[Senate Hearing 112-105]
[From the U.S. Government Publishing Office]
S. Hrg. 112-105
PROPOSED BUDGET FOR FISCAL YEAR 2012 FOR THE DEPARTMENT OF ENERGY
=======================================================================
HEARING
before the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
TO
RECEIVE TESTIMONY ON THE U.S. DEPARTMENT OF ENERGY'S BUDGET FOR FISCAL
YEAR 2012
__________
FEBRUARY 16, 2011
Printed for the use of the
Committee on Energy and Natural Resources
_____
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
JEFF BINGAMAN, New Mexico, Chairman
RON WYDEN, Oregon LISA MURKOWSKI, Alaska
TIM JOHNSON, South Dakota RICHARD BURR, North Carolina
MARY L. LANDRIEU, Louisiana JOHN BARRASSO, Wyoming
MARIA CANTWELL, Washington JAMES E. RISCH, Idaho
BERNARD SANDERS, Vermont MIKE LEE, Utah
DEBBIE STABENOW, Michigan RAND PAUL, Kentucky
MARK UDALL, Colorado DANIEL COATS, Indiana
JEANNE SHAHEEN, New Hampshire ROB PORTMAN, Ohio
AL FRANKEN, Minnesota JOHN HOEVEN, North Dakota
JOE MANCHIN, III, West Virginia BOB CORKER, Tennessee
CHRISTOPHER A. COONS, Delaware
Robert M. Simon, Staff Director
Sam E. Fowler, Chief Counsel
McKie Campbell, Republican Staff Director
Karen K. Billups, Republican Chief Counsel
C O N T E N T S
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STATEMENTS
Page
Bingaman, Hon. Jeff, U.S. Senator From New Mexico................ 1
Chu, Hon. Steven, Secretary, Department of Energy................ 3
APPENDIX
Responses to additional questions................................ 53
PROPOSED BUDGET FOR FISCAL YEAR 2012 FOR THE DEPARTMENT OF ENERGY
----------
WEDNESDAY, FEBRUARY 16, 2011
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The committee met, pursuant to notice, at 9:32 a.m. in room
SD-366, Dirksen Senate Office Building, Hon. Jeff Bingaman,
chairman, presiding.
OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW
MEXICO
The Chairman. Why don't we get started here. Today's
hearing will examine the President's proposed fiscal year 2012
budget for the Department of Energy. I'd like to welcome
Secretary Chu, thank him for testifying today. I also want to
just alert folks that we have a short business meeting that we
will try to interrupt the proceedings to conduct when we get 12
members. So I've advised the Secretary of that, and we will not
interrupt his testimony, but we will interrupt the questions
portion of the hearing.
The President's proposed an overall budget for the Federal
Government that reflects his desire for fiscal restraint, but
he's made a strong statement that energy is a priority for his
administration even within this constrained picture. The
Department of Energy budget before the committee today
represents a significant investment in our Nation's ability to
compete in global clean energy markets, whether it is making
solar energy cost competitive with other electricity sources or
maintaining our Nation's lead in innovative nuclear power plant
designs using small modular reactors.
There can be no doubt about the seriousness of the
competitive challenge that we face in energy. I'd like to call
everyone's attention to the 2 charts that we've got over here.
The first chart shows that we actually spend less than China on
energy R and D per unit of gross domestic product. China's
investing heavily in manufacturing and deploying wind, solar,
and nuclear power plants. These investments are already
translating into global sales and domestic Chinese jobs in an
area where the United States once led the world.
The second chart which is put up there shows that our
investment in energy research and development is far below
other areas of our Nation's research and development. The
proposed fiscal year 2012 DOE budget for energy R and D brings
us up from the 2007 figure of $1.8 billion to $4.8 billion, but
still remains well below other areas of research.
So I compliment the Secretary for successfully advocating
for a budget that contains much that I support. I hope the
Senate can fully fund many of the research and development
initiatives proposed, as well as that for the Energy
Information Administration.
I do have a few concerns that I would like to mention and
I'll pursue in the question period. First, the budget proposes
to sell 500 million of oil from the Strategic Petroleum Reserve
with very little in the way of justification that I could find.
Second, the budget has a series of cuts to R and D in the
Department of Energy's fossil energy programs. While I strongly
believe in the clean energy objectives of the administration
and this budget request, I believe that fossil energy sources
can be made much cleaner by the application of appropriate
research and development, and that needs to be a priority as
well.
In any case, we face a long period of transition from our
dependence on fossil fuel, so continuing research related to
advanced coal technologies and natural gas and unconventional
sources of fossil energy is a sensible part of an overall
energy strategy. We can discuss that further. I do not want any
shortcomings in this area to obscure the fact that the majority
of calls made in this budget request for the Department of
Energy in my view are the right calls.
So again, thank you, Mr. Secretary, for being here.
Let me call on Senator Murkowski for her statement.
Senator Murkowski. Thank you, Mr. Chairman. I am glad to be
with you this morning. I also welcome the new members to the
committee. We had an opportunity to welcome them one by one.
Hopefully, today we'll see everybody together so we can get to
a business meeting.
I think it is a testament to the good work that goes on in
this committee that when members were making their choice, at
least on the Republican side, what I heard was they wanted to
come to this committee, not only because of the importance of
the work, but how this committee has conducted itself over the
course of the years, and I thank you for your leadership.
I think it is appropriate that our first official hearing
today is with Secretary Chu regarding the Department of Energy
proposed budget. I think that we should all agree, that while
the challenge of providing our Nation with abundant,
affordable, clean domestic energy is great, there is an endless
number of technologies that might some day lead us to these
goals, and during this Congress I'm sure that this committee
will have a chance to consider the many different proposals for
new programs that might very well be good ideas if time and
money were unlimited. But I think we all know that is not the
case today, that's not the world that we are operating in, when
our time and our money are now scarce.
Just like every other member of this committee, I'm
concerned about our Federal spending, I'm concerned about the
debt, I'm concerned about the deficit. To rein in Federal
spending, we need to look at every program and at every agency.
I think this Department of Energy is no exception.
This year's budget includes approximately $30 billion in
spending for DOE, which is roughly 25 percent more than just 5
years ago. This is on top of a tremendous amount of funding for
DOE within the 2009 stimulus bill. Nearly all of those funds
have now been obligated, but DOE has also reported one of the
slowest spendouts of any Federal agency. As of yesterday, the
Department's own web site showed that more than $21 billion, or
65 percent, of its stimulus funding remains to actually be
spent.
To put this into perspective, $21 billion would have been
almost 90 percent of DOE's total budget just 3 years ago. That
does not factor in the $3.5 billion that was taken away from
DOE last Congress to help pay for Cash for Clunkers and the
States aid bill.
This brings up one of my disappointments with this budget
request, that even though DOE has grown significantly in recent
years and even though it still has billions of dollars in
stimulus funds, it is once again in line for a sizable
increase. Now, I share the desire to promote clean energy
technologies, but, given the very urgent need that we have to
make tough budget decisions, I think that we need to draw a
distinction between the programs that we want to fund and the
programs that we need to fund, and I'm not entirely convinced
that this budget request will move us in that direction.
Finding policies that will move us toward our energy goals
within the budget constraints that we face is an enormous
challenge, but it is certainly not insurmountable. One of the
best ways that we can ensure that we do make continued progress
on items within the budget and the legislation that comes
before us is to make sure that they're fully paid for. When it
comes to energy policy, one of the best ways that we can do
that is to harness our own abundant resources and then apply
the revenues to help develop more advanced technologies.
Mr. Chairman, I think we have some great members on the
committee. We have some fresh ideas coming in. I look forward
to the dialog that we will have as a committee and working with
the Secretary to advance the energy goals of this country.
Thank you.
The Chairman. Thank you very much.
Secretary Chu, why don't you go right ahead and take
whatever time you think is appropriate.
STATEMENT OF HON. STEVEN CHU, SECRETARY, U.S. DEPARTMENT OF
ENERGY
Secretary Chu. Thank you, Chairman Bingaman, and also thank
you, Ranking Member Murkowski. Members of the committee: I want
to thank you for the opportunity to appear before you today to
discuss the President's fiscal year 2012 budget request for the
Department of Energy. President Obama has laid out a plan for
the United States to win the future by out-innovating, out-
educating, out-building the rest of the world, while at the
same time addressing the deficit.
Many countries are moving aggressively to lead in clean
energy. We must rev up the great American innovation machine to
create jobs, win the energy race, and secure our future
prosperity. To that end, President Obama has called for an
increased investment in clean energy research, development, and
deployment. In addition, he has proposed a bold but achievable
goal of generating 80 percent of America's electricity from
clean energy sources by 2035. A clean energy standard will
provide a clear long-term signal to industry to bring capital
off the sidelines and into the clean energy sector. It will
grow the domestic market for clean energy sources of energy,
creating jobs, driving innovation, and enhancing national
security. By drawing on a wide range of energy sources,
including renewables, nuclear, clean coal, natural gas, it will
give utilities the flexibility they need to meet our clean
energy goal while protecting consumers in every region of the
country.
The Department of Energy's fiscal year 2012 budget request
for $29.5 billion supports these goals and strengthens the
Nation's economy and security. Through programs to make homes
and buildings more energy efficient, we will save money for
families and businesses by saving energy. In addition, the
budget supports the research, development, and deployment of
renewable sources of energy, the modernization of the electric
grid, and the advancement of carbon capture and sequestration
technologies and it helps reduce our dependence on oil by
developing the next generation of biofuels and accelerating
electric vehicle research and deployment.
We're also requesting a new credit subsidy that will
support approximately $1 billion to $2 billion in loan
guarantees for renewable energy and energy efficiency
technologies. We're also requesting $100 million in credit
subsidies for a new better buildings pilot loan guarantee
initiative for universities, schools, and hospitals.
To jump-start the nuclear industry, the budget requests up
to $36 billion in loan guarantee authority, while also
investing in advanced nuclear technologies, including small
modular reactors.
To spur innovation, the President's budget invests in basic
and applied research and keeps us on a path to doubling funding
for key scientific agencies, including the Department's Office
of Science. The budget invests $550 million in Advanced
Research Projects Agency for Energy, known as ARPA-E. The
administration also seeks an additional $100 million for ARPA-E
as part of the President's wireless innovation and
infrastructure initiative. This investment will allow ARPA-E to
continue the promising early stage research projects that aim
to deliver game-changing clean energy technologies. ARPA-E's
projects are generating excitement both in the Department and
in the private sector.
For example, through a combined total of $24 million from
ARPA-E six companies have been able to advance their research
efforts and show the potential viability of cross-cutting
technologies. This extremely valuable--and I might add that
they were able to then go out, after doing this research, and
secure private funding at a ratio of 4 to 1, 4 times more
private funding. This additional valuable early support enabled
those companies to achieve R and D milestones that in turn have
attracted $100 million in private sector funds for the
projects. This is precisely the innovation leverage that is
needed to win the future.
Another key piece of our research effort is the energy
innovation hubs. Through the hubs, we're bringing together our
Nation's top scientists and engineers to achieve similar game-
changing energy goals, but where a concentrated effort over a
longer time horizon is needed to establish innovation
leadership. The budget requests $146 million to support these 3
existing hubs and to establish 3 new hubs in the areas of
battery and energy storage, smart grid technologies, and
systems and critical materials.
The energy innovation hubs were modeled after the
Department of Energy's bioenergy institutes, which have
established an outstanding 3-year track record.
Finally, the budget continues to support the energy
frontier research centers, which are mostly university-led
teams working to solve specific scientific problems that are
blocking clean energy development. When you think of the EFRCs,
think about a collaboration of teams of scientists such as
Watson and Crick unlocking the secrets of DNA. When you think
of ARPA-E, think of visionary risk-takers launching new
technologies and starting companies out of their garages. When
you think of the hubs, think of large mission-oriented research
efforts such as the Manhattan Project, the development of radar
at MIT's Radiation Laboratory during World War II, and the
research in America's great industrial laboratories in their
heyday.
To reach our energy goals, we must take a portfolio
approach to R and D, pursuing several research strategies that
have proven to be successful in the past. But I want to be
clear. This is not a kitchen sink approach. This work is being
coordinated and prioritized with a 360-degree view of how the
pieces fit together. Taken together, these initiatives will
help America lead in innovation.
In addition to strengthening our economy, the budget
request also strengthens our security by providing $11.8
billion for the Department's National Nuclear Security
Administration. The request of $7.6 billion for weapons
activities provides a strong basis for transitioning to a
smaller, yet still safe, secure and effective nuclear
stockpile, without additional nuclear testing. It also provides
much-needed resources to strengthen science, technology, and
engineering capabilities, and to modernize the physical
infrastructure of our nuclear security enterprise.
To support the President's goal of securing all vulnerable
nuclear material around the world in 4 years, the budget
invests $2.5 billion in the Defense Nuclear Nonproliferation
Program.
Through our investments, we're laying the groundwork for
the Nation's future prosperity and security. At the same time,
we're mindful of our responsibility to the taxpayer. We're
cutting back in multiple areas, including eliminating
unnecessary fossil fuel subsidies, reducing funding for fossil
fuel energy programs and reducing funding for the hydrogen
technology program. We're streamlining operations. We're making
some painful cuts, including ending the operation of the
Tevatron Accelerator and freezing salaries and bonuses for
hard-working national lab employees, site and facility
management contractor employees.
The United States faces a choice today: Will we lead in
innovation and out-compete the rest of the world or will we
fall behind? To lead the world in clean energy, we must act
now. We can't afford not to.
Thank you and I'm pleased to answer any questions you may
have.
[The prepared statement of Secretary Chu follows:]
Prepared Statement of Hon. Steven Chu, Secretary, Department of Energy
Chairman Bingaman, Ranking Member Murkowski, and Members of the
Committee, thank you for the opportunity to appear before you today to
discuss the President's Fiscal Year 2012 budget request for the
Department of Energy.
In his State of the Union address, President Obama laid out a plan
for the United States to win the future by out-innovating, out-
educating and out-building the rest of the world, while at the same
time addressing the deficit. The President's budget request invests in
much-needed programs while cutting back where we can afford to.
Many countries are moving aggressively to develop and deploy the
clean energy technologies that the world will demand in the coming
years and decades. As the President said, this is our generation's
``Sputnik moment.''
We must rev up the great American innovation machine to win the
clean energy race and secure our future prosperity. To that end,
President Obama has called for increased investments in clean energy
research, development and deployment. In addition, he has proposed a
bold but achievable goal of generating 80 percent of America's
electricity from clean sources by 2035.
A Clean Energy Standard will provide a clear, long-term signal to
industry to bring capital off the sidelines and into the clean energy
sector. It will grow the domestic market for clean sources of energy--
creating jobs, driving innovation and enhancing national security. And
by drawing on a wide range of energy sources including renewables,
nuclear, clean coal and natural gas, it will give utilities the
flexibility they need to meet our clean energy goal while protecting
consumers in every region of the country.
The Department of Energy's FY 12 budget request of $29.5 billion
supports these goals and strengthens the nation's economy and security
by investing in the following priorities:
Supporting groundbreaking basic science, research and
innovation to solve our energy challenges and ensure that the
United States remains at the forefront of science and
technology;
Leading in the development and deployment of clean and
efficient energy technologies to reduce our dependence on oil,
accelerate the transition to a clean energy economy and promote
economic competitiveness; and
Strengthening national security by reducing nuclear dangers,
maintaining a safe, secure and effective nuclear deterrent and
cleaning up our Cold War nuclear legacy.
While we are investing in areas that are critical to our future, we
are also rooting out programs that aren't needed and making hard
choices to tighten our belt. Additionally, we are improving our
management and operations so we function more efficiently and
effectively.
leading in the global clean energy economy
As the President said in his State of the Union address, investing
in clean energy will strengthen our security, protect our planet, and
create countless new jobs here at home. The Department's budget request
invests $3.2 billion in energy efficiency and renewable energy
programs.
Through programs to make homes and buildings more energy efficient,
including a new ``Better Buildings Initiative'' to make commercial
buildings 20 percent more efficient over the next decade, we will save
money for families and businesses by saving energy. That is money that
can be re-invested back into the economy. In addition, the budget
supports the research, development and deployment of renewable sources
of energy like wind, solar and geothermal. It supports the
modernization of the electric grid and the advancement of carbon
capture and sequestration technologies. And it helps reduce our
dependence on oil by developing the next generation of biofuels and
accelerating electric vehicle research and deployment to support the
President's goal of putting one million electric vehicles on the road
by 2015. This includes a $200 million competitive program to encourage
communities to invest in electric vehicle infrastructure.
We're also focused on moving clean energy technologies from the lab
to the marketplace. Over the past two years, the Department's loan
programs have supported more than $26 billion in loans, loan
guarantees, and conditional commitments to guarantee loans for 23 clean
energy and enhanced automotive fuel efficiency projects across the
country, which the companies estimate will create or save more than
58,000 jobs. Building on this success, we are requesting new credit
subsidy that will support approximately $1 billion to $2 billion in
loan guarantees for innovative renewable energy and energy efficiency
technologies. These deployment efforts build on the substantial
investment made in the clean energy sector by the Recovery Act, and are
supplemented by tax incentives that have also played an important role
in bringing clean energy projects to market, such as the 48C
manufacturing tax credits and the 1603 cash grants in lieu of
investment tax credits, which the 2012 budget also expands. We are also
requesting $100 million in credit subsidy for a new ``Better Buildings
Pilot Loan Guarantee Initiative for Universities, Schools, and
Hospitals,'' which will guarantee up to $2 billion in loans to support
energy efficient retrofits.
Nuclear energy also has an important role to play in our energy
portfolio. To jumpstart the domestic nuclear industry, the budget
requests up to $36 billion in loan guarantee authority. It also invests
in the research and development of advanced nuclear technologies,
including small modular reactors.
supporting groundbreaking science
To spur innovation, the President's budget request invests in basic
and applied research and keeps us on the path to doubling funding for
key science agencies, including the Department's Office of Science. As
Norm Augustine, former Chairman of Lockheed Martin and former Under
Secretary of the Army, has said, under-funding R&D in a time of
austerity is like removing the engine of an aircraft to reduce its
weight.
That is why the budget request increases support for the
Department's comprehensive research strategy to accelerate energy
breakthroughs.
Through $5.4 billion for the Office of Science, we're expanding our
investment in basic energy sciences, advanced scientific computing and
biological and environmental sciences--all key areas for our future
economic competitiveness.
The budget invests $550 million in the Advanced Research Projects
Agency-Energy, also known as ARPA-E. The Administration also seeks an
additional $100 million for ARPA-E from the Wireless Innovation Fund to
support wireless clean energy technologies. This investment will allow
ARPA-E to continue the promising early-stage research projects that aim
to deliver game-changing clean energy technologies. ARPAE's projects
are generating excitement both in the Department and in the private
sector. For example, through a combined total of $24 million from ARPA-
E, six companies have been able to advance their research efforts and
show the potential viability of their cutting-edge technologies. This
extremely valuable early support enabled those companies to achieve R&D
milestones that, in turn, have attracted more than $100 million in
private sector funds to the projects. This is precisely the innovation
leverage that is needed to win the future.
Another key piece of our research effort is the Energy Innovation
Hubs. Through the Hubs, we are bringing together our nation's top
scientists and engineers to achieve similar game-changing energy goals,
but where a concentrated effort over a longer time horizon is needed to
establish innovation leadership. The Department has established three
Energy Innovation Hubs in the areas of energy efficient buildings,
modeling and simulation for nuclear reactors and fuels from sunlight.
The budget requests $146 million to support the three existing Hubs and
to establish three new Hubs in the areas of batteries and energy
storage, smart grid technologies and systems, and critical materials.
The Energy Innovation Hubs were modeled after the Department of
Energy's BioEnergy Institutes, which have established an outstanding
three-year track record.
Finally, the budget continues to support the Energy Frontier
Research Centers, which are mostly university-led teams working to
solve specific scientific problems that are blocking clean energy
development.
The Energy Innovation Hubs, ARPA-E, and EFRCs represent three
complementary approaches to advance groundbreaking discovery. When you
think of the EFRCs, think about a collaborative team of scientists such
as Watson and Crick unlocking the secrets of DNA. When you think of
ARPA-E, think about visionary risktakers launching new technologies and
start-up companies out of their garages. When you think of the Hubs,
think of large, mission-oriented research efforts such as the Manhattan
Project, the development of radar at MIT's Radiation Laboratory during
World War II and the research in America's great industrial
laboratories in their heyday.
We don't know where the big energy breakthroughs are going to come
from. To reach our energy goals, we must take a portfolio approach to
R&D: pursuing several research strategies that have proven to be
successful in the past. But I want to be clear--this is not a ``kitchen
sink'' approach. This work is being coordinated and prioritized, with a
360-degree view of how these pieces fit together. Taken together, these
initiatives will help America lead in science and technology
innovation.
nuclear safety and security
In addition to strengthening our economy, the budget request also
strengthens our security by providing $11.8 billion for the
Department's National Nuclear Security Administration. The five-year FY
12 to FY 16 request of nearly $65 billion for NNSA reflects the
President's nuclear security priorities, as well as his commitment to
modernize the U.S. nuclear weapons enterprise and sustain a strong
nuclear deterrent for the duration of the New START Treaty and beyond.
The request of $7.6 billion for Weapons Activities provides a
strong basis for transitioning to a smaller yet still safe, secure and
effective nuclear stockpile without additional nuclear testing. It also
provides much-needed resources to strengthen science, technology and
engineering capabilities and to modernize the physical infrastructure
of our nuclear security enterprise.
The President has identified the danger of terrorists getting their
hands on nuclear weapons or the material to build them as the greatest
threat to global security. To support the President's goal of securing
all vulnerable nuclear material around the world in four years, the
budget invests $2.5 billion in the NNSA Defense Nuclear
Nonproliferation program. This is part of a five-year, $14.2 billion
commitment for the program.
The budget also requests $1.2 billion to support the Navy's nuclear
powered submarines and aircraft carriers. And it provides $6.1 billion
to protect public health and safety by cleaning up the nation's Cold
War nuclear legacy.
fiscal responsibility
Through our investments, we are laying the groundwork for the
nation's future prosperity and security. At the same time, we are
mindful of our responsibility to the taxpayer.
We are cutting back in multiple areas, including eliminating
unnecessary fossil fuel subsidies, reducing funding for the Fossil
Energy program and reducing funding for the hydrogen technology
program. We're streamlining operations to reduce administrative costs.
And we're making some painful cuts, including ending operation of the
Tevatron accelerator and freezing salary and bonuses for hard-working
National Laboratory, site and facility management contractor employees.
Finally, we continue to make progress on a management excellence
agenda to improve our operations.
The United States faces a choice today: will we lead in innovation
and outcompete the rest of the world or will we fall behind? To lead
the world in clean energy, we must act now. We can't afford not to.
Thank you, and now I am pleased to answer any questions you may
have.
highlights of the fy 2012 budget request
In his State of the Union address, President Obama said that
America faces ``our generation's Sputnik moment'' and that we need to
out-innovate, out-educate and outbuild the rest of the world to capture
the jobs of the 21st century. ``In America, innovation doesn't just
change our lives. It's how we make our living.'' Through innovation in
promising areas like clean energy, the United States will win the
future and create new industries and new jobs. To lead in the global
clean energy economy, we must mobilize America's innovation machine in
order to bring technologies from the laboratory to the marketplace. The
Department of Energy (DOE) is on the front lines of this effort. To
succeed, the Department will pursue game-changing breakthroughs, invest
in innovative technologies, and demonstrate commercially viable
solutions.
In addition to energy advances that spark economic growth, national
security remains fundamental to the Department's mission. Through
bipartisan ratification of the New START treaty with Russia, America
and its global partners are leading by example in implementing the
focused expansion of domestic and international activities to reduce
the threat of nuclear weapons, nuclear proliferation, and unsecured or
excess weapons-usable materials. The National Nuclear Security
Administration (NNSA) supports the international effort to secure all
vulnerable nuclear materials around the world within four years. The
NNSA also fulfills the President's commitment to modernize the nation's
nuclear stockpile until a world without nuclear weapons can be
realized.
The Department's Fiscal Year (FY) 2012 budget request is $29.5
billion, an 11.8 percent or $3.1 billion increase from FY 2010 current
appropriation levels. The FY 2012 request 6 supports the President's
goals to increase America's competitiveness by making strategic
investments in our nation's clean energy infrastructure and to
strengthen our national security by reducing the global threat of
nuclear materials. The President has called for advancing research on
clean energy technologies and manufacturing, doubling the share of
electricity generated from clean energy supplies by 2035, and putting
one million electric vehicles on the road by 2015. The Department's
request prepares for a multiyear effort to address these interconnected
objectives and prioritizes research and development of renewable energy
technologies to expand sustainable energy options for the United
States.
The FY 2012 budget builds on the intense planning, execution, and
oversight of the $35.2 billion from the American Recovery and
Reinvestment Act of 2009. By the end of FY 2010, the Department
successfully obligated $32.7 billion of Recovery Act funds, including
all funding that was set to expire. In developing the FY 2012 budget
request, the Department has taken these investments into account and
will oversee execution of these funds with value to the taxpayer in
mind. Recovery Act investments are focused on: energy conservation and
renewable energy sources ($16.8 billion), environmental cleanup ($6
billion), loan guarantees for renewable energy and electric power
transmission projects ($2.4 billion), grid modernization ($4.5
billion), carbon capture and sequestration ($3.4 billion), basic
science research ($1.6 billion), and the Advanced Research Projects
Agency--Energy ($0.4 billion). The Department's Recovery Act activities
are strengthening the economy by providing much-needed investment,
saving or creating tens of thousands of jobs, cutting carbon pollution,
and reducing U.S. dependence on oil.
The President's FY 2012 Budget supports three strategic priorities:
Transformational Energy.--Accelerate the transformation to a
clean energy economy and secure U.S. leadership in clean energy
technologies.
Economic Prosperity.--Strengthen U.S. science and
engineering efforts to serve as a cornerstone of our economic
prosperity and lead through energy efficiency and secure forms
of energy.
Nuclear Security.--Enhance nuclear security through defense,
nonproliferation, naval reactors, and environmental cleanup
efforts.
As the President has articulated, innovation is essential to
America's economic competitiveness. To meet the challenge of `our
generation's Sputnik moment,' the Department supports a coordinated
strategy for research and development across all of its programs. With
every initiative the Department undertakes, sound science is at the
core. In FY 2012, we will increasingly emphasize cross-cutting
initiatives to link science throughout the Department, specifically
with energy and national security programs in order to deliver results
to the American taxpayer. In the Office of Science, the Department
requests $5.4 billion, a 9.1 percent or $452 million increase over the
FY 2010 current appropriation levels, to support an elevated focus on
the advancement of the United States' leadership in fundamental
research. Advanced Research Projects Agency--Energy (ARPA-E) is
building on established gains since its initial funding in FY 2009
through the Recovery Act to perform transformational research and
create gamechanging breakthroughs for eventual market adoption. The FY
2012 budget request includes $550 million for ARPA-E to sustain
investment in new energy technologies.
Energy Innovation Hubs play a key role in solving specific energy
challenges by convening and focusing top scientific and engineering
talent to focus on those problems. The Hubs bring together
multidisciplinary team of researchers in an effort to speed research
and shorten the path from scientific discovery to technological
development and commercial deployment of highly promising energy-
related technologies. The Department is proposing to double its
commitment to this research approach by requesting three new Hubs to
focus on batteries and energy storage, critical materials, and Smart
Grid technologies and systems. The Department will continue funding the
three Energy Innovation Hubs introduced in FY 2010 to focus on
developing fuels that can be produced directly from sunlight, improving
energy efficient building systems design, and using modeling and
simulation tools to create a virtual model of an operating advanced
nuclear reactor. Complementing the Hubs, the Department plans in FY
2012 to continue coordination with the Office of Science's Energy
Frontier Research Centers, which exemplify the pursuits of broad-based
science challenges for energy applications.
Energy Security: Promoting America's Energy Security through Reliable,
Clean and Affordable Energy
In his State of the Union address, the President outlined clearly
to the American people his roadmap for transforming our nation's energy
economy to meet the demands of future generations. ``Instead of
subsidizing yesterday's energy, let's invest in tomorrow's,'' he said.
To meet the President's challenge, the Department must recruit the
sharpest research minds and build on its aggressive discovery agenda
across all programs to achieve breakthroughs on the most pressing
energy challenges facing the United States.
In his address, President Obama laid out a goal for clean energy
sources to account for 80 percent of America's electricity by 2035. In
FY 2012, the Department requests funds to help achieve this
Presidential objective and address many of the energy delivery
challenges facing American families and energy providers.
Applied Research, Development and Deployment.--Meeting the
President's goal of making America the first country to have
one million electric vehicles on the road by 2015, the
Department will research cost competitive methods to develop
electric vehicles, increase the adaptability and capacity of
the grid to enable vehicle charging, incentivize communities to
invest in electric vehicles and infrastructure and send these
vehicles to the nation's roadways. The Department will also
launch competitive manufacturing research for breakthrough
technologies in energy efficiency diagnostics and retrofits to
help business owners around the country save money on energy
costs.
Loan Guarantees.--The Loan Programs Office (LPO) is a vital
tool for promoting innovation in the energy sector across a
broad portfolio of clean and efficient energy technologies. In
FY 2012, the Department is requesting credit subsidies to
support approximately $1 to $2 billion in loan guarantees for
renewable energy deployment and up to $36 billion in additional
authority to loan guarantees for nuclear power projects. The
Department will also continue to streamline and prioritize the
issuance of loan guarantees to leverage private sector
investment in clean energy and energy efficiency projects that
will save and create jobs.
Better Buildings Initiative.--Last year, commercial
buildings consumed roughly 20 percent of all energy in the U.S.
economy. Improving energy efficiency in our buildings can
create jobs, save money, reduce our dependence on oil, and make
our air cleaner. The President's Better Buildings Initiative
will make commercial buildings 20 percent more energy efficient
over the next decade through initiatives that include: re-
designing the current tax deduction for commercial buildings
and upgrades to a credit that is more generous and that will
encourage building owners and real estate investment trusts
(REITs) to retrofit their properties; improving financing
opportunities for retrofits through programs including a new
Better Buildings Pilot Loan Guarantee Initiative for
Universities, Schools and Hospitals, for which the Department
of Energy requests $100 million in credit subsidy to guarantee
up to $2 billion in loans for energy efficiency retrofits for
these facilities; creating a $100 million Race to Green
competitive grant program for state and municipal governments
to implement innovative approaches to building codes,
performance standards, and regulations so that commercial
building efficiency will become the norm in communities across
the country; and calling on CEOs and university presidents to
join the Department of Energy and other Federal partners in a
Better Buildings Challenge to make their organizations leaders
in saving energy. The Better Buildings Initiative builds on our
investments through the Recovery Act and our continued
commitment to passing ``HOMESTAR'' legislation to encourage
American families to make energy saving upgrades in their
homes.
Electricity Reliability and Energy Management.--Reliable,
affordable, efficient, and secure electric power is vital to
expanding economic recovery, protecting critical
infrastructures, and enabling the transition to renewable
energy sources. The FY 2012 request invests $238 million to
bring the next generation of grid modernization technologies
closer to deployment and commercialization, to assist states
and regional partners in grid modernization efforts, and to
facilitate recovery from energy supply disruptions when they
occur. The request includes a new Smart Grid Technology and
Systems Hub that will address the total electricity system,
covering applied science, technology, economic, and policy
issues that affect our ability to modernize the grid. The FY
2012 request also plans an expansion of the Home Energy Score
program that provides homeowners with information on how their
homes can be more energy efficient and guidance for saving on
home energy costs. This is in addition to the President's
support for passage of the Home Star rebate program in 2011.
Investing in energy efficiency, renewable energy generation, and
grid modernization are fundamental steps necessary for creating a clean
energy economy. We must also invest in the improvement of existing
sources of energy that will provide a bridge between current and future
technologies. These technologies are already a major segment of the
energy mix and will play a critical role in providing a solid
foundation that will make possible the creation of a new energy
economy.
Leadership in Nuclear Energy.--Nuclear energy currently
supplies approximately 20 percent of the Nation's electricity
and 70 percent of the Nation's clean, non-carbon electricity.
The request for the Office of Nuclear Energy includes $380
million for research and development, in addition to key
investments in supportive infrastructure. In addition, the
Department is engaging in cost-shared activities with industry
that may help accelerate commercial deployment of small modular
reactors. The request includes funding for costshared design
certification and licensing activities for small modular
reactors, the deployment of which holds promise for vastly
increasing the generation of clean energy on a cost competitive
basis. The Department will also promote nuclear power through
the Loan Guarantee Program, which is requesting up to $36
billion in additional loan guarantee authority in FY 2012.
Advanced Fossil Energy.--Experience in Carbon Capture and
Storage--The world will continue to rely on coal-fired
electrical generation to meet energy demand. It is imperative
that the United States develop the technology to ensure that
base-load electricity generation is as clean and reliable as
possible. The Office of Fossil Energy requests $452.9 million
for research and development of advanced coal-fueled power
systems and carbon capture and storage technologies. The Budget
focuses resources within the fossil energy program on
activities that can reduce carbon pollution and have potential
benefits for both the existing fleet and new power plants --
specifically, post-combustion capture R&D and geologic carbon
storage R&D.
Ending Tax Subsidies to Fossil Fuel Producers.--In
accordance with the President's agreement at the G-20 Summit in
Pittsburgh to phase out subsidies for fossil fuels so that we
can transition to a 21st century energy economy, the
Administration proposes to repeal a number of tax preferences
available for fossil fuels. Tax subsidies proposed for repeal
include, but are not limited to: the credit for oil and gas
produced from marginal wells; the deduction for costs paid or
incurred for any tertiary injectant used as part of a tertiary
oil recovery method; the ability to claim the domestic
manufacturing deduction against income derived from the
production of oil and gas and coal; and expensing the
exploration and development costs for coal.
Economic Security: Sharpening America's Competitive Edge through a
Clean Energy Economy
To meet ``our generation's Sputnik moment'' and promote economic
competitiveness, the U.S. must demonstrate leadership in clean energy
technologies. ``We'll invest in biomedical research, information
technology and especially clean energy technology--an investment that
will strengthen our security, protect our planet, and create countless
new jobs for our people,'' said President Obama before Congress in the
State of the Union address. President Obama outlined his comprehensive
vision to lead our nation's clean energy economy and provide economic
security to Americans. As the Administration seeks to reduce federal
government spending, the Department recognizes its role and has
tightened its expenditures in several areas such as oil and natural
gas. The FY 2012 budget request acknowledges the Department's missions
to achieve these imperative goals while setting forth a clean energy
economy for entrepreneurs and manufacturers to reclaim their
competitive edge in clean energy innovation.
The Department plans to promote economic security by building on
the progress made through the over $32 billion in grants and contracts
under the American Recovery and Reinvestment Act of 2009, which made
historic investments in the nation's economy and has put the country on
target to double renewable energy generation by 2012. The Recovery Act
helped create tens of thousands of jobs and, combined with the FY 2012
request, will help the Department accelerate the transition of our
nation to a clean energy economy.
The President's FY 2012 Budget supports the plan to rebuild our
economy through clean energy research and development by:
Expanding ARPA-E to spur innovation.--The President's
request proposes $550 million for the Advanced Research
Projects Agency--Energy (ARPA-E) program, plus an additional
$100 million for the program from the Wireless Innovation and
Infrastructure Initiative for a total of $650 million. ARPA-E
performs transformational and cutting edge energy research with
real-world applications in areas ranging from grid technology
and power electronics to batteries and energy storage. The
budget also supports programs with significant promise to
provide reliable, sustainable energy across the country, such
as the SunShot initiative aimed at making solar energy cost
competitive. With focused investment in manufacturing
innovation and industrial technical efficiencies, the
President's proposal will move private sector capital off the
shelves and into the marketplace.
Targeting investments for future economic growth.--To secure
a competitive advantage in high-tech industries and maintain
international leadership in scientific computing, we will
invest in core research activities for energy technologies, the
development of general biological design principles and new
synthetic molecular toolkits to improve understanding of
natural systems, and core research activities to advance the
frontiers of high performance computing. Underlying these
investments in research is the education and training of
thousands of scientists and engineers who contribute to the
skilled scientific workforce needed for a 21st century
innovation economy.
Doubling the number of Energy Innovation Hubs to solve key
challenges.--Innovation breakthroughs occur when scientists
collaborate on focused problems. The FY 2012 budget request
proposes three new Energy Innovation Hubs that will bring top
American scientists to work in teams on critical energy
challenges in areas such as critical materials, batteries and
energy storage, and Smart Grid technologies. These will join
three existing Hubs that focus on fuel generation from
sunlight, building efficiency, and nuclear reactor modeling and
simulation.
Integrating Research & Development.--The Department has
identified areas where coordinated work by discovery-oriented
science and applied energy technology programs hold the
greatest promise for progress in achieving our energy goals.
The Energy Systems Simulation to increase the efficiency of the
Internal Combustion Engine (ICE) will produce a set of modern,
validated computer codes that could be used by design engineers
to optimize the next generation of cleaner, more efficient
combustion engines. An initiative on extreme environments will
close the gap between actual and ideal performance of materials
in nuclear environments. And the Department's Exascale
Computing initiative will allow the Department to take the lead
in developing the next generation of scientific tools and to
advance scientific discoveries in solving practical problems.
Pursuing the passage of HOMESTAR.--Enactment of this program
will create jobs by providing strong short-term incentives for
energy efficiency improvements in residential buildings. The
HOMESTAR program has the potential to accelerate our economic
recovery by boosting demand for energy efficiency products and
installation services. The program will provide rebates of
$1000 to $3000 per household to encourage immediate investment
in energyefficient appliances, building mechanical systems and
insulation, and whole-home energy efficiency retrofits. This
program will help middle-class families save hundreds of
dollars a year in energy costs while improving the comfort and
value of their most important investment--their homes. In
addition, the program would help reduce our economy's
dependence on fossil fuels and support the development of an
energy efficiency services sector in our economy.
Extending access to tax credit and tax grant programs.--Two
provisions of the American Recovery and Reinvestment Act have
been extraordinarily successful in spurring the deployment of
renewable energy projects and building advanced manufacturing
capabilities: Section 48C Advanced Energy Manufacturing Tax
Credit program and the Section 1603 Energy Cash Assistance
program. The Administration is pursuing an additional $5
billion in support for the Section 48C program, which, by
providing a 30% tax credit for energy manufacturing facilities,
will continue to help build a robust high-technology, U.S.
manufacturing capacity to supply clean energy projects with
U.S. made parts and equipment. The Section 1603 tax grant
program has created tens of thousands of jobs in industries
such as wind and solar by providing up-front incentives to
thousands of projects. The Administration is seeking a one-year
extension of this program.
Promoting efficient energy use in our everyday lives.--
Currently, weatherization of more than 300,000 homes of low
income families has been achieved, providing energy cost
savings and financial relief to households. The FY 2012 request
of $320 million continues residential weatherization, while
increasing the focus on new innovative approaches to
residential home weatherization.
National Security: Securing Nuclear and Radiological Materials,
Maintaining Nuclear Deterrence, and Advancing Responsible
Legacy Cleanup
A pillar of President Obama's national security agenda for the
United States is to eliminate the global threat posed by nuclear
weapons and prevent weapons-usable nuclear material from falling into
the hands of terrorists. As part of this agenda, the Administration and
Congress worked tirelessly toward the December 2010 bipartisan
ratification of the New Strategic Arms Reduction Treaty (New START)
with Russia, which cuts the number of strategic nuclear weapons each
country can deploy to 1,550. After signing this agreement in April
2010, President Obama said, ``In many ways, nuclear weapons represent
both the darkest days of the Cold War, and the most troubling threats
of our time. Today, we've taken another step forward . . . in leaving
behind the legacy of the 20th century while building a more secure
future for our children. We've turned words into action. We've made
progress that is clear and concrete. And we've demonstrated the
importance of American leadership--and American partnership--on behalf
of our own security, and the world's''.
The Department's National Nuclear Security Administration (NNSA),
through work with global partners and efforts to secure vulnerable
nuclear materials, achieved significant milestones during FY 2010 and
FY 2011 to reduce the risk of proliferation and leverage science to
maintain our nation's nuclear deterrence. Additionally, the
Environmental Management program made progress advancing responsible
nuclear cleanup from the Cold War. The Department's FY 2012 request
seeks to build upon these successes and advance the President's nuclear
security agenda.
Reduce the Risk of Proliferation
In 2009, President Obama committed the United States to an
international effort to secure vulnerable nuclear material worldwide in
four years. To solidify international support for this effort, and to
address the threat of nuclear terrorism, the President convened leaders
from 47 countries at the Washington Nuclear Security Summit in April
2010. The Summit resulted in a Communique which stated, ``Nuclear
terrorism is one of the most challenging threats to international
security, and strong nuclear security measures are the most effective
means to prevent terrorists, criminals, or other unauthorized actors
from acquiring nuclear materials.''
The FY 2012 budget for the NNSA Defense Nuclear Nonproliferation
program will help advance further work that is needed to meet the goals
of President Obama and the Nuclear Security Summit, recognizing the
urgency of the threat and making the full commitment to global
cooperation on nonproliferation. The budget provides $2.5 billion in FY
2012, and $14.2 billion through FY 2016 to detect, secure, and dispose
of dangerous nuclear and radiological material worldwide. This request
is a decrease of 5 percent, or $138 million, from the FY 2011 request,
which reflects completion of accelerated efforts to secure vulnerable
nuclear materials within the President's stated timeframe. The decrease
also reflects our decision to await agreement between the United States
and Russia on detailed implementation milestones prior to requesting
additional U.S. pledged funding to support Russian plutonium
disposition. The FY 2012 budget request follows through on securing
vulnerable materials and supports efforts to design new technologies in
support of treaty monitoring and verification, which will contribute to
implementation of New START. The budget also broadens cooperative
nonproliferation initiatives with foreign governments and international
organizations in support of the President's objective of a world
without nuclear weapons. The budget continues the provision of security
upgrades at selected sites, both within the United States and in
foreign countries, to address outsider and insider threats, and
accelerates the pace of research reactor conversions from use of
highly-enriched uranium fuel to lowenriched uranium fuel.
