:\DOCUMENTS AND SETTINGS\CWELLS1\HEARINGS\110-113 SCOM1 PsN: JIMC
156 

port of the RFS will be important in demonstrating to the ethanol, transportation 

fuel and financial industries that there will be a market for ethanol. 

3. Increased Usage of Ethanol and Greater Numbers of Flexible Fuel Vehicles. Recent research supports the inclusion of greater concentrations of ethanol as a gasoline replacement—expanding the use of ethanol beyond its historical role as a fuel 

oxygenate. So called ‘‘Mid Level Blends’’ of E20 and E30 have shown to be equal 

and in some cases better in overall miles per gallon with little to no deleterious impact on vehicles that make up the current U.S. automotive fleet. The increased commercialization of flexible fuel vehicles could help drive the greater usage of these 

mid level blends further reducing our dependence on foreign oil, reducing our fuel 

costs and helping the environment. 

4. Governmental support. Governmental programs are necessary, especially during the early stages of the cellulosic ethanol industry development to enable financing at the grower/farmer level as well as cellulosic ethanol producers in terms of 

incentives, loan guarantees and market assurances. The energy title of the House 

passed farm bill provides the support through loan guarantees and a pilot program 

for the harvesting, transporting, and storing of cellulosic material that will move 

cellulosic ethanol much quicker to commercialization. 

5. Continued investment in research and development. Significant cost reductions 

in the cellulosic ethanol process are required. The cost of enzymes still remains one 

of the most significant variable costs associated with the process. Microorganisms 

are only 20% as efficient in converting biomass derived simple sugars into ethanol 

as their counterparts that convert starch to ethanol. 

Thank you for the opportunity to submit recommendations. Poet looks forward to 

working in partnership with the Congress, DOE, and USDA to advance cellulosic 

ethanol to the marketplace in order to meet our renewable energy goals. 

Mr. BOUCHER. Thank you very much, Dr. Stowers. 

Mr. Kripke. 

STATEMENT OF GAWAIN KRIPKE, DIRECTOR, POLICY AND 

RESEARCH, OXFAM AMERICA 

Mr. KRIPKE. Thank you, Mr. Chairman. Thank you, Representative Upton and the members of the Subcommittee. Thanks very 

much for holding this hearing, which is very timely, and in particular for inviting Oxfam to testify and giving us the opportunity 

to bring our concerns and perspectives before you on this important 

issue. 

I am here today representing Oxfam, which is a nonprofit international aid and development organization. We work to reduce 

hunger and poverty in more than 120 countries around the globe. 

We don’t take U.S. government funding. Our support comes from 

American citizens and philanthropies that care about global poverty. 

The reason we are concerned about the issues today is because 

of the rapid rise in food prices around the world. The international 

food price index has been increasing and accelerating in recent 

years. It grew by 9 percent in 2006, accelerated to 40 percent 

growth in 2007 and has been accelerating even faster in the first 

few months of this year. This confluence of commodity price spikes 

across all the major food commodities means that there are very 

few safety valves for consumers to switch foods. So this is creating 

what has been described as a perfect storm of stresses, and in addition, there is every indication that these price increases will be sustained over time and that we may be witnessing a structural 

change in the market. 

While this hearing is about renewable fuels, I hope you will give 

me a minute to talk about poverty and hunger because I think 

these issues are related. The majority of the world’s poor people are 

157 

food producers and so food price increases actually can have a beneficial effect, but all the world’s poor people are food consumers and 

so higher food prices create stresses. On balance, the recent food 

price increases have been more negative for poverty and hunger 

than positive. The World Bank studied the issue and found that 

the recent food price hikes have probably increased global poverty 

by about 4.5 percent. In global terms, that is about 100 million people being pushed into absolute poverty. Put another way, that is 

about 7 years of progress in reducing poverty that has been turned 

back in 1 year. 

Humanitarian agencies like Oxfam and the World Food Program 

are facing real stresses in meeting our fundamental mission. Those 

of us who distribute and use food in our programming are finding 

that our dollars go much less far than they used to and we are having to cut programs. Millions of people may be cut off of food assistance this year because of the high food prices, and the World Food 

Program and other agencies have put out specific appeals to deal 

with the high food prices. 

Now, it is important to remember what these impacts are on 

poor people. In this country, households spend about 10 percent of 

their income on food but in developing countries; poor people can 

spend between 50 and 80 percent of their income on food. So even 

modest increases in food prices can have really devastating impacts 

on households. Food prices require changes in behavior that include reducing food consumption, switching to less nutritious food, 

reduced consumption of other needs like healthcare and education, 

and the sale of assets like livestock and land or some combination 

of these activities. 

We believe that the diversion of corn to ethanol in this country 

is having a significant impact, not just on food prices on this country but globally. The scale of it is quite large. This year we are 

going to convert approximately a quarter of our corn harvest into 

biofuels. That is an increase from 20 percent last year and 14 percent the year before. The volume is almost doubled in 2 years of 

corn diverted from food and feed toward energy. Now, remember 

that 1.2 billion people around the world rely on corn as their preferred staple cereal and the United States is a major exporter. In 

fact, we export more corn than all world’s other exporters combined, so what happens in the U.S. markets has big impacts on 

corn prices and other commodity prices in other countries. So by 

taking 3.1 million bushels of corn off the food market this year, we 

are taking about one-tenth of the global corn production off the 

food market this year, and that is having a global impact. 

The IMF estimates that this year our ethanol mandates are generally one-half of the increased consumption in cereals. Now, we 

have heard other panelists say that they don’t think that the ethanol mandates are having an impact on prices, but our ethanol 

mandates are generating half of the increase in consumption. More 

than China, more than other factors, is the diversion of corn into 

ethanol in this country. What is very worrisome is that these mandates are scheduled to escalate over coming years to approximately 

double within only a few years so the stresses that we are experiencing now could be magnified in future years. 

158 

I want to quickly shift to the recommendations, and I see my 

time is up, so I will make this quick. We have a range of responses 

that range from immediate to longer term. The first is that we 

have to deal with the humanitarian crisis and we recommend that 

Congress fully respond to the UN agency’s appeal for added funds 

to deal with the higher food prices. The World Food Program estimates they need an additional $755 million this year just to keep 

current operations. 

