[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
EXAMINING ADVANCEMENTS IN BIOFUELS:
BALANCING FEDERAL RESEARCH
AND MARKET INNOVATION
=======================================================================
JOINT HEARING
BEFORE THE
SUBCOMMITTEE ON ENVIRONMENT &
SUBCOMMITTEE ON ENERGY
COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
FIRST SESSION
__________
JULY 25, 2017
__________
Serial No. 115-24
__________
Printed for the use of the Committee on Science, Space, and Technology
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://science.house.gov
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COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
HON. LAMAR S. SMITH, Texas, Chair
FRANK D. LUCAS, Oklahoma EDDIE BERNICE JOHNSON, Texas
DANA ROHRABACHER, California ZOE LOFGREN, California
MO BROOKS, Alabama DANIEL LIPINSKI, Illinois
RANDY HULTGREN, Illinois SUZANNE BONAMICI, Oregon
BILL POSEY, Florida ALAN GRAYSON, Florida
THOMAS MASSIE, Kentucky AMI BERA, California
JIM BRIDENSTINE, Oklahoma ELIZABETH H. ESTY, Connecticut
RANDY K. WEBER, Texas MARC A. VEASEY, Texas
STEPHEN KNIGHT, California DONALD S. BEYER, JR., Virginia
BRIAN BABIN, Texas JACKY ROSEN, Nevada
BARBARA COMSTOCK, Virginia JERRY MCNERNEY, California
BARRY LOUDERMILK, Georgia ED PERLMUTTER, Colorado
RALPH LEE ABRAHAM, Louisiana PAUL TONKO, New York
DRAIN LaHOOD, Illinois BILL FOSTER, Illinois
DANIEL WEBSTER, Florida MARK TAKANO, California
JIM BANKS, Indiana COLLEEN HANABUSA, Hawaii
ANDY BIGGS, Arizona CHARLIE CRIST, Florida
ROGER W. MARSHALL, Kansas
NEAL P. DUNN, Florida
CLAY HIGGINS, Louisiana
RALPH NORMAN, South Carolina
------
Subcommittee on Environment
HON. ANDY BIGGS, Arizona, Chair
DANA ROHRABACHER, California SUZANNE BONAMICI, Oregon, Ranking
BILL POSEY, Florida Member
MO BROOKS, Alabama COLLEEN HANABUSA, Hawaii
DANIEL WEBSTER, Florida CHARLIE CRIST, Florida
BRIAN BABIN, Texas EDDIE BERNICE JOHNSON, Texas
GARY PALMER, Alabama
BARRY LOUDERMILK, Georgia
JIM BANKS, Indiana
CLAY HIGGINS, Louisiana
LAMAR S. SMITH, Texas
------
Subcommittee on Energy
HON. RANDY K. WEBER, Texas, Chair
DANA ROHRABACHER, California MARC A. VEASEY, Texas, Ranking
FRANK D. LUCAS, Oklahoma Member
MO BROOKS, Alabama ZOE LOFGREN, California
RANDY HULTGREN, Illinois DANIEL LIPINSKI, Illinois
THOMAS MASSIE, Kentucky JACKY ROSEN, Nevada
JIM BRIDENSTINE, Oklahoma JERRY MCNERNEY, California
STEPHEN KNIGHT, California, Vice PAUL TONKO, New York
Chair JACKY ROSEN, Nevada
DRAIN LaHOOD, Illinois BILL FOSTER, Illinois
DANIEL WEBSTER, Florida AMI BERA, California
NEAL P. DUNN, Florida MARK TAKANO, California
LAMAR S. SMITH, Texas EDDIE BERNICE JOHNSON, Texas
C O N T E N T S
July 25, 2017
Page
Witness List..................................................... 2
Hearing Charter.................................................. 3
Opening Statements
Statement by Representative Andy Biggs, Chairman, Subcommittee on
Environment, Committee on Science, Space, and Technology, U.S.
House of Representatives....................................... 4
Written Statement............................................ 6
Statement by Representative Suzanne Bonamic, Ranking Member,
Subcommittee on Environment, Committee on Science, Space, and
Technology, U.S. House of Representatives...................... 8
Written Statement............................................ 10
Statement by Representative Randy K. Weber, Chairman,
Subcommittee on Energy, Committee on Science, Space, and
Technology, U.S. House of Representatives...................... 12
Written Statement............................................ 14
Statement by Representative Marc A. Veasey, Ranking Member,
Subcommittee on Energy, Committee on Science, Space, and
Technology, U.S. House of Representatives...................... 16
Written Statement............................................ 18
Statement by Representative Eddie Bernice Johnson, Ranking
Member, Committee on Science, Space, and Technology, U.S. House
of Representatives............................................. 20
Written Statement............................................ 22
Witnesses:
Dr. Paul Gilna, Director, BioEnergy Science Center (BESC) and
Deputy-Division Director of Biosciences, Oak Ridge National
Laboratory
Oral Statement............................................... 24
Written Statement............................................ 27
Dr. John DeCicco, Research Professor, University of Michigan
Energy Institute
Oral Statement............................................... 36
Written Statement............................................ 38
Ms. Emily Skor, Chief Executive Officer, Growth Energy
Oral Statement............................................... 53
Written Statement............................................ 55
Mr. Nicolas Loris, Herbert and Joyce Morgan Research Fellow,
Institute for Economic Freedom and Opportunity, Heritage
Foundation
Oral Statement............................................... 64
Written Statement............................................ 67
Discussion....................................................... 91
EXAMINING ADVANCEMENTS IN BIOFUELS:
BALANCING FEDERAL RESEARCH AND MARKET INNOVATION
----------
Tuesday, July 25, 2017
House of Representatives,
Subcommittee on Environment and
Subcommittee on Energy
Committee on Science, Space, and Technology,
Washington, D.C.
The Subcommittees met, pursuant to call, at 10:04 a.m., in
Room 2318, Rayburn House Office Building, Hon. Andy Biggs
[Chairman of the Subcommittee on Environment] presiding.
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Chairman Biggs. Good morning. The Subcommittees on
Environment and Energy will come to order. Without objection,
the Chair is authorized to declare recesses of the
Subcommittees at any time.
Welcome to today's hearing entitled ``Examining
Advancements in Biofuels: Balancing Federal Research and Market
Innovation.'' And I recognize myself for five minutes for an
opening statement.
Good morning, and welcome to today's joint Subcommittee
hearing entitled ``Examining Advancements in Biofuels:
Balancing Federal Research and Market Innovation.'' Today,
we'll examine federal biofuel funding and the effects of
federal mandates on the market. We will also examine basic
research in biology and biochemistry and the ways that it can
be best utilized by industry to spur private innovation.
I thank each of our witnesses for being here today. Some of
you have traveled a good distance, and we're very appreciative
that you would take time to share your expertise on this
important subject.
For far too long, the federal government has been picking
winners and losers in the American energy market. Federal
policies prop up unsuccessful or mediocre business ventures,
limit opportunities for new or different business ideas, and
stifle innovation in the private sector. It is time we focus on
and pursue more market-friendly policies, rather than spending
taxpayer dollars on misguided subsidies and inefficient
commercial-scale projects. We should avoid intervening in the
free market and focus instead on supporting federal funding for
basic research that supports technological advances in biofuels
and provides tools for businesses to deploy new technologies.
As an initial reform, I will be introducing the FUEL Reform
Act tomorrow to fully eliminate the biofuel subsidies and
related programs in Title IX of the farm bill. The FUEL in that
bill title is an acronym that stands for ``Farewell to
Unnecessary Energy Lifelines,'' and I very much hope that our
nation will follow that policy directive.
Over the last 30 years, the American taxpayer has paid out
billions of dollars in federal biofuel subsidies. For instance,
the 2014 Farm Bill energy titles alone cost taxpayers $879
million, funding things like the Bioenergy Program for Advanced
Biofuels. This program in turn provides subsidies to advanced
biofuels producers to increase their production levels without
taking into account such basic market principles as real-world
demand.
Senseless policies like this distort the market by forcing
businesses to improvise rather than innovate, and the American
energy consumer foots the bill. By continuing to force
technologies into the market that are not competitive or in
demand, we are doing the American people a disservice. Simply
put, we don't get out of these programs what we are putting
into them.
Furthermore, the federal government's biofuel policies have
had an unintended adverse effect on food costs. The price of
corn, soybeans, and related retail food products have all
increased. Land is drawn away from competing crops, and input
prices for livestock producers have gone up. I am, however,
encouraged that research is underway to improve our ability to
generate biofuels more efficiently, both from traditional
sources like corn and soybeans, as well as from new sources
like poplar trees and switchgrass.
We will hear today about research conducted by the
BioEnergy Science Center at Oak Ridge National Laboratory, one
of the Department of Energy's Bioenergy Research Centers.
Researchers at Oak Ridge are discovering ways to generate
advanced biofuels from new sources that are not also food
stock. Partnering with industry stakeholders, they will pursue
fundamental science that supports new technologies to increase
the sustainability and economic viability of advanced biofuels.
While I stress very strongly once again that we should be
working toward the goal of fully eliminating energy subsidies,
I am interested in learning more about how current taxpayer
dollars can be used more effectively and efficiently,
particularly when it comes to basic and early stage biofuels
research. The sooner this type of research comes to fruition
and can be commercialized by the private sector, the better.
When the free market operates, innovation breaks through, and
the economy thrives.
I look forward to learning more from our distinguished
panel and have no doubt that this will be a wide-ranging and
fascinating discussion.
[The prepared statement of Chairman Biggs follows:]
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Chairman Biggs. Now, I recognize the Ranking Member of the
Environment Subcommittee, the gentlewoman from Oregon, for an
opening statement.
Ms. Bonamici. Thank you very much, Mr. Chairman, and
welcome to all of our witnesses.
Our country's dependence on crude oil to fulfill our
transportation needs is problematic in at least a few ways.
It's made us subject to the boom-and-bust cycles of the
volatile oil market, and it's the reason why, according to the
EPA, the transportation sector accounts for about 27 percent of
our country's greenhouse gas emissions. Those are excellent
reasons why it's crucial for us to develop and use fuels that
will reduce our carbon footprint while still reliably meeting
our transportation needs.
The renewable fuel standard was passed in 2005 to diversify
our energy portfolio and reduce our reliance on the unstable
international fossil fuel market. Policies such as the RFS have
multiple goals in addition to reducing our overreliance on
crude oil. They include providing more sustainable sources of
energy, reducing carbon emissions, encouraging rural economic
growth, and bringing new job opportunities to our districts.
We will likely hear from some witnesses today that policies
like the RFS have failed. The evidence, however, points to the
contrary. Federal policies such as the RFS have grown our
economy by providing market certainty for biofuels. It's
allowed the private sector to continue to innovate and expand
the renewable fuel industry. The Renewable Fuels Association
found that ethanol supported more than 74,000 direct jobs in
renewable fuel production and agriculture in 2016.
The production and use of ethanol also has net positive
environmental effects through its lifecycle. The Department of
Energy's Argonne National Laboratory has found, through
lifecycle analysis, that corn ethanol can produce approximately
48 percent less greenhouse gas emissions than conventional
gasoline. This is bolstered by sustainable farming practices in
the United States that have led the same Argonne team to find
that the production of a gallon of corn ethanol can use up to
50 percent less water than the production of a gallon of
petroleum gasoline.
