SPEAKERS CONTENTS INSERTS
Page 1 TOP OF DOC
61–020 CC
1999
1999
THE NATIONAL SUSTAINABLE FUELS AND CHEMICALS ACT OF 1999 AND BIOMASS RESEARCH
HEARING
BEFORE THE
SUBCOMMITTEE ON RISK MANAGEMENT,
RESEARCH, AND SPECIALTY CROPS
OF THE
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
ON
H.R. 2827
OCTOBER 19, 1999
Page 2 PREV PAGE TOP OF DOC
Serial No. 106–38
Printed for the use of the Committee on Agriculture
COMMITTEE ON AGRICULTURE
LARRY COMBEST, Texas, Chairman
BILL BARRETT, Nebraska,
Vice Chairman
JOHN A. BOEHNER, Ohio
THOMAS W. EWING, Illinois
BOB GOODLATTE, Virginia
RICHARD W. POMBO, California
CHARLES T. CANADY, Florida
NICK SMITH, Michigan
TERRY EVERETT, Alabama
FRANK D. LUCAS, Oklahoma
HELEN CHENOWETH-HAGE, Idaho
JOHN N. HOSTETTLER, Indiana
SAXBY CHAMBLISS, Georgia
RAY LaHOOD, Illinois
JERRY MORAN, Kansas
BOB SCHAFFER, Colorado
JOHN R. THUNE, South Dakota
Page 3 PREV PAGE TOP OF DOC
WILLIAM L. JENKINS, Tennessee
JOHN COOKSEY, Louisiana
KEN CALVERT, California
GIL GUTKNECHT, Minnesota
BOB RILEY, Alabama
GREG WALDEN, Oregon
MICHAEL K. SIMPSON, Idaho
DOUG OSE, California
ROBIN HAYES, North Carolina
ERNIE FLETCHER, Kentucky
CHARLES W. STENHOLM, Texas,
Ranking Minority Member
GEORGE E. BROWN, Jr., California 1
GARY A. CONDIT, California
COLLIN C. PETERSON, Minnesota
CALVIN M. DOOLEY, California
EVA M. CLAYTON, North Carolina
DAVID MINGE, Minnesota
EARL F. HILLIARD, Alabama
EARL POMEROY, North Dakota
TIM HOLDEN, Pennsylvania
SANFORD D. BISHOP, Jr., Georgia
BENNIE G. THOMPSON, Mississippi
JOHN ELIAS BALDACCI, Maine
Page 4 PREV PAGE TOP OF DOC
MARION BERRY, Arkansas
VIRGIL H. GOODE, Jr., Virginia
MIKE McINTYRE, North Carolina
DEBBIE STABENOW, Michigan
BOB ETHERIDGE, North Carolina
CHRISTOPHER JOHN, Louisiana
LEONARD L. BOSWELL, Iowa
DAVID D. PHELPS, Illinois
KEN LUCAS, Kentucky
MIKE THOMPSON, California
BARON P. HILL, Indiana
Professional Staff
WILLIAM E. O'CONNER, JR., Staff Director
LANCE KOTSCHWAR, Chief Counsel
STEPHEN HATERIUS, Minority Staff Director
KEITH WILLIAMS, Communications Director
Subcommittee on Risk Management, Research, and Specialty Crops
THOMAS W. EWING, Illinois, Chairman
BILL BARRETT, Nebraska,
Vice Chairman
NICK SMITH, Michigan
TERRY EVERETT, Alabama
Page 5 PREV PAGE TOP OF DOC
FRANK D. LUCAS, Oklahoma
SAXBY CHAMBLISS, Georgia
RAY LaHOOD, Illinois
JERRY MORAN, Kansas
JOHN R. THUNE, South Dakota
WILLIAM L. JENKINS, Tennessee
GIL GUTKNECHT, Minnesota
BOB RILEY, Alabama
GREG WALDEN, Oregon
MICHAEL K. SIMPSON, Idaho
DOUG OSE, California
ROBIN HAYES, North Carolina
ERNIE FLETCHER, Kentucky
GARY A. CONDIT, California,
Ranking Minority Member
GEORGE E. BROWN, Jr., California 1
CALVIN M. DOOLEY, California
EARL F. HILLIARD, Alabama
EARL POMEROY, North Dakota
SANFORD D. BISHOP, Jr., Georgia
JOHN ELIAS BALDACCI, Maine
VIRGIL H. GOODE, Jr., Virginia
MIKE McINTYRE, North Carolina
DEBBIE STABENOW, Michigan
Page 6 PREV PAGE TOP OF DOC
BOB ETHERIDGE, North Carolina
CHRISTOPHER JOHN, Louisiana
LEONARD L. BOSWELL, Iowa
KEN LUCAS, Kentucky
MIKE THOMPSON, California
(ii)
C O N T E N T S
Barrett, Hon. Bill, a Representative in Congress from the State of Nebraska, prepared statement
Condit, Hon. Gary A., a Representative in Congress from the State of California, prepared statement
Ewing, Hon. Thomas W., a Representative in Congress from the State of Illinois, opening statement
Stabenow, Hon. Debbie, a Representative in Congress from the State of Michigan, prepared statement
Stenholm, Hon. Charles W., a Representative in Congress from the State of Texas, letter of October 20, 1999 to Mr. Ewing
Witnesses
Desrochers, Paul E., director, fuel procurement, Thermo Ecotek Corp.
Prepared statement
Gonzalez, I.M., Under Secretary, Research, Education, and Economics, U.S. Department of Agriculture
Prepared statement
Holt, Don A., senior associate dean, College of Agricultural, Consumer, and Environmental Sciences, University of Illinois
Page 7 PREV PAGE TOP OF DOC
Prepared statement
Jones, Richard L., chair, Experiment Station Committee on Organization and Policy, and director, Florida Agricultural Experiment Station
Prepared statement
Reicher, Dan, Assistant Secretary, Energy Efficiency and Renewable Energy, U.S. Department of Energy
Prepared statement
Udall, Hon. Mark, a Representative in Congress from the State of Colorado
Wilson, Douglas A., president, Illinois Corn Growers Association
Prepared statement
Yost, Mike, president, American Soybean Association
Prepared statement
THE NATIONAL SUSTAINABLE FUELS AND CHEMICALS ACT OF 1999 AND BIOMASS RESEARCH
TUESDAY, OCTOBER 19, 1999
House of Representatives,
Subcommittee on Risk Management,
Research, and Specialty Crops,
Committee on Agriculture,
Washington, DC.
The subcommittee met, pursuant to call, at 10:12 a.m. in room 1300, Longworth House Office Building, Hon. Thomas W. Ewing (chairman of the subcommittee) presiding.
Present: Representatives Barrett, Smith, LaHood, Gutknecht, Ose, Hayes, Condit, Pomeroy, Baldacci, Goode, Etheridge, Boswell, Lucas of Kentucky, and Stenholm [ex officio].
Page 8 PREV PAGE TOP OF DOC
Also present: Representative Minge.
Staff present: John Goldberg, professional staff; Ryan Weston, subcommittee staff director; Christy Cromley, legislative assistant; Wanda Worsham, chief clerk; Callista Bisek, scheduler/clerk, Anne Simmons, minority consultant.
OPENING STATEMENT OF HON. THOMAS W. EWING, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS
Mr. EWING. The hearing of the Subcommittee on Risk Management, Research, and Specialty Crops to review H.R. 2827, the National Sustainable Fuels and Chemicals Act of 1999, and biomass research, shall come to order.
I want to welcome you to this morning's hearing to review H.R. 2827, The National Sustainable Fuels and Chemicals Act of 1999. I would like to thank our witnesses for taking time to appear before our subcommittee on this important piece of legislation.
While the title of this legislation may lead you to believe that this topic can be extremely technical in nature, the goal of this legislation is simple: to authorize research that will allow the coproduction of food and chemicals from a single plant and to find ways to use an entire plant more efficiently in the production of biobased products.
People may wonder why this legislation is critical to the United States. With the world population expected to grow from today's current 6 billion people to an estimated 10 billion people in the next 55 years, simply providing the amount of food and fuel needed to live at today's standards will be a daunting challenge in the years to come.
U.S. citizens enjoy the benefit of automobile transportation, largely dependent upon oil transports. The recent increase in gasoline prices at the pumps have made it all too clear just how dependent we are on imported oil.
U.S. farmers have long been the envy of the world regarding their efficiency and production levels. While current farm gate prices are extremely low, finding other sources of income for U.S. farmers may be the perfect way to help increase their net farm incomes.
Page 9 PREV PAGE TOP OF DOC
I would like to give you a brief overview of H.R. 2827 to discuss how this bill can help with increasing U.S. biobased fuel production and increasing farm income at the same time.
Biomass products, including biobased fuels, can be derived from corn or any type of plant, tree, or organic agricultural waste, such as rice hulls and sugarcane stalks. The bill creates a sustainable fuel and chemical research initiative to award competitive grants, contracts, and other financial assistance to research entities, and it would authorize $49 million a year, from 2000 to 2005 to fund the initiative.
The legislation would further establish a Sustainable Fuel and Chemical Board to coordinate the programs. The Sustainable Fuel and Chemical Board would consist of high-level officials from the Departments of Agriculture, Energy, and Interior; the Environmental Protection Agency; the National Science Foundation; and the Office of Science and Technology.
The legislation also establishes a Sustainable Fuel and Chemical Technical Advisory Committee, which is comprised of seven members who have expertise in biobased products.
These professionals will provide guidance to the Board in determining how to award the grant and research money authorized in the bill. New research created by this legislation will help to provide in the expedited development of alternative fuels that are environmentally friendly. Problems with alternative fuels such as MTBE have proven the need for more environmentally-friendly alternative fuels, such as ethanol.
The bill will also authorize the appropriation of $14 million to the U.S. Department of Agriculture in 2000 to construct a pilot plant for corn-based ethanol research. This pilot plant and further research authorized in this bill will assist in providing the information on the benefits of ethanol to the Federal Reformulated Gasoline Program.
H.R. 2827 is needed to ensure that this committee meets its responsibilities to authorize and encourage research for competitive energy sources such as those which may be developed from continued biomass research.
Page 10 PREV PAGE TOP OF DOC
My bill is a companion bill to legislation that Senator Lugar has introduced, Senate bill 935. These two pieces of legislation build upon an idea expressed in a White House Executive Order released in August of this year. Both Senator Lugar and I understand how much each and every research dollar is valued. Because this is such important research, not only for agriculture producers, but also for those interested in protecting the environment and creating a sustainable energy supply, we need to push forward with this legislation. We cannot afford to let other countries be the first to develop and monopolize new technologies, since it may lead to our future dependence on imported energy sources.
It will take an organized effort in these emerging technology sciences to engage their development and growth.
We will also hear from one of our colleagues on the Science Committee, who has introduced similar legislation, which further proves the need and interest for more research in this area.
I look forward to today's testimony and am eager to hear about the new and exciting biomass opportunities which may be discovered in the near future.