Leverage Science to Maintain Nuclear Deterrence
The FY 2012 budget request advances the Department's commitment to
the national security interests of the United States through
stewardship of a safe, secure and effective nuclear weapons stockpile
without the use of underground nuclear testing. The 2010 Nuclear
Posture Review Report calls for the United States to reduce nuclear
force levels. As the United States begins the reduction required by New
START, the science, technology and engineering capabilities and
intellectual capacity within the nuclear security enterprise become
more critical to sustaining the U.S. nuclear deterrent. NNSA continues
to emphasize these capabilities, including functioning as a national
science, technology, and engineering resource to other agencies with
national security responsibilities. Through the NNSA, the Department
requests $7.6 billion for the Weapons Activities appropriation, an 8.9
percent, or $621 million, increase from the President's FY 2011
request. It also is an 18.9 percent, or $1.205 million increase from
the FY 2010 enacted appropriation. This increase reflects an investment
strategy that provides a strong basis for transitioning to a smaller
yet still safe, secure and effective nuclear stockpile without
additional nuclear testing, strengthening the science, technology and
engineering base, modernizing the physical infrastructure, and
streamlining the enterprise's physical and operational footprint. These
investments will further enable the Nuclear Posture Review's
comprehensive nuclear defense strategy, based on current and projected
global threats that rely less on nuclear weapons, while strengthening
the nation's nuclear deterrent through completing major stockpile
system life extensions, stabilizing the science, technology and
engineering base, and modernizing the infrastructure.
The Naval Reactors program ensures the safe and reliable operation
of reactor plants in nuclear-powered submarines and aircraft carriers,
constituting 45 percent of the U.S. Navy's combatants. The FY 2012
request for Naval Reactors of $1.2 billion, is an increase of $83.2
million or 7.8 percent over the FY 2011 request and $209 million or
18.1 percent above the FY 2010 enacted appropriation. Funding for this
program is ramping up for reactor design and development efforts for
the Ohio Class Replacement Submarine ($121 million), refueling of the
Land-Based Prototype ($99.5 million), and recapitalization of the naval
spent nuclear fuel infrastructure for the Spent Fuel Handling
Recapitalization program ($53.8 million) at the Naval Reactors Facility
located at the Idaho National Laboratory.
Advance Responsible Environmental Cleanup
The FY 2012 budget includes $6.13 billion for the Office of
Environmental Management (EM), to protect public health and safety by
cleaning up hazardous, radioactive legacy waste from the Manhattan
Project and the Cold War. This funding will allow the program to
continue to accelerate cleaning up and closing sites, focusing on
activities with the greatest risk reduction. Acceleration of cleaning
up sites where funding would have immediate impact was established as
the overarching objective of the $6 billion in Recovery Act funding. EM
will use the remaining $309 million of Recovery Act funding during FY
2012 as it completes footprint reduction and near-term completion
cleanup activities.
As the Department continues to make progress in completing
environmental cleanup, the FY 2012 budget request of $170 million for
the Office of Legacy Management supports the Department's long-term
stewardship responsibilities and payment of pensions and benefits for
former contractor workers after site closure.
department of energy fy 2012 program office highlights
Office of Science: Invest in the Building Blocks of American Innovation
The Department of Energy's Office of Science (SC) delivers
scientific discoveries and major scientific tools to transform our
understanding of energy and matter and advance the energy, economic,
and national security of the United States. SC is the largest Federal
sponsor of basic research in the physical sciences, supporting programs
in areas such as physics, chemistry, biology, environmental sciences,
applied mathematics, and 15 computational sciences. In FY 2012, the
Department requests $5.4 billion, an increase of 9.1 percent over the
FY 2010 current appropriation, to invest in basic research. The FY 2012
request supports the President's Strategy for American Innovation, and
is consistent with the goal of doubling funding at key basic research
agencies, including the Office of Science. The FY 2012 Office of
Science budget request supports the following objectives from the
Strategy, including:
Unleash a clean energy revolution
Strengthen and broaden American leadership in fundamental
research
Develop an advanced information technology ecosystem
Educate the next generation with 21st century skills and
create a world-class workforce
In FY 2012, SC continues to support fundamental research for
scientific discovery, but today our country needs to move strongly to
solve our energy problems. Therefore, the central theme of this year's
budget in SC is research in new technologies for a clean energy future
that address competing demands on our environment. These efforts,
coordinated with the DOE applied technology programs and with input
from the scientific community and industry, will emphasize research
underpinning advances in non-carbon emitting energy sources, carbon
capture and sequestration, transportation and fuel switching,
transmission and energy storage, efficiency, and critical materials for
energy applications.
In the area of advancing non-carbon energy sources, the FY 2012
budget request will provide for new investments in the science of
interfaces and degradation relevant to solar photovoltaics, basic
actinide chemistry research related to advanced nuclear fuel cycles,
and research in materials under extreme environments relevant to
extreme nuclear technology environments, and genomics-based research on
biological design principles and synthetic biology tools to underpin
bio-based energy solutions. Carbon capture and sequestration research
will focus on novel molecular design for materials and multiscale
dynamics of flow and plume migration, respectively. SC will initiate an
energy systems simulation research effort focused on predictive
modeling of combustion in an evolving fuel environment in support of
the Department's efforts in transportation and alternative fuels. Also
underpinning transportation and fuel switching, as well as energy
storage, the FY 2012 request will support an Energy Innovation Hub for
Batteries and Energy Storage. The Fuels from Sunlight Hub, established
in FY 2010, as well as the Energy Frontier Research Centers and DOE
Bioenergy Research Centers also continue. Research in enabling
materials sciences will support needs of future electricity
transmission systems and novel building materials to improve building
efficiencies.
The FY 2012 budget request also provides for foundational science
in condensed matter and materials physics, chemistry, biology, climate
and environmental sciences, applied mathematics, computational and
computer science, high energy physics, nuclear physics, plasma physics,
and fusion energy sciences; and provides for research facilities and
capabilities that keep U.S. researchers at the forefront of science.
The FY 2012 request supports targeted increases in areas such as
computational materials and chemistry by 16 design, nanoelectronics,
and advanced scientific applications and integrated
applicationhardware-software co-design for exascale, which position the
U.S. to secure a competitive advantage in high-tech industries and
maintain international leadership in scientific computing. Underlying
these investments is the education and training of thousands of
scientists and engineers who contribute to the skilled scientific
workforce needed for the 21st century innovation economy.
The Office of Science supports investigators at about 300 academic
institutions and from all of the DOE laboratories. Over 26,000
researchers from universities, national laboratories, industry, and
international partners are expected to use the Office of Science
scientific user facilities in FY 2012.
Advanced Research Projects Agency--Energy: Transformational Research
and Development
The FY 2012 budget request includes $550 million for the Advanced
Research Projects Agency--Energy (ARPA-E), plus an additional $100
million for the program from the Wireless Innovation and Infrastructure
Initiative for a total of $650 million. ARPA-E was launched in FY 2009
to sponsor specific high-risk and high-payoff transformational research
and development projects that overcome the long-term technological
barriers in the development of energy technologies to meet the Nation's
energy challenges, but that industry will not support at such an early
stage. An essential component of ARPA-E's culture is an overarching
focus on accelerating science to market. Beyond simply funding
transformational research creating revolutionary technologies, ARPA-E
is dedicated to the market adoption of those new technologies that will
fuel the economy, create new jobs, reduce energy imports, improve
energy efficiency, reduce energy-related emissions, and ensure that the
U.S. maintains a technological lead in developing and deploying
advanced energy technologies.
Office of Energy Efficiency and Renewable Energy: Investing in
Breakthrough Technology and a Clean Energy Future
The Office of Energy Efficiency and Renewable Energy (EERE)
supports research, development, demonstration, and deployment
activities on technologies and practices essential for meeting national
security goals by reducing dependence on oil, meeting environmental
goals by minimizing the emissions associated with energy production and
use, and stimulating economic growth and job creation by minimizing the
cost of energy services. The EERE portfolio emphasizes work areas where
the potential impact is largest, where Federal funds are most critical.
It balances investments in high-risk research with partnerships with
private firms that speed the translation of innovations into practical
business opportunities. The diverse set of technologies supported helps
ensure that the U.S. has many options for meeting its energy goals.
Program management is designed to identify the best groups in the
country to address these challenges and supports work in universities,
companies, national laboratories, and consortia.
The FY 2012 budget request of $3.2 billion, the increase of 44.4%
over the FY 2010 current appropriation, is aimed at accelerating
innovation and change in the Nation's 17 energy economy. The request
includes programs associated with meeting the President's goals of
investing in the next generation of clean energy technologies, vehicles
and fuels, and energy efficiency measures that reduce energy use in
Federal agencies and the industrial and building sectors.
Clean, Renewable Energy Generation
The FY 2012 budget request continues to work to transform the
Nation's energy infrastructure by investing over $1,164.9 million in a
variety of renewable programs including solar ($457.0 million), wind
($126.9 million), water ($38.5 million), hydrogen ($100.5 million),
biomass ($340.5 million), and geothermal ($101.5 million). Research,
development, and deployment of these technologies will reduce the
production of greenhouse gas emissions and revitalize an economy built
on the next generation of domestic production. The request includes the
solar SunShot program which will invest in transformative research
focusing on achieving radical cost reductions in photovoltaic modules,
balance of systems, and power electronics.
Energy Efficiency
The Department implements a number of efforts to increase energy
efficiency in homes, transportation, and industry. The FY 2012 budget
requests $1,805.3 million to accelerate deployment of clean, cost-
effective, and rapidly deployable energy efficiency measures in order
to reduce energy consumption in residential and commercial buildings,
and the industrial and Federal sectors. The Department will invest
$470.7 million in the Building Technologies program and $33.0 million
for the Federal Energy Management Program. Federal assistance for
state-level programs such as State Energy Program ($63.8 million),
Tribal ($10.0 million) and Weatherization Assistance Program ($320.0
million) will continue to help citizens implement energy efficiency
measures, lower energy costs and greenhouse gas emissions, and build a
technical workforce. ($319.8 million) for Industry will provide a
balanced portfolio of advanced R&D and pursuit of near-term low cost
opportunities with the objectives of increasing U.S. competitiveness,
enhancing clean energy manufacturing, and improving energy
productivity. There will be a focus on next generation manufacturing
processes and materials, activities for clean energy manufacturing, and
refocused efforts for Industrial Technical Assistance to achieve
greater results with less funding through more effective leveraging of
funding for deployment partnerships. A new Energy Innovation Hub on
critical materials will be competed through the Industrial Technologies
program. The FY 2012 request also includes $588 million to accelerate
research, development and deployment of advanced vehicle technologies,
working in concert with biomass RD&D to reduce the use of petroleum and
greenhouse gas emissions.
Better Buildings Initiative for Commercial Energy Savings.--The
President's Better Buildings Initiative is focused on achieving a 20
percent improvement in commercial buildings' energy use by 2020. The
initiative will include many new components to achieve this goal. The
following are supported in the Department's FY 2012 request: launch of
the Race to Green competitive grant program for states and municipal
governments to encourage higher standards for commercial energy
efficiency, which is funded within the Buildings Technologies Program;
a new pilot loan guarantee program to support energy efficiency
retrofits for buildings that serve as community assets; and increased
R&D funding for building technologies. The Department intends to work
with the business and academic communities to make their organizations
leaders in saving energy.
Office of Electricity Delivery and Energy Reliability: Enabling a Clean
Energy Economy
The Office of Electricity Delivery and Energy Reliability (OE) is
responsible for leading national efforts to modernize the electric
grid, enhance the security of energy infrastructure, and facilitate
recovery from disruptions to the energy supply. The Department's FY
2012 budget request for OE of $238 million, a 38% increase over the FY
2010 appropriation, represents a clear and determined effort to
accelerate the transformation of one of the Nation's key enablers of a
clean energy economy--the electricity delivery system.
The U.S. electricity delivery system was built on technology that
was developed early in the 20th century and designed for the demands
and challenges of that era. Today, this aging and often congested
system is facing many new and complex challenges that require
considerable improvements in the physical and technological components
of the system. In order to alleviate the stress on the system from
increasing demand for electricity and to enable greater use and
integration of renewable and distributed resources, all while
maintaining the reliability, security, and affordability of electric
power, research and development breakthroughs and new energy management
approaches are critical in the areas of transmission and distribution,
energy storage, and cyber security.
OE's FY 2012 budget request provides $193 million for research and
development in these critical areas to bring the next generation of
grid technologies closer to deployment and commercialization. The
increased investment reflects the President's vision and OE's role in
competing in a worldwide technological race. As such, with $20 million
in FY 2012, OE will establish a new Energy Innovation Hub, or in the
words of President Obama, one of ``the Apollo projects of our time.''
The Smart Grid Technology and Systems Hub will bring together a
diverse, multi-disciplinary group to develop an integrated approach to
enhancing smart grid technologies and systems. OE will also expand its
advanced modeling capabilities to include other system layers in order
to provide a more in-depth system understanding. The energy storage
program will expand to aggressively support the deployment of grid-
scale energy storage technologies with new demonstrations, and the
cyber security program will continue to focus on the development and
integration of secure control systems.
The budget request continues to support Permitting, Siting, and
Analysis (PSA) with $8 million to develop and improve policies, state
laws, and programs that facilitate the development of electric
infrastructure needed to bring new clean energy projects to 19 market,
and to provide technical assistance to states and regions. It also
supports Infrastructure Security and Energy Restoration (ISER) with
$6.2 million to enhance the reliability and resiliency of critical
energy infrastructure and to facilitate recovery from energy supply
disruptions.
Office of Environmental Management: Meeting Commitments and Making
Progress
The mission of the Office of Environmental Management (EM) is to
complete the safe cleanup of the environmental legacy brought about
from over six decades of nuclear weapons development, production, and
Government-sponsored nuclear energy research. This cleanup effort is
the largest in the world, originally involving two million acres at 110
sites in 35 states, dealing with some of the most dangerous materials
known to man.
EM continues to pursue its cleanup objectives within the overall
framework of achieving the greatest comparative risk reduction benefit
and overlaying regulatory compliance commitments and best business
practices to maximize cleanup progress. To support this approach, EM
has prioritized its cleanup activities:
Activities to maintain a safe and secure posture in the EM
complex
Radioactive tank waste stabilization, treatment, and
disposal
Spent nuclear fuel storage, receipt, and disposition
Special nuclear material consolidation, processing, and
disposition
High priority groundwater remediation
Transuranic and mixed/low-level waste disposition
Soil and groundwater remediation
Excess facilities deactivation and decommissioning
The FY 2012 budget request for $6.13 billion will fund activities
to maintain a safe and secure posture in the EM complex and make
progress against program goals and compliance commitments by reducing
the greatest risks to the environment and public health, using science
and technology to reduce lifecycle costs, and reducing EM's geographic
footprint by 90 percent by 2015. EM continues to move forward with the
development of the capability for dispositioning tank waste, nuclear
materials, and spent (used) nuclear fuel. The budget request includes
the construction and operation of three unique and complex tank waste
processing plants to treat approximately 88 million gallons of
radioactive tank waste for ultimate disposal. It will also fund the
solid waste disposal infrastructure needed to support disposal of
transuranic and low-level wastes generated by high-risk activities and
the footprint reduction activities.
EM carries out its cleanup activities with the interests of
stakeholders in mind. Most importantly, EM will continue to fulfill its
responsibilities by conducting cleanup within a ``Safety First''
culture that integrates environment, safety, and health requirements
and controls into all work activities to ensure protection to the
workers, public, and the environment, and adheres to sound project and
contract management principles. EM is also strengthening its project
and planning analyses to better assess existing priorities and identify
opportunities to accelerate cleanup work. Working collaboratively with
the sites, EM continues to seek aggressive but achievable strategies
for accelerating cleanup of discrete sites or segments of work. In
addition, functional and cross-site activities such as elimination of
specific groundwater contaminants, waste or material processing
campaigns, or achievement of interim or final end-states are being
evaluated.
After the EM program completes cleanup and closure of sites that no
longer have an ongoing DOE mission, post closure stewardship activities
are transferred to the Office of Legacy Management (LM). LM also
receives sites remediated by the U.S. Army Corps of Engineers (Formerly
Utilized Sites Remedial Action Program) and private licensees (Uranium
Mill Tailings Radiation Control Act, Title II sites). Post closure
stewardship includes long-term surveillance and maintenance activities
such as groundwater monitoring, disposal cell maintenance, records
management, and management of natural resources at sites where active
remediation has been completed. At some sites the program includes
management and administration of pension and post-retirement benefits
for contractor retirees.
Loan Programs Office: Helping Finance Clean Energy Deployment
Innovative Technology Loan Guarantee Program.--To encourage the
early commercial deployment of new or significantly improved
technologies in energy projects, the Department requests up to $36
billion in loan guarantee authority for nuclear power facilities and
$200 million in appropriated credit subsidy to support an estimated $1
to $2 billion in loans for renewable energy system and efficient end-
use energy technology projects under section 1703 of the Energy Policy
Act of 2005. The additional loan guarantee authority for nuclear power
projects will promote deployment of new plants and support an
increasing role for private sector financing. The additional credit
subsidy will allow for investment in the innovative renewable and
efficiency technologies that are critical to meeting the
Administration's goals for affordable, clean energy, technical
leadership, and global competitiveness.
The FY 2012 budget also requests $38 million to evaluate
applications received under the eight solicitations released to date
and to ensure efficient and effective management of the Loan Guarantee
program. This request is expected to be offset by collections from
borrowers authorized under Title XVII of the Energy Policy Act of 2005
(P.L. 109-8).
Advanced Technology Vehicle Manufacturing Program.--The Department
requests $6 million to support ongoing loan monitoring activities
associated with the program mission of making loans to automobile and
automobile part manufacturers for the cost of re-equipping, expanding,
or establishing manufacturing facilities in the United States to
produce advanced technology vehicles or qualified components, and for
associated engineering integration costs.
Better Buildings Pilot Loan Guarantee Initiative for Universities,
Schools, and Hospitals.--To spur investment in energy efficiency
retrofits for buildings which serve as assets to our communities, the
Department requests $100 million for loan guarantee subsidy costs to
support up to $2 billion in loan authority for universities, schools,
and hospitals. This pilot program is one component of the President's
Better Buildings Initiative and would fund cost-effective technologies
and measures to assist universities, schools, and hospitals save on
energy usage and associated energy costs. The Department also requests
$5 million for administrative expenses to carry out the program. The
request is subject to the enactment of legislation authorizing this
program.
Office of Nuclear Energy: Investing in Energy Innovation and Technical
Leadership
The Department is requesting $852.5 million for the Office of
Nuclear Energy (NE) in FY 2012--a decrease of 0.6 percent from the FY
2010 current appropriation. NE's funding supports the advancement of
nuclear power as a resource capable of meeting the Nation's energy,
environmental, and national security needs by resolving technical,
cost, safety, proliferation resistance, and security barriers through
research, development, and demonstration as appropriate.
Currently, nuclear energy supplies approximately 20 percent of the
Nation's electricity and over 70 percent of clean, non-carbon producing
electricity. Over 100 nuclear power plants are offering reliable and
affordable baseload electricity in the United States, and they are
doing so without air pollution and greenhouse gas emissions. NE is
working to develop innovative and transformative technologies to
improve the competitiveness, safety and proliferation resistance of
nuclear energy to support its continued use.
The FY 2012 budget supports a balanced set of research,
development, and deployment (RD&D) activities. This program is built
around exploring, through its R&D: technology and other solutions that
can improve the reliability, sustain the safety, and extend the life of
current reactors; improvements in the affordability of new reactors to
enable nuclear energy to help meet the Administration's energy security
and climate change goals; development of sustainable nuclear fuel
cycles; and minimization of risks of nuclear proliferation and
terrorism.
NE is requesting $125 million for Reactor Concepts Research,
Development and Demonstration. This program seeks to develop new and
advanced reactor designs and technologies. NE is also requesting $67
million for the Light Weight Reactor SMR Licensing Technical Support
program, which will support cost-shared design certification and
licensing activities for two light water reactor-based designs. Small
modular reactors are a technology that the Department believes has the
promise to help meet energy security goals. Work will continue on R&D
for the Next Generation Nuclear Plant to support demonstration of gas-
cooled reactor technology in the United States. The program also
supports research on Generation IV and other advanced designs and
efforts to extend the life of existing light water reactors.
The FY 2012 request includes $155 million for Fuel Cycle Research
and Development to perform long-term, results-oriented science-based
R&D to improve fuel cycle and waste management technologies to enable a
safe, secure, and economic fuel cycle. The budget also requests $97.4
million to support the Nuclear Energy Enabling Technologies program,
focused on the development of cross-cutting and transformative
technologies relevant to multiple reactor and fuel cycle concepts. The
Crosscutting Technology Development activity will focus on a variety of
areas such as reactor materials, creative approaches to further reduce
proliferation risks, and establishing advanced modeling and simulation
capabilities to complement physical experimentation. The Transformative
Nuclear Concepts R&D activity supports, via an open, competitive
solicitation process, investigator-initiated projects that relate to
any aspect of nuclear energy generation ensuring that good ideas have
sufficient outlet for exploration. Modeling and Simulation Energy
Innovation Hub, supported within this program, will apply existing
modeling and simulation capabilities to create a ``virtual'' reactor
user environment to simulate an operating reactor and is a prime
example of the type of crosscutting, transformative activity that will
enhance many research areas within NE. NE will also continue its
commitments to investing in university research, international
cooperation, and the Nation's nuclear research infrastructure--
important foundations to support continued technical advancement.
Office of Fossil Energy: Sustaining American Energy Options through
U.S. Ingenuity
The FY 2012 budget request of $521 million for the Office of Fossil
Energy (FE) will help ensure that the United States can continue to
rely on clean, affordable energy from traditional domestic fuel
resources. The United States has 25 percent of the world's coal
reserves, and fossil fuels currently supply over 80 percent of the
Nation's energy.
The Department is committed to developing technologies and
providing technologybased options having public benefits including
enhanced economic, environmental and energy security impacts. In FER&D,
the emphasis, in keeping with Presidential priorities, is in supporting
long-term, high risk initiatives targeted at carbon capture and storage
as well as advanced energy systems and on cross-cutting research.
In addition, $122 million of FE's $521 million request will be to
provide for national energy security through the continued operations
of the Strategic Petroleum Reserve. The budget proposes to sell $500
million of SPR oil in order to provide operational flexibility in
managing the Reserve.
The National Nuclear Security Administration: Leading Global Partners
on Nonproliferation by Securing Vulnerable Nuclear Materials;
Reaffirming Commitment to Stockpile Modernization
The National Nuclear Security Administration (NNSA) continues
significant efforts to meet Administration and Secretarial priorities,
leveraging science to promote U.S. national security objectives. The FY
2012 President's budget request for NNSA is $11.8 billion; an increase
of 5.1 percent from the President's FY 2011 Request. The five-year FY
2012-2016 President's Request for the NNSA reflects the President's
global nuclear nonproliferation priorities and his commitment to
modernize the U.S. nuclear weapons complex and sustain a strong nuclear
deterrent, as described in the 2010 Nuclear Posture Review (NPR)
Report, for the duration of the New START Treaty and beyond. The NNSA's
defense and homeland security-related objectives include:
Ensure that the U.S. nuclear deterrent remains safe, secure
and effective while implementing changes called for by the 2010
NPR and the New START Treaty
Broaden and strengthen the NNSA's science, technology and
engineering mission to meet national security needs
Transform the Nation's Cold-War era weapons complex into a
21st century national security enterprise
Work with global partners to secure all vulnerable nuclear
materials around the world and implement the President's
nuclear security agenda expressed in the May 2010 National
Security Strategy and the Nuclear Posture Review report
Provide safe and effective nuclear propulsion for U.S. Navy
warships
The FY 2012 budget request of $7.6 billion for the Weapons
Activities appropriation provides funding for a wide range of programs.
Requested activities include providing direct support for the nuclear
weapon stockpile, including stockpile surveillance, annual assessments,
life extension programs, and warhead dismantlement. Science, Technology
and Engineering programs are focused on long-term vitality in science
and engineering, and on performing R&D to sustain current and future
stockpile stewardship capabilities without the need for underground
nuclear testing. These programs also provide a base capability to
support scientific research needed by other elements of the Department,
the federal government national security community, and the academic
and industrial communities. Infrastructure programs support facilities
and operations at the government-owned, contractor-operated sites,
including activities to maintain and steward the health of these sites
for the long term and construct new facilities that will allow the
United States to maintain a credible nuclear deterrent. The unique
nuclear security expertise and resources maintained by NNSA are made
available through the National Laboratories to other Departmental
offices, agencies and to the Nation for security and counterterrorism
activities.
The Weapons Activities request is an increase of 8.9 percent over
the President's FY 2011 Request. This level is sustained and increased
in the later outyears. The multi-year increase is necessary to reflect
the President's commitment to maintain the safety, security and
effectiveness of the nuclear deterrent without underground nuclear
testing, consistent with the principles of the Report on the Plan for
the Nuclear Weapons Stockpile, Nuclear Weapons Complex, and Delivery
Platforms (known as the ``1251 Report'') and the Stockpile Management
Program as stipulated in Sections 1251 and 3113(a)(2) of the National
Defense Authorization Act of Fiscal Year 2010. Increases are provided
for direct support of the nuclear weapon stockpile, for scientific,
technical and engineering activities related to maintenance assessment
and certification capabilities, and for recapitalization of key nuclear
facilities. The President's Request provides funding necessary to
protect the national resource of human capital at the national
laboratories through a stockpile stewardship program that exercises and
retains these capabilities.
The FY 2012 request for Defense Nuclear Nonproliferation (DNN) is
$2.5 billion; a decrease of 5.1 percent from the President's FY 2011
Request. This decrease reflects completion of long-lead procurements
for the Mixed Oxide Fuel Fabrication Facility (MOX) and Waste
Solidification Building (WSB). It also reflects our decision to await
an agreement between the U.S. and Russia on detailed implementation
milestones prior to requesting additional U.S.-pledged funding to
support Russian plutonium disposition. The Administration prioritizes
U.S. leadership in global nonproliferation initiatives as directed
through the National Security Strategy and has advanced this agenda
through commitments from global partners during the 2010 Nuclear
Security Summit. In addition to the programs funded solely by the NNSA,
Defense Nuclear Nonproliferation programs support interagency and
international efforts to protect national security by preventing the
spread of nuclear weapons and nuclear materials to terrorist
organizations and rogue states. These efforts are implemented in part
through the International Atomic Energy Agency, the G8 Global
Partnership against the Spread of Weapons and Materials of Mass
Destruction, and the Global Initiative to Combat Nuclear Terrorism.
DNN supports the President's goal to secure vulnerable nuclear
materials around the world within four years. The Global Threat
Reduction Initiative's emphasis in FY 2012 is to convert domestic and
international nuclear reactors from weapons-usable highly enriched
uranium fuel to low-enriched uranium fuel (LEU); while preserving our
capability to produce the critically needed Molybdenum 99 isotope. The
FY 2012 President's request for International Nuclear Materials
Protection and Cooperation reflects selective new security upgrades to
buildings and sites in accordance with the President's goal to secure
vulnerable nuclear materials around the world within four years, as
well as enhancements and sustainability support for previous work. The
Fissile Materials Disposition program continues domestic construction
of the MOX Fuel Fabrication Facility scheduled to come online in 2016;
and design for the pit disassembly and conversion capability to provide
it with plutonium oxide feedstock.
The President's request of $1.2 billion for Naval Reactors is an
increase of 7.8 percent over the President's FY 2011 Request. The
program supports the U.S. Navy's nuclear fleet, comprised of all of the
Navy's 72 submarines and 11 aircraft carriers, which constitute 45
percent of the Navy's combatants. The U.S. relies on these ships every
day, all over the world, to protect our national interests. The budget
provides funding increases for the Ohio Class Replacement submarine to
design and develop required submarine reactor plant technologies. R&D
is underway now, and funding during this Future Years Nuclear Security
Program is critical to support the long manufacturing spans for
procurement of reactor plant components in 2017, and ship construction
in 2019. Resources are also requested in FY 2012 to support design work
for the recapitalization of the spent nuclear fuel handling
infrastructure and refueling of the Land-based prototype.
The Office of the Administrator appropriation provides for federal
program direction and support for NNSA's Headquarters and field
installations. The FY 2012 request is $450.1 million; a 0.4 percent
increase over the President's FY 2011 Request. This provides for well-
managed, inclusive, responsive, and accountable organization through
the strategic 25 management of human capital, enhanced cost-effective
utilization of information technology, and integration of budget and
performance through transparent financial management practices. The
increase reflects additional federal oversight for construction of the
Pit Disassembly and Conversion project, the Uranium Processing
Facility, and the Chemistry and Metallurgy Research Replacement
Facility.
The Chairman. Thank you very much.
We do have a quorum of 12 members or a few more than that,
so let me go ahead with our business meeting, as I indicated we
would, before we start asking you any questions, Mr. Secretary.
[Whereupon, at 9:48 a.m., the hearing was recessed and the
committee proceeded to other business.]
[Reconvene at 9:53 a.m.]
The Chairman. Mr. Secretary, let me start with questions,
and we'll go back to the regular hearing. You described in your
opening statement there the innovation hubs in a general way.
Could you be a little more--elaborate a little more on what
these accomplish that ongoing research is not able to
accomplish in your opinion?
Secretary Chu. Sure. Let me be specific. Let's start with
the transmission and distribution hub. Typically when we make
grants in the past we made specific grants to improve the smart
grid, improve devices within the smart grid. But if you look at
where the gains can be made, it would be in actually
integrating the entire system.
The system we have to evolve to is a system where you need
to manage two-way flows, you need to integrate the fossil fuel
generation in a way that's automatic. Just in case wind dies
down or if clouds go over the sky and there's a lull in
transmission of renewable energy sources, you have to
automatically ramp up as quickly as possible these fossil fuel
sources. The integration of that has only just begun if you
look at the wide range of technologies that have to be
developed.
So a hub like this will be emphasizing looking across all
the board to actually get an integrated system of transmission
and distribution, which also has to integrate into the
generation and the use of energy and the two-way flows. That's
one example.
Batteries. We invest a lot in batteries. Again, it's the
same thing. There's a specific idea of a battery, but the thing
that really matters is--if I take a subset, automobile
batteries for electric and plug-in hybrid vehicles, those
batteries, it's not just the battery technology, the cell
itself, but it's actually the integrated system, how it's
packaged, if it's integrated into something that actually takes
out the heat and manages the heat. This is the thing that
really matters in a car.
Again, if you look at the individual proposals we're doing,
it all looks good. But if you look at what the competition is
doing--for example, Toyota has recently announced that one
advanced battery technology they want to develop--this is for a
lithium-air battery or zinc-air; these are the kind of
batteries used in your hearing aids. We're investing that
similarly in university research groups and other groups and
companies, but Toyota is putting 50 engineers in order to bring
this to market, get them rechargeable, as a concerted effort,
which includes the integration, the packaging into the car.
So an individual group doesn't have the wherewithal to do
that. So we're saying, OK, so you look at the broad portfolio
of things and get a team to, say, deliver the goods that
actually can be installed in a car. It's a very competitive
world out there.
Finally, the materials hub. There are critical materials.
We know that the world right now is mostly dependent on China
for rare earth materials. So if you look at how we can get
substitutes for rare earths, new technologies, or use the rare
earths in a much smarter way so you use less of them.
There are other critical materials having to do with
higher-temperature steels that would be useful in improving the
efficiency of nuclear reactors and traditional gas and goal
power plants. These things are--the plants of the future will
be higher efficiency. These materials are again something
looking broadly, how do you actually connect all the dots.
So this is exactly the vision we have, that also happened
in World War II in the radar, where the scientists and
engineers get together and they say, we have to deliver the
full package, we've got to get it in the airfields, on ships,
on airplanes. It's that concerted effort to actually do the
basic research, but also to make sure it's deliverable in a
very timely manner. It's a very competitive world out there and
that is why we think we need these hubs.
The Chairman. Thank you.
Let me ask about a somewhat parochial issue here. At the
beginning of this month we had very severe cold weather in my
State of New Mexico and in Texas. There were rolling
electricity blackouts. We had an interruption in natural gas
service to about 30,000 New Mexico residents for several days.
We're going to have a field hearing next week in
Albuquerque to look at this. The Federal Energy Regulatory
Commission I think has initiated a staff inquiry into what went
wrong and what could be done to prevent this in the future.
Does the Department of Energy have a role in responding to
or investigating this kind of an energy emergency, and is there
anything that you folks are doing or could do to be of help to
us in understanding how to avoid this in the future?
Secretary Chu. The answer, the short answer, is yes, we do
have a role. If there's interruptions in power, if there are
things like you spoke about, also hurricanes, we are the agency
that tries to coordinate. The energy delivery systems are
private sector enterprises, but we have a responsibility to
coordinate the restoration, to decide which areas to bring on
as fast as possible, the most critical areas. So we have that
responsibility and certainly we take that job very seriously.
The Chairman. Good. We might urge that you have--we're not
calling anyone from the Department of Energy as such at this
hearing next Monday, but we are calling representatives from
FERC to testify. But you might see if someone from your
Department might monitor what goes on there.
Secretary Chu. In terms of natural gas, I think that's more
FERC's domain. We're mostly electricity, but we'll be happy to
send----
The Chairman. We're looking at both because the natural gas
producers say the problem was that they didn't get electricity
and the electricity companies say the problem was they didn't
get natural gas. So we're trying to figure out who's to blame.
Senator Murkowski.
Senator Murkowski. It does sound like a government
operation.
Mr. Secretary, I want to ask you about the Strategic
Petroleum Reserve. The budget proposes a $500 million non-
emergency sale of SPRO oil. There's no explanation. I guess I'm
a little curious about this, because we're sitting here more
than 50 percent dependent on foreign sources of oil. We're not
seeing any new permits being issued for domestic offshore
production here. Given what is going on in North Africa, in the
Middle East, from Tunisia to Egypt to Algeria to Iran and all
that is happening, why is it appropriate at this particular
juncture for the United States to reduce our stocks of
emergency crude?
Secretary Chu. Yes, I'd be glad to respond to that. I think
what we're asking for is a reduction. We have an issue with one
of our reservoirs and there's one cavern that has some
integrity issues, and we're draining that and backfilling other
storage locations. But we're concerned of an overfill in those
storage locations.
So what we want--we don't want to lose this crude. So we
are trying to manage that. In addition, I think the scale is
also very important. We're talking about--we're required by
law, both the government resources and the private sector, to
have a 90-day supply of oil. The government portion of that
would be 75 days. So what we feel is going to be a temporary
reduction will reduce the total supply, emergency supply, by 1
day as we work through the cavern issues.
Senator Murkowski. But from what you said, we have some
issues with integrity of the reservoir itself. So that could be
a longer-term issue that we're dealing with or perhaps a more
costly issue as we work to address the challenges?
Secretary Chu. Right. It's the reservoir, meaning the
caverns, the underground caverns where we store those.
Senator Murkowski. Right.
Secretary Chu. So there are some integrity issues with one
of them. So we are working to do this.
Also, right now, because we're in this economic downturn,
severe recession, for the moment the reserves--we're expecting
a flat or even declining use of oil. Now, as that goes up we
certainly have to adhere to the responsibilities and we would
like that to be essentially full. So it's a temporary
situation.
Senator Murkowski. I'd like to learn a little bit more
about what's going on within these caverns, and we can have a
follow-up conversation on that.
Let me ask you about the comments that you made as it
relates to a clean energy standard. Of course, the President
discussed this in his State of the Union. But looking at the
budget, it appears that some resources will be advantaged over
others. If you just look at it from a budget perspective, wind
is getting a 60 percent plus-up, solar almost 88 percent
increase, biomass is at about a 57 percent plus-up, geothermal
135 percent, massive budget increases in terms of their
categories.
But you look to some of others: hydropower, which is one
that we pay particular attention to in Alaska, cut by 20
percent; nuclear power decreases slightly at .6 percent;
nuclear waste is not addressed; all funding for natural gas
technologies are zeroed out.
When we're talking about how the administration might look
to design a CES, if that's the direction that we go, the
question is will it be a technology-neutral standard. I'm
hoping that the answer to that is yes, but when you look at
these budget categories it seems to me that within the
administration you are picking those areas through the budget
process that you would like to see enhanced and also choosing
to not promote in certain other areas.
Can you address that?
Secretary Chu. Sure. First, the clean energy standard is
meant to be technology-neutral. Any technology that will
advance the goal of producing energy in a clean, sustainable
way is on the table. So there are certain regions that like
solar, if they like wind, if they--hydro, with improved
turbines to get more output from existing dams--those should
all count in clean energy. Natural gas has partial credit.
Clean coal, coal with carbon capture and sequestration, would
also count.
So in that respect, that standard, which creates a
marketplace, it creates certainty for industry and for the
investment community, so they say, OK, if you build a clean
coal power plant, if you build a nuclear plant, if you build
solar or wind, that you have a market. So that's one part of
it.
Now, if you look, the other part of the question is you're
now referring to our technology investments. If you look at the
history of the United States, there are mature technologies and
then there are technologies that we need to have further
developed. In the beginning, the late 1800s, the beginning of
the first half of the 20th century, oil and gas got
considerable help from the Federal Government to grow those
things.
We consider those mature technologies today. But if you
look at, for example, the solar industry, we feel that there
could be dramatic improvements in photovoltaics and solar
thermal. Quite frankly, it's a world race in order to get to
those improvements. Whether it's going to be by the end of this
decade or perhaps a few years further, there's a significant
chance that solar energy will be competitive without any
subsidy with fossil fuel. The country or the companies that
develop that technology will have a worldwide market.
So we see these as putting investments in the new
technologies that we think ultimately will be the technologies
of the future. The other ones we will need and there's no doubt
we will need oil, we will need gas, we will need coal going
forward. There's no doubt about that. But we consider those
more mature technologies.
Senator Murkowski. Mr. Chairman, my time has expired. I
know we're going to have an opportunity to discuss this
further, but it does appear, just looking at the budget
categories, that the administration is clearly picking those
winners and designating those losers.
Thank you, Mr. Chairman.
The Chairman. Senator Coons.
Senator Coons. Thank you.
Secretary Chu, I just wanted to say I was very pleased with
the broad direction this budget submission takes. I think the
strategy for American innovation documents a fairly compelling
vision, and I'm interested to dig into some of the details of a
number of the different programs here.
I support ARPA-E getting a significant increase and think
it has shown, both in its strategy and its focus, a real
innovative approach. I'm concerned about how, beyond investing
in basic research and then in early applied work,
commercialization gets ramped up. I was very pleased to see the
48
[c] program, the loan guarantee programs, be part of your
request and Treasury's request.
Please help me understand how electric vehicle deployment
and offshore wind deployment, which I think are neither early
stage lab bench nor, obviously, fully commercialized
technologies, how your proposals are going to help ramp them up
quickly and what they're going to do to make sure that they're
sustainably supported in the budget?
Secretary Chu. As I said before, the electric vehicles, I
see this as a worldwide race. Right now we have electric
vehicles. We anticipate by 2015 to have a real penetration. We
think we can achieve a million vehicles. But we want to go much
further than that. I think we need to develop electric vehicles
that can go 3 to 500 miles on a single charge overnight, and at
a price and a performance that would be competitive with
internal combustion engines.
We think that this goal is within reach. There are a number
of very innovative ideas that the Department of Energy is
funding that can greatly reduce the cost, greatly increase the
safety and, above all, the energy density by a factor of 3 to
5, 300, 500 percent improvement.
We know that industry will achieve 100 percent improvement
to 50 percent improvement within a couple years. In fact, it
was an idea that was funded by the Department of Energy, done
by a national lab, Argonne National Lab, patented, the first
patent application in the year 2000, there's a bevy of patents,
now being licensed by General Motors for the next generation
Volt battery. These are all very, very good stories.
But further--so another few years down the road, we see
great things. So we're very focused on that, not only on
batteries for vehicles, but batteries for energy transmission
and storage, so we can use all our sources of energy much more
effectively.
Senator Coons. How will the proposals here help offshore
wind deployment, in particular the credit subsidy cost and the
loan guarantee program?
Secretary Chu. So wind is a fairly mature technology, but
offshore wind, as you indicated, is not. In order to be
financially competitive and to get the investments it needs,
offshore wind has to be much more reliable because of many
things. The initial costs are more, but even more important in
my mind, these things have to operate, the large turbines have
to operate, perhaps 15, 20 years without major overhauls. That
reliability is something we need to work for, work toward.
What we are investing in is what do we need in order to
enhance the reliability of these very large turbines, because
in choppy seas you cannot service these turbines. But the flip
side of that is the wind resources offshore are better, they're
steadier, they're higher category wind sources, and they're
closer to the population centers. So if you go 15 to 20 miles
offshore in the Eastern seaboard and the Great Lakes, you have
something that's not directly in anyone's back yard and you
have a steady wind source.
So the advantages of offshore are tremendous. But we need
technology development.
Senator Coons. Last, if I could, you've got a whole suite
of energy efficiency initiatives here: the better buildings
initiative, the race to green, Home Star, which is already
being deployed in Delaware. Talk to me about how a different
approach here is a model for how you're going to make
significant advancements in efficiency and how that's going to
help business competitiveness?