The importance of federal biofuels research at the
Department of Energy cannot be overstated. These investments
allow for further development of advanced biofuels by using the
technology infrastructure from first-generation biofuels.
Despite this vital ongoing work at our national labs, the
draconian cuts to biofuels research programs in the President's
budget threaten to derail current research priorities.
Regulations like the RFS are making a difference at the
state level as well. When I was in the Oregon State Senate, we
passed a bill to adopt a clean fuel standard to lower the
carbon intensity of transportation fuels by ten percent over a
ten-year period. And just this year, the Oregon Economic
Council found that within the first three quarters of
implementing the standard, more than 589,000 tons of climate
pollution had been displaced. The standard has also helped grow
area businesses like SeQuential in Portland, Oregon, which
converts used cooking oil into biodiesel.
Also in my district in northwest Oregon, Summit Foods, they
make delicious apple chips and they sell dried blueberries to
places like Panera. Then, they use the food waste to make a
fuel called Thunderbolt that they sell to racecar drivers.
Companies in the region give their food waste to Summit, and
they convert it into fuel. All of the products would otherwise
go into the landfill.
Racecar and race boat drivers love this fuel. They get 30
to 50 percent more horsepower. One customer said he was never
able to get his race boat to go over 200 miles an hour, but
with Thunderbolt he can. And traditional petroleum race fuel
costs $10-$20 a gallon, and Thunderbolt is about half of that.
Racecar drivers are proud to purchase a product made in Oregon
that's great for their cars and great for the environment.
And as I've said in the past, our nation's long-term
economic and energy security is tied to our ability to
diversify our energy portfolio and to transition to lower-
carbon energy sources. The development of first-generation and
advanced biofuels, whether through market innovation or
federally funded research or both can help us achieve these
goals and should be encouraged by this Committee.
I look forward to the discussion today about how both
federal research and private sector innovation are helping our
country move forward in the development of biofuels.
With that, I yield back the balance of my time. Thank you,
Mr. Chairman.
[The prepared statement of Ms. Bonamici follows:]
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Chairman Biggs. Thank you, Ms. Bonamici.
I now recognize the Chairman of the Subcommittee on Energy,
Mr. Weber, for his opening statement.
Mr. Weber. Thank you, Chairman.
Good morning and welcome to today's joint Environment and
Energy Subcommittee hearing examining federal support for
biofuels. Today, we will hear from witnesses on the cost and
environmental impact of federal mandates and subsidies for
biofuels production and their impact on the fuels market. We
will also hear about the exciting basic and early stage
research happening at our national labs that can provide the
foundation for development of new, more efficient, advanced
biofuels and bioproducts.
As we've heard before, the federal government is a poor
substitute for the market when it comes to picking the most
effective energy sources and technologies. I would add the
federal government seems to pick more losers than winners.
Federal subsidies, grants, loans, and loan guarantees may prop
up an industry or give it a competitive advantage, but they
can't and do not drive innovation. The biofuels industry
provides a cautionary example of this misplaced government
investment.
Unfortunately, the federal government hasn't accomplished
much more than require the use of conventional biofuels that
were already available in the commercial market. Did I mention
the federal government picks more losers than winners it seems?
Congress started with worthy goals, enacting mandates and
authorizing subsidies with the hope of achieving energy
independence and improving the environment. But as we will hear
from our witnesses today, conventional biofuels cost the
taxpayers money through the cost of federal subsidies and grant
programs and don't actually benefit the environment.
The federal government has an important role to play in
energy innovation but an abysmal track record on picking
winners when we try to commercialize technology. It is clear
that the best value for the taxpayer in scientific discoveries,
new technology, and developing the next generation of science
is found in basic and early-stage research. Industry can build
on these early-stage research discoveries and use research
infrastructure to create market-ready, next-generation energy
technologies.
We can see this nexus between basic research and potential
commercial technology in the Department of Energy Bioenergy
Research Centers, or BRCs. Funded through the DOE Office of
Science, these centers conduct basic research in genomic
sciences and microbial systems biology to advance energy-
relevant systems biology. Researchers at these BRCs provide
foundational science to industry partners, who then can develop
new products and biofuels based on their discoveries.
Along with three other centers around the country, the BRC
at Oak Ridge National Lab--led by Dr. Paul Gilna, who joins our
panel today--focuses on cutting-edge research to gain access to
sugars in plants that do not compete with food crops. In a year
where the Administration and Congress are making tough choices
about DOE's funding, the bioenergy research centers were
recently re-charted--re-chartered for five years by Secretary
Perry, with $40 million in funding awarded in fiscal year 2018
to continue this basic research.
Dr. Gilna, thank you for joining us today, and we look
forward to hearing about your important research.
By getting the government out of the way and allowing the
market to determine the best approach, we can facilitate
private industry's efforts to develop technology that will
increase energy efficiency, reduce environmental impact, and
actually save the American people money.
I want to thank our witnesses for testifying today, and I
look forward to a discussion about the consequences caused by
the federal government's intervention in the American energy
market. Congress has the opportunity to fix these problems
caused by government overreach and should advance legislation
to repeal existing mandates and roll back expensive subsidy
programs. This will allow us to invest in basic science
research that will lead to real innovation in our energy
supply.
Mr. Chairman, I yield back.
[The prepared statement of Mr. Weber follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Biggs. Thank you, Mr. Weber.
I now recognize the Ranking Member of the Subcommittee on
Energy, Mr. Veasey, for his opening statement.
Mr. Veasey. Thank you, Mr. Chairman, for holding this
hearing and thank you for the witnesses for taking the time to
be here today.
Biofuels play an important role in diversifying our
transportation fuel. They are produced right here in the United
States, and they provide a much safer source of octane for our
fuels than MTBE. By replacing MTBE, biofuels help prevent
harmful contaminants from reaching our drinking water and soil.
The growth of conventional biofuels has helped launch the
advanced biofuels industry, which has the potential to provide
significant environmental benefits to supply our transportation
fuels. However, I'm not suggesting there are no potential
drawbacks to take into account. As we set our national biofuels
policy, we should continue to consider the concerns regarding
land use, potential degradation of certain engines, legacy
fleets, recreational boaters, and a variety of different fuel
types. We should accurately weigh these factors right alongside
the benefits we receive in emissions reductions, energy
security, fuel diversification, and economic growth. And it is
my hope that we will hear a practical assessment of biofuels
that accurately weighs these costs and benefits from today's
panelists.
However, I do want to caution, as oftentimes when we talk
about anything that's energy-related, including renewable fuel
standards, are DOE's bioenergy research programs. That
conversation unfortunately tends to turn to partisan ideology,
and it's an ideology that would have us decimate our research
enterprise as we have seen proposed in both the Trump budget
and the Heritage Foundation's ``blueprints.'' Abandoning our
investments in innovation and emerging markets is not a recipe
for economic growth. What it is, though, is a path to make the
United States less competitive and less attractive for further
business investments.
The other criticism of biofuels that we will hear today is
a scientific one, and one that we should all welcome. Dr.
DeCicco will inform us of his concerns with how we account for
lifecycle emissions of corn ethanol. The debate is continuing
to play out, and as policymakers, I think it's our
responsibility to listen and do our best to follow the
guidelines of the scientific consensus when legislating. This
applies to something as broad as climate change or as narrow as
emissions modeling for biofuels. And while I look forward to
hearing and considering the scientific dissent offered during
this hearing, it does not mean we should throw out the work of
the collection that these scientists have amassed at these
national labs and universities. I hope that we can hear from
other scientists in the future that may provide additional
perspectives on this issue.
On that note, I am very proud to offer my strong support to
DOE's scientists, including those at the national laboratories
and universities across the country. They are doing valuable
work that has empowered researchers in the public and private
sector to make the United States the leader in bioenergy
research. I am sure that we will also hear from Dr. Gilna from
Oak Ridge on that very issue.
As we consider an appropriations bill this week that would
provide funding for DOE, I strongly encourage my colleagues to
stand against any attempts to cut vital research at the
Department. If the House bill were signed into law as-is, the
bioenergy research centers would receive a severe cut. The
private sector will not be able to continue the research that
has been left undone because the federal government cuts them.
If we want to maintain U.S. leadership in this field, we need
to advocate for consistent and robust R&D funding.
I will also look forward to hearing from Ms. Skor about
where she sees the future of this industry and how we can
accelerate the path to utilizing next-generation biofuels. As I
am also sure that we're going to hear today, the market for
transportation fuels is very competitive, but it is far free
from an actual--but it's far from an actual free market. There
are lots of barriers, hidden subsidies that the energy industry
has enjoyed for many, many years and decades. And with that
said, I'm glad to see that the U.S. biofuels industry is
vibrant today, and I look forward to continuing to expand
consumer choice across the transportation sector.
And, Mr. Chairman, I yield back the balance of my time.
[The prepared statement of Mr. Veasey follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Biggs. Thank you, Mr. Veasey.
I now recognize the Ranking Member of the Full Committee
for a statement.
Ms. Johnson. Thank you very much, Mr. Chairman. And let me
acknowledge and thank the leadership of both of these
Subcommittees, as well as welcoming our witnesses today.
The issue we are discussing this morning is not cut and
dry. As we have already heard on more than one occasion, some
are willing to forgo almost any government role in promoting
the development and use of renewable fuels, ignoring the
progress we have made to date. This progress would not have
been possible without the substantial investment and
innovations made in first-generation biofuels, investments and
innovations largely driven by the renewable fuel standard.
While I agree that there are challenges associated with
production of corn ethanol that merit continued scrutiny, it
has created a bridge to a cleaner future for our transportation
fuels.
That said, the progress of advanced biofuels has not
matched the expectations that were set in the 2007 law.
However, with commercial-scale production now picking up, it
appears that many of the technical challenges have been
addressed. Now, we must focus our attention on making these
cleaner fuels more cost-effective and integrating them into the
market. This is precisely the role of the RFS, as well as of
the biofuels research supported by the Department of Energy.
Unfortunately, this Administration is proposing to
drastically cut our investments area. If the proposed budget
were enacted, the DOE Office of Science's Bioenergy Research
Centers would each see their annual budget cut by 60 percent
and the Bioenergy Technology Office would be cut by 72 percent.
All of this has been proposed with little justification
provided beyond a vague declaration that the Department is
shifting its focus to early-stage research. I hope the
Department will reconsider these cuts in light of testimony we
received just last week from an excellent panel of witnesses
who made clear that there is no clear-cut divide between the
so-called basic and applied research. That panel also indicated
that we need to be making investments across the innovation
spectrum if our nation is ultimately going to remain
competitive in these growing industries.
While I understand that there is not yet a scientific
consensus on his findings with regard to emissions from
biofuels, I am happy to see that the majority invited a witness
to today's hearing who is focused on addressing the urgent
challenge of climate change. I hope Dr. DeCicco also can not
only provide his insights on our nation's biofuels policy but
also can convince my colleagues to spend more time and effort
on addressing what may well be the biggest long-term problem
facing the world.
In closing, while there may be differing views on how best
to guide our nation's biofuels policies, it is clear to me that
DOE-supported research and the RFS are important tools for
reducing our dependence on fossil fuels, reducing our nation's
greenhouse gas emissions, and encouraging innovation that is
leading to the development of advanced, more sustainable
alternative fuels. I hope that today's hearing is not the end
of our discussions on this matter.
I thank you and yield back.
