Remarks by Senator Tom Daschle at the American Coalition for Ethanol Annual Meeting
Text as Prepared for Delivery
Thank you, Dave.
For those of you who know Dave well, you know that his email address begins with the capital letters D-E-H. Figuring that the “D” stands for Dave, and the “H” stands for Hallberg – I looked at the “E” for a while and remember thinking: “Ethanol really is his middle name.”
Dave, even though the “E” doesn’t stand for “ethanol” – your commitment is unparalleled, and I couldn’t be more proud to have you as a friend.
As Dave mentioned, we’ve been at this a long time. Looking out at all of you today, I continue to be amazed at our progress. The first meeting of the American Coalition for Ethanol was 19 years ago. I don’t remember if it was in Sioux Falls or Grand Forks, but it doesn’t much matter, because we could have held it in a telephone booth.
In fact, the only national interest our first meeting could have gotten was from the FBI, because with founding fathers like Merle Anderson from Climax, Minnesota, and Orrie Swayze of Wilmont, SD – they could have thought it was a gathering of crazy economic separatists.
Of course, I’ve come to realize that the thing that separates “crazy” from “visionary” – is progress. And we’ve made a lot of progress. Listen to some of these recent headlines:
From Fortune Magazine: “Ethanol is the answer to the energy dilemma. It’s clean and green and runs in today’s cars. And in a generation, it could replace gas.” (2/6/06)
From the New York Times: “Ethanol Is the New Real Estate” (7/8/06)
From the San Francisco Chronicle: “Ethanol as Economic Elixir” (6/12/06)
From the Philadelphia Enquirer: “Automakers ask Congress for more Ethanol stations” (5/19/06)
From the Washington Post: “Ethanol Is in High Demand, Lifting Farm Fortunes.” (2/18/06)
From the USA Today: “Ethanol a Real Option to High Gas Prices.” (8/26/05)
That’s a big change. How well I remember back during the debate surrounding the 1990 Clean Air Act Amendments, the first President Bush called ethanol: “Daschle Gas.” He didn’t mean it as a compliment. I’m not sure he was even talking about fuel, to be honest. I consider it a sign of progress that what the father thought was a joke, the son was willing to call – in the State of the Union speech – a necessity.
We owe this progress, in large measure, to the dedication and hard work of the American Coalition for Ethanol. We also owe our success to the contributions of the Governor’s Ethanol Coalition, now chaired by my good friend Governor Kathleen Sebelius of Kansas, and co-Chaired by Governor Heineman of Nebraska. I’m pleased to be a strategic advisor to the Governor’s Ethanol Coalition, along with a coworker of mine by the name of Bob Dole.
People are sometimes surprised two former Leaders of opposite parties voluntarily choose to work together in D.c= these days. But when I left office, one of the first calls that I got was from Senator Dole. Bob wanted to talk to me about post-Senate options. Immediately, I got a little nervous. After all, some of you may remember that Bob’s first job after leaving the Senate was as the spokesman for Viagra. Never having used the stuff…As it turns out he made a different offer…To join him at the law firm Alston & Bird – where one of our specialties is energy.
Thanks to hard work, those leaders who went from crazy to visionary, we’ve reached a point where ethanol is not a pie-in-the-sky idea, not a boutique fuel, but a viable and growing solution to America’s energy future.
If you look at our energy policy over the past several years, we have been borrowing money from our economic competitors in order to indirectly subsidize some of the very people who we are asking our soldiers to fight.
Finally – our country and our President seem to have acknowledged that while we may never be able to drill our way to energy independence, we can begin to grow our way there.
Audiences to whom I speak are always surprised to learn that last year, ethanol displaced 170 million barrels of oil, lowered the price of gasoline for consumers by eight cents a gallon, and reduced greenhouse gas emissions by eight million tons – which is – I know you know – equal to taking over a million vehicles off the road.
