[Senate Hearing 110-685]
[From the U.S. Government Publishing Office]
S. Hrg. 110-685
CLEAN ENERGY AND ``GREEN'' JOBS
=======================================================================
HEARING
before the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
TO
RECEIVE TESTIMONY REGARDING INVESTMENTS IN CLEAN ENERGY AND NATURAL
RESOURCES PROJECTS AND PROGRAMS TO CREATE GREEN JOBS AND TO STIMULATE
THE ECONOMY
__________
DECEMBER 10, 2008
Printed for the use of the
Committee on Energy and Natural Resources
U.S. GOVERNMENT PRINTING OFFICE
46-256 PDF WASHINGTON DC: 2008
---------------------------------------------------------------------
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512�091800
Fax: (202) 512�092104 Mail: Stop IDCC, Washington, DC 20402�090001
COMMITTEE ON ENERGY AND NATURAL RESOURCES
JEFF BINGAMAN, New Mexico, Chairman
DANIEL K. AKAKA, Hawaii PETE V. DOMENICI, New Mexico
BYRON L. DORGAN, North Dakota LARRY E. CRAIG, Idaho
RON WYDEN, Oregon LISA MURKOWSKI, Alaska
TIM JOHNSON, South Dakota RICHARD BURR, North Carolina
MARY L. LANDRIEU, Louisiana JIM DeMINT, South Carolina
MARIA CANTWELL, Washington BOB CORKER, Tennessee
KEN SALAZAR, Colorado JOHN BARRASSO, Wyoming
ROBERT MENENDEZ, New Jersey JEFF SESSIONS, Alabama
BLANCHE L. LINCOLN, Arkansas GORDON H. SMITH, Oregon
BERNARD SANDERS, Vermont JIM BUNNING, Kentucky
JON TESTER, Montana MEL MARTINEZ, Florida
Robert M. Simon, Staff Director
Sam E. Fowler, Chief Counsel
Frank Macchiarola, Republican Staff Director
Karen K. Billups, Republican Chief Counsel
C O N T E N T S
----------
STATEMENTS
Page
Bingaman, Hon. Jeff, U.S. Senator From New Mexico................ 1
Book, Kevin, Senior Vice President, Energy Policy, Oil &
Alternative Energy, Friedman Billings Ramsey Capital Markets
Corporation, Arlington, VA..................................... 18
Domenici, Hon. Pete V., U.S. Senator From New Mexico............. 7
Galvin, Denis, Trustee, National Parks Conservation Association.. 76
Hauser, Steve G., Vice President, Gridpoint, Inc., Arlington, VA. 37
Hendricks, Bracken, Senior Fellow, Center for American Progress.. 10
Limbaugh, Mark A., Former Assistant Secretary for Water and
Science, Department of the Interior............................ 70
Loper, Joe, Senior Vice President, Policy and Research, Alliance
to Save Energy................................................. 32
Moseley, Cassandra, Ecosystem Workforce Program, Institute for a
Sustainable Environment, University of Oregon, Eugene, OR...... 64
Woolf, Malcolm D., Director, Maryland Energy Administration,
Annapolis, MD.................................................. 23
APPENDIXES
Appendix I
Responses to additional questions................................ 93
Appendix II
Additional material submitted for the record..................... 113
CLEAN ENERGY AND ``GREEN'' JOBS
----------
WEDNESDAY, DECEMBER 10, 2008
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The committee met, pursuant to notice, at 9:35 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. OK, why don't we go ahead and get started.
The hearing will come to order.
With the economy now in recession, many economists have
urged that the Congress get busy early in the new Congress and
adopt an economic stimulus package that focuses on spending for
infrastructure and other goods and services that will maximize
job create over the short term, and also a return on our
investment over the long term. President-elect Obama also
favors such a strategy; and, particularly, he had called for a
stimulus bill that focuses on investments in clean energy
programs and infrastructure and conservation projects that
create green-collar jobs.
The stimulus bill is expected to be taken up early in the
new Congress. Although there's no final decision about the size
or scope of the stimulus package, all reports are it will be
big.
The purpose of today's hearing is to discuss a range of
energy and natural resource programs that should be considered
as part of an economic stimulus package. I'm glad that we have
the excellent witnesses we have today on the subject.
Clearly, there are a number of important energy measures
that can be implemented quickly and that will provide green
jobs and will result in significant energy savings, and will
enhance the incorporate needed to move to a clean energy
economy. Those, in my view, should be a central part of any
stimulus package. I'm very glad that the President-elect has
made this a priority.
I also hope that the package will include a substantial
investment in the critical infrastructure needs facing the land
and water management agencies under this committee's
jurisdiction. These agencies face many billions of dollars in
deferred maintenance of roads, trails, dams, and buildings,
much of which is in very great need of repair at this time.
In addition to this physical infrastructure, we need to
invest in restoring our natural infrastructure; that is, our
forests, wetlands, rivers, and rangelands. For example,
national park and forest restoration, water reuse, and
abandoned mineland reclamation projects can be as good an
investment, in the context of an economic stimulus strategy, as
our other public work projects. I hope we can see a significant
amount of the funds in a new stimulus bill devoted to land and
water resource management agencies in the Department of the
Interior and the Forest Service to restore the physical and the
natural infrastructure that they manage for the American
people.
I'd also like to note that, in addition to the stimulus
package, I do believe--and I've said this publicly several
times--that we have a real opportunity in the new Congress to
make progress on comprehensive and forward-looking energy
policy. I look forward to working with all my colleagues, both
Democrat and Republican, on this committee to get people's best
ideas for what ought to be included in that proposed energy
legislation.
Soon after the new Congress convenes, I hope we're in a
position to put forward draft legislation, for the committee to
consider, that is bold and, I hope, broadly supported.
Today, our first panel will discuss clean energy proposals,
and our second panel will discuss how we can stimulate the
economy through projects related to land and water management.
Before going to the first panel, let me call on Senator
Domenici for any opening comments that he'd like to make.