Next, we believe that Congress really needs to sort out the impacts that the ethanol mandates are having. There isn’t yet very 

good and agreed-upon information about what the interrelations 

are between the environment, the ethanol mandates and food 

prices, and so we recommend something along the lines of a blue 

ribbon commission or a consultation with experts to provide a clear 

analysis and recommendations for action, and if the result of that 

analysis is that biofuel mandates are driving up food prices and exacerbating hunger and poverty, we think that Congress should act 

very quickly to freeze or even roll back the biofuels mandates. 

The last two recommendations are that if biofuels do offer benefits for energy security and for the environment, that we should 

consider making the market fair and open and allowing other competitors to compete for our market. Biofuels can offer economic benefits and opportunities for developing countries and there is no reason why they shouldn’t also benefit from this new trend in the 

market. 

[The prepared statement of Mr. Kripke follows:] 

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Mr. BOUCHER. Mr. Kripke, thank you. Your time is expired. 

I want to thank all of the witnesses for their testimony here this 

afternoon and particularly for your patience in awaiting our return 

from that extended stay on the House Floor. 

Let me begin my questions by simply asking for some projections 

from those who care to make these about the time when we can 

anticipate that cellulosic processes for making ethanol will be fully 

commercially feasible and we can anticipate widespread commercial deployment for cellulosic ethanol. Dr. Stowers, you and Mr. 

Kramer perhaps might want to go first on this, but others may 

have some views as well. Dr. Stowers? 

Mr. STOWERS. Yes. Thank you very much for the question. Our 

current Project LIBERTY, as I indicated before, is scheduled to 

be—to start up in 2011. I think that the stepwise approach to 

Project LIBERTY involves our engineering and beginning our construction so we are going through a very methodical approach with 

our DOE funding. 

Mr. BOUCHER. Well, I understand you are going to start making 

the product in 2011, but as I understand your testimony, you are 

also getting substantial government support for that project, and 

my question is, at what point will cellulosic ethanol be able to 

stand on its own and produce fuel for the market that is commercially feasible and competitive with petroleum and other sources? 

Mr. STOWERS. The concept that we have with Project LIBERTY 

involves—it is a commercial demonstration plant of 25 million gallons. Part of our proof of principle at commercial scale will be actually the Project LIBERTY itself. One we have established that, 

then the rollout of a Project LIBERTY bolt-on to existing facilities 

is well within our reach. We have, as I said, 23 plants operational. 

By the end of the year we will have 27 corn-to-ethanol so we will 

be able to roll that in based on the economics demonstrated at LIBERTY. I can’t give you an exact rollout of plants per year but it 

is our intention to capture as much of the cellulose ethanol market 

as we are able to do with the technology and do it profitably. 

Mr. BOUCHER. OK. Well, that is a careful answer. Thank you. 

Mr. Kramer, would you care to comment? 

Mr. KRAMER. Sure. Sir, I think the biggest thing for KL, as we 

look at widespread mass production of cellulose-based ethanol, we 

made our first ethanol back in August of 2007 but, as I said in my 

statement, it was privately funded, and the revenues from our 

corn-based technology have dropped and it has a lot to do with the 

fear that is being instilled by the media and others that cause the 

debt and equity markets in the United States to shy away from 

any kind of ethanol, whether it is corn or cellulose. So we have real 

problems. We are ready to go to the commercial market as soon as 

this summer but our business development guy, as I sit here today, 

is in Paris trying to raise money to build the first plant in South 

Dakota. That is the problem that we have. It is not a matter of the 

technology being ready or not. It needs to be further developed and 

efficiencies need to be improved, no doubt about that, but the point 

is, is that the fear that is out there against all ethanol is causing 

sources of funds to dry up. 

Mr. BOUCHER. Do you believe that if you can raise the capital 

that you are currently seeking that it would be possible to build a 

172 

facility and have it be commercially successful without any level of 

government support? 

Mr. KRAMER. No, I don’t believe that because I do—I believe that 

there still needs to be the same level of support that jump-started 

corn-based ethanol and the oil industry. 

Mr. BOUCHER. So this would be the 51-cent-per-gallon tax benefit? 

Mr. KRAMER. I am not going to say specifically. I can’t say specifically whether the 51-cent would help us or not because that is 

designed for the oil industry to blend it. It is not designed for ethanol production. That is, I think, the confusion that exists out 

there, that any of the subsidies that ethanol might get is not for 

producers, it is for blenders, and that, I think, is the confusion. 

Mr. BOUCHER. All right. Let me ask a little different question, 

and Mr. Faber, we will get your comment on this too. In the year 

2010, current Federal law requires a 100-million-gallon contribution by cellulosic ethanol as a component of the mandate that 

comes into effect in that year. Can that be met? Mr. Dinneen. 

Mr. DINNEEN. Mr. Chairman, let me tell you that I believe that 

we will meet that initial target. I have testified in the past that 

there is not a company that I represent that does not have a very 

aggressive cellulose-to-ethanol research program and there are several companies working on being able to convert fiber, which is already coming into the plant, into ethanol, and that is cellulose material. There is a commercial-scale ethanol facility being constructed today in Georgia, Range Fuels, that will be utilizing soft 

wood, and there are many others. You have Verenium, you have 

Blue Fire that is looking to produce ethanol from municipal solid 

waste. You have Iogen, that has announced that they are going to 

be building a plant in Canada later this year. So there is a lot of 

activity and I believe that we will be able to meet those targets. 

The key though that has been suggested is that if you are going 

to have a second-generation ethanol industry, you have to make 

sure that you have not eviscerated the first-generation ethanol industry that is providing the foundation from which those newer 

technologies will be able to flourish. 

Mr. BOUCHER. All right. Let me ask for those who want to comment on views of Congresswoman Herseth Sandlin’s legislation, 

which was the subject of testimony earlier, that would allow biomass harvested from Federal lands, woody biomass, to be counted 

toward the mandate, and the ethanol manufactured from that 

counted toward the mandate. Views on the appropriateness of that 

legislation, pros and cons, anyone want to comment? Let us start 

with Mr. Greene. 