Six years ago, when Senator Lugar and I introduced the first RFS legislation, we faced great skepticism about our initial goal of 5 billion gallons by the year 2012. At today’s pace, it is a source of pride for me that the industry will exceed the current RFS minimum requirement of 7.5 billion gallons per year by the end of next year—five years ahead of schedule.
And the prospects for tomorrow can be even brighter – when it comes to reduced energy dependence, when it comes to trade, and when it comes to strengthening the rural economy.
Everyone in this room knows the numbers. The Renewable Fuel Standard set by Congress in 2005 will, by 2012, reduce crude oil imports by 2 billion barrels, cutting the amount we pay to foreign oil producers by $64 billion. I enthusiastically applaud ACE and the GEC for leading the charge for new legislation that would double the RFS requirement, to at least 15 billion gallons annually – a number that represents about 10 percent of US gasoline consumption.
When it comes to reduced energy dependence, by making the investments we need to make, we can turn America’s farms and fields into the victory gardens of the 21st century. Just as ethanol can reduce energy dependence, it can also help us shrink what is becoming a dangerously large trade deficit. Right now, we are running the largest trade deficit in our country’s history. There are only two industries in America currently running a merchandise trade surplus… Hollywood and agriculture: films and farms.
This may not be a very Hollywood-looking crowd, and that’s okay, because a full one third of our trade deficit comes from energy-related petroleum imports. And that’s a gap you’re helping to close. Some of you may have seen the op-ed by President da Silva of Brazil a couple of weeks ago in the Wall Street Journal. His is a country that mandates E-20 in all gasoline, and offers E-100 at 30,000 stations… Making Brazil now completely oil self-sufficient.
But President da Silva wrote, and I quote “Although Brazil is often seen as a model in the ethanol sector, we do not wish to achieve a dominant global position… it is important we have as many countries as possible producing ethanol.” I couldn’t agree more. If we simply go from importing foreign oil to importing foreign ethanol, we’re not decreasing our dependence, we’re not creating jobs, we’re not achieving the full benefits that ethanol…can offer. But, by producing and using more home-grown ethanol, we can help restore balance to our trade imbalance.
And the potential benefit to our rural economies is huge. In my home state of South Dakota alone, today’s ethanol industry accounts for more than $1 Billion in economic activity each year. An important part of ethanol’s story is…jobs.
Last year, nationwide, ethanol production supported the creation of 154,000 jobs including 19,000 in our hard-hit manufacturing sector. According to one study, a new American ethanol plant creates 700 new permanent jobs, more than $1.2 million in local and state tax revenue, and $19.6 million more in local household income. And under the Renewable Fuel Standard set by Congress last year, our industry will, by 2012, create 235,000 new jobs, increase US household income by $43 billion, add $200 billion to the GDP, and create $6 billion in new investment in renewable fuel production spending.
Ethanol can fuel a lot of engines – and it can be an economic engine as well.
But for that to happen, we need to continue to make progress.
Some of that progress will be made legislatively – a few years ago, a legislative update would have taken 2 minutes. Today, proposed legislation in Congress and state houses across the country spans the spectrum, from bills that would increase the production of ethanol by raising the RFS levels and commercializing cellulosic biomass ethanol production, to bills that would expand upon the nation’s E85 infrastructure and end use system.
For example, Congress should pass a requirement that most new vehicles sold in America be Flex-Fuel vehicles within 10 years. And all retail gas stations have E-85 pumps in half of their stations in the same time frame.
There are other initiatives, too, that are critical to our success. One that I want to mention in particular is the ballot initiative in California. That would allow in that state what is already being done in virtually every other oil producing state. Oil companies would pay a royalty on what they take from California’s coastal waters and dedicate those funds to developing and deploying alternative fuels.
We know that there is a viable, homegrown, and cleaner burning alternative to oil out there on the market. We need to work to see that the people of California realize it, too. The problem is not going to be the alternative – it’s going to be the oil companies.
