Segment 2 Of 2 Previous Hearing Segment(1)
SPEAKERS CONTENTS INSERTS
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HEARING ON H.R. 2819, BIOMASS RESEARCH
AND DEVELOPMENT ACT OF 1999, AND H.R.
2827, NATIONAL SUSTAINABLE FUELS AND
CHEMICALS ACT OF 1999
THURSDAY, OCTOBER 28, 1999
House of Representatives,
Committee on Science,
Subcommittee on Energy and Environment,
Washington, DC.
The Subcommittee met, pursuant to notice, at 1:30 p.m. in room 2318, Rayburn House Office Building, Hon. Ken Calvert [Chairman of the Subcommittee] presiding.
Opening Statement by Representative Ken Calvert (CA–42), Chairman, Subcommittee on Energy and Environment, Committee on Science, U.S. House of Representatives
We will now convene the hearing. The hearing will come to order.
The reason for today's hearing is to hear testimony on H.R. 2819, the Biomass Research and Development Act of 1999, and H.R. 2827, the National Sustainable Fuels and Chemicals Act of 1999.
Our purpose today is to examine the provisions of these bills and evaluate the merits in the context of competing funding considerations—a concern that is central to the jurisdiction of this committee.
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The bills are very similar—both bills find that increased funding for biomass conversion research and development and biobased industrial product technology demonstration will lead to energy independence, environmental benefits, economic efficiency and economic development. Both bills direct the Secretaries of Energy and Agriculture to cooperate in promoting biomass research, development and demonstration, and to authorize additional funding for biomass.
Although the bills are quite similar, some differences do exist. Both bills instruct the Secretaries of Energy and Agriculture to jointly create a Board to coordinate research and development among Federal Departments and Agencies in order to maximize our Federal scientific investment. H.R. 2827 states that the Secretaries will co-chair this Board but H.R. 2819 states that the Secretary of Energy shall chair and the Secretary of Agriculture shall be vice chair of the Board. I prefer the second provision since the Department of Energy conducts the Federal Government's largest biomass R&D program—with a Fiscal Year 2000 appropriation of $72.0 million for the Biomass/Biofuels Energy Systems Program. Additionally, both bills acknowledge that administrative support and funding responsibilities will most likely fall to the Department of Energy. For these reasons, I would urge that the Secretary of Energy chair the Board.
Also, both bills create a Technical Advisory Committee to advise the Board. However, H.R. 2819 exempts the Advisory Committee from Section 14 of the Federal Advisory Committee Act, which limits the duration of any Federal advisory committee to a two-year term. Effectively, this provision of the bill creates an Advisory Committee that will serve in perpetuity unless deliberately terminated. I, generally, do not favor such exemptions unless there is an overriding concern that I may not be aware of in this specific case.
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Joining us today to present testimony are:
The Honorable Dan W. Reicher, Assistant Secretary for Energy Efficiency and Renewable Energy, U.S. Department of Energy;
The Honorable I. Miley Gonzalez, Under Secretary for Research, Education and Economics, U.S. Department of Agriculture;
Dr. Bruce Dale, Co-Chair, Committee on Biobased Industrial Products, National Research Council, National Academy of Sciences, and Chairman Dept. of Chemical Engineering, Michigan State University;
Dr. David Pimentel, College of Agriculture and Life Sciences, Cornell University;
Mr. Steve Clemmer, Senior Energy Analyst, Union of Concerned Scientists.
I am pleased to welcome our witnesses today and to hear their discussions of the strengths and weaknesses of these bills.
Chairman CALVERT. We will now convene the hearing. The hearing will come to order.
Today we will hear testimony on H.R. 2819, the Biomass Research and Development Act of 1999, and H.R. 2827, the National Sustainable Fuels and Chemicals Act of 1999.
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I have a personal interest in exploring this subject. The University of California at Riverside, which is in my district, is involved in two biomass projects. One is hydro-gasification, which efficiently converts biomass material, including wood chips, to renewable fuels. UCR is also conducting a biological treatment program that would convert waste normally destined to landfills to ethanol.
While there are some differences, the two bills are very similar. Both bills direct the Secretaries of Energy and Agriculture to cooperate in promoting biomass research, development and demonstration and both authorize additional funding for RD&D. Our purpose today is to examine the provisions of these bills and evaluate their merits in the context of competing RD&D funding considerations, a concern that is central to the jurisdiction of this committee.
I understand the gentleman from Illinois, Mr. Ewing, the lead sponsor of H.R. 2827, the gentleman from New York, Mr. Boehlert, a co-sponsor of H.R. 2819, would like to make opening statements. And I would like to yield to them at this time. Mr. Ewing, you may begin.
Opening Statement by Representative Thomas W. Ewing (IL–15), Member, Subcommittee on Energy and Environment, Committee on Science, U.S. House of Representatives
Mr. Chairman, I would like to thank you for holding this afternoon's hearing on my legislation H.R. 2827, ''The National Sustainable Fuels and Chemicals Act of 1999,'' and my colleague Mr. Udall's bill, H.R. 2819 ''The Biomass Research and Development Act of 1999.''
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U.S. farmers have long been the envy of the world regarding their efficiency and production levels. While current commodity prices are extremely low, finding other sources of income for U.S. farmers may be the perfect way to help increase their net farm income.
I would like to give you a brief overview of H.R. 2827 to discuss how this bill can help with increasing U.S. bio-based fuel production and increasing farm income:
As you are aware, Biomass products including bio-based fuels can be derived from corn or any type of plant, tree, or organic agricultural waste such as rice hulls and sugarcane stalks.
H.R. 2827 creates a Sustainable Fuels and Chemicals Research Initiative to award competitive grants, contracts and other financial assistance to research entities involved in the biomass arena, and it would authorize $49 million a year from 2000–2005 to fund the Initiative.
The legislation would further establish a Sustainable Fuels and Chemicals Board to coordinate programs.
The Sustainable Fuels and Chemicals Board will consist of high level officials from the Departments of Agriculture, Energy, Interior, the Environmental Protection Agency, the National Science Foundation, and the Office of Science and Technology.
The legislation also establishes a Sustainable Fuels and Chemicals 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.
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New research created by this legislation will help to aid in the expedited development of alternative fuels that are environmentally friendly. Problems with certain alternative fuels such as MTBE, have proven the need for more environmentally friendly alternative fuels, such as ethanol.
The bill would also authorize the appropriation of $14 million to the U.S. Department of Agriculture (USDA) 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 information on the benefits of ethanol to the federal reformulated gasoline program (RFG).
H.R. 2827 is companion legislation to Senator Lugar's bill S. 935. Both Senator Lugar and I understand how much each and every research dollar is valued. Because this is such important research not only for agricultural 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 technology since it may lead to our further dependence on imported energy sources. It will take an organized effort in these emerging technological sciences to enable their development and growth. Again, thank you Mr. Chairman for holding this very important hearing.
Mr. EWING. Thank you, Mr. Chairman.
I'd like to thank you for holding this hearing this afternoon on legislation that I've introduced, H.R. 2827, the National Sustainable Fuels and Chemicals Act of 1999. We may need to change that to 2000, but right now it's 1999, and my colleague Mr. Udall's bill, H.R. 2819, the Biomass Research and Development Act, also of 1999.
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U.S. farmers have long been the envy of the world regarding their efficiency and production levels. While current commodity prices are extremely low, finding other sources of income for U.S. farmers may be the perfect way to help increase net farm income. I would like to give you a very brief overview of H.R. 2827, to discuss how this bill can help with increasing U.S. biobased fuel production and increasing farm income.
As you are aware, biomass products include biobased fuels, can be derived from corn or any type of plant, tree or organic agricultural waste, such as rice hulls and sugar cane stalks. H.R. 2827 creates a sustainable fuel and chemical research initiative to award competitive grants, contracts and other financial assistance to research entities involved in the biomass arena. And it would authorize $49 million a year from the year 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 will consist of high level officials from the Department of Agriculture, Energy, 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 7 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 aid and expedite the development of alternative fuels that are environmentally friendly. Problems with certain alternative fuels, such as MTBE, have proven the need for more environmentally friendly alternative fuels, such as ethanol.
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The bill would authorize approximately $14 million to the U.S. Department of Agriculture in 2000 to construct a plant for corn-based ethanol research. This plant and further research authorized in this bill will assist in providing information on the basis of ethanol to the Federal Reformulated Gasoline Program.
H.R. 2827 is the companion legislation to Senator Lugar's bill, S. 935. Both Senator Lugar and I understand how much each and every research dollar is valued. Because this is such important research not only for agricultural 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 further dependence on imported energy sources. It will take an organized effort in those emerging technology sciences to enable their development and growth.
Thank you again, Mr. Chairman, for holding this very important hearing.
Chairman CALVERT. I thank the gentleman.
Mr. Boehlert.
OPENING STATEMENT BY REPRESENTATIVE SHERWOOD L. BOEHLERT (NY–23), MEMBER, SUBCOMMITTEE ON ENERGY AND ENVIRONMENT, COMMITTEE ON SCIENCE, U.S. HOUSE OF REPRESENTATIVES
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Mr. BOEHLERT. Thank you very much, Mr. Chairman.
It seems apparent to me that we have something of an embarrassment of riches today. We have 18 members of Congress on 2 bills that would advance the research and development of biomass technologies. Now, to me, that presents a compelling case for this Committee to act quickly, go to markup and pass a bill that would make biomass research and development a high priority.
Mr. Chairman, I'm not alone when I say that I believe biomass is very much a part of our future. We will not always have abundant petroleum reserves to make fuel, plastics and chemicals as we do today. Even the petroleum industry recognizes this. In fact, Shell Oil predicts that within 50 years, a half a century, half of the world's energy may be supplied by renewable energy, including biomass.
The biomass R&D bills before this committee today will help lay the groundwork for the technologies that will ultimately sustain our economy in the future. But we don't have to wait until then to begin reaping the benefits that biomass offers us. Biomass, that's a somewhat ''techie'' word for specially-grown trees or grasses, animal waste and yard waste, and old pallets and corn stalks and the stuff that's left over when they press apple cider in my district in beautiful upstate New York.