Mr. GREENE. As I mentioned in my oral statement, we believe 

that legislation would be very detrimental to the progress of making sustainable biofuels. The legislation that passed and was 

signed into law, went from the House to the Senate and back, received a lot of attention and does a very careful job of including the 

vast majority of economically available woody biomass while protecting our national forests and Federal lands, which are an incredibly important reserve of biological diversity and standing carbon. 

Allowing all sorts of other material really only excludes from private lands, old growth, native grasslands and the conversion from 

173 

natural forest to plantations. You can still use all the material on 

plantations. You can still use all the material from natural forests 

that are naturally managed. You just can’t convert it from a natural forest to a plantation. 

Mr. BOUCHER. OK. Well, thank you, Mr. Greene. I gather your 

organization opposes that legislation. 

Mr. GREENE. We do. 

Mr. BOUCHER. Let me just ask you this. If it were somewhat 

more narrowly tailored to assure that if the biomass is harvested 

from the Federal lands for other purposes such as natural thinning 

or just removing deadwood, for example, that otherwise would contribute to greenhouse gas emissions as it decays, would you have 

a different view? 

Mr. GREENE. Well, no, because—— 

Mr. BOUCHER. OK. Well, that is enough. 

Mr. GREENE. But there are good reasons why. 

Mr. BOUCHER. My time is expiring and I do have one other question that I want to pursue, but let me give people on the panel a 

chance to comment with regard to this, if there is something. Mr. 

Kramer? 

Mr. KRAMER. Thank you. Again, our plant being in the Black 

Hills and around the national forest, there is 720,000 tons of piled 

up slash that is there already and that came from harvest programs based on Federal government mandates. All we are asking 

for is that slash. We are not looking to clear-cut. In fact, if you go 

out behind Mt. Rushmore, you can come out this summer and visit 

South Dakota, you will see the effects of thinning the forest makes 

the old growth healthy. So our angle is to go after what has already been harvested. That is all. 

Mr. BOUCHER. Let me just get you to respond to one thing that 

I believe Mr. Greene made as a point, and that is that if you permit that material off of Federal forest lands to be utilized, that utilization might interfere with the orderly development of a feedstock 

market, the growing perhaps of switchgrass or other kinds of 

things that might be devoted to cellulosic ethanol production. Do 

you want to comment with respect to that suggestion? 

Mr. KRAMER. I think the point that I would make there is that 

there is enough biomass, and again, I will refer to the billion-ton 

study that was done by DOE, to go around for everyone and I think 

there wouldn’t be a creeping effect because our—we are as much 

of stewards of the environment as anybody but I don’t believe that 

it would create a competition or an effect on the market. 

Mr. BOUCHER. OK. Well, my time expired long ago and the Chair 

intends to be very generous with other members in terms of their 

use of time as well. So at this time I would be happy to recognize 

Mr. Upton. 

Mr. UPTON. Well, I thank you, Mr. Chairman. I have just a couple of questions. I have a big group that is waiting for me so I am 

going to maybe not use all my time. I will yield some time back. 

A couple questions I have. By the way, Dr. Stowers, I have a district that I have always viewed as a microcosm of the county in lots 

of different ways and I have one particular county that is rumored 

to have 10 times more hogs than people, all right? How are they 

going to like the idea of another draw from the corncobs that those 

174 

hogs are going to otherwise gobble up? Are they going to be OK 

with that? 

Mr. STOWERS. Well, the corncobs that we will be using are corncobs that are typically left on the field and that is part of—— 

Mr. UPTON. A lot of these hogs are outside. 

Mr. STOWERS. Again, we will be collecting cobs simultaneously 

with the collection of grain and those are typically the cobs that are 

left on the field, so we don’t see that impacting that area of Michigan in particular. 

Mr. UPTON. Now, my science tells me that sugar, particularly as 

you look at Brazil, Brazilian sugarcane has been a phenomenal 

source of making ethanol, particularly in Brazil. How does the 

sugar component compare in terms of the quality of the ethanol as 

compared to corncobs? Have you looked at that at all? 

Mr. STOWERS. Well, in terms of the ethanol is ethanol, so the 

quality of the end product should be the same. It is all a matter 

of getting that ethanol to the markets, being able to produce that 

here domestically, being able to offset the foreign oil that we currently purchase for our transportation fuels. 

Mr. UPTON. Now, it is my understanding that of course we have 

I think what is a 54-cent tariff on out-of-country or exports coming 

into this country per gallon. It is estimated that I think the subsidy 

for ethanol domestic producers is about 51 cents a gallon. We have 

seen, as you indicated, somebody indicated, I think Mr. Dinneen indicated that the price of oil went up $2 just since this hearing 

started this morning per barrel. I would like to know each of your 

perspectives in terms of should Congress look at both repealing the 

tariff—I don’t suspect that there is a lot of ethanol that comes in, 

maybe it is because of the tariff—and also suspending the subsidy 

on ethanol, knowing full well that the price is going up as it meets 

that market test. So either a yes-yes, a yes-no, a no-no, whatever. 

Mr. Greene, we will start and go right down the panel. Should we 

get rid of both these subsidies, in your view, or not? 

Mr. GREENE. As I said during my oral testimony, I think we need 

to reform both of them and make them both performance-based. 

Mr. UPTON. Mr. Dinneen? 

Mr. DINNEEN. No, no, but there is a longer answer, and that is, 

it just depends on whether or not you want to subsidize Brazilian 

sugarcane growers and Brazilian ethanol because the tax incentive 

that is available to refiners for ethanol use goes to those refiners 

whether the product is imported or domestic. So if you would remove the secondary tariff, which simply offsets the benefit that 

they would then receive, we are now subsidizing Brazil. And I am 

not really sure that that makes a great deal of sense, particularly 

at a time when we are trying to reform our own farm policies. 

Mr. UPTON. Mr. Drevna? 