They are going to fight this, and fight it hard. They have a lot of cash. In fact, record amounts. They had already put in $10 m, and just last week one company alone (Chevron) wrote a check for $9 million to beat the initiative. We know that they see this initial $19 m — which will grow to $100 m — as a down payment to guarantee future record quarterly profits.
For the sake of the future of the ethanol industry, it is critical that we strongly support this initiative with financial resources of our own.
In all of our legislative efforts, two major trends are very encouraging. The first is that many of the sponsors are new supporters of the ethanol industry. And the second is that in an era where there is so much partisanship and division, this has become a bipartisan endeavor: Lugar and Obama… McCain and Biden — the appeal of renewable fuels is helping to bring parties together for the good of the nation, and that’s an extremely positive sign.
The success we see today and the prospects for greater success in the future bring challenges, however. How well we meet those challenges will, in large measure, dictate how we write the next 25 years of ethanol’s story.
One of the reasons for our success is that people have come to realize that ethanol – and the people who promote it – have always been acting more in the national interest than in self-interest. And because we – as an industry – have been acting in the national interest, we have received some national benefits: generous tax credits… demand enhancement measures such as the RFS…encouragement for farmer-owned plants, just to name a few.
To continue to enjoy those benefits, and to continue to grow, there are things we cannot allow to happen to this industry.
Three things we must do:
First, we cannot allow for contentment. We must not be satisfied.
Many in this industry are doing well by ethanol right now. But that is no excuse for doing nothing further. The only guaranteed consumption is from the E-10 standard blend market – or about 15 billion gallons annually. The amount coming online could eclipse that significantly – leading to a glut of production without a developed market to consume it. The real opportunity for growth is over and above the blend market. Ethanol will truly succeed when it’s not a petroleum additive, but when it’s a petroleum substitute.
Consumers and carmakers are taking a leap of faith by building and buying
E-85 vehicles. This is a historic opportunity to turn to a new era – but this opportunity won’t exist forever. Remember, our opponents spent a lot of time trying to shut this industry down. They will be very happy to see us fail.
But failure is not an option. That means not only working to promote the distribution and consumption of E-85, but making sure it’s worth consuming. It also means making sure that the 15 percent that isn’t ethanol is quality gasoline. If we lose the environmental benefit, or make E-85 drivers sacrifice performance, we lose our credibility, and we’ve lost this historic opportunity.
Second, we cannot allow ethanol to become the next Exxon.
Let us always remember where we came from, and who it is that we represent. The heart of the ethanol industry is found in rural America.
Third, ethanol must continue to be both an energy choice and an environmental choice. We have managed to demonstrate that ethanol is good for the environment. Now we need to work to make it even more environmentally efficient. Rather than simply feeding a growing demand for ethanol with the construction of coal-fired ethanol plants. We need to encourage investment in new and better ways to produce ethanol, and ensure that we are seeking out technological advances that not only make it more cost effective, but also more environmentally friendly. Climate change will be a bigger and bigger issue in the years ahead. Carbon limits are a real possibility in future years.
This represents real opportunities for this industry. It is why I am excited about breakthrough technology represented by companies like Prime Biosolutions and the plant in Meade, Nebraska.
We should look at the demands that are being placed on one of our biggest customers: the livestock industry. The explosive growth in ethanol production will generate enormous volumes of high protein feeds, with proven nutrition benefits. However, these concentrated protein co-products also concentrate phosphorus, which will require new methods of mitigation and management.
We must establish more organized programs for R&D. We must show our fellow citizens that our industry is committed to putting in place sustainable, environmentally sound facilities that will not only reduce the nation’s dependence upon fossil fuels and stimulate new economic activity, but will also help to improve our environment, and make this world a better place.
I began by reading some headlines – headlines we couldn’t have imagined even 10 years ago.
As excited as I am about the stories that have been written, what excites me most is the story that we’re writing – right now. By continuing our work together and by maintaining our focus on the national interest, the simple act of fueling our cars can be an act that heals our environment, strengthens our economy, and secures our nation.
We’ve come a long way. There’s a long way to go. And we’ve got the fuel for the road ahead.