Creating Long-Term Energy Alternatives for the Nation Act of 2007--Continued

Floor Speech

CREATING LONG-TERM ENERGY ALTERNATIVES FOR THE NATION ACT OF 2007--Continued -- (Senate - June 20, 2007)

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Mr. GRASSLEY. Mr. President, I thank the Senator for yielding. I am glad to come to the floor to speak about renewables. I am going to speak against the Kyl amendment.

I think we ought to put things in perspective. For two decades, maybe longer than that, this country has been seeking various approaches to alternative energy so that we are not dependent upon foreign sources and, more recently, violent and unpredictable sources of energy for the United States for reasons of national security, for reasons of our economy. There are a lot of good reasons we shouldn't be so dependent upon fossil fuels and foreign sources of energy. So we have had two or three decades, starting out with ethanol and now going into other things such as biodiesel, wind, Sun, and things of that nature.

Now we are finding that the things this country was so united on, such as the need for renewables, the need for helping agriculture, the need for lowering our trade deficit, the needs of national security, the needs of a cleaner environment--everybody was united that we ought to be doing it, and now we are being somewhat successful. It used to be we would have to listen to all of the excuses of big oil, fight big oil, why we shouldn't have renewables. Now we are finding out about the high price of food, the high price of animal feed, just as if all of the problems of our country are on the backs of the American farmers, which is very unfair. Now we are finding some dissension from other industries being affected. We are still in the infancy of these industries, whether it is ethanol after a couple of decades or whether it is biodiesel after 3 or 4 years. We are in a state of infancy yet in renewables.

We ought to be as united today as we were over the past two decades on what is right for this country, good for agriculture, good for the environment, good for our national defense, good for good-paying jobs in parts of rural America where it has never been before. Everything about it is good, good, good. We better stick together because otherwise we will continue to be dependent upon those violent regions of the world for energy; we are going to be dependent on something God made a finite quantity of, such as fossil fuels. We need to move forward, united. This is the second amendment today and, who knows, we may have 10 other amendments which are very detrimental to the causes of getting this infant industry of renewables off the ground.

Having said that as a backdrop, I wish to speak specifically about what is wrong with the amendment that is before us. I can't replace the good things--or I can only add to the good things which the Senator from Montana has already spoken to. But there is no cap on any biodiesel production. They may go forth and produce and meet their specific chemical standards. They have the right to produce as many gallons of biodiesel as they like, and it will be qualified for the excise tax credit through the end of 2010. Now, people will argue that it ought to be longer, but you have to fit things into what we have offsets for, so it is the year of 2010. If they are a small producer, they will be able to receive the credit until December 2012. If you are a noncoprocessing facility and do 100 percent biomass, not including chemicals, catalysts, and the like, they have the same rules as biodiesel. If you coprocess at a facility, your total credit is limited to 60 million gallons. If you claim a renewable diesel credit, the 60 million gallons is the current definition of a small producer. So a coprocessor facility will not be able to receive any more tax benefits than the small producer. For example, if you have a 100-million-gallon facility that you are concerned about, they have a built-in $40 million advantage over any coprocessing facility. Obviously, a barrel of vegetable oil or animal oil is substantially more expensive than a barrel of crude oil, and the credit by law is limited to only the volumetric amount of the biomass.

I hope this makes it clear that we should not support the amendment of the Senator from Arizona.

I yield the floor.

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Mr. GRASSLEY. Mr. President, this is the third amendment today that has been very detrimental to the future of ethanol and other renewable fuels.

If we had had this attitude expressed 20 years ago when we started, in a very elementary way, down the road to a successful renewable fuels industry that we are now developing, and it is still an infant industry, we would never be here today, where we could say that we have a strong opportunity of renewable fuels.

This is the third amendment that raises questions about whether we are going to continue to have investment in renewable fuel production and everything that is connected with it.

Something that bothers me more than anything else, and I have expressed it on previous amendments today, is throughout the development of renewable fuels, and particularly agriculture being the production of the renewable feedstock, we have always had agriculture very much united between renewable fuels.

Within the last 4 or 5 months, because corn has gone from $2 to $4 a bushel, we now have beef producers raising questions about whether we ought to have an ethanol industry. You have the pork producers--and evidently we have the poultry people--raising the same question. If agriculture is not going to be united, if they had not been united, we would never have gotten here. I do not know what happens in a matter of 4 or 5 months, that after 20 years, all of a sudden things are bad about renewable fuels, and the farmer is being blamed for everything, $4 corn, food going up, energy prices going up.

You know, food prices, a farmer gets a nickel out of a big box of Corn Flakes that is half full of air when you buy it for $4. The farmer is being blamed for $4 corn, raising the price of food, raising the price of energy, causing livestock feed to go up.

You know, for the last 40 years, we have had a principle in agriculture that we call the hog-corn ratio. It was never felt, during the corn-hog ratio, when you use that, that the high price of corn was bad for livestock because, you
know, livestock prices would soon rise, and it was considered good, good, good. Everything about ethanol has been considered good, good, good:

Good for the farmers, good for the environment, good for high-paying jobs in the small towns of rural America, good for national defense because of less dependence upon violent parts of the world for petroleum to be delivered, good for our balance of trade. Everything is good, good, good about renewable energy.

Now, in the last 4 or 5 months--do you think the price of corn is going to be $3.50 or $4 forever? This fall at harvest time, we might find corn at $2.50. We had 77 million acres of corn planted last year. We have 91.5 million acres believed to be planted this year. When June 30 comes and the USDA makes their next report, it may be 95 million acres of corn--the most acres planted since 1944. When you have that supply of grain coming in, the fact that the price is going to be where it is today is a dream. In 1995, we had a drought. Corn got to $4 or $5. Everybody thought it was going to be $4 or $5 for the next 5 years. The next harvest season, it was down to $1.60 a bushel. Here we have people raising questions about the stock ratio, the stock on hand that we have of grain, that when it gets down to a certain level, we are not going to use grain for renewable fuels. What are you going to do? Are you going to go shut down every ethanol plant that is operating in the United States? What other amendment comes to the floor with the idea that we are going to shut down an industry under certain circumstances? It never happens.

This is not a very good approach, particularly the use of stock ratios as proposed in this amendment. There are even questions about the use of that among economists at this point.

This is a very bad amendment for renewable fuels, for agriculture. All that is good about renewable fuels, and you shut down the whole industry, it is for naught. You can't do that.

I ask Members to vote against the amendment.

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