SUBJECT: INCREASE U.S. ENERGY INDEPENDENCE BY PROMOTING RENEWABLE FUELS
PARTICIPANTS: SENATOR TOM HARKIN (D-IA); SENATOR BARACK OBAMA (D-IL); SENATOR RICHARD LUGAR (D-IN); AND SENATOR BYRON DORGAN (D-ND)
SEN. HARKIN: Good morning, everyone. I'd like to thank Senators Lugar, Obama and Dorgan -- Byron Dorgan is speaking on the floor right now, but he'll join us shortly. We're getting together this morning to talk about America's energy future and about our bill, the Biofuels Security Act of 2007.
In his State of the Union remarks on Tuesday night, President Bush called for aggressively ramping up the production and use of renewable fuels, and nobody applauded louder than I, unless it was Senator Lugar, perhaps, or Senator Obama, I don't know. On the first day of this Congress, I joined with these senators to introduce the Biofuels Security Act, which would dramatically increase the production, distribution and use of renewable fuels. Indeed, the president's goals Tuesday evening clearly echo the goals of our bill.
The president said he'll ask Congress to require oil companies to blend 35 billion gallons of renewable and alternative fuels by 2017. This year, our nation's ethanol industry will produce about roughly 5 billion gallons. If we reach the president's goal entirely with renewable fuels, that would require a seven-fold increase in just 10 years. This is a terrific goal. It's an achievable goal, but only if we make major new commitments of federal resources. For starters, we know we won't reach our objective with corn-based ethanol alone. We need to rapidly develop technology to produce cellulose-based ethanol from corn stover, switchgrass, wood chips, and other forms of biomass. And clearly, the leader on this, who, in an article I think it was in Foreign Affairs Quarterly a long time ago, said this is the way we got to go, and that's Senator Dick Lugar of Indiana. He has been our leader on this issue.
But it's going to take dramatic new investments in R&D and is going to take the right incentives.
At the same time, we need to promote a distribution network to get these large volumes of biofuels to consumers. And we need to convert the nation's vehicle fleet to flex-fuel vehicles capable of using blends that are higher than the 10 percent blend that's readily available right now.
Our Biofuel Security Act would accomplish all of these things.
So yes, I liked what the president said about biofuels on Tuesday evening, but now it's time to show us the money. In the president's budget submission next week, we need to see a level of funding that matches these ambitious goals.
Our farm bill this year, on which Senator Lugar and I served, is the appropriate vehicle to address the supply side of this effort. We need the OMB to recognize this and to have a budget that will permit us to move more aggressively.
Finally, according to a new nationwide poll released today by the Renewable Fuels Association, 85 percent of American voters think the government should be involved in the development of alternative fuels. In addition, 88 percent of American voters believe that the development of the domestic ethanol industry helps create jobs and would be beneficial to the overall economy.
I would just draw your attention to the lead editorial in The New York Times this morning, "Energy Rhetoric, and Reality," which says -- which raises the next question about the plan: Where is the money coming from?
And I would also refer you to an editorial that appeared in The Des Moines Register by an editorial writer, Richard Doak, talking about a "New era of energy crops demands new farm policy." That's what we're going to be about in our farm bill. Our farm bill will be pulled through or pushed through by energy, and we intend to be aggressive in our bill to help meet the goals set forth by President Bush in his State of the Union message.
And with that, I will turn to the person who first alerted us to the use of cellulosic ethanol, my good friend Senator Lugar of Indiana.
SEN. LUGAR: Thank you, Tom.
SEN. HARKIN: Thank you, Dick.
SEN. LUGAR: It's a privilege to be with Chairman Harkin this morning, with Senator Obama, Senator Dorgan, and simply in a practical way to hit this bill as senators do, on the road.
Now physically, this summer I went to every site in Indiana that either has the construction of an ethanol plant or contemplates doing that, likewise biodiesel situations, getting commitments of people to produce more.
That's of the essence.