Biomass can be converted into important high-value products like polymers, to make plastics, oils for high performance lubricants, biochemicals and adhesives. And of course, biomass can be used to produce fuels and electricity.
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Biomass technology also promises to be more environmentally friendly than petroleum. Fuels derived from biomass do not contribute to the net carbon in the atmosphere, which many scientists believe contributes to global climate change. Also, the less we rely on fossil fuels, the less we must drill for oil, which results in less damage to sensitive off-shore ecosystems.
And the option of producing plastics that are biodegradable could help us solve longstanding problems with shrinking capacity in our landfills, a problem we have not just in New York but across the country. I won't feel quite as guilty the next time I go to McDonald'sTM.
But, the environment isn't the only benefactor of using biomass. It can also fuel our economy and bolster our energy security, two very worthy objectives. Bio-refineries can provide an additional income stream for our farmers, as Mr. Ewing has so properly mentioned, create more domestic chemical manufacturing jobs, and boy, we want to do that, and diversify our energy supply and improve our energy security by reducing our reliance on foreign oil.
But, Mr. Chairman, there are significant technological hurdles we must overcome first. Mr. Udall and I have introduced a bill and Mr. Ewing has introduced another that would focus our research and development priorities on overcoming these hurdles. Both bills, Mr. Chairman, would advance biomass R&D, and I don't believe the differences are so great that the Committee would have any trouble working together to combine and pass the best of both bills.
I look forward to working with my colleagues, Mr. Ewing, Mr. Udall and the rest of the Committee on both sides of the aisle, as is the tradition of this great Science Committee, to advance the development of biomass technologies and speed their transfer to the private sector.
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And, just let me close with a thought. It warms my heart to see Mr. Reicher at the witness table, because, I know of his important responsibilities and interest in this subject. And, I would point out that he has the good judgement to be from the 23rd Congressional District of New York, magnificent Cazenovia, where biomass is sort of a mantra that we recite at least three times a week.
Thank you, Mr. Chairman.
Chairman CALVERT. I thank the gentleman. This is a bipartisan Committee and I'm willing to make a deal right now, if the two gentlemen from Illinois and New York will get on H.R. 11, I'll be happy to get on these two bills. [Laughter.]
But anyway, I'd like to thank the gentlemen for their statement.
Today, joining us on testimony is the Honorable Dan Reicher, Assistant Secretary of Energy and Efficiency and Renewable Energy at the U.S. Department of Energy. Welcome once again. The Honorable Miley Gonzalez, Under Secretary of Research, Education and Economics at the U.S. Department of Agriculture. Dr. Bruce Dale, Co-Chair, Committee on Biobased Industrial Products, National Research Council, National Academy of Sciences, and he's also Chairman of the Department of Chemical Engineering at Michigan State University. And finally, Mr. Steve Clemmer, Senior Energy Analyst with the Union of Concerned Scientists.
I'm pleased to welcome today's witnesses and would ask unanimous consent that the testimony of Dr. David Pimentel of the Cornell University College of Agriculture and Life Sciences be entered into the record.
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Without objection, so ordered.
[The prepared statement of Dr. Pimentel may be found in Appendix 1.]
OPENING STATEMENT OF CONGRESSMAN JERRY F. COSTELLO
Thank you Mr. Chairman. I'd like to welcome all of our witnesses for today's hearing on biomass research and development. As a composer of Mr. Udall's legislation I think it is essential that we as a nation look more to renewable sources of energy to meet our ever-growing energy needs. The prospects of biomass energy are great and with more research, it is possible that our nation could produce environmentally-cleaner ways of burning not only ethanol but other agricultural waste, perhaps in combination with coal and other domestic energy sources. It may prove to be a reliable source of domestic energy helping to reduce our dependence on foreign oil.
I look forward to hearing from our witnesses regarding both Mr. Udall's Biomass Research and Development Act as well as Mr. Ewing's National Sustainable Fuels and Chemicals Act, which includes an initiative important to my state and my district. Congress has already appropriated $2 million for the site work and final design for the pilot project. Illinois has conducted formal testing for three years to evaluate ethanol's role as an alternative fuel for the future. I'd like to yield the balance of my time to my friend and colleague form Colorado, Mr. Udall.
Chairman CALVERT. Before we get started, however, I would like to remind the members of the Subcommittee and our witnesses that this hearing is being broadcast live on the Internet, so please keep that in mind during today's proceedings.
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I would also ask unanimous consent that all members who wish have their opening statements be entered into the record. Without objection, so ordered.
And now, I'd like to turn to my good friend, the Ranking Minority Member, my good friend from the State of Illinois, the State where ethanol was discovered, the gentleman, Mr. Costello.
Mr. COSTELLO. Mr. Chairman, thank you, and, I appreciate you pointing out that ethanol was discovered in Illinois.
Mr. BOEHLERT. Wasn't it the Vice President who discovered it?
Mr. COSTELLO. The internet and ethanol, yes. [Laughter.]
OPENING STATEMENT BY REPRESENTATIVE JERRY F. COSTELLO (IL–12), RANKING MINORITY MEMBER, SUBCOMMITTEE ON ENERGY AND ENVIRONMENT, COMMITTEE ON SCIENCE, U.S. HOUSE OF REPRESENTATIVES
Mr. COSTELLO. Mr. Chairman, thank you, and I would like to welcome all of our witnesses here today for the hearing on biomass research and development.
As the co-sponsor of Mr. Udall's legislation and a strong supporter of Mr. Ewing's bill, I believe it is essential that we as a Nation look more to renewable sources of energy to meet our ever-growing energy needs.
The prospects of biomass energy are great, and with more research, it is possible that our Nation could produce environmentally cleaner ways of burning not only ethanol, but other agricultural waste, perhaps in combination with coal and other domestic energy sources. It may prove to be a reliable source of domestic energy, helping to reduce our dependence on foreign oil.
I look forward to hearing from our witnesses regarding both Mr. Udall's Biomass Research and Development Act bill, as well as Mr. Ewing's National Sustainable Fuels and Chemicals Act, which includes, I might add, an initiative important to our State of Illinois, and in particular, to my district in Illinois. Congress has already appropriated over $2 million for site work and final design for the pilot project in Illinois, and the State of Illinois has conducted formal testing for over 3 years to evaluate ethanol's role as an alternative fuel for the future.
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Mr. Chairman, at this time, I would like to yield the balance of my time to my friend and colleague from Colorado, Mr. Udall.
OPENING STATEMENT BY REPRESENTATIVE MARK UDALL (CO–2), MEMBER, COMMITTEE ON SCIENCE, U.S. HOUSE OF REPRESENTATIVES
Mr. UDALL. Thank you, and I thank my colleague Mr. Costello for yielding me the time. I wanted to also thank the Chairman, Mr. Calvert, for his interest in holding this hearing on this very important topic of biomass research and development. I think my colleagues have spoken eloquently to the opportunities that we have and also the challenges that we have in the biomass area.
If I might, I would take a couple of minutes and just talk about the bills and what I see are some of the strengths and some of the areas where we might collaborate. Biomass currently provides about 4 percent of the U.S. energy needs today. I think it's probably one of the most under-utilized renewable resources in the U.S. We understand a fair amount about using biomass to generate electricity, heat, liquid fuels, such as ethanol and other alcohol fuels.
But, we have a great deal to learn about the higher value use of biomass. We need to explore the potential of various kinds of biomass as sources of, a list that's quite lengthy, in fact, starch, oils, protein, paint, solvents, synthetic fibers, plastics, glues, fabric softeners, food ingredients, preservatives, biopesticides and enzymes are all on that list. A recent study from the National Research Council suggests that over 90 percent of our chemical consumption and up to 50 percent of our liquid fuel needs could potentially be satisfied with biobased products.
The two bills that we're considering today, and they have much in common, they both have recognized the increased contribution that biobased products can make to our economy, both can help lead to new jobs, industrial development, and so on. And, both bills have similar structures, involving cooperation between the Departments of Agriculture and Energy. And, they also include other agency inter-coordination and solicitation of views of outside experts in developing priorities.
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However, my bill differs from Mr. Ewing's in several ways. I just wanted to touch on those. We require peer review of research to study the effects of increased bioproduction the environment, and consideration of the economics and energy balance of bioenergy and biobased industrial products. We have somewhat different ideas on definitions and on the makeup of the advisory committee. And, the bills also differ on how much specificity should be contained and on what degree the research priorities should be established by outside experts as opposed to Congressional mandate.
But, in the end, there are many, many more similarities than differences. And, I look forward to working with Mr. Ewing and others as we combine our efforts.
I wanted to mention that I particularly appreciate Mr. Ewing's bill, its emphasis on cellulosic conversion. In Colorado, along the Front Range, which is a part of my district, there is a close proximity of national forests and major population centers. In fact, there are close to 370,000 homes and 750,000 people are in areas that are potentially threatened by wildfires. There is a public need to thin this wood waste buildup. But, there is no market for that waste.
And, I think the research that we could do, with the help of this bill, may help us find whether we can create ethanol or other bioproducts from this wood fiber. Having said that, we need to carefully manage and keep in balance our forest efforts. We have to make sure we don't destroy forests in order to save our homes. But, I think we can find some interesting solutions in this situation.
So with that, Mr. Chairman, I appreciate the opportunity to be here today and look forward to the testimony.
[The Complete Written Statement of Representative Udall follows:]
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Remarks of Mark Udall Before the Subcommittee on Energy and Environment
Mr. Chairman, thank you for holding this hearing on the very important topic of biomass research and development. I'd like to thank the Ranking Member Mr. Costello for his support, and I'd especially like to thank my colleague on the other side of the aisle, Mr. Boehlert, who has worked with me as an original cosponsor of H.R. 2819. Finally, I'd like to extend a welcome to our panelist this afternoon. Thank you for being here.