If any other Members have opening statements, I would encourage them to submit them for the record.
PREPARED STATEMENT OF HON. BILL BARRETT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEBRASKA
Thank you, Mr. Chairman for holding this very important hearing to discuss H.R. 2827, the National Sustainable Fuels and Chemicals Act of 1999. This bill is very important as we continue to address the many concerns regarding the future of biotechnology.
As you know, this bill would establish a research initiative into the variable uses of bioengineered commodities. Our farmers are experiencing a tough time when it comes to marketing and establishing a market for their crops. Also, biotechnology is one of the most important issues as agriculture moves into the next century.
Page 11 PREV PAGE TOP OF DOC
This legislation would move bioenergy/biomass industry together for a joint research initiative that could prove to be very beneficial in the near future. By combining the two industries the research that is derived will lead to better coordination and improved innovation.
The results of this research will lead to new markets in the agriculture economy, as well as broadening the existing markets. It appears that corn and soybeans will benefit the most through ethanol and biodiesel. With the current excess supply of soybeans, biodiesel could become a valuable market to soybean farmers in the Midwest.
The future of biotechnology is on every soybean and corn farmer's mind as he prepares for the upcoming planting season. It seems like only last year that genetically modified seeds were introduced as a move into the future of agriculture. Producers in Nebraska have used the genetically modified seed in the past and have expressed the numerous benefits of planting genetically modified seed as opposed to conventional seed. It has allowed farmers to control their crops while lowering the number of chemical applications.
The research that this bill will provide could open markets that we never thought were possible in the agriculture industry. Through this committee, I will continue to express the importance of biotechnology to the future of agriculture. I believe the research that has been conducted regarding biotechnology is very important to the future of our Nation's farmers.
Again, I would like to thank the chairman for holding this very important hearing. I look forward to hearing testimony from our distinguished panel of witnesses.
PREPARED STATEMENT OF HON. GARY A. CONDIT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Chairman, thank you for having this important and educational hearing. I cannot think of a better time for this subcommittee to address the potential value of renewable resources as the world approaches a new millennium with a rapidly growing population. This means that we have to get more creative in using materials often considered ''excess'' or ''waste,'' while being environmentally and economically sound.
Page 12 PREV PAGE TOP OF DOC
California has unique traits that make it a viable candidate for using biobased products: high pollution, densely-populated cities, limited water, and one of the most diverse and productive agricultural areas in the world. Not only does California have the need for biomass research, but it also has an abundant biomass supply.
Energy produced in California accounts for more than 30 percent of the Nation's biomass-generated electricity—far more than any other State. Wood wastes, rice straw, and specialty crop residues are all used to produce energy. This provides a valuable use for pits from peaches, prunes, and olives and shells from walnuts and almonds. Otherwise, these wastes would be burned in open fields or dumped into landfills. By reducing smoke and methane emissions, we help improve air quality of the Central Valley. Other benefits include increased employment opportunities in a high unemployment area, more tax revenue to rural communities, and a decreased risk of wildfires.
Other efforts being undertaken in California include the conversion of rice fiber into low cost fiberboard to replace wood, insulation, and drywall materials. Rice straw may also be converted into ethanol and citric acid. These uses reduce the amount of rice straw currently being burned after harvest.
The University of California system is also involved, creating and evaluating new technologies to promote emission reduction and energy efficiency in transportation and manufacturing processes. This includes production of methanol, as opposed to ethanol, from renewable resources to use as a primary fuel, fuel additive, or hydrogen energy source. Researchers are also developing economical and viable uses for animal waste, which is sorely needed by the entire sector of animal agriculture. This is especially important to the dairy and poultry producers in my district.
Mr. Chairman, I commend you for your bill, H.R. 2827, the National Sustainable Fuels and Chemicals Act of 1999. The coordination of research and application efforts among public and private entities is vital in furthering the opportunities to use such unconventional resources.
Page 13 PREV PAGE TOP OF DOC
While I have no doubt scientists can create bioenergy and other bioproducts, I do recognize the economic and logistic challenges of applying these discoveries to real world uses. Farmers must want to supply biomass, industry must want to use biomass, and consumers must want to buy biobased products. Through proper regulation and oversight, Congress can assist in making this transition easier. I look forward to hearing input from the panel discussions today.
PREPARED STATEMENT OF HON. DEBBIE STABENOW, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN
Mr. Chairman, thank you for bringing the subcommittee today to review the important issue of biomass research. I appreciate the opportunity to consider the legislation before us, H.R. 2827, the National Sustainable Fuels and Chemicals Act of 1999.
As we all know, biomass research is a critical issue for the 21st century. Not only will biomass research open new markets for agricultural commodities and byproducts, but it holds the promise of improving our global environment and our Nation's energy security. Earlier this year, I was pleased to participate in a event on the National Mall as the Argo research team completed a cross-country drive in a truck that used biobased lubricants. The composition of the lubricant was 100 percent biobased materials, a good majority of which were derived from soybeans. Michigan soybean producers have formed a partnership with Argo and are working to develop a marketable product. I am proud that a fleet of postal vehicles in Michigan have already contracted with Argo to use the lubricant. I am encouraged by this progress and strongly support the continued development of biobased products.
I am pleased with the legislation that is before us today. It is critical that the research efforts at USDA and DOE are integrated so we can maximize our results in this important field. The Sustainable Fuels and Chemical Research Initiative is what this nation needs to direct biobased research.
Page 14 PREV PAGE TOP OF DOC
Mr. EWING. Yes, Mr. Minge?
Mr. MINGE. Mr. Chairman, I'd simply like to thank you for holding this hearing today.
I, along with colleagues, are co-chairs of the Sustainable Fuel Coalition here in the House of Representatives, and we very much appreciate both your interest in this legislation and your commitment to this cause.
And I'd like to also note that one of our colleagues, Mark Udall, is here, and I look forward to your remarks.
And, finally, I'd like to acknowledge the presence of the chairman of the American Soybean Association from Murdock, MN in my district as a witness on behalf of that association, and thank him for coming out from Minnesota in the midst of a busy harvest season.
Thank you.
Mr. EWING. Thank you very much.
Due to time constraints, we will operate under the 5-minute rule.
The Chair will ask that witnesses help meet our time constraints by summarizing oral testimony as quickly as possible. We would like to give the Members adequate opportunity for questions. Your entire written statement will be included in the record.
The Chair would also like to ask witnesses to remain available throughout the hearing to comment on issues that may arise later in our proceedings.
The committee would call its first panel to the table, The Honorable Mark Udall, representative of the second district of Colorado.
Welcome. We are interested in hearing about your bill.
STATEMENT OF HON. MARK UDALL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF COLORADO
Page 15 PREV PAGE TOP OF DOC
Mr. UDALL. Thank you, Mr. Chairman. I want to thank you for holding this hearing on a very important topic.
As I begin, I should note that, although I'd like to stay and hear the totality of all the testimony, I am expected at a Resources Committee hearing with Secretary Babbitt and will have to leave after I deliver my comments.
As your subcommittee considers biomass legislation, I appreciate the opportunity you have extended to me to bring to your attention bill H.R. 2819, the Biomass Research and Development Act of 1999, which was introduced on the 8th of September of this year by Congressman Boehlert, Congressman Minge, who is here today, and me. We worked for a number of months with the administration and Senator Lugar's staff to develop a bill that builds on the Senate measure.
The good news is that both of our bills have much in common. Both recognize the increased contribution that biobased industrial products can make to our economy if an appropriate research program is put in place.
We have barely scratched the possibilities to date. Chemicals, lubricants, adhesives, plastics, and pharmaceuticals are all key areas where research and development can lead to new products, new industrial development, and new jobs.
Both of our bills have similar structures, including cooperation between the Departments of Energy and Agriculture, other inter-agency coordination, and the solicitation of the views of outside experts to developing priorities.
Our bill, I should add, does go beyond H.R. 2827 in a number of areas, such as peer review of research, study of the effects of increased bioproduction on the environment, and study of the economics of bioenergy and biobased industrial products.
We have somewhat different ideas on definitions and on the makeup of the Advisory Committee. There is also a difference regarding how much specificity should be in the bill and to what degree research priorities should be established by outside experts. Still, there are more similarities than differences in our two approaches. I hope we will be able to combine our efforts somewhere in the legislative process and send to the Senate and to the President a bill that contains the best ideas from both our efforts.
Page 16 PREV PAGE TOP OF DOC
Your bill specifies several important research focuses for the program, such as cellulosic conversion.
We had talked earlier, Mr. Chairman. This is particularly important in Colorado, because, along our front range, where most of the people in Colorado live, there is a close geographical proximity of national forests and major population centers, and there are a total of about 370,000 homes and 750,000 people in areas that are potentially threatened by wildfires. To reduce and control these risks, there is a need to thin the fuel buildup, but there is currently no effective use or market for much of this material.
Of course, to do that, we need to proceed carefully and keep in balance with our forest management, but I think there is great value in exploring the development of ethanol from wood fiber and the creation of other new bioproducts from these wastes.
The other research priorities in your bill that your bill lists are important, even central, to today's biomass R&D needs; however, I wonder whether the specificity of narrowly-focused goals could result in unintended restrictions on the sort of R&D we can do in the future as new problems and capabilities emerge.
I hope, therefore, that the definitions can be kept broad and that the bill's resources can be directed to developing new uses for a variety of types of biomass, including novel materials not available from petroleum sources.
In closing, I would like to thank you again for the courtesy you have shown me in allowing me to present my views. I look forward to working closely with you and your committee as this legislation works its way through the legislative process.
Thank you, Mr. Chairman.
Mr. EWING. Thank you, Mr. Udall.
In just the little comparison between the legislation I have introduced and that which you have introduced, the Department of Energy appears to be on a higher level than USDA on your Biomass Research Development Board. Is there a reason for that, maybe perceived disparity?
Page 17 PREV PAGE TOP OF DOC
Mr. UDALL. There's not any particular reason for that. We had worked, of course, with the Senate efforts of Senator Lugar and we looked at the various ways we might put the bill together and put the advisory groups together, but that's certainly not locked in concrete.
Mr. EWING. You mentioned broad definitions and making—and I understand the reasoning for that, but with the $49 million is not a lot of money for research, and I don't know how far that will go, and we hope maybe we will know better after our hearing today, but if we make it too broad do you think we have a problem of maybe spreading everything too thin and not coming up with as many concrete results as we might hope?
Mr. UDALL. I think you point out the real challenge here is to walk that line between making sure that we give people the sense that we ought to explore every possibility, but in the end, if we have only got $50 million—and I say ''only'' with acknowledging that still is real money.
Mr. EWING. That's Washington talk, ''Only $50 million.''
Mr. UDALL. We want to have something to show for it when we get down the line a way, so I acknowledge the concerns here that we have to balance that desire.
Mr. EWING. Fine.
Are there other Members that have questions of Mr. Udall?
Mr. GUTKNECHT. Mr. Chairman, I just wanted to acknowledge, you made a very important point about fuel load, and it seems to me that there are some people who are unwilling to acknowledge that that is a serious problem.