Secretary Chu. Sure, be glad to. The idea here is we
believe very strongly that if you have--if you make modest
capital investments--and in the end these are going to be
hopefully capital investments where you borrow a long-term
loan--that you can then make investments so that out-of-pocket
expenses, including payment of loans, is actually saving you on
a month to month, year to year basis, so that these investments
paying back over a 20-year period, the length of time of these
energy improvements, can actually save money.
So we're targeting in this new better buildings, it's a
pilot program. You look at universities and schools and
hospitals, that we can give them the necessary capital in order
to make these investments. We want to also prove that these are
real moneymakers and real energy savers. It's very important to
demonstrate numerous times that making investments in energy
efficiency, including the interest on the loan and even the
discount for that, is something which is a net moneymaker. So
we're also working with Sean Donovan in HUD to enable one to
develop mechanisms of financing, long-term financing, that can
enable people, both people in their homes and businesses, in
order to get this energy savings and make our infrastructure
run much more efficiently. That money saved goes directly back
into the economy.
Senator Coons. Thank you, Mr. Secretary.
The Chairman. Senator Portman.
Senator Portman. Thank you, Mr. Chairman.
Secretary Chu, thanks for being with us today. I would note
that your budget increase since 2010, which is essentially
where we are in the CR this year, is about a 12 percent
increase. Being on the Budget Committee and talking to other
agencies, that's not the case with all, as you know. Certainly
in this budget environment we face, I am pleased to see you
talking about streamlining operations and some of the tough
decisions you've made on freezing salaries of certain employees
or contractors, and I hope you will continue to focus on that.
I would share the chair's concern and the ranking member's
concern on some of the priorities in the budget, particularly
on the fossil fuel side, because, given not just our budget
problems, but our economic problems, we need to be sure that
we're able to continue to rely on relatively inexpensive fossil
fuels to keep our economy moving forward and create jobs.
You talked about revving up the great American private
sector to address energy needs in your testimony. I couldn't
agree with you more. You used the example of Toyota putting 50
engineers against a project and in essence saying the U.S.
Government needs to counter that. We also need to be sure that
the private sector is incentivized to do that, which goes to
our regulatory environment and other issues.
So I, having talked to you privately, I know you have an
interest in being sure that the picking and choosing by
government doesn't displace that private sector ingenuity and
innovation. I hope that continues to be the case.
On nuclear power, you did list it this morning on your list
of clean energy sources. I was pleased to see that and
encouraged that you seem to be interested in moving forward. I
would hope we could expedite the regulatory regime there.
That's not something that I see addressed adequately in this
budget, and obviously the loan guarantees is critical to get
out so that we can catch up, frankly, on the nuclear power
production in this country.
I have a specific concern, as you know, on the source of
fuel for nuclear power, which is the enriched uranium. You and
I have talked about the Piketon plant and the American
Centrifuge project, which is the only manufacturer of that
enriched uranium in the U.S., U.S.-owned, for a nuclear Navy
and also for nuclear power plants.
I would ask you a question about that if I could. There is,
of course, a loan guarantee application pending and I'm very
concerned that it's taken a few years to move that forward. As
you know, we're at a very critical juncture there.
One of the issues is going to be what the credit subsidy
is. I'm assuming that there will at some point be an
understanding on the technology and on the financing side of
this from the company's point of view. But still, we have a
credit subsidy issue.
If you could talk to me just for a second about how you
determine that credit subsidy and whether national security is
one of the issues that's considered. As you know, this will be
the only source in the United States for tritium, which is
critical to our nuclear weapons arsenal, and whether that is
considered in the credit subsidy calculation.
Secretary Chu. OK, there were a number of topics you
covered, so let me go back to just----
Senator Portman. You don't have to hit them all.
Secretary Chu. Let me try, at least the nuclear part. I
mean, the specifics of the loan guarantee, of course, you know
I can't comment on. But over globally, I share your view that
the United States should have an in-country technology, and we
are anxious to make sure that we have a technology that is
intellectual property and it's done in the United States and
it's intellectual property we own, it's not black box. So we
share your view that that's very important to our national
security.
In terms of the specifics of the credit subsidy, that is
something--officially, that is in the bailiwick of the OMB.
When we do our due diligence, we try to structure the deal to
protect the taxpayer as much as we can, so that we make sure
that the loan is a sound loan and that if something should go
south the U.S. Government can get back a lot of the assets. But
the exact credit subsidy we can make recommendations only, but
they have the final word.
Senator Portman. Do you believe national security should be
a consideration?
Secretary Chu. It should be, absolutely, in particular
technologies like the enrichment of uranium, I agree. But I'm
not sure how--but the credit subsidy part is something the OMB,
they should be able to factor that in as well.
So with regard to fossil, we had to make some tough
decisions, but part of the guidance on the fossil energy--I
agree with you, the fossil energy will be part of our future,
but if you look at the Recovery Act and our base budget, for
example, clean coal technologies and in sequestration, the
demonstration of sequestration, multiple sites in the United
States. We already know over a decade or more of experience at
certain sites around the world it's proved to be safe storage
for long periods of time.
But we have to go further in demonstrating in U.S.
geological sites that at scale it's also safe. That's something
that private industry will not do and we're stepping up to the
plate, and that's part of our program.
In terms of the demonstration----
Senator Portman. But the budget reduces funding for carbon
sequestration.
Secretary Chu. Right. That's right. The other part has to
do with helping demonstrate technologies, especially
technologies near commercial scale. So in the Recovery Act and
our base budget we made about $4 billion of commitments in the
last 2 years, I would say matched by the private sector with
$11 billion. So that's very, very significant.
We felt because of that that the demonstration and
deployment part of this has got a good start. So we're focusing
on the next generation of technologies, which we believe can
dramatically reduce the prices relative to the demonstrations
that are being planned or are about to go into operation today.
So we made that difficult choice.
Senator Portman. My time is up. I look forward to following
up with you on sequestration.
Thank you, Mr. Chairman.
The Chairman. Senator Franken.
Senator Franken. Thank you, Mr. Chairman.
Mr. Secretary, thank you for being here today. It's good to
see you again. I understand you were in Minnesota last week and
I apologize I wasn't able to join you. But I'm glad you had a
chance to sit and talk with Minnesota leaders in energy
technology and innovation.
In looking through this budget proposal, I'm happy to see
that the administration has prioritized innovation and
renewable energy. Those are my priorities as well, and I'd like
to ask you a few questions in some pretty specific areas.
At the risk of sounding parochial, but I think this has
wider implications and it speaks to the loan guarantee
programs, and I know that you may not be able to speak
precisely to these particular instances. But one of the
countries represented at the roundtable that you were at in
Minnesota was Sage Electrochromatics. Sage has developed these
energy-efficient windows, as you know, which work on solar
voltaic cells to--they darken during the summer to keep the
heat out and they lighten up during the winter to bring the
energy in. Actually, they lead the world in this technology,
and they're looking to expand its facility in Farabow,
Minnesota, which will create 150 high-tech manufacturing jobs.
Now, Sage got a $72 million loan guarantee under the
section 1703 program, but, as you know, this requires the
company to pay a credit subsidy fee to offset the government's
risk for issuing the loan guarantee. For Sage, this costs an
estimated $15 to $25 million and is standing in the way of
expanding the plant.
I'd like to get this credit subsidy fee waived for Sage so
that the project can move forward. In this budget proposal, the
administration is requesting $200 million from Congress to
cover credit subsidy fees for 1703 loan guarantees. I was
wondering whether the Department would consider making this
retroactive for companies like Sage which are ready to go for
creating jobs?
Secretary Chu. I'm not sure about the authorities we might
have for making it retroactive. I think this is mostly in
Congress. But let me speak more broadly to the issue here. I'm
very familiar with the Sage product and, quite frankly, it was
tested and Lawrence Berkeley National Lab, the lab that I was a
director of, was part of that, an integral part of that
testing. We think it's a good thing.
But I don't want to talk specifically about Sage.
Senator Franken. I understand.
Secretary Chu. The most important thing I want to say is,
in the new budget proposal that was limited to renewable
energy, but we are asking that it be broadened so it would also
include energy efficiency.
Senator Franken. Right.
Secretary Chu. Energy efficiency, you can either make clean
energy or you can save energy, and we think they're equally
valuable. In many instances, saving energy is a low-cost option
to make our infrastructure run much more efficiently.
So the new request in our 1912 budget is actually to allow
credit subsidies for energy efficiency, as well as renewable
energy.
Senator Franken. That's good. I like that.
I think I want to move on to the ARPA-E program, which is
so critical for new technologies. ARPA-E reminds me of DARPA,
the Defense Advanced Research Program Agency, which created the
Internet. How did that work out? That was good, right?
Secretary Chu. I've been told the Internet has had a
profound influence on the American economy.
Senator Franken. OK. So what I worry about--I saw recently
that a group funded by ARPA-E licensed its new battery
technology to General Motors for use in the Chevy Volt. In the
years ahead, technologies like this are vital to help us reduce
carbon emissions and use less oil.
I was glad to see that the President requested $550 million
for ARPA-E. Unfortunately, some in the House have proposed
funding only $50 million for the rest of 2011. My question is,
if we are to extrapolate and follow the House-proposed ARPA-E
budget for fiscal year 2012, what would you anticipate the
impacts to be on development of new technologies and on the
companies that would eventually sell them to the commercial
market?
Secretary Chu. It would be a very significant setback. As
you know, the ARPA-E is a new program that was started a year
and a half ago. What already is mentioned--as I mentioned
before, the investments in the first round companies that we
have now a year, year and a quarter, year and a half of
experience, has been remarkably good. We give $3 or $4 million,
$2 million, to a company, they go around and do the necessary
research. With those new research results, they are able to
raise money in the private sector. That's a significant 4 to 1
ratio.
This is exactly what we want to do. We want to leverage the
precious Federal dollars to really stimulate industries to
create these new things, so that we will remain a leader in
innovation in the energy technologies.
At a budget of $50 million, a lot of these spectacular
people that we have been able to recruit over the last year--
these are people who've come out of industry, people who've
come out of academia, who are in the prime of their creativity,
who are--and it's been noted--many of these people are truly
outstanding scientists and engineers who are willing to
sacrifice their own lives and families and income to come work
for the Federal Government. Those people, some of them will
just simply have to go home. It will deflate a lot of things,
because if you don't give them money to manage this they'll
say: What am I doing here? I'll go back to MIT, I'll go back to
Intel, I'll go back to wherever.
So to use the technical word, it'll be a real downer, and
the opportunities to the United States in order to get what
industry widely regards and venture capital widely regards as a
very exciting program--
Senator Franken. I'm in total agreement and it would be a
bummer. If we are going to out-innovate the rest of the world,
ARPA-E is so important. I just would ask people to think about
what would have happened if we hadn't had DARPA and DARPA had
never created the architecture for the Internet, what the loss
of that would have been. So thank you very much for your
testimony.
Secretary Chu. Thank you.
The Chairman. Senator Lee.
Senator Lee. Thank you so much for joining us today, Mr.
Secretary.
I want to start with the President's ambitious goal of
achieving 80 percent clean energy resources by the year 2035.
Can you talk to me for a minute about what you anticipate will
be the distribution among clean energy resources at that point,
meaning as we examine that universe that will comprise the 80
percent of our total power needs what percentage of it is
likely to be from nuclear, from wind, solar, hydroelectric,
geothermal, and so forth?
Secretary Chu. OK. First let me start with where we are
today. We're roughly 40 percent, 20 percent nuclear. Hydro is
6.5, 7 percent. Wind is 3 or 4, let's say 4 percent now
contribution. Solar is smaller. Geothermal is half a percent, a
third of a percent. Remember, we're giving partial credit to
natural gas. So if you look at strictly carbon-free sources,
we're at 30. But then you get to 40 with partial credit.
So the goal is ambitious, but it's actually quite
reasonable if you think of it, especially in the time scale,
because the time scale to 2035 is very important because we
have to work very hard to drive down the costs of clean coal.
It's not only clean coal, but the carbon capture and
sequestration will be needed in all fossil fuel generation--
gas, also stationery sources of carbon. So it is very important
that we develop those technologies.
To get large-scale deployment and get the investment, a 10
to 15&ear time scale is just too short. So that's why it was
2035.
Nuclear, a similar sort of thing. If you want to say, I
want to build a nuclear power plant, and you begin now to think
about it, 10 years is too short. 15 years in my opinion is too
short. But by the time you're at 20 years or 25 years, that
gives you a lot of headroom.
I think we're anticipating that nuclear at 20 percent, we'd
like to grow that. The clean energy standard, by the way, gives
the marketplace the certainty that clean energy production will
be needed. So what nuclear faces today is it needs to establish
a track record, you can build the reactors in a timely manner
on budget, on time, and that over the long haul, because when
you invest in a nuclear power plant that's a 70-year
investment, perhaps over longer, that over that period of time
you will have a market.
So we see that as a great stimulus, but it won't
automatically shift there. We see it increasing a little bit.
We see natural gas increasing. We also, quite frankly, see
renewables, solar and wind increasing. Geothermal will be
increasing where it's appropriate. But we see all of them
increasing.
Senator Lee. But do you have an anticipated breakdown of
where the 80 percent will come from? I mean, will half of that
be from nuclear?
Secretary Chu. I think less than half will be from nuclear.
Again, it really depends going forward on what happens,
especially in the solar technology field, because we anticipate
the price--most industry--people in the industry believe that
the price of solar energy will drop by 50 percent within this
decade, and where again we have an initiative to see that it
drops by 75 percent.
If it drops by 75 percent, solar can be a huge factor.
Senator Lee. How are you dealing with the fact that, as
great as the developments in these areas, the areas of wind and
solar may be and have already been, how do you deal with the
fact that they can't really provide what we call baseload
power?
Secretary Chu. In fact, that's what one of our hubs is
doing. Again, you need a diverse supply of energy. You need
energy on demand. If you look, for example, at what northern
Europe is doing, in certain countries, let's say Ireland,
they're already 20 percent wind, 80 percent fossil. In order to
get to 20 percent wind, you need to have a generating capacity
of 40 percent. What they have done is they have looked up a
system so they integrate very intimately the fossil fuel plants
with the wind and very short-term predictions--hour, half
hour--and automatic controls enable them--and they claim that
it does not decrease the efficiency of the fossil fuel plant.
So we have to integrate all those things.
Senator Lee. With regard to nuclear, would you agree that
it's a good thing to have available domestic sources of
uranium?
Secretary Chu. Yes.
Senator Lee. Were you consulted by your counterpart at
Interior, Secretary Salazar, in his efforts to effectively halt
the mining operations? Some of the Nation's very best uranium
mining operations can be found in southern Utah and northern
Arizona. Yet those have been largely halted by Secretary
Salazar. Did they consult you prior to doing that?
Secretary Chu. No, he didn't. But I'd be glad to work with
Secretary Salazar. I'm sure he has very good reasons and we
would be glad to work with him on that.
Senator Lee. Thank you.
The Chairman. Senator Udall.
Senator Udall. Thank you, Mr. Chairman.
Good morning, Secretary Chu. Always a pleasure to see you,
and thanks for your leadership. It's been consistent, it's been
clear, on this whole area of opportunities, which is clean
energy. I was encouraged by the pledge the President made in
the State of the Union last month. I'm also very pleased to
hear that you and Secretary Salazar are working together to
make sure that we can deploy renewable energy on our public
lands in an appropriate way.
I also understand that you're working even more closely
with the Department of Defense to help them transition their
energy systems to cleaner, more efficient, and safer
technologies. That has a certain harmony since the DOE is an
offshoot or a sibling, maybe a child, of the DOD, for those who
know the history there.
We're going to have to have a really concerted effort, as
you well know, to reach these clean energy goals and a lot of
important pieces have to be put together to help us arrive at
that place. One example of such a project--and you won't be
surprised, I'm going to be a little Colorado-centric here in my
question--is the Energy Systems Integration Facility, which is
at the National Renewable Energy Laboratory in Colorado. My
opinion is it's needed because it's the only R and D facility
that can model, develop, and validate the complex integrated
systems that are required to move clean energy technology onto
the grid, as you just shared in that regard your thoughts with
Senator Lee. Also, there will be applications into the DOD
needs when it comes to their installations and their forward
operating bases. As I understand it, ESIF will also ensure that
we keep our current high standards of grid efficiency and
reliability.
Can you tell me what's being done to expedite the ESIF
project, and how soon do you think we can get ground broken?
Secretary Chu. Yes. As you know, we can't start a project
until we accrue all the funds necessary. What has happened
because of the cost, we've been sort of piggybacking 2-year
budgets. The last budget, 2011, should enable us to ground-
break. But right now, as you well know, the 2011 budget is a
continuing resolution and so we hope that somehow Congress can
see the wisdom in allowing that project to go forward.
But that's the hangup at the moment, is the last
installment before we actually can start the project.
Senator Udall. I don't want to be a contrarian, but I did
want to throw out this point, that I think ESIF's an ongoing
project, which means it isn't subject to the CR and therefore
would not need the final appropriation to start construction.
Secretary Chu. I can go back and look at--I'd be willing to
go back and look at it. But I've been informed by my people
that the last--again, it is an ongoing thing, but there was an
allocation in the 2011 budget for that.
Senator Udall. I'll keep pushing. We'll work with all of
your experts and the appropriators and everybody else who's
involved. There's enormous opportunity here.
Let me also comment that I think this budget has done what
we've got to do across the entire Federal budget, which is set
some priorities, reduce here, increase there. In particular,
the focus on innovation, R and D, in the new emerging
technologies versus the more mature technologies really makes
sense to me from where I sit.
I don't know if you've talked more about the SunShot
program, but in my remaining time I wanted to point out that it
looks like there's a $7 million cut in the proposed budget.
It's almost a 10 percent reduction. I just was curious how we
can simultaneously give a vital new role and responsibilities
to the NREL solar team while at the same time propose that we
give them fewer resources to accomplish a pretty ambitious
goal?
Secretary Chu. My recollection--I don't know. I can get
back to you on that. Certainly the SunShot goal is something we
have spent a lot of time thinking about. It's something that we
really believe will help propel the innovation in the United
States so that we can become not only competitive, that we can
be a dominant force in the technologies for solar power.
So we have pulled a lot of things into the budget. It's a
very coordinated attempt as well that cuts across the energy
technologies area, energy efficiency, renewable energy. It also
cuts across ARPA-E and the Office of Science. We brought in an
outstanding engineer who happened to be just elected to the
National Academy of Engineering this year, a person in his 40s.
Again, that's the caliber of people that we are now being able
to attract to this. He's leading the charge on how to
coordinate all these things to drive the cost down and to do
the research, including research in manufacturing technologies.
We're talking about fully installed costs. We're not just
talking about modular costs.
So it's something we're very excited about and it really
will--it will be one of the landmarks, if successful, in the
President's pledge to out-innovate, out-compete. This is going
to be important.
We actually have gathered money up and said we're funneling
it into this for that Sunshot. So I think it's going the other
way. We're actually increasing the budget for that program.
Senator Udall. Thank you, Secretary Chu.
The Chairman. Senator Hoeven.
Senator Hoeven. Thank you, Mr. Chairman.
Dr. Chu, good to see you again. Thank you for your trips
out to our State, multiple trips. We appreciate that very much.
As you know, we're doing exciting things in energy development,
and we work very hard to support energy development across the
board. You know that. You've seen it, both in terms of what
we're doing through our universities, what we're doing through
our State programs, like our oil and gas research fund, our
lignite energy research fund, our renewable energy programs,
biofuels, wind.
All of those--and I know you've had a chance to observe
them and learn a little bit about them. But the concept that
we've employed is let's develop all of our energy resources,
both traditional and renewable; let's try to do it in a way
where we create partnerships and synergies between them; let's
do it in a way where we incentivize new technologies to not
only produce more energy, more dependably, more cost-
effectively, with better environmental stewardship; and let's
build a legal, tax, and regulatory environment where we create
as much certainty as possible, so that we encourage private
investment because companies, investors, know the rules of the
road.
That's the approach we've taken, and we're seeing growth
both in traditional sources, oil and gas, coal, clean coal
technologies, and the renewables as well, the biofuels, the
wind, solar, biomass, and so forth.
So when I look at your budget--and this follows some of the
comments made by Senator Murkowski and probably Senator Portman
as well--you really seem to be stepping into this situation
where you're picking winners and losers. But if we're going to
create--and every source of energy has its strengths and every
one, each one, has its weaknesses as well. You really seem to
be choosing, rather than this concept of let's bring them all
up together, create more jobs, grow this economy, and work
toward a clean energy environment where the new technologies
drive better environmental stewardship in all of the different
subsectors of the energy category, oil and gas, coal,
traditional sources, as well as renewables.
So why are you going that direction, rather than really
trying to bring all of them up together, based on what you see
going on in our State and other places, where it's been very
successful?
Secretary Chu. Sure. It's very much along the lines that
Senator Murkowski was talking about. It's actually for the same
reason why we're decreasing the investments of onshore wind and
saying, what do we need to do to promote offshore wind, because
we feel that onshore wind is becoming a mature technology. So
in those areas where you have very mature technologies that are
proven, they're profitable, some very profitable, we feel that
they don't need that assistance.
The clean energy standard doesn't actually pick any winner,
so that's different. We again want to differentiate between
investments in technology development R and D that could help
improve things.
Now, in our investments in R and D, for example this
materials hub, we are very keen on developing new alloys of
metal or metal-ceramic alloys that can go to higher
temperatures. That will be extremely useful in things like new
generations of efficient cogen plants for gas, as well as
nuclear. But it's a research and then finally research and
development opportunity.
So we want to invest in things which will give the United
States the competitive edge, primarily in areas where we do not
see the private sector, just as we do not see the private
sector picking up in sequestration experiments that we think is
a vital part of what we need. So we say, OK, in that case
there's a real government role.
But the clean energy standard proposal itself doesn't
actually pick a winner or a loser. If it looks like natural gas
can be competitive, natural gas gets to play in the field. Each
region--the energy issues are regional. Some areas like
renewables and wind and have great solar resources. Other areas
think that nuclear power would be a good proposal. So it
doesn't--the clean energy standard specifically doesn't pick
the winners. You're talking about our investments.
But our investments are R and D investments in technology.
Senator Hoeven. Right, but I would submit to you that to
develop a lot of the energy sources that you want to develop in
these areas you're going to have to create these partnerships
and synergies, and you can't just invest in certain subsectors.
You're going to have to work with all of them.
Sequestration is a great example. You're going to need oil
and gas research in the nontraditional methods to truly develop
sequestration if you want to put CO2 down a hole and
bring up tertiary oil recovery. That's one example.
Secretary Chu. I think the oil and gas industry could be
extremely helpful in helping us in sequestration, not only--
enhanced oil recovery is not really sequestration. It's using
the carbon dioxide to squeegee more oil out.
Senator Hoeven. But it makes it economically viable, and
that's vital, right?
Secretary Chu. They recover the carbon dioxide and use it
for more EOR.
But I think the technology--but I agree with you that the
technology that the oil and gas industry has would be vitally
useful, and I'd love to work with them in putting up monitoring
of where the carbon dioxide goes, because there is a real
opportunity there. So I would ask that you encourage the oil
companies to partner with us in that.
But again, it's something--these are technologies--we're
investing in the things that are going to make us competitive
in the next year and the following year and the years to come.
We see a worldwide market out there and a worldwide
competition.
Remarkably, I might add that there are 2 partnerships in
carbon capture and sequestration with an American company, AEP
and Duke Energy, with 2 companies in China, Hunang Group and
ENN. The sequestration experiments are actually being done in
China--the capture experiments, rather. So China also sees an
economic opportunity here.
So I think we want to invest in that research that will
actually--we want to see it made in America. Let me be blunt
about all this stuff, because again that's something very
important to the future prosperity of this country.
Senator Hoeven. I know I'm out of time. Thank you, Mr.
Chairman.
The Chairman. Thank you.
Senator Hoeven. I look forward to more discussion on that
subject.
The Chairman. Senator Sanders.
Senator Sanders. Thank you very much, Mr. Chairman.
Secretary Chu, let me just thank you very much. Your job is
a difficult one. You're dealing with contentious issues. You're
taking on very powerful special interests. I think in the last
2 years you have done an extraordinary job, and I thank you
very much for what you've done.
One of my concerns is that we are in the midst of a
horrendous recession. Unemployment is extremely high. As
chairman of the Green Jobs Subcommittee, we had a hearing
yesterday just dealing with sustainable energy. What we
discussed is the fact that China now manufactures roughly half
of the world's wind and solar energy products, while at the
same time the United States, we've lost 42,000 factories in the
last 10 years.
So our manufacturing capabilities are crumbling. China is
exploding. There is a great fear out there that a lot of these
technologies--solar, wind--that were developed in the United
States are slowly but steadily moving to China.
Now, how do we rebuild those technologies here in the
United States? How do we have factories producing the wind
turbines, the solar panels that we need? How does your budget
reflect those goals?
Secretary Chu. Thank you for that question. First, I will
agree with you there is a race out there. The country and
companies that develop the clean energy technologies that will
be needed in the future or the energy transmission and
distribution technologies, the highest voltage transmission
lines, the most efficient plants, the most efficient
infrastructure, that country can not only have great advantage
at home because they run more efficiently, they don't waste as
much money, but they have a world market out there.
This is why the President, in these very tough budget
times, has chosen to not decrease the Department of Energy's
budget, but to actually increase it in very, very hard budget
times. There was a difficult choice made. I agree with you
wholeheartedly. Especially in the last 10 years, U.S.
manufacturing has nosedived.
So it's not only that we invest the things here with our
great research universities and national labs, but we also do
the innovation here. We don't want it invented in the United
States and manufactured in China.
Senator Sanders. You know that there was a very sad story
in Massachusetts. There was a major----
Secretary Chu. Oh, yes.
Senator Sanders. You saw that. They shut down and they
moved to China, for a variety of reasons. But I think you are
cognizant of that, and we're going to work together to rebuild
our manufacturing base and we're going to focus on sustainable
energy.
Secretary Chu. Right, absolutely. Now, I go back to the
clean energy standard. This creates a market, a market
certainty, to drive investment. Quite frankly, if you look,
talk to any manufacturer around the world, whether it's wind
turbines or solar energy, there is a key--any company, whether
it's in Spain or Germany or Denmark or China, they would prefer
to set up local supply chains for wind turbines in the country
that they're going to be used. The way to develop local supply
chains, which means local manufacturing, is that you have to
create a market.
So it's very important. So that is--the clean energy
standard creates that market. You develop the local supply
chains. You bring back the manufacturing capability in the
United States. ``Made in America'' is something that we have
been very proud of for over a century, and we have to get back
the quality manufacturing back in the United States. The clean
energy standard creates a market draw for that.
Senator Sanders. I couldn't agree with you more.
Let me just ask you another question or 2. As you're aware,
I strongly support solar energy. We've authored a bill called
the 10 Million Solar Rooftops. I believe that this bill
complements your SunShot initiative, which aims to make solar
cost-competitive with fossil fuels. We're making significant
progress as the cost of solar panels goes down.
I look forward to working with the Department to
incorporate some elements of your initiative into a new version
of 10 Million Solar Rooftops, in particular focusing the
competitive grants in my bill on helping to cut the cost of
solar energy by making local permitting more efficient.
Can you talk a little bit about how standardization of
permitting could help reduce costs of solar energy
installations?
Secretary Chu. Yes, absolutely. I think you have to break
down the barriers in the local communities, the cities and
municipalities. Right now in many places around the country, I
should say most places around the country, the local towns or
cities or districts would say, oh, you want to put a solar
thing on your rooftop? It requires a structural inspection of
your roof to make sure it doesn't fall down. It requires
licensing agreements, things of that nature.
So we're doing 2 things. First, as part of our SunShot
initiative we want to develop those technologies that greatly
reduce the load, the weight load, going from very thin glass
backings to plastic backings, so you don't have to puncture the
roof.
But the other thing we want to do is to work with the local
communities so that, for example, you don't--there are not long
delays. I've heard some stories where if you want to put a
solar panel on your roof you have to go and stand in line and
personally--it's a department of motor vehicle experience, I am
told, that you're sitting on line for several hours to get a
permit. We don't require this for a water heater.
So what we'd like to do is to help the local--this is the
local community jurisdiction, this is State jurisdiction. But
we would like to help them streamline those things.
Senator Sanders. I think that that is terribly important.
The last point that I want to make, Mr. Chairman, is to
tell you Vermont has been a leader in the Nation, as you know,
in terms of energy efficiency. We are getting out the
weatherization money that came from the Department I think very
rapidly and effectively. I can tell you many wonderful stories
where older people are now living in homes which are much more
energy efficient, saving a lot of money on their fuel bills and
saving energy consumption in general.
We are also beginning to make some significant progress in
moving toward sustainable energy. I know the stimulus bill is
much maligned, but as a result of the money coming into the
State of Vermont you drive around the State now, you see a lot
more solar panels, significant solar installations. Some
businesses are getting almost all of their electricity from
solar. We're going to move forward on wind.
So I think we're making some progress. We look forward to
working with you. Thank you for what you're doing.
The Chairman. Senator Barrasso.
Senator Barrasso. Thank you very much, Mr. Chairman.
Secretary Chu, welcome back to the committee. As you know
and others have mentioned, the President's budget calls for a
significant increase over 2010 spending levels. I know you
still have unspent stimulus money and Senator Murkowski made
reference to that. I remember us having a discussion in the
committee with the stimulus money earlier about how can you
spend all of that money. Your own inspector general has
identified major problems with how the money has been spent--
bills paid to contractors for labor charges when no labor had
been done; materials that had not been installed, and on and on
and on and on.
I still have a lot of concerns about that stimulus money,
how it's been spent and the justification for additional budget
at this time.
In your response to Senator Murkowski, you justified
massive increases in funding for renewables because you said
they were not mature technologies yet. The budget cuts 26
percent from clean coal investments. Clean coal is something
that the President even referenced in the State of the Union.
So my question then is, is clean coal a mature technology in
your perspective?
Secretary Chu. No, clean coal is not a mature technology.
As I tried to explain, the investments in the Recovery Act,
inappropriately maligned, is tremendous investments in clean
coal technologies during that period. The clean air base
budget, $4 billion have been obligated to those. That's a lot
of money to obligate to those technologies. So we believe clean
coal--in fact, the capture of carbon from all the stationary
sources is part of the technologies the world will need in the
coming years, and we want the United States to have a
leadership position in this, because coal will be around. It's
not only the United States, but China and India and Russia have
tremendous coal reserves that they will use, and there will be
a market for that internationally.
So we think that it is a vital part of that. With regard to
the Recovery Act, we've obligated 100 percent of the funds.
I've read that inspector general's report and, look, on balance
it is actually not a bad report at all. It talked about some
lagging in funding, but it noted that the Department of Energy
itself--many of these had to do with other programs, but the
Department of Energy itself was doing everything it could in
its power in order to do that. We had a spend-rate plan and, as
you know--for example, many of the programs, you would have to
have a request for proposals, you assign that money, it's
awarded to particular companies or States or whatever, and then
what happens is those orders go down, and what really starts
the ball rolling is then all of a sudden you've got a contract
out there. They're starting the work. You have to go through a
selection process. The jobs get going and people get hired, and
what you're talking about is the eventual billing of that. But
the construction jobs start, they get paid, and then the last
thing you do is bill.
We are not that far from our initial 2009 claim. If you
look at what we were thinking we were going to be at a spend
rate, we're pretty close to that. So I think there are a few
hiccups, but overall it's been actually a good performance.
Senator Barrasso. It does show how difficult it is with the
amount of money that needed to be spent to really be careful
with the taxpayer dollars, because there are clearly abuses
with this program.
I do want to follow up on Senator Lee's question about that
80 percent clean energy by 2035. The budget included massive
increases for renewables. How has the Department calculated the
amount of--or have you calculated the amount of new
transmission lines that are going to be needed, as well as the
amount of land needed, to meet this goal with renewables like
wind and solar, and how are you going to be dealing with that?
Secretary Chu. This is a coordinated effort. The Department
of Energy has a central role in this, but there are other
players--FERC, Interior, Agriculture. We are very interested in
developing these transmission lines. We think that the
transmission lines and the coordination, because the
coordination is the real issue. There are regional transmission
sectors, there are vertically integrated utility companies,
there are transmission line companies.
Each company and each State tries to solve the problem
within the control of what their jurisdictions are, the best
they can. Also, when you build a new source of energy you try
to solve that problem as best you can. But what is really
needed is an overall coordination. So we are working very hard,
and we've recently had a series of meetings going forward to
try to get the private sector to get coordinated. We view
ourselves as part of the grease, if you will, to say, OK, if
you coordinate you can stop what one Western Governor referred
to as the spaghetti of transmission lines, rather than a right-
sized transmission line which is rational, if you could step
back and say in certain Western States it makes much more sense
to right-size it, to allow you to put up a tower, maybe string
one or 2 lines, but it has the capacity for 4 lines.
So this is something we think there is a plan in the
Western States and the Eastern States, and so we think that
this is very important. With transmission lines, we see an
incredible opportunity to bring the overall cost of energy down
because you can tap the right sources.
Senator Barrasso. Thank you. Thank you, Mr. Secretary.
Mr. Chairman, 2 additional questions I'd like to submit in
writing if I could, because my time is up. One is on the Rocky
Mountain Oilfield Testing Center and the other is about the
Department's loan guarantee program.
Thank you, Mr. Secretary. Thank you, Mr. Chairman.
The Chairman. Thank you.
Senator Manchin.
Senator Manchin. Thank you very much, Mr. Chairman.
Mr. Chu, Dr. Chu, thank you for being here. The State of
West Virginia, as you know, is an energy State. We're a net
exporter of power. What you might not know is that we use a
little bit of everything. We have an energy portfolio bill
that's realistically looking at what we can do in our State to
be independent and also be a net exporter. We have one of the
largest wind farms east of the Mississippi.
So we have basically diversified ourselves and done as much
as possible. But we find it very difficult to continue on
because of the EPA's intervention and their very onerous
position that they've taken on permitting and being able to
supply the energy the Nation needs.
I think the question I would ask first of all, from the
administration's point of view and maybe from your point of
view also the highest priority, how would you rate that? Would
it be the independence, for us to be independent from foreign
oil, or to develop renewable energy policy?
Secretary Chu. The highest priority is, as the President
said, is neither of those. It's really to make sure that we put
in place an infrastructure that will ensure the prosperity of
all Americans going forward this year, next year, and in the
decades to come. The energy charge and our responsibility is to
be an essential role in ensuring that prosperity.
So within that, I think it may be a false choice to say
it's either this or that. We want--part of that prosperity is
we want to be independent from importing foreign oil. It's
roughly $400 billion a year, and that's why we said we have to
improve the mileage standards, the efficiency of our
automobiles. We have to continue to develop biofuels and
electrification of vehicles, especially for personal
transportation.
So all of those things we think can deal significantly with
that issue.
Senator Manchin. I mean, we could be using the existing,
like from coal to liquids, which we get very little help, very
little direction, from the administration to do that, to make
us less dependent on foreign oil.
We're fighting a war, the longest war in history, because
of our dependency and the unstableness of the Middle East
because of our dependency. It continues to go on and on and on.
Yet, basically through the budget process all of the advantages
have been given to the renewables, which is fine. I mean, we're
fine with that.
But I think if I can ask you this question. If you looked
at the cost of energy in China right now, who has cleaned our
clock on manufacturing, has theirs increases as much as ours
has in this Nation as far as the baseload power?
Secretary Chu. Yes, their energy costs are going up. Let me
first mention something about coal to liquids. There are new
technologies that we're really interested in doing. Coal to
liquids, including carbon capture and sequestration, with the
addition of biomass, has a real advantage here. A recent study
of the National Academy of Sciences and National Research
Council entitled ``America's Energy Future'' had an entire
section on coal to liquids with carbon capture and
sequestration and biofuels. Right now the technology with
carbon sequestration of the excess carbon dioxide has better
life cycle costs than the life cycle carbon emission of oil.
But if you begin to blend in biomass at 30 percent, 40
percent, it actually becomes a net decrease in the carbon
dioxide in the atmosphere, including the tailpipe emission. So
the Academy report actually says: Wait a minute; this is--you
normally think coal to liquids, the old process----
Senator Manchin. Has the EPA read that report?
Secretary Chu. I'm sure it has.
Senator Manchin. They sure haven't acted on it.
Secretary Chu. But this is coal to liquids with carbon
capture and sequestration. It also makes very clean fuels. Then
once you start blending in biofuels, it becomes a real plus. It
becomes carbon-neutral, including tailpipe emissions.
So for that reason, the Department of Energy is very eager
to promote that type of research.
Senator Manchin. The only last thing I would say is that
you described onshore wind as being mature than offshore wind.
How is onshore wind more mature than solar when they both
basically have been in the same timeframes?
Secretary Chu. That's a good question. If you look at the
development of and what I would call the technological headroom
of wind versus solar, what wind has been doing--and it's made
spectacular improvements over the last decade, 2 decades, going
to very large turbines, much more efficient construction,
things of that nature--and you project forward where they're
going to really be improving, they're going to be improving by
going to taller turbines and increasing the reliability of
those turbines.
There's a few niche markets where there are new designs.
But we think that the headroom in wind is less than the
technological headroom of what we see coming down and the ideas
being generated in solar.
But now, having said that, there could be--we're rooting
for wind as well. We think that if you can get carbon composite
materials done inexpensively that have the longevity, the new
gearbox is direct drive, there's a lot of things. So I see a
future of continuing improvement.
But the most improvement again is going back to the
reliability. So we're focused on what can--we have precious
dollars in our budget. What can we do to improve the
reliability? In offshore, where there's less experience, salt
water does a lot--salt water, salt air, does a lot of corrosive
things, and so there are materials issues there.
So again, we have to make difficult choices. We don't have
an infinite budget. We have much less than that. So we have to
make tough choices.
Senator Manchin. Thank you. I have other ones, but maybe
hopefully a second round, or I'll submit.
The Chairman. Senator Risch.
Senator Risch. Thank you, Mr. Chairman.
Mr. Secretary, welcome, good to see you again. Thank you
for coming today.
First of all, the good news. I want to thank you again for
the approval of the guarantee for the enrichment facility that
actually is up and moving, the Eagle Rock facility in Idaho
Falls, Idaho. As you know, as has been discussed here, it's
really critical to national security and to us as Americans to
have that there. So thank you for that.
However, moving on from that, put me in the same category
as the vice chairman and Senator Portman, and I think to some
degree Senator Manchin was critical of the priorities. I'm one
that really believes that we really need to pay more attention
to those that brought us to the dance. That's in the immediate
future the fossil fuel is something that is very important to
the American people, and second the nuclear industry is so
important to us. With all due respect, I don't think your
budget reflects the importance of those priorities. Certainly
the vision that you have for the future on solar and battery-
operated cars and things like that is all well and good, but
we've got immediate problems in this country.
So let me take this down to a real pragmatic basis. Today
we're sitting here in February 2011 and my constituents are
asking me, how come gas is over $3 a gallon and diesel's over
3.50 a gallon? What's going to happen a year from now, February
2012, when your phone rings and you pick up the phone and he
says, this is the President and I've got a little election
coming up here in a few months and, gosh, the White House
switchboard is getting a lot of calls about $4 gasoline and
4.75 diesel? You're the Secretary of Energy. What are you doing
about this and can you turn the spigot up for me so I can get
reelected again? What are you going to tell him?
Secretary Chu. The Secretary of Energy has some
authorities, but we do not--we cannot control the price of a
world commodity. What we can do is to decrease our use of oil.
The United States uses about 25 percent of the oil of the
world, and if we use it in the most efficient way possible and
if we develop a diverse supply of alternates like biofuels and
electrification, which allows us to generate electricity any
number of ways, including nuclear, that they can offload our
use of oil, because we're such a significant user of oil, if we
drop our use from 25 to 20 percent of the world market this
will actually have a very positive effect on the prices. It
will drive the prices down.
So what we try to do is say, how can we decrease our use of
oil, go to higher efficiency, get alternatives that diversify
our energy supply, so that we will not be subjected to those--
or at least minimize those price spikes that can occur.
Now, on the long term, if you just look at what is on the
horizon, I don't know what will happen a year from now or 2
years from now, but 5 and 10, 20 years from now, I think you
and I both will see the handwriting on the wall. You see
developing countries rising in prosperity, generating auto
industries--the largest carbon manufacturer in the world is now
China--for the home market. So India is going to be coming
along. You see the multinational oil companies, the Shells and
Exxon Mobils and Chevrons and BPs and companies of that ilk,
where they feel that their future accessibility will be
increasingly in deep offshore and Arctic. So you see a rising
demand. You see going to more expensive sources. So in the long
term--
Senator Risch. Mr. Secretary, I appreciate that, but I
think you're going to need to polish that answer a little bit
if you get that call, because he's going to be looking for
something a lot more immediate than the long-term, 20-year
picture that you're talking about.
My constituents are concerned. I mean, they go out and fill
their car with gas once a week or what have you and they are
really concerned. You're the Secretary of Energy and I
understand your answer that you're not responsible for a world
commodity, but as the Secretary of Energy you're going to have
to answer some questions about this, because I understand you
say you don't know what's going to happen a year from now, but
certainly you're reading the trade publications and everyone
else that talk about China's thirst, India's thirst, the fact
that our production goes down day by day by day.
I mean, this is not getting any better, and a year from now
it isn't going to be any better, and the President is going to
be looking to you for some immediate answers.
Secretary Chu. I agree, it's not getting any better. The
production in the United States has been declining since the
middle 1970s. Even though we're getting better at finding oil
and we're getting better at extracting the amount of oil in the
ground, the fraction of oil in those reserves, the long-term
position is we have to do something about that and we have to
do it. That's why we're so keen on controlling the expansion of
the use of oil in the United States.
