STATEMENT OF

JOSEPH J. ROMM
ACTING ASSISTANT SECRETARY
OFFICE OF ENERGY EFFICIENCY AND RENEWABLE ENERGY
U. S. DEPARTMENT OF ENERGY

BEFORE THE

COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY
UNITED STATES SENATE

JULY 16, 1997

Mr. Chairman and members of the Committee, my name is Joseph Romm, Acting Assistant Secretary for the United States Department of Energy, Office of Energy Efficiency and Renewable Energy. It is my pleasure to return to the Committee today to discuss the the Department of Energy's role in agriculture research and development. We estimate that DOE invests approximately $90 million annually in agriculturally-related research and development, the majority of which is found in the Office of Energy Efficiency and Renewable Energy (EERE) which I represent.

Last year in my testimony before you, I outlined the critical role that agriculture could play in increasing our Nation's energy security, and stemming the flow of U. S. dollars for oil imports. My message then was that prudent energy-related R&D investments in our own agricultural fields could substantially reduce the investments we are now forced to make in other's oil fields. These are still compelling reasons to support energy related agricultural R&D investments. But over the next several years growing crops to produce energy will become even more important to the environmental and economic health of Americans.

In the beginning of this century, farmers grew energy along with food crops. They grew feed for the animals which pulled their plows and feedstocks which were used to make industrial chemicals. Then fossil fuels emerged and farmers lost valuable markets to the petroleum industry. Ultimately, as U. S. reserves diminished, and demand increased, America lost the economic benefit of renewable home-grown products to imported oil. Now only a few million acres of farmland are devoted to growing energy, primarily liquid fuels, from corn and oilseeds. But the land potentially available for growing energy crops is huge. These crops include short rotation woody crops such as hybrid willows or herbaceous energy crops such as switchgrass. In 1992, the U.S. Environmental Protection Agency estimated that between marginal land and surplus prime cropland, 78-230 million acres was available for wood energy crop production.

First I would like to discuss our work on biomass power - using energy crops to make electricity. The mission of the DOE Biomass Power Program is to expand domestic and global markets for renewable electricity from sustainable biomass resources by fostering partnerships with U.S. industry, agriculture, and forestry. In this effort, the program is encouraging the highest standards of stewardship of our air, water, and soil resources, with improved biological diversity, while providing strong economic and environmental benefits to society.

Biomass power already accounts for about 7000 MW of electric capacity in the United States employing more than 66,000 people. Most of this biomass is supplied as byproducts from the forestry and pulp and paper industry. There are already a few local markets for energy crops. Pulp and paper companies buy wood for energy as well as fiber and hundreds of small power plants in this country are equipped to run on wood or agricultural wastes. We are working toward a future with sustainable farms and forests integrated with clean, efficient, cost-competitive biomass power production from dedicated feedstocks contributing to power supplies in domestic and international markets. Collaborative partnerships among DOE, USDA, and the private sector will help commercialize a range of biomass power systems, substantially revitalizing rural economies through the integrated development of biomass power and coproducts such a feed, fiber or fuel. Our goal is to have an industry employing almost 300,000 persons and generating about six billion dollars in annual income by the year 2010. Here is how we plan to accomplish our goals.

Biomass Power for Rural Development. The Biomass Power Program of DOE and the USDA issued in December 1994 a competitive procurement to provide 50/50 cost sharing for projects that demonstrate and deploy biomass power systems which use fuels grown on the farm. Awards were made to four teams and contracts were signed in 1996.