We have got a big problem in northern Minnesota. We had a terrible wind storm, and we have got an awful lot of downed trees up there, and somehow we have got to figure out, I think, a way to get them out of there; otherwise, we are going to lose a big, big chunk of some very beautiful country because of the fuel load. I am delighted that you at least acknowledge that. Thank you.
Page 18 PREV PAGE TOP OF DOC
Mr. UDALL. If I might respond just briefly, in Colorado we are caught in the dilemma between prescribed burning and maybe some sort of mechanical harvesting. Particularly in the front range you have a lot of brush, you have a lot of wood products that really aren't commercially viable for the kinds of products that would be used in the building of homes and so on, but I think could potentially have a use.
You also have in eastern Colorado, of course, a lot of farming and a lot of farmers that are looking for additional ways to generate revenue, and it is very exciting what is going on, particularly, Mr. Chairman, in your encouragement of the cellulosic side, where literally I have been out to the National Renewable Energy Lab, which is in Colorado, and they have these new enzymes where you can put baseball bats, that kind of material, in a vat, and in a couple of weeks have ethanol.
I know I am overstating it slightly. I know the USDA is sitting behind me here. But that's exciting stuff because we have been so dependent on the high carbohydrate farm materials—corn, in particular—to generate ethanol, and if we could really open this up to even urban waste streams based in cellulose material that we could generate ethanol from.
Mr. EWING. Very good.
Anyone else? Mr. Ose.
Mr. OSE. Thank you, Mr. Chairman.
I would like to echo the remarks of my good friend, Mr. Gutknecht. Many of you have probably seen in the paper here the last few days the significant fires we have been having in California, and I have yet to reconcile the demand for the cellulose fiber and getting to it by means of clearing underbrush and the lack of impetus in the Forest Service, for instance, for timely regular timber sales or now an extension of a moratorium on road development. That is a critical element in my district from a public safety standpoint due to the growth of the underbrush in the forest.
Page 19 PREV PAGE TOP OF DOC
I did not want it to be Minnesota-specific, because it's not. It's also California-specific, and I wanted to echo my good friend's comments.
I appreciate Mark coming and testifying similarly.
Mr. UDALL. Mr. Chairman, just a brief comment, if I might.
Mr. EWING. Yes.
Mr. UDALL. I acknowledge my two freshman colleagues over here.
I do want to point out, too, in my bill, and I believe the chairman is also addressing this in his, there is some research to be done on the environmental impacts of harvesting this biomass material and trying, again, to find the balance between protecting the environment, but also using those materials that are there for energy production. So I look forward to that discussion continuing.
Mr. EWING. Thank you. Thank you for your presentation.
Mr. UDALL. Thank you, Mr. Chairman, and thank you to the committee.
Mr. EWING. We are going to look forward to working with you.
Mr. UDALL. Thank you.
Mr. EWING. The Chair intends to continue on and Mr. Barrett will return after he votes and take over the committee, so, Members, feel free to go for the general vote, and also I would encourage you to come back when that is completed.
Our second panel of witnesses, I would like to call them to the table: the Honorable I.M. Gonzalez, Under Secretary for Research, Education, and Economics, U.S. Department of Agriculture; and the Honorable Dan W. Reicher, Assistant Secretary for Energy Efficiency and Renewable Energy, U.S. Department of Energy.
Good morning, gentlemen.
Mr. GONZALEZ. Good morning.
Page 20 PREV PAGE TOP OF DOC
Mr. REICHER. Good morning.
Mr. EWING. Thank you for being here. We will start with you, Mr. Gonzalez.
STATEMENT OF I.M. GONZALEZ, UNDER SECRETARY, RESEARCH, EDUCATION, AND ECONOMICS, U.S. DEPARTMENT OF AGRICULTURE
Mr. GONZALEZ. Thank you very much, Mr. Chairman and members of the committee. It is a pleasure to be with you this morning to give testimony in terms of this important topic. As we have just heard from the comments made by Congressman Udall and the Chair's opening comments, this subject is tremendously important to all of us that are here today and certainly to the Clinton administration. We have had a number of opportunities to review the testimony from others, and I think we are all very much on target in terms of support of this legislation that you have introduced, Mr. Chairman.
If I may, I'd like to introduce some members of my staff at USDA that are here that have been working on these issues of biobased products and bioenergy for some time and would be available to respond to questions as we move through the testimony this morning.
From the Chief Economist's office, Mr. Roger Conway, seated right behind me to my right; Dr. Frank Flora from the Agricultural Research Service; and Dr. Dan Kugler from the Cooperative State Research, Education, and Extension Service, who are here this morning.
To add emphasis to the things you have talked about, Mr. Chairman, already this morning, biomass crops such as poplar, willow, and switch grass, and agricultural waste streams could become important feed stocks of electric power, liquid fuel, and chemical production. In addition, biomass feed stocks can offer significant environmental benefits compared to fossil fuels.
For example, energy produced from biomass crops does not add greenhouse gasses to the atmosphere like we would from burning of fossil fuels.
Page 21 PREV PAGE TOP OF DOC
Advances in technology in farm production and processing offer enormous market opportunities for the Nation's farmers and hold the potential for transforming a significant portion of our fossil fuel based economy to a biobased economy. The Clinton administration wants to help encourage that transformation.
In recent USDA analysis, in cooperation with the Department of Energy, the results indicated that at $40 per dry ton of energy crops at the farm gate, about 42 million acres could be planted to energy crops by the year 2008, with annual production of 188 million dry tons of biomass feed stock and no significant increase in major commodity prices.
Net farm income is estimated to increase by $5 1/2 billion over the baseline projection from the year 2000 to 2008.
As a part of our testimony, we have a list of programs and projects that we have provided that we hope to enter into the record that give examples of the kind of programs that are ongoing.
I would like to comment on your bill, Mr. Chairman. The administration supports the goals of H.R. 2827, the National Sustainable Fuels and Chemicals Act of 1999, but would prefer to see less-prescriptive language.
USDA believes a mix of directed and competitive research would be best in approach to addressing the issue.
While funding provided under the bill's authorization would have to compete with existing programs under discretionary budget ceilings, we believe that by formalizing cooperation and coordination among the Department of Agriculture, the Department of Energy, and other agencies in sustainable fuels and chemicals research, this legislation would help to reinforce the commitment of the agencies to match resources and realize potential of biofuels and biobased products.
In addition to an Advisory Committee to help focus strategic planning, the development of a joint sustainable fuels and chemicals initiative to carry out the research on biobased industrial products will ensure that the funds from both departments are efficiently and effectively leveraged.
Page 22 PREV PAGE TOP OF DOC
I might add parenthetically that we have continued to work jointly on our programs with both the Department of Energy and the Department of Agriculture in the recent past.
I am pleased to inform the subcommittee that we have improved cooperation across several agencies, and, as we carry out the President's directive, we have been working together to carry out a number of goals of the H.R. 2827.
As you know, President Clinton—and we were made aware earlier—on August 12 came to sign the Executive Order for developing and promoting biobased products and bioenergy, and USDA and DOE are taking steps to meet the requirements of that Executive Order and to accompany the President's memorandum.
USDA currently spends $9 million annually for biofuels research and $63 million annually for research on new industrial uses of bioproducts.
To coordinate these activities within USDA, Secretary Dan Glickman established a biobased Products Coordination Council, which I chair. In response to Executive Order 13134, the council has been renamed the Biobased Products and Bioenergy Coordination Council.
The Council promotes biobased industrial products research, development, and commercialization through information sharing, implementation of strategic planning, and providing policy advice for the Department.
It is also developing a list of biobased products for use by the Federal agencies and their procurement officials, as directed in Executive Order 13101, the greening of Government initiative.
In my prepared remarks, I have highlighted several areas where USDA is conducting research and administering programs in the area of ethanol research, research on biodiesel and other biobased products, our agricultural utilization research, biomass initiatives, and renewable portfolio standards, and I did bring some products from a recent visit to Iowa, where we are developing some of the new products that are based on soybeans.
Page 23 PREV PAGE TOP OF DOC
In regard to ethanol research, one of the most promising roles biomass can play is strengthening our energy security. In 1995, USDA released a study on the net energy balance of corn ethanol that showed that ethanol contains 22 percent more energy than used to produce the ethanol, itself. And since then technological innovation in corn production and ethanol conversion have substantially reduced the energy required to produce corn ethanol.
Our most recent estimate is that energy content of ethanol is 34 percent greater than the energy used to grow, harvest, and transport corn, produce the ethanol, and distribute the ethanol.
In addition, a recent study conducted by Argonne National Laboratories with USDA collaboration showed both corn and cellulosic ethanol produce significantly fewer greenhouse gas emissions than petroleum.
Research to reduce ethanol production costs can improve the competitiveness of and expand the quality of ethanol use as a fuel or fuel additive. USDA analysis suggests that long-term technology improvements strictly devoted to ethanol production might reduce costs by 9 to 15 cents per gallon.
Our researchers believe that additional savings of 13 to 18 cents per gallon may be possible by developing higher-value products called ''coproducts'' from raw materials not used up in the ethanol production.
USDA has been conducting research to develop biobased products under the moniker of agricultural utilization for over 50 years, primarily at its four regional utilization centers. I think, given the importance of the topic today, it is good to note that we have been doing this and the continued investment for agricultural research in these areas has been there, and we thank those members of the committee that have provided that support.
Many of the research activities are conducted at the Agricultural Research Service National Center for Agricultural Utilization in Peoria, IL. Other agricultural utilization research is conducted at our ARS facilities in the Eastern Regional Research Center at Wyndmoor, PA, and our other regional laboratories in New Orleans and Albany, CA.
Page 24 PREV PAGE TOP OF DOC
Another product that is making significant progress is biodiesel. biodiesel, as well as lubricants, chemicals, and solvents produced from agricultural fats and oils, offer another opportunity to supplant petroleum derivatives. In doing so, an expanded market for agricultural fats and oils may develop, providing farmers with high-volume markets for high-value, non-food products.
Like ethanol, biodiesel has a positive net energy balance. This high energy efficiency translates to a much lower emission of greenhouse gases compared to petroleum-based fuels.
USDA conducted a study with the Department of Energy at our National Renewable Energy Laboratory that found the use of biodiesel reduces net carbon dioxide emissions by 78 percent relative to petroleum diesel.
Selected niche market opportunities for biodiesel are emerging. As a result of the legislation passed last year, Federal agencies can use biofuels, blending 20 percent mixture of biodiesel with the regular diesel, and receive a credit against alternative fuel vehicle purchases.
I am glad to report that in August of 1999 we began using biodiesel fuel at USDA facilities here in the Beltsville, MD area and elsewhere, and we have provided a brochure with a summary of that material for the committee.
I would also like to point out that the Cooperative State Research, Education, and Extension Service provides funding for a number of biobased and bioenergy projects conducted at land grant universities and other academic institutions with agricultural interests, and we continue to work closely with our land grant community and with the private sector in moving these programs forward.