On September 8, my colleagues Mr. Boehlert, Mr. Minge, and I introduced H.R. 2819, the Biomass Research and Development Act of 1999. We worked for a number of months with the Administration and with the staff of Senator Lugar, who was already developing a bill in the Senate.
We believe we must think now about how to make the transition to renewable sources of energy and chemical feedstocks. These technologies further our national goals of broad-based economic growth, environmental protection, national security, and economic competitiveness.
Biomass—which currently provides about 4 percent of U.S. energy needs—is probably the most underutilized renewable resource in the U.S. today.
We already understand a fair amount about using biomass to generate electricity, heat, or liquid fuels, such as ethanol and other alcohol fuels. But we have a great deal to learn about higher value uses of biomass. We need to explore the potential of various kinds of biomass as sources of other important products, such as starch, oils, protein, paints, solvents, synthetic fibers, plastics, glues, fabric softeners, food ingredients, preservatives, biopesticides, and enzymes.
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In fact, a recent study of the National Research Council suggests that over 90 percent of U.S. chemical consumption and up to 50 percent of liquid fuel needs potentially could be satisfied with biobased products.
Today we are considering two bills. Besides, H.R. 2819, there is H.R. 2827, the Ewing/Lugar bill. The two 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. Both can help lead to new products, new industrial development, and new jobs. Both bills have similar structures involving cooperation between the Departments of Agriculture and Energy, other interagency coordination, and solicitation of the views of outside experts in developing research priorities.
However, our bill does go beyond H.R. 2827 in several important ways. We require peer review of research, the study of the effects of increased bioproduction on the environment, and consideration of the economics and energy balance of bioenergy and biobased industrial products. We have somewhat different ideas on definitions and on the makeup of the advisory committee. And the bills also differ on how much specificity should be in the bill and on the degree to which research priorities should be established by outside experts as opposed to by Congressional mandate.
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 of our efforts.
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I particularly appreciate the Ewing bill's emphasis on cellulosic conversion. This is important to me because in Colorado, along the Front Range, there is a close geographical proximity of national forests and major population centers. In fact, in that part of Colorado some 373,000 homes and 750,000 people are in areas that are potentially threatened by wildfires. There is a public safety need to thin the wood waste build-up, but there is currently no effective use of market for much of this material. The Colorado State Forest Service, USDA's Forest Service lab, and the National Renewable Energy lab are some of the groups working in Colorado to see whether ethanol or other bioproducts can economically be made from this wood fiber.
Of course, we need to proceed carefully and keep balance in our forest management. We must not make the mistake of thinking we have to destroy our forests to save our homes. But I think we should support the efforts of those working to respond to the situation, and I think biomass research can play a useful role.
Our bill is less specific in research objectives than is H.R. 2827 because this is multi-year legislation, and we do not feel that we are informed enough to spell out research priorities several years into the future. We want the Departments of Energy and Agriculture to be able to respond to new problems and capabilities as they emerge. We, therefore, recommend that definitions be kept broad and that resources be directed to developing new uses for a variety of types of biomass, including novel materials not available from petroleum sources.
Thank you again, Mr. Chairman, for agreeing to consider these two bills. I look forward to hearing the testimony of the panelists.
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Mr. COSTELLO. Mr. Chairman, before I yield back my time, I would ask unanimous consent that Mr. Udall be allowed to participate in the balance of the hearing and to ask questions as well.
Chairman CALVERT. Without objection, so ordered.
Gentlemen, it's our policy to swear in all the witnesses. So if you will please stand and raise your right hand.
Do you swear to tell the truth, the whole truth and nothing but the truth, so help you, God?
[Witnesses respond in the affirmative.]
Chairman CALVERT. Let the record show that the gentlemen answered in the affirmative.
Without objection, the full written testimony of the witnesses will be entered into the record. However, I would ask the witnesses to please keep your oral remarks to 5 minutes or less so we will have plenty of time for questions. So without further delay, Mr. Reicher, you may begin. Thank you.
The Honorable Eddie Bernice Johnson, Subcommittee on Energy and Environment, Hearing on H.R. 2819 and H.R. 2827
Mr. Chairman, I want to thank you and Ranking Member Costello for holding this hearing today.
The purpose of this hearing is to receive testimony on the Biomass Research and Development Act of 1999 (H.R. 2819) that has been introduced by Rep. Mark Udall and the National Sustainable Fuels and Chemicals Act (H.R. 2827) that has been introduced by Rep. Thomas Ewing.
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Both these bills have merit and I want to compliment their sponsors on their leadership when it comes to helping to develop a comprehensive policy on bioenergy. While the use of biomass to produce electricity, transportation fuels and chemicals currently provides only three percent of the nation's energy requirements—bioenergy holds promise.
Bioenergy has great potential in electricity generation and transportation. Power plants and vehicles, for example, are responsible for producing two-thirds of carbon emissions and over three-quarters of nitrogen oxide emissions which lead to smog formation. The Dallas-Fort Worth Metroplex has been cited for having excessive emissions by the Environmental Protection Agency, which unless addressed will prohibit future expansion of our transportation system and limit growth.
The federal government needs to take an active role in the research and development of bioenergy so that we can overcome the challenges that are posed by fossil-based fuels.
I look forward to hearing from the witnesses on both these bills.
Thank you, Mr. Chairman.
"The Official Committee record contains additional material here."
TESTIMONY OF THE HONORABLE DAN W. REICHER, ASSISTANT SECRETARY FOR ENERGY EFFICIENCY AND RENEWABLE ENERGY, U.S. DEPARTMENT OF ENERGY
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Mr. REICHER. Thank you, Mr. Chairman and members of the subcommittee. I very much appreciate the opportunity to testify today. I applaud your leadership in helping to build an industry that will produce electricity, transportation, fuels and chemical products from nature's power plants, the crops and trees we call biomass.
I also want to thank Representatives Ewing and Udall for their leadership on this issue.
This hearing, and the bills, H.R. 2819 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 industry that can reduce our dangerous dependence on foreign oil, cut greenhouse gas emissions, reduce air pollution and help confront the crisis in the agricultural and forest economies of our Nation.
I'm especially pleased to be here today with Under Secretary Gonzalez, who has been very active in our efforts to implement President Clinton's recent executive order to move the Government industry bioenergy initiative forward.
On the first board, Mr. Chairman, you see the broad opportunities for biomass as an energy source. Trees, crops, residues and organic wastes can today be readily converted into large quantities of electric power, a broad array of fuels and a great number of chemical products.
Unfortunately, Mr. Chairman, the current nascent bioenergy industry is greatly fragmented. Chemical companies are pursuing biomass as a feedstock, alternative to petroleum use. 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. There is simply not enough integrated work to stimulate an overall bioenergy industry.
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To be honest, Mr. Chairman, we are equally fragmented in the Federal Government, with bioenergy work being pursued in multiple offices across the Department of Energy, the U.S. Department of Agriculture and many, many other agencies. However, the good news is that the President's recent executive order will be used to 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 have brought us an exquisitely set of integrated technologies, market signals and policy drivers that determine at any given moment the highest and best use of a barrel of oil. The biorefinery of the future holds a similar promise. But achieving this promise will require serious and sustained efforts 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 feedstocks, 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 costs.
And in utilization, the challenge is clear but not simple. The fuel, power and chemicals we derive from biomass must be competitive with their fossil fuel counterparts in terms of efficiency, environmental impacts and again, cost.
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In the market arena, biomass supply and demand is obviously key, as are the costs 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 resource, biomass. And this, Mr. Chairman, 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.
The board lists some of the industrial partners that we're working with. They include entities like the National Corn Growers Association, Archer Daniels Midland, DuPont and Weyerhauser, to name only a few. Mr. Chairman, H.R. 2819 and H.R. 2827 are important steps in building an integrated bioenergy industry, recognizing as they do the need for better coordination across Government and within industry, and the critical need for additional resources.
I would offer three suggestions, and I will be done in about 30 seconds. First, we'd like to give greater recognition, particularly in Mr. Ewing's bill, 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.
Second, both bills 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.
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Third and finally, agency work must be supported through increased appropriations. My office requested approximately $117 million in fiscal year 2000 for our work in biopower, biofuels, biochemicals and forest products. To date, Congress has appropriated less than this amount. To be frank, and as both bills recognize, achieving success in bioenergy and biobased products will require substantially greater Federal funding.
In conclusion, Mr. Chairman, with Congress' support and the implementation of the Executive Order, 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 next century.
Thank you very much.
[The prepared statement and biography of Mr. Reicher follow:]
"The Official Committee record contains additional material here."
Chairman CALVERT. I thank the gentleman.
Dr. Gonzalez.
TESTIMONY OF THE HONORABLE I. MILEY GONZALEZ, UNDER SECRETARY, RESEARCH, EDUCATION AND ECONOMICS, UNITED STATES DEPARTMENT OF AGRICULTURE; ACCOMPANIED BY: ROGER CONWAY, OFFICE OF CHIEF ECONOMIST; DON ERBACH, AGRICULTURAL RESEARCH SERVICE; AND HOWARD ROSEN, U.S. FOREST SERVICE
Dr. GONZALEZ. Thank you very much, Mr. Chairman.
We're delighted to be here to give testimony this afternoon, and to discuss the future of renewable fuels and biobased products for American agriculture and for the American economy.
With me this afternoon are members of our staff at USDA: Mr. Roger Conway, of the Office of Chief Economist; Don Erbach, from Agricultural Research Service; and Howard Rosen, from the Forest Service, to answer any technical questions that we might have.
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Biomass crops, such as switch grass, forest products and waste, agricultural crops and waste streams, can become important feedstocks of electric power, liquid fuel and chemical production. In addition, biomass feedstocks can offer significant environmental benefits compared to fossil fuels, as we've already heard. Advantages in technology and farm production and processing offer enormous market opportunities for the Nation's farmers, and hold the potential of transforming a significant portion of our fossil fuel based economy to a biobased economy.
