[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]
A LOOK AT THE RENEWABLE ECONOMY IN RURAL AMERICA
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COMMODITY EXCHANGES, ENERGY, AND CREDIT
OF THE
COMMITTEE ON AGRICULTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
FIRST SESSION
__________
NOVEMBER 16, 2021
__________
Serial No. 117-22
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Agriculture
agriculture.house.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
49-362 PDF WASHINGTON : 2022
COMMITTEE ON AGRICULTURE
DAVID SCOTT, Georgia, Chairman
JIM COSTA, California GLENN THOMPSON, Pennsylvania,
JAMES P. McGOVERN, Massachusetts Ranking Minority Member
FILEMON VELA, Texas AUSTIN SCOTT, Georgia
ALMA S. ADAMS, North Carolina, Vice ERIC A. ``RICK'' CRAWFORD,
Chair Arkansas
ABIGAIL DAVIS SPANBERGER, Virginia SCOTT DesJARLAIS, Tennessee
JAHANA HAYES, Connecticut VICKY HARTZLER, Missouri
ANTONIO DELGADO, New York DOUG LaMALFA, California
BOBBY L. RUSH, Illinois RODNEY DAVIS, Illinois
CHELLIE PINGREE, Maine RICK W. ALLEN, Georgia
GREGORIO KILILI CAMACHO SABLAN, DAVID ROUZER, North Carolina
Northern Mariana Islands TRENT KELLY, Mississippi
ANN M. KUSTER, New Hampshire DON BACON, Nebraska
CHERI BUSTOS, Illinois DUSTY JOHNSON, South Dakota
SEAN PATRICK MALONEY, New York JAMES R. BAIRD, Indiana
STACEY E. PLASKETT, Virgin Islands JIM HAGEDORN, Minnesota
TOM O'HALLERAN, Arizona CHRIS JACOBS, New York
SALUD O. CARBAJAL, California TROY BALDERSON, Ohio
RO KHANNA, California MICHAEL CLOUD, Texas
AL LAWSON, Jr., Florida TRACEY MANN, Kansas
J. LUIS CORREA, California RANDY FEENSTRA, Iowa
ANGIE CRAIG, Minnesota MARY E. MILLER, Illinois
JOSH HARDER, California BARRY MOORE, Alabama
CYNTHIA AXNE, Iowa KAT CAMMACK, Florida
KIM SCHRIER, Washington MICHELLE FISCHBACH, Minnesota
JIMMY PANETTA, California JULIA LETLOW, Louisiana
ANN KIRKPATRICK, Arizona
SANFORD D. BISHOP, Jr., Georgia
______
Anne Simmons, Staff Director
Parish Braden, Minority Staff Director
______
Subcommittee on Commodity Exchanges, Energy, and Credit
ANTONIO DELGADO, New York, Chairman
SEAN PATRICK MALONEY, New York MICHELLE FISCHBACH, Minnesota,
STACEY E. PLASKETT, Virgin Islands Ranking Minority Member
RO KHANNA, California AUSTIN SCOTT, Georgia
CYNTHIA AXNE, Iowa DOUG LaMALFA, California
BOBBY L. RUSH, Illinois RODNEY DAVIS, Illinois
ANGIE CRAIG, Minnesota CHRIS JACOBS, New York
ANN M. KUSTER, New Hampshire TROY BALDERSON, Ohio
CHERI BUSTOS, Illinois MICHAEL CLOUD, Texas
------ RANDY FEENSTRA, Iowa
KAT CAMMACK, Florida
Emily German, Subcommittee Staff Director
(ii)
C O N T E N T S
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Page
Davis, Hon. Rodney, a Representative in Congress from Illinois,
submitted letters.............................................. 95
Delgado, Hon. Antonio, a Representative in Congress from New
York, opening statement........................................ 1
Prepared statement........................................... 2
Feenstra, Hon. Randy, a Representative in Congress from Iowa,
submitted report............................................... 53
Fischbach, Hon. Michelle, a Representative in Congress from
Minnesota, opening statement................................... 3
Thompson, Hon. Glenn, a Representative in Congress from
Pennsylvania, opening statement................................ 4
Witnesses
Skor, Emily, Chief Executive Officer, Growth Energy, Washington,
D.C............................................................ 6
Prepared statement........................................... 8
Submitted information........................................ 98
Pratt, Jeff, President, Green Power EMC, Tucker, GA; on behalf of
National Rural Electric Cooperative Association................ 24
Prepared statement........................................... 25
Wheeler, Gary, Executive Director and Chief Executive Officer,
Missouri Soybean Association, Missouri Soybean Merchandising
Council, and Foundation for Soy Innovation, Jefferson City, MO;
on behalf of American Soybean Association...................... 27
Prepared statement........................................... 29
Bowman, Jessica, Executive Director, Plant Based Products
Council, Washington, D.C....................................... 34
Prepared statement........................................... 36
Stolzenburg, Nan C., Principal Planner and Founder, Community
Planning & Environmental Associates, Berne, NY................. 61
Prepared statement........................................... 63
Submitted question........................................... 153
Aberle, Randy, Executive Vice President of Agribusiness and
Capital Markets, AgCountry Farm Credit Services, Fargo, ND..... 69
Prepared statement........................................... 71
Submitted question........................................... 156
Submitted Material
Gallo, Sarah Vice President, Agriculture and Environment,
Biotechnology Innovation Organization, submitted letter........ 99
Rehagen, Donnell, Chief Executive Officer, National Biodiesel
Board, submitted letter........................................ 148
Singh, Ph.D., Rina, Executive Vice President, Policy, Alternative
Fuels & Chemicals Coalition, submitted letter.................. 151
A LOOK AT THE RENEWABLE ECONOMY IN RURAL AMERICA
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TUESDAY, NOVEMBER 16, 2021
House of Representatives,
Subcommittee on Commodity Exchanges, Energy, and Credit,
Committee on Agriculture,
Washington, D.C.
The Subcommittee met, pursuant to call, at 10:01 a.m., in
Room 1300 of the Longworth House Office Building and via Zoom,
Hon. Antonio Delgado [Chairman of the Subcommittee] presiding.
Members present: Representatives Delgado, Plaskett, Khanna,
Axne, Rush, Craig, Kuster, Bustos, Fischbach, Austin Scott of
Georgia, LaMalfa, Davis, Jacobs, Balderson, Cloud, Feenstra,
Cammack, Thompson (ex officio), Hartzler, and Baird.
Staff present: Emily German, Chu-Yuan Hwang, Luke Theriot,
Paul Balzano, Josh Maxwell, Erin Wilson, and Dana Sandman.
OPENING STATEMENT OF HON. ANTONIO DELGADO, A REPRESENTATIVE IN
CONGRESS FROM NEW YORK
The Chairman. This hearing of the Subcommittee on Commodity
Exchanges, Energy, and Credit entitled, A Look at the Renewable
Economy in Rural America, will come to order. Welcome, and
thank you all for joining today's hearing. After brief opening
remarks, Members will receive testimony from our witnesses
today, and then the hearing will open to questions. Members
will be recognized in order of seniority, alternating between
Majority and Minority Members, and in order of arrival for
those Members who have joined us after the hearing was called
to order. When you are recognized, you will be asked to unmute
your microphone, and will have 5 minutes to ask your questions
or make a comment. If you are not speaking, I ask that you
remain muted in order to minimize background noise. In order to
get as many questions as possible, the timer will stay
consistently visible on your screen.
In consultation with the Ranking Member and pursuant to
Rule XI(e), I want to make Members of the Subcommittee aware
that other Members of the full Committee may join us today.
Good morning, and thank you all for joining us today. We
are here to talk about the renewable economy in rural America.
From the agricultural commodities used to produce biofuels or
biobased products to the land used for wind and solar projects
and efficiency, increasing technologies like anaerobic
digesters, rural communities are integral to the future of
renewable energy. And as long as we have the right policies and
supports in place, these communities stand to benefit greatly.
Renewable technologies and processes continue to develop
and improve. As they do, it is important that Congress ensure
Federal programs and incentives are effective and impactful for
rural communities transitioning to renewable energy. In today's
hearing, we will hear about the latest developments in the
renewable economy, challenges that need to be addressed, and
how rural America can continue to benefit from its growth.
While creating more business and economic opportunities for
rural areas, it is an important focus of today's hearing, we
cannot forget that residential energy affordability is still a
real problem in rural America. Inefficient and outdated energy
infrastructure means more costly energy bills for rural
residents. We have seen a slower transition to renewable
energy, as it often proves too costly without outside support
or incentives.
Our panel of witnesses will touch on all of these issues,
the status of the biofuels and biobased product industry, and
the financing, construction, and crafting of renewable energy
projects that benefit rural communities.
While the focus of our hearing is on the benefits strategic
investments in the renewable economy provide rural America, the
growth of this industry stands to have a substantial impact on
the national and global economy, with some experts estimating
the direct economic impact of biobased products, services, and
processes at up to $4 trillion per year globally over the next
10 years. Furthermore, the growth of the domestic renewable
economy helps secure America's energy future, reducing our
reliance on petroleum imports and making the best use of our
domestic resources.
The topic of today's hearing is dynamic, multi-faceted, and
timely, and as the House Agriculture Committee begins work on
the next farm bill, the discussion we have here today will be
informative to that process.
[The prepared statement of Mr. Delgado follows:]
Prepared Statement of Hon. Antonio Delgado, a Representative in
Congress from New York
Good morning and thank you for joining us. Today we are here to
talk about the renewable economy in rural America. From agricultural
commodities used to produce biofuels or biobased products, to land used
for wind and solar projects and efficiency increasing technologies like
anaerobic digesters, rural communities are integral to the future of
renewable energy. And as long as we have the right policies and
supports in place, these communities stand to benefit greatly.
Renewable technologies and processes continue to develop and
improve. As they do, it's important that Congress ensure Federal
programs and incentives are effective and impactful for rural
communities transitioning to renewable energy.
In today's hearing, we will hear about the latest developments in
the renewable economy, challenges that need to be addressed, and how
rural America can continue to benefit from its growth. While creating
more business and economic opportunities for rural areas is an
important focus of today's hearing, we cannot forget that residential
energy affordability is still a real problem in rural America.
Inefficient and outdated energy infrastructure means more costly energy
bills for rural residents. We've seen a slower transition to renewable
energy as it often proves too costly without outside support or
incentives.
Our panel of witnesses will touch on all of these issues--the
status of the biofuels and biobased product industry and the financing,
construction, and crafting of renewable energy projects that benefit
rural communities. While the focus of our hearing is on the benefits
strategic investments in the renewable economy provide rural America,
the growth of this industry stands to have a substantial impact on the
national and global economy, with some experts estimating the direct
economic impact of biobased products, services, and processes at up to
$4 trillion per year, globally, over the next 10 years. Furthermore,
the growth of the domestic renewable economy helps secure America's
energy future, reducing our reliance on petroleum imports and making
the best use of our domestic resources.
The topic of today's hearing is dynamic, multi-faceted, and timely.
And, as the House Agriculture Committee begins work on the next farm
bill, the discussion we have here today will be informative to that
process.
The Chairman. With that, I would now like to welcome the
distinguished Ranking Member, the gentlewoman from Minnesota,
Mrs. Fischbach, for any opening remarks she would like to give.
OPENING STATEMENT OF HON. MICHELLE FISCHBACH, A REPRESENTATIVE
IN CONGRESS FROM MINNESOTA
Mrs. Fischbach. Thank you, Mr. Chairman, and thank you for
the opportunity, and good morning to everyone. I want to thank
you all for taking the time to be here today.
Like many of my colleagues, I represent a rural ag-based
district. We are among the top ag-producing districts in the
nation, and we are responsible for nearly half of Minnesota's
agricultural sales.
Minnesota and my district also play a key role in renewable
energy. Minnesota farmers care deeply about the conversation
and the environment, and are innovators in that area. Being the
first state to implement E10 and the B20 mandates, my district
is home to eight biofuel plants and we are the top producer in
corn and soybeans that provide feedstocks for these plants.
Discussions of lower carbon emissions must include, and
enhance, the use of biofuels. It is an existing proven fuel
source, and must be part of that conversation.
Since taking office, I have spent a lot of time traveling
across my district. I have met with local officials, business
owners, farmers, families, and many others. One thing I can
tell you is that rural America is facing many challenges right
now--made all the more evident by COVID-19--challenges like
limited access to capital, worker and skill shortages, aging
infrastructure, limited access to broadband, and diminished
access to healthcare services. We should be doing everything we
can to help these ag economies thrive, and should be wary of
taking actions that will create more challenges than
opportunities.
I am a little concerned about some of the efforts the
Majority has that don't recognize that biofuels have been an
important part of the role in reducing our greenhouse
emissions. Combines cannot run on electricity or wind or solar.
There remains an important role for liquid fuels to play in our
communities.
I would also like to have the conversation about
bioproducts of agriculture commodities. I am glad to see
panelists that can speak to the work they are doing to
diversify the value-add of products coming from the farm as a
vehicle for rural development. I am interested in learning more
in that regard.
Taking care of our rural communities and ensuring that they
have what they need to thrive benefits the ag economy, but it
also benefits the rest of the country. If we can help meet
those needs together, it is all of our constituents who will
reap those benefits.
I join the Chairman in welcoming all of our witnesses, and
we appreciate your time and I am looking forward to today's
discussion.
Thank you, Mr. Chairman. I yield back.
The Chairman. Thank you, Ranking Member. I also would like
to recognize Ranking Member Thompson for any opening comments
he would like to make.
OPENING STATEMENT OF HON. GLENN THOMPSON, A REPRESENTATIVE IN
CONGRESS FROM PENNSYLVANIA
Mr. Thompson. Thank you, Mr. Chairman and Ranking Member. I
really appreciate you both, and thank you for convening today's
hearing on rural America's renewable economy.
As you have heard me say before, without the producers in
rural America, our cities would wake up in the cold, dark, and
hungry.
With that being said, I would like to thank all of you here
today for your role in powering rural America, and for sharing
your perspective and testimony with us.
In Pennsylvania's 15th Congressional district, which I am
proud and honored to represent, there is innovation at every
turn. Whether that be biomass, renewable power sources, or
critical mineral research, our universities and private
institutions are contributing to significant progress within
the renewable energy economy.
And, research is just as critical to help grow our new
markets for biobased products of all kinds, including both
energy and advanced materials. For example, the 2018 Farm Bill
contains provisions that support research and development for
cross-laminated timber and tall wood buildings. Developing
materials like CLT provide forest owners new opportunities for
renewable wood products and support rural communities, while
generating forest health benefits in the process.
While I proudly support research and innovation, deployment
of renewables, I must stress that the farmers, ranchers, and
landowners in my district cannot supply the world's food and
fiber without 24/7 access to reliable and affordable energy.
I must also address the current makeup of my state's
renewable energy economy. The Energy Information Administration
found that in 2020, renewable energy resources generated about
four percent of Pennsylvania's electricity. As this number
grows, I am committed to balancing the needs of the
Commonwealth's families, communities, and producers who rely on
natural gas-fired, coal-fired, and nuclear power generation
with the needs of the innovators in the renewable economy that
we are hearing from today.
With that, thank you, Mr. Chairman, and I look forward to
today's discussion and yield back.
The Chairman. Thank you, Ranking Member Thompson.
The chair would request that other Members submit their
opening statements for the record so witnesses may begin their
testimony, and to ensure that there is ample time for
questions.
To our witnesses, I am pleased to welcome such a
distinguished panel of witnesses to our hearing today. Our
witnesses bring to our hearing a wide range of experience and
expertise, and I thank you all for joining us.
Our first witness today is Emily Skor, the Chief Executive
Officer of Growth Energy, which represents over \1/2\ of all
U.S. ethanol production. Since joining Growth Energy, Ms. Skor
has led initiatives to grow the retail presence of higher
biofuel blends across the U.S. and launched Growth Energy's
first consumer education initiative to redefine ethanol as a
cleaner and more affordable fuel choice. Under her leadership,
Growth Energy membership has grown to include 92 plant
producers and 91 innovative businesses that support biofuel
production. Welcome, Ms. Skor.
Our next witness today is Mr. Jeff Pratt, the President of
Green Power EMC. Green Power EMC secures renewable energy
resources for the broader family of 38 electric cooperatives in
Georgia, which delivers power to approximately 4.3 million
Georgians. In his role, Mr. Pratt leads efforts to source,
evaluate, and contract for renewable energy projects. Today,
Georgia's electric cooperatives have approximately 1,600
megawatts of renewable energy in operation or under
construction. Mr. Pratt also serves as the Vice President of
Emerging Technologies for Oglethorpe Power Corporation, where
he leads collaborative efforts to explore, engage, and
implement emerging technologies such as electric vehicles and
other new technologies changing the energy landscape. Welcome,
Mr. Pratt.
To introduce our third witness today, I am pleased to yield
to our colleague on the Committee, the distinguished
gentlewoman from Missouri, Mrs. Hartzler.
Mrs. Hartzler. Oh, thank you, Mr. Chairman, and it is an
honor to introduce Gary Wheeler. He is the Executive Director
and CEO of the Missouri Soybean Association, the Missouri
Soybean Merchandising Council, and the Foundation for Soy
Innovation. Gary and I have worked together for years. He is a
very respected leader in agriculture in our state, and I feel
confident that he is going to bring us many very helpful
insights as we look at renewables and the role that agriculture
can play in it. So, I am proud to welcome Gary, and thank you
for being here.
I yield back.
The Chairman. I thank the gentlewoman.
Our fourth witness is Ms. Jessica Bowman, who is the
Executive Director of the Plant Based Products Council. The
Plant Based Products Council represents a broad range of
companies who support greater adoption of products and
materials made from renewable plant-based inputs. Ms. Bowman
leads the organizations efforts to advocate for the expanded
use of renewable plant-based materials, including through
collaboration with early-phase start-ups and Fortune 500
companies on their sustainability efforts and awareness
initiatives. As an engineer and lawyer, Ms. Bowman plays a
unique role in bridging the gap between today's biobased
innovations and policies that encourage their broader adoption.
Welcome, Ms. Bowman.
Now, I am incredibly pleased to introduce our next witness
from my own district, Ms. Nan Stolzenburg, the Principal
Consulting Planner of Community Planning & Environmental
Associates, and a friend. Ms. Stolzenburg plays an important
role in assisting small and rural communities in development of
land use and environmental planning. Ms. Stolzenburg has a
special interest in small town and rural planning, community
revitalization, comprehensive planning, land use regulations,
and public participation. In her role, she has been the
principal consultant in over 70 communities, and is 1 of 33
people nationwide to have received the Certified Environmental
Planner advanced certification. Ms. Stolzenburg is also a
member of my locally-based agriculture advisory committee.
Welcome, Ms. Stolzenburg.
To introduce our sixth and final witness today, I am
pleased to yield to the Ranking Member, the gentlewoman from
Minnesota, Mrs. Fischbach.
Mrs. Fischbach. Thank you, Mr. Chairman.
It is my pleasure to introduce Randy Aberle, Executive Vice
President of Agribusiness and Capital Markets for AgCountry
Farm Credit Services, a financial cooperative that helps more
than 200,000 business in North Dakota, Minnesota, and
Wisconsin. Mr. Aberle is certainly an expert in the field. He
received a Bachelor of Science degree in agricultural
economics, and has worked with AgCountry for over a decade. I
am so excited for everyone here to benefit from his experience
and to hear more about how AgCountry has been involved in the
renewable economy. Farm Credit is so important in rural America
as an outlet for financing that might not otherwise be
available, compared with cities where big banks are plentiful.
I know that they have helped a lot of family farms and
businesses in my district, like Kohls Land and Cattle in
Hutchinson, and Matt and Erica Jensen's farm in Fergus Falls.
It is important that we remember the real farmers and ag
producers like them need to have a seat at the table in all
proposed legislation and discussions, particularly as we begin
work on the next farm bill. Welcome to the Committee.
Thank you. I yield back.
The Chairman. I thank the gentlewoman.
Welcome to all of our witnesses today. We will now proceed
to hearing your testimony. You will each have 5 minutes. The
timer should be visible to on your screen and will count down
to 0, at which point your time has expired.
Ms. Skor, please begin when you are ready.
STATEMENT OF EMILY SKOR, CHIEF EXECUTIVE OFFICER, GROWTH
ENERGY, WASHINGTON, D.C.
Ms. Skor. Chairman Delgado, Ranking Member Fischbach, and
Members of the Subcommittee, thank you for the opportunity to
testify today on the role of renewable energy in the rural
economy. I am Emily Skor, CEO of Growth Energy, the nation's
largest ethanol trade association, representing plant producers
and their innovative business partners.
Ethanol production has long been an economic driver for our
rural economies. The United States is home to 210 biorefineries
across 27 states that have the capacity to produce more than 17
billion gallons of low-carbon renewable fuel. Our industry is
the second largest customer for U.S. corn growers, and will
purchase nearly $30 billion worth of corn this year to produce
ethanol and an expanding array of biobased products, such as
high protein animal feed, renewable chemicals, and corn oil.
Renewable fuels like ethanol remain the single-most
affordable and abundant source of low-carbon motor fuel on the
planet, and are critical to meeting carbon reduction goals
today. Recent research shows there is no path to net-zero
emissions without biofuels. Even accounting for the projected
growth of electric vehicles, the Energy Information
Administration indicates that the vast majority of cars on the
road through 2050 will run on liquid fuels. Higher blends of
ethanol can be used in our current auto fleet to accelerate our
transition to a 100 percent renewable energy future. Put
simply, America cannot de-carbonize the transportation sector
without homegrown biofuels.
To meet the rising demands for renewable energy, we must
first have a strong and thriving rural economy and biofuel
industry. At a minimum, that means the Biden Administration and
Congress must ensure that biofuels are part of our
transportation mix now and into the future. This can be
achieved through a strong Renewable Fuel Standard, accelerated
nationwide use of higher blends like E15, accurate carbon
modeling of ethanol to better reflect the most current data,
sustainable farming innovations, and carbon intensity
reductions at our biorefineries, and incentives that provide
producers with strong policy signals to further reduce our
carbon intensity, and expand to new transportation markets.
A strong RFS will reduce carbon emissions and provide a
steady market for U.S. grain. The annual blending requirements
are woefully delayed, and in recent weeks, unsettling media
reports indicate the EPA may turn its back on greater biofuel
blending. It is critical for ethanol producers and suppliers
that EPA immediately propose 15 billion gallons of conventional
biofuels for 2021 and 2022. The Biden Administration simply
cannot meet its climate goals while rolling back low-carbon
biofuel blending requirements. We ask that the Subcommittee
help deliver this message to the Administration.
We appreciate the Committee including nearly $1 billion in
the Build Back Better Act (Pub. L. 117-169) to provide drivers
access to more low-carbon, higher ethanol blends. This
provision builds upon USDA's successful biofuel infrastructure
programs under the last two Administrations. This investment
complements a nationwide move to a 15 percent ethanol blend,
which would meaningfully reduce greenhouse gas emissions, the
equivalent of removing nearly four million vehicles from the
road each year. It would also create more than 182,000
additional jobs, and save consumers $12.2 billion in fuel costs
annually. To help realize these benefits, Congress must pass
the Year-Round Fuel Choice Act of 2021 (H.R. 4410) from
Representative Angie Craig to restore E15 summer sales.
Through continued innovation, America's ethanol producers
and farmers are using fewer inputs and improving efficiencies
at the plant and on the farm. We are pleased to see voluntary
initiatives in the Build Back Better Act that would help
further reduce the carbon intensity of agriculture, which
accounts for 50 to 65 percent of our lifecycle emissions. As
biofuel producers capture the value of low-carbon farming
practices, farmers would also have the opportunity to benefit
in the form of premium prices for their commodities. The
legislation also contains several important incentives to help
ethanol producers further reduce the carbon intensity of their
fuel, and explore new markets. These provisions, along with
some recommended changes, are detailed in my written testimony.
To close, with the right policy environment, our industry
can continue to de-carbonize our transportation sector from
passenger vehicles to our aviation fleet. We stand with rural
America, ready to assist Congress and the Administration to
achieve our nation's climate goals.
Thank you for the opportunity to testify. I look forward to
your questions.
[The prepared statement of Ms. Skor follows:]
Prepared Statement of Emily Skor, Chief Executive Officer, Growth
Energy, Washington, D.C.
Chairman Delgado, Ranking Member Fischbach, and Members of the
Subcommittee:
Thank you for the opportunity to testify today on the role biofuels
like ethanol play in the renewable economy in rural America. My name is
Emily Skor, and I am the CEO of Growth Energy, the world's largest
ethanol trade association.
Growth Energy represents over \1/2\ of all U.S. ethanol production,
including 92 producer plants, 91 innovative businesses that support
biofuels production, and tens of thousands of ethanol supporters around
the country.
Ethanol production has long been an economic driver for our rural
economies. The United States is home to 210 biorefineries across 27
states that have the capacity to produce more than 17 billion gallons
of low-carbon, renewable fuel.
Ethanol is also the second-largest customer to 300,000 U.S. corn
growers with roughly \1/3\ of the field corn crop used to produce fuel
ethanol each year.\1\ In a particularly unusual year of depressed
demand in 2020, the ethanol industry purchased 4.78 billion bushels of
corn to produce nearly 14 billion gallons of biofuels and more than
36.4 million tons of dried distillers grains.\2\ Also in 2020, 26.6% of
field corn went into fuel ethanol.\3\ This year, our industry will
purchase nearly $30 billion of corn to produce ethanol and co-products
such as high-protein animal feed and corn oil.
---------------------------------------------------------------------------
\1\ National Corn Growers Association. https://www.ncga.com/key-
issues/current-priorities/ethanol.
\2\ ``Grain Crushings and Co-Products Production--2020 Summary,''
U.S. Department of Agriculture. March 2021. https://
downloads.usda.library.cornell.edu/usda-esmis/files/v979v304g/
jh344m06h/1j92h279h/cagcan21.pdf.
\3\ ``Corn Usage by Segment 2020,'' National Corn Growers
Association. April 2021. https://www.worldofcorn.com/#corn-usage-by-
segment.
---------------------------------------------------------------------------
Renewable fuels like ethanol remain the single most affordable and
abundant source of low-carbon motor fuel on the planet--and are
critical to meeting carbon reduction goals today.
Recent research shows there is no path to net-zero emissions by
2050 without biofuels. Even accounting for the projected growth of
electric vehicles, the Energy Information Administration indicates that
the vast majority of cars on the road through 2050 will run on liquid
fuels. Biofuels like ethanol are affordable, available, and can be used
in our current auto fleet. Put simply, America cannot de-carbonize the
transportation sector without homegrown biofuels.
My comments today will focus on how America's ethanol industry is
leading the way in producing renewable energy in our rural areas,
driving new economic activity and environmental benefits. Specifically,
I will explore the following areas:
Why low-carbon liquid biofuels like ethanol are essential to
meet our climate goals;
How programs at the U.S. Department of Agriculture and
provisions in the Build Back Better Act can help us further de-
carbonize transportation;
How a strong and growing RFS will continue to cut carbon
emissions from transportation; and
How higher-level ethanol blends like E15 can drive down
emissions and lower consumer fuel costs.
Biofuels: An Essential Solution to Meet Climate Goals
Figure 1: U.S. GHG Emissions by Sector
Total U.S. Greenhouse Gas Emissions by Economic Sector in 2019
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: EPA.
This past year has seen an increased focus on achieving long-term
carbon reduction goals. The Biden Administration has pledged to reduce
greenhouse gas (GHG) emissions by 50-52% by 2030 and make the United
States carbon neutral by 2050. There is no one-size-fits-all path
toward de-carbonization. Meeting this challenge will require a broad
array of solutions and renewable biofuels like ethanol are readily
available today to accelerate our transition to a healthier, net-zero
emission, 100% renewable energy future.
In 2019, the transportation sector accounted for 29% of all
greenhouse gas emissions in the United States, the highest of any major
economic sector.\4\ Lowering carbon emissions in transportation is
paramount to meet the Biden Administration goals. Biofuels can
immediately lower GHG emissions and help de-carbonize the
transportation sector.
---------------------------------------------------------------------------
\4\ ``Sources of Greenhouse Gas Emissions,'' U.S. Environmental
Protection Agency. https://www.epa.gov/ghgemissions/sources-greenhouse-
gas-emissions.
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Plant-based ethanol is low-carbon and can be used in our current
auto fleet. It is also affordable, keeping fuel prices lower for all
drivers in all communities. Drivers today can choose fuel blended with
ten percent ethanol (E10), fifteen percent ethanol (E15), or up to
eighty five percent ethanol (E85).
A recent January 2021 study by Environmental Health and
Engineering, Inc. found that ethanol reduces GHGs by 46% compared to
traditional gasoline.\5\ The use of biofuels from 2008 to 2020 has
already resulted in cumulative reductions of almost 1 billion metric
tons of carbon dioxide-equivalent GHG emissions.\6\ Additionally, a
study by Growth Energy showed that nationwide transition from E10 to
E15 would lower GHG emissions by 17.62 million tons annually, the
equivalent of removing 3.85 million vehicles from the road.\7\
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\5\ ``Carbon Intensity of corn ethanol in the United States: State
of the science,'' Environmental Health & Engineering, Inc. Melissa
Scully, Gregory Norris, Tania Alarcon Falconi, and David MacIntosh
(March 2021). https://iopscience.iop.org/article/10.1088/1748-9326/
abde08.
\6\ ``GHG Emissions Reductions due to the RFS2--A 2020 Update.''
Life Cycle Associates, Unnasch, Stefan and Debasish, Parida. February
2021. https://ethanolrfa.org/file/748/LCA_-_RFS2-GHG-Update_2020.pdf.
\7\ ``GHG Benefits of 15% Ethanol (E15) Use in the United States,''
Air Improvement Resources, Inc. http://www.airimprovement.com/reports/
national-e15-analysis-final.pdf.
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Recent data from the U.S. Energy Information Administration (EIA)
indicates that while we will see dramatic growth in the number of
electric vehicles, vehicles that run on liquid fuels will dominate the
light duty transportation landscape for decades. EIA's Annual Energy
Outlook from 2021 stated that gasoline and flex fuel vehicles will
account for 79% of vehicles sales in 2050, down from 95% today, as
referenced in Figure 2.\8\ Moreover, EIA projects in its 2021
International Energy Outlook that, worldwide, the number of
conventional light-duty vehicles--those which operate on liquid fuels--
will not peak until 2038.\9\
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\8\ ``Annual Energy Outlook 2021,'' Energy Information
Administration. https://www.eia.gov/outlooks/aeo/pdf/
AEO_Narrative_2021.pdf.
\9\ ``EIA projects global conventional vehicle fleet will peak in
2038,'' Energy Information Administration. https://www.eia.gov/
todayinenergy/detail.php?id=50096&src=email.
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Figure 2: Light-duty Vehicle Sales by Fuel Type
Light-Duty Vehicle Sales by Technology/Fuel AEO2021 Reference Case
Millions of Vehicles
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: U.S. Energy Information Administration.
To meet these challenges, we cannot rely on a single solution to
propel our transportation sector to net-zero carbon emissions by 2050.
We will need every tool in our toolbox. We will see increased efforts
towards electrification and vehicle efficiency, but we will also need
more biofuels like ethanol, which have the potential to do even more to
reduce the carbon intensity of transportation with the right
combination of policy and marketplace certainty. An analysis by the
Rhodium Group released in January 2021 found that biofuels are a
mainstay for any climate strategy looking to attain net-zero emissions
by 2050.\10\
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\10\ ``Closing the Transportation Emissions Gap with Clean Fuels,''
Rhodium Group. https://rhg.com/research/closing-the-transportation-
emissions-gap-with-clean-fuels/.
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One of the most compelling demonstrations of the essential role
biofuels play in meeting climate goals is California's Low Carbon Fuel
Standard (LCFS). The goal of the LCFS is to, ``encourage the use of
cleaner low-carbon transportation fuels in California, encourage the
production of those fuels, and therefore, reduce GHG emissions and
decrease petroleum dependence in the transportation sector.'' \11\
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\11\ California Air Resources Board. Accessed 6/15/2021, https://
ww2.arb.ca.gov/our-work/programs/low-carbon-fuel-standard/about.
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According to data by the California Air Resources Board (CARB),
biofuels are responsible for nearly 80% of all carbon reductions
credited under the LCFS, with the recorded carbon intensity (CI) of
ethanol declining 33% since 2011.\12\
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\12\ ``Data Dashboard: Low Carbon Fuel Standard,'' California Air
Resources Board. May 2020, https://ww3.arb.ca.gov/fuels/lcfs/dashboard/
dashboard.htm.
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CARB tracks the CI of a variety of fuel options and has updated the
CI scores annually since the state's LCFS was adopted in January 2011.
Figure 3 shows the steady decline in the CI score for ethanol and the
uptick in CI score for gasoline over the same period.
Figure 3: CARB's Carbon Intensity Scores of Ethanol and Gasoline
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: California Air Resources Board.
Improvements in ethanol's CI scores can be attributed to the
biofuel industry's increased manufacturing efficiency through less
energy intensive energy usage, more effective biotechnology, lower
water usage and increased efficiencies in the amount of land used for
biofuel feedstock production. America's corn growers are producing
stronger yields with less acreage, and biorefineries can manufacture
more gallons of ethanol per bushel of corn. Total cropland acreage has
fallen from 470.8 million acres in 1978 to 391.9 million acres in
2012.\13\ Moreover, yields of corn have increased dramatically over the
last 50 years, increasing from 72.4 bushels per acre in 1970 to 172
bushels per acre in 2020. Over the last 10 years, corn yield has
increased by 20%,\14\ while land planted for corn has remained steady.
Figure 4 demonstrates the improvements in corn yields over the last 150
years.
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\13\ ``Cropland, 1945-2012, by State: The sum of cropland used for
crops, cropland idled, and cropland used for pasture,'' U.S. Department
of Agriculture's Economic Research Service. August 2017, https://
www.ers.usda.gov/data-products/major-land-uses/.
\14\ ``Crop Production Historical Track Records,'' National
Agricultural Statistics Service. April 2021, https://www.nass.usda.gov/
Publications/Todays_Reports/reports/croptr21.pdf.
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Figure 4: Corn Crop Yields 1866-2019
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Data Source: USDA-NASS (as of Jan. 2020).
Source: USDA-NASS and Historical Corn Grain Yields in the
U.S. (Purdue University) *
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* https://www.agry.purdue.edu/ext/corn/news/timeless/
YieldTrends.html.
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USDA: A Department Well Positioned to Help De-carbonize Transportation
USDA's 2015 Biofuel Infrastructure Partnership (BIP) and the 2020
Higher Blends Infrastructure Incentive Program (HBIIP) are prime
examples how the Department can support the productivity of our farmers
and boost rural economies while decreasing GHG emissions. With the $1
billion of funding included in the Build Back Better (BBB) Act to
expand the availability of biofuels, we stand ready to work with the
Department to put this funding to work to further de-carbonize the cars
on the road today.
Currently, more than 95% of cars on the road are compatible with
E15,\15\ and consumers have driven more than 25 billion miles on the
fuel. There is a significant market available today for higher blends
of biofuels like E15 if consumers can access these products. The
biofuels industry is ready to provide the fuel necessary to meet those
demands; however, long-term infrastructure incentives for our
retailers, like the competitive grant structure under BIP and HBIIP,
must be available.
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\15\ Air Improvement Resources, Inc. ``Analysis of Ethanol
Compatible Fleet for Calendar Year 2021,'' November 9, 2020. https://
growthenergy.org/wp-content/uploads/2020/11/Analysis-of-Ethanol-
Compatible-Fleet-for-Calendar-Year-2021-Final.pdf.
---------------------------------------------------------------------------
Demand for these grants exceeded funds available, demonstrating
that retailers and the working families they serve want a lower cost
fuel and more choices at the pump. This gives retailers a competitive
advantage in the market while providing our transportation sector a
higher quality fuel that decreases GHG emissions.
Build Back Better with Biofuels
The BBB Act currently before Congress includes important
infrastructure funding to encourage the adoption and availability of
higher-level biofuel blends through the Biofuel Infrastructure and
Agriculture Product Market Expansion provision included in the bill.
This important funding is a key component of a suite of authorities
included in the BBB that provide concrete incentives to lower the
carbon intensity of transportation fuel.
The Biofuel Infrastructure and Agriculture Product Market Expansion
program provides $960 million in funding through September 30, 2031, to
install, retrofit, or otherwise upgrade fuel dispensers or pumps and
related equipment, storage tank system components, and other
infrastructure required at a location to dispense ethanol blends above
10% and biodiesel blends above 5%. Funds may also be used to build and
retrofit distribution systems for ethanol blends, traditional and
pipeline biodiesel terminal operations (including rail lines), and home
heating oil distribution centers or equivalent entities to blend
biodiesel and to carry ethanol and biodiesel. This provision authorizes
a maximum Federal share of a project would be 75%, up from 50% under
the most recent USDA program from 2020. And importantly, the provision
allows USDA to provide sizeable grant packages to market participants
that sell high volumes of fuel, allowing the program to secure more
carbon reductions at a lower cost.
Biofuel Infrastructure and Agriculture Product Market Expansion Program
Recommendations
Having worked very closely alongside retailers for both BIP and
HBIIP to secure grant funding, and having administered the industry's
more than $90 million private matching grant program, Prime the Pump,
we have three different recommended approaches we encourage the House
Agriculture Committee and USDA to consider for the next round of
infrastructure incentives for higher blends should the BBB be passed
into law:
1. Use an equipment-focused approach and allow all fuel dispensing
and underground storage equipment upgrades to be eligible
under a future grant program.
Historically, BIP and HBIIP have focused on dispenser
replacement and underground storage tanks. However, there
are more than 100 pieces of equipment needed to legally
dispense fuels, so the cost per site can vary widely based
on retailer needs. Based on historical sales data provided
by retailers, assuming a $960 million grant program, this
program would generate about 8 billion gallons of E15
sales. The program should also require that E15 is sold on
a shared hose with other grades of fuel to make consumer
access as easy as possible.
2. Provide a sales incentive for retailers offering E15.
Industry research by the National Association of Convenience
Stores \16\ found that consumers will drive 5 miles out of
their way to save $0.05 per gallon. By providing a $0.05
per gallon of E15 incentive, a $960 million grant program
has the potential to yield nearly 18 billion gallons of E15
sales. Offering retailers a performance incentive, along
with small bonus payments for installation targets, has
been the optimal method for Prime the Pump.
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\16\ National Association of Convenience Stores. ``2015 Retail
Fuels Report,'' Page 12. https://www.convenience.org/.
3. Increase funding for large volume retailers and streamline the
---------------------------------------------------------------------------
paperwork required by a retailer.
We are pleased to see that the language included in the BBB Act
that allows for additional funds for large-volume
retailers. Some larger retail chains will want to upgrade
hundreds of stores to provide universal access to E15 and
higher blends across their entire market chain, increasing
the availability of low-carbon liquid fuels. For small
retailers, reducing the amount of paperwork will help them
access infrastructure grants. Lastly, we recommend that any
future grant programs allow companies which aggregate fuel
for several small retailers be eligible to participate in
the program as well.
In the end, flexibility is the most important element of the next
infrastructure program. Focusing the grants solely on dispensers and
tanks, disincentivizing large volume retail locations, or issuing too
many burdensome administrative hurdles limits overall access to the
program. We encourage the Subcommittee and USDA to leverage learnings
from previous public and private grant programs. Growth Energy will
lend our expertise to help in any way we can to ensure a future program
is another success.
Build Back Better Provides Voluntary Incentives to Lower Carbon Farming
America's biorefineries have deployed a number of low-carbon
practices to reduce the carbon intensity of our fuel, including wind
energy, solar energy, carbon capture, combined heat and power, and
more. In fact, almost all capital expenditures at ethanol biorefineries
today are aimed at reducing their carbon footprint to take advantage of
low-carbon fuel markets like those in the western United States and
abroad.
Even with significant innovation at our member's plants, farming
practices still account for roughly 50-65% of the lifecycle carbon
emissions of these fuels. Farmers have already responded to the call
for improved sustainability, using fewer inputs and increasing
efficiencies in their farming practices. These improved practices have
already helped reduce the CI of farming, and therefore the overall
carbon intensity of biofuels.
The BBB Act provides further voluntary incentives like cover crops,
nutrient management, buffers, and incentives for locally led
conservation efforts that will help reduce the CI of agriculture even
further, helping biofuel producers provide an even lower carbon liquid
fuel at a time when demand for low-carbon fuels is rising. As biofuel
producers benefit from low-carbon farming practices, farmers also
benefit in the form of premium prices for their commodities.
States like California, Oregon, and Washington are all placing an
emphasis on incorporating more carbon-friendly fuel into their
transportation supply through Low Carbon Fuel Standard and Clean Fuel
Standard (CFS) programs in the states. The LCFS places a premium on
fuel sources which have lower CI scores to act as an incentive to fuel
producers. Biofuels continue to provide the foundation towards reaching
goals set in both California's LCFS and Oregon's CFS, but the American
farm economy could further benefit with improved modeling.
For example, the LCFS does not currently account for low-carbon
farming practices when rating the CI for various biofuels. Using less
fertilizer through precision agriculture technologies lowers nitrogen
use and would improve ethanol's CI score. Further improvements also
include adopting farming techniques like no-till and planting cover
crops keep nutrients in soil. The CI score can also be lowered
significantly through the use of updated modeling that accurately
reflects the carbon sequestered with the planting of corn, a natural
carbon sink. Accounting for the CI benefits brought by these techniques
and more would provide a greater premium for ethanol producers and the
farmers they support.
How the Build Back Better Act Will Encourage More Low-Carbon Biofuels
Besides the important funding for infrastructure and voluntary
farming incentives, the BBB Act contains several important incentives
that will help ethanol producers further reduce the CI of their fuels
and explore new markets outside of light-duty vehicles. We appreciate
and support the inclusion of the following items:
1. The extension and increase of the 45Q tax incentive for the
capture, utilization, and storage of carbon dioxide.
Roughly half of our member plants either capture carbon for
food and beverage use, expect to transport carbon dioxide
by a carbon pipeline for permanent geologic storage, or
expect to store carbon nearby for geologic storage. With
99.9% pure, clean fermentation carbon from an ethanol plant
being relatively easy to capture, our facilities provide a
good opportunity to deploy carbon capture technology and
appreciably lower emissions. For the average U.S. ethanol
plant, carbon capture can cut the CI in half.
2. The establishment of the Clean Fuel Production Credit (CFPC, or
45CC), which provides an incentive to produce low-carbon
biofuels.
This credit provides a producer-based tax incentive to
encourage the adoption and deployment of low-carbon fuel
technologies. The size of the incentive is based on the
percentage of carbon reduction relative to a fixed
baseline, re-orienting our biofuels tax policy toward
carbon reductions instead of producing specific types of
fuel.
3. A credit for the blending and production of sustainable aviation
fuel (SAF).
4. The BBB Act establishes a standalone credit for SAF from 2022-26
and folds the SAF credit into the CFPC for 2027-31.
If properly implemented, these SAF incentives could provide a
new marketplace for ethanol.
We would also like to provide the Committee with a list of
suggested changes that would make the three provisions above work
better and further reduce carbon in the transportation sector:
1. A facility cannot claim CFPC (including SAF) and 45Q at the same
time in last 5 years, while they can claim the initial
standalone SAF credit and 45Q for first 5 years.
Because SAF will need an additional incentive to ensure parity
with petroleum-based jet fuel, we believe that allowing an
ethanol producer to claim both credits will have the
maximum carbon reduction benefit and will continue to drive
innovation in our industry.
2. The CFPC does not start until 2027, leaving ethanol producers
without a de-carbonization incentive between 2022 and 2027.
We recommend allowing low-carbon fuel facilities the option to
elect to start the CFPC in 2022 to further accelerate
emissions reductions.
3. The positive 45Q changes only impact projects that commence
construction after January 1, 2022.
We would encourage these changes to apply to all projects,
allowing forward-thinking facilities that have already
begun efforts to innovate to capture this benefit.
4. Despite improvements, the SAF modeling language is still
confusing and is now bifurcated after 2027 between non-
aviation fuels, which use the Greenhouse Gases, Regulated
Emissions, and Energy Use in Technologies (GREET) Model by
the Argonne National Laboratory, and SAF, which has limited
specification for a life cycle analysis model.
We recommend adopting the GREET model for all biofuels--
including SAF--from the date of enactment moving forward.
The Department of Energy's Argonne National Laboratory is a
world leader in lifecycle analysis of biofuels, and it only
makes sense to adopt their latest analysis, which is
updated annually. It is important that new tax incentives
are guided by technology-neutral life-cycle assessments by
scientists who understand the U.S. biofuel sector. U.S. tax
credits must reflect U.S.-based modeling.
Our industry is committed to growing more clean energy jobs and
the incentives in this legislation would provide that
opportunity. We would encourage Congressional leaders to
provide more detailed information on how our common goal of
growth in clean-energy jobs can be met with the prevailing
wage and apprenticeship requirements in the legislation.
Figure 5: Achieving Net-Zero Ethanol
Carbon Intensity of Ethanol Continues To Approach Net-Zero
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: California Air Resources Board and Environmental
Health and Engineering.
Biorefineries are researching and implementing technological
improvements to further reduce the carbon intensity of ethanol. Using
the California Air Resources Board data on the carbon intensity of
ethanol as shown in Figure 5 above, biorefineries can reach net-zero
ethanol and even achieve negative carbon emissions using today's
technology. Some examples include installing more renewable sources of
energy including wind and solar and installing carbon capture and
sequestration equipment.
Sustainable farming practices can also have an impact on reducing a
biorefinery's carbon intensity score. Precision fertilizer and
accurately accounting for the carbon sequestered with the planting of
corn are other examples of methods to further reduce the carbon
intensity.
A Strong and Growing RFS Will Continue to Cut Carbon Emissions from
Transportation
The Renewable Fuel Standard (RFS) is one of the nation's most
successful renewable energy policies in reducing GHGs and providing a
steady market for U.S. grain. This policy is the bedrock for the modern
biofuels industry, providing a stable policy platform for ethanol
producers to grow, expanding our nation's supply of renewable, low-
carbon liquid fuels. Given the importance of this policy, we are
greatly concerned about media reports that the Biden Administration is
considering cutting the RFS, a position we believe directly contradicts
President Biden's strong commitment to biofuels as a way to help rural
economies and lower carbon emissions and only leaves us further reliant
on fossil fuels.
Biofuels have long been an economic driver for our rural economies.
In addition to the key jobs statistics cited at the outset of this
testimony, it is important to note that biorefineries employ a skilled
workforce in small, rural communities and are often the epicenter of
the local economy. Accordingly, we have a strong interest in the future
success of American agriculture.
Rural communities are eager to lead this charge, and the benefits
to our economy are significant, especially as the cost of oil surges.
Ethanol saves the average household $142 per year--an average of 22
per gallon--and even more with higher blends of ethanol. With this
homegrown energy comes homegrown jobs, from farmers to the union
professionals. As Daniel Duncan, Executive Secretary-Treasurer of the
Maritime Trades Department (MTD), AFL-CIO, said just last week,
``[u]nion members are not just on the production side of the American
biofuel industry, but also build, operate, and maintain the
infrastructure that keeps homegrown fuels like ethanol and biodiesel
flowing. This sector is an important source of strength for union jobs,
especially when it comes to growth in agricultural regions of the
nation.'' \17\
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\17\ Seafarers International Union. ``Biofuel Industry Boosts Union
Jobs.'' November 10, 2021. https://www.seafarers.org/biofuel-industry-
boosts-union-jobs/.
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Figure 6: Contribution of Ethanol Production to Individual State
Economies, 2019
----------------------------------------------------------------------------------------------------------------
Production (Mil
Gal) Production Share GDP (Mil $) Employment Jobs Income (Mil $)
----------------------------------------------------------------------------------------------------------------
IA 4,126 26.0% $9,096 82,294 $4,910
NE 2,176 13.7% $4,797 43,401 $2,589
IL 1,833 11.5% $4,041 36,560 $2,181
MN 1,315 8.3% $2,900 26,232 $1,565
IN 1,083 6.8% $2,388 21,601 $1,289
SD 1,002 6.3% $2,209 19,985 $1,192
WI 648 4.1% $1,429 12,924 $771
ND 487 3.1% $1,074 9,713 $579
KS 518 3.3% $1,142 10,332 $616
OH 408 2.6% $900 8,138 $485
TX 335 2.1% $739 6,682 $399
Ml 283 1.8% $624 5,644 $337
TN 230 1.4% $507 4,587 $274
MO 165 1.0% $364 3,291 $196
NY 165 1.0% $364 3,291 $196
CA 158 1.0% $348 3,151 $188
CO 125 0.8% $276 2,493 $149
GA 120 0.8% $265 2,393 $143
PA 110 0.7% $243 2,194 $131
----------------------------------------------------------------------------------------------------------------
*Excludes construction, exports and R&D.
Source: ABF Economics.
In a February 2020 study, ABF Economics broke down the economic
impact ethanol production brought to each state in 2019 which is shown
in Figure 6.\18\ The RFS is the policy that supports all this good work
in building out clean-energy jobs in our rural areas and supporting the
U.S. farm economy. We ask that the Members of this Subcommittee work
with the Environmental Protection Agency (EPA) in ensuring the agency
releases growth-oriented Renewable Volume Obligations (RVOs), the
annual requirement for renewable fuel blending. In a first test of
upholding his campaign promises, it has been reported that President
Biden's EPA will reach back 2 years and retroactively lower RVOs for
2020 and also propose flat RVOs for 2021 with no market-forcing
considerations.
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\18\ ``Contribution of the Ethanol Industry to the Economy of the
United States in 2019,'' Urbanchuk, John M., Managing Partner. February
4, 2020. https://files.constantcontact.com/a8800d13601/9e769376-3aef-
4699-b31f-3c6415b8fa63.pdf.
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We are especially concerned about EPA reopening the 2020 RVOs
retroactively and acceding to requests by oil states and refineries to
lower 2020 RVOs for reasons unrelated to RFS compliance. The Biden
Administration simply cannot meet its climate goals while retroactively
rolling back low-carbon biofuel blending requirements even further to
help oil refiners, in particular, when the hardship they claim
resulting from the COVID crisis has been widely shared across a number
of economic sectors. In addition, this would be an unprecedented move
that not only exceeds EPA's legal authority under the RFS, but also
would fail to recognize the RFS' built-in mechanism, via the annual RVO
percentage standard, that already accounts for any changes in fuel
demand that differ from original projections. When COVID decreased fuel
demand in 2020, the RFS percentage standard decreased the requirement
for conventional biofuels by at least 1.6 billion gallons, a more than
10% decrease. There is no need for further decreases.
We are also awaiting the RVOs for 2022, which will establish a
foundation for RVOs over the next few years as EPA begins the Set
rulemaking process to establish renewable fuel volumes for 2023 and
beyond. It is critically important that EPA propose 15 billion gallons
of implied conventional biofuels for 2022 so that the ethanol industry
has a solid foothold in producing adequate supply in for years to come.
We urge you to continue to coordinate with EPA on proposing strong
RVOs for 2021 and 2022 and release those values as soon as possible. We
strongly oppose further delay and uncertainty with the RVOs--similar to
what we saw in 2014 and 2015--and in particular, the loss of a binding,
strong requirement for 2022. Continued delay creates uncertainty in the
marketplace and has profound implications on the RFS set and the future
of the program. The 2022 RVO, for example, will set the ratio of total
vs. advanced renewable fuel volumes for 2023 RVOs and beyond. If EPA
sets the 2022 RVO below 15 billion gallons of conventional biofuels--or
does not set it at all--this could negatively impact renewable fuel
blending for years to come.
Small Refinery Exemptions
Despite the demonstrable economic, environmental, and energy
security success of the RFS, the Trump Administration repeatedly
granted oil refiners an unprecedented number of small refinery
exemptions (SREs), allowing them to avoid their obligations to blend
biofuels into our national fuel supply. Many on this Subcommittee
advocated on behalf of biofuel producers in your districts to the Trump
Administration against this radical escalation of exemptions, and we
thank you for those efforts.
The SRE authority was included under the Clean Air Act to provide
small refineries (those with a daily input capacity of less than 75,000
barrels of crude oil) with a temporary avenue to avoid blending
obligations, provided the refinery demonstrate that compliance results
in severe economic hardship. But in the previous Administration, the
number of SREs increased six-fold with no transparency into the process
or explanation as to which refineries received an exemption and why.
As shown in Figure 7, EPA granted 88 SREs over 4 years, which cost
the industry 4.3 billion gallons of lost biofuel demand. Many of the
SREs went to some of the largest, most profitable oil companies in the
world.
Figure 7: SREs by Administration
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Source: EPA's SRE Dashboard.
In January 2020, the 10th Circuit Court of Appeals issued a
unanimous decision that invalidated SREs granted by EPA to three
refineries for the 2016 and 2017 compliance years on three grounds.
First, the court held that EPA could grant SRE ``extensions'' only to
those refineries who had received SREs in all prior years. Second, the
court held that it was improper for EPA to find disproportionate
economic hardship on bases other than alleged hardship caused solely by
compliance with the RFS. Third, the court held that EPA failed to
explain why it deviated from its previous position that refineries
recoup their costs of compliance through downstream pricing. The
refineries petitioned the U.S. Supreme Court for review of the decision
solely on the first, ``extension'' holding of the 10th Circuit, and the
case was argued before the Court on April 27, 2021. On June 25, 2021,
the Supreme Court overturned the ``extension'' portion of the 10th
Circuit opinion.
Under the Biden Administration, EPA has stated that it agrees with
the remainder of the 10th Circuit Court's opinion, in particular, that
SREs must be based solely on hardship caused by compliance with the
RFS.
We strongly urge the Biden Administration to uphold the integrity
of the RFS program by encouraging more renewable, low-carbon fuel
blending, narrowing the use of SREs in line with the decision in the
10th Circuit Court of Appeals, and set conventional blending
requirements of at least 15 billion gallons.
RIN Prices
Renewable Identification Numbers (RINs) were included in the RFS to
add flexibility to the compliance mechanism of the RFS. Obligated
parties have the option to either blend biofuels and generate RINs or
purchase RINs to meet their obligations under the RFS.
We are aware that some refiners that have chosen to purchase RINS
in lieu of blending renewable fuels are seeking a waiver for their
blending obligations, citing economic hardship as a result of high RIN
prices. Some refineries claim this causes higher gasoline prices. To be
clear, there is no relationship between RIN prices and refinery
profits, as EPA has repeatedly stated:
``We do not believe that the price paid for RINs is a valid
indicator of the economic impact of the RFS program on these
entities [refiners], since a narrow focus on RIN price ignores
the ability for these parties to recover the cost of RINs from
the sale of their petroleum products.'' \19\
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\19\ ``Renewable Fuel Standard Program--Standards for 2019 and
Biomass-Based Diesel Volume for 2020: Response to Comments.''
Environmental Protection Agency, November 2018. https://nepis.epa.gov/
Exe/ZyPDF.cgi?Dockey=P100VU6V.pdf.
First, as EPA wrote in November 2018, refiners recoup the cost of
RIN purchases when they sell petroleum products on the market. Any RIN
cost is incorporated into the sell price, so refineries account for
this during their transactions.
Figure 8: Price of Retail Gas, WTI Crude, and D6 RINs
Source EIA, EPA.
Second, refineries have had almost 14 years to comply with the RFS,
a law which was constructed to encourage an increasing scale of biofuel
blending. Supply and demand ultimately dictate price, so blending more
biofuel creates more RINs, which in turn push RIN prices down. The
easiest way to lower RIN prices is to blend more biofuels.