The development and expansion of a renewable fuel and biobased products industry, founded in a strong agricultural and forestry sector, can play an increasingly important role in enhancing energy security, cleaning our environment, and promoting farm and rural economic growth.
Page 25 PREV PAGE TOP OF DOC
Petroleum and fossil fuel prices, feed stock costs, coproduct markets, energy, and environmental policies, and advances in technology are all critical determinants of market growth for both biofuels and biobased products.
The Clinton administration will work with Congress and others to advance the technology and to improve the economics of producing and marketing biofuels and new bioproducts from agricultural commodities.
We are delighted to be part of this testimony today and would welcome any questions that the chairman or the committee members may have.
Thank you very much.
[The prepared statement of Mr. Gonzalez appears at the conclusion of the hearing.]
Mr. BARRETT [presiding]. Thank you sir. I now recognize Mr. Dan Reicher.
STATEMENT OF DAN W. REICHER, ASSISTANT SECRETARY, ENERGY EFFICIENCY AND RENEWABLE ENERGY, U.S. DEPARTMENT OF ENERGY
Mr. REICHER. Thank you, Mr. Barrett. I very much appreciate the opportunity to testify today.
This hearing and H.R. 2827 are a welcome spur to the effort we in the Department of Energy, under Secretary Richardson, have been pursuing, along with the Department of Agriculture and U.S. companies, to grow an integrated bioenergy that can reduce our dangerous dependence on foreign oil, cut greenhouse gas emissions, and help confront the crisis in the agriculture and forest economies of our Nation.
I am especially pleased to be seated here with Under Secretary Gonzalez, who has been very active in our efforts to implement President Clinton's recent Executive Order, and also move the Government/industry bioenergy initiative forward.
Page 26 PREV PAGE TOP OF DOC
On the first board to your left, Mr. Chairman, you see the broad opportunities for biomass as an energy source. Trees, crops, residues, and organic waste can today be readily converted into large quantities of electric power, a broad array of fuels, and a great number of chemical products.
On the next board you see, unfortunately, Mr. Chairman, the current nascent bioenergy industry is greatly fragmented. Chemical companies are pursuing biomass as a feedstock alternative to petroleum, power companies are pursuing biomass electricity for its environmental and climate change benefits, corn growers, as you know, are producing liquid fuels, the forest products industry derives a great deal of heat energy today from biomass and is focused in the future on producing gaseous fuels to drive turbines.
There is simply not enough integrated work to stimulate an overall bioenergy industry. And, to be honest, Mr. Chairman, we are equally fragmented in the Federal Government with bioenergy-related work being pursued in multiple offices across the Department of Energy, the U.S. Department of Agriculture, and many, many other agencies you see represented here.
However, the good news is that the President's recent Executive Order will be used to better coordinate Federal efforts to accelerate the development of 21st century biobased industries.
In a separate executive memorandum, the President set a goal of tripling U.S. use of biobased products and bioenergy by 2010. He stated that reaching the tripling goal would generate as much as $20 billion a year in new income for farmers and rural communities, while reducing greenhouse gas emissions by as much as 100 million tons a year.
Mr. Chairman, we, of course, know what a successfully-integrated industry looks like. In oil refining, almost 150 years of development has brought us an exquisitely-integrated set of technologies, market signals, and policy drivers that determine at any given moment the highest and best use of a barrel of oil.
Page 27 PREV PAGE TOP OF DOC
The biorefinery of the future holds a similar promise, but achieving this promise will require serious and sustained effort by both industry and government.
We believe it requires greatly-improved technologies, a set of smart supporting policies, and aggressive building of markets, both here and abroad. Technology development is absolutely necessary, but not at all sufficient to deliver us bioenergy and biobased products in large quantities at a competitive price.
There are many technology, market, and policy challenges before us. In feed stocks, we have to increase yields of energy crops, improve harvesting, simplify transportation, and overall drive down costs.
In conversion, whether it is cellulose-derived ethanol, biomass co-firing with coal, or gasification, we have to improve efficiency and reliability and, again, drive down cost.
And utilization, the clear but not simple challenge is the following: fuel, power, and chemicals we derive from biomass must be competitive with fossil fuel counterparts in terms of efficiency, environmental impacts, and cost.
In the market arena, biomass supply and demand is obviously key, as are the cost of capital, other competing investment options, and a range of other challenges.
Policy issues also loom large. How will bioenergy be treated in the tax code? How will it be handled in State and Federal electricity restructuring legislation? What will be the impact of environmental regulations?
The bioenergy initiative is a partnership among senior representatives of industry, national laboratories, the Department of Energy, the Department of Agriculture, and other agencies, States, and citizen groups. Very simply, the initiative will help power America by using our most abundant natural research, biomass.
This is our challenge: by making a ton of biomass a viable market competitor to a barrel of imported oil, the bioenergy initiative will help strengthen U.S. energy security, protect the environment, reduce greenhouse gas emissions, and revitalize rural America.
Page 28 PREV PAGE TOP OF DOC
This board lists some of the industrial partners that we are working with. They include entities like the National Corn Growers Association, Archer Daniel Midlands, the DuPont Corporation, and Weyerhauser, to name just a few.
Mr. Chairman, H.R. 2827 is an important step in building an integrated bioenergy industry, recognizing, as it does, the need for better coordination across government and with industry and the critical need for additional resources.
I would offer three brief suggestions.
First, we believe the bill, in the interest of better bioenergy integration, should give greater recognition to the role of biomass-derived electricity, particularly with the opportunities afforded by restructured electricity markets and the environmental challenges faced by the power industry today.
Second, the bill should be complemented by Congressional efforts to stimulate policies and markets friendly to bioenergy through the tax code, loan programs, environmental regulation, and Federal procurement.
I would note, in particular, the importance of extending and expanding the current biomass tax credit, which is pending in the Ways and Means Committee.
Third, agency work must be supported through increased appropriations. My office requested approximately $117 million in fiscal year 2000 for our critical work in biopower, biofuels, chemicals, and forest products. To date, Congress has appropriated less than this amount.
To be frank, and as H.R. 2827 recognizes, achieving success in bioenergy and biobased products will require substantially greater Federal funding.
Mr. Chairman, before I conclude my statement, I also want to recognize Mr. Udall's bill, which shares a common goal to enhance and improve the Nation's use of biomass for fuels and industrial processes.
Page 29 PREV PAGE TOP OF DOC
In conclusion, Mr. Chairman, Congress' support and the implementation of the Executive Order, based on those we believe Government and industry can together grow an integrated bioenergy industry that supports key economic, environmental, and security interests of the Nation in the 21st century.
Thank you very much.
[The prepared statement of Mr. Reicher appears at the conclusion of the hearing.]
Mr. BARRETT. Thank you sir. Dr. Gonzalez, as I scanned your written testimony, you stated that you would prefer to see less-prescriptive language. What are you talking about?
Mr. GONZALEZ. Well, as we reviewed the material, I think a balance between the competitive grants part of that initiative and the ongoing long-term research capability that is already available at our utilization labs should be factored into the total initiative process.
I think there are a number of these areas where we thought some additional discussion would be appropriate for us to consider.
Mr. BARRETT. Thank you, sir.
Mr. Reicher, is there a difference between the cost of the blended fuel and the fossil fuel?
Mr. REICHER. Yes, there are differences today in terms of the cost of the petroleum-based fuels versus the cost of biobased fuels.
Mr. BARRETT. Is it sizeable?
Mr. REICHER. It is not insignificant, but the good news is that it is coming down, and quickly. With further improvements, for example, in corn-based ethanol, with the future we see in making ethanol out of a whole host of other biological materials, some of those waste products, we think that any gap can be closed over time.
Page 30 PREV PAGE TOP OF DOC
Just to give you an example, if we can make ethanol out of materials that are wastes that today we pay to get rid of—for example, waste in the rice industry or waste in the sugarcane industry or waste in the corn or other industries—those kinds of products that have a negative value today, if those are what we make ethanol out of, in addition to making ethanol out of corn, we can drive those costs down.
In the area of electricity production, biomass is competing with the cost of coal, the cost of natural gas, and, again, we have got to close that gap, but we are making good progress in that area, as well.
Mr. BARRETT. You mentioned particularly ethanol. Can you give me an example of the difference in cost between, let's say, a gallon of ethanol and a gallon of fossil-based unleaded fuel?
Mr. REICHER. Mr. Barrett, I have to be careful. I don't have those numbers in my head and I don't—I would hesitate——
Mr. BARRETT. Is it possible for you to supply the committee with those?
Mr. REICHER. We can definitely supply those for the record. We could also plot for you the trajectory that we see in those costs coming down, both the corn-derived ethanol and the cellulosic ethanol.
I am told by my colleagues at the Department of Agriculture that the produced price, petroleum-based around $1.10, ethanol around $1.60, therefore about a 50-cent differential.
Mr. BARRETT. Per gallon?
Mr. REICHER. Per gallon. We think that that differential, again, can be closed, particularly with the improvements we are seeing in both corn-based ethanol and the great opportunities we see in making ethanol from various kinds of biomass waste.
Page 31 PREV PAGE TOP OF DOC
Mr. BARRETT. Thank you very much.
Mr. EWING [presiding]. Thank you, Mr. Barrett, for sitting in and handling that so well.
Mr. Gutknecht.
Mr. GUTKNECHT. Well, Mr. Chairman, I really don't have any questions. I do want to tell all the panelists and the other people gathered here that it is unfortunate we have other meetings. I have another meeting that starts at 11 o'clock, but I appreciate what you are doing. I appreciate this whole concept. I have believed for a long time that when you talk about biomass fuels, particularly ethanol and biodiesel—and I am a strong supporter of biodiesel, as well, because in fact, just this morning I was crossing the street and a bus was taking off, and I remind my colleagues as often as possible that if we could get them to use a 20 percent blend of soybean oil with that diesel, we could cut the amount of smoke coming out of those stacks by about 40 percent, some say even more than that.
So this really is a win/win situation. It's a win for the environment. It's a win for our economy. And in rural America it is a win for our farmers, as well.
So I think the small amount of money that we spend on the research and development of these new biomass fuels it seems to me are going to come back to us.
And back to the question about the differential now in the cost, I really believe that part of the thing that has helped keep the price of a barrel of oil below $30 is the basic notion that at some point our biofuels, and particularly ethanol, becomes incredibly competitive. And so I think part of the reason we are seeing oil prices kept in check is because we have this trump card that we can play, and the stronger we can make that trump card I think, long term, the better for us as an economy.
So I am a strong supporter of this notion and what you folks are doing.
I have no real questions. I do apologize for my colleagues and, as I say, I have another meeting that I have to go to at 11 o'clock. It doesn't mean that this committee and this Congress doesn't take this issue seriously, because more and more Members are realizing, whether they are from rural America or from urban America, that this is a win for the environment and it is a win for the economy, as well.
Page 32 PREV PAGE TOP OF DOC
Thank you very much.
Mr. EWING. Thank you.