The Clinton Administration wants to help encourage that transformation. In a recent USDA–DOE analysis, the results indicate that $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 a net farm income estimated to increase by $5.5 billion over the USDA baseline projection.
The Administration supports the goals of H.R. 2819, the Biomass Research and Development Act of 1999 and H.R. 2827, the National Sustainable Fuels and Chemicals Act of 1999. In addition to the comments already provided by my colleagues, Mr. Secretary Dan Reicher, I have a few comments about the bills.
First, USDA believes a mix of directed and competitive research would be the best approach to address the issue for future success. Secondly, the makeup of the advisory committee and the number of members on it should be carefully reviewed to ensure appropriate representation from all sectors involved in biobased products and bioenergy. We would also like to see that the initiative is co-chaired by USDA and DOE as set forth in H.R. 2827, and in the Presidential executive order. Both departments bring distinct expertise to this initiative.
We believe that by formalizing cooperation and coordination among USDA, DOE and other agencies in biobased products and sustainable fuels, it will help reinforce the commitment of the agencies to match resources and to ensure that funds from both Departments are efficiently and effectively leveraged. President Clinton signed Executive Order 13134 on August 12th on developing and promoting biobased products and bioenergy. USDA and DOE are already taking steps to meet requirements of the executive order. In doing so, we are continuing to improve our cooperation among our agencies in the Federal partnership.
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USDA currently spends $60 million annually for research on new industrial uses of biobased products, and $9 million annually on biofuels research. To coordinate these activities within USDA, Secretary Glickman established the Bioproducts Coordination Council in 1995. I chaired the Council, which was renamed the Bioproducts and Bioenergy Coordination Council after the President's signing of the executive order. Among its duties is to develop a list of biobased products for use by Federal agencies and their procurement officials.
In my prepared remarks, I have highlighted several areas where USDA is conducting research, and among these are ethanol research, research on biodiesel and agricultural utilization research. In regards to ethanol research, one of the most promising roles biomass can play is strengthening our energy security, as has been pointed out. In 1995, USDA released a study on the net energy balance of the corn ethanol that showed that ethanol contains 22 percent more energy than is used to produce the ethanol. And since then, technological innovation in corn production and ethanol conversion have substantially reduced the energy required to produce corn ethanol.
USDA has been conducting research to develop biobased products under the moniker of agricultural utilization for more than 50 years, primarily at its 4 regional utilization centers. Many of the research activities are conducted at the Agricultural Research Service National Center for Agricultural Utilization in Peoria, Illinois. Other utilization research is conducted at ARS Eastern Regional Research Center in Wyndmoor, Pennsylvania and at our regional laboratories in New Orleans, Louisiana and Albany, California.
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 the petroleum derivatives. Selected niche markets, opportunities for biodiesel, are emerging now. As a result of the legislation passed this last year, Federal agencies can use fuel blends containing 20 percent biodiesel as a credit against alternative fuel vehicle purchases.
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I'm glad to report that in August, we began biodiesel fuel use in approximately 80 USDA vehicles at 2 locations, our Beltsville location in Maryland and the Black Hills National Forest in South Dakota. I'd also like to point out that through the CSRES activities we are able to fund a number of biobased and bioenergy projects conducted at land grant universities and other academic institutions.
The development of an expansion of renewable fuels and biobased products industry founded on 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. We thank Representative Udall and Representative Ewing for their leadership on this issue. And we would be available to answer any questions that might come as we proceed.
Thank you very much.
[The prepared statement of Dr. Gonzalez and biography follow:]
OFFSET FOLIOS 198 TO 214 INSERT HERE
Chairman CALVERT. Thank you, Dr. Gonzalez.
Dr. Dale.
TESTIMONY OF DR. BRUCE E. DALE, CO-CHAIR, COMMITTEE ON BIO-BASED INDUSTRIAL PRODUCTS, NATIONAL RESEARCH COUNCIL, AND CHAIR, DEPARTMENT OF CHEMICAL ENGINEERING, MICHIGAN STATE UNIVERSITY
Mr. DALE. Thank you. I'd like to commend all the sponsors for their foresight in proposing this legislation. The bills that you've introduced to help create the knowledge base on which we can create a new industry, producing hundreds of billions of dollars a year of products sustainably.
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First, I'll provide testimony regarding H.R. 2827, then make a few specific points regarding important differences between the two bills. If we do the research to reduce the cost of converting plant material to useful products, the resulting industry will cost effectively and sustainably meet many human needs from a renewable agricultural and forest resources. In my testimony I'm going to make 5 points to support this assertion.
First, biobased raw material and petroleum raw material costs are already roughly equivalent. Second, biorefineries must produce a variety of products, including fuels. Third, processing cost reduction is key to the biobased products industry. Four, life cycle analysis of biobased products must be done to ensure environmental compatibility and sustainability. And finally, research centers consortia must be large enough to address and integrate key issues.
I chair the Department of Chemical Engineering at Michigan State University. Chemical engineering is that branch of engineering that's concerned with conversion of raw materials to more valuable finished goods by chemical, thermal, biological and other approaches. I've been involved with research on conversation of agricultural materials to fuels and chemicals for almost 25 years.
In my testimony I refer to these agriculturally-derived commodities for industrial use as biobased industrial products. I recently directed a National Research Council panel report entitled Biobased Industrial Products, from which many of my remarks today are derived.
First, I'll comment on 2827. Point one, biobased raw material and petroleum raw material costs are already equivalent. Might I have the slide, please?
[Slide shown.]
Mr. DALE. Chemical engineering has been a discipline for nearly 100 years.
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May I have the overhead, please?
[Slide shown.]
Mr. DALE. Chemical engineering has been a discipline for nearly 100 years. In that time, we have learned that approximately one half of the cost of producing commodity products is due to the cost of the raw materials that go into the process. It's critical to realize that plant-based raw materials already compete very well with fossil-based raw materials on a cost per pound basis.
Crude oil, for instance, at $18 a barrel, is roughly equivalent to the cost of corn grain at $2.75 a bush, both cost about $110 per ton. Hays, grasses and crop residues, which we refer to as cellulosic materials, in fact are much less expensive than petroleum and are available in very large quantities at about $30 to $40 per ton.
However, the processes to convert cellulosic materials are comparatively very underdeveloped. The fact that agricultural raw materials cost the same or less than petroleum per ton is a crucial point. In other words, in our effort to cost effectively produce these biobased products, we're already essentially halfway there, because we have very low cost plant based raw materials to convert.
We can reap the benefit of many years of agronomic research to produce these low cost products if we now develop the necessary research attention to learn how to cost effectively convert these materials to the final finished goods.
The second point, then, biorefineries must produce a variety of products, including fuels. There are strong technical and economic reasons why these biobased products will be produced in very large, integrated facilities that we might call a biorefinery, as alluded to by Secretary Reicher. This highlights their similarities to a petroleum refinery.
In a petroleum refinery, the principal raw material or crude oil is converted to a wide range of higher value but lower volume and higher volume but lower value products, such as fuels, chemicals, plastics and other materials. A recent DOE study highlights the fact that an oil refinery built only for fuels production would not be economically viable. The co-products of fuel production are absolutely essential to attain and maintain economic viability of the oil refining industry. The same thing will occur in a biorefining industry.
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Biorefineries can also manufacture other products that oil refineries cannot, including foods, feeds and biochemicals. These give additional financial stability and competitive edge to these biorefineries. Emphasis on the Act, then, and product diversification is essential, as is the emphasis on the research to convert, reduce the costs of converting plant materials to biobased products.
There are a lot of interesting scientific issues surrounding biobased products, but as it turns out, most of them will not materially affect the cost of producing the products. To achieve its goals, the Act must be administered in such a way to ensure that fundamental research work is focused in areas where you can really make an impact on the cost of production.
Fourth, if the intent of the Act is to be realized, we must consciously and thoroughly integrate evaluations and environmental impact and sustainability in all of our research directions and decisions. I believe the Act gives good emphasis to sustainability and life cycle analysis.
Point number 5, the Act envisions research that will be inherently inter-disciplinary and quite broad in scope. It's essential to integrate research efforts to achieve the goals of the Act to make best use of taxpayer funds. Integrated goal-directed work is probably best carried out in consortia or research centers.
Now I'd like to make a few final comments on H.R. 2819. This is also a good bill. I think it could be strengthened in the following ways. In general, in demonstration, I don't believe that these bills should devote funds to demonstration activities. There are two reasons for this. Demonstration is a very expensive activity compared with research and development. Second and most important, this area is not really right for demonstration. We don't have that much good cost-effective biomass technology to demonstrate.
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I'll cut to the chase here. A couple of other things. I also believe that USDA, for a number of reasons, needs to have a co-equal role in this effort. Also, I believe that the requirement of dollar to dollar matching industrial funds to Federal support would tend to undermine the intent of the bill, rather than strengthen it.
Finally, I believe that H.R. 2819 should increase the range of products defined as biobased products and I believe that the definition of biomass in H.R. 2827 is the preferred definition compared with H.R. 2819.
Thank you for the invitation to appear here today.
[The prepared statement, biography, and financial disclosure statement of Dr. Dale follow:]
OFFSET FOLIOS 222 TO 242 INSERT HERE
Chairman CALVERT. Thank you, Doctor.
We have about 10 minutes left, so Mr. Clemmer, if you could begin your testimony, and as soon as you finish your testimony in 5 minutes or so, then we'll recess for a vote and come back immediately.
Mr. Clemmer.
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TESTIMONY OF STEVE CLEMMER, SENIOR ENERGY ANALYST, UNION OF CONCERNED SCIENTISTS
Mr. CLEMMER. Thank you for the opportunity to appear today on behalf of the Union of Concerned Scientists.
UCS is an independent, non-profit alliance between many of the Nation's leading scientists and thousands of committed citizens. UCS works to ensure that all people have clean air and energy as well as safe and sufficient food.
I would like to commend Representative Ewing and Representative Udall for their leadership in introducing bipartisan legislation to support increased biomass use. UCS strongly supports this legislation for two main reasons. First, additional research and development is needed, along with other policies, to lower the costs and support the commercialization of new crops and advanced technologies to produce energy and chemicals.