[The prepared statement of Ms. Johnson follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Biggs. Thank you, Ms. Johnson.
I'll now introduce our witnesses. Our first witness today
is Dr. Paul Gilna, Director of the BioEnergy Science Center,
and Deputy Division Director of Biosciences at Oak Ridge
National Laboratory. Dr. Gilna received his bachelor's degree
in pharmacology and biochemistry, as well as his Ph.D. in
pharmacology from the University--from University College
Dublin.
Our next witness is Dr. John DeCicco, Research Professor at
the University of Michigan Energy Institute and Director of the
University of Michigan Energy Survey. Dr. DeCicco received his
bachelor's degree in mathematics from the Catholic University
of America, his master's degree in mechanical engineering from
North Carolina State University, and his Ph.D. in mechanical
engineering from Princeton University.
Our next witness is Ms. Emily Skor, CEO of Growth Energy.
Ms. Skor received her bachelor's degree in political science
from Wellesley College.
Our last witness is Mr. Nicolas Loris, Herbert and Joyce
Morgan Research Fellow at the Institute for Economic Freedom
and Opportunity at the Heritage Foundation. Mr. Loris received
his bachelor's degree in economics, finance, and political
science from Albright College and his master's degree in
economics from George Mason University.
And so I now recognize Dr. Gilna for five minutes to
present your testimony.
TESTIMONY OF DR. PAUL GILNA, DIRECTOR,
BIOENERGY SCIENCE CENTER (BESC)
AND DEPUTY-DIVISION DIRECTOR OF BIOSCIENCES,
OAK RIDGE NATIONAL LABORATORY
Dr. Gilna. Chairman Biggs, Chairman Weber, Ranking Members
Johnson, Bonamici, and Veasey, and Members of the
Subcommittees, thank you for the opportunity to appear before
you today with this distinguished panel.
I am Paul Gilna, Director of the BioEnergy Science Center
at the United States Department of Energy's Oak Ridge National
Laboratory.
The Department of Energy has a long and successful history
supporting the biological and environmental research tracing
back to the Manhattan Project when scientists sought to
understand the impacts of radiation fallout and the byproducts
of nuclear energy production on human health and the
environment. Research originating from this mission has played
a central role in advancing our understanding of the structure
and function of DNA and in 1986 prompted DOE to initiate the
Human Genome Project, which has become the foundation of
modern-day genomic research and a critical factor in the
formation and growth of the biotechnology industry.
In 2007, DOE, through its Office of Biology and
Environmental Research, established three bioenergy research
centers, or BRCs, to address the scientific challenges of
bottlenecks associated with achieving the cost-effective
sustainable commercial production of fuels from cellulosic
biomass. To help understand the problem, envision if you would
a field of corn used for conventional biofuel production where
only the kernels are used to extract the starch or sugars that
are fermented into fuel. Realize, then, that approximately 75
percent more sugar again can be obtained by utilizing the
remainder of the plants, whether that be the stalks, leaves,
and even leftover cobs, saving the kernels for food. The
challenge has been to develop methods to cost-effectively
extract those sugars deeply entrapped in the cell wall
structures of any nonfood crops that we would seek to use.
The BRCs have consisted of multidisciplinary teams
involving many national lab, university, and industry partners.
Together, these three centers represent the work of more than
1,000 scientists at partners located in 19 States.
Over the past ten years, through the initial phase of the
bioenergy research center program, we have created multiple
fuel production breakthroughs. The three original centers led
by the University of Wisconsin Madison, in partnership with
Michigan State University, Oak Ridge National Laboratory,
Lawrence Berkeley National Laboratory have helped deepen the
understanding of sustainable agricultural practices, have
instituted the major reengineering of plant feedstocks, develop
new methods for deconstructing those feedstocks, and have
reengineered microbes for more effective fuel production.
In all, the BRCs have produced over 600 invention
disclosures, which has led to 378 patent applications and over
90 patents issued to date. This intellectual property has
attracted 191 licenses or options, and the centers' scientific
productivity has resulted in over 2,600 peer-reviewed
publications over the past decade. Thus, the BRCs of openly
transferred their knowledge and data to the scientific
community, and through their intellectual property activities,
they have transferred substantial insight and expertise that is
being translated into applications by industry.
To continue and expand this groundbreaking research
following extensive peer review, DOE recently announced the
establishment of four new bioenergy research centers beginning
in fiscal year 2018. The four centers include two new centers
led by Oak Ridge and the University of Illinois, along with the
Wisconsin and California centers. These BRCs will follow on the
successes of the original centers and lay the scientific
groundwork for a renewed bio-based economy that promises to
yield a range of important new products and advanced fuels,
those beyond ethanol, directly from nonfood biomass. The multi-
institutional centers include research partners now stretching
across 25 States.
An important example of what could be achieved in this next
phase comes from research that will open up the potential for
using lignin, until now, largely a waste product from the
biomass pretreatment in the current cellulosic process. At Oak
Ridge we have demonstrated that lignin can be converted
directly into carbon fiber, which could then be used in
applications such as lighter components to help make
automobiles or aircraft more efficient. Thus, the new industry
takes shape where many rural bio refineries analogous to oil
refineries produce numerous value-added bioproducts, presenting
new renewable options to chemical companies currently reliant
on petrochemical sources.
In closing, the body of research from the last ten years,
which, while originally motivated by biofuels policy and more
specifically by the promise of cellulosic ethanol, has created
value and based on that is now poised to head in the direction
of developing value-added products from cellulosic biomass,
products that could be easier to make or better than the same
coming from petrochemicals. Ten years ago, we did not have
enough scientific knowledge to do this. We do now, and this
could not have happened without that initial investment in
research.
Thank you again for the opportunity to provide this
briefing. I welcome your questions on this important topic.
[The prepared statement of Dr. Gilna follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Biggs. Thank you, Dr. Gilna.
I now recognize Dr. DeCicco for five minutes to present his
testimony.
TESTIMONY OF DR. JOHN DECICCO,
RESEARCH PROFESSOR,
UNIVERSITY OF MICHIGAN ENERGY INSTITUTE
Dr. DeCicco. I wish to thank the Chairs, Ranking Members,
and other Members of the Committee and Subcommittees for the
opportunity to testify.
The question being addressed today--that of the right
balance between fundamental scientific research and government
intervention in the marketplace--is crucially important. The
focus on biofuels is telling because it involves so many
aspects of the question. Indeed, federal biofuels policy
provides a morality tale of how things can go wrong when the
right balance is not struck.
Before delving into the problems, however, I want to
emphasize the importance of maintaining a robust federal
investment in research across all fields of study. Funding for
science is crucial to maintaining American leadership and
fostering innovation that leads to high-quality job growth.
Federal support for university research in particular is
crucial for training a new generation of Americans to fill
those jobs.
To summarize my written submission, here are some key
points. First, protecting the climate from a worsening
disruption due to excess CO2 in the atmosphere is
now a top challenge for energy research and policy. But the
choice of what technologies to deploy must be left to the
marketplace, to industries and entrepreneurs who take risks
with private money rather than rely on public funds. Policies
to address nonmarket concerns such as CO2 should
therefore be technology-neutral and well-informed by
independent science.
Moreover, the climate challenge should not be used as an
excuse to pick winners through costly demonstration and
deployment programs, subsidies, and technology mandates.
Federal resources are best leveraged through fundamental R&D
and technology-neutral regulation.
Unfortunately, federal biofuels policy has overstepped
these bounds. The result is not only wasted tax dollars but
excess costs for consumers and harm to the environment.
Biofuels are making CO2 emissions worse, and the
renewable fuel standard has been damaging in that regard.
Finally, it's time to face up to the fact that the federal
push for advanced biofuels has failed. DOE and other agencies
have supported bioenergy research demonstration and deployment
for many decades and with billions of dollars. None of the
promised cellulosic fuels have become commercially viable, even
with subsidies amplified by mandates. In short, it's time to go
back to basics on these issues, to revisit biofuel policies
that science and economics now show to have been ill-premised.
I realize that my work contradicts many long-standing
assumptions about biofuels. Twenty years ago, I accepted the
notion that biofuels were inherently carbon neutral, meaning
that the CO2 emitted when they are burned does not
count because it's taken from the air when crops are grown. In
reality, however, all CO2 emissions increase the
amount of CO2 in the atmosphere, regardless of where
the carbon comes from. The correct question is whether
feedstock production speeds up how quickly CO2 is
removed from the air. That does not happen when productive land
is used for biofuels instead of food or even just used for
forest to sequester carbon.
Last year, we published research to evaluate what actually
happened as the RFS ramped up. We found that ethanol and
biodiesel are not carbon-neutral. Their use provided no
significant direct CO2 reduction. Once indirect
impacts are considered, it turns out that biofuels have caused
higher CO2 emissions than petroleum fuels.
We do need to address emissions for motor fuel use, along
with those from the power sector and other sources, but the
best ways to do that are by improving vehicle efficiency,
controlling emissions during oil production, and offsetting
tailpipe CO2 emissions through reforestation. If
biofuels policy were restricted to basic R&D, we would learn
some things that help students build science and technology
skills. Those are worthwhile outcomes even if the research does
not yield successful products.
Research is risky by nature. Not all of it bears fruit, and
that's why the portfolio should be diverse. University research
is broadly beneficial in that regard. In contrast to when
federal funds are used for subsidies and demonstrations, the
funds go a long way when shared with many schools to support
students and young scientists.
Thank you again, and I'll look forward to your questions.
[The prepared statement of Dr. DeCicco follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Biggs. Thank you, Dr. DeCicco.
And now, Ms.--I'll recognize Ms. Skor for her five minutes
to--presentation.
TESTIMONY OF MS. EMILY SKOR,
CHIEF EXECUTIVE OFFICER,
GROWTH ENERGY
Ms. Skor. Thank you, Chairman Weber, Chairman Biggs,
Ranking Members Johnson, Bonamici, and Veasey, and Members of
the House Committee on Science, Space, and Technology. Thank
you for the opportunity to discuss today the advancement in
America's biofuels industry.
My name is Emily Skor, and I am the CEO of Growth Energy.
Growth Energy is America's leading biofuels trade association,
representing 87 biorefineries and 83 companies in the biofuel
supply chain. Our members produce fuel from grain, crop
residues, algae, and woody biomass. In 2016 alone, our industry
contributed more than $42.1 billion to the U.S. economy and
supported almost 340,000 American jobs. And with stable and
predictable policy, America's biofuels industry stands ready to
deliver more biofuels that provide even greater environmental
and human health benefits.
The development of the ethanol industry is a shining
success story where the public sector supports private
innovation. Ours is a competitive thriving renewable energy
industry that continues to produce more with less, including
significant reductions in greenhouse gas emissions, water
usage, and energy usage. Our production process has become more
sustainable and more efficient and uses a wider range of
biomass feedstocks.
Today, ethanol is blended into 97 percent of our fuel
supply, meeting more than ten percent of our motor fuel needs.
Ethanol's naturally high octane enhances engine performance and
increases fuel efficiency. As our country looks at ways to get
more mileage from a gallon of fuel, high-octane fuels are a key
component to that effort.
The key to all this progress is the renewable fuel
standard. Following human health in groundwater contamination
concerns with petroleum-derived MTBE, Congress sought a
renewable, affordable alternative to deliver octane into
America's gas tanks. Knowing we do not have a free and open
fuel marketplace, the RFS helps correct an imperfect market to
allow competition.