Mr. Smith.
Mr. SMITH. Mr. Chairman, thanks.
It was about in 1970 or 1971 when OPEC got together and the Arab oil embargo significantly scared the heck out of this country in terms of whether or not we were going to have the energy we needed, so we started an all-out effort at that time promoting both research and subsidization of the development of alternative fuels. At that time, if my memory serves me correctly, we were importing about a third of our energy needs. Now, after 27 years of dedicated research and effort and promotion and subsidy, I think we are importing 55 percent, 58 percent.
For 27 years we have been subsidizing and researching the development of ethanol. Are you suggesting that more somehow can be accomplished in the next several years than we have accomplished over the last 27 years?
Mr. REICHER. If I could, Mr. Smith, I think the answer to that is yes, and the real—there are a number of opportunities. Let me focus on the opportunity that we are working on at the Department of Energy, collaborating with the Department of Agriculture, and that is being able to make ethanol out of a variety of biological materials.
If we can succeed—and we are making very good progress—in producing commercial-scale quantities of ethanol from materials that are today waste products——
Mr. SMITH. Of course, we started doing that in 1972, looking at how you could break down the cellular compositions to have more-efficient and better utilization to make that into usable fuels.
Mr. REICHER. Yes. But what I am talking about is, in addition to the starch that is in the kernel of corn which we are making ethanol from today, the opportunity is to make ethanol from the fibrous part of the rest of the corn plant——
Page 33 PREV PAGE TOP OF DOC
Mr. SMITH. No, but I say we started that in 1972, that research.
Mr. REICHER. I understand, and in 1990 a major breakthrough, which received actually patent number 5,000,000,000 from the Patent Office—it was so significant they gave it that designation—breakthrough was made then, and since that time we have made rapid progress in putting in place the capability to make use of all of these other biological materials. And, in fact, some time this year or next year the first commercial-scale ethanol plant that will make ethanol from these other biological materials—in the case of this project, from waste from the sugarcane industry—will go on line in Louisiana. It's a 20 million-gallon-a-year plant.
If those kinds of projects can go on in Louisiana and California and Illinois—in New York, where there are discussions going on of making ethanol from municipal solid waste, a plant may well be built there.
Mr. SMITH. Are either of you aware of how many ethanol plants have closed down in the last 25 years?
Mr. REICHER. I understand there have been plants that have closed down.
Mr. SMITH. Hundreds, at least. Just in my neighborhood, alone, there have been three plants closed down.
Mr. GONZALEZ. Mr. Smith, I think your question targets where we have been, and I think the most recent move toward the commercialization of alternative crops to this total arena, and I think particularly important, as we continue to move forward with legislation and support for this area is the fact that we have had the demonstration sites, we have been looking at other products other than only our agricultural commodities, although that is still a major focus for us. But the question earlier about the forestry component, when we look at the number of trees that are down and, through a pruning process or——
Page 34 PREV PAGE TOP OF DOC
Mr. SMITH. As a corn farmer, of course, I am interested in the utilization of corn.
Mr. GONZALEZ. Exactly.
Mr. SMITH. As an American, I am interested in the production of more-efficient energy to give us greater independence.
Have we fallen down in the amount of research that has been done? Has that been one of the problems? Who is doing the research right now?
Mr. GONZALEZ. Energy——
Mr. SMITH. Is [the Department of] Agriculture?
Mr. GONZALEZ. We have agricultural research that continues to go on that has been in place. As I mentioned earlier in my testimony, for 50 years we have been working on some of the basic research as it moves to the applied side.
But the question—and, again, from my standpoint, one of the places where I think we have had additional need is in the education of what these things mean to the general consumer—that they have alternatives, that they are environmentally friendly, that we take advantage of that research and move it to the next stage, which has been in the recent past and through the collaborative work that we are doing with Energy and Agriculture now, is to get it commercialized.
Mr. SMITH. Is the Department of Energy or Agriculture doing more research in alternative fuels? Well, I guess that would be definitely Energy. How about ethanol?
Mr. REICHER. I think the larger investment of Federal dollars is on the Department of Energy side than the Department of Agriculture side.
Let me say that we have a research goal, a production goal of 75-cents a gallon of ethanol made from these other biological materials. What we have been chasing, frankly, is the cost of oil.
Page 35 PREV PAGE TOP OF DOC
As you know, oil has gotten down to a point over the last year or two at $10 or $12 a barrel, so it has been difficult to compete with that declining price of oil.
We think, though, that, with this continued progress we are making in driving down the cost of making ethanol out of these other materials, including, as I say, the rest of the corn plant, we think we are going to be able to compete readily with oil over time.
I would mention one other part of this—and this is what is interesting—is that we are not only looking at making ethanol from these materials, but when you make ethanol, as you know, you can pull a variety of other products out of the material that you can burn to make electricity, that you can use to make chemicals, and so this option of producing other coproducts in what we call a biorefinery really may be the key to this—drive down the cost of producing the ethanol and get some money out of selling those other coproducts.
And we think we will be able to compete with oil. Obviously, though, I am first to admit that oil at $10 or $12 a barrel is tough to compete with.
Mr. SMITH. Mr. Chairman, through you to them, may I request that the committee be furnished a review of the research and where it is done and how much we have contributed to that research in the last 5 years or 10 years or something?
Mr. REICHER. We would be pleased to provide it over the last decade. That would make sense, and we could work on that together.
Mr. EWING. Thank you.
Mr. Reicher, I am sorry I missed your testimony, but I appreciate your being here.
How much money are other countries spending in this type of research? Do we know? Do we have an idea? And who might be doing a lot of research in this area?
Mr. REICHER. Mr. Ewing, I don't know the spending figures for those other countries. We definitely can provide you those for the record.
Page 36 PREV PAGE TOP OF DOC
I would say that, in terms of ethanol production, the world leader is Brazil, and they produce on the order of double what we produce in this country.
There is great activity going on in the Scandinavian countries, for example, in looking at—not looking at, but actually producing power and producing fuels from products from their forest industry, and there are great advances in technology being made there.
The Japanese and the Indians, as well, have been very active in this work.
One of the active areas internationally has been in biocatalysts and enzymes, improving the bacteria and other materials that you use to break down these biomass materials to make ethanol.
So there is something of a race going on worldwide to be the leader in these technologies, because there is, frankly, a huge market.
We are working on a technology called ''gasification,'' which will allow us to take biological materials, turn them into a gas that could be used like natural gas to operate a turbine and make electricity. That is a very promising technology.
The forest products industry is looking at that to get rid of a lot of their wastes, and they could become a net generator of electricity.
If we can proceed in that technology, we will have huge international markets from developing countries where there's lots and lots of biomass to be used through the forest-products-based countries around the globe.
Mr. EWING. The world market for ethanol, is that as the blend in gasolines for clean air? I mean, Argentina is a major producer. Do they use it locally, or do they export it? Brazil. You said Brazil, not Argentina.
Mr. REICHER. Brazil uses it mostly domestically. I am not aware—there is some export.
Mr. EWING. But it is mostly for domestic?
Page 37 PREV PAGE TOP OF DOC
Mr. REICHER. My understanding is it is mostly for domestic use, and this is, to a large extent, based on the growth of sugarcane.
Mr. EWING. Do you feel that this legislation will ensure a net improvement in our environmental quality? Do you think that this is a way to go in that regard? This question is to both of you, Mr. Reicher and Mr. Gonzalez.
Mr. GONZALEZ. Mr. Chairman, I do believe, based on the ongoing research that we have had, and as was pointed out earlier, the reduction of emissions using a blend, if you will, of the biodiesel with regular petroleum-based product, is significant. We think that's where the advantage is to the American consumer is to have these alternatives of products, new products, that not only produce energy but utilize our commodities—corn and soybean and other products from the forest area—for both increasing the economic value, as well as adding to this benign or friendly environmental impact.
In fact, the products that I have here that I brought as a sample for you, this is the soy-based fifth wheel grease for the semi trucks and others.
But, again, the fact that we know that we lose this product into the environment as we go down the road, and we know now that it will have no negative impact I think is an indication of the kind of impact that we will see for the long term.
The same way when we look at forest products. This is a little sample. I know that we are a long way away, but this is a little sample of the oil used on chain saws on the bar oil. That, again, we lose it into the environment, and, again, it has a friendly impact, if you will, in the use of it.
So there are a number of these where we are looking at. In fact, Department of Energy, at our Sandia Labs, is testing the hydraulic oil. Again, we use a lot of hydraulic oil for a lot of areas, not only in agriculture but industrial.
So the industrial side of the development of application of research through the commercialization I think not only provides those additional economic opportunities, but they will be environmentally friendly.
Page 38 PREV PAGE TOP OF DOC
Mr. REICHER. Mr. Chairman, if I could, quickly, first of all, as Under Secretary Gonzalez has mentioned, we can cut traditional air pollutants—the sulfur dioxides, nitrogen oxides, all of that—with the use of biomass in its various forms.
Second, we can also cut greenhouse gas emissions. The real benefit of biomass, unlike fossil fuels, is the following: with fossil fuels, when you dig them up and you burn them you are introducing carbon dioxide for the first time to the atmosphere that has been trapped underground, and that is obviously the key global warming gas.
In the case of biomass, when the tree or the corn plant grows, it pulls carbon dioxide out of the air. When you use it in some form through bioenergy, it releases about the same amount back to the atmosphere, so we say that it is carbon neutral—you are not increasing or decreasing.
So one of the big benefits of biomass from a climate change perspective is that it is carbon neutral.
I mention, for example, the forest products industry. If they can make this jump to this newer technology to gasify their waste, they can cut emissions of global warming gases by 30, 40, 50 million metric tons a year, and that's a huge cut in those emissions, to say nothing of the traditional air pollution.
Similarly, we can make changes like that in automobiles and in a variety of other uses of these materials.
Mr. EWING. I am going to indulge the privilege of being chairman here and ask one more follow-up question, which is where I was really trying to get.
Please, either of you indicate if I am too parochial in my view, but in Illinois we try and put back on our land what is left of the corn plant after we harvest. It's the same with beans. And that is something that the environmentalists and conservationists look at very closely as protection for the ground during the winter months when it is open and there are no crops on it.
Page 39 PREV PAGE TOP OF DOC
Do you think that there is, indeed, a place that we should be considering taking this off and using it for further development of ethanol or biomass products that would have an impact on the environment in at least our area of agriculture in Illinois?
We are going to hear from my good friend, Doug Wilson, of the Corn Growers later, and he will certainly give me his idea. I'd like to have yours.
Mr. REICHER. Obviously, Mr. Chairman, when you look at a crop or a tree, a forest or a field, some of that material needs to stay to improve the soil as cover and all of that.
I think what the scientists tell us, though, is that some proportion of that—perhaps more than what we are using today—could be used to produce energy in various ways.
So, for example, the corn plant, as I understand it—you know more than I—that is harvested today, the Stover variety of parts of it, and some of that can be used to produce additional products and energy sources, and without harm to those fields. The key is striking a balance between how much you leave and how much you take, and I think enough is understood by the agricultural scientists to know how to strike that balance, and, obviously, we would be very, very sensitive to that.