The first award was made to the Salix Consortium led by Niagara Mohawk Power Corporation in New York. New York farmers will plant 1000 acres of highly productive, fast growing willow crops (salix) on underutilized New York farmland for cofiring with coal in utility boilers. The benefits include reduction in sulfur dioxide, sequestration of carbon, and an estimated 300 new and permanent jobs mostly in the agricultural and forestry sector. The consortium is not only investigating willow as an energy crop but also looking to value added opportunities to help its farmers and foresters. The consortium is working with the poultry industry to use willow chips to compost chicken litter solving a major disposal problem in the poultry industry. The forestry industry is also involved in the New York project as the consortium looks to using timber stand improvement to enhance tree stand value, reduce the probability of forest fires, and provide a source of energy from forest thinnings. Other members of the Salix team include: Cornell University, a land grant institution, South Central Resource, Conservation and Development, the State University of New York and Case Corporation, an agricultural equipment manufacturer. Willow is also being planted in nearby Vermont and Pennsylvania as both farmers and power companies in those States have indicated an interest in this exiting opportunity.

The second award was made to a Midwestern farmer's cooperative. The Minnesota Valley Alfalfa Producers (MnVAP) will demonstrate using alfalfa stems to produce baseload electricity while using the leaves as animal feed. This project will sell power from the cooperative's 75 MW power plant to Northern States Power Company using newly developed gasification and gas turbine technology. This project has a multitude of economic benefits. Diversification of farm products and increased agricultural opportunities will benefit 2,000 participating farmers. Construction of this project will mean more than 1,000 jobs. More than 100 full time workers will be employed to operate the alfalfa processing and power plant. Distribution sales, and marketing of the leaf meal product will provide additional economic benefits. Moreover, value added processing of agricultural commodities will strengthen declining U.S. agricultural export markets. The University of Minnesota, Westinghouse Electric Corporation, and the City of Granite Falls are other key members of the MnVAP team.

The third award is in Iowa. The Chariton Valley RC&D has undertaken large scale cultivation of switchgrass for power production. Switchgrass has exceptional environmental benefits - preventing soil erosion, improving water quality and fixing carbon - and is an approved cover crop under the Conservation Reserve Program (CRP). A planned 40,000 acres of switchgrass are to be planted on Iowa. Already 4000 acres of CRP land has been identified for this purpose giving farmers a potential cash crop and the American people a better use of land in the CRP program. Iowa plans to produce 35 MW of electrical power and will investigate up to 6 MW of power production from gasification technology developed in other DOE cost shared programs. Iowa State University (another land grant college), and John Deere Company (another agricultural equipment manufacturer) are also members of the Chariton Valley team.

The fourth award was also made in Minnesota. Energy Performance Systems Inc. is to investigate using whole trees such as mature stands of hybrid poplars, for electricity production. Using whole trees will reduce the costs of handling and transporting the fuel to the power plant. The most important attribute of this program is the reproducibility of this project throughout agricultural America which is where both needed resources exist.

Basic Research. The Department's National Laboratories are supporting the more applied aspects of our program. There are basic scientific issues associated with growing energy crops for fuel such as improving yields, developing data for certification standards for specific clonal varieties, or examining the combustion or gasification characteristics of these plant materials. The National Renewable Energy Laboratory in Colorado, provides management and technical support to the national DOE program. Its scientists and engineers are responsible for day-to-day management of the power programs research and technical activities concentrating on fuel combustion and conversion issues. Because biomass is an energy crop, the program also relies heavily on feedstock development work carried out at Oak Ridge National Laboratory in Tennessee. Resource assessments, economic studies and environmental analysis conducted by ORNL staff and its subcontractors are helping to gain an understanding of the types of land most suitable for production of energy crops and environmental effects of planting and harvesting energy crops. ORNL works or sponsors work on biomass energy crops with both USDA forestry and agricultural experimental stations across the country.

Biomass energy is an indigenous resource. Its profits and jobs stay in the local community where biomass is produced and used. Biomass energy crops help solve problems for farmers and foresters, for example composting chicken litter, timber stand improvement, flood protection barriers and prevention of non point pollution. The 200 billion dollar per year electricity industry is in the process of restructuring and we at the DOE are very pleased to be working with USDA and the American farming and forestry community to offer the option of planting for fuel to capture some of the potential electricity generation market .