Tom Harkin is right that we can't make these goals on corn alone, and cellulosic ethanol has been talked about for a long time. But the research monies for this have been deficient; likewise, the political will. We've gone up and down the Hill many times. The Department of Energy now has some money we appropriated, yet no experiments.
So in practical ways, we must pass the legislation. But then the senators -- you have to ride herd on the administration and likewise on our constituents to make this happen.
The second thing -- even after we have the ethanol from either corn or the biodiesel or what have you, we have to have cars that can use it. These are so-called flexible fuel cars. There are not many of them in America, less than 10 million by most estimates, less than 10 percent of our entire fleet.
So the skeptics will say practically you can produce all of this, and people become enthusiastic about that, but who is going to use it? Good point. And therefore, we mandate that by a certain date, all the cars of America be flexible fuel. There is no excuse why our cars should not be flexible fuel. This is a national security emergency quite apart from an environmental emergency.
Now, finally, we take a step which some may feel is our basis, but I think it's practical -- by a certain date we require that half of the filling stations, half of the pumps in America have E85 capability, whatever may be the state of the art at that point in terms of using something beyond the 10 percent blend which is there now.
Now, I have added in one other piece of legislation -- and I think my colleagues here have been a part of this -- the thought that where you have to offer some guarantee that the price of oil will not dip suddenly and undercut all the investments. There is a lot of talk among economists as to what that point is -- $45 to $50 a barrel or what have you -- but nevertheless, I've offered at least a suggestion which can certainly be amendable as to how certain subsidies kick in if the price of oil goes under that and certain subsidies go out if the price of oil goes up and stays up, as many observers believe it will on most occasions.
In essence, we cannot be undercut by the petroleum industry not just here, but worldwide, because 80 percent of oil reserves are now controlled by governments, not by oil companies, not by private people following the market.
And that's why this is a strategic national defense security issue, in addition to being one of greater convenience for our public. So I support the legislation, and I'm pleased the president has endorsed the major points of it.
But I agree with Chairman Harkin, the Ag Committee and elsewhere. We need to act upon this so that there is, in fact, the authorization and the appropriations of money, and then, hopefully the will of the bureaucrats to have to deal with this thing as well as people on the road to act.
SEN. HARKIN: Thank you very much, Senator.
SEN. OBAMA: Well, I am thrilled to be standing here with some of the most important leaders on this issue. They have consistently pointed out that we have the capacity to create more of our own energy here in the United States if we just have the will to do it. You know, there are few challenges that are as great as this country's dependence on foreign oil in terms of our economy, our national security and our environment. And fortunately, we can now say that there are few issues where there should be as much bipartisan support as the desire to replace fuels with alternative biofuels like ethanol.
You know, Senators Harkin, Lugar and I have introduced some innovative legislation that I think would represent the most significant steps ever taken by this Congress to increase ethanol production availability in this country. Now that the president has voiced support for these goals in broad terms in his State of the Union address, then it appears there's no reason for inaction.
As has already been mentioned, our proposal would make major headway towards building an entire ethanol infrastructure in this country. There has been terrific progress made on ethanol production, but part of what we have to do is make sure that ethanol distribution and consumption is in place, and that's where the need to make sure that pumps have E85 fuel in them all across America. And making sure that cars can accommodate these new blends are absolutely vital.
If consumers have cars that they know will take E85, and if they know that when they go to the gas station they can fill up that car with E85, I guarantee you that they will want to use E85. But, you know, that's going to require a little bit of a prod, a catalyst, by the federal government, and that's the intention of this legislation.
It's an exciting moment. For so long, we've simply talked about our addiction to oil and America's need for energy independence. Now we have the support and the chance to actually do something about it. I'm proud that we've been able to put together this bipartisan and comprehensive piece of legislation, and I think this offers us enormous opportunity over the next several months to really make a dent in something that is going to have a big determination on our children's future and our grandchildren's future.
SEN. HARKIN: Thank you very much, Barack.
Okay, Senator Dorgan?
SEN. DORGAN: Thank you, Tom.
