SECTION: CAPITOL HILL HEARING TESTIMONY

LENGTH: 1506 words

COMMITTEE: SENATE ENERGY & NATURAL RESOURCES

HEADLINE: NATIONAL ENERGY POLICY

TESTIMONY-BY: MR. GARY MARSHALL, VICE CHAIRMAN,

AFFILIATION: NATIONAL ETHANOL VEHICLE COALITION, JEFFERSON CITY, MO

BODY:
July 17, 2001

Mr. Gary Marshall, Vice Chairman, National Ethanol Vehicle Coalition, Jefferson City, MO

Good morning Mr. Chairman, members of the Committee, ladies and gentlemen. My name is Gary Marshall and I serve as the CEO of the Missouri Corn Growers Association, which has offices in Jefferson City, MO. I am here today representing the National Ethanol Vehicle Coalition in which I also serve as the Vice-Chairman of the organization. Thank you for the opportunity to appear before the Committee and discuss the use of 85 % ethanol or E85, as a form of alternative transportation fuel. My comments will be very brief to allow the Committee an opportunity to ask any questions that you may have.

The National Ethanol Vehicle Coalition is composed of state and local organizations, state and local elected officials, third- part stakeholders, ethanol producers, vehicle manufacturers, and agricultural interests. Our members include:

The 26 members of the Governors' Ethanol Coalition National Corn Growers Association and several state affiliates including

Missouri Corn Growers Association

Colorado Corn Growers Association

Kansas Corn Growers Association

Maryland Corn Growers Association

General Motors Corporation

Ford Motor Company

DaimlerChrysler

Ethanol Management Corporation

Corn Plus

Nebraska Ethanol Board

BCInternational, and others

The National Ethanol Vehicle Coalition (NEVC) is the nation's primary advocacy group promoting the use of 85% ethanol as a form of alternative transportation fuel. We do not engage in the debate and discussions regarding the use of ethanol as a form of oxygenate or fuel blend, however, it is important to note that we do support and advocate all uses of ethanol. Our focus is on high- level blends of ethanol and the opportunity that E85 has to supplement the existing use of ethanol and not supplant the use of E10.

The NEVC and a broad range of project partners have been involved with the establishment of the E85 fueling infrastructure for the past several years, and are seeking to integrate E85 into a broad based national energy strategy. Today, most ethanol is produced from corn and other agricultural crops. As ethanol demand increases, future production will expand from grain based feedstocks to the use of agricultural wastes, wood wastes and even municipal solid waste. It is important to note that the NEVC supports and advocates the production of ethanol from all forms of feedstock's, including biomass, agricultural waste, and feed grains.

Testimony of the National Ethanol Vehicle Coalition

U.S. automakers have made significant investments to bring E85- compatible vehicles to the marketplace at no additional cost to the consumer. By the conclusion of Model Year 2001, there will be approximately 1.9 million flexible fuel vehicles on the nation's highways - capable of consuming more than 1.5 billion gallons of ethanol annually-if the infrastructure were available. The number of these vehicles will continue to increase as production of new E85 flexible fuel vehicle models are introduced. A flexible fuel vehicle is designed to operate on either gasoline or E85. There are no separate fueling tanks, no switches to flip, and if E85 is unavailable and fuel is needed, gasoline is introduced into the same filling tube and mixed into the same tank.

Please allow me a moment to outline the impact that the use of an additional 1.5 billion gallons of ethanol would have beyond today's 1.8 billion gallons of ethanol being utilized as a fuel oxygenate and octane enhancer.

If each of these 1.9 million flexible fuel vehicles would use E85 as its primary fuel, the impact would be to:

Displace approximately 34 million barrels of imported petroleum;

Use of an additional 528 million bushels of corn to produce ethanol (from the 2 billion bushel surplus);

Generation of an additional $3 billion in farm income;

Development of a marketplace for the production of ethanol from biomass and waste materials;

Significantly reduce the emissions of non-methane hydrocarbons, carbon monoxide, and air toxics;

Implement a reduction of more than 4.3 million tons per year of greenhouse gas emissions; and,

The establishment of a long-term sustainable, alternative domestic transportation fuel.

The source materials for the preceding calculations will be provided to your staff.

These benefits could be realized today as the technology is available, the vehicles are on the street, and more vehicle models are being offered annually. There is no form of transportation fuel that provides the broad range of environmental and economic benefits to the nation, as does the use of E85.

Clearly there are impediments to achieving the aforementioned results, including

- A lack of infrastructure to fuel the vehicles. Approximately 200 public E85 fueling stations are currently in place across the nation.

- Ethanol contains less energy on a BTU basis than does gasoline, and even with the existing blenders credit, the cost of a "gasoline gallon equivalent" of E85 exceeds unleaded gasoline.

- The automakers are being criticized for producing flexible fuel vehicles that do not operate on alternative fuels and debate is pending to reduce or eliminate the CAFE Credits provided for the production of these vehicles.

The Alternative Motor Fuel Act of 1988 provided credits to automakers to encourage the production of alternative fuel vehicles. These credits, while limited, can assist an automaker in achieving the Corporate Average Fuel Economy standards provided by law. The automakers have been criticized by both the press and the environmental community for taking advantage of these CAFE Credits that were provided by the Congress, in that little alternative fuels are being used. I submit that the automakers have only used an incentive that was provided and promoted the United States Congress, which clearly intended these incentives to be used to initiate and promote the production of alternative fuel vehicles. The weakness of the Alternative Motor Fuel Act of 1988 was that the Act did not address the infrastructure needed to fuel these vehicles. It is our position that the automakers are being unfairly targeted and that it is appropriate to remember that General Motors, DaimlerChrysler, and Ford Motor Company are in the business of manufacturing motor vehicles, not selling or marketing transportation fuels.

In order to allow adequate opportunity for questions, I will close by offering only a short and very general set of conclusions and recommendations that the Committee may wish to consider to bring alternative fuels into the nation's mainstream.

The Committee may wish to consider that:

- All forms of alternative fuels are products of North America and they will all promote national energy security.

- E85 and biodiesel are the only alternative fuels that can significantly reduce the emissions of greenhouse gases.

- E85 and biodiesel are the only forms of "renewable transportation fuels" available in a liquid form that could use the nation's existing fuel delivery system.

- Renewable fuel production can be a cornerstone for important economic development and job creation across the nation.

Many, many legislative proposal have been and are being considered in this session of Congress. While time does not allow for us to comment on the details of these numerous bills, the NEVC does support the development of a national energy strategy. As you and the Congress deliberate, you may wish to consider the following options to implement a national energy strategy.

- It may be appropriate to establish a "National Alternative Fuel Trust Fund" that is used to promote the use of all forms of alternative transportation fuels. Such trust fund could potentially be financed by major emitters of greenhouse gases that could contribute to this fund in lieu of making costly and inefficient modifications to manufacturing processes that would otherwise reduce such emissions.

- Development of a financial mechanism that would provide "gasoline gallon equivalency" to all forms of alternative transportation fuels so that the motoring public would not be faced with reductions in fuel mileage when using alternative fuels.

Establishment of new incentives or the extension of existing incentives available to the automakers to assist in offsetting the cost of producing alternative fuel vehicles.

- Implementation of incentives to fuel providers across the nation that would potentially change their existing paradigm from that of a "petroleum company" to that of a "transportation fuel" company.

Thank you for allowing the National Ethanol Vehicle Coalition to provide these comments today. We would like to ensure the Committee that we are available to provide assistance at your convenience and we look forward to working with the Committee and Congress in development of programs to promote all forms of alternative transportation fuels.



LOAD-DATE: July 17, 2001