With respect to gas prices, as shown in Figure 8, gas prices are
directly correlated with the price of crude oil, not RINs. According to
the EIA, crude oil is the most impactful contributor, accounting for
56% of the price of gasoline.\20\ The RIN market is independent from
gas prices and instead reflects the blending decisions by obligated
parties.
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\20\ U.S. Energy Information Administration. ``Gasoline explained--
Factors affecting gasoline prices,'' https://www.eia.gov/
energyexplained/gasoline/factors-affecting-gasoline-prices.php.
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The RFS works best when it is implemented in accordance with
Congressional intent. We encourage Members of this Subcommittee and the
administrative bodies it oversees to maintain the integrity of the RFS.
Breaking Down Barriers to Biofuels: Marketplace Hurdles for Higher
Blends
As stated earlier, a nationwide transition from E10 to E15 would
lower GHGs by 17.62 million tons annually, the equivalent of removing
3.85 million vehicles from the road. Further, an ABF Economics study
from June 2021 \21\ shows that moving to a nationwide E15 standard
would offer even further economic benefits:
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\21\ ABF Economics. ``Economic Impact of Nationwide E15 Use,''
Urbanchuk, John M. June 10, 2021. https://growthenergy.org/wp-content/
uploads/2021/06/Nationwide-E15-Use-Economic-Impact-Final.pdf.
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Add $17.8 billion to the U.S. Gross Domestic Product
$27.9 billion would come from boosted corn production
Create an additional 182,700 jobs
76,000 of these would be in agriculture
Generate $10.5 billion in new household income
Save consumers $12.2 billion fuel costs annually
E15 is typically $0.05 to $0.10 cheaper than E10 due
to the higher ethanol content
Agriculture jobs that would be supported by a nationwide E15
standard include farm advisors, producers, distributors of crop
protection and fertilizer products, farm equipment, and other service
providers. These jobs are typically located in rural parts of the
United States and would greatly benefit from more biofuel production
due to E15 expansion efforts.
However, the pathway to these higher-level ethanol blended fuels
has regulatory hurdles and outdated policy assumptions. To fully
realize these potential gains in economic growth and emissions
reductions, we recommend Congress pass legislation, the Year-Round Fuel
Choice Act (H.R. 4410), or EPA take relevant regulatory action to
restore summer sales for E15 and complete a pending rulemaking that
would clear unnecessary hurdles related to the pump labeling of E15 and
clarify some potential refueling infrastructure hurdles.
Summer E15 Sales Restriction
The Clean Air Act includes seasonal fuel vapor pressure provisions
intended to reduce evaporative emissions in the summer months (June 1
to September 15). In the 1990 amendments to the Clean Air Act, Congress
limited allowable fuel vapor pressure during the summer months to 9
pounds per square inch (psi) Reid Vapor Pressure (RVP) in certain areas
of the country. Congress also specified, however, that fuel blends
containing 10% ethanol would receive a 1.0 psi RVP waiver from the
seasonal RVP limit to encourage use of ethanol-blended fuels, which
provide significant reductions in tailpipe emissions. This RVP waiver
made the sale of E10 and lower ethanol blended fuels possible year-
round throughout the country. However, the waiver predates the
introduction of higher blends of ethanol like E15, which have a lower
RVP than E10.
In May 2019, EPA clarified that E15 could be sold in the summer
months, resolving ambiguity in the 1990 statute that arose because
there was no 15% ethanol fuel at the time. Following this EPA
rulemaking, the oil industry challenged this rulemaking in court. In a
July 2021 D.C. Circuit Court of Appeals ruling, the court reversed
EPA's interpretation, denying the majority of American drivers access
to a cleaner, more affordable biofuel blend during the summer months
starting on June 1, 2022. This move threatens the expansion of clean,
homegrown renewable energy.
The DC Circuit ruling affects nearly 85% of retailers currently
selling E15 across 30 states and creates needless uncertainty across
the marketplace. We urge the Members of this Subcommittee to move
swiftly to ensure uninterrupted access to lower-cost E15 for the summer
of 2022 and beyond, particularly as consumers seek relief from rising
gasoline prices. If not addressed, the court's decision would require
E15 retailers to change out fuels twice a year (on June 1 and September
15), a costly and burdensome process that actually increases GHG
emissions, counter to Congress' intent of providing cleaner fuel
choices at the pump.
This decision impacts all non-reformulated gasoline markets
throughout 33 states--conventional markets outside of urban areas that
are not required to participate in our nation's reformulated gasoline
program. In these areas, summer sales of E15 in retail sites could fall
by 85%, and the new restrictions on E15 sales would also cut overall
ethanol consumption and increase greenhouse gas emissions nationwide as
more petroleum products would be used. This decision has no impact on
long-standing rules that permit sales of E15 in RFG and other markets,
which are found in 17 states. However, the largest concentration of RFG
markets is in California and the Northeast, where the availability of
E15 is already limited.
Labeling and Equipment Compatibility
Current EPA Label Growth Energy Proposed Label
In order to remove unnecessary barriers that prevent consumers from
utilizing E15, Growth Energy supports EPA finalizing their proposed
rule to address E15 Fuel Dispenser Labeling and Compatibility with
Underground Storage Tanks that would erase market hurdles for E15
adoption. We support modifying the E15 label requirement to increase
clarity and ensure it clearly advises consumers of appropriate uses of
the fuel, while not unnecessarily dissuading the vast majority of
consumers whose vehicles can refuel with E15.\22\ Either modification
of EPA's E15 label or removal of the E15 label requirement entirely
would expressly preempt and conflict--preempt any state or local
government E15 label requirement.
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\22\ Growth Energy Comment on EPA's NPRM ``E15 Fuel Dispenser
Labeling and Compatibility with Underground Storage Tanks'' (Docket ID
No. EPA-HQ-OAR-2020-0448): https://www.regulations.gov/comment/EPA-HQ-
OAR-2020-0448-0051.
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In addition, Growth Energy strongly supports EPA's proposal to
modify the underground storage tank (UST) compatibility requirements
applicable to E15 and other fuel blends. There is ample evidence that a
wide variety of fuel storage equipment, including USTs and related
piping, may store E15 if it is suitable for use with E10. Removing
unnecessary impediments to retailers' use of such existing equipment is
imperative to providing E15 equal footing in the fuels marketplace.
Fixing these outdated and confusing barriers are critical to
ensuring we can capture the emissions reduction, farm income, and fuel
price relief benefits that come with E15 expansion. As our nation faces
the challenges of climate change, it is imperative that EPA act quickly
to support greater access to cleaner renewable fuel blends for all
Americans. E15 and higher ethanol blended fuels will deliver immediate
benefits for our environment and are a critical piece of our nation's
efforts to reduce carbon emissions. Clearing hurdles to the sale of E15
and growing markets of biofuels would also provide an economic lifeline
for rural communities as they continue to rebuild in the wake of COVID.
The Future of Biofuels: De-carbonizing Land, Air, and Sea
Transportation
As carbon reduction becomes more important to the transportation
sector, ethanol is poised to play a greater role in de-carbonizing all
forms of transportation--whether on land, in the air, or in the seas--
and we are energized by the potential opportunity to expand our role in
reducing our nation's carbon emissions. In addition to our current
light-duty vehicle market, we see new and emerging low-carbon fuel
markets in hard-to-electrify sectors such as aviation, marine, and
heavy-duty vehicle markets. Earlier in this testimony, I discussed the
potential incentive structure for sustainable aviation fuel. U.S. based
airlines used more than 18 billion gallons of jet fuel in 2019.\23\
Accessing the aviation market through ethanol to SAF, along with new
technologies that allow ethanol to be used in marine and heavy-duty
applications provide America's ethanol industry the opportunity to be
utilized in more than just light duty cars and trucks.
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\23\ ``Airline Fuel Cost and Consumption (U.S. Carriers--
Scheduled),'' Bureau of Transporta[t]ion Statistics. https://
www.transtats.bts.gov/fuel.asp.
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With the appropriate investment in critical research and
development and the right policy environment, our industry can continue
to de-carbonize our transportation sector--from passenger vehicles to
our aircraft fleet. However, in order to achieve the Biden
Administration's goal of 3 billion gallons of SAF production by 2030
and net-zero emission in aviation by 2050, we need game-changing
solutions and for that we must have a healthy and thriving corn ethanol
industry and rural economy. That starts with a strong RFS, a nationwide
E15 standard, and accurate carbon modeling.
Ethanol Production Co-Products
Ethanol biorefineries produce several valuable co-products, which
are integral to related supply chains. The industry produced an
estimated 43.6 million short tons of distiller's grains and nearly 3.9
billion pounds of distiller's corn oil (DCO) in 2019 with an aggregate
market value for these products at $7.5 billion.\24\ Distiller's grains
are a high-protein feed purchased by local livestock farmers and
provide a steady stream of animal feed for their farms. Roughly half of
all DCO is used in animal feed, while the other half is used by the
biomass-based diesel industry in their production process.
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\24\ ``Contribution of the Ethanol Industry to the Economy of the
United States in 2019,'' Urbanchuk, John M., Managing Partner. February
4, 2020. https://files.constantcontact.com/a8800d13601/9e769376-3aef-
4699-b31f-3c6415b8fa63.pdf.
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Additionally, about 50 biorefineries have the ability to capture a
pure stream of carbon dioxide, which has a wide variety of uses
including water treatment at municipal water facilities, food and
beverage preservation. During the peak of the COVID pandemic, the
ethanol industry also stepped up during a national hand-sanitizer
shortage, converting ethanol production to produce high-quality,
pharmaceutical-grade hand sanitizer for local hospitals and consumers.
Captured carbon dioxide is also being used as dry ice for the safe
transportation of COVID vaccinations.
Ensuring Access to International Markets for U.S. Ethanol
As nations around the globe are looking to achieve their carbon
reduction goals, international markets are turning to biofuels as a
solution. However, tariffs, technical trade barriers, and follow-
through on trade agreements pose challenges to U.S. exporters looking
to fulfill growing biofuel demand abroad.
Total U.S. Ethanol Exports by Year
Source: USDA.
The USDA designates an official trade representative who leads
efforts on promoting U.S. agricultural products, including biofuels,
abroad. USDA Secretary Vilsack has not yet selected a nominee to fill
that position, but we encourage him to do so as soon as possible.
In 2020, U.S. ethanol exports totaled 1.33 billion gallons, which
fell 9.8% compared to 2019.\25\ The decline is almost entirely due to
COVID's downward impact on gasoline demand, as shown in the graph
[above]. Through Q3 2021, the U.S. exported 872.1 million gallons of
ethanol. Unfortunately, this is on pace to fall below last year's
export numbers by nearly 170 million gallons.
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\25\ U.S. Department of Agriculture, Foreign Agricultural Service.
``Biofuels,'' https://www.fas.usda.gov/commodities/biofuels.
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Growth Energy has been working closely in markets such as Brazil,
Canada, India, Mexico and China to encourage the adoption of biofuels
as a displacement to petroleum products. Expanding ethanol use around
the world will boost domestic production and help countries meet their
carbon reduction and clean air commitments at the same time.
Industry Assistance for COVID Losses
On June 15, 2021, USDA announced that it will provide $700 million
in aid to support biofuel producers recover from the wake of the COVID
pandemic. The funds will be distributed through USDA's Pandemic
Assistance for Producers initiative to provide additional relief to the
farmers that depend on a vibrant biofuels industry, however, no funds
have been released to date.
Although the details on how these funds will be distributed remain
opaque, Growth Energy has provided USDA the following suggestions,
which we urge you to support:
1. Assistance should only be available to biorefineries that were in
normal operation between Jan. 1 and March 1, 2020.
As the emergency relief funding is intended to address only
revenues lost as a direct result of COVID, ethanol
biorefineries that were not operating normally prior to the
pandemic should not qualify to receive assistance.
2. Assistance levels should be the same on a per gallon basis for
each biorefinery who seeks assistance.
Because each biorefinery in operation during COVID suffered the
same economic injury due to the pandemic, each biorefinery
should receive the same per gallon level of assistance. We
recommend providing assistance of 10 a gallon based on
each qualifying biorefinery's production in 2019, the last
full year before COVID demand destruction.
3. Payments made to biorefineries should be made public.
We support making available to the public information on which
entities are receiving assistance and in what amount.
We are grateful for this support from USDA which reflects President
Biden's repeated promises to support rural and clean energy jobs.
However, we urge the USDA to release this funding as soon as possible.
Many biofuel producers have yet to recover from the devastating drop in
fuel demand due to COVID and are lacking certainty due to the delay in
releasing the COVID aid.
Higher Octane Fuels Help to Drive Lower Vehicle Greenhouse Gas
Standards and Better Fuel Economy
It is imperative to consider the benefits of using high-octane,
low-carbon fuels to make engines more efficient. Beyond E15, Growth
Energy has been a leader on the need for higher octane, mid-level
ethanol blends, first submitting a proposal for a 100 RON, E30 fuel
nearly a decade ago. By moving towards higher octane, lower carbon mid-
level blends, automakers can optimize engines to further improve
efficiency and further reduce both greenhouse gas and tailpipe
emissions.
The science supporting the benefits of a high-octane, low-carbon
midlevel blend in conjunction with a high compression ratio engine is
not new, and has been well-explored by the national labs, automobile
manufacturers, and other scientific institutions.\26\ Ethanol has a
very high octane number, a lower carbon content than the gasoline
components it replaces, and myriad other benefits that assist in
combustion to increase engine efficiency and reduce both greenhouse gas
and tailpipe criteria pollutant emissions.
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\26\ See e.g., Oak Ridge National Laboratory, Summary of High-
Octane, Mid-Level Ethanol Blends Study (July 2016), available at
https://info.ornl.gov/sites/publications/Files/Pub61169.pdf.
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We urge the Committee to work with USDA, EPA, and the Department of
Transportation to move quickly to require a minimum octane standard as
well as to approve a high-octane, mid-level ethanol blend such as that
first proposed by Growth Energy for vehicle certification as well as
for consumer use. Additionally, we strongly support the Next Generation
Fuels Act (H.R. 5089) introduced by Congresswoman Bustos. This
important legislation would increase the use of high-octane, low-carbon
biofuels while limiting the use of harmful petroleum additives. We
would urge Congress to consider and enact this key legislation.
Conclusion
The biofuel industry stands ready to work with Congress and the
Biden Administration to meet our national commitments to attaining
aggressive climate goals by mid-century while supporting rural
development, working families, and renewable energy. With forward-
leaning policies that support innovation and access to markets, our
industry will continue to reduce our carbon footprint, create more
clean energy jobs, spur economic activity in rural and farming
communities, and provide drivers across the country with affordable,
clean fuel choices today.
Congress can help accelerate our transition to a clean energy
future and a prosperous rural America with some of the provisions in
the Build Back Better Act that help reduce the carbon footprint of
transportation. Infrastructure investments will expand consumer access
to higher fuel blends of homegrown biofuels like E15. Ensuring the RFS
is administered as intended by Congress will guarantee that we blend
more low-carbon renewable fuel in our transportation sector each year.
And reducing trade barriers to U.S. ethanol allows greater access to
foreign markets, boosts our domestic production, and assists other
countries in meeting their carbon reduction commitments.
In short, we have ample opportunity to achieve our renewable energy
goals while supporting an industry that has supported rural America for
decades. I appreciate the opportunity to participate in this important
hearing on renewable energy's role for agriculture and rural economies.
Thank you and I look forward to answering your questions.
The Chairman. Thank you, Ms. Skor.
Mr. Pratt, please begin when you are ready.
STATEMENT OF JEFF PRATT, PRESIDENT, GREEN POWER EMC, TUCKER,
GA; ON BEHALF OF NATIONAL RURAL
ELECTRIC COOPERATIVE ASSOCIATION
Mr. Pratt. Thank you, Chairman Delgado, Ranking Member
Fischbach, and Members of the Subcommittee. On behalf of Green
Power EMC and 38 other member cooperatives in the State of
Georgia, we really appreciate the opportunity to testify today.
I want to share with you the growth opportunities that we
found in renewable energy in Georgia, and the challenges and
opportunities that poses for rural America.
My name is Jeff Pratt, and I am the President of Green
Power EMC, and our co-ops serve about four million Georgians,
there are about 900 similar cooperatives across the country
that serve about 56 percent of the mostly rural areas of this
country.
In 2001, the electric co-ops in Georgia had a lot of
foresight, and before it was popular, created Green Power EMC
and focused on the procurement of renewable energy, mostly
biomass energy and hydro energy. Since that time, though, in
2015, almost 14 years later, we created our first large-scale
solar project in about 200 acres. Six years later, today we
have committed to over 15,000 acres. That is about an 8,000
percent increase.
To that end, we have made great strides in reducing our
carbon footprint in the State of Georgia through nuclear power
and this renewable engagement. But in rural America, and in
Georgia, most of our solar plants are located in these areas
where there are challenges and competing land interests. So, we
work very hard to make sure that we are good stewards of the
land in those areas, and we do that in a couple of ways that I
want to share with you.
One of them is to make sure there are no surprises to those
rural communities, and make sure that we are very courteous and
honor the local farms in meaningful ways. One of those is to
create regenerative farming on the solar farm itself by putting
sheep and managing vegetation with livestock, and sequestering
carbon underneath in the soil of those facilities as we do so.
There are other challenges with renewable energy in the
State of Georgia, and while we have one of the most robust
transmission and distribution systems in the country, the
intermittent nature of renewable energy, especially solar in
Georgia, creates challenges that will require investment and
planning and dedication to make sure that we do not sacrifice
reliability and affordability for all of our customers, which
are very important, especially in those rural areas.
Some of the challenges are going to require technologies
that are just emerging, that we are just learning to engage,
and they are not cheap. Some of the provisions in the proposed
legislation recently include opportunities that would help make
some of that technology more affordable as it becomes
available, provisions such as tax incentives. Tax incentives
are very helpful, but in Georgia, we have some difficulty as
not-for-profit utilities and extracting the full value of those
tax incentives. So, we would be very supportive of direct pay.
Second, $10 billion, I understand, has been proposed to
relieve debt burden and to invest in new clean technologies.
All of those we would like to have in our quiver of tools to
help increase our emission reductions in the state.
I would like to say that we are very supportive of all the
efforts that the Committee is looking at here. We want to make
sure that these efforts are affordable, the efforts do not
sacrifice reliability, and bring opportunities to rural
America, which is a big part of the areas in which our
cooperatives serve.
Thank you very much, Mr. Chairman.
[The prepared statement of Mr. Pratt follows:]
Prepared Statement of Jeff Pratt, President, Green Power EMC, Tucker,
GA; on Behalf of National Rural Electric Cooperative Association
Chairman Delgado, Ranking Member Fischbach, and distinguished
Members of the Subcommittee, on behalf of Green Power EMC and Georgia's
electric cooperatives, thank you for the opportunity to testify on
renewable energy growth across Georgia and the opportunities and
challenges it presents for rural communities.
My name is Jeff Pratt and I am the President of Green Power EMC,
the not-for-profit electric cooperative that secures renewable energy
resources for the broader family of 38 Georgia electric cooperatives.
Electric cooperatives (or, as we call them in Georgia, Electric
Membership Corporations (``EMCs'')) are not-for-profit electric
utilities owned and operated by the communities they serve. In Georgia,
electric cooperatives distribute power to their member-consumers--
residents, businesses, and public institutions--approximately 4.3
million Georgians across 65% of the state's land area in 151 of 159
counties. Georgia's electric co-ops represent the largest group of
cooperatives in the U.S. based on the number of end-use customers and
their electrical load.
Around the country, there are approximately 900 electric
cooperatives in 48 states serving 56% of the nation's landmass but only
about 13% of the population. We operate in the most rural parts of the
country and serve 92% of the country's persistent poverty counties. Our
not-for-profit status and local control help us be nimble and
innovative as we strive to meet evolving consumer demands.
Background
In 2001, long before it was popular to be ``green,'' Georgia's
electric cooperatives founded Green Power EMC to source renewable
generation for the cooperative energy portfolio. Green Power EMC became
the first renewable energy provider in the state of Georgia,
aggregating the interest in renewables of small and large cooperatives
alike, evaluating renewable energy alternatives, and recommending
projects for cooperative participation.
In its early days, Green Power EMC procured energy from landfill
gas projects. Later, Green Power EMC purchased power from Georgia's
only certified run-of-river hydro facility. In 2010, Green Power EMC
began purchasing energy from two of Georgia's first solar projects.
In 2015, through Green Power EMC, Georgia's cooperatives contracted
for their first large-scale solar project--a 20 megawatt facility
covering nearly 200 acres of land in south Georgia. In the past 6
years, Georgia's electric cooperatives have grown their solar portfolio
by 8,000%, utilizing approximately 15,000 acres of land in rural
Georgia. These solar projects will collectively produce enough
electricity to serve more than 270,000 cooperative households each
year. This growth is driven by market economics and consumer demand,
without mandates by our state or Federal Government.
On behalf of its members, Green Power EMC continues to evaluate new
solar opportunities as well as the potential for other renewable
technologies including wind, biomass, and hydro projects. However, the
significant decline in the cost of solar energy production equipment
and the ample availability of sunlight in Georgia make solar energy the
current most cost-effective means to provide affordable renewable power
for our cooperatives.
From a Federal perspective, 491 electric co-ops in 43 states use
solar energy, with a combined capacity, including utility-scale and
community solar, of 1,374.8 megawatts. In addition to solar, electric
cooperatives have been engaged in other renewable resources for many
years. Nationally, we have nearly tripled our total renewable capacity
from 3.9 gigawatts in 2010 to more than 11.4 gigawatts in 2020. That's
enough energy to serve nearly 2.7 million homes. Additionally, co-ops
have announced more than 6.4 gigawatts of new renewable capacity
planned from 2021-2024. Because of our geographic diversity, electric
cooperatives are significant stakeholders in solar, wind and
hydroelectric generation assets.
Challenges and Opportunities
Technology and Intermittency: Georgia's electric cooperatives are
committed to reducing greenhouse gas emissions, without sacrificing
reliable and affordable electric service. While solar is among the
lowest cost of energy in Georgia, the intermittent nature of this
generating resource presents technical and economic challenges as it
becomes a larger percentage of our electricity generation portfolio. As
the volume of solar energy increases, so do necessary investments in
technologies such as battery storage and new energy management control
systems to maintain expected levels of reliability. While these
technologies are advancing rapidly, the investment required to deploy
these technologies is significant and the effectiveness to ensure
reliability and affordability on a utility scale is largely unproven.
While we wait for battery storage technologies to be perfected, Georgia
relies heavily on base load power such as nuclear generation, to
provide 24/7 reliability to balance the intermittency of our large
solar portfolio.
Transmission and Distribution: Georgia has one of the most robust
transmission and distribution systems in the United States. The
transmission system is unique because the infrastructure is shared
among the state's utilities through a structure called the Integrated
Transmission System, which comprises joint system planning and
minimizes redundant equipment. We are accustom to responding to
changing market conditions with cost-effective and timely transmission
system improvements. However, as higher levels of intermittent
generation resources are connected to our transmission and distribution
systems, it will be necessary to adjust our system planning and
management practices, equipment, and control software to maintain
current levels of reliability and resiliency.
A foundational program for most electric cooperatives in Georgia,
and a key financial resource to help meet these transmission
challenges, is the U.S. Department of Agriculture's Rural Utilities
Service (RUS) Electric Loan program. Georgia's electric cooperatives
utilize RUS loans for many basic functions of providing electricity to
our state, such as building new distribution lines, installing smart
meters, making environmental improvements to generation facilities, and
strengthening transmission lines.
Programs like the RUS Electric Loan Program will help make many of
these transmission system improvements possible. Many states may also
take advantage of the new opportunities made available through the
Infrastructure Investment and Jobs Act passed by Congress just a few
days ago.
Co-ops and Federal Financial Incentives: Electric cooperatives are
meeting today's energy needs and planning for the future, but
historically we've been limited by the Tax Code and the costs of
implementing new technologies. As not-for-profit businesses, current
law does not allow electric cooperatives to access the full value of
clean energy tax incentives available to taxable businesses, including
investor-owned utilities. Electric cooperatives need access to ``direct
pay'' tax incentives to reduce the cost of energy innovation projects,
including the deployment of renewables, nuclear energy and other
emerging technologies, the expansion of energy storage projects, and
installation of electric charging infrastructure. This direct pay
option is included as part of the clean energy tax credits in current
drafts of the Congressional budget reconciliation bill.
The current draft of the budget reconciliation bill also includes a
proposed voluntary $10 billion USDA-based clean energy fund to assist
electric cooperatives with outstanding debt on stranded generation
assets or to facilitate the deployment of new clean energy sources.
This program could help electric cooperatives grow green energy
programs like we already have in Georgia.
Rural Economic Opportunity: Georgia's rural communities have
realized great financial benefits from the growth in cooperative solar
projects. These projects have created thousands of construction jobs
for local citizens and contribute significant ongoing tax revenue for
local economies and governments supporting health, emergency, and
school services in rural communities across Georgia. In many cases, a
large-scale solar project generates the largest tax revenue in the
county.
Supply Chain: Rapid growth in demand combined with current global
trade inefficiencies have increased the cost of solar equipment.
Electric cooperatives are facing uncertainty about the availability of
raw materials for all parts of our business, including the anticipated
growth of our solar footprint in the coming months and years. This
could be compounded by, and will need to be managed in concert with,
the growth of new Federal incentives to incentivize more rapid
renewable deployment.
Balancing Land Use Demands: Despite these economic benefits, as
investments in solar projects increase, some communities have been
challenged to find a balance between the competing interests of solar
land use and traditional farming operations. The majority of the land
area ideal for solar energy facilities in Georgia is rooted in rural
agriculture. Georgia's electric cooperatives have a long history of
providing electricity to these agrarian communities.
Green Power EMC and its members, in partnership with solar
developers and innovative local agricultural leaders, are employing
regenerative agriculture practices at solar farms, including land
management using planned sheep grazing. Herds of livestock reside part-
time at the solar farms and graze beneath the solar panels. As sheep
bite off the tops of plants, keeping vegetation from shading the solar
panels, they fertilize the soil, causing more plants to grow. This
agricultural practice is designed to improve soil health, sequester
carbon, and boost water quality on land used for solar power
generation. This approach also generates new long-term revenue
opportunities for farmers and the local communities and supports
important agricultural jobs. Additionally, these practices also promise
to provide measurable sequestration of carbon in natural systems
thereby providing additional mitigation of climate change challenges
that face our planet.
Conclusion
Green Power EMC and its member cooperatives are proud of Georgia's
significant growth in renewable energy. We are committed to meeting the
demands of a transitioning energy landscape in innovative ways that can
support local economies while not sacrificing affordability or
reliability. Thank you for conducting this hearing and for the
opportunity to share how renewable energy is benefitting rural Georgia
economies.
The Chairman. Thank you, Mr. Pratt.
Next, we have Mr. Wheeler. Please begin when you are ready.
STATEMENT OF GARY WHEELER, EXECUTIVE DIRECTOR AND CHIEF
EXECUTIVE OFFICER, MISSOURI SOYBEAN
ASSOCIATION, MISSOURI SOYBEAN MERCHANDISING
COUNCIL, AND FOUNDATION FOR SOY INNOVATION,
JEFFERSON CITY, MO; ON BEHALF OF AMERICAN SOYBEAN ASSOCIATION
Mr. Wheeler. Good morning, Subcommittee Chairman Delgado,
Ranking Member Fischbach, Ranking Member Thompson, and Members
of the Subcommittee. It truly is an honor to testify before you
on the renewable economy and what it means for America's soy
farmers. I am Gary Wheeler, Executive Director and CEO of
Missouri Soybean Association, the Missouri Soybean
Merchandising Council, and the Foundation for Soy Innovation.
The Missouri Soybean Association, along with Missouri
Soybean Merchandising Council and the Foundation for Soy
Innovation, are affiliates of either the American Soybean
Association, which represents 500,000 soybean farmers on
domestic and international policy issues, or the United Soybean
Board, which invests in check-off funds to advance soybean
marketing, production, technology, and development of new uses.
It may be obvious to the Members of this Committee that
America's abundant supply of soybeans helps feed our country
and the world. However, it is less known that U.S. companies
now also offer approximately 1,000 soy biobased products,
thanks to the versatile chemical composition of soybeans. When
processed, soybeans are divided into protein and oil. Soy
protein is around 80 percent of the bean and is primarily used
in plant-based foods like tofu and in livestock animal feed,
but is also an ingredient in plastic composites, synthetic
fiber, paper coatings, adhesives, and more. Soybean oil, the
remaining 20 percent of the bean, is one of the most versatile
natural oils. Its molecular structure and suitable fatty acid
profile can be used in many applications, from food use and
cosmetics, to asphalt and biodiesel.
Bioproducts made from soy are sustainable. Unlike fossil
fuel-based feedstocks, soybeans capture carbon dioxide from the
atmosphere. In addition, most soybean acreage in the U.S. uses
conservation tillage, which disturbs less soil and helps
sequester carbon in cropland. Soy bioproducts also lower
greenhouse gas emissions, reduce energy costs, and exposure to
toxic chemicals by workers, and add credits toward LEED
certification. There are also economic advantages to using soy
in manufacturing and consumer products.
This year, growers are harvesting an immense crop of 4.4
billion bushels. This abundance has enabled soy ingredients to
maintain an historic price advantage over petrochemical
equivalents, and has helped reduce America's dependence on
foreign oil.
Soy-based bioproducts create jobs. USDA's most recent
report on the economic impact of the U.S. biobased products
industry found that increasing demand for domestic biobased
products added $470 billion and over 4.6 million direct and
indirect jobs to the U.S. economy.
In Missouri, we partner with Cole County Sheriff's
Department to demonstrate that Goodyear soy tires perform so
well that they meet the demands of law enforcement. Goodyear
determined that soybean oil mixes more readily with rubber
compounds, reducing energy consumption and improving tire
efficiency. Goodyear is now increasing soy oil consumption as
part of their commitment to phase out petroleum-derived oils
from products by 2040.
Another opportunity in the transportation sector is
PoreShield, a soy-based concrete protector developed through a
partnership among Purdue University, the Indiana Soybean
Alliance, and the Indiana DOT. PoreShield is nontoxic and
provides long-lasting concrete protection while replacing
traditional sealants and eliminating reliance on harmful
solvents. My Indiana counterparts recently highlighted this
award-winning product at the UN Climate Change Conference in
Scotland.
As we continue to look at new markets, uses, and soybean
research, I wanted to highlight the unique relationship between
land-grant institutions and check-off investments in driving
innovation. In one success story, the University of Missouri
and USDA Agricultural Research Service are joint owners of the
patent for SOYLEIC and MSMC is the exclusive licensee. SOYLEIC
is a non-GMO, high oleic seed trait that can be incorporated in
today's soybean varieties, resulting in high oleic oil and
meal. These products demonstrate that we are off to a great
start; however, the Federal Government needs to invest further
for the renewable economy to truly take off.
First, Congress can urge EPA to fulfill its statutory
authorities under the Renewable Fuel Standard to support
American grown soy-based biofuels. Failure to release annual--
--
The Chairman. Mr. Wheeler, I am sorry. If you could wrap it
up in the next couple seconds, that would be helpful.
Mr. Wheeler. Under the RFS created uncertainty in the
biofuel markets, and this inaction continues to stymie the
growth.
The nation's 500,000 soybean farmers are unified in their
effort to grow market opportunities. By providing the best raw
materials to create sustainable, biobased products, we stand
ready to work with this Committee, Congress, and the Biden
Administration to help grow the bioeconomy, great jobs, and
enhance American sustainability.
I look forward to answering your questions and continuing
this important discussion on the renewable economy. Thank you.
[The prepared statement of Mr. Wheeler follows:]
Prepared Statement of Gary Wheeler, Executive Director and Chief
Executive Officer, Missouri Soybean Association, Missouri Soybean
Merchandising Council, and Foundation for Soy Innovation, Jefferson
City, MO; on Behalf of American Soybean Association
Introduction
Chairman Delgado, Ranking Member Fischbach, and Members of the
House Committee on Agriculture Subcommittee on Commodity Exchanges,
Energy, and Credit, it is an honor to testify before you on the impact
of the bioeconomy in rural America and what it means for America's soy
farmers. My name is Gary Wheeler, Executive Director and CEO of the
Missouri Soybean Association (MSA), Missouri Soybean Merchandising
Council (MSMC), and Foundation for Soy Innovation (FSI).
MSA is a statewide membership organization designed to increase the
profitability of Missouri soybean farmers through legislative advocacy,
public policy initiatives, and education efforts across the state. MSMC
is a farmer-run organization dedicated to improving the profitability
of the Missouri soybean farmer through a combination of marketing,
research, and commercialization programs. FSI builds strategic
partnerships and leverages resources throughout the soy value chain to
advance innovation and grow demand through partnership and scholarship.
The Missouri soy organizations are affiliates of either the
American Soybean Association (ASA), which represents America's 500,000
\1\ soybean farmers on domestic and international policy issues
important to the soybean industry, or the United Soybean Board (USB),
which invests check-off funds in programs and activities that advance
soybean marketing, production, technology, and the development of new
uses. MSA, MSMC, FSI, ASA, and USB are all farmer-led organizations.
---------------------------------------------------------------------------
\1\ USDA National Agricultural Statistics Service.
---------------------------------------------------------------------------
America's soybean growers play an essential and growing role in the
bioeconomy. It may be obvious to the Members of this Committee that
America's abundant supply of soybeans helps feed America and the world.
However, it is likely less known that U.S. companies now also offer
approximately 1,000 soy biobased products made with ingredients grown
on American family farms--thanks to the versatile chemical composition
of soybeans.
When processed, soybeans are divided into protein and oil. Soybean
protein (approximately 80% of the bean) is primarily used in plant-
based foods like tofu and livestock animal feed, but it is also an
ingredient in plastic composites, synthetic fiber, paper coatings,
adhesives, and more. Soybean oil (the remaining 20%) is one of the most
versatile natural oils; its molecular structure and suitable fatty-acid
profile can be used in many applications, including biodiesel.
Bioproducts made with soy protein and oil are sustainable. Unlike
fossil fuel-based feedstocks, soybeans capture carbon dioxide from the
atmosphere. They also fix their own nitrogen for energy, limiting
chemical-based fertilizer applications. In addition, most soybean
acreage in the U.S. uses conservation tillage, which disturbs less
soil, reduces fuel use, and helps sequester carbon on cropland. End-
users continue to increase demand for sustainably produced products,
and soy growers are ready to help deliver manufactured products with
environmental benefits that include lower greenhouse gas emissions,
reduced energy costs, lower volatile organic compounds (VOCs), reduced
exposure to toxic chemicals by workers, credits toward LEED
certification of certain finished products, and reduced processing
costs and environmental compliance fees.
There are also economic advantages to using soy in manufacturing
and producing consumer goods. Soybeans are renewable and abundant--this
year soy growers are harvesting an immense crop of 4.4 billion
bushels--which has enabled soy ingredients to maintain an historic
price advantage over petrochemical equivalents and has helped reduce
America's dependence on foreign oil. Soy-based bioproducts also create
jobs. Released in 2021, USDA's most recent report on the economic
impact of the U.S. biobased products industry found that American-made
biobased products added $470 billion and more than 4.6 million direct
and indirect jobs to the U.S. economy.\2\
---------------------------------------------------------------------------
\2\ Daystar, J., Handfeld, R.B., Pascual-Gonzalez, J., McConnell,
E. and J.S. Golden (2020). An Economic Impact Analysis of the U.S.
Biobased Products Industry: 2019 Update. Volume IV. A Joint Publication
of the Supply Chain Resource Cooperative at North Carolina State
University and the College of Engineering and Technology at East
Carolina University.
---------------------------------------------------------------------------
Across America, cities, communities, companies, and government
agencies are transitioning to plant-based products, limiting reliance
on petroleum-based products while reducing greenhouse gas emissions.
The increased production of biobased products to meet this demand
contributes to the development and expansion of the U.S. bioeconomy,
where society looks to agriculture for sustainable sources of fuel,
energy, chemicals, and products.
Biobased Soy Products
Through the soybean check-off, U.S. soybean organizations are
partnering with major companies and universities to create new rapidly
renewable materials made with soy. It would be impossible to walk
through the many biobased soy products on the record today, but I am
pleased to use this hearing as an opportunity to highlight several soy
biobased success stories and outline opportunities that this Committee
and the Biden Administration have to further strengthen the bioeconomy.
In Missouri, we collaborated with the Cole County sheriff's
department to demonstrate that Goodyear soy tires perform so well that
they meet the demands of law enforcement. The Goodyear Tire & Rubber
Company discovered that soybean oil mixes more readily with rubber
compounds than other oils and reduces energy consumption, which
improves tire manufacturing efficiency. Because of this achievement,
Goodyear received the prestigious Tire Technology International Award
for Innovation and Excellence in the ``Environmental Achievement of the
Year'' category at the 2018 Tire Technology Expo. Incidentally, this
same soy-based technology is now also delivering grip, stability, and
durability in Skechers brand running shoes for men, women, and children
thanks to a collaboration with Goodyear.
Goodyear's 2020 use of soybean oil increased 73% over 2018 usage,
and this year the company announced a new sustainable soybean oil
procurement policy and a commitment to phasing out petroleum-derived
oils from its products by 2040, using soybean oil in its place.
Another exciting opportunity for highways, buildings, and more is
PoreShieldTM, a revolutionary soy-based concrete protector
that is the result of a partnership between Perdue University, Indiana
Department of Transportation, and the Indiana Soybean Alliance. In
addition to providing long-lasting concrete protection,
PoreShieldTM prevents pollution by replacing traditional,
toxic concrete protectors and sealants, reducing VOCs by 90%, and
eliminating the need for harmful solvents. As a nontoxic product,
PoreShieldTM is safe for the environment and workers and
requires no personal protective equipment while applying. The product
received the 2021 Indiana Department of Environmental Management
Governor's Award for Environmental Excellence, and it also drew the
attention of the U.S. Department of Agriculture, which invited Indiana
soybean growers to highlight PoreShieldTM at the U.N.
Climate Change Conference (COP26) this month (Nov. 2021).
According to the Federal Highway Administration, there are more
than 4 million miles of paved roads in the U.S. On average, 400 bushels
of soybeans are used for every two-lane mile receiving a full surface
PoreShieldTM treatment. Using soy in such sustainable road
construction and maintenance presents countless opportunities to
support U.S. soybean farmers and boost local economies.
Soy has also demonstrated success in construction and paving by
winning the American Chemical Society (ACS) 2021 Cooperative Research
Award in Polymer Science and Engineering for ``putting soy-based
thermoplastics to work in the construction industry.'' The United
Soybean Board and the Iowa Soybean Association contributed to research
on a soy oil polymer that can replace petroleum-based polymers in
asphalt paving. The cost-effective asphalt biobased polymer debuted in
2019, and it has been demonstrated in multiple municipalities and
tested in 30 states. The soy-based polymer improves performance even
while it promotes environmental stewardship--not only because it's
biobased, but also because it allows for more recycled asphalt content.
Importantly, soy-based polymer is cost competitive with asphalt paving
materials that depend on foreign oil instead of U.S.-grown soybeans.
To highlight an exciting bioproduct currently in development, MSMC
is partnering with Dr. Ram Gupta of the Kansas Polymer Research Center
at Pittsburg State University to develop biodegradable, soy-based,
high-performance golf balls. In general, golf balls are made of three
layers: core, inner layer, and outer layer. We plan to use soybean-
based composites for the core and soybean oil-based polyurethane
coating as the outer layer. Golf is played by more than 60 million
people around the world. In the United States alone, over 24 million
people enjoy playing the game, including more than 8,000 professional
players. More than 850 million golf balls are produced every year to
fulfill that demand, but many are lost on the course or in the water
and are never recovered, permanently cluttering natural areas.
Utilizing soybean materials to serve this $550 million market will
support agriculture and make the game of golf more eco-friendly, or
what I like to call staying green on the green!
It's critical that we continue to push the envelope when it comes
to new market uses and soybean research. The unique relationships
between land-grant universities and check-off investments drive
innovative technologies and traits that become industry standard. In
one successful public-private partnership, the Curators of the
University of Missouri and the USDA Agricultural Research Service are
joint owners of the patent for SOYLEIC', and MSMC is the
exclusive licensee. The patented process is the product of a
partnership between the University of Missouri, USDA, MSMC, and USB.
SOYLEIC' is a non-GMO, high-oleic seed trait that can be
incorporated into today's soybean varieties, resulting in high oleic
oil and meal. High oleic soybeans can be used in high-performing
industrial applications. They also lack trans fats and have an extended
shelf life, and the oil is more stable in baking and frying, helping
create nutritious food for humans and feed for animal diets.
This type of public-private partnership is key to the success of
growing a renewable rural America. The demand for high oleic soybeans
is growing significantly, creating diversified and value-added options
for farmers and opportunities for downstream customers in the U.S. and
abroad. Proceeds from the sale of soybean varieties developed through
the research program are then reinvested into soybean research--and
growing demand and preference for U.S. soy around the world.
Soy-Based Biofuels
When talking about the benefits of soy-based bioproducts, perhaps
there is no better example than soy-based biofuels. Biodiesel,
renewable diesel, and sustainable aviation fuel are made from a variety
of readily available feedstocks, including soybean oil. After the Food
and Drug Administration started regulating trans fats in 2006, the
demand for soy oil for food dropped significantly. Around the same
time, we were developing new cooking oil options like high-oleic,
soybean growers and others also worked to promote commercial production
of biodiesel made from soybean oil--a biobased product that supports
farmers and rural communities and diversifies our fuel supply while
reducing emissions.
The growth of the biodiesel industry, and more recently the
renewable hydrocarbon diesel industry, has been spurred by strong
Federal and state-level policies that promote cleaner, lower-carbon
energy sources, including the Renewable Fuel Standard. Biodiesel offers
lower emissions solutions in the transportation and heating sectors,
among others. With just under half of the homes in the northeast still
reliant on home heating oil in the colder months, biodiesel blended
into ``Bioheat''' offers a lower-carbon alternative that
meets state low-carbon standards while sparing homeowners from
retrofitting their home heating systems. Looking toward the
transportation sector, as the Administration seeks to move toward an
electric vehicle-focused approach to lowering GHG emissions, biodiesel
and renewable diesel can offer GHG emissions reductions of at least 50%
compared to petroleum diesel in aging vehicles that still require
liquid fuel and in heavy-duty vehicles that are more difficult to
electrify.
Of note, government and corporate entities around the country are
already utilizing biodiesel as an opportunity to achieve lower
emissions. For example, New York City requires all 11,000 city fleet
vehicles to use biodiesel--from vehicles used by the police and fire
departments to those used by the department of sanitation and other
off-road city equipment vehicles. New York City also uses
Bioheat' to heat municipal and private buildings across the
city. Other cities like Washington, D.C. are also transitioning their
fleets to biodiesel. In 2018, D.C. used 120,000 gallons of biodiesel in
its vehicle fleet, which resulted in 1,000 fewer tons of GHG emissions.
Last year, the D.C. Department of Public Works announced it would begin
running 17 garbage trucks on B100, or 100% biodiesel--an 86% GHG
emissions reduction from a traditional petroleum-fueled garbage truck.
The results are so clear that the city plans to double the size of its
B100 vehicles in the next year. Through funds granted by EPA's Diesel
Emissions Reduction Act program, D.C. Water Authority is expanding its
use of B100 to 31 vehicles where it also benefits worker health. Soy
farmers are proud of the success of biodiesel not only for the new
market opportunities the fuel created for us, but also for being able
to grow a clean energy solution right in our fields. Many of us use
biodiesel in our own farming equipment.
Center for Soy Innovation
In Missouri, our own organization is setting an example by using
these products. Our new Center for Soy Innovation in Jefferson City,
Missouri, opened in March 2020 as a collaboration between MSMC, MSA,
FSI, and other partners. The center showcases soy-based building
materials and demonstrates new uses for soybeans, and it serves as a
hub for biobased business development and incubation. Our living,
hands-on displays illustrate the decades of research made possible by
American soybean farmers and our industry partners, who continue to
find new and innovative uses for soy. Some of the soy-based products on
display include:
Biodiesel, which powers the center's furnace.
Columbia Forest Products' PureBond' plywood. The
soy flour-based PureBond' adhesive won an EPA Green
Chemistry Award and represents the first cost-competitive,
environmentally friendly adhesive that replaced toxic urea-
formaldehyde (UF) resin.
Huntsman's Building Solutions's Heatlok' soy
spray foam insulation. A high-performing versatile spray foam
made with 14% renewable soybean oil and recycled plastics.
Heatlock' is used in a wide variety of applications,
including insulating the underside of bridges and tunnels. It
can provide strength to structures and reduce water seepage and
damage from freezing and thawing.
Sherwin Williams paint, which received an EPA Presidential
Green Chemistry Challenge Award in 2010 for its breakthrough
paint formulation that uses both soybean oil and recycled
plastic bottles. This technology eliminates use of thousands of
barrels of oil and hundreds of thousands of VOCs.
Signature Flooring high-performance carpet with soy backing,
which offers a durable solution for commercial, high-traffic
installations, has excellent moisture resistant properties and
emits low VOC levels for improved indoor air quality. The
Pentagon installed similar door mats in 2010 and continues to
use them as a durable, cost-effective solution to help reduce
the environmental footprint of the world's largest (and heavily
trafficked) office building.
SYNLawn' artificial turf, which uses soybean oil
to displace 60% of the petroleum in its backing. This same turf
is installed at Kennedy Space Center's Visitor Complex in the
rocket launch viewing area and in more than 200,000 other
installations in the U.S. plus 19 other countries. The
SYNLawn' company is adding 10% more soy to its
products in 2021 and will start using sugarcane and other
agricultural products as well.
Cargill's Anova, a biobased asphalt rejuvenator, is featured
in our parking lot. This product offers an important benefit,
as it allows for increased use of recycled asphalt.
The Center for Soy Innovation was a $4 million investment in the
Jefferson City community, bringing capital, jobs, and visitors to the
region. There is no other facility like it, aggregating a soy education
center, conference space, and research facility all under one roof. I
invite all the Members of this Committee to visit the center for an up-
close look at the soy biobased industry in action.
How can the government support biobased?
Biofuels Policy
The Federal Government is in a unique position to support and
promote biobased products and the bioeconomy through policy and
purchasing power. Since 2005, the Federal Government has supported
growth in the biofuels sector through the Renewable Fuel Standard
(RFS). The RFS, paired with other supports like USDA's Higher Blends
Infrastructure Incentive Program, increases access to and demand for
biofuels across the country. Unfortunately, over the past several
years, EPA has failed to release annual Renewable Volume Obligations
(RVOs) under the RFS in a timely manner. Failure to update these volume
obligations has created uncertainty in the biofuels market, which
directly impacts biofuel producers and has a negative downstream effect
on growers. To date, the Administration has yet to fulfill its
statutory requirement to release its 2021 or 2022 RVO under the RFS.
Without action on RVOs, the Administration is missing a prime
opportunity to promote lower-carbon fuel options for consumers and
continues to stymie biofuels industry growth due to a lack of certainty
in Federal support.
Federal Procurement and Coding
Beyond biofuels policy, the Federal Government has a unique
opportunity to support the bioeconomy through its purchasing power. The
U.S. Government is the single largest consumer in the world, purchasing
more than $550 billion in goods and services each year. Through the
2002 Farm Bill and subsequent farm bills, Federal purchasing
requirements for biobased products have been mandated and expanded.
This requirement in the Federal Acquisition Regulation, supported by
the USDA BioPreferred program, spurs growth in the biobased sector
while creating new markets for soybean growers. Since 2002, ASA has
supported farm bill provisions that created and enhanced the Federal
BioPreferred Program at USDA. ASA has encouraged USDA to actively
promote the use of biobased products to Federal agencies and other
buyers.
Because someone develops a better product by using biobased
content, it unfortunately does not mean that product has a guaranteed
buyer. Federal agencies have a huge opportunity to drive demand for
these products by doing what the farm bill promotes, which is to buy
biobased products that are designated by USDA's BioPreferred Program.
Much like the USDA BioPreferred program, the North American
Industry Classification System (NAICS)--the standard used by Federal
statistical agencies in classifying businesses for the purpose of
collecting and publishing statistical data about the U.S. economy--can
be a tool to help spur growth in the biobased products space. NAICS is
used domestically for various contracting and tax purposes, like state
governments offering tax incentives for specific NAICS-coded
industries. NAICS is also used by several Federal agencies for
procurement programs, requiring a NAICS code be provided for each good
or service procured. Unfortunately, NAICS does not currently include
codes for biobased products manufacturers.
Through the 2018 Farm Bill, Congress issued a statutory directive
to the Department of Commerce to develop a NAICS code specifically for
biobased products manufacturers in coordination with USDA. Since that
time, all annual revisions of NAICS codes have excluded biobased
products. Without a NAICS code, many biobased products manufacturers
get buried in other product classification codes that do not properly
identify their products (e.g., plastic, chemicals, packaging, etc.).
Without these dedicated codes, data collection, statistical reporting,
and consumer trend tracking are nearly impossible, thus hampering
growth in the bioeconomy. ASA has urged the Office of Management and
Budget, through its annual NAICS revision process, to heed Congress'
directive to include a specific code for biobased products.
Research and Community Development
Aside from Federal procurement and coding, the government's support
of research and community development can advance the renewable economy
in America.
Federal support of land-grant universities and extension services
is especially critical, and soy growers support increasing funding for
these rural fixtures. These institutions are responsible for educating
the next generation of farmers, ranchers, and citizens; through public-
private partnerships--such as the collaboration that created
SOYLEIC'--they provide the foundation for America's
leadership in research and development; and by fostering innovation and
entrepreneurship, they boost communities and economies.
Another exciting new development is the inclusion of a pilot
program in the bipartisan infrastructure bill to study the
environmental benefits of biobased construction materials and consumer
goods. As mentioned earlier, soybean farmers have long supported the
development of a wide variety of biobased products and are hoping that
this pilot program will provide another opportunity to highlight the
benefit of these products--especially soy-based construction materials,
which have proven success in projects administered by state departments
of transportation but have yet to be utilized by the U.S. Department of
Transportation (DOT).
Furthermore, USDA, DOT, Department of Defense, and other agencies
can use their programs to promote use of biobased products across the
nation through their partnerships with states and local communities.
There will never be a robust bioeconomy without leadership that
literally paves the way for others to see that biobased products
perform as well as--or better than--alternatives. It is essential that
Federal agencies incorporate biobased products throughout their
programming.
Last, we are grateful that funding from USDA Rural Development
contributed to the construction of our Center for Soy Innovation. Rural
development programs can drive community demand for biobased products
during the USDA-supported construction of local buildings and
infrastructure projects. Rural communities would benefit through
increased demand for biobased products using the very same products
grown in local farmers' fields, while at the same time contributing to
the sustainability of USDA-supported facilities.
Conclusion
Chairman Delgado, Ranking Member Fischbach, and Members of the
Subcommittee, thank you again for the opportunity to testify on the
importance of biobased products and the significant contributions of
America's soybean farmers to the bioeconomy. The nation's 500,000
soybean farmers are unified in their effort to grow market
opportunities by providing the best raw materials to create
sustainable, biobased products. U.S. soy farmers are leaders when it
comes to using leading-edge technologies and best management practices
to increase economic and environmental sustainability, and I am
grateful for the opportunity to represent my peers in the soy industry
here today.
The soy industry stands ready to work with the Committee and
Subcommittee, Congress, and the Biden Administration to help grow the
bioeconomy, create jobs, and enhance American sustainability.
Thank you.
The Chairman. Thank you, Mr. Wheeler.
Ms. Bowman, please begin when you are ready.
STATEMENT OF JESSICA BOWMAN, EXECUTIVE DIRECTOR, PLANT BASED
PRODUCTS COUNCIL, WASHINGTON, D.C.
Ms. Bowman. Good morning, Chairman Delgado, Ranking Member
Fischbach, and Members of the Subcommittee. I am Jessica
Bowman, Executive Director of the Plant Based Products Council.
Thank you for the opportunity to talk with you today about
plant-based products and the role that they can play in a
renewable economy in rural America.
So, with plant-based products, we can use a variety of
feedstocks, from corn, to soy, to hemp, even agricultural waste
materials, to make many of the products that we use every day,
plastics, textiles, personal care products, building materials,
and more. The vast majority of these products are recyclable or
compostable at their end-of-life.
Plant-based products present an immense economic
opportunity for rural America. A recent report from USDA showed
that this industry grew 27 percent from 2013 to 2017, bringing
$470 billion in value to the U.S. economy, and supporting 4.6
million American jobs. These are often high-paying quality STEM
jobs like chemists, engineers, and accountants. But the overall
U.S. bioeconomy accounts for less than 2\1/2\ percent of the
U.S. economy, so we are really just scratching the surface
here.
This industry also represents the future of American
agriculture's role in providing innovations and solutions that
can reduce greenhouse gas emissions, and also move us to a more
circular bioeconomy where we are minimizing waste, using more
renewable resources, and keeping those resources in use longer.
USDA estimates that plant-based products have the potential to
reduce greenhouse gas emissions by 12.7 million metric tons of
CO2 equivalence per year.
To support growth of the circular bioeconomy and the plant-
based products industry, there are a few ways that Congress can
help. One is to make the plant-based products industry more
visible through better data. One critical action that is needed
and was actually included in the 2018 Farm Bill is the
establishment of North American Industry Classification codes,
or NAICS codes, for biobased product manufacturing. These codes
are really key to the future success of this industry, because
they allow for effective and accurate tracking and analysis of
the economic activity and growth of the industry. So, we urge
Congress to call for the Administration to fulfill the 2018
Farm Bill mandate.
It is also critical to make sure that the data regulators
are using to assess plant-based products is based on best
available science and modeling. Another opportunity is to
modernize USDA's BioPreferred Program. The program has had a
lot of success in its history, but we believe there is the
potential to do much more. We think this program could gain
household name recognition, much like EPA's EnergyStar program,
but it has a fraction of the budget so it is really hampered in
being able to fulfill that potential.
And finally, helping communities develop essential end-of-
life infrastructure. It is important for all products to have
the end-of-life infrastructure that supports a circular path,
but one significant opportunity that can really help tackle our
waste management challenges while also generating quality local
jobs is in expanding composting infrastructure. I mentioned
that many plant-based products are compostable. They are
compostable in industrial composting facilities. So, when those
products are used in a food contact application like packaging,
they present an opportunity to divert substantial food waste to
composting so it is not contaminating the recycling stream, or
going to a landfill where it contributes to significant
landfill methane emissions.
So, the COMPOST Act (H.R. 4443, Cultivating Organic Matter
through the Promotion Of Sustainable Techniques Act), which
Congresswoman Julia Brownley introduced in the House in July,
represents an example of how the Federal Government could
provide financial resources to help local communities, NGOs,
nonprofits and the private-sector to build out composting
infrastructure systems that meet their community needs. So, we
are eager to work with the Committee on the best way to achieve
that goal.
I wanted to close by highlighting one of our member
companies, Green Dot BioPlastics. This is a Kansas-based
company. They are using plant-based feedstocks that are grown
by American farmers to make more sustainable bioplastics that
are used in everything from toys to car parts. And in rural
Kansas, their employees are making two to three times the
average salary in their community, and they are helping their
customers re-shore jobs back to the U.S. That reduces
production time, cost, and environmental impacts. So, with
Congress's support, the plant-based products industry can bring
a new generation of innovation and jobs to rural America.
Thank you, and I look forward to your questions.
[The prepared statement of Ms. Bowman follows:]
Prepared Statement of Jessica Bowman, Executive Director, Plant Based
Products Council, Washington, D.C.
