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Federal Document Clearing House
Congressional Testimony
April 11, 2000, Tuesday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 2454 words
HEADLINE:
TESTIMONY April 11, 2000 RUS MILLER CHIEF OPERATING OFFICER
SENATE AGRICULTURE, NUTRITION AND FORESTRY CLEAN GASOLINE
ADDITIVE
BODY:
To: United States Senate Committee
on Agriculture, Nutrition, and Forestry Senator Richard Lugar, Chairman From:
Arkenol Rus Miller, Chief Operating Officer Testimony: the Affects on the Demand
for Renewable Fuels caused by reductions in MTBE in reformulated
Gasoline Under Various Scenarios April 11, 2000 MTBE has been
found in groundwater throughout the United States. It was identified early in
California where it has been banned and is now being phased out of usage. MTBE
was the refiner's choice to meet the original specifications as the preferred
oxygenate in California in order to meet EPA requirements for Clean Air Act
regulations and meet the federal minimum oxygen requirement in Reformulated
Gasoline. The alternate renewable fuel ethanol has always been
available, but was a non-petroleum source and its use was resisted by petroleum
producers. The removal of MTBE from the fuel supply of United States offers
policy makers two choices. The first choice is to remove the oxygenated fuels
requirements. Arkenol believes that the evidence in the EPA Clean Cities and
Reformulated Gasoline programs of reduction in air pollution
after requiring oxygenated fuels over the objections of petroleum producers
speaks for itself. Since oxygenated fuels provide cleaner air the second choice
becomes then, which oxygenates should be used? There are technical and societal
factors to be evaluated in each case. Arkenol, obviously being a technology
provider for ethanol production, concurs with the determination that ethanol is
the best currently available route. While the Arkenol technology may be applied
to produce numerous other oxygen bearing fuels, those fuels have not yet been
proven in the marketplace, so ethanol is the choice. The question before the
Committee today is what would be the demand for renewable fuels under various
scenarios. The California Energy Commission published a report 'Evaluation of
Biomass-to-Ethanol Fuel Potential in California' in December of 1999. This
report includes within it several studies of this question with ethanol as the
fuel. The Executive Summary of that report is attached to my written remarks and
a full copy of the report has been given to your staff. I would like to address
the key scenarios briefly and then answer your questions. Scenario 1 - Oxygenate
requirements are unchanged To attain the required levels of oxygenation to
effect the air pollution reductions currently achieved, MTBE must be used in
about an 11% concentration in gasoline. As ethanol has a higher
oxygen concentration, a blend would only require 6% ethanol to attain the same
level of oxygenation. Ethanol has been typically blended at higher levels of 10%
to comply with the tax code. The complete replacement of MTBE with ethanol would
generate a demand of over 1 billion gallons per year solely within California.
Scenario 2 - Oxygenate Waiver is granted except for EPA Seasonal requirements in
Carbon Monoxide non-attainment Air Basins. Under this scenario the Los Angeles
and Sacramento air basins would be required to use an oxygenated fuel in the
winter when carbon monoxide levels seriously exceed EPA Clean Air limits. The
demand for ethanol to replace MTBE would be approximately 150 million gallons
per year. Scenario 3 - Oxygenates are no longer required. With no oxygenate
requirements in California there would likely be no renewable fuel used in the
state. The petroleum producers are very unwilling to give up market share of
their production volumes of basic gasoline. This is clearly
expressed by the price of ethanol being $0.66 per gallon when unleaded
gasoline is $0.85 today and ethanol has a higher octane rating.
Scenario 4 - A Renewable fuels standard is enacted A renewable fuels standard is
a sensible approach, but its implementation must be carefully considered to
truly effect an expansion in renewable fuels use. It combines: (a) awareness of
the environmental benefits of renewable fuel on immediate air pollution through
oxygenation of fuel with (b) awareness of the environmental benefits of reduced
carbon dioxide emissions with (c) awareness of the societal benefits of reduced
oil importation from abroad. California uses about 14 billion gallons of
gasoline per year. The United States as a whole uses about ten
times that. The USA imports 50% of the oil needed to make that
gasoline at great cost to foreign exchange rates and in being
militarily prepared to defend those foreign sources. The requirement for a
Renewable Fuels Portfolio would ensure a clear requirement of biologically
derived fuel with arithmetical precision. A 1% standard would continue a nation
wide demand of 1.4 billion gallons, which is roughly the current production
capacity of ethanol in the USA. An additional 1% added to that standard would
then double the volume needed and displace 2% of the imported oil currently
used. California has identified waste biomass volumes which could replace 30% of
the total gasoline used within the state. Other states have
similar resources. As an aside here, these discussions only address
gasoline blends. A nearly equal volume of diesel fuel is used
in the USA. Ethanol is readily cosolvent blended into diesel nearly eliminating
the particulate emissions typical of a diesel bus. Arkenol has made other
biological oxygenates which blend with diesel without cosolvents. Arkenol has
used third party tests to demonstrate that they achieve the same virtual
elimination of particulate emissions. Summation You have heard from many people
today who are more qualified than I about various aspects of this decision
making process in which you are engaged and you will hear from many more. I want
to leave you with the understanding that there is a current industry which can
support the use of renewable fuels. And more importantly from my company's
perspective, there is an industry of biomass-to-ethanol technologies ready to
meet nearly any demand for renewable fuels which can be imagined. These
technologies can use the biomass cellulose from agricultural wastes,
Conservation Resource Plan lands, urban green wastes, or even municipal solid
wastes. These new technology companies need a reliable market for our products
in order to attract the leading institutions to finance building the plants
required. We urge you not to succumb to this nation's petroleum addiction or the
same scare tactics used to resist removal of lead from gasoline
and implementation of reduced sulfur in
gasoline. Do not take a step backwards by ignoring the
demonstrated air benefits of renewable oxygenated fuels. Use the opportunity
created by the current MTBE and oil price crisis to set an example for the world
and put our nation on a path towards a sustainable future. We look forward to
your decision supporting the renewable fuels community. I thank you for the
opportunity to appear before you and would like to answer any questions that you
might have. Respectfully Yours Rus Miller Arkenol, Inc.
LOAD-DATE: April 13, 2000, Thursday