Second, the Federal Government has an important role to play in continuing to advance bioenergy commercialization efforts to capture the potentially large economic, national energy security, environmental and public health benefits of increased biomass use. I will now highlight some of these compelling benefits.
First, Federal R&D investments have helped industry substantially reduce the cost of biomass technologies and energy crops. For example, it costs about one-third as much to produce a gallon of ethanol today as it did in 1980.
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Second, commercialization of biomass technologies and crops will increase national energy security and keep more energy dollars at home.
In 1997, over $60 billion flowed out of the U.S. economy to purchase imported oil, according to the Energy Information Administration. By 2020, EIA projects this energy dollar drain to more than double, to $135 billion, as oil imports rise from half to nearly two-thirds of U.S. oil consumption.
Third, biomass has enormous potential to diversify our energy mix. Biomass has the technical potential to supply up to half the Nation's electricity or up to two-thirds of the Nation's motor fuel needs without irrigation and without competing with food crops.
Fourth, domestic commercial success for biomass technologies will create jobs in manufacturing and rural areas. DOE estimates that a concerted effort to develop energy crops could create 120,000 new jobs over the next 15 years.
Fifth, biomass can have significant environmental benefits, as we've heard. Electricity generation and transportation are responsible for producing two-thirds to three-quarters of the Nation's air pollution and global warming emissions. If the electric utility industry is deregulated without adequate safeguards, these problems could become even worse.
By contrast, biomass that is grown and harvested in a sustainable manner and used in advanced technologies would greatly reduce air pollution and carbon emissions. Therefore, increased biomass use can provide a hedge against increasing costs from potential greenhouse gas reduction targets, and can help meet national and regional air quality goals.
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Growing cellulosic grasses and trees can also provide environmental benefits, compared to producing biomass from conventional row crops, like corn, especially when grown on marginal or degraded lands. Perennial crops require relatively few chemical inputs, dramatically reduce erosion, increase the organic content of soil, improve water quality and can increase biodiversity.
Despite these potential environmental benefits, biomass production could have negative impacts if it is not grown and harvested sustainably, or if energy crops replace natural habitats. In addition, the inappropriate use of genetically engineered crops should be avoided, especially in light of recent scientific evidence showing severe adverse effects on monarch butterfly caterpillars that were fed pollen from genetically modified BT corn. Developing energy crops that follow the principles of sustainable agriculture should help mitigate negative environmental impacts.
We were pleased to see language included in both bills requiring biomass to be produced in ways that enhance overall environmental quality and use sound land use management practices.
We have three recommendations for strengthening this legislation. First, we recommend combining the strengths of both bills into a single piece of legislation. One possible approach would be to incorporate the best ideas from Mr. Udall's bill into Mr. Ewing's bill, which is virtually identical to Senator Lugar's bill.
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For example, we would suggest using language from Mr. Udall's bill that would place greater emphasis on studying the environmental impacts of increased biomass use, and on funding demonstration projects, exclude incineration of unsegregated municipal solid waste and contaminated biomass waste as being eligible for funding, and establish and require the use of a set of criteria to assess the economic and environmental impacts of increased biomass use under reporting requirements.
Second, we would support additional R&D on the positive and negative environmental impacts of increased biomass use. Third, we would also support R&D to identify and create long-term sustainable markets for biomass use.
In conclusion, for every taxpayer dollar spent on biomass R&D, the Federal Government is providing America with rural economic revitalization, development of high-tech industries, increased national energy security and environmental benefits. Furthermore, biomass technologies and crops, once commercialized, can help pull down the overall cost to taxpayers of preserving the environment and protecting public health. For these reasons, we support the legislation.
Finally, while this legislation will make an important contribution to lowering the costs and supporting the development of new crops and advanced technologies, other policies will also be necessary to create a vibrant and sustainable market for biomass. Two particular policies stand out. First, UCS supports proposals to create——
Chairman CALVERT. If the gentleman will suspend, we will have to finish his opening statement when we return. We will recess for a vote and return as quickly as possible.
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Thank you.
[Recess.]
Chairman CALVERT. Mr. Clemmer, do you have any concluding remarks, or shall we go to questions?
Mr. CLEMMER. I just have one last point to make, it's two or three sentences, so I'll do that if that's okay.
Chairman CALVERT. Go ahead.
Mr. CLEMMER. My last point was, finally, while this legislation will make an important contribution to lowering the cost and supporting the development of new crops and advanced technology, other policies will also be necessary to create a vibrant and sustainable market for biomass. Two particular policies stand out.
First, UCS supports proposals to create minimum renewable energy content, or portfolio standards, that would require a growing share of U.S. electricity and transportation fuels to include renewable resources. Second, UCS supports extending the Section 45 tax credit for biomass and wind power and expanding the definition beyond dedicated energy crops to include other clean biomass resources.
Again, thank you for this opportunity to provide the views of the Union of Concerned Scientists and our members on this important issue.
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[The prepared statement, biography and financial disclosure statement of Mr. Clemmer follow:]
"The Official Committee record contains additional material here."
Chairman CALVERT. Thank you.
NEED FOR LEGISLATION SINCE EXECUTIVE ORDER 13134 CREATED SIMILAR INTERAGENCY COUNCIL
Mr. Reicher and Dr. Gonzalez, Executive Order 13134, titled Developing and Promoting Biobased Products and Bioenergy, dated August 12th, 1999, created the Inter-Agency Council on Biobased Products and Bioenergy. It is co-chaired by the Secretaries of Energy and Agriculture.
Gentlemen, since this Council already exists, and is very similar to the inter-agency Board to be created by both bills under consideration today, why do we need this legislation?
Mr. REICHER. Mr. Chairman, I think the legislation would be extremely useful because it would institutionalize this through legislation. Executive Orders, as you know, often come and go with Administrations. And in the case of this very important opportunity in bioenergy, we believe that a statutory basis for this kind of coordination, statutory direction to move on this important opportunity, would be very important.
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Chairman CALVERT. So you're saying the President would like to have statutory approval before creating an Executive Order?
Mr. REICHER. Not at all, Mr. Chairman. [Laughter.]
Chairman CALVERT. Dr. Gonzalez.
Dr. GONZALEZ. Yes, Mr. Chairman. Well, I think, as Secretary Reicher has indicated, we've gone through that discussion about looking at both of the bills, as well as the committee that we now have. And in response to some of that question, we think that the opportunity we have for maintaining the co-chairmanship, if you will, of the advisory committee, and working together in the two Departments is along the right lines. And the legislation will help support that.
Chairman CALVERT. Okay. So the baby's born, so we want to make it legitimate.
[Laughter.]
Mr. REICHER. Actually, Mr. Chairman, there was a great deal of agreement between Senator Lugar and the President on the outlines of the Executive Order and on the outlines of the legislation. Senator Lugar was there at the ceremony where the Executive Order was unveiled. So we're in strong agreement, and I do agree that if we could institutionalize this through legislation, it would be very important.
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COST COMPETITIVENESS OF BIOMASS FUELS WITH TRADITIONAL FUELS
Chairman CALVERT. This is for all the witnesses. Information from—surprise—the University of California Riverside, CE–CERT, which I'm happy to note is in my district, indicates the cost of producing ethanol from corn-based biomass or from other high quality biomass, including segregated municipal waste, just isn't economical. In fact, it requires subsidies just to marginally compete.
What evidence do you have, if any, to the contrary?
Mr. REICHER. I could start, Mr. Chairman. We've had a very impressive downward trend in the cost of corn-based ethanol over the last 20 years, as we've seen with a variety of renewable energy sources. And we're going to, I think, continue to see some downward trend in corn-based ethanol.
In the so-called cellulosic ethanol, ethanol made from the rest of the corn plant, made from municipal solid waste, made from agricultural residues and waste and forest waste, we're seeing costs that are even lower than today's corn-based ethanol. And we have very sound projections that over the next several years, with the kind of progress we're seeing, that we could be below $1 a gallon for this cellulosic ethanol in commercial markets.
But it's going to take continued R&D, it's going to take continued progress on the demonstration side. But with both forms of making ethanol, we're seeing very good progress.
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Chairman CALVERT. This is for the whole panel. Dr. Gonzalez?
Dr. GONZALEZ. Yes, sir, just to follow up on Dan's comments, I think we've seen over a period of time, and certainly our relationship with the university community and ag. research has brought some of this cooperation that we've talked about this afternoon in regard to the research. And we're seeing that through that sustained effort into the research arena that we've reduced costs for the production of the fuel, as well as looking at the co-products that come from this research.
And so I think it's broad-based, we have a number of products, if you will, that will come from the results of the research over that long period of time.
Dr. DALE. In my testimony, I pointed out that the cost of producing materials depends on the cost of the raw material plus the processing costs. With corn-based ethanol, there's a very important floor beneath which we really can't go. If corn costs $2.50 a bushel, and you get roughly 2 and a half gallons of ethanol per bushel of corn, then your floor cost just for the raw material is $1 a gallon.
Now, we can make some progress in that with by-products, but by and large, there is a lower floor limit for corn-based ethanol, under which we just aren't going to be able to go. That isn't the case for cellulosic ethanol, or straw or hay ethanol, if you will. Because the cost of the raw materials is 1/3 or less. So the cost reduction potential, because of the lower cost of raw material, is much greater.
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Chairman CALVERT. Are you saying that that type of ethanol, then, is more productive than corn-based ethanol?
Dr. DALE. It's potentially much cheaper.
Chairman CALVERT. So would that put the corn-based ethanol people out of business?
Dr. DALE. No, I think over time their facilities can be adapted to use the cellulosic ethanol. In other words, much of the infrastructure that they have would support a corn-based, a corn-stove or corn residue or straw-based ethanol. So they would transition as the technology got good.
Chairman CALVERT. I see. Mr. Clemmer.