Well, the root of all of this is that we have a dangerous dependency on oil from troubled parts of the world -- Saudi oil, Kuwaiti oil, and more. And the president has said -- and we believe, and have believed for a long while -- that we need to reduce that dependency. And we should use renewable energy, and especially support ethanol and the biofuels in a very significant way.
The question has never been, is there a way? The question has been, is there a will? And clearly, there is now a will, with the president, at the State of the Union address, pointing out a very aggressive strategy. And we had pointed out previously a very aggressive strategy. The four of us have co-sponsored a significant piece of legislation on this issue.
I authored the Renewable Fuels Standard, as a member of the Energy Committee in the conference two years ago, of 7.5 billion gallons a year. We are now going to be at 10 billion gallons a year by 2010. We use 140 billion gallons of fuel in this country a year. If we get to 35 or 40 or 60 billion gallons of ethanol, which I support, we're going to have to have blends much, much higher than 10 percent. We're going to have to have 20, 30, 40, 50 percent blends through blend pumps at filling stations. We're going to have to use E85 in a significant way in order to justify that production. But we should and we must, in my judgment.
In North Dakota, we have 16,000 flex-fuel vehicles and 24 pumps in which you can get E85, in a state 10 times the size of Massachusetts. And that's true almost over the country.
If we don't find a way to distribute this, have more flex-fuel cars, it won't work. But we must make it work, and we can make it work.
Let me make the point that both at the White House and in the Congress, there is a substantial amount of wind energy, and that has always been so. (Laughter.) It is much easier to say than to do with respect to aggressive public policy. All of us believe that the president's call and our previous call for a dramatic increase in the biofuels and ethanol is the right road for this country, and we intend to make it happen.
SEN. HARKIN: Thanks. Thanks, Senator Dorgan.
Any questions? Mike?
Q Senator, what role, if any, Detroit had in the drafting, if you will, of this bill; what input, what consultations did you have about that type of fleet of automobiles you need?
SEN. HARKIN: Detroit?
SEN. : The automakers.
SEN. HARKIN: Well, I -- yeah, I don't know. We've talked with them in the past.
Q Any opposition or cooperation --
SEN. HARKIN: I -- no. In fact, the last time that a number of us met with the head of Ford, they were -- William Ford -- they were much in favor of moving ahead aggressively on building flex-fuel cars.
The point is it costs somewhere between $20 and $30, if I'm not mistaken, at the beginning, to design and build this into an automobile. It takes about $125, I think, to retrofit.
SEN. : Right.
SEN. HARKIN: So it's much cheaper to put it in at the beginning. And they're already doing it. They've already built flex-fuel cars, so that's not a real problem. Our bill, of course, would mandate that every year they increase the number of flex-fuel cars so that we would have at least 50 percent in 10 years -- every -- 50 percent of all the cars would be flex-fuel. We also feel that once Detroit starts making half of the cars flex-fuel, they'll make them all flex-fuel.
SEN. OBAMA: Just one follow-up on that. Just keep in mind that Brazil now has about 70 percent of its cars on the road -- about 70 percent of the cars on Brazil's roads are flexible fuel vehicles. A lot of those are made by American --
SEN. HARKIN: Ford, GM.
SEN. OBAMA: -- automakers, Ford and GM. So, you know, there's no reason why carmakers should not be able to respond if there's going to be a market for it.
But this is where the issue of having the pumps is so vital. You know, my campaign leases a flex-fuel vehicle. But I'll be honest with you, a lot of times you're in -- 30 miles from the closest E85 pump, that it's going to cost you more to drive there and fill up than just filling up with regular gasoline.
So that's a critical component.
SEN. LUGAR: I'll maybe just supplement that just a second, because we're trying to forge a broad coalition among all the players. The automobile companies are very important in this. And in fairness, as Tom has said, Bill Ford has indicated 250,000 flex-fuel in last year's makes, and the other companies -- GM, DaimlerChrysler -- pledge to do at least 250,000. And we welcome that. And whenever somebody does that, we write congratulatory letters. We're in touch with the presidents of these corporations, encouraging them.