Mr. DREVNA. Sir, yes, yes, and I find it intriguing that it is nono but it is our tax benefit that Mr. Dinneen keeps telling us that 

we get. So logic would indicate that it would be yes over there and 

no here if we got it. That subsidy, that direct 51-cent-a-gallon subsidy is directly impacted by the—directly taking into account on 

the price of every gallon of ethanol. That is when I suggested the 

earlier comment where ethanol is cheaper than gasoline doesn’t— 

175 

it can’t be. If you take away that 51-cent-a-gallon subsidy and you 

consider the BTU difference, it is a lot more expensive. 

Mr. DINNEEN. That is simply not true. 

Mr. UPTON. There is a reason why we put you together. 

Mr. Kramer, I am running out of time so—— 

Mr. KRAMER. Yes, sir. Very quickly, I do believe that the mandate should stay in place and the incentives should stay in place. 

However, my caveat is, they shouldn’t stay around forever, and as 

we go through 2022, a stepped reduction in the way that the technology develops, I think that is what we are trying to get to, should 

be maintained to allow us that jump start that we had with corn 

through the cellulose time. 

Mr. UPTON. Mr. Faber? 

Mr. FABER. Yes, we should eliminate the tariff to address record 

food inflation and we should reform the tax credit to make it much 

more attractive to bring cellulosic ethanol to commercial scale very 

quickly. 

Just to answer Mr. Boucher’s question, we expect about 2 billion 

gallons to be online of cellulosic ethanol between now and 2014, so 

it is important to remember it took 20 years for these guys to bring 

their first 2 billion gallons on, so that is a pretty good lead time. 

Mr. TOLMAN. We would agree with the ethanol industry and say 

no, no. In fact, there is not record food price inflation. It is high 

but not record. I will just add that we do import significant quantities of ethanol, I think in the range of 650 million gallons this 

past year. It has been up as high as nearly 1 billion through the 

Caribbean basin. 

Mr. STOWERS. We would be no, no. We believe that a strong cornto-ethanol industry is imperative for a strong cellulose-to-ethanol 

base and achieving the RFS as passed last year. 

Mr. KRIPKE. We would say probably, probably. It needs a bit of 

evaluation, and I think the law of unintended consequences is prevailing today in some of the policies already taken. I think we need 

to do some careful evaluation of both measures before taking any 

steps forward. 

Mr. UPTON. I know my time is expired. Thank you, Mr. Chairman. 

Mr. BOUCHER. Thank you very much, Mr. Upton. 

The gentleman from Washington State, Mr. Inslee, is recognized 

for 5 minutes. 

Mr. INSLEE. Thank you. I just thought of kind of a provocative 

question. I haven’t thought through whether I should ask it or not 

but here goes. We have these significant Federal policies for 

biofuels. I have been a supporter and I am a particular champion 

of the advance of cellulosic ethanol. I think that has a significant 

future for our country and I want to hasten that transition to the 

second and third and get to algae-based biodiesels and the whole 

9 yards. But I was in California yesterday talking to some entrepreneurs who are just doing all of these incredible low- and zerocarbon technologies—enhanced geothermal, solar thermal power, 

advanced photovoltaics. I guess the question is, would anyone on 

the panel say there is a reason not to provide these other low-carbon and zero-carbon potential industries equivalent treatment to 

biofuels? Is there any reason not do to that? 

176 

Mr. FABER. I think anybody who has looked even—certainly not 

as much as you have, Mr. Inslee, but anybody who has looked at 

the energy supply-and-demand problems that this country faces realizes that we should be trying to provide generous incentives to 

get these true green technologies to commercial scale as quickly as 

possible, and that would go for solar, wind, geothermal, et cetera. 

I think there is a critical lack of investment. Certainly that is true 

in cellulosic ethanol where we are—hopefully that will be addressed probably through the Farm Bill but we need—I think it 

was Mr. Rogers who said we need sort of a man on the moon sort 

of level of investment in R&D, loan guarantees, incentives and so 

on to get cellulosic to commercial scale as quickly as possible so 

that we are not pitting our hunger needs against our energy needs. 

Mr. INSLEE. Mr. Dinneen? 

Mr. DINNEEN. Just to give me the opportunity to agree for once 

with Mr. Faber, I will say yes, we have to have all sources of renewable energy to address the critical problems we are facing. 

Again, $122-a-barrel oil. We can’t be saying no to anything right 

now. 

Mr. INSLEE. So I hope you will all put your shoulders to the 

wheel for other industries as well and particularly the investment 

tax credit and the production tax credit we are struggling to get extended that is going to expire this December, and if you have a 

chance to talk to anyone with clout in Washington, D.C., we hope 

that you will do so, even though it is not exactly in your job description. 

I want to address this issue of food prices. You know, we hear 

such disparate economists’ evaluations of this. My own take is that 

my sense is that I think there are much larger forces dealing with 

food prices that are probably the larger bulk of the reason for food 

run-up than biofuels. That is my own kind of take from where I 

am sitting, and the reason I say that, I was listening to George 

Soros talk the other night about the flight of capital from currency 

speculation into commodity speculation that drives up demand for 

commodity speculators and that demand, the real demand is from 

speculators as much as eaters. Now, we have increased demands 

of people in China wanting to eat beef, which takes more grain, 

and world population going up and everything else, but it is something I hadn’t really tumbled to and so you have George Soros saying it is not biofuels policy, it is change in speculation from currency speculators with the collapse of the dollar into commodities. 

I also have trouble buying that a very small number of acres in the 

United States, which is just a portion of the food supply can cause 

this radical increase in multiple products. You know, we have food 

riots about rice and I know there is some transfer from grain to 

grain but I just have a hard time believing that our biofuels policy 

has caused these huge spikes in rice prices causing food riots. So 

at least from where I am sitting, I am seeing the bulk of it caused 

by gas prices, increasing demand, or in currency speculation, increasing demand with population and people eating more meat, 

frankly, around the world. So I am just asking for people to comment on that. Mr. Faber is anxious. 