Good morning, Chairman Delgado, Ranking Member Fischbach, and
Members of the Subcommittee. My name is Jessica Bowman, and I serve as
Executive Director of the Plant Based Products Council or PBPC. PBPC is
an association representing a broad range of companies who support
greater adoption of products and materials made from renewable, plant-
based inputs.
Thank you for the opportunity to appear before you to discuss the
renewable economy in rural America.
With plant-based products, we use a wide variety of feedstocks,
from corn to soy to hemp, even agricultural waste materials, to make
many products that consumers and industry rely on every day. Plant-
based chemicals and materials are used to make plastic packaging,
textiles, personal care products, building materials, and more, the
vast majority of which are recyclable or compostable.
Plant-based products present an immense economic opportunity for
rural America. A recent report from USDA showed this industry grew over
27% between 2013 and 2017, bringing $470 billion in value to the U.S.
economy and supporting 4.6 million American jobs with annual wages of
up to $96,000. These jobs are diverse, and many are STEM-based like
chemists, engineers, and accountants. But the overall U.S. bioeconomy
accounts for less than 2.5% of American economic activity, so we are
only scratching the surface.
The plant-based products industry represents the future of American
agriculture's role in providing technology, innovations, and solutions
that help reduce greenhouse gas emissions and move the U.S. to a more
circular bioeconomy where we are minimizing waste, using more renewable
resources, and keeping those resources in use longer. USDA estimates
that plant-based products have the potential to reduce greenhouse gas
emissions by an estimated 12.7 million metric tons of CO2
equivalents per year. That's equal to taking over 2.7 million cars off
the road for a year.
To support growth of the circular bioeconomy, including the plant-
based products industry, Congress can help in several ways:
1. Make the plant-based products industry more visible through better
data.
One critical action that is needed, and in fact was mandated
in the 2018 Farm Bill, is the establishment of North American
Industry Classification System (NAICS) codes for biobased
product manufacturing. Such codes are key to the future success
of the industry because they allow for accurate and effective
tracking and analysis of the economic activity and growth of
the industry. We urge Congress to call for the Administration
to fulfill the 2018 Farm Bill mandate.
It is also critical to ensure that data used by regulators
to assess plant-based products is based on best available
science and modeling.
2. Modernize USDA's BioPreferred Program.
USDA's BioPreferred Program has several successes in its
history, and we believe the program could do a great deal more.
We think this program has the potential to gain household name
recognition like EPA's Energy Star program, but with a fraction
of the budget, BioPreferred is extremely hampered in fulfilling
its potential.
3. Help communities develop essential end-of-life infrastructure.
It is important to provide the end-of-life infrastructure
that supports a circular path for all products. One significant
opportunity that can help tackle our waste management
challenges while generating quality local jobs lies in the
expansion of composting infrastructure. Many plant-based
products are compostable in industrial composting facilities.
When used in food contact applications, these materials present
an opportunity to divert substantial food waste to composting,
avoiding food waste contamination in the recycling system, and
significantly reducing landfill methane emissions. The COMPOST
Act (H.R. 4443), which Congresswoman Julia Brownley introduced
in the House in July, represents an example of how the Federal
Government can provide financial resources to help local
governments, nonprofits, and the private-sector build
composting systems that meet their community needs. We are
eager to work with the Committee on the best way to achieve
this goal.
Renewable and biobased products offer new rural development
opportunities. I'll close by highlighting one of our member companies,
Green Dot Bioplastics. This Kansas-based company is using plant-based
feedstocks grown by American farmers to make more sustainable
bioplastics used in everything from toys to car parts. In rural Kansas,
their employees make 2-3 times the average salary in their community,
and they are helping their customers re-shore jobs back to the U.S.,
moving their manufacturing facilities down the road instead of across
the ocean. This reduces production time, costs, and environmental
impacts. With Congress's support, the plant-based products industry can
bring a new generation of innovation and jobs to rural America.
Attachments
[Fact Sheet]
PBPC Advocacy Agenda Brief
Who We Are: The Plant Based Products Council (PBPC) includes
businesses, small and large, from all links in the plant-based products
supply chain. PBPC is working to grow the circular bioeconomy by
encouraging greater use of plant-based materials in products and
packaging, along with supporting infrastructure to ensure these
materials can be composted, recycled, or otherwise repurposed.
Plant-based products made from renewable resources present an
opportunity to:
Respond to increased consumer demand for more sustainable
products and packaging
Address a number of environmental challenges, including
climate change and our growing waste management crisis
Help bring quality manufacturing jobs to rural America
To support growth of the circular bioeconomy, including the plant-
based products industry, Congress can help incentivize the manufacture
and use of plant-based products, spur job creation, support expansion
of end-of-life infrastructure, foster workforce development, and fund
needed research and development.
117th Congress Advocacy Agenda
USDA Research
Economic studies
An apples-to-apples comparison of the U.S. bioeconomy's size
and scope, including direct/indirect jobs and average wages,
economic output, tax payment contributions, and investment,
with other major economic regions.
An assessment of how investment in rural America to expand
plant-based product production could affect local and state
economies as well as the need for worker training,
infrastructure, and other public services.
Environmental studies
A projection of the total greenhouse gas emissions that
could be avoided if food waste and compostable packaging is
diverted from landfills to composting facilities.
A synthesis of existing life cycle analyses for key biobased
products (e.g., common bioplastic resins, molded fiber,
biobased textiles) to show the current environmental impact
data in various categories.
Bioproduct Recognition
Establishment of North American Industry Classification
(NAICS) codes for biobased products to allow for effective
measurement of this growing industry.
Ensure appropriate consideration of biobased plastics in
plastics-focused legislation and other policy efforts.
Infrastructure
Authorization of a composting infrastructure loan/grant
program at USDA to support the development of economically
viable composting facilities.
Tax Incentives
Establish tax incentives to support the manufacture and
market expansion of plant-based products.
Appropriations
Increase appropriations to USDA's BioPreferred Program to
support broader growth and public awareness of the program.
Increase appropriations to the full authorized level of
funding ($25M/year) for grants under the Urban Agriculture &
Innovation Production Program established in the 2018 Farm
Bill.
Support appropriations through programs such as USDA's
National Institute of Food and Agriculture or the National
Science Foundation to increase research, education and training
in plant-based products manufacturing, engineering, and
agronomy.
For more information, contact Robin Bowen, PBPC Vice
President of External Affairs, at [email protected]
[Comment Letter]
Organizations: Plant Based Products Council (PBPC), Corn Refiners
Association (CRA), American Soybean Association (ASA), National
Corn Growers Association (NCGA), Plastics Industry Association
(PLASTICS), Alternative Fuels and Chemicals Coalition (AFCC), Ag
Energy Coalition (AgEC)
Date: August 16, 2021
Subject: NAICS Updates for 2022
FR Reference: Federal Register/Vol. 86, No. 125/Friday, July 2, 2021/
Notices
Docket Number: USBC-2021-0004
The undersigned organizations appreciate the opportunity to provide
input in response to the Office of Management and Budget's (OMB) July
2, 2021 solicitation for comments on the Economic Classification Policy
Committee's (ECPC) recommendations for the 2022 revision of the North
American Industry Classification System (NAICS); update of Statistical
Policy Directive No. 8, Standard Industrial Classification of
Establishments; and elimination of Statistical Policy Directive No. 9,
Standard Industrial Classification of Enterprises.
We disagree with the conclusion of the ECPC that a NAICS code for
renewable chemicals manufacturers and biobased products manufacturers
is not warranted and respectfully request OMB implement the statutory
directive in the 2018 Farm Bill \1\ immediately.
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\1\ Pub. L. No. 115-334, H.R. 2, the Agriculture Improvement Act of
2018. 115th Congress. 9002(f)(1). https://www.congress.gov/bill/
115th-congress/house-bill/2.
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The Bioeconomy and Biobased Products
USDA defines bioeconomy as ``[t]he global industrial transition of
sustainably utilizing renewable aquatic and terrestrial resources in
energy, intermediates, and final products for economic, environmental,
social, and national security benefits.'' \2\ According to USDA, the
U.S. biobased products industry expanded more than 27% in terms of
value added between 2013 and 2017, contributing roughly $470 billion of
value to the U.S. economy. In 2017, the U.S. biobased products industry
supported 4.6 million direct and indirect jobs,\3\ an increase of
580,000 jobs from 2013. In terms of environmental benefits, the
biobased products industry displaces about 9.4 million barrels of oil
through replacing traditional products, as well as the potential to
reduce greenhouse gas emissions by 12.7 million metric tons of carbon
dioxide equivalents per year.
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\2\ Golden, Jay S. et. al. An Economic Impact Analysis of the U.S.
Biobased Products Industry: A Report to the Congress of the United
States of America (2015) pp. 201-209, https://www.researchgate.net/
publication/280979090_An_Economic_Impact_Analysis_of_the_US_Bio
based_Products_Industry_A_Report_to_the_Congress_of_the_United_States_of
_America.
\3\ Daystar, Jesse et. al. An Economic Impact Analysis of the U.S.
Biobased Products Industry: 2019 Update. United States Department of
Agriculture BioPreferred' Program (2019) pp. 6-7. https://
www.rd.usda.gov/sites/default/files/
usda_rd_economic_impact_analysis_us_bio
based_products_industry.pdf.
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Biobased products derived from renewable agricultural commodities
are an important part of the U.S. and global bioeconomy. Biobased
products span a diverse array of product categories including renewable
chemicals, cleaning supplies, packaging, furniture, and clothing.
Globally, the biochemicals market alone is expected to grow from $6.5
billion in 2016 to $23.9 billion by 2025.\4\
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\4\ Guo, Mingxin and Song, Weiping. The Growing U.S. Bioeconomy:
Drivers, Development, and Constraints. New Biotechnology (2019) p. 54.
https://doi.org/10.1016/j.nbt.2018.08.005.
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Importance of NAICS Codes to the Bioeconomy
Distinct NAICS codes for manufacturers of renewable chemicals and
biobased products are key to the future success of these biobased
industries. Stakeholders across the U.S. economy, including industry,
academia, research, and government agencies, struggle to track and
analyze the economic activity and growth of the bioeconomy as a whole
as well as biobased product segments due to the absence of distinct
NAICS codes. Several academic researchers and economists, in attempting
to measure the bioeconomy, repeatedly highlighted that the present
NAICS system ``does not provide an effective means of tracking the
economic and job implications of the biobased products sector in the
United States.'' \5\ Academic researchers and economists expressly join
industry groups calling for unique NAICS codes to improve measurement
and economic contributions of the bioeconomy.\6\ Below are a few
examples of these sentiments:
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\5\ Golden, J.S., Handfield, R.B., Daystar, J. and, T.E. McConnell.
An Economic Impact Analysis of the U.S. Biobased Products Industry A
Report to the Congress of the United States of America. U.S. Department
of Agriculture (2015) p. 83.
\6\ Golden, J.S., Handfield, R.B., Daystar, J., and McConnell,
T.E., An Economic Impact Analysis of the U.S. Biobased Products
Industry. U.S. Department of Agriculture (2016) p. 13.
USDA. An Economic Impact Analysis of the U.S. Biobased
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Products Industry (2015):
``NAICS does not provide an effective means of
tracking the economic and job implications of the biobased
products sector in the United States. This results from a
lack of industry-specific codes that were representative of
the biobased products sectors of the economy. Many
economists and industry groups recommended that NAICS codes
be developed for biobased products and that reporting
requirements be established to allow more effective
tracking.'' \7\
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\7\ Golden, Jay S. et al. An Economic Impact Analysis of the U.S.
Biobased Products Industry: A Report to the Congress of the United
States of America. Industrial Biotechnology 11 (2015). https://
www.researchgate.net/publication/
280979090_An_Economic_Impact_Analysis_of_the_
US_Biobased_Products_Industry_A_Report_to_the_Congress_of_the_United_Sta
tes_of_America.
Robert Carlson, Estimating the biotech sector's contribution
to the US economy (2016): \8\
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\8\ Carlson, R. Estimating the biotech sector's contribution to the
US economy. Nat. Biotechnology 34, 247-255 (2016). https://doi.org/
10.1038/nbt.3491.
``Consequently, using the current NAICS to estimate
biotech employment is a difficult proposition, because the
current codes do not map well onto existing and emerging
bioproduction methods. Modernizing the NAICS must be a
priority of both the public- and private-sectors to enable
accurate economic analyses, employment measurements and
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appropriate marshaling and allocation of resources.''
Without dedicated NAICS codes, data collection and statistical
reporting for the rapidly growing bioeconomy are severely hampered. The
absence of specific industry NAICS codes also masks the growth, market
developments, and trends in these biobased industries, handicapping
efforts by policymakers, businesses, investors, and industry
stakeholders to make well-informed decisions.
Better data is particularly important to policymakers, which is why
Congress included a directive on NAICS codes for biobased products in
the 2018 Farm Bill. Biobased products can contribute to efforts to
reduce greenhouse gas emissions, particularly methane emissions from
landfills, as well as improve soil and water quality. President Biden's
Plan to Build Back Better in Rural America has a specific goal to grow
the bioeconomy and biobased manufacturing to bring cutting-edge
manufacturing jobs back to rural communities.\9\ It is clear that
expanding the biobased products industry is part of the policy and
economic growth goals of both Congress and the Biden Administration.
NAICS codes for biobased products are a key tool in helping the
private- and public-sectors achieve multiple objectives.
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\9\ The Biden-Harris Plan to Build Back Better in Rural America.
https://joebiden.com/rural-plan/.
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Concerns with the ECPC Recommendation
Currently, manufacturers of biobased products are by default hidden
in a smattering of NAICS code product classifications (e.g., plastic,
chemicals, packaging). In the July 2, 2021, OMB Economic Classification
Policy Committee (ECPC) response to public comments requesting the
development of NAICS codes for biobased chemicals and products, the
ECPC stated that ``based on the data provided in supporting documents
of the proposal, the current market sizes for manufacturing of
renewable chemicals and biobased plastic resins are not significant
enough in the economy to create new NAICS industries. Due to disclosure
concerns, creating NAICS industries for the manufacture of these
biobased goods is not recommended at this time.''
Stakeholders of the biobased products industry have multiple
concerns with the ECPC recommendation.
First, the ECPC recommendation ignores the clear legislative
directive stated in Sec. 9002 of the 2018 Farm Bill, the Agriculture
Improvement Act of 2018. Sec. 9002 provides that ``[t]he Secretary and
the Secretary of Commerce shall jointly develop North American Industry
Classification System codes for--(A) renewable chemicals manufacturers;
and (B) biobased product manufacturers.'' \10\ This unambiguous
directive compels USDA and Commerce to jointly develop NAICS codes for
biobased product manufacturing.
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\10\ Agriculture Improvement Act of 2018 9002. https://
www.congress.gov/115/plaws/publ334/PLAW-115publ334.pdf.
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Second, available data in fact demonstrate that there is strong
growth and increased demand for biobased products. Over the past 10
years, USDA's BioPreferred program has certified more than 4,700
individual products at 930 companies.\11\ While this is impressive,
this is only a snapshot of the total amount of biobased products
available in any number of product categories. Looking to the private-
sector, many companies are making significant investments in biobased
product manufacturing with an eye toward long-term growth that
contradict the assertion that the market size and potential for these
products is small. For example, biotechnology company Danimer
Scientific announced in March of this year that it plans to invest $700
million in expanding one of their bioplastic manufacturing plants,
adding 300 employees, nearly quadrupling their workforce at this
facility, by 2023.\12\ Another example, Ecoproducts, a brand of one of
the largest American packaging companies, Novolex, just opened up a new
product line of biobased compostable cups in June 2021, with plans to
serve biobased packaging markets in the U.S. and globally.\13\ Many
bioplastics were sold out for 2021 by midyear. These examples do not
indicate a small industry struggling to show demand for its products,
rather this indicates an industry ready to expand further and meet the
demands of an evolving domestic and global economy in which consumers
are demanding more sustainable products derived from renewable
materials.
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\11\ BioPreferred 10 Year Anniversary Infographic. https://
www.biopreferred.gov/BioPreferred/faces/pages/articles/TenYears.xhtml.
\12\ Danimer Scientific Planning $700 million, 400-Job Expansion in
Decatur County. Danimer Scientific press release. March 2021. https://
danimerscientific.com/2021/03/30/danimer-scientific-planning-700-
million-400-job-expansion-in-decatur-county/.
\13\ Novolex Launches New U.S. Manufacturing Line to Make
Compostable Cups from Plant-Based Plastic. Novolex press release.
https://www.prnewswire.com/news-releases/novolex-launches-new-us-
manufacturing-line-to-make-compostable-cups-from-plant-based-plastic-
301314575.html?tc=eml_cleartime.
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Request
Consistent with the express legislative directive of the 2018 Farm
Bill, the undersigned stakeholders request that OMB and the ECPC work
with USDA and Commerce to immediately develop NAICS codes for renewable
chemicals and biobased product manufacturers as required by statute.
NAICS codes are essential for the success of the biobased products
industry as well as the future of the U.S. bioeconomy. It is imperative
that these codes be developed so that the economic and environmental
benefits associated with a robust domestic bioeconomy can be fully
realized.
Thank you for your consideration of these comments. Should you have
any questions, please contact either or both of the following
individuals:
Jessica Bowman at 202-331-2028 or [email protected]
Lloyd Ritter at 202-215-5512 or [email protected]
Sincerely,
[Plant Based Products Council [Corn Refiners Association (CRA)]
(PBPC)]
[American Soybean Association [Plastics Industry Association
(ASA)] (PLASTICS)]
[National Corn Growers Association [Alternative Fuels and Chemicals
(NCGA)] Coalition (AFCC)]
[Ag Energy Coalition (AgEC)]
[Fact Sheet]
Plant-Based Leaders: Green Dot Bioplastics
``Our customers have
a genuine desire to
make something that is
more sustainable and
less damaging to the
environment.''
Mark Remmert, CEO, Green Dot Bioplastics
Nearly 10 years ago,
visionary investors saw an
opportunity to replace fossil-
fuel based plastics with
similar materials sourced from
renewable agriculture instead
of petroleum.
CEO Mark Remmert, a Kansas
native, was hired to build the
firm, called Green Dot
Bioplastics, from scratch.
Mark had spent decades in Europe and Asia leading multinational
chemical companies who specialized in traditional plastics and he chose
rural Kansas as the start-up's headquarters.
Many were surprised by the choice, but Mark had a vision for the
company and the community.
As he has fulfilled that vision, the company has carved a path that
could serve as a roadmap for revitalizing much of rural America.
Marine Degradable Bioplastics
Green Dot Bioplastics sells its products to manufacturers and brand
owners large and small, including well-known brands and Fortune 500
companies. They come to Green Dot Bioplastics when they want to make a
product that is better for the environment but retains the features of
traditional plastic.
Some customers are exceptionally knowledgeable, including plenty of
plastics professionals who arrive with product specifications, such as
tensile strength, melt flow, shrink rates, and other standard plastics
requirements.
Others arrive with a simple goal: they want to do better by the
planet.
``Our customers have a genuine desire to make something that is
more sustainable and less damaging to the environment,'' said Mark.
``They reach out seeking to reduce their carbon footprints, lessen
global waste and pollution, or to find sustainable raw materials for
their products,'' added Mark. ``And we can help them achieve all three
goals, and more besides.''
His most promising products today are marine degradable
bioplastics.
``Several years ago, we invented the chemistry and then created the
process to make a line of plant-based polymers that are not only
industrial compostable but also backyard, soil, and marine
biodegradable,'' said Mike Parker, Director of Research and Development
proudly.
``We're certainly not advocating that plastic should end up in the
ocean,'' Mark quickly added. ``But we are all aware this does happen,
and our material will biodegrade in weeks instead of decades.''
From Farm to Factory
The process begins with a range of different agricultural inputs:
wheat, potatoes, corn, cassava, and wood are just a few of the
company's plant-based sources. Agricultural processors like ADM or
Cargill buy these commodities from farmers, plus their leaves, stalks,
and inedible parts some might call waste. Then, the companies process
the inputs down to starches, proteins, and fibers.
Green Dot Bioplastics buys these nearly-raw materials and hands
them over to their chemists on staff who create new materials from
them.
Today, the company has dozens of plant-based plastics and drop-ins
with a wide variety of purposes and mechanical properties.
At this stage in manufacturing though, the bioplastics simply look
like small, spherical pellets. The magic occurs when these pellets are
fed into plastics manufacturing equipment and molded, extruded, or
blown into the same products, indistinguishable from their petroleum
cousins, except when it comes to sustainability.
``We invented the chemistry and then created the process to
make a line of plant-based polymers that are not only
industrial compostable but also backyard, soil, and marine
biodegradable.''
Mike Parker, Director of Research and Development, Green Dot
Bioplastics
Emporia, KS, home to Green Dot's headquarters.
Today, plant-based materials from Green Dot Bioplastics are found
in scores of products including furniture, lawn & garden products,
children's toys, automobile parts, and cell phone cases. The marine
degradable bioplastics are best suited for single-use, disposable and
packaging applications, such as food service ware, films, and bubble
wrap, to name a few.
Green Dot Bioplastics sells a considerable portion of their product
to Asia.
The company even has a full-time sales representative and
manufacturing partner in Japan.
Supporting American Ag
But it all begins in American agricultural communities.
U.S. farmers produce significantly more than can be consumed
domestically. For example, our country utilizes only 40 percent of the
soybeans grown here.
Farmers need someone to buy the excess.
``More than 90% of the plant based feedstocks we buy come from
American farms,'' said Mark. ``We work hard to support our nation's
agriculture.''
The Value Add
The economics are impressive. ``Take a bushel of grain that costs
$3 to $4. A farmer could export it raw for 5 a pound. Mill it and turn
it into starch or protein, and a processor might get 20 or 30 a
pound,'' Mark calculated.
But that's still a commodity with almost no differentiation or
variation. And it can be purchased anywhere in the world.
``We turn those milled materials into a highly-differentiated
plastic available in only a few places globally, and we're able to sell
it for $1.50 to $3.50 per pound,'' said Mark[.]
That's a 500-600% increase in value resulting from Green Dot
Bioplastic's capital investments, chemistry expertise, polymer
expertise, and numerous innovations.
Rural America's Next Engine of Growth
Better still, the economic benefits reach more than just American
farmers.
Green Dot Bioplastics has three facilities, all in Kansas
communities ranging in population from 700 to 26,000 people and each at
least 2 hours' drive from a major airport.
Seventy-five percent of Mark's employees hold college degrees,
including scientists, chemists, and engineers. Even the staff running
machines on the manufacturing floor have at least 2 year degrees.
``In these communities, I'd estimate our salaries are two to three
times the community average. In some cases, our employees are among the
highest paid folks in town,'' added Mark.
These types of Ag Tech and STEM jobs help grow and support the
local rural economy.
``It's also about the brain power that didn't leave and the brain
power we are bringing in. Many of our rural communities are now on
their third or fourth generation of brain drain, and that's worse than
the money leaving,'' noted Mark.
One example is plant Engineering Manager, Amanda Childress, who
joined the team, moving from New Mexico to put her mechanical
engineering degree to work.
``The good news is, that in a small, rural community it doesn't
take much to make a big difference,'' Mark added.
But Green Dot Bioplastic's economic contribution to rural America
doesn't end there.
``More than 90% of the plant based feedstocks we buy comes
from American farms. We work hard to support our nation's
agriculture.''
Green Dot's Remmert.
Reshoring Jobs
Over the last 30 years, substantial amounts of American
manufacturing moved to China. Companies built complex, global supply
chains, supported by just-in-time shipping.
``Entire industries have gone extinct in the United States, and the
institutional knowledge has disappeared as well,'' said Mark.
Even before trade wars and the coronavirus accelerated a reversal
in these trends; American companies who once relied exclusively on
overseas production are seeking to return to U.S. shores.
``As a raw material maker based in the rural Midwest, U.S.
companies are increasingly seeking our advice on how to make their
products in the U.S.,'' Mark said. While Green Dot Bioplastics can't
disclose specific clients, Mark noted, ``We've been able to help
several big, well-known companies move millions of dollars' worth of
manufacturing back to the U.S.''
Consider the advantages. Previously, U.S. farm products were
shipped to China for production and manufacture, then returned to the
U.S.
``First there's an enormous carbon footprint to all that travel.
Second, imagine the shipping costs--two trips across the Pacific,''
Mark noted.
All in all, it took 3 months.
``Today, we make that product on Monday, it travels 100 miles down
the road to our customer on Tuesday, and they go intoproduction on
Wednesday,'' said Mark.
Three months are reduced to 3 days. The thousands of tons of carbon
required for global transportation becomes a short ride by truck. And
the manufacturer saves substantial shipping costs.
``This industry offers a truly unique opportunity,'' said Mark.
``We can bring manufacturing back to rural America--creating jobs in
research and development, chemistry, and engineering for areas that
have suffered economically. Not only that, the industry based on our
nation's existing competitive strength in sustainable agriculture--
supporting farmers--while helping solve some of our greatest
environmental challenges in plastic pollution and greenhouse gas
emissions.''
``We've been able to help several big, well-known companies
move millions of dollars' worth of manufacturing back to the
U.S.''
Green Dot's Remmert.
Plant-Based Leaders: Hexas Biomass
Woman-Owned Startup Uses Grass to Save Forests
``Our forests are
increasingly threatened
by climate change,
forest fires, and bark
beetles and other
pests.''
Wendy Owens, CEO, Hexas Biomass.
A forest of 20 year old pine
trees and a field of giant
perennial grass appear to have
little in common, but once
harvested, their biochemistry
is actually quite similar.
Wendy Owens, CEO of Hexas
Biomass Inc., founded her
startup company on that
insight. ``We've developed
varieties of
a giant perennial grass that are exceptionally versatile and fast-
growing and able to serve as a substitute for wood, bamboo, and fossil
fuel-based raw materials,'' Wendy explained. ``We call the varieties
Xano Grass.''
Cut the Grass, Leave the Trees
The idea behind Hexas grew out of Wendy's love for trees and the
need to ease the industrial burden on forests globally. ``When it comes
to wood, we can be a supplement or total replacement,'' said Wendy.
``That's essential as our forests are increasingly threatened by
climate change, forest fires, and bark beetles and other pests.''
Meanwhile the global demand for wood is growing exponentially,
driving up wood costs. The USDA expects wood prices in the U.S. to rise
31-46% between now and 2050.
Hexas is working with current and potential customers to use Xano
Grass fiber to produce particle board, medium density fiberboard,
packaging, bioplastics, and aggregate.
When turned into a renewable fuel, Xano Grass biofuels meet the
requirements of Renewable Fuels Standard (RFS) Program. EPA-approved
biofuel applications of Xano Grass include biodiesel, renewable natural
gas, jet fuel, heating oil, naphtha, and ethanol.
``Xano Grass produces three times more ethanol per acre than
corn,'' said Wendy. ``This means it can replace fossil fuels and allow
corn to be used for food, not fuel.'' She added that when converted
into energy pellets, Xano Grass burns as hot or even hotter than wood
pellets in BTUs per pound. In addition, Hexas is also exploring its
ability to be used in hydrogen production.
From Grass to Globally Recognized Furniture
When companies are considering a shift to more sustainable raw
materials, like Xano Grass, they often study the impact of such a shift
on their already existing manufacturing systems, fabrication processes,
and bottom line.
``To upgrade to a `more sustainable lightbulb,' companies shouldn't
have to replace the entire light fixture,'' said Wendy. ``We can
deliver Xano Grass raw material as dust, chips, or fiber of any size or
moisture content. And it drops right into existing manufacturing
systems.''
Wendy added, ``We work with an international home goods company on
fiberboard applications, which they plan to utilize in their
furniture,'' said Wendy. One of Hexas' largest customers is a well-
known Fortune 100 brand, with stores all around the world.
In place of wood, Xano Grass fiber is seamlessly dropped into the
existing particle board production process, helping to reduce the
burden on forests all around the world.
In addition to the current applications, Hexas is studying how its
feedstock may be used in pulp and paper, green chemicals, textiles,
building materials, and composite materials such as concrete and
fiberglass. ``Right now we are testing Xano Grass fiber in concrete, in
order to make it lighter while enhancing its acoustic and insulative
properties without losing its strength,'' explained Wendy.
``To upgrade to a `more sustainable lightbulb,' companies
shouldn't have to replace the entire light fixture. We can
deliver Xano Grass raw material as dust, chips, or fiber of any
size or moisture content. And it drops right into existing
manufacturing systems.''
Hexas' Owens.
Additional Environmental Benefits
``We wanted to offer a plant-based raw material product that was
both regenerative and cost effective,'' said Wendy. ``A product that is
good for fields and farmers.''
Xano Grass Fiber.
In addition to reducing the pressure to harvest the world's trees,
Xano Grass also improves the soil by returning nutrients to the earth,
preventing soil erosion, and capturing significant amounts of carbon in
the soil.
``It grows in a variety of soils--salinated, sandy, nutrient-poor,
and soil that has deteriorated. It also will remediate soil by removing
pollutants, including heavy metals, chemicals, and effluviant,'' added
Wendy. ``For farmers, that means it can help remediate marginal land so
it can be used to produce food crops again.''
Fiberboard made from Xano Grass.
Xano Grass also prevents nutrient run-off from excess fertilizer
when planted along row crops. ``Studies have shown that Xano Grass
absorbs the excess nutrients applied to the row crops, helping to
prevent algae blooms in rivers and watersheds,'' added Wendy.
When a company chooses Xano Grass, Hexas goes to work contracting
with local farmers to grow it, offering them long-term contracts.
``From the very first year, Xano Grass offers farmers solid annual
yields, 20 or more dry tons per acre. This creates a steady revenue
stream for them. And Xano Grass doesn't require a lot of time in the
field to support production,'' explained Wendy.
Importantly, Hexas will not allow cultivation that displaces crops
grown for food.
``We only use marginal land, which we define as land that cannot
economically support food crop production,'' said Wendy. But, she says,
farmers are often eager to put such land to work, especially given all
Xano Grass' environmental benefits.
Strengthening Local Economies
Just like in real estate, biomass production comes down to
location, location, location because transporting low density biomass
long distances doesn't make economic sense.
``Shipping any kind of biomass is about time and space,'' Wendy
said.
With that limitation in mind, Hexas strives to enlist farmers
within 60 miles of a customer's manufacturing plant.
The good news is that Xano Grass thrives in a broad range of
climates.
Unforeseen benefits have come from these transportation challenges.
``It means that our customers are supporting their local farmers, and
that builds important relationships and keeps revenue within those
local communities,'' explained Wendy.
Hexas is looking to strengthen this idea by working with community
stakeholders, like the Yuba Community College District in northern
California.
They are hoping to train the next generation of agronomists,
biomass processors, as well as many others who can build careers in the
new bioeconomy.
Choosing an Accelerator
Like many start-ups, Wendy sought the support of a start-up
accelerator, researching a handful before identifying which was the
best fit for Hexas. Wendy chose Cascadia CleanTech Accelerator from the
CleanTech Alliance and Vertue Labs and had an incredible experience
learning with them.
``The program not only examined our ideas at the macro level, but
dug deep into the technological and economic feasibility,'' said Wendy.
``The networking was essential as well. We met mentors that we're still
working with today.''
``Our customers are supporting their local farmers, and that
builds important relationships and keeps revenue within those
local communities.''
Hexas' Owens.
Xano Grass sprouts.
Hexas won the Standout Company Award in 2019.
``Even though this is my fourth start-up, there's always room to
learn--so we feel extremely fortunate for the experience,'' she added.
Based on her experience, Wendy recommends participating in an
accelerator with a proven track record. She suggests looking into the
companies that have previously participated in the accelerator and
meeting with a few before making any important decisions.
``Review the curriculum to make sure it meets your needs and
understand the time commitment,'' Wendy adds. ``Accelerators can
consume your entire day, leaving founders to run their business at
night.''
Ms. Owens recommends avoiding any accelerator that requests large
up-front fees and suggests that founders think very carefully about
whether or not they are willing to give up equity in their company in
exchange for funding and participation.
Many accelerators request equity as a condition of joining their
programs.
Wendy purposely chose an accelerator that did not require Hexas to
give up any equity. ``It was too early in our development to understand
how that would impact our cap table and the company's valuation further
down the line,'' she added.
Federal Programs and Support
Policymakers in Washington have an important role to play when it
comes to ensuring a competitive plant-based products industry, explains
Wendy, singling out the USDA BioPreferred Program for special praise.
She suggests that the Federal Government can and should do more by
promoting non-food bioenergy crops as viable substitutes for petroleum-
based products and first-generation bioenergy crops like corn.
Wendy believes, ``Washington needs to accentuate and accelerate the
bioeconomy through policies and regulations that support its expansion
in rural communities in particular.''
She points to the addition of bioeconomy-based NAICS codes as a
very important example of where a relatively simple policy change could
give a real boost to the industry.
``There is no specific NAICS code for plant-based products or their
raw material components. There's no code for biomaterials or
bioenergy,'' explained Wendy. Wendy went on to say that without such
codes, the Federal Government cannot effectively measure these
industries.
While the Federal Government has an essential role to play, Wendy
says consumers will ultimately drive the market. Research from the
Plant Based Products Council (PBPC) shows that 54% of U.S. consumers
view these types of products favorably and more than half are more
likely to purchase plant-based products in the next 3 months.
``Companies who can deliver sustainable products will find an eager
market of more than 136 million U.S. customers, according to the
data,'' said Ms. Owens.
``Companies who can deliver sustainable products will find an
eager market of more than 136 million U.S. customers.''
Hexas' Owens.
Plant Based Leaders: Novamont
Award Winning B-Corp and Compost Champion Creates Environmental
Solutions
``We can all help
reduce the burden on
landfills and lower
methane emissions by
ensuring food waste
instead becomes
compost.''
Paul Darby, VP Marketing, Novamont.
Food waste is the single
largest input to landfills.
In fact, 75% of our nation's
food waste ends up in
incinerators and landfills.
Once discarded in a landfill,
food waste decomposes and con-
tributes directly to the emission of methane (CH4), a
greenhouse gas. Methane is ``more than 25 times as potent as carbon
dioxide at trapping heat in the atmosphere,'' reports the U.S.
Environmental Protection Agency (EPA).
EPA notes that landfills are ``the third-largest man-made source of
CH4 emissions in the United States.''
``We can all help reduce the burden on landfills and lower methane
emissions by ensuring food waste instead becomes compost,'' explained
Paul Darby of Novamont, which is a member of the Plant Based Products
Council (PBPC).
Compostable bags are one essential component to addressing rising
greenhouse gas emissions.
Such bags provide consumers an easy and hygienic way to collect
their food scraps for composting.
``Two of America's top ten largest grocery chains offer such
compostable bags--one provides them to shoppers as fresh produce bags
for use in-store and the other as food waste bags for use at home. Both
are made in the USA from our MATER-BI. For every 1.5 kg of food waste
collected and composted in this bag, 2.6 kg of CO2
equivalent is saved, avoiding methane production in landfills,'' added
Darby.
Novamont's MATER-BI is a compostable biopolymer, derived from
plants and biodegradable materials.
Food Waste for Healthier Soils
But composting doesn't simply reduce greenhouse gas emissions. With
the help of farmers and gardeners, composting's benefits reach much
further.
Compost captures nutrients and minerals in the food scraps and
returns them to the soil. The rich organic matter benefits soil health
through structural amelioration, increased water holding capacity, and
greater water infiltration capabilities.
And using soil-enriching compost helps prevent erosion of valuable
topsoil.
A Composting Infrastructure Case Study
A Novamont-assisted project illustrates one way to achieve these
important goals.
``Milan is Italy's second largest city, with more than one million
residents,'' explained Darby.
In 2012, the city introduced a door-to-door organic waste
collection system utilizing compostable bags made from Novamont's
MATER-BI biopolymers.
The company provided a starter kit of 25 free bags for every
resident and supported a city-wide educational campaign.
Italian legislation also requires all grocery store shopping and
produce bags to be compostable which helps avoid plastic bag
contamination at compost and anaerobic digestion facilities, all while
creating another source of easy-to-find bags for collecting food waste
at home.
For example, every time shoppers fill a bag with fresh fruit and
vegetables, they bring home a new bag that will contribute to this
important environmental effort.
The bags are then used by shoppers to line their home from kitchen
counter food scrap bins, making disposal of apple cores, banana peels,
and other food scraps quick, clean, and easy through the city's
curbside collection system.
``Today, Milan collects over 85% of its residential organic
food waste for composting and anaerobic digestion with the easy
access to compostable bags playing a pivotal role in
participation rates while avoiding contamination with
conventional plastic bags.''
Novamont's Darby.
``We gave consumers the tools they need to divert food waste
landfill and incineration,'' added Darby.
Milan's Exceptional Results Spread Across Europe
By June of 2014, the program reached 100% citywide participation,
collecting 50% of resident's organic waste, diverting it from local
landfills, and delivering it to composting facilities plus anaerobic
digestion facilities with on-site post-composting.
That impressive result both extends the life of local landfills and
dramatically reduces methane emissions.
``Novamont worked closely with the city and retailers to create and
share messages about how to use the compostable bags, making sure
consumers knew to put their cores and peels back in the bag for
composting and curbside pick-up,'' added Darby.
Italy, France, Spain, and Austria all require grocery store loose
produce bags to be compostable.
U.S. Policymakers Study Milan's Success
``We also welcome American policymakers and other influencers for
educational trips to see the success we've had in Milan.''
``For example, in 2019 we worked closely with the Natural Resources
Defense Council (NRDC) to help coordinate a trip with city officials
from Baltimore, Columbus, Denver, Oakland, and Phoenix,'' said Darby.
A core tenet of NRDC's Food Matters project is to foster a food
waste knowledge sharing network among cities.
For 4 days, participants had the chance to see how the City of
Milan, a hub for food systems work, has taken a systems approach to
make its food system more sustainable.
``Participants met with governmental actors, NGO, and business
innovators and built connections across cities and countries,''
explained Darby. ``And we would welcome visits from other interested
policymakers in the future.''
``Our goal was to highlight different approaches that U.S. cities
could learn from,'' added Darby.
Today in the U.S., for example, the City of San Francisco allows
only paper or certified compostable produce bags in their grocery
stores. The compostable produce bags can be re-used for food scrap
collection for the city's curbside organics program.
But the paper bags are not ideal for food scrap collection, due to
the high water content of most foods. They instead can be recycled.
Novamont's educational campaign for policymakers focused on city-
level officials, because until recently, composting policies and
related infrastructure projects were generally local, municipal issues.
But that is about to change.
Congress Considers Composting
Novamont, as part of the Plant Based Products Council, helped
launch the U.S. Composting Infrastructure Coalition. The Coalition
supports the COMPOST Act, which establishes a USDA-led Federal grant
and loan guarantee program to help fund composting infrastructure.
Other members of and advisors to the coalition include the NRDC, U.S.
Green Building Council, National Waste & Recycling Association, U.S.
Composting Council, Biodegradable Products Institute, and the Institute
for Local Self-Reliance, and the American Sustainable Business Council.
``Our Goal is to launch products that can be conceived as
environmental solutions.''
Novamont's Darby.
``We couldn't be prouder to be part of PBPC and their legislative
push to see the bill enacted into law,'' added Darby.
``More than 80% of Americans do not have access to food scrap
composting. This bill can help provide funds to deliver that critical
infrastructure. The result will be improved air, soil, and water
quality across the nation.''
Novamont cares about these issues because it is so close to U.S.
Businesses and customers.
From the U.S. to Italy and Back Again
For over 30 years, Novamont's visionary founders have taken an
integrated approach to chemistry and agriculture.
MATER-B Resin Pellets.
Today, the company is a global leader in bioplastics and biobased
products development and production, with over 1,800 patents, primarily
in biopolymers and biochemicals.
``Our goal is to launch products that are conceived as
environmental solutions,'' explained Darby.
MATER-BI resins are made in part by utilizing a patented technology
from San Diego-based Genomatica. That technological process converts
plant-based sugars to the renewable green chemical known as 1,4
butanediol (or Bio-BDO), utilizing industrial-strength engineering of
microorganisms to perform the chemistry reliably at commercial scale.
The company's products reach far beyond bags, all the way to the
beginning of the plant-based value chain. For example, Novamont
produces MATER-BI resins used to manufacture agricultural mulch film.
This substitute for conventional plastic mulch is used by farmers
the world over to protect crops from insects and disease. It also helps
eliminate weeds, lining the ground next to row crops and vegetables.
``Our mulch film helps farmers improve production and efficiency.
Then, at the end of the growing season, our mulch can simply be plowed
back into the soil where it will biodegrade,'' explained Darby.
MATER-BI is also used for food service applications which include a
coating for paper cups and packaging to help provide water and grease
proof resistance.
A Model for Revitalizing U.S. Manufacturing
``We understand the importance of supporting local manufacturing.
We work closely with a number of U.S.-based manufacturers, and we want
to promote the growth of this industry in the U.S.,'' said Darby. ``We
see opportunities to invest further in the U.S., but we need the help
of policymakers to shape the business environment and boost this
growing industry.''
After all, Novamont has already shown how its economic
revitalization model succeeded in Italy.
In preparing to develop their four key production facilities
including the one tied to the partnership with Genomatica, Novamont
identified previous manufacturing sites that were no longer
competitive, seeking an opportunity to redevelop idle infrastructure.
While such facilities were once drivers of the local industrial
economy, Novamont converted these sites into 21st century biorefineries
and production facilities on the very cutting edge of chemistry and
manufacturing.
Refurbishing unused buildings and fermentation equipment combined
with new equipment, the Bio-BDO facility created 300 local construction
jobs and today 70 people are employed at the plant, delivering high-
quality jobs in the manufacturing sector.
In fact, the regeneration of local areas through the rehabilitation
of abandoned production sites is a primary company principle, aligned
with its B Corp ethos.
B-Corp Status
The global network B Lab has nominated Novamont a B-Corp `Best for
the World 2021' company, recognizing its exceptional environmental
performance, which is in the top 5% of all B-Corp companies worldwide.
Certified by the independent body B Lab, the Benefit Corporation
designation establishes that in addition to generating profit for
shareholders, B-Corp companies also create a positive impact on society
and the environment, thus building a more inclusive and sustainable
economy.
``Benefit Corporations meet the highest standards of verified
social and environmental performance, public transparency, and legal
accountability to balance profit and purpose,'' explained Darby.
``We work closely with a number of U.S.-based manufacturers
and we want to promote the growth of this industry in the U.S.
We see opportunities to invest in the U.S. but need the help of
U.S. policymakers.''
Novamont's Darby.
Plant Based Leaders: Virent
Innovative Company Recreates Petrochemicals & Fuels with Sustainable
Plant-Based Biomass
Dave Kettner, President & General Counsel of Virent, Inc.
Today's global economy relies
on hydrocarbons in the form of
natural gas and oil. Those
resources began as organic
matter--decaying plants and
animals, subjected to intense
geological pressure over
millions of years.
Now, in an effort to reduce
our reliance on oil and natural
gas, that geological process
has been reimagined and
recreated by Virent scientists,
who have substituted
sustainable biomass
for ancient organic matter, creating a new source of green chemicals
and biofuels.
Yet at the molecular level, these new and renewable products are
identical to their petroleum-derived counterparts. That means Virent's
materials are ``drop-ins''--they can be used in the current
manufacturing and energy infrastructure and production plants without
changes to existing supply chains.
A Simple Explanation for a Complex Process
Ralph Lerner explained the process from their Madison, Wisconsin
facility. He serves as Senior Vice President of Commercial Development
at Virent.
``Fossil fuels are comprised of carbon and hydrogen.''
``Meanwhile, renewable feedstocks are made up of carbon, hydrogen,
and oxygen. To create renewable hydrocarbons, you need to remove that
oxygen. That's what our technology achieves,'' said Ralph.
Dave Kettner, President of Virent, added, ``And while oil and
natural gas are created over geological time frames, our process is
done rapidly. Better still, our primary byproduct is water, rather than
the carbon and methane pollutants produced by extracting and processing
oil and natural gas.''
That result? Dramatically lower carbon footprints for companies
choosing Virent's plant-based green fuels and chemicals.
From Plant-Based Bio Polyesters to Sportswear, Clothing and Beverage
Bottles
``Polyester is one of the biggest and fastest-growing material
sectors--used in clothing, textiles, plastic films and packaging, and
plastic bottles, among many other things,'' explained Ralph.
Polyester today is made from a petroleum-based precursor chemical
known as paraxylene.
Virent has created an alternative source of paraxylene, made from
sustainable agricultural feedstocks and, once commercially available,
lignocellulosic materials from wood waste and the stalks of corn, sugar
cane, and other materials. Because it is the same molecule, albeit
biobased, Virent's renewable version can be seamlessly substituted for
its petroleum-based counterpart to make biopolyesters.
Manufacturers of all types are taking notice.
``We've spoken to numerous companies in many different end use
areas that are interested in biopolyesters. Many want to make more
sustainable products, others are working to reduce greenhouse gas
emissions,'' said Ralph. ``Our products help companies achieve both.''
Virent believes it can help achieve those goals.
A Life Cycle Analysis study conducted with a third party found a
greater-than 50% reduction in the CO2 footprint of Virent's
biobased paraxylene when compared to its petroleum-based counterpart.
PET is the acronym for the materials that make common petroleum-
based plastic bottles.
In 2015, in partnership with Coca-Cola, Virent created the world's
first demonstration-scale production of a plastic bottle made entirely
from plant-based paraxylene. The sustainable chemical was dropped into
an existing PET production process, spotlighting just how easy such a
transition could be, according to the Virent team.
``And these plant-based bottles are completely recyclable through
existing waste management systems,'' added Ralph.
Ralph Lerner, Senior Vice
President of Commercial Development, Virent, Inc.
We've spoken to
numerous companies
interested in
biopolyesters. Many
want to make more
sustainable products,
others are working to
reduce greenhouse gas
emissions. Our products
help companies achieve
both.
Virent's Lerner.
Essential Feedstock & Product Flexibility
Perhaps most impressively, Virent has a growing portfolio of green
chemicals.
Hard plastics used in applications such as electronics, laptops,
motorcycle helmets, and safety goggles, for example also start with
chemical raw materials that include benzene.
``Benzene is another petrochemical we've re-created from plant
feedstocks. It's commonly converted into advanced engineered plastics,
detergents, packaging materials, and various other applications,''
noted Ralph.
``Another interesting market is construction materials--think about
petroleum-based products like ABS and polycarbonate, for applications
including plastic pipes and building windows as examples. These
products currently use benzene as one of the raw materials and could
also ultimately be based on plant-based chemicals,'' noted Dave.
``When made from Virent's renewable, plant-based chemicals, these
long-lasting products actually become carbon sinks. After all, they are
made from atmospheric carbon removed from the environment during
photosynthesis,'' explains Dave.
``We can also make plant-based toluene, which has solvent
applications, or which can be a building block for other specialty
chemicals,'' Ralph notes.
The mix of scientific names may not mean much to non-chemistry
majors, but the technology's flexibility is the important takeaway.
``A single commercial plant will be able to make all three green
compounds from a wide diversity of feedstocks,'' said Dave. ``To make
our green chemicals, our technology can use carbohydrates from corn,
beets, sugar cane, corn stover, ag waste, and multiple types of woody
biomass, including pine, ash, and others. For a commercial scale plant,
we are focused on feedstocks that are commercially available today,
while looking towards cellulosic feedstocks when they are available.''
The U.S. today has the world's most efficient agricultural sector
that meets U.S. demand and also exports products around the world.
Agricultural productivity is continuing to increase and companies like
Virent are providing new market and growth opportunities to U.S.
agricultural producers.
Consumer Demand Drives Sustainability
Of course, the Virent name won't appear to consumers on store
shelves. The company sits near the beginning of the manufacturing
process, with plans to work with companies in the chemical industry to
develop its plant-based chemicals and establish a supply chain.
But the consumer market is key.
``Getting consumers and the consumer brand companies invested in
sustainability issues is essential to creating a healthy market for
renewable products,'' said Dave. ``As more consumers speak up--calling
for responsible corporate action and better products--we see interest
at companies growing.''
``Right now, our marketing focus is on working with brands and end
users to convey the potential of biobased materials and also to produce
demonstration products. It's a chance to show them that we have the
technology. And consumer-facing brands have been quite interested,''
said Ralph.
Virent is actively working on the scale-up and commercialization of
its technology. Longer term, the company also has plans for licensing
the technology so that others can help make a positive difference
towards a more sustainable environment.
``We're actively pursuing all avenues,'' said Dave.
Virent is one of the few that design green chemicals with
catalysts instead of microorganisms.
Virent's Kettner.
Government's Role
``Our industry is 5 or 10 years old and we're scaling up a whole
new industry from scratch,'' explained Dave. ``Of course, we're
simultaneously competing with oil and petrochemicals--sectors that have
decades of investment and optimization.''
The first refineries were built over 100 years ago, and
petrochemicals date back to the 1930s.
``Biobased products are increasingly competitive on price, but it's
tough to beat someone with a century-long head start. And that's where
government policy and tax incentives could really help,'' he said.
More on the Science
Virent is not the only company making green chemicals. But they're
one of the few that design these essential building blocks with
catalysts instead of microorganisms.
Catalysts are inanimate. Microbes are, of course, living creatures.
``Scientists have engineered yeasts and other microorganisms to eat
the sugar from biomass feedstocks and then excrete the chemical
compound of interest. That is how ethanol is commonly manufactured,''
explains Dave.
``But as living creatures, the microorganisms also need to grow and
replicate, and so they consume some of the sugars for that purpose,
reducing the yield of the final product.''
Most microorganisms eat only one or a couple types of sugar. They
can be sensitive creatures, too--to temperature, contamination, and
competition.
``Our catalysts don't care about any of those issues and don't
consume a drop for other purposes, so they don't reduce yield,'' added
Dave. ``They conduct their proscribed chemical reactions and are ready
to go another round. Better still, we've designed our catalysts to work
with all types of sugars and other secondary compounds, which provides
us feedstock flexibility so that we can co-locate our production
facilities near feedstock inputs from nearly every part of the U.S. and
around the world.''
The Chairman. Thank you, Ms. Bowman.
Next, we have Ms. Stolzenburg. Please begin when you are
ready.
STATEMENT OF NAN C. STOLZENBURG, PRINCIPAL PLANNER AND FOUNDER,
COMMUNITY PLANNING & ENVIRONMENTAL ASSOCIATES, BERNE, NY
Ms. Stolzenburg. Thank you. Good morning, everyone. My name
is Nan Stolzenburg, and I am a community and land use planning
consultant with almost 30 years of experience working with
rural communities. Today, I am not representing any specific
agency or organization, but wish to represent the many rural
communities I have experienced working with on the topic of
siting renewable energy facilities.
To grow the renewable economy, we must address the
challenges relating to siting of renewable energy facilities in
rural areas. I will focus specifically on solar facilities, and
how the lack of land use planning, information sharing,
community involvement, and forethought relating to siting
creates barriers to the renewable economy.
There certainly is recognition that we need to develop
renewable energy resources to meet climate change challenges,
but at the same time, our efforts to meet that challenge should
not diminish agricultural production, or adversely impact our
rural communities or our environment. Because facility siting
is currently industry-driven, local communities usually are
reactive to a specific proposal. Few have done or even know how
to do any proactive planning to identify and locate appropriate
sites that would work for all. Few communities have the
resources to do comprehensive analysis with a lot of public
input to identify acceptable locations for siting. Coupled with
real or perceived lack of tangible benefits for host
communities, poor siting that removes prime farmland soils,
prevents other desired rural land use opportunities, and
adversely affects other aspects of the rural economy causes
friction and fosters negative attitudes towards renewable
energy. Rural communities often resent their losses that
benefit urban areas. Development of large-scale solar
facilities are often at cross purposes to other stated public
goals, such as protecting prime farmland soils for agriculture,
or for woodlands to promote carbon sequestration.
Although some facility siting guidance and planning tools
exist, they often remain unreachable for our small communities
due to lack of coordination, staff, communication, and regional
planning. But these challenges can be overcome with good
planning.
What does good planning mean? Good planning involves
identifying both natural resources and critical local features
that need to be protected together with identifying locations
that have the right conditions for a renewable facility. Models
exist for this natural resource-based type of planning, but
they are not commonly or easily applied. It would be a planning
process carried out at the local level to involve local
officials and community members. This would build both
acceptance and more assurance for approval processes. It would
include development of much-needed site selection systems that
can be applied broadly but fine-tuned locally with incentives
and required performance standards. It should prioritize lands
that are distressed or no longer usable for other purposes, and
identify sites consistent with other local goals and regional
goals. Suburban and urban locations should receive a lot more
attention as locations for renewable energy facilities,
especially related to rooftop, parking lot, and building
integrated systems and with incentives to support them. Prime
agricultural soils and forestlands should be protected.
I urge Congress to consider establishing programs and
policies that address these problems. Some of these solutions
could include to promote local planning and provide financial
resources that assist communities in assessing their renewable
energy capacity, and that involves local residents in a
meaningful way to apply criteria, identify appropriate sites,
and balance a variety of needs. We can collate existing
planning models in renewable energy siting research to
establish siting criteria, and then incentivize them or require
them in certain instances. We should require or incentivize use
of dual-use, that is, like agrivoltaics, in renewable energy
siting and involve the farm community early so that they can
also benefit from these renewable facilities. Agrivoltaics can
couple food protection, raising and use of native grasses and
pollinator friendly plants that meshes agricultural
entrepreneurship with renewable development. We need to promote
truly community-scaled facilities that provide more benefits
locally and that are perceived to be beneficial to the rural
community. I urge Congress to establish national policies
related to siting of renewable energy facilities, and to
enhance local planning tools that consider the complex and
multi-faceted experiences, expectations, and values of our
rural residents. We should be looking across states and
carefully identifying and prioritizing suitable locations that
balance smart land use planning in a way that also develops
renewable energy resources.
It is my hope that by taking these steps, that the
renewable energy economy will flourish. Thank you very much.
[The prepared statement of Ms. Stolzenburg follows:]
Prepared Statement of Nan C. Stolzenburg, Principal Planner and
Founder, Community Planning & Environmental Associates, Berne, NY
Good morning and thank you for the invitation to participate in
today's hearing. My name is Nan Stolzenburg, and I am owner of, and
Principal Planner for the consulting firm, Community Planning &
Environmental Associates (CP&EA) located near Albany, NY. I have
provided land use and environmental planning consulting to small and
rural communities throughout New York State for over 28 years. I am
certified as a Planner (AICP) and an Environmental Planner (CEP) by the
American Planning Association.
My work is focused exclusively on the planning needs of small and
rural communities, and we have been principal consultants on numerous
county-level and town-level agricultural and farmland protection
planning efforts across the state. I have also worked with many rural
communities on issues related to renewable energy land uses. My
comments stem from my experiences from being retained by communities
specifically to address renewable energy land uses at the local level
through Town comprehensive plans, open space plans, natural resource
inventories, and local land use regulations. Also, my personal
experience as a member of a dairy farm family and a resident of a very
rural area, offers me an additional, first-hand experience to share.
I am honored to speak to you today. I feel it is particularly
important to convey to you one aspect of renewable energy development
and it is an issue that challenges movement towards a more positive
renewable energy economy. That issue is the siting of renewable energy
facilities, specifically solar facilities, and the local perspective on
such facilities. As my experiences attest, this topic needs much more
attention. This topic is not only relevant to the broader renewable
economy, but to agriculture. As the industry moves towards large-scale
solar development, rural communities and their local policies can and
do affect farmers needs or desires to use their farmlands for renewable
energy development. Creative opportunities to promote renewable energy,
multi-use farming, and build community exist, but are generally not
taken advantage of. Solar developers economic decisions are driving the
system, which typically leads to friction with rural host communities.
