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Transcript of Senator Sessions Keynote

U.S. Senator Jeff Sessions

Auburn University Alternative Fuels Conference

October 23, 2006

Well, thank you Dr. Richardson.  Well I had to go into town - you know - we lived in the country but you're not born in the country, they have to take you to the hospital.  So my mama went to the hospital in Selma.  I claim Camden, which is about a thousand people - there were about 30 people in my senior class, including Congressman Jo Bonner and his sister.  But I actually lived 15 miles south of Camden at the crossroads community of Hybart.  Is that country enough for you?  That's pretty far out there, I gotta tell you.

President Richardson, it is great to be with you.  Thank you for those comments.  I would like to just express my appreciation and pride for Auburn University and the leadership that you've given.  I know you've committed talent, time, and money to this effort.  And it's great to see you work with the University of Alabama, Auburn Montgomery, A&M, Tuskegee, and other colleges and universities who are active in dealing with these issues.  It creates opportunities for some very good things.

I see Mike Rogers, my good friend and Congressman from this area.  He is just so valuable in Washington.  He serves, as I do, in the Armed Services Committee.  One of his number one projects has been alternative energy.  I know Mike has given hours to this issue.  He's talked about it nationally and locally, and it's great to have him at this conference. 

It's also good to see so many of the representatives from the private sector.  Many of you I've met around the state or in Washington, and it's good to renew those acquaintances.  You can feel the excitement in this room. People are excited about the possibilities that are about to occur here, and I just couldn't be more proud: ours is a state that has tremendous natural resource potential for bio-energy as well as a state that has the technology and the capability to exploit it, and to be a national and world leader in it.  And that's what I would like to see happen. 

I know that there are areas in this state that economically could be transformed if we could convert wood and switch grass or other crops efficiently to ethanol as we go forward.  It's exciting to me and I think that's a responsibility I have as an official - to try to utilize what little influence I may have to see if we can make those events occur.   So in truth we embark on a new national race - an effort like the race to the moon. It's my opinion that success will improve the economy, the environment, and the lives of our people.  And it will enhance our national security.  Every new technology is a step down that road that we need to be moving down.  It's exciting to me to be a part of it and be here with you today. 

Thomas Friedman, author of Lexus and the Olive Tree and other books that he's written, has published an article entitled "The First Law of Petropolitics" in Foreign Policy Magazine.  He measures how free the people of a nation are and he plotted a "freedom index."  What he found was - this is kind of surprising, but perhaps not so if you think about it - the more oil revenues a country receives from its exports, the less free its people are.  He says, "The price of oil and the pace of freedom always move in opposite directions in oil rich nation states." 

Well, I think we ought to try to help, don't you? 

Let's quit sending so much money there.  Look at Venezuela.  Chavez goes to the UN and calls Bush a "monster" and a "devil."  When the United States questioned Iran's nuclear capabilities, they threatened to shut off oil and the price jumped nearly two dollars a barrel.  We heard all this flap about buying our six ports - 6.8 billion dollars - I'd like to ask you, where'd they get that money?  They got it from us.  That's where it came from. 

And that is a big, big deal. 

So, we are looking now at a transfer of American wealth to unstable nations - many of them are hostile to our interests - in the amount of 250 billion dollars a year.  OPEC, I submit to you, does not deal competitively in a world market but seeks to tax the United States and the rest of the world.  The price of producing a barrel of oil in Saudi Arabia is five dollars a barrel.  How does it get to be seventy-five dollars a barrel on the world market?  I submit to you that they control the price; they call themselves a cartel.  This is not a free market.  It's a fixed market.  And how do you compete with it?  Well, you have to find alternative sources if you don't have sufficient oil and gas in your own country, and we really don't at the rate we are using it, and we need to think about that. 