Biofuels. We continue to believe that substantial energy and environmental contributions can be made through the large scale use of ethanol from biomass resources. We have established three basic goals for the program. Our near-term goal is to demonstrate the commercial scale production of ethanol by the turn of the century from one or more waste feedstocks, including wood waste, forest residues, and/or grain processing wastes. Our mid-term goal (year 2005) is to demonstrate ethanol production utilizing switchgrass as part of the feedstock supply system. Our long-term goal is to demonstrate that ethanol from dedicated energy crops, such as switchgrass and hybrid poplars, is competitive with gasoline. Our mid- and long-term goals address the fact that the large scale use of biomass-based fuels will require the use of crops grown specifically for energy purposes.

Conversion R&D. The objective of this research activity is to develop a cost-effective conversion technology for the production of ethanol from the cellulose and hemicellulose contained in grasses, trees, and waste biomass. The research and development supported by the Department over the decade of the 1980s have resulted in estimated production cost reductions from $3.60 per gallon to $1.22 per gallon, a threefold reduction in the estimated cost of producing ethanol from cellulosic biomass. In the 90's, steady progress has continued, for example, in the area of genetic engineering to develop microorganisms capable of converting the broad spectrum of sugars found in biomass to ethanol. As encouraging as these results are, additional technology improvements need to be made to reduce the estimated costs of producing biomass-based ethanol from wastes and energy crops. We have identified two major areas that could give us significant cost reductions: pretreatment and hydrolysis. In the area of pretreatment technology, current technologies involve dilute acid treatment of the biomass feedstocks, resulting in release of the hemicellulose in the form of sugars, and allowing the cellulose to be more easily converted during hydrolysis. Pretreatment technology that could represent a quantum leap in cost reduction is based on a countercurrent process, using a more efficient design of the dilute acid pretreatment that also minimizes the need for cellulase enzymes.

Current hydrolysis technologies under development at the National Renewable Energy Laboratory (NREL) are dependent upon the action of enzymes that are capable of hydrolyzing biomass to sugars which can then be fermented to ethanol. These enzymes, called cellulases, are currently available because of their use in the textile industry. However, they are very expensive in terms of the economics required for successful ethanol processing. Four colloquies were held in 1997, bringing major enzyme producers, ethanol producers, and research scientists at DOE/NREL and USDA together to determine the appropriate strategies needed to lower the cost of these enzymes. These stakeholder meetings are enabling the program to direct research efforts toward improvement of the enzymes, production protocols, and fruitful collaborations with the industrial elements needed to meet cellulase cost goals.

Technologies for the production of ethanol from biomass have not been demonstrated anywhere in the world beyond the laboratory and pilot scale. However, rapid transition from the laboratory to the commercial production is underway. The Alternative Fuel Users Facility (AFUF) and the one ton per day Process Development Unit (PDU) at the NREL will continue to play a key role in this transition. The PDU, AFUF laboratory facilities, and NREL technical staff are supporting our industrial partners committed to the construction of demonstration facilities.

Biofuels Feedstock Production Program. The objective of the program is to develop low cost biomass feedstocks to be deployed in the mid and long term for energy applications. The program focuses on the development of two model perennial crops: switchgrass as a model grass crop and hybrid poplar as a model tree crop. These crops were selected because they grow rapidly and can be grown across several regions and sites in the United States. The use of perennials can also provide for comparatively environmentally benign or beneficial use of low cost, marginal land by building up soil carbon, reducing soil erosion, and increasing water quality and other environmental benefits.

The program has established Feedstock Development Centers for these model crops in the Midwest/Lake States and in the Southeastern United States, patterned after our successes in the Pacific Northwest, where clones developed by the program through university-funded research have been transferred to industry and used in commercial plantings. Research and development activities at the Feedstock Development Centers range from biotechnology and breeding to field testing of improved varieties and clones suitable for the region. In many of these activities we are collaborating with the USDA Agricultural Research Service and the Forest Service. Also, the USDA is evaluating the deployment of energy crops on Conservation Reserve Program (CRP) lands which offer mutual benefits to farmers and biomass energy producers.