My perspective is shaped from experiences in New York. I recognize
that the situation seen here may not be the case in all states. The key
point I wish to convey is that a general lack of planning,
coordination, information sharing, community involvement, and
forethought related to siting of renewable facilities in rural areas
has created barriers to a broader renewable economy and many missed
opportunities. Lack of proactive planning for siting and site layout of
these facilities coupled with the solar industry solely at the helm of
site selection has had adverse impacts. These include the removal of
valuable farmland and forestland, adverse impacts to rural character--
one of the largest economic assets a rural community has, and promotion
of negative attitudes towards renewable energy. The lack of tangible
benefits received by host communities, taxation issues, and growing
resentment that these facilities are imposed on rural communities to
benefit urban communities are also on the minds of many rural residents
and local officials.
There certainly is a recognition in many rural communities that we
need to move assertively to develop renewable energy resources to meet
the challenges posed by climate change. But our efforts to meet that
challenge should not diminish agricultural production, or adversely
impact our farm communities, or our environment. I do not accept the
premise that our renewable energy economy must come no matter its cost
to our communities and environment. As a professional land use planner,
I know there are indeed steps that can and should be taken to address
this.
Solar facilities (as well as wind and biofuel) are often the
largest built, non-farming feature in a rural community's landscape.
These are major land uses built at a scale and intensity in stark
contrast to other uses. Facilities are getting larger, not smaller. The
current acceleration to develop renewables revolves around economics
and economies of scale, and thus site selection gives little thought to
the very features most highly valued in rural communities. Universally,
those highly valued features revolve around rural character,
agriculture, open spaces, and clean environments. At its core, the
current direction focusing on large-scale renewables is seen as
inconsistent with what these communities are all about. A failure to
address this is a barrier to an expanded renewable economy.
These barriers often result in prohibitive local regulations, more
rural/urban divisions and lost opportunities for farmers. Not
surprisingly, new, large-scale renewable energy facilities fosters
`NIMBY' or ``Not In My Backyard'' attitudes, and thus stymies public
support.
Rural communities are generally unprepared to address large-scale
renewable facilities. They often have no staff support, rely on
volunteer planning boards that often have little information about
options they could incorporate into an application to promote best
management and siting practices. They are not skilled in the
environmental review of such facilities and lack resources and tools to
evaluate and incorporate renewable energy into their local land use
decision making. We need to empower our communities to overcome these
weaknesses.
More planning is needed to guide solar facility siting. Few states
and even fewer local municipalities have actually gone through a
concerted planning process to identify locations that would be
acceptable and suitable for renewable facilities.
Good planning would involve identifying both natural resources and
critical local features that need to be protected and identifying
locations that have the right conditions for the renewable facility,
such as proximity to transmission lines. Through use of Geographic
Information System technology, these criteria for siting solar and
other renewables can be easily applied and mapped. Communities could
collectively make choices about where they can accept such facilities.
Local policies can be fashioned to facilitate this. Such planning would
give both renewable energy developers and local communities guidance as
to where to focus efforts and this will lead to more efficient and
better approval outcomes. It would eliminate the perspective that
renewable facilities are being `foisted' on them that benefit others.
There are some examples of this type of planning: For example, in
Kentucky, a ``solar siting potential'' map has been developed that can
be used to help local communities plan for, instead of simply react to,
renewable facilities. In other places, land trusts and environmental
organizations have stepped in to fill that same planning need with
siting guidelines and/or mapping tools. For instance, the Maine
Farmland Trust, Scenic Hudson (in NY),\1\ the American Farmland Trust,
and the Chesapeake Conservancy in Maryland have all developed
guidelines or GIS-based planning tools to help foster good facility
siting and planning. Also, many solar developers publish their own
siting guidelines (Such as the Solar Energy Industries Association, or
SEIA). The U.S. Department of Energy, Solar Energy Technology Office
(SETO) \2\ has been conducting research into best management practices
for solar siting and has many good resources.
---------------------------------------------------------------------------
\1\ https://www.scenichudson.org/our-work/climate/renewable-energy/
welcome-to-scenic-hudsons-solar-mapping-tool/.
\2\ https://www.energy.gov/eere/solar/solar-energy-technologies-
office.
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All these are good tools with good information that could be
helpful. A significant issue is that these tools usually do not trickle
down to the local level where the actual renewable development is
taking place. That reflects a lack of coordination, communication, and
regional planning to address these issues.
In order to both avoid and mitigate negative impacts and to build
acceptance, planning processes need to take place at the local level to
involve local officials and community members. As stated in a 2017
report Accelerating Large-Scale Wind and Solar Energy in New York:
Principals and Recommendations \3\ ``communities need tools and
resources, such as comprehensive planning and zoning ordinances, and
expertise in how to use them, to be effective partners in the
renewables development process.'' And that is simply not happening. As
a result, the positive opportunities associated with renewables are
greatly diminished.
---------------------------------------------------------------------------
\3\ https://www.nature.org/content/dam/tnc/nature/en/documents/
accelerating-large-scale-wind-and-solar-energy-in-new-york.pdf.
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In New York State at least, a variety of siting guidelines have
been produced by state agencies and organizations, but there remains
little coordinated, state-wide forethought into considering impacts to
farmland, food systems, farmers & farm communities. While multiple
siting guidelines exist and offer recommendations, there are still no
special protection of prime agricultural soils and in many cases,
forested areas. Clearcutting of large swaths of forest land, which is
happening when solar is developed, is especially difficult for rural
communities to accept.
Development of solar facilities are often at cross purposes to
other stated public goals. For instance, prime farmland soils are often
lost to agricultural production when it is more profitable to farm the
sun than food. Farmers that rely on rented farmland for their
operations have lost access to those fields which have been converted
to solar use. This loss can disrupt farm viability. When rented
farmland is slated for solar development, the farmer loses ability to
implement whole-farm nutrient management plans for example. Loss of
leased farmlands decreases the number of farms, which will also affect
farm suppliers, services, and the regional economy. In our current farm
economy, it is a disturbing trend that it is more economically
beneficial for farmers to host solar facilities than farm that land.
Right now, because developers propose the sites and government
regulators only react to proposals, it is site developers that are
making the choices about where these facilities get located. Flat,
accessible land is, unfortunately, desirable for both farming and
renewable energy and so this friction often enters the review process
from the very beginning.
Local communities, often referred to as `host communities' more
often than not in my experience have no say in whether they want to
host these facilities, and do not often feel like they receive any
benefits. Resentment that builds due to having to accept adverse
impacts to their landscape, environment and community with no local,
tangible benefits contribute to the rural/urban divide.
This absence of planning and proactive involvement of local
communities often places significant barriers to renewable energy
development. Legitimate concerns should be taken into consideration in
the renewable economy. Planning that involves local officials, farmers
and residents is a pressing need that is currently unsupported. I
strongly advocate for government to take a greater role in guiding and
incentivizing facility siting and providing standard protocols,
methods, and expectations. We should be looking across states, and
carefully identifying and prioritizing suitable locations that balances
smart land use planning that preserve what is important to rural
communities and the need to develop renewable energy resources.
Governments should consider creating a potential site hierarchy
system, with incentives and a faster and easier approval process for
sites deemed best suited for such facilities. There should be policies
and requirements in place that emphasize prioritizing lands that are
distressed and no longer useful for other purposes. Suburban and urban
locations should receive a lot more attention so that development of
rooftop solar and building integrated solar for residential and
commercial buildings is an equal part of the solution. At the same
time, prime agricultural soils and other important agricultural
resources should be protected during the siting and application review
process. This is especially important in the northeastern United States
which has land resources and water to support farming in ways western
and mid-western communities do not.
Government should not shy away from local community input. Instead,
use community input in a planning process to help inform the selection
of potential sites so that local communities have a voice in that
selection and simply don't have sites imposed on them by developers and
regulators.
Our policies should consider encouraging more smaller solar energy
facilities that distribute the power generated locally. Communities in
general view these facilities more favorably because they make a
difference locally and there are tangible benefits that could outweigh
disadvantages. Smaller facilities will likely have smaller footprints
and lower impacts to agriculture lands, rural character, and the
environment.
Farms and agricultural lands are just as fragile as our
environmental resources. The key is to use sensible planning to ensure,
that in meeting the challenges of one environmental problem, we don't
create new problems and other adverse environmental impacts. Local
agriculture and agricultural resources need to be accorded more value
in siting decisions, to protect productive agricultural lands and
forestlands for our future. The [COVID] pandemic and its exposure of a
broken food system is a sharp demonstration of the community need for a
robust supply of local farm products.
There are many but yet mostly untapped opportunities to promote
dual use of farms where agricultural activities can take place
simultaneously with energy generation. Dual use (often referred to as
`agrivoltaics') can promote use of native grasses and pollinator-
friendly plants to provide habitats for butterflies and support bees
that farmers rely on. Sheep grazing on solar farms is an excellent
opportunity that meshes agricultural opportunities and entrepreneurship
with renewables, but is neither required, nor easily accepted by the
solar developers (See Solar and Multiuse Farming, attached). There is a
great need for information, incentives and in some cases requirements,
to promote these opportunities for agrivoltaic uses. Should that take
place, we must also address lack of markets and processing for sheep
and their products. This is an example of ways solar development can
provide multiple benefits and provide a way to help farmers use solar
as a steady revenue stream.
In light of these challenges, I urge Congress to consider
establishing programs and policies that address these problems. These
include:
1. Promote local planning that assists local communities in
assessing renewable energy capacity in a way that involves
local residents in a meaningful way. This includes
supporting local planning efforts such as comprehensive
planning, natural resource inventories, and open space
planning. These plans need to establish methods that allow
for renewable energy projects in appropriate areas
supported by the community. Financial resources are needed
for conducting these basic community planning efforts.
These are grassroots efforts that help engage people and
promote communication. This will ultimately empower local
communities to accept renewables into their economy.
2. Provide assistance in the form of technology and staff to help
these communities navigate myriad sources of information.
Fund agencies such as Cooperative Extension or others to
serve as information clearinghouses to aid rural
communities.
3. Promote application by solar developers of best management
practices that preserve environmental and especially,
scenic resources. These are major barriers and must be
addressed.
4. Establish policies that incentivize use of disturbed sites first,
as well as rooftop, parking lot, and building-integrated
solar facilities in all locations--rural and urban--first
instead of green locations. Do not put rural areas in the
position of having to supply all renewable energy to urban
and suburban areas.
5. Collate existing models developed across the States to identify
farmland criteria to steer renewable energy facilities to
locations that preserve valuable farmland needed for food
production, and require or incentivize application of these
criteria.
7.* Require or incentivize use of agrivoltaic's in renewable energy
siting and involve the farm community early in siting so
that the farm community can benefit from renewable
facilities.
---------------------------------------------------------------------------
* Editor's note: there was no item number ``6.'' in the submitted
statement. It has been reproduced herein as submitted.
8. Promote smaller-scaled facilities that are truly `community
facilities' so that renewable energy production has greater
---------------------------------------------------------------------------
benefits locally.
9. Promote use of host community agreements so that affected
communities see benefits.
10. Further, address tax issues and support training for those
involved in taxation of renewable facilities to enhance
effectiveness and fairness of PILOT agreements that are
negotiated--again to offer local benefits.
Conclusion
I urge Congress to establish national policies related to siting of
renewable energy facilities and to enhance planning tools and
principals when thinking about ways to expand the renewable economy. In
so doing, consider the complex and multi-faceted experiences,
expectations, and values of rural residents, find ways to promote
renewables in a way that recognizes and balances the often-competing
community goals and needs, and establish programs, requirements and
incentives that positively involve rural communities and residents in
the renewable economy rather than imposing it on them.
Attachment
Solar & Multiuse Farming
September 2019
www.seia.org www.solargrazing.org
Co-locating Utility-scale Solar with Livestock & Pollinators
Solar development and agricultural use can exist not only side-by-
side, but increasingly are found together.
A farmer can add solar to their property and get steady
income from a land or rooftop array.
Solar energy facilities can also collaborate with local
farms and bee-keeping organizations to incorporate pollinator
friendly plants and bee hives onto their sites.
Responsible solar development could improve soil health,
retain water, nurture native species, produce food, and provide
even lower-cost energy to local communities.
Sheep farmers have opportunities to contract for vegetation
management of solar sites and thus increase farm viability.
Photo Credit: American Solar Grazing Association.
Benefits to Farmers
Farming is an extremely low-margin, competitive industry. If a
farmer can add solar to their property and get steady income from a
land or rooftop array, it can enable them to keep their farm.\1\ Steady
income from solar projects means that farmers are less vulnerable to
fluctuations in market prices on their products. Especially for larger
solar projects, local government and communities benefit from collected
taxes and localized spending.
---------------------------------------------------------------------------
\1\ https://www.renewableenergyworld.com/articles/2016/04/solar-
power-more-lucrative-than-crops-at-some-us-farms.html.
---------------------------------------------------------------------------
``Solar grazing'' is a method of vegetation control for solar sites
that utilizes livestock, primarily sheep.\2\ While solar grazing is
currently in pilot phases on various sites, it is increasing in
popularity. Solar companies can contract with local farmers, resulting
in a relationship that is financially beneficial for both farmers and
solar developers. Properly installed systems are benign to nearby
animals.
---------------------------------------------------------------------------
\2\ Various livestock, and sheep in particular, may be sensitive to
the preexisting mineral contents of the soil, and proper soil testing
should always be done prior to grazing.
------------------------------------------------------------------------
-------------------------------------------------------------------------
According to a study conducted by Cornell University in 2018 \3\ and
a study from the National Renewable Energy Laboratory in 2016,\4\ co-
location and solar grazing bring net positive benefits for farmers, in
the form of hundreds of dollars per acre each year in additional
income, and solar sites, through increased energy production and
reduced maintenance expenses.
\3\ Kochendoerfer, N. Hain, L., Thonney, M.L. (2018) The Atkinson Center
for a Sustainable Future at Cornell University https://
www.solargrazing.org.
\4\ https://www.nrel.gov/news/features/2019/beneath-solar-panels-the-
seeds-of-opportunity-sprout.html.
------------------------------------------------------------------------
Solar energy facilities can also collaborate with local farms and
bee-keeping organizations to incorporate pollinator friendly plants and
bee hives onto their sites. There are many benefits to combining solar
facilities with pollinator habitats: \5\
---------------------------------------------------------------------------
\5\ https://www.greenbiz.com/article/solar-farms-could-make-
fertile-habitats-bees-and-butterflies.
Using one large solar field or perimeter screening area is
akin to planting thousands of backyard pollinator gardens,
which ultimately increases the productivity of farmland for
---------------------------------------------------------------------------
miles around the facility.
Planting native pollinator habitats reduces waste water
runoff, and pollinator-friendly vegetation management
practices, including minimal use of pesticides, results in more
stable bee populations, benefiting farmers in the surrounding
area.
Photo Credit: Pine Gate Renewables, North Carolina.
Solar Projects Can Improve Biodiversity
Solar farms can support a greater diversity of plants as well as
greater numbers of butterflies and bees, particularly under management
which focuses on optimizing biodiversity when compared to equivalent
agricultural land. This increase in plant and invertebrate availability
may lead to more opportunities for foraging birds in terms of
invertebrate prey and seed availability.\6\ When joint solar and
vegetation designs are developed together, the benefits achieved can be
maximized.\7\
---------------------------------------------------------------------------
\6\ Montag, H., Parker, G., Clarkson, T. (April 2016). The Effects
of Solar Farms on Local Biodiversity: A Comparative Study.
\7\ Macknick, J., NREL (June 2016) Overview of opportunities for
co-location of agriculture and solar PV.
Photo: SouthHill Community Energy.
Solar Installations Could Be Win-Win-Win for Food, Water, and Renewable
Energy
Responsible solar development could improve soil health, retain
water, nurture native species, produce food, and provide even lower-
cost energy to local communities. The Department of Energy's (DOE)
Innovative Site Preparation and Impact Reductions on the Environment
(InSPIRE) project brings together researchers from DOE's National
Renewable Energy Laboratory (NREL), Argonne National Laboratory,
universities, local governments, environmental and clean energy groups,
and industry partners to better understand how to maximize local
benefits.\8\
---------------------------------------------------------------------------
\8\ https://www.nrel.gov/news/features/2019/beneath-solar-panels-
the-seeds-of-opportunity-sprout.html and https://openei.org/wiki/
InSPIRE.
---------------------------------------------------------------------------
At several InSPIRE sites, local beekeepers and university and
national laboratory researchers are tracking their bees' visits to the
pollinator-friendly vegetation under the solar panels. The goal is to
determine how vegetation at solar sites can benefit insect populations
and to understand the extent to which pollinator-friendly solar
installations can boost crop yields at surrounding farms.
The Chairman. Thank you.
Next, we have Mr. Aberle. Please begin when you are ready.
STATEMENT OF RANDY ABERLE, EXECUTIVE VICE PRESIDENT OF
AGRIBUSINESS AND CAPITAL MARKETS, AgCountry FARM CREDIT
SERVICES, FARGO, ND
Mr. Aberle. Mr. Chairman [inaudible]. Excuse me. Should I
start over?
Voice. Yes.
Mr. Aberle. Excuse me. I will start over.
Mr. Chairman, Ranking Member Fischbach, and other
distinguished Members of this Subcommittee, thank you for
calling this hearing today to discuss the renewable economy in
rural America and allowing me to testify on behalf of AgCountry
Farm Credit Services. My name is Randy Aberle. I am the
Executive Vice President, Agribusiness and Capital Markets at
AgCountry Farm Credit Services based in Fargo, North Dakota.
AgCountry Farm Credit Services is a member of the Farm
Credit System. We are a cooperative owned by our customers. We
provide financing, crop insurance, and related services to more
than 20,000 farmers, ranchers, agribusinesses, and rural
homeowners in western Minnesota, eastern North Dakota, and
central Wisconsin. We currently provide over $8 billion in
loans through our 37 branch locations, and have nearly 600
employees. AgCountry and our customer owners are deeply
involved in the renewable economy in a variety of ways.
Farmers, ranchers, and agribusinesses are some of the most
creative and innovative people you will meet. AgCountry has
been lending to the biofuels and alternative energy industries
for over 2 decades. I have personally served as the lead lender
in financing over 23 biofuel plants. Each of these plants are
multi-million-dollar enterprises owned by farmers and rural
entrepreneurs. We are financing projects that reduce carbon
emissions at these plants, which meet the Low Carbon Fuel
Standards of California. AgCountry is also financing
investments to capture waste landfill gas to power biofuel
plant operations. Similarly, dairy farmers are utilizing
anaerobic digesters to capture methane from manure lagoons to
produce renewable energy, electricity, and renewable natural
gas.
Beyond providing loans, we have shown support through
sponsorships and regenerative agricultural research to improve
the carbon footprint of agricultural production. AgCountry is
currently in a public-private partnership with commodity and
research groups, along with state funding, to finance crop
research and a small-scale soybean crush facility in rural
northwestern Minnesota. One goal of this project is to develop
higher oilseed crops for use for feedstocks for renewable
diesel and biodiesel production.
The renewable economy offers great opportunities for
farmers, ranchers, and agribusinesses, and AgCountry is
prepared to support our customers as they seek these
opportunities. Financing biofuels and other innovative
approaches for farmers and ranchers can be challenging. The
size, technology, and maturity of the business all impact how
lenders can best support the effort.
As lenders, we analyze different financial metrics when
deciding on whether to finance a project. One of these metrics
is recurring cash flows from operations. This measure helps
determine if the project has the ability to repay the loan.
Oftentimes, tax credits or incentives to invest in these types
of projects are not enough to meet the required cash flow
necessary to get these operations up and running to self-
sufficiency. Financing start-up businesses can be particularly
complex and challenging, especially when new technology is
involved. A project champion or sponsor needs access to
financial capital, which may come from a venture capital
partner, where both the risk and reward expectations are very
high. Technology, processes, and products must be able to be
replicated for broad acceptance in the financial markets.
Congress could support new technology and start-ups by
providing greater incentives, as well as more certain and
predictable revenue streams for these capital investments to
entrepreneurs or sponsors in order to cover start-up losses and
loan repayment in the early phases of a project. Additional
public-private partnerships can work with adequate grants and
investments that provide liquidity until sustainable cash flows
can be generated.
From our own lending standpoint, we are doing everything
that we can to make projects within the renewable economy work.
AgCountry works with our customer borrowers to find reasonable
solutions when plans do not materialize. As a farmer-owned
cooperative, it is our mission to serve agriculture and rural
America. These projects provide good paying jobs, new
opportunities in our rural communities, and other potential
revenue streams for farmers and entrepreneurs. Agriculture
plays a vital role in environmental stewardship, and we believe
farmers and ranchers are part of the solution to the climate
challenges facing us today.
Thank you again for calling this hearing, and I would be
pleased to respond to your questions.
[The prepared statement of Mr. Aberle follows:]
Prepared Statement of Randy Aberle, Executive Vice President of
Agribusiness and Capital Markets, AgCountry Farm Credit Services,
Fargo, ND
Mr. Chairman, Ranking Member Fischbach, and other distinguished
Members of the Subcommittee, thank you for calling this hearing today
to discuss the renewable economy in rural communities and for allowing
me to testify on behalf of AgCountry Farm Credit. My name is Randy
Aberle, and I am Executive Vice President of Agribusiness and Capital
Markets for AgCountry Farm Credit Services, based in Fargo, North
Dakota.
AgCountry Farm Credit Services is a financial cooperative providing
financing, crop insurance and related services to more than 20,000
farmers, ranchers, agribusinesses, and rural homeowners in eastern
North Dakota, western Minnesota, and central Wisconsin. We provide more
than $8 billion in loans through our 37 locations throughout our
territory and have nearly 600 employees.
We are a member-owned, locally-governed cooperative and a proud
member of the Farm Credit System. Along with 70 other Farm Credit
institutions, AgCountry shares a critical mission to support rural
communities and agriculture with reliable, consistent credit and
financial services, today and tomorrow.
Farm Credit is a nationwide network of borrower-owned lending
institutions that share a critical mission assigned to them by Congress
a century ago. These independent institutions include four wholesale
banks and 67 retail lending associations, all of which are
cooperatively owned by their customers: farmers, ranchers,
cooperatives, agribusinesses, rural utilities and others in rural
America.
Our mission is to ensure that rural communities and agriculture
have a reliable, consistent source of financing irrespective of cycles
in the economy or vagaries of the financial markets. Hundreds of
thousands of farmers, agribusinesses and renewable energy producers
around the country developed business plans this year knowing that Farm
Credit has the financial strength to finance that plan and the strong
desire and ability to help them succeed.
Farm Credit's unique cooperative structure means that the customer-
owners who sit on our boards of directors are living, working, and
raising their families in rural communities. They are deeply invested
in the success of those communities and are interested in finding more
ways for Farm Credit to contribute to that success.
Farm Credit is committed to supporting a diverse agricultural and
rural economy, which certainly includes the renewable energy sector.
Our customers span a wide range of climate smart and renewable energy
operations including renewable fuel producers, farm operations with
methane digesters selling energy back to the grid, biomass projects,
and operations which have incorporated wind and solar energy
production.
AgCountry and our customer-owners are deeply involved in the
renewable economy in a variety of ways. Farmers, ranchers, and
agribusinesses are some of the most creative and entrepreneurial people
you will meet.
AgCountry has been lending to the biofuels and alternative energy
industries for over 2 decades. I have personally served as the lead
lender on 23 biofuel plants. Each of these plants are multi-million-
dollar enterprises owned by farmers and rural entrepreneurs. We are
financing projects that reduce carbon emissions at these renewable
energy plants, which meet the Low Carbon Fuel Standards of California.
AgCountry also is financing investments to capture waste landfill gas
to power biofuel plant operations.
Beyond providing loans, we have shown support through sponsorships
in regenerative agricultural research to improve the carbon footprint
of agriculture production. AgCountry is currently in a public-private
partnership with commodity and research groups along with state funding
to finance crop research and a small-scale soybean crush facility in
rural northwestern Minnesota. One goal of this project is to develop
higher oilseed crops for use as biofuel feedstock for renewable diesel
and biodiesel production.
The renewable economy offers great opportunities for farmers,
ranchers, and agribusinesses and AgCountry is prepared to support our
customers as they seek opportunities.
Financing biofuels and other innovative approaches in the renewable
economy can be challenging. The size, technology, and maturity of the
business all impact on how lenders can best support the effort.
[Profitability] in the sector can also vary greatly. For example,
according to Iowa State University research, the average daily
operating margin for U.S. fuel ethanol plants ranged from about 5 per
gallon in June to over 40 per gallon in September.
Based on AgCountry's past experience, some biofuel projects can
cost anywhere between $30 to $100 million or more. Multiple lenders,
investors, and others often are required and AgCountry partners closely
with other Farm Credit lenders, commercial banks, and equity investors
to provide the total financing package necessary while spreading the
financial risk among many institutions.
As lenders, we analyze different financial metrics when deciding on
whether to fund a project. One of these metrics is recurring cash flows
from operations. This measurement helps determine if a project has the
ability to repay the loan. Oftentimes, the tax credits or incentives to
invest in these types of projects are not enough to meet the required
cash flow necessary to get these operations up and running to a level
of self-sufficiency.
Financing start-up businesses can be particularly complex and
challenging, especially when new technology is involved. A project
champion or sponsor needs access to financial capital, which may come
from a venture capital partner where both the risk and reward
expectations are high. Technology, processes, and products must be able
to be replicated for broad acceptance in the financial markets.
Congress could support new technology innovation and start-ups by
providing incentives for capital investments to entrepreneurs or
sponsors in order to cover startup losses and loan repayment in the
early phase of a project. Additional public-private partnerships can
work with adequate grants and investments that provide liquidity until
sustainable cash flows can be generated.
From our own lending standpoint, we are doing everything that we
can to make projects within the renewable economy work. AgCountry is a
patient lender that works with our customer-borrowers to find
reasonable solutions when plans do not materialize. As a farmer-owned
cooperative, it is our mission to serve agriculture and rural America.
These projects provide good paying jobs, new opportunities to our rural
communities, and another potential revenue stream for farmers and
entrepreneurs.
Farm Credit is proud to serve as the financial partner to many of
the nation's rural electric cooperatives and other rural power
providers, many of which are making forward looking investments in
renewable sources of energy. Farm Credit is working with rural
communities and entrepreneurs across the nation to find additional
opportunities to support the renewable energy industry.
As the Federal Government continues to find ways to grow this part
of the agricultural economy, we firmly believe policies rooted in
voluntary, science-, and incentive-based principles will spur growth in
the agriculture industry and will ensure Farm Credit is able to best
serve its current and future customers. We would also emphasize that
government programs need to be transparent and income streams from them
need to be predictable and certain, so lenders can include them in
calculations to support loan making.
Thank you again for calling this important hearing. I would be
pleased to respond to your questions.
The Chairman. Thank you, sir.
At this time, Members will be recognized for questions in
order of seniority, alternating between Majority and Minority
Members. You will be recognized for 5 minutes each in order to
allow us to get to as many questions as possible. Please keep
your microphones muted until you are recognized in order to
minimize background noise.
I recognize myself for 5 minutes.
I want to direct my questions to Ms. Stolzenburg. You spoke
about rural communities lacking the resources to proactively
identify locations with the right conditions for renewable
energy facilities, which I think is a very important point to
focus on. I introduced the Rebuild Rural America Act (H.R.
2361) with my colleagues, Reps. Bustos, Craig, and Spanberger,
to provide consistent, flexible use funding to rural
communities for locally tailored needs. This type of funding
could be used, I believe, for planning for renewable energy
multi-use solar development and more. I do agree it is critical
that Congress provide resources to empower rural communities
for projects that meet their needs.
In your testimony, you talked about the critical need for
good planning, and you highlighted that there are models that
exist for this effort. Could you elaborate a bit more on those
models, and then as a follow-up, I would be interested to know
how we could better promote, from your vantage point, those
models.
Ms. Stolzenburg. Sure, thank you.
So, the models really are based on use of tried and true
comprehensive planning methods, which are grassroots programs
that involve the community in understanding and identifying
their values and--but the technology part of it is usually a
geographic information system where we use mapped information
to look at all of the resources in a community, from slope to
wetlands and streams to prime agricultural soil, and using that
technology, you can very easily identify and then apply
criteria that, say, a solar facility might need to identify
potential locations that address community identified features,
as well as the facility identified features. And then through
the comprehensive planning process, work with the community to
identify locations that, again, meet that variety of local
needs.
So, I think that it is both a planning model and the GIS-
based model.
The Chairman. Thank you, and in terms of our ability at the
Federal level to promote and/or provide resources and funding
for these types of efforts, are you aware of any current
Federal programs that have been utilized or can be utilized for
these sorts of efforts?
Ms. Stolzenburg. Not that I am aware of at the very local
level. It is a huge need. Communities want to do planning and
there are very few resources to help them gain the skills or
the staff or the ability to get them done. So, I am not aware
of a program at the national level that can help do that.
The Chairman. And separate and apart from potential funding
sources, are there any other ways in which the Federal
Government can support new renewable projects and new market
opportunities for farmers?
Ms. Stolzenburg. Well, as I mentioned, I think the
agrivoltaics is a great example of something that can mesh
renewable energy and opportunities for new types of
agriculture. In my experiences, they have been resisted by the
solar developers, at least around here, but there are lots of
opportunities to mesh that, and that would grow community
acceptance if it was contributing to the local food systems.
The Chairman. All right. Thank you very much. I yield back.
Next, we are going to go to, I believe, Mrs. Fischbach,
Ranking Member Fischbach.
Mrs. Fischbach. Thank you, Mr. Chairman, and I appreciate
all of the testimony. I have taken a lot of notes, so I
appreciate the opportunity.
Mr. Aberle, in your testimony you mentioned a project that
you have been working on in northwestern Minnesota. I think I
might know the project you are talking about. It is in my
district. Could you talk a little bit further about the project
and how does this project, and by extension AgCountry and the
other sponsors, impact the renewable economy as well as the
surrounding area economy?
Mr. Aberle. Well, thank you, Congresswoman Fischbach. I
would be happy to respond to that.
This project in northwest Minnesota gives the local region
an opportunity to add value-added agriculture through continued
research to develop the additional soy bioproducts that our
representative from the Missouri Soybean testified to. As they
develop more and many uses of the soybean, it is able to
generate more revenue in local communities, providing jobs and
more revenue sources for the area producers.
Specific to that region, there is a need to produce higher
protein and higher oil soybeans for the markets for both the
food-based product and for feedstocks for biofuel and renewable
diesel. And so, this was an opportunity for our cooperative
lending structure to utilize our core values and be responsible
to each other and our cooperative, caring for ag and rural
America, and play our role as a lender for this project through
a collaboration with commodity research groups and commodity
groups, along with state funding to get a project up and
running, to continue this required research to get the
commercial scale production on new products.
Mrs. Fischbach. Well, thank you very much, and I do know
that that is quite a collaborative project. There are a lot of
folks who came together, including AgCountry, to move that
project along. So, I appreciate your involvement in that
project, I only have about 3 minutes left.
Ms. Skor, in your written testimony, you listed data on
state level economic impacts of the biofuel industry, and
Minnesota was near the top. The lion's share of that impact
comes from my district.
I am interested in your mention of the uncertainty as a
result of the lack of year-round E15, and delayed RVOs from the
EPA. Can you speak to the effects that that uncertainty would
have on future development and investment in the industry?
Ms. Skor. Certainly, Congresswoman. Thank you for the
question.
As you well know, in the height of the pandemic, half of
our industry was offline because of the drop in fuel demand. We
are still getting our footing back as an industry. What we need
is market stability and certainty, and strong signals. The
Renewable Fuel Standard, as passed and intended by Congress,
forces more blending of renewable biofuel into our fuel supply
every year. We need those requirements to be set and upheld by
EPA. Consumers should have year-round access to a low-cost,
low-carbon fuel, E15, year-round. When we have year-round
access to E15, when we have a Renewable Fuel Standard upheld as
Congress intended, that is how we start to unleash the power of
biofuels. That is how we become, yet again, a thriving economy
that can, in turn, make the capital investments required for
continued de-carbonization of our fuel and our ability to
diversify the markets that we can play in, and including
potentially sustainable aviation fuel.
Mrs. Fischbach. Thank you very much.
Mr. Aberle, can you speak to the effect that this
uncertainty has from the financing perspective of it?
Mr. Aberle. Yes, whenever there is a certain uncertainty
and unpredictability to the cash flows of these companies, is
always a concern for lenders for us to provide the stability of
credit facilities to these ongoing businesses. And when those
cash flows are then disrupted through policies and other
uncontrollables, these companies have to react and sometimes,
as was the case during the pandemic when they lost a lot of
market share and they had to shut down production, it did
disrupt the jobs and the business, and it made bankers more
cautious about lending into this space in the future.
Mrs. Fischbach. Thank you very much, and I will yield back
my 20 seconds, Mr. Chairman. Thank you.
The Chairman. Thank you.
Mrs. Fischbach. And thank you both for your answers.
The Chairman. Thank you.
I now recognize Representative Axne for 5 minutes.
Mrs. Axne. Thank you, Chairman Delgado, and as we work on
solutions to address the climate crisis, it is absolutely
imperative that we utilize the tools that we have in rural
America, and we take full advantage of the opportunities there
to not just support our climate, but of course, our farmers.
So, thank you for holding this hearing today.
And then, of course, one of our best solutions we have is
the use of biofuels in our transportation sector. Biofuels, of
course, support good paying jobs in our rural communities. It
is a robust market for our farmers, and of course, addresses
climate issues that we are facing.
So, I am thrilled to see that in the Build Back Better Act
(H.R. 5376), my amendment, the one that provides for $1 billion
towards the expansion of infrastructure for biofuels across
this country, will help not just Iowans, but Americans.
So, Ms. Skor, my question first is to you, and thank you so
much for being here and lending your expertise to the
Committee.
As Congress debates the Build Back Better Act this week,
what kind of benefits can we expect from the billion-dollar
investment in biofuels infrastructure within the bill itself?
Ms. Skor. Congresswoman, thank you so much for all of your
work to make sure that that infrastructure funding is included
in the Build Back Better Act. As you well know, this would be
the largest investment in higher blend infrastructure we have
seen to date. It really would unleash the power of biofuels. It
gives us the ability to work with our retail partners to
accelerate the market inclusion of E15, which is a lower cost,
lower carbon, higher value fuel choice for consumers. So, this
is an unprecedented, wonderful opportunity for biofuels. It is
great for American drivers, and it is certainly great for the
rural economy.
Mrs. Axne. Thank you for that, and I am looking forward to
the Build Back Better Act getting put into law, and I sure hope
that all my colleagues who are here today vote for it, because
it is $1 billion in biofuels that we are talking about directly
here.
Of course, another top priority for me is making sure that
we get E15 year-round. We just talked about that a little bit,
and as you know, earlier this year, a court case struck down
the EPA's authority that had allowed year-round E15. I am very
thankful for my colleague, Angie Craig, and her legislation to
fix this issue to make clear that the EPA has the authority.
That is legislation that I helped introduce.
And once again, we talked a little bit about uncertainty
earlier in the previous question, Ms. Skor, but if we don't
address this issue of EPA year-round and pass our legislation
to allow year-round E15, how is that going to impact sales and
the market opportunities for farmers?
Ms. Skor. Well, I appreciate the question, and again, thank
you for your support for year-round E15.
We agree this is a misguided court decision, and
unfortunately, next summer--E15 is sold across 30 states. 85
percent of those retail locations will not be able to offer,
for 3\1/2\ months next year, their consumers a lower cost,
higher value fuel. E15 averages about 5 to 10 per gallon less
than standard 87 fuel. It is a higher octane. It is cleaner
burning. It is better for the pocketbook. So, this is something
that we have to rectify. We appreciate your support,
absolutely. We cannot realize the full potential of low-carbon
renewable fuels without year-round access to E15.
Mrs. Axne. Well, thank you, and those are some sobering
numbers that we all need to be keeping in mind here.
I am also absolutely concerned that reduction of these E15
goals would impact our climate goals, they run in tandem.
Earlier this year, a Harvard study concluded that corn ethanol
reduces greenhouse gas emissions by nearly 50 percent compared
to gasoline, all while being produced, of course, by our great
farmers and communities across this country who support those
economies.
So, my last question to you, Ms. Skor, is as we look for
ways to de-carbonize, how can we utilize biofuels both
domestically and internationally to take full advantage of
carbon benefits?
Ms. Skor. There are so many ways that we can better utilize
biofuels, and as you said, we cut carbon emissions in half
relative to gasoline today, and with technologies that are
available today, we can become as an industry net-zero in terms
of our carbon emissions.
We need strong policy signals to show that there is a
marketplace and a growth opportunity. We need a strong
Renewable Fuel Standard that blends 15 billion gallons of
biofuel, of corn ethanol, every year into our fuel supply. We
need year-round access to E15. We need infrastructure
investments in terms of to allow for higher blends to be sold
in 50 states across the nation. And importantly, as the
discussion in our carbon-focused world continues, we need to
make sure that the carbon modeling and the measuring stick is
fair, it reflects up-to-date science, and it accurately
accounts for all of the innovation taking place at the plants
and on the farms.
Mrs. Axne. Well, you summed it up so well. We have 8
seconds left here, but thank you so much.
I want to continue to work with all of my colleagues here
as we advance biofuels across the country to help our farmers
and address climate change. I appreciate it.
The Chairman. I now recognize Rep. Thompson for 5 minutes.
I now recognize Mr. Scott.
Mr. Austin Scott of Georgia. Thank you, Chairman Delgado,
and I am going to focus my questions for Mr. Pratt, because his
testimony highlights one of my primary concerns as we work to
find the balance here on the economy, the environment, and
especially rural Georgia.
Your testimony highlights the majority of the land area
ideal for solar energy facilities in Georgia, my home state, is
rooted in rural agriculture and that some communities have been
challenged to find a balance between the competing interests of
solar land use and traditional farming. And, I include forestry
in that definition of farming. I am sure you are familiar with
the project in south Houston County where approximately 800
acres of forestland was clear cut that provided a tremendous
amount of wildlife habitat, that is no longer there.
My concern is that if we take the most fertile soil out
there and whether it be forestland or whether it be farmland,
and we convert that into solar fields, what the net impact of
using that more fertile land is for solar fields versus less
fertile land?
And so, can you speak a little more about the balance and
the need to find less fertile land instead of more fertile land
to put the solar fields on?
Mr. Pratt. Yes, sir. Thank you, Representative Scott. I
think that is an excellent question, and I appreciate your
service to Georgians.
I would say that there is--when you look at energy in
general that we use, there is no free lunch. There are always
tradeoffs in producing energy and environmental impacts, and
that doesn't--solar is included in that, as you point out, the
clear cutting of trees. The fact is, we cannot generate solar
energy with shade. You have to have clear location to the sun.
I will say that we work hard to mitigate those efforts, in
Georgia at least, through one of the other testimonies that
said--and that is through agrivoltaics. And that really is
bringing farm and bio-mimicry back to the land that occurred
there before, and that is through--we have thousands and
thousands of sheep on our farms, solar farms, going forward in
the future. That is not the same as forestland, but it is a
crop and it is a financial benefit for agriculture, and we hope
to find those right balances and work really hard to do so.
Mr. Austin Scott of Georgia. Okay. You touched on some of
the supply chain disruptions. That is obviously another issue
that I remain extremely concerned about, and I think that
everybody on the Committee, regardless of party, is concerned
about.
From the production of the solar energy and the other
things that you are directly involved in, can you speak to the
biggest issues for this subject about your primary concerns
with regard to supply chains and what you are seeing right now
with regard to the construction and development of solar
panels, solar fields, and the other areas you are working in?
Mr. Pratt. Yes, sir. Those are extremely challenging areas
for solar and other aspects of the utility business across the
country. For solar specifically, most of the solar panels--the
components are produced outside of the United States, and much
of that is in China and some of the regulations and the supply
chain issues associated with that country are creating
bottlenecks to receive the materials that we need to propagate
more solar in the United States.
But it goes beyond that. It is transwire. It is
substations. It is equipment that is fundamental not only to
solar, but to the rest of the electrical infrastructure as
well. Bucket trucks, 3 years to receive a bucket truck
[inaudible]. So, all those things are very important.
Mr. Austin Scott of Georgia. Okay. My time has almost
expired, but I appreciate you, Mr. Pratt. It does bother me to
see so much wildlife habitat destroyed in the name of, if you
will, the environment, and I do think that we need--if we are
talking about environmental policy, we need to be looking at it
from a whole, not from a piecemeal standpoint. And so, when you
tear down all that forestland, you have water, you have
wildlife habitat, you have a lot of area issues that that
forestland is very, very good for. And when you get rid of it
to replace it with solar panels, I think we would be better
served if we were focusing on less fertile soils in areas that
we put those fields.
So, thank you for your time.
The Chairman. I now recognize Representative Rush for 5
minutes.
Mr. Rush. I want to thank you, Mr. Chairman. I was
delighted, Mr. Chairman, that not one but two of our witnesses
today are from cooperatives. I believe that co-ops are critical
to putting resources directly into the hands of [inaudible]
population and that a firm belief must further confirm your
testimony today.
While cooperatives are empowering, they are unfortunately
underutilized. To that end, Mr. Pratt and Mr. Aberle, how do we
encourage the use of cooperatives, and specifically given the
sharp decline in the number of African American farmers, how do
we do so in areas with large minority populations? And further,
have you given, both of you, any thought to how we may marry a
cooperative-type approach to both rural and urban ag?
Mr. Pratt. Representative, this is Jeff Pratt. I will make
a couple comments, and then pass it on to Mr. Aberle.
First, thank you for your question. Much of rural Georgia
is impoverished and challenged, and much of the investment we
are putting into those local communities provides very
important tax revenue for those local governments. So, we are
very glad to make that happen.
I will say that as far as marrying the urban and suburban
and rural areas, much of the energy that is produced in those
rural areas from these solar facilities, in my example, is
actually transmitted cost effectively to the more urban areas
where there are also African American communities that benefit
from that as well.
When you think of cooperatives in general, I would say that
cooperatives are engaged in those local communities. They are
owned and governed by the citizens that are in those
communities, so land use and diversity are very important, and
we take great pride to make sure those work.
Thank you, sir.
Mr. Rush. Thank you.
Mr. Aberle, do you have any comments?
Mr. Aberle. I would just add a few comments from our
perspective.
One of our core values at our cooperative is that we
advocate for our customers. And so, if there is a need out
there in these rural communities, being able to serve
agriculture and rural America is one of our core values and our
mission out here, and we are very purposeful about that. So, if
there is a need from a group of producers or farmers that have
a common vision, we do try to care for ag and rural America,
and try to advocate for them to meet their business goals.
And so, as a lender, we can only play a certain role, but
as these groups get together and have a common vision, we
certainly try to provide a pathway for them to meet their
objectives and to serve that community.
Mr. Rush. Thank you.
Mr. Chairman, with that, I yield back the balance of my
time.
The Chairman. Thank you, Representative Rush.
I now recognize Representative LaMalfa for 5 minutes.
Mr. LaMalfa. Thank you, Mr. Chairman. I would like to
direct this towards Mr. Pratt with the issue with generating
electricity via renewables.
So, I come from northern California where we have burned
millions of acres of forests over the last few years, and so,
we have this material out there that already exists. We don't
have to grow it. It grows on its own pretty much, especially
when you look at 4 decades or so of nonmanagement of Federal
lands, forestlands. We have approximately 170 million dead
trees that aren't--you don't count in the burned trees in the
state due to drought and insect infestation, and overcrowding
of the forestlands.
So, what I am getting at is we have a lot of material out
there that needs to find a home, a much better home than
burning it via accidental forest fires, or even slash burning
when it does get around to getting managed. So, what I am
speaking of is having this material moved to a good end-use,
such as generating electricity in a biomass plant. I wish we
had much more of that in California. I wish we had a friendlier
attitude towards it.
Mr. Pratt, what is your experience with the southern states
also have vast forested areas and much crop that is taken off
of them, and much that is converted into chip product of the
waste material. We are not talking saw logs. We want to cut saw
logs, too, because we need lumber. We need paper products as a
byproduct. But we have a lot of material that isn't good for
anything else other than either letting it burn in a forest
fire or doing controlled burns, which is only a little better,
in some cases than as far as the smoke and CO2
output and such. Please talk to us about the ability to convert
more of this material into biomass and produce electricity, and
have that be a green energy source.
Mr. Pratt. Thank you very much, Representative for that
comment--or that question. That is a very good one, especially
for Georgia, which has one of the largest harvestable timber
crops in the country.
We do have a waste wood facility that burns waste wood, and
much as you said, insect problems or the waste slash that
results from forestry, and we burn at that facility in a boiler
that creates renewable energy. There have been some questions
about how green that method is. I would say that we believe it
is quite renewable, and the reason is that when this forest
product, as you mention, waste and slash lays in the forest, it
decomposes and creates methane. Methane is 20 to 50 times more
harmful to the environment than carbon dioxide. So, when we
gather that waste and burn it in a way that creates energy and
usable energy, we are also reducing methane to carbon dioxide,
which is 20 times better, and gaining some electricity from
that that will offset the petroleum-based generation as well.
So, I think it is a very helpful project, and something we
ought to fully consider.
Mr. LaMalfa. You make a great point on that. A rotting
forest is creating--or any rotting organic material is creating
methane, whereas you can control that situation when you are
burning in a controlled high heat situation with very, very low
output. So, it ought to be looked at as a very green way of
making electricity, because the other ways also have their
costs of environmental purpose as well, when you are talking
solar panels requiring mining of rare earths and materials like
that. Everything has a cost to it, and that is what isn't
acknowledged around here in the argument in the way it is
looked at environmentally. And so, when we have--in my home
state and yours, it sounds like too, we have already so much
material that needs to be moved out of there to have a
sustainable healthy forest situation, one that is drought-
proof, insect-proof, and we need to be doing this yesterday.
So, Mr. Pratt, how friendly is Georgia towards looking at
this material as a good source of electricity, and that it is a
green way of doing so?
Mr. Pratt. It is friendly towards that, Georgia is, but it
is also challenged because it is not as cost effective as solar
in this case. I agree with you that looking at the whole
economic picture is very important----
Mr. LaMalfa. Let me jump in on that. Cost effectiveness is
very important, because we spend billions putting fires out in
the West. We spend a lot also on the alternatives as well for
green power. They are not cheap. None of these sources are
cheap, but we have a material that will provide jobs in our
backyard for the loggers, for the truckers and taking that
material that is now a waste product, that is now a methane-
producing product, as you mentioned, and one that is harming
our air quality, our water quality, when the ash and such
washes into our system, in our streams and rivers and lakes in
California.
So, when you add up the whole spectrum of environmental
cost, you are looking at an issue that is very, very expensive
versus the subsidies that it would require to take the material
from long distance to a power plant somewhere. I think the
offset of that to the Forest Service, towards all those other
things when you put it all up, put it on a point scale system
there, you get a big win out of this.
So, I appreciate the time, and I yield back, Mr. Chairman.
The Chairman. Thank you.
I now recognize Representative Bustos for 5 minutes.
Mrs. Bustos. Thank you, Mr. Chairman, and thanks for
holding this hearing today, and also thanks to our Ranking
Member.
I am so excited about the opportunities for rural America
and the role that we are going to be able to play and are
playing already in clean energy. I really appreciate our
witnesses here today who are testifying before us about how are
we going to be able to execute on this successfully.
Let me start with biofuels. Obviously, the issue of climate
rescue is perhaps the most pressing task of our time. It is a
challenge that will require us to use every tool at our
disposal. One of those tools, I am very proud to say, is corn
ethanol, and it is a fuel that we know can cut carbon emissions
in half, in half, compared to traditional gasoline. And the
Congressional district that I serve in central and western and
northern Illinois, we have seven biofuel plants in and around
this district. We grow a little bit more than 1\1/2\ million
acres of corn every year. It is critical that we protect the
jobs that this creates, the livelihoods in rural America, and
that we put biofuels on a level playing field with the other
renewable fuels.
And as we continue to talk about the climate and we forge
ahead, we can continue talking about new and innovative
technologies, like sustainable aviation fuel, and how that will
be a strong--and really, the need for a strong and unified
model across sectors and how we calculate carbon emissions.
Let me start with my question for Ms. Skor, in your
testimony, you mentioned that the Department of Energy's GREET
model--I think you all know that that stands for Greenhouse
Gases, Regulated Emissions, and Energy Use in Technologies. But
that GREET model, how that is a leading-edge model for
measuring the carbon intensities of different fuels.
Would you please expand on how a unified model like GREET
would be beneficial to driving down carbon emissions in a
meaningful way, and specifically when it comes to biofuels
policy in the motor vehicle and aviation sectors?
Ms. Skor. Absolutely. Making sure that a model used to
account for our carbon intensity accurately reflects in real
time the most up-to-date innovations is critically important.
As you stated, the Department of Energy and Argonne
National Laboratory through their GREET model, that is really
the gold standard in terms of carbon modeling right now. It is
updated every year. It has the most robust set of agricultural
inputs to truly account for all of the practices and
innovations taking place. And so, we need to use that modeling,
whether we are talking about the RFS, EPA hasn't updated its
modeling in 10 years, and also very importantly, on sustainable
aviation fuel, we need accurate modeling to make sure that we
are competitive in the marketplace and we are eligible to
compete for these new markets like sustainable aviation fuel.
Right now in the proposed Build Back Better legislation,
the legislation is putting U.S. tax incentives based on a UN
modeling agency, a modeling that they haven't updated in 10
years, and it is woefully inadequate relative to GREET. So, we
very much encourage and support the use of GREET as a gold
standard for all decisions on our ability to compete in the
marketplace and to be eligible. That is what we need to be able
to be a thriving industry, and to further reduce the intensity
of our fuel and broaden the amount of markets we are eligible
to compete in.
Mrs. Bustos. All right. Thank you, Ms. Skor.
Let me use my remaining minute and 15 seconds to shift to
the electricity sector, and how renewables can make an impact
in rural America.
So, rural electric co-ops all around the Congressional
district I serve, whether it is Joe Carroll Energy or Spoon
River Co-op, serve tens of thousands of our community members
with reliable and affordable power.
Mr. Pratt, the Build Back Better Act would allocate nearly
$10 billion for rural electric co-ops to reduce fossil fuel-
related debt and invest in clean sources of electricity. What
would that mean for your cooperative and others like it across
the country, and what technologies would that help unlock for
your organization?
Mr. Pratt. So, it would help buy down debt and stranded
costs that potentially could result from mandates and
requirements that might be required. It would also help us
invest in clean energy technology, and it would help us look at
mitigating the unintended consequences from some of this, which
is batteries and other investments that are required to bring
more intermittent resources onto the grid.
Mrs. Bustos. All right. I am out of time, and with that, I
will yield back. Thank you very much to both of those witnesses
who answered my questions. Thank you, Mr. Chairman.
The Chairman. Thank you.
I now recognize Representative Balderson for 5 minutes.
Mr. Balderson. Thank you, Mr. Chairman, and thank you for
the folks that are here speaking today. I appreciate you taking
questions.
My first question is for Mr. Wheeler. Mr. Wheeler, the
United States currently produces just under 1 billion gallons
of renewable diesel annually. The Energy Information Agency
announced this past summer that domestic production of
renewable diesel could reach 5 billion gallons annually by
2024. Currently, \1/3\ of soybean oil production in the United
States is used toward biofuels, roughly 8.8 billion pounds. If
renewable diesel production estimates from the EIA hold true
and we see production multiply five times within a few years, I
would assume the demand for soy oil will increase in a similar
fashion.
How is your industry preparing for this possible surge in
demand? And my follow up to that would be do you think this
demand will have an adverse impact on other soybean oil
applications?
Mr. Wheeler. Thank you, Congressman.
Well, definitely here in the Midwest, we continue to expand
our crush capacity, not just in Missouri, but definitely in the
states that surround us. We have several that are going into
Iowa. We are looking at two here in Missouri, and then there
are other states as well that are looking at it into the
Southeast as well.
As far as when it comes to meeting the demand, as farmers,
we continue to try to build this out, and protect our current
infrastructure within the biodiesel industry. There is
definitely going to be enough production as far as when it
comes to soybean and the soybean oil, and we are here to stand
and support it.
Mr. Balderson. Thank you very much.
My next question is for Ms. Skor, and I would like to shift
gears to ethanol. As you know, the United States is the largest
global producer of ethanol, producing 56 percent of the world's
ethanol. In your testimony, you mentioned the future of
domestic ethanol production, and how the international market
will play an important role in that. Can you elaborate more on
the importance of having a Chief Agricultural Negotiator who
works on behalf of American agriculture producers and
processors, and why this position is so important to ethanol
producers?
Ms. Skor. There is a growing demand for low-carbon
renewable fuels, not just domestically but globally as well,
and I appreciate the question.
Typically, we export about ten percent of our product.
Right now, Canada is actually our largest trading partner for
ethanol. So, it is incredibly important that we as an industry
continue to be able to grow, to provide our product not only to
domestic supply as we look toward higher blends nationwide, but
also in other countries that are looking to build their rural
economies, keep gas prices affordable, and make sure that they
can achieve their climate goals. And again, the solution for
all of that, cleaner air, more affordable fuel choices, and
boosting rural economies is going to be greater use of ethanol.
Mr. Balderson. Thank you.
My next question is for Ms. Bowman. I thank you also for
being here.
You mentioned in your testimony the NAICS code which was
required for biobased products in the 2018 Farm Bill has yet to
be promulgated. Do you know why this is?
Ms. Bowman. We have been working with the various
stakeholders in the Administration who are working on this
issue. It is extremely important for this to move forward.
Biobased products manufacturing is really lumped into broader
manufacturing, so you are not able to see trends. You are not
able to see market growth, where investment is needed. So, we
would really call on Congress to work with OMB, USDA, and
Commerce to get the farm bill mandate moved forward.
Mr. Balderson. Okay, and is this an issue that the USDA can
solve on its own?
Ms. Bowman. I believe not on its own. USDA needs to work
with Commerce, OMB is also involved. They oversee the
interagency committee that considers all of the recommended
changes to the NAICS code, so I think all of those agencies are
critical to moving this forward.
Mr. Balderson. Okay, thank you very much.
Mr. Chairman, I yield back my remaining time. Thank you
all.
The Chairman. Thank you, and I recognize Representative
Craig for 5 minutes.
Ms. Craig. Thank you so much, Mr. Chairman, and thank you,
Ranking Member Fischbach, my fellow Minnesotan, for focusing on
energy in rural America. Thank you so much to our witnesses
here this morning.
I want to focus my questions today on biofuels and the role
that they can play in helping to build our rural communities
and the pocketbooks of hardworking Americans. Right now when I
am back in my district, I am hearing a lot about supply chain
shortages and higher gas and energy prices, in addition to
increases in the price of groceries and other goods. I am also
hearing from farmers who are wondering about all of these
rumors swirling about the RVOs and that the Administration is
considering. They thought they could expect robust numbers, not
more relief for refiners. And I am wondering the same thing
myself, actually.
It is clear to me, especially after hearing the testimony
from Ms. Skor and Mr. Wheeler, that we need to be investing
more in the biofuels industry right now as we seek to address
energy costs. Ethanol and biodiesel blends have traditionally
saved money for consumers at the pump, as cheaper, cleaner
burning fuel options, and they drive rural investment, which
means more and better paying jobs in rural communities.
But biofuels are also subject to policy decisions, just
like the other fuel sources that Americans rely on. So, I would
like to focus on the policy decisions in front of us now.
First, the Administration should immediately issue robust RVO
numbers for 2022. This delay has gone on for far too long.
Second, we should make E15 available year-round across the
country. Ms. Skor, thank you for mentioning my bill in your
opening remarks, the Year-Round Fuel Choice Act of 2021 (H.R.