Mr. CLEMMER. I would agree with the other speakers in that the focus on driving down the cost of conversion technologies to use cheaper cellulose-based materials is how it will be accomplished on a market basis. The other thing I would add is just that all the other benefits that I talked about in my testimony are not factored into the price that we pay for energy. And that's where the Federal Government comes in to put a value on those benefits.
Mr. REICHER. Mr. Chairman, if I could just say that there is real potential harmony between the corn-based ethanol and making ethanol from these other materials. We have, we are increasingly close to having the technology to make use of the rest of the corn plant, stalk, cob, all those materials. Just like we can make ethanol increasingly from the organic portion of municipal solid waste, waste that various agricultural producers are now in some cases paying to get rid of. We're helping with a new plant in Louisiana, 20 million gallons a year, that will make ethanol from waste that the sugar cane industry is now literally paying to get rid of.
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So you have actually a negative value to the input. And so that can radically change the economics of ethanol, both on the corn side and cellulosic side.
Chairman CALVERT. Thank you. Mr. Costello.
Mr. COSTELLO. Thank you, Mr. Chairman.
NON-ENERGY RELATED BIOMASS TECHNOLOGY OPPORTUNITIES
Mr. Reicher, your testimony and the testimony of some of the other witnesses this afternoon talks about creating energy or fuel from biomass. I wonder if you might talk about some of the non-energy related technologies that might be developed as a result of biomass.
Mr. REICHER. Mr. Costello, there is both the opportunity in the production of various kinds of energy, for example, ethanol, to pull other products out. For example, we've heard the term co-products. When you make ethanol from cellulosic material, you end up with the rest of the plant that you're not turning into ethanol, the so-called lignin. And that, for example, could be burned to make electricity. You can also make a variety of chemical products out of the lignin.
In a more holistic way, in a biorefinery, there's lots and lots of things that you can do with the sugars, the proteins, the structural materials in biomass. In the corn industry, they make vitamins, they make polyethylene, they make a whole variety of things from the plant. And so the opportunity here is literally like the petroleum industry, which takes a barrel of oil in and tunes up the plant based on market signals and regulatory drivers to make everything from chemicals to fuels to power.
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We can do the same thing with biomass, responding to market signals, responding to regulatory drivers. The key is that we're many decades behind the petroleum industry in terms of the sophistication of the products and the processes, and we've just got to keep moving forward and we'll get there.
LEVEL OF COOPERATION BETWEEN DOE AND USDA
Mr. COSTELLO. I'd like you to talk a little bit about the collaboration between your agency and USDA. We have seen, through this committee, Federal agencies duplicating services and duplicating projects. And I wonder if you might talk a little bit about—in your testimony you talk about the collaborative effort between the two agencies. One, I'd like you to discuss that a little bit. Two, what insurance do we have or assurance do we have that there's not a duplication of effort on this project?
Mr. REICHER. Well, first of all, most importantly, the two agencies under Secretary Gonzalez and I, and other senior people at USDA, are coordinating well today. There are things going on today that a year or 2 or 5 years ago weren't happening in terms of communication. That's been fostered by the Executive Order. I think this legislative push has helped as well, the great and growing interest in biomass generally.
So I think we're very focused, as people in senior ranks in these agencies, in making sure that we don't duplicate work that our research agendas do in fact align well.
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Secondly, I think that the structures created under the Executive Order, and that would be created under the legislation, will cause us to focus even more specifically on who does what best, how do we avoid duplication, how do we maximize the use of the taxpayer's dollars. And I think it's readily achievable. We know how to coordinate and I think we can do a good job at it going forward.
Mr. COSTELLO. Dr. Gonzalez, let me ask you, recently scientists have announced the discovery of an enzyme that could lead to the cheaper production of ethanol from corn. In your testimony you discuss some of the current work in some of the R&D that USDA is doing. And I wonder if you might elaborate a little bit as to what USDA is doing as far as in the area of ethanol and corn.
Dr. GONZALEZ. Okay. If I may take advantage of the question to talk a little bit about, in response to your question to Assistant Secretary Reicher.
Mr. COSTELLO. Please.
Dr. GONZALEZ. The additional products, when we talked to the initial question on the cost of production, in addition to the energy and fuel components, there are a number of things that we've done, in fact, in the Chairman's district, with rice straw. We're looking at a number of materials that we are able to build because of the research in these areas.
And I'll get back to the specifics of your question. But building materials, the oils, the lubricants that we've talked about, in addition to fuels, cleaners, the tree-free paper, for those areas. And I know that in the case of forest issues, these become other alternatives. In the areas of landscaping and fruit crops, like in New York State, we know that these are other alternatives for the use of those materials.
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Environmental remediation, shipping and packing materials that we've been able to come up with, or household and personal care products, human and animal health products that Dan referred to earlier. And so we're looking again at the additional and continuation of our basic research, in order to be able to address these. Because as we've talked, beyond using corn as we've done in the past, and Dr. Dale talked about this earlier, that we're able to use the cellulosic material and use the feedstock, if you will, for the production and reduction of costs of these materials.
FULL PRODUCTION COST OF CORN-BASED FUEL
Mr. COSTELLO. Dr. Dale, let me ask you, in your testimony you discuss the cost of biomass as compared to petroleum-based fuels. Does the cost of corn you cited include the cost of growing the corn and harvesting the corn, including the examples, the fuel used to plow, harvest, water, store, all of the associated costs?
Dr. DALE. Yes, it's cost to produce and to deliver at a refinery.
ENVIRONMENTAL AND HEALTH IMPACTS OF GENETICALLY MODIFIED MATERIALS
Mr. COSTELLO. Some experts have expressed concerns about using genetically modified materials. And I wonder if you might express your opinion on this issue.
Dr. DALE. This is not an area that I know about, but I'll tell you what I do know. I understand that most of the concern there revolves around consumption, ingestion either by human or animals of genetically modified plants, organisms or whatever. That's not what we're talking about here. We're talking about things we put in our gas tank or paint the car with or make carpet out of, not things that either humans or animals would consume.
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And second, if I understand correctly, many of the people that are concerned about the genetically modified organisms are also people who have a very great concern for the environment. So they are a little bit on the horns of a dilemma here, because these biobased industrial products offer the potential for wonderful environmental advantages. And, some of those will be achieved by making use of genetic techniques.
So I suspect, and I won't speak for Mr. Clemmer here, and maybe his organization doesn't have a position on it, but I suspect that many of the people who are concerned about GMs also support environmentally friendly technology, will want to see these biobased products move forward because of their environmental benefits.
Mr. COSTELLO. Mr. Clemmer, would you comment?
Mr. CLEMMER. Sure. One concern I had expressed in my testimony was related to the recent problem that happened with genetically modified BT corn in the Cornell University study that showed severe impacts on monarch butterfly caterpillars. So I would say that the issue is relevant to what we're talking about here, since corn is used to produce energy.
But it applies a little bit more broadly to any type of energy crop that we're going to develop, and how that organism competes with other natural organisms in adjacent ecosystems.
Just one final thing, as we do have a sustainable agriculture program in our organization that deals with this issue, it's not my field, but I'd be happy to provide more information to you on it.
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Mr. COSTELLO. What do you think should be done to make certain that we take into consideration the pitfalls of genetically produced?
Mr. CLEMMER. Well, once again, it's not my expertise, but I think we just need to be very careful in examining the potential effects before we go to a large scale with it. Because what we're talking about here, what the end goal is here is to have large scale bioenergy production. So we just need to be careful what the impacts of that are.
Chairman CALVERT. We have time for a second round. Mr. Rohrabacher.
MEASURES TO COMPARE COSTS OF BIOMASS PRODUCTS AND PETROLEUM PRODUCTS
Mr. ROHRABACHER. Thank you very much, Mr. Chairman.
When we're talking about the costs, the question we just talked about, and you were mentioning per ton that it's cheaper now for corn biomass products than oil and coal, but is that cheaper per ton or how does this, is it cheaper per measure of unit of heat produced?
Dr. DALE. It's not necessarily cheaper per unit of heat produced.
Mr. ROHRABACHER. Right.
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Dr. DALE. But it is as expensive or less expensive per ton of total mass.
Mr. ROHRABACHER. Right. So the actual, when you're making comparisons between a ton of this and a ton of that, it's irrelevant unless you're really talking about per measure of heat, isn't that right?
Dr. DALE. No, sir. No, sir, it's not. And the reason is that we're not just going to make fuel products, we're not just going to make energy products out of these things.
Mr. ROHRABACHER. I see. That's very good. Okay. So you're saying that to the degree that that ton of coal produces much more heat than a ton of corn or whatever it is, the by-products from that operation will, you believe, pay for the difference?
Dr. DALE. Yes, sir.
NET CO2 RELEASES FROM BIOMASS FUEL
Mr. ROHRABACHER. All right. Now, what about in terms of release of hydrocarbons, I guess that's what we're looking at, hydrocarbons into the air? When you have a ton of oil that's burned versus a ton of corn in order to achieve that level of energy that you're trying to achieve, which one releases the most hydrocarbons into the air, which of course is something, I think that this is what the original basis of trying to get this thing was all about?
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Dr. DALE. Are you referring to hydrocarbons or to carbon dioxide?
Mr. ROHRABACHER. Well, how about carbon dioxide, then.
Dr. DALE. In terms of carbon dioxide, there's a number of very good studies that show, because plants are consumers of carbon dioxide. We exhale carbon dioxide, but plants inhale it, they use it to fix more plant material.
Mr. ROHRABACHER. Right. But you're actually burning them at the end. There's a release then?
Dr. DALE. Yes. Oh, definitely. Anything we combust or that decays, ultimately the carbon goes from——
Mr. ROHRABACHER. Okay, let me anticipate your answer. So you're saying that although in the burning process of this, and in order to produce the biomass and get it to the point where you're going to produce energy, that although it releases what into the air?
Dr. DALE. Carbon dioxide.
Mr. ROHRABACHER. Carbon dioxide, it releases more carbon dioxide into the air than if you were burning just oil in and of itself, the fact that the plants have already gone through a cycle of sucking a certain amount of carbon dioxide out of the air, that that balances that. Is that what you're saying?
