Statement of Clint Norris, Chief Operating Officer, BC International
April 27, 2001

Thank you for the opportunity to provide testimony for consideration by your full Committee. I met one of your staffers, Jeff Rose, on April 23, 2001 in Salem, NH, and he fully explained your reasons for postponing the hearing. Unfortunately, I will be unable to attend on the revised hearing date, but am submitting my comments in writing. It is my intent that they will be additive and meaningful - and also brief. Individually, I have worked not only in industry, but also have served as policy and strategy advisor to governments via a role as a periodic consultant to the United Nations. My firm, BC International, has been actively involved biomass ethanol development, not only in New England, but throughout the USA and world-wide since the early 90's. We are currently participating in several U.S. DOE/NREL-supported projects to locate ethanol plants in the Southern and Western US, using various wastes to make ethanol. We have also been engaged in feasibility work in the Northeast, and have spent some considerable effort looking at viability of forest based feedstocks over the past few years. We are very familiar with the issues and are pleased to discuss them in this forum. We are also engaged in the use of biomass to make other petroleum based products in order to use our own country's renewable resources as the fossil based supplies get more expensive over time.

There are more than environmental reasons for addressing the issue of renewable fuels. There are also strategic issues regarding reducing our foreign-sourced energy dependences; there are economic issues associated with a serious trade deficit and its impact on our nation's capital resources; there are inter-generational issues associated with affordable energy and its future availability; and there are public health issues. Weaving a policy that successfully integrates all the needs will require courage and a rhetoric filter of grand proportions in order to do what is best to address these issues. The following facts may be helpful.

1. Alcohol (Ethanol) has been around for thousands of years. People drink it with their food, at ballgames, in their back yards, etc. They spray it on their bodies via personal care products, use it as an antiseptic to dress wounds, gargle with it in mouthwash, spray it in their hair in hairsprays, etc. It is also used industrially as a solvent. It is generally safe, but it is a chemical and it can be toxic, as all chemicals are. To gage toxicity, as a reference point, Merlot wine generally contains 13% ethanol, or 130,000,000 parts per billion. When ethanol breaks down or is burned, it can give off acetaldehyde, but acetaldehyde also breaks down to acetic acid (vinegar), then to carbon dioxide and water.

2. In contrast, MTBE has only been around for a very few years. No one would think of drinking it, spraying it on their bodies, pour it on a wound or gargle with it. If water is contaminated with 0.2 parts per billion, it has a turpentine-like taste, and to gage toxicity of MTBE - it can be toxic at levels below 10 parts per billion. When MTBE is burned it gives off formaldehyde, which also further breaks down, eventually, to carbon dioxide and water.

3. NRC reported that measurements in the countryside to determine MTBE presence from vehicles which used it were relatively easy to make. In contrast, ethanol and acetaldehyde were difficult to detect beyond background levels that are always present, due to the nature of living matter as it undergoes its natural breakdown and return to the earth. Thus, our environment does have a "natural" level of ethanol-based compounds in it.

4. The Health Effects Institute of Cambridge, MA was commissioned to do a study on the effects of oxygenates used in gasoline. It's a 155 page report. On pages 103-6, ethanol is mentioned. The study concludes that reproductive, development, and long term effects of exposure to ethanol from its use in fuel is not expected to cause any effects. The reason is because exposure levels are not expected to increase blood levels significantly - the increase in levels would be much lower than those found endogenously in the blood. As a point of reference, the report states "...ethanol is a product of many catabolic pathways and is present in blood even in the absence of ingested alcohol."

5. Currently, national ethanol production is located primarily in the Midwest. By utilizing improved technologies that cost effectively make ethanol from biomass wastes and resources, the biomass-rich Northeast also has the potential to become an ethanol production center. I believe that specific measures to support biomass ethanol should be a component of policies to support renewable fuels. This will ensure that the economic and environmental benefits of ethanol production both continue in the Midwest and spread to other regions of the nation, as ethanol markets and production expands.

6. If a national policy is not forthcoming in the short term, and states seek to ban the use of MTBE (such as Gov. Shaheen's recent order), a default mandate will be created for some alternative, most likely ethanol. Other alternatives have some limitations. Alkylates - potentially attractive to refiners - require additives to get fuel octane to necessary levels. The additives are normally "BTX" - benzene, toluene, and xylene. BTX burns with more particulates and toxics, which results in loss of air quality vs levels already achieved. This is called backsliding and the EPA Blue Ribbon Panel specifically recommended against backsliding.

7. A renewable fuels program preserves the original non-environmental policy intent of the oxygenate mandate, and allows accomplishment of other broad policy goals the 2 percent oxygenate mandate originally sought to advance. Some of these policy goals include greater economic development, greater fuel diversity, and increased national security. Consistent with these goals, I support thoughtful policies to develop renewable fuel use nationwide.

8. NESCAUM reported that 1.3 billion gallons per year of MTBE are presently used in gasoline in the Northeast. Assuming a 5.7% ethanol blend in gasoline, replacement of a 10% MTBE blend with ethanol would require about 750 million gallons per year of ethanol. Abundant biomass resources and a potentially large Northeast market for ethanol provide the region with the opportunity to establish itself as a leader in the nascent biomass-to-ethanol industry supplying the northeast needs. Abundant biomass resources also exist to ensure ample ethanol production to guard against any supply disruptions.

9. Increased use of ethanol will help protect against price spikes by creating an additional supply source for fuel. Gas prices have risen sharply last year in part due to U.S. reliance on imported fuel and a decrease in international petroleum production. Increasing the diversity of domestic fuel sources will improve price stability in the U.S.

10. Nationally, no new petroleum refineries have been built since the 70's. This has put great stress on those refineries trying to meet the nation's needs during the past 3 decades of growth. Chemical plants that run greater than a nominal 85% sales to capacity ratio are generally at increased risk of running into supply chain reliability problems. Our nation's refineries are running at levels exceeding 90%. The use of ethanol, in addition to being one of the safer alternatives, will provide some relief for these stressed refineries by acting as a fuel extender.

11. The nation's infrastructure is quietly developing in a way that will bring even greater relief to the heavily burdened refining industry. Ford, General Motors and Daimler-Chrysler are all making flexible fuel vehicles (FFV's). An example is the standard Taurus. FFVs can run up to 85% ethanol (E-85) in their gas tanks. These growing numbers of vehicles are creating a corresponding growth in demand for E-85, which in turn provides even more relief for the public concern over refinery-dependant price spikes.

With your continued leadership, we can develop a policy solution that facilitates the phase-out of MTBE while also continuing to advance the development of renewable fuels. I firmly believe that a consensus-based legislative outcome can meet the broad range of policy needs, including: fuel security, economic development, cleaner air, the protection of water quality, mitigation of global warming, and reduction of biomass wastes. I look forward to working with you and other stakeholders on this issue. Please do not hesitate to contact me with any questions. Thank you for your leadership and initiative on this issue.