4410), and this should be passed as soon as possible by this
Congress. And I am glad you also mentioned the $1 billion in
biofuels infrastructure, which I believe is so critical in the
Build Back Better Act. Cindy Axne, my great colleague from
Iowa, and I have been leading the fight to extend the biodiesel
tax credit through 2026, and I think we have to move
immediately.
Because with gas and energy costs rising, we would be fools
not to address the roles that biofuels can play in reducing
price pressures for Americans across the country.
With that in mind, I would like to turn to Ms. Skor for the
first question.
In your written testimony, you included a chart that
demonstrated clearly that RIN prices are not correlated with
gas prices, which is an argument that we often hear from fossil
fuel companies. With that in mind, can you speak to the role
that biofuels play in placing downward pressure on gas prices
and helping Americans save money on fuel and energy costs?
Ms. Skor. Absolutely, Congresswoman, and you mentioned the
two things that are going to help us reduce the price of fuel
for consumers, a strong Renewable Fuel Standard, and year-round
sales of E15. The more biofuel we blend, the greater our
ability to reduce gas prices. This year, according to the EIA,
the retail price of gasoline in average has gone up by $1 per
gallon. That is a hard hit for working Americans in all 50
states. So, with a strong Renewable Fuel Standard that
encourages and really requires more blending of low-cost
biofuels with year-round sales of E15, that is how we can
really support drivers and make sure that we are managing fuel
costs appropriately.
Ms. Craig. Let me just follow up your view moving forward
with the regulatory certainty that would come from year-round
sales of E15. How would the industry be ready and poised to
provide renewable fuels across the country?
Ms. Skor. We are absolutely ready and poised to do that
now. In fact, we have had 3 summers of year-round E15.
Consumers have already driven 25 billion miles on this fuel. It
is a fantastic fuel. It is a great value for the consumers. We
simply need to return back to the marketplace that we had for
the past 3 years. We are absolutely ready and able, and
retailers too are anxious to be able to offer this choice to
their consumers.
Ms. Craig. Thank you so much for your perspective, Ms.
Skor, and your comments really do help highlight the important
role that biofuels play in today's renewable energy economy as
we look to alternatives to traditional fossil fuels.
As you know, I am leading that Year-Round Fuel Choice Act
to make sure that access to E15 for all the reasons that you
talked about, to lower the cost at the pump, decrease the
carbon intensity of our transportation sector, and support
family farmers and the biofuels sector. I will continue to
focus on the role that they play in the renewable economy of
rural America.
Thank you so much, Mr. Chairman, and I yield back.
The Chairman. Thank you, and I recognize Representative
Feenstra for 5 minutes.
Mr. Feenstra. Thank you, Chairman Delgado and Ranking
Member Fischbach.
My district leads the nation in biofuel production, making
it a pillar for Iowa's rural economy. According to the 2021
report from the Iowa Renewable Fuels Association, Iowa produced
3.7 billion gallons of ethanol and 351 million gallons of
biodiesel in 2020 alone. Additionally, the industry supports
over 40,000 jobs. Ensuring that our biofuel producers are
prioritized through strong renewable volume obligations, RVOs,
levels is not only critical for the industry but it is also my
many constituents who engage with the economy built on its
success.
Ms. Skor, how has a lack of the RVO announcement inhibited
the biofuels industry?
Ms. Skor. Thank you for the question, Congressman.
As I mentioned, we are still in the mode of recovering and
getting back on the road to recovery from COVID, at a point
when our fuel demand nationwide was cut in half. And so, we
absolutely need some certainty and stability and clarity in
terms of the marketplace opportunities. This is required not
only for us to get fully back on our feet, but for then in turn
for us to have the capital investment required to continue R&D
so we can continue to de-carbonize our fuel and diversify the
co-products that we are able to provide across America.
Mr. Feenstra. Ms. Skor, can you share your vision on how
biofuel production and the use fits into the future clean
energy format?
Ms. Skor. We are already an active participant in our
nation's climate strategy, I would say. The State of California
with its Low Carbon Fuel Standard, biofuels account for 80
percent of the credits in California's Low Carbon Fuel
Standard. So, we are a low-carbon renewable fuel plant-based
homegrown here in the U.S. We have the ability to do so much
more by use of higher blends nationwide to make sure that we
have modeling that accurately reflects all of the innovations
taking place on the farm and at the plant. So, we have the
ability to make sure that the 270 million cars on the road
today are using a low-carbon fuel, and with a strong industry,
we can also do the R&D to expand into hard to electrify spaces
like sustainable aviation fuel.
Mr. Feenstra. I am glad to hear that, Ms. Skor. Thank you
for those comments. I believe exactly what you said, the future
of biofuels and renewable energy is strong, and we are hearing
today through these testimonies that this is the case. And as
you noted, Biojet Fuel Research Act (H.R. 5620) that I am
working on would create a working group to analyze the future
of sustainable aviation fuel, very important.
I have another area. As the renewable economy grows, it is
important that the Federal Government provide updated and
accurate data on lifecycle emissions, such as through the GREET
model.
Ms. Skor, are there any changes to the GREET model that we
would benefit from or that the biofuels industry should know
about?
Ms. Skor. One of the wonderful things about the GREET model
is that it is updated every year, and there is an incredibly
robust data set, a lot of inputs going into the modeling
specific to agricultural innovations. So, we would like to see
that standard of carbon modeling used in every policy where we
are talking about incentivizing low-carbon fuels and rewarding
companies and private-sector for producing low-carbon fuels.
So, we absolutely support using that and applying that in
really any context.
Mr. Feenstra. Yes, thank you. I fully agree with you.
Biofuels like ethanol are low-cost and low-carbon
solutions, and they can be carbon negative in the next decade.
I mean, I just looked at carbon sequestration that we are
looking at in Iowa for biodiesel and ethanol plants. I mean,
there are so many things that are happening right now.
An announcement for the strong RVO levels will encourage
investment and innovation in this already proven industry that
deserves and will create decreasing carbon today. I am very
passionate about this.
Thank you everyone for your testimonies, and I look forward
to working with everyone as we further go down this path. Thank
you.
The Chairman. Thank you.
I now recognize Representative Plaskett for 5 minutes.
Ms. Plaskett. Thank you, Mr. Chairman, and thank you to the
witnesses who are here. This has been very enlightening, and
thank you for your research and the work that you are doing in
this area.
Mr. Wheeler, I wanted to ask you a question. Can you talk
about what role an extension service can play in educating
farmers on the benefits of bioeconomy?
Mr. Wheeler. Thank you, Congresswoman.
One of the most important things that an extension program
can do is that very thing, is to educate. One of the main
things that we are lacking throughout the United States for our
land-grant institutions are resources. So, one of the main
focuses that we focus on here in Missouri and the surrounding
states specifically is on the research side, and making sure
that we carry out that not only the land-grant institution
mission and its vision, but also the mission and vision of its
very farmer and its check-off. So, it is--I know it is very
important to a lot of states. I know it is here in Missouri,
and we continue to grow that effort and be laser-focused in
that effort to bring in additional resources, but as well as
find ways to reach those producers and our farmers.
Ms. Plaskett. What difference do you think that reach could
make on their businesses?
Mr. Wheeler. I believe--well specifically, it is getting
the farmer to us. That is one of the very difficult things that
we have, because as any farmer, they are very independent and
they are all small businessmen and -women. So, there are a lot
of folks that actually struggle with that, to be able to reach
out. But the ultimate goal through the extension program on a
county basis is getting that research and that information to
those businessmen and -women so they can make more informed
decisions to the very point that you are referring to.
Ms. Plaskett. Thank you, and I know that the farmers in the
Virgin Islands would appreciate that.
This is a question to any one of the witnesses. My district
and other remote areas of the United States have developed
energy plans to move forward further away from relying on
petroleum for power and fuel. The non-contiguous areas of the
country and other remote areas understand the burden of high
energy costs. Being isolated, not having scale, not being able
to connect to other areas. One proposal to address this in the
Caribbean region is the Renewable Energy for Puerto Rico and
the U.S. Virgin Islands Act, H.R. 2791, which would create a
USDA grant program for investments in renewable energy, energy
efficiency, energy storage, smart grids, and microgrid projects
in territories of the United States.
Can any of the witnesses speak to the importance of
developing and using renewable energy sources in small, rural,
remote areas?
Ms. Skor. I will go ahead and start, Congresswoman. Thank
you for the question.
I think it is mission critical that all consumers have
access to renewable energy sources, whether they are in an
urban environment or a rural remote environment. On behalf of
the ethanol industry, we are very proud that we are able to
provide renewable fuel that is low-cost and affordable for all
communities. That is one of the reasons that we want to see
greater use of ethanol to extend our fuel supply and make fuel
supply more stable, and also more low-cost. So, I appreciate
the question.
Mr. Wheeler. Congresswoman, Gary Wheeler.
I think one of the main things, it goes back to there are a
lot of us that have referred to it as HBIIP, but it comes back
to infrastructure and the resources that can be provided to
those regions. Infrastructure throughout the entire United
States, whether it is biodiesel or increase E15, it really
boils down to resources being laser-focused and making sure
that those dollars are being spent where they need to be spent.
Ms. Plaskett. Thank you.
Mr. Aberle, did you have something you wanted to add?
Mr. Aberle. The only thing I would add is that when you
talk about investment and research to design and build out the
successful technology platforms, whether they are microscale or
large-scale projects, there has to be a path of proven
technology before other stakeholders are willing to invest in
that. And providing dollars for initial scale and demonstration
scale projects is valuable in identifying that technology
pathway to be replicated to larger stakeholders.
Ms. Plaskett. Thank you, I appreciate that. And thank you
for the time, Mr. Chairman. I yield back.
The Chairman. Thank you, and I recognize Representative
Davis for 5 minutes.
Mr. Davis. I was actually--you were right on the edge of
time. I mean, I was waiting for you to yield. I would have
taken those last 2 seconds, Ms. Plaskett.
I do want to say thank you--unfortunately, I want to say
thank you to Ranking Member Fischbach and fortunately to
Chairman Delgado for having this hearing today to discuss
important renewable energy production issues in rural America,
and the work that our ag producers are already doing to reduce
emissions.
This Administration, though, is headed down a dangerous
path as it continues to pass up opportunities to uphold the
Renewable Fuel Standard, and support America's ethanol and
biodiesel producers. I have been proud to lead initiatives to
strengthen and restore the integrity of the RFS, alongside my
friends in my biofuels Democratic and Republican co-chairs. My
colleagues on this Committee, Ranking Member Fischbach and Mr.
Feenstra, have also been key in our efforts to hold this
Administration accountable. In June, I sent a letter along with
my Republican colleagues to President Biden regarding the
rumors that the Administration was considering a nationwide
waiver of the RFS to cut demand for more combined gallons than
all those cut due to the small refinery exemptions issued by
the prior Administration. And we encouraged the President to
keep his 2020 promises to rural America and actually uphold the
law.
Now, we continue to wait on the RVO and have yet to receive
a response to our letter, which is actually concerning. I hope
that this is not an indication of the Administration's
unwillingness to stand with America's farmers. And further, in
March I sent a letter with my Republican colleagues to the USDA
encouraging the Department to quickly provide assistance using
existing funds to biofuels producers for COVID-related market
disruptions. Secretary Vilsack responded to that letter in
August, stating that an update to the Pandemic Assistance for
Producers Program at the USDA would be provided by Labor Day.
However, we are still waiting. Eleven months into this
Administration and no biofuels producers have seen any relief.
Mr. Chairman, I request unanimous consent to insert into
the record the three letters I referenced.
The Chairman. Without objection.
[The letters referred to are located on p. 95.]
Mr. Davis. Thank you.
Madam Ranking Member, do you object?
Mrs. Fischbach. Never.
Mr. Davis. Thank you.
First question. Ms. Skor, great to see you again. I want to
know, has any prior Administration considered retroactively
cutting the RVO in the way this Administration is rumored to be
considering?
Ms. Skor. Thank you, Congressman, and thank you for all
your leadership as a Member of the House Biofuels Caucus.
No. The rumors that we have heard, that this EPA is looking
to reopen the 2020 blending requirements for RVOs, that is
unprecedented and we believe there is no legal authority for
the agency to do that.
As you said, we need to get these renewable blending
obligations out. They need to be at Congress's intent of 15
billion gallons of conventional blending. So, we are still
waiting, too.
Mr. Davis. Mr. Wheeler, what do you think?
Mr. Wheeler. Congressman, it is unprecedented for sure, and
just want to say I greatly appreciate all your leadership and
your work down in Illinois, and it is good to see you as well.
Mr. Davis. Great to see you.
Ms. Skor, do you believe the biofuels industry is better or
worse off under this Administration?
Ms. Skor. Well, as we have said from the outset, the first
real test of the Administration is commitment to follow through
on many of Mr. Biden's comments stated on the campaign trail is
with the Renewable Volume Obligations. We have yet to see
those. We are anxiously awaiting. That is going to be really
the first test to show that they are committed to low-carbon
renewable fuels that can be used in our current auto fleet.
Mr. Davis. And this is our test right now, Ms. Skor, this
is the test of the Administration. I mean, these are rumors but
a lack of response to letters coming from Members of Congress,
and a lack of response to questions coming from your industry,
it only leads us to speculate, right?
Ms. Skor. Speculation and uncertainty, and that is not what
our marketplace needs right now. So, we are already well past
our 2021 blending obligations. We have to get 2022 out so that
we get back on track, which is something that the
Administration had committed it would do at the outset, the
beginning of the year.
Mr. Davis. They committed, they campaigned to be elected on
keeping the promise to America's biofuel producers in upholding
the RFS, and all we hear right now is silence. That, to me,
sounds like an almost--and hopefully this hearing will help
change that--but it sounds to me like it is almost a broken
campaign promise. And I will tell you, we here, we Republicans
who have sent these letters, we will hold this Administration
accountable.
So, what can this Administration and we in Congress, Ms.
Skor, do right now to provide certainty to your industry?
Ms. Skor. What we need is to get those renewable volume
blending requirements out. They need to be at 15 billion
gallons. We need to restore year-round sales of E15. So, we get
back on track and we can use more biofuels. They are good for
the rural economy. They are good for the American driver.
Mr. Davis. Thank you. I yield back my 2 seconds.
The Chairman. Thank you.
I recognize Representative Cammack for 5 minutes. Thank
you.
Mrs. Cammack. Well, thank you, Mr. Chairman. Thank you,
Ranking Member Fischbach, and to all our witnesses for being
here today, as well as virtually.
It has been noted here several time already that our
agricultural producers and businesses are some of the most
entrepreneurial, forward-looking people out there today, and I
think it is important to remember that this entrepreneurial
innovative spirit, not government directives, is pushing
American agricultural operations to make these new choices,
like a dairy just outside my district that is making the choice
to construct and operate a digester. Or as is the case with one
operation within my district, leading the way in developing a
biomass facility to energy with zero emissions that can produce
electricity, heat, and high-quality biochar and diesel from
wood waste. In a state like Florida, wood waste is plentiful,
especially after a storm. Not only can this plant operate
connected to the grid, but it can also operate as emergency
support for critical infrastructure when other energy sources
have been knocked offline. In a state like Florida, a plant
like this one and others can provide a lifeline for critical
infrastructure in the wake of a hurricane or other disaster.
As the Ranking Minority Member of Emergency Preparedness,
Response, and Recovery Subcommittee of the Homeland Security
Committee, this is an issue that is very close and near and
dear to my heart. Great synergy here for what we are talking
about.
This is a great example of private capital and innovation
coming together in rural America to identify an opportunity
that has the added effect of helping to protect our environment
for generations to come. We need to find ways to encourage this
private activity and innovation.
Now, I know that we have kind of circled around this and
you have answered this a few different ways, but Mr. Aberle--
and I hope I am saying that right--can you talk a little bit
about the Federal policies and whether they help or hurt in the
search for predictability in the marketplace as we are looking
to finance these projects? And my follow up would be the
uncertain nature of future cash flows needed to finance a
project. I know you have talked a little bit about this and Ms.
Plaskett hit on this as well, talking about proven technology
and the pathway for stakeholders, oftentimes a pilot program.
But just getting that off the ground, can you talk about some
of the challenges within financing and what we might be able to
do to clear the path?
Mr. Aberle. Well, thank you for that question,
Congresswoman.
We have been involved in this space for a long time, and I
was fortunate to be involved in the build-out of the ethanol
industry by financing Greenfield Construction and new plants.
From that perspective, the Federal policies that are in place
really do put a floor on the business plan to give the
entrepreneurs courage to move forward, and it also gives the
lenders more courage to share or partner with them on
developing new technologies to develop that pathway. It may not
be the optimization of that business plan, but it does provide
a floor where they can address the capital needs and the
liquidity that they are going to need for a successful project.
And so, by having Federal policies in place, it does give
them kind of a rock to start their foundation on for a
successful biofuel or renewable project.
Mrs. Cammack. Are there particular programs in which you
have seen success, and how might we be able to expand on those
to make them better, more efficient, hit our intended targets,
et cetera?
Mr. Aberle. Well, the RFS was one example of one great one,
because there was a market out there that was already built
that needed to be served. And so, they knew when they built the
project that there was to be a place for that product to go and
be developed into the market. And so, that was the stepping
stone to build out all these ethanol plants across the country.
Mrs. Cammack. Thank you.
Mr. Pratt, you mentioned that intermittent energy
production can be challenging to grid operations, so what kind
of activities do you undertake and equipment do you install to
compensate? Now, are these mitigation efforts complicated,
expensive, or both, and can you provide examples of renewable
energy sources of energy where they come without the problem of
intermittency?
Mr. Pratt. Representative, thank you very much for your
question.
So, yes, your second question first. Intermittent
resources, renewable resources that are not intermittent would
be biomass, waste biomass, as you mentioned. Digesters can be
that as well. So, you make good examples with those. Solar
energy is more intermittent, so is wind. We also have
geothermal out West, and that can be more consistent.
So, what we are doing is looking at different technologies
like batteries and grid enhancements and controls technology to
help mitigate intermittency.
Mrs. Cammack. Excellent, thank you so much.
And with that, I yield back.
The Chairman. Thank you. I now recognize Representative
Baird for 5 minutes. You might have to unmute.
Mr. Baird. Sorry about that. I thought I already had.
Anyway, I really appreciate, Mr. Chairman and Ranking Member
Fischbach for holding this hearing, and I really appreciate the
witnesses being here and the technology that they bring and
share with us.
My first question, then, goes to Mr. Pratt. I really
enjoyed your testimony and hearing about your organization and
how they work to bring technological enhancements to your
members, and I feel that the nation's rural electric co-ops do
have an important role to play in the renewable marketplace.
And it is interesting to me how you use the RUS program to help
support your efforts for these facilities in Georgia's grid.
But anyway, I was reminded of the interest in my district
and the state to leverage the generation potential of anaerobic
methane digesters, so this potential to harness the co-product
of one of our nation's animal protein industries is often
stymied by the difficulty and cost of getting these kinds of
operations connected to the grid.
So, Mr. Pratt, do you have any insight on how the livestock
producers could be incentivized or we could be more supportive
in helping them to connect the output of these digesters into
the rural electric grid?
Mr. Pratt. Yes, sir, Representative Baird. I appreciate
your question about digesters.
First, I think there is a lot of potential for digesters,
and there are quite a few in the United States, but they aren't
as inexpensive to produce energy from as solar energy today, so
they have some headwinds for utilities in that respect. That
does not mean they are not important. In the larger picture, I
think they can be very helpful. There has been some difficulty
in maintaining reliability of those facilities; however, I
think the technology continues to change and there will be
opportunities for both low interest loans from the USDA and
RUS, as you mentioned. I think that making sure they have
access to the similar tax credits that other forms of renewable
energy could be helpful, and I think it could also be very
beneficial to those agricultural and rural communities to
dispose of waste in a very economical and helpful fashion, and
produce some energy while we do that.
Mr. Baird. That is great. I think we have some food waste
that we could probably incorporate into that same system, as
well as the forestry industry and some of that. It would be a
feedstock for these kinds of digesters, so I think that has
potential and I really appreciate your comments.
Next, I want to go to Mr. Wheeler. You made reference to
the PoreShield project that can be used to extend the longevity
of our nation's bridges and concrete. That is sort of exciting
to me, and you did that work in cooperation with the soybean
farmers in Indiana, as well as Purdue University. So, I am just
going to give you the opportunity to expand on that product and
its use, and what spurred you to make that kind of discovery?
Mr. Wheeler. Sure. So, thank you, Congressman.
Well, it was actually developed in Indiana in partnership
with their farmers and the check-off, and so, it is a perfect
example of where the check-off can really partner on a public-
private position and develop new products, biobased products.
We specifically use PoreShield here at Soy Innovation here
in Jefferson City, Missouri, on a lot of our sidewalks, but we
also participated in a pilot project with the Soy
Transportation Coalition also provided through our check-off
programing and our farmers, and we partnered with several
different municipalities here in the State of Missouri and
across the Midwest to showcase what PoreShield can actually do,
and lengthen the life of not only concrete, but also asphalt.
So, this is just one of many projects and ideas that have come
to fruition over the past several years that is produced from
this little thing we call the soybean, which is magnificent.
So, thank you for your passion as well as our passion as
well, and there will be many more products that will be coming
out into the future. Thank you for the soybean farmer and our
check-offs. So, thanks for the question.
Mr. Baird. Thank you very much, and it looks like I have
about 10 seconds left, so I yield back my time.
But Ms. Skor, I was going to ask about the reduction in
greenhouse gas emissions by 46 percent by using ethanol, but I
am out of time, and so, I yield back.
[The information referred to is located on p. 98.]
The Chairman. Thank you.
Before we adjourn today, I want to invite Ranking Member
Fischbach to share any closing comments you may have.
Mrs. Fischbach. Well, I just want to say thank you so much.
I think it has been a very helpful conversation, and I think
that we need to continue to make sure that we are recognizing
and promoting the biofuels as something that is a part of our
entire ag economy and part of that carbon emissions reductions,
and so we need to continue the conversation, and I appreciate
Congressman Davis talking a little bit about what is going on
within the Administration.
Mr. Davis. What about science? Where are we at on it?
Mrs. Fischbach. But I will just say thank you so much for
being here, and I appreciate the conversation and we will
continue the conversation, and thank you, Mr. Chairman, for
putting the Committee hearing together today.
The Chairman. Thank you, Ranking Member Fischbach.
As we bring this hearing to a close, I would want to again
express my gratitude for the expertise provided today by our
panel of witnesses, along with the work that you all do to keep
our rural communities thriving.
I represent the eighth most rural Congressional district in
the country, so to be able to facilitate a conversation like
the one we have had today gives me hope that this Committee can
continue to work for rural America and find commonsense
solutions that improve the economic, social, and environmental
well-being of our communities.
Under the Rules of the Committee, the record of today's
hearing will remain open for 10 calendar days to receive
additional material and supplementary written responses from
the witnesses to any question posed by a Member.
This hearing of the Subcommittee on Commodity Exchanges,
Energy, and Credit is adjourned.
[Whereupon, at 12:04 p.m., the Subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Submitted Letters by Hon. Rodney Davis, a Representative in Congress
from Illinois
Letter 1
March 24, 2021
Hon. Thomas ``Tom'' J. Vilsack,
Secretary,
U.S. Department of Agriculture,
Washington, D.C.
Dear Secretary Vilsack,
As you know, as part of the agricultural economy, the biofuels
industry has been subject to immense financial distress due to the
COVID-19 pandemic. Many of our local ethanol and biofuels plants
continue to recover from dramatic demand loss in 2020. While demand for
fuel has increased, past losses must be addressed.
Rural communities and agricultural economies where the biofuels
industry plays a major role are still grappling with the economic
impacts of COVID-19. To that end, we respectfully urge you to use
remaining funds provided by the Coronavirus Aid, Relief, and Economic
Stabilization (CARES) Act (P.L. 116-136) and the Consolidated
Appropriations Act of 2021 (P.L. 116-260), to support our biofuels
producers. These packages passed on an overwhelming bipartisan basis
with the intent of providing broad assistance to producers, and
biofuels should not be left out.
While the biofuels industry, along with our other impacted
agricultural producers have waited for nearly 2 months for the
Coronavirus Food Assistance Program (CFAP) to reopen, our local farmers
continue to struggle. CFAP has played a critical role in keeping many
of our local farming operations afloat prior to the Administration's
freeze on the Program that started in January. Assistance must resume
and action must be taken immediately to provide parity, and much-needed
assistance to the biofuels industry.
We encourage you to expeditiously reopen the program and provide
aid to our local biofuels producers and processors to sustain good-
paying local jobs, and keep key markets open to our local farmers. It
is critical that this Administration acknowledge Congressional intent
and provide targeted relief to the biofuels industry as outlined in the
bipartisan Consolidated Appropriations Act of 2021 (P.L. 116-260), and
quickly send payments to our local producers.
We stand ready and look forward to working with you on solutions to
bolster Rural America, and to ensure relief for the biofuels industry
along with other sectors of the agricultural economy. Thank you for
your consideration of this request.
Sincerely,
Hon. Rodney Davis, Hon. Adrian Smith, Hon. Dusty Johnson,
Member of Congress Member of Congress Member of Congress
Hon. Randy Feenstra, Hon. Michelle Hon. Jim Hagedorn,
Member of Congress Fischbach, Member of Congress
Member of Congress
Hon. Darin LaHood, Hon. Don Bacon, Hon. Ann Wagner,
Member of Congress Member of Congress Member of Congress
Hon. Tom Emmer, Hon. Blaine Hon. Mike Bost,
Member of Congress Luetkemeyer, Member of Congress
Member of Congress
Hon. Ashley Hinson, Hon. Mariannette Miller- Hon. James R. Baird,
Member of Congress Meeks, Member of Congress
Member of Congress
Hon. Adam Kinzinger,
Member of Congress
Letter 2
August 19, 2021
Hon. Rodney Davis,
Member,
U.S. House of Representatives,
Washington, D.C.
Dear Congressman Davis:
Thank you for your letter of March 24, 2021, cosigned by your
colleagues, to the U.S. Department of Agriculture (USDA), regarding
relief for biofuels industry that was in the Consolidated
Appropriations Act, 2021. I apologize for the delayed response.
We understand your concerns that the development, implementation,
and rollout of a program to aid the biofuels industry has been taking a
while, but we want to assure you that the program will be implemented
this year. While it is a priority for the Administration, there are
many other provisions that USDA needs to work through from both the
Consolidated Appropriations Act, 2021 and the American Rescue Plan Act,
all of which are also important to implement.
USDA's Office of the Chief Economist, Rural Development, and the
Farm Service Agency are working together to make sure the program's
policies are equitable and will help as many people as possible in the
biofuels industry who have been affected by COVID-19.
USDA is committed to delivering financial assistance to farmers,
ranchers, and agricultural producers who have been impacted by COVID-19
market disruptions. On March 24, I announced that USDA is establishing
new programs and efforts to bring financial assistance to farmers,
ranchers, and producers who felt the impact of these market
disruptions. The new initiative, USDA Pandemic Assistance for
Producers, will reach a broader set of producers than in previous
COVID-19 aid programs. I've asked my team to review support for
biofuels producers and we are working towards an update of programs by
Labor Day.
We will continue to provide the latest information about the
Pandemic Assistance for Producers initiative on www.farmers.gov. The
site will have timely updates and announcements for producers.
Again, thank you for writing. A similar response has been sent to
your colleagues.
Sincerely,
Hon. Thomas ``Tom'' J. Vilsack,
Secretary.
Letter 3
September 22, 2021
Hon. Joseph R. Biden,
President,
The White House,
Washington, D.C.
Dear President Biden,
We are deeply disappointed by the rumors that indicate your
Administration is reversing course on its promises as it relates to
upholding the Renewable Fuel Standard (RFS). During your campaign, just
over a year ago, you said that former President Donald J. Trump ``could
have made explicit his imperative to stand with American farmers by
reversing harmful waivers and setting strong levels for 2021,'' \1\ and
yet, we understand that the forthcoming Renewable Volumes Obligation
(RVO) will cut the demand for more combined gallons of ethanol than all
gallons cut due to Small Refinery Exemptions (SREs) issued by the prior
Administration.
---------------------------------------------------------------------------
\1\ https://joebiden.com/2020/09/15/statement-by-vice-president-
joe-biden-on-need-to-stand-with-farmers-and-biofuel-producers-after-
donald-trumps-latest-insult-to-ethanol-industry/.
---------------------------------------------------------------------------
If your Administration makes the unprecedented move to reopen the
finalized 2020 RVO, and strip the demand for billions of gallons, the
industry will certainly be devastated. As you stated, ``Lip service
won't make up for nearly 4 years of retroactive damage that's decimated
our trade economy and forced ethanol plants to shutter.'' If these
rumors are correct, demand for over 5 billion gallons of renewable,
clean fuels will be lost.
Biofuels production is a major piece of the rural economy in our
districts, therefore, we strongly urge you to direct your EPA to
reconsider the rule to ensure that your Administration makes good on
these promises to ``fight for family farmers and revitalize rural
economies . . . by ushering in a new era of biofuels.''
Both oil refiners and ethanol refiners were hurt by decreased
demand due to the COVID-19 pandemic, and while we hope that markets
will continue to rebound, it is now more important than ever to uphold
the law and ensure our domestic biofuels producers have certainty
through fulfilling the statutory obligation of 15 billion gallons of
conventional ethanol, annually, along with a strong overall RVO.
Given the challenges facing our farmers from all sides on this
issue, it is imperative that your Administration choose to stand with
American farmers. We stand ready to work with you to ensure that our
biofuels producers are once again prioritized through a strong RVO, and
that the law is upheld. Thank you for your attention to this request.
Sincerely,
Hon. Rodney Davis, Hon. Adrian Smith, Hon. Dusty Johnson,
Member of Congress Member of Congress Member of Congress
Hon. Ashley Hinson, Hon. Michelle Hon. Randy Feenstra,
Member of Congress Fischbach, Member of Congress
Member of Congress
Hon. Darin LaHood, Hon. Tom Emmer, Hon. Ann Wagner,
Member of Congress Member of Congress Member of Congress
Hon. Tracey Mann, Hon. Mariannette Miller- Hon. Jim Hagedorn,
Member of Congress Meeks, Member of Congress
Member of Congress
Hon. Vicky Hartzler, Hon. James Comer, Hon. Ron Estes,
Member of Congress Member of Congress Member of Congress
Hon. Jake LaTurner, Hon. James R. Baird, Hon. Adam Kinzinger,
Member of Congress Member of Congress Member of Congress
Hon. Sam Graves, Hon. Don Bacon, Hon. Blaine
Member of Congress Member of Congress Luetkemeyer,
Member of Congress
Hon. Mike Bost,
Member of Congress
______
Supplementary Information Submitted by Emily Skor, Chief Executive
Officer, Growth Energy
Insert
Mr. Baird. Thank you very much, and it looks like I have
about 10 seconds left, so I yield back my time.
But Ms. Skor, I was going to ask about the reduction in
greenhouse gas emissions by 46 percent by using ethanol, but I
am out of time, and so, I yield back.
To meet the challenges in reducing carbon emissions from our
transportation sector, biofuels are an immediately available, renewable
liquid fuel which reduce greenhouse gas emissions (GHGs) from light-
and heavy-duty vehicles.
A January 2021 study conducted by Environmental Health and
Engineering, Inc., led by Harvard Adjunct Professor David MacIntosh,
found that GHGs from corn-based ethanol are 46% lower than gasoline.\1\
Additionally, a study by Growth Energy showed that a nationwide
transition from E10 to E15 would lower GHGs by 17.62 million tons
annually, the equivalent of removing 3.85 million vehicles from the
road.\2\
---------------------------------------------------------------------------
\1\ https://iopscience.iop.org/article/10.1088/1748-9326/abde08.
Editor's note: references annotated with are retained in
Committee file.
\2\ http://www.airimprovement.com/reports/national-e15-analysis-
final.pdf.
---------------------------------------------------------------------------
We need more biofuels like ethanol, which have the potential to do
even more to reduce the carbon intensity of transportation with the
right combination of policy and marketplace certainty. With this in
mind, we ask that you continue your strong support for the biofuels
industry so we can continue to innovative and de-carbonize our
transportation fleet.
Emily Skor,
CEO, Growth Energy.
______
Submitted Letter by Sarah Gallo, Vice President, Agriculture and
Environment, Biotechnology Innovation Organization
November 16, 2021
Hon. Antonio Delgado, Hon. Michelle Fischbach,
Chairman, Ranking Minority Member,
Subcommittee on Commodity Subcommittee on Commodity
Exchanges, Energy, and Credit, Exchanges, Energy, and Credit,
House Committee on Agriculture, House Committee on Agriculture,
Washington, D.C.; Washington, D.C.
Dear Chairman Delgado, Ranking Member Fischbach, Members of the
Subcommittee:
The Biotechnology Innovation Organization (BIO) is pleased to
submit a statement for the record to the United States House of
Representatives Committee on Agriculture Subcommittee on Commodity
Exchanges, Energy, and Credit hearing on A Look at the Renewable
Economy in Rural America.
Introduction
BIO\1\ represents 1,000 members in a biotech ecosystem with a
central mission--to advance public policy that supports a wide range of
companies and academic research centers that are working to apply
biology and technology in the energy, agriculture, manufacturing, and
health sectors to improve the lives of people and the health of the
planet. BIO is committed to speaking up for the millions of families
around the globe who depend upon our success. We will drive a
revolution that aims to cure patients, protect our climate, and nourish
humanity.
---------------------------------------------------------------------------
\1\ https://www.bio.org/.
---------------------------------------------------------------------------
A Look at the Renewable Economy in Rural America
BIO applauds the Subcommittee for examining how the Renewable
Economy can benefit Rural America. As the Committee and Congress begin
work on the 2023 Farm Bill, it will be critical to examine policies to
combat climate change, strengthen the renewable economy, create jobs,
and maintain our supply chains.
Growing the renewable economy will require Congress to lead with
science and U.S. innovation. We must incentivize the adoption of
innovative, sustainable technologies and practices; and streamline and
expedite regulatory pathways for breakthrough technology solutions.
Investment in and deployment of cutting-edge technologies will be
crucial to ensure farmers, ranchers, sustainable fuel producers, and
manufacturers are able to respond to climate change and maintain the
U.S.'s global leadership in agriculture. This includes removing
barriers and assisting beginning and socially disadvantaged farmers and
ranchers to access and utilize these technologies, so all producers can
adapt to the challenges ahead. By accelerating and deploying
innovation, American agriculture can be resilient, self-sustaining, and
drive our economic recovery.
BIO supports legislative action that that catalyzes resilient and
sustainable biobased economies. Policy should use science-based targets
to increase the use of biobased manufacturing and low-carbon fuels.
Science-based policy will promote resilient and sustainable supply
chains across economic sectors including translating sustainability to
best practices in all bioindustries. This will enable U.S. agriculture
to combat climate change while producing enough food, feed, fuel, and
fiber for a growing world.
To aid the Subcommittee in its work and provide more background on
these technologies and the innovative breakthroughs that can reduce
greenhouse gas emissions throughout agricultural supply chains,
attached is BIO' Biotech Solutions for Climate Report,\2\ which
examines biotechnology's contributions to addressing the climate
crisis. This report highlights how biotechnology can achieve at least 3
billion tons of CO2 equivalent mitigation annually by 2030,
by delivering vital climate solutions in four key areas:
---------------------------------------------------------------------------
\2\ https://www.bio.org/sites/default/files/2021-04/
Climate%20Report_FINAL.pdf.
---------------------------------------------------------------------------
Producing sustainable biomass feedstock
Empowering sustainable production
Developing lower carbon products
Enhancing carbon sequestration
Conclusion
By bolstering existing technologies and investing in emerging
biotechnologies the agricultural value chain could provide
transformative greenhouse gas benefits in a range of sectors, to the
benefit of Rural America's renewable economy.
BIO is committed to working with the Subcommittee to support policy
that advances pioneering technology breakthroughs. With science we can
return our nation and the world to health and prosperity by taking bold
and drastic action to address the climate crisis.
Sincerely,
Sarah Gallo,
Vice President, Agriculture and Environment,
Biotechnology Innovation Organization.
attachment 1
Biotech Solutions for Climate Report
Executive Summary
Examining biotechnology's contributions to addressing the climate
crisis
``Climate change is one of the greatest public policy
challenges facing this generation.''
New approaches are required at almost every level of the economy.
Biotechnology has the potential to be a transformative asset in this
struggle, offering vital contributions to near-term greenhouse gas
(GHG) reductions and revolutionary tools to avert catastrophic climate
change in the longer term. New biotech tools, including gene editing
and synthetic biology, can be transformative climate solutions in key
emerging industry sectors. Policies supporting the development and
deployment of biotech climate solutions should be part of any
government effort to address climate change.
Biotechnology can achieve at least 3 billion tons of CO2
equivalent mitigation annually by 2030, using existing technologies,
and emerging biotechnologies could have transformative GHG benefits in
a range of industrial sectors. Biotechnology can deliver vital climate
solutions in four key areas:
Producing sustainable biomass feedstock
Empowering sustainable production
Developing lower carbon products
Enhancing carbon sequestration
Producing Sustainable Biomass Feedstock
Substituting sustainably produced biomass feedstocks for fossil
feedstocks is a critical component of de-carbonizing the U.S. economy
because it leverages the capacity of photosynthesis to remove carbon
from the atmosphere. Biomass substitution has provided vital near-term
reductions in the carbon intensity of transportation fuels and a
rapidly growing array of consumer products. In several key markets,
such as aviation fuels, biobased alternatives offer the only viable
path to GHG reductions. Biotechnology is being deployed to develop and
utilize a range of next-generation sustainable biomass feedstocks to
expand the availability and further reduce the carbon intensity of
biofuels and biobased products. Future climate gains from biomass will
depend critically on the carbon footprint of biomass feedstock
production.
Biotech innovations in sustainable biomass production are also
transforming the broader agriculture sector. Agriculture accounts for
roughly 10% of total U.S. GHG emissions.\1\ The vast majority of these
emissions are nitrogen emissions from fertilizer and soils and methane
emissions from livestock. Biotech is being deployed to tackle both
issues.
Key Findings:
Biofuels from agricultural or municipal waste and dedicated
energy crops such as algae, switchgrass, hybrid poplar and
Miscanthus have achieved GHG reductions of up to 80% versus
petroleum with current technology.\2\
Continued improvements in feedstock production, conversion
efficiency, and co-products are expected to yield pathways with
negative carbon scores.\3\
Biotechnology is being deployed to radically reduce
agricultural nitrogen emissions: first, by introducing
nitrogen-fixing microorganisms, known as agricultural (ag)
biologicals, to the soil; and second, by using plant
biotechnology to engineer plants to better utilize soil
nitrogen. Biotech solutions could reduce nitrous oxide
emissions from agriculture by more than 150 million metric tons
of carbon equivalent.
Ag biologicals and plant biotechnology are being similarly
leveraged to enhance soil carbon sequestration through
introduction of carbon-fixing soil microbes and larger plant
root systems. Ag biologicals and plant biotechnology could
enhance soil carbon sequestration by up to 600 million metric
tons per year if widely deployed.
Biotechnology is reducing methane emissions from livestock
through new animal feeds and feed ingredients, more efficient
animals, and solutions for processing and reusing animal waste.
Plant biotechnology will be critical to continued
agriculture sustainability gains, including improvements in
crop yields, photosynthetic efficiency, and climate resiliency.
Together, biotech solutions have the potential to reduce
agriculture sector GHG emissions by nearly 1 billion metric
tons (1 gigaton) annually--or the equivalent of GHG emissions
from more than 100 million U.S. homes.
Empowering Sustainable Production
Manufacturing of everyday products, like apparel, plastics,
packaging, carpet and cosmetics, is a major greenhouse gas emitter,
responsible for 22% of total GHG emissions.\4\ Biotechnology can
dramatically reduce these emissions by making their building blocks
from renewable feedstocks rather than fossil fuels; in many cases,
biology allows drop-in replacements of existing building blocks,
enabling faster adoption throughout our economy with homegrown
solutions. New biotech tools, including gene editing and synthetic
biology, offer the potential for transformative climate solutions in
key emerging industry sectors. Biotech offers a sustainable model for
manufacturing in the 21st century.
Key Findings:
Biomanufacturing--the use of enzymes and microorganisms in
manufacturing--can reduce GHG emissions 80% or more relative to
traditional chemical routes for a variety of chemicals and
consumer products.\5\
CRISPR and other gene editing tools have dramatically
increased the speed and reduced the cost of genetic engineering
and are being deployed to tackle a range of global challenges,
including climate change.
Biology-based parallel computing and DNA data storage have
the potential to cut the energy and carbon footprints of
computing and data storage--sectors expected to account for 14%
or more of global GHG emissions by 2040 \6\--by 99% or more
versus current technology.\7\
Biological sensors, coatings and ingredients can
substantially reduce food and feed waste, which is responsible
for roughly seven percent of total global GHG emissions.\8\
Devloping Lower-Carbon Products
As awareness of the climate crisis expands, consumers are
increasingly demanding lower-carbon options and more sustainable
replacements for existing products. This means finding low-emission
alternatives that provide the same level of performance, durability and
cost-effectiveness as mature fossil-based systems. Biotechnology allows
for the production of low-carbon consumer products through the
substitution of biomass or other recycled carbon feedstocks and by
enabling more efficient, biologically-based production, satisfying an
increasingly important market segment while reducing emissions.
Key Findings:
First-generation biofuels have reduced U.S. transportation
sector GHG emissions by 980 million tons over the past thirteen
years,\9\ equivalent to taking roughly 16 million vehicles off
the road, or 19 coal-fired power plants offline, for that
period.\10\ Biotech innovations in feedstocks, processing, co-
products, and carbon recycling continue to lower their carbon
intensity.
With lifecycle GHG reductions of 80% or more versus
petroleum, next-generation feedstocks will more than double the
transportation GHG emissions reductions achieved by first-
generation biofuels and are poised to deliver carbon-negative
transportation solutions.
Biobased products produced from biomass or biologically
recycled waste gases added $459 billion to the U.S. economy in
2016 \11\ and are built from carbon that would otherwise reside
in the atmosphere, creating a pivotal pathway for atmospheric
carbon removal.
Biobased plastics and polymers, such as PLA, PHA, and BDO
have achieved lifecycle GHG reductions of up to 80% versus
their petroleum-based counterparts.\12\ A rapidly growing list
of new biobased chemical building blocks is now in development.
Biotechnology is lowering the carbon footprint of animal
products and making possible a growing array of sustainable,
low-carbon options for meat and animal products through:
Plant-based and cultured meats with up to 89% lower
lifecycle GHG emission.\13\
Algae and microbial feed ingredients that reduce
enteric methane emissions from ruminant animals by 68% or
more,14-15 avoiding the equivalent of up to 140
million metric tons of carbon annually.
Other biotech ingredient options for fish feed that
reduce its carbon footprint by up to 30%.\16\
Anaerobic digestion of animal waste, with the
potential to reduce U.S. GHG emissions by 151
MTCO2 eq. annually by 2050 using current
technology.\17\
Enhancing Carbon Sequestration
A broad scientific consensus exists that reducing carbon emission
alone will be insufficient to avert catastrophic climate change. Almost
every model of a successful stabilization of global temperatures
includes a substantial component of carbon dioxide removal from the
atmosphere as well.\18\ Biotechnology has multiple critical roles in
achieving the needed carbon removal.
Key Findings:
Biological carbon capture is the most feasible near-term
pathway to meaningful atmospheric carbon removal. Development
of thermochemical systems for point-source and direct-air
capture remains an important technology pursuit, but
photosynthesis and other biological pathways remain the only
established mechanisms for carbon capture on a scale sufficient
for carbon removal.
Bioenergy with Carbon Capture and Sequestration (BECCS)
could cost-effectively remove over 700 million metric tons of
carbon per year by 2040, or more than half the emissions from
all U.S. coal power plants.\19\
Algae and other microbial carbon capture systems applied to
biomass energy or other biorefinery systems offer one of the
most carbon-negative climate solutions available.
Suitable land and other infrastructure exists to deploy
algae-based carbon capture systems at more than 500 power
plants and ethanol facilities in the U.S. These systems would
have a potential to capture more than 200 million tons of
CO2 annually.\20\
Conclusion
Biotechnology is a crucial enabling technology to combat climate
change. It offers gigaton solutions from existing technologies and
potentially transformative solutions in multiple sectors of the
economy. Current and future biotechnology innovations will be needed to
achieve a zero-carbon economy and play a key role in carbon capture and
sequestration to take us beyond zero. Policies supporting the
development and deployment of biotech climate solutions should be part
of any government effort to address climate change.
[Endnotes]
\1\ http://cfpub.epa.gov/ghgdata/inventoryexplorer/.
\2\ htts://www.epa.gov/fuels-registration-reporting-and-compliance-
help/lifecycle-greenhouse-gas-results.
\3\ Kim S., Zhang X., Reddy A.D., Dale B.E., Thelen K.D., Jones
C.D., Izaurralde R.C., Runge T., Maravelias C. Carbon-Negative Biofuel
Production. Environ. Sci. Technol. 2020 Sep. 1; 54(17): 10797-10807.
doi: 10.1021/acs.est.0c01097. Epub 2020 Aug. 19. PMID: 32786588. http://
pubmed.ncbi.nlm.nih.gov/32786588/.
\4\ https://cfpub.epa.gov/ghgdata/inventoryexplorer/.
\5\ Erickson, B. ``New Biotech Tools for a Cleaner Environment.''
Washington, D.C.: Biotechnology Industry Organization, 2005. http://
www.bio.org/sites/default/files/legacy/bioorg/docs/files/
CleanerExecSumm.pdf.
\6\ http://www.sciencedirect.com/science/article/abs/pii/
S095965261733233X?via%3Dihub.
\7\ http://www.pnas.org/content/113/10/2591.abstract.
\8\ Food Wastage Footprint: Impacts on natural resources. Summary
Report. France: Food and Agriculture Organization of the United
Nations, 2013. http://www.fao.org/3/i3347e/i3347e.pdf.
\9\ Unnasch. S. and D. Parida (2021) GHG Reductions from the RFS2--A
2020 Update. Life Cycle Associates Report LCA. LCA.6145.213.2021
Prepared for Renewable Fuels Association. http://ethanolrfa.org/wp-
content/uploads/2021/02/LCA_-_RFS-2-GHG-Update_2020.pdf.
\10\ U.S. Environmental Protection Agency. Greenhouse Gas
Equivalencies Calculator. http://www.epa.gov/energy/greenhouse-gas-
equivalencies-calculator. Accessed April 3, 2021.
\11\ Daystar, J., Handfield, R.B., Golden, J.S., and, T.E. McConnell
(2018). An Economic Impact Analysis of the U.S. Biobased Products
Industry: 2018 Update. Volume IV. A Joint Publication of the Supply
Chain Resource Cooperative at North Carolina State University and the
College of Engineering and Technology at East Carolina University.
2018. http://www.biopreferred.gov/BPResources/files/
BiobasedProductsEconomicAnalysis2018.pdf.
\12\ Yu, J. and Chen, L. The Greenhouse Gas Emissions and Fossil
Energy Requirements of Bioplastics from Cradle to Gate of a Biomass
Refinery. Environ. Sci. Technol. 2008, 42, 18, 6961-6966. http://
pubs.acs.org/doi/abs/10.1021/es7032235.
\13\ Khan, S. Comparative environmental LCA of the Impossible
Burger with conventional ground beef burger, Quantis International,
Feb. 27, 2019. http://impossiblefoods.com/mission/lca-update-2019/.
\14\ Roque, B.M., et al. Red seaweed (Asparagopsis taxiformis)
supplementation reduces enteric methane by over 80 percent in beef
steers. bioRxiv 2020.07.15.204958; doi: https://doi.org/10.1101/
2020.07.15.204958. https://www.biorxiv.org/content/10.1101/
2020.07.15.204958v1.abstract. Roque B.M., Venegas M., Kinley R.D., de
Nys R., Duarte T.L., Yang X., et al. (2021) Red seaweed (Asparagopsis
taxiformis) supplementation reduces enteric methane by over 80 percent
in beef steers. PLoS ONE 16(3): e0247820. https://doi.org/10.1371/
journal.pone.0247820. http://journals.plos.org/plosone/
article?id=10.1371/journal.pone.0247820.
\15\ Press Release: Leading California University Finds 78 Percent
Reduction in Livestock Methane Emissions with Direct-fed Microbials
from Locus Fermentation Solutions. March 26, 2020. http://locusfs.com/
leading-california-university-finds-78-percent-reduction-in-livestock-
methane-emissions-with-direct-fed-microbials-from-locus-fermentation-
solutions/.
\16\ Cumberledge, T. Assessment of environmental impact of
FeedkindTM protein. Carbon Trust, April 2016. http://
www.carbontrust.com/resources/assessment-of-environmental-footprint-of-
feedkind-protein.
\17\ Zaks, David P.M., et al. ``Contribution of anaerobic digesters
to emissions mitigation and electricity generation under U.S. climate
policy.'' Environmental Science & Technology vol. 45,16 (2011): 6735-
42. doi:10.1021/es104227y. http://www.ncbi.nlm.nih.gov/pmc/articles/
PMC3155279/.
\18\ http://www.ipcc.ch/site/assets/uploads/sites/2/2019/02/
SR15_Chapter2_Low_Res.pdf.
\19\ Langholtz M., Busch I., Kasturi A., Hilliard M.R., McFarlane
J., Tsouris C., Mukherjee S., Omitaomu O.A., Kotikot S.M., Allen-Dumas
M.R., DeRolph C.R., Davis M.R., Parish E.S. The Economic Accessibility
of CO2 Sequestration through Bioenergy with Carbon Capture and Storage
(BECCS) in the US. Land. 2020; 9(9): 299. http://doi.org/10.3390/
land9090299. http://www.ornl.gov/news/bioenergy-carbon-capture-combo-
could-cost-effectively-mitigate-carbon-dioxide.
\20\ Algae Biomass Organization. DOE 2016 Billion-Ton Report: Ample
Resources for Algae Production in the U.S. July 13, 2016 http://
algaebiomass.org/blog/9541/doe-2016-billion-ton-report-ample-resources-
for-algae-production-in-the-u-s/.
attachment 2
Biotech Solutions for Climate Report
Examining biotechnology's contributions to addressing the climate
crisis
Matt Carr, Green Capitol, LLC
Tristan Brown, State University of New York, College of Environmental
Sciences and Forestry
Colin Murphy, University of California, Davis, Policy Institute for
Energy, Environment, and the Economy
Table of Contents
Introduction
Technologies
Products
Advanced Biofuels
Renewable Chemicals and Biobased Products/Materials
Food and Feed Ingredients
Agriculture Inputs and Climate Services
Agricultural Biologicals
Biological Carbon Capture, Use and Storage
New Biotech Tools and Bio-[Industrial] Manufacturing
New Biotech Tools
Applications of Bio-Manufacturing in Traditional Industries
New Markets and Novel Applications
Plant and Animal Biotechnologies
Plant Biotechnology and Gene Editing
Animal Biotechnology
Renewable Chemicals and Biobased Products/Materials
Food and Feed Ingredients
Climate Analysis
Issues in LCA for Biotechnology
GHG Mitigation [Potential] on National Scale
Feedstock
Empowering Sustainable Production
Developing Lower-Carbon Products
Enhancing Carbon Sequestration
Barriers to Adoption and Policy Proposals
Financing Barriers
Regulatory Barriers
Policy Proposals
De-carbonizing Transportation
De-carbonizing Industry
De-carbonizing Agriculture
Negative-Carbon Tech
Economy-Wide Climate Programs
Introduction
``Climate change is one of the greatest public policy
challenges facing this generation.''
The rapid accumulation of anthropogenic carbon dioxide in the
atmosphere is already altering natural climate \1\ and biological
systems, resulting in abnormally destructive wildfires, storms,
rainfall patterns and the spread of infectious disease. It is
increasingly clear that the historical, fossil fuel-based models of
carbon, energy and material cycling through the economy are
incompatible with maintaining a hospitable environment. Humanity will
need to bring every tool it has to bear on this critical challenge. New
approaches are required at almost every level of the economy.
Biotechnology has the potential to be a transformative asset in this
struggle.
Biotechnology is technology based on biology. Biotechnology
applications touch most aspects of modern life, from agriculture to
manufacturing to medicine. In the context of climate change,
biotechnology offers solutions in four key categories:
Producing sustainable biomass feedstock
Empowering sustainable production
Developing lower carbon products
Enhancing carbon sequestration
Biotechnology offers vital contributions to near-term greenhouse
gas (GHG) reductions and revolutionary tools to combat climate change
in the longer term. Policies supporting the development and deployment
of biotech climate solutions should be part of any government effort to
address climate change. This report reviews the current contributions
of biotechnology to greenhouse gas (GHG) reductions and identifies the
emerging biotech solutions with the greatest potential to avert, and
reverse, catastrophic climate change. We focus on four main areas:
Producing Sustainable Biomass Feedstock. For most of human
existence, our lives were based on the products of renewable biomass--
plants and other living material. In the past 150 years, much of our
economy has come to depend on petroleum and other non-renewable
resources. The environmental consequences of this transition from
renewable resources to non-renewable resources are well documented.\2\
Biotechnology has developed more sustainable, biobased alternatives for
many products, including fuels, polymers, and other chemicals. The U.S.
consumed over 7.5 billion barrels of petroleum in 2019,\3\ some of
which was turned into plastic; as much as 35 million tons of plastic
ended up in waste streams annually in recent years.3-4 More
sustainable options have been developed over recent decades, but
ultimately they still require a material input. Biobased alternatives
offer the potential for significantly reduced carbon footprints and
environmental benefits compared to the traditional systems they
displace, and these alternatives depend on broad availability of
sustainable biomass feedstock. At present, there are concerns that not
enough biomass will be sustainably available to meet growing demand.
Biotechnology is rapidly reducing the carbon footprint of feedstock
production by enabling new, sustainable ways to produce usable biomass,
improving yields on existing crops, developing scalable, low-input
production systems, and finding new ways to utilize biomass that would
otherwise be waste.
Empowering Sustainable Production. Manufacturing is a major
greenhouse gas emitter, from industrial boilers, chemical production,
and the release of high-warming-potential gases like methane or
fluorinated hydrocarbons. Biotech empowers a variety of options to
reduce emissions from these processes, by reducing the need for energy
inputs, facilitating more efficient material processing, or replacing
high-warming-potential gases. Biotechnology has also enabled renewable
natural gas systems that can displace the fossil-based methane today,
simply by switching the source of the gas. The U.S. manufacturing
sector is responsible for 22% of total GHG emissions,\5\ and while no
single technology or solution can single-handedly solve the problem,
biotech enables opportunities for lower-emission production across many
sectors.
Developing Lower-Carbon Products. As awareness of the climate
crisis expands, consumers are increasingly demanding lower-carbon
options and more sustainable replacements for existing products.\6\
This means finding low-emission alternatives that provide the same
level of performance, durability and cost-effectiveness as mature
fossil-based systems. Biotechnology allows for the production of low-
carbon consumer products through the substitution of biomass or other
recycled carbon feedstocks and by enabling more efficient, biologically
based production, satisfying an increasingly important market segment
while reducing emissions at the same time.
Enhancing Carbon Sequestration. While there is a lot of uncertainty
about what a sustainable future may look like, several features are
common across all likely scenarios. One of these is the deployment of
massive amounts of carbon capture and sequestration (CCS), which
converts carbon to a form that does not contribute to climate change or
stores it underground. CCS cannot be the sole or even the primary
solution to climate change, but it will make a critical contribution.