What I'm saying is, however, it's obvious that they'll have to do a great deal more. They understand the problem or they would not be having full-page ads about 250,000. And so this is a big part of it. Now, our bill, however, mandates that by a certain date, they do it. So we really all want to be on the same page if we possibly can.
Q (Off mike) -- your personal vehicles have any kind of alternative or flex-fuel --
SEN. LUGAR: I have a Toyota Prius, so it doesn't use flex-fuels. Another item, however, (that I would commend ?), and that is the hybrid technology.
SEN. HARKIN: But we really have to break this chicken-and-egg thing. Senator Lugar and I wrote a letter last year to the heads of all the automobile companies asking them about flex-fuel vehicles. We got a very nice letter back from the heads, every one of them, saying, "Yes, we understand this is the way to go, but you understand that there's not the pumps out there for them." So then Senator Lugar and I wrote a letter, then, to the heads of all the oil companies asking them why they don't have more pumps that have E85. We got a very nice letter back from each of them saying, "Yes, we think that ethanol's going to play an important part in the future, but there aren't any cars out there that can use E85." So you see what I'm saying. We've got to break this. And that's what our bill is intended to do.
Q (Off mike) -- E85 highway -- (off mike) -- states. So I'm just asking do any of you have in your personal vehicles --
SEN. OBAMA: As I indicated, the --
Q Your campaign.
SEN. OBAMA: Well, no, it's not only my campaign, it's the car that I drive around with for the most -- I only have one personal car. That's Michelle's car. And the car that we drive most of the time that I'm in is a flexible-fuel vehicle.
Q (Off mike.)
SEN. OBAMA: It's an old one, so -- you know.
SEN. HARKIN: And we just -- and our office in Iowa is just buying -- well, no, we don't buy it, we lease a small minivan for our office as a mobile office, and we were able to get a flex-fuel one. So we've just done that in Iowa.
SEN. DORGAN: And let me just say mine is the same, and I was proud to find an E85 pump, to pull up to the pump and say, "Fill it up with corn," only to learn it was self-service. (Laughter.) But I still got it in the tank, E85.
Q Senator Lugar, I'm (sure there's a solution ?) on cellulosic ethanol. What can you do, what will you try to do to protect Indiana farmers from -- and particularly livestock producers from soaring grain costs, and also to deal with the conservation issues that come along with using everything available once you -- (off mike).
SEN. LUGAR: Well, we have a long way to go before these crises that are predicted daily in both the ag press as well as the general press come about.
From the standpoint of Indiana farmers, most of the livestock people are also corn farmers. That's been my family tradition. And we're going to make more money on the corn for the moment, rather than livestock, but these things go in cycles.
But I take your point. The distillers' dry grain, the DDG, the protein that comes from the process, is great feed not only for livestock but for chickens, for others that use it. And we just have not had a distribution system that got DDG in. But people putting up the ethanol plant in Marion, Indiana, do. They have carloads of it that's going to come out of there at the same time the ethanol does, and it'll make a difference in the economies of feeding livestock, which is an important consideration.
Ultimately, we can only produce so much corn, so many soybeans in America. That's why the cellulosic thing is critical.
But it's been critical.
Our Ag Committee has had hearings on this for the last eight years, and yet the Ag budget is cut routinely in terms of basic research. Now that has to stop, and this year thank goodness it will stop if the president supports what he has indicated he's going to in his State of the Union.
Q Well, how much money is that? He said about $1.6 billion in 10 years, about $160 million a year. You say about $200 million. This morning, Senator Harkin said even $200 million -- (off mike) -- in, let's say, five years.
SEN. LUGAR: Well, we'll have to confer and really see -- even if we have the money -- who is prepared to do the research; who is physically up and able. And finally -- who -- there are some plans right now that are being put up for cellulosic with small amounts of money raised on Wall Street, while people are still temporizing at the Department of Energy. The fact is that the time has come, and we'll have to ride herd in our oversight capacity both to get the money, to make sure somebody uses it.
SEN. DORGAN: Let me just make a point. I'm going to be chairing the Subcommittee on Energy and Water in the Appropriations Committee, and appropriation for this research in renewable energy is a high priority. And I'll make that a high priority as I chair that subcommittee's decisions.
