The Path Forward, 20th Annual American Coalition for Ethanol Conference and Trade Show
The Path Forward
20th Annual American Coalition for Ethanol Conference and Trade Show
SENATOR THUNE Remarks AS PREPARED: Thank you for the kind introduction and thank you to the American Coalition for Ethanol for hosting this important event. I'd also like to thank all those in attendance today. The size of this crowd is a reflection of renewable energy's important contribution to our nation and the growing coalition of businesses and individuals committed to creating a better, more energy independent America.
For past 20 years, the American Coalition for Ethanol has lead the ethanol industry from relative infancy to a strong and growing industry that is creating jobs in rural America and strengthening our energy independence. The leadership and members of the American Coalition for Ethanol are a strong voice for America's domestic renewable energy supply, and should be congratulated on 20 years of successfully driving change in the ethanol industry. Together, we will make the next 20 years even more successful.
Today's event is a great opportunity to come together and discuss the status of the renewable fuels industry. It is important to exchange industry knowledge and hear from industry experts on today's technology that will lead to tomorrow's biofuel production.
Today's conference is also an important opportunity to examine the opportunities and challenges facing a young, but growing industry. In 2001, ethanol production totaled approximately 1.8 billion gallons of ethanol. At the end of last year, this number was approximately 5.4 billion gallons of clean renewable fuel. With more plants coming on line, nationwide ethanol production will soon double.
In the coming years, as ethanol contributes an ever greater portion of our fuel supply, ethanol will transition from being a fuel additive to a petroleum replacement. Corn-based ethanol will also be supplemented by future supplies of commercial scale cellulosic ethanol production. The industry will grow through blend walls and infrastructure constraints. Innovation will lead to breakthroughs in enzyme production lowering the costs and increasing the efficiency of ethanol production.
Additionally, ethanol production will move from regional production markets to nationwide production while ethanol companies begin to compete with the largest energy companies in the world.
The question many industry leaders and policymakers must ask is, "How do we get from here to there?"
Certainly, the ingenuity and dedication of the leaders in this room are keys to ethanol's success. As I work with my colleagues to promote ethanol in the United States Senate, I have met with numerous industry pioneers and market leaders, several of whom are here today. Those present today will continue to drive innovation and will continue to move the ethanol industry forward.
Congress also has an important role to play as ethanol transitions through a critical period in the industry's history. We need effective public policy that keeps the ethanol industry growing in a sustainable and productive manner. A higher Renewable Fuels Standard, greater access to renewable fuel pumps, more research and development of cellulosic ethanol, and, perhaps most importantly, the approval of intermediate ethanol blends are critical to the growth and sustainability of the ethanol industry.
The ethanol industry has two historic opportunities for legislative victories in the current Congress: a comprehensive renewable energy bill and the 2007 Farm Bill.
In June, the United States Senate passed its version of the CLEAN Energy Act of 2007. This bill included important initiatives for renewable energy production and historic levels of ethanol production. This bill included loan guarantees and grants for cellulosic ethanol plants, studies on higher blends of ethanol up to E40, and more research and development, which will benefit the industry for generations to come.
During debate of the CLEAN Energy Act, several anti-ethanol amendments were introduced that would have derailed domestic ethanol production. Although most of the anti-ethanol amendments were withdrawn, two in particular were debated and voted upon on the Senate floor.
The first amendment dealt with removing the existing tariff on ethanol imports. As many in this room understand, the ethanol tariff offsets heavy foreign subsidies on ethanol imports. Countries like Brazil have been subsidizing their ethanol industry for decades and are hungry to dump their ethanol into the United States duty-free.
Prematurely ending the ethanol import tariff would not only harm our growing domestic ethanol industry, but would also harm American taxpayers. Seeing that the current blenders tax credit doesn't distinguish between domestic or foreign-produced ethanol - lifting the ethanol import tariff means that foreign ethanol would be subsidized hard earned American tax dollars. We should not substitute our dependence on foreign sources of oil for dependence on foreign sources of ethanol.