The council on foreign relations just issued a 77 page report, called "The National Security Consequences of US Oil Dependency."  The council on foreign relations found that energy suppliers have been increasingly able and willing to use their energy resources to pursue strategic and political objectives.  Energy consuming nations, they found, are finding that their growing dependence on imported energy increases their strategic vulnerability and constrains their ability to produce a broad range of foreign policy and national security objectives.  Well, that's pretty obvious to us if you look at it and what's been happening and we can do better about that. 

So, as we've been talking here at the table, there are a lot of ways to fix this situation.  And I think in fact it will be a multiplicity of ways - there is no one clear solution to the problem, and I tended to go that way, for a while.  I'd think, well, we'll just fix it with nuclear power.  My friend said one time, whatever the question is, the answer is nuclear power.  Well, it's a big part of it - we can do more with nuclear power.  But it will not solve all our problems.  I'm telling you.  Not any time soon as it appears to me.  The EIA forecast points out the problem, they estimate that the net oil imports will increase to the United States from 12 million barrels a day - 12 million barrels a day - to 17.2 million barrels a day over the next 25 years.  That's a 40 percent increase.  General energy demand will go up throughout the world as developing countries require more energy.  India has seen its economic growth increase at 8.4 percent annually over the last three years.  China's economy is expected to grow at 10.5 percent this year. 

I was in South America and Central America with Senator Arlen Specter recently this summer.  Brazil is growing at over 5 percent, Peru over 5 percent, Columbia over 5 percent, Dominican Republic I think was 8 or 10 percent better than the previous year.  All of South and Central America are growing too, not just Africa and India.   And as people want to live better lives, they want to have electricity.  They want to have automobiles.  They want to have better transportation.  And we want them to have that.  We don't want people to have to walk to get to the doctor in some undeveloped area of the world - we want them to be able to drive.  So how do we confront these increasing demands?

It's pretty clear to me that our nation can and should increase domestic production of oil and gas significantly.  Over 19 billion barrels of oil remain under moratorium in US waters.  Congress should at least pass the Gulf of Mexico Energy Security Act when we return in November.  It cleared the Senate, and a similar bill cleared the House.  The legislation would allow 1.3 billion barrels of oil and 6 trillion cubic feet of natural gas to be produced in the Gulf Coast.  And, actually for the first time, give Alabama and the other producing Gulf states a sizable portion of it - 37.5 percent of the royalties that all have been going to the federal government would now be shared under the legislation we passed in the Senate.  So that's exciting - but it hasn't passed yet.  There are some problems getting it across the finish line.   I'm getting a little nervous about it, frankly, but we ought to do that.   Florida says they don't want any drilling off their coast, even 200 miles off their coast, but they are quite happy, however, to have a pipeline from Mobile all the way to Tampa to take the natural gas that we produce off our coast and send it down there so they can sit in their air-conditioned mansions and drink their mint juleps and watch the sunset.  All with your energy.  I mean, everybody get real here. 

We've got to have more domestic production.  Clean cold technology has some real potential and it would be great if Alabama could be involved in that, and I think Southern Company and some others are doing some things that have the possibility of sequestering the carbon production our of coal.  Some of these things could actually work.  We have one quarter of the world's coal reserves, but coal is not as clean, so we have some technology hurdles there. 

Nuclear power is growing.  When we passed the energy bill last year there were no preliminary applications for a nuclear plant then pending.  Since the bill passed, there are now 24.   The first new plant will be in Brown's Ferry up in North Alabama.  Bellefonte has been selected as a sight up near Scottsboro and that could also be brought online.  We've got 2 plants there, one 60 percent complete, one 80 percent complete, neither producing a kilowatt at Bellefonte, and that's just a tragedy when you look at it.  But that can be done.

And I think the other step that we can do, and is probably most important, is a transition to alternative fuels.  That's what we're talking about today.  Biomass is already the leading source of renewable energy, but only 4 percent of the total energy produced in the United States.  We can absolutely do better there.  And I would submit - I'm a pretty frugal guy if you know me - I don't think we need to waste money.   Tax payers sent me to Washington to manage their money, not to create jobs for somebody who's got an idea they'd like to create a job with.  I'm telling you we need to manage tax dollars wisely.  It gets away from us if we don't watch it.  But as an early founding member of the National Energy Security Caucus, we have discussed this at some length.  People like Joe Lieberman, Sam Brownback, Norm Coleman, Evan Bayh, and Lindsay Graham - we began to look at this thing as a question of national security. 