Dr. DALE. Yes.
Mr. ROHRABACHER. Okay. You've done studies to indicate that that is—it's not a clear shot here. I mean, what we're talking about is not clear-cut. What we're talking about is it takes a lot of, there's a lot more onion layers to peel there before you get to the payoff, isn't that right?
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Dr. DALE. Well, I'm not sure exactly which onion you're referring to. [Laughter.]
Chairman CALVERT. Is that biomass, we're going to burn these onions?
Dr. DALE. I do know that there have been both net carbon dioxide analyses and net energy analyses of both corn-based ethanol and cellulosic-based ethanol. And for the case of corn-based ethanol, it's a slight positive gain in energy. For the case of cellulosic ethanol, it's a very large potential gain. Because if we're going to burn something, either oil or a ethanol derived from plant matter, it will depend on how it's made.
Mr. ROHRABACHER. Okay. But to be confident that we're doing something really good, we have to go back and include that part of the process in which the plant is sucking up the bad stuff from the air?
Dr. DALE. Yes, sir. In my testimony, I referred to what we call life cycle analyses, and that's part of it. Yes, sir.
Mr. ROHRABACHER. Okay. If somebody else wants to jump in here.
Mr. REICHER. Congressman, if I could, the big difference is that in the case of petroleum or coal, the carbon that's released has been carbon that has been locked in the Earth for millions of years. And it's first released to the atmosphere, and so you're adding to the amount of CO2 in the atmosphere.
The difference with biomass is that the biomass, as it grows, it pulls the CO2 out of the air, as it's burned, it releases that CO2 back into the air.
Mr. ROHRABACHER. I see.
Mr. REICHER. So it is much closer to a net zero effect on CO2 than fossil based resources, where you are adding for the first time——
Mr. ROHRABACHER. Okay, got you.
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Mr. REICHER [continuing]. In human history the CO2 gas.
Mr. ROHRABACHER. Got you. Now, let me ask you this, and then my red light's going to go on. And I am mentioning this to some of my colleagues on the way down. What about charcoal? Will this biomass make charcoal? It will?
Mr. REICHER. Yes.
Mr. ROHRABACHER. So there's a group in California that's producing a fuel cell that is based on charcoal. So if it was producing electricity based on biomass created charcoal, it would perhaps give electricity in that same plus range that you talked about, perhaps?
Mr. REICHER. You'd have to look at the life cycle, but yes, the potential is certainly there.
Mr. ROHRABACHER. Okay, well, thank you very much, Mr. Chairman.
Chairman CALVERT. I thank the gentleman. Mr. Udall.
H.R. 2819 LIMITS ON FUNDING FOR DEMONSTRATION PROJECTS
Mr. UDALL. Thank you, Mr. Chairman.
I was mindful of one of the examples I was given when we were talking about cellulosic material, was that you could literally take baseball bats and put them in a vat with this new enzyme, and although I'm a fan of the Atlanta Braves, I think maybe we've got a great market, given the way they've performed at the plate the last week. [Laughter.]
But I think it's a great example of what we're talking about, particularly in light of the Chairman's question about corn-based ethanol production versus cellulosic.
Mr. REICHER. Mr. Boehlert has the baseball bats in Cooperstown, so——
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Mr. UDALL. This is true.
I thought I'd start with Dr. Dale, just with a couple of clarifying comments and questions. I know that in my bill, the key, one of the key parts of it was that the demonstration projects would demand a 50 percent cost share and that only 10 percent of the resources allocated could go to demonstration projects. And I want to just clarify with you if that would be a concern. I think in your testimony you expressed some concern.
Dr. DALE. I misread that part. I support cost sharing for demonstration, large investment projects. I don't believe that cost sharing for the fundamental basic research is a good idea.
Mr. UDALL. Okay. What about the 10 percent cap on the total funds for demonstration projects combined with a 50 percent cost share requirement? Would that make you more comfortable with that approach?
Dr. DALE. Yes, sir, it would.
ENVIRONMENTAL IMPACT CONCERNS
Mr. UDALL. Moving to Mr. Clemmer, I want to make sure you had a chance, Mr. Clemmer, to talk about any additional environmental concerns that you might have, and then if you would, speak to the part of my bill that suggests we ought to make sure we really research this particular area in detail.
Mr. CLEMMER. Well, I don't have too many more concerns to add to what I expressed in my testimony, I think. I mean, there are areas where in the case of liquid fuels, for example, we need to make sure that we're having net environmental benefits. And I think using high-ethanol blends in advanced technologies like hybrid electric vehicles and fuel cells has significant potential to achieve that. So that's one thing I didn't mention.
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In particular, in the bill, in your bill, on some of the environmental language, I think there's a few areas where you use a little bit more cautionary language. I can provide some examples. I don't have them right with me now, but there's some more cautionary language to make sure that again, the analysis is done to show what the impacts are from this research that's being done. I think also that there, in some ways, the definition that is included in your bill for biomass is restrictive in some ways, but it also includes some exclusions that I think are worthwhile from an environmental perspective.
As I mentioned in my testimony, incineration of unsegregated municipal solid waste and contaminated waste, incineration of contaminated waste, have been shown to have negative environmental impacts, and we're concerned about that. That's not to say that you couldn't use some advanced technology to help improve the environmental characteristics of that, such as gasification, potentially might help that out.
Mr. UDALL. I see that my colleague, Congressman Rohrabacher, has left, but I wanted to throw a question out to the panel, but also acknowledge that, Dr. Dale, Congressman Rohrabacher always has a lot of onions in the air, and they are in different stages of being unpeeled. And he brought up a very good point about the net gain that we might see with greenhouse gases.
In that light, is ethanol not a cleaner burning fuel than petroleum is when you compare the two fuels as well?
Dr. DALE. Yes, and to the extent particularly that ethanol does not have either nitrogen or sulphur associated with it, you don't get either what we refer to as NOX or sulphur compounds. Now, I understand there's some concern about aldehyde emissions. I don't know a lot about that. But I assume that's something we can take care of with appropriate technology and development.
Mr. UDALL. And in our urban areas, NOX and SO2 are caused both particulate situations as well as in some cases problems with breathing, and so on and so forth?
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Dr. DALE. That's right. That's my understanding, too.
FUNDED RESEARCH: H.R. 2819 VERSUS H.R. 2827
Mr. UDALL. Secretary Reicher, you stated that you think the less prescriptive approach in 2819 is a little more preferable than the provisions in 2827. Could you comment on that situation?
Mr. REICHER. Yes, Mr. Udall. It's our view that it's difficult to predict at any given moment what research priorities ought to be. And what we would look to do is take the input through the Advisory Committee that both bills set up, the Advisory Committee that we're setting up under the Executive Order, the technology road mapping processes that we're engaged in, a variety of inputs, so that in a given year, in a given funding cycle, we with industry can determine the highest and best use of the limited dollars that are available.
We're somewhat concerned that if we lock in a set of research priorities into a particular piece of legislation that those will be set, and it will be hard to veer towards the more productive directions.
Mr. UDALL. Thank you. Thank you, Mr. Chairman.
Chairman CALVERT. Thank you. Ms. Johnson.
COMMERCIAL AVAILABILITY OF BIOFUELS
Ms. JOHNSON. Thank you, Mr. Chairman. I apologize for not being able to get here earlier, and I hope I won't ask a question that has already been asked.
Being from north Texas, that includes the Dallas-Fort Worth metroplex, we have a tremendous problem with our environment, due to the many emissions fumes and everything else mixed. So we're looking very excitedly for areas of alternative fuels and energy. And wonder almost daily how close we're getting to improved or alternative fuels. And so it leads me to wonder how much collaboration is going on between the Department of Energy and the Department of Agriculture, and perhaps even some prediction of some of the results and how soon we might get it.
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Dr. GONZALEZ. Thank you for the question. We did talk a little bit about this coordination issue a little earlier, and I think it's important to point out that we've been involved in the research jointly. We have a number of programs where some of this has been done, both DOE and USDA, specifically at some of our utilization labs, some of the energy labs, where some of this has been done.
In fact, one of the products, looking at biobased diesel, the soy diesel, and grease and lubricants and those things, have been done through some of the cooperation of both USDA and DOE. One in working with our university community to produce the product, and secondly with the Department of Energy to test it. And so we know that we've had several of these products where this is an ongoing effort. The legislation and the Executive Order really kind of bring this to a level of cohesiveness that perhaps we have not had because of the questions that often come up about the duplication of effort with regard to research.
And I think the other part of this discussion this afternoon, you know, we talk about the energy component, and certainly very, very important, but as a couple of other questions have pointed out, coal products, the other products, the other ability in addition to the environmental impact, of being able to provide for our producers other economic returns, value added, the use of other by-products from the process of developing energy, I think these are all major components of this effort and the legislation.
Mr. REICHER. I would just say, Congresswoman, that the availability of alternative fuels that are cleaner burning is on the rise, natural gas, ethanol, methanol. And what's exciting is that in combination with those alternative fuels, we're seeing the U.S. auto companies and also foreign auto companies beginning to bring to market new technologies that will radically reduce emissions and greatly increase mileage. We took receipt 3 weeks ago of an automobile from Ford under a research contract, 5 to 6 passenger sedan, gets above 60 miles per gallon, in a hybrid configuration. And when you combine that with the exciting developments in alternative fuels, you get a sense about where we could be headed in the near term in terms of cutting emissions and cutting foreign oil dependence.
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Ms. JOHNSON. One final thing. We have, Texas has a major supply of natural gas. And we have some natural gas conversions, and we are grateful for those. But in speaking to our Governor about transferring this to State vehicle use, the question still comes up of availability and distances at which vehicles can travel. Are we seeing any particular research in those areas that would close the gap on some of that?
Mr. REICHER. We are actually making some progress. There is now in the U.S. about 5,000 stations of various sorts where one can get alternative fuels, natural gas, ethanol, electric recharging, methanol, a whole variety of them. But not nearly enough to sort of form the nucleus you'd need in a metropolitan area like yours.