We cannot simply walk up to the pump and offer a higher-
quality product at a lower price and compete for customers.
Instead, the gasoline point-of-sale is very much controlled by
the oil industry through direct ownership or franchise
contracts that block new market entrants. The private sector
response to the RFS has been dramatic and impactful because the
policies set forth a long-term predictable energy strategy to
blend more renewable fuel into our fuel supply.
In 2005, the United States produced 3.9 billion gallons of
ethanol. This year, the industry is on pace to produce over
15.6 billion gallons. America's biofuels industry has followed
the policy signal from the RFS to produce more advanced and
cellulosic biofuels. We at Growth Energy have three operating
commercial cellulosic members--POET-DSM, DuPont, and Quad
County--producing ethanol with dramatic greenhouse gas emission
reductions. We have other members producing a diversity of
fuels from a diversity of feedstocks. The RFS is driving this
innovation.
Congress always intended for consumers to be able to buy
higher ethanol blends at the pump. In 2011, the EPA approved
the sale of E15 for all 2001 and newer vehicles. Since that
time, Growth Energy has been working with fuel retailers to
provide consumers access to higher levels of biofuels such as
E15 and E85. Today, these higher ethanol blends are available
at thousands of gas stations around the country, and they are
saving consumers between 5 and 50 or more cents per gallon when
compared to non-ethanol fuels.
I would be remiss if I did not mention a key policy hurdle
with making E15 available across the United States year-round.
In 1990, Congress limited evaporative emissions or Reid vapor
pressure as part of a larger effort to combat smog during the
summer fueling season. This law also provided ethanol-blended
fuels an allowance because these fuels lower tailpipe and
particular matter emissions. When E15 was approved as a new
fuel, EPA did not extend that allowance. This means that 9 in
10 drivers can only legally purchase E15 for 8-1/2 months of
the year. There's a bill pending before the House, H.R. 1311,
that would fix this problem.
The American biofuels industry stands ready to move America
forward. With a stable policy and access to drivers, we believe
we can deliver more low-carbon, low-cost, high-performing,
sustainable vehicle fuel solutions. This will save consumers
money at the pump, increase vehicle performance, and improve
our environment.
Thank you, and I'd be happy to take any questions.
[The prepared statement of Ms. Skor follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Biggs. Thank you, Ms. Skor.
And now, I'll recognize Mr. Loris for five minutes for his
opening statement.
TESTIMONY OF MR. NICOLAS LORIS,
HERBERT AND JOYCE MORGAN RESEARCH FELLOW,
INSTITUTE FOR ECONOMIC FREEDOM AND OPPORTUNITY,
HERITAGE FOUNDATION
Mr. Loris. Thank you. Chairman Biggs, Chairman Weber,
Ranking Member Veasey, Ranking Member Bonamici, and
distinguished Members of the Subcommittees, thank you for this
opportunity to discuss U.S. biofuels policy. The views I
express in this testimony are my own and should not be
construed as representing any official position of the Heritage
Foundation.
To justify biofuels programs, policymakers have promised
reduced dependence on foreign oil, a new source of cleaner
energy to lower gas prices, and an improved environment. None
of this has materialized in any substantial way. More
fundamental than that, the biofuels mandate and subsidies
reveal the inability of the federal government to centrally
plan energy markets and the unintended consequences that occur
when doing so. No matter how brilliant or well-informed,
politicians cannot predict the future of energy supplies and
demand. It's difficult enough to know where gas prices will be
six months from now, let alone projecting nearly two decades
into the future.
With regard to the RFS, blend wall concerns with corn-based
ethanol and Congress grossly over predicting the commercial
viability of cellulosic ethanol demonstrate why the government
should not set production quotas in the first place. And the
RFS is far from the only mechanism that the federal government
has used it to prop up the biofuels markets. Since 1980,
federal taxpayers have spent more than $57 billion on ethanol
subsidies. We've imposed tariffs on cheaper imported ethanol,
provided loan guarantees for cellulosic ethanol, and provide a
number of taxpayer subsidies on biofuels infrastructure through
the energy title in the farm bill.
These policies concentrate benefits to a select few and
disburse the costs among the rest of us. And those costs are
substantial as we pay tens of billions of dollars more in
higher food and gas prices each year. These policies harm low-
income families who spend a disproportionately higher
percentage of their budget on these goods.
While a select group of producers has certainly benefited,
we can't ignore the groups in rural America that have been hurt
by these policies and these subsidies as well. The federal
government has supported corn and soybean growers at the
expense of livestock and other crop producers. Some rural towns
bet big on biofuels and lost big. A recent Utah State
University study details how preferential treatment for ethanol
shifted the business risk from companies to local communities
where cities and towns would offer incentives that in some
instances lasted multiple decades or would front the cost to
build out ethanol infrastructure projects. When these projects
failed and went bankrupt, state and local communities were
stuck with the tab.
Furthermore, the mandate and complementary subsidies have
not contributed to any meaningful reductions in oil
consumption. Biofuels contributed a mere five percent of the
U.S. transportation fuel market in 2016. By comparison, natural
gas provided four percent with no such mandate in place.
Biofuels also have unintended environmental impacts. Even
the Environmental Protection Agency acknowledges that the
increases in soybean production as a result of the mandate can
cause adverse effects to water quality, ecosystems, and
habitats while increasing criterion pollutants like sulfur
dioxide.
Furthermore, the alleged climate benefit from the RFS and
biofuels policy is dubious at best. Even under the assumption
that switching from biofuels--switching from oil to biofuels
significantly reduces greenhouse gas emissions, which is a very
generous assumption, the impact on global temperatures would be
barely detectable. Broadly speaking, the mandate and subsidies
provide valuable lessons about the problems when the federal
government intervenes in energy markets. Bad policies that
reward preferential treatment remain in place because the
supposedly political importance trumps economic viability.
In Washington, it's rare to have a diverse mix of
individuals and groups such as environmental organizations,
world hunger activists, economists, free-market think tanks,
and many in the agricultural community voicing their concerns
over one single policy, and yet these policies remain in place
to appease entrenched special interests.
But the issue is not with biofuels themselves but rather a
set of policies and programs that pick winners and losers. This
holds not true just for biofuels but for all energy sources.
There's an enormous profit incentive that already exists for
fuel producers that can benefit from a competitive industry
without the aid of taxpayer money or a government-imposed
mandate.
American motorists purchased nearly 400 million gallons of
gasoline per day in 2016. Globally, the transportation fuel
market is a multitrillion dollar opportunity for competitive
industries to meet the world's energy demands. Congress should
recognize the economic and environmental costs of biofuels
policy and repeal the RFS and all biofuels subsidies. Congress
should do so as part of fundamental reform that eliminates
subsidies for all energy sources and technologies.
Now, there are ways in which Congress can drive alternative
fuel competition such as implementing tax reform that allows
for immediate expensing for all capital investments and using
the Department of Energy's national labs as catalysts for
innovation. In this scenario, the DOE should conduct the
research to meet government objectives that are not being done
by the private sector and enable a system that allows the
private sector using their own money to tap into that research
for commercial purposes. While this already occurs on some
level and with some success, private sector access to the labs'
assets and labs' employees and the ability to turn the research
into market applications are stifled by cultural rigidity,
funding issues, as well as complex and overly restrictive
conflict-of-interest and intellectual-property-rights
regulations. Enacting such reforms will empower the private
sector and innovative companies to drive fuel competition and
choice.
Thank you, and I look forward to your questions.
[The prepared statement of Mr. Loris follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Chairman Biggs. I thank each of you for your testimony, and
I recognize myself for five minutes to ask questions.
And I want to begin with you, Dr. DeCicco. In your
statement you mentioned that once indirect impacts are
considered, it turns out biofuels have caused higher CO2
emissions, and I was wondering if you can tell us what some of
those indirect causes are producing those indirect impacts.
Dr. DeCicco. Sure, Mr. Chairman. The heart of the problem
is really three issues, three types of indirect issues that
result in higher emissions for biofuels. One is the basic fact
that all of the biofuel production, statistically speaking,
when you look at the volumes, is really based on feedstocks,
crops, primarily corn and soybeans that are harvested from
existing land. In fact, Congress--part of the criteria to
qualify for feedstock on the RFS is that, you know, feedstocks
that come from existing land.
Now, that was essentially a well-intended provision, but
just because we remove, say, nearly on a net basis after
counting coproducts about 30 percent of our corn and the
calories in that corn from the food market to make fuel doesn't
mean that the country has consumed 30 percent less calories. I
think we know that. It has to get made up somewhere else.
So, that leads to the next effect of concern, and that's
land-use change. And that happens both in the United States and
it's been documented by satellite imagery where cropland has
expanded into other lands, particularly grasslands in the north
central region, prairie States. That--when you convert that
land, it releases enormous amounts of carbon that was locked up
in those lands.
And then you have the international commodity market
effects where, to compensate for the biofuel demand for starch,
for corn grain, and for soybean, you end up having to make that
up in international markets, and you have more crops planted on
the frontier, resulting in deforestation, amplifying
deforestation in the Amazon and other carbon-rich areas that
creates an enormous release of CO2.
Then, finally, the third indirect impact is that, yes, the
use of biofuels does displace some petroleum fuels, so you
reduce petroleum demand; that's true. That has a slight, you
know, marginal depressing effect on the price of petroleum
products that then induces greater petroleum product
consumption elsewhere. That's been also a well-documented
indirect effect that, by itself, can erase up to half of the
alleged CO2 emission benefit of biofuels, but since
I believe there's no benefit to begin with, that's just
additional excess emissions.
Chairman Biggs. Thank you. Dr. Gilna, what's the primary
difference between conventional biofuels produced primarily
from corn and the advanced biofuels from nonfood sources that
you're researching at Oak Ridge?
Dr. Gilna. Well, the primary difference is its source. As I
described earlier, our goal and hopes have been to be able to
generate initially biofuels such as ethanol but moving to
beyond that to other fuels, higher-order hydrocarbons from
plant sources again that do not compete with food and in fact
use different non-marginal lands that cannot normally be
ascribed or used for food, food production. So, for example,
we've talked about and published on crops such as switchgrass,
rapidly growing trees such as populus as a new bioenergy
feedstock that allows us to generate fuels, initially, ethanol
but now more advanced fuels such as isobutanol. We use the term
often drop-in fuels. These are fuels that can use the existing
infrastructure, the pump structure and the piping structure.
So, essentially, the directions that we're going is in advanced
fuels that use the existing system from nonfood crops.
Chairman Biggs. Thank you.
And then my last question, as I'm almost out of time, is
back to you, Dr. DeCicco. You mentioned biofuel policies
restricted to basic R&D. Where do you draw the line? How do we
make that a bright-line boundary?
Dr. DeCicco. Sure. I think the type of basic R&D needed
here is really on sort of the very fundamental mechanisms
related to, you know, the manipulation, utilization of organic
substances, so some of the very fundamental work that Dr. Gilna
has himself done for many years looking at, you know, genetic
biochemistry-related things, so stuff that is really enabling
and could be potentially used for multiple purposes.
The other really important area of fundamental research in
this regard has to do with things that essentially help plants,
help natural systems pull CO2 out of the air more
rapidly because, as I mentioned, if there's to be any
mitigation effect at all, it doesn't come downstream when you
substitute the molecules. It comes upstream by mechanisms that
increase the rate at which you pull CO2 out of the
air and then do something with it, which need not necessarily
mean turning it into fuel. It could just mean sequestering it.