The second amendment was an automatic waiver of the Renewable Fuels Standard if the corn stocks-to-use ratio fell below 10 percent. This ratio is a false indicator of corn demand and expected price. Weather conditions, export demand, feed production, and other market forces all play a role in determining the corn-stocks-to-use ratio. Such a waiver would suffocate investment in new ethanol plants as investors would be forced to predict future corn-stocks-to-use ratios.
Fortunately, the majority of U.S. Senators saw these amendments as misguided attempts to derail domestic biofuel production, and these amendments were soundly defeated on the Senate floor - the tariff amendment was defeated 56 to 36 and the corn-stocks-to-use amendment was defeated 63 to 31. However, these amendments are an important reminder that Congress cannot rest on our laurels following the 2005 RFS and must continue to work hard on behalf of the American farmer, our ethanol producers, and consumers across the country who are tired of being held hostage by high gas prices and foreign oil dependency.
I am proud to have actively worked to defeat both anti-ethanol amendments during the recent Senate debate on the energy bill, and I am also pleased that several key ethanol provisions were included in the Senate-passed bill.
In particular, the Senate energy bill included my bi-partisan legislation to boost the number of alternative fuel refueling pumps. This provision would give station owners grants for 30 percent (not exceeding $30,000) to offset the costs of installing E85 refueling pumps. Roughly one percent of our nation's gas stations offer E85, and with over 6 million flexible fuel vehicles on the road today, consumers must have access to E85 in every part of our country.
Two weeks ago, Assistant Secretary for Energy Efficiency and Renewable Energy, Andrew Karsner, testified before Congress that only 440 E85 pumps were installed nationwide in the past 12 months. At this pace, he noted that: "it will take 110 years to reach critical mass in the E85 infrastructure." Clearly, more must be done to improve access to E85 at the retail level, and I believe my legislation to provide grants for E85 pumps is a step in the right direction. When Congress reconvenes this fall, I look forward to working to ensure this provision is signed into law.
The Senate-passed CLEAN Energy Act would also increase the Renewable Fuels Standard to 36 billion gallons in 2022. During the last Congress, I was proud to have played a role in passing the first ever Renewable Fuels Standard of 7.5 billion gallons by 2012 as part of the Energy Policy Act of 2005. After four long years of delay, members from both sides of the aisle came together and declared that ethanol will be part of our nation's energy future.
Since the passage of the Energy Policy Act of 2005 - which the President signed into law two years ago this week, the American farmer and the ethanol industry have responded to this call by ramping up production in a historic fashion. We are now on pace to exceed the current Renewable Fuels Standard over three years ahead of schedule. Mandating more biofuels in our nation's fuel supply is a critical step toward energy independence
Unfortunately, the Democratic leadership in the House of Representatives does not believe the Renewable Fuels Standard should be increased. Just last Saturday, as the House worked to finish last minute legislation before the August recess, the House passed its energy bill -- which excluded an increase to the Renewable Fuels Standard.
I am discouraged that the House left out this important provision. Clean renewable fuel is not a partisan issue, it is an American issue, and I look forward to returning to Washington and working with my colleagues in Congress to increase the Renewable Fuels Standard in the final version of the energy bill.
In addition to the RFS, Congress and the Administration must work together with the ethanol and automotive industries to approve intermediate blends of ethanol blended gasoline for non-flex fuel vehicles. Many industry leaders, including some of those present today, have concern about the short-term market for ethanol as we approach what some call an "E10 wall."
The E10 wall is the point at which the market for E10 gasoline is saturated and ethanol production continues to grow. While some in the industry disagree on when we will hit the E10 wall, it's widely accepted that we must act to ensure that demand for ethanol keeps pace with industry expansion. If we fail to act, excess production capacity could have harmful effects on the overall ethanol industry.
Fortunately, the short-term answer to this solution is simple: the Environmental Protection Agency must approve higher blends of ethanol in a safe and timely manner.
Sometime this summer, the State of Minnesota, under the strong leadership of Governor Tim Pawlenty, is expected to submit a waiver request to the Environmental Protection Agency, which would allow for the use of E20 in non-flex fuel vehicles. The EPA has 180 days to accept or deny this application under the Clean Air Act. Earlier this year, I wrote to the EPA urging them to prepare for this waiver in order to ensure its timely approval.
