Testimony of David K. Garman

before the

Subcommittee on Clean Air, Climate Change and Nuclear Safety

Committee on Environment and Public Works

United States Senate

March 20, 2003

Thank you for the opportunity to discuss the prospects for renewable fuels such as ethanol and biodiesel, as well as legislative proposals to promote the use of renewable fuels and additives.

Biofuels can play an important role in reducing our dependence on foreign oil while reducing emissions of criteria pollutants and carbon dioxide. The Administration supports legislation such as S. 385 that phases out the use of MTBE across the country in a reasonable timeframe and in the context of a national Renewable Fuels Standard (RFS) designed to achieve a five billion gallon annual average use target by the year 2012.

Getting to this level of production and beyond will be a challenge. According to the Energy Information Administration, the U.S. ethanol industry produced 2.13 billion gallons in 2002. According to the Renewable Fuels Association, currently 70 plants have a capacity of producing over 2.75 billion gallons per year, with an additional 500 million gallons of capacity under construction. During the last Congress, the Energy Information Administration prepared several analyses of an RFS and related provisions affecting the use of fuel additives at the request of the Senate.

The expanded capacity needed to reach the 5 billion gallon target will depend on starch, primarily from corn. There is an ongoing debate over just how much ethanol can be produced from feed grains. Secondary effects such as impacts on food and feed markets, by-product market saturation, the sustainability of production on marginal agricultural lands and environmental impacts from agricultural production in general become more acute as biofuels production solely from food grains increases substantially above five billion gallons per year.

Because we want renewables to play an even greater role in displacing some of the roughly 136 billion gallons of gasoline and 33 billion gallons of highway diesel we use each year, we must look beyond starch-based ethanol if we wish to have the impact we desire. S. 385 explicitly recognizes the need for new technologies through provisions that provide extra RFS credits for ethanol produced from cellulosic materials. The Department of Energy (DOE) has been focusing on a research and development (R&D) program to develop cellulosic-based ethanol that could be produced from many types of agricultural resources, residues, and energy crops. In addition, the aggressive fire-supression policies of the past have led to a dangerous buildup of fuels in many of the nation’s forests. The fuels reduction efforts will yield cellulosic materials in the form of brush and small diameter trees that could be converted into liquid fuels.

According to the Oak Ridge National Laboratory (ORNL), there are about 500-600 million tons of biomass residue and waste generated per year. Some of these residues need to remain in the fields to maintain soil nutrient levels, but much of the remainder can be used for ethanol production if affordable methods of collection, transportation, and conversion are developed.

Success in converting these cellulosic materials into ethanol will depend in part on the continued development of enzymes that break down the cellulosic materials into shorter chains of fermentable sugars. We have demonstrated the ability to do this… but at greater expense and difficulty compared to starch-based approaches. So our R&D program will work to continue to bring down the costs and complexity of cellulosic conversion.

But our approach to using the nation’s supply of biomass is not limited to liquid fuels such as ethanol and biodiesel. Biomass can be converted to a multitude of products for everyday use. In fact, there are very few products that are made today from a petroleum base that cannot also be produced from biomass. Paints, inks, adhesives, plastics, fibers and a variety of value-added products and chemicals currently produced from oil can be produced from biomass. In addition, biomass can also be used to produce heat and electricity.

So we are thinking beyond ethanol to the full range of power, products, and liquid fuels that can be produced from biomass. Achieving competitive production focused only on producing fuels or products or power is extremely difficult. However, if one pursues an integrated approach to the production of liquid fuels, power and products simultaneously in an integrated biorefinery, process synergies can improve the economics of production significantly.

Put another way, we are working toward the day when rural economies are revitalized through the domestic production of biomass feedstocks used to produce a wide variety of products, fuels and power in integrated biorefineries—displacing fuels and products we currently derive from imported petroleum.

Pursuant to the Biomass R&D Act of 2000, the Department of Energy has been working with the Department of Agriculture (USDA) to expand the economic prospects and environmental promise of biomass. I am privileged to serve as the Co-Chairman of the Biomass R&D Board with Agriculture Undersecretary Mark Rey. Other members of this Federal agency biomass coordination group include the Department of Interior, the National Science Foundation, the Environmental Protection Agency, the Office of Science and Technology Policy, and the Office of the Federal Environmental Executive.