So, fundamental research essentially helps plants sequester,
build, rebuild soil carbon and things like that. I think some
of that work also goes on at Oak Ridge perhaps in another
division.
So, there are certain really fundamental biological
sciences work that is crucially important for many reasons.
Personally, I draw the line right after that. I think--I don't
think the petroleum industry needs help figuring out how to
synthesize fuel molecules. They will figure out how to make
fuel molecules out of whatever feedstock is economically
possible. That's their core competency.
Some of the earliest work on this cellulosic thing, which
is over 40 years old, was started by Chevron in the '70s and
other oil companies. They've invested in that. I don't think
there's a need for federal investment in an area where, you
know, the global oil industry has its huge core competency in
chemical engineering and related things.
Chairman Biggs. Thank you.
And now, I recognize the gentlewoman from Oregon, Ms.
Bonamici.
Ms. Bonamici. Thank you very much, Mr. Chairman. And, Ms.
Skor, I want to follow up on the question that the Chairman was
asking Dr. Gilna. In your testimony, you mentioned that
advanced biofuels have the potential to reduce greenhouse gas
emissions significantly. It could be up to 100 percent or more
over gasoline. Can you please elaborate on why cellulosic
biofuels are particularly advantageous, especially to reduce
greenhouse gas emissions?
And then also, when comparing the lifecycles of fuels side
by side, how would the lifecycle assessments of gasoline
compare to the advanced cellulosic fuel that's becoming more
readily available?
Ms. Skor. To your question on the value of the cellulosic
biofuel, yes, Argonne National Labs recently finished a study
showing that when you're using cellulosic biofuel, you can
reduce greenhouse gas emissions up to 100 percent depending on
the type of feedstock that you're using. And so, you know, to
have that--the research from other institutions, as well as
demonstrating that there is a phenomenal increase in the amount
of greenhouse gas emissions reduction that you can achieve when
you go from the first generation to the second generation of
biofuel.
And with regard to the distinction between the lifecycle of
the two, I may--as a nonscientist, I may differ a bit more to
Dr. Gilna and others in terms of that to answer that question,
but I can say that when you look at the totality of research
out there and you have to look at independent government
research, what is coming out of USDA, Department of Energy,
EPA, our national labs and our universities, there's a wide
body of consensus from that scientific community when you look
at a lifecycle analysis of cornstarch ethanol that is not only
good for the environment, it's great for the environment. And
depending on the study, that will find--the results are that--
anywhere from a 30 to 60 percent reduction in greenhouse gas
emissions with cornstarch. And as I said earlier, cellulosic
you can get up to a carbon sink.
Ms. Bonamici. Dr. Gilna, can you answer the question about
when comparing lifecycles of fuels side by side how would
lifecycle assessment of gasoline compare to advanced cellulosic
fuel?
Dr. Gilna. I must confess I'm the pointy-headed scientist
in this room, and so my world is more based on the--in the
fundamental science, science research, and I would defer to my
colleagues----
Ms. Bonamici. Thank you.
Dr. Gilna. --who work on that.
Ms. Bonamici. Thank you. Ms. Skor, in his testimony, Mr.
Loris argues that when the free market operates, technologies
flourish, leading to new job opportunities and economic growth.
And he's suggesting that the renewable fuel standard should be
repealed to encourage a healthier free market. Can you comment
about why the fuels market is not a free market and whether
this--the current renewable fuel standard is sufficient to
level the playing field, and also importantly, what might
happen to rural economies if the RFS was repealed?
Mr. Loris. Wouldn't it be wonderful if our transportation
fuel sector were a free market? Unfortunately, it is not. We
are in a situation if you have a renewable source of energy
that's higher quality, lower cost, we have to knock on the door
to our competitor and ask our competitor to be our customer in
order to access the consumer. And the consumer needs that to
happen in order to have more choices at the pump to find and
select the fuel that is best for their engine needs.
And so the renewable fuel standard doesn't entirely address
the problems of this broken system, but it helps by saying that
we have goals as a country. We will be blending more biofuels
that introduces a bit more competition into the marketplace.
I will say, however, there still exists fuel policies and
rules that date back to a time before you had alternative fuels
like ethanol and do advantage the oil industry. So again, it
starts to correct but does not fully correct that market. I
would say one opportunity that is very much in the spirit of
free market is lifting Reid vapor pressure restrictions on E15.
That simply says consumers, you have the ability to purchase a
currently legal fuel all months of the year and not 8-1/2
months.
Ms. Bonamici. Thank you. And I know there was some concern
raised about E15 and--it was a couple years ago in a hearing
here that a lot of vehicles couldn't accommodate it. How old
does the car have to be to not accommodate it?
Ms. Skor. Well, let me start by saying E15 is the most
tested fuel used in the country. EPA approved it for use in
vehicles 2001 and newer. That's 9 out of 10 cars on the road.
It has been used by--consumers have driven more than 1 billion
miles on E15, and they are not registering complaints in terms
of any fuel-related concerns on their engine performance.
Ms. Bonamici. And also, you know, let's say there's a major
event that disrupts the global oil supply. What could an
increased supply of domestically produced biofuels do to
insulate the United States from the consequences of that kind
of event?
Ms. Skor. One of the goals of the RFS is greater energy
security, and so for us to have the ability to produce home-
grown renewable fuel does protect us from uncontrollable events
in the global marketplace, yes.
Ms. Bonamici. Mr. Chairman, you did go two minutes over. I
have one more question.
Chairman Biggs. Actually, I completed my question with
about 15 seconds to go and the answer took two and a half
minutes, so your time is expired. Thank you.
I'll go to the gentleman from Texas, Mr. Weber.
Mr. Weber. Thank you, Mr. Chairman.
Mr. Loris, in your testimony you talk about this,
``chicken-and-egg,'' approach in energy innovation where
supporters of government mandates and subsidies argue that if
we want consumers to buy new products, the government should
subsidize the infrastructure to deliver that product and then
mandate its sale.
Now, let me just parenthetically say we want to be careful
because the next thing you know the government will be
mandating we all have to buy some form of health insurance. I'm
just saying. Does any of this government meddling help that new
product--in this case biofuels--become more cost-effective,
efficient, or competitive? I won't ask you to opine on the
insurance market.
Mr. Loris. Yes, I appreciate that. In the long run, no; it
promotes technological stagnation. And markets overcome
chicken-and-egg problems all the time. As I said, it wasn't all
that long ago in terms of historical senses where people didn't
have access to cell phones and you need cell phone towers to
have access to cell phones and use them appropriately. The
market solved that chicken-and-egg problem where cell phones
are so rapid and expansive that even homeless people have them
now.
So, I don't know what technological innovations will come
from the government's investing in these things. It may result
in a few refueling stations, but that shouldn't be the role of
the government. You have Tesla, who's investing a lot in
refueling stations for electric vehicles using their own money
with some subsidies from State Governments, but they should be
funding those refueling stations on their own, too, just as
natural gas vehicles should be doing the same for their
infrastructure. That's not the role of the federal government
to solve this chicken-and-egg problem when markets do it all
the time.
Mr. Weber. You don't want the federal government setting up
refueling exchanges?
Mr. Loris. I'll pass.
Mr. Weber. Okay. I got it. A smart man. So what you're
saying is that the market itself, in the name of competition,
manufacturers will produce a more efficient product, a more
cost-effective product on their own, and if the government
mandates and gets involved and subsidizes, then as I said in my
opening statement, they have a habit of picking winners and
losers, unfortunately, more losers than winners.
Mr. Loris. That's right, and it creates a dependence on
those programs. And when these companies are dependent on
targeted tax credits or loan guarantees, they fail to recognize
the true price point at which they're cost competitive with
other fuels, and so that's absolutely right.
Mr. Weber. Sure. You bet you.
Is it DeCicco?
Dr. DeCicco. That works.
Mr. Weber. That works? DeCicco, okay. Okay. Well, I think
I'm going to come to you here in a little bit, but I just want
to make sure I have your name right.
Dr. Gilna, let me jump over to you real quick. In your
prepared testimony, you mentioned the history of DOE biological
sciences. It's my understanding that much of Oak Ridge National
Lab's expertise in biological systems--and you've said this as
much--came from early work related to the Manhattan Project.
And I think it's interesting, you know, ironically so, that
much of our discussion has nothing to do with nuclear fuel. It
was based on national security. And you could say the nucleus
of that--of this project developed from the Manhattan Project.
So, can you share some of the background on that expertise,
how it got developed, how it's helping us today?
Dr. Gilna. Well, first, I may not have been clear. I think
the point--one point to be made here is that there is a history
that goes all the way back of biology research at the
Department of Energy that stemmed from the scientific needs----
Mr. Weber. Give me a year for that.
Dr. Gilna. So, back 50 years at least.
Mr. Weber. Yes.
Dr. Gilna. So, there's been biology research in both ERDA
and the Atomic Energy Commission dating all the way back to the
early days of Los Alamos. Where--what that has led to has been
now using those capabilities and that knowledge now focused on
genomic aspects of microbial science, of energy science, and
plant science in particular. So it's a long-standing history
that really has--is now being applied to energy issues by and
large.
Mr. Weber. Thank you.
Dr. DeCicco, you said in your testimony some harsh--you had
harsh words for DOE Office of Energy Efficiency and Renewable
Energy programs, EERE. Quote, ``DOE and other agencies have
supported bioenergy research, demonstration, and deployment in
many decades and with billions of dollars. None of the promised
cellulosic fuels have become commercially viable, even with
subsidies.'' Why do you think the programs in EERE have become
so unsuccessful? You've got 30 seconds.
Dr. DeCicco. Well, they've simply failed to deliver on
promises that we've now heard for decades. I mean, with all due
respect to, you know, Dr. Gilna, I heard those same things
that--you know, 25 years ago when I began focusing on these
issues. It's a difficult problem, that's true, but at some
point you have to recognize that we should move on to other
areas of research that might be more promising.
Mr. Weber. Mr. Chairman, I yield back.
Chairman Biggs. Thank you.
I recognize the gentleman from Texas, Mr. Veasey.
Mr. Veasey. Thank you, Mr. Chairman.
I wanted to ask Dr. Gilna a question. The Trump
Administration has proposed to gut DOE research into bioenergy
in its fiscal year 2018 budget request. Specifically, the DOE
Office of Science's bioenergy research centers would see their
annual budget cut by about 60 percent and the Bioenergy
Technology Office would be cut by about 72 percent. Also, I
think, which is equally concerning, is the House appropriation
bills that come before the chamber later this week include
similar severe cuts, and I wanted to know if you could describe
the consequences of the proposed cuts in the budget request
would have on the bioenergy research centers if enacted? And
please be as specific as possible.
Dr. Gilna. Well, firstly, I should be sure to thank the
Members of Congress for the fact that the BRC centers are in
the appropriations this year. I think that's important and
important to continue this work. I think to help calibrate all
of the centers that have been selected for funding based on the
DOE request for proposals came in at around $25 million a year,
again, by design. So, at this point in time the effect of the
proposed budget is that the centers are essentially reduced by
25 percent--50 percent, excuse me.
