STATEMENT
of the
Honorable Nydia M. Velázquez, Chairwoman
House Committee on Small Business
Hearing on the Impact of Renewable Energy Production in Rural America
May 3, 2007

Entrepreneurs in this country have a huge stake in ensuring access to an affordable energy supply.  Their bottom line is affected every time prices go up at the pump, natural gas spikes, or the cost of electricity rises.  Today, we will hear that small businesses are not only are consumers of energy, but they are also playing a vital role in producing it. 

At a time when this country is facing record energy prices, it is critical that we find alternative energy supplies to help reduce costs as well as foreign dependence.  Today’s panelists will outline how rural America is achieving this with the production of biofuels.

The growth in the renewable fuels industry has been a win-win for the U.S. economy.  Biofuels have had an enormous impact on rural communities, while helping provide this nation with another source of clean energy. 

It is an industry that small companies are at the forefront.  Approximately 70 percent are small firms with most employing less than 50 people.  These small businesses are not only growing themselves, but they are helping other entrepreneurs in rural America.

Small farmers are providing the necessary inputs for the production of these fuels.  For ethanol, farmers provide the 2.5 billion bushels of corn each year.  In the biodiesel industry, they supply the soybeans, canola, and other inputs.  And they are also working to develop resources in the growing area of cellulosic ethanol.  As a result, all of these have increased the demand for farmer’s products.

The industry has also had a lasting imprint on the economic picture in rural America.  A February 2007 study points out that 163,000 new jobs were created because of ethanol production. This includes more than 20,000 jobs in our manufacturing sector making biofuel production the single most important value-added market for farmers. 

But while the growth in these industries has been strong, challenges remain.  Because producing biofuels involves high-cost inputs, it has been necessary to have in place federal policies that make plants financially viable.  These range from tax incentives and trade policies to usage requirements and financing assistance.  Without these incentives and programs, the industry would not be where it is today.

With all this success, we still have a long way to go.  Though renewable fuels have grown exponentially over the past decade, they still make up less than one percent of current U.S. production.  My hope is today’s hearing will focus on ways that this can be increased.  

Whether it be the new and improved energy programs or maintaining existing ones, we need to do what it takes to ensure small businesses in these areas will have the chance to thrive.  

The issues discussed today affect every member’s district.  While it may seem that there is no connection between an ethanol plant in Iowa and the price of gas in New York, the economics show otherwise.  Biofuels impact those in urban districts and rural districts alike. 

Today’s hearing will provide the committee with a better understanding of the biofuel industry from those who understand the challenges the most.  I look forward to hearing about what policies have been successful and if there are additional reforms needed to ensure future growth.  The success of small companies in this sector can serve as a model for other industries.  The committee can draw on this as it formulates legislation to improve the overall economic environment for small businesses.