So we are doing everything we can, as I outlined before.
This is not 10-year, 15-year plans. This is today we're doing
these things.
Senator Risch. Thank you, Mr. Chairman. I hope you'll
polish the answer a little better. Thank you.
The Chairman. Thank you very much.
Senator Shaheen.
Senator Shaheen. Thank you, Mr. Chairman.
Thank you, Secretary Chu, for being here this morning and
for being one of those scientists who is willing to sacrifice
to commit to serving the country in your role as Secretary. So
very much appreciate that.
I apologize for having to leave for part of your testimony,
but it was an appropriate leave because I went over to the
Alliance to Save Energy's great Energy Efficiency Day. Their
slogan for this year is ``Energy Efficiency, the First Fuel of
the 112th Congress.'' So I was very pleased to see the focus in
the budget on energy efficiency. As we all know, it's the
fastest, cheapest way to achieve our energy needs.
One of the things that I wondered about, however, was the
President's proposed clean energy standard, because it wasn't
clear to me that what he is proposing includes energy
efficiency as a qualifying resource. Even 2 years ago when this
committee did our energy standard we included energy efficiency
as one of the potential savings. So can you talk about, first,
what your understanding is of what's being proposed for that
clean energy standard and what the role of energy efficiency
ought to be in a clean energy standard?
Secretary Chu. Sure. The outline of the clean energy
standard, which we the administration will need to work out the
details with Congress if there is enthusiasm, which I hope
there will be, does not include energy efficiency. It really
has to do with energy generation. Having said that, I agree
with you 100 percent that energy efficiency is the cheapest,
best way to save money as well as reducing our dependency on
foreign oil versus all the other things that we hold near and
dear to our heart.
Energy efficiency is a very big deal, and there should be
similar incentives and encouragement to encourage families and
businesses, you name it, to save energy. The most important
thing is to demonstrate that saving energy really means saving
money and to really get that out in the thinking.
Most people think if you're going to invest in energy
savings, well, that's a good virtue, but it's going to cost. We
think it's not going to cost. If done right, it will actually
save money, and that money gets reinvested into the business,
reinvested in the United States.
So we think just because it was not included in CES, the
clean energy standard, does not mean that--it is part of this
effort to actually make the United States prosperous, and it's
very much part of the plan, but it's just been separated out
from the clean energy standard.
Senator Shaheen. So should we have an energy efficiency
standard?
Secretary Chu. A lot of the jurisdictions on energy
efficiency standards are local, State and local jurisdictions.
So I don't think we can--we can make recommendations on how
much insulation should be in a home. We can make
recommendations like that. We can facilitate the information,
where money could be best invested to save the maximum amount
of money and energy.
We also have appliance standards, which are actually
remarkable in the sense that those appliance standards--
normally, if you don't have a standard what industry wants to
do is, it's a competitive world out there, they want to drive
down costs.
Senator Shaheen. Right.
Secretary Chu. But they do not necessarily want to drive
down what we call life cycle costs. You buy a refrigerator and
you own it for 15 or 20 years; what will happen? What we have
found is, we looked at before standards were put in place and
after standards were put in place, and if it's a reasonable
standard that nudges industry and their engineers to do the
right thing, we found a remarkable event. For example, in
refrigerators those standards have actually made industry
design refrigerators that saved America many billions of
dollars over the last--starting with California, but since
middle 1975, in a trajectory that they would not have done on
its own.
So those things are actually an enormous asset to
Americans, because these refrigerators of today--the
refrigerators of today are large in size, they're 22 cubic
feet, they're frost-free, and if you look at the inflation-
adjusted price of that and compare it to when I was a kid of an
8 or 10 cubic foot refrigerator where there's a freezer inside
and every month or so I had to chip away the ice, they're more
efficient and on an inflation-adjusted price they're cheaper,
and they're bigger.
Senator Shaheen. I totally agree with you, Mr. Secretary.
You don't have to convince me. I'm trying to figure out how we
convince everybody else.
Secretary Chu. I think that's part of my job, is to
actually show America that you can actually save lots of money
with no loss of life style or any of those things. I think this
is a great opportunity. With those highly efficient products
you have a world market as well.
Senator Shaheen. Thank you. My time is up.
The Chairman. Senator Coats.
Senator Coats. Thank you, Mr. Chairman.
Mr. Secretary, thank you. I'm sorry I couldn't be here. We
all have to balance more than one committee. But I have looked
at your statement and looked at some of the information that's
been provided.
Given where we currently are from a fiscal standpoint here
in the United States, I think the handwriting's on the wall
that there are a lot of things we would like to do, but we're
not able to afford to do them. So I was surprised when the
number came out under the President's budget request that
there's a significant, in fact $3.12 billion, increase over
this fiscal year's budget.
Obviously, this is true for a lot of the agencies. My
question is, I think the handwriting's on the wall here that
these numbers are not going to be available to you. I see the
projections here about the significant increases in a whole
number of programs.
From 2010--I don't have the 2008 comparisons for what's
been increased over the last 2 years--but just on energy
efficiency, 45.6 percent plus-up there. As you go through the
various categories, I know there are some offsets, but overall
we're looking at a budget which is probably not going to be
realized.
So my question to you is, does the Department, and you and
the Department, have a plan B, a plan B which is going to have
to deal with a much lower number? How are you going to
prioritize where to spend that money? What kind of management
decisions are you going to have to make in terms of personnel,
in terms of commitment of resources?
I'm very skeptical about government's ability to
successfully pick winners and avoid the losers. The market
always gets in the way of those decisions.
So we're at a very difficult time, and that's going to put
a lot of responsibility on your and every agency, every Cabinet
department, in terms of finding, coming in at that lower
number. So have you analyzed that in terms of where would we go
if what appears to be the reality of the funds that are going
to be available for this next fiscal year don't come in
anywhere near where it's projected?
Secretary Chu. Sure. First, I think in the budget presented
by the President there were some tough decisions made and, as
the President pointed out, this is----
Senator Coats. Yes, but the overall is a very significant
increase.
Secretary Chu. That's right. There are 2 agencies that got
increases, Education and Energy, because it was felt--and every
other agency had decreases or held the same. The overall budget
was flat and he was calling for a 5-year--just stopping the
increases for 5 years.
So now, so that's something that was--since the Eisenhower
Administration, that was the first time a President has
proposed a budget like that, and for the outgoing years. So
difficult choices were made.
We think that, the administration thinks, the President
thinks, that the reason why Education and Energy were receiving
increases during these very tough budget times--and I agree
with you, I recognize that in the coming 4, 5, 6 years that
there will be huge demands to show fiscal restraint and to try
to get back to a balanced budget. I absolutely agree with that
and it's important.
But the reason we're making those investments is this is
about the future, next year and the following year and the
years that follow, that to put America in the best competitive
position this is what we need to do.
I'm reminded of a friend of mine, Norm Augustine. He was
the chair and CEO, former chair and CEO of Lockheed Martin.
Senator Coats. A friend of mine also, and a wise man.
Secretary Chu. Yes, great. So I served on that committee,
``Rise Above the Growing Storm,'' with him, and since that time
he has become a friend. He became the chair of my advisory
board at Lawrence Berkeley National Lab. He's on the Secretary
of Energy's advisory board. A very wise man.
He said: In times of fiscal austerity--and we are in those
times today--from his experience at Lockheed Martin, the last
thing you want to do is to decrease your research and
development budget. It's like you were designing an airplane,
the plane is overweight and what do you do? You don't take off
an engine to reduce the weight problem. So it's difficult
choices.
Now, if in the wisdom of Congress it turns out that we
won't get our full budget, I would be glad to work with
Congress, and we do have a priority of things. But again, this
really is about winning the future, and that's why those tough
decisions were made and the other agencies got significant
cuts.
Senator Coats. I understand that about winning the future
and I think that is where investment ought to go, particularly
at the basic research level, not necessarily the applied
research level, because again I have great skepticism over the
political process's ability to make the right selection.
I had the opportunity to live and serve in Germany for 4
years and they made political decisions about how much
mandatory wind and sun had to be produced by a certain fixed
date, and a lot of places found that the sun didn't shine as
much as they thought or the wind blow as hard as they thought.
Then the political process always raises its ugly fist, because
it turned out that most of the politicians representing various
geographic areas of the country had to get their share, even
though the statistics showed that from a wind standpoint it
blew a lot harder in somebody else's district than it did down
south and the sun is showing more down south than it is up
north. But everybody had to get their panels and their money
for solar and wind. It seems to me that the political process
often intercedes in a way that distorts the correct application
of the funds.
So I'm not here to tell you how to fix that or deal with
that. I just think the 2 points I want to make is, it's likely
that you'll be called on to do less--to do more with less, and
if so hopefully there is a plan in place and a set of
priorities that you can share with us in terms of where you
think that is best applied.
Second, to the extent that we can get the decision process
out of the political process--and I'm not just saying out of
your Department; I'm also pointing the finger at us--and get
the needed dollars of research that will be investments for the
future settled in a non-political, more market-directed way,
which as you know capital follows--it will follow subsidies. We
can make decisions even though the market, even those putting
up private money, think that's the wrong decision or have
reservations; it'll follow the subsidy, and then dries up,
potentially dries up capital where it could have been applied
more efficiently.
In any event, I look forward to working with you on this
committee and everyone on this committee, the chairman and
others, and helping work through that process. Thank you.
The Chairman. We've all had a chance to ask 5 minutes of
questions. Let me go back around for those who are still here
and see if they have additional questions.
Senator Coons.
Senator Coons. Thank you, Mr. Chairman.
First, I just was interested in a previous exchange about
the promise of coal mixed with biomass and wondered what role
you think advances in catalysis and catalytic science might be
able to make in achieving that sort of intermediate stage
deployment of a blend of sort of coal to liquid fuels and
biofuel, and how the AFRCs or the innovation hubs might plan a
role in connecting national labs to research universities to
that work? It's something the University of Delaware is
particularly strong in and I'm interested in seeing deployed if
possible.
Secretary Chu. Catalysis is a major part, if not one of the
crucial aspects, of the ability to convert biomass and the
ability to decrease the energy penalties in converting one form
of energy into a cleaner form of energy, separating out the
carbon dioxide and sequestering it. That's again talking about
the technological possibilities.
We see catalysis as a real technological possibility so
that we can do some of these gasification, liquification to
transportation fuels that works toward our energy independence,
diversify our supply, and where we can then create wealth using
American resources. So that's why we're so keen on it, because
if you do this in conjunction with the carbon sequestration of
the excess carbon dioxide it's a winner all around--
environmentally, it's a winner in terms of our energy
independence, and it's a winner in terms of wealth creation in
the U.S.
But it's science, it's research, and that's why we're so
focused on doing that research that can see if it has a shot.
Now, once the research is done, I would agree with the remarks
of the last Senator that the private sector then would be in a
position to make those investments.
Again, the clean energy standard is very important because
it goes toward promoting--you have a market for these products
and the business community has some certainty.
Senator Coons. How valuable do you see the proposal for a
new offshore transmission line that would cover basically the
whole mid-Atlantic to the rapid deployment of offshore wind,
and how do some of these proposals help advance that?
Secretary Chu. That's a good concept. I'm supportive of it.
What I like about it especially is that if you begin to connect
the mid-Atlantic States from, let's say, North Carolina to on
up north to New Jersey, and even the New England States--well,
you've got to go around Long Island, so the first part is just
from New Jersey on south--that creates a way of distributing
the power so that the wind energy can be distributed much more
effectively, more of it can be utilized, and so you can start
to port energy into places where it is needed, where in many of
these areas there's a spot market for energy, and all of sudden
if you're paying not 5 cents for a wholesale price of
electricity or 6 cents per kilowatt hour, if you're paying 50
or 500 cents per kilowatt hour, you can port it up there.
So it will make the energy infrastructure much more
efficient and it will overall lower the price of electricity.
So I'm very keen on it. We'll see. There are a number of
private companies looking at this very hard.
Senator Coons. I think that's critical, as you discussed
before, to creating the kind of draw that will sustain
manufacturing here.
My last question. I was interested in the advanced
manufacturing technology consortia which your Office of Science
is participating in. Many of us are concerned about how do we
advance not just the basic science for deployment, but
manufacturing related to energy in the United States. Given the
previous question, given the budget realities, if there was one
particular investment or program you wanted to highlight today
that you think has the best chance short-term of helping
advance manufacturing, what would you draw our attention to in
today's budget submission?
Secretary Chu. It's a mixture of advanced manufacturing of
batteries and photovoltaics. I think again I see a lot of space
where the research--and this again is research. If you can
develop a new method of taking molten silicon, creating very
thin wafers, and taking it off that substrate and then directly
making it into solar cells, you've radically changed the
manufacturing process in a very fundamental way.
I liken it to the radical change in making glass. If you
look at a building of 200 years ago, it's this wrinkly sort of
glass and very expensive. Then all of a sudden someone figured
out how to float glass on another surface, another liquid
surface, and gravity just makes it flat and cheap, and that had
a profound influence on the manufacturing of glass and drove
down costs.
So we are looking very hard. It's not just research in
materials, but research in manufacturing, that can transform
the way we make things. Again, in this competitive world that
is part of what we need to do in order to bring back this high-
quality manufacturing, which has been a very strong leg in the
American enterprise and the American economy.
So a lot of our research is actually research in new ways
of manufacturing which could transform the world.
Senator Coons. I want to close by just echoing the comments
of some other Senators. I'm grateful for your service and
appreciate the direction you're taking the Department. Thank
you.
The Chairman. Senator Lee, did you have additional
questions?
Senator Lee. Mr. Secretary, I assume you're aware of the
current debate surrounding FERC's proposed rule on transmission
cost allocation. Has the administration taken a close look at
this, including on whether and to what extent FERC has
authority to issue this and what the effect might be on
customers?
Secretary Chu. Yes, we're looking at that and I'm aware of
the controversy. I think it is--people have different opinions
on how to do this. Typically in the past the transmission--if
you generated a new fossil fuel plant, a solar farm, a wind
farm, you name it, the transmission costs for the hook-over
were generally borne by the people who were producing the
source of energy. That was effective in the days when energy
was produced, generated locally and distributed locally,
because it made a lot of sense. If you have a power plant,
you're not reaching out 500 miles, 1,000 miles somewhere. You
are actually making that power plant to satisfy local needs.
Now, having said that, if you look toward the future and
what's going to be happening, to take full advantage of the
wind resources, take full advantage of nuclear sources, which
are mostly the capital expense--the fuel is a few percent of
the cost; it's the capital expense of the power plant. Once you
make these huge capital investments--wind, solar, nuclear, are
capex-intensive--you want to keep them running as long as
possible and you want to port that energy.
So then all of a sudden overall you can actually drive down
the cost to consumers and to businesses by being able to say,
can this energy go across the jurisdictions, across the
regional areas, across the utility companies? Again, if you
look at the auctioning that's going on now in the market,
especially in the eastern section of the United States, if you
have a very small area you can get price spikes, incredibly
price spikes in demand. All of a sudden, demand goes up and the
cost can increase dramatically, from 10, 15 cents, 5 cents a
kilowatt hour to, as I said, 50, 100, 500 cents.
Having a transmission system that allows you to make
interchanges will mean that the energy assets of the United
States could be used to distribute it and so you don't have
these huge little spikes in prices. So I think this is
something--if you have a closed market and you're a merchant
supplier, you might like to see that. So what we're driving at
is the best possible way to satisfy all the stakeholders in
this, but ultimately it's the businesses and the people of the
United States and how do you drive down the cost. We're using
transmission as a tool.
Senator Lee. Are you satisfied that FERC's current
statutory authority is sufficient to enable it to do that?
Secretary Chu. I don't think it's sufficient in the sense
that it doesn't have the teeth that we have in gas lines. But
in terms of the costing, this is something that I think--these
are mostly, almost exclusively private enterprise, and so the
government's role is, one, we need to help all the stakeholders
come together and say what is in the best interests of the
United States and the best interests of its industries and its
consumers.
Senator Lee. So perhaps acting as a facilitator rather than
regulator?
Secretary Chu. Right now, especially in the Department of
Energy, we see ourselves as facilitators, to try to get the
best possible plan going forward over not only the short-term,
but transmission and distribution is really a long-term issue.
Senator Lee. OK. Shifting gears really quickly, recognizing
I'm almost out of time, I wonder why you appear to be moving in
a direction in which you're devoting less attention rather than
more to hydropower, notwithstanding the fact that hydropower
currently supplies, if I'm not mistaken, about two-thirds of
our renewable energy resources and about 7 percent of our total
electricity production in this country, and it's also an area
in which many of the resources for hydropower are under the
jurisdiction, the control one way or another, of the Federal
Government.
Does that strike you as something you might want to
reconsider?
Secretary Chu. I think hydropower--I agree with you,
hydropower is a very good energy resource. In fact, it is the
fastest way to turn on electricity instantly in generation. I
think without building new reservoirs and new dams, just
putting in more efficient turbines, which are friendlier to
fish that migrate, but more efficiency, or putting in turbines
in water control projects that are built for flood control, but
we don't--to generate that--I think there is still a lot of
potential for hydropower, not in the traditional sense of a new
dam, but in the sense of using what we have and the reservoirs
that we have already.
Senator Lee. Or marine generation, tidal power.
Secretary Chu. Yes.
Senator Lee. Are you looking at that also?
Secretary Chu. We are looking at marine, underwater
currents, tidal power. All those things are things that we are
looking at.
Senator Lee. Thank you.
The Chairman. Senator Shaheen.
Senator Shaheen. Thank you, Mr. Chairman.
I have a parochial question, notwithstanding some of the
earlier discussions. New Hampshire is at the end of the
pipeline for oil, and yet we are very heavily dependent on oil.
So that means cost to heat our homes for using oil is more
expensive in New Hampshire and Maine than in much of the rest
of the country.
One of the things that we do have is a lot of forests, so a
lot of biomass. New Hampshire is the second most heavily
forested State in the country. I was pleased to see that DOE's
budget proposal increased funding for biomass and biorefinery
systems, but I noticed that most of the money is going into
liquid biofuels.
There's been a fair amount of interest in New Hampshire and
I think also in some of the other New England States in
combined heat and power to fund--to support district heating
systems. In fact, in 2007 I think Congress authorized a program
within DOE to help communities with setting up those kinds of
district heating systems with combined heat and power.
So do you see doing anything in that area in this new
budget, and how can we help incentivize some of those
communities who are interested in building these kinds of
systems and just need a little bit of incentive to get that
going?
Secretary Chu. OK, sure. There are 2 issues. One is that
when you use biomass in New England, Vermont, New Hampshire,
Maine, those areas where heating costs and fuel costs,
especially fuel oil, is very high, we see that it can play a
very important role, and that if you manage the forest in a
sustainable way, so that as you use trees you plant trees and
in the long term that's a sustainable use of the forest, I
think that should be part of a clean energy standard, quite
frankly.
Senator Shaheen. Me too.
Secretary Chu. Get 100 percent credit, if you will, for
taking in a managed way, so you sustain. When you chop down,
you replant. Europe does this in spades and we too can do this.
So that's one thing. We support that. We are looking at ways in
our biofuels programs, inexpensive ways of concentrating the
material so that you can transport it, pelletizing, other
things. Ideally, for the transportation field you would want to
convert it into a liquid form. But that's one area where we are
doing research.
There are very inexpensive ways of taking lumber residues,
residues from paper mills, you take that and you port it; also
old dead trees, trees where you can transport it in a much more
economic way. But I think the biggest incentive was let it
count as clean energy, part of the portfolio.
Senator Shaheen. I certainly agree with that, and
hopefully, if we adopt a clean energy standard, it will include
biomass as part of that. But again, as you're looking at your
budget and focusing on those liquid biofuels, do you see any
opportunities in the biomass for combined heat and power?
Secretary Chu. Yes. I think--just recalling, there's a
little bit of work being done on the issue. As you blend in
traditional fossil fuel sources with biomass, as you go to
higher and higher fractions, there are issues having to do with
the conventional boilers. There are residues----
Senator Shaheen. Right.
Secretary Chu. So to that extent, yes. Again, on the more
research and development side of things, how do you enable or
design it to use that biomass in a way that doesn't sort of
gunk it up, so to speak. So that's one of the issues, so that
you can go, not from 10 percent, but to 20 to 30 percent and
higher.
Senator Shaheen. There are some boilers already on the
market in Europe, Denmark in particular----
Secretary Chu. Right.
Senator Shaheen [continuing]. That can take care of that
problem.
Secretary Chu. We're following what Denmark is doing very
closely because they are the leader in that, the higher and
higher fractions of blending biomass with conventional fossil
fuel.
Senator Shaheen. Thank you.
The Chairman. Mr. Secretary, thank you very much. We
appreciate your testimony, and please keep us informed as to
what we need to be doing. Thank you.
Secretary Chu. Thank you.
[Whereupon, at 11:42 a.m., the hearing was adjourned.]
APPENDIX
Responses to Additional Questions
----------
Responses of Hon. Steven Chu to Questions From Senator Bingaman
re-enrichment of uranium tails
Question 1. Mr. Secretary, do you support a competitive procurement
process in re-enriching any high assay tails in possession by the DOE?
Answer. Any determination by the Department to re-enrich its higher
assay tails would include careful consideration of several factors,
among them an appropriate contracting approach, the economic benefits
to the taxpayer and the potential market impacts of processing and
selling the higher assay tails. Other significant factors for
consideration include the condition of the material, the costs
associated with enrichment at the time of disposition, and the
suitability of the containers in which the tails are stored for
transportation.
additional blend down of heu
Question 2. Has DOE been involved in discussions with the Russian
Government, or is it aware of any such discussions, relating to the
additional U.S. purchase of down-blended Russian highly enriched
uranium following completion of the current program in 2013? What is
the status of such discussions and what time span and SWU volumes are
envisioned?
Answer. Senior DOE officials have informed Russian officials on
several occasions over the past calendar year of our desire to pursue
further HEU elimination after the current HEU Purchase Agreement
expires in 2013. Although Russia has indicated firm opposition to
extending the HEU Purchase Agreement beyond 2013, NNSA plans to include
discussions of additional Russian HEU downblending options as part of
our broader dialogue on U.S.-Russian nuclear nonproliferation and
commercial partnerships. These discussions would examine the potential
time span and SWU volume of a follow-on agreement.
small modular reactors
Question 3. For Fiscal Year 2012, the Department is proposing a
program to work with industry to help license small light water modular
reactors. How long a program does the Department envision before being
able to successfully license these designs before the NRC?
Answer. The FY 2012 request envisions a five-year program costing
$452 million to support certification and licensing activities by
vendors and utility partners for SMR deployment projects. The
Department expects that SMR vendors will have sufficiently learned from
interaction with the Nuclear Regulatory Commission (NRC) and that
continued support by DOE will not be necessary after the five-year
program.
Question 4. The budget proposes a 100 percent increase for the
Equipment Standards and Analysis activity to expand and accelerate the
analysis, establishment and enforcement of product energy efficiency
standards.
Congress will be considering legislation similar to the bill
considered last year, S. 3925. The bill would enact consensus
agreements negotiated between product manufacturers and energy
efficiency advocates and establish new or increased standards for:
furnaces, heat pumps, central air conditioners, room air-conditioners,
refrigerators, freezers, clothes washers, clothes dryers, dishwashers,
drinking water dispensers, hot food holding cabinets, electric spas,
pool heaters, and service-over-the-counter refrigerators.
Generally, what would be the impact on the schedule and budget of
the Equipment Standards and Analysis activity, and what schedule and
budget adjustments would be made, if legislation along these lines were
to be enacted?
Answer. If legislation to adopt the negotiated consensus agreements
between manufacturers and energy efficiency advocates is enacted, many
of the Department's appliance and equipment standards schedules would
be accelerated. Moving forward the Department would revisit its
prioritization of these newly covered products for FY 2012 and beyond.
With these potential rulemakings, DOE does not foresee any essential
changes to the budget.
The majority of equipment standards that stakeholders proposed in
the consensus standard levels are included in S. 398, Implementation of
National Consensus Appliance Agreement Act of 2011 (INCAA), and are
scheduled for completion by June 30, 2011. This includes the
rulemakings for furnaces, central air conditioners, central air
conditioning heat pumps, room air conditioners, and clothes dryers
which all have court ordered deadlines. DOE is striving to meet this
schedule regardless of the outcome of proposed legislation. If
legislation is enacted to adopt negotiated consensus agreements as
statutory standards for these covered products, the impacts would be
minimal because these rulemakings are scheduled to be completed in FY
2011.
The rulemakings for dishwashers and residential clothes washers are
scheduled to continue into FY 2012. If legislation is enacted to adopt
negotiated consensus agreements as statutory standards for these
covered products, then DOE could have additional resources in FY 2012
to pursue other rulemakings.
Potential standards for drinking water dispensers, hot food holding
cabinets, electric spas, heat pump pool heaters, and service over the
counter refrigerators have not gone through DOE rulemaking processes in
the past. If legislation is enacted that prescribes standards for these
products, DOE would revisit its prioritization of newly covered
products for FY 2012 and beyond.
Question 5. As with last year's appliance standards bill, the
legislation expected to be considered this year directs the Department
to conduct four studies, on: video game consoles, motor market
assessment, efficiency standards compliance, and direct current
electricity supply in buildings.
Very approximately, what do you estimate each of these studies
would cost to conduct, and would the cost be covered from existing
program funds?
Answer. As described below, the Department expects the four studies
to cost approximately $8 million to complete. To cover these costs, DOE
would need to re-prioritize its list of products that it is considering
for coverage based on these new initiatives and the funding
implications caused by these new actions.
The proposed legislation directs DOE to conduct a video game
console energy efficiency study. Such a study would address
manufacturer characteristics and market shares, existing regulatory and
nonregulatory efficiency improvement initiatives, trends in product
markets and characteristics, and identification of energy saving
technologies. DOE estimates a study of this magnitude would cost
approximately $500,000 to complete and the cost would be covered from
existing appliance and equipment standards program funds.
The proposed legislation also directs DOE to conduct a study of
compliance with energy standards for appliances, which would include
running a testing verification program for covered products and
equipment. DOE estimates this study, including the purchasing and
laboratory testing needed to support any recommendations, would cost
approximately $5,000,000 to complete and the cost would be covered from
existing appliance and equipment standards program funds.
Furthermore, the proposed legislation directs DOE to conduct a
motor market assessment and commercial awareness program. While DOE's
appliance standards program is currently working on a motor market
assessment for certain types of motors currently subject to rulemakings
under DOE's regulatory programs, the proposed legislation would
significantly expand the scope of the current study. Additionally, it
would require DOE to establish a national program to increase awareness
of the energy and cost-savings opportunities of using more efficient
motors. DOE estimates this study and administration of such a program
would cost approximately $2,000,000. The Department would consider
whether to request funds for the administration of such a program in
future budget requests.
Lastly, the proposed legislation directs DOE to conduct a study of
using direct current (DC) electricity supply in buildings. DOE would
need to investigate the various end uses of the electricity used in
buildings and the details of the wiring in various types of buildings.
DOE estimates this study would cost approximately $500,000 to complete
and the cost would be covered from existing EERE's solar technologies
program funds.
Question 6. Please briefly describe the steps that have been taken
by this Administration to enhance enforcement of equipment energy
efficiency standards.
Answer. The Department of Energy has established a new program to
systematically enforce-for the first time-federal energy conservation
standards that have been in place for decades. The Department has also
ramped up testing of ENERGY STAR appliances to verify products' energy
efficiency claims. The Department created a new Office of Enforcement
within the Office of the General Counsel that, with the support of the
Building Technologies Program, has been proactive-issuing enforcement
guidance, revising DOE's regulations to improve the effectiveness of
its enforcement efforts, and bringing numerous enforcement actions
against entities who fail to comply with DOE's rules and efficiency
standards. Since we began our efforts, manufacturers have newly
certified more than 600,000 products as meeting our energy efficiency
standards. To date, the Department has collected nearly $550,000 in
civil penalties and removed 70 products from the market that did not
meet DOE's energy conservation requirements. More details can be found
at http://www.gc.energy.gov/enforcement_news.htm. The Department's goal
is to establish a practical, systematic, and fair enforcement program
that will allow DOE to enforce the federal standards effectively and
ensure a level playing field in the marketplace, without unduly
burdening regulated entities. Effective enforcement of the Department's
energy standards will save energy and costs for American consumers and
create incentives to reward those businesses that incur the risks and
the costs needed to create more efficient products.
Question 7. Has DOE been involved in discussions with the Russian
Government, or is it aware of any such discussions, relating to the
additional U.S. purchase of down-blended Russian highly enriched
uranium following completion of the current program in 2013? What is
the status of such discussions and what time span and SWU volumes are
envisioned?
Answer. Senior DOE officials have informed Russian officials on
several occasions over the past calendar year of our desire to pursue
further HEU elimination after the current HEU Purchase Agreement
expires in 2013. Although Russia has indicated firm opposition to
extending the HEU Purchase Agreement beyond 2013, NNSA plans to include
discussions of additional Russian HEU downblending options as part of
our broader dialogue on U.S.-Russian nuclear nonproliferation and
commercial partnerships. These discussions would examine the potential
time span and SWU volume of a follow-on agreement.
Question 8. I see that you plan to sell about 6 million barrels of
oil from the SPR, generating about $500 million.
Could you explain any operational benefits to SPR management from
such a sale?
Answer. A sale of approximately six million barrels would relieve
the over filling issues that existed at several SPR caverns. For
example, the caverns need spare capacity and operational flexibility to
allow site personnel to perform casing inspections on all caverns in
order to comply with a recent Texas Railroad Commission requirement.
The sale would create the space needed to do the mandatory cavern
inspections and workovers.
Question 9. If this sale is intended to improve operations of the
SPR, could you explain why the revenue from the sale is directed to the
federal treasury, rather than the SPR petroleum account? (I note that
this gives the appearance that the sale is intended as a revenue raiser
to the federal treasury.)
Answer. Past emergency and test sales proceeds were used to
repurchase crude oil for the SPR to replace the oil sold. However, the
SPR is currently at capacity and no repurchase of crude oil is planned.
The purpose of the six million barrel sale is to provide operational
flexibility in managing thi Reserve including alleviating unplanned
overcapacity at some SPR caverns. The sale provides an opportunity to
free up space in overfilled caverns in order to perform mandatory
cavern inspections and workovers. Reducing the volume of inventory in
the overfilled caverns also alleviates concerns associated with cavern
maintenance and on-site crude oil movements.
Question 10. Could you talk about why the Department recommends
repealing the Department's authority to use Royalty-in-Kind oil to fill
the SPR? This strikes me as a legislative issue that is firmly within
the jurisdiction of this Committee, and I'm not sure that it's
appropriate for such a policy measure to be included in a budget and
appropriations discussion.
Answer. The Secretary of the Interior cancelled the royalty-in-kind
program in 2009 and it is no longer an option for DOE.
Question 11. I recognize that HHS, not DOE, manages the Low Income
Home Energy Program. But since you are here--can you explain why the
Administration has proposed a 50% cut for FY2012 (from $5.1 billion to
$2.57 billion). State programs will have to reduce the number of
households served by about 3 million. EIA reports that the average cost
of home heating is expected to decline from $1033 during the winter of
2008-2009 to $990 for this winter heating season. However, that is a
4.1% decline in costs for home heating and is clearly disproportionate
to a 50%. cut in funding.
Answer. The Department of Energy does not implement the Low Income
Home Energy Program and defers to HHS for response.
Question 12. I am very pleased with the emphasis on efficiency and
clean energy in your budget--particularly the ``Better Buildings
Initiative''. We look forward to working with you on this initiative.
How do you envision the program working? How will you select the
universities, schools, and hospitals for energy retrofits? How will you
measure the energy savings?
Answer. The Better Buildings Initiative is a Presidential priority.
It will leverage the lessons learned from other federal and state
programs, as well as years of research and experience in energy
efficiency. As envisioned, the Program has five important components
including a new tax incentive for commercial building upgrades,
financing programs, competitive grants to state and local governments
who implement innovative approaches to building codes, regulations and
performance standards, and a challenge to the private sector and
universities to make facilities more energy efficient. Those meeting
the challenge would have their organizations recognized and supported
with technical assistance.
Universities, schools, hospitals and other commercial buildings are
currently encouraged to participate in existing programs such as DOE's
Commercial Building Energy Alliances as well as the Energy Star Program
which promotes consumer recognition of highly efficient products and
provide public recognition of highly efficient buildings.
DOE envisions that savings data will be gathered from the
Initiative partners and allies who will report their energy savings
accomplishments and financial results as part of the reporting and
recognition requirements of the program.
Question 13. There has been an increasing awareness of the
connection between energy and water and we are beginning to understand
the water availability may be a constraint on both conventional
renewable energy development in the future.
Can you please give us an overview of how the connection between
energy and water is being addressed within the Department's programs?
Answer. The nexus of water conservation and energy use continues to
be an area of interest across the Department, and one we are addressing
through research activities and standards. In particular, energy
efficiency technologies and practices often contribute to reductions in
both energy and water use. As such, both our Buildings Technologies
Program and Industrial Technologies Program have activities impacting
water conservation. Within the Building Technologies Program, water
conservation activities are included under the Appliance Standards
Program. In accordance with the Energy Policy and Conservation Act of
1975, as amended, DOE administers a program of energy conservation
standards for consumer products and certain commercial equipment and
water conservation standards program for residential dishwashers,
residential and commercial clothes washers, and products and plumbing
equipment. The standards for residential dishwashers and residential
and commercial clothes washers include both water and energy
conservation requirements. The standards for plumbing products and
equipment set water consumption requirements only.
In addition, certain water use assessments and conservation
measures can be implemented in parallel with the types of energy use
assessments and efficiency measures performed and promoted by the
Department through the Industrial Technologies Program's Save-Energy-
Now initiative, and could immediately benefit those industrial partners
already benefiting from the existing DOE energy programs. These onsite
energy saving assessments for industrial facilities include a boiler
assessment, which considers water chemistry and water use in steam
boilers. Other portions of assessment cover steam transport systems and
pumps, both of which can directly affect water consumption and use in
the plant. Improvements in any of these systems generally will result
in water efficiency improvements as well.
ARPA-E is also currently addressing the issue of water use in
energy production and incorporates water issues into the development
and management of its programs whenever practicable. One example of how
ARPA-E is actively addressing the energywater connection in its current
programs is in the Electrofuels program. ARPA-E is engaging with one of
its performers to model its Electrofuels system in order to understand
the water demand per gallon of fuel produced. In ARPA-E's FY2012 budget
request, water plays a prominent role. ARPA-E plans to include water
use as a performance metric in any embedded efficiency programs it
might run. ARPA-E is also interested in the possibility of using water
to produce energy in new ways. One possibility ARPA-E is considering is
the electrical generation potential from osmotic power at the locations
where freshwater rivers meet saltwater oceans.
In addition, DOE's Office of Electricity Delivery and Energy
Reliability is coordinating an energy-water initiative in support of
interconnection-wide transmission planning. Funded with $4 million in
the American Recovery and Reinvestment Act funds, this work focuses on
the western interconnection and Electric Reliability Council of Texas
(ERCOT). In the West especially, water resources play a critical role
in generation availability. This is the first time that water resources
are being comprehensively considered in an interconnection-wide
electric transmission planning process.
Further methods of reducing water needs for energy production are
explored in the Office of Fossil Energy. The program is completing
research to improve management of produced waters from oil and gas
operations, currently the largest byproduct of fossil energy
production. Another area of research relates to the water increase when
applying carbon capture and storage (CCS) technologies to new and
existing plants. Current research shows that the application of CCS
could effectively double the water usage at some plants. Research is
directed towards new methods and processes such as the use of membranes
to separate CO2, and higher-efficiency integrated gasification combined
cycle (IGCC) systems that use less water compared to conventional
pulverized coal power plants.
Question 14. There has been an increasing awareness of the
connection between energy and water and we are beginning to understand
the water availability may be a constraint on both conventional
renewable energy development in the future.
How can we be assured that the Department will continue to address
these issues as it moves forward with its various priorities?
Answer. Clearly energy efficiency is a top priority for the the
Department and through efficiency measures we will continue to support
both energy and water conservation efforts. As you know, improving our
standards is a priority of mine, and provides assurance that water and
energy consumption will be addressed in the future.
Question 15. There was language included in the 2011 Defense
Authorization law supporting the development of the Energy Parks
Initiative within DOE. What progress has been made to date?
Answer. On February 17, 2011, DOE announced the establishment of a
task force on asset revitalization to facilitate a discussion among the
DOE, communities around DOE sites, nonprofits, tribal governments, the
private sector and other stakeholders to identify reuse approaches as
environmental cleanup efforts at DOE sites reach completion. The task
force will explore opportunities to reutilize DOE site assets for
beneficial purposes, which may include clean energy development,
environmental sustainability projects, open space or other uses.
Question 16. What are the Department's plans to reuse assets and
excess property at sites across the defense complex?
Answer. On February 17, 2011, DOE announced the establishment of a
task force on asset revitalization to facilitate a discussion among the
DOE, communities around DOE sites, nonprofits, tribal governments, the
private sector and other stakeholders to identify reuse approaches as
environmental cleanup efforts at DOE sites reach completion. The task
force will explore opportunities to reutilize DOE site assets for
beneficial purposes, which may include clean energy development,
environmental sustainability projects, open space or other uses.
superconductivity
Question 17. Japan and Korea continue to make heavy investments in
superconductivity, yet the Department has deleted support for
superconductivity deployment and demonstration for fiscal year 2012.
Will there be any support within the Department or government--wide for
such activity to ensure we remain competitive in this technology?
Answer. The Department's Office of Electricity Delivery and Energy
Reliability (OE) is winding down its involvement in high temperature
superconductivity (HTS) wire research because, after investing over
$600 million over the past 20 years, the Department believes that the
HTS wire research has reached a point that provides meaningful
technical value and that second generation HTS wire technology can be
successfully transitioned to the U.S. manufacturing base. While this
program is phasing out, there are other activities within DOE related
to superconductivity. OE is continuing to support the several ongoing
demonstrations of prototype high temperature superconducting (HTS)
equipment, which was funded through the American Recovery and
Reinvestment Act. These innovative systems include a grid-scale HTS
fault current limiter, HTS power cable and HTS fault current limiting
transformer.
In addition, DOE's Advanced Research Projects Agency-Energy (ARPA-
E) is funding a project for the development of an advanced HTS magnetic
energy storage system that could store significantly more energy than
current superconducting magnetic energy storage (SMES) systems at a
fraction of the cost. If successfully developed in this project, HTS-
based SMES will allow this technology to become cost competitive for
delivering megawatt hours of stored electricity to address the
renewables ramping challenge. In the area of advanced materials
technology research and development, DOE's Office of Science Energy
Frontier Research Center for Emergent Superconductivity is performing
basic research to discover new superconductors. The Office of Science
also supports basic research on synthesis, advanced characterization,
and theory to understand fundamental phenomena related to
superconductivity. In addition, the FY 2012 request for OE has proposed
a Smart Grid Technology and Systems Hub, which can leverage
crosscutting technologies and capabilities developed under the
superconductivity program to impact this and other energy applications.
I am also aware of superconductivity work going on at other
agencies. For example, the Department of Homeland Security is examining
the feasibility of a HTS fault current limiting power cable. And at the
Department of Defense, the Navy is developing innovative applications
for military usage, and the Air Force is supporting basic research on
superconductivity and also has some investments in superconducting
devices through the Small Business Innovation Research program.
Responses of Hon. Steven Chu to Questions From Senator Murkowski
taxes vs. subsidies
Question 1. Do you draw any distinction between the amount of taxes
that a company pays to the government, and the amount of taxpayer
dollars that the government directs to companies or individuals in the
form of subsidies? In the Department's view, are tax decreases and
government subsidies functionally equivalent to one another?
Answer (a). The Administration's approach to tax reductions and
subsidies was stated in the State of the Union Address, ``the only way
to tackle our deficit is to cut excessive spending wherever we find
it--in domestic spending, defense spending, healthcare spending, and
spending through tax breaks and loopholes.''
Answer (b). The Administration does, however, make a distinction
between broad-based tax decreases like the ones contained in the Tax
Relief, Unemployment Insurance Reauthorization, and Job Creation Act of
2010, which the President signed into law following a historical
bipartisan compromise, and tax breaks for special interests, such as
the Fossil Fuel Preferences that the President's Budget proposes to
eliminate.
stimulus
It has been two years since the President signed the 2009 stimulus
bill into law. The Department of Energy received more than $35 billion
through that Act, but has consistently lagged behind nearly every other
federal agency in actually having those funds spent. According to the
Department's website, just 34 percent of its stimulus have actually
been outlaid.
Question 2. Can you explain why some programs that still have
significant stimulus balances would receive additional funding under
the budget request? An example: weatherization's budget would increase
by 46 percent, when DOE's own website shows that it has more than $2.6
billion in ARRA funds obligated but unspent.
Answer. Under the American Reinvestment and Recovery Act 2009, the
Weatherization Assistance Program (WAP) received $5 billion to provide
weatherization services to over 600,000 to low-income families.
According to a 2010 report from Oak Ridge National Laboratory, families
save an average of $400 a year on their energy bills as a result of
WAP. To date, the weatherization program has paid out over $2.7 billion
(54%) and helped more than 400,000 low-income families nationwide
improve the energy efficiency of their homes and help them save money
on their energy bills. Moreover, in the first quarter of 2011, WAP
funding supported thousands of jobs.