If you look at what's happening politically and diplomatically and militarily in the world, we've got to do something about our dependence on foreign oil.  We've got to stop spending so much of our wealth, sending it to nations that are not friendly to us. 

So our legislative proposal - the Vehicles and Fuel Choices for American Security Act of 2005 - has now 27 co-sponsors.  It calls for some bold and aggressive steps: setting a target for reducing our nation's oil consumption by 2.5 million barrels per day between 2016 and 17 million barrels a day by 2026, which is a 25 percent reduction off the projected 2026 production.  That's a big step.  That is a real challenge.  I think we can get there.  Some say we are not bold enough in setting our goals.  It calls for 50 percent of all passenger vehicles manufactured by 2016 to be alternative fuel vehicles, and it provides loan guarantees and tax credits to build up the infrastructure needed to manufacture and fuel these vehicles.   

So I ask, how do you justify this fairly dramatic step, this alteration of what some would argue to be the normal course of our economy?  Well, I think we can justify it because of a national security threat.  It changes the analysis you give it, when you see it in that context.  So protecting the long-term national security of America is a legitimate function.  And we can invest money now to bring new products to the market faster - that is a legitimate goal.  And a legitimate national interest.  As I've indicated, we can't waste money.  We can't throw money at projects, but we need great technicians, scientists, and great universities that are involved to help us identify those things that can work that have the potential to be successful.  I believe we can get there.  The American people get it. 

Some of the polling data has shown that, when asked how are we going to deal with our energy problem, overwhelmingly it's through new technology.  That's the answer you get.  85 percent of respondents favored spending government money to develop alternative sources, new technologies to fuel automobiles. American people are into that.  76 percent of the respondents of a Gallop poll said that they believe that cars will run on some other fuel thirty years from now.   So I guess in many ways that's what we're gathered here for today.  How much of our fleet of automobiles and vehicles can we drive with these alternative fuels to reduce this transfer of American wealth?  All the while, creating jobs in our country, often in poorer areas of our state and nation to produce that.  So it's an exciting thing and I'm delighted to be a part of it. 

Corn is not going to be the sole answer.  It's a fairly mature technology.  I'm sure they'll have breakthroughs as time goes by.  So as Secretary Johannes at Agriculture said, "it will be a combination of things that works."  And I think that's correct.  It's clear that cellulosic conversion of woody fibers and plant material is very important to meet our needs.  That is going to be a critical part of it.  And it's very, very, very important, that we move as rapidly as we can to create the most efficient transformation of that cellulosic material to energy.  It will be a tremendous thing for our entire state.  To reduce oil consumption by one-third, experts predict we'll need cellulosic feedstock supply of one billion dry tons a year.  I guess that's a number you could calculate.  It's not impossible, some of these numbers you wonder how or whether they pull them out of the air or what.  But they think a billion dry tons.  So the question is, could we do that?  Is that within our grasp?  The United States Department of Agriculture has found the United States has the potential for 1.3 billion dry tons per year of biomass from current U.S. forest and agricultural lands.  So I think that's good news.  At least 30 percent of the feed stock for energy production would come from timber, pulp, paper mills, and urban wood residue in logging sights.  This is important to Alabama because forest products are Alabama's largest manufacturing industry - over 70 percent of the state is forested, with 23 million acres of timberland.  We have some of the best timberland growing areas in the world.  Alabama's forest land covers more acres than the entire size of Connecticut, Delaware, Maryland, Massachusetts, New Hampshire and Rhode Island combined.  We have over a thousand forest manufacturing operations and businesses in Alabama.  The infrastructure is largely in place and could be adapted to biomass energy production. 