Biotechnology has a key role in advancing CCS techniques, making it
more scalable, reliable and cost-effective.
2 Technologies
In this section, we review biotechnology applications to climate
mitigation in four broad categories: products; agricultural inputs and
climate services; new biotech tools and bio-industrial manufacturing;
and plant and animal biotechnologies.
2.1 Products
2.1.1 Advanced Biofuels
Liquid biofuels were one of the earliest biotechnology products to
be deployed at scale in the U.S. for the purpose of achieving
greenhouse gas (GHG) emission reductions. In the early 21st century,
production mostly took the form of the first-generation biofuels
ethanol and biodiesel, derived from feedstocks such as corn and
vegetable oils. Concerns about competition for these feedstocks with
the food and animal feed sectors prompted the development of second-
generation liquid biofuels that are produced from low-carbon-intensity
(CI) feedstocks, such as lignocellulosic biomass.
Existing first-generation biofuels pathways rely heavily on the
fermentation of starch-rich feedstocks to ethanol and, to a lesser but
still substantial extent, the transesterification or hydrotreating of
vegetable oils to biodiesel or renewable diesel, respectively.
Fermentation is one of the oldest examples of biotechnology, having
been mastered by humans thousands of years ago for the purpose of
producing alcoholic beverages. Glucose is easily fermented by the
microorganism Saccharomyces cerevisiae to yield a diluted form of
ethanol known in the industry as ``beer''. Distillation of this
intermediate produces a high-proof ethanol that is then blended with
gasoline for use in motor vehicles. Most gasoline in the U.S. today
contains 10% ethanol, with 15% blends increasingly available.\7\
Advances in biotechnology have enabled U.S. ethanol producers to
achieve substantial efficiency improvements in recent decades that have
enabled the volume of first-generation ethanol obtained from a bushel
of corn to increase by more than 10% between 1982 and 2014.\8\ Milling
improvements based on improved knowledge of corn kernel composition
increased conversion efficiency, reducing the amount of corn
required.\9\ Likewise, a better understanding of yeast biology led to
ethanol yield optimization via temperature-controlled fermentation.\10\
And advanced fractionation techniques have allowed for greater yield of
co-products, such as distillers dry grains (DDGS), a key animal feed
ingredient. Together these advances have improved the process economics
and sustainability of the pathway by reducing costs and waste. The EPA
estimates them to have resulted in reductions to ethanol's carbon
intensity in excess of 10%.\11\ A shift to more sustainable growing
practices, driven by a desire to capture the compliance value of low-
carbon programs such as the California Low Carbon Fuel Standard (LCFS),
is further reducing the carbon intensity of first-generation fuels. And
the prospect of deploying carbon capture technology at ethanol plants,
detailed in section 2.2.2, could reduce the carbon footprint of first-
generation ethanol by an additional 40%.\12\
Biotechnology has also made a wide range of low-carbon intensity
feedstocks available for utilization by biofuel producers. Glucose is a
fundamental building block of plants, and plants possess multiple
defense mechanisms to protect themselves from yeast and other
microorganisms that consume glucose. Plants' glucose content takes the
form of the polysaccharide cellulose that is not digestible by most
living things (one notable exception being termites). Other simple
sugars such as arabinose and xylose comprise a second type of major
polysaccharide that plants contain, hemicellulose. Plants are further
protected by a third compound with antimicrobial properties, lignin,
that is cross-linked with cellulose and hemicellulose to protect them
against attack by microorganisms. These traits allow plants to thrive
in the wild but have also posed a major hurdle to their use as a
second-generation biofuel feedstock by inhibiting their conversion to
ethanol via fermentation.
Recent progress in the development of biocatalysts and engineered
microorganisms has made possible the production of ethanol from second-
generation feedstocks such as grasses, shrubs, and other dedicated
energy crops. The enzymatic hydrolysis pathway employs biocatalysts to
break cellulose and hemicellulose down to glucose and other constituent
sugars. The glucose is converted to fuel ethanol in the same manner as
corn glucose. Microorganisms that are naturally able to ferment glucose
have been engineered to make them capable of also fermenting simple
sugars derived from hemicellulose to ethanol, improving both yields and
efficiencies of lignocellulosic biofuel production.
An early commercial application of this pathway utilizes the
lignocellulose that is found in small quantities in corn kernels to
produce ethanol. Biotech companies POET, Syngenta, and Enogen, among
others, have begun adding corn kernel fiber conversion units to first-
generation ethanol plants, potentially increasing ethanol yield per
bushel of corn by nearly 10%.\13\
The full potential of cellulosic biofuel to mitigate climate change
will depend on broad deployment of cellulosic technology to
agricultural residues, municipal solid waste (MSW), and dedicated
energy crops. An initial wave of cellulosic ethanol biorefinery
construction occurred following the 2009 implementation of the Federal
Renewable Fuel Standard (RFS) program. Leading first-generation ethanol
producers such as POET, LLC, have partnered with leading biotech
innovators to build first-of-a-kind cellulosic biofuel plants in the
U.S., Europe, and South America, but low oil prices, policy obstacles,
and technology challenges have limited global production volumes.
Advances in biotechnology have expanded the supply of feedstocks
available to biodiesel and renewable diesel, two of the major success
stories in sustainable transportation. Biodiesel (BD) is produced via
the transesterification process in which lipid feedstocks are reacted
with methanol to yield a fatty acid methyl ester (FAME) that can be
blended into conventional diesel, without needing any modification to
the engine. Renewable diesel (RD) is made by hydrotreating the same
kind of lipid feedstocks, in a process very similar to parts of
conventional oil refining; it has performance characteristics like
those of diesel fuel, passes the same product specifications and can be
used in any diesel engine at any concentration. Historically most U.S.
BD and RD have been produced from soybean oil.\14\ The need for new
feedstocks has grown over the last decade, however, as production has
expanded and policies such as California's Low Carbon Fuel Standard
(LCFS) have incentivized the use of second-generation low-carbon
intensity feedstocks. Some of these newer feedstocks are waste products
that are not as easily converted to biodiesel as first-generation
feedstocks. Biocatalysts have been developed that improve the
conversion efficiencies and performance characteristics of biodiesel
that is yielded from waste feedstocks,\15\ allowing for more of them to
be converted to low-carbon transportation fuel.
Biotechnology has also enabled the production of novel low-carbon
fuels that complement existing ethanol and biodiesel production. First-
generation biofuels have a limited ability to widely displace existing
fossil fuels due to infrastructure compatibility hurdles. The U.S. only
allows ethanol blends of up to 15% by volume with gasoline in non-flex
fuel vehicles\16\ and most diesel engine warranties only cover
biodiesel blends of up to 20% by volume.\17\ Moreover, neither is
capable of displacing specialized fossil fuels such as aviation fuel.
Technological advances have yielded a new category of ``drop-in
biofuels''--so named for their ability to utilize the existing refined
fuels infrastructure--that have an even greater de-carbonization
potential.
Biobutanol (butanol derived from biomass) was one of the first
biofuels to gain attention for its drop-in properties, as it chemically
behaves more like a hydrocarbon than ethanol does. While actually an
intermediate to renewable hydrocarbons (see below), biobutanol's high
energy equivalence ratio compared to ethanol and ability to be blended
with gasoline at rates of up to 16% by volume allow it to displace
correspondingly larger volumes of gasoline.\18\ Biobutanol is produced
via fermentation from the same simple sugars as in ethanol production.
Some biofuel producers have genetically modified ethanol yeast to
instead produce isobutanol. There are also pathways that utilize
bacteria for the conversion rather than yeast. Biobutanol can also be
produced via engineered microorganisms from the carbohydrates in some
microalgae strains that remain after lipids have been extracted,
allowing for microalgae to serve as a simultaneous feedstock for both
biobutanol and biomass-based diesel.\19\
More recently, biobutanol has attracted interest as a key step
towards production of the renewable hydrocarbon fuels isooctane and
sustainable aviation fuel SAF). Unlike biobutanol, which is an alcohol,
biobased isooctane and SAF are hydrocarbons with performance
characteristics that are very similar to their fossil counterparts
(isooctane is an important blending component in gasoline). They are
true drop-in biofuels in that they can be used in the same quantities
as the fossil fuels that they displace before encountering
infrastructure constraints.
Biotechnology has also enabled the production of SAF directly from
biomass via fermentation. Historically the conversion of biomass to
hydrocarbons via fermentation has been limited by the presence of
oxygen in biomass that has caused microorganisms to favor oxygen-
containing products (e.g., ethanol, butanol). Metabolic engineering has
been employed to improve the yield of the specific hydrocarbon,
kerosene, that comprises a common form of aviation fuel by increasing
the selectivity of fermenting microorganisms.\20\ The microorganisms
are able to convert sugars derived from a variety of feedstock types to
SAF.\21\ Hydrocarbons have hydrophilic properties, allowing those
produced in this manner to avoid the need for the energy-intensive
distillation step that is required when producing fuel alcohols.
Biofuels currently supply approximately 12% of U.S. on-road
transportation fuel.\22\ Ethanol and biodiesel currently comprise the
large majority of U.S. biofuels consumption. Production of second-
generation biofuels is expected to increase rapidly during the early
2020s, however, as the new feedstocks and pathways made possible by
biotechnology breakthroughs are commercialized (see Figure 1).\23\ A
combination of factors is responsible for this development. First, the
COVID-19 pandemic has seriously disrupted demand for fossil fuels in
the U.S. transportation sector, in turn limiting demand for biofuels
such as ethanol that have restrictive blend limits. Second, policies
such as the Federal revised Renewable Fuel Standard (RFS2), the
California Low Carbon Fuel Standard (LCFS) and the Oregon Clean Fuels
Program incentivize second-generation biofuels, with their lower carbon
intensities, over first-generation biofuels (and both over fossil
fuels). Third, whereas the last decade's rapid growth in first-
generation biofuels production has slowed due to supply constraints,
second-generation feedstocks remain underutilized.\24\
Figure 1: Estimated U.S. biofuel production volumes by type of fuel,
2010-2050.
U.S. Production of Selected Biofuels in AEO2020 Reference Case (2010-
2050)
(million barrels per day (MMb/d))
Source: U.S. Energy Information Administration.[\25\]
The carbon intensities of biofuels vary widely depending on
feedstock(s), conversion processes, and the geographic length of the
supply chain. California publishes detailed carbon intensities of the
biofuels that participate in its LCFS for both broad biofuel categories
as well as individual producers. Ethanol, which has historically been
the primary source of biofuels under the LCFS by volume, has achieved
average GHG emission reductions compared to gasoline of between 32% and
41% in recent years.\26\ Ethanol from waste, or dedicated energy crop
feedstocks, have achieved GHG reductions of up to 80% with current
technology.\27\ Continued improvements in feedstock production,
conversion efficiency, and co-products are expected to yield pathways
with negative carbon scores.\28\
Similarly, biodiesel has achieved average GHG emission reductions
compared to diesel fuel of between 69% and 74% over the same period,
although individual reduction values range from as low as 50% to over
90% depending on the feedstock used.\29\ In both cases, California
reports the lowest carbon intensities for those biofuels that are
produced from waste feedstocks, illustrating the value that
biotechnology has provided by helping to make such feedstocks usable by
biofuels producers.
Biobutanol from lignocellulosic biomass has yet to achieve
commercial-scale production volumes and does not have published LCFS
carbon intensity values as a result. Independent life cycle assessments
estimate a GHG emission reduction for the biofuel compared to gasoline
of approximately 66%, which is comparable to ethanol from
lignocellulosic biomass.\30\ Likewise, SAF from biobutanol is estimated
to achieve GHG emission reductions compared to petroleum aviation fuel
of between 60% and 75% depending on the choice of feedstock and
conversion inputs.\31\
GHG emissions are not the only form of air pollution that the use
of biofuels reduces. Emissions of criteria pollutants such as carbon
monoxide, particulate matter, and sulfur dioxide have a direct impact
on human health, causing air pollution to be one of the main risk
factors causing non-communicable diseases globally.\32\ The combustion
of commonly used biofuels in both blended and unblended forms has been
found to reduce many, if not all, of the criteria pollutants that are
emitted by the combustion of petroleum fuels.33-34
Gevo Case Study
Gevo is an advanced renewable fuel producer that converts
renewable energy to energy-dense liquid hydrocarbons by
transforming renewable energy into low-carbon transportation
fuels. This next generation of renewable premium gasoline, jet
fuel and diesel fuel has the potential to achieve net zero
carbon emissions, addressing the market need of reducing GHG
emissions with sustainable alternatives while continuing to
utilize current infrastructure and vehicles.
The company originally converted an existing dry-mill corn
ethanol facility to a commercial-sized scaled up facility in
Luverne, Minnesota. The converted facility utilizes corn starch
as feedstock. While corn-based biofuels have not historically
been credited with large reductions to carbon intensity
relative to gasoline, Gevo employs an integrated approach to
carbon intensity reductions that maximizes the environmental
and sustainability potentials from agricultural systems, while
creating innovative solutions to convert the feedstocks into
energy-dense hydrocarbons.
In January 2021, Gevo announced a new project, planned for
construction at Lake Preston, South Dakota, to be named ``Net-
Zero 1.'' Gevo expects that Net-Zero 1 would have the
capability to produce liquid hydrocarbons that when burned have
a net-zero greenhouse gas footprint.\35\ Net-Zero 1 is expected
to have a capacity of 45 million gallons per year of
hydrocarbons for gasoline and jet fuel and will produce more
than 350 million pounds per year of high-protein feed products
for use in the food chain. In addition to feed and fuel, the
facility will produce enough renewable natural gas to be self-
sufficient for production process needs. The facility will also
generate renewable electricity with a combined heat and power
system and integrate additional renewable power production
utilizing wind energy.
Gevo's integrated approach utilizes de-carbonization
practices across the entire supply chain. It begins by working
with the farmers who employ best farming practices that
maximize soil carbon sequestration and minimize GHG emissions
during the planting, growing, and harvesting stages.\36\ The
partnership with farmers involves the active tracking and
monitoring of the feedstock suppliers to ensure that best
practices are encouraged and in the future can be incentivized
for the purpose of consistently minimizing feedstock carbon
intensity.
Gevo also conducts experimental trials to identify additional
feedstock de-carbonization routes such as the use of manure in
place of nitrogen fertilizer application, enhanced soil carbon
sequestration via reduced soil tillage practices, and improved
crop yields via microbial soil solutions. The company estimates
that its corn feedstock has a carbon intensity that is at least
50% lower than the U.S. average.\37\
Because of the low-carbon-footprint feedstocks, the
sustainable agricultural practices used to produce feedstock,
and the use of renewable energy for the production processes--
much of which is expected to be generated on site--the
hydrocarbon fuel products produced at Net-Zero 1 have the
potential to achieve net-zero greenhouse gas emissions, as
measured across the whole of the life cycle, based on Argonne
National Laboratory's GREET model. The GREET model takes into
account emissions and impacts ``cradle to cradle'' for
renewable resource based fuels, including inputs and generation
of raw materials, agriculture practices, chemicals used in
production processes of both feedstocks and products, energy
sources used in production and transportation, and end fate of
products.
Gevo's Luverne facility also makes extensive use of other
sources of renewable energy to reduce the carbon intensity of
its production process. The production of biofuels such as
isobutanol from corn uses process heat and electricity that
have historically been obtained from fossil fuels, such as coal
and natural gas. And Gevo has installed wind turbines to
generate renewable electricity. Minnesota has abundant access
to low-cost wind power and Gevo pays ``about the same'' price
for electricity as it did prior to the installation of the wind
capacity.\38\ In 2019, Gevo announced its intention to utilize
renewable natural gas that is produced from dairy manure in
place of the fossil natural gas it used to produce process heat
in the past.\39\ In both cases, Gevo has been able to take
advantage of local renewable energy resources that are supplied
directly to the Luverne facility via transmission line and
natural gas pipeline.
2.1.2 Renewable Chemicals and Biobased Products/Materials
Fossil-derived chemicals and products are a key future driver of
petroleum consumption.\40\ The chemicals sector (known as
petrochemicals when derived from fossil feedstocks) accounts for a wide
variety of common products, including plastics, synthetic rubber,
solvents, fertilizers, pharmaceuticals, additives, explosives, and
adhesives.\41\ They differ from fossil fuels in that their consumption
does not normally cause GHG emissions via combustion. They are still
produced from fossil fuels, though, especially petroleum and natural
gas, and their production incurs both direct and indirect emissions. By
one estimate the petrochemicals sector generates 18% of direct
industrial GHG emissions, and its production capacity is growing
rapidly.\42\ The sector is also, due to its reliance on fossil fuels,
an important source of other forms of pollution that have a detrimental
impact on human health, especially in disadvantaged communities.\43\
Moreover, many fossil-derived products such as plastics are resistant
to degradation and end their useful lives either in landfills or in
natural environments as litter.
Biotechnology's contributions to efforts to mitigate the damage
caused by fossil chemicals and products generally fall into one of two
broad categories: (1) the replacement of these fossil-derived products
by non-fossil products, and (2) the replacement of degradation-
resistant materials with biodegradable materials. A substantial amount
of overlap exists between the two categories due to the novel
production pathways and product types that have been developed by the
biotechnology industry. The ability of biomass to replace a wide
variety of fossil products has greatly benefited from recent
biotechnology advances that have enabled the manufacture of products
from both categories.\44\
The petrochemical industry is expected to become a primary driver
of demand for fossil fuels by 2030.\45\ Many advances have been made in
the production of the same chemicals and products from biomass or
recycled feedstocks rather than fossil feedstocks. One early biobased
chemical was developed as an extension of biofuels production, allowing
it to utilize existing production capacity. Ethanol obtained from corn
and sugarcane, but potentially from lignocellulosic biomass in the
future, is easily dehydrated to yield a biobased version of the
plastics precursor ethylene.\46\ Plastics comprise most of the fossil
chemicals market,\47\ giving biobased plastics an important role to
play in its de-carbonization.
Biotechnology companies have also developed biobased versions of
synthetic fibers that are used by the textile industry. Polyester,
which is widely employed in the manufacture of textiles and bottles, is
usually produced from natural gas and/or petroleum feedstocks. Its
building blocks can instead be obtained either from ethanol, as in the
production of biobased plastics, or from hydrocarbons that are directly
converted from biomass feedstocks.48-49 In both pathways the
resulting fibers are the same as those that are currently produced from
fossil feedstocks, making them drop-in biobased products.
Growing concerns over the longevity of plastic waste in the
environment have also prompted the development of biodegradable
plastics that are capable of decomposing over short timeframes compared
to those of traditional plastics. The most common of these are
polylactic acid (PLA) and polyhydroxyalkanoates (PHA). PLA is derived
from plant sugars that are naturally fermented by bacteria to yield
lactic acid. This lactic acid is then chemically converted to PLA for
use as a biobased plastic.\50\ PHA is produced via the fermentation of
plant sugars (although vegetable oils and even wastewater can also be
used) by a different type of bacteria under very specific conditions
that promote PHA synthesis.\51\ Biobased plastics made from both PLA
and PHA are biodegradable under higher-temperature conditions such as
those found in industrial composters.
Biotechnology breakthroughs have also been made in the replacement
of lesser known but equally important fossil products. Lubricants made
from petroleum are in common use throughout the industrial and
transportation sectors and, while they represent a small share of a
typical refinery's product mix, they are a critical input for many
applications (e.g., engine oil). Plant sugars can be fermented by
bacteria to yield a chemical that is capable of conversion to biobased
versions of the synthetic lubricants that are normally obtained from
petroleum.\52\ In a similar application biodiesel, which has a high
lubricity, is blended with petroleum-derived ultra-low sulfur diesel
fuel to improve the latter's low lubricity.\53\ Finally, novel
medicines and medical treatments are being developed through
biotechnology, including those that are personalized to individual
patients.\54\
Renewable chemicals and materials provide climate benefits through
twin advantages. First, by leveraging biological production platforms,
biobased products are frequently less energy-intensive to produce than
their petrochemical counterparts. For example, BASF Corporation has
developed a biobased home insulation product that results in 66% fewer
GHG emissions than its fossil-based alternative.\55\ But, perhaps most
significantly, whether produced from biomass or waste gases, biobased
products are built from carbon that would otherwise reside in the
atmosphere, and thus serve as a vital pathway for atmospheric carbon
removal.
The direct recycling of GHG emissions, both biogenic and fossil in
origin, to create chemicals and fuels has emerged as a notable pathway
over the last decade. Landfills and animal waste lagoons are sources of
biogenic emissions of the potent GHG methane. Methane is the primary
component of natural gas, however, making biogenic methane when
captured a potential biobased chemicals feedstock. Biogas captured from
landfills and agricultural anaerobic digesters is also directly
utilized as fuel for natural gas-powered vehicles.\56\ The use of
biogas in both applications has especially large climate benefits
because it eliminates a source of methane emissions while
simultaneously displacing demand for a fossil feedstock (biogas
combustion converts methane to the comparatively weaker GHG carbon
dioxide).
Finally, biotechnology advances have also enabled fossil GHG
emissions to be captured and recycled via a pathway known as carbon
capture and utilization (CCU), thereby reducing demand for fossil fuels
and the resulting emissions without requiring biomass (see Section
2.2.2). One novel process developed by carbon recycling pioneer
LanzaTech utilizes engineered microorganisms to ferment emissions
captured from industrial facilities such as steel mills to either fuels
or chemicals, depending on the choice of microorganism.\57\ While the
resulting products are not of biological origin, their climate benefits
are substantial and comparable to those of biobased products in that
both partially eliminate the need for fossil fuel extraction and serve
as sinks for carbon that would otherwise be emitted to the atmosphere.
Like biofuels, the market for biobased chemicals has been
constrained by persistent low natural gas and petroleum prices for much
of the last decade. The lack of mandates or other policy mechanisms in
the U.S. that internalize biotechnology products' climate benefits have
made it still more difficult for biobased pathways to compete with
fossil pathways. That said, a growing interest by many manufacturers
and their consumers in reducing their climate impacts in service of ESG
goals has supported an expansion of the U.S. biobased products industry
despite these hurdles. One recent analysis estimated the industry's
size to be $459 billion in terms of valued added to the U.S. economy in
2016, up from $393 billion in 2014 and $353 billion in 2012.\58\ These
bioproducts were estimated to displace 9.4 million barrels of petroleum
equivalents in 2016. While still smaller than the fossil products
sector--the U.S. chemicals industry alone achieved $765 billion in
sales in 2017 \59\--the U.S. biobased products industry is expected to
grow rapidly as state governments and corporations increasingly act to
minimize plastic waste, methane emissions, and other forms of
pollution.\60\
Biodegradable biobased products have the potential to substantially
contribute to climate change mitigation efforts due to their ability to
achieve net carbon sequestration under certain production conditions. A
life cycle analysis of the biodegradable bioplastic PHB calculated
negative GHG emissions for the product when produced from either corn
or biogas, with the greatest amount of carbon sequestration occurring
when the PHB is produced from existing PHB that has degraded to
biogas.\61\ A separate analysis of PHA production determined that the
bioplastic has a carbon intensity that is 80% lower than that of
fossil-derived plastics even before taking into account the PHA's
ability to be recycled following biodegradation.\62\ Biobased PLA for
use in water bottles has likewise been found to have a substantially
lower carbon intensity than fossil-derived plastic.\63\ Finally, a
comparison of multiple chemicals and fuels pathways determined that
products derived from recycled carbon dioxide achieved carbon intensity
reductions compared to conventional fossil products despite ultimately
being derived from fossil feedstocks.\64\
Biobased products such as renewable chemicals historically have not
received as much attention from policymakers as biofuels, due to the
lack of direct emissions resulting from their use. That is changing,
however, as policymakers in states such as California and New York have
implemented economy-wide restrictions on GHG emissions. In addition to
disincentivizing the use of fossil feedstocks in energy-intensive
manufacturing processes, such policies also encourage entities such as
steel mills and refineries to develop new revenue streams via the
implementation of CCU technologies.\65\ Biotechnology provides a wide
range of options for reducing the carbon intensities of many of the
biobased chemicals and products upon which the U.S. economy relies.
Danimer Scientific Case Study
Biobased PHA is Danimer Scientific's primary bioplastics
product. The company manufactures the polyester at a commercial
facility in Winchester, Kentucky, by feeding a bacterium with
inexpensive vegetable oil feedstock derived from agricultural
oilseed crops such as canola, and soy. In addition to directly
displacing the fossil fuels used in the manufacture of
conventional plastics, Danimer Scientific's production pathway
also provides indirect environmental benefits.
Danimer Scientific obtains vegetable oils via the crushing of
oilseeds. The crushing process yields protein-rich byproducts
that are employed as a natural fertilizer and livestock feed.
The vegetable oils are consumed by soil bacteria that
biosynthesize the PHA in a bioreactor. The PHA is then
separated from the bioreactor medium, purified, and dried in
preparation for conversion to various plastic resins, blending
with other biopolymers such as PLA, or bonding with materials
such as paper.\66\
Danimer Scientific's biobased PHA possesses performance
parameters that are comparable to those of many fossil plastics
and are capable of use in many of the same applications,
including food preservation and storage and conversion to
multiple types of finished resins. Unlike fossil plastics,
however, PHA utilizes only renewable feedstocks and is
biodegradable. This latter characteristic is an important
advantage over fossil plastics at a time of growing concern
over land-filling and the widespread presence of non-
biodegradable plastic waste in many ecosystems.
Genomatica Case Study
Genomatica has commercialized a more sustainable, biobased
technology to make a key ingredient used in apparel, spandex,
footwear, and plastics used in electronics and automotive
parts. Millions of tons per year of this ingredient, 1,4-
butanediol (BDO), are currently produced from fossil-derived
feedstocks, resulting in many millions of tons per year of
greenhouse gas emissions. By contrast, Genomatica's GENO
BDOTM process uses renewable feedstocks--the sugars
that come from locally-grown crops such as corn and sugarcane--
along with engineered microorganisms and fermentation. The
products made with Genomatica's ingredient have 56% lower
carbon intensity,\67\ and their renewable content is
traceable--meaning customers know that the carbon actually came
from plants. Genomatica's technology also avoids the use of
toxic compounds like formaldehyde, common to fossil processes.
Genomatica's technology has been proven at industrial scale
since 2012. Italy-based plastics manufacturer Novamont started
production of biobased BDO at a 30,000 ton per year capacity
plant in 2016, built with Genomatica's licensed technology.
Novamont's BDO has been used in compostable produce bags, mulch
film and coffee capsules. BASF has also licensed Genomatica's
BDO technology. The Novamont plant is the world's first
commercial scale plant to make a widely-used intermediate
chemical biologically. Genomatica has received repeated
recognition for its innovations, including three EPA Green
Chemistry awards, the Kirkpatrick award and ICIS Innovation
awards.
2.1.3 Food and Feed Ingredients
According to the 2019 U.N. IPCC Special Report on Climate Change
and Land, the global food system--including the land and resources to
raise animals and grow crops, plus processing, packaging, and
transportation--is responsible for up to 19.1 GtCO2eq
annually, or 37% of total net GHG emissions.\68\ The report finds that
changes in both production and consumption are needed to meet global
emissions reduction objectives. Biotechnology offers the potential for
substantial emissions reductions at every stage of the food system,
including potentially transformative solutions in food and feed
ingredients.
Animal products account for the largest segment of food sector
emissions. According to the FAO, livestock production accounts for
approximately 7.1 GtCO2eq annually, or 15% of global GHG
emissions, and consumes roughly \1/4\ of available land worldwide, with
meat production expected to increase 19%, and dairy production 33%,
from 2017 levels by 2030.\69\ Solutions that reduce dependence on
animals offer the greatest potential for emissions reductions from the
food sector. But, given the growing global demand for meat and other
animal products, sustainable near-term solutions are also needed for
animal agriculture. Biotechnology is playing a leading role in the
development of both new low-carbon product choices and technologies to
reduce the carbon footprint of animal agriculture.
Plant-Based Proteins and Food Products
A recent analysis found that if Americans opted for nutritionally
equivalent plant-based products for their meat (beef, chicken and pork)
consumption choices, U.S. GHG emissions would be reduced by 280 million
metric tons annually--roughly equivalent to the total emissions of the
state of Ohio.\70\ Consumer concerns with the carbon footprint of
animal agriculture--along with health and animal welfare
considerations--are driving strong growth in plant-based proteins and
food product choices. Many of the leading options leverage
biotechnology.
Impossible Foods, the fourth fastest growing brand in the U.S. in
2019,\71\ uses engineered yeast to add heme, an iron-containing
molecule found in blood, to its plant-based products to produce a meaty
flavor. As of September 2020, Impossible Foods burgers were in 11,000
supermarkets and on the menu of a growing list of national and regional
restaurant chains.\72\ A 2019 lifecycle analysis of Impossible Foods'
burger found a 89% reduction in carbon footprint and 96% reduction in
land use versus traditional beef burgers.\73\
Perfect Day Foods is bringing a similar approach to milk, cheese
and ice cream, using genetically engineered microbes to produce animal-
free dairy products.\74\ Given the high carbon intensity of dairy
products (nearly 12 kilograms of carbon dioxide are produced for every
kilogram of butter, for example) \75\ plant-based dairy has the
potential to have an outsized impact.
Motif FoodWorks, a spinoff of biotech leader Ginkgo Bioworks, is
employing synthetic biology to develop fermentation-based ingredients
to enhance the taste and texture of plant-based meat and dairy options.
Motif is expected to launch its first commercial product--an ingredient
to improve the flavor of beef substitutes--in 2021.\76\
One of the more novel applications of biotechnology is cultured
meat products. New Age Meats is one of several companies working to
produce cultured meat, an engineered tissue produced in laboratories by
microorganisms that induce and feed the growth of animal muscle cells
in a bioreactor. Unlike plant-based approaches, cultured meat is a
drop-in option for applications in which specific meat attributes are
desired. Cultured meat production is an energy-intensive process that
requires more energy than poultry production and almost as much energy
as pork production (albeit less than sheep or cattle production). But
cultured meat's lack of methane production and ability to utilize low-
carbon energy sources is projected to reduce GHG emissions up to 96%
compared to traditional meat products.\77\ Cultured meat production
also utilizes a small fraction of the land required by livestock
production, potentially resulting in lower indirect GHG emissions from
land-use change. Cultured meat's consumer acceptance is currently
limited by its high production costs and novelty, although this is
expected to change as the product moves toward commercialization.\78\
Feed and Feed Ingredients
Roughly half of animal agriculture emissions result from land use,
production and processing of animal feed.\79\ Biotechnology is being
harnessed to address feed-related emissions from multiple angles, from
development of new, low-carbon feed options and lower-carbon approaches
to feed production to ingredients that reduce feed waste.
In addition to developing biotech options for animal products,
biotech innovation is also being deployed to develop new, low-carbon
animal feeds. NouriTech, a joint venture between biotech start-up
Calysta and Cargill, is among a growing list of companies using
microorganisms to convert methane and other heat-trapping waste gases
into single-cell proteins or other ingredients for animal feed. In
addition to recycling GHGs that would otherwise be emitted directly to
the atmosphere, this process, known as gas fermentation, does not
require the use of arable land, avoiding the largest source of GHG
emissions associated with feed production. A lifecycle analysis of
NouriTech's FeedKind fish feed protein found GHG emissions up to 30
percent lower than conventional fish meal, depending on the source of
methane used.\80\ Several biotech businesses are also developing feed
ingredients using algae. Similar benefits are anticipated.
Reducing Emissions from Animals
Another leading source of GHGs from agriculture are emissions from
the animals themselves. Roughly 40% of all animal agriculture emissions
is attributable to methane from enteric fermentation in the digestive
system of ruminant animals, for example.\81\ Biotech solutions are
being developed to address emissions from cattle, swine, poultry, and
other animals.
Cattle are the leading source of animal emissions, due to the large
numbers of cattle grown globally and their high levels of enteric
methane production. Microbial feed additives have the potential to
dramatically reduce enteric methane emissions from ruminant livestock
by disrupting the methane production process. One ester additive
suppresses the enzyme that causes methane production in the digestive
tracts of cattle, reducing methane emissions by 30% or more.\82\ A
study in peer review of microbial feed additives developed by biotech
start-up Locus Fermentation Solutions found reduction in methane levels
of up to 78%.\83\ And recent studies have found methane reductions of
up to 99% using certain species of algae.84-85 Feed
additives based on extracts of garlic and citrus have also produced
strong results.\86\ All three additives are being developed for the
market. Finally, two other feed additives that are already on the
market, one a yeast culture \87\ and the other a blend of essential
oils,\88\ reduce dairy cow methane emissions indirectly by increasing
the efficiency of milk production, thereby reducing the number of
methane-emitting dairy cows needed to produce a certain volume of milk.
Biotech enzymes from Novozymes and others have also been introduced
into pig and chicken feed to improve nutrient uptake, reduce waste, and
substantially reduce carbon footprint.\89\
Emissions of methane and nitrous oxide from manure is another
significant source of GHGs, accounting for ten percent of emissions
from animal agriculture.\90\ As mentioned previously, biotechnology has
a key role in reducing these emissions as well. The use of anaerobic
digestion in animal agriculture has the potential to reduce U.S. GHG
emissions by 151 MTCO2eq. annually by 2050 using current
technology.\91\ Considerable research and development is also underway
to utilize biotechnology to improve the efficiency of anaerobic
digestion through optimization of the microbes and microbial
communities used.\92\
Open manure lagoons are capable of both reducing existing methane
emissions and displacing fossil fuels when converted to enclosed
anaerobic digesters. These systems capture the lagoons' methane
emissions in the form of biogas that can be used to displace fossil
fuels such as natural gas as a source of heat and/or electricity. The
combustion of the biogas converts the methane into the less-potent GHG
carbon dioxide. (One ton of methane has 84 times the global warming
potential over 20 years of a ton of carbon dioxide.) \93\ This
capability, when combined with fossil fuel displacement, can result in
carbon intensity values for biogas that are very negative despite not
involving net carbon sequestration. Biogas that is produced from dairy
manure and injected into natural gas pipelines for use as
transportation fuel in compressed natural gas vehicles under
California's LCFS has received certified carbon intensities that are
almost four times lower than that of gasoline, for example.\94\ One
estimate calculated that up to 3% of total U.S. electricity consumption
could be met by biogas produced in manure lagoons and captured for use
with microturbines.\95\
Increased demand for animal protein will cause the livestock
sector's contribution to global GHG emissions to increase in the years
ahead. The use of biotechnology to limit the climate change impacts of
livestock production is at a comparatively early stage of development
due to a lack of low-carbon incentivizes, such as those that have
existed in the U.S. power and transportation sectors since the turn of
the century. Biotechnology has the potential to drive both near-term
and long-term GHG emission reductions in the livestock sector, however.
Feed additives and the use of enclosed anaerobic digesters can reduce
near-term emissions.
Food and Feed Waste
Waste from food and feed production and delivery is also a
significant source of GHG emissions. Nearly \1/3\ of all food produced
is wasted annually. This food waste had a carbon footprint of 3.3
GtCO2eq in 2007, representing seven percent of total global
GHG emissions, according to the FAO.\96\ Biotech solutions are
available or under development to reduce food waste at multiple stages
of the food and feed system.
The use of enzymes in bread and other baked goods has significantly
enhanced product shelf life and reduced waste.\97\ Organic acids and
other products of industrial biotechnology have been developed by BASF
and others to reduce spoilage of animal feeds.\98\ Other biotech
innovators are developing biobased antimicrobial coatings to reduce
spoilage and inhibit pathogens in fruits and vegetables.\99\ Others
still are focusing on the use of biosensors to optimize produce
ripeness to minimize spoilage.100-101
Food Ingredients
Biotechnology is also reducing the carbon footprint of a variety of
food ingredients. The plant-based sweetener, stevia, for example has
shown an 82% reduction in carbon footprint compared with beet sugar and
a 64% reduction compared with cane sugar.\102\ But the most desirable
compounds of the stevia leaf are present in very low concentrations,
limiting its market. Biotech leaders Evolva and DSM have developed
pathways to produce those key stevia compounds through fermentation.
Both have formed partnerships with Cargill and began production of
fermentation-based stevia at commercial scale in 2019. Cargill's
initial lifecycle assessment suggests the fermentation-based stevia has
an even lower carbon footprint than the plant-based extract.\103\
Nearly 200 million tons of sugar are produced globally each year.\104\
With a carbon footprint of 241 kg CO2e per ton of
sugar,\105\ the sugar sector accounts for roughly 48 MTCO2
annually.
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Applications in Food and Feed
Biotechnology Waste
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Organic Acids Reduce Spoilage In Animal Feeds
Biobased Coatings Reduce Spoilage and Inhibit
Pathogens in Fruits and
Vegetables
Biosensors Optimize Ripeness to Minimize
Spoilage
Plant Genetic Engineering Develop Food Varieties With Less
Spoilage
Animal Genetic Engineering Develop Farmed Animals That
Require Less Food
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As another example, vanillin, one of the most widely used synthetic
food ingredients, was traditionally produced through a carbon- and
energy-intensive process using coal tar. New biotech routes now allow
for purer production without reliance on extraction or processing of
fossil fuels.\106\
Food Processing
Biotech enzymes are also being used to dramatically lower the
carbon footprint of food processing. The most significant example is
the use of enzymes in meat processing. By eliminating energy-intensive
traditional processing steps, industry-wide integration of enzymatic
processes for meat processing would result in over 100
MTCO2e annually, according to the World Wildlife Fund.
Smaller, but significant, reductions would result from adoption of
enzymatic processing in fish and dairy processing, and beer and wine
production. WWF estimated the total potential reductions from enzyme
applications in the food sector at 114 to 166 MTCO2e
annually.\107\
Figure 2. Potential GHG reductions from applications of biotechnology
in the food industry.
Source: Figure 5, https://wwfeu.awsassets.panda.org/
downloads/wwf_biotech_technical_report.pdf.
Veramaris Case Study
Fish are among the lowest carbon intensity sources of
meat.\108\ As global demand for animal products continues to
grow, and with most of the world's wild fish stocks at, or
beyond, sustainable harvest levels,\109\ aquaculture--farmed
fish and other seafood--will play a key role in mitigating the
impact of meat consumption on the climate.
Salmon aquaculture is the fastest-growing food production
system in the world.\110\ Salmon's popularity and relatively
low-carbon intensity make it an attractive option to displace
some of the projected growth in the consumption of beef and
other higher carbon intensity meats. The growth of salmon
aquaculture is currently limited by the availability of the
marine omega-3 oils EPA and DHA, key components of salmon
diets. Marine omega-3 oils have, until recently, been derived
almost exclusively from wild-caught oily fish, such as anchovy
and menhaden, whose wild stocks are limited and increasingly
threatened by climate change.\111\
Veramaris, a joint venture between biotech leaders DSM and
Evonik Industries, has eliminated this supply chain and
sustainability barrier by developing a biotech approach to
marine omega-3 oil production. Veramaris identified marine
algae that produce EPA and DHA naturally, and recently began
commercial production of algae-based omega-3 oils at a $200
million facility in Blair, Nebraska.\112\ The facility can
produce omega-3 oils equivalent to 1.2 million tons of wild-
caught fish, enough to supply 15 percent of salmon farming
industry demand,\113\ and has brought jobs and economic
development to a region hit hard by low commodity prices and
recent trade disputes.
By sourcing omega-3 oils from locally grown algae, Veramaris
also dramatically shortens the feed supply chain, reducing
emissions associated with the harvesting, processing, and
transport of fish oil.
2.2 Agriculture Inputs and Climate Services
2.2.1 Agricultural Biological
Modern agriculture is an energy-intensive process. In addition to
the need to fuel heavy machinery, many farming practices release carbon
dioxide from both biogenic and fossil sources that would otherwise
remain stably sequestered. Intensive tilling practices expose soil
carbon to the atmosphere, allowing it to react with oxygen to form
carbon dioxide. Nitrogen fertilizers increase the sequestration
potential and minimize the land footprint of crops, but they are
derived from fossil fuels such as natural gas and generate the potent
GHG nitrous oxide. Advances in crop science and technology can mitigate
some of these unwanted environmental effects. No-till agriculture using
herbicide-resistant crops limits soil disruption and reduces the amount
of soil carbon that is released to the atmosphere as carbon dioxide.
The development of crop varieties with added or improved nitrogen-
fixing capabilities allows for more efficient use of nitrogen
fertilizer when combined with crop rotation practices.\114\ And the
engineering of commonly used crops to give them resistance to
environmental threats such as drought and pests enhances their carbon
sequestration potential while minimizing indirect GHG emissions from
deforestation.
One of the fastest growing, and most promising, applications of
biotechnology is in agricultural biologicals. Soil microorganisms play
a key role in plant growth, enabling efficient access to nutrients and
protecting against pests and diseases. Ag biologicals leverages
biotechnology to improve soil microbes and enhance these natural
processes. A major area of focus for ag biologicals companies is
increasing plant uptake of nitrogen to allow for more efficient use of
synthetic nitrogen fertilizer. Synthetic nitrogen fertilizer is a
significant source of climate-warming gases. It is energy intensive to
produce, and a substantial fraction of the nitrogen in fertilizer
becomes nitrous oxide (N2O) a greenhouse gas 298 times more
potent than carbon dioxide. Joyn Bio, a joint venture between the
synthetic biology company, Ginkgo Bioworks, and Bayer, is engineering
microbes to enable cereal crops like corn, wheat, and rice to convert
nitrogen from the air into a form they can use to grow, allowing for
more efficient use of synthetic fertilizers for many of the world's
leading crops.
Other biotech researchers and businesses are developing nitrogen-
and carbon-fixing bacteria or algae to build soil carbon and enhance
the absorption of atmospheric nitrogen by soils.115-116 And
biotech innovators such as Vestaron are developing safer, more
sustainable crop protection tools, such as biological peptides, to
provide crops with greater resiliency to plant stress induced by
climate change.\117\
Joyn Bio Case Study
Nitrogen is an essential nutrient for plant growth, but the
abundant nitrogen in the atmosphere is not in a form that
plants can use. Soybeans, peanuts, and other legumes have
developed a symbiotic relationship with nitrogen-fixing
microorganisms in the soil that convert nitrogen from the air
into a form they can absorb through their roots. But cereal
crops like corn, wheat, and rice don't have this ability, and
require the addition of fertilizers to maximize growth.
Synthetic nitrogen fertilizers have revolutionized farming,
but are a potent source of agricultural greenhouse gas
emissions. They are energy intensive to produce, and a
substantial fraction of the nitrogen in fertilizer becomes
nitrous oxide (N2O) a greenhouse gas up to 298 times
more potent than carbon dioxide.\118\ Joyn Bio, a joint venture
between the synthetic biology company, Ginkgo Bioworks, and
Bayer, is using biotechnology to reduce agricultural GHG
emissions by designing nitrogen-fixing soil microbes that work
with corn and other cereal crops, allowing for more efficient
use of synthetic fertilizers for many of the world's leading
crops.
2.2.2 Biological Carbon Capture, Use and Storage
Biomass is one of America's major, albeit transitory, carbon sinks.
All forms of biomass that employ photosynthesis capture atmospheric
carbon dioxide and convert it to carbon-based compounds such as sugars,
starch, and lignocellulose. The carbon content of this biomass remains
sequestered until the biomass is either consumed or decomposes, at
which time much of it is oxidized and released back to the atmosphere
as carbon dioxide. Some of the carbon content, such as that contained
in a plant's roots, is sequestered for much longer time periods in the
form of below-ground biomass. It is for this reason that the
afforestation/reforestation of marginal land can result in the
formation of new carbon sinks and the long-term removal of carbon
dioxide from the atmosphere.
Carbon that is sequestered as below-ground biomass can remain in
that state so long as the surrounding soil is not disrupted. The length
of time that biomass's aboveground carbon content remains sequestered
depends on how the biomass is utilized. The combustion of biomass,
whether in its natural form or following conversion to biofuel, results
in the oxidation and release of its carbon content as carbon dioxide.
While carbon-neutral in the sense that the released biogenic carbon had
been captured from the atmosphere during the growing season,
traditional combustion prevents the carbon from being either
sequestered or reused prior to the completion of another growing
season.
A variety of biotechnologies have been developed that either
capture and sequester or recycle atmospheric carbon dioxide. Many of
these processes are closely related to the biobased products covered in
Section 2.1 because of the ability of biomass to capture atmospheric
carbon dioxide before being converted to different fuels and products.
The technologies in question impact every stage of the biomass supply
chain, from growth/production to conversion and ultimately end-of-life
disposal.
Carbon capture and storage (CCS) technologies enable carbon dioxide
emissions from fossil power plants or industrial facilities, such as
cement or steel, to be captured at the facility and stored underground.
A variety of approaches have been developed to absorb carbon dioxide
from flue gases, or to remove carbon prior to combustion.\119\ CCS can
also be deployed at facilities utilizing biomass as feedstock. The
process is largely the same as that employed at some fossil fuel
facilities but, whereas fossil energy carbon capture and sequestration
(FECCS) processes reduce the GHG emissions of fossil fuels, biomass
energy carbon capture and sequestration (BECCS) processes actually
reverse past emissions. The biomass captures atmospheric carbon dioxide
during its growth phase and is then combusted, yielding both energy and
carbon dioxide. The bioenergy displaces fossil energy and the carbon
dioxide is either sequestered in underground caverns as a gas or
converted to a degradation-resistant solid such as biochar. BECCS is
therefore a carbon-negative process in that it results in more carbon
dioxide being sequestered than emitted. Biotechnology advances that
increase the growth rate, growth potential, and harvest efficiency of
biomass that is used as BECCS feedstock all enhance the process's
carbon sequestration capability.
BECCS technology can also be deployed to achieve negative carbon
results at any industrial facility using biomass as a feedstock.
Perhaps the most intriguing application of BECCS is its potential use
at ethanol plants and other biorefineries. One third of the carbon in
the biomass feedstock used to produce ethanol is released in the form
of carbon dioxide during the fermentation process. Using BECCS to
capture this CO2 reduces the carbon intensity of ethanol by
40%.\120\ Biorefineries represent an extremely attractive option for
deploying BECCS because the product of fermentation is a nearly pure
(99%) stream of CO2, requiring little or no separation from
other gases. As a result, biorefinery BECCS is among the lowest-cost
carbon capture opportunities available, at an estimated cost of under
$30 per ton of CO2 compared to $60-$120 per ton at fossil
power plants or traditional industrial facilities.\121\ The world's
first ethanol BECCS project is now in operation in Decatur, Illinois,
capturing and storing 1 MTCO2eq per year that would
otherwise have been emitted to the atmosphere.\122\
In addition to its role in providing biomass feedstocks for BECCS,
biotechnology is increasingly seen as a key enabling technology for
carbon capture itself. The U.S. Department of Energy (DOE) has invested
over $150 million since 2015 in the development of algae and other
microbial systems for carbon capture as an alternative--or
complimentary--approach to chemistry-based approaches to CO2
extraction from flue gases.\123\ Microbial systems have several
significant advantage over thermochemical approaches to carbon capture.
Typical thermochemical CCS systems are highly energy intensive. Roughly
30% of captured carbon is offset by the additional fossil fuel
combustion required to separate, compress, and transport the captured
carbon.\124\ Microbial systems can dramatically reduce this ``parasitic
load.'' Algae and other microbes extract CO2 or other target
gases biologically, via photosynthesis or other natural energy
pathways, eliminating the energy inputs required for separation.
Microbial systems can even operate efficiently at the relatively low
CO2 concentrations found in flue gases from natural gas or
coal-fired power plants, and can be deployed economically at relatively
small scale to address emissions from smaller power plants and
industrial facilities that cannot support traditional CCS systems.
Microbial systems also convert the captured carbon into a usable solid
or liquid form directly, eliminating the substantial energy inputs
required to compress captured CO2 for transport, or for use
in enhanced oil recovery. As such, microbial carbon capture systems
applied to biomass energy or other biorefinery systems offer one of the
most carbon-negative climate solutions available.
DOE in its 2016 Billion Ton Report found that suitable land and
other infrastructure exists to deploy algae-based carbon capture
systems at more than 500 power plants and ethanol facilities in the
U.S. These systems would have a potential to capture more than 200 MT
CO2 annually.\125\
Biomass and carbon capture can then be combined with the carbon
dioxide recycling technologies discussed in Section 2.1 to produce
negative-carbon products from captured biogenic carbon. The biomass
energy carbon capture and utilization (BECCU) process displaces both
fossil energy consumption and fossil fuel emissions. As with BECCS,
BECCU uses biogenic carbon to generate energy via combustion,
displacing fossil fuels in the process. The resulting carbon dioxide is
captured but, instead of being sequestered, is converted into yet
another fuel or product that displaces additional fossil fuels. BECCU
can still be carbon-negative, either because it displaces more carbon
dioxide emissions from fossil fuels than it emits when the utilization
takes the form of conversion to biofuels or biodegradable products, or
because the utilization takes the form of conversion to non-
biodegradable products.\126\ In the latter case, carbon sequestration
still occurs, but in a long-lifetime product, rather than geologic
storage.
BECCS and BECCU are not widely employed in the U.S. at present due
to a relative lack of economic or policy incentives for the capture of
carbon dioxide. Those CCS projects that do exist in North America
involve fossil rather than biogenic sources of carbon.\127\ That said,
climate scientists increasingly believe that the two technologies will
need to be widely utilized if catastrophic climate change is to be
avoided. The UN's Intergovernmental Panel on Climate Change (IPCC) has
concluded that keeping the atmospheric carbon dioxide level below 450
ppm by 2100, as is necessary if catastrophic climate change is to be
avoided, will require the ``availability and widespread deployment of
BECCS and afforestation.'' \128\ The primary hurdle facing BECCS/BECCU
commercialization is one of economics rather than technology: carbon
capture is economically unattractive at a time when the cost of
emissions is lower than the cost of capture.\129\ The technical
feasibility of capture and sequestration is especially well-established
for those technologies that rely upon natural processes such as the
building of soil carbon via afforestation/reforestation or the planting
of certain dedicated energy crops. BECCU also offers an advantage over
BECCS in the absence of a high emissions cost due to its production of
higher-value products such as fuels or chemicals; BECCS, by contrast,
produces lower-value products such as heat and electricity.\130\
The ability of BECCS to achieve net-negative carbon emissions and
their magnitude depend on several different factors involving the
different stages of the supply chain. A comparison of multiple biomass
feedstocks combusted in a power plant equipped with CCS technology
determined that while growth of the three feedstocks considered
(Miscanthus, switchgrass, and willow) all have the potential to achieve
net sequestration, the actual amount of sequestration that occurs is
determined by biomass transportation distances, carbon capture rates,
and especially land-use change (e.g., what type of land that the
biomass feedstock is grown on).\131\ The analysis calculated that the
amount of carbon dioxide ultimately sequestered on average while
generating 1 megawatt hour of electricity via BECCS with Miscanthus and
switchgrass is equal to the average amount emitted by U.S. power plants
to generate an equal amount of electricity.
BECCU has also been found to achieve low-to-negative carbon
intensities. A life cycle assessment that compared the carbon
intensities of ethanol produced from steel mill waste gases found its
carbon footprint to be at least 60% lower than that of gasoline.\132\
Dedicated energy crops such as Miscanthus and willow grown for the
purpose of electricity generation have been found to achieve net-
negative emissions of carbon dioxide due to the combined effects of
soil carbon sequestration and the displacement of fossil fuels.\133\ A
different analysis found emissions via afforestation/reforestation to
also be negative even if the forest is harvested and utilized as wood
products such as sawtimber, as these constitute a different form of
BECCU.\134\
The carbon dioxide reduction and sequestration potential of BECCS/
BECCU technologies is very sensitive to land-use change. For example,
the largest amount of sequestration occurs when dedicated energy crop
growth or afforestation/reforestation occurs on abandoned or marginal
croplands that have previously had their soil carbon depleted. On the
other hand, the conversion of grassland to these uses results in a
reduced sequestration potential, while the conversion of productive
cropland can have the lowest sequestration potential of all if the
resulting decrease in the supply of the crop causes the conversion of
land such as forest to cropland somewhere else. Biotechnology provides
several methods for mitigating these unintended consequences through
advances in plant and crop science that are described in more detail in
Section 2.4.1.
LanzaTech Case Study
LanzaTech is unique for its ability to make low-carbon fuels
and chemicals from a variety of waste-based feedstocks,
including industrial emissions, unsorted, unrecyclable
municipal solid waste, and agricultural or forestry wastes and
residues. The company utilizes a naturally occurring bacteria
originally isolated from rabbit droppings. As part of its
natural biology, the bacteria ferments gases containing carbon
dioxide, carbon monoxide, and/or hydrogen into ethanol. This
ethanol can be used directly as a fuel to displace gasoline or
as a chemical in consumer products.\135\ Additionally, ethanol
can be upgraded to make consumer goods from polyethylene \136\
or PET, and to make sustainable aviation fuel (SAF) via the
LanzaJet Alcohol-to-Jet pathway,[i] to displace
fossil fuel demand in the aviation sector. The opportunities
for LanzaTech's technologies to utilize waste carbon to produce
multiple low-carbon fuels and chemicals has expanded over the
last decade as its technology has been licensed worldwide.
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\[i]\ http://www.lanzatech.com/2019/11/22/lanzatech-moves-forward-
on-sustainable-aviation-scale-up-in-the-usa-and-japan/.
Editor's note: there appears to be a discrepancy in the numbering
of the footnotes. Footnotes 137-139 were used in the LanzaTech Case
Study and were duplicated in the following section. To avoid confusion
the LanzaTech Case Study footnotes are renumbered [i]-[iii].
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The LanzaTech pathway differs from conventional ethanol
production in that it feeds its microorganisms with a gas
stream rather than a liquid sugar substrate. While carbon is
the most important ingredient in this gas stream, the
microorganisms are capable of fermenting gases produced from a
variety of industrial processes and feedstocks. The gases are
captured and compressed before being delivered to a bioreactor
where fermentation to ethanol occurs. The ethanol is then
recovered from the bioreactor and stored for future use either
in that form or following subsequent upgrading to a hydrocarbon
fuel.
The first commercial-scale facility to utilize LanzaTech's
pathway is a steel mill located near Beijing, China. Waste
gases produced at the mill are captured and fermented to
ethanol at a rate of 16 million gallons per year. The company
estimates that the recycling of the mill's GHG emissions in
this manner is the equivalent of removing 80,000 cars from the
road annually.[ii] The success of the technology at
such a large scale has resulted in plans to apply it to other
types of industrial facilities, including a petroleum refinery
in India that will achieve an annual ethanol yield of 11
million gallons, a steel mill in Belgium that will achieve an
annual ethanol yield of 21 million gallons, and a smelter in
South Africa that will achieve an annual ethanol yield of 17
million gallons.
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\[ii]\ http://www.cnbc.com/2018/07/27/lanzatech-turns-carbon-waste-
into-ethanol-to-one-day-power-planes-cars.html.
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Beyond recycled carbon fuels, LanzaTech's platform can make
second generation biofuels through gasification of biomass
wastes and residues. LanzaTech is developing a project to
convert locally available agricultural residues to
approximately 5.3 million gallons per year of fuel grade
ethanol in India, using commercially proven gasification
technology and LanzaTech's commercially proven gas fermentation
platform. The integrated technology will have the flexibility
to process a wide range of biomass feedstocks enabling rapid
replication at other locations.
A by-product of the project will be a nutrient rich biochar.
Biochar can be a useful soil supplement to enrich soil organic
carbon and other nutrients. In 2018, LanzaTech launched a new
company, LanzaJet to accelerate the commercialization of SAF
production. The LanzaJet process can use any source of
sustainable ethanol for jet fuel production, including, but not
limited to, ethanol made from recycled pollution, the core
application of LanzaTech's carbon recycling platform.