In essence, what this means simply is that some aspects of
the work will simply not get done. The science will focus on
specific issues but not the broad breadth of work that was
called on from the centers. And I think people and essentially
partners that I described earlier will get dropped.
I think the bigger issue will be if you think of the ten
years of activity and a thousand scientists, we've reached the
sort of critical mass of scientific production in this country,
and I think that the potential consequence of this drop is a
stutter step in that productivity.
Mr. Veasey. More broadly, what would the proposed cuts do
to federally funded bioresearch centers and the progress that
we've made up to this point?
Dr. Gilna. Well, essentially, we would--we talked--I talked
earlier--and I can speak more specifically to the Oak Ridge
Center, so we talked about continuing extensive research in two
model cellulosic crops, either populus--or poplar trees and
switchgrass as a grass. And, in essence, I think in order to
fit to the lower constraints, we would essentially diminish if
not indeed rule out at least one of those crops, switchgrass,
which would drop some partners as well.
Mr. Veasey. What about--you know, one of the things that
you hear any time we get ready to have this debate is that if
the federal government is not helping out in this area, if
they're not--if funding is cut from the federal government,
that there's just going to be this avalanche of money that's
going to come in from the private sector, and America will keep
its competitive edge because the private sector will want to
just vigorously jump in and just--and put money into these
projects. What--I mean, what is your opinion on the private
sector funding research that is proposed for elimination, as
some have suggested today?
Dr. Gilna. I don't--I didn't include this with my testimony
and I should have, but we have produced a single graph that
depicts all the logos from the different companies that have
come to work with us. We call this our NASCAR slide because
there's at least 100 logos on that slide. And in all those
cases these represent companies that have come to us, the
centers, for help, for increased knowledge, as well as
obviously to license products that they can take forward. So,
you know, if the issue is would industry simply do this itself,
I think the evidence suggests no.
Mr. Veasey. Thank you very much. And I wanted to ask a
quick question to Mr. Loris. In your testimony, you stated
unequivocally that, ``Activities with the purpose of
commercialization, regardless of where they lie on the
technological development spectrum, are not legitimate
functions of the federal government.'' Nowhere in that entire
section that criticizes DOE's R&D investment do you cite any
data, study, or report to back up that statement. To me it
sounds like it's very political and out of touch with reality,
and I wanted to know if you had any actual data to support that
statement, that certain activities are not legitimate functions
of the federal government, and not any anecdotes or political
theories but just some real data to support what is a very
broad statement.
Mr. Loris. Well, I don't think the federal government
should be involved in trying to predict what our future energy
sources should be, so it is looking at that--whether or not it
is a legitimate function of the federal government. I don't
know what will be our energy future, whether it's fusion,
whether it's batteries, whether it's biofuels. The market will
sort that out. We've had a number of projects in which the
Department of Energy provided loan guarantees to solar
companies, to carbon capture and sequestration plants that have
failed miserably on the backs of the taxpayers, and so I think
there's plenty of evidence in which we've lost taxpayer dollars
trying to predict what those technology futures will be.
And again, I don't think it's the role of the federal
government to try to lower the cost to make these technologies
competitive in the marketplace. There was DOE's SunShot
Initiative which said it was going to take solar from the basic
research level and make it commercially viable. That is the
role of the private sector. It's not the role of the federal
government.
Mr. Veasey. Thank you, Mr. Chairman. I yield back.
Chairman Biggs. Thank you, Mr. Veasey.
The Chair recognizes Mr. Dunn, the gentleman from Florida.
Mr. Dunn. Thank you very much, Mr. Chairman, and thank the
panelists for being here as well. It's always fun to hear from
so many very learned people.
Dr. DeCicco, the--there's a lot of timber in the 2nd
Congressional District of Florida. It's the largest
agricultural product that we have. It's a very agricultural
district. It's a huge driver of our economy. We have about 4.5
million acres of timber under cultivation. The pulp and paper
manufacturers in Florida's 2nd District also generate energy
from their biomass, so I was going to ask you a biomass
question. Is the minimally produced woody biomass that is
burned to generate the bioenergy--and most of that is just
scrap that they're generating themselves--to power these pulp
and paper mills closer to carbon neutral than other renewables
you've studied?
Dr. DeCicco. Yes, it is. In that case you have something,
you know, pulp and paper, black liquor, things like that that
are byproducts that might otherwise be dumped and then just
decay. So, the reason that those are beneficial typically is
because--take, you know, some of these residues and black
liquor is concentrated--if that was just dumped, it would
eventually and in fairly short order break down, and that means
it gets gobbled up by organisms, and they exhale the CO2
and that CO2 goes into the air. So, by taking those
things that would otherwise decay and then using them to make
energy instead of, say, natural gas or some other fossil fuel,
you have essentially reduced emissions by reducing the
emissions of decay. You've not changed how much emissions come
out when you burn it, but you've avoided those emissions from
those waste products just kind of going back into the
atmosphere through natural processes. So, that is an example of
a potentially and likely beneficial bioenergy process.
Mr. Dunn. All right. Let me follow on if I may. So you--we
talked about the DOE's research portfolio, and over time, that
has shifted towards these advanced biofuels, the drop-ins and
whatnot. And I mean, I guess I'm wondering do you think that
these advanced new biofuels will actually become commercially
competitive with petroleum-based products?
Dr. DeCicco. I see no evidence for that. I mean, again,
that promise has been made in one form or another for decades.
That was the premise--I mean, it was, you know, President Bush
who, in his 2007--January 2007 State of the Union got up and
talked about cellulosic ethanol, talked about switchgrass as a
source of fuel, and the mandate that, you know--for the
cellulosic products I did a back-of-the-envelope calculation
based on EPA's most recent rule, and this year, the amount of
cellulosic fuel is only three percent of what was targeted for
the RFS, and most of that three percent is biogas. And again,
when--he got up and talked about cellulosic ethanol. We're
talking about a liquid fuel that everybody could use in all
their cars. I don't think he was talking--you know, it was not
sold to the American people to, you know, pardon the, you know,
informality here to--that we'd be running our cars on cow
farts. I mean, most of the cellulosic has been gaseous at this
point.
So, it's just, you know, pretty consistently failed to
deliver. Fundamental research is needed. As I said, I think the
very fundamental work is legitimate, but then trying to turn,
you know, stuff into molecules, I don't think the federal
government needs to keep investing in that.
Mr. Dunn. So I wasn't going to wander into that area, the
biogas, but we actually have one of the largest dairies in the
country in the district, and they have 14,000 dairy cows, and
they are recycling. They have this biogas plant that actually
generates more energy than they can use on the farm, and I
can't remember----
Dr. DeCicco. That's----
Mr. Dunn. --I think it was like two or four----
Dr. DeCicco. That's--I'm not saying that----
Mr. Dunn. --two to four megawatts of energy on this thing.
And the guy is a real entrepreneur. He's really making this
thing go, and it's exciting, if a little bit odorous to be
there but----
Dr. DeCicco. Sure. No, I'm a big fan of biogas. I think
it's a great thing. I just don't think that that is what, you
know, we need a mandate for, you know----
Mr. Dunn. So, I think----
Dr. DeCicco. --billions of gallons of fuel----
Mr. Dunn. --we have 15 seconds left, and I just want to say
I've seen--I was not a big fan of biogas, did not believe in it
until I got to this farm and they do it. They do it on their
own dime. There's no subsidies, there's no tax breaks, and he's
running all of his farm--several farms on either side of him as
well.
I yield back, Mr. Chair.
Chairman Biggs. Thank you.
The Chair recognizes the gentleman from New York, Mr.
Tonko.
Mr. Tonko. Thank you, Mr. Chair.
I come into this hearing without many predetermined
conclusions. I do not have any major corn or oil interests in
my district, so I appreciate all of our witnesses taking the
time to better educate us today.
I do have a few principles on when it comes to thinking
about biofuels and their use. First, I care deeply about
fighting climate change, and we should consider how investment
in biofuels are indeed--can impact greenhouse gas emissions.
Secondly, regardless of the blend of our liquid fuels, our
vehicles should use those resources as efficiently as possible
and always keeping in mind that they cannot be a substitute for
our vehicle fuel efficiency standards.
And finally, in the long-term, I truly believe we must
promote greater electrification of the transportation sector.
It is necessary and probably inevitable, but I also recognize
we are decades away from that becoming a widespread reality.
But even with greater electrification, aircraft and ships and
possibly heavy trucks will still require liquid fuels. It is
critical that we continue to develop a domestic advanced
biofuels industry. I understand the industry has not developed
as predicted, but Congress should not undercut or
disincentivize that industry's future development.
I also remain concerned about major cuts that the Trump
Administration has proposed, especially how these cuts will
affect the world-class research happening at our national labs.
No matter our individual thoughts on this specific issue, I
hope my colleagues on both sides of the aisle can come together
to agree that, as a nation, we must invest in research. To not
do so would be costly in terms of innovation, in terms of job
growth and our future workforce.
With that being said, Ms. Skor, what have been the biggest
factors in holding back development of advanced and cellulosic
biofuels?
Ms. Skor. Thank you. The biggest factor has been a lack of
stable policy guiding investors, guiding innovation. If you
look at the EPA's implementation of the renewable fuel
standard, it took three years to figure out the rules of the
road. We then had an economic recession. And then in 2014 to
2016 for three years the EPA was not coming out with blending
targets. And as a result, the--that had a very chilling effect.
As a country, we lost more than $20 billion in investment and
innovation during that time frame because the signal the
government was giving to investors was we will turn back the
clocks on renewable fuels.
Fortunately, we've gotten back on track. The blending
targets are--have been in 2017 and proposed 2018 more in line
with Congressional intent, and you are seeing an infusion in
the private sector now into the investment and the technology
and innovation.
So having said that, we've only been working on cellulosic
for ten years. The government started investing in fracking
technology and R&D back--as far back as 1975, and that took 30
years to get to the commercial point with that technology. So,
I would say that we are very much at commercial scale with
cellulosic. We aren't as advanced as we'd like to be, but we
are making progress.
Mr. Tonko. Thank you. And would additional federal research
monies help open pathways or lower costs for more feedstocks to
become viable alternatives to corn ethanol?
Ms. Skor. I think Dr. Gilna very beautifully articulated
that, yes. And I would say, as a blanket statement, if our goal
is energy innovation, energy diversity, energy dominance,
energy stability, any of those goals require both public and
private investment and collaboration. We have, as an industry,
benefited from government support and R&D throughout the
innovation spectrum and would continue to do so, yes.
Mr. Tonko. Thank you. And, Dr. Gilna, one of Mr. Loris'
criticisms of the DOE national laboratories is that they need
to transform in order to, I quote, ``engage more with the
private sector.'' Mr. Loris--and the Heritage Foundation also
strongly advocate eliminating any research that they do not
consider to be either basic or early-stage research. These two
criticisms seem to contradict each other. Based on your
experience, on what types of activities is the private sector
most interested in collaborating with the national
laboratories?
Mr. Loris. Based on my experience, the most productive and
valuable experience is when industry and the labs work together
to solve problems in a collaborative fashion. Most often, it is
recognition on the part of industry that a problem in the
pipeline is basic research-based. And so coming to use the
capabilities and knowledge base of universities and the
national labs is the best form of synergy that can help solve
industry's problems.
Mr. Tonko. Thank you. And----
Chairman Biggs. Thank you, Mr. Tonko. Your time is expired.
Thank you.