And about 70 percent of the feedstock for biomass energy are expected to come from crops and animal wastes, as Dr. Bransby mentioned; some of it is corn, soy beans, switch grass, and sugar cane.  So, Auburn has been a leader in exploring the role of energy crops such as switch grass and others. 

I remember, Dr. Bransby, about nine years ago I came and visited your stand of switch grass out there and it was exciting.  We were able to work with you some then and assist, and I watched with great interest your reputation grow around the country.  It is interesting to see that you've become on a first name basis with the President.  But he'll ask the right questions, and he knows a lot about energy.  He invited a group of us over to the White House last year and there wasn't a thing raised that he was not knowledgeable about and conversing about.  He's determined and he believes that we can do a lot more, and that's good for our potential of success in gaining more funding. 

So, I believe to meet these challenges we'll be dealing with government, industry, and universities.  The government has got to step forward.  President Bush has set clear goals during his state of the union address.  In the short term his goal is to make cellulosic technology cost competitive within six years.   I see Secretary Buchanan spoke earlier, and I guess I wanted to tell him if he was still here: well, one year is already gone, so get busy guy. 

Second is the long term goal to sustain a 60 billion gallon per year production of biomass fuels by 2030.  Thirty percent of transportation fuels at 2030 would then be biomass fuel.  That's quite a step forward.  Of course, people have talked about hydrogen and other things, but you really need the liquid right now that you can put in a tank.  Maybe we'll have a breakthrough, but we haven't made it yet.  And I think the most logical thing to expect is that we want people want to drive their vehicles with a liquid product. 

So, Congress is also receptive.  Policies that didn't make sense at 20 dollars a barrel make a lot of sense at 60 dollars a barrel or 70 dollars a barrel or even 50 dollars a barrel.   There is more interest than ever - we had a hundred and sixty-seven bills offered during the 109th Congress dealing with ethanol, can you believe that?  A hundred and sixty-seven; that shows some interest.   Congress has already provided us some strong incentives to jump start ethanol, the renewal fuels standard in the Energy Policy Act of 2005 requires 7.5 billion gallons of ethanol be blended with conventional gasoline by 2012.  The ethanol tax credit of 51 cents a gallon, a small ethanol producer credit of 10 cents, the bio-diesel tax credit of a dollar a gallon for agri bio diesel produced from soy bean or animal fat, over a hundred million dollars in USDA and DOE grants for loans for biomass development.  Perhaps we ought to have more than that, a hundred millions dollars in loans.  

And private industry is stepping up.  The expense of a large ethanol plant is high: the USDA estimates the cost at 80 million dollars for a 40 million gallon per year plant.  The projects must have a potential to be economically feasible.  Cellulosic ethanol can decrease that break even point and help us get there because it is so plentiful.  But as we know, in many ways this is a risky industry.  Oil and gas is a boom or bust business; a lot of investors are nervous that the price might fall from forty to thirty dollars a barrel in the years to come, and then what was feasible in the investment then may not be feasible today.  And that's something we've got to think about: is there a realistic way that we can give some guarantee to investors that we are not going to allow a surplus of oil to flood the market that would crush the investment that they had made.  But, actually I doubt we're going to see below 40 dollar a barrel oil.  We certainly know from the oil and gas industry, if you read "The Prize," Yergin's great book, it has been up and down in dramatic amounts and investors get nervous. 

Private investment by Wall Street is encouraging.  Goldman Saks put 28 million dollars in a Canadian corporation for cellulosic ethanol.  Royal Dutch Shell added a hundred and forty three million to the same company.  Bill Gates has invested 84 million in Pacific Ethanol - a corn based ethanol product. Richard Bransom at Virgin Airlines - Dr. Bransby talked to him recently - pledged 3 billion dollars over 10 years on environmentally friendly technologies, including cellulosic ethanol. 

