By Denise Ross

Sen. John Thune held the first hearing of the Energy Subcommittee of the Senate’s Agriculture Committee for the current Congress Wednesday at SDSU (Go Jacks!) in Brookings. And there’s really only one thing to say about that: Ethanol.

(All photos by Denise, which explains why some aren’t in crisp focus.)Â

Sen. Thune discusses little jars filled with corn in various stages of processing on its way to becoming fuel. The various versions are the result of companies seeking ways to use more parts of the plant. Those little jars and a few dead plants - a corn stalk, some switch grass, etc., were the main props of the 2-hour hearing.

Cornstalks and other fuels of the future had places of prominence.

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It truly was standing room only in the Volstorff Ballroom.

Look for tax credits and incentives - for farmers, for gas station owners, for ethanol makers, for auto makers - to be debated as this issue progresses. Thune noted that the oil companies are putting up a “very spirited” fight, referring to a recent Wall Street Journal article (available online only to subscribers) that outlined tactics, such as contractually preventing gas stations from installing ethanol blend pumps.

Also, there was talk that the EPA has the regulatory authority to increase the ethanol blend at the pump. An act of Congress is not needed, panelists said.

Thune said “the sky’s the limit” on ethanol’s future, calling domestic energy development a matter of national security. “Is it important as a matter of national policy to become energy independent, or isn’t it?” Thune asked, seeming to challenge colleagues and bureaucrats who weren’t in attendence.

(Thune was the lone senator at the hearing. One is all you need to have a hearing. The record on the hearing will remain open through Monday, April 9, and then the testimony will be entered into the record as farm bill deliberations progress.)

Anna Rath, business development director for Ceres Inc., said that oil companies’ proven reserves influence their stock prices, which incentivizes exploration. She called for incentives to have a category for “renewable reserves,” thereby creating an incentive for oil companies to invest seriously in renewable energy. Specifically, she asked that the Securities and Exchange Commission promulgate a definition of renewable reserves.

Don Endres, CEO of VeraSun Energy, said stepping up from the current E-10 ethanol blend that’s widely available to an E-20 blend is the logical next step to eventually having E-85 (not widely available; the Wall Street Journal explains why) as the dominant American motor fuel. Endres said America should transition from ethanol “as an additive to gasoline to an alternative to gasoline.” 2008-09 will be the pilot years for cellulosic ethanol - think switch grass, not corn - and then commerical operations will open. “Then you’re going to see exponential ramp-up,” he said.

Dave Nomsen, national legislative director of Pheasants Forever, called biofuels “South Dakota’s next frontier” and remembers that President Bush’s line in a State of the Union speech about getting fuel from switch grass got chuckles in some circles.

“There were 2.5 million pheasant hunters who knew exactly what he was talking about,” Nomsen said. Â

Later, an audience member said he has been selling E-30 blend successfully for a year in Britton and has just started selling E-40. Thune said he filled up with E-30 in Watertown earlier this week. (I need to get out more often; I didn’t even know that existed.)

Jeff Fox, a vice president at Poet (formerly Broin), said, “Ethanol has come of age.” He brought the little jars of magic, calling them the result of “a lot, a lot of research.” Some of that research is done by private companies like his, much of it is done by universities like SDSU with the help of government grants. As the government fostered the development of corn-based ethanol, so it should for development of cellulosic ethanol, which an be made from some parts of the corn plant. And Poet is working on that.

Kevin Kephart, SDSU’s vice president of research, dean of the graduate school and director of the Sun Grant Initiative, agreed with Thune’s past statement that South Dakota is the Saudi Arabia of cellulosic energy, given the potential of its native prairie grasses.

“We’re in the heart of what the country has to offer,” Kephart said.

Kephart also noted the energy potential in trees, naming poplar and willow specifically, saying we can “store them on the stump.” That means they can be harvested when needed, whereas grasses and corn require annual harvests.

Reid Jensen of South Dakota Corn Growers credited the 2005 energy bill with boosting the ethanol market (note the chart behind him), calling it “our domestic energy security agenda.” Now, one problem will be matching production capacity with infrastructure - namely railroads - to carry corn to market.

“Ethanol could hit a wall” at 15 billion gallons annually if the transportation isn’t beefed up, he said, with acknowledgement from him and Thune of the ongoing DM&E situation.

Thune said he sees ethanol as integral to the future of agriculture and said that no one need apologize for seeking government assistance in developing the industry. Government policy - largely through tax credits, loan guarantees and grants - has been present for energy companies of all kinds, he said.

“South Dakota’s farmers and ranchers will rise to the challenge of growing food and fuel on the Plains,” Thune said.