Specific activities underway to meet the year 2005 deployment goal involve scale-up plantings of switchgrass in the Southeast and the Midwest with the best potential for providing low cost feedstock for ethanol production.

Climate Change Benefits. We are preparing to take advantage of opportunities that capitalize on bioethanol's ability to reduce carbon dioxide emissions. The transportation sector accounts for approximately 450 million metric tons per year of carbon emissions, one third of the total U.S. carbon emissions. Among the supply side transportation sector strategies that the DOE is pursuing to address the greenhouse gas issue, biofuels hold the most promise. Cellulosic ethanol offers the potential to reduce carbon emissions by more than 80 percent compared with conventional gasoline, and can be used in motor vehicles that are essentially identical to current vehicles, except that they have fuel systems, fuel sensors and engine controls that permit the use of either ethanol or gasoline (flexible fuel vehicles).

Ethanol also can be mixed into gasoline at volumes up to at least 10 percent and be used in conventional motor vehicles, displacing about an equal amount of gasoline, with the associated energy security and carbon reduction benefits. This is an important transitional market that substantially eases the difficulties of having to introduce simultaneously a new fuel and new vehicles that can use the fuel. Cellulosic ethanol has very low emissions because the carbon content of the alcohol is primarily derived from the carbon that was sequestered in the growing of the biomass. DOE's projected cellulosic ethanol use is 7.5 billion gallons by 2010. This will result in a reduction of 12.6 million metric tons of carbon per year.

Another strategy that will significantly contribute to the reduction of greenhouse gases is the Partnership for a New Generation of Vehicle (PNGV). A government/industry cooperative effort to develop a highly fuel-efficient car with mileage capacity three times that of conventional cars, and with the associated benefits of reduced carbon emissions. By 2010, DOE's projections show that PNGV cars will help reduce oil consumption by 190,000 barrels per day and reduce carbon emissions by 2.7 million metric tons per year.

Energy Diversity. More than 50 percent of the petroleum used in the United States is imported. Since 97% of the energy required for transportation comes from petroleum, even a minor disruption in the supply of oil could have significant effects on our nation. This lends special significance to the Biofuels Program as a means of diversifying the fuel base in our transportation sector with a domestic renewable fuel. An important corollary to the notion of increasing energy security is the concept of energy diversity. Today, in the United States, natural gas, propane, methanol and biodiesel are establishing a place in the transportation fuel market. Bioethanol is yet another option in the fuel mix that we seek to provide. Mr. J.S. Jennings, Chairman of Royal Dutch Shell, a company recognized as the leading strategic thinker in the energy industry, has stated that "…the only prudent energy policy is one of diversity and flexibility." A diverse portfolio of fuels, including bioethanol, would bring money and jobs and will provide a needed boost to our agricultural sector, a mainstay of the United States economy.

Year 2000 Technology Demonstration and Deployment. The cellulosic ethanol industry will likely develop primarily in the Midwest, the location of the current corn-based ethanol industry, in view of the favorable State incentives, consumers' attitude, and the relative ease with which the existing industry can expand its feedstock base to encompass cellulosic biomass. DOE views the establishment of a cellulosic ethanol industry as an evolutionary process whereby cellulosic feedstocks will be gradually added to the corn feedstock base in order to keep ethanol a competitive fuel or oxygenate in the marketplace. Therefore, it is essential to maintain a strong and healthy corn ethanol industry that serves as the building block for the deployment of the cellulosic bioethanol industry. Corn-based ethanol production is about 1.1 billion gallons per year, although the installed production capacity is higher, at about 1.5 billion gallons. We will increase our communication and coordination efforts to further the commercialization of bioethanol in the Midwest.