The Chair recognizes Mr. LaHood from Illinois.
Mr. LaHood. Thank you, Mr. Chairman.
And I want to thank the witnesses for being here today, for
your valuable testimony on this debate.
And we've talked here today about the role of the federal
government on this issue, and I think it's important to
remember the genesis of the current RFS policy was put in place
under the George W. Bush Administration under a Department of
Energy led by Dr. Samuel Bodman, who was no shrinking violet
when it came to energy policy and putting this forth. And while
it may not be perfect, it has been a policy that, again, going
back and looking at it, is one that was, you know, put in place
with valid reasons for it.
And as someone that represents a district that's fairly
rural, a lot of agriculture there, I look at the RFS and I see
the real results of biofuels: innovation in a district like
mine, also improving the environment, creating lots of jobs in
rural America and driving fuel efficiency.
And we've heard a lot today and competing studies going
back and forth on different initiatives and whether they've
worked and of agro-companies benefiting specifically from this.
I could just tell you, in a district like mine, rural
communities, local jobs have been enhanced by ethanol and
biofuels. We have the largest dry mill ethanol plant in the
world in my district owned by a local family, all local jobs,
all local businesses, not some carveout for a big company. And
so, I also see the technology and the innovation that has gone
in there in terms of constantly improving and modernizing this
technology, and there's been real effects of that that have
been beneficial to folks I think throughout, you know, the
middle part of the country.
Ms. Skor, let me ask you a little bit about the RFS. A lot
of this is implementation through the EPA, and I know you work
with them on that. Can you talk a little bit about the problems
in the past and the future--or I guess looking at the future on
how--what EPA does impacts the RFS in terms of the biofuels
industry?
Ms. Skor. Yes, the EPA administers the RFS, and so the way
in which they do that, being timely and being genuine and true
to Congressional intent is mission critical for our ability to
make the RFS successful, as envisioned by Congress. And some of
the challenges in the implementation side that I talked about a
bit before really go back to EPA's delays and coming out with
targets, blending targets on time, consistent with
Congressional intent in a way that gives certainty and
stability to the marketplace because private sector will
respond to the direction and the tone set forth by the Agency.
We've had several conversations with this Administration.
Administrator Pruitt has consistently pledged to come out on
time and comply with Congressional intent, and that's very
encouraging news for us to hear that because that's the most
important thing EPA can do to help make the renewable fuel
standard as successful as possible.
Mr. LaHood. And when you look at the rollback of the RFS in
2014, 2015 and '16 in the new Administration, has the biofuels
industry seen any improvement with the implementation of the
RFS?
Ms. Skor. The 2018 proposed RBOs were the first real test
of this Administration's pledged support for biofuels, and
we're encouraged at the blending targets, $15 billion for
conventional corn, so yes, that's very encouraging to see that.
We want to have greater conversation on some of the advanced
and cellulosic target numbers and better understand. Those
numbers are below 2017. We think the market is moving in a much
more forward, positive direction, and so that's a conversation
we'll have in the weeks and months ahead.
Mr. LaHood. And can you give us an update on where E15
sales currently are and what kind of impact it's making on
consumers at the pump?
Ms. Skor. There's been discussion this morning about
picking winners and losers in the marketplace, and I think the
goal for all of us is that the consumer picks the winner and
the loser. And what you are seeing with the E15 experience
that's now sold in 29 States is that when consumers actually
have the chance to have greater choices at the pump, they are
exercising that and they are reaching for E15 because they see
the benefits to their pocketbook. They save 5 to 10 cents a
gallon, the benefits to the environment and to their community.
Mr. LaHood. Thank you. Those are all my questions, Mr.
Chairman.
Chairman Biggs. Thank you.
The Chair recognizes Mr. Norman, the gentleman from South
Carolina.
Mr. Norman. Thank you, Mr. Chairman.
Dr. DeCicco, in your testimony you mentioned that federally
funded research and development should be precompetitive. What
does that mean, and how would we prioritize this kind of R&D in
the future?
Dr. DeCicco. Well, I think precompetitive, you know, speaks
to some of the very issues where we have some, you know,
disagreements here. You know, precompetitive really refers to
the very basic research--again, some of the biochemistry,
molecular, biology, genetic engineering, things like that--that
provide new knowledge that can be used by industry to produce
new products, produce better products, and all of the above.
But when you get into trying to do something to make a specific
product, you know, where the government is going to try to make
a fuel, that is right there in the competitive realm.
The downstream industries, downstream petroleum industry is
a very competitive industry in terms of the technologies.
They're always looking for ways to make fuels, fuel molecules
that meet the standards of high performance at lower cost. So,
I do not think actual fuel synthesis is, you know, necessary in
this--you know, for R&D.
Mr. Norman. Thank you.
Mr. Loris, policymakers have I guess made the argument that
subsidized biofuel production will reduce the dependence on
foreign energy sources. Do you agree or disagree?
Mr. Loris. Yes, but marginally. I mean, again, as I
mentioned in my oral remarks, the U.S. biofuels market
represents only five percent of the entire transportation fuels
market. We've seen a lot of penetration of natural gas
vehicles, so if you're going to mandate the production of
increased and offer more biofuels, that's going to in some
senses reduce our dependence on oil and foreign oil, but it's a
drop in the bucket compared to how much we use.
Mr. Norman. So, the yield on the--the return on investment
is not there in your opinion?
Mr. Loris. Not for the cost that we're paying, certainly
not.
Mr. Norman. Thank you.
I yield, Mr. Chairman.
Chairman Biggs. Thank you.
The Chair recognizes the gentleman from Indiana, Mr. Banks.
Mr. Banks. Thank you, Mr. Chairman.
I'm new around here, so I'm trying to figure all of this
out. And to jump right into the conversation, many
conservatives argue that mandates like RFS, while intentioned
for incorporating and advancing biofuel development into the
market, has not accomplished what it set out to do in the first
place.
So, as I look at--as I research a little bit about Growth
Energy and look at the FEC campaign filings, which appear that
Growth Energy PAC, which is associated with your organization,
Ms. Skor, gives a lot of money away to candidates for federal
office who support RFS. When I look at the list of board
members on your website, it appears that your board members
benefit quite handsomely from RFS.
I wonder--my question is actually for you, Mr. Loris. I
wonder, as I look into that background, how much can we rely on
research from an organization like Growth Energy--their
research, their testimony, their studies--when it appears that
they gain a pretty significant political benefit from RFS in
the first place?
Mr. Loris. Well, I won't speak to the credibility of their
research, but I will say that when you point to job numbers
created by the RFS and by government subsidies, what you don't
see is the costs not just to the taxpayers but where those
investments could have been made elsewhere. Yes, if you mandate
something or subsidize something, you're going to get people to
produce that, you're going to have jobs as a result, but those
are investments and that's an opportunity cost where those
investments could have been made elsewhere. You could use your
taxpayer money elsewhere. Those private sector investments that
chasing--that are chasing public money could have been invested
elsewhere as well. So, you have--when you look at government-
subsidized jobs, you also have to look at the opportunity cost
of what that money could have been spent on.
Mr. Banks. So, as I dig a little bit deeper, one of Growth
Energy's board members said that ``Mandating biofuels is the
renaissance of rural America'' is what he said. Is that true?
Are mandating biofuels really the cure for American energy or
the, ``renaissance of rural America,'' or is this just another
example of crony capitalism?
Mr. Loris. Yes. I would say it's cronyism for sure. And
then we do have a lot of cronyism in energy markets. It's not
limited to biofuels, but absolutely when there are certain
select few that benefit in these rural communities. But as I
mentioned in my oral remarks as well, there were certain rural
communities that bet big on this promise and lost. There's a
lot of local and state incentives, and when you had corn price
spikes in 2008 and 2012, a lot of these companies went belly
up. Contracts to farmers weren't paid. You had these small
towns going through very difficult bankruptcy litigation. You
had tenant farmers who were being squeezed out of the land
because the land prices were increasing so much.
So, even in rural America I think there's been a lot of
winners and losers, not to mention again all the livestock
producers and the increased costs for animal feeds, which is
why you have organizations like the Turkey Federation and the
Chicken Council and the Restaurants Association, which are also
a lot of small-business owners opposing this policy.
Mr. Banks. So, you would agree then that actually we've--
with RFS we've actually distorted the market?
Mr. Loris. Absolutely.
Mr. Banks. Okay. My next question, when I look at Growth
Energy's website, they claim that the use of American ethanol
reduces our nation's overreliance on volatile foreign energy
markets. And Ms. Skor's own testimony states that every gallon
of clean-burning ethanol decreases our dependence on foreign
oil. But from my research, from a lot of sources, it seems that
the United States has become in fact more reliant on foreign
imports of soybeans and ethanol from South America to comply
with RFS's goals.
So, Mr. Loris, can you speak a little bit about the
accuracy of Ms. Skor's testimony about reliance on the RFS
eliminating the reliance on foreign imports?
Mr. Loris. Yes. Well, in terms of biomass diesel, we have
seen a huge increase in imports from--I believe it was 7
million gallons in 2009 to over 900 million gallons in 2016. We
are now a net importer of biomass diesel by about 600 million
gallons. So, yes, we are relying on these other countries who
can provide these fuels cheaper. And that's not to say in a
world where we have the RFS we should limit our ability to
import it. If other countries can make this product cheaper,
then we should be able to import it, but that just slaps in the
face of economic reality if we have to slap tariffs on our
U.S.-based biofuel production to keep it competitive and keep
it meeting America's market demand that's a result of the
actual mandate.
Mr. Banks. Thank you, Mr. Chairman. I yield back.
Chairman Biggs. Thank you.
Ms. Skor. Mr. Chairman?
Chairman Biggs. The Chair recognizes the gentleman from
Illinois, Dr. Foster.
Mr. Foster. Yes. I guess I would like to use the first 45
seconds of my time to allow Ms. Skor to answer some of the
things.
Ms. Skor. Thank you. There were a lot of statements with
respect to Growth Energy's credibility, and I just wanted to
correct the record on a few things.
First of all, our industry does not enjoy any government-
subsidized jobs. The biofuels industry today does not have any
tax incentives. We once did, a blender's tax credit, that
expired with our support in 2011. I would say in contrast the
oil and gas industry today enjoys more than $4 billion in
annual tax incentives, so I just wanted to set the record
there.
With respect to the question on the renaissance for rural
America, it is very true and very important that the biofuels
industry provides a wonderful marketplace for the American
farmer. We, as a country, are so fortunate to have such a
robust agricultural sector, and we--the--our American farmers
are growing more with less every year, and they need a
marketplace. Ethanol provides a wonderful marketplace for the
farmer. So to the extent that my members and ethanol producers
are successful, it is a result of being able to provide a
marketplace for the American farmer, while also providing a
high-energy, high-octane fuel.
Mr. Foster. Thank you. That was two points that I intended
to make myself. And, you know, I think the distortion of the
marketplace, you know, caused by the subsidies for fossil fuels
that are not present for biofuels are really, you know, a
painful distortion of the marketplace that's hurting rural
America, and so I should--I put myself on the record as a
strong supporter of ethanol.
I think a lot of the attacks against ethanol are based on
really obsolete research, that if you look at a state-of-the-
art ethanol plant, it has made impressive gains in its energy
efficiency and reuse of DDGs, all that sort of stuff. If you
actually scored the carbon footprint, for example, for a modern
ethanol plant, it is a big win for the environment.