Mr. FABER. I will start by saying that there are many factors 

that are driving food prices as high as they are and certainly comVerDate Nov 24 2008 14:10 Jan 08, 2010 Jkt 037690 PO 00000 Frm 00182 Fmt 6633 Sfmt 6633 C:\DOCUMENTS AND SETTINGS\CWELLS1\HEARINGS\110-113 SCOM1 PsN: JIMC
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modity speculation is one of them, the weak dollar, export restrictions. Probably one of the most, if not the most significant is simply 

global demand, that we are seeing a huge increase in demand for 

these coarse grains greatly exceeding our capacity to increase our 

yields. In fact, yields over time are falling on average and now they 

are increasing about 1, 1.2 percent a year. So if you look at the 

long-term, long-run projections that USDA put out just this last 

week and when you look at how much demand is going to increase 

because of rising living standards in places like China and India, 

you really start to worry that we are moving into a period of significantly higher commodity prices across the board. Then you have 

to ask the question, why would we make that worse by diverting 

40 percent of our corn and 30 percent of our vegetable oils into our 

fuel supplies. It is not a question of how much our biofuels policies 

or food-to-fuel policies are contributing to this. Clearly there are 

different estimates. The President at one point said 15 percent. 

EPRI said 25 to 33 percent. You would probably get five different 

economists to give you five different answers. The real question is, 

given what we are seeing in the next 5 years, 5 to 10 years with 

global agricultural demand compared with likely increases in 

yields, does it make sense to then go over and above that and divert so much of these basic commodities out of our food supply and 

into our fuel supplies? We would clearly argue it doesn’t. Given 

what we are seeing with ending stocks, what we are seeing with 

sort of an increase in uptick in global hunger, you know, we simply 

can’t afford—the global family can’t afford to divert this much food 

into our fuel supplies. 

Mr. INSLEE. I will just give you one perspective—oh, my time is 

up. I am sorry. 

Mr. BOUCHER. If you want to ask another question, go ahead. 

Mr. INSLEE. I was going to make more of a comment. Would you 

allow comment? I am going to indulge the Chair. Just one perspective. I think that is a very important question. Just from where I 

am sitting, if these policies drive us to the second and third generation of biofuels, which if we play it right I believe that they will, 

and if that achieves some reduction of global warming, which prevents the devastation of our food production capability, which I believe will occur if we don’t make a transfer off of carbon, I think 

it is a more complicated question than that, and just one member 

thinks we should continue leading this work to advance biofuels. 

Mr. DINNEEN. Congressman, if I could just really quickly—because you are absolutely right. The causes of food price inflation 

are extremely complex. The single-most important cause of food 

price inflation is $122-a-barrel oil, and the only thing that we have 

got going to reduce the cost of crude oil and the price of gasoline 

is the use of renewable fuels in this country, and if you eliminate 

renewable fuels, you will drive gasoline prices up further and you 

will drive food prices up much further. 

Mr. INSLEE. Thank you. 

Thank you, Mr. Chair. 

Mr. BOUCHER. Thank you very much, Mr. Inslee. 

The gentleman from Oklahoma, Mr. Sullivan, is recognized for 5 

minutes. 

Mr. SULLIVAN. Thank you, Mr. Chairman. 

178 

My first question is for Mr. Kripke. You propose rolling back the 

renewable fuels standard to avoid large diversions of corn and 

other food supplies from the market. Do you believe that if we fail 

to accomplish this rollback, that hunger caused by food-to-fuel diversion will actually be measurable in incidences of malnutrition 

and death? Is it already happening, and where on earth is that 

happening, if it is? 

Mr. KRIPKE. Thank you, Congressman. We haven’t made a specific recommendation about rolling back. We do believe it needs 

more study but we are concerned about the diversion of food to fuel 

and we do believe it will drive poverty and hunger. Right now the 

most observable impacts of the food price inflation, which is significantly contributed to by this diversion of food, is observable in food 

aid programs where food aid programmers or implementing agencies are not able to provide the actual food delivery and so you are 

seeing cutoffs of 450,000 children from school feeding programs in 

Cambodia, for example, or many other agencies cutting off millions 

of people from food aid. So those people presumably are going to 

have nutrition problems and we are seeing that across the world 

but especially in Asia and Africa. So I think the—as yet we have 

not observed hunger on the increase but we are expecting it because it is simple arithmetic that if income doesn’t rise as far as 

food does, then poverty increases and food insecurity comes. So 

that is probably not exactly what you wanted to hear but that is 

what we have right now. 

Mr. SULLIVAN. Are these children that are being—are they being 

totally cut off or are they just going to less nutritious food sources? 

Mr. KRIPKE. The World Food Program announced that in May 

they will cut off some of their programs in Cambodia and other 

places and the contingencies I am not sure about, whether they 

will have some alternatives, but I suspect not. 

Mr. SULLIVAN. So these children are being totally cut off? 

Mr. KRIPKE. Yes. 

Mr. SULLIVAN. Mr. Drevna, how are you, sir? I have a question 

for you. Your testimony does not touch on other alternatives to unstable foreign oil. Does the NPRA believe that there is a role for, 

let us say, coal-to-liquid fuel or compressed natural gas? 

Mr. DREVNA. Oh, absolutely, Congressman. You know, if we go 

back about 2 hours ago and listen to what Mr. Rogers, his opening 

statement, I think he pretty much summed up what the state of 

the union is right now, and even Bob had mentioned, you know, 

we need all sorts of supply. We need nuke, we need coal, coal-toliquids, and we need biofuels. The problem comes in is when you 

mandate, you know, large volumes of things that really don’t exist 

today in commercial quantities, and you mandate them and the 

penalty will be paid by refiners and other obligated parties for not 

meeting a requirement that somebody else has not met. That is the 

problem. The second problem that we see is, even if these things 

come into existence, the front-loaded volumes of these fuels, once 

we pass E10, and which is going to be very shortly, most people 

are talking about E, you know, 2010, 2011, how are the 250 million 

legacy vehicles in this country going to run on E11, E12, E15, E20? 

They are not going to be warranteed by the auto manufacturers. 

Are we going to tell 250 million Americans who own automobiles 

179 

to go out and buy new ones because we have to figure out how to 

force-fit E15 and E20 into the marketplace? These are the kind of 

things that we have been talking about over the years as this type 

of legislation has emanated. We are in full support, we being 

NRPA, the refiners, the oil and natural gas industries, of biofuels 

but we do say let the market figure out where best to use them, 

how to use them, when to use them. 