The counterpart group created under the Act is the Biomass Research and Development Technical Advisory Committee. This Committee consists of 31 members from the biomass community that include high-level representatives of industry, academia the farming community, technology developers, states and environmental and conservation entities. Last year, after a collaborative public process, the Technical Advisory Committee developed a Roadmap for Biomass Technologies in the United States. That roadmap is focused, among other things, on achieving the challenging goal of deriving 20 percent of our transportation fuel from biobased sources by 2030.

We are also taking direction from the Food Security and Rural Investment Act of 2002, commonly referred to as the 2002 Farm Bill. Title IX of the Farm Bill includes sections addressing the Federal procurement of biobased products; biorefinery grants; biodiesel education; the continuation of the Bioenergy program to provide up to $150 million for farmers to produce ethanol and biodiesel; and further funding under the Biomass R&D Act of 2000.

This last provision under the Biomass R&D Act has led to a joint solicitation between USDA and DOE to competitively award funding for breakthrough technology development. This is an unprecedented level of cooperation between our two agencies. The Departments have issued this week a solicitation with the same scope of work with individual agency program selection priorities based on their respective departmental missions. One merit review committee will review all proposals, and source selection officers from each department will make selections from the same merit review evaluation. This has required a much higher level of interaction between the Departments, and a much closer working relationship. DOE also learned a great deal from last year’s competitive biomass solicitation, although it was not nearly as coordinated with USDA as this year’s solicitation. As a consequence of last year’s solicitation, we received almost 200 proposals for work to be 50 percent cost-shared with industry. After careful review, we are funding $75 million to six projects, mostly tied to the production of inexpensive sugars from cellulosic sources that can be converted to fuels and chemicals—work that is critical to the development of integrated biorefineries.

Prior to last year, DOE biomass programs had been organized in a fragmented way with separate offices for the production of biofuels, biopower, and bioproducts. I reorganized my office last year, placing this scattered work under a single biomass office. Research within the new office is now organized and focused on two technology platforms, with the intent of advancing the technology needed for integrated biorefineries. These platforms are known as the “Sugars Platform” and the “Syngas Platform.” The Sugars Platform follows the biochemical route and involves the breakdown of biomass by enzymes into component sugars, which are fermented to produce a potentially wide range of fuels and products. The Syngas or Synthesis Gas Platform involves gasifying biomass to simple chemical building blocks which can be transformed to fuels, products, power, and hydrogen. The linkage to hydrogen is one I would like to stress in particular.

As this Subcommittee is aware, we have made tremendous progress in reducing pollutant emissions from our cars and trucks as well as our stationary power sources, and we will continue to make incremental gains through regulatory approaches such as EPA’s Tier II tailpipe and fuel standards for passenger vehicles. But we ultimately want a transportation system that is free of dependence on foreign energy supplies and emissions-free. We also want to preserve the freedom of consumers to purchase the kind of vehicles they want to drive. That is the concept behind the FreedomCAR partnership and Hydrogen Fuel Initiative, which are designed to develop the technologies necessary for hydrogen fuel cell vehicles and the infrastructure to support them.

Secretary Abraham unveiled the FreedomCAR partnership in January 2002 at the North American Auto Show in Detroit with the major U.S. automakers by his side. And President Bush unveiled the Administration’s Hydrogen Fuel Initiative during his State of the Union address in January. As the President put it:

“With a new national commitment, our scientists and engineers will overcome obstacles to taking these cars from laboratory to showroom, so that the first car driven by a child born today could be powered by hydrogen and pollution free.”

Producing the hydrogen necessary for the President’s vision will require a variety of domestic feedstocks, and biomass can play a crucial role. We believe that the Nation’s energy sector may be able to produce, on an annual basis, as much as 40 million tons of hydrogen—enough to power 100 million fuel cell vehicles—from 500-600 million tons of biomass residues and waste.

In so doing, we will not only be producing a clean, domestic energy carrier to power emission free cars, we will be helping to reverse the economic fortunes of rural America. This is indeed an exciting prospect that I appreciate the opportunity to share with you this morning. With that, I will be pleased to answer any questions you may have today or in the future.