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WASHINGTON STATE LEGISLATION ACKNOWLEDGED DURING CONGRESSIONAL DEBATE OF FEDERAL RENEWABLE FUELS LEGISLATION

The U.S. Senate has passed legislation co-authored by Senator Maria Cantwell (D-WA) to encourage the production of ethanol from wheat straw and other agricultural byproducts common in Washington and other non-corn producing states. The legislation was presented on the Senate floor as an amendment to the Senate version of the federal Renewable Fuels Standard (RFS). In a statement made before the Senate, the Senator acknowledged the work of the Puget Sound Clean Cities Coalition and other interest groups in passing the package of state legislation to provide tax incentives for the production of biofuels (House Bills 1240 - 1243), stating that the RFS amendment is "attempting to add a federal dimension to these efforts." The Coalition participated, along with other relevant parties, in discussions of the RFS amendment with Senator Cantwell's office.

The Renewable Fuels Standard would require 5 billion gallons of renewable fuel be used in the nation's fuel supply by 2012. The amendment, co-authored by Senators Barbara Boxer (D-CA), Richard Lugar (R-IN), and Cantwell, gives ethanol refiners an added incentive to produce ethanol from non-corn sources such as wheat straw and other forms of cellulosic biomass. These feedstocks are much more prevalent in Washington State than corn. The amendment is designed to give an extra boost for efforts to build the first large-scale biomass ethanol plants, which could result in particular economic benefits to Washington State. The incentive is provided by increasing the Renewable Fuel Standard credit for ethanol produced from agricultural residues or cellulosic biomass from 1.5 to 2.5 gallons.

Following is the statement on the Boxer-Lugar-Cantwell amendment made on the Senate floor on June 5, 2003. The comments concerning the Washington State biofuels bills are highlighted near the end of the statement.

STATEMENT ON BOXER-LUGAR-CANTWELL AMENDMENT

Mr. President, I rise today in support of the Boxer-Lugar-Cantwell amendment. This amendment would increase from 1.5 gallons to 2.5 gallons the credit available to refiners that choose to use ethanol derived from certain types of cellulosic (Cell-U-Losic) biomass to meet the requirements of the Renewable Fuels Standard.

This amendment will ensure that-as we strive to reduce our reliance on foreign oil, displacing it with home-grown products that will provide both environmental benefits and economic stimulus to our nation's rural communities-we also develop the renewable fuel diversity that is the hallmark of good energy policy.

Mr. President, it may interest my colleagues to learn that, as early as 1925, Henry Ford told the New York Times that ethanol was "the fuel of the future." But while 90 percent of the ethanol produced in this nation today is derived from corn, Henry Ford's vision was much broader. "The fuel of the future is going to come from apples, weeds, sawdust-almost anything. There is fuel in every bit of vegetable matter that can be fermented," he told the Times.

This amendment attempts to move that vision forward. 

I believe the logic is clear, and I want to thank Senators Boxer and Lugar for their leadership on this issue. While today ethanol derived from corn dominates the renewable fuels market, not every state in this nation-the State of Washington, for example-is a major corn producer. Nevertheless, Washington state is home to other crops-wheat, for example--that hold significant promise as potential sources of cellulosic biomass ethanol.

But despite the promise of these alternatives, the technology for producing ethanol from cellulosic sources such as wheat straw and other agricultural residues has lagged behind for a number of reasons. 

Yet, Mr. President, by providing the appropriate incentives and promoting research, development and deployment, the cosponsors of this amendment and I believe the technology for the conversion of cellulosic materials to ethanol would-just as was the case with corn over the years-develop to maturity and achieve cost-competitiveness. 

The Boxer-Lugar-Cantwell amendment would increase the RFS credit for one specific type of cellulosic materials-agricultural residues such as wheat or rice straw--from 1.5 to 2.5, reflecting a recent Department of Energy analysis.

Mr. President, providing incentives for the development of cellulosic ethanol production is simply a matter of good public policy, for five reasons: the environmental benefits; potential energy gains; long-term cost impacts; fuel diversity, and the need to spread the economic benefits among all of our nation's agricultural communities.

First, there are added environmental benefits. According to studies including an analysis conducted by the Department of Energy's Argonne National Lab, a gallon of ethanol produced from cellulosic biomass will represent a greenhouse emissions reduction of around 85 percent to 130 percent-about 7 times the air quality benefits of starch or corn-based ethanol.

Second, there are energy benefits. Researchers at Argonne and elsewhere have concluded that cellulosic ethanol represents a net energy gain of 60,000 British Thermal Units. That's three times more than starch-based ethanol, and an overall energy gain of more than 2.5 times all the energy inputs used to manufacture this type of renewable fuel.

Third, there is the issue of long-term cost. According to researchers at the Energy Information Administration, "ethanol costs could be reduced dramatically if efforts to produce ethanol from (cellulosic) biomass are successful." That's because these sources are readily available almost everywhere-and at costs well below those of commodities such as corn.

Next, there is fuel diversity. Mr. President, the biggest advantage conferred by fuel diversity is that it provides redundancy in our supply and insulates American consumers from price shocks. Today, about 90 percent of our nation's ethanol production occurs in just five, centrally located states. And, as some of my colleagues may recall, as recently as 1995, export demand and high corn prices resulted in an 18 percent slide in ethanol production.

Similarly, as we are setting new standards for renewable fuels, we must be sensitive to the possibility that a regional drought-a natural disaster similar in impact to what we recently experienced in the Northwest-could have serious consequences. Diversifying our renewable fuels mix to included ethanol produced from alternative sources will help defray these risks.

Lastly, there is the issue of economic benefit. Many of my colleagues have spoken eloquently about the impact renewable fuels production has had on the agricultural economies in their home states. Mr. President, by providing an incentive to diversify the commodities used to produce ethanol, we will make it possible for rural communities across this nation to share in these benefits-regardless of whether they grow corn, wheat, sugar or rice. 

Mr. President, in the State of Washington, the agricultural community wants to help meet the Renewable Fuels Standard proposed by Senators Frist and Daschle. While we don't have corn-we do have an abundance of wheat-and wheat straw-that would serve as a source. In fact, a study by researchers at the Washington State University Energy Extension concluded that our state could produce 200 million gallons per year in cellulosic-based ethanol-and as much as 1.2 billion gallons per year with technology improvements. With the construction of one 40 million gallon plant, the State of Washington would be entirely ethanol self-sufficient under today's laws.

And according to a study conducted by Oregon State University, such a plant would have a significant economic impact-particularly for rural counties in the eastern part of my state. A single 40 million gallon production plant would create about 104 direct jobs and 335 indirect jobs.

Local counties would see an economic benefit of $19.6 million per year, with a state-wide benefit of $26.1 million per year.

With the construction of three plants like these, Washington state would be entirely ethanol self-sufficient under the Renewable Fuels Standard proposed here. And with more, we are poised to become an important supplier to other states in the West.

To help this vision become a reality, a broad coalition of Washington state agricultural and environmental interests have banded together, and this year helped pass a package of bills through our state legislature that include tax incentives for the production of biofuels. Those bills were signed by our Governor just last month.

With the Boxer-Lugar-Cantwell amendment, we are attempting to add a federal dimension to these efforts. This provision reflects good public policy and good energy policy, and I ask my colleagues to support this amendment.