All recipients of Recovery Act funds plan to spend their funds by
Spring 2012. However, many states such as Wisconsin, Idaho and Ohio,
among others, have already spent the majority of their funds and will
need base budget funding by FY12 to retain their state program and
high-trained weatherization workers.
Question 3. What are the top 3 impediments that have slowed down
the Department's progress in outlaying ARRA funds?
Answer. From the first day after the Recovery Act was signed into
law, DOE has been focused on moving the money out the door quickly to
create jobs and spur economic recovery. Under the Recovery Act, the
Department of Energy received $35.2 billion in direct appropriations,
$32.7 billion in grant and contract authority and $2.5 billion in loan
guarantee credit subsidy. This represents nearly a 5-fold increase in
normal energy base budget operations.
In just 18 months, DOE used competitive process to select projects,
signed under contract and now manage over 5,000 clean energy recipients
across the nation. The Recovery Act allowed DOE to break down silos
across the complex and pride ourselves along the way with the highest
standard of transparency and accountability. Most importantly, we are
partnering with the private sector to make a meaningful down payment on
the nation's clean energy future.
Additional Resources Required to Stand Up Operations
As noted above, the Recovery Act represented a nearly five-fold
increase over the Department's base energy budget. The funding levels
for many programs represented a dramatic year-on-year increase,
creating major scale-up challenges. Additionally, DOE had to not only
expand existing programs (in some cases nearly 20 fold), but also build
new programs (e.g. Advanced Research Projects Agency--Energy (ARPA-E),
Energy Efficiency Community Block Grants (EECBG), Loan Guarantee
Program Section 1705, Smart Grid Investment Grant Program, Smart Grid
Demonstration Program). Beyond this challenge, DOE had to carry out the
Recovery Act with unprecedented transparency and accountability. In
order to scale up operations while at the same time avoiding waste,
fraud and abuse, DOE, as well as State and local governments had to
bring on additional human resources to stand up operations.
Within DOE, the Recovery Act staff had to establish clear
milestones and schedule for nearly 144 programs. The Recovery team
built out a master plan defining key deadlines: for issuing notices of
funding opportunities, for applications to be due, for the completion
of review processes, for announcements to be made, for environmental
clearances to be in place, for contracts to be completed, and for
projects to start. The master plan defined a timeline and a tempo
necessary to deliver against the goals of delivering on time. The
master plan also specified the resources required to get through each
stage for each project and, in March 2009, highlighted the need for
unprecedented collaboration across offices within the Department. All
told, more than 4,600 reviewers spent almost 80 person-years reviewing
Recovery Act applications. These extra resources created the capacity
to deliver at scale. As a result, some grant and loan processes that
had taken 2 years were shortened to six months, with no loss of rigor.
Compliance Requirements
The Recovery Act imposed new compliance requirements for DOE
programs. Applying Davis-Bacon Act (DBA) provisions required a complex
wage-setting process and imposed new compliance reporting. Working
through environmental reviews required DOE to develop a new approach to
categorical exclusions (CX) to speed processing. Jobs reporting imposed
new challenges on funds recipients. We had to develop streamlined
approaches to make it easier for recipients to comply with
FederalReport.gov reporting, National Environmental Preservation Act
(NEPA), DBA, Buy American, and National Historic Preservation Act
requirements.
In order to complete all of the compliance requirements stated
above, DOE established:
Recovery Act Call Center: DOE expanded clearinghouse call
center operations during the Recovery Act to field calls 10
hours a day. To date, the Recovery Act call center has handled
over 50,000 calls on topics ranging from funding opportunity
announcements, applications, reporting requirements and
compliance practices, among others.
Templates: DOE has shared lessons learned with recipients
through sample NEPA, Historical Preservation and Buy American
document packages and templates to help expedite the review
process.
Guidance: The Department issued program guidance as early as
possible to explain new Recovery Act compliance requirements
and outlining applicability on their projects.
Categorical Exclusions: In cases where it was appropriate
and environmentally responsible to do so, the Council on
Environmental Quality encouraged the use of CXs. CXs are the
least time consuming form of NEPA review. DOE has made these CX
determinations publicly available on its NEPA website.
Regular Interagency Collaboration: DOE worked closely with
other federal agencies to ensure proper application of federal
requirements. For example, DOE worked closely with Department
of Labor on DBA determinations and the Advisory Council on
Historic Preservation (ACHP) and the National Conference of
State on Historic Preservation Issues.
Invoicing
Many of DOE's Recovery Act recipients are first-time recipients of
government funding and were unfamiliar with the government's invoicing
and payment process. To expedite payments, DOE has run invoicing
``webinars'' for recipients not familiar with the government process;
communicated and closely tracked each of our recipient's monthly
financial and performance targets; and offered technical assistance to
States and other recipients who are not spending funds on pace to meet
outlay targets.
Question 4. How many employees has the Department hired to
implement ARRA? How many of those individuals remain employed by the
Department today? How long will those individuals continue to work for
the Department? Has the hiring of any employees to work on stimulus-
related accounts prevented the Department from hiring, even
temporarily, any full-time employees for any other offices or programs
within DOE?
Answer. The Recovery Act represented a nearly five-fold increase
over the Department's base energy budget. Most of DOE's Recovery funded
programs were new initiatives designed to reinvest in America's future
and provide for long-term benefits to the American economy. We ran
competitive review and selection process for over 10,000 applications.
In total, we stood up two new program office and signed agreements
with over 5,000 direct recipients. We are now overseeing over 15,000
clean energy projects across the nation that our direct recipients are
developing. In order to scale up operations while at the same time
avoiding waste, fraud and abuse, the Department brought on over 500
Recovery Act hired employees across DOE headquarters, site offices and
service centers. Many of these Recovery Act hires were temporary in
nature (typically 2 years) to overcome the burden of standing up
Recovery Act implementation. However, now that Recover Act programs
have moved to more routine operations, nearly 50% of these specific
Recovery Act hires have gone on to other jobs. Moreover, many have
accepted positions in the private sector, with clean energy firms that
are now able to hire as a result of the economic activity spurred by
the Recovery Act.
These Recovery Act hires have not prevented the Department from
hiring full-time employees for other offices as Recovery Act funds can
only be used to pay salaries for work on Recovery Act issues.
alaska
Question 5. Alaska boasts some of the most exciting possibilities
in the nation for renewable energy from hydropower both conventional
and hydrokinetic--to geothermal and wind. Despite this potential, last
year the Department terminated the Arctic Energy Office. This was a
huge disappointment for Alaska and DOE is missing a real opportunity to
perfect new technology in cold climate conditions. Does the Department
have any plans to devote additional resources to test or develop
renewable energy projects in Alaska in the coming year?
Answer. The Department is committed to continuing its support for
renewable energy and energy efficiency technologies in Alaska. The
Department's devotion of resources includes funding an on-site
renewable energy expert from the National Renewable Energy Laboratory's
(NREL), direct funding through the American Recovery and Reinvestment
Act, and work with the U.S. Coast Guard to convert some of its facility
heating from diesel fuel to biomass.
NREL has been funded by the Department to help develop Alaska's
renewable energy and energy efficiency potential by joining forces with
developers, state government, Native corporations, and tribal and
community leaders to assist them in making smart decisions about
deploying sustainable energy technologies and preparing for a
cleanenergy driven economic transition. NREL's technical training,
energy planning assistance, education, and outreach activities, led by
Project Manager Brian Hirsch from the satellite Arctic Energy office in
Anchorage, are providing the catalyst for transforming the way Alaska
uses energy.
NREL's Clean Energy in Alaska initiative currently includes the
following activities:
1. Supporting the Cold Climate Housing Research Center's
Sustainable Northern Shelter near net zero residential building
program, the Alaska Center for Energy and Power's monitoring
program for wind-solar-diesel hybrid power systems and stranded
renewables analysis, and the Chaninik Wind Group's high
penetration winddiesel project;
2. Providing technical assistance to the state, numerous
village utilities, private industry tidal and in-stream
hydrokinetic developers, Native corporations, and others;
3. Technical assistance on the Fire Island Wind Project;
4. Publishing a report on ``Renewable Energy and Energy
Efficiency Opportunities and Challenges in Alaska;''
5. Chairing the Alaska Emerging Energy Technologies Fund
Advisory Committee;
6. Participating on the Denali Commission's Energy Advisory
Committee, and bringing private industry to Alaska for
renewable energy investment and local job creation;
7. Working closely with the state of Alaska on woody biomass
heating for diesel displacement throughout rural Alaska.
In addition to providing technical training, energy planning
assistance, education, and outreach activities through NREL and its
onsite Project Manager, the Department has supported the state of
Alaska with direct funding under the American Recovery and Reinvestment
Act. Funding has been provided to the State Energy Program ($28
million), Weatherization Assistance ($18.5 million), and Energy
Efficiency and Conservation Block Grants ($12 million to tribes and
$16.5 million to the state of Alaska). Through these formula and
competitive grants, SEP, WAP and EECBG facilitate the adoption of
renewable energy and energy efficiency technologies to address energy
challenges in local communities nation-wide and reap the economic
benefits of energy savings. These programs represent a federal
investment in the ideas and innovations of state and local governments,
empowering communities to design programs that meet their energy needs
while working towards national goals of energy independence and a
transition to clean energy economy. In the FY12 budget proposal, the
programmatic formula would provide Alaska with $1,648,134 for WAP and
$222,000 for SEP.
In addition to funding from the aforementioned state and local
programs, DOE has been active in supporting renewable energy deployment
projects in Alaska in numerous ways, including the following:
1. Fort Yukon/Council of Athabascan Tribal Governments,
biomass development--$1.2 million
2. Haida Corporation, Reynolds Creek Hydroelectric--$1.1
million
3. Kootznoowoo Inc, Thayer Lake Hydroelectric--$1.1 million
4. Chaninik Wind Group, Village energy smart grid and wind-
diesel hybrid systems--$750,000
5. Chickaloon Village, Energy Efficiency and Renewable Energy
feasibility study--$244,000
6. Native Village of Eyak, Wind energy resource assessment--
$248,000
7. Cook Inlet Tribal Council, Weatherization apprenticeships
and Building feasibility-$253,000
8. Central Council of Tlingit and Haida Indians,
Weatherization--$200,000
9. University of Alaska Fairbanks-Alaska Center for Energy
and Power, Geothermal for Pilgrim Hot Springs--$4.6 million
10. University of Alaska Fairbanks-Alaska Center for Energy
and Power, EPSCoR Wind-Diesel Applications Center--$3 million
11. Naknek Electric, Geothermal--$12.4 million
Another DOE-led initiative that is being implemented by both NREL
and the National Energy Technology Laboratory is conversion of US Coast
Guard facility heating from diesel fuel to biomass where available. The
current focus within Alaska has been the USCG Kodiak base, the largest
in the country, as well as bases in Sitka, Juneau, Ketchikan, and
Cordova. This effort, when fully implemented, may provide enough demand
to establish wood pellet markets in southeast and south-central Alaska
from local supply for local consumption. NREL is working with USDA, the
US Forest Service, the Alaska Energy Authority, and private industry on
establishing this wood pellet manufacturing industry in Alaska.
methane hydrates
Question 6. In the 2005 Energy Policy Act, Congress demonstrated
its support for research and development into methane hydrates. In S.
1462, the energy bill approved by this Committee last year, we
reiterated that support with additional funding authorizations. The
President's FY 2012 budget request, however, calls for just $10 million
in methane hydrate research funding. Why isn't the Administration more
supportive of this type of research, especially given the favorable
results of an Alaska North Slope drilling project in 2009 which
demonstrated that hydrates can flow into production? What does DOE hope
to accomplish with the requested level of funding?
Answer. The $10 million request in the Office of Science's Basic
Energy Sciences (BES) program is commensurate with the Administration's
fiscally responsible FY 2012 budget request and supports basic research
associated with methane hydrates. BES funding will support basic
experimental research and advanced simulation on how hydrates are
formed, including the subtle, intermolecular forces that govern the
structure and properties of hydrates; the multi-phase behavior of
hydrate-sediment systems; and the stability of hydrates in the natural
environment.
gasline
Question 7. Do you feel that the federal government has done and is
doing everything it can to encourage a successful open season which
will lead to construction of an Alaska Gas Pipeline project as rapidly
as possible?
Answer. The Federal government is doing all it can to encourage a
successful Open Season. The Federal Coordinator, an independent agency,
has the lead authority for coordination of Federal actions regarding
the development of the Alaska Natural Gas Pipeline and is therefore the
appropriate agency to provide updates on the status of the project. The
Federal Energy Regulatory Commission (FERC) has the lead responsibility
for setting the regulations for the Open Season process. The Department
of Energy has been authorized by Congress to provide a loan guarantee
when a commercial project has been identified, but holds no direct role
in the Open Season process.
strategic petroleum reserve
The Department's budget request assumes a $500 million, non-
emergency sale of SPR oil. To follow up on questions asked during
Tuesday's hearing:
Question 8. Does DOE have any alternative options outside of
selling the oil in Bayou Choctaw Cavern 20?
Answer. The proposed sale would afford operational flexibility in
managing the reserve. No decision has been made about which caverns
will be used to comprise the six million barrels of crude oil to be
sold or the quantity of crude oil to be taken from each cavern. The
Bayou Choctaw Cavern 20 situation is just one example of the need for
operational flexibility in managing the reserve. The 7.5 million barrel
capacity Cavern 20 currently holds 3.2 million barrels-4.3 million
barrels has already been removed and distributed to other SPR caverns
as a precaution. Consequently, many SPR caverns have been overfilled
and may be better candidates from which to comprise the six million
barrels to be sold. There are no other currently available options for
adjusting the volume of oil in the Reserve.
Question 9. Does DOE plan to repurchase an equivalent volume of
oil? If so, when?
Answer. DOE has no plans for repurchase. The purpose of the sale is
to ``free up'' a small amount of space to provide operational
flexibility in managing the reserve. The receipts from the sale will
not be used for the SPR. The receipts from the sale will be deposited
into a general fund receipt account of the Treasury and therefore will
not be available for expenditure by DOE.
Question 10. Does DOE intend to devote the revenues from the sale
of oil to any specific purpose or program, or will those revenues be
returned to the Treasury?
Answer. The 2012 Budget (SPR Petroleum Account appropriation
language) proposes that the funds generated in the sale be deposited in
a general fund receipt account of the Treasury and therefore will not
be available for expenditure by
Question 11. How often is DOE authorized to conduct non-emergency
sales of SPR oil?
Answer. In the absence of Congressional direction, there is no
legal authority under the Energy Policy and Conservation Act (EPCA)
(P.L. 94-163, as amended) for DOE to conduct non-emergency sales of SPR
oil, except through the conduct of a test sale. Test sales or exchanges
of no more than 5 million barrels per test are authorized by section
161(g) of EPCA (42 USC 6241(g)), but there is no statutory restriction
on how often they may be conducted.
In the 1990s, Congress directed non-emergency sales from the SPR
for reasons of budget savings. The President's FY 2012 budget proposes
a non-emergency sale from the SPR for operational reasons related to
the overfilling of several SPR caverns. Implementation of the
President's FY 2012 Budget proposal, requires new statutory authority
as proposed in the SPR legislative language included in the 2012
Budget.
Question 12. Is there a minimum amount of oil in the SPR that must
be maintained in order for DOE to conduct non-emergency sales of oil?
Answer. In the absence of Congressional direction, there is no
legal authority under the Energy Policy and Conservation Act (EPCA)
(P.L. 94-163, as amended) for DOE to conduct non-emergency sales of SPR
oil, except through the conduct of a test sale. Test sales or exchanges
of no more than 5 million barrels per test are authorized by section
161(g) of EPCA (42 USC 6241(g)), but there is no statutory restriction
on how often they may be conducted. There is no statutory limitation
regarding a minimum amount of oil that must be maintained in the
Reserve to conduct a non-emergency sale.
spr + royalty-in-kind authority
Question 13. Has the abolishment of the Royalty-in-Kind program
within the Interior Department had any effect, direct or indirect, on
the statutory mandate for DOE to expand the SPR to one billion barrels?
Answer. No. Prior to the Department of the Interior cancelling the
royalty-in-kind program, the SPR had completed fill to its capacity of
727 million barrels. The President's FY 2011 budget requested
cancellation of $71 million of prior year funds for expansion to one
billion barrels and Congress enacted the request.
Question 14. When does DOE forecast its compliance with the mandate
to expand SPR to one billion barrels?
Answer. The Energy Policy Act of 2005 directed the DOE to expand
the SPR to its authorized level of one billion barrels, as
expeditiously as practical, without incurring excessive cost or
appreciably affecting the price of petroleum products to consumers. The
Administration will review its policy related to 1 billion barrel
expansion.
ultra-deepwater program
Question 15. What is the status of approval of the 2011 Annual Plan
for the Ultra-Deepwater and Unconventional Natural Gas program
authorized in Section 999 of EPACT '05?
Answer. The Unconventional Resources Technology Advisory Committee,
one of two Federal advisory committees required by the Energy Policy
Act of 2005 (EPAct 2005) to review the draft annual plan, provided its
written comments in October 2010. The members of the other Federal
advisory committee, the Ultra-Deepwater Advisory Committee (UDAC) were
appointed in February 2011. The UDAC held its first meeting to begin
its review of the Draft 2011 Annual Plan on February 23, 2011. Written
comments, as required by EPAct 2005, are expected by the end of April
2011. Upon receipt of all written comments, the 2011 Annual Plan will
be made final, transmitted to Congress, and published in the Federal
Register.
The research program established pursuant to EPAct 2005 Section
999A has been refocused to emphasize greater focus on quantification of
risk and environmental sustainability, especially as related to ultra-
deepwater and unconventional natural gas (shale gas).
Question 16. How many projects are currently being managed under
the Section 999 program for ultradeepwater and unconventional natural
gas research and development?
Answer. There are currently 79 active projects being managed under
the Section 999 program for ultra-deepwater and unconventional natural
gas research and development. An additional 8 are anticipated to be
awarded in 2011. To date, 12 projects have been completed for a total
of 99 projects for Fiscal Years 2007-2009.
Question 17. In the wake of the Deepwater Horizon incident, what is
your view of the role of the Section 999 program, as it exists under
current authorities and funding levels, in terms of increasing safety
and well integrity through ultra-deepwater research and development?
Answer. Following the explosion of the Macondo well in the Gulf of
Mexico on April 20, 2011, the Program Consortium was instructed to
refocus the Section 999A Ultra-Deepwater research so that at least 50%
of the funds are invested in quantification of risk and environmental
sustainability. This change will be manifested in the 2010 research
portfolio and the 2011 Annual Plan.
This shift in research emphasis is based on the recognition that
technological improvements in the efficiency and cost-effectiveness of
producing oil and gas from deepwater fields and unconventional
reservoirs, while important, must only be applied when potential
negative environmental impacts are well defined and the appropriate
plans and technologies are in place to either prevent or mitigate these
impacts. While previous Annual Plans have focused primarily (although
not entirely) on technologies focused on efficiency and cost, the
ultra-deepwater projects in 2010 and the annual plan going forward in
2011 will focus on quantifying potential environmental risks and
developing technologies to address them.
Question 18. Has the Sec. 999 program focused on or required
inclusion of safety, well integrity, and environmental sustainability
elements in its work?
Answer. Although all projects included in the program satisfy
certain aspects of safety and environmental sustainability a greater
emphasis on quantification of risk and environmental sustainability has
been placed on projects to be selected as part of the 2010 research
program and solicitations subject to the 2011 Annual Plan. The Program
Consortium was instructed to refocus the Section 999A Ultra-Deepwater
research so that at least 50% of the funds are invested in
quantification of risk and environmental sustainability. This change
will be manifested in the 2010 research portfolio and the 2011 Annual
Plan.
This shift in research emphasis is based on the recognition that
technological improvements in the efficiency and cost-effectiveness of
producing oil and gas from deepwater fields and unconventional
reservoirs, while important, must only be applied when potential
negative environmental impacts are well defined and the appropriate
plans and technologies are in place to either prevent or mitigate these
impacts. While previous Annual Plans have focused primarily (although
not entirely) on technologies focused on efficiency and cost, the
ultra-deepwater projects in 2010 and the annual plan going forward in
2011 will focus on quantifying potential environmental risks and
developing technologies to address them.
Question 19. In the last 4 years the federal government has
invested just over $92 million in the ultradeepwater and unconventional
gas program. How much have public and private partners brought forward
in matching funds during that time?
Answer. For the projects selected in years 2007-2009, a total of
$45.6 million of matching funds have been provided for the $92.8
million of government funds provided for those projects, $11.7 million
for Ultra-Deepwater research, $26.5 million for Unconventional
research, and $7.4 million for Small Producers research.
Question 20. Of the 99 projects the Sec. 999 program has funded,
how many involve universities and how many universities have received
program awards?
Answer. A total of 65 projects involve universities as lead or
partners in 22 states. Of this, a total of 48 awards have been made
directly to universities as the lead. This represents a total of $53.9
million for projects involving universities of which $33.5 million was
awarded directly to universities.
energy efficiency
Question 21. The President's FY 2012 budget request calls for
funding his new Better Buildings Initiative to achieve a 20 percent
improvement in commercial buildings' energy use by 2020. The budget
materials describe this new initiative as ``including many new
components to achieve this goal.'' One such component appears to be for
a $100 million loan guarantee program for universities, schools, and
hospitals, plus an additional $5 million for administrative costs.
The Administration appears to be seeking $100 million in
appropriations to cover the subsidy cost amount, like the Section 1705
loan guarantee program created in the Stimulus bill for renewable
technologies. Q21. The Administration appears to be struggling to
administer the existing Section 1703 (under which the project developer
pays the subsidy costs) and the Section 1705 loan guarantee programs,
as well as the loan guarantee program for Advanced Technology Vehicle
Manufacturing (ATVM). In fact, last Congress, the Department's
implementation was so slow that $3.5 billion of the Section 1705 funds
was taken away from the DOE loan program to pay for ``Cash for
Clunkers'' and State assistance. The ATVM program has issued just one
small conditional loan in the past 10 months and nearly two-thirds of
the program's loan authority remains unused. How can DOE reasonably be
expected to administer yet another loan guarantee program? How much
additional personnel would be needed to handle this new program?
Answer. The Title XVII Loan Program Guarantee was authorized in
2005 and funded in 2007, yet had not issued a single loan until this
Administration. Since the spring of 2009, the Loan Programs has
supported over $40 billion in total government supported financing,
including capitalized interest, in loans and loan guarantees to 42
clean energy projects with total project costs of over $63 billion.
Cumulatively, project sponsors expect these projects to produce nearly
38 million megawatt hours yearly--enough to power over two million
households--and to fund almost 68,000 jobs\1\ across 38 states. LPO
estimates that the existing conditional commitments for projects may
utilize all of our remaining credit subsidy appropriations under the
Section 1705 program.
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\1\ Breakdown by program is as follows (based on Sponsor
estimates): 1703: 5,210 construction, 1,340 permanent; 1705: 16,783
construction, 3,995 permanent; ATVM: 8,200 created, 38,960 saved.
---------------------------------------------------------------------------
DOE anticipates that the $100 million in credit subsidy for a new
``Better Buildings Pilot Loan Guarantee Initiative for Universities,
Schools, and Hospitals'' could support up to $2 billion in loan
guarantees to support energy efficient retrofits, depending on the
exact parameters of the authorizing legislation and governing rules.
The Department looks forward to working with Congress to develop the
elements of a successful program.
Question 22. The President's FY 2012 budget request calls for
funding his new Better Buildings Initiative to achieve a 20 percent
improvement in commercial buildings' energy use by 2020. The budget
materials describe this new initiative as ``including many new
components to achieve this goal.'' One such component appears to be for
a $100 million loan guarantee program for universities, schools, and
hospitals, plus an additional $5 million for administrative costs. The
Administration appears to be seeking $100 million in appropriations to
cover the subsidy cost amount, like the Section 1705 loan guarantee
program created in the Stimulus bill for renewable technologies.
In addition to this new $100 million loan program, the President is
calling for an ``aggressive reform of existing tax and other incentives
for commercial building retrofits and proposing a new competitive grant
program.'' How will these be paid for, beyond the $100 million that the
President is asking Congress to appropriate? Please break down the
costs and the funding.
Answer. The Better Buildings Initiative is a Presidential priority.
It will leverage the lessons learned from other federal and state
programs, as well as years of research and experience in energy
efficiency. This program is part of the Department of Energy's proposed
budget request and program plans for FY2012 which has just been
transmitted to Congress. Specific activities included in the Better
Buildings Initiative including a new tax incentive for commercial
building upgrades, financing programs, competitive grants to state and
local governments who implement innovative approaches to energy
efficiency building codes, regulations and performance standards, and a
challenge to the private sector and universities to make facilities
more energy efficient. Those meeting the challenge would have their
organizations recognized and supported with technical assistance.
Question 23. The President is requesting an almost 50% increase in
funding from FY10 levels for the Weatherization Assistance Program
(WAP). As you know, this program received $5 billion in the American
Recovery and Reinvestment Act (ARRA or Stimulus). I understand there
have been several instances of waste, fraud and abuse. In fact, DOE's
Inspector General has initiated several investigations into the use of
WAP funds under ARRA. It is troublesome, then, that Congress is being
asked to increase funding to this program that clearly has suffered
from lack of oversight.
Has all of the $5 billion in stimulus money for this program been
spent? If not, how much is left? DOE's website shows that the agency
has more than $2.6 billion obligated but still unspent from the 2009
stimulus bill for this program.
Answer. Under the Recovery Act, the Weatherization Program received
$5 billion to provide weatherization services to over 600,000 to low-
income families. These weatherization services include the repair of
heating and cooling systems, electrical systems, and electrical
appliances, while at the same time ensuring health and safety.
According to a 2010 report from Oakridge National Laboratory, families
save an average of $400 a year on their energy bills as a result of the
weatherization program. This is significant given that the total
heating and cooling costs average 10 percent or more of a low-income
family's income per year, compared with just 3 percent for the average
American home.
To date, the weatherization program has paid out over $2.7 billion
(54%), and helped more than 400,000 low-income families nationwide
improve the energy efficiency of their homes and help them save money
on their energy bills. Moreover, in the first quarter of 2011, WAP
funding supported thousands of jobs. Many of these workers are former
construction workers or contractors that were hit hard by the downturn
in the housing market. The weatherization program expects to weatherize
over 600,000 homes by Spring 2012.
Question 24. Please describe actions that DOE will be taking with
regard to the IG's recommendations stemming from these reports.
Answer. The Department of Energy works closely with the Inspector
General on the audit and inspections it carries out. Their work has
been an integral part of the Department's monitoring and oversight
efforts, and we are committed to continuing to work with the Inspector
General (IG) to address any substantive issues that they identify.
Moreover, DOE will continue to work in real-time with the Inspector
General to implement recommendations as the IG report is being written.
Guidance
Based on IG findings and recommendations, Weatherization Assistance
Program (WAP) has reviewed and updated a variety of guidance documents,
including but not limited to monitoring and oversight, grant guidance,
reporting, eligibility provisions, and health and safety measures.
Moreover, WAP also developed new guidance documents based on IG
findings, including but not limited to Davis Bacon, Historic
Preservation, privacy of recipients' services, and policy procedures,
such as call-backs.
Monitoring
In addition to issuing additional guidance on monitoring (amending
Weatherization Program Notice 01-6), we've also worked hard to identify
and resolve risks associated with individual recipients. We used risk
scores for individual Recovery Act recipients to prioritize our
oversight and monitoring efforts. We further established a Recipient
Risk Management System that considers 48 distinct risk indicators to
inform management, procurement, and oversight staff of potential risks
associated with individual Recovery Act recipients and sub-recipients.
As part of this effort, we are also receiving real-time alerts on
potentially problematic developments related to our recipients, which
we share with the Inspector General, as appropriate.
In addition to weekly and monthly desktop reviews with recipients,
Weatherization project officer also conduct frequent site visits
corresponding to the value of the award and risk level. In general,
frequency is as follows:
Grants over $90 Million (Quarterly)
Grants between $90 Million--$40 Million (Three visits)
Grants under $40 Million (Semi-Annual)
Note: More visits may be done depending on specific situation or need
of recipients.
Staff Focused on Targeted Areas
To ensure sufficient level of oversight and outreach with
recipients, Weatherization has hired additional, targeted staff such
as:
Training and Technical Assistance Team
Expanded WAP policy and guidance team
A Buy American specialist
Davis Bacon specialists
Question 25. The budget request notes that this proposed increase
is for ``key activities of weatherization formula grants and
innovations in weatherization within the Weatherization Assistance
Program.'' Given that the WAP has been around for 33 years, what are
these innovations?
Answer. The FY2010 Appropriations Bill's Conference Report*
provided $30 million from within available funds for the development of
a pilot project that would increase the leverage of Federal funding
through the formation of partnerships between the Department and
traditional and/or nontraditional weatherization providers. *(Official
title: ``Conference Report to Accompany H.R. 3183, Report 111-278,'' at
page 105 under Weatherization Assistance).
In order to address this Congressional directive, DOE introduced a
competitive funding opportunity, a new Weatherization Innovative Pilot
Program (WIPP), to select the applications that met these goals of
increased leverage and the formation of new innovative partnerships.
The first round of WIPP grantees included organizations that have not
historically been a part of the Department's Weatherization Assistance
Program, including private companies, non-profit organizations,
universities, city governments, and national partners like Habitat for
Humanity and YouthBuild USA. WIPP projects will help build the local
capacity of new weatherization providers and will allow DOE to
rigorously test the cost-effectiveness of a range of new weatherization
approaches that have the potential to accelerate efforts to build an
efficient and sustainable weatherization and retrofit market. Projects
include:
New technologies, such as solar, efficient hot water
systems, and in-home energy devices, that hold the promise of
increased energy savings and cost-effectiveness
Innovative financing, loans, and revolving funds to increase
leveraging of federal funds
Healthy homes approaches that streamline health
interventions with weatherization and produce better energy and
health outcomes
Volunteer-based national organizations that have legacies of
strong corporate funders and in-kind donations, which both
increase the level of non-federal funds into the program and
decrease direct labor expenses
Additional funding for the WIPP program will help DOE to achieve
the program's goals of leveraging federal grant dollars 3-to-1 with
non-federal funds, attracting new partnerships with both traditional
and non-traditional weatherization providers, and increasing
effectiveness through more efficient delivery of services and higher
energy and dollar savings for clients. http://apps1.eere.energy.gov/
news/progress_alerts.cfm/pa_id=384
See the full list of selected awardees: http://www.eere.energy.gov/
wip/pdfs/grantees_selected_wipp_awards.pdf
Description of 16 funded WIPP Projects, which is generally
indicative of the type of things we would like to fund in 2012: http://
www1.eere.energy.gov/wip/wipp_projects.html
nuclear
Question 26. The budget request calls for $550 million for ARPA-E
plus an additional $100 million for wireless technologies, yet the
COMPETES Reauthorization Act only authorizes ARPA-E at $306 million for
FY2012. I understand all $400 million provided to ARPA-E by the
Recovery Act two years ago has now been obligated and awarded, but
since these programs are forward funded we won't see the results for
several years. Given that it took ARPA-E two years to obligate and
award $400 million, and that was in part due to the timeline required
under the Recovery Act, can ARPA-E really obligate and award $650
million in programs in the next fiscal year?
Answer. ARPA-E is confident in its ability to obligate and award
all of the funds in its budget request in the next fiscal year. ARPA-E
implemented a process for the development and creation of programs that
features extensive technical community engagement, topical workshops, a
three-stage peer review process that allows for rebuttals to reviewer
comments, and rapid contract negotiation, as shown in the figure
below.*
---------------------------------------------------------------------------
* Figure has been retained in committee files.
---------------------------------------------------------------------------
Despite its depth of engagement and multi-stage evaluation, this
model affords a timeline from conception to execution that is greatly
accelerated--typically six to eight months. This allows ARPA-E to
respond rapidly to newly emerging technological discoveries in its
creation of new programs.
ARPA-E's embedded dedicated legal and procurement teams allow it to
achieve a rapid pace of transferring awards from announcement to
signing cooperative agreements--usually about two to three months--a
pace that is uncommon in the public sector. ARPAE successfully
responded to the challenge of awarding Recovery Act funds in just 17
months--with only a fraction of current staffing levels and having to
start a brand new agency from scratch--through the creation of an
innovative process, careful resource allocation, and the efforts of a
bright, determined team.
ARPA-E can now do in one year what previously took seventeen months
because we have fully ramped up and can ``hit the ground running'' with
new funds. The current, expanded ARPA-E team--with its previous
experience of creating and managing the seven existing programs,
awarding and obligating the Recovery Act funds, and establishing
policies and practices--has the capacity to obligate and award the
entire FY2012 appropriated amount on schedule.
Question 27. Section 302 of the Nuclear Waste Policy Act of 1982,
as amended, authorizes the Secretary of Energy to establish a Nuclear
Waste Fund through the collection of fees from the nuclear industry for
the construction of a geologic repository for high-level radioactive
waste and spent nuclear fuel storage. The Act expressly identifies the
Yucca Mountain site as the sole permanent repository to be considered.
The Act also directs the Secretary to propose an adjustment of the fee
if the amount collected is insufficient or in excess of the amount
needed to meet the cost of the construction of the repository. With the
attempted withdrawal of the Yucca Mountain license application and the
proposed termination of the only expressly identified permanent
repository, do you believe that the fees collected and deposited in the
Nuclear Waste Fund are in excess of the amount needed to meet the
repository's costs? Do you believe an adjustment of the fee is in
order?
Answer. The Nuclear Waste Policy Act establishes a fee of one tenth
of a cent per kilowatt-hour of electricity generated and sold that must
be paid by nuclear utilities and deposited in the Nuclear Waste Fund.
The Act also requires that the Secretary of Energy annually review the
adequacy of this fee. If the Secretary determines that either
insufficient or excess funds are being collected, the Secretary must
transmit a proposed fee adjustment to Congress.
The Department completed its most recent annual review of the
adequacy of the Nuclear Waste Fund fee in November 2010. The review
concluded that there is no reasonable basis to conclude that the
current fee is generating either insufficient or excess funds to cover
the costs of the Department's obligation to dispose of the Nation's
high-level nuclear waste and spent nuclear fuel. A copy is available on
the U.S. Department of Energy website at: http://www.gc.energy.gov/
documents/Secretarial_Determination_WasteFee.pdf
Although the Department has determined that a geologic repository
at Yucca Mountain is not a workable option and should be terminated,
the Department has repeatedly affirmed the Government's commitment to
meeting its obligation to dispose of high level waste and spent nuclear
fuel.
The Department is committed to reviewing the fee annually and to
making its review publicly available. If the Department concludes in
the future that either insufficient or excess revenues are being
collected to meet this obligation, the Department will promptly propose
an appropriate adjustment of the fee to Congress.
Question 28. The new Light Water Reactor--Small Modular Reactor
Licensing Technical Support program anticipates a cost of $452 million
over five years. Do you expect this program to run longer than five
years or do you believe two SMR designs will have made it through the
licensing process in that time frame?
Answer. The Department does not expect the program to run longer
than five years. The program is designed to help improve the timeline
for the commercialization and deployment of these relatively mature
technologies and the Department expects that adequate progress will
have been made on the most critical steps of the licensing process in
that time frame. The Department expects that SMR vendors will have
sufficiently learned from interaction with the Nuclear Regulatory
Commission (NRC) and that continued support by DOE will not be
necessary after the five year program.
Question 29. Please provide more detail on the types of
technologies you expect the new Nuclear Energy Enabling Technologies
program to develop and support. Why is it necessary to have a new,
separate program from the Reactor Concepts and Fuel Cycle programs to
achieve these goals?
Answer. The mission of the Nuclear Energy Enabling Technologies
(NEET) program is to conduct research and development to deliver
crosscutting technologies that directly support and enable the Office
of Nuclear Energy's (NE) broad research and development portfolio and
to encourage the development of transformative, ``outside-the-box''
innovations in nuclear energy science and engineering.
The Transformative component of NEET is open to the full range of
nuclear energy technology and is not specific to any on-going mission
activities. It is designed to provide a mechanism for identification
and development of creative, new, emerging technologies via an open,
competitive solicitation process. The effort will support
transformative projects that have the potential for making significant
leaps forward in advanced nuclear technology development in all aspects
of the civilian nuclear energy program.
The NEET program will also conduct crosscutting research and
technology development relevant to the various reactor and fuel cycle
concepts within the scope of NE research and development (R&D) programs
that offer substantially improved economic and safety performance. NEET
will be able to coordinate efforts on common issues and avoid
duplication of efforts in technology development in separate programs.
The NEET program is intended to carry out research that is beyond the
scope of individual NE R&D programs, lead and coordinate research that
is needed by several NE R&D programs, and identify and deliver enabling
technologies to achieve critical steps in technology deployment. The
activities undertaken in this program complement those within the
Reactor Concepts Research Development & Demonstration and the Fuel
Cycle R&D programs by providing a mechanism for pursuing broadly
applicable R&D in areas that may ultimately benefit specific reactor
and/or nuclear fuel concepts. Reactor and fuel cycle designs are
currently limited by technologies at the subsystem and component level,
and NEET research is aimed at providing new options to the system level
designs.
Through coordinated R&D, this program will ensure that resulting
technologies and solutions are scalable to individual reactor and fuel
cycle applications (e.g., development of high-temperature resistant
materials and radiation-hardened electronics, proliferation risk
assessment of different nuclear fuel cycle options, etc.). This R&D
will ultimately result in lower costs for needed capabilities across NE
R&D programs, better use and coordination of expertise and leveraged
facilities across the enterprise, and assurance that the best
technologies are available for nuclear energy deployments when needed.
Examples of the types of technologies expected in NEET crosscutting
areas include the following:
New, innovative reactor materials concepts for fuel cladding
and structural materials well beyond those currently considered
by most industrial interests will be explored to provide alloys
with improved performance over traditional materials. Improved
performance may include a 5- to 10-fold increase in strength,
or increased maximum operating temperature by over 200 Celsius
(C), with a service period of at least 80 years.
Advanced manufacturing technologies that could provide
simplified, standardized, and labor-saving outcomes for
manufacturing and civil works processes (both technologies and
methods) for new nuclear component manufacturing and plant
fabrication will be investigated. For example, concrete
installation is one of the most costly (up to $1 million per
day) and time-consuming aspects of building a new nuclear power
plant. Potentially, the use of high-strength concrete or steel-
concrete composite wall construction could significantly reduce
construction cost and schedules.
Advanced instrumentation and sensors that could: (1) operate
in the temperature regimes and harsh environment (e.g., 1000C
gas environment, liquid metals) that preclude the cross-
compatibility of existing instrumentation, (2) directly measure
primary process parameters that would otherwise be inferred or
measured from a distance with a corresponding loss in precision
and increase in uncertainty, (3) minimize measurement drift
that can support longer intervals between maintenance and
service outages, as envisioned for advanced reactors, and (4)
include electronics that are, or can be made to be, radiation
tolerant due to their proximity to the nuclear reactor core and
back end of nuclear fuel cycle process.
Advanced modeling and simulation tools are being developed
that will provide a greater understanding of the long-term
performance of fuels both in the reactor during operations and
once discharged (useful to regulators, designers, and
operators). For example, the Advanced Multi-Physics (AMP) code
being developed at the Oak Ridge National Laboratory models
fuel at the ``pin'' level in three dimensions with very high
temporal and spatial resolution. The AMP code is presently
being considered for use in the virtual reactor model being
developed by the Energy Innovation Hub for Modeling &
Simulation of Nuclear Reactors.
Question 30. The Office of Electricity proposes a significant
increase to $238.22 million in FY 2012 (+41%). With this proposed
increase in funding, will the Department also examine the potential
impact of regulations, such as those contemplated by EPA, on the
nation's grid reliability? According to news reports you recently told
a renewable energy conference that there will be ``massive'' closures
of coal plants in the United States within the next 5 to 8 years. Do
you believe those closures will have any have any impact on the
reliability of the electrical grid, or the cost of energy paid by
consumers? What role do you believe EPA regulations will play in
provoking those closures?
Answer. The Office of Electricity Delivery and Energy Reliability
is working collaboratively with other Federal agencies, including EPA,
as well as States, and the electric generation industry to evaluate the
potential impact of EPA's proposed regulations. These regulations are
just one of many factors that are expected to lead to an increase in
the number of retirements of existing generation facilities over the
next 3-8 years.
The business decision surrounding if, or when, an electric
generation facility is retired is not easily predicted. There are a
range of factors that are expected to result in coincidental
retirements including age of existing facilities, build out of new
generation, load forecasts, and cost of compliance with environmental
requirements. In addition, this decision making process will be unique
for each utility. For example, the factors considered by a rate-based
vertically integrated utility are quite different than those considered
by merchant facilities. Determining which facilities will retire, and
when, is not possible at this time. Similarly, any impact on the cost
to consumers may only be evaluated when more specific information
becomes available. Any increase in cost would at least partially be
offset by State and Federal energy efficiency programs.
As site-specific retirement information becomes available,
reliability analyses will become possible. These analyses are often
conducted as part of the supporting information when a facility is
proposed for retirement. If reliability issues are identified, a
variety of alternatives are considered. When potential conflicts arise
between achieving timely environmental protection contemplated in EPA's
proposed regulations and maintaining electric reliability, DOE will
work with EPA, States and the appropriate utilities to ensure electric
reliability is maintained.
Question 31. The Office of Electricity proposes a significant
increase to $238.22 million in FY 2012 (+41%). A full $60.8 million is
to be directed to clean energy transmission and reliability. DOE's
budget materials further explain that the Department proposes to
examine system requirements to integrate renewables into the grid. As
you know, FERC recently release a long-awaited study on grid
reliability that was conducted by the Lawrence Berkley Laboratory. How
does DOE's proposed effort differ from what has already been completed
by the Lab?
