Ethanol and the Energy Bill

For the past century, the United States has supported public policy initiatives to increase the use of renewable fuel ethanol in motor vehicles. The modern fuel ethanol industry was created with the passage of the Energy Security Act of 1978. The Act created favorable tax legislation and research and development commitments which represented the first of numerous bipartisan legislative efforts to expand fuel ethanol production in the United States. As a result of ethanol's bipartisan support, several goals and technological advancements have been achieved by the U.S. fuel ethanol program during the past two decades.

-Ethanol capacity increased from essentially zero to nearly 3 billion gallons per year, and plant efficiency increased steadily at a rate of about 2% per year;

- Refueling infrastructure investments, public acceptance and automaker endorsements have led to the
routine use of ethanol in gasoline blends, cleaner burning reformulated gasoline, and alternative fuel
vehicles. Today, one out of every eight gallons of gasoline sold in the U.S. contains ethanol, and ethanol vehicles are now routinely produced and sold to the public at no extra cost. More than 3 million
flexible-fuel vehicles are currently on the road;

- High protein by-products made in the fuel ethanol production process, such as distillers dried grains and gluten feeds, have gained the full acceptance of feedlot operators and dairymen as premium feeds for
their cattle, and represent billions of dollars in valued-added exports;

- Ethanol's ability to reduce toxic air pollution and greenhouse gas emissions is recognized;

- The US ethanol program has resulted in a new industry representing billions of dollars in domestic
investment and producing more than 240,000 jobs that increase federal and state tax revenues while
strengthening rural communities across the nation;

- A Renewable Fuels Standard, with guaranteed annual increases in ethanol production, will ensure that
these benefits will double over the next decade.

- Passage of the Energy Independence and Security Act of 2007!

These achievements, in concert with major advances in technology to convert cellulosic biomass into fuel
ethanol and other biofuels, have set the stage for a significant expansion of the industry during the next
decade. Advances in genetics, farming practices and feed grain production will increase the efficiency of
ethanol production from conventional and new energy crops. More importantly, the use of cellulosic
biomass (i.e., agricultural residues, wood wastes, yard and garden trimmings and the biomass fraction of
municipal waste) essentially eliminates the upper boundaries to the production of ethanol and other biofuels.

The use of ethanol can also help offset U.S. dependence on imported oil. Under no circumstance should dependence on imported oil at the level we are now experiencing in this country be acceptable. Exacerbating the situation is the fact that the global demand for petroleum in developing countries like India, China, and Korea is estimated to double the demand - and along with it perhaps the price - over the next two decades.