This waiver will be based on the 14-month study currently underway at the University of Minnesota on the drivability and engine compatibility of E20. This morning, I had the opportunity to visit with some of the members of the University of Minnesota faculty who are leading this important study, some of whom you heard from earlier this morning. I am encouraged by their dedication and leadership on this issue. Together, we must break through the E10 blend wall, and I will continue to pursue this issue until higher blends are approved in a timely manner.
EPA approval of intermediate ethanol blends would complement their recent decision to reclassify fuel ethanol plants under the Clean Air Act (Rule was finalized July 2, 2007). Prior to this reclassification, fuel ethanol plants were classified under an arbitrary 100-ton per year major source permitting threshold.
I have been working for years with the EPA on this important rulemaking, which will result in greater, more efficient ethanol production. I am pleased that the EPA acted on this issue, and I hope the EPA will once again support reasonable measures to promote homegrown energy by approving intermediate blends of ethanol for non-flex fuel vehicles.
Beyond the blend wall, widespread use of E85 and intermediate blends of ethanol depend on the commercial scale production of cellulosic ethanol. According to the U.S. Department of Agriculture, cellulosic ethanol must be commercially viable as corn-based ethanol production approaches 15 billion gallons per year. The 2007 Farm Bill is an ideal opportunity to lay the groundwork for increased cellulosic biomass production within our agriculture community.
As a member of the Senate Agriculture Committee, I have proposed a Biofuels Innovation Program, which will provide incentives for farmers to grow energy dedicated crops while cellulosic ethanol biorefineries are being constructed.
Under this program, communities, ethanol companies, and producer groups can apply as single entity for inclusion in this program. If the U.S. Department of Agriculture determines that a cellulosic biorefinery is feasible in that particular area, participating producers would receive a cost share for planting energy dedicated crops and a per-acre rental payment while the crops are being established and the biorefinery is being constructed.
Producers who deliver energy dedicated crops or crop residues to the gate of a biorefinery are also eligible for a dollar-for-dollar match up to $45 per ton for the harvest, storage, and transportation of cellulosic biomass. This is a critical component to an economical cellulosic ethanol supply chain, and the 2007 Farm Bill is an ideal vehicle to move this legislation.
I am pleased that House Agriculture Committee Chairman Collin Peterson included a similar provision in the House-passed farm bill. His leadership on this issue is strong and his Biomass Energy Reserve Program is forward looking and critical to the success of cellulosic ethanol. I look forward to working with my colleagues on the Senate Agriculture Committee to ensure such a provision is included in the Senate Farm Bill.
Last week, a barrel of crude oil hit another record high at over $78 per barrel. I believe that with each increase, the American consumer pays a higher terrorism tax. The terrorism tax is the excessive profits collected by countries like Venezuela and others in the Middle East that want to harm the United States.
It is up to the ethanol industry leaders present today, state legislators across the country, and Congressional leaders in Washington D.C. to replace the terrorism tax with positive energy production here in the United States. Increased ethanol production is the key to reversing our dangerous dependence on foreign oil and thus reducing the terrorism tax on U.S. consumers.
As the ethanol industry expands into new markets, attacks from ethanol's opponents will ultimately follow. World hunger groups and extreme environmental groups are now singing the siren song of doomsday consequences of increased ethanol production. Leftist foreign leaders are criticizing the U.S. for taking proactive measures to promote our domestic renewable resources. Big Oil is stifling access to ethanol through a variety of tactics that restrict access to E85 at franchise stations.
It is easy to get caught up in these arguments and to lose sight of the admirable goal of energy security. However, we must remind ourselves that collectively, we are striving for something far greater. No one ever said that transforming the primary energy source for the world's largest economy would be easy, but America's farmers and ethanol producers are meeting this challenge. The industry continues to grow, more plants are being constructed, technology is advancing, and legislative victories are being won in Washington, DC.
My message for your today is simple. Keep moving forward. Keep investing in new technology and new plants. Keep creating jobs in rural America. Keep America on a path to energy independence. And Congress will continue to support ethanol as the cornerstone of our nation's energy policy.
Thank you again for the opportunity to address you today. I look forward to working with you as we continue to make our country stronger and more energy independent.
Source