Commercialization of this process, called Alcohol-to-Jet
(AtJ) has been years in the making, starting with the
partnership between LanzaTech and the U.S. Energy Department's
Pacific Northwest National Laboratory (PNNL). PNNL developed a
unique catalytic process to upgrade ethanol to alcohol-to-jet
synthetic paraffinic kerosene (ATJ-SPK) which LanzaTech took
from the laboratory to pilot scale. SAF produced via the
company's pathway has already been employed in two commercial
flights to demonstrate its ability to displace fossil aviation
fuel.[iii] LanzaTech estimates that SAF produced
using its technology achieves a 70% reduction to carbon
intensity compared to fossil aviation fuel.
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\[iii]\ http://www.lanzatech.com/2018/10/04/virgin-atlantic-
lanzatech-celebrate-revolutionary-sustainable-fuel-project-takes-
flight/.
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2.3 New Biotech Tools and Bioindustrial Manufacturing
2.3.1 New Biotech Tools
Rapid advances in the fundamental tools of biotechnology
increasingly are enabling biotech solutions in manufacturing sectors
beyond food, fuels and chemicals. These developments offer the
potential for transformative climate solutions in applications beyond
manufacturing as well.
Biotech tools for manipulating DNA have been in use for decades.
Many of the most important contributions of biotechnology--vaccines and
therapies, biotech crops, and modern industrial biotechnology--were
made possible by this first generation of genetic engineering tools.
But the past decade has seen a wave of new biotech tool innovation with
transformative potential. In synthetic biology, scientists insert
synthesized pieces of DNA into an organism's genome to alter the
characteristics or function of the organism. In genome editing,
scientists use tools to make more precise changes to the organism's own
DNA to achieve the same outcome.\137\ These and other new biotech tools
have dramatically increased the speed and reduced the cost of genetic
engineering applications and are being deployed to tackle a range of
global challenges, including climate change.\138\
2.3.2 Applications of Bio-Manufacturing in Traditional Industries
Some of industrial biotechnology's earliest uses were in the
application of enzymes to improve efficiency and reduce energy use in
traditional industries. The introduction of enzymes for pulp and paper
bleaching, for example, reduced energy consumption 40% versus
traditional bleaching, and a shift to fermentation-based production of
riboflavin (vitamin B2) in the early 2000's reduced
associated CO2 emissions 80% compared to the traditional
chemical manufacturing route.\139\ Applications of enzymes in textile
processing, such as pretreatment, bleaching and desizing, save
approximately 10 MTCO2e annually today. Full adoption of
these technologies would triple these reductions. The widespread use of
enzymes in laundry and dishwasher detergent could save an additional 30
MTCO2e annually by 2040 by allowing for cold-water washing
of laundry and more efficient dishwashing. Full market penetration of
biotech applications in these traditional industries is estimated to
save 65 MTCO2e annually by 2030.\140\ While these GHG are
incremental relative to the global challenge of climate change, they
represent near-term opportunities that will be essential to reducing
near-term emissions.
GHG reduction potential from applications of biotechnology to
traditional industries.
Source: Figure 7, https://wwfeu.awsassets.panda.org/
downloads/wwf_biotech_technical_report.pdf.
2.3.3 New Markets and Novel Applications
With the emergence of synthetic biology and the ability to tailor
microbes to specific industrial tasks, industrial biotechnology
solutions are moving into an ever-expanding range of applications. A
rapidly growing number of companies, such as Gingko Bioworks, Arzeda,
and Twist Biosciences, are providing organism design and DNA synthesis
services, using synthetic-biology and other modern biotechnology tools
to optimize manufacturing pathways. SynBio companies raised over $1
billion in investment in the second quarter of 2019 alone.\141\ One
intriguing potential application of these new biotech tools is in
biological data storage, the storage of data on strands of DNA instead
of semiconductors or magnetic devices. DNA is roughly a million times
denser than conventional hard-disk storage. Testing is now underway
with computers that store data by synthesizing strands of DNA. A shift
to biological data storage would eliminate the need for mining and
production of silicon or precious metals. More significantly, it could
dramatically reduce the need for massive data storage facilities.\142\
Energy consumption by data storage facilities already accounts for 2%
of global GHG emissions, and is projected to surge to 14% of global
emissions by 2040.\143\ DARPA, the Defense Department's Advanced
Research Projects Agency, is investing $15 million in work by
Microsoft, Twist Bioscience, and others to develop DNA storage.\144\ A
collaboration between the University of Washington and Microsoft
successfully demonstrated their fully-automated end-to-end DNA storage
process in 2019.\145\
Biology-based parallel computing--in which biomolecules are used to
test a large number of solutions to a problem simultaneously--is also
being evaluated as another potential application of biotechnology. A
proof of concept experiment at McGill University yielded a solution to
a complex mathematical problem with less than 0.1% of the energy
required to solve the problem with traditional computing.\146\
Synthetic biology is also being deployed to accelerate the
development of solutions to the COVID-19 pandemic.
In addition to applications in manufacturing, synthetic biology has
the potential to provide transformative solutions for carbon dioxide
removal from the atmosphere and oceans.\147\
Synthetic biology could be applied to enhance photosynthetic
efficiency of trees, or reduce respiration from soil microbes, to shift
natural carbon cycles towards carbon removal. Even small improvements
in these natural carbon cycles could have profound impacts, given that
120 GTCO2e is removed from the atmosphere by terrestrial
photosynthesis.\148\ As discussed in section 2.2.2, deployment of
microbial systems for carbon capture has the potential to further draw
down atmospheric carbon concentrations.*
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* Editor's note: there is no corresponding footnote reference for
footnote 149. The reference as been incorporated herein as follows:
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Inscripta Case Study
The power of synthetic biology lies in its ability to make
possible microbes to perform any task. SynBio innovators are
applying the tools of their trade to design microbes to make
plastics from plants, optimize fertilizer, capture carbon and
even combat COVID-19. But unlocking the full potential of
synthetic biology to take on the world's greatest challenges--
including climate change--will require synbio tools to be
available to every scientist or biotech start-up.
Jennifer Doudna at the University of California, Berkeley,
and Emmanuelle Charpentier at the Max Planck Institute in
Berlin were awarded the 2020 Nobel Prize in Chemistry for their
work in developing the CRISPR gene editing technique, an
approach that has revolutionized genetic engineering. But,
until recently, CRISPR technology was prohibitively complex and
expensive for most researchers.
In 2019, Boulder, Colorado-based Inscripta flipped the
script, launching an affordable system that can perform
thousands of gene edits at the push of a button.\150\ This
innovation has attracted hundreds of millions of dollars in
venture capital investments and a growing list of global
customers, many of whom will surely apply the technology to
addressing global climate change.
2.4 Plant and Animal Biotechnology
2.4.1 Plant Biotechnology and Gene Editing
Biomass has a critical role to play in efforts to mitigate climate
change. As described in Sections 2.1 and 2.2, biomass can replace a
wide variety of fossil fuels and products, reducing or even
sequestering carbon dioxide emissions in the process. At the same time,
though, biomass can contribute to climate change if it is used
unsustainably, and it will need to adapt to unprecedented growing
conditions as the planet continues to warm. Biotechnology is providing
important advantages on both counts, enhancing the amount of biomass
that can be sustainably harvested while also improving the climate
resiliency of many important crops and other plants.
Genetically modified organisms (GMO) have been used since the 1990s
to make important crops such as grains and oilseeds resistant to common
threats including drought and pests. These past breakthroughs mitigated
climate change by reducing the amount of land required by the
agriculture sector. Yields of corn per acre in the U.S. increased by
approximately 60% between 1991 and 2019 \151\ while those of soybeans
increased by almost 50% over the same period.\152\ There were fewer
acres of cropland in production in the U.S. in 2012 than there were in
1945,\153\ despite the large increases to the U.S. and world
populations that occurred over that time, due to this improved
productivity.
It is important that these productivity increases continue to be
made in the coming decades if agriculture's contributions to climate
change are to be limited. The continued growth of the global population
will create additional demand for crops at a time when growing seasons
and conditions are expected to become more uncertain due to climate
change.\154\ Future food crop shortages, whether due to increased
demand from population growth or crop failures caused by extreme
weather, would potentially contribute to climate change by encouraging
the conversion of carbon sinks such as grassland and forests to
cropland, thereby releasing carbon dioxide sequestered in the biomass
and soil to the atmosphere. Likewise, improvements to the resiliency of
dedicated energy crops during extreme weather events will improve both
climate and energy security by enabling their utilization as low-carbon
bioenergy and bioproduct feedstocks to increase.
Biotechnology is also enabling the expansion of existing bioenergy
pathways. The U.S. is currently undergoing a rapid increase to its
renewable diesel production capacity that will result in additional
demand for lipid feedstocks.\155\ Work is underway to utilize fast-
growing and/or resilient undomesticated biomass such as Jatropha and
microalgae as biofuels feedstocks. Both forms of biomass can grow on
marginal lands while limiting the disturbance of existing carbon sinks.
However, their utilization as bioenergy has historically been
constrained by poor crop yields outside of the laboratory. Cell
engineering has enabled the necessary yields for commercial production
to be achieved in microalgae,\156\ and research is actively underway to
improve Jatropha as a feedstock.\157\ Biotechnology is also being
utilized to expand the supply of lipid feedstocks by enabling the
conversion of waste products, as is described in Section 1.1.1.
The development of the CRISPR gene editing technique over the last
decade has already led to notable breakthroughs in the effort to
mitigate climate change. In addition to microalgae,\158\ multiple
strains of bacteria, yeast, and filamentous fungi have been modified
via the CRISPR technique to increase the yields and types of products
produced via fermentation.\159\ The CRISPR technique has also been
employed with dedicated energy crops such as Miscanthus, poplar,
switchgrass, and willow to refine specific traits that improve both
resiliency and yields, although the higher complexity of these forms of
biomass and regulatory uncertainty about their possible status as
genetically modified organisms have slowed progress.\160\ Finally,
CRISPR gene editing has also been employed to improve the resiliency
and carbon efficiency of first-generation bioenergy feedstocks such as
corn \161\ and soybeans under the types of extreme weather conditions
that are expected to occur with growing frequency as a result of
climate change.\162\
Biotechnology is also being used to develop plant varieties,
including apples and potatoes, that extend shelf life and avoid
cosmetic issues, such as browning or spotting, that cause consumers to
throw away food.\163\
Biotechnology has enabled major improvements to the yields, land-
use efficiency, and resiliency of important U.S. bioenergy feedstocks
in recent decades. Continued biotechnology advances will need to occur
in the near future if these improvements are to be maintained, let
alone expanded upon. Climate change is expected to result in extreme
weather events that are greater in frequency, magnitude, and duration,
and these will threaten production of both the feedstocks that have
contributed heavily to U.S. bioenergy and bioproducts to date as well
as the plant biomass that slows the rate of atmospheric GHG
concentration increase. The development of the CRISPR gene editing
technique, along with continued advances in more traditional genetic
engineering processes, will do much to enhance the ability of biomass
to mitigate fossil fuel consumption and GHG emissions.
2.4.2 Animal Biotechnology
In addition to the on-farm applications addressed in previous
sections, biotechnology is also being leveraged to improve the carbon
efficiency of animal agriculture through genetic engineering of the
animals themselves. The biotech AquaBounty salmon, for example,
requires 25% less feed than traditional Atlantic salmon. The
combination of lower inputs and a closed-loop, land-based production
system that can be deployed much closer to U.S. customers is estimated
to result in a carbon footprint that is 96% lower than traditional
farmed salmon.\164\
Biotech tools are also being used to improve fertility, increase
production efficiency, and reduce disease in cattle, swine and other
animals, further reducing waste in animal production. Scientists in the
U.S. are employing genomic tools to improve the ability of cattle to
tolerate higher temperatures while maintaining their growth.\165\ Heat
stress, which is an increasing problem in the livestock sector due to
climate change, limits the production of animal protein, and heat-
tolerant cattle will be better able to maintain their production
efficiency as temperatures increase. The genetic sequencing of dairy
cattle has likewise led to efforts to improve the efficiency of milk
production via genetic engineering.\166\ Livestock are a major source
of the potent greenhouse gas methane, causing improvements to the
efficiency of protein and milk production to have an outsized impact on
GHG emissions.
3 Climate Impact Analysis
3.1 Issues in LCA for Biotechnology
Successfully mitigating the impacts of climate change will involve
simultaneous transformational shifts across technology, policy and
business. Effectively planning, managing and evaluating these shifts
will require an equally profound shift in how we track and account for
carbon. Life Cycle Analysis (LCA) is widely regarded as the most
appropriate and effective way of evaluating the carbon impacts of
products and processes in the complex, modern economy. LCA is an
analytical technique in which all inputs, outputs and impacts of a
product or process are tracked and accounted for through its full life
cycle. This includes the materials used to make things, the energy and
associated emissions from transporting and processing them, and what
happens at the end of a product's useful life. LCA is especially
important and complex when biological systems are involved, since they
introduce a significant degree of uncertainty; external conditions,
pathogens, or changes in surrounding ecosystems can all impact the
productivity of any organism.
There are three main approaches to LCA: attributional LCA,
consequential LCA and economic input-output (EIO) LCA. Attributional
LCA focuses on the direct actions taken by a producer in order to make
a product; all of the energy or materials consumed during production
would be captured by an attributional LCA, for example. Consequential
LCA, in contrast, focuses on comparing the world with the product in
question to a hypothetical world without it; it not only captures all
the materials used in production, but also how the product and its
supply chains affect markets or other products. EIO LCA uses the flow
of money through systems to estimate environmental impacts. For
example, an EIO-LCA may use the average carbon emissions per dollar of
revenue in the petrochemical industry to estimate the impacts of
petrochemical inputs to other products. The accuracy of EIO LCA suffers
because its impact-per-dollar estimates are, by necessity, industry
averages or abstract estimates. It is best used for high level, market-
wide estimates rather than evaluating individual products or services.
Attributional LCA is simpler than consequential, especially for most
manufacturing processes, but consequential LCA is widely viewed as a
more accurate technique because it can account for indirect effects,
such as those that occur because of changes in commodity prices or
disrupted supply chains. Attributional LCA would overlook the impact of
new strains of crop on agricultural markets, for example, whereas
consequential approaches may be able to account for these.
The science of LCA has rapidly evolved over recent decades;
however, a number of critical challenges remain pertaining to LCA in
biotech:
Lack of Data on Critical Inputs or Processes--Like most modeling
techniques, the results of an LCA are only as good as the input data.
In many cases, critical elements needed to understand the impacts of a
product or process are unavailable, due to insufficient fundamental
research, protections on proprietary information, or changes in
technology. One common example is that many biotechnological
manufacturing systems use enzymes or catalysts. Data on the energy or
materials used to make these inputs is typically considered proprietary
business information, which renders many LCAs on biotech products
uncertain, at best. In other instances, the only source of data on an
industrial practice is extrapolated from textbooks or older research on
the subject, often overlooking recent technological developments in the
field.
Inadequate tracking of existing markets or systems--Consequential
LCA's value derives largely from its ability to assess indirect
effects. A common example of an indirect effect is Indirect Land Use
Change (ILUC), which occurs when a system uses an agricultural product
as its input, such as a biofuel made from soybean oil. While the
biofuel itself may release little carbon during its production or use,
the gallons of soybean oil which went into the biofuel would have
otherwise been consumed elsewhere, such as in food products, animal
feed or cosmetics. Those previous consumers must now find alternative
sources of vegetable oil on the open market, driving up prices, which
may result in clearing land to grow more oilseed crops. This land
clearance is ILUC, the acres being cleared may not be used to produce
biofuel, but they are cleared because of biofuel. Consequential LCA
often requires tracking markets, land use, or behavior over a long
period of time in order to establish ``normal'' behavior in that
system; at present these data are often not collected, or are
proprietary.
Multiple LCA Methods--LCA is at its heart a scientific exercise,
but parts of it require subjective judgment, like decisions about how
to define system boundaries or allocate impacts between multiple
products. There may be multiple valid answers to these judgment
questions. For example, in the U.S. almost all ethanol production takes
in corn and produces ethanol as well as the solids left behind after
processing, which are typically sold as a high-protein animal feed
known as ``distiller's grains''. The question for LCA practitioners is
how much of the energy used in the process is assigned to the ethanol
product vs. the distiller's grains. There are several methods for doing
this, such as assigning based on the relative mass, energy content or
monetary value of each product, but there is no objectively right or
wrong answer about which method should be selected; it's a judgment
call. When true objectivity may be impossible to attain, consensus can
be a reasonable substitute. Government, industry and academic
stakeholders can mutually agree on answers to questions like this to
ensure that at the very least, LCAs can be made on the basis of similar
assumptions, so that they can be effectively compared against each
other.
Ultimately, the analytical tools which support LCA will need to
evolve in parallel with the biotech industry as it rises to meet the
challenge of climate change. Industry groups can help support the
continued development of LCA data by supporting basic research,
agreeing to make more data on inputs and outputs from manufacturing
available to researchers, and continuing to support and publish LCA
studies of their products. Luckily, LCA shares a common characteristic
of many sciences: as knowledge accumulates, future studies become
easier and more powerful. Groups of companies that use similar
processes to make a common product can aggregate their data together to
publish industry averages for energy or materials use, thereby
protecting their proprietary business information while improving
analysts' ability to research. LCA data developed for one study is
often used in subsequent ones; students who study real-world examples
emerge better prepared to contribute in real-world work; and as more
studies are published and critiqued, consensus emerges. While
successfully mitigating climate change will require significant new
investments in cleaner technologies and production systems,
complementary investments must occur in evaluation and analysis of
these systems to ensure that the LCA tools necessary to inform the next
decades' decisions evolve as well.
Keys to Maximizing Biotech's Potential to Reduce GHG Emissions
GHG accounting needs to be based on life cycle analysis, and
include indirect effects such as ILUC. Industry groups can help
by making data available to regulators and researchers; IP can
be protected by aggregating or anonymizing the data.
Most biotech solutions will require massive amounts of
feedstock, finding ways to produce this more efficiently will
always be useful.
Using waste biomass to produce energy can make a real
difference, but keeping organic carbon in solid form as long as
possible maximizes GHG benefits.
Biofuels may not be zero-carbon, but they can be very low-
carbon and the scale of transportation means making them
sustainable and scalable is critically important.
Carbon capture and sequestration will be necessary for
success, but as a complement to reducing emissions, not a
replacement.
3.2 GHG Mitigation Potential on National (U.S.) Scale
3.2.1 Producing Sustainable Biomass Feedstock
Biomass is one key to de-carbonizing the U.S. economy because it
leverages the capacity of photosynthesis to remove carbon from the
atmosphere and convert it to carbohydrates, which can be utilized for
their embodied energy, carbon, or both. In theory, biomass can be a
carbon-neutral resource, but in practice the situation is much more
complex. Growing biomass, especially at commercial scales, typically
requires fertilizer and other inputs which have associated emissions.
Depending on how the land being used for biomass is treated, there may
be additional sources, or sinks, of carbon in the soil. Understanding
the emissions impacts of biomass across its full life cycle requires
understanding the ecosystems, carbon and nutrient cycles at play where
it's grown. Given the potential for biomass production to result in
significant and unexpected emissions of carbon, a risk-averse approach
is prudent, but the immense potential of biofuels, bioenergy and
bioproducts argues in favor of utilizing these resources where
available. While there is significant uncertainty around the emissions
associated with any source of biomass, there are a few useful rules of
thumb:
1. Biomass can be low-carbon but is almost never zero-carbon. While
the carbon embodied in plant matter was taken from the
atmosphere, and therefore has a minimal on climate change,
there are numerous sources of climate-forcing emissions
from fertilizer, irrigation, transport, processing and
changes in the soil.
2. Biobased products can reduce GHG emissions when substituted for
high-carbon ones, especially those relying on fossil fuels.
GHG reductions are realized when low-carbon biobased
products displace higher-carbon ones. Without that
displacement, there is minimal environmental benefit.
Substitution, by itself, is no guarantee of benefit, a few
biobased products are more carbon-intensive than their
fossil equivalents.
3. Alternative uses and indirect effects must be considered.
Accurately assessing biomass carbon emissions typically
requires considering indirect effects like ILUC, as well as
what would have happened in absence of the biomass
production. A cultivation system may increase soil carbon,
but should only be credited for these increases if this
increase is greater than what would have happened
otherwise.
4. The labels ``waste'' and ``residue'' can be misleading. In
theory, wastes or residues have no value, and cause
emissions from their use. In truth, many of these materials
are used in some fashion, sometimes by sustainable bio-
product systems, sometimes more traditionally, as animal
bedding or returned to the soil; these uses must be
considered.
Climate policy has largely overlooked emissions from agriculture to
date, in part because of the complexity of the system and concern about
financial impacts on farmers and rural communities. With new focus on
sustainable and regenerative agriculture, however, a window of
opportunity is opening to achieve a win-win scenario for agricultural
producers: utilize the latest science to find opportunities to use
agriculture as a tool to reduce emissions, and reward farmers for the
carbon benefits they provide.
Agriculture in the U.S. emitted GHGs equivalent to about 658.6
million metric tons of carbon dioxide in 2018, roughly 10% of the U.S.
total.\170\ * About 94% of this was emitted from agricultural soils or
livestock (direct or ``enteric'' emissions from animals as well as
manure management). Additional emissions come from the production of
ammonia, which is a primary input for most fertilizers. With continued
population growth as well as the emergence of the bioeconomy, the
agricultural sector will be called upon to produce even more food,
fodder, fiber and feedstock. Meeting this challenge while reducing
emissions will require the rapid deployment of advanced biotechnology
in several critical areas including:
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* Editor's note: there are no corresponding footnote references, or
footnotes for nos. 167-169. The report has been reproduced herein as
submitted.
Optimizing fertilizer use through new crop strains or increased
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nitrogen fixation.
Nitrogen is often a limiting factor in agricultural yields. The
``Green Revolution,'' which massively increased agricultural production
and allowed rapid population growth during the 20th Century, was
largely facilitated by the development of the Haber Process for
producing ammonia from natural gas. Ammonia production supports 50-75%
of global fertilizer production and is responsible for more than 1% of
global GHG emissions.\171\ Removing biomass from fields, whether it's
crops for consumption or residues for bioenergy, takes some of that
nitrogen along with it, which must be replaced. Biotech can improve
plants' efficiency at utilizing nitrogen, or adding genes from
nitrogen-fixing organisms to allow them to produce their own. Using
modern biotechnological tools to optimize the use of synthetic
fertilizers allows growers to consume less of them, which could help
U.S. farmers cut back on 15-20 million metric tons of carbon associated
with its production, about as much as fueling 3-4 million cars for a
year.\172\
Reducing nitrous oxide emissions from soil
Nitrogen fertilizers enhance plant growth, but many soil microbes
convert fertilizer nitrogen to nitrous oxide (N2O), a
greenhouse gas up to 298 times more potent than carbon dioxide. In
2017, nitrous oxide emissions from agricultural soil accounted for 266
million metric tons of carbon dioxide equivalent in the U.S. Relatively
low-tech interventions, such as using less volatile fertilizers and
applying them more efficiently could reduce nitrous oxide emissions by
30-100 million metric tons annually.\173\ Analyses of chemical
inhibitors indicate a potential to cut nitrous oxide emissions by over
40%, and there are promising lines of research which would integrate
production of these inhibitors into a plant's root system.\174\ By
combining all of these approaches, nitrous oxide emissions could be
reduced, by well over 150 million metric tons of carbon equivalent, or
as much as shutting down 32 U.S. coal power plants for a year.
Enhancing soil carbon retention through expanded root growth
Despite its mundane appearance, soil is a complex and dynamic
environment, in which carbon and nutrients enter and leave through
multiple avenues and cycle through plants, animals, microbes and fungi.
There are several promising approaches by which the soil carbon system
could be encouraged to retain more carbon in solid form, rather than
being decomposed and released to the atmosphere. Root growth is a major
pathway for soil carbon accumulation, as plants take carbon from the
atmosphere and convert it to solid plant matter, moving it underground
as roots grow. Engineering crops to have larger and deeper root systems
expands this pathway and could sequester carbon by 200 to 600 million
metric tons per year if widely deployed, though this number is highly
uncertain due to the relative immaturity of this technology.\175\
Reducing methane emissions from livestock
As population and incomes increase globally, so does the
consumption of meat and dairy products. This leads to an increase in
livestock numbers and the associated emissions. Livestock, especially
cattle, are a major source of methane, from enteric sources (i.e.,
burps) as well as from decomposing manure. Several novel feed additives
have been proposed which may be able to reduce the amount of methane
emitted without negatively affecting animal health or reducing yields.
DSM has announced a cattle feed supplement that claims to reduce
methane emissions by 30%,\176\ while other compounds under
investigation--often derived from red seaweed--may be able to provide
80% reductions or greater in methane emissions.177-178 While
numerous technological and policy hurdles remain, widespread deployment
of feed technologies like these could reduce emissions from livestock
production by 50-140 million metric tons, or roughly one to three times
the annual emissions from the state of Oregon.
3.2.2 Empowering Sustainable Production
Empowering Sustainable Production
Modern economies produce a staggering amount of things. From
millions of printed silicon microcircuits in electronics to billions of
tons of concrete and steel, production of physical objects is a
hallmark of human society. As we seek to limit the damage caused by
climate change, a new focus on sustainability must enter the
conversation about how we make things. Luckily, advances in technology
have presented a number of opportunities to do just this, by developing
more efficient and lower-emission alternatives to traditional
industrial techniques. Biotechnology can continue this process by
leveraging the affinity biological processes have for working within a
circular economy.
Green is the New Black
Elements of a circular economy.
Source: PBL Netherlands.\179\
Traditionally, once materials were extracted, their life was a one-
way trip that ended in a landfill. As industries become more aware of
the need to reduce emissions, it is becoming clear that reuse and
recycling of materials and energy is an essential tool for
sustainability. Biotechnology is well-positioned to succeed in a
sustainable circular economy because it is built on a foundation of
biological carbon cycling. Working with natural systems which have
evolved to capture and re-use carbon and nutrients, biotechnology firms
can expand these processes to commercial scale, replacing energy- and
emission-intensive extractive industries with low-impact circular ones.
Turning Carbon into Products
U.S. industry emits over 800 million metric tons of carbon per year
from the combustion of fossil fuels; at present almost all of this goes
into the atmosphere, representing over \1/8\ of national emissions.
Numerous projects have already sought to demonstrate the feasibility of
capturing this carbon and sequestering it underground, or using it for
enhanced oil production, but a number of innovative processes are
emerging to use the carbon as a raw material for other products,
including polymers, carbon fiber, chemicals, nanomaterials or fuels
using a variety of methods. Conventional carbon capture systems can
typically pull 80-90% of the carbon dioxide out of exhaust from
combustion systems,\180\ which means that there is a potential resource
of hundreds of millions of tons of carbon dioxide which could
potentially be used to make new products. The limiting factor will
probably be the availability of processes to utilize the carbon and
markets for the resulting products.
Bioplastics have been one of the first large-scale applications of
biotechnology for the purpose of improving industrial sustainability.
Dozens of alternative biobased polymers have entered the market,
demonstrating the capacity to replace fossil carbon in a variety of
applications and, in many cases, offering more sustainable recycling or
reuse options than traditional equivalents. Around 1% of U.S. GHG
emissions come from producing plastics. Switching from fossil-based
plastics to corn-based biopolymers could reduce emissions by 0.6kg-
1.4kg of CO2 per kilogram of plastic.\181\ * Widely applied,
this could reduce emissions from plastic production by about 25%,
totaling 16 million metric tons of CO2 per year. Switching
from corn to cellulosic feedstocks, like switchgrass, Miscanthus, or
corn stover could double the emission benefits.\183\
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* Editor's note: there is no corresponding footnote reference for
footnote 182. The reference as been incorporated herein as follows:
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Organic Waste Utilization
Researchers and policy makers are becoming increasingly aware of
the need to more efficiently use materials in industry. This is
particularly true of organic waste, like food scraps, agricultural
residue and un-recyclable wood products, because they not only require
fertilizer and other inputs to make those materials, but as they
decompose, also emit carbon dioxide or, worse, methane. Anaerobic
digestion (AD) is a well-understood technology for converting organic
waste into energy, while recovering nutrients that can be returned to
the soil. When decomposition happens in the absence of oxygen, microbes
convert organic waste into biogas--a mixture of methane, carbon
dioxide, water vapor and other trace components. This can be cleaned up
to yield Renewable Natural Gas (RNG), which is mostly methane and
functionally equivalent to fossil natural gas. AD produces not only
this valuable product, but also solid digestate, which is very similar
to compost and can be used as a beneficial soil amendment. By capturing
the methane which would otherwise have been released into the
atmosphere, AD further reduces the GHG footprint of organic waste
disposal; in some cases the effect of preventing uncontrolled releases
of methane can be so great that the resulting RNG is effectively
carbon-negative, when evaluated by LCA.\180\ Widespread deployment of
RNG systems at landfills, wastewater treatment plants, livestock yards
and other organic waste hotspots could displace enough fossil natural
gas to offset 40-75 million metric tons of carbon dioxide emissions.
Using agricultural residue or wood waste could add another 12-40
million metric tons, though these resources may have other competing
uses in a low-carbon economy.\184\
Cleaner Buildings
There are opportunities to build sustainable, circular material
cycles into more than just consumer products. Carbon can be pulled out
of the atmosphere and used to make the very buildings, roads, and
cities we live in. Wood, long thought of as a traditional building
material, is enjoying new attention as a low-carbon solution for future
construction. Since wood pulls carbon from the air as it grows, it
represents a very stable and durable removal mechanism for atmospheric
carbon, which will remain sequestered as long as the wood remains
solid. Engineered wood products, including cross-laminated timber,
fiber or polymer reinforced products, or wood composites can provide
strength and durability previously thought possible only from metal. A
recent study of engineered wood products found that they can reduce GHG
emissions by 20% when substituted for fabricated metal, 25% for
concrete and 50% for iron or steel. Engineered wood has been used to
build several multistory demonstration buildings to show that high-rise
construction is possible without conventional materials. A five-story
wood building stores about 26 lb of carbon per square foot.\185\ With
over 350 million square feet of multifamily housing constructed in the
U.S. in 2019, the potential carbon savings could be substantial.\186\
Another opportunity to find uses for carbon dioxide is in cement,
which is currently one of the largest sources of greenhouse gas
emissions in the world and was responsible for over 40 million tons of
emissions in the U.S.\187\ Researchers have been investigating
alternative formulations of cement, which utilize carbon dioxide during
production or absorb it from the air as it cures. By integrating these
techniques with renewable energy to power the process, it is possible
to end up with carbon-neutral concrete turning some infrastructure
projects into net carbon sinks.
3.2.3 Developing Lower-Carbon Products
If humanity is to successfully avoid the worst impacts of climate
change, it will have to find lower-carbon substitutes for many of its
most important products. No product exemplifies this challenge better
than transportation fuel. The ready availability of reliable, high-
speed transportation is a foundational element of life in the U.S.; it
is the lifeblood of modern supply chains and personal lifestyle. The
U.S. is by far the biggest consumer of oil in the world, consuming
almost 20 million barrels of crude oil per day, and processing it
through more than 130 refineries into a wide range of fuels and
petrochemical products, most importantly gasoline and diesel.\188\ The
emissions from vehicle tailpipes, plus the production and refining of
petroleum total over 1,900 million metric tons of carbon dioxide
equivalent each year, almost 30% of the U.S. total or about as much as
Germany and Japan, combined.\189\
Neither the U.S. nor any other nation can halt climate change while
depending on petroleum to fuel its transportation system. There is no
single solution to this problem, a full portfolio of tools is needed.
Light-duty vehicles, like cars, trucks, and SUVs consume the majority
of petroleum in the U.S.; there is consensus within the transportation
research community that replacing these with battery electric vehicles,
charged on a grid dominated by renewables or other carbon-free sources,
will by the primary way of reducing these emissions, with mass transit
and other measures also playing a role. Many of the medium and heavy
duty vehicles, like box trucks, delivery vans and some tractor-trailers
will also be powered by electricity from batteries, or possibly
hydrogen fuel cells.\190\ There are some types of transportation,
however, for which energy-dense liquid fuels will be much harder to
replace. Aviation is the biggest of these; the U.S. consumed over 18
billion gallons of jet fuel in 2019,\191\ and while the industry will
take some time to recover from the ravages of COVID-19, commercial air
travel will continue to factor in global transportation. Some marine
applications, long-haul trucking, military operations, backup and
emergency power, and specialized vehicles may also need liquid fuels.
The U.S. currently consumes around 15 billion gallons of ethanol per
year, and around 2.5 billion gallons of biomass-based diesel
substitutes including biodiesel and renewable diesel. The vast majority
of ethanol is made from corn, while around [] of U.S. biomass-based
diesel is made from soybean or canola oil, with the rest coming from
waste oil or byproducts.\192\
Most of the biofuels currently used in the U.S. reduce carbon
emissions when they displace petroleum fuels. Typical corn ethanol
emits about 30% less carbon than gasoline, when the full life cycle of
both products are considered, and typical biodiesel or renewable diesel
from soybean oil reduces carbon by 40-50% over the full life
cycle.\193\ With domestic consumption of these fuels measured in the
billions of gallons each year, these emission reductions represent
millions of tons of avoided carbon. The use of biofuels is estimated to
have reduced U.S. transportation sector GHG emissions by 980 MMT
CO2 from 2009-2020.\194\ This is equivalent to taking
roughly 16 million vehicles off the road, or 19 coal-fired power plants
offline, forthat 13 year period.\195\
First-generation biofuels alone cannot meet the challenge of near-
complete de-carbonization by mid-century, but have achieved critical
near-term reductions as other low-carbon transportation solutions are
being developed; and they form an important technological foundation
for the next generation of low-carbon fuels. The biotech industry can
leverage its capacity to innovate to help advance biofuels in two main
ways, reducing emissions from current production and developing zero,
or near-zero carbon fuels.
Reducing Emissions From Existing Fuels
The U.S. fuel ethanol industry operates around 200 production
facilities spread across the U.S., representing tens of billions of
dollars in capital investment and thousands of jobs.\196\ While corn-
based ethanol may struggle to achieve the very low-carbon levels needed
in the long-term future, it has a critical role to play over the next
few decades. As long as there is petroleum-based gasoline being
consumed in the world, there will be value in producing a substitute
that is 30% less carbon intensive; and the evidence suggests that the
industry can reduce emissions even further. Driven in large part by the
adoption of carbon intensity standards like California's LCFS, the
ethanol industry has improved the efficiency of its facilities and
found new ways to recover valuable co-products. Doubling down on these
processes can continue to reduce emissions.
Improved efficiency of ethanol production facilities has reduced
the energy inputs needed per gallon of output by a few percent per
year,\197\ and the industry has begun to utilize cellulosic processing
technology to convert the previously indigestible corn kernel fiber
into ethanol, increasing the yield from each bushel of corn by 3-4%.
Improved crop yields and strains optimized for fuel production also
help reduce the emissions associated with each unit of fuel.
Incremental improvements like these seldom grab headlines, but on the
scale of U.S. ethanol production, they add up. Each 1% improvement in
average carbon intensity, across the entire U.S. ethanol industry
results in around 800,000 metric tons of avoided carbon dioxide
emissions each year.\198\ Similarly, there are opportunities to improve
the efficiency of biodiesel and renewable diesel production, the latter
of which anticipates almost a six-fold increase in U.S. production
capacity over the next 5 years.\199\ More efficient catalysts and
purification systems can reduce the need for energy or reagent inputs,
driving GHG emissions down even further. If the U.S. renewable diesel
industry grows as anticipated, each 1% improvement in efficiency yields
around 170,000 metric tons of avoided emissions each year.\200\
Figure 2: Each 100 million gallons of advanced, low-carbon biofuel has
the potential to displace as much as 1 million tonnes of
carbon, if it displaces petroleum fuels, or over 200,000 tonnes
if it displaces current-generation biofuels.
Potential Emissions Reductions From 100 Million Gal. of Advanced
Biofuel
Source: California Air Resources Board.
Developing Zero or Near-Zero Carbon Fuels
Decarbonizing transportation will require a new generation of
fuels. Cellulosic biofuels, which use inedible plant matter as their
feedstock, offer the potential for much deeper reductions in carbon
emissions.\201\ Cellulosic biofuels have been on the horizon for many
years, but technological and supply chain challenges sank several early
projects. A new wave of cellulosic production facilities, promising 60-
80% lower emissions than conventional fuels are under development and
if early projects are successful, could be the start of a new, multi-
billion gallon per year industry. One key difference between the first
wave of cellulosic production facilities and this one is that rather
than breaking down cellulose into sugars and fermenting them into
ethanol like you would with starch, these facilities use heat to
convert biomass into a gas, or light oils, then process those into
finished fuels. There are numerous opportunities to further refine the
process, however, by making more selective and durable catalysts, or
providing feedstock which improves yields, is more easily handled or
requires less pre-treatment.
Algae or other microbes may offer the greatest potential to deliver
fuels that approach or achieve carbon neutrality. Algae can be grown
using wastewater or even exhaust gas as their primary source of
nutrients and can be tailored to produce highly desirable oils or
carbohydrates at extremely high theoretical yields. Attempts to scale
these systems up have run into problems with pathogens, competition
from wild microbes and finding efficient methods to separate desired
products from water and cell mass. If algal fuels, or other advanced
synthetic fuels could be commercialized, they offer the potential for
billions of gallons of a product that is compatible with existing
vehicles and infrastructure. Figure 2, shows the potential emissions
reductions from 100 million gallons of a hypothetical advanced fuel, at
various carbon intensities.\202\ Depending on what it displaces, the
emissions benefits could be a few hundred thousand to over 1 million
metric tons each year[.]
3.2.4 Enhancing Carbon Sequestration
Enhancing Carbon Sequestration
Drastically reducing carbon emissions is necessary if humanity is
to avoid the worst effects of climate change, but more will be needed.
Almost every model of a successful stabilization of temperatures
includes a large amount of carbon dioxide removal from the atmosphere,
through enhanced plant growth and CCS. Figure 3 shows results from the
IPCC 5th assessment report regarding global carbon emissions
trajectories that preserve a hospitable climate. Each line represents
one simulation of the future in which average temperature increase is
kept below 1.5 C (the graph for a 2 C outcome looks quite similar).
In every case, net emissions must not only be reduced to zero, but the
world will need to rapidly remove carbon from the atmosphere over the
second half of this century.\203\ Biotech can provide crucial tools to
help this effort.
It is difficult to estimate how much of an impact carbon capture
might have on the climate system of the future; in some ways the sky is
really the limit since there is certainly no shortage of carbon dioxide
in the atmosphere to remove. Accelerated R&D and rapid deployment of
demonstration projects will be necessary to identify and prove the
capabilities of the many technological options which could contribute.
Figure 3
Source: IPCC 5th Assessment Report.
Bioenergy with Carbon Capture and Sequestration (BECCS)
Many of the most promising concepts for scalable carbon
sequestration rely on photosynthesis to do the actual capturing of
carbon dioxide, which can then be used or stored. One of the most
promising is BECCS, which uses the biomass from plants to produce fuels
or energy, storing carbon along the way. There are many proposed models
for BECCS, from burning biomass in conventional power plants and
capturing carbon from the exhaust, to gasification systems which leave
behind carbon-dense biochar that can be used as a carbon-sequestering
soil amendment. The energy or fuels produced by these systems would
also help displace fossil fuels, providing a double climate benefit. A
recent analysis estimated that, by 2040, BECCS could cost effectively
remove over 700 million metric tons of carbon per year,\204\ or more
than half the emissions from all U.S. coal power plants, though doing
so would require a massive amount of sustainable biomass feedstock to
be produced.
Sequestration in Natural and Working Lands
Natural ecosystems have been sequestering carbon for millennia
without human assistance and should not be overlooked as a method of
removing carbon from the atmosphere. The main mechanism of
sequestration is through the growth of roots in the soil, accumulation
of fallen organic matter, or the accumulation of organic matter at the
bottom of oxygen-poor bodies of water. Most biomass decomposes or is
consumed by animals but some, especially the hard-to-digest fibrous
parts of plants composed of lignin and cellulose, remains in solid form
for decades or more and is integrated into soil. Human encroachment on
natural lands and climate change are affecting most natural ecosystems,
often disrupting this process; but careful intervention, through things
like managed replanting, selective breeding for sequestration
potential, soil amendments such as compost or biochar, selective
harvest and prescribed fire can increase the rate of carbon
sequestration and build healthy, resilient ecosystems. The National
Academies concluded that enhanced management of forests could sequester
anywhere from a few hundred pounds to over a ton of carbon per hectare
annually; \205\ widely deployed this could result in sequestration of
100 million metric tons of carbon per year, with an additional 150
million metric tons possible through expanding forested areas, this
would be like taking 20 to 50 million cars off the road.
Enhanced Weathering
While the majority of carbon removal from the atmosphere is done by
plants, it is not the only mechanism. Certain types of mineral like
olivine, serpentine and basalt will react with carbon dioxide to form
stable carbonate minerals in a process known as ``weathering''. This
mechanism has been largely responsible for mitigation of high
atmospheric CO2 concentrations in prehistoric times.
Unfortunately, it is naturally quite slow, suited for geological rather
than human time scales; but there are ways that it might be accelerated
and scaled to help address the climate crisis. Olivine and serpentine
are often found in discarded mine tailings or asbestos formations;
basalt can often be found in geologically active areas, where
geothermal power plants may be active. By managing air flow, moisture
and pH levels in these sites, the rate of carbon uptake could be
substantially increased. Adding catalysts, or microbial agents could
increase the potential even further.
Direct Air Capture
Most carbon capture systems rely on natural processes to remove
carbon from the atmosphere, but new innovative approaches may offer the
opportunity to cut out the intermediate step. Several processes are
being tested that use chemical solvents, such as amine or carbonate
solutions, to absorb CO2 from the atmosphere, and release it
into a containment system, resulting in pure CO2 that can
then be sequestered underground or used to make products. Since
CO2 is only a few hundred parts per million in the
atmosphere, this process requires a lot of surface area and usually
uses heat to regenerate the solvent solution. This can make these
systems bulky and energy-intensive. By developing more effective and
durable solvents, or lower-energy regeneration processes, these systems
could be made cheaper and more scalable. The upper limit of potential
for these systems depends on how optimistic one is about the rate at
which they will improve their energy and cost efficiency. Studies have
projected the impact of direct air capture at anywhere from a few
hundred million tons to more than half of today's global CO2
emissions.\206\
4 Barriers to Adoption and Policy Proposals
4.1 Financing Barriers
Biofuels and bioproducts have historically faced a major
commercialization hurdle in the form of access to financing.
Biotechnology products that are intended to reduce GHG emissions must
necessarily compete with fossil fuels that supply a well-established
refining and petrochemicals production infrastructure. Whereas this
fossil infrastructure is often decades old and has often been fully
paid off by its owners, biotechnology products require investment in
either new infrastructure or large-scale retrofits of existing
infrastructure. These investments can be very expensive, with one
review of announced commercial-scale cellulosic biofuel projects
finding capital costs to be approximately $11/gallon of installed
production capacity.\207\ With the exception of large, established
companies, few new producers have ready access to this amount of
capital, necessitating that they access the capital markets through
lenders and/or investors.
Private sources of capital generally require a demonstration that a
biotechnology project can achieve certain levels of profitability in
the form of a ``hurdle rate'' before providing access to financing.
Biobased fuels and products compete with fossil fuels and products for
market share, and the market value of the former operates as a function
of the latter as a result. On occasion this has been advantageous for
biotechnology products, such as when fossil fuel prices rose sharply in
2007-08. The steady decline of fossil fuel prices that has occurred
over the last decade in response to increased unconventional production
of natural gas and petroleum in the U.S. has made it more difficult for
biotechnology products to obtain the necessary hurdle rates for
financing, however, even as climate change has become an important
concern for American consumers.\208\ Likewise, the immediate financial
incentive to make investments in energy efficiency and other marginal
reductions to GHG emissions is limited when energy costs are low.
A challenge faced by biofuels and bioproducts is that many of the
advantages that they offer over fossil fuels are not reflected in their
market value. For example, in addition to the GHG emissions reductions
discussed above, many biotechnology products achieve low levels of
other types of pollution such as particulate matter emissions, sulfur
emissions, water contamination, and toxic waste production compared to
fossil fuels. These reduced impacts on human health and the environment
have a clear monetary benefit in the form of reduced spending on
medical services, environmental remediation, recovery from extreme
weather events, etc.\209\ Moreover, biotechnology provides the ability
to reduce GHG emissions and other forms of pollution across a variety
of economic sectors, including agriculture, manufacturing, and
transportation. Such benefits are not reflected in the market value of
the biotechnology products, however, placing them at a competitive
price disadvantage to fossil fuels.
Governments have sometimes enacted policies that cause the benefits
of biofuels and bioproducts to be reflected on the marketplace, either
by subsidizing those biotechnology products that have reduced impacts
on human health and the environment or by increasing the cost of fossil
fuels (see Section 4.3). Some, such as California's LCFS, have prompted
rapid growth in the use of biofuels by subsidizing biofuels, especially
those from second-generation feedstocks, based on the degree to which
they reduce transportation GHG emissions.\210\ The LCFS recently
expanded to provide support for CCS; when combined with Federal 45Q tax
credits, this can offer over $150/tonne of total incentive for project
developers.211-212 Government incentives in the U.S. have
not always been sufficient to make biotechnology products competitive
with inexpensive fossil fuels, though: one recent analysis calculated
that new cellulosic biorefineries would struggle to be financially
viable despite the presence of supporting Federal policies because of
the low fossil fuel prices that have prevailed since 2014.\213\
Producers of biotechnology non-fuel products, for which government
support mechanisms are fewer, have also faced high hurdles to private
financing.
Some producers of U.S. biofuels and bioproducts have been able to
obtain public financing in the form of loans, loan guarantees, and
grants from the Federal and state governments. The U.S. Department of
Agriculture offers loan guarantees of up to $250 million for the
building of capacity for the production of specific biotechnology
products including advanced biofuels and biobased chemicals.\214\ The
loan guarantee program was started in 2008 to enable financing of
advanced biofuels and was expanded in 2014 to cover other bioproducts
as well. The loan guarantee reduces the barriers to obtaining private
financing by having the U.S. Government backstop qualifying loans to
producers. While this backstop does not guarantee private financing for
the facility, it substantially reduces the producer's financing hurdle
rate by reducing the risk of default on any loan covered by the
guarantee. Several states operate their own direct loan and loan
guarantee programs for biorefineries, albeit on a smaller scale.\215\
Grants are another public finance mechanism that has supported the
commercialization of biotechnology. Unlike direct loans and loan
guarantees, grants are one-time awards of financing that are not
repaid. The awards generally involve smaller amounts of financing than
are provided via direct loans and loan guarantees, and they have often
been used to support R&D or make improvements to existing facilities
rather than to build a new commercial-scale facility. One example is
the Value-Added Producer Grants program administered by the U.S.
Department of Agriculture, which ``helps agricultural producers enter
into value-added activities related to the processing and marketing of
new products.'' \216\ Other grants indirectly support the establishment
and commercialization of biofuels by being directed toward the
upgrading of infrastructure that is downstream of production facilities
and improving consumer access.
The private and public capital that has been invested into biobased
fuels and products has spurred the commercialization of low-carbon
technologies since the turn of the century. Investments have fallen far
short of what is necessary to avert catastrophic climate change,
however, reflecting the major hurdles to financing that still exist
within the biotechnology industry. The IPCC estimates that $2.4
trillion in annual investment is needed globally in the energy sector
alone until 2035 to limit temperatures to no more than 1.5 C above
pre-industrial levels.\217\ This number is larger still if the de-
carbonization of non-energy sectors such as agriculture and materials
are accounted for. Actual global low-carbon energy investment in 2019
was only $0.6 trillion, or 25% of what is needed.\218\ Additional
policy mechanisms will be required to rapidly reduce existing hurdles
to the financing of biobased projects. Governments will also need to
reduce the regulatory barriers that these projects face, as unfavorable
regulatory environments increase the financial risks that they bear and
their hurdles to financing.
4.2 Regulatory Barriers
The biotechnology industry plays an important role in developing
and commercializing novel products that are not always directly
compatible with the existing infrastructure in the sectors into which
they are introduced. Moreover, many of these products are manufactured
using technologies such as gene editing that are closely regulated by
national governments. These factors have resulted in the formation of
multiple regulatory barriers that hinder the adoption of low-carbon
biofuels and bioproducts and constrain the biotechnology industry's
ability to reduce emissions of GHGs and other pollutants.
Biotechnology Regulation
GMOs have had a long and contentious regulatory history in the U.S.
Since 1986, biotech products in the U.S. have been regulated under the
Coordinated Framework for the Regulation of Biotechnology (Coordinated
Framework).\219\ The framework has been updated several times since its
introduction, including a comprehensive revision in May 2020, known as
the Sustainable, Ecological, Consistent, Uniform, Responsible,
Efficient (SECURE) rule, or Part 340 rule, which significantly
streamlined and modernized the regulatory framework.\220\ While U.S.
regulators and consumers are relatively accepting of GMO products,
societal opposition to the use of GMOs in the agriculture sector in
particular has, on occasion, prompted a cautious response to new GMO
products by regulators that has slowed the introduction of biotech
products to the market.
Regulations in other regions, such as Europe, are more
hostile,\221\ hampering the ability of the U.S. biotechnology market's
products to make an outsized contribution to global GHG emission
reductions. For example, as discussed in Section 1.4, GMO food crops
have enhanced resiliency under the types of extreme weather conditions
that are becoming more common as the climate changes, thereby reducing
the amount of land required by agriculture and reducing the incentive
to increase GHG emissions via land-use change.
Studies have found that Americans, including those residing in
states with large agricultural sectors, have concerns about the
production of bioenergy from GMO feedstocks as well.\222\ Some second-
generation bioenergy feedstocks have attracted opposition due to their
use of fast-growing and potentially invasive forms of biomass. These
feedstocks, especially those that have been genetically engineered to
expand rapidly, have prompted concerns that they could expand into and
damage the surrounding ecosystem.\223\ Notably, though, biotechnology
has also provided a means of potentially overcoming this barrier. In
one recent research breakthrough, microalgae grown as a biofuels
feedstock has been genetically engineered to be unable to survive
outside of the production facility, thereby preventing its uncontrolled
growth.\224\
Genetically engineering microorganisms used in the production of
fuels, chemicals and other products are also subject to Federal
regulation, but their place in the Coordinated Framework has long been
unclear, and GE microbes were not clearly addressed in the SECURE rule.
This regulatory uncertainty is likely to present a significant barrier
to the development and commercialization of biotech climate innovation.
Regulation of Fuels and Products
A second major regulatory barrier is posed by conflicting state
policies on certain biotechnology products. While the U.S. has a
comparatively more integrated common market than the European Union,
individual state governments sometimes have policies in place that
discourage the introduction of biotechnology products into entire
regions, let alone individual markets. This situation can prevent the
adoption of products that have interstate supply chains. One example
that is already occurring involves the transport of renewable diesel
through existing refined fuels pipelines. Renewable diesel is a drop-in
biofuel that can utilize cost-effective distribution infrastructure
such as the refined fuels pipelines that connect refineries to multiple
states' markets (e.g., the Colonial Pipeline in the Southeastern U.S.).
Many states require that the biofuels content of fuels retailed within
their borders be stated on a fuel pump label, but this is not easily
known if the renewable diesel is being pipelined in a blended form with
diesel fuel. The result is that having even a single state on an
interstate pipeline with strict pump labeling requirements can
discourage the movement of a drop-in biofuel such as renewable diesel
through it. The biofuel must instead be transported by rail, ship, or
truck, all of which are more expensive and polluting options than
pipeline.\225\
Biotechnology products that are not compatible with unmodified
existing infrastructure often face a heightened regulatory barrier.
U.S. ethanol consumption has historically been constrained by the so-
called ``ethanol blend wall'', which refers to the maximum blend that
can be used in existing infrastructure. Ethanol is a hydrophilic fuel
that is miscible with water, and this trait prevents its movement
through pipelines at any blend rate and use in unmodified engines above
specific blend rates due to the potential for water contamination.
Ethanol blends for use in unmodified engines were limited to 10% by
volume (E10) until 2011, when the U.S. Government began to allow blends
of up to 15% by volume (E15) during certain seasons of the year.\226\
The unrestricted sale of E15 was not permitted until 2019.\227\ The
blend limits apply to ethanol whether produced from corn or
lignocellulosic biomass, and the blend wall sharply constrained fuel
ethanol demand from all feedstocks beginning in 2013 as a result.\228\
The U.S. Government has also used regulatory changes to restrain
demand for all biofuels since 2017. National biofuels demand over the
last decade has been driven by the revised Renewable Fuel Standard
(RFS2), which mandates the annual consumption of specific volumes of
different types of biofuels. Petroleum refiners are tasked with
ensuring that sufficient quantities of biofuels are blended with
refined fuels to comply with the mandate, and a refiner's individual
blending quota is determined by its market share. Between 2017 and 2019
the Federal Government greatly increased the number of hardship waivers
that it awarded to refiners, reducing their blending quotas and overall
demand for biofuels under the mandate.\229\ One analysis calculates
that the increased number of hardship waivers awarded caused demand for
advanced biofuels under the mandate to be up to 1 billion gallons lower
per year, and that the amount of the annual reduction has equaled as
much as 50% of U.S. production.\230\
Regulatory barriers can be particularly high for truly novel
biotechnology products due to a lack of suitable regulatory frameworks.
Cultured meat, for example, has been identified as one product for
which existing U.S. regulations are inadequate due to the existence of
myriad production techniques and the potential for genetic modification
as part of the production process.\231\ Regulatory uncertainty is as
much of a barrier as adverse regulation is, inasmuch as both discourage
financiers from providing the capital necessary for commercialization.
The lack of an adequate regulatory framework also raises the
possibility that adverse regulation could result from a regulatory
rulemaking process.
The future growth of the U.S. biotechnology industry will be
heavily affected by existing and potential regulatory barriers. One
recent analysis estimated that 50% of the total economic impact of
biotechnology over the next decade ``could hinge on consumer, societal,
and regulatory acceptance'' of the industry's products.\232\ The
analysis further calculated that this amount increases to 70% over the
next 2 decades. This has important implications for the ability of
biotechnology to provide climate solutions given that early emissions
reductions are more valuable than later reductions. The continued
presence of regulatory hurdles is an especially pressing issue given
the major shortfall of de-carbonization investments (see Section 4.1).
4.3 Policy Proposals
The growing recognition by many U.S. policymakers that existing
efforts to de-carbonize the country's economy are falling short of its
commitments under the 2015 Paris Climate Agreement has led to the
unveiling of a variety of climate policy proposals at the Federal,
state, and local levels of government. These proposals fall into two
broad categories: the first category focuses on the de-carbonization of
individual sectors while the second category instead takes an economy-
wide approach. The sector-based proposals are similar to policies
already in place in states such as California, whereas the economy-wide
proposals are more novel and less well established. An aggressive
combination of sector-based and economy-wide policies is needed to
rapidly realize the full potential of biotechnology to combat climate
change.
4.3.1 De-carbonizing Transportation
The first 2 decades of the 21st century saw the introduction of
several policies to reduce the carbon intensity and GHG emissions of
the transportation sector. Some, such as Federal RFS2 and California
LCFS, were successfully implemented and have resulted in the partial
de-carbonization of the on-road transportation sectors in their
respective jurisdictions through the increased use of biofuels. But
regulatory implementation of these policies has, particularly in the
case of RFS2, limited their impact. Barriers to the full implementation
of existing Federal renewable fuels policies should be removed and
aggressive follow-on transportation sector climate policies adopted to
achieve the maximum near-term and longer-term GHG reductions.