The good news is that there is an overwhelming amount of biomass available in this country to make fuels and to make products. We don't lack for biomass across this country, both in the agriculture community and in the forest community.
Mr. EWING. Thank you.
Mr. GONZALEZ. I would just add that, given the nature and availability of this biomass, that it is regional. As we look at different products and different crops, the opportunity is for us to take some of that off the land at the appropriate time to cut down on the negative side or negative impact.
Page 40 PREV PAGE TOP OF DOC
So, given the nature of agriculture and its regionality and the peculiarities of each of our crops, I think, again, the research that we have conducted points out the opportunity that we have for a variety of uses for those products.
Mr. EWING. Thank you.
Mr. LaHood.
Mr. LAHOOD. Secretary Gonzalez, thank you for being here. Thank you for visiting the lab in Peoria. I know that the people there were thrilled with the opportunity to meet you and know of your interest in the work that goes on there.
Mr. GONZALEZ. Thank you, sir.
Mr. LAHOOD. You have hit all the right notes with this Member. You mentioned ethanol, Caterpillar, and the Peoria Lab. [Laughter.]
I don't know what more you could have done in this statement for me.
Let me just ask you a question. I have made note over the last few years that the other labs—New Orleans, Albany, and Philadelphia—have actually received increases in funding. Peoria has not.
Now, I know Peoria is undergoing a major renovation. We have benefitted by a multi-million-dollar renovation at the facility to bring it up to a state-of-the-art facility, but in terms of program, and so forth, do you anticipate additional funding for the lab in Peoria? Maybe not—well, on the same level as the increases have been for the other three labs?
Mr. GONZALEZ. Mr. LaHood, thank you for the question. Mr. Chairman, as we look at the product utilization laboratories that we have in our system, one of the things that we have worked with is not only to continue to modernize the facilities around the country, but also to take a look at our priorities in terms of the research agenda right now and knowing that we have limited funds for some of these areas.
Page 41 PREV PAGE TOP OF DOC
So we have taken a step at a time, if you will, to be sure that we continue to focus on those priorities that are the highest in a given year and continue to move to bring all of our facilities up to speed, if you will.
Certainly more funding in these areas of research, and particularly when we look at new products or new uses of traditional products, and knowing the kind of facility and the research agenda that we have at our facility in Peoria, it is a high priority for us and we will continue to work on that and we will, of course, need your help to get that done.
Mr. LAHOOD. Well, you will have that. I think you realize—I know you realize, and I think those of us who have these labs in our areas know that they are the future of agriculture and they provide an enormous amount of opportunity for development of so many different products and byproducts, and the Agriculture Lab in Peoria is quite historic in many of the things that have been developed there and the research that goes on, and I am awfully proud that we do have that facility there.
One of the things that we were able to include last year was the notion that we try and assign to the lab an opportunity to look at better uses of animal waste, particularly as it relates to these mega-hog operations that have developed around our State.
I am sure you don't know the answer now, but I wonder if you could just give us a progress report some time by way of letter or memo or something on what is happening with the status of that and their ability to really look at how we can control the environment, the smell and so forth, as a result of these mega-hog operations.
I know that we have included some language, and I know Chairman Ewing had included some language for the University of Illinois also for this type of research.
I don't know if that has begun or if it is in the works.
Mr. GONZALEZ. Mr. LaHood, Mr. Chairman, we have some of that that has begun. I think when we hear the testimony from some of our university partners, that there may be some indication as to where we are in that process.
Page 42 PREV PAGE TOP OF DOC
I will say to you that those are the priority areas that I think have emerged, and we have some of that research going on at different places.
I think the industry—one of the things that we have not talked about a great deal this morning, but what we will, I am sure, hear is that the industry component, the support and increased funding from industry for these programs that we are talking about this morning, is tremendously important, and commercialization as a part of the research agenda through CRADAS or whatever other instruments that we have had—and certainly the importance of the university relationship with our Federal departments—is tremendously important and on target in terms of the direction.
So we will provide you with an update on those.
Mr. LAHOOD. The other thing I would say is I recently had the occasion to visit the ADM facilities in Decatur. One of the things they are doing there now, they have a whole new business of the development of vitamins, particularly—they have a whole building where they just produce vitamin E, and they are building a structure where they are going to produce vitamin C, and I don't think—all as a result of using the byproducts of soybeans. I know they would not have been able to do these kinds of things if it weren't for the research that goes on in Peoria, and perhaps in some of these other labs.
So I just think there are things that go on in these labs that have enabled businesses to provide spin-off businesses and do things that provide good, healthy things for people, whether it is vitamins or other byproducts.
I know it is true of Staley in Decatur, so we appreciate the support we get for the Agriculture Lab. We appreciate the work that you do. I hope that you will keep us somewhere at the top of your list for additional funding.
Thank you, Mr. Chairman.
Mr. EWING. Thank you very much.
Page 43 PREV PAGE TOP OF DOC
Mr. Ose.
Mr. OSE. Thank you, Mr. Chairman.
Again, I pay my respects to my good friend from the south.
My immediate question has to do with my specific district. I have around 500,000 acres of rice in my district, and in California we have a law that prevents the burning of rice stubble, which forces our farmers to either till it back under or to let it be harvested into rice bales.
As a result of this dilemma of what to do with the stubble in my district, there is a cooperative project called ''The Gridley Rice Straw Project'' in Oreville—notice I said Gridley Rice Straw Project in Oreville. We are very generous around California—the purpose of which is to use technology to convert the rice straw into ethanol. It has received some funding. I am hopeful of receiving additional funding.
Mr. Chairman, you and I have spoken very briefly about your piece of legislation and including, in addition to corn, applying it also to rice, and I'd appreciate any comments you might care to add, but I'd be curious of the level of knowledge, in particular, that Mr. Reicher has of this project and its current status.
Mr. REICHER. Congressman, we are quite supportive of this project. This is another example of, we think, the great opportunity to use what are today often wastes in the agricultural industry to produce ethanol at a very, very competitive price.
These are materials that often cost to get rid of, and if you have a situation like that the input is very cheap to produce ethanol, so it has got great opportunities going forward.
In terms of this project, specifically, we have been supporting it. We, in fiscal year 2000, are looking at on the order of about $5 million for the company, BC International, that is doing the research, development, and deployment of this technology at plants in both Louisiana and in California, including Gridley. We are working very closely with BCI. I have spoken on several occasions to the chairman of that company. He was there when the President rolled out the Executive Order, when Senator Lugar was in attendance, as well, and we think this holds great promise, and we are very strongly supportive of these projects, including the Gridley project.
Page 44 PREV PAGE TOP OF DOC
Mr. OSE. Would it fit within the parameters of Chairman Ewing's legislation to, for instance, expand from corn only to corn and rice the application of 2827?
Mr. REICHER. Our view of 2827, of Mr. Udall's bill, of the Executive Order is that they all need to be broadly focused on biomass, generally. There are all sorts of opportunities across all of these product areas in both agriculture and in forestry to make use of the very same technologies. The same bacteria that you could use to break down the cellulose in a corn stalk you can use to break down the cellulose in rice straw, you can use to break down the cellulose in the organic fraction of municipal solid waste, believe it or not.
So we think we have got to approach it overall as the material that it is, which is biomass, and, just like we look at a barrel of oil, we have got to look at a ton of biomass and look at its potential.
Reflecting back on what Congressman LaHood was talking about, one of the real opportunities with these materials are the coproducts. Pulling out of these materials not only the primary product, which might be a liquid fuel, it might be something else, but also the coproducts.
For example, in the case of the rice straw, there will be materials left over that can be burned to make electricity. In the case of making ethanol, there is a whole host of products that can be used for other beneficial purposes.
And the beauty of that is that you can improve the economics of producing, whether it is a gallon of ethanol or a BTU of electricity or whatever else you are after, by making use of those coproducts.
Mr. OSE. Mr. Chairman, the reason I asked for that dissertation was that the project in Gridley and Oreville is kind of a three-pronged deal. For 4 months of the year we use rice straw and rice hulls, 4 months of the year we use waste or biomass, if you will, from the forest, and the other 4 months of the year we are kind of looking around, looking for any inputs we can.
Page 45 PREV PAGE TOP OF DOC
I do see my time has expired. I would appreciate, if we are going to have a second round, asking the question about how do we get biomass out of the forest to use in these plants, rather than allowing it to burn, as it is doing today in California.
With that, I thank you.
Mr. EWING. Congressman Ose, you have got one choice. You can either use rice or stuff from the forest. You don't get to put two in. [Laughter.]
Mr. OSE. Actually, Mr. Chairman, the technology we are looking at in Gridley allows us to use rice for about 4 months of the year. For 4 months of the year we use the forest material, and then we are looking for a third source to use the rest of the year, so it is actually very flexible.
I know where you are headed. I am not going to go there. [Laughter.]
Mr. EWING. I mentioned rice in my opening statement, so you—but if you have another question, do it, because we probably will not have another round.
Mr. OSE. All right. My final question—and I made this point earlier with Congressman Udall—is that we have a terrible problem in California, and particularly in the northern districts, about the underbrush or the undergrowth in the national forests and on private property.
On private property, the harvesting or the clearing of that underbrush is not a problem. On the Forest Service ground it is. And what we see today is significant conflagrations on Forest Service ground that is effectively using this as fuel, the consequence of which is a decline in public safety and, in some cases, people lose their homes.
What I am trying to do is find the balance, as Mr. Udall said, between getting that product out of the forest in a timely and environmentally sound manner and using it to fill, for instance, the 4 months demand at the Gridley plant.
I'd appreciate any input you might have on that.
Page 46 PREV PAGE TOP OF DOC
Mr. REICHER. Mr. Ose, this past August we sponsored a major conference in the Lake Tahoe area on this very subject, looking at the problems of fire caused by the growth of these materials in the underbrush, and what emerged from that meeting was a pretty strong recognition that, if we can get these materials out of the forest in an economic way, there are a variety of things we can do with them. We can make power on a modular basis—that is, we can make electricity. We can make fuels, as would happen at Gridley.
The issue is getting access to those for us, being able to pull this material out in a way that is environmentally sensitive and is economic.
We are working towards that end, because there is a terrific challenge out there in terms of these forest fires, but it is going to require some additional progress and technology, it's going to require some policy decisions about access to those forests, and also working through these market mechanisms to make sure that we have got markets for the electricity or for the liquid fuels.
Mr. OSE. As it relates to the policy decisions, I would hope that, when the discussion is taking place, for instance, at the DOE, there is direct input that a blanket policy of taking 40 million acres and unilaterally putting them aside does not serve the interest of the forest if the net result is that the under brush grows, we get a lightning strike, and all of the sudden we have a conflagration.
Mr. REICHER. Yes. I made that point in my remarks to this conference. I was there, helped open it, and I stressed the need to strike a balance in terms of the policies that do get set.