Answer. On January 20, 2011, FERC issued for public comment a
study, conducted by Lawrence Berkeley National Laboratory (LBNL), which
examined what is known as the frequency response of the bulk power
system. Frequency response measures how the electric system performs in
responding to a sudden loss of generation that could cause reliability
problems such as blackouts.
This report presents a systematic approach to identifying metrics
that are useful for operating a reliable system with increased amounts
of variable renewable generation, building on existing industry
practices for frequency control after unexpected loss of a large amount
of generation. It introduces a set of metrics (or ``tools'') for
measuring the adequacy of frequency response within an interconnection.
These metrics take advantage of new information gathering and
processing capabilities for wide-area situational awareness that DOE is
working with system operators to develop.
The Transmission Reliability and Renewables Integration activities
within the Clean Energy Transmission and Reliability program includes
research that is focused on developing advanced technologies and
applications that enhance real-time operational decision-making by
enabling wide-area measurement and situational awareness. This includes
the information technologies, software programs, and reliability/
analysis platforms (or ``technology tools'') needed by system operators
and reliability coordinators to monitor, track, predict, and respond to
maintain grid reliability. These technologies, for example, could allow
operators to monitor the parameters (or metrics) identified in the LBNL
frequency response report.
reliability
Question 32. Section 202(c) of the Federal Power Act grants the
Department of Energy the authority to order an electric generation
facility to operate in an emergency to preserve the reliability of
electricity service and serve the public interest. Is an electric
generation facility required to operate under this authority if the
operation of the facility violates an environmental law (including but
not limited to, the Clean Air Act, Federal Water Pollution Control Act,
Solid Waste Disposal Act, the Safe Drinking Water Act, Endangered
Species Act, and Comprehensive Environmental Response, Compensation and
Liability Act or analogous laws or regulations promulgated by any
federal state or local authority)?
Answer. The Department is aware of only one instance where there
was a possible conflict between an emergency order issued under FPA
section 202(c) and environmental statutes. That involved Mirant
Corporation and its wholly owned subsidiary, Mirant Potomac River, LLC.
In that instance, DOE worked closely with United States Environmental
Protection Agency (EPA) and state authorities to achieve both
electricity reliability and protection of the environment. Under such
circumstances it is the responsibility of the executive branch to
administer all statutes in a manner that promotes their underlying
policy goals and carefully balances any potential conflicts.
On August 21, 2005, Mirant ceased operation of the Potomac River
Generating Station (Plant) in response to a letter from the Virginia
Department of Environmental Quality (DEQ) requesting that Mirant
undertake such action necessary to ensure protection of human health
and the environment in the area surrounding the Potomac River
Generating Station. In response to Mirant's decision, the District of
Columbia Public Service Commission filed an Emergency Petition and
Complaint requesting the Secretary of Energy to find that an emergency
exists under subsection 202(c) of the FPA and to issue an order
directing Mirant to continue operation of the Plant. The basis for the
petition was that the shutdown of the Plant ``...will have a drastic
and potentially immediate effect on the electric reliability in the
greater Washington, D.C., area and could expose hundreds of thousands
of consumers, agencies of the Federal Government and critical federal
infrastructure to curtailments of electric service, load shedding and,
potentially, blackouts.'' The structure of the electricity transmission
system at that time placed the Plant in a uniquely important position
with regard to maintenance of electric reliability for downtown
Washington.
After extensive investigation and analysis of the electric supply
situation in the Central D.C. area, and in consultation with EPA and
the DEQ, on December 20, 2005, the Secretary of Energy issued DOE Order
No. 202-05-3, pursuant to FPA section 202(c), ordering the limited
operation of the Plant. The order found ``that an emergency exists
because of the reasonable possibility an outage will occur that would
cause a blackout, the number and importance of facilities and
operations in our Nation's Capital that would be potentially affected
by such a blackout, the extended number of hours of any blackout that
might in fact occur, and the fact that the current situation violates
applicable reliability standards.''
In issuing the order, the Secretary was cognizant of the concerns
that were expressed concerning the potential adverse environmental
consequences of operating the Plant, and of the national interest in
attainment of the NAAQS that have been established under the Clean Air
Act. To address those concerns, the order sought to harmonize
environmental protection interests to the extent reasonable and
feasible by ordering Mirant to operate in a manner that provided
reasonable electric reliability, but that also minimized any adverse
environmental consequences from the operation of the Plant.
On June 1, 2006, EPA entered into an Administrative Compliance
Order by Consent (ACO) with Mirant pursuant to the Clean Air Act. The
ACO provided specific operating parameters and procedures for Mirant to
follow in ``Non-Line Outage Situations'' and ``Line Outage
Situations.'' In a June 2, 2006, letter order to Mirant, DOE directed
Mirant to operate the Plant in accordance with the ACO in Non-Line
Outage situations.
On January 31, 2007, the Secretary of Energy issued DOE Order No.
202-07-2, extending the emergency order. The Secretary made two
noteworthy additions to the Ordering Paragraphs contained in the
original December 20, 2005 order. These additions were:
A. During any period in which one or both of the 230 kV lines
serving the Central D.C. area is out of service, whether
planned or unplanned, Mirant will operate the Potomac River
Generating Plant to produce the amount of power (up to its full
capacity) needed to meet demand in the Central D.C. area as
specified by PJM for the duration of the outage.
1. In the event of a planned outage, Potomac River
units will generate that amount of electricity
specified by PJM to meet demand.
2. In the event of an unplanned 230 kV line outage,
Potomac River units will generate that amount of
electricity specified by PJM to meet demand as soon as
possible.
When producing electricity pursuant to this
paragraph, Mirant shall utilize pollution control
equipment and measures to the maximum extent possible
to minimize the magnitude and duration of any
exceedance of the NAAQS. Compliance with the ACO shall
constitute compliance with this requirement.
B. During periods when the two 230 kV lines serving the
Central D.C. area are not out of service, Mirant shall keep as
many units in operation, and shall take all other measures to
reduce the start-up time of units not in operation, for the
purpose of providing electricity reliability, but without
causing or significantly contributing to any exceedance of the
NAAQS or causing serious risk of danger to the Plant or
unreasonable risk to Plant personnel. Pursuant to DOE's June 2,
2006 letter to Mirant, Mirant will operate the Plant in
accordance with paragraph B of Part IV of the ACO, and any
other applicable terms of the ACO.
Thus, the Department in recognizing the ACO and tailoring its order
to avoid to the maximum extent possible any adverse environmental
effects, and EPA in recognizing the vital importance of reliable
electricity service to the Central D.C. area (and the adverse
environmental effects of a blackout) when fashioning the ACO,
demonstrated how the executive reconciled potentially conflicting
statutory goals. The Department's order expired when upgrades to the
regional transmission system made it no longer necessary.
Question 33. If DOE retains such authority, and a generation
facility is required to operate by DOE in conflict with any environment
laws, would the facility operator be subject to civil or criminal
liability?
Answer. As the Department's experience in the Mirant matter
described above demonstrates, the Department believes the appropriate
course to pursue in such a case is to harmonize the working of
applicable federal regulatory regimes when invoking the Department's
authority under section 202(c) of the Federal Power Act. Given the
absence of any provision of section 202(c) of the Federal Power Act
explicitly describing the relationship of its requirements to those
imposed by the other federal statutes referred to in the question,
administering whatever federal regulatory statutes may be applicable to
a given facility in a way that harmonizes potentially differing effects
seems the only sensible way to carry out these laws.
Question 34. As you know, this Committee addressed cyber security
issues last Congress in S.1462, the American Clean Energy Leadership
Act, in which we provided additional authorities to both DOE and FERC.
Other Senate Committees have also been working on the cyber issue but
would prefer to give overarching authority to the Homeland Security
Department. I understand that the Administration prefers a
comprehensive approach to cyber security as opposed to the sector
specific plan we approved in the Energy Committee. Does the
Department's proposed decrease in cyber security funding reflect a
preference by the Administration that cyber security efforts be
concentrated in another Department?
Answer. No. In fact, the Department cannot achieve its mission to
modernize the electric grid without the development and integration of
cyber security solutions to meet the stringent performance requirements
of the mission-critical systems that manage, monitor, and control the
reliable delivery of energy to the nation. The decrease in funding
compared to FY 2010 reflects a one-time allocation for a
Congressionally-directed activity, as well as the successful completion
of several industry-led projects. The FY 2012 request supports the
Department's activities, which are specifically designed to address the
unique cyber security challenges of the energy sector as detailed in
the 2011 ``Roadmap to Secure Energy Delivery Systems''. The 2011
Roadmap is an updated version of the 2006 ``Roadmap to Secure Control
Systems in the Energy Sector'' which has led to the development and
deployment of several critical cyber security solutions, including more
secure supervisory control and data acquisition (SCADA) systems, a
secure SCADA communications protocol to secure data communications
between remote substations and utility control centers, and software
tools to help utilities ensure that SCADA systems and applications are
properly configured against cyber attacks. These tools also help
utilities ensure compliance with the North American Electric
Reliability Corporation cyber security requirements.
While there are a number of public and private sector entities
working on cyber security solutions for traditional IT business and
network systems, these solutions are not appropriate or adequate to
meet the cyber security needs for energy delivery systems for a number
of reasons. Energy delivery systems must be designed to control real-
time physical processes that deliver continuous and reliable power to
support national and economic security. As such, they require security
solutions that meet unique performance requirements and operational
needs. For example, electric control systems must operate 24/7/365 with
extremely high availability; data communications in substations require
time-critical responses of less than 4 milliseconds for protective
relaying; and technologies to provide wide-area situational awareness
for transmission lines require data communications links with time
delays of less than a second. Further, when vulnerabilities are found,
patching the system is difficult and sometimes not possible. Because
system upgrades could cause power outages if not implemented properly,
they are planned weeks or months in advance through pilot
implementations on backup systems before deployment on production
systems. Pre-deployment testing of any security solution or update is
essential to validate system performance. Also, power system sensing
and control devices are widely dispersed across large geographic
regions, and often located in populated areas where they are vulnerable
to physical tampering. Finally, cyber security solutions for the energy
sector must ensure the timely and proper operation of cyber-physical
devices (e.g., opening a digital relay or changing settings on
transformers). Thus, cyber attacks on energy delivery systems can cause
power outages, as well as physical damage to expensive electric grid
components like generators that can take many months to replace. The
Stuxnet worm-designed to attack a specific control system-was
discovered last summer. Stuxnet underscores the seriousness of targeted
cyber attacks on energy control systems, and emphasizes the need for
research that provides cyber security protections tailored to the
unique requirements of the energy sector.
Question 35. In the budget request, the Office of Electricity is
slated for a significant increase of 41.4 percent for $238.22 million
in FY 2012. Within this office, the Research and Development arm is
slated to receive the lion's share at $192.8 million to support
research into smart grid (+$13.5 million), clean energy transmission
(+23.4 million), energy storage (+43.4 million), and cyber security (-
8.9 million). Just this month, the Department announced it was
launching a new Cyber Security Initiative, calling cyber security
``vital to the development of a modern electric grid.'' Why are you
supporting a decrease of funding in this critical area, particularly in
light of DOE's new initiative and given the fact that both Smart Grid
($4.4 billion) and clean energy transmission ($6 billion loan guarantee
program before the $3.5 billion rescission and $20 million for
transmission planning) received substantial Stimulus funding?
Answer. The decrease in funding from FY 2010 reflects a one-time
allocation of funds in 2010 to support the creation of the
congressionally-directed National Electric Sector Cybersecurity
Organization, or NESCO, as well as the successful completion of several
industry-led projects. The FY 2012 request will continue to sustain the
Department's work with the energy sector, academia, and national
laboratories to address the unique cyber security challenges of the
energy sector. As new advanced digital computing and communications
devices are developed and deployed (i.e., Smart Grid) and the threat
continues to evolve, adapt, and become more persistent, it is critical
that industry and government continue to work together to develop and
deploy resilient systems that can survive an intentional cyber event
without loss of critical functions as set forth in the 2011 ``Roadmap
to Secure Energy Delivery Systems.''
Question 36. According to the Administration, the nation already
receives 40 percent of its electricity from clean energy resources by
2035. The White House explained to my staff that to get to this 40
percent figure they're counting nuclear (20%), half of our natural gas
(so 10%), hydropower (7%) and the remaining renewable resources (3%).
With that calculation then, we're really talking about a 40 percent
standard by 2035, correct?
Answer. The Administration believes that the simplest way to define
the clean energy share is to divide total clean generation by total
electricity sales. This leads to the 40% initial share, and it puts the
2035 goal in the context of our current energy system. With this
definition, the President has proposed an 80% share by 2035-40
additional percentage points above the current share.
Question 37. Which agency is best suited to run this new program--
DOE or FERC?
Answer. The administration of a CES program, if enacted by Congress
would require strong support from DOE and FERC as well as other
relevant agencies such as the EPA. The designation of a lead agency is
a policy decision, and one that the Administration looks forward to
working with Congress on.
Question 38. How do you propose figuring out the baseline
calculations for this new mandate? How do you propose treating existing
sources of clean energy?
Answer. Baselines should be calculated using EIA data. The
treatment of existing sources of clean energy is a policy decision, and
one that the Administration looks forward to working with Congress on.
Question 39. How do you envision this new Clean Energy Standard
interacting with the renewable energy mandates already in existence in
29 states plus the District of Columbia?
Answer. A federal CES would be an independent program. As the
Administration envisions the Clean Energy Standard working, there is no
implied interaction or interference with state RPS programs, and states
could continue to operate these programs as appropriate.
smart grid
Question 40. Last Congress, the Stimulus bill provided $4.4 billion
in smart grid funding. The President's budget request calls for even
more money in the smart grid arena ($45 million) plus a new Smart Grid
Innovation Hub. Has all the Smart Grid stimulus funding been dispersed
to date? How much additional funding is needed for the new Innovation
Hub? As you know, FERC has yet to approve interoperability standards
for smart grid. How is the lack of such standards hindering
development?
Answer. All Smart Grid-related stimulus funds were obligated by
September 30, 2010. While it took time as 342 awards were put in place,
the projects, aimed at improving grid reliability and efficiency, are
now in full swing. 97 percent of the funds were competitively awarded,
and resulted in significant private sector investment. Recipients
contributed a cost share of almost $5.6 billion, more than matching the
Federal investment. In contrast to the research and development work
funded by annual appropriations, the Recovery Act-funded primarily
focused on deployment of Smart Grid technologies.
In addition to the Smart Grid R&D activities, the FY 2012 request
includes $20 million for the Smart Grid Technology and Systems Hub for
the first year, with a goal to continue funding research activities for
an additional four years. The Hub will invest in research and
development to address high-level challenges to the modernization of
the grid.
Although the Federal Energy Regulatory Commission (FERC) was
charged in the Energy Independence and Security Act of 2007 with
adopting standards as they deem necessary to advance the Smart Grid,
their exact role in discharging that duty is still evolving. The lack
of such standards directly from FERC, however, has not been a hindrance
to the Smart Grid interoperability and standards work going on in the
Smart Grid Interoperability Panel led by the National Institute of
Standards and Technology. Significant development has taken place on
addressing important gaps, an overarching framework for standards
development, and cyber security, as well as interoperable standards
that are providing guidance and direction for utilities, industry, and
State and local regulators.
renewables
Question 41. The President has proposed an 80 percent standard to
increase deployment of clean energy resources by 2035. Hydropower
currently makes up approximately 7 percent of total electricity
generation and two-thirds of renewable electricity generation. Clearly,
in order to meet the President's goal, increased deployment of
hydropower resources--including conventional, marine and hydrokinetic
and pumped hydro storage--will play a critical role. Yet, DOE's FY 2012
budget proposes a cut to its waterpower program of over 20 percent from
FY 2010 levels to $38.5 million. At the same time, all the other
renewable programs--wind (+60.6%), solar (+87.8%), geothermal (+
135.5%) and biomass (+57.5%)--are slated for substantial increases.
What is the reason for this clear disparity? In light of the
President's ambitious goal, how can you support funding cuts for the
country's leading renewable resource?
Answer. The FY 2012 budget request does not represent lowered
expectations for water power technologies. In fact, the Department of
Energy is optimistic about the opportunities to further develop
emerging marine and hydrokinetic energy technologies and to increase
generation from our nation's hydropower resources. The FY2012 request
builds upon the significant investment the Recovery Act made in
conventional hydropower activities and will advance work to support the
development of cost-competitive water power technologies. The $38.5
million requested for water power research in FY2012 is sufficient to
perform this work and accelerate the market adoption of these
technologies.
The Water Program is completing a comprehensive set of resource
assessments, and undertaking detailed techno-economic assessments of
emerging technologies, which will help us to effectively determine the
opportunities and costs associated with these technologies. These
important analyses will help the Department determine what funding
levels are necessary and appropriate to realize water power's potential
and are a responsible use of taxpayer dollars.
For conventional hydropower, the Department's current goals are to
facilitate the deployment of new sustainable hydropower generating
capacity, including timely and low-cost upgrades at existing
hydroelectric facilities, the powering of non-powered dams and
constructed waterways, and assessing the potential for new small
hydropower deployment. The Department also works with other federal
agencies, such as the Army Corps of Engineers and the Department of the
Interior's Bureau of Reclamation, to support the development of
environmentally sustainable hydropower by increasing energy generation
at federally-owned facilities and exploring opportunities for new
development of low-impact hydropower.
Question 42. If the country is to move toward greater clean and
renewable energy generation, particularly with increased variable
renewable energy generation, then energy storage will be needed. As you
know, pumped hydro storage is a proven, existing, grid-scale energy
storage technology with almost 22,000 MW of installed capacity in the
U.S. and with over 30,000 MW of new projects under consideration.
Pumped hydro storage already provides significant grid reliability
benefits and assists with integration issues throughout the system. The
President's budget contains items for energy storage research and
project deployment. Can you discuss whether and how pumped hydro
storage projects can benefit from these programs? The Department's
budget materials note that DOE will start on new methods for
identifying promising locations for pumped hydro--something I have
called for in my Hydropower Improvement Act. What other initiatives
will the Department pursuing to increase deployment of pumped storage
resources? Will you be examining the FERC licensing process at all?
Answer. The Department's energy storage research efforts support a
diversified storage portfolio with large (compressed air energy storage
and pumped storage hydropower (PSH)) and medium-to-small (batteries,
flywheels, etc.) grid-scale technologies, which operate on various
time-scales and power levels, that will be needed to make the power
system more robust and efficient.
The Department recognizes the value of pumped storage hydropower
and has taken several steps to spur deployment of new PSH in the U.S.
DOE convened a pumped storage technology summit meeting in September
2010, to address issues and barriers related to PSH development.
National and international industry experts, manufacturers, developers,
and other stakeholders from diversified fields relevant to pumped
hydropower were present. This meeting identified several key issues and
outlined prospective actions to advance PSH development through
competitive solicitations to be released in FY2011. Going forward, the
Department will also demonstrate the full value of pumped storage
through improved modeling, which will include the beneficial effect of
PSH on further renewable energy system deployment and effective
integration into the power system. DOE is also evaluating the
complimentary role of PSH with other storage technologies. For example,
DOE, in collaboration with the Bonneville Power Administration, is
engaged in a study to explore the synergies between PSH, battery
storage, and wind forecasting for better integration of wind power on
the grid. DOE also hopes to release a Funding Opportunity Announcement
in FY11 to capture opportunities to cost-effectively increase the
capacity and generation of renewable electricity from conventional
hydropower resources in the United States. Potential areas of support
include investments in sustainable small hydropower, PSH, and
environmental mitigation technologies.
solar
Question 43. The FY 2012 budget request supports an ambitious
program, deemed the SunShot Initiative, to reduce the cost of an
installed solar photovoltaic system to price parity to fossil-based
electricity. The goal is to achieve a dollar-a-watt installed price for
Solar PV electricity before the end of the decade. What is the current
average national installed price for Solar PV? How does that compare to
the average installed price for wind, hydropower, biomass, geothermal,
coal, nuclear, and natural gas? How much does the Administration
estimate this new initiative will cost?
Answer. The goal of the SunShot Initiative is to reduce the total
costs of solar energy systems by about 75 percent so that they are cost
competitive with other forms of energy without subsidies before the end
of the decade. This would equate to an installed cost of approximately
$.05-06 per kilowatt-hour. At this price, DOE believes that solar
energy has the potential to supply 15-18% of U.S. electricity by 2030,
without energy storage. This will increase American economic
competiveness and help the U.S. regain leadership in the global market
for solar energy.
To compare different technologies, one must look at the levelized
cost of energy (LCOE) as this number reflects all cost factors
including capital, financing, taxes, fuel and operating costs.
According to analysis by DOE's Office of Energy Efficiency and
Renewable Energy (EERE), current LCOE for residential photovolatics
(PV) is estimated to be at $0.33; the LCOE of commercial PV is
estimated at $0.28; and the LCOE of utility-scale PV is estimated at
$0.14.
According to analysis by EERE, the LCOE for land-based wind is
estimated at $0.09; small hydropower is estimated at $0.09; and
geothermal (hydrothermal) is estimated at $0.10. Energy Information
Agency data is used for pricing on other technologies.
Meeting the SunShot goal will require investments in research,
development, and demonstration that are closely linked with the efforts
of ARPA-E and the Office of Science (SC). The current FY12 budget
request of $457 million covers the costs of this ambitious program for
EERE, and addresses the competitiveness gap that now exists. The EERE
efforts are supported by an SC request of $8 million in FY 2012 to
support new scientific research focused on understanding the
fundamental mechanisms of the degradation of photovoltaic materials
during use and ARPA-E projects that focus on ``out-of-the-box''
transformational energy research that industry by itself cannot or will
not support due to its high risk. The SunShot Initiative goals will be
reached within the decade.
Question 44. Last Congress, Senator Sanders introduced S. 3460, the
Ten Million Solar Roofs Act, to allow states to use federal loans to
provide rebates, loans and other incentives to consumers to purchase
solar energy systems. How would the Administration's SunShot Initiative
interplay with the Ten Million Solar Roofs Act if that legislation were
enacted?
Answer. The goal of the SunShot program is to reduce the cost of
solar technologies to be competitive with conventional generation
without subsidies by the end of the decade. This would equate to a 75%
reduction in installed cost or approximately $1/WattDC for utility
scale systems. Meeting this goal will require addressing costs due to
permitting, interconnection, and inspection delays; so-called ``soft''
balance-of-system costs that are predominantly due to local and state
regulation. These costs are a significant and rising part of total
system costs, and addressing them is central to SunShot objectives. S.
3460 provides for a competitive grant program to fund activities that
support the purchase and installation of solar technologies at today's
prices which are not yet competitive with commercial power. Preference
for these grants would be provided to States, Indian tribes, and local
governments that have established and maintained, or agreed to commit
to establish and maintain, standards and policies conducive to
distributed generation, including interconnection and net metering.
reverse auction for cellulosic biofuels
Question 45. Through the Biomass and Biorefinery R&D program, the
administration requests $150 million for a reverse auction for
cellulosic biofuels. Many within the industry have called for this
funding, but some observers believe it will have minimal effect on
cellulosic production--that it's more effective at increasing
production from existing plants, rather than helping ensure that plants
are built in the first place. Can you explain how the reverse auction
would work? Where do you project cellulosic biofuel production will be
this year, before the auction, and where do you project it would be
after the auction has been completed? Is this a one-time request, or
does the Department intend to make additional requests in future years?
Answer. The Cellulosic Ethanol Reverse Auction will add a market-
based outlet for cellulosic ethanol demonstration plants. Specifically,
a reverse auction will solicit bids from potential producers of
cellulosic biofuels with a 750% decrease in greenhouse gas emissions.
Those producers submitting the lowest bids would be awarded the
production incentives. This is motivated by our detailed analysis,
which demonstrates that we need to create a strong market signal for
cellulosic ethanol and other advanced biofuels to solidify investment
towards commercialization and meet the RFS targets. The auction will
not increase any biofuels production from current biofuels facilities
producing starch-based ethanol or biodiesel.
The auction will incent the production of cellulosic biofuels,
which are ``new'' products requiring new production facilities. DOE
anticipates it will support additional auctions if the cost benefit
analysis validates the value of continued funding requests.
geothermal
Question 46. The Department proposes to increase funding for
geothermal activities by 135.5 percent to $101.53 million. I've been a
long-supporter of geothermal research and authored Section 635 of the
2007 Energy Independence and Security Act (EISA) that authorized the
U.S. Department of Energy (DOE) to provide grants for the installation
of geothermal projects in high-cost areas nationwide. There are
numerous opportunities for geothermal projects in my home state, as
well as throughout the West. With additional geothermal funds, will the
Department commit to finally funding Section 635 of EISA?
Answer. Following up with Senator Murkowski's staff, DOE confirmed
that the Senator was referring to EISA Section 625, High Cost Region
Geothermal Energy Grant Program.
The DOE Geothermal Technologies Program (GTP) is implementing EISA
Section 625 by including in its Funding Opportunity Announcements
(FOAs) a program policy factor for projects in high electricity cost
regions as an additional consideration in the selection process for
applications that have met merit review standards. High cost regions
have been, and will continue to be, important areas for geothermal
development. This is especially true where the geothermal resource can
offset expensive diesel generators and other high-cost fuels.
The Program currently supports four projects in the State of Alaska
as authorized under Section 625 and other sections of EISA, using
funding appropriated under the Recovery Act. These projects include:
------------------------------------------------------------------------
Awardee Title DOE Funding
------------------------------------------------------------------------
Hattenburg, Dilley, and Linnell, Identifying Fractures $313,858
LLC with Geochemical
Techniques
------------------------------------------------------------------------
University of Alaska Pilgrim Hot $4,274,792
Springs(Innovative
Exploration
Technologies)
------------------------------------------------------------------------
Naknek Electric Association Implementation of a $12,376,568
Demonstration EGS
Project at Naknek,
Alaska
------------------------------------------------------------------------
The Trabits Group Development of an $2,154,238
Improved Cement for
Geothermal Wells
------------------------------------------------------------------------
In FY 2012, the Program will continue to focus on expanding access
to geothermal energy nationwide and include the policy factor for high
electricity cost regions in its FOAs.
critical minerals report and permitting
Question 47. In December of last year, DOE issued an excellent
report on minerals critical to clean energy. That report lays out a
great deal of work that must be done to re-establish recycling and
production capabilities here in the United States. Some of that work,
however, falls outside the jurisdiction of DOE.
Focused on the length of time it takes to permit new, domestic
mines. The DOE report notes that the U.S. ranks dead last in this
category worldwide, and that it can take up to a decade to obtain
approval in the United States but only 1-2 years in Australia, for
example. We absolutely must protect the environment, but I believe that
goal is best met through competent implementation of the laws we have
on the books--not by delaying projects, stranding private capital, and
hoping domestic mineral development efforts are abandoned. Those
tactics are short-sighted, counterproductive, and ultimately result in
similar mines operating in areas of the world with far less stringent
environmental protections.
The DOE is scheduled to release an update of this report by the end
of 2011. Is it possible to have that version jointly written by DOE and
the Interior Department, with specific steps laid out that DOI not only
can take, but will take, to address these permitting deficiencies?
Answer. DOE's 2010 Critical Materials Strategy highlighted three
pillars to address the challenges associated with critical materials in
the clean energy economy. We anticipate that the updated 2011 report
will expand on the discussion of these three pillars.
First, substitutes must be developed. Research leading to material
and technology substitutes improves flexibility to meet the material
demands of the clean energy economy. Second, recycling, reuse and more
efficient use can significantly lower world demand for newly extracted
materials. Research into recycling processes coupled with well-designed
policies will help make recycling economically viable over time.
Finally, diversified global supply chains are essential. To manage
supply risk, multiple sources of material are required. This means
encouraging other nations to expedite alternativesupplies and exploring
other potential sources of material (such as existing mine tailings or
coal ash) in addition to facilitating environmentally sound extraction
and processing here in the United States.
Within this larger context, we do intend to discuss domestic
production of rare earths in our 2011 report. Production within the
United States is important for at least two reasons. First, the United
States' considerable reserves of some critical materials could add
significantly to total global production and to greater diversity in
the global supply of these materials. Second, U.S. technology and best
practices developed during mine operations can help promote safe and
responsible mining in other countries, further contributing to supply
diversity and the sustainable development of resources. With regard to
mining in the United States, it is important to point out that permits
are not the only requirements that can extend the time required to open
a mine. The substantial capital investment required for rare earth mine
development can also lead to delay.
DOE will work with interagency colleagues (including DOI, USDA,
EPA) whereappropriate in the development of the updated 2011 report and
will recognize the significant role that DOI plays in domestic natural
resource management.
loan guarantees
Question 48. When the money under Section 1705 of the Loan
Guarantee Program runs out, do you view Section 1703 as conducive to
helping smaller renewable energy technologies?
Answer. We are currently focused on ensuring that the Section 1705
program draws to a successful close. Once that program ends, we look
forward to using existing authorities including Section 1703, to
promote commercial deployment of innovative renewable energy
technologies.
hydrogen/fuel cells
Question 49. Generally, please describe the advances that have been
made in hydrogen and fuel cell technologies over the past 15 years.
Please include a description of how costs have come down, how
efficiency has increased, and any role the federal government has had
in those developments.
Answer. Hydrogen and fuel cell technologies have made significant
advances over the last 10 to 15 years (in cost, durability, efficiency,
platinum loading, etc.), due in large part to funding provided by the
federal government. For example, DOE-funded research and development
(R&D) has, in separate projects:
Reduced the cost of automotive fuel cells by more than 80%
since 2002, from $275/kW to $51/kW (projected for high volume
manufacturing)\2\
---------------------------------------------------------------------------
\2\ U.S. DOE Hydrogen Program Record 10004, http://
www.hydrogen.energy.gov/pdfs/10004_fuel_cell_cost.pdf; costs are based
on projections to high-volume manufacturing (500,000 units/ year)
---------------------------------------------------------------------------
Contributed to a more than order of magnitude reduction in
platinum loading (from 4 mg/cm2 to less than 0.2 mg/
cm2), which corresponds to reducing the amount of
platinum in a typical fuel cell electric vehicle from more than
300 grams to less than 20 grams\1\, \3\
---------------------------------------------------------------------------
\3\ See for example, Ian Raistrick, U.S. Patent 4876115 (1989),
``Electrode assembly for use in a solid polymer electrolyte fuel cell''
(www.freepatentsonline.com/4876115.html)
---------------------------------------------------------------------------
Enabled significant reductions in the cost of high
temperature stationary fuel cells; for example from roughly
$20,000/kW in 1996 to about $4,000/kW in 2010\4\, \5\
---------------------------------------------------------------------------
\4\ `International Status of Molten Carbonate Fuel Cell (MCFC)
Technology, R. Bove, A. Moreno, S. McPhail, JRC Scientific and
Technical Reports (2008)
\5\ `US DOE MCFC and PAFC R&D Workshop Summary Report (2010);
'Molten Carbonate and Phosphoric Acid Stationary Fuel Cells: Overview
and Gap Analysis'', Technical Report NREL/TP-560-49072 (2010)
---------------------------------------------------------------------------
Increased fuel cell efficiencies by more than 30% at both
higher current densities and lower platinum loadings, from
roughly 42% in 1999\6\ to 55% in 2010\7\
---------------------------------------------------------------------------
\6\ Mahlon S. Wilson et al., ``PEMFC Stacks for Power Generation,''
in: Proceedings of the 1999 U.S DOE Hydrogen Program Review, http://
www1.eere.energy.gov/hydrogenandfuelcells/pdfs/26938aa.pdf
\7\ M. K. Debe et al., ``Advanced Cathode Catalysts and Supports
for PEM Fuel Cells,'' Mark K. Debe et al., ``Advanced Cathode Catalysts
and Supports for PEM Fuel Cells,'' in: FY 2010 Progress Report for the
DOE Hydrogen Program, U.S. Department of Energy, Washington, DC, 2010,
pp. 790. http://www.hydrogen.energy.gov/pdfs/progress10/v_e_1_debe.pdf
---------------------------------------------------------------------------
Reduced the cost of electrolyzer stacks by more than 80%
over the last decade, from more than $2,500/kW to roughly $460/
kW when projected at high volumes\8\
---------------------------------------------------------------------------
\8\ M. Hamdan, ``Low cost, high pressure hydrogen generator'', DOE
Annual Merit Review presentation, 2008, http://www.hydrogen.energy.gov/
pdfs/review08/pd_10_hamden.pdf
---------------------------------------------------------------------------
Demonstrated 152 fuel cell electric vehicles and 24 hydrogen
stations, achieving 2.8 million miles, up to 59% efficiency
(more than twice the efficiency of conventional gasoline
engines), and a driving range of more than 250 miles;\9\ and
independently validated an additional vehicle to be capable of
430 miles on a single fill of hydrogen\10\
---------------------------------------------------------------------------
\9\ K. Wipke, et al., ``Controlled Hydrogen Fleet and
Infrastructure Analysis,'' 2010 Annual Merit Review Proceedings, 2010,
www.hydrogen.energy.gov/pdfs/review10/tv001_wipke_2010_o_web.pdf.
\10\ K. Wipke, et al., ``Evaluation of Range Estimates for Toyota
FCHV-adv Under Open Road Driving Conditions,'' Sandia National
Laboratories and the National Renewable Energy Laboratory, August 2010,
http://www.nrel.gov/hydrogen/pdfs/toyota_fchv-
adv_range_verification.pdf
---------------------------------------------------------------------------
More than doubled the durability of fuel cells,
demonstrating the ability to achieve 2,500 hours (75,000 miles)
of durability in vehicles on the road with less than 10%
degradation\8\
Reduced the cost of producing hydrogen from a number of
pathways, such as reducing the cost of hydrogen production from
distributed natural gas from $5.00 per gallon gasoline
equivalent (gge) in 2002 to $3.00/gge in 2005.\11\
---------------------------------------------------------------------------
\11\ Distributed Hydrogen Production from Natural Gas, Independent
Review, October, 2006, http://hydrogen.energy.gov/pdfs/40382.pdf; and
Hydrogen Program Record # 5035, ``Cost Analysis of Hydrogen Production
from Natural Gas, 2003--2005,'' http://hydrogen.energy.gov/pdfs/
5035_cost_analysis_production.pdf.
The R&D efforts of the Department's Fuel Cell Technologies Program
have resulted in nearly 200 patents, 30 products becoming commercially
available, and industry currently pursuing development of more than 50
emerging technologies.\12\ These R&D gains have directly enabled
companies such as Proton OnSite to sell more than 1,400 electrolyzers,
Quantum Technologies to sell more than 2,000 hydrogen storage tanks,
and 3M manufacture more than 800,000 fuel cell membrane electrode
assemblies to date.
---------------------------------------------------------------------------
\12\ Pathways to Commercial Success: Technologies and Products
Supported by the Fuel Cell Technologies Program, 2010, http://
www1.eere.energy.gov/hydrogenandfuelcells/pdfs/pathways.pdf
---------------------------------------------------------------------------
Question 50. Has the hydrogen and fuel cell program at DOE
generally met the targets established for it?
Answer. DOE's hydrogen and fuel cells programs have generally met
their targets and milestones. Past accomplishments include:
Reduced the cost of automotive fuel cells, projected at high
volumes, by 30% since 2008 and 80% since 2002 (from $275/kW in
2002 to $51/kW in 2010)\13\
---------------------------------------------------------------------------
\13\ DOE Program Record 10004, http://www.hydrogen.energy.gov/pdfs/
10004_fuel_cell_cost.pdf
---------------------------------------------------------------------------
Demonstrated improved durability of fuel cell systems in
vehicles operating under real-world conditions from 950 hours
in 2006 to 2,500 hours (approximately 75,000 miles), which
exceeds the 2009 target of 2,000 hours\14\
---------------------------------------------------------------------------
\14\ K. Wipke, et al., ``Controlled Hydrogen Fleet and
Infrastructure Analysis,'' 2010 Annual Merit Review Proceedings, 2010,
www.hydrogen.energy.gov/pdfs/review10/tv001_wipke_2010_o_web.pdf.
---------------------------------------------------------------------------
Developed a non-platinum group metal catalyst with mass-
transport corrected activity exceeding the DOE 2010 target of
130 Amps/cm3 at 0.8 volts\15\
---------------------------------------------------------------------------
\15\ P. Zelenay, ``Advanced Cathode Catalysts,'' 2010 Annual Merit
Review Proceedings, 2010, http://www.hydrogen.energy.gov/pdfs/review10/
fc005_zelenay_2010_o_web.pdf.
---------------------------------------------------------------------------
Developed a 5- to 10-kW solid oxide fuel cell system for
combined heat and power applications, with a 24% increase in
system power density, which enabled a 33% reduction in stack
volume and a 15% reduction in stack weight;\16\ this system's
high volume cost has been projected to be $729/kW, which
surpasses the 2011 target of $750/kW
---------------------------------------------------------------------------
\16\ ``Development of a Low Cost 3-10 kW Tubular SOFC Power
System,'' 2010 DOE Hydrogen Program Annual Progress Report, http://
hydrogen.energy.gov/pdfs/progress10/v_g_2_bessette.pdf.
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Reduced the modeled cost of hydrogen production from natural
gas at high volume, meeting the 2005 target of a gasoline-
competitive price of $3.00/gallon of gasoline equivalent\17\
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\17\ Distributed Hydrogen Production from Natural Gas, Independent
Review, October, 2006, http://hydrogen.energy.gov/pdfs/40382.pdf; All
production costs are based on projections to high-volume production;
centralized production costs do not include delivery and station costs.
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Reduced the cost of producing hydrogen through several
production pathways, including distributed electrolysis
($4.90--$5.70/gge) and centralized electrolysis from wind
($2.70--$3.50/gge)\18\
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\18\ Current (2009) State-of-the-Art Hydrogen Production Cost
Estimate Using Water Electrolysis, NREL, September 2009, http://
hydrogen.energy.gov/pdfs/46676.pdf.
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Improved hydrogen-from-coal technologies-hydrogen flux rates
of greater than 400 scfh/ft\2\ have been observed for best
alloy membranes, and baseline alloy membranes show stable
performance for 200 scfh/ft\2\ during lifetime reactor testing,
meeting the Program's 2010 technical targets for flux\19\
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\19\ S. Dillich, ``Hydrogen Production,'' 2010 Annual Merit Review
Proceedings, 2010, www.hydrogen.energy.gov/pdfs/review10/
pd00a_dillich_2010_o_web.pdf
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Operated integrated laboratory-scale, hydrogen from nuclear
power, high-temperature electrolysis unit for 45 days achieving
5,650 liters per hour peak output at 12 kWe input\20\
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\20\ S. Herring, ``FY 2009 Laboratory-Scale High Temperature
Electrolysis System,'' 2009 Annual Progress Report, http://
hydrogen.energy.gov/pdfs/review09/pd_14_herring.pdf.
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Reduced the projected cost of hydrogen delivery by achieving
a 30% reduction in projected tube trailer costs, 20% reduction
in projected pipeline costs, and a 15% reduction in projected
liquid hydrogen costs\21\
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\21\ R. Farmer, ``Fuel Cell Technologies Program Overview,'' 2010
Annual Merit Review Proceedings, 2010, www.hydrogen.energy.gov/pdfs/
review10/pln005_farmer_2010_o_web.pdf.
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Identified several promising new materials for high-
capacity, low-pressure, on-board hydrogen storage systems,
which have provided more than 50 percent improvement in storage
capacity since 2004, with some materials achieving nearly 10
percent material-based capacity by weight; R&D conducted to
modify the performance characteristics of these materials has
demonstrated potential for room temperature storage in sorbent
materials (which would normally require cryogenic temperatures)
and has increased the rates at which hydrogen is released from
materials (including increasing the release rate from one
material by a factor of 60 For the amount of this material that
stores roughly 5 kg of hydrogen, the rate increase was from
0.02 grams of hydrogen per second to approximately 1.4 grams of
hydrogen per second, close to the 2015 and Ultimate Full Fleet
system target rate of 1.6 grams of hydrogen per second for an
80 kilowatt automotive fuel cell system.\22\, \23\, \24\
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\22\ L. Simpson, ``Overview of the DOE Hydrogen Sorption Center of
Excellence'' 2010 Annual Merit Review Proceedings, 2010,
www.hydrogen.energy.gov/pdfs/review10/st014_simpson_2010_o_web.pdf.
\23\ http://www.hydrogen.energy.gov/pdfs/5037_h2_storage.pdf
\24\ http://www.hydrogen.energy.gov/pdfs/
9014_hydrogen_storage_materials.pdf
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Developed and demonstrated a novel ``cryo-compressed'' tank
concept, achieving system gravimetric capacity of 5.4 percent
by weight (wt %), which exceeds the Program's 2010 system
target of 4.5 wt %, and a volumetric system capacity of
approximately 31 g/L\25\
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\25\ ``Hydrogen Storage Sub-Program Overview,'' 2007 Annual
Progress Report, DOE Hydrogen Program, 2007, p. 337,
www.hydrogen.energy.gov/pdfs/progress07/iv_0_introduction.pdf.
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Reduced the cost of gas diffusion layers in one project by
more than 60% through improved materials and manufacturing
processes\26\
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\26\ J. Morgan, ``Reduction in Fabrication Costs of Gas Diffusion
Layers,'' 2010 Annual Merit Review Proceedings, 2010,
www.hydrogen.energy.gov/pdfs/review10/mn002_morgan_2010_o_web.pdf.