[The prepared statements of Senators Salazar, Cantwell,
Murkowski, Sessions, and Bunning follow:]
Prepared Statement of Hon. Ken Salazar, U.S. Senator From Colorado
Thank you Chairman Bingaman and Ranking Member Domenici for holding
today's hearing on investments in clean energy and natural resources
projects and programs to create green jobs and to stimulate the
economy. We all know how critical these issues are, and I am pleased to
have the opportunity to explore solutions that will not only create
jobs for the hard-working people of America, but that also lay a
foundation for a clean and secure future. I would like to thank our
witnesses for being here today to share their expertise with us.
I believe each of our witnesses and many members of this committee
are driven by a common insight that renewable energy will enhance our
energy, environmental, and economic security. In Colorado I have
witnessed firsthand the economic potential of clean energy, where our
citizens' commitment to a renewable electricity standard has attracted
thousands of new jobs to the state. In the Denver metro region alone,
the number of renewable-energy sector jobs tripled between 2004 and
2007. This economic growth, through clean energy and natural resources
projects can be expanded throughout our nation. We can invest in
projects on public lands that protect our water resources, decrease
wild-fires, and improve our aging infrastructure and we can invest in
our energy infrastructure, incorporating new high-tech solutions that
help us to curb our usage and improve energy efficiency. These jobs can
reach out to all sectors of our economy, helping blue-collar workers to
research scientists, and providing jobs to folks in our rural areas as
well as in our cities.
We have taken great strides over the past few months in advancing
our energy policy and I hope today's hearing will help us understand
the how to maximize the benefits of the work we have already done in
order to make even greater strides. Our nation holds the technological
potential and the workforce to implement these green initiatives, now
we must restart the economic system in order to capitalize on it. Time
and again throughout our history Americans, their hard work and
ingenuity have risen to meet our greatest challenges.
I believe that implementing homegrown solutions to our energy and
economic problems will not only help us here at home, but open new
economic opportunities to export these technologies to the rest of the
world. Clean energy will be an economic driver for the 21st century,
and I believe it is what we need to turn to now to put our nation on a
path to a clean and secure future. I look forward to hearing the
testimony and would like to thank the Chairman and Ranking member once
again.
______
Prepared Statement of Hon. Maria Cantwell, U.S. Senator From Washington
Thank you, Mr. Chairman, for calling this timely and important
hearing.
I feel we have finally reached a national consensus on something
most members of this committee have long known--to remain a world
economic leader and military superpower we urgently need to transform
and revitalize our nation's energy system to be cleaner, more diverse,
and more distributed.
I'd especially like to welcome Bracken Hendricks here today.
Bracken and I worked first worked together in 2003 to launch the Apollo
Alliance.
Back then the notion that a significant multi-billion dollar
investment in clean energy could be an engine of economic growth and
competitiveness, and create millions of high-wage manufacturing jobs
that could not be outsourced, was not well appreciated.
Today the need for this investment has been recognized and embraced
by both sides of the aisle and really the rest of the world so I look
forward to hearing Bracken's specific ideas.
A GENERATIONAL OPPORTUNITY
While some may argue that our current economic crisis makes it
harder to be bold and make the necessary investments, I believe this is
actually a generational opportunity to invest in America's long
neglected energy infrastructure.
A generational opportunity to repower America and end our
debilitating and costly over reliance on fossil fuels.
A generational opportunity to reestablish America at the forefront
of technological advancement and leadership.
A generational opportunity to harness our nation's manufacturing
prowess to make the trillions of dollars of new clean energy
technologies our world will need.
A generational opportunity to establish a robust clean energy
export market.
A generational opportunity to get serious about tackling and
slowing down global warming.
AMERICA'S TRANSMISSION GRID OUTDATED
Our nation's electricity grid is one area in particular I believe
suffers from a lack of public investment. While America's grid has been
called the most complicated machine on earth, with age and strain it's
grown a little creaky--and I'm afraid it's never been very smart.
Today's grid is based on outmoded technology that makes it less
reliable and requires greater generation resources than it should.
And with electricity demand predicted to grow by 17 percent in the
next decade, this is an urgent problem that will only get worse.
Now is the time to make the long neglected investments necessary in
our nation's electricity grid to increase its efficiency and
reliability and to meet future demand growth by integrating more
renewable and distributed sources of energy.
According to a recent report by the Department of Energy, 20
percent of the United States could be powered by wind energy by 2030.
But, we must commit approximately $60 billion in new transmission
capacity over the next 20 years to reach that target.
BPA BORROWING AUTHORITY
In the Northwest, we are blessed to have a more centralized
authority, the Bonneville Power Administration, which historically has
ensured our region has sufficient and reliable transmission capacity.
However, future demand growth and the need to accommodate vast new
wind farms threatens to overwhelm BPA's current infrastructure and
limit the deployment of green energy and green jobs.
That's why I plan to work with the Northwest delegation to push for
an additional $5 billion in Treasury borrowing authority that will
allow 4,700 megawatts of renewable resources to come online in the next
two years.
This green power investment means 50,000 green jobs--including high
wage construction jobs and economic multiplier spinoffs that benefit
local communities.
And unlike many stimulus measures, taxpayers are all but guaranteed
to get paid back with interest. BPA has a consecutive 25-year record of
making its annual payment to the U. S. Treasury.
WANT TO HEAR IDEAS ON HOW TO REVITALIZE GRID
Besides giving BPA access to the capital it needs, I look forward
to hearing from our witnesses on other measures we can enact in the
upcoming stimulus bill to build the transmission lines we need.
What we need to do to ensure our grid has the capacity and
flexibility to incorporate a diverse range of new renewable generation
sources.
And to make sure we are simultaneously infusing intelligence into
America's electric power grid to make it more efficient and dependable.
INVESTING IN A SMART GRID
Making our electricity grid smarter has been one of my top
priorities, and I'd like to welcome Steve Hauser, a long time
collaborator on this issue.
Steve played an important role in helping me draft the smart grid
legislation that became the Smart Grid Title of the 2007 Energy Bill.
Steve and the many members of the Gridwise Alliance know
revitalizing our nation's grid will take more than just putting more
steel in the ground and copper wires in the sky. Any new grid
investments must incorporate smart grid technologies that are able to
record and communicate valuable information on condition of supply,
consumer loads, or system performance.
