Recently I had the pleasure of sharing the podium
with Federal Reserve Chairman Ben Bernancke in Greenville, South
Carolina at a Leadership South Carolina event attended by over
700 South Carolina Business leaders. It was a welcome home
for the newly appointed Fed Chair, who hails from South Carolina's
Dillon County, and I was asked to make closing comments after
the Question and Answer period. In his remarks, Bernancke told
the audience that, "If the recent gains in productivity growth
are to be sustained, ensuring that we have a work force that is
comfortable with and adaptable to new technologies will be essential."
The first question the new Fed Chairman received
from the audience was about the economically depressed I-95 corridor,
which includes his hometown. He admitted that the communities
along the corridor present significant economic challenges to
South Carolina, a state that in the past, relied heavily on agriculture.
He also remarked that educational attainment in these communities
is also of great concern. These communities are in counties
that are not only rural and poor, but in many instances, predominantly
African American and have been neglected or ignored by state leaders
for decades.
In my closing remarks I recalled growing up in Sumter
when tobacco, cotton and sugar cane fields stretched for miles
and miles throughout these counties that are now bisected by Interstate
95. I continued that some years ago decisions were made
to toss sugarcane in favor of cotton and tobacco. Today, however,
we can no longer rely on tobacco or textiles to contribute to
the economic future of the nation or this region, but sugar cane
and other cellulosic plants like soybeans, switchgrass, sweet
potatoes, and corn definitely could.
Biofuels present a huge opportunity for America's
rural economies and energy needs, and I applaud the alternative
fuel research that is underway at many of our nation's leading
colleges and universities, such as the hydrogen technology project
at the University of South Carolina and the International Center
for Automotive Research (ICAR) at Clemson.
While I support these initiatives, I believe their
potential is more long-term. I also believe that America's
rural communities currently have the resources at their disposal
to be leading forces in alternative fuel production in the near
term, and they should no longer be ignored.
Creating a New Market
The 200-mile stretch of I-95 that crosses South
Carolina is part of an interstate that runs the length of the
East Coast from Maine to Miami, Florida. As Chairman Bernancke
would agree, these communities offer a good fit to jumpstart sagging
rural economies, because it won't take much workforce retraining
to transition from tobacco to cellulose crops that can be converted
to biofuels.
The market is developing. One South Carolina
Company, Carolina Soya and Energy in the Hampton County town of
Estill, is already capitalizing on this emerging market.
The company
currently processes one out of every three bushels of soybeans
produced in Georgia and South Carolina into meal that is used
as an ingredient in animal feed. They are now investing
$8 million to add a soybean oil refinery that will extract the
crude oil from soybeans that can be used as biofuel. This
is expected to be completed by the end of the year and the company
will add 15 to 20 employees to its current workforce of 40.
The company is already making plans for an expansion that will
double its staff. This is a success story that can be duplicated
hundreds of times over along the I-95 corridor from Maine to Florida,
and around the country in rural agricultural regions in the West
and Midwest.
A New Direction on Alternative Sources
of Fuel
As Chair of the House Democratic Caucus, I have
been urging my fellow Democrats to support an agenda that promotes
the use of home grown, American owned biofuels that could end
America's dependence on foreign oil within 10 years. The recently
enacted Energy Security Act (ESA) calls for the use of at least
7.5 billion gallons of renewable fuels by the year 2012.
This is meager compared to the capacity we are capable of producing
and utilizing if we make a commitment to this emerging market.
South Carolina alone has used over 8 million gallons of ethanol
since 2003, without such an initiative in place. A celebration
was held in October 2005 to commemorate one billion gallons of
gasoline being displaced by alternative fuel sources. It
is clear the goal set by the ESA will be met without any government
action if this trend continues. In addition, at the proposed
7.5 billion gallon level, the United States will not be able to
significantly reduce its dependence on foreign oil.
Some states, including South Carolina, have already
enacted tax incentives for the production, distribution and use
of alternative fuels. This must become part of the national
agenda if we are to achieve our goal of American owned and home
grown energy. To succeed in this effort, Democrats want
to enact legislation that would require a phase-in of flex-fuel
vehicles until 100 percent of the domestic vehicle fleet is equipped
with flex-fuel capability.
In order to support these flex-fuel vehicles, House
Democrats support increasing tax incentives for the conversion
of gasoline pumps to biofuels or the installation of new biofuel
pumps at retail stations. The phase-in would coincide with
the vehicle conversions, and all stations would be required to
have a flex-fuel pump by 2016. Again, South Carolina is
among the top ten states in the country with retail outlets offering
biofuels. The first such station in the nation opened in
2001 in Aiken, and today there are 35 stations in South Carolina
and that number is growing annually. Part of the reason,
South Carolina is a national leader in this emerging market is
because it offers a comprehensive tax incentive package:
These state incentives are in addition to current
federal law, which allows small ethanol producers a 10 cent-per-gallon
production income tax credit up to 15 million gallons of production
annually. Thus, the credit is capped at $1.5 million per
year per producer. A small ethanol producer is defined by
the production of 60 million gallons per year or less. This
tax incentive is set to expire in 2010, but House Democrats want
to extend it through 2015.
Since this is such a fast-growing and potentially
lucrative market, we expect large oil and agribusiness companies
to try to monopolize production. While we want to encourage
private investment, House Democrats want to ensure that America's
family farmers continue to significantly benefit from, if not
drive, the growth in this area. Our legislation includes tax incentives
like access to low interest renewable energy bonds, access to
preferential financing, and tax credits to encourage local, rural
ownership.
Our legislation calls for all new government fleets
to be flex-fuel vehicles by 2010. For example, the University
of South Carolina currently has a fleet of 70 flex-fuel vehicles
and they are installing their own E85 refueling station on campus.
Operating these vehicles on E85 will displace 42,834 gallons of
gasoline each year. These programs would be financed
much like efforts to electrify rural America in the 1930's and
'40's. Democrats' legislation would grant the authority
and resources to the USDA's Rural Development Agency to operate
a Farm-Based Energy Financing Program to help fund the creation
and expansion of farmer-owned renewable fuels facilities.
We should also expand resources dedicated to basic
biofuels research in the United States through the Department
of Energy, the Department of Agriculture and the college and university
systems. The U. S. House recently approved my request for
$1,000 for biomass research along the I-95 corridor in South Carolina
at Claflin and Francis Marion Universities. Such research
programs could be expanded through the initiative discussed above.
Those of us who represent rural constituencies are always searching
for ways to bring vibrancy back to these once thriving communities.
Hope for the Future
When Fed Chairman Bernancke returned to Dillon,
Reuters News Service observed that the community he formerly called
home is “a former tobacco and textiles center that has largely
failed to benefit from the globalization and productivity improvements
he has advocated.” I believe that this is true only
because we have failed to broaden our vision. With a little more
vision, I believe that Dillon and other agriculture-based communities
could have much brighter futures.
Leadership South Carolina, which brought Chairman
Bernancke back to South Carolina, presented the perfect opportunity
for me to use my closing remarks at the event to highlight this
emerging market for our state's business leaders. I also
noted in my remarks that seated in the audience was former Governor
Dick Riley, whose vision to cultivate emerging business leaders,
led to the creation of Leadership South Carolina.
I concluded my comments noting my wholehearted agreement
with the Proverb, “Where there is no vision, the people perish.”
There is enough visionary leadership in South Carolina and the
nation to make us energy independent and to create new markets
to once again make rural communities all across America thriving
and self sufficient.
U.S. Congressperson James E. Clyburn (D - SC)
can be reached via his Website: clyburn.house.gov/