Mr. SULLIVAN. And be more realistic about it. 

Mr. DREVNA. I guess that sums it up in one word, yes. Thank 

you. 

Mr. SULLIVAN. Also Mr. Drevna, what is your response to the 

claim that gas prices would be even higher if it were not for the 

RFS? 

Mr. DREVNA. Well, I think there are two responses to that. If you 

look at historic oil prices, crude oil prices versus gasoline prices, 

they tend to track pretty closely. What you are seeing right now 

is a huge divergence. The oil price at $120, $122 a barrel and what 

you are seeing at the retail stations today do not track. There is 

a much larger delta than one would expect. Now, why is that? That 

is because in the beginning of 2008, inventories of gasoline are at 

a 5-year high. Remember last year or the year before, those inventories were much lower and the prices spiked a lot higher. So yes, 

are gasoline prices high today? Absolutely. Are they as high as they 

would be given the fact where crude oil is today? Absolutely not. 

So it is not that ethanol is being put into the mix. I mean, if you 

really look at what the cost of ethanol is, again, as I said previously, on a BTU basis, it is 30 percent more because of simply 

the BTUs. You take away that tax credit and it is uneconomical. 

Mr. SULLIVAN. Thank you, Mr. Drevna. 

Mr. BOUCHER. Thank you very much, Mr. Sullivan. 

Under the rules of the committee, we need to go to Mr. Shimkus 

next and take questions from subcommittee members before turning to those who are not subcommittee members, so Mr. Shimkus 

from Illinois for 5 minutes. 

Mr. SHIMKUS. Thank you, Mr. Chairman, and I appreciate that 

and my good friend, Gene Green. 

I guess—I have been in and out like everybody in a lot of different hearings. The hearing is basically about the food-fuel debate. 

I think it has been clearly—USA Today did an editorial a couple 

days ago that said weather, energy costs, changing habits, renewable fuel—that was the four reasons. Renewable fuel was one. One 

of three other things was environment, drought, energy costs. And 

it was quoted to me last week that for commodity product to get 

out of the field, which I have a lot of them, to the grocer’s shelf, 

travels about 1,500 miles to 2,000 miles at double the cost of diesel 

today. That has got to have a major impact on the high cost. We 

have—you have heard my ranting and raving over the past couple 

weeks. The frustrating thing from those of us who are supply guys, 

I am a more-is-better guy, Mr. Green. Because if you had more, 

then they could compete in the market and it would drive down 

costs. But when we talk about the ability for people to pay for food 

around the world, it is just like the LIHEAP debate. We don’t explore our own resources so the demand goes up, so it costs more 

to heat your homes, so then we taxpayers have to pay to help the 

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people who can’t afford home heating. Now, here we have the same 

equation. We won’t go to our natural resources. We don’t go to the 

OCS, Outer Continental Shelf. I have got the numbers of how 

much oil and natural gas is there. Whether it is the East Coast or 

the West Coast or the West Gulf or the East Gulf, or we won’t go 

to ANWR to bring in these reserves so that we have an inflated 

price for crude oil, and I have the chart. It is $122. That is right. 

That is the quote right now, $122 a barrel. That spikes diesel costs, 

which pushes higher food costs, which then we now have to pay 

more taxpayers’ dollars to help people subsidize their food costs. 

Wouldn’t a better opportunity be to help push and drive down fuel 

costs by bringing on more supply? More supply. 

Mr. Drevna, you represent the refiners. How can we justify not— 

why haven’t we built a new refinery in this country in 30—what 

is it, 32 years? A new one from ground level. We have expanded, 

but haven’t we built a new one? 

Mr. DREVNA. Well, I mean, it comes down to siting and cost. 

Mr. SHIMKUS. Siting and cost? 

Mr. DREVNA. Yes, and one thing—I mean, the things we have 

done, Congressman, you and I have had some discussions about 

this in the past is that if you look at the statistics, we as an industry have been adding the equivalent of one new world-class refinery 

per year for the past 12 to 14 years. 

Mr. SHIMKUS. And I appreciate that, because I visited the 

ConocoPhillips refinery down in Wood River. They are the size of 

the four other refineries that used to stand there. I never—and I 

appreciate that expansion but my point being, in the 2005 energy 

bill when we would not move to incentivize new refineries, and you 

heard my opening statement that we are importing refined product, 

that ought to make you feel good. As a guy who represents refiners 

and the companies and the people that work those jobs, that we 

lose that capital, we lose that siting, we lost that tax base because 

we are importing refined product. That is nuts. So what do we do? 

We incentivize renewable fuels. We send a signal. We have 147 

ethanol plants from the ground up and now we want to send a signal, oh, no, markets, we want to stop. How many of your refineries 

now have the biofuels—you say you supported it. How many are 

actively involved in producing ethanol or biodiesel portion of the refineries? 

Mr. DREVNA. Sir, I am going to have to get back to you on that, 

on exact statistics, but rest assured, this industry has devoted a lot 

of research and a lot of capital into producing biodiesel at the refineries on the front end. 

Mr. SHIMKUS. Biodiesel? 

Mr. DREVNA. Biodiesel, yes. 

Mr. SHIMKUS. Which, you know, we started one in May 1988 including that in the EPAct and which it was our legislation that 

came through this committee. 

Mr. DREVNA. But again, I can emphasize that it is going to take 

a whole menu of options, and you referenced the Outer Continental 

Shelf, both for oil and natural gas, and the same could be said for 

some lands that have been artificially kept out of development, you 

know, on land. Thirty-five years ago, 40 years ago, maybe that was 

181 

the right thing to do, not with today’s technologies. We could 

produce that very environmentally sound. 

Mr. SHIMKUS. I would concur, and if one message is to be sent 

from this is to make sure that you don’t have one bad actor, and 

I don’t think we have really decided this, whether energy input, 

changing habits and renewable fuels has driven up the cost of commodity products. But if we get a control with a national energy policy that talks about supply and we look at the East Coast, the 2.31 

billion barrels of oil there, and the 24.05 trillion cubic feet of natural gas, the eastern gulf of 3.5 billion barrels of oil and the 12.31 

trillion cubic feet of natural gas or the West Coast with 10.71 billion barrels of oil and 18.95 trillion cubic feet of natural gas, that 

is not even talking about ANWR, that that supply has to be made 

accessible so that we drive the cost of everything down, which 

would drive the cost down of food. 