Alabama has been doing a lot.  I've seen as I've traveled the state, for example, Mr. Rankin is here from Union Town.  Did y'all know they make cheese in Union Town?   It's not too far through the woods from Camden to Union Town.  They make cheese, but there's a by-product of that called whey, and you've got to do something with it.  They used to use it as fertilizer, and the environmentalists complained about that, so they built a pond and they put it in there, and it didn't smell so good, and the neighbors didn't like that.  So they got some scientists together and they put it out there in this pond and put a plastic tarp over it and threw a little cow manure in it and methane comes out - a lot of methane.  And if you've been around a cow you know a lot of methane comes out of cows.  So it's really been an economic thing, I saw Mr. Rankin here... there he is.  It was great to be with you over in Union Town recently.  Mobile County has a landfill, it wasn't designed for it, but they've now put a top over it and a pipe on it and they're taking methane and sending it to a chemical company to utilize it.  Had that plant probably been better designed, they could probably get even more methane out of it.  Alabama Power is still using, in Gadsden, switch grass and other products.  They are still working with that.  Moundville has a bio-diesel soy bean facility they've added, I visited it recently, they've got four times as much production as they had just a year and a half ago I believe there.   That is really turning out to be effective.  A new bio-diesel plant was announced for Monroe County.  In Daphne they collect grease and produce bio-diesel.  And we're going to Eufaula this afternoon; Eufaula is going to do the same thing.  Massada - we'll hear from them tomorrow afternoon I believe, they take garbage in one big thing and somehow they go through this process and out comes ethanol.  Just whatever garbage comes out of the truck, as I understand it, can be put it in there, and they're moving to the point of making progress there.  So there are a lot of things happening.  Each one of those represents discrete steps down the road to success and lower dependence on foreign oil. 

One of the things I've learned about this in talking with our leaders is we have a shortage of a knowledgeable trained workforce in bio energy matters.  The Department of Energy has said that industry can not find enough engineers with the credentials necessary.  Melissa Klembara of the Department of Energy, Office of Biomass program, said recently that there is no way we will meet our biomass goals without the creation of a workforce that is educated in cellulosic conversion technology.   We don't want to get to the point of having to import technical expertise from foreign countries, but if people like South Africa are willing to give them up, we'll take them. 

So I believe that universities around the country must focus on offering undergraduate and graduate programs in alternative fuel so that we can develop workforce capabilities that put us on the cutting edge.    This is really, really exciting.

So just let me wrap up by saying that dependence on foreign oil is more than an economic issue, it is a real threat to our national security that deserves bold and aggressive action by government industry and researchers.  It requires us and will allow us and justify us in spending more than we would if it were just simply an economic issue.  

Second, cellulosic ethanol can be cost competitive, I believe for sure.  And Alabama is postured to be a leader in the alternative energy field, because of the abundant resources we have here and the excellent initial research connectivities that have been going on.   

Finally, creating a work force that is skilled in this new technology is critical.  I hope our universities will be thinking about how they might do that.  I know some already are.  They must train people to expedite the commercialization of bio refineries and technologies. 

So these are just some of the thoughts I had and I would say to you that I believe this President, I believe this Congress is motivated to do something to increase our independence from foreign sources of oil, to create systems of energy production that do not impact adversely our environment, they reduce carbon emitting projects.  And certainly biomass meets that challenge if it can be more efficiently made.   In the long run, that will make the lives of American people better, freer, safer, and more prosperous.  In fact, the technology we develop will spread around the world and it will be good for the entire world and all of human kind. 

Energy has made our lives better.  Where electricity is readily available the life span of a citizen is twice that where they do not have electricity.  In that respect, this is a humanitarian issue.  So, making these great energy sources that we're so familiar with available world wide is an exciting, exciting thing. 

Thank you for all you do - the technological breakthroughs that I know are coming will be in large part due to people just like you and universities just like Auburn and those participating today.  We look forward to working with you to try to enhance it, to be able to make sure that your government is cooperative instead of just being in the way. 

Thank you so much for letting me be with you.