And I think the opportunity we have here is that the technology has progressed to a point where we can make use of that material effectively and improve, for example, the California environment in the process, because, again, we would be using biologically-based materials. It would help cut traditional pollutants, it would help cut greenhouse gas emissions, so it could end up being a win/win, not only for the forests, themselves, but for the overall California and western environment.
Page 47 PREV PAGE TOP OF DOC
Mr. OSE. Mr. Chairman, you have been very generous to this freshman. I thank you.
Mr. EWING. Thank you.
Now, Mr. Condit, the ranking member of the subcommittee.
Mr. CONDIT. Thank you, Mr. Chairman.
I just simply want to thank you for holding the hearing and welcome the witnesses. I am sorry I wasn't here for the first panel, but I'd welcome the witnesses, and particularly those from California. This is an interesting industry in California. It is a very important industry. The University of California system is working very hard to create environmentally-friendly transportation and manufacturing processes, and all the witnesses, as Mr. Ose has done, will point out some of the issues, such as wood waste, rice straw, specialty crops that are being provided, already being used to generate biomass energy produced in California.
This is a very important issue, and, Mr. Chairman, I appreciate the opportunity to have these people here and make us better informed about this. It's one of those issues that I am sure we are going to revisit.
With that, I have a statement I would like to submit for the record.
I have no questions for this panel.
If I may, I would like to yield to the ranking member of the full committee, Mr. Stenholm, and let him use the balance of my time if he likes.
Mr. EWING. Mr. Stenholm is recognized, and thank you for your participation.
Mr. STENHOLM. Thank you, Mr. Chairman.
Following up, Mr. Reicher, on a comment you made in response to Mr. Ose's question a moment ago, can you tell us about the types of research ongoing in regard to the use of livestock and/or poultry waste for bioproduct and bioenergy? And, in doing so, talk about some of the main issues involved in making the use of animal or poultry waste a viable alternative.
Page 48 PREV PAGE TOP OF DOC
Mr. REICHER. Mr. Stenholm, there is a variety of research going on, both Government research and industry research, university research, on how you can take a whole host of wastes—pig waste, chicken waste, waste from the cattle industry—and do useful things with it.
There are a variety of things that are either in use or being explored. One is gasifying it—turning it into a gas that you can fire a turbine with and make electricity. Another would be to use it to make liquid fuels like ethanol. Another would be to potentially make various kinds of products from it—things that would avoid having to, in the cases where this is a problem, spread it on the ground where it could get into waterways.
That work is going on. DOE supports some of it. EPA supports some of it, Department of Agriculture, and there's a lot of interest in industry.
I will give you a specific example. As we speak, in North Carolina there is a real problem as a result of the floods with a lot of animal waste being carried off by the floods and how to deal with that issue very directly and in very much of a health and safety context.
So we think more needs to be done on both the Government side and the industry side. There's big potential to produce energy and other products from this material. There is, in pending tax legislation, credits that would extend to not only biomass but to some of the animal wastes, as well, to encourage their use in power generation. All of these things—R&D supportive tax policy, stimulating markets are important if we are going to deal better with this problem.
Mr. STENHOLM. Is there any particular line of research or research effort in any of the governmental entities you mentioned that is showing more promise than other? Any suggestion of where we might need to target scarce resources for quicker, better results in this area? Or is it still pretty much in the explorative sense?
Page 49 PREV PAGE TOP OF DOC
Mr. REICHER. Well, there are clearly things we can do today with these wastes—for example, to generate energy. The issue is how you can improve the efficiency of their use and drive the cost down.
I think what may be most useful, Mr. Stenholm, would be we could jointly and probably with EPA provide the subcommittee with a quick overview of all that is going on and suggest where the gaps are, because there are gaps today in terms of the research that is underway.
Mr. REICHER. And then most importantly, I think, how to actually stimulate the use of these technologies, that's the key.
As I said earlier—I think before you came in—one of our real challenges is that we are always competing with relatively low energy prices in this country, and so the emergency of these kinds of technologies is always a challenge when you are in that regime.
But, given the environmental imperatives we have today with trying to deal with this animal waste, we think there is a pretty bright future for producing energy from these materials, and we could supply a review for you if that would be helpful.
Mr. STENHOLM. I take it from your answer there that you see the biomass industry as having multifaceted possibilities, and that we need to be looking at more broadly-focused sources, and are looking, I guess I should say—if I understood you correctly, we are looking at more broadly-focused sources of biomass and energy through our research effort, and would need to continue in that direction, rather than narrowing it down to one or two particular or three areas.
Mr. REICHER. Yes. A ton of biomass, whatever it is, you can make electricity out of it, you can make liquid fuels out of it, you can make chemicals and chemical-based products out of it. That's sort of the general range. And so what we are doing with agriculture and with industry is to sort of move that whole raft of possibilities forward, and in doing so make sure that we maximize the use of that ton of biomass. Pull all the possible products out of it so we can improve the economics and, in a sense, compete with other traditional energy sources, and that's really the key to make it work in the economy.
Page 50 PREV PAGE TOP OF DOC
Mr. EWING. Mr. LaHood.
Mr. LAHOOD. Thank you for allowing me to ask one more question.
Since we have been talking so much about ethanol here today, I wonder if either of you or your staff have had a chance to look at H.R. 11, which I think would be a terrible setback for the ethanol industry. It is the Brian Bilbray bill which has been marked up in the Subcommittee on Commerce. This would be the beginning of the death knell, one of the death knells for the ethanol industry if this bill were to pass, which would exempt the provision for California for MTBE. I think it would be a terrible, terrible mistake for the full committee to pass it.
But, since we have talked to much about ethanol and you have emphasized it in your testimony, I wonder if either of you have had a chance to look at it. If not, you can, perhaps, when you send the other information, send that, what your feelings are about that, which I, obviously, think would be a very, very bad bill to pass.
Mr. REICHER. As I understand it, the bill would eliminate the oxygenate requirement to get at this issue of MTBE. Oxygenates, we believe, overall are important in gasoline as a way to fight traditional air pollution problems that come out of the tailpipe. It is also clear that MTBE does pose some environmental risk in terms of ground water, and, therefore, we do need to reduce its use.
The question is: how much do we need to reduce its use and how fast do we need to reduce it?
I think, when all is said and done, the good news is that ethanol is a very good alternative to MTBE. It is a good oxygenate, and it is one that we ought to keep in the mix. In fact, the challenge is that if we ramp down MTBE use, the challenge is how quickly we can ramp up ethanol production to replace that MTBE use.
Mr. LAHOOD. That would be no problem at all.
Page 51 PREV PAGE TOP OF DOC
Mr. REICHER. We hope you are right, and we think ramping it up is, in a sense, twofold. It's both ramping up the traditional corn-based ethanol, we also think it's ramping up the cellulosic ethanol, being able to make ethanol from the rest of the corn plant and all those other biological materials and waste that are out there today.
If we take that two-prong approach, we think we can make sure that there are adequate supplies of this good oxygenate as the country moves to limit the use of MTBE.
Mr. GONZALEZ. Mr. Chairman and Mr. LaHood, I'd like to ask Roger Conway to respond to that question.
Mr. CONWAY. Thank you.
We provided information for the EPA MTBE Blue Ribbon Panel indicating that over 4 years that corn ethanol could meet the requirements in terms of the oxygenate, and also much of the octane in the United States without much of a problem.
The petroleum industry had indicated that they would need 4 years to make any such adjustments. When we did our economic analysis, we based it on their needs to have a 4-year window. In addition, the ethanol industry indicated that they felt—Jack Huggins from Williams Industry was the speaker that day—indicated that they would be able to ramp up the industry to meet that demand, so that information we do have on the record.
In a general statement that Administrator Browner has made, once the MTBE EPA Blue Ribbon Panel made its recommendations, she indicated that MTBE use needed to be reduced. At the same time, she indicated strongly that renewables such as ethanol needed to have their market maintained, and the administration feels very strongly about that.
Mr. EWING. Thank you.
Mr. Goode.
Mr. GOODE. Pass, Mr. Chairman.
Mr. EWING. Well, Mr. Gonzalez and Mr. Reicher, thank you very much. It has been an interesting discussion, and you have been very helpful.
Page 52 PREV PAGE TOP OF DOC
You are excused.
Mr. GONZALEZ. Thank you very much.
Mr. REICHER. Thank you, Mr. Chairman.
Mr. EWING. We will call the third panel to the table.
Gentlemen, thank you for being here today. It is a great pleasure for me to introduce Dr. Don A. Holt, senior associate dean, College of Agricultural, Consumer, and Environmental Sciences at the University of Illinois in Urbana, IL. Mr. Holt has had a very distinguished career at the most outstanding agricultural university in the country, which just happens to be located in my district.
So welcome, Don, and thank you for being here.
Mr. Richard Jones is Chair of the Experiment State Committee on Organization and Policy, and director, Florida Agricultural Experiment Station, University of Florida, Gainesville, FL; Mr. Doug A. Wilson, president of the Illinois Corn Growers Association from Gridley, IL, on behalf of the National Corn Growers Association, and also a constituent of mine from Illinois.
Welcome, Doug. It is very good to have you.
Mr. Mike Yost, chairman of the American Soybean Association, Murdock, MN. Welcome.
And Mr. Paul E. Desrochers, director of fuel procurement, Thermo Ecotek Corporation, Roseville, CA.
Gentlemen, thank you very much for being here and for sitting through the first two panels.
We will start with you, Mr. Holt.
STATEMENT OF DON A HOLT, SENIOR ASSOCIATE DEAN, COLLEGE OF AGRICULTURAL, CONSUMER, AND ENVIRONMENTAL SCIENCES, UNIVERSITY OF ILLINOIS, URBANA, IL
Page 53 PREV PAGE TOP OF DOC
Mr. HOLT. Thank you, Congressman Ewing and members of the subcommittee. I appreciate this opportunity to testify on H.R. 2827.
Needless to say, this topic is of great interest within my institution and the land grant university community, in general, and all its stakeholders throughout the Nation.
Over my 7 years as a farmer, 19 years as a researcher, and 18 years as an administrator of research programs, I have had the opportunity to see a lot of very interesting and promising research projects that would result in new renewable fuels and chemical feedstocks. I detailed some of those in my written testimony.
What has been frustrating, however, in watching these projects is that there were rarely sufficient resources to pursue these promising possibilities as aggressively and strategically as would be justified by their potential, and we see H.R. 2827 as promising to help alleviate that bad situation.
I think H.R. 2827 is particularly timely, also, in that advances in biotechnology open up an incredible number of new food and non-food products that can be produced in and by plants, animals, and microbes. Many of these fall into the categories of renewable fuels and chemical feedstocks.
Inevitably, the new and improved products envisioned by this legislation will be produced in complex, multi-stage, value-added enterprises carried out by producers, processors, distributors, retailers, and consumers of new products and by suppliers of inputs and support services.
Also inevitable is the need for unprecedented levels of communication and coordination up and down those complex value chains.