We need to make the investments necessary to take our two-lane dirt
road electricity grid and turn it into the superhighway with on-ramps
for all sorts of new clean energy sources.
PNNL Smart Grid Study
In a groundbreaking study earlier this year, the Pacific Northwest
National Laboratory in my state of Washington reported on the results
of a year-long effort to put the power grid in the hands of consumers
through technology.
By enabling consumers to be active participants in improving power
grid efficiency and reliability, consumers who participated in the
project saved approximately 10 percent on their electricity bills
Plug in Electric Vehicles
Making our electricity grid smarter and more flexible is key not
only to making our grid more reliable and efficient, but also to making
distributed generation sources and plug in vehicles work for America.
Without smart grid technologies that can help ensure all these new
generation sources are managed wisely, we will potentially have future
peak demand problems during the day and underutilized grid capacity at
night.
CONCLUSION
There are immense technical and logistical issues involved in
transitioning to a clean energy system, but the benefits are clear.
The history and the strength of our nation lie in our ability to
continually invent new and better ways of doing things.
Whether it is building the most reliable electric system in the
world, laying down a massive interstate highway system, or creating the
Internet, Americans have marched forward making breathtaking
discoveries.
These achievements and investments have historically provided us
with immense prosperity as a nation and a quality of life we cherish.
The upcoming stimulus bill is a once in a generation opportunity to
ensure we have the infrastructure we need to reinvent, repower, and
revitalize America.
I look forward to working with my colleagues and the stakeholders
here today to find the right mix of investments to achieve our shared
goals.
Thank you.
______
Prepared Statement of Hon. Lisa Murkowski, U.S. Senator From Alaska
Mr. Chairman, Thank you for holding this hearing on this important
topic. Let me start by thanking Senator Domenici for his kind words. It
is hard to believe that this is truly the senator's final hearing of
his 36-year career. We all will miss him terribly, and the country will
miss his wisdom, integrity and his commitment to sound public energy
and land use policy. He leaves giant shoes to fill, which is not lost
on any of us on our side of the aisle as we look to the next Congress.
As Senator Domenici said about this hearing, given that our economy
is now officially in the recession we have all assumed has been
underway for months, it is important that we work to find a way to
stimulate our economy. Clearly this month and early next year the new
Administration of President-Elect Obama, and in fact, all of Congress,
will want to work quickly on efforts to lessen the length and severity
of this economic downturn.
Given last week's jobs report where we lost an unexpectedly large
number of jobs in November--533,000 of them--bringing the total to 1.9
million jobs so far this year--we need to do more than our action
during the first lame duck session last month of extending unemployment
insurance compensation for an additional 13 to 26 weeks.
But given that our national debt as of today is $10.66 trillion
dollars, meaning each citizen's share of the debt is now nearly
$35,000, and that our debt is increasing by about $3.8 billion a day,
and given that we could face a trillion dollar budget deficit for FY
`09 even if we don't pass a second stimulus bill; I will want to be
very certain that a new stimulus bill is not just a glorified
supplemental appropriations bill.
I will want it to contain projects that will jumpstart our economy
by both creating jobs, AND also result in useful capital stock that
will stimulate both the economy and the productivity of American
workers for decades to come.
When every dollar we are spending is going to have to be borrowed,
admittedly at this moment at low interest rates, this bill is going to
have to make America's economy more productive in order for us to
afford to pay this money back in the future without diminishing our
standard of living and harming our way of life.
I certainly believe that spending money for improvements in our
energy infrastructure can meet that definition. As I said recently, I
believe that the sharp record increases in energy prices of this summer
were a key trigger to the financial/mortgage meltdown that we have seen
this year.
While oil and natural gas prices currently are plummeting, oil
today costing just 28% of what it did five months ago, if we don't
improve our energy system and increase our production of domestic
energy, Americans will be right back to paying unsustainable prices for
energy as soon as the global economy improves. Even worse, if OPEC
nations are successful at drastically cutting back their oil
production, we may be paying high prices again even before the global
economy fully bounces back.
We still need a balanced national energy policy that promotes
renewable energy and energy efficiency, but also an expansion of
domestic fossil fuel production--the three-legged stool that I have so
often talked about in this committee.
Thus I am supportive of additional funding in a recovery bill for
weatherization--only if we can effectively spend more than the $487
million that is now proposed through past spending and the $250 million
more we added to the continuing resolution Sept. 30th (Section 130).
I support additional spending for electric vehicle battery
development--especially for aid to get such batteries made in the
U.S.--provided it does not overlap the $25 billion in loans to U.S.
auto manufacturers we approved in the Energy Independence and Security
Act (EISA) just a year ago this week.
But rather than just copying President Roosevelt's Civilian
Conservation Corps program and building more parks--even though I like
parks--I will want to see a significant amount of any stimulus spent to
help fund renewable, alternative and technological upgraded energy
projects, conventional energy projects on Native and Indian lands, and
national electricity transmission grid development that is so vital to
get new power from where it is generated to where it is needed.
I agree with the criteria that is rumored to likely be imposed on
all projects funded through a new stimulus: that they be already
authorized at least broadly, that they involve significant job
creation, that they can start construction, preferably within three to
six months, at least within 24 months, and help lead to the creation of
2.5 million new jobs within the life of the 111th Congress, and that
when they are completed, they will do ``double duty,'' both providing a
stimulus during construction; and making our economy more efficient and
making us more productive over their design lives.
I happen to believe that providing financial incentives NOW in a
stimulus for appropriate alternative energy projects and improvements
to conventional fuels will pay big dividends later.
For example, my home State of Alaska, is in the process of awarding
$100 million in state aid for renewable energy projects. Alaska has
identified 120 projects needing $311 million, from small hydro
projects, to geothermal, from biomass co-generation to solar electrical
generation, that could be under construction within a year--more than
20 of the projects could be under construction by this spring.