Renewable Fuel Standard
The continued presence of the RFS2 as the centerpiece of U.S.
transportation sector de-carbonization efforts has had an important
impact on the development of intermediate-term GHG emission reduction
strategies, with cumulative reductions of 980 MMT CO2 since
RFS2 was enacted.\233\ But a series of EPA regulatory actions has
substantially limited the program's climate gains. The agency has
repeatedly reduced RFS volume obligations and has issued a growing
number of small refinery waivers, further reducing the market for
biofuels in the U.S.\234\
EPA has taken some steps to expand U.S. biofuels markets. The
ongoing effort to expand the volume of ethanol permitted by the ethanol
blend wall is one example of this trend (see Section 3.2). Following on
earlier efforts to ease restrictions on E15 consumption, in 2020 the
Trump Administration announced that the Federal Government would not
block the use of E15 in fuel pumps that were compatible with E10
(although state governments are still able to do so).\235\ The complete
replacement of E10 consumption by E15 would increase the amount of fuel
ethanol consumed in the U.S. by 50%. While the magnitude of the
associated transportation sector emissions reduction would depend on
the feedstocks being used, any increase to E15 consumption would
contribute to the sector's de-carbonization. Additional actions to
expand U.S. biofuel markets and establish greater RFS program certainty
are needed to maximize near-term climate gains.
Low Carbon Fuel Standard
The success of California's LCFS and a lack of Federal action on
climate policy after 2016 has prompted similar policies to be proposed
in other states. Oregon adopted a LCFS under its Oregon Clean Fuels
Program that mandates a 10% reduction to the carbon intensity of its
transportation sector from 2015 levels by 2025.\236\ Efforts to
implement a statewide LCFS in neighboring Washington are ongoing
despite the failure of an earlier attempt.\237\ Similar regional
initiatives have been proposed in the Midwest \238\ and East
Coast,\239\ although legislative action on these proposals has yet to
occur.
Efforts to implement a national LCFS date to 2007, when then-U.S.
senator Barack Obama introduced a bill to require future reductions to
the carbon intensity of the U.S. transportation sector.\240\ While that
proposal was ultimately discarded in favor of legislation that created
the RFS2, the U.S. House Select Committee on the Climate Crisis
recently recommended that the RFS2 be transformed into a national
LCFS.\241\ That recommendation also included a provision to expand the
remit of the RFS2 to include shipping and aviation fuels, in addition
to on-road transportation fuels, as part of the transformation. The
success of California's LCFS and steps by other states to adopt similar
programs suggests the time has come for a Federal low-carbon fuel
standard.
Other Fuel Policies
In addition to market-driving programs such as the RFS and LCFS,
ongoing Federal and state investments in the improvement of existing
biofuels and the development of next-generation biofuels are
recommended to achieve the greatest near-term climate benefit. Robust
Federal investment in biofuel research and development at the U.S.
Department of Energy and USDA and long-term tax credits or other
incentives for private-sector biofuel research and development and
facility construction are recommended to help drive additional private-
sector investment in low-carbon fuels.
The development of a long-term sustainable aviation fuel specific
blender's tax credit will attract significant investment to the sector,
address existing structural and policy disincentives, and ramp up
domestic SAF production to meaningful levels.. Further continuation of
the Second Generation Biofuel Producer Tax Credit is incredibly
important to companies that are making significant investments to
create new agricultural supply chains, build infrastructure for liquid
biofuels, and develop innovative new technologies.
4.3.2 De-carbonizing Industry
Policy has historically favored the production of biofuels over
other forms of biobased products. Renewable chemicals and other non-
fuel biobased products that achieve GHG emission reductions, such as
those described in Section 2, will need to be supported if sectors
outside of transportation are also to be successfully Dearborn. Several
potential mechanisms exist for achieving this result, some of which
build upon existing policy frameworks and others that employ more novel
approaches.
Renewable Chemical and Biobased Product Programs
The U.S. Government operates two important farm bill energy title
programs, the BioPreferred Program and the Biorefinery, Renewable
Chemical, and Biobased Product Manufacturing Assistance Program, that
support the commercial development of renewable chemical and biobased
product manufacturers. These producers continue to face substantial
hurdles to commercialization due to the lack of an even playing field
with producers of competing products from fossil fuels.
The BioPreferred Program, originally authorized under the 2002 Farm
Bill and reauthorized and expanded under the 2018 Farm Bill, includes a
Federal biobased product procurement preference program and a voluntary
USDA labeling program for biobased products.\242\ These programs have
significantly increased both consumer awareness and market demand for
biobased products. The 2018 Farm Bill provided increased funding for
BioPreferred and, among other provisions, directed USDA and the
Department of Commerce to develop North American Industry
Classification System (NAICS) codes for renewable chemicals and
biobased products.\243\ The 2020 National Academies of Science report
on ``Safeguarding the Bioeconomy'' cites the lack of an industry
classification system for biotech products as a significant roadblock
to investment and broader adoption, and recommends a series of actions
to fill this gap.\244\
The Biorefinery, Renewable Chemical, and Biobased Product
Manufacturing Assistance Program (BAP) provides loan guarantees for the
development, construction, and retrofitting of commercial-scale
biorefineries.\245\ The 2018 farm significantly expanded and
streamlined the BAP loan program.
The Commerce Department and USDA should move swiftly to implement
biobased product classification systems, and Congress should fully fund
BioPreferred and the BAP loan program.
Tax Policy
Tax policy has been a vital early driver of biofuel and other
renewable energy development. Several recent policy proposals seek to
provide a similar push to non-fuel biobased products. A proposed change
to Federal tax law would enable producers of biobased products to
utilize the Master Limited Partnership pass-through tax structure that
is widely employed by fossil fuel producers to improve access to
capital and reduce tax burdens.\246\ Such an expansion has been
employed in the past in the U.S. to support the development of
renewable electricity and biofuels logistics infrastructure, making its
absence in the biobased products sector particularly notable. Federal
legislation to expand existing business-related and investment tax
credits to include renewable chemicals production has also attracted
bipartisan support in Congress,\247\ although it has yet to become law.
U.S. tax policy should be updated to extend renewable energy tax
incentives to renewable chemicals and biobased products.
4.3.3 De-carbonizing Agriculture
One of the most important mechanisms available to leverage
biotechnology for climate mitigation is agriculture policy. As
discussed in section 2, the carbon intensity of industrial products is
highly dependent on the carbon intensity of feedstocks. Substitution of
biobased feedstocks for fossil feedstocks is an essential step, but the
greatest gains are achieved when climate objectives are integrated into
the production of the feedstocks themselves, internalizing the
environmental benefits that are provided by producers of biobased
products, especially those that operate within the agricultural sector.
One such proposal would expand farm bill programs such as the
Conservation Stewardship Program, which encourages producers to
undertake conservation activities on working lands,\248\ to include
practices that decrease the carbon intensity of agricultural production
while increasing crop yields. Likewise, the existing section 45Q tax
credit for certain CC&S technologies could be expanded to encompass the
building of soil carbon in the U.S. agriculture sector.
The agriculture sector faces high barriers of entry to voluntary
carbon credit programs that prevent their full carbon sequestration
potential from being recognized. Federal legislation such as the
Growing Climate Solutions Act of 2021 has been introduced as a means of
enabling the private-sector to overcome these hurdles,\249\ but Federal
agencies could also provide additional support by expanding existing
agricultural conservation programs and creating agricultural
sequestration certification programs.
Congress and the White House should move swiftly to implement
programs to reward farmers for reducing the carbon footprint of
feedstock production and for capturing and sequestering carbon.
4.3.4 Negative-Carbon Technologies
To achieve agreed upon climate mitigation objectives, a major focus
of climate policy must be investment in negative-carbon technologies.
This will require policies that drive carbon capture, use and storage
throughout the economy, including in agriculture and manufacturing.
This should include sector-specific programs in each of these areas.
Climate policy should drive investment in agricultural biologicals,
plant biotechnology and other biotechnologies to increase soil carbon
sequestration and should reward microbial carbon capture and other
biotechnologies for carbon removal and recycling. Provisions for
biological carbon capture and use in the section 45Q tax credit provide
a template for inclusion of these technologies in future climate
policy.
4.3.5 Economy-Wide Climate Programs
The U.S. transportation and power sectors have been the primary
focus of policymakers due to their large share of total U.S. GHG
emissions (28% and 27%, respectively, in 2018).\250\ Several states
have adopted more ambitious long-term policies that require the full
de-carbonization of their economies by 2050, however, and the remaining
sectors (industry, commercial/residential, and agriculture) will need
to achieve future carbon intensity reductions greater than those that
have been achieved by the power and transportation sectors to date if
these policies are to be successful.
The first such state policy to be implemented was California's
Global Warming Solutions Act of 2006, which mandated an economy-wide
emission reduction of 80% by 2050.\251\ In 2018 California's governor
issued an Executive Order that changed this target to 100% on a net
basis by 2045.\252\ Equally ambitious is the New York Climate
Leadership and Community Protection Act (CLCPA). Passed in 2019, the
CLCPA requires that the state's economy-wide emissions by reduced by
100% by 2050,\253\ although up to 15% of the reduction can take the
form of offsets such as those described in Section 2.2. Colorado,
Connecticut, Maine, Massachusetts, Minnesota, Nevada, Rhode Island, and
Washington also all have statutory targets requiring statewide GHG
emission reductions of at least 80% by 2050.\254\
A notable aspect of the deep economy-wide de-carbonization targets
is that they will likely require the widespread deployment of carbon-
negative technologies and non-fuel bioproducts in order to be
successful. Policy language referring to ``net zero'' emissions targets
or, in the case of New York, explicit carbon offset thresholds reflects
the recognition of this probable outcome by policymakers. Existing
state de-carbonization requirements also identify varying degrees of
de-carbonization difficulty for different economic sectors. New York's
statutory target, for example, imposes an absolute zero-emission target
on its power sector by 2040 through language that explicitly excludes
the use of carbon offsets by that sector. The reason for this
distinction is the expectation that zero-emission technologies such as
solar PV and wind will enable an absolute zero requirement to be
achieved. Those sectors such as transportation and manufacturing that
utilize more energy-intensive systems, by contrast, will need to rely
upon biomass and biotechnology to achieve net-zero emissions, sometimes
via carbon-negative technologies, while supplying close substitutes for
the fossil fuels and products that modern economies rely upon.
Existing government efforts in the U.S. to incentivize de-
carbonization have largely been limited to the transportation sector,
whereas the implementation of performance-based de-carbonization
standards in manufacturing would enable the broad scope of
biotechnology's benefits to be recognized by the market. Such standards
include, but are not limited to, financing R&D, promoting alternatives
to non-fuel fossil products, supporting and expanding sustainable
procurement policies, and incentivizing the development of green
manufacturing and sustainable agriculture practices.
Recent years have seen only limited action at the Federal level to
encourage the utilization of biotechnology's de-carbonization
potential. Several states have adopted more ambitious long-term
economy-wide de-carbonization targets, however. While the policy
mechanisms to achieve these targets have yet to be established, their
success will likely depend on the extent to which the policies properly
value the de-carbonization, including net carbon sequestration,
abilities of both fuel *
---------------------------------------------------------------------------
* Editor's note: the paragraph is not completed in the submitted
report. It has been reproduced herein as submitted.
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Summary and Conclusion
``Climate change will affect every person, nation, industry,
and culture on Earth.''
Avoiding its worst effects will require an equally universal
response. The biotechnology industry is uniquely positioned to play a
leading role in the effort to reduce emissions, adapt to new climate
conditions, and address the needs of the 21st century and beyond. In
this report, three key themes have emerged. These themes should guide
policymakers--and the biotech industry itself--if we are to achieve the
full potential of biotechnology to address climate change.
Biotechnology is an essential climate mitigation tool. Biotech has
already delivered vital climate solutions and holds the potential to
provide transformative climate technologies across a broad spectrum of
industrial sectors.
Biotech can achieve at least 3 billion tons of CO2
equivalent mitigation annually by 2030 using existing technologies. The
biotechnologies with the greatest potential impact include:
Biotech solutions have the potential to reduce agriculture
sector GHG emissions by nearly 1 billion metric tons (1
gigaton) annually--or the equivalent of GHG emissions from more
than 100 million U.S. homes. This includes reducing nitrous
oxide emissions from agriculture by over 150 million metric
tons of carbon equivalent and enhancing soil carbon
sequestration by up to 600 million metric tons per year through
a combination of agriculture biotechnology and agricultural
biologicals.
The transition to next-generation biofuels enabled by
biotechnology will double the per-gallon emissions reductions
of biofuels versus petroleum. Doubling biofuel use through
broad adoption of next-generation biofuels in aviation and
other transportation sectors would increase the contribution of
biofuels to U.S. transportation sector GHG emissions reductions
from 980 million tons over the past thirteen years to over 1.8
billion tons for the decade 2020-2030, a reduction equivalent
to taking more than 45 coal-fired power plants offline.
Broad adoption of algal and microbial feed ingredients that
reduce enteric methane emissions from ruminant animals can
avoid the equivalent of up to 140 million metric tons of carbon
annually.
Broad adoption of anaerobic digestion for animal waste would
reduce U.S. GHG emissions by over 150 million metric tons
annually using current technology.
Bioenergy with Carbon Capture and Sequestration (BECCS)
could cost-effectively remove over 700 million metric tons of
carbon per year, or more than half the emissions from all U.S.
coal power plants.
Suitable land and other infrastructure exists to deploy
algae-based carbon capture systems at more than 500 power
plants and ethanol facilities in the U.S. These systems would
have a potential to capture more than 200 million tons of
CO2 annually.
Emerging biotechnologies could have transformative GHG benefits in
a range of industrial sectors. Among the most promising applications
are:
Biobased plastics and polymers, such as PLA, PHA, and BDO
have achieved lifecycle GHG reductions of up to 80% versus
their petroleum-based counterparts. A rapidly growing list of
new biobased chemical building blocks is now in development.
Plant-based and cultured meats are providing new consumer
choices and up to 89% lower lifecycle emissions for a global
food sector responsible for more than \1/3\ of total GHG
emissions.
Biology-based parallel computing and DNA data storage have
the potential to cut the energy and carbon footprints of
computing and data storage--sectors expected to account for 14%
or more of global GHG emissions by 2040--by 99% or more versus
current technology.
Biotechnology offers vital contributions to near-term GHG
reductions and revolutionary tools to combat climate change in the
longer term. To successfully address the challenge of climate change,
humanity will need to predominantly de-carbonize the global economy by
mid-century and begin significantly drawing down concentrations of
atmospheric carbon shortly thereafter. The struggle against climate
change must be viewed as a multi-decade process, which needs to begin
immediately. A ton of carbon emissions avoided now matters more than a
ton avoided next year, but every step needs to be evaluated from the
perspective of maintaining a trajectory towards success.
An aggressive combination of sector-based and economy-wide policies
is needed to rapidly realize the full potential of biotechnology to
combat climate change. The future growth of the U.S. biotechnology
industry will be heavily affected by both existing and potential
regulatory barriers, and by the degree to which governments invest in
the development and deployment of biotech solutions. Biotechnology is a
vital component of the national and global infrastructure needed to
combat catastrophic climate change. The economy-wide scope of this
challenge will require the adoption of policies that reflect the
ability of biotechnology products to achieve de-carbonization across
all major sectors of the U.S. economy. Biotechnology companies will
need to speak up not only to ensure that new policy provides
opportunities for success, but to make it clear that prosperity is not
threatened by sustainability. There is ample evidence that reducing
emissions is, in fact, essential in supporting a thriving economy.
The biotechnology industry has a tremendous opportunity to build
upon decades of success, and provide critical tools and expertise for
the decades to come. Like every other industry, change will be profound
and lasting, but if any industry can demonstrate that change can be an
opportunity for growth, it is this one.
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______
Submitted Letter by Donnell Rehagen, Chief Executive Officer, National
Biodiesel Board
November 16, 2021
Dear Chairman Delgado, Ranking Member Fischbach, and Honorable
Subcommittee Members,
Thank you for considering the testimony of America's clean fuel
producers, who play a pivotal role in the U.S. bioeconomy.
The National Biodiesel Board (NBB) represents the cleanest, lowest
carbon fuels available at a commercial scale today for use in existing
diesel engines and in many of the hardest-to-de-carbonize
transportation sectors. Our members include biodiesel, renewable
diesel, Bioheat' fuel, and sustainable aviation fuel (SAF)
producers as well as soybean growers and waste fats and oil processors.
NBB is the industry's central coordinating entity for technical,
environmental, and quality assurance programs and the strongest voice
for its advocacy, communications, and market development.
Jobs and Economic Growth
The U.S. market today uses more than 3 billion gallons of these
clean fuels--which supports more than 65,000 jobs across the country
and generates more than $17 billion in economic opportunity. Our
industry is on a path to sustainably grow domestic production to 6
billion gallons annually by 2030, which can eliminate more than 35
million metric tons of greenhouse gas emissions each year. Every 100-
million-gallon increase in U.S. production supports an additional 3,200
jobs and $780 million in economic activity and can eliminate an
additional metric ton of greenhouse gas emissions each year.
With advancements in feedstock, the market can reach 15 billion
gallons by 2050. The United States will need these fuels in the future
to meet the nation's clean air, energy, and agriculture goals--which
are also the goals of the bioeconomy.
Our industry includes many small biodiesel producers in addition to
large, integrated companies. In many rural areas of the country, small
biodiesel plants are a driving force of the local economy, supporting
the employment of plant operators, technicians and engineers as well as
local construction workers, truck drivers and farmers. The economic
opportunities and rural community development demonstrate biodiesel's
potential to contribute to the rural, renewable economy.
Value Added to Other Bioeconomy Sectors
Our industry's clean fuels are made from an increasingly diverse
mix of resources, including recycled cooking oil and animal fats as
well as surplus soybean, canola and distillers corn oils. Our fuels add
value to fats, oils and greases that might otherwise lead to costs for
other sectors of the bioeconomy.
For example, soybean oil is separated from soybean meal through
oilseed crushing. Demand for the meal as a high protein animal feed
drives growth in soybean production, which reached 4.4 billion bushels
in the current marketing year. This growth creates an ever-increasing
surplus of oil.
About 60 percent of the separated oil is currently used in U.S.
food production, with some additional exports. However, the volume of
oil for food and exports has been stable over the past decade without
any growth. Biodiesel and renewable diesel producers are currently the
only commercial-scale industry capable of absorbing the growing surplus
of soybean oil. Approximately half of the biodiesel produced in the
U.S. comes from soybean oil.
Traditionally, roughly half of all U.S.-grown soybeans have been
exported each year--and crushed overseas--to meet animal feed demand.
Instability in these markets--including trade wars--combined with
growing markets for renewable fuels in the United States are
encouraging investment in more U.S. crush capacity to keep the value of
soybean oil here at home.
StoneX estimates that without biodiesel and renewable diesel
production, the value of every bushel of soybeans grown in the United
States could fall as much as 13 percent. Growth in biodiesel and
renewable diesel production is enhancing the value of soybean oil to an
increasing share of the value of the overall bushel. The bottom line is
that farmers receive better value for their soybeans thanks to their
partnerships with biodiesel and renewable diesel producers.
Rural livestock producers also benefit from increased biodiesel
production. By boosting the value of surplus soybean oil--which would
otherwise represent a loss to crushers--biodiesel production provides a
counterweight to the price of soybean meal and the cost of raising
poultry and livestock. As more surplus soybean oil is processed for
biodiesel production, farmers can grow and crushers can process more
soybean meal for animal feed at a lower price. Informa Economics has
estimated livestock producers pay $21 per ton less for soybean meal due
to increased biodiesel production and use.
Approximately \1/4\ of all animal fats produced in the U.S. now go
into biodiesel. Higher demand has led to increased value for those
fats. While the price of animal fats are not primary drivers in
determining the prices paid for fed cattle and market hogs, they do
affect the profit margins in these industries.
Similarly, restaurants and other businesses must engage
environmental service firms to handle used cooking oil, which is
designated by the Environmental Protection Agency as a hazardous waste.
By adding value to recycled cooking oil, biodiesel and renewable diesel
production provides a counterweight to the costs for restaurants and
environmental service companies to meet these regulations.
Environmental Health Contributions
Clean fuel production contributes to the bioeconomy by reducing the
impacts and costs of carbon and particulate emissions. Biodiesel and
renewable diesel reduce greenhouse gas emissions on average by 74%
compared to petroleum diesel. In difficult-to-de-carbonize
transportation applications--the majority of diesel end-uses--these
clean fuels immediately and substantially reduce greenhouse gas
emissions. Additionally, they significantly reduce criteria pollutants
from diesel transportation and other end-uses, which can have direct
benefits for both rural and urban communities.
Biodiesel and renewable diesel have reduced U.S. emissions by 143.8
million metric tons since 2010, when the Renewable Fuel Standard first
included biomass-based diesel obligations. These fuels have also made
significant contributions to the carbon reduction goals of many states.
For instance, California's total biodiesel and renewable diesel volume
grew to 855 million gallons in 2020, meeting nearly 24% of California's
total diesel demand for the year. These fuels have reduced the state's
greenhouse gas emissions by 32.3 million metric tons since 2011.
In the Northeast, biodiesel and Bioheat' fuel will be
required to meet the states' carbon reduction goals. Currently, one in
five existing homes in the Northeast (around 4.5 million) rely on oil
heat, using more than 2.3 billion gallons yearly. The region's
biodiesel and Bioheat' fuel use annually avoids more than
1.5 million tons of CO2 emissions, equivalent to removing
320,000 vehicles from the road or the emissions from annual energy use
by 180,000 homes.
In addition to having one of the lowest carbon intensities of any
liquid fuel, biodiesel also significantly reduces criteria pollutants
from diesel transportation and other end uses. Major trucking
corridors, warehouse distribution centers and other diesel hot spots
close to population centers (often rural communities) can inflict
serious harms to human health and often highlight disparities in the
impacts of transportation pollution burdens as a result of emissions
from petroleum fuel. Since biodiesel and renewable diesel cut these
harmful emissions by half, their use can generate immediate health
benefits for rural and disadvantaged communities.
A recent study, conducted by Trinity Consultants for NBB, shows
that converting from petroleum-based diesel to 100 percent biodiesel
(B100) results in a multitude of health benefits at the neighborhood
level, including lowering cancer risk, reducing premature deaths, and
decreasing asthma attacks. The study quantifies public health benefits
and corresponding economic savings of converting from petroleum-based
diesel to B100 for 13 disadvantaged communities in the U.S. currently
exposed to some of the highest rates of petroleum diesel pollution.
The study found that switching to B100 in the home heating oil and
transportation sectors would provide immediate community health
improvements that can be measured in reduced medical costs and health
care benefits, including approximately 50,000 fewer sick days in the
study demographics.
In the transportation sector, benefits included a potential 44
percent reduction in cancer risk when heavy-duty trucks use B100,
resulting in 203,000 fewer or lessened asthma attacks for the
communities studied. When biodiesel is used for home heating oil, the
study found an 86 percent reduced cancer risk and 17,000 fewer lung
problems for the communities studied.
These are benefits that can be achieved today with available
production of biodiesel, renewable diesel and Bioheat' fuel.
Since the study focused on only 13 communities, it represents the tip
of the iceberg in what can be accomplished this decade through growth
of the clean fuels industry.
Supportive Federal Policies
As Congress develops legislation to address the nation's
infrastructure, climate and economic priorities, we ask that you
support continued growth of the biodiesel and renewable diesel industry
as a pivotal driver of economic opportunities for rural America. The
Renewable Fuel Standard and biodiesel tax incentive have supported the
growth of our industry to 3 billion gallons. Extension and optimization
of policies will support the rural bioeconomy in the future.
Our industry grows and creates jobs and economic opportunities in
rural communities when the biodiesel tax incentive is stable and
forward-looking. For example, in 2020 the U.S. market for biodiesel and
renewable diesel increased by nearly 200 million gallons even while the
coronavirus pandemic reduced overall demand for transportation. We
applaud Congress' proposal to provide a straightforward, multiyear
extension of the biodiesel tax incentive.
NBB and its members appreciate the leadership of Rep. Cindy Axne
(D-IA) and many others for advocating a long-term extension of the
biodiesel tax incentive in the Build Back Better Act. This provision
grew out of bipartisan legislation--H.R. 3472--that she cosponsored
with Rep. Mike Kelly (R-PA) and 41 other Members of the House. The
policy enjoys bicameral support with companion legislation, introduced
by Senators Grassley and Cantwell and cosponsored by 12 other Senators.
We ask that Congress maintain an equitable balance in duration and
value for the policy in relation to other renewable energy incentives.
NBB and its members also applaud efforts to continue the Federal
matching grant program supporting higher blends of biodiesel. USDA's 1
year Higher Blends Infrastructure program was a huge success, providing
a tremendous return at a very low-cost. To date, \1/3\ of the program's
announced grants have been awarded to 24 biodiesel projects, which
received a combined $23.2 million. Completion of these projects will
increase consumer access to 910.7 million gallons of biodiesel while
eliminating 8.5 million metric tons of greenhouse gas emissions every
year at a 1 year cost of $2.83 per ton. Continuing the program will
help the industry build or retrofit terminals, storage, and rail
capacity to extend access to these clean, low-carbon fuels.
We thank Reps Angie Craig (D-MN) and Axne for championing a 10 year
authorization and funding of this grant program and support its
inclusion in the Build Back Better Act. The proposal evolved from
bipartisan, bicameral legislation cosponsored by Reps. Rodney Davis (R-
IL) and Dusty Johnson (R-SD) as well as Sens. Amy Klobuchar (D-MN) and
Joni Ernst (R-IA). It promises to be an effective way to expand
consumer access to cleaner, low-carbon transportation options.
Additionally, Congress can work with the Environmental Protection
Agency to optimize the Renewable Fuel Standard to achieve carbon
emission reductions. It is clear that 2021 will end without EPA
establishing an RFS rule for the year. It is also clear that EPA cannot
meet its statutory deadline to set a 2022 rule and 2023 volumes before
next year. And EPA must still consider more than 60 small refinery
exemption petitions for 2019, 2020 and 2021.
EPA's delays in rulemaking create uncertainty for the biodiesel and
renewable diesel industry, which hampers growth and opportunities
within the rural economy. The delays allow refiners to manipulate the
RFS rules and create uncertainty for renewable fuel producers. And
uncertainty among biodiesel producers could undercut the value of this
year's soybean harvest and impact jobs and economic growth
opportunities throughout rural America.
Congress must encourage EPA and the Administration to support
reasonable, sustainable growth in biodiesel volumes, issue annual rules
in a timely manner, and increase the transparency of the small refinery
exemption process.
Conclusion
NBB and its members thank the Committee for holding this hearing
and considering this written testimony. The clean fuels industry is a
pivotal contributor to rural economies across the country, creating
jobs and value-added markets for agricultural partners. Moreover,
biodiesel and renewable diesel use can improve environmental health and
reduce associated costs for both rural and urban communities. Cleaner,
better fuels highlight the contribution that rural economies can make
to the nation's overall climate and carbon reduction goals. We look
forward to working with Congress on policies that maximize these
benefits.
Donnell Rehagen, CEO,
National Biodiesel Board.
______
Submitted Letter by Rina Singh, Ph.D., Executive Vice President,
Policy, Alternative Fuels & Chemicals Coalition
November 16, 2021
Hon. Antonio Delgado, Hon. Michelle Fischbach,
Chairman, Ranking Minority Member,
Subcommittee on Commodity Subcommittee on Commodity
Exchanges, Energy, and Credit, Exchanges, Energy, and Credit,
House Committee on Agriculture, House Committee on Agriculture,
Washington, D.C.; Washington, D.C.;
Hon. David Scott, Hon. Glenn Thompson,
Chairman, Ranking Minority Member,
House Committee on Agriculture, House Committee on Agriculture,
Washington, D.C.; Washington, D.C.
Dear Chairman Delgado, Chairman Scott , Ranking Member Thompson,
Ranking Member [Fischbach], and Members of the Subcommittee:
Alternative Fuels and Chemicals Coalition (AFCC) appreciates the
opportunity to submit statement for the record to the United States
House Subcommittee and House Agriculture Committee on the hearing, ``A
Look at the Renewable Economy in Rural America'' being held on November
16, 2021.
AFCC and its member companies applaud the House Subcommittee on
Commodity Exchange, Energy and Credit in addressing both short term and
long term goals [from] which rural America would flourish, and prosper
through new jobs.
Introduction
AFCC is a collaborative government affairs effort organized by the
Kilpatrick Townsend & Stockton law firm and American Diversified
Energy. AFCC was created to address policy and advocacy gaps at the
Federal and state levels in renewable chemicals, bioplastics/
biomaterials, cell-cultured food ingredients, single cell protein for
food and feed, enzymes, alternative fuels, biobased products and
sustainable aviation fuels (SAF) sectors. AFCC member companies work on
feedstocks, renewable chemicals, food, feed, fiber, bioplastics and
biomaterials, and biofuels impacting the biobased economy.
Modernizing USDA BioPreferred' Program
Tracking Renewable Chemicals and Biobased Products: NAICS Codes
The 2018 Farm Bill directs the Secretary of Agriculture and the
Secretary of Commerce to jointly develop NAICS codes for renewable
chemicals and biobased products manufacturers. Biobased product
specific codes would greatly enhance the ability to track and report on
the biobased products industry. While there is no single, centralized
Federal reporting system for collecting data on Federal renewable
chemicals and biobased product procurement, the requirement for the
development of standardized NAICS codes for renewable chemicals and
biobased products will provide a unique opportunity for standardizing
reporting.
AFCC and its member companies strongly urge that OMB and the ECPC
work with United States Department of Agriculture and Department of
[Commerce] to develop the NAICS codes for renewable chemicals and
biobased products as Congress directed in the 2018 Farm Bill. The NAICS
codes for renewable chemicals and biobased products manufacturers are a
requirement now since the specific NAICS codes would greatly enhance
the ability to track and report on the renewable chemicals and biobased
products industry, determine the funding requirements from Federal and
state governments, track innovative activities in the sector, mitigate
climate change, and capture the jobs created.
USDA Federal Biobased Procurement
The USDA Federal biobased procurement program, the
BioPreferred' Program, encourages purchasing ``green.''
While the program has been successful in certifying (labeling) products
over the years, Federal agencies have not been required to buy
BioPreferred' options where available. There is a lack of
transparency with all stakeholders in the procurement process and sales
data. Moreover, when advocates for the BioPreferred' Program
try to tap into the additional discretionary funding approved for the
program in the 2018 Farm Bill, they are asked by Congress: ``How well
is the program doing?'' Without sound sales numbers, it is very
difficult for program advocates to answer this question and for
Congress to continue supporting the growth of the program. If the
program were operating properly, it would be very successful. The
failings of this program need to be addressed immediately, and more
time needs to be spent by USDA and its contractors developing the
procurement side of the program, determining what these sales numbers
are in reality, and operating the program as Congress intended. The
appropriate steps need to be taken in the implementation of the
program. There are contractors assigned by Federal agencies to
facilitate the procurement of biobased products.
Develop Sustainability Parameters: Carbon Footprint
At a time of increased pressures on retailers, brands and
manufacturers to reduce the carbon footprint of their products there
exists the opportunity to create and implement a carbon intensity label
or seal of biobased products for renewable chemicals and biobased
products which are in the USDA BioPreferred' catalog. The
carbon intensity score will be determined through the development of an
American Standard Test Method (ASTM). A carbon intensity label would be
of increased interest and importance to all consumers providing
purchasing choices. Currently, the BioPreferred' Program
does not have sustainability parameters, instead only has a biocontent
which is focused on beginning of life and not end of life for the
consumer product.
Smart Climate Practices for Rural America: Development of ASTM Seal
Regenerative Agriculture Practices
It is imperative that the USDA enables American producers to
participate in climate conscious initiatives, including the promotion
of healthy soils, carbon markets and alternative fuels, that are being
demanded by consumers worldwide. American agriculture has the unique
opportunity to model to the world best-in-class regenerative
agriculture practices and value-added products backed by a traceable,
verifiable data. This must be implemented by meeting producers where
they are today, incentivizing the sound regenerative practices used
across the United States, and providing the tools needed to realize the
opportunities such as precision agriculture technologies and e-
connectivity. The measure of carbon in the soil through standard
practices developed in an ASTM will help farmers obtain tax incentives
such as 45Q using a standardized test method for determining carbon
capture in soil.
Creating an ASTM standard based on good science practices that
utilizes baseline soil carbon storage, annual carbon sequestration
level along with classical life cycle analysis to provide a standard
for certifying a carbon intensity (CI) score across a broad diversity
of product categories.
The ASTM standard would assist in developing standard used in:
45Q for carbon capture in soil[.]
The Growing Climate Solutions Act would create a voluntary,
producer-led carbon sequestration certification program at the
U.S. Department of Agriculture (USDA) and provide farmers with
technical resources to participate in carbon markets.
USDA BioPreferred' Program with sustainable
parameters or carbon footprint, thus providing consumers
choices to purchase biobased products with a carbon intensity
(CI) score.
New Grant Program: The Bioeconomy Development Opportunity (BDO) Zone
Program
BDO Zone Supports Energy Infrastructure in Rural & Distressed
Communities
The Bioeconomy Development Opportunity Zone Program is a
certification and regional designation grant program that enables
economic development agencies and communities to more effectively and
credibly disclose feedstock-related risks and promote biobased
development opportunities to developers and investors around the world.
The BDO Zone Program will leverage up to $50,000,000 to facilitate
the awarding of regional feedstock and infrastructure risk ratings for
communities in U.S. Federal Opportunity Zones to support the
development, scale-up and investment in new facilities that produce
renewable chemicals, sustainable aviation and ground transportation
fuels, and other biobased manufacturing in low income rural and urban
areas.
The BDO Zone Program will match investments from state economic
development agencies with grants of up to $1,000,000; it will match
investments from local economic development agencies, communities,
nonprofits, and the private-sector with grants of up to $100,000. The
program will be funded by $25,000,000 from mandatory Federal funds.
Support a national rollout of the Bioeconomy Development Opportunity
(BDO) Zone Initiative to drive biobased jobs and infrastructure
development in economically distressed communities
Background
The BDO Zone Initiative supports clean energy infrastructure
development, equitable clean energy transition and social justice, by
leveraging the New Market Tax Credit and Opportunity Zone tax
incentives to drive new biofuel, biochemical, biogas and biomaterial
production facilities in economically distressed regions.
Fifty-two million Americans live in economically distressed
communities. These communities are plagued by a lack of investment
capital--but many of them have substantial biomass assets in the form
of corn stover, wood fiber, and food and farm waste. These are
essential supply chain components for plants that produce ground and
aviation biofuel, renewable chemicals and bioproducts. The problem is
that these communities do not have the budget, the platform, or the
credibility to communicate this to biobased investors and developers
around the world.
The BDO Zone Initiative solves the problem by enabling communities
to powerfully leverage biomass assets to serve as anchors for clean
energy-based economic development.
The BDO Zone Initiative awards ``AA'' or ``A'' ratings to areas
that have undergone rigorous and extensive due diligence studies, using
an analysis framework comprised of more than 100 standardized,
transparent and validated risk indicators. BDO Zone Ratings enable
developers and investors to identify areas that qualify for powerful
tax incentives and that present the low feedstock risk characteristics
essential for financing biobased development. In short, BDO Zone
Ratings identify the regions best positioned to locate new plants that
produce biogas, biofuels, renewable chemicals, and biomaterials.
BDO Zone designations are force-multipliers for Federal, state and
local incentive programs like the New Market Tax Credit and Opportunity
Zone tax incentive, and other incentives designed to support renewable
energy investment in economically distressed areas. Where BDO Zones
overlap with these tax incentives, they supercharge the ability of
these programs to unlock billions of dollars into biobased economic
development and to create renewable energy jobs in economically
challenged areas across the country.
Thank you for the opportunity to provide statement for the record.
Sincerely,
Rina Singh, Ph.D.,
Executive Vice President, Policy,
Alternative Fuels & Chemicals Coalition.
______
Submitted Questions
Question Submitted by Hon. J. Luis Correa, a Representative in Congress
from California
Response from Nan C. Stolzenburg, Principal Planner and Founder,
Community Planning & Environmental Associates
Question. Renewable natural gas (RNG) is naturally occurring
biomethane captured above the Earth's surface from sources such as
dairies, poultry operations, and hog farms. When it is cleaned up, it
is put into our existing natural gas infrastructure and can be used as
a carbon neutral or carbon negative transportation fuel.
In 2020, California fleets fueled with California-produced RNG were
carbon-negative, based on an annual average carbon intensity score of
^5.845 gCO2e/MJ, the lowest of any motor fuel in use
including renewable electricity. New York State, another dairy state,
is also leading in RNG production and use of clean-burning RNG in heavy
duty vehicles.
Ms. Stolzenburg, what incentives do you think are needed in order
to continue investments in rural America, so that we can capture this
waste liability and turn it into a clean transportation fuel?
Answer. February 7, 2022
Thank you for reaching out to me requesting additional information
regarding the excellent question posed by Representative Correa. I am
pleased to be able to provide additional information for consideration.
Indeed, capturing biogas from farms is an important renewable
energy source that benefits the environment, contributes to farm
sustainability and profitability, provides new fuel sources, and that
benefits our rural communities. In this memo, I have addressed several
types of incentives that I feel are important. One group of incentives
is oriented to communities to enhance planning for and acceptance of
renewable energy facilities, and the other is oriented towards
enhancing both profitability and support for participating in biogas
technologies.
On the farm side, financial viability is paramount in order for
this to be successful. Adequate incentives need to be in place to
enable agricultural producers to reduce greenhouse gas emissions, to
reward quality environmental performance, and ultimately, to produce
renewable energy. At the same time, it is important to also view
provision of education and ongoing support as a needed incentive to
help farmers learn about and implement these technologies. Another area
out of my expertise for you to consider are incentives to utilities.
Some of the incentives could include:
1. Expand the California program (Cap-and-Trade Program) to become a
national program.
In 2006, California passed the Global Warming Solutions Act,
which called for the state to reduce its greenhouse gas
(GHG) emissions to 1990 levels by 2020. A key component of
this act is the Cap-and-Trade program, which created one of
the largest carbon markets in the world. This was
accomplished by setting a declining permissible level of
GHG emissions (the ``cap'') for entities in California and
requiring emitters to stay below the cap by either reducing
their emissions, or by purchasing and redeeming carbon
offset credits, which represent a real reduction of 1
metric ton of carbon dioxide equivalent emissions. Carbon
offset credits are valuable fungible commodities that can
be generated by registered compliance offset projects,
which are awarded credits based on GHG emission reductions
that are monitored and verified. A key component of the
compliance offset program is the livestock protocol, which
allows livestock operations such as dairy, cattle and swine
farms to generate carbon offset credits by installing
manure biogas control systems to reduce methane emissions
from their facilities. After undergoing monitoring and
verification, the livestock operators are awarded carbon
offset credits and can sell these credits to covered
entities in the Cap-and-Trade program. This not only
provides a valuable additional revenue stream for farmers,
but also allows them to transition their farms toward net-
zero operations by significantly reducing the emission of
methane, which is a powerful greenhouse gas that is twenty-
five times stronger than carbon dioxide.
2. Expand the California Low Carbon Fuel Standard (LCFS) program to
become a national program.
In 2011 the California Air Resource Board (CARB) began
implementation of the LCFS regulation, which was designed
to incentivize the use of low-carbon fuels in the
transportation sector of California, and to incentivize the
production of such fuels. A key component of the LCFS
program is the production of renewable natural gas (RNG)
through livestock anaerobic digestion projects, which
allows farmers to produce RNG from biogas generated from
the digestion of manure at their facilities. The farmer is
awarded LCFS credits (which are fungible commodities
similar to carbon offset credits from the Cap-and-Trade
program) when the fuel is used in the transportation sector
in California. The number of credits awarded is based on
the carbon intensity (CI) of the fuel that is generated.
The lower the carbon intensity of the fuel, the more
credits can be awarded. Other states are already beginning
to adopt a legislation similar to the Low Carbon Fuel
Standard, to incentivize the de-carbonization of the
transportation sector, which is one of the biggest
contributors to climate change.
Both the Cap-and-Trade program and the Low Carbon Fuel Standard
have paved the way to further incentivize the
implementation of anaerobic digesters at livestock farms,
by awarding farmers with valuable commodities that add a
significant additional revenue stream for farmers, as well
as providing a structured and scientifically defensible
protocol for drastically reducing methane emissions from
the agricultural sector. Other states should use these two
programs as a template for creating their own legislation
that incentivizes anaerobic digestion projects at livestock
farms, to create important sources of revenue for local
farmers, bolster rural economies, and significantly reduce
methane emissions from the agricultural sector, which has
been identified as a major contributor to climate change.
3. Expand USDA C-Change grants, other grants, and loan programs. Tax
incentives, tax credits to offset up-front costs associated
with building biodigester systems, cost sharing, cost
reimbursement, loan guarantees, and other funding sources
must be in place, but also must be easy for the farmer to
access, and easy to administer in order for them to take
advantage of. Adequate incentives in these forms should be
readily available to both farmers and utilities. Financial
incentives should facilitate private financing, carbon
pricing, and clean fuel standards.
California created the Dairy Digester Research and Development
Program (DDRDP) which awards competitive grants to
implement dairy projects that result in methane emission
reductions and minimize or mitigate adverse environmental
impacts. As per EPA's AgStar, this program has been
``instrumental in transforming the agricultural-based AD
industry. Most of these projects are focused on the
generation of RNG to be utilized in California and are
sourced from clusters of multiple farms.'' This is an
example of an incentive program that should be expanded
beyond California.
4. Increase awareness of and support to expand outreach to farmers
through such programs as the EPA AgStar program and other
educational efforts. There must be educational
opportunities and advocacy in place so that the farm
community learns about and understands the financial,
technical, agricultural, and community implications. Many
farmers are unaware of any of these programs, their
benefits, or how to get involved. Once involved, they need
a variety of technical support to implement and manage the
program. To expand the reach to all farms who are already
eligible for digester technology (such as those with more
than 500 cows, or 2,000 swine), there needs to be a
concerted effort to `get the word' out to fully support
these efforts. In addition to the AgStar program, an
additional incentive would be to ensure that farmers have
full support throughout the process. Enabling such
additional support through agencies such as Cooperative
Extension and our land-grant universities would be most
helpful. This is an area that Cooperative Extension can be
extremely helpful to work hand-in-hand with farmers on the
local level.
5. Many rural communities react negatively to renewable energy
facilities and activities and local plans and land use
regulations often place barriers to this and other types of
renewable energy facilities. Examples of `NIMBY' related to
renewables (especially solar) are extremely prevalent.
While currently there are many challenges solar and wind
facilities face, it is also relevant to the discussion of
biomethane production and transportation when local
residents become concerned about pipelines, truck traffic,
noise, smells, fear of pollution, and industrial
development in their community. This is a community
planning issue and one that we cannot ignore.
In order to integrate renewable energy into local landscapes
and economies at a scale and design that also meets the
many other needs and goals a community might have, there is
a large need for adequate community planning. Many rural
communities, especially, feel that the burden of hosting
such facilities and negative consequences that may result
from that fall disproportionately on them to serve urban
areas. Communities need to be able to understand, evaluate,
and find mechanisms to include and balance a variety of
land uses. This is usually accomplished through long-term
comprehensive or strategic planning, followed by updating
local regulations. Many communities have neither the funds
nor the expertise to develop these plans. Incentives to
promote these activities include providing technical
support and planning grants to local governments to improve
their planning and zoning. These grants should require
evaluation of and planning for expanded renewable energy
facilities, as well as smart growth, transportation- and
transit-oriented development, and farmland protection
measures. Few states and even fewer local municipalities
have actually gone through a concerted planning process to
identify locations that would be acceptable and suitable
for renewable facilities.
Good planning would involve identifying both natural resources
and critical local features that need to be protected and
identifying locations that have the right conditions for
the renewable facility, such as proximity to transmission
lines. Through use of Geographic Information System
technology, these criteria for siting solar and other
renewables can be easily applied and mapped. Communities
could collectively make choices about where they can accept
such facilities. Local policies can be fashioned to
facilitate this. Such planning would give both renewable
energy developers and local communities guidance as to
where to focus efforts and this will lead to more efficient
and better approval outcomes. It would eliminate the
perspective that renewable facilities are being `foisted'
on them but that benefit others.
I also reiterate information from my oral testimony that offers
additional details on several community-level incentives that I
recommended:
Provide assistance in the form of technology and staff to
help communities navigate myriad sources of information. Fund
agencies such as Cooperative Extension or others to serve as
information clearinghouses to aid rural communities.
Establish policies that incentivize use of disturbed sites
first, as well as rooftop, parking lot, and building-integrated
solar facilities in all locations--rural and urban--first
instead of green locations. Do not put rural areas in the
position of having to supply all renewable energy to urban and
suburban areas.
Provide funding to support farmland protection. Without
farms, we will not be able to have farm-related biodigesters.
Thank you for the opportunity to provide these answers for the
record.
Response from Randy Aberle, Executive Vice President of Agribusiness
and Capital Markets, AgCountry Farm Credit Services
Question. Renewable natural gas (RNG) is a renewable fuel source
driving huge clean energy investments in rural America. Turning
agricultural waste into renewable natural gas (RNG) is a win-win for
farms: it generates an additional source of income and also mitigates
the methane emissions from livestock manure. The process of building
digesters and processing biogas, however, can be a daunting endeavor.
Companies like Clean Energy Fuels, based in California, invest
millions in dairy farms throughout the state, providing needed capital
investments and guidance for farms as they install anaerobic digesters
for capturing RNG for use in transportation.
Mr. Aberle, how do you think the Federal Government can continue to
incentivize private investment in this digester technology in the rural
communities where your organization operates?
Answer. January 28, 2022
To the Honorable Rep. Correa,
AgCountry Farm Credit Services and the Farm Credit System support
private investment in digester technology to capture renewable biogas
by financing eligible borrowers investing in this technology. Please
see the linked published articles below:
https://farmcredit.com/story/dairy-goes-green-california
http://biomassmagazine.com/articles/17805/amp-americas-
brings-minnesota-rng-project-online
AgCountry and the Farm Credit System understand the value of this
renewable energy source that reduces methane gas emissions from
livestock manure. Consumers and businesses can utilize this renewable
source of energy to heat their homes and run their businesses. Many of
these private digester technology providers do not meet the eligibility
and scope for Farm Credit System financing, which is subject to
constraints around ownership structure and requirements for owners to
have some feedstock throughput to the project.
From a Lender's perspective, the Federal Government could encourage
more private investment in this industry by:
1. Broadening and modernizing the eligibility authorities and scope
of financing so AgCountry and the Farm Credit System could
provide financing to credit worthy rural entrepreneurs to
make these technology investments in rural America.
2. Providing direct grants and/or tax credits directly to both the
digester technology providers and the agricultural
producers providing the manure. This would encourage more
investment in this technology and more ag producers willing
to consider digester projects.
3. Providing 100% loan guarantees for lenders to finance the
construction and installation of the digester projects.
Most of these installations are large projects and do not
fit the Guaranteed Loans and Grants under the Rural Energy
for America Programs for Renewable Energy Systems (REAP).
Increased government loan guarantee levels would allow
entrepreneurs' private investment dollars to be leveraged
with lender funds with limited lender risk.
The Federal Government should continue to support and incentivize
private investment in renewable energy in rural communities through
USDA and other bioenergy programs. These Federal incentives supplement
the private investment to accelerate the renewable energy
infrastructure build-out for the benefit of agriculture, rural America
and the environment. The government support of these projects provides
a better foundation towards a successful bioenergy project.
Please reach out directly with any additional questions. Thank you
for the opportunity to respond.
Sincerely,
Randy Aberle,
EVP Agribusiness and Capital Markets.
attachment 1
[https://farmcredit.com/story/dairy-goes-green-california]
Dairy Goes Green in California
Southern San Joaquin Valley, California
Farm Credit West \1\ supports the dairy industry, the
environment and local communities by financing a methane
converter project in California.
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\1\ https://www.farmcreditwest.com/.
In less than a decade, California's dairy industry--the nation's
leader in milk production and the state's largest agricultural
commodity-faces a daunting requirement: reduce greenhouse gas emissions
from manure storage by 40 percent. Considering the industry's 1.7
million dairy cows are the state's largest agricultural methane
producer, it's an imposing task to accomplish by 2030--but given the
economic stakes, a crucial one.
Farm Credit: financing the future
Deeply committed to its customers, Farm Credit West has taken bold
action and become the principle financier of a solution to this
challenge. It's a solution that simultaneously helps dairy producers
reduce their emissions and meet the state mandate, while also providing
cleaner air and economic vitality to some of California's most under-
served areas.
Farm Credit West has partnered with California Bioenergy (CalBio),
a dairy digester developer, Chevron U.S.A. and California dairy farmers
to build three clusters of methane digesters and upgraders across
California's southern Central Valley.
The digesters and upgraders, built by CalBio, repurpose methane
released from dairy manure by first capturing, then converting it to
renewable natural gas (RNG). The methane captured in digesters at the
dairy farms is sent to a centralized processing facility where it is
upgraded to RNG and injected into local utility SoCalGas and PG&E's
pipelines. The RNG is then marketed as an alternative fuel for heavy-
duty trucks and buses, many of which regularly travel the Central
Valley corridor.
A win-win-win
Farm Credit West's plan moving forward comprises 17 digester sites
in three different clusters across Kern, Tulare and Kings counties.
Dairy owners provide the manure and the site on which to build the
digester. The farmers then receive a percentage of the profits from the
sale of RNG, as well as renewable energy credits from California's cap-
and-trade energy market and the National Renewable Fuel Standards
program.
In addition to providing an elegant solution to the dairy
industry's looming emissions-reduction mandate, this project attracts
numerous construction and engineering jobs to the state's Central
Valley, an area that struggles with high rates of poverty and
joblessness.
Farm Credit West Senior Vice President Jonathan Kennedy has been
working on the project for more than a year. He describes it a win-win-
win for California.
``This project is good for all the stakeholders involved,''
Jonathan said. ``Cleaner air benefits not just agriculture, but the
whole community. In terms of the dairy industry, it provides additional
viable income. And the communities where these will be built-some are
the most impoverished in the state--will benefit from well paid, stable
jobs.''
Farm Credit stepped up to the challenge
Jonathan, who has worked for Farm Credit West for 31 years, says
the deal was the most complex he'd ever worked on. Since they had never
financed a digester project this large, the underwriting process
involved numerous meetings with attorneys and real estate
professionals; drawing up land leases and pipeline easements; drafting
agreements between dairy farmers and CalBio; and determining the value
of fuel and how it will be paid for, among other steps.
In the end, Farm Credit West's history of supporting local
producers and experience with the dairy sector made the decision to
finance a forward-thinking project with numerous benefits to the dairy
industry, the environment and community an easy one.
``Our commitment to agriculture and to the dairy industry in all of
California, and also the personal relationships we have with dairy
producers, made it clear this is something we needed to be a part of,''
Jonathan said. ``Other banks may not have looked at it from that
perspective.''
The project is owned by individual dairy farmers, Chevron, and
California Bioenergy, LLC, whom all contributed significant equity.
Farm Credit West, in conjunction with CoBank, provided $50 million in
loan funding. Additional agencies provided support and capital too,
including the California Air Resource Control Board, the California
Department of Food and Agriculture, the California Energy Commission,
the California Public Utilities Commission and the Natural Resources
Conservation Service.
A perfect fit for Farm Credit's mission
Farm Credit West President and CEO Mark Littlefield echoed
Jonathan's sentiments. In a video recorded for a virtual ribbon cutting
in September 2020, Mark said providing the economic engine for this
project fulfills Farm Credit West's mission to support agricultural
producers and the communities they serve.
``The California Bioenergy project allows our customers to meet
their business goals, strengthens rural economies, improves local air
quality and contributes to a healthy, sustainable future,'' Mark said.
``For more than a century, Farm Credit West has supported rural
communities and agriculture with consistent, reliable credit and
financial services. As a member-owned cooperative, we are intimately
connected to the pressures and opportunities facing dairy producers
today, and it is our mission to develop unique solutions to help these
growers thrive. We've been adapting and innovating with our customer-
owners for the last one hundred years; we won't stop now.''
A version of this article first appeared in Farm Credit
West's Spotlight Magazine,\2\ titled, ``Financing the Future,''
by Sarah Kearbey.
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\2\ https://issuu.com/farmcreditwest/docs/
fcw_spotlight_winter_2020_web.
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attachment 2
http://biomassmagazine.com/articles/17805/amp-americas-
brings-minnesota-rng-project-online
Amp Americas brings Minnesota RNG project online
By Amp Americas D March 16, 2021
Amp Americas on March 10 announced that its fourth biogas
facility producing renewable natural gas (RNG) from dairy waste
is now operational and delivering RNG to the pipeline. The
facility is located in Morris, Minnesota. Source: Amp Americas.
Amp Americas, a pioneer in the renewable transportation fuel
industry, on March 10 announced that its fourth biogas facility
producing renewable natural gas (RNG) from dairy waste is now
operational and has begun delivering RNG into the Alliance natural gas
pipeline to be used as transportation fuel. Located in Morris,
Minnesota near the state's western border, the new plant is Amp
Americas' largest dairy RNG project to date and the state's first on-
farm biogas-to-vehicle fuel facility. With this project, Amp Americas
has now developed dairy RNG production on 12 dairies with over 66,000
cows.
Working with Riverview LLP, a dairy operation based in Minnesota,
the project captures over 700,000 gallons of manure per day from three
different sites, converts it into renewable methane, purifies it into
RNG, and compresses it to inject into the pipeline. Along with two RNG
projects in Indiana and another in Arizona, Amp Americas is now
operating four of the largest dairy biogas-to-transportation fuel
projects in the country, producing a total of over 10 million gallons
of RNG annually. Amp Americas markets its dairy RNG to fleets in
California along with gas from a number of other dairy, landfill, and
wastewater projects developed by others through its Amp Americas
Marketing arm.
``We're thrilled to partner with Riverview and to launch our
largest project to date,'' said Grant Zimmerman, CEO of Amp Americas.
``We installed pipelines connecting three of Riverview's dairies,
restarted mothballed digesters, and built our RNG plant and the
pipeline injection station. This project will produce millions of
gallons of 100% renewable transportation fuel and will prevent 100,000
tons of greenhouse emissions each year, the equivalent of taking over
20,000 cars off the road annually.''
Brad Fehr, partner of Riverview LLP explained, ``We were skeptical
of digester projects and developers before we decided to work with Amp
Americas. They built an important project for our community, and we
look forward to our long-term partnership.''
During construction, the project employed 140 people, and now in
operations, Amp Americas has added six permanent full-time jobs in
Morris, Minnesota bringing the company's team to a total of 60 across
six states. Amp Americas will operate the Riverview RNG facilities
under its Amp Americas Services business, a unit of Amp Americas that
leverages its 9 years of unique experience, expertise, and leadership
in biogas operations. Amp Services also operates other dairy RNG
projects such as the company's Indiana projects now owned by Generate
Capital, and another dairy RNG project located in Arizona.
Amp Americas recently expanded its ongoing relationship with EIV
Capital, LLC, to provide the required equity investment needed for
continued buildout of the business. David Finan, partner of EIV
Capital, LLC stated, ``Amp's growing platform provides true value to
the communities in which it operates and also to its employees and
investors. We are grateful to work with a team that can leverage its
decade-plus experience of continuous operations in the dairy RNG space
to build a leading business in the development and management of these
assets.''