Mr. Chairman, you know my positions on supply and I am just 

trying to reiterate it. Thank you. 

Mr. BOUCHER. Thank you very much, Mr. Shimkus. 

The gentleman from Texas, Mr. Green, is recognized for 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman, and it is great to follow 

my colleague from Illinois, who does have refiners and refineries in 

Illinois, because I am familiar with them, but coming from the area 

I have in Houston, we have a whole lot of them. But we also 

produce in the western gulf. It is the eastern gulf that we are having trouble with that is off Florida. We produce off of the western 

gulf in Texas a great deal of product. 

Mr. Dinneen, let me ask you, because I have heard some questions earlier and I would like to have testimony on the studies of 

the efficiency or the BTU equivalent of ethanol versus gasoline. I 

have heard 25 percent, 30 percent. Is the efficiency or the BTU 

ratio for a gallon of ethanol in relationship to gasoline, what does 

Renewable Fuels Association have? 

Mr. DINNEEN. Good today and improving all the time and certainly much, much better than $120-a-barrel crude oil. 

Mr. GREEN. Oh, no, I am talking about the efficiency, because I 

have heard it is 80 percent or 75 percent of a gallon of gasoline. 

Mr. DINNEEN. Energy in, energy out, you get 80 percent—— 

Mr. GREEN. How much do I get if I put ethanol—— 

Mr. DINNEEN. With ethanol you get, according to the latest DOE 

analysis, 1.64 BTUs for every BTU that goes into the production 

of the ethanol. But as I said, we are getting better all the time. Oregon National Labs just a couple of weeks ago released a study 

from an analysis, a survey of the industry that showed just in the 

last 4 years, Congressman, dry mill ethanol plants have improved 

their energy efficiency by some 22 percent. With each new ethanol 

plant that opens up, and they are opening up all the time including 

some in Texas, they are using the most efficient technology and our 

energy balance is improving every day. 

Mr. GREEN. Well, what I am trying to do is, if I buy a gallon of 

ethanol and put it in my Chevy Tahoe and I buy a gallon of gasoline, the efficiency of that gallon of gasoline. I know the refineries 

are getting more efficient. In fact, we do have oil refineries that are 

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much more efficient today and are getting better every day too, but 

what is that equivalent? 

Mr. DINNEEN. It is roughly 76, 77 percent on a BTU basis. Now, 

it is important, though, to recognize that ethanol is going to burn 

more efficiently than gasoline but nonetheless, if you are utilizing 

ethanol as your replacement to gasoline, you are going to have 

fewer BTUs. 

Mr. GREEN. Well, then at 76, 77 percent, that is with what I understand, and I have an E85 pump in my district that I get to look 

at every once in a while, and I notice—— 

Mr. DINNEEN. It is a lot cheaper than gasoline, isn’t it? 

Mr. GREEN. About 40 cents, and if you factor in $3, and in Texas 

it is $3.49 or $3.50 a gallon, and, you know, if you factor in that, 

it is less efficient. 

Mr. DINNEEN. Well, typically the refiners or the marketers will 

price the ethanol to be cost-competitive on a BTU-adjusted basis. 

The E85 pump that I go to, it is about 45, 50 cent cheaper and the 

flexible fuel vehicle I drive, it certainly gets better mileage on a 

dollar-in basis than with gasoline. 

Mr. GREEN. Let me ask Mr. Drevna, is that the same information 

that you have? 

Mr. DREVNA. On the BTU value, that is correct. It is a lot less 

BTUs per gallon of ethanol. I didn’t realize that we priced the ethanol though. I thought the ethanol producer did, but—— 

Mr. DINNEEN. The gasoline marketers that are selling the E85 

are selling it and those are the members. I will introduce you—— 

Mr. GREEN. OK—— 

Mr. DREVNA. But anyway, when you factor in that E85, the number of automobiles that can actually take E85 are, what, 4 to 6 million or something like that on the road today, when you factor in 

the fact that although our domestic auto manufacturers have indicated they are going to increase production of E85 vehicles over the 

next few years but still produce gasoline-only vehicles at a rate of 

about 6 to 7 or 8 to 1, we are still going to have to figure out how 

we are going to do anything over E10 for the long term. 

Mr. GREEN. Can the members of your association meet the mandate for RFS that was mandated in the 2007 energy bill? 

Mr. DREVNA. We have—there are two or three problems we have, 

Congressman Green. One is, even if the large volumes, 9 billion 

gallons in 2008, 11 billion gallons in 2009, even if they are produced, which, again, I think is still a question, the other part is, 

how is—the infrastructure. How are we going to get that to the 

blending facilities? We haven’t figured that out yet. And if we don’t 

meet it, we are the ones that are penalized. So the jury is out on 

that. We are very concerned, and if you heard the testimony from 

Mr. Meyers this morning, that is one of the problems the EPA is 

having and how we are going to implement these rules. 

Mr. GREEN. Mr. Chairman, I know I am out of time and we have 

a vote call, but I asked a question earlier of the EPA on the RFS 

requirements, the study requirements, and I would like to ask if 

the results of these studies are found to be negative harmful impacts on the industries or the environment, would they be willing 

to require the EPA to adjust the mandate to prevent unintended 

consequences that may have been done in the 2007 energy bill. Is 

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that—just in the brief period of time we have, is there a feeling 

that we ought to be able to have that mandate instead of just EPA 

being willing to consider it? 

Mr. DREVNA. I think our testimony is that we should take a long, 

deep breath as a Nation, look at what the art of the possible is, 

not what we want to do, what we can do, and I think if you look 

at the 2007 Energy Independence and Security Act, it is what we 

would want to do, far from what we can do today. 