All of these projects would have the advantage of cutting
electricity costs in their local communities by between 20 and more
than 50 cents per kilowatt hour compared to the cost of diesel-
generated power currently used. And many of the projects would create
jobs, both during construction and operation. And the projects for
Alaska were authorized in Section 803 of EISA and the geothermal
projects were authorized by Section 625 of EISA in both Alaska and
across the country.
I'm sure Alaska is not unique. I'm sure utilities across the
country could suggest in short order renewable energy projects that
would help them to diversify their sources of power, while reducing
carbon emissions, and projects that might be economically competitive
with fossil fuels, especially after the receipt of this grant
incentive. These projects can all help make green energy companies
viable by improving their economies of scale, thus helping our economy
grow.
High voltage transmission funding is another area that should be
included. Many here have spoken to T. Boone Pickens who wishes us to
help expand wind generation from the Great Plains. But his plan only
works if the nation's transmission grid is rapidly expanded. Given
justified concerns about brownouts in both the Northeast and California
in the near future, spending money now on transmission makes vital
sense.
In the Energy Policy Act of 2005 in Title 5 we authorized $2
billion of grants to help get energy projects going on Native lands and
Indian reservations--all intended to help the resource owners and make
America less dependent on foreign energy sources. We have actually
funded about $1 million of those grants. There is a lot of pent up
demand for such aid. In my home State of Alaska, Cook Inlet Region Inc.
Native Corporation could start work on a huge Fire Island wind farm to
supply power to Anchorage, Alaska's largest city, if such money were
appropriated to help with the project.
And there are a host of carbon capture and storage projects, many
involving coal gasification technology , that are also ready to
proceed. There are nuclear projects also awaiting loan guarantees and
in some cases for new designs grant aid. We could quickly assemble a
list of such projects, if money were likely to become available.
I just hope that as we and staff work with the President-Elect to
settle on the details of a new economic recovery bill, that we keep an
open mind and include funding for a wide variety of clean-energy,
alternative energy and improved conventional energy projects and
transmission.
That is the way that we will improve American productivity and get
our economy back on track most quickly. Spending more on energy
infrastructure truly will be the gift that keeps giving to this nation,
long after the holiday decorations are put away.
I hope the witnesses when they recommend spending comment on the
number of jobs such spending may produce, whether the jobs are short
term or likely long-term in nature and provide any specific information
they have on the stimulative benefits of their proposed spending. I
look forward to the testimony of our witnesses and especially to
getting a chance to question them. Thank you Mr. Chairman.
______
Prepared Statement of Hon. Jeff Sessions, U.S. Senator From Alabama
I favor reducing our dependence on imported oil and I strongly
support any viable program that will reduce the amount of money that we
export to unfriendly foreign nations for oil. It is a sound policy to
redirect that money towards creating wealth and jobs here at home in
the United States, and we need to increase our domestic energy supply.
I also support effective policies that will reduce pollution and
CO2. We have the potential to move forward with a productive
Energy Plan, but the tendency of Congress has been to overreact and
throw money at programs that do not work or which are not cost
effective.
There needs to be a realistic approach that will benefit American
citizens and the American economy, and at the same time lower gasoline
and electricity prices and reduce pollution and CO2
emissions.
In a December 5th , Washington Post article by the able and liberal
columnist, E.J. Dionne Jr. he states that ``Obama's luxury is that the
economic demands of the moment almost perfectly coincide with his
political interests. With even conservative economists urging Obama not
only to cut taxes but also to spend and spend and spend some more, he
has an opportunity to keep a whole raft of political promises all at
once.''\1\ Dionne goes on to say that ``what we should fear most is not
that Obama will get to keep some of his campaign pledges but that the
stimulus will fall victim to classic logrolling. With so much cash on
the table, the temptation will be enormous to lard the package with a
slew of unproductive projects and all manner of narrow tax breaks for
interests that probably never knew existed.''\2\
---------------------------------------------------------------------------
\1\ http://www.washingtonpost.com/wp-dyn/content/article/2008/12/
04/AR2008120402860_pf.html
\2\ Id.
---------------------------------------------------------------------------
There is truly a chance to reach a political consensus on programs
that we all know will work. Let's get busy and do those things and do
them quickly. On matters that are more dubious or more questionable,
let's get busy and follow our chairman as he seeks the most accurate
and up to date information concerning best priorities for action. It is
plain to me that the expanded use of nuclear power for electricity
generation must be a part of any serious program for clean energy.
Creating jobs in clean energy programs can work. By redirecting our
transfer of wealth abroad to purchase energy, mainly oil, to cost
effective American energy production, we in effect, create these jobs
with the wealth we were transferring abroad. Count me in on this
effort.
Still, I believe that not every program is worthwhile. Not every
program is as good as another. Thus, this country and this Congress
should take great care to not waste a single dollar and to ensure that
supported programs are the best bang for the buck.
______
Prepared Statement of Hon. Jim Bunning, U.S. Senator From Kentucky
Thank you Mr. Chairman. At a time when the average American's
pocket book is getting tighter and tighter, it is imperative that we
carefully consider each new government spending initiative.
Whether it is in the form of a bailout or a stimulus, spending is
still spending and it is all ``green.''
When looking at how to best promote economic growth within our
nation's energy sector, we must be careful not to pick winners and
losers. All too often through overregulation or open-ended subsidies,
American taxpayers pay the price for the government's political
handouts.
I have long supported market-based initiatives to improve energy
efficiency and lower emissions through new technology. I have authored
bills and fought for provisions in the 2005 and 2007 energy bills to
expand Clean Coal Technology.
I believe that carbon sequestration technology is an integral part
of the future of coal.
Over half of our nation's electricity comes from coal power plants.
Without cheap energy from coal, Americans would pay much higher
electricity bills and our country would lose more manufacturing jobs to
foreign countries.
While the coal industry is important to our nation's economy, they
also have obligations to our environment. The future of coal must be
clean coal. Through the adoption of new technologies we can reduce
emissions and clean up the coal power process.
When considering any new green energy initiatives we must consider
all initiatives--including clean coal. Until alternative forms of
energy and renewable are more technologically sound, it is important
not to turn our backs our nation's most abundant resource.
A true energy policy needs only a light touch from Washington and
must be technology neutral and based on free markets.