We are working with our industrial partners to demonstrate cellulosic bioethanol technology commercially by the turn of the century using low cost feedstocks in niche market applications. These biomass feedstocks are generally associated with existing industries, and are low or negative cost by-products from the processing of biomass in a primary product. Some examples of niche markets opportunities currently under consideration for various collaborative demonstration projects are corn fiber, bagasse, rice straw and wheat straw. For the purposes of projected ethanol prices, we have assumed that the price of such low value feedstocks will not exceed $15 per dry metric ton.

Among the most interesting near term feedstocks identified for the year 2000 are softwoods, which may come from paper mill waste, pulping operations, sawmill residues, forest residues, waste paper, and green wood waste in municipal solid waste streams. Current pretreatment methods and fermentation technology have not been optimized for softwoods. Among the waste sources of softwoods mentioned, forest residues deserve special mention because they represent a pressing environmental issue in many parts of the United States, (e.g., Northern California). As a result of our extremely successful efforts to protect national forests from the ravages of fire, we have created an unanticipated crisis. Many of our national forests have unprecedented levels of "fuel" which, when exposed to the summer dry conditions, are producing devastating forest fires. Many western States are seeking new approaches to controlled burns in these forests. Converting this residue into bioethanol may prove to be a win-win solution for forestry officials and the fledgling bioethanol industry.

Rice straw is another example of an immediate environmental problem that could be turned into an opportunity for bioethanol. California's rice growers are no longer permitted to burn rice straw in the field, posing a problem for disposal of this residual material. We have identified partners in California who are developing technology and business plans for rice straw derived bioethanol. Development and Deployment Activities with Industrial Partners. The key to successful deployment is identifying and working with industrial partners who will bring bioethanol technology to the marketplace. There are several ways in which the program's interaction with partners enhances the likelihood of success. First, it allows us to expand our efforts beyond the core technology work being developed by DOE and its national labs. We are forming alliances with other companies working on technologies that are different from the core technology of the program. The more alternatives being developed by the program and by other industry partners, the greater the probability of commercial demonstration and deployment by the year 2000. Second, we are building collaborative partnerships with the industry players who will ultimately finance, build and operate these facilities. Thus, we rely on industry partners to develop business plans and guide scale-up activities. Finally, it is through partnerships that we can identify the best business opportunities for bioethanol.

The list of partners involved in the program is growing. Some of the companies with which we are presently working, include:

Arkenol – developers of acid hydrolysis technology for conversion of waste biomass to ethanol and chemicals

Amoco – the first partners to utilize our pilot plant using a combination of Amoco and DOE developed technology components for conversion of corn fiber to ethanol

BC International – a company currently converting an existing ethanol facility to commercially demonstrate cellulosic ethanol technology using bagasse.

SWAN Biomass – developers of bioethanol technology for conversion of rice straw and other biomass feedstocks

Bioengineering Resources Inc. - developer of ethanol technology Masada Inc. - developer of acid hydrolysis technology for ethanol

Morris Ag - a 7 million gallons per year corn ethanol producer

Ethanol Demand from Flexible-Fuel Vehicles. The automotive industry has begun to join State and Federal efforts in encouraging expansion of the ethanol infrastructure. Chrysler recently announced that it plans to produce minivans next year that can run on gasoline or an ethanol-gasoline mix. The announcement followed a similar move by Ford, which intends to make flexible fuel pickup trucks and cars over the next four years. Ford began mass production of the E85 Taurus in 1996, and has since put more than 10,000 Taurus cars on the road. As consumers see the availability of E85 vehicles, it is likely that increased purchases of such vehicles will lead to higher demand for ethanol in this new market segment. We are working and supporting the efforts of organizations dedicated to further develop the infrastructure for the deployment of the ethanol flexible-fuel vehicles (e.g., the Ethanol Fuel Vehicles Coalition).

Mr. Chairman, the linkages between energy and agriculture, and the resolve these two sectors can bring to the problems of global climate change are enormous. Sound, environmentally-benign energy systems fueled by agriculturally-based products that sequester carbon dioxide makes good business sense.

I will be pleased to answer any questions the Committee may have. Thank you.