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Deployed 152 fuel cell vehicles and 24 hydrogen fueling
stations to validate R&D advances under real world conditions-
these vehicles have traveled over 2.8 million miles and the
fueling stations have produced or dispensed over 150,000 kg of
hydrogen. The Program validated the status of these
technologies, including:
--Vehicular fuel cell efficiency of up to 59 percent
--Vehicular fuel cell system durability of 2,500 hours (nearly
75,000 miles), with less than 10% degradation
--Vehicle range of more than 250 miles between refueling\27\
(another vehicle, which is not part of the Program's
demonstration activities, was independently validated to be
capable of 430 miles on a single fill of hydrogen)\28\
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\27\ K. Wipke, et al., ``Controlled Hydrogen Fleet and
Infrastructure Analysis,'' 2010 Annual Merit Review Proceedings, 2010,
www.hydrogen.energy.gov/pdfs/review10/tv001_wipke_2010_o_web.pdf.
\28\ K. Wipke, et al., ``Evaluation of Range Estimates for Toyota
FCHV-adv Under Open Road Driving Conditions,'' Sandia National
Laboratories and the National Renewable Energy Laboratory, August 2010,
http://www.nrel.gov/hydrogen/pdfs/toyota_fchv-
adv_range_verification.pdf
Developed online resources to disseminate hydrogen safety
information and facilitate the process of permitting hydrogen
installations, including: The Hydrogen Safety Best Practices
Manual, the Technical Reference on Hydrogen Compatibility of
Materials Manual, the Regulators' Guide to Permitting Hydrogen
Technologies, the Hydrogen Safety Bibliographic Database, the
Hydrogen Incidents and Lessons Learned Database, and the
Permitting Hydrogen Facilities Compendium
Launched the ``Increase Your H2IQ Public Information
Program''\29\ which includes radio spots, podcasts, and print
materials; and disseminated hydrogen and fuel cell course
materials to over 8,000 middle school and high school
teachers,\30\ and developed 25 university courses and
curriculum modules.
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\29\ ``Increase Your H2IQ,'' www1.eere.energy.gov/
hydrogenandfuelcells/education/h2iq.html.
\30\ M. Spruill, ``H2 Educate! Hydrogen Education for Middle
Schools,'' 2010 Annual Merit Review Proceedings, June 2010, http://
hydrogen.energy.gov/pdfs/review10/ed017_spruill_2010_p_web.pdf.
More work needs to be done to advance the development and use of
these technologies in the marketplace. The President's FY2012 Budget
request for Hydrogen and Fuel Cell Technologies will support activities
that address a variety of near-, mid- and longer-term applications and
technologies. For example, in FY 2012, fuel cell R&D will focus on
achieving a catalyst specific power of 5.7 kW per gram of platinum
group metal in 2012 compared to 2.8 kW per gram in 2008.
Question 51. Has the hydrogen and fuel cell program at DOE been
successful in attracting private investment in these areas?
Answer. The Department's Fuel Cell Technologies program has been
successful in attracting private investments for R&D and demonstration
activities. Awards made by the program require at least 20% cost share
from non-federal sources for applied research and development projects
and at least 50% cost share for demonstration activities. The overall
cost share for the program in Fiscal Year 2010 was 25%, resulting in
$46 million of leveraged funds. In addition, the program provided $43
million for the deployment of up to 1,000 fuel cells under the Recovery
Act of 2009, which was matched by an additional $54 million by
industry. In fact, one company receiving Recovery Act Funding ordered
100 additional fuel cell forklift trucks funded 100% privately.
In one major demonstration project with energy companies and
automobile companies, the Department spent $135 million since 2005,
which was matched with an average of more than 50% cost share by
industry, bringing the total direct private investment to $152 million.
In addition to direct private investment as cost share for DOE
funded projects, the research and development efforts of DOE's Fuel
Cell Technologies Program have resulted in significant industry
investment through nearly 200 patents developed, 30 products brought to
commercial availability, and current industry development of more than
50 emerging technologies.\31\
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\31\ http://www1.eere.energy.gov/hydrogenandfuelcells/pdfs/
pathways.pdf
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Question 52. Where does the United States rank globally--especially
compared to Europe and Asia--in the development of fuel cell and
hydrogen technologies?
Answer. The United States continues to lead in the development of
fuel cell and hydrogen technologies. Department of Energy funding has
already enabled fuel cell cost reductions of more than 80% since 2002
and 30% since 2008;\32\ and continues to focus on research and
development to further improve technology and enable domestic
leadership. The Department has invested more than $2 billion over the
last decade in fuel cell and hydrogen technologies.\2\, \3\ Europe and
Asia are planning similar levels of investment through 2016, focused on
deployment and demonstration of fuel cells and related
infrastructure.\4\
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\32\ http://www.hydrogen.energy.gov/pdfs/10004_fuel_cell_cost.pdf
\2\ DOE Hydrogen Program Budget,'' http://hydrogen.energy.gov/
budget.html
\3\ Dr. Shailesh D. Vora, ``Office of Fossil Energy Fuel Cell
Program-Solid State Energy Conversion Alliance (SECA): Clean, Economic
Energy for a Carbon Constrained World,'' National Energy Technology
Laboratory, July 2010, www.netl.doe.gov/publications/proceedings/10/
seca/Presentations/Vora%20_Presentation.pdf.
\4\ http://iphe.net/docs/Resources/
IPHE_FINAL_SON_press_quality.pdf)
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One external estimate indicates that there are more than 630 active
companies and laboratories in 47 states involved in fuel cell and
related fuels industry, investing an estimated $1B a year.\5\ According
to a 2010 report global investments in fuel cell companies (in venture
capital and private equity) grew from $155 million in 2007 to $242
million in 2009.\6\ Out of the top ten venture capital and private
equity investors in hydrogen and fuel cell technologies worldwide, the
highest cumulative investment over the last decade ($825 million) was
from the United States.\6\
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\5\ http://www.fuelcells.org/StateoftheStates.pdf
\6\ http://www1.eere.energy.gov/hydrogenandfuelcells/pdfs/49492.pdf
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Question 53. Under the Department's FY 2012 request, how much
funding would be applied to hydrogen and fuel cell technologies, and
how much funding would be applied to electrification-related
technologies?
Answer. Under the FY12 Budget request, the Hydrogen and Fuel Cell
Technologies Program would receive a total of $100,450,000. The budget
request also includes $433.5 million for electrification related
technologies through the Vehicle Technologies Program.
Question 54. Secretary Chu stated that funding for hydrogen and
fuel cell technologies is being slashed because the Department intends
to ``focus on technologies deployable at large scale in the near
term.'' At least four major manufacturers--Honda, Toyota, GM, and
Daimler--are currently working on fuel cell vehicles, however, and many
expect their cars to be commercially available by 2015. Could cutting
funding for this program--and putting more money into electric vehicles
instead--send the wrong signal and have a chilling effect on future
investments into hydrogen and fuel cell technologies?
Answer. The Department's strategy is to sustain a balanced research
and development (R&D) portfolio, with emphasis on nearer-term
priorities, such as batteries, advanced vehicle technologies, and
technologies for renewable power and energy efficiency. Fuel cell
electric vehicles (FCEVs) are still part of the portfolio of options
under development. DOE's funding for battery R&D will also be
beneficial for fuel cell electric vehicles (FCEVs) which rely on
batteries in addition to fuel cells.
The Department will continue its critical efforts in hydrogen and
fuel cell R&D, which have already reduced the cost of fuel cells by
more than 30% since 2008 and 80% since 2002.\33\ DOE's hydrogen and
fuel cell program has also resulted in approximately 200 patents, 30
products becoming commercially available, and industry currently
pursuing development of more than 50 emerging technologies.\34\ The
FY12 budget sustains DOE's core R&D efforts which will continue to
advance the technologies and improve the likelihood of a successful
rollout by automobile manufacturers in the coming years.
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\33\ 33 http://hydrogen.energy.gov/pdfs/10004_fuel_cell_cost.pdf
\34\ http://www1.eere.energy.gov/hydrogenandfuelcells/pdfs/
pathways.pdf
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president's goal for electric vehicles
Question 55. What percentage of the overall vehicle fleet would 1
million electric vehicles represent in 2015?
Answer. According to projections in the Energy Information
Administration's Annual Energy Outlook 2011, one million plug-in
vehicles would represent 0.42% of the U.S. light-duty vehicle fleet in
2015. However, it is important to note that the one million vehicles
initiative is considered a milestone for growth of the advanced
technology vehicle market, rather than an end point. Significant
additional market penetration is required to fully address petroleum
consumption and greenhouse gas reductions across the nation's vehicle
fleet.
Question 56. How much oil consumption would 1 million electric
vehicles displace per year?
Answer. The Department of Energy's Vehicle Technologies Program
estimates that one million electric-drive vehicles would save 11.5
million barrels in 2015. This estimate compares the fuel consumption of
one million electric-drive vehicles to one million conventional
vehicles in 2015 and assumes the electric-drive vehicles are a 50-50
mix of batteryelectric vehicles and plug-in hybrid electric
vehicles\35\. Additionally, it is important to note that one million
electric-drive vehicles is only a small percentage of the nation's
vehicle fleet (currently over 240 million vehicles) and represents a
milestone for growth of the advanced technology vehicle market, rather
than an end point. Significant additional electric-drive vehicle market
penetration in the coming decades would result in significant
additional oil savings.
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\35\ 2015 stock vehicle listed as 22 miles per gallon in the 2011
Energy Information Agency Annual Energy Outlook (table 59), plug-in
hybrid assumed to have a 40 mile all-electric range.
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Question 57. What is the total amount of federal subsidy and
outlay--including all spending at DOE, the proposed communities
deployment program, the per-vehicle tax credits, loan programs, and
other federal assistance--that those 1 million electric vehicles are
projected to receive?
Answer. Aside from the $7,500 tax credit, the first one million
electric vehicles sold will not receive Federal funds. Department of
Energy funds are not specifically targeted to subsidize the first
million vehicles. However, the Department's vehicle-related programs,
such as activities funded through the American Recovery and
Reinvestment Act, the Vehicle Technologies Program, and the Advanced
Technology Vehicle Manufacturing Loan Program, support advanced vehicle
technology development, demonstration, and commercial deployment. These
efforts focus on a broad range of technologies including not only
batteries and power electronics needed for electric-drive vehicles but
also advanced combustion, materials technologies, and fuels
technologies that support the transformation of the nation's entire 240
million vehicle fleet. Electric drive R&D funds are not solely focused
on reaching the 1 million vehicle goal; instead R&D is focused on
removing technical barriers to broad market acceptance.
vehicle techologies program
Question 58. In recent years, light duty vehicles have received far
more funding from this program than have medium-and heavy-duty trucks.
Please provide a breakdown of funding for the Fiscal Year 2012 request.
How much funding would light-duty vehicles receive? How much funding
would heavy-duty vehicles receive?
Answer. With the President's fiscal year (FY) 2012 budget request
of $588 million, the Department of Energy's Vehicle Technologies
Program plans to continue its support of a broad range of advanced
vehicle technologies including electric drive, advanced combustion,
fuels, and materials technologies that are applicable to light-,
medium-, and heavy-duty vehicles. Of the total request amount, $200
million would support a new competitive grant program to help
communities accelerate the deployment of electric vehicles and electric
charging infrastructure. The remaining $388 million would support work
specifically related to light, medium, and heavy-duty vehicles, as well
as work that crosscuts vehicle classes, including enabling technologies
and outreach, deployment, and analysis activities.
The precise division of FY 2012 funds for work supporting different
vehicle classes will depend on the selection of projects under a
recently closed FY 2011 solicitation and new solicitations planned for
FY 2012. It is important to note that the program's support of light-
duty vehicle technologies generally reflects their significant
contribution to highway transportation energy use, compared to other
vehicle classes: light-duty vehicles account for 76% and heavy trucks
account for 19% of U.S. highway transportation energy use (buses and
medium trucks account for the remaining 5%).
Question 59. Will natural gas vehicle technologies receive any
funding through this year's Vehicle Technology Program request, or any
other program within the Department?
Answer. The Vehicle Technologies Program (VTP) has no plans to fund
additional work projects on natural gas engines in fiscal year (FY)
2012 or FY 2011. In FY 2010, VTP awarded $5 million in new projects for
work on natural gas engine and vehicle platform integration and this
work will continue during the next several years. These funds are being
partly matched by the California Energy Commission and the California
South Coast Air Quality Management District for a total of more than
$12 million, in addition to recipient cost share.
ev community deployment program
Question 60. The utility NRG Energy has announced it will deploy
electric vehicle charging stations in Dallas and Houston using its own
money, and is considering expanding to other markets in the near
future. A lot of companies--from the Best Buys of the world to
Walgreens--seem to be realizing that they have an economic incentive to
install chargers to help draw in customers.
Given that most consumers are expected to charge their vehicles at
home or at work, how necessary is it for the federal government to
provide significant additional funding--beyond the existing tax
credit--for public charging infrastructure?
Answer. Although it is anticipated that consumers will most often
charge their plug-in electric vehicles at home or at work, it is
critical that adequate public charging infrastructure exist in order to
promote consumer acceptance of grid-connected vehicles. The presence of
this infrastructure will alleviate concerns over range-anxiety,
positively impacting the number of consumers who consider purchasing
electric-drive vehicles. Additionally, public charging infrastructure
will expand the practical operating area of electric vehicles, allowing
the benefits to be realized more broadly than with residential and
workplace charging alone. Adequate public charging infrastructure is a
key enabler for the adoption of grid-connected vehicles, and federal
funding to support deployment will greatly accelerate the transition of
our nation's vehicle fleet away from its reliance on petroleum. While
commercial entities may establish some charging infrastructure,
government should work to leverage those activities.
Question 61. How would communities be selected to receive grants
under the Department's proposed program?
Answer. Communities would be selected through an open and
competitive process and selection criteria would be included in the
Funding Opportunity Announcement, which will be publicly available.
While the specific selection criteria have not been finalized, we
envision the following factors as being key to a successful
application:
Does the community have credible plans to overcome
permitting barriers?
Has the community engaged the right partners and key
stakeholders to be successful?
Has the community proposed innovative incentives to promote
adoption?
How is the community using local and private funds to highly
leverage the available Federal funds?
Does the total number of charging points proposed represent
a very high value for the funding?
Question 62. How will you prevent this program from crowding out
investment, and replacing private dollars with federal funding?
Answer. This program would not crowd out investment and replace
private dollars with Federal funding; rather, it would highly leverage
non-Federal funds and encourage stakeholder involvement and investment
at the local level. Among the considerations for selecting communities
for award would be the way in which they use local and private funds to
highly leverage the available Federal funding.
atvm (advanced technology vehicle manufacturing) loan program
Despite initial reports that it was greatly oversubscribed, just
one small conditional loan has been offered in the past 10 months, and
nearly two-thirds of the ATVM loan program's authority remains unused.
Question 63. Will you explain what exactly is happening with the
Advanced Technology Vehicle Manufacturing, or ATVM, Program?
Answer. On July 13, the Department announced the conditional
commitment of a loan to Severstal for $730 million. To date, the
Advanced Technology Vehicle Manufacturing Loan program has made six
loans or conditional commitments to vehicle manufacturers or parts
suppliers so far totaling over $9 billion. Approximately $4 billion of
the credit subsidy remains for future loans awarded under the Advanced
Technology Vehicle Manufacturing Loan Program. We anticipate offering a
number of additional conditional commitments under the program in the
near future.
Question 64. Why did the past year feature so few new loans?
Answer. There are several reasons why the ATVM program had fewer
loans in 2010. First, the statute requires a nexus between a component
maker's products and an advanced technology vehicle. Traditional
business practices do not ordinarily entail long term contracts for
such components well in advance of production, nor the earmarking of
components for specific car models. Even some major traditional
suppliers could not meet this requirement. Second, the past year (2010)
represented a recovery in the automobile market over the disastrous
economy of 2009. Suppliers are generally financed by Original Equipment
Manufacturers (OEMs) who were cutting production and experiencing cash
flow problems in 2009, but increased production in 2010, thus providing
the financing which suppliers rely on. Third, several major OEMs
struggling through bankruptcy needed time to meet all the necessary
eligibility requirements for the program. Finally, as major OEMs
announced new advanced technology product offerings, the competitive
environment became much more difficult for OEM start-ups and many
failed to qualify for or pursue ATVM loans.
Question 65. Please provide a breakdown of how the ATVM program's
$20 million administrative budget was spent in Fiscal Year 2010, and is
being spent during Fiscal Year 2011.
Answer. In FY 2010, the ATVM Loan Program obligated $1.4 million
for federal salaries and expenses and $17.4 million for contractor and
other expenses including legal advisors, financial advisors, market
advisors, and technical reviews provided by DOE labs. In FY 2011, the
ATVM Loan Program is projected to obligate $2 million for federal
salaries and expenses and $10 million for contractor and other
expenses.
Question 66. In the President's budget request, this program's
administrative costs are trimmed to $6 million to ``support ongoing
loan monitoring activities.'' Do you anticipate originating and/or
closing any new loans this year? When do you believe the ATVM program
will have exhausted its statutory $25 billion in loan authority?
Answer. The FY 2012 budget request anticipated the ATVM program to
have awarded the bulk of the authority by the end of FY 2011.
Therefore, by FY 2012, the program expected to be in the role of
primarily monitoring the loans completed through FY 2011. Since that
time, GM has generated sources of capital that permit it to finance its
own technical work and others have been affected by the factors
articulated in Q64 above. We are working to process all pending
applications as fast as possible.
china
Question 67. In November, you likened clean energy to a ``race''
and suggested we were on the verge of falling behind other countries
including China. While China is working on a range of clean energy
technologies, it would be helpful to understand their broader energy
policies. How does China approach oil, natural gas, coal and mineral
development, both within its borders and abroad? How does China
approach hydropower? Is China building new coal plants without carbon
capture and sequestration technology, and if so, at what rate?
Answer. China is investing heavily in its energy sector.
Increasingly, Chinese energy investments are characterized not just by
their size, but by the high quality of the technologies deployed. The
Chinese government is focused on promoting energy innovation as a core
part of its economic development strategy. Furthermore, China is
seeking to develop its energy industry by investing both domestically
and abroad.
Oil
According to the Energy Information Administration (EIA), China is
the second largest oil consumer behind the United States, with oil
accounting for 19 percent of its total energy mix. China used to be a
net exporter of oil in the 1990s, but by 2009, was the world's second
largest net importer of oil, again behind the United States. Currently,
China is reliant on imports for just over half of its oil consumed
domestically, a share that has been trending upwards due to the peaking
of production of its largest domestic onshore oil fields in the
northeast. China has set up a strategic petroleum reserve (SPR),
starting construction in 2004. On the demand-side, China has begun to
introduce price reforms to manage demand. It launched a fuel tax on the
retail sale of gasoline in 2008 and has also liberalized the pricing
system of gasoline to better reflect crude oil prices in the
international market. In 2010, the government announced it would levy a
new 5 percent ad valorem resource tax on upstream hydrocarbons in 13
provinces.
Natural Gas
Natural gas accounts for approximately 4 percent of China's energy
consumption, but demand for it and its share in the consumption mix is
increasing. Demand for natural gas is projected by EIA to more than
triple by 2035. In an effort to move away from heavy coal use and
reduce fossil fuel emissions, China is seeking to double the share of
natural gas to 8.3 percent of the total energy mix by 2015 under its
new five-year plan. In order to meet increased demand, China's National
Energy Administration estimates China will import 90 billion cubic
meters of gas a year by 2015, in addition to producing 170 billion
cubic meters domestically. China is also thought to have rich reserves
of ``unconventional'' gas, which is buried in shale or coal rock
formations. Unconventional natural gas has yet to be produced
commercially on a large scale in China. In an effort to gain the
technical expertise to develop its own unconventional gas resources and
acquire additional natural resources overseas, Chinese national oil
companies (NOCs) have purchased shares of unconventional gas deposits
in other countries, including the United States.
Coal
According to EIA, coal comprises 71 percent of China's total energy
consumption and 80 percent of its electricity production. It is both
the largest producer and consumer of coal. China's coal reserves are
third largest in the world behind the United States and Russia. Despite
vast coal resources, China became a net importer of coal for the first
time in 2007. Over the past two years, it has steadily increased its
imports of coal from countries like Russia, Indonesia and Australia.
China is seeking to boost the productivity and efficiency of both its
coal mine operations and coal-fired power plants. Coal mining is a
highly fragmented industry in China, with tens of thousands of small,
inefficient coal mines operating with unsafe worker conditions. Over
the past few years, China has undertaken the process of closing down
thousands of small, mostly illegal, coal mines. Small, inefficient
coal-fired power plants have also been the target of closures as part
of China's broader goal to reduce economy-wide energy intensity.
Although these plant closures are offset by new coal-fired capacity
coming online, the new power plants tend to be larger in scale and
boast some of the highest thermal efficiencies in the world. China is
starting to export the technologies from such efficient coal power
plants to other countries, most notably India. China is investing
heavily in Carbon Capture and Storage (CCS) R&D, and there are pilot
CCS plants up and running in Beijing, Tianjin and Shanghai. Data
collected by DOE's National Energy Technology Lab (NETL) shows that
China added about 458 GW of new coal plant capacity from 2005--2010,
with a planned addition of 209 GW over the 2013-2016 period. U.S. 2009
coal capacity was 314 GW, with NETL projecting virtually no new U.S
coal after 2018 until the end of its reference case in 2035 following
the completion of several planned CCS demonstration plants.
Minerals
China currently has the largest share of discovered rare earth
reserves in the world at 36 percent and produces over 95 percent of
global rare earth raw materials in the form of rare earth oxides. Rare
earth deposits and mines are distributed widely in China, but three
mines--in Baotou, Sichuan, and Jiangxi--together make up nearly all of
China's total deposits. China has had ongoing R&D efforts on rare
earths since the 1950s, including two key national research programs
and four state laboratories that form part of the country's desire to
accelerate high-tech development. Industry consolidation is beginning
to accelerate with the goal of creating three to five ``national
champions'' in addition to curbing illegal trade. The Chinese
government has acknowledged and approved a pilot project for the
country's rare earth reserve mechanism which may be launched next year.
Chinese state-owned enterprises also show an interest in acquiring
foreign mining companies with significant rare earths operations in
North America and Australia.
Hydropower
China has a significant number of hydropower projects under
construction or in development that will not only help meet growing
energy demand, but also help China meet its target of achieving 15
percent of its primary energy mix through non-fossil sources by 2020.
China has relatively extensive experience in this sector, it has a well
developed domestic industry, and it has extensive hydro resources.
According to media reports, the Chinese government aims to have 380 GW
of installed hydroelectric capacity in 2020, compared to 210 GW
installed currently. China's most famous hydropower project is the
Three Gorges Dam located in Hubei Province on the Yangtze River.
China's hydropower companies are expanding overseas to build dams in
Latin American, Southeast Asia and Africa.
white house office of energy and climate
Question 68. Carol Browner recently had her last day at the White
House, and it's still unclear if a new czar will be named to take her
place. The White House Office of Energy and Climate is not listed in
this year's budget, but it wasn't listed in previous years, either. Do
you anticipate that office will continue to exist? If so, what do you
estimate its budget will be for Fiscal Year 2012? Do you believe it has
a useful, constructive influence on U.S. energy policy?
Answer. This question should be directed to the White House.
Responses of Hon. Steven Chu to Questions From Senator Stabenow
electric vehicles
Question 1. Michigan and the rest of the United States need to out-
innovate, out-educate, and outbuild the rest of the world. Already,
Michigan is leading the nation in manufacturing plug-in electric
vehicles, advanced batteries, and their component parts. To leverage
that success, I introduced the Charging America Forward Act, which will
make plug-in electric vehicles more affordable for consumers and
businesses and encourage American innovation and manufacturing of
advanced vehicles. I'm pleased that the Budget includes my proposal to
change the existing $7,500 tax credit for electric vehicles into a
rebate that will be available to all consumers immediately at the point
of sale.
How will this proposal help meet the President's goal of putting
one million advanced technology vehicles on the road by 2015?
Answer. Changing the existing $7,500 tax credit to a point of sale
benefit is expected to significantly encourage electric drive vehicle
adoption. By providing the benefit at the point-of-sale, the cost
reduction is applied immediately and consumers will not have to wait
until filing their tax return to receive the benefit. This initial-cost
reduction is likely to positively affect consumers' purchase decisions.
vehicle technologies program
Question 2. I applaud the President's budget request for the
Vehicle Technologies Program. Last year, this committee passed a bill
that I introduced known as the Advanced Vehicle Technology Act, which
helped to ensure that the Vehicle Technologies Program is working with
companies of all sizes and not just focused on one type of vehicle
technology.
Could you please explain how this funding increase will be used and
on which technologies the program will be focusing on? Will this
include medium and heavy-duty hybrid and electric vehicles as well?
Answer. The Vehicle Technologies Program (VTP) will continue to
work across a broad range of technologies, including electric-drive
advanced combustion, fuels technology, and materials technologies, that
benefit all vehicle classes (light-, medium-, and heavy-duty).
Specifically, the funding increases included in the fiscal year 2012
budget request would support the following:
Within the VTP Outreach, Deployment, and Analysis activity:
--Implement a new competitive grant program to assist community-
based partnerships accelerate electric vehicle deployment;
up to 30 awards would support highly-leveraged local
efforts to streamline permitting processes, invest in
electric charging infrastructure, develop and implement
local incentive programs to encourage electric vehicle
adoption, and develop and implement workforce training
related to electric vehicle deployment.
--A new effort to explore ways to reduce fuel consumption and
greenhouse gas emissions of the nation's existing vehicle
fleet by reducing the miles traveled and developing/
deploying cost-effective, fuel-efficient aftermarket tires.
Within the VTP Batteries and Electric Drive activity:
--A new Battery Readiness Initiative intended to (1) move mature
battery technology closer to market entry through design
and development of preproduction prototypes; (2) support
the market entry of materials through scale-up, pilot
production, and commercial sampling; and (3) accelerate the
development of computer-aided engineering tools. This new
focus will provide a systematic, coordinated development of
electric drive system technology to meet performance
targets and realize drastic cost reductions.
--Significantly expanded activities in the research and development
of advanced power electronics and electric machines to meet
performance targets and realize drastic cost reductions, as
well as reduce the use of rare earth materials in electric
motors and support long-term research to develop novel,
low-cost magnetic materials with no rare earth content.
Within the VTP Vehicles and Systems Simulation and Testing
activity, expand codes and standards work to address identified
areas of concern such as vehicle charging, smart chargers, and
vehicle-to-grid interfaces; expand research and development to
improve efficiencies of vehicle HVAC systems and reduce thermal
loads, improving on-road electric vehicle efficiency by as much
as 20%; and develop, evaluate, and demonstrate advanced
wireless electric vehicle charging that can address consumer
convenience, safety, and grid management issues.
section 136 and the 1705 doe loan guarantee programs
Question 3. Mr. Secretary, as you know the Advanced Technology
Vehicle Manufacturing Loan Program, and the Department of Energy Loan
Guarantee Program have both been a big priority for me. To date, the
Advanced Technology Vehicle Manufacturing Program has approved several
loans and has created approximately 35,000 jobs nationwide, including
thousands of jobs for my home state of Michigan.
While I appreciate this great work, I have also been hearing from
companies that are currently working with the department that say the
process takes too long, and that the hurdles for receiving a loan are
even higher than if they had gone through the private sector. Clearly,
this is not what we intended when these programs were designed.
Can you provide us with an update on when we can expect more loans
to be finalized? Can you provide suggestions for ways to improve these
programs?
Answer. On July 13, the Department announced the conditional
commitment of a loan to Severstal for $730 million. There are a number
of applications under review in the Section 136 program. DOE is
reviewing these applications as quickly as possible.
DOE reviews each loan guarantee application against a common set of
criteria outlined in each solicitation and the programmatic statutory
and regulatory requirements. All projects must meet the basic
eligibility criteria, at a minimum, including the statutory requirement
of a ``reasonable prospect of repayment.'' In order to ensure that
taxpayer monies are properly safeguarded, the Department uses best
practices, similar to those private sector lenders would use in
reviewing such deals. It is important to keep in mind that these
transactions are large and complex and that no two deals are alike. In
the private sector, the due diligence associated with such transactions
is measured in months, not weeks. We are committed to processing
applications as quickly as possible, while ensuring that taxpayer funds
are properly safeguarded.
industrial technologies program
Question 4. I see that the Industrial Technologies Program received
a significant increase and will be refocusing on innovation in
industry.
Can you please describe in greater detail what the program will now
be doing and in what ways it will be working with industry to improve
energy efficiency?
Answer. As noted in the preface to this question, the Industrial
Technologies Program (ITP) will seek to continue elevating and
advancing innovation in industry. To that end, ITP will prioritize
research development, demonstration and deployment (RDD&D) of a
strategically selected set of new manufacturing technologies and
materials needed to ensure that U.S. producers lead the world in modern
production technologies. These technologies can reduce manufacturing
costs, energy use, and pollution while simultaneously improving product
quality and business competitiveness. This will ensure that U.S.
companies can be fully competitive in the production of clean energy
technologies, such as advanced photovoltaics, lighting devices, sensors
and controls, batteries, wind system components and other devices
essential for meeting US energy and efficiency goals. The overarching
goal of ITP is to develop a suite of advanced manufacturing
technologies and practices that provide pathways for doubling the
energy productivity of U.S. industry and enable the associated carbon
reductions by 2020.
Investments in these advanced manufacturing technologies both
revitalize existing industries and support the development of new
products in emerging industries such as clean energy.
New directions proposed for FY 2012 include an expanded emphasis on
advanced manufacturing techniques that lead to dramatic increases in
energy productivity such as use of ionic liquids, membrane separations,
and continuous monitoring and optimization of processing. ITP intends
to provide support for a new critical materials energy innovation hub.
ITP will seek to also build and strengthen its highly successful
program for helping business learn about and adopt strategies that can
lead to striking gains in the energy productivity of existing
facilities. At its core, that program seeks to foster a new corporate
culture of energy efficiency and carbon management through a
combination of workforce development, technical assistance and energy
management standards setting efforts.
Moving forward, ITP intends to promote continuous energy
improvement for manufacturers throughout the supply chain. This push
will include the provision of software tools, training and technical
resources to companies both directly and through partners like state
energy offices and utilities. ITP will also support this effort through
its Superior Energy Performance program-a market-based, American
National Standards Institute (ANSI)-accredited energy management
certification program. Collectively, ITP's activities are designed to
build: 1) demand for energy efficiency savings, 2) supply of energy
efficiency services, and 3) a supportive market environment.
energy innovation hub-batteries
Question 5. One of the things that I was very happy to see proposed
was a new innovation hub for batteries and energy storage. As you know,
advanced battery manufacturing has created hundreds of permanent jobs
in my home state through companies like LG Chem, Dow Kokam, Johnson
Controls, and A123 Systems. Each company was able to receive support
through the Recovery Act's Advanced Battery and Component Manufacturing
Program. This program has helped the U.S. to go from producing only 2%
of the world's advanced batteries to 40% of the world's advanced
batteries.
Given all the work that we have been doing in this area, can you
describe how this new innovation hub will work?
Answer. The Battery and Energy Storage Hub will help retain and
grow U.S. leadership in advanced batteries. Today's electrical energy
storage devices can benefit from further improvements in performance,
from energy and power capacities, rates of charge and discharge,
calendar and cycle life, to abuse tolerance. Many of the fundamental
performance limitations are rooted in the constituent materials making
up the storage system and in the fundamental physics and chemistry that
govern the transport and storage of energy in the material. The
research challenges are inherently multidisciplinary.
The Batteries and Energy Storage Hub will support the research and
development needed to fill the gaps in scientific understanding that
prevent technological breakthroughs in both grid and mobile
applications. The Hub will expand our scientific base for synthesis of
novel nanoscale materials with architectures tailored for specific
electrochemical performance, develop new methodologies to characterize
materials and dynamic chemical processes at the atomic and molecular
level, and expand our competencies in simulation and prediction of
structural and functional relationships using leading computational
tools.
The Hub's ultimate technological goals are development of radically
new concepts for producing storage devices from materials that are
abundant and have low manufacturing cost, high energy densities, long
cycle lifetimes, and high safety and abuse tolerance for a broad range
of energy storage applications. The breadth and depth of the scientific
challenges associated with these goals will require that the Hub
integrate premier scientific talent from the disciplines of chemistry,
physics, materials sciences, biology, and engineering. The Hub is
likely to develop strong collaborations with industry to overcome
engineering and manufacturing challenges. The Hub will facilitate
expansion of domestic manufacturing of high-tech energy storage
technology for both grid-level and transportation applications.
cr rescission of arra funding
Question 6. Many businesses and non-profits across my state and the
country are extremely concerned about the Continuing Resolution
currently being debated in the House. Many of these organizations are
worried about the provision to rescind the unobligated balances from
the American Recovery and Reinvestment Act of 2009 (Public Law 111-5).
In fact, many grantees working on clean energy projects are concerned
that the rescission would unintentionally take away funds that have
been committed by contract, but not yet spent or disbursed by the
agency, potentially interrupting projects that are currently in
underway with local businesses.
Is it safe to presume that an executed assistance agreement counts
as ``obligated'' funds?
Answer. An assistance agreement that has been signed by both the
Department of Energy (DOE) and the recipient constitutes an obligation.
There would be significant legal consequences if DOE attempted to
rescind obligated dollars--indeed it is possible that attempting to
rescind obligated dollars would cost the government more than simply
complying with the obligations. With rare exceptions, Congress has
rescinded funds that were obligated to DOE instruments, and thus this
would be uncharted territory.
For financial assistance agreements, DOE does not include a
provision allowing DOE to deobligate funds, nor do our financial
assistance regulations permit us to do so without cause. As a matter of
law, the Government can only terminate a financial assistance
agreement, in order to deobligate funds, on one of the following
grounds:
1. A finding that the recipient ``materially fail[ed] to
comply with the terms and conditions of an award''.
2. A mutual agreement by DOE and the recipient; or
3. A written notification from the recipient announcing its
intention to terminate the award.\36\
---------------------------------------------------------------------------
\36\ The specific rules that apply to termination of financial
assistance differ slightly depending on the nature of the recipient,
but the categories described above apply to all three. See 10 C.F.R.
Section 600.161 (nonprofits); section 600.243 and 600.244 (state and
local governments); and section 600.351 (for-profits).
Thus were there an attempt simply to ``rescind'' the obligated
funds, it would not alter the legal obligation to make payment. We
believe refusing to make payment of obligated financial assistance
funds would lead to litigation. Moreover, many of our financial
assistance has associated private cost share and the recipient would be
entitled to submit a settlement for costs incurred as a result of the
termination (e.g. purchase orders, legal fees, etc).
Response of Hon. Steven Chu to Question From Senator Barrasso
Question 1. Your budget zeroes out the base funding stream for the
Rocky Mountain Oilfield Testing Center (RMOTC) in Wyoming. This is
similar to last year's proposal. Last year's budget justified the cuts
as phasing out subsidies for fossil fuels. RMOTC provides small
businesses and inventors great facilities to test and develop new
technology. Casper College uses the facility for renewable energy
classes for technician training and education programs. There is also
geothermal testing and demonstration at RMOTC. I am concerned that the
Department of Energy is pulling the rug out from under this program,
without a transition plan. Last year the Administration required the
facility to operate as a user facility without providing the roadmap or
tools to implement that requirement. This year's budget says ``RMOTC
will identify and analyze options for becoming a self-sustaining user
facility.''
In January 2011, RMOTC laid off 27 contract employees. It is
turning away potential testing partners. RMOTC is a valuable asset.
Whatever the long-term plan--100 percent remediation, selling it to a
private entity, or transitioning to a user facility--the Department
needs a plan so the taxpayer gets maximum value for the asset.
a. Does the Department have an approved plan for RMOTC to
operate as a user facility or for long-term remediation?
Answer. The Department prepared a Report to Congress in 2007
entitled Environmental Liabilities Study of the Rocky Mountain Oilfield
Testing Center, November 2007. That study places the environmental
liabilities at RMOTC in excess of $100 million. A small portion of
remediation has been completed to date. The FY 2012 budget request
proposes that the Department develop a plan for the sale or disposition
of NPR-3. In this plan, disposition options and strategies will be
analyzed and further engineering design will be conducted to more
precisely determine environmental remediation costs and schedules.
Funding for testing at RMOTC will be supplied by the entity
conducting the testing; no appropriation is requested. Funding of
geothermal and other renewable energy technology testing is expected to
follow a similar path.
b. How will the Department provide the necessary flexibility
to support projects that are 100% fully reimbursable?
Answer. The Department intends to develop a disposition plan by the
end of FY 2012 that will include a determination of the final use of
the property. Maximizing the value of this asset will be a major factor
in the determination of the final disposition of this property.
In the interim, the Department is investigating creative methods to
provide RMOTC with the proper business support systems and agreements
with partners to maximize the use of non-appropriated funds in a manner
that will allow RMOTC to operate as a viable and successful testing
center. The Department, recognizing that RMOTC's resources allows it to
test energy technologies broader than oil and gas, is also
investigating collaborative funding with renewable energy programs
where applicable.
Responses of Hon. Steven Chu to Questions From Senator Johnson
Question 1. The President and the Department of Energy have made an
important commitment to a forward-looking energy policy that invests in
clean energy research, development and deployment. I am especially
interested in the continuing role of biofuels in meeting our clean
energy goals. How does the Administration's budget request support
increasing the amount of biofuels in the overall mix of transportation
fuels.
Answer. The Administration's budget request for Office of Biomass
Programs in FY 2012 is $340M. Within this request DOE will continue
work on biorefinery deployment projects. The portfolio includes a
diversity of feedstocks, conversion technologies, products, refinery
scales, and project maturity. These projects will contribute to the
2014 Biomass Program goal of 100 million gallons per year of biofuel
production. Research and development will continue to reduce costs in
processing steps associated with advanced biofuels, with an emphasis on
hydrocarbon biofuels such as diesel and green gasoline, and including
algae as a feedstock. In addition, research conducted in collaboration
with the Office of Science will be initiated to enhance the
biomanufaturing sector, including fuels and products that enable
economics of the biorefinery. Lastly, the Administration has requested,
$150M to support a reverse auction incentive program, authorized under
Section 942 of the EPAct 2005, Pub. L. 109-58 (August 8, 2005). The
purpose of the program is to:
(1) accelerate deployment and commercialization of biofuels;
(2) deliver the first one billion gallons of annual
cellulosic biofuel production by 2015;
(3) ensure biofuels produced after 2015 are cost competitive
with gasoline and diesel; and
(4) ensure that small feedstock producers and rural small
businesses are full participants in the development of the
cellulosic biofuels industry.
Question 2. I am pleased to see the continued emphasis on
increasing renewable energy in our electricity generation. South Dakota
has great wind potential and is home to many successful wind projects.
To meet the true potential for wind in the Great Plains, we also need
to address our interstate transmission system. Will you elaborate on
programs in the budget and other efforts aimed at helping us further
develop and deploy this important domestic energy source?
Answer. Department of Energy efforts to further develop and deploy
wind energy are coordinated between the Office of Electricity Delivery
and Energy Reliability and the Office of Energy Efficiency and
Renewable Energy's Wind and Water Power Program. These offices are
coordinating two efforts to better understand the impact of high levels
of wind deployment--the second phase of the Eastern Wind Integration
and Transmission Study and the Western Wind and Solar Integration
Study.
In addition, within the Office of Electricity Delivery and Energy
Reliability, the Office of Electricity is funding collaborative
approaches for long-term transmission planning at the interconnection
level. These projects will determine the transmission requirements
associated with a broad range of electricity supply futures, including
intensive development of renewable resources. With respect to
developing deployable technology solutions, the Office of Electricity
is funding efforts to expand wide-area situational awareness (through
widespread deployment of phasor measurement units and smart grid
devices) to address operational variability associated with renewables
and to develop energy storage technologies to meet the challenge of
wind integration on the grid. In Iowa, for example, a compressed air
energy storage plant will be able to absorb nighttime wind power from
the Great Plains and deliver day time peak power.
The Wind and Water Power Program is working to better understand
reliability impacts of wind deployment though analysis of wind turbines
providing frequency response, support from experts at national labs to
various utilities on wind integration studies, analysis of coordinated
dispatch and operations between utilities to aid in wind deployment,
the development and validation of non-proprietary wind generator models
for use by system planners, efforts to improve wind forecasting and
increase its use by operators, and efforts to establish methodologies
for determining the impacts on reserves needed in systems with high
levels of wind.
Question 3. I appreciate Department of Energy's support to date for
the Deep Underground Science and Engineering Laboratory at Homestake.
Considering the envisioned changes to the model for stewardship of
the DUSEL between the National Science Foundation and DOE, do you feel
that there is sufficient support from the Obama Administration and NSF
leadership to facilitate an expanded DOE role and successful completion
of DUSEL in the future?
Answer. The Administration does not plan to build DUSEL but remains
committed to achieving the science goals of the Office of Science High
Energy Physics and Nuclear Physics programs. We are assessing options
for the Long Baseline Neutrino Experiment far detector, as well as
future dark matter and neutrinoless double beta decay experiments. We
have asked an independent panel of experts for assistance in making
this assessment, which will include an alternatives analysis for the
location of individual experiments.
Question 4a. How have DOE and NSF been working together to plan for
a smooth transition into a revised stewardship agreement on DUSEL?
Answer. Since the decision by the National Science Board to decline
further funding for construction of the DUSEL facility, DOE and NSF
have continued to communicate about DOE plans for the Long Baseline
Neutrino Experiment far detector, as well as future dark matter and
neutrinoless double beta decay experiments.. NSF is providing
$4,000,000 to bridge an approximately four month funding gap between
June to September 2011 to keep the Homestake Mine dry through FY 2011.
The Office of Science has requested $15,000,000 in FY 2012 for
continued de-watering and minimal sustaining operations to maintain the
viability of the Homestake Mine while the DOE assessment is carried
out. DOE and NSF are continuing to communicate on DOE's plans to carry
out its assessment.