Thank you Mr. Chairman and I look forward to questioning the
witnesses.
STATEMENT OF HON. PETE DOMENICI, U.S. SENATOR FROM NEW MEXICO
Senator Domenici. First, Senator Bingaman, I've been
treated harshly most of the time, in New Mexico--my next-door
neighbor hasn't come down to visit me. I mean, I've had at
least ten events that I thought Salazar would come down to, but
I look around, I called his name, and he never came.
[Laughter.]
Senator Salazar. Your staff forgot to invite me.
Senator Domenici. No, you were invited. I mean, it may be
that we didn't do it right. Anyway, I look forward to seeing
you there.
I thought that I had finished with hearings, because I was
already celebrating my departure. Now you called a meeting, and
you said it was urgent, and so, I came. I'm glad I came, except
I can't do anything except try to be part of the party, here,
because I'm not going to have any votes next year. But, I do
think your idea of getting started early and quick and putting
good people on this issue of what things in the energy area--
call them ``green,'' call them whatever you would like--that
we've already authorized but one still waiting. Which ones can
we do? Which ones might be part of a big deal? If we don't do
something, rest assured, they won't be there.
The second thing that I wanted to comment on, and I hope
you will not consider this to be trying to dump on
environmental rules and regulations, but I believe one of the
things you're going find most difficult about this is that
almost anything you do in this area is going to be subject to
long delays up front because of NEPA rules and regulations and
the kinds of things that are going to be required to approve
the projects. I even thought, as I reviewed this package last
night, that maybe if I were doing it and had enough time, I
might even do the crazy thing of suggesting an expedited
process for all of the environmental rules for these projects
that you are going to try to get done as part of the stimulus
package. Now, that may turn a lot of people off immediately,
because, when you talk about that, that's the end of the world,
right? I mean, I'm free to say these kind of things now that
I'm not running.
[Laughter.]
Senator Domenici. But, I used to say them before, too.
In any event, my statement, which I'm going to put in the
record, I believe is important, but there's too many Senators
present, and they want to participate. But, I did outline what
this committee did regarding the energy crisis. I, frankly,
believe, under your leadership for 2 years, my leadership for 2
years, and the other time that you've had it when we weren't in
control, that we have done more in 6 years than has been done
in 30 years or more to move America ahead in the energy crisis.
Many of the things being talked about by this administration as
things we ought to do because they'll help with the energy
crisis, we've already authorized them. There's billions of
dollars authorized in programs that will, indeed, fit the bill
that you're talking about.
We did three main bills that changed the energy face of
America, and probably the next people that look at it are going
to build on them and not even whisper that we already did them.
I hope you all will build on them because that wasn't easy
work. The passage of the big bill was difficult, and it's
filled with good things that we can do under Chairman
Bingaman's leadership. Filled with them. You know, they're
talking about green buildings. We have all the authorization
for green buildings in the Federal Government already
authorized. I mean, 2, 3, $4 billion worth is already in there.
We aren't doing anything with it. Nobody's putting any money
up.
So, I'd just like to put my statement in the record.
[The prepared statement of Senator Domenici follows:]
Prepared Statement of Hon. Pete V. Domenici, U.S. Senator From
New Mexico
Mr. Chairman, thank you for convening this important hearing today.
Obviously, these are extraordinary times. Congress is in session this
week to consider a bailout package for the Big 3 automakers, but our
country's economic woes go far beyond the domestic auto industry. We
have seen a rapid rise in unemployment and a distressed housing market.
A credit freeze threatens our nation's largest financial institutions.
And we have seen record declines in the stock market wipe away
literally trillions of dollars of wealth.
In response, President-elect Obama is contemplating the largest
public works program since the 1950s. The purpose of today's hearing is
to explore ideas within this Committee's jurisdiction for inclusion in
the expected stimulus package in January.
After 36 years in the Senate, it is difficult to leave this great
institution--but even more so with our country facing such tremendous
challenges. However, I can say with pride that we have all worked
hard--and in a bipartisan manner--to address the nation's energy and
natural resource needs in the 2005 Energy Policy Act, the 2006 Gulf of
Mexico Energy Security Act, and in the 2007 Energy Independence and
Security Act.
Indeed, in the last four years we've done more to advance energy
policy than had been achieved in the past 30 years, including:
Codifying, in 2005, the most extensive amendments to the
U.S. energy tax laws in over a decade, with $15 billion in
energy tax incentives--$4.5 billion of which was dedicated to
renewable energy incentives;
Opening 8 million acres on the Outer Continental Shelf to
access 1.25 billion barrels of oil and 6 trillion cubic feet of
natural gas resources;
Promoting the construction of clean energy projects through
the establishment of a Loan Guarantee Program. While I have
been disappointed with the Administration's implementation of
this Loan Guarantee Program, we now have applications for about
30 new nuclear units before the NRC. This program has never
been more important than it is now when it is so difficult to
secure the necessary funding to build clean energy projects. It
is my hope that the Obama Administration can realize the
promise of the Loan Guarantee Program we created in a
bipartisan fashion;
Directing the Federal Government to lead by example by
purchasing electricity generated from renewable resources,
``greening'' their substantial building stock through increased
energy efficiency measures, and imposing federal fleet
conservation requirements;
Increasing the production of biofuels through the
establishment of a Renewable Fuels Standard; and
Increasing the Corporate Average Fuel Economy Standards for
vehicles.
Of course, this is in no way a complete list of the numerous policy
advancements promoted by these bills. In fact, many of the suggestions
we will hear today are not new ideas at all. Instead, the witnesses
will ask that funding be provided for the programs this Committee has
already authorized. It is unfortunate that partisan politics has
prevented the handling of the appropriations process pursuant to
regular order as perhaps some of these important programs would have
already received needed funding.
For purposes of today's hearing though, we must make sure that we
are not simply throwing money at the problem. Instead, any
Congressional action must have a demonstrable impact on jobs in the
near-term, meaning within the next 12 to 24 months.
With regard to natural resource issues, there is great potential
for physical infrastructure projects, such as maintenance, restoration,
and reclamation projects, to provide jobs and stimulate the economy.