Likewise, the research and development efforts creating and supporting these complex value chains will, inevitably, need to be coordinated and integrated over diverse disciplines, research and development functions—and by that I mean basic, developmental, and adaptive research and technology transfer—and steps in complex, value-added processes.
Page 54 PREV PAGE TOP OF DOC
They will have to address not only technical characteristics of the new and improved products, but also their marketability and potential environmental, social, legal, safety, and political implications.
To state this need another way, we need to move from the linear paradigm of research and development organization toward the parallel approach, and to talk about that I'd like to refer to the diagram that is attached to my testimony.
In the parallel approach, research and development functions are conducted simultaneously instead of sequentially. Activities are organized around practical goals and evaluated in terms of whether the goals are achieved.
At the University of Illinois, we have gained some experience with the parallel approach, thanks to strong encouragement and support of a stakeholder group known as the Illinois Council for Food and Agriculture Research, or C-FAR.
C-FAR insists that research sponsored by C-FAR funds, which are State funds, be not only tactically but also strategically sound and organized in the parallel manner.
Our experience is that it is hard, especially in public institutions, to make the transition from the linear to the parallel approach. The parallel approach requires more planning, team building, and monitoring of progress, and much more coordination. The transaction costs are high and need to be kept to a minimum. Overall project costs are high, because each effort necessarily has many component subprojects. All the pieces of the puzzle eventually have to come together and fit.
The situation is further complicated by the fact that few institutions, agencies, or private firms have all the research resources and capabilities needed to conduct useful research and educational programs in support of all stages of any of these complex value chains.
On the other hand, there are many benefits to the parallel approach. Overall progress is more rapid, which, in the long run, saves resources and helps meet time constraints imposed by competition. And, of course, that's the whole point of the parallel approach.
Page 55 PREV PAGE TOP OF DOC
Bottlenecks and other problems are anticipated or detected early and circumvented. Progress is easier to measure, since clear goals are established.
Students, professors, and other cooperators involved in projects of this nature gain valuable experience in team efforts, learn how to work effectively with specialists in other disciplines, and become more aware of the importance of their individual contribution in each overall effort. This approach does not restrict the creativity and flexibility of basic scientists, as was a major fear initially.
An important and tangible benefit is the shared vision, commitment, and entrepreneurial spirit engendered by functionally-integrated projects.
We strongly support the vision embodied in H.R. 2827 and hope that, as its provisions are implemented, procedures and protocols will foster and expedite the complex, multidisciplinary, cross-functional, inter-institutional team efforts required for success in research on sustainable fuels and chemical feedstocks.
Thank you for the opportunity to express views on this important matter.
[The prepared statement of Mr. Holt appears at the conclusion of the hearing.]
Mr. EWING. Mr. Jones, you may proceed.
STATEMENT OF RICHARD L. JONES, CHAIR, EXPERIMENT STATION COMMITTEE ON ORGANIZATION AND POLICY, AND DIRECTOR, FLORIDA AGRICULTURAL EXPERIMENT STATION, UNIVERSITY OF FLORIDA, GAINESVILLE, FL
Mr. JONES. Thank you, Mr. Chairman.
Mr. Chairman, members of the subcommittee, I appreciate the opportunity to speak to you today regarding H.R. 2827, the National Sustainable Fuels and Chemicals Act of 1999. I am speaking in my capacity as Chair of the Experiment Station Committee on Organization and Policy, which represents the State agricultural experiment stations across the United States. As well, my remarks have been developed in consultation with some of our colleagues in the Extension Committee on Organization and Policy, which represents the Cooperative Extension System.
Page 56 PREV PAGE TOP OF DOC
To facilitate our discussions here today, I will target my comments to the legislative language of this bill, rather than providing a more-technical narrative regarding the merits of specifically areas of biomass and biofuels research; however, we will be more than happy to provide detail and technical background to the members and staff of the committee on any of the following points.
We support H.R. 2827. We commend the Congress and the administration for the bipartisan and bicameral approach that has been taken to improve research on the conversion of biomass into biobased industrial products. It is remarkable to see the breadth of support that this legislation enjoys, with approval coming from farm, industry, and environmental groups.
The administration is already moving to implement the intent of provisions developed in this legislation. These beginning efforts to facilitative, multi-agency cooperative cooperation between the Department of Energy and the Department of Agriculture are commendable.
The level of support and cooperation speaks well to the importance of this legislation. Like other groups, we would like to make some recommendations that we think would further strengthen the bill, but we see it as fundamentally sound and well-developed legislation.
We concur with the value and need to promote biomass and biofuels industries. Supporting the increased use of biomass to develop other biofuels and other biobased products has a number of benefits:
First, the development of alternative fuel sources, which thereby reduce U.S. dependency on foreign sources and provide alternative energy sources in the future when petroleum reserves begin to decline.
Second, benefitting to the environment by potentially cleaner fuel combustion emissions, increased carbon sequestration and biomass crops, and providing alternative crops and farm practices in fragile areas where production of traditional crops and practices could be detrimental.
Page 57 PREV PAGE TOP OF DOC
Third, turning agricultural waste into useful products, such as the use of sugarcane processing residue.
Fourth, development of alternative crops and markets for agricultural producers and processors.
And, fifth, development of biobased energy industries that capture capital and economic resources in rural communities.
Mr. Chairman, despite economic constraints due to what, in my opinion, are very under-valued fossil fuels, the directions set forth by H.R. 2827 are really our only options for a sustainable energy supply in the future.
We support a comprehensive, market-oriented problem-solving approach. Many of the discussions regarding increased use of biomass for developing biobased products focus on reducing the cost of production and processing. This is important; however, this is also a systems problem in that biomass producers need assurances that they will have a steady biomass supply, while biomass producers need assurances of a steady market demand. Both the supply and demand have to emerge together.
Moreover, making biomass products price competitive with fossil fuels and petroleum-based products requires innovative and integrated approaches.
For example, a major cost limitation in the use of grass crops for biomass products is the cost of transportation. It can cost too much to dry the grass, which makes it much lighter for shipment. As well, biofuel and biobased products derived from a grass crop may not be cost effective by themselves. However, innovative projects have emerged that simultaneously address the issues of transportation, fuel production, and biomass-based products.
In one instance, a small processing plant was established on a farm, which took care of the transportation cost. The plant was small enough so that it did not need a larger supply of biomass, which might not be readily available or steadily available in the area.
Page 58 PREV PAGE TOP OF DOC
The farmer generated energy that he used in his own operations, and the surplus energy was sold back into the local power grid. A byproduct of the energy generation is used for feeding his livestock.
The farmer calculated that the combination of all these activities made these efforts profitable, as a whole, but removing any of these components would have made the enterprise unprofitable.
Because of these complexities, H.R. 2827 could be strengthened by more clearly stating the need for targeting some of the supported research to address the development of biomass fuel and products in the context of economically-viable production systems.
If it is possible, this legislation would also be strengthened by clarifying that producers and processors would be eligible to receive research tax credits for exploring the development of these new systems.
We concur with the value and need for expanded research in areas identified by the bill and recommend some additional areas that need to be addressed.
The recent National Academy of Science Report, the President's Council on Science and Technology, and, indeed, the legislative language of this bill provide an excellent listing of the critical topics in the arena of biomass production and processing that need additional research.
We strongly endorse the issue areas identified in this bill, and we would like to suggest several additional areas of research to be identified in this legislation.
We note that some industry groups have suggested, in addition to cellulose breakdown, that research is also needed on developing better catalysts and separation processor. As well, industry and processes have suggested that additional research is needed in the area of developing alternative uses for plant remains and the byproducts of biofuel production.
We concur with each of these recommendations.
Page 59 PREV PAGE TOP OF DOC
I would like to elaborate on Mr. Reicher's comments regarding sugarcane residues, and I would like to elaborate on it because of the potential it has for more rapid progress in the future, with respect to ethanol in particular, than we have had in the past.
This particular technology is due to a breakthrough in molecular biology, which really enabled more rapid progress in reducing the cost of a biofuel, ethanol. U.S. Patent No. 5,000,000 issued to the University of Florida covered movement of a gene from a bacteria that has not been used in ethanol production into bacteria Escherechia coli that are used in ethanol production, so that this microbe could then metabolize five-carbon sugars as well as six-carbon sugars, and so this makes for a more efficient process, and this is the basis of the plant being built in Louisiana.
The whole arena of molecular biology has huge potential to make possible more rapid progress in the future. We note that some environmental groups have called for additional research on the environmental consequences of producing, processing, and using biomass for fuel in industrial processes. We concur.
We also note that some farm groups have suggested that support for corn-based products and grass-based products be managed so that both are supported and advanced, rather than becoming competitive efforts. We concur with this.
Lastly, we suggest that additional language be provided that clarifies the need to work on biobased fuels and products in an integrated systems approach with adequate support for economic and market research to support the development of new technologies, processes, and products.
We recommend adding a capacity to address education and extension needs as part of a comprehensive approach. It is not sufficient for research to develop new biomass crops and more cost-efficient production technologies. This research needs to be communicated to producers and processors. If production and processing problems emerge, this needs to be communicated back from the field to the scientist. If novel partnerships between producers and processors are necessary to develop economically-successful biomass production systems, someone needs to be charged to act as a social catalyst, creating the opportunity for the various actors to meet and develop joint ventures.
Page 60 PREV PAGE TOP OF DOC
Our land grant system is unique in that it combines the need to address research and extension together to apply science to real-world problems.
Mr. Chairman, how am I doing on time.
Mr. LAHOOD [presiding]. If you could conclude, it would be marvelous.
Mr. JONES. Thank you.
We support innovative, multi-agency collaboration. We recommend clarifying the proposed language on funding mechanisms to ensure that the intent of the bill is realized. And this legislation does an excellent job of stating Department of Energy and Department of Agriculture need to coordinate and collaborate, and we would like to emphasize that this be done.
We recommend building on the unique Federal/State/local partnership built into the land grant system. In addition to the unique partnership between research, extension, and education built in the land grant university system, we are also unique in that we are simultaneously engaging our Federal, State, and local partnerships, and we would like to emphasize or request that the legislation address and take advantage of this unique relationship.
Lastly, we commend this committee for its leadership in bringing this important legislation forward, and at the appropriate moment I would be happy to respond to any questions.
Thank you, Mr. Chairman and committee.
[The prepared statement of Mr. Jones appears at the conclusion of the hearing.]
Mr. LAHOOD. Thank you, Mr. Jones. Welcome, Doug.
STATEMENT OF DOUGLAS A. WILSON, PRESIDENT, ILLINOIS CORN GROWERS ASSOCIATION, ON BEHALF OF THE NATIONAL CORN GROWERS ASSOCIATION
Page 61 PREV PAGE TOP OF DOC
Mr. WILSON. Thank you, Mr. Chairman and members of the committee. I am Doug Wilson, a corn and soybean grower from Gridley, IL, and I am president of the Illinois Corn Growers Association.
I am testifying today on behalf of the National Corn Growers Association