On May 18, the U.S. House Agriculture Committee held a field hearing in Sioux Falls, South Dakota in preparation for writing the 2012 Farm Bill. Two representatives from the biofuels industry had the opportunity to testify before the committee, and the topic of ethanol also came up several times across both panels in the question and answer period with the Committee.

The South Dakota hearing, held on the campus of Augustana College, was the eighth in a series held across the country and was attended by the most members of the Committee of any hearing to date.

Dr. Scott Weishaar of POET and David Hallberg of Prime BioSolutions testified on the second panel, along with Jim Nieman, a forest products producer from Hulett, Wyoming, and Dr. Kevin Kephart of South Dakota State University. Hallberg is a member of the American Coalition for Ethanol, a former ACE board member, and founder of the Renewable Fuels Association.

Hallberg’s testimony focused on removing market barriers to biofuels, especially the E10 Blend Wall.

“What you and your colleagues are doing here today will ultimately have a substantial – if not defining – impact on the future of the domestic biofuels industry, and on the nation’s campaign to significantly reduce, and one day eliminate, its costly dependence upon imported oil,” he stated.

No “free market” in transportation fuels

“I can emphatically say there is no ‘free market’ in the transportation fuel business,” Hallberg said. “Unless government helps to level the playing field for alternatives like renewable ethanol to compete, the oil industry – especially the multinational petroleum companies – will erect insurmountable barriers to entry, and ensure that ethanol is nothing more than a minor contributor to the nation’s energy needs.”

He went on to describe how the E10 Blend Wall has been hit, as evidenced by plummeting ethanol prices, approaching a dollar less than gasoline in some places. Another damaging impact of the Blend Wall is the deterrent effect it has on the capital necessary to increase biofuel production capacity to meet the Renewable Fuels Standard targets.

“Investors and lenders will be unwilling to provide the billions of dollars in new investment until they see that the nation has put in place a sustainable strategy capable of smoothly absorbing the annual increases in production called for under RFS schedules, without having to rely on the uncertain prospects of securing EPA approvals of Clean Air Act waiver provisions,” Hallberg said.

The importance of fuel choice

Hallberg emphasized that the U.S. must “drive our system to emulate the Brazilian model.”

Today more than 95 percent of automobiles sold in Brazil are flex-fuel, and the success of the country’s flex-fuel program has opened up its transportation fuels market to competition. This benefits the motorists, who can choose between gasoline and ethanol, and benefits the entire economy, as seen by the resilience Brazil showed during the 2008 economic crisis. Being a more energy-independent country insulated them from the oil price shocks that were so devastating to other economies.

Hallberg said the single most important policy challenge facing today’s U.S. ethanol industry is the “absence of a sustainable national market development program for higher ethanol blends.” Creating such a plan can be accomplished, he said, through Senate Bill 1627, the Harkin-Lugar “Choice Act.”

S. 1627, strongly supported by the American Coalition for Ethanol, calls for increasing numbers of flex-fuel vehicles and blender pumps, which allow gas stations to dispense a wide variety of gasoline-ethanol blends in the same space as a regular pump.

Hallberg’s written testimony, along with the other witnesses, can be accessed through the House Agriculture Committee website at http://agriculture.house.gov.