However, as we all know, such major projects undertaken by our federal
land management agencies are more often than not subject to legal
challenges over environmental issues. This begs the question of whether
any natural resource-related jobs will be available within the desired
two-year timeframe unless waivers or an expedited NEPA process are
addressed in the stimulus package. One only has to look at the anemic
progress made on the Healthy Forest Restoration Act to understand how
slowly the wheels of progress turn.
This will be, of course, my last hearing as a member of this
prestigious Committee. I leave it in the capable hands of our Chairman
and the incoming Ranking Member, Senator Murkowski. I have no doubt
that they will provide outstanding leadership on energy and natural
resource issues while continuing the Committee's well-deserved
reputation for bipartisanship.
Senator Domenici. In summary, I think there are many things
already included in the energy bills and energy laws that we
have passed, that we could look at them carefully and get a
very good, powerful basketful of things that you should spend
money on if you're going to spend it. I'm not sure how much we
should spend, because I'm not sure that this kind of money has
gotten us out of recessions in the past, but maybe our new
President knows something I don't know, and maybe we can get
out of it with spending money on new projects.
We used to do it, when I started here, until they sent a
team out, and, for two consecutive recessions, they measured
them and found that the jobs came on 36 months after the
recession was over. That wasn't a very good plan, right? So, we
stopped that, we didn't put that kind of program in. Now, it's
here again. I think the new President is very worried. So,
we'll see.
Thank you, Senator. Thank you very much.
The Chairman. All right. Let's go ahead and hear from our
first panel. Let me just introduce them, and then we'll hear
each of them take 5 to 6 minutes to summarize the main points
we need to know, and then each--I'm sure each member here on
the panel, each Senator, will want to ask some questions.
First is Mr. Bracken Hendricks, who is a senior fellow with
the Center for American Progress here in Washington; next, Mr.
Kevin Book, who is senior vice president and senior analyst
with Friedman Billings Ramsey & Company, in Arlington,
Virginia; next, Mr. Malcolm Woolf, who is a director of the
Maryland Energy Association; Mr. Joe Loper, who is the vice
president for policy and research with the Alliance to Save
Energy; and Mr. Steve Hauser, who is vice president of
GridPoint, in Arlington, Virginia.
So, thank you all for being here, and please go right
ahead.
STATEMENT OF BRACKEN HENDRICKS, SENIOR FELLOW, CENTER FOR
AMERICAN PROGRESS
Mr. Hendricks. Thank you very much, Chairman Bingaman,
Senator Domenici, members of the committee. It's an honor to
speak before you today. I do want to commend you for your
leadership.
I couldn't agree with you more, Senator Domenici, that many
of the things that need to be done today have already been
moved forward in energy legislation, but there has been a lack
of commitment to actually appropriate and to put the funds
forward to make the sort of investments that we need to steer a
clean energy future and to move our country onto a low carbon
path that reduces our dependence on oil. But, most importantly
for today, doing all of those things will jumpstart our
economy. It will create a tremendous new investment in the
foundation of our economy, in productive infrastructure, and,
very critically, in job creation.
I'm a senior fellow with the Center for American Progress.
We are a nonpartisan, multi-issue think tank. But,
interestingly, we have come back to the position that clean
energy is at the foundation of all of the elements of our
policy. It really is at the root of our national security
strategy. It's at the root of our plans to invest in the
domestic economy. It's at the root of our plan to rebuild
cities and create jobs.
So, I want to talk to you briefly today to set the context
of why a green stimulus--why investing in a clean energy
strategy a the core of an economic recovery package makes sense
as economic policy, not only as environmental policy. I think
that your committee is positioned to lead in this critical
conversation around what an economic recovery package will look
like.
We stand at a unique moment in American economic history.
This is one of the deepest and longest recessions that we've
faced in a generation. The decline in GDP in the third quarter
was the biggest since the recent recession of 2001. Job losses
in 2008 are almost 2 million, half a million in November alone.
Household income is lower now than it was in 1999. One in 11
mortgages is delinquent or in foreclosure. Credit-market
borrowing has dropped by about 45 percent. This is a very
serious contraction. It's a contraction that's lasted for over
a year. The resulting loss of demand in the economy is not
going to go away within 3 to 4 months.
I could impress upon you one thing in this conversation, it
would be that we need a recovery package, and that the
traditional rules of stimulus, while they are critically
important in a V-shaped, short-term downturn, in a U-shaped
recession, which has a prolonged trough with sustained job
losses, needs not only an infusion of capital, an infusion of
demand and new borrowing, new spending in that very short 3- to
4-month window, but it critically needs it over the course of
12 and 18 months, as well.
So, we've put forward a 12-month economic recovery package
at the Center for American Progress. We feel that it's
important that it be balanced. It's about split equally between
short-term impacts that will use tax credits and immediate
spending to increase demand, but also longer-term projects that
will be released a little bit more slowly--investments in
transit, investments in energy infrastructure, like the
electrical grid, investments in green buildings, schools, and
critically needed projects that have been neglected that will
produce a long-term legacy, as well.
I also want to impress upon you that the size of the
recovery package matters, as well. There's a unique convergence
right now. The Chamber of Commerce and the Center for American
Progress stand side by stand in calling for significant
investments in infrastructure. Paul Krugman, a progressive
economist, has called for a $600-billion recovery package,
about 4 percent of GDP. Interestingly, Goldman Sachs has come
to almost the same number: 500 million.
So, the Center for American Progress is putting forward a
call for a $350-billion first-year recovery package, with the
possibility of a 2-year plan. That's over 2 percent of GDP.
We've called for about a third of that package being focused on
critical needed energy investments.
I want to stress for you that these investments will create
vitally important jobs. We did a job study, starting in the
summer, when we could see that a recession was looming and that
a recovery package would be needed, and we found that $100
billion invested in smart grid, green building, manufacturing
job creation would be critically important to jumpstart the
economy. Very interestingly, it would create 2 million jobs.