And I think that since we generally do not look at the
social impact of CO2 emissions in general in most
economic analyses that it is appropriate to frankly distort our
economy in the opposite direction to make ethanol--you know,
make ethanol and biofuels generally, those with good carbon
footprints, preferred.
I'd also like to talk a little bit about, you know, this
question of whether you have--whether long-term federal
research--you know, at what point you make the transition from
that to just say, okay, let the market decide. And if you look
at some of the things that are going to be transformative in
biofuels for--in the next few years, there's no question that
high on that list is CRISPR, you know, the ability to do
genetic engineering of crops. This is going to be
transformative for everything you can name. It avoids a lot of
the discussions--you know, many people, you know, for good
reasons or bad, are very reticent about using genetically
modified food, but, you know, genetically--ethanol made with
genetically modified organisms has little science-based
objection to it.
And so this is something that was--went from being, you
know, deep speculative federally funded research to just
transformative to the medical industry and in the coming years
to biofuels in very short order, and so I think it's a mistake
to contemplate the sort of draconian budget cuts that we're
seeing to federally funded, you know, quote/unquote, you know,
curiosity-based research because of the speed at which that can
go from being a laboratory curiosity to something that our
future economy depends on.
And so I was wondering if any one of you wants to kind of--
to, you know, speak, for example, on, you know, the massive
budget cuts that we are seeing contemplated by the Trump
Administration in research that is long-term research but yet
targeted in the long term towards energy? Yes.
Dr. DeCicco. Yes, I do want to make clear, you know, when
I've been critical of the direction of some of the research
oriented to making biofuels, that that should not be taken to
think that I think that we should contract federal support for
research overall, so I'm really talking about a need to
reprioritize, perhaps focus more on fundamentals, focus more on
other areas. So, I really think that the country needs to
maintain a very high level and very robust level of federal
investment in fundamental science and R&D, all the different
areas of science to, you know, really help the country maintain
competitiveness and give industry the new knowledge and the new
insights that it can run with.
So, just--even though I'm--I feel like there's a need for
reprioritization and to question some assumptions around the
particular area of bioenergy, I think, you know, the country
definitely should maintain a high level of federal research
investment overall.
Mr. Foster. Thank you. And I believe my time is expired.
Chairman Biggs. Thank you.
The Chair recognizes the gentleman from Texas, Mr. Babin.
Mr. Babin. Thank you, Mr. Chairman. I appreciate it. Thank
you, witnesses.
Dr. DeCicco, your testimony stated that biofuels mandates
and subsidies have largely failed because they are designed to
promote fuels that are, ``fundamentally inferior to liquid
hydrocarbons,'' for most transportation needs. What scientific
breakthroughs would be necessary to change the potential of
biofuels to compete on a performance basis with hydrocarbons?
Dr. DeCicco. Well, there was a lot of increasing emphasis,
including direct federal subsidization of biofuel companies.
One of the notable bankruptcies was a company called KiOR that
received many tens of millions of dollars of federal grants. It
also had private investment. And it promised to make fuels that
were fully fungible, in other words, to take biomass, use a
process known as pyrolysis, and convert it into the kind of
molecules that we find in ordinary gasoline and diesel fuel.
Liquid hydrocarbons, when it comes to liquid fuel, they're
pretty much as close to perfect as you can get for fuel. They
don't really need to be improved upon. You can make octane--
octane itself is a hydrocarbon, okay, so you can make it, make
octane enhancing components of various kinds from many sources.
Biomass is a potential source, but that should be really
dictated by the economics.
Ethanol is an octane booster, there's no question about
that, but it's not the only way to boost oxygen. And fuels no
longer need oxygen in them. Ms. Skor mentioned, you know, the
oxygenate mandate, which happened before the RFS after the MTBE
phaseout. There was a time when it was thought that oxygen
would be beneficial in a fuel. That time has long since come
and gone with advances in reformulated gasoline, reformulated--
well, you never want oxygen in diesel anyway.
So, you know, the point here is that, again, to go back to
my earlier point, you know, the industry--the petroleum
industry knows how to make a very excellent fuels, and I don't
think there's anything to offer on the bio side to make a
better fuel. But the banner clean burning is just in my view--
I'm sorry, it's just rhetoric. There's no scientific basis
because you can burn gasoline now extremely cleanly.
Mr. Babin. Thank you very much.
And, Dr. Gilna, do you agree with what he said, and why or
why not? And what research are you conducting at BESC that
would help accomplish this goal?
Dr. Gilna. Well, if you will allow me, I'd like to give a
somewhat folksy answer to your question, and it's simply this.
I--my wife and I have a granddaughter. She's two years old,
Molly. And of this much I am certain, that whatever she uses
when she's my age to fuel her hover car will not be fossil
fuel-based unless at least it's synthetic. So I think from my
perspective certainly we need and have the opportunity here to
take a long view, and that is the role of government in basic
research here is we need to develop options. It may or may not
be biofuels. Right now, as far as I'm concerned personally, the
investment of my time and my skills is best pointed at that.
But I think as a country, we need to--we need a diversity of
options for the consumer for fuels. That's my folksy answer.
Mr. Babin. Okay. Well, let me ask you a little bit further,
then. If she's 2 and when she's your age--and you look like a
fairly young guy--are you saying that she will not be using
fossil fuels because there--that won't be available or because
there will be other developments besides biofuels, et cetera,
et cetera?
Dr. Gilna. My basic premise here is that, no matter where
they come from, our fossil fuel resources in this--on this
planet are by definition finite.
Mr. Babin. Now, we've had numerous, huge findings----
Dr. Gilna. We have.
Mr. Babin. --around the world some people say that will
last us for the next two centuries. Were you aware of that?
Dr. Gilna. Yes. Yes. But I actually--I still believe that
alternatives and choices are needed.
Mr. Babin. Yes, sir. Dr. DeCicco?
Dr. DeCicco. One of the things that people fail to
understand in the renewable debate is that the resource for
making biofuels is far more limited than the fossil resource
because that resource is high-quality arable land. Talk about
finite. That is finite. That's why, as the ethanol mandate or
RFS has ramped up, sod has been--had to been busted. We've had
to--had indirect effects moving into deforestation. Land is not
renewable. It's one of our most precious resources. And how we
use that land and what we use that for is absolutely critical,
and in my view the science, which I know my science dissents
from the many piles of studies that have been generated over
the years talking about the benefits of biofuels, the issue
here is the opportunity cost of land.
Natural arable land is by definition already removing
CO2 from the atmosphere. That's why it's productive.
If we were to have the kind of breakthroughs to, say, grow
algae in test tubes in the desert, well, that would be
potentially beneficial. And really fundamental work--not trying
to, you know, turn the algae into fuel but work on maybe
organisms that can do that better than current algae, that's--
falls within the very fundamental work that I think the
government should be investing in.
But I just want to point out that this claim of renewable
for biofuels is in many ways very misleading because land is a
precious resource, and we are far closer to running out of good
land with all the different needs for land than we are for
running out of the fossil resource underground.
Mr. Babin. Thank you.
Thank you, Mr. Chairman.
Chairman Biggs. Thank you.
The Chair recognizes the gentleman from Kansas, Mr.
Marshall.
Mr. Marshall. Thank you, Chairman.
I think I'll start with Ms. Skor. And I apologize for being
late. We were talking about foot-and-mouth disease over in ag
land and thought that was a pretty important topic, too.
I do live in the largest ag-producing district in the
country, and when ethanol was first becoming of age, one of the
biggest concerns was going to be the price of corn. We have
lots of feedlots. And so what has happened to the price of corn
since ethanol's came--come around and expanded and the price of
corn and the cost of food as well?
Ms. Skor. The price--first of all, one thing that the
ethanol marketplace has done is provide stability in corn
prices, which is extremely important for the corn farmer. I
will say the price of corn today is actually lower than it was
when the RFS was enacted and expanded. And so there is
stability, but you aren't seeing off-the-charts corn prices
right now.
With respect to food prices, if you open up Wall Street
Journal or Bloomberg or Financial Times, you'll read stories
about the fact that, as a country, we are experiencing an all-
time low continuous trend in terms of food prices. I know the
U.N. has an index looking at the price of cereal, and the price
of cereal is lower than it was in 2007 when we expanded the
renewable fuel standard. And so there is not a correlation in
terms of the price of food and expansion in terms of ethanol
production. The data clearly show there's not a correlation.
Mr. Marshall. Ms. Skor, I've visited with several ethanol
plants, and they typically offer a nickel or dime more a bushel
to the farmers. Is that a typical across-the-country situation
or I think it's unique in Kansas?
Ms. Skor. I think there are many ethanol plants that are
co-op farmer-owned, and so they're very sympathetic to the
farmer and they're comfortable--they would like to make a
profit, and they're comfortable with the farmer making a profit
as well. As an industry, we are public--we have publicly owned
plants and privately owned and large and small, so we really
reflect the country as a whole.
Mr. Marshall. Yes, it's been a great example of American
ingenuity in my district. I think we're up to ten ethanol
plants in the State now. Also, when the corn came along, I mean
like ethanol came along, the cattle feeders had lots of
concerns. And through modern technology, I have something
called dry distillers grain that not only is used in the local
feedlots but we're even able to export it. Could you comment a
little bit on dry distillers grain and some of the other
byproducts that we're seeing with our ethanol plants now?
Ms. Skor. Many people don't know that an ethanol plant is
actually a biorefinery, and we have many coproducts that we
produce. One of them is distillers grains. It's a high-protein
animal feed. It's actually the second-largest source of animal
feed within the country, and it is so economical and so healthy
for the animal that we do have a substantial export market for
the distillers grains as well.
Mr. Marshall. Who are we exporting it to? Is it China or
who gets most of it?
Ms. Skor. China has been a wonderful trading partner for
both distillers grains and ethanol. It's unfortunate this year
that they are erecting some protective tariffs in place, and so
that's a real challenge for the U.S. agricultural sector.
Mr. Marshall. I think I'll finish up with just my--you
know, national security of course is on everyone's mind, and
one of my goals I said on the campaign oftentimes was someday I
hope my grandson never has to use gasoline from imported oil.
And in fact we're saving, they say, maybe 2 billion barrels of
foreign oil each year from being imported. The biofuel is--the
first generation is corn ethanol and advanced biofuels. How do
the--how do these greenhouse emissions differ from the corn
ethanol versus advanced biofuels?
Ms. Skor. You nearly double the greenhouse gas reduction
when you go from first-generation cornstarch ethanol to second-
generation, and you're starting at a pretty healthy baseline
with a 43 percent reduction to begin with, so substantial
savings when you're talking about the environment.
Mr. Marshall. Okay. I yield back the remainder of my time.
Thank you.
Ms. Bonamici. We don't have any, Mr. Chairman, but if
you're willing to do a second round of questions, we'd be
interested.
Chairman Biggs. As much fun as this has been the first
round, and I do think it's been very interesting and very, very
informative, I think we'll pass on the second round of
questions. Thank you, though.
I thank the witnesses. It's been very interesting and
valuable testimony, very informative.
The record will remain open for two weeks for additional
comments and written questions from Members. I appreciate the
remarks regarding mandates, subsidies, innovations, basic
versus fundamental research, been very interesting.
This hearing is adjourned.
[Whereupon, at 11:53 a.m., the Subcommittees were
adjourned.]
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