Question 4b. Does the FY 2012 budget request reflect inter-agency
discussions and agreements?
Answer. The Office of Science and NSF have discussed DOE's
$15,000,000 FY 2012 request to continue dewatering activities and
minimal sustaining operations at the Sanford Laboratory while DOE
assesses cost effective options to carry out experiments planned by the
High Energy Physics and Nuclear Physics programs.
Question 5. With regard to DUSEL, do you feel that the $15 million
you are proposing in FY 2012, despite the NSF's proposal to provide no
additional funding, is sufficient to maintain progress on this
important national facility, leveraging the more than $250 million
invested to date in private, state, and federal funds?
Answer. The Office of Science requested $15,000,000 in FY 2012 to
continue dewatering activities and minimal sustaining operations at the
Homestake Mine in Lead, South Dakota. Before making further
investments, DOE must assess its plans for the Long Baseline Neutrino
Experiment far detector, as well as future dark matter and neutrinoless
double beta decay experiments.
Question 6. Is DOE prepared to provide any additional funding
needed in FY 2011 to ensure that no jobs are lost in the near term
while DOE evaluates its long-term options and plans in high energy
physics?
Answer. DOE is not currently planning to provide any additional
funds toward DUSEL in FY 2011. Before making further investments, DOE
must assess its plans for the Long Baseline Neutrino Experiment far
detector, as well as future dark matter and neutrinoless double beta
decay experiments. That assessment will continue through FY 2011.
Question 7. Has the National Science Foundation been a strong
collaborator to date on DUSEL and do you foresee future collaborations
with them on other high priority nationally reviewed science facilities
given the difficulties encountered to date?
Answer. The National Science Foundation and the DOE have a strong
partnership in high energy physics and nuclear physics.The National
Science Board declined funding to bridge the NSF supported DUSEL
Project team between the submission of the DUSEL Preliminary Design
Report and approval to begin the DUSEL Final Design Report. Since that
time, NSF has not communicated its intentions to DOE concerning further
partnering on DUSEL. DOE welcomes continued partnership with the NSF on
high priority nationally reviewed science projects.
Question 8. How is DOE prepared to work with the university
community to ensure that the research needs will still be met with any
proposed changes to the existing plans for DUSEL?
Answer. As part of DOE's assessment of the options for the Long
Baseline Neutrino Experiment far detector and future dark matter and
neutrinoless double beta decay experiments, reports will be given by
DOE stakeholders, including the research community, on the science
impacts of different budget and site location scenarios. Based on the
findings of this assessment, the Office of Science will seek to develop
a cost effective plan, which maximizes scientific opportunity for the
research community.
Responses of Hon. Steven Chu to Questions From Senator Wyden
Question 1. President's Export Initiative Q1. When you were here
last year to testify on the 2011 budget, the President had just
announced the creation of National Export Initiative, or the NEI, to
double exports over the next five years. The Administration has put
forward a plan to boost clean energy exports as put forward in the
``Renewable Energy and Energy Efficiency Export Initiative,'' which is
part of the NEI. The key components of the plan appear to be to use the
resources of the Export Import Bank to help provide financing to
exporters, to negotiate trade deals to lower tariffs on these products,
and to help connect U.S. businesses with foreign buyers. Has the Energy
Department developed specific goals and benchmarks related to this plan
and to boosting exports of clean energy products to recapture market
share? Will this plan be sufficient to help our manufacturers compete
against China in our market and in those overseas? What more should DOE
and the Administration do?
Answer (a). DOE co-led the development of the Renewable Energy and
Energy Efficiency Export Initiative (RE4I) with the Department of
Commerce's International Trade Administration. The RE4I involves 23
commitments for new programs, actions, or deliverables from across the
U.S. Government organized around four pillars: 1) more tailored
financing options for RE&EE exporters; 2) enhanced market access for
U.S. RE&EE products and services; 3) increased trade promotion to
better link buyers and sellers of U.S. RE&EE technologies; and 4) the
more efficient delivery of U.S. export promotion services to RE&EE
companies.
The Renewable Energy and Energy Efficiency Export Initiative (RE4I)
is a product of coordinated effort among a dozen agencies participating
in the Trade Promotion Coordinating Committee Working Group on
Renewable Energy and Energy Efficiency. DOE provides technical
assistance, data, and analysis to all the interagency partners working
together to achieve the goals and benchmarks set forth in the REEE
Export Initiative. DOE has not developed specific RE4I goals and
benchmarks that apply only to the Department.
Answer (b). The RE4I will enhance the federal government's capacity
to promote exports of clean energy technologies made in America. It
will not enhance domestic demand for those technologies nor stimulate
more investment in domestic manufacturing, both of which are key to
competing successfully with suppliers from other countries including
China. The RE4I is not a substitute for the strong, consistent domestic
energy policy this country needs to motivate domestic investors to
innovate and deploy clean energy technologies.
Answer (c). As co-chair of the TPCC Working Group on Renewable
Energy and Energy Efficiency, DOE will continue to support the
Department of Commerce's efforts to lead the implementation of the
RE4I. DOE's efforts will include active support for trade missions,
commercial advocacy, and outreach to American companies. Through the
Clean Energy Ministerial and other international activities, DOE will
also continue working with counterparts in other countries to create
market conditions that encourage rapid growth in markets for clean
energy technologies. In addition, we will continue working with our
interagency partners to improve the information-sharing U.S. RE&EE
exporters need to compete effectively in global markets.
DOE and the Administration will continue to pursue the kind of
strong, consistent energy policy America needs to compete successfully
in markets for clean energy technologies. Effective energy policies
that stimulate domestic demand for clean energy technologies provide
Americans the stable, domestically-produced clean energy our country
needs while also developing a manufacturing capacity that can support
exports to meet demand around the world.
buy-american
Question 2. As far as DOE is concerned, it's OK to count a solar
panel assembled in the U.S. from 100% foreign parts as made in America,
but it's not OK to import a solar panel with 50% American parts and
count that as American. I don't see how it helps convince companies to
invest in supply chain manufacturing facilities in the U.S. when DOE
has a policy that they can't get credit for what they make here. DOE
has the statutory authority to define what's made in America based on
the public interest. Why is it not in the public interest for companies
that manufacture or purchase value-added components in the United
States to get credit for those components? Would you agree to reexamine
the Department's policy on U.S. content in the solar Buy America
waiver?
Answer. The Solar Public Interest Waiver issued by DOE dated 9/30/
2010 was made to be consistent with prior iterations of Buy American
regulations which used ``substantial transformation'' as the applicable
standard--specifically those within Title 19 CFR (trade, tariffs and
Customs duties). It allows for either cells or modules to be
manufactured in the U.S. to qualify for Buy American. In constructing
this waiver, DOE specifically considered precedents from other
industries such as the semiconductor industry. In this case, wafers and
ingots produced in the United States, but assembled into
microprocessors abroad, have been considered a sub-component of the
final product and therefore such microprocessors did not qualify as
American-made. Applying this precedent to the PV industry would mean
that only modules manufactured in the U.S. would qualify as American
made. In the U.S. PV industry, only three companies would currently
qualify under this determination which could result in reduced market
competition. For that reason, DOE agreed to expand the definition
temporarily to include both U.S.-made cells or U.S.-made modules. In
granting this waiver it was understood that even foreign made cells
would likely contain significant U.S. content since the U.S. currently
supplies approximately 40% of the world's supply of polysilicon as well
as other supply chain components used in conventional PV cells. Further
expanding the definition, however, to explicitly consider these supply
chain components would go well beyond established precedent for the
definition of ``substantial transformation'' and make the policy
virtually impossible to administer since once the cell is manufactured,
there is no systematic way to verify the origin of the components. Any
attempt to use manufacturer reported information would be made more
difficult since most manufacturers use multiple supply sources, not all
of which may be located in the U.S.
Further, DOE believes that decisions to invest in U.S.
manufacturing are based on a number of factors including IP protection,
access to a skilled workforce, and proximity to the U.S. market. In
2010, the U.S. PV market grew approximately 100% most of which we
believe did not include Government installations which are subject to
Buy American. We believe that this level of growth will continue and
will accelerate, and will draw both supply chain as well as cell and
module companies to the U.S. DOE is also directly supportive of the
U.S. domestic PV supply chain. As part of the Recovery Act, DOE awarded
over $1 billion to solar companies under the 48C Manufacturing Tax
Credit program, many of which were for the manufacturing of PV supply
chain components.
DOE recognizes that the U.S. PV industry is highly dynamic and that
the current policy may need to be revised. As stated in the waiver, the
Assistant Secretary reserves the right to revisit and amend this
determination based on new information or new developments. This waiver
expires in August 2011.
budget cuts and impact on exports and competition
Question 3. I am also concerned that no one really thought about
exports and foreign competition when your budget was put together. For
example, your new budget cuts funding for fuel cells and wave energy
technology. Fuel cells are technology where the U.S. still has some
real technology leadership and genuine export potential. Last year, for
example, one of our fuel cell companies in Oregon signed a $40 million
distribution agreement with Korea to sell 800 of their fuel cells
there, but there's no evidence that DOE thought about exports like
these, or foreign competition, when it cut the fuel cell program. Wave
energy is a technology where our competitors are investing hundreds of
millions dollars in technology development and demonstration and yet
your budget cuts the program back to less than $18 million.
If the theme of the President's budget is to ``out-innovate, out-
educate, and out build the rest of the world,'' how is that going to
happen when your budget slashes funding in some of the very areas, like
fuel cells and wave energy, where the U.S. has a real opportunity to
compete in the international market?
Answer. As the President has stated, ``A decade of deficits,
compounded by the effects of the recession and the steps we had to take
to break it, as well as the chronic failure to confront difficult
decisions, has put us on an unsustainable course.'' The objective of
the President's budget is to pare down these debts, while investing in
the areas that position the United States to compete in the global
economy.
Meeting these spending cuts requires tough choices and sacrifices.
The President's budget set as priorities those programs that are poised
to make an impact sooner and at a larger scale. For example, the
President's budget provides resources to put one million advanced
technology vehicles on the road by 2015. The President's budget also
makes important investments in fuel cells and wave energy technology.
For hydrogen and fuel cells, DOE's Fiscal Year 2012 budget request
sustains critical research and development including $45.5 million for
Fuel Cell Systems R&D and $35 million for Hydrogen Fuel R&D, which we
believe to be the key to continued U.S. competitiveness and widespread
commercialization hydrogen and fuel cell technologies. With the
progress that has been made in fuel cell technology such as reducing
the projected high-volume cost of automotive fuel cells by 30% since
2008 and 80% since 2002 (from $275/kW in 2002 to $51/kW in 2010)\37\;
doubling the durability of fuel cell systems operating in real-world
conditions to 2,500 hours (with less than 10% degradation; equivalent
to 75,000 miles of driving); and reducing the high volume cost of
hydrogen production from natural gas to a gasoline-competitive price of
$3.00/gallon of gasoline equivalent\38\, the Department has already
enabled progress to allow leadership of U.S. industry.
---------------------------------------------------------------------------
\37\ http://hydrogen.energy.gov/pdfs/10004_fuel_cell_cost.pdf
\38\ http://www1.eere.energy.gov/hydrogenandfuelcells/
accomplishments.html
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DOE is optimistic about the opportunities to further develop
emerging marine and hydrokinetic (MHK) energy technologies, including
wave and tidal energy technologies. For example, DOE has previously
funded both the Ocean Renewable Power Company (ORPC) and Verdant Power,
who may potentially develop tidal current arrays in Canada and China
respectively. Verdant has signed an MOU with China's Energy
Conservation Environment Protection Group to develop tidal power in the
country, the first MOU of this sort between China and a U.S. MHK
company.
We believe that the $38.5 million requested for water power
research in FY2012 is sufficient to continue the program's ongoing
efforts to advance industry development and export capability of MHK
technologies. We are currently completing a comprehensive set of
resource assessments and undertaking detailed techno-economic
assessments of emerging technologies, which will help us to effectively
determine the opportunities and costs associated with these
technologies. These important analyses will help the Department
determine what funding levels are necessary and appropriate to realize
water power's potential.
investing in jobs
Question 4. Secretary Chu, your Department is one of the few
agencies that would get increased funding under the President's Budget.
If Congress approves this additional proposed funding, what will you do
to ensure that the additional investment will focus ``in areas that
show the most promise for job creation'' as the President's Budget
calls for? [Investing in American Innovation p. 34]
Answer. As we know, the Recovery Act helped create tens of
thousands of jobs and, combined with the FY 2012 request, will help the
Department accelerate the transition of our nation to a clean energy
economy. These investments are designed to accelerate investment in
clean energy projects and pull private investment off the sidelines.
They are jumpstarting a major transformation of our energy system
including unprecedented growth in the generation of renewable sources
of energy, enhanced manufacturing capacity for clean energy technology,
advanced vehicle and fuel technologies, and a bigger, better, smarter
electric grid.
The President's FY 2012 Budget supports the plan to rebuild our
economy through clean energy research and development. Some specific
areas of focus include:
Expanding programs that spur innovation.--The President's
request proposes for the Advanced Research Projects Agency--
Energy (ARPA-E) program a FY 2012 request of $550 million.
ARPA-E performs transformational and cutting-edge energy
research with real-world applications across areas ranging from
grid technology and power electronics to batteries and energy
storage. The budget also supports programs with significant
promise to provide reliable, sustainable energy across the
country, such as SunShot, an initiative aimed at making solar
energy cost competitive. With focused investment in
manufacturing innovation and industrial technical efficiencies,
the President's proposal will move private sector capital off
the shelves and into the marketplace.
Doubling the number of Energy Innovation Hubs to solve key
challenges.--Innovation breakthroughs occur when scientists
collaborate on specific problems. The FY 2012 budget request
proposes three new Energy Innovation Hubs that will bring top
American scientists to work in teams to research critical
energy challenges in areas such as critical materials,
batteries and energy storage, and electricity grid
technologies.
Promoting efficient energy.--Currently, over 50 percent of
the goal to weatherize 600,000 homes of low -income families
has been achieved, providing energy cost savings and financial
relief to households. The FY 2012 request of $320 million
continues residential weatherization, with more than one-third
of the funding devoted to new innovative approaches to
residential home weatherization.
oil liability for contractors
Question 5. The President's Budget states ``the Administration is
committed to holding the oil and gas industry accountable for the risks
associated with oil and gas production by removing the existing
liability cap for damages associated with offshore drilling activity.''
[p.37] Does this commitment to holding the industry accountable extend
to holding drilling contractors accountable or are you only proposing
to hold the primary leaseholders accountable?
Answer. While the basic thrust of the proposal is clearly stated in
the budget material, the Department understands that the exact wording
of the legislative text has yet to be refined for submission to
Congress. The question you have posed involves the scope and reach of
the proposal, which will turn on the wording of the text, and we look
forward to working with the Congress to address such issues.
energy storage strategic plan
Question 1. Last year, the Department provided a report to the
Committee outlining the Department's research and development
activities related to energy storage technologies. In light of the many
applications for energy storage--from electric vehicles to integration
of intermittent renewables--and the many offices within the Department
with a direct interest in energy storage, I believe that it is
imperative that the Department develop an integrated strategic plan for
research, development and deployment of energy storage technologies.
Can I have your commitment to produce such a plan?
Answer. As you know, the Grid Storage Report provided by the
Department to the Committee in July 2010 outlined a strategy for grid-
level storage projects through a discussion of applications, DOE
collaborative activities, and focused efforts of specific offices
within the Department. It has served as a valuable tool in our efforts
to further improve our internal coordination, and better integrate work
by the various parts of the Department on this issue.
As we approach the one-year anniversary of that report, the
Department plans to revisit the strategy it outlined, and incorporate
lessons we have learned in the intervening time from the applied
technology programs, the Office of Science, ARPA-E, and the new Energy
Innovation Hub on Batteries and Energy Storage. Coordinating this
strategic planning effort will require direct involvement from senior
leadership as well as programlevel staff, and an ongoing willingness to
work across organizational silos. The Department is committed to this
effort, because the opportunity for improved system reliability,
reduced energy consumption, and increased economic benefits are very
large, but will only be realized through coordinated action across the
Department's multiple programs. We will continue to keep the Committee
fully informed of our progress.
Responses of Hon. Steven Chu to Questions From Senator Cantwell
challenges of commercialization activities at doe
Question 1. Can you please comment on commercialization efforts
within DOE generally and on these examples specifically?
Answer. In order to achieve its mission of addressing America's
energy challenges through transformative science and technology
solutions, DOE must be focused on moving its technologies in the labs
out into the marketplace in order to ensure broad deployment and
strengthening US competitiveness. It is important to note that the
commercialization needs of awardees vary both by technology readiness
level and type of organization (i.e. university, small business, large
corporation, etc). As such, DOE is facilitating commercialization and
deployment of clean energy technologies in a number of ways through
EERE, ARPA-E and SC programs. These efforts include facilitating
connections to translate technology concepts to a market need,
developing mentorship opportunities, and engaging with industry experts
to receive feedback, as well as, provide a venue for industry
collaboration and partnerships.
In response to your specific questions:
DOE Loan Guarantee Program
DOE reviews each loan guarantee application on its own merits
against a common set of criteria outlined in the program's statute,
regulations, and each solicitation. All projects must, at a minimum,
meet the basic eligibility criteria, including the statutory
requirement that they demonstrate a ``reasonable prospect of repayment.
This requirement, established by Congress, is important to ensuring
that taxpayer funds are safeguarded, and DOE takes it very seriously.
The Department uses best practices, similar to those private sector
lenders would use in reviewing such deals. It is important to keep in
mind that these transactions are large and complex and that no two
deals are alike. In the private sector, the due diligence associated
with such transactions is measured in months, not weeks.
Fuel Cell Market Transformation
The Department agrees with the importance of continued investment
in clean energy technologies, including fuel cells, and recognizes the
benefit of market transformation activities. In fact, although not
reflected in the FY 2012 budget request, the Department invested $43
million under the Recovery Act to enable the deployment of up to 1,000
fuel cells for early market applications such as forklifts and backup
power. This additional funding will allow the Department to collect
data on the performance and cost of fuel cells for early market
applications, deferring market transformation funds until this data
becomes available. In the mean time, funding is invested in critical
research and development to ensure that domestic companies continue to
develop their technologies. Other mechanisms such as the investment tax
credit and grants in lieu of tax credit (section 1603) allow companies
to take advantage of incentives available for commercial deployments.
48C Advanced Manufacturing Tax Credit
I understand the importance of ensuring that small companies be
able to monetize the 48C credit in order to take advantage of it. As
you know small, innovative companies are critical for the U.S. clean
energy manufacturing sector and we want to make sure we do everything
in our power to support the growth of this industry. We believe that
tax policies, can provide highly effective mechanisms to increase the
amount of investment in the US and increase job growth in these crucial
markets.
Fortunately, companies of varying size have been able to take
advantage of the 48C tax credit. It is important to ensure that small
companies which may not have large, nearterm tax liabilities are able
to take advantage of the credit. Our experience with the 48(c) program
has suggested that those companies were able to successfully monetize
the credit and bring their plants on line.
I have to defer questions related to Section 6103 of the Tax Code,
which limits requests to taxpayers for any new information that was not
originally provided in the application, to the IRS.
challenges of commercialization activities at doe
Question 2. How can their effectiveness be improved? Why is it so
difficult to get commercialization efforts firing on all cylinders?
Answer. There are a number of ways that DOE is improving the
effectiveness of its technology transfer program and commercialization
efforts. We have re-established the Secretary of Energy's Advisory
Board (SEAB), which has a strong focus on technology transition and
deployment. The first full-time Technology Transfer Coordinator (TTC)
has been appointed to address known concerns. She is also exploring
additional initiatives to improve the impact and outcomes of the
technology transfer program. We recognize that a strategic and
coordinated effort is needed to facilitate and encourage the successful
commercialization of our scientific discoveries to the private sector.
We published a Request for Information to provide stakeholders an
opportunity to voice their concerns, and we are already tackling
several of the commonly raised issues that affect collaborations and
transfer of technologies.
smart grid innovation hub
Question 3. I was pleased to see the DOE's intent to establish a
new Innovation Hub for Smart Grid Technology and Systems. As you know,
the Pacific Northwest is investing in substantial grid transformation
activities with important support from Recovery Act grants ranging from
the Northwest Regional Smart Grid Demo (the nation's largest), the
Western Interconnection Synchrophasor Project, multiple smart grid
workforce training grants, and several smart grid investment grants.
On top of all this, the Pacific Northwest is a leader in renewable
wind integration. In fact the Bonneville Power Administration's system
is now home to 3.6 Gigawatts of wind, within BPA's 9 Gigawatt balancing
area.
I think a Smart Grid hub, as contemplated in the budget, gives us
the opportunity to build on this work, in a way that should deliver
both innovations that improve current grid operations and, more
importantly, point to new paradigms for the way in which we operate the
grid.
A smart, digital power system can deliver more value and greater
resilience with more efficiency and fewer emissions.
Can you share how you envision this innovation hub providing
leadership in shaping our national pursuit of a transformed power
system for the 21st century?
Answer. The Smart Grid Technology and Systems Hub would establish a
U.S. center of excellence where top performers from various disciplines
will come together to focus on the holistic transformation and
modernization of the electricity infrastructure that ties the electric
grid together. Research, development, and demonstration of novel
technologies and concepts devised from a systems-level approach will
generate innovations and analyses that lower the risk to the private
sector and supplement the on-going transformations in the electric
industry. The flexibilities introduced by these new technologies will
facilitate the adoption and use of wind, solar, electric vehicles,
storage, smart meters, and other advanced components. In addition, the
Hub also represents an investment in human capital that will help build
the capabilities, expertise and skills to foster the leaders for the
power systems of tomorrow.
Responses of Hon. Steven Chu to Questions From Senator Shaheen
Question 1. I would like to get your thoughts on the President's
proposed Clean Energy Standard (CES). From what I have seen, the
proposal doesn't list energy efficiency qualifying as a ``resource'',
as it does for wind, nuclear and natural gas. I think this is a
mistake, since the cheapest unit of power is the one we don't have to
produce.
Answer. The Administration is committed to unlocking the full
potential of energy efficiency and intends to use efficiency as an
important means to achieve the President's clean energy goals, through
programs such as the Better Buildings Initiative and HOMESTAR as well
as existing programs to promote energy efficiency in the industrial
sector. As a starting point in the design process, we believe that a
CES can be more effective in driving the deployment of clean energy
technologies if it is focused on the generation side, while a suite of
complementary energy efficiency measures work to reduce electricity
demand. We also note that even without crediting energy efficiency as a
resource, a CES inherently creates a strong economic incentive for
reducing load through demand-side energy efficiency. However, the
Administration is committed to working with all interested parties on
CES legislation and is eager to discuss alternative approaches to
achieving the twin goals of clean energy deployment and energy
efficiency.
Question 2. Several states include efficiency as a resource in
their own Renewable Electricity Standards (RES). Even more states have
their own separate Energy Efficiency Resource Standards (EERS). If
these states recognize the value of efficiency as a ``resource''
shouldn't it also be recognized in Clean Energy Standard or a separate
federal Energy Efficiency Resource Standard?
Answer. A separate energy efficiency resource standard (EERS) is
one example of a complementary energy efficiency policy. The
Administration is open to working with all members of Congress to
design policies such as these and others that could help realize the
full potential of energy efficiency.
Question 3. What role do you see for highly efficient combined heat
and power (CHP) and waste heat recovery systems in a Clean Energy
Standard? Aren't these systems just as efficient and ``clean'' as
natural gas, which is included in the President's CES proposal?
Answer. Combined Heat and Power (CHP) and waste heat recovery
systems are both highly efficient on-site energy systems and, as such,
could be readily integrated into a Clean Energy Standard. The
Administration is eager to work with interested members of Congress to
explore the best ways to give clean energy credits in a CES for
measurable clean electricity generation from such technologies, taking
into account the increased efficiency of cogeneration systems as well
as the consumption of electricity onsite.
Responses of Hon. Steven Chu to Questions From Senator Landrieu
Question 1. In the President's State of the Union speech, he
announced a goal of putting one million electric vehicles on the road
by 2015. In reviewing the budget documents, I understand that the DOE
is planning to invest $588 million in electric vehicle research to help
achieve this goal. I generally think moving to electric vehicles is a
laudable goal, but I think we must be realistic about how quickly we
can get there.
I recently read a great article in the Washington Post from January
28, entitled, ``Cold truths on electric avenues.'' The author
highlights, that even if we reach the President's goal, it would
represent just 0.4 percent of the U.S. automotive fleet, yielding no
substantial reduction in carbon emissions or U.S. dependence on foreign
oil. Given that the President's budget includes $588 million to help us
achieve that goal, one would hope we could get more bang for our buck.
The article recommends that an alternative policy would do more to
accomplish the Administration's goal faster and at a lower cost--this
alternative policy is to use a more efficient internal combustion
engine.
As you know, Mr. Secretary, there is a company called Next
Autoworks that has developed a more efficient combustion engine. Next
Autoworks is currently working its way through the DOE Advanced
Technology Vehicle Manufacturing (ATVM) loan program authorized by the
Energy Independence and Security Act of 2007. I am told DOE has been
reviewing their application for 18 months now.
Do you agree that using a more efficient internal combustion
engine, in the short term, can help us reduce our dependence on oil and
lessen our carbon emissions faster than waiting for electric vehicle
technology to become accessible to the average consumer?
Answer. It is true that significant advances in internal combustion
engines (ICEs) are possible, and it is also true that these
technologies can be transferred to the market quickly through existing
manufacturing facilities and capability. In the very short term,
increasing vehicle efficiency using advanced ICE technology is an
important pathway to address reducing petroleum consumption and
greenhouse gas emissions. However, to completely address these issues
and break our dependence on oil, we must transition to a combination of
technologies using biofuels and electric vehicles. Advanced ICEs can
play a role in this transition, as using advanced ICEs in hybrid
electric vehicles and plug-in hybrid electric vehicles will enable even
greater fuel savings benefits.
Question 2. If you agree, it seems DOE has the perfect opportunity
to help enable the production of a more efficient internal combustion
engine. As such, why has DOE taken so long to review Next Autoworks'
application and is there any way this process can be accelerated? Do
you expect DOE to finalize this application soon?
Answer. It is Department policy not to comment on specific
applications. However, we are committed to processing applications
under our programs as efficiently as possible, while ensuring that
taxpayer funds are properly protected and that all program requirements
are met.
Question 3. In the President's State of the Union speech, he
announced a goal of putting one million electric vehicles on the road
by 2015. In reviewing the budget documents, I understand that the DOE
is planning to invest $588 million in electric vehicle research to help
achieve this goal. I generally think moving to electric vehicles is a
laudable goal, but I think we must be realistic about how quickly we
can get there.
I recently read a great article in the Washington Post from January
28, entitled, ``Cold truths on electric avenues.'' The author
highlights, that even if we reach the President's goal, it would
represent just 0.4 percent of the U.S. automotive fleet, yielding no
substantial reduction in carbon emissions or U.S. dependence on foreign
oil. Given that the President's budget includes $588 million to help us
achieve that goal, one would hope we could get more bang for our buck.
The article recommends that an alternative policy would do more to
accomplish the Administration's goal faster and at a lower cost--this
alternative policy is to use a more efficient internal combustion
engine.
As you know, Mr. Secretary, there is a company called Next
Autoworks that has developed a more efficient combustion engine. Next
Autoworks is currently working its way through the DOE Advanced
Technology Vehicle Manufacturing (ATVM) loan program authorized by the
Energy Independence and Security Act of 2007. I am told DOE has been
reviewing their application for 18 months now.
I understand that about $7.5 billion was provided in the Stimulus
Act to provide loan guarantees to ATVM awardees. How much of that $7.5
billion remains and do you expect to award the remaining funds within
the year?
Answer. ATVM did not receive any appropriated credit subsidy under
the Recovery Act. The program was established by Section 136 of the
Energy Independence and Security Act of 2007, and the FY 2009
Continuing Resolution (CR), enacted on September 30, 2008, appropriated
$7.5 billion to support a maximum of $25 billion in loans under the
ATVM Loan Program. However, the ATVM program did receive $10 million in
funds under the Recovery Act to cover administrative costs.
On July 13, the Department announced the conditional commitment of
a loan to Severstal for $730 million. The ATVM Loan Program has issued
loans or conditional commitments totaling over $9 billion to six
advanced technology vehicle manufacturers or parts suppliers. The
program has approximately $4 billion in credit subsidy remaining. DOE
is continuing to review a number of applications under the program.
Question 4. Mr. Secretary, I note that one of the largest cuts on a
percentage basis is a 45% cut to the Office of Fossil Energy. I am
concerned about the large cut and the impact it will have on the timely
review of permits and applications.
For instance, I want to ask you about a project that would have a
positive impact on Louisiana jobs and U.S. exports. On September 7,
2010 Sabine Pass Liquefaction filed an application with the Department
of Energy's Office of Fossil Energy for authorization to export
liquefied natural gas (LNG) from its Cameron Parish facility. The
Department opened a period for public comment on the application
through December 13, 2010 that was extended through January 11, 2011. I
joined the bipartisan Louisiana delegation in writing to you on July 26
of last year, describing the importance of the proposed project to
creating jobs on site and supporting expanded natural gas production in
northern Louisiana. As you know, timely regulatory reviews are critical
to the planning and construction of such a large, capital-intensive
project.
Do you expect this large cut to affect the timely review of permits
and applications? When can we expect the Department to make a final
decision on the Sabine Pass application?
Answer. The Administration's FY 2012 budget request provides
funding for Department of Energy staff positions that perform
regulatory review functions and issue authorizations in response to
applications submitted by the private sector requesting authority to
import and export natural gas and liquefied natural gas from and to the
U.S.
There are no statutory or regulatory timelines for the Department
to issue a decision on the type of application submitted by Sabine Pass
Liquefaction. This application is the first application that has been
submitted by a company that is proposing to export domestically
produced, lower-48 natural gas as LNG. As such, it is a precedent-
setting application, with potential ramifications on any similar future
applications, and the Department must perform a careful review and
evaluation in order to determine whether or not the application is
consistent with the public interest. The Department is currently
reviewing the application, as well as all comments and interventions
associated with this application, and we expect to issue a decision
concerning the public interest determination sometime in the first half
of CY 2011.
Question 5. Mr. Secretary, I understand that the Department is now
in the process of working with industry to form a public-private
partnership to implement the NGNP project. Can you please describe to
me the Department's planned process and time frame for accomplishing
this?
Answer. The Department of Energy has completed a market research
survey that asked respondents for feedback on a number of aspects of
the terms and conditions of various potential federal contracting
mechanisms. The results of this survey are being factored into a draft
solicitation for forming a cost-shared public-private partnership for
the design, licensing and construction of the Next Generation Nuclear
Plant Demonstration Project. As stated in the Budget, a Secretarial
decision on the future of the NGNP project is planned for the fourth
quarter of FY 2011 and will consider technical, financial performance,
and other issues in determining the appropriate next steps, including
whether to proceed further on the project. Future funding needs will be
determined through standard planning and budget development processes
and will be outlined in future Budget requests.
Question 6. Mr. Secretary, your Department has made reduction of
carbon emissions a major priority. The Idaho National Laboratory and
the NGNP Industry Alliance have estimated that if we applied nuclear
energy as a substitute for just 25% of the current fossil fuel input to
the petrochemical, refinery and fertilizer industries in the U.S.,
there is a market for over 300 high temperature gas cooled reactor
modules--resulting in a very substantial reduction in greenhouse
gasses. I'm told that for these industries, there's really no other
foreseeable alternative to fossil fuels than high temperature gas
cooled reactors. Given these facts, I'm a bit disappointed that
attention the NGNP project receives in the budget is so very modest.
Assuming the Department is successful in forming a partnership with
industry on the NGNP project, is it your plan to substantially grow the
NGNP budget in future years? If not, why not?
Answer. The Department's budget request reflects the belief that
light water reactors, both large and small, offer the quickest path to
deploying new reactors and achieving clean energy goals. A Secretarial
decision on the future of the NGNP project is planned for the fourth
quarter of FY 2011 and will consider technical, financial performance,
and other issues in determining the appropriate next steps, including
whether to proceed further on the project. The FY 2012 request for NGNP
maintains essential research and development activities. Future funding
needs will be determined through standard planning and budget
development processes and will be outlined in future Budget requests.
Question 7. I know that DOD, particular the Air Force, has a major
initiative in terms of developing alternative sources of liquid fuels--
-in fact, as I understand it, our military is one of, if not the
largest consumer of liquid fuels in the world. I know that the
Department of Energy has met with the Department of Defense to
encourage their support for Small Modular Reactors for electric power
production. Has your Department had a similar meeting or meetings with
Defense about the potential of high temperature gas cooled reactors in
terms of synfuel manufacture and coal liquifaction? Has the Department
encouraged DOD to become involved in the NGNP project? If not, why not?
Answer. The Department of Energy (DOE) is currently engaged with
the Department of Defense (DOD) on the deployment of light water small
modular reactors for electricity at various defense installations.
Previous conversations with DOD included discussions on the marrying of
high-temperature gas-cooled reactors (HTGRs) to the production of syn-
fuels from bio-feedstocks or coal and its potential impact on energy
and national security. DOE and DOD will continue to assess the
feasibility of liquid fuel production using nuclear energy as the heat
source, but no specific project is currently envisioned.
Question 8. Can you please tell me about the current status of the
Department's work with the NRC on a licensing regime for high
temperature gas cooled reactors? How much money is the FY12 budget for
this activity?
Answer. Since the Department of Energy (DOE) and the Nuclear
Regulatory Commission (NRC) submitted the joint Next Generation Nuclear
Plant Licensing Strategy--A Report to Congress in 2008, significant
progress has been made. Current efforts are focused on R&D
collaborations particularly in the area of thermal hydraulic modeling,
and the resolution of key policy and technical issues affecting high
temperature gas-cooled reactors (HTGRs). DOE has submitted 8 of 13
planned white papers to the NRC which address priority licensing
topics. DOE is also engaged in performing a detailed regulatory gap
analysis to review existing NRC rules and regulations and identify
their applicability to HTGRs. The results of the gap analysis and NRC
disposition of white papers will serve as the basis for a license
application content guide for HTGRs. The gap analysis is projected to
be completed 2011. The Department plans to spend $2.2 million on
licensing efforts in FY2012, which includes providing $1.5 million
directly to the NRC.
Question 9. As we all know, the budget for Yucca Mountain was
eliminated two budget cycles ago, but we are still dealing with the
ramifications of the decision to pull this the plug on the project. As
such, DOE's current liability for failing to begin accepting spent fuel
now stands at $16 billion and that is approximately a $2 billion
increase over the previous year's estimate. Previously, the liability
was estimated to be growing at $500 million per year; and now since
termination of the program, it has doubled the growth of the liability
to $1 billion per year. As such, what is DOE doing to rectify this
situation? Have you evaluated the long-term implications of your Yucca
Mountain termination decision on DOE's liability? What is DOE's
forecasted liability in 20 years or 60 years if the DOE fails to begin
accepting spent fuel?
Answer. For the purpose of appropriately recognizing the
Government's potential financial liability in the Department's
financial statements, the Department annually performs an assessment of
the Government's future potential liability due to the Department's
delay in beginning the acceptance of spent nuclear fuel in accordance
with the provisions of the Standard Contracts with the nuclear
utilities. The most recent estimate of the outstanding liability as of
the end of fiscal year 2010 was $15.4 billion. The Department based
this estimate of the future potential liability upon, among other
things, the costs that utilities have submitted for compensation and
that the Department has approved for recovery, pursuant to the existing
settlement agreements with nuclear power plant operators. This estimate
assumed that the Department would begin acceptance of spent nuclear
fuel in 2020, as was assumed in the previous year's estimate. While the
Department believes that the methodology utilized in performing this
assessment is appropriate for quantifying the Government's total
potential liability resulting from the delay in performance under these
contracts with utilities, the Department has no way to determine when
utilities will actually incur these costs and submit claims for
reimbursement, or when a Court's judgment may become final and
unappealable. As a result, the Department is unable to provide an
annual projection of the potential liability, and the estimates may
vary substantially from year to year, based upon the prior year's
actual cumulative experience of payments of claims under settlements or
judgments.
The Department's prior statements that each year of additional
delay in the beginning the acceptance of spent nuclear fuel would
increase the government's liability by up to $500 million were
predicated upon a further delay in completing the Yucca Mountain
repository. The Department has determined that a geologic repository at
Yucca Mountain is not a workable option. The Secretary has established
the Blue Ribbon Commission on America's Nuclear Future, and has charged
the Commission with identifying alternatives for managing the Nation's
nuclear waste. The Administration will evaluate the information from
the Commission as it develops a new strategy for nuclear waste
management and disposal. Forecasts will reflect strategies and
alternatives as appropriate.
Responses of Hon. Steven Chu to Questions From Senator Coons
Question 1. I was disappointed to see the House GOP propose
sweeping cuts to the ARPA-E program, which would leave it with only $50
million for the remainder of FY 2011. I think the program is absolutely
critical to continue to drive innovation and keep America competitive.
Over the next 5-6 years, how much more do you think we need to invest
in cutting edge technologies to be competitive in the global clean
energy market and what would be necessary to be the world's leader?
Answer. I thank you for your support of ARPA-E. ARPA-E is devoted
exclusively to funding specific high-risk, high payoff, research and
development projects to meet the nation's long-term energy challenges.
ARPA-E fulfills a critical need for transformational energy
technologies. Given the recent surge in energy investments overseas and
unparalleled growth in the global demand for energy resources, the next
few decades must be the most innovative period of U.S. history in order
to remain competitive in the energy economy of the future. ARPA-E will
play a key role in fostering that innovation. The magnitude of this
challenge is enormous, as is the opportunity. Encouraging American
innovation and maintaining our leadership in research and technology is
a high priority for the Administration.
I support the President's request for ARPA-E's budget, and look
forward to continuing to work with the authorization and appropriations
committees in Congress.
Question 2. The proposed DOE budget includes a decrease for the
ATVM program of 70% for the program in FY 2012, due to the fact that
credit subsidy scores have come back higher than expected, leading to
higher than anticipated costs. Do you think this is a critical program
that should be moved forward? How can we best ensure that it does?
Answer. The Advanced Technology Vehicles Manufacturing Loan Program
(ATVM) is a critical program that provides loans to automobile and
automobile part manufacturers for the cost of re-equipping, expanding,
or establishing manufacturing facilities in the United States to
produce advanced technology vehicles or qualified components, and for
associated engineering integration costs.
The ATVM Loan Program budget requests from FY 2010-2012 were for
administrative operations only because the $7.5B credit subsidy
appropriated in 2009 provided sufficient budget authority. The ATVM
Loan Program requested $6M for administrative operations in FY12
compared to $10M requested in FY11 and $20M appropriated in FY10. The
decrease in FY12 over the FY11/10 levels is due to the fact that the
ATVM loan program anticipates transitioning from loan origination to
portfolio management activities.
The Department is committed to utilizing the funds currently
appropriated to the ATVM Loan Program to fund solid projects to achieve
our statutory objectives. On July 13, the Department announced the
conditional commitment of a loan to Severstal for $730 million. To
date, over $9 billion in direct loans and conditional commitments have
been made to six manufacturers, three of which have been exclusively
focused on plug-in electric and hybrid electric vehicles. In addition,
we are currently engaged in due diligence on numerous other projects.
Question 3. I am pleased to see $5 billion for the Advanced Energy
Manufacturing Tax Credit (Section 48c) in the Department of Treasury's
budget. I participated in an effort during the lame duck session to try
and extend the program, and was disappointed that it did not pass. Do
you know the number and scale of clean energy manufacturing
opportunities we are missing out on because of this lapse?
Answer. Department of Energy (DOE) has supported Internal Revenue
Service (IRS) to award of $2.3 billion in tax credits for 183 clean
energy manufacturing projects in 43 states under the 48(c) program. The
manufacturing capacity supported by these grants will produce solar
panels, wind turbines, geothermal equipment, nuclear plant components,
and energy efficient building products, putting the US on track to
significantly increase our capacity to manufacture these high
technology, clean energy components. These facilities represent some of
the premier companies in renewable manufacturing.
The interest was extraordinary and the program was oversubscribed
by a ratio of more than 3 to 1. The Administration has called on
Congress to provide an additional $5 billion to expand the program.
Since, this program was a onetime snapshot of multiple industries
taking advantage of a program; the data was not comprehensive enough to
draw a specific conclusion. However, market research suggests that the
US wind industry is a $16 billion industry, solar is $3-4 billion, and
building controls and energy efficiency is roughly a $4 billion
industry. New technologies and advancements are being made every day
thanks to these 48c investments. Many of these technologies are new,
innovative, and game changing technology.
Question 4. The University of Delaware is currently working on a
proposal to establish a demonstration project for offshore wind off the
southern coast of Delaware. This project would provide critical
information for future offshore wind projects, including turbine
performance and impacts of storms, which will help reduce costs and
uncertainty, and draw more offshore wind projects to the U.S. Is there
any funding in DOE's FY 2012 budget for demonstration projects? If not,
do you expect to eventually offer such a program and when?
Answer. The Department of Energy's FY 2012 budget request includes
$63.7 million for offshore wind energy research, development, and
demonstration. The budget request specifically identifies $12 million
for partnerships with commercial developers, research consortia, power
producers, and electric utilities in the development and demonstration
of first-of-akind offshore wind power projects. DOE anticipates
selecting demonstration project partners through competitive
solicitations. The initial scope of DOE's anticipated funding awards to
these demonstration projects will focus on addressing project
deployment needs and will support basic technical data reporting
requirements.