So what we're doing through a program called Clean Cities, we've now got over 70 cities across the country that, we're helping them put in that kind of infrastructure, so that alternative fuel vehicles, particularly natural gas and ethanol vehicles can actually be useful, fleets, individual owners. And then what we're doing from that is beginning to link corridors. When you have enough in one city, enough in a nearby city, you can create enough of an infrastructure that you actually can move long distances with these alternative fuel vehicles.
And so we're making progress. We've got some distance to go, though.
Ms. JOHNSON. Thank you. Thank you, Mr. Chairman.
USDA BIOFUELS AND BIOBASED RESEARCH BUDGET ISSUES
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Chairman CALVERT. Thank you.
Dr. Gonzalez, according to testimony before another House subcommittee less than 10 days ago, USDA currently spends $9 million on biofuels research and $63 million on research on new industrial uses of biobased products, totaling $72 million annually. Your testimony states a total annual biofuels and biobased product research of $69 million. Just to let you know we do count over here.
We just want to know what happened to that other $3 million.
Dr. GONZALEZ. I think it's in our—thank you for the question. [Laughter.]
Chairman CALVERT. Remember, you're under oath. [Laughter.]
Dr. GONZALEZ. I promise to tell the truth. There are a couple of initiatives that we have put forth to capture this area of research, both on the Forest Service side of this program, and they don't have it, I know that. But in the carbon sequestration part of this agenda, we have some of that that's devoted into the woody products and forest part of the agenda. I don't know the exact detail of how that's broken down. But I'll check the numbers.
Chairman CALVERT. Well, we're holding the record open. I'm sure that you could——
Dr. GONZALEZ. We could provide you some information.
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Chairman CALVERT. Provide some information for the Committee.
Dr. GONZALEZ. Yes.
Chairman CALVERT. All right. Continuing on that, both bills authorize $49 million, Dr. Gonzalez, per year for 6 years. In addition, H.R. 2827 authorizes $14 million per year beginning in 2000, for a USDA corn-based ethanol pilot plant.
What is your understanding of how this money will be allocated among the participating agencies?
Dr. GONZALEZ. Well, with regard to the pilot plant issue, I think this is one of the issues where we wanted to come back and have some additional discussion, since we have four of our sites where we already are doing research with ethanol. And I think the study that was done 2 or 3 years ago by ARS looked at the feasibility, and I think all of the pieces are there. But we would like some additional time to discuss the particulars of how that would come out in terms of what we're already doing and the potential for this other site.
Chairman CALVERT. If USDA receives half of the authorization plus the $14 million for the corn-based ethanol pilot plant, your budget could increase by as much as $40 million. What are the programatic implications of the 50 percent budget increase in the first year, and would you instead recommend the ramping up of authorization?
Dr. GONZALEZ. I would think that, well, there are two parts of the possibilities that we have here. One is the fact that there are some of those that are competitive dollars and competitive grants that could be used with a number of entities, including our university partners. And the other piece is to maintain the baseline of research that we've had, for example, at ARS over a period of time.
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As I indicated in my testimony, we've been doing some of this testimony for 50 years. And I think it gives us an opportunity to maintain that line of research so that we can come back with relatively quick solutions, if you will, to some of the problems that we anticipate.
Chairman CALVERT. Mr. Udall.
FUNDED RESEARCH: H.R. 2819 VERSUS H.R. 2827
Mr. UDALL. Thank you, Mr. Chairman.
Dr. Dale, I understand the points you made regarding the list of research focus areas that you think ought to be included in whatever bill is eventually approved. You're the expert, and you know what the current challenge is on.
But in 2819, the bill attempts to give the role of setting research priorities on an annual basis back to the experts in the form of an inter-agency Board and then a Technical Advisory Committee whose suggestions would have to be responded to by the Government Board. Explain if you would why you think Congress should so proscriptively set these priorities instead of leaving it to the experts. And as a part of that, if our research focus changes over time, would the proscriptive approach in 2827 perhaps prohibit the kind of efforts that I think you truly want and we all want?
Dr. DALE. Yes, thank you. Actually, I believe that there's already a considerable amount of latitude, even what you regard as a proscriptive approach. But the focus areas that are in 2827 are really in line with the NRC report that I co-authored. And that really contains, at least currently, the distilled thinking of some of the best experts in the country in the area.
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With the limited amount of funding, and I know $49 million is a lot of money, but it's still limited compared to the opportunity, I believe it's important that we do focus our efforts in the areas that are likely to have the biggest impact.
Specifically, the cellulose conversion effort does not really have a strong industry advocate. And so the importance of overcoming the resistance of cellulose to being converted, we're not going to get the huge environmental benefits that we would like from replacing oil, unless we learn how to crack that cellulose problem. I believe that deserves to be a focus area almost in perpetuity until we crack the problem.
Regarding other things, I'm sure there's give and take. But specifically, there's not a lot of industry, I understand industry will have a role in that, there's just not that much industry that's doing this work. So obviously, we need to update priorities. How you do that, I don't know. But the current priorities in 2827 and Senator Lugar's bill do reflect focus areas that the NRC report highlights.
Mr. UDALL. Well, let's keep that discussion going. With all due respect to the body in which I serve, we sometimes can put rules and strictures around efforts that in the long run can cause us concern.
Dr. DALE. I think it's obvious that there needs to be some way of updating it. I don't know exactly how to do that.
SENIORITY LEVEL OF BOARD MEMBERS
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Mr. UDALL. I look forward to continuing to work with you on that.
I want to just extend a question to everybody on the panel. I note that in 2827, the bill requires the inter-agency chairs of the biomass R&D board to be Senate confirmed in the other bill, 2819. We don't have that requirement because of some of the excessive delays that have been involved in White House selection and Senate confirmation of officials who are below cabinet level. Anybody have an opinion on that, without, don't worry about the other body being insulted, I'm just curious what folks think about that particular part of these two bills. [Laughter.]
Mr. REICHER. I think it would probably make sense for us to, from the Administration side, to get an opinion on that and get back to you. (See Appendix 2)
Mr. UDALL. Very good answer.
Mr. REICHER. I just spilled my water, so you see how this is——
Mr. UDALL. I barely held onto mine. [Laughter.]
NATIONAL FORESTS AS BIOMASS SOURCE
Mr. UDALL. Dr. Gonzalez, as I mentioned, in Colorado and I think in the west, we have this growing urban interface with national forests. And I was interested to see if you had any comments on what the USDA is proposing in regards to efforts that we're now undertaking to reduce those fuel loads and preserve the safety and welfare of the citizens that live in those areas.
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Dr. GONZALEZ. Thank you, Mr. Udall.
There have been a couple of these questions that I think get at some of this effort. One is where did the $3 million go. And we did have a major emphasis in our Forest Service bioenergy program, which I think helps to answer some of that question. We know the prevalence of our fires out in the west and being a southwesterner, I know that that's important to all of our areas out there, both from an environmental standpoint as well as from economic and other impacts.
Certainly, the opportunity for us to continue the research in the use of some of these areas for the biomass component for new products, new uses, as well as maintaining the health of the forest area, which I think is part of that discussion. So we're doing some research now, we're continuing. And I think it's important, as we talk here this afternoon, that a lot of this is done not only through the partnership of the Department of Energy and Department of Agriculture, but with our university community, where they are in those local districts and States and are continuing to move forward with that agenda.
Mr. UDALL. I want to thank you for focusing your remarks on biomass. I said in my earlier remarks I didn't want to imply that we ought to just go out and cut all the forests in the west in order to reduce the fire dangers. It's been mentioned forests play an important role in cleansing our air and providing us clean water and so on. But I think there's a potential opportunity here.
Dr. GONZALEZ. If I may just, as you talked I remembered another of these issues that we've talked about in the past with regard to this legislation. And that is that there's an educational and extension component to this research effort, and that the public has to know the benefits and they have to be engaged in help us to develop that marketplace for some of these biobased products.
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CLOSING REMARKS
Mr. UDALL. Mr. Chairman, thank you for your indulgence. I just want to make one last comment, and that's for the record to thank Congressman Boehlert and Congressman Minge, who signed on as original co-sponsors on my legislation. And Congressman Boehlert had to leave, but I wanted to acknowledge his work and that of Congressman Minge as well. Thank you.
Chairman CALVERT. Great. I see Mr. Ehlers, a colleague from Michigan, that I would like to recognize. The gentleman from Michigan.
Mr. EHLERS. Thank you very much. I appreciate the panel being here. I do apologize to you and to the Chairman for missing most of this, because I had other meetings. And that's one of the frustrating aspects of life here.
I have no question, I just wanted to comment. I think this is an extremely important issue, particularly in the future as petroleum products become potentially more scarce. They'll still be there, but they're going to cost a lot more. And the whole competitive balance of the energy industry is going to change in anywhere from 5 years to 2 decades.
So it's very important that we do continue our research on other sources of energy. Even though at this point they are more expensive in the long run, we'll be doing our constituents a favor, because that will make lower cost alternatives readily available at such time as fossil fuels become too expensive.
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So thank you for your presence here and thank you for holding the hearing. I appreciate that.
Chairman CALVERT. I thank the gentleman.
Mr. Costello, any closing remarks?
Mr. COSTELLO. Mr. Chairman, I have no further questions. We have no questions on this side. I'd just like to thank the witnesses for being here today and thank you for calling this hearing.
Chairman CALVERT. I thank the gentleman. I too would like to thank all of our witnesses for answering our questions, and listening to your testimony, it was all very interesting. I know with all that, all my colleagues will get on H.R. 11 right after this hearing today. [Laughter.]
Chairman CALVERT. With that, this hearing is concluded.
[Whereupon, at 3:15 p.m., the Subcommittee was adjourned, to reconvene at the call of the Chair.]
OFFSET FOLIOS 292 TO 629/630, 631 to 710/711, 712 to 736 and 739 to 1027/3000, 001 INSERT HERE
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