I mean, we can't just talk about this. We have to do it, and part of doing it is, as Senator Lugar suggests, being willing to invest in the base research that is important here.
Q Senator Harkin, have you thought if you'd like to incorporate this -- if you're going to incorporate these measures in the farm bill or you see this as stand-alone legislation?
SEN. HARKIN: Well, some of what's in our Biofuels Security Act is outside our jurisdiction, obviously. To the extent that we have jurisdiction, of course we're going to move ahead on it, and we're going to look for ways that we can put in incentives for facilities, incentives for farmers to start growing biomass crops, like switchgrass. We need some transitions for that to provide incentives for farmers to do that.
But as Senator Lugar said, we need to really put money into research and development. We need research on better enzymes, for example. We need research on how you grow it, how you cut it, how you store it, how you transport it. There's a lot of things that need to be put into that to move us ahead on that pathway.
Q And you can do that to the farm bill?
SEN. HARKIN: Well, I'd like to say sure we can.
STAFF: All right, last question.
Q Sir, is there any concern that the president's speech has broadened --
Q (Off mike) -- are you considering -- (inaudible) -- to a low carbon fuel standard in order to limit the greenhouse gases in terms of ethanol production and ethanol fuel?
SEN. HARKIN: I'm sorry, say that again.
Q (Inaudible) -- considering -- (inaudible) -- setting a low carbon fuel standard, as well as in renewable fuel, in order to limit the amount of greenhouse gases -- (inaudible) -- by ethanol --
SEN. HARKIN: That's for the energy committee. That's not on my jurisdiction, on my watch. But let me just put it this way, there's a lot less carbon dioxide released in the atmosphere from the manufacturer of ethanol than there is, say, for fuel from coal. Plus the fact that, as you know, even though CO2 is put in the atmosphere when you burn ethanol, when you grow the crop that takes it out. So for every -- I would say this and scientists back this up -- for every gallon of ethanol basically that you're burning, the CO2 that you put in is taken out. So there's no net gain in CO2 from ethanol.
Q Sir, is there any concern that the president seems to have broadened the definition for alternative fuels which include synfuels as part of the 35 billion gallons?
SEN. LUGAR: I don't see a concern. But I think the last question raised is an important one. We're dealing with the climate change issue, too. Now, we haven't touched upon that, but it is right there as a very big objective. We're contending, correctly, that the synfuels, plus ethanol, plus biodiesel reduce carbon, but they don't do away with it. Critics would say well, there's a lot of carbon still left in all this. This is not wind energy, for example, and something that has greater purity. Or is not a plug-in hybrid, which may be the transportation of the future.
And so we can always let the very best be the enemy of the better. As practical people, we believe that there are some steps here now that in fact will cut carbon, that will help. But they are not cure-alls, and we'll have to examine critically what happens in these procedures and how they can be perfected so that the climate change situation improves even as we're doing better on transportation.
SEN. DORGAN: Let me make a point on that. I serve on the Energy Committee. And Senator Bingaman and I were up here a couple of days ago. I think this is going to be a very important partnership with the Agriculture Committee.
I know Senator Bingaman and Senator Harkin have talked and, you know, there's portions of this that spill over. But we have, on the Energy Committee, the same determination that Senator Harkin, Senator Lugar have on the Agriculture Committee to move in this direction, do so aggressively, and do so while we minimize all of the other issues that we know that are challenges, with respect to the production of this quantity of ethanol.
Q So synfuels could be a part of an RFS, or an extended RFS?
SEN. HARKIN: In terms of synfuels, again, you've got the problem, I think, of a lot of carbon sequestration that's going to have to take place. I don't know how you handle that. I'm not proficient in that at all. I don't know at all on that -- on the technology of that. But everything I've read indicates that synfuels, that the production of it will not really be economically competitive, for example, with biomass fuels, simply because you're going to have to do a lot of carbon storage some way, and sequestration, and that could be very expensive.
STAFF: All right, thanks everybody.