When we compared that to spending on a traditional
consumption-based stimulus that would simply give tax breaks or
rebates to people to encourage immediate household consumption,
we found that 22 percent of that spending would leave the
economy immediately in purchasing imported goods, where, if you
invest in infrastructure, in capital projects that have been
backlogged, that are ready to go, only 9 percent, 9 cents on
the dollar, would leave the economy; fully 91 cents would stay
within local communities and create jobs.
We also compared that package to what it would mean to
invest the same amount of money in oil in a traditional energy
economy, and we found that investing in these green projects
that create efficiency and encourage renewable energy
deployment, encourage new markets, new skilled labor--it takes
dollars that would be spent on waste energy, and, instead, we
put it into the skills of working people, new construction, and
new manufacturing jobs, and you get four times the number of
jobs from investing in green clean-energy projects than you
would from investing in traditional energy, and three times the
number of jobs earning above $16 an hour.
So, this is not only green stimulus, but it's good
stimulus. It's fiscally sound, it's economically prudent, it's
smart government. We need to be, not only getting our economy
moving, but we need to be getting it moving in the right
direction.
So, let me just very quickly touch on broad categories that
I think are essential to have significant pots of spending on
in the near term to stimulate growth. Energy efficiency and
conversation programs, like the block grant, will drive
critical investment into States and cities who are hurting
right now and create spending on construction jobs. Programs
like weatherization will save consumers money, and green school
construction will put money into communities. Similarly, we can
invest in manufacturing and create jobs, as well. So,
infrastructure, construction, and manufacturing, and then
investing in the training and skill-building provisions that
will make that possible.
So, thank you very much. I look forward to answering
specific questions as we move forward.
[The prepared statement of Mr. Hendricks follows:]
Prepared Statement of Bracken Hendricks, Senior Fellow, Center for
American Progress
Chairman Bingaman, Senator Domenici, and Members of the Committee,
thank you for the invitation to discuss how investments in clean and
efficient energy and environmental improvements to our nation's
infrastructure can create jobs and economic stimulus during this time
of tremendous challenge for working families.
Today we urgently need immediate stimulus and near term recovery
investments; yet we must also use our resources wisely, not only to get
our economy moving but to get it moving in the right direction. A green
recovery plan will create more jobs, and more good jobs at higher
wages, and it will create new markets for American business while
reducing the overall cost of addressing our climate and energy crises.
This is smart public policy and good government, and I applaud your
leadership in seeking this path forward for the nation.
I am Bracken Hendricks, Senior Fellow at the Center for American
Progress Action Fund, a non-partisan multi-issue think tank focused on
developing innovative policies that build a more broadly shared
prosperity. At CAPAF, we have come to believe, through deep research on
the matter, that smart strategic investments in climate solutions can
help to rebuild the underpinnings of our economy and create significant
numbers of good jobs.
Built on the foundation of efficient and low-carbon energy sources,
this transition can be a source of increased business opportunity and
competitiveness, stronger communities, improved national security, and
increased prosperity. We call this approach ``the Energy Opportunity,''
and we believe that it must be at the center of both America's energy
policy and our economic policy as we confront the interrelated
challenges of a sagging economy, rising energy prices, and a growing
climate crisis.
In this testimony, the Center for American Progress Action Fund
offers some thoughts on: 1) the current economic downturn and the
urgent need for an aggressive stimulus package that extends well into
the coming year; 2) why clean energy should be a major centerpiece of
any such recovery plan, possibly constituting from one quarter to one
third of a larger stimulus package; and 3) priority measures that will
not only create jobs and growth in the short term, but help rebuild the
foundation of the U.S. economy over the long term on the platform of
renewable and efficient low-carbon energy.
THE NEED FOR STIMULUS AND RECOVERY
The U.S. economy is facing the most serious difficulty we have
experienced at any time in a generation. Long-run problems of stagnant
or falling wages and incomes are no longer hidden by artificially
inflated asset values. The effects of the financial crisis have moved
from Wall Street to the daily operations of business and the daily
lives of families.
Consider that:
The 0.5 percent decline in gross domestic product in the
third quarter of 2008 was the biggest since the last recession
in 2001.
Total job losses in 2008 have hit over 1.9 million,
including 530,000 in November alone.
Median household income is lower than it was in 1999.
The values of homes fell by 2.5 percent, or $351 billion, in
the second quarter of 2008.
One in 11 mortgages is delinquent or in foreclosure, and
credit card defaults rose to 5.5 percent of all credit card
debt by the second quarter of 2008.
Credit-market borrowing financed 35.2 percent of fixed
investment by non-financial corporate businesses in the second
quarter of 2008, down from 80.1 percent a year earlier.
In this climate, there is an urgent need for federal policies
designed to provide stabilization, stimulus, recovery, and growth to
address these huge problems. Without action, there is too great a risk
of further collapse and an ever-worsening spiral of job loss and
economic decline. In addition to action aimed at stabilizing the
extremely shaky auto industry and financial and housing markets,
Congress should act quickly to pass measures to stimulate the broad
economy and commence the road to recovery.
Stimulus policies should be designed to offer an immediate boost
throughout the economy by spurring demand. Their purpose is to quickly
stall a downward spiral in the economy and give confidence to
businesses to invest and hire by restoring demand for their products.
But the consequences of the current downturn are not likely to be
reversed quickly by traditional, fast-moving stimulus measures. Also
needed is a recovery program to accelerate the creation of a strong
labor market and restore lost jobs over the next two years.
There is a growing consensus that stimulus and recovery spending
should be on the order of 2 percent to 4 percent of GDP. Nobel Prize-
winning economist Paul Krugman concludes that, ``the stimulus package
should be at least 4 percent of GDP, or $600 billion.''\1\ Goldman
Sachs calls for a stimulus of $500 billion.\2\ CAP Senior Fellow Gene
Sperling, former director of President Bill Clinton's National Economic
Council and Clinton's national economic advisor, says, ``The breadth
and potential depth of that demand crisis require us to undertake a
bolder `Powell Doctrine' on stimulus in which $300 billion to $400
billion--or at least 2 percent of GDP--should be the starting point
with an understanding that more could be needed and that we will need
to call for a coordinated global stimulus.''\3\
---------------------------------------------------------------------------
\1\ Paul Krugman, ``Stimulus math (wonkish),'' ``The Conscience of
a Liberal,'' November 10, 2008, available at http://
krugman.blogs.nytimes.com/2008/11/10/stimulus-math-wonkish/.