Mr. DINNEEN. And I would hope that we would want to take just 

as close a look at the environmental and health impacts of increased gasoline supply coming from Canada and the tar sands because if there isn’t ethanol, where are we going to get this increased fuel supply? More and more of it is going to come from 

much more environmentally sensitive parts of the globe. 

Mr. GREEN. Mr. Chairman, I understand we do import a lot of 

oil from tar sands but I don’t know of any refined product that we 

are getting from up there, because typically that comes to our refineries in Illinois and maybe even Texas if we can get some pipelines there. 

Mr. FABER. I would just add, Mr. Green, that I do agree that we 

need to revisit the mandate and figure out how much we can really 

afford to divert from our food supplies into our fuel supplies, not 

just this year but in the next few years. I think a really important 

point that has been missed here is that in the short, medium, and 

long run, corn ethanol is not going to be able to displace very much 

of our gasoline supplies or ultimately impact the price of gas very 

much. It is cellulosic ethanol and the enormous amount of biomass 

that holds a lot more potential in the long run, and the decision 

to divert either—whether it is 6.5, 7, 8, or 9 billion gallons in 2008, 

whatever that number is will have no effect whatsoever on the development of those second generation of fuels. I concede that if you 

got rid of all the mandates entirely, that would have a detrimental 

impact on the development of these second-generation fuels, but if 

Congress decided to divert 6.5 or 7 billion gallons instead of 9 this 

year, good lord, I don’t think that will have any impact on whether 

Wall Street decides to bet on Vinod Khosla or something else, 

so—— 

Mr. BOUCHER. Thank you very much, Mr. Green, and again 

thanks to all of the members of this panel for joining us here today. 

We, I think, have learned a lot as a consequence of today’s hearing 

and we will consider whether or not additional testimony will be 

necessary as we continue our evaluation of questions relating to 

biofuels. There may be additional questions that members of this 

committee have to those who have testified here today, in which 

case they will be submitting in writing, and we will keep this 

record open for a brief period of time for questions to be submitted 

to you by others and for your responses. 

So with the Chair’s thanks, this hearing stands adjourned. 

[Whereupon, at 3:30 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 

STATEMENT OF HON. JOHN D. DINGELL

Mr. Chairman, thank you for convening this important and timely hearing. We 

are here today to examine our biofuels policy from several standpoints. 

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First, what progress has the Environmental Protection Agency (EPA) made in implementing the Renewable Fuels Standard (RFS)? 

The original RFS was enacted as part of the Energy Policy Act of 2005. It was 

expanded under the Energy Independence and Security Act of 2007 (EISA) which 

directs EPA to finalize many of the rules required to implement the new elements 

of this program by December 2008. The Agency did a commendable job in implementing the first RFS and was widely praised for the balanced way it pursued consensus, consistent with the law. We expect it will do the same in this instance. 

The new RFS contained in EISA is an aggressive approach to biofuels policy. It 

attempts to both accelerate deployment of traditional ethanol and hasten the arrival 

of cellulosic biofuels, while balancing the need to reduce greenhouse gas emissions 

with the need for EPA to grant waivers should unforeseen events arise. Whether 

the Act’s goals will be realized remains to be seen. In the meantime, this committee 

must be vigilant in its oversight of the program to see how close, or far, we are to 

achieving those goals. 

I would observe that the ink had hardly dried on this new law when the clamoring began to alter the RFS, and these requests for congressional intervention continue. In my view, amendments to the law at this time would be unwise and could 

lead to unintended consequences. 

I believe that all stakeholders would be well-advised to consult with the EPA as 

it develops the rule and try to address any concerns within that forum. If unresolved issues still remain after the rule is finalized, there may be need for congressional action. To act in advance of that date, however, undermines important processes. 

Second, this hearing will examine many of the recent questions raised about 

biofuels, including the following: the effects of RFS on grain and food prices; the 

interaction between the price of oil and increased food prices; the role ethanol plays 

in the retail price of gasoline; the impact that increased biofuels production could 

have on the environment, particularly through land use changes; and how biofuels 

policy affects issues of hunger and poverty. 

Biofuels policy impacts a broad range of crucial global issues, requiring us to be 

vigilant toward the potential consequences of these policies. I look forward to the 

insights from our witnesses on these matters and appreciate their appearance before 

the Subcommittee today. 

STATEMENT OF HON. CHARLES W. ‘‘CHIP’’ PICKERING

Thank you, Mr. Chairman, for the chance to discuss The Renewable Fuels Standard and its implementation and opportunities. 

My colleagues on both sides of the aisle worked together to craft the original 

framework for a renewable fuels standard in the 2005 energy bill. 

With its passage and implementation, we put our country on a path to cultivate 

and depend on its own energy resources, ranging from the traditional source in coal 

to the alternative in woody biomass. 

Industry response was evident: nuclear enjoyed a resurgence in new license applications; corn-based ethanol facilities increased production; automobiles became more 

efficient. 

To supplement these efforts, Congress should focus on technology incentives to 

speed the development of additional energy sources that improve the quality of 

lives, not increase the cost of living. 

In my district, Mississippi State University is currently working on two technologies that offer viable long-term solutions. 

The first project is using woody biomass to produce cellulosic ethanol from syngas. 

The supply of wood-waste is vast and would not compete within its industry or with 

our food supply. 

Currently, the 2007 energy bill does not recognize forest biomass in its definition 

and excluding it leaves out a tremendous energy source. 

Including forest biomass in Section 201 of last year’s energy bill could increase 

cellulosic ethanol production on schedule with its mandate. Additionally, it offers 

the public reduced wildfire risk, reduced insect infestations, improved wildlife habitat for outdoor recreation, and a new market opportunity for the family forest 

owner. 

A second technology Congress should consider is the conversion process of wastewater to biocrude. 

Municipal wastewater presents numerous opportunities as a fuel source. 

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It also works outside our food supply and offers substantial economic and environmental opportunities for metropolitan areas and defense installations around the 

world. 

Wastewater facilities are ideally suited to produce biocrude on a large scale. It can 

be refined into renewable propane and diesel and utilize the existing petroleum 

transport infrastructure. 

I hope our committee and this Congress will continue to work together to advance 

alternative fuel production and thank you, Mr. Chairman, for my time. 

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