\2\ Brian Faler, ``Democrats Set to Take on Stimulus Bill as Price
Rises,'' Bloomberg.com, November 4, 2008, available at http://
www.bloomberg.com/apps/news?pid=20601103&sid=aXUnWNKW7P5I&refer=us.
\3\ Gene B. Sperling, Testimony before the House Energy and
Commerce Subcommittee on Health, November 13, 2008, available at:
http://www.americanprogressaction.org/issues/2008/
sperling_testimony.html.
---------------------------------------------------------------------------
Beyond the immediate challenges, the economy has long-standing
fundamental problems that must be addressed by major changes in our
nation's approach to energy, education, infrastructure, scientific
research, innovation, and other areas as described in the Center for
American Progress report ``Progressive Growth.''\4\ Stimulus and
recovery measures aimed at the immediate crisis should be designed, as
a matter of good governance, to serve double duty by providing a
jumpstart in the investments needed for the country's long-term growth.
A green recovery strategy can meet both of these objectives.
---------------------------------------------------------------------------
\4\ John Podesta, Sarah Rosen Wartell, and David Madland,
``Progressive Growth: Transforming America's Economy through Clean
Energy, Innovation, and Opportunity.'' Center for American Progress,
November 2007. Available at: http://www.americanprogress.org/issues/
2007/11/progressive_growth.html
---------------------------------------------------------------------------
The Center for American Progress has outlined a plan to invest $350
billion (greater than 2 percent of GDP) in a one-year stimulus and
recovery package that will jump start economic demand and stimulate job
creation while making a significant down payment on meeting these
broader public policy challenges, making efficient use of taxpayer
funds. In broad categories, the $350 billion package includes
approximately:
$55 billion to spur demand and assist those most in need.
$70 billion aid for state and localities.
$175 billion for infrastructure investments in stimulus and
recovery.
$50 billion for tax cut stimulus.
Within the infrastructure section, this plan identifies over $100
billion of clean energy and environmentally beneficial projects and
programs that could help direct new investment rapidly into deploying
energy efficiency and low-carbon technology. This approach will drive
new investment in construction and manufacturing jobs, create new
markets for technology and skilled labor, and help cut consumer energy
costs, all while leaving a legacy of productive infrastructure and
investments.
A GREEN RECOVERY MEANS MORE GOOD JOBS
Working in partnership with the University of Massachusetts'
Political Economy Research Institute, the Center for American Progress
recently released a report entitled, ``Green Recovery: A Program to
Create Good Jobs and Start Building a Low-Carbon Economy.'' The report
outlines a program of investment that would rapidly inject $100 billion
into the domestic economy through near-term spending on energy
efficiency and renewable energy.
This analysis found that a strategy for economic recovery that
invests in new energy alternatives and smart public infrastructure
provides superior improvements in economic performance and job creation
when compared to either rebates or comparable spending on traditional
energy sources. A program of investment in deploying new clean energy
technology and improving building efficiency is good short-term
economic policy. It would drive immediate spending into some of the
hardest hit sectors of the domestic economy in construction and
manufacturing. Put simply, a green recovery package creates more jobs
and more good jobs than any other strategy. It deserves strong
consideration at this time.
There are many ways in which government spending can stimulate the
economy and create jobs as part of a recovery program. Public spending
directed toward a green recovery, however, would result in more jobs
than spending in many other areas, including, for example, on rebates
for increasing household consumption, which was the primary aim of the
April 2008 $168 billion stimulus program. Near-term investments in
energy efficiency and renewable energy also have the added benefit of
moving the country toward the low-carbon future that is necessary to
increase our international competitiveness and national security, and
avoid the devastating social, economic, and environmental effects of
global warming over the long term.
A green recovery program is more effective as an engine of job
creation than spending the same amount of money within the oil industry
or on household consumption. Increasing spending by $100 billion on
household consumption along the lines of the April 2008 stimulus
program would create about 1.7 million total jobs, or about 16 percent
fewer jobs than the green recovery program. In addition to creating
more jobs, targeting an economic stimulus program at increasing green
investments also creates more good jobs at higher wages than either a
conventional stimulus or comparable spending in the traditional energy
sector. A green recovery strategy also offers longer-term benefits:
reducing home energy bills to provide consumer savings; stabilizing the
price of oil, natural gas, and other non-renewable energy sources
through reduced demand and increased energy diversity; and, of course,
building over time a low-carbon economy.
While it is not proposed as an option for economic stimulus,
spending on current fossil fuel-based energy offers a useful comparison
to demonstrate the substantially increased economic benefits of
investing in renewable energy and efficiency. Spending $100 billion
within the domestic oil industry, for example, would create only about
542,000 jobs in the United States. A green infrastructure investment
program would create 2 million jobs, or nearly four times more jobs
than spending the same amount of money on expanding oil energy
resources. And again, spending on oil offers no benefit in
transitioning the U.S. economy toward a low-carbon future, and it
perpetuates the economic and national security vulnerabilities of
continuing to rely on oil for the lifeblood of our economy.
A green recovery strategy will help to improve the overall
efficiency of the U.S. economy, which currently uses nearly twice the
energy for every unit of GDP when compared to many of our European and
Asian competitors.\5\ If the Bush administration had pursued an
aggressive package of energy-efficiency measures across the economy
starting in 2001, with implementation beginning in 2002, the cumulative
savings to the economy today would be a remarkable $206 billion in
avoided energy costs.\6\ These energy cost savings can increase the
purchasing power of American families for more productive purposes. In
addition, it will generate new markets for American manufactured goods
and advanced technology. But for the purposes of a near-term economic
stimulus package, two features of a green recovery are critical: it is
relatively more labor intensive than other investments, and the jobs
that it creates are more concentrated on domestic workers.
---------------------------------------------------------------------------
\5\ Center for American Progress and the Worldwatch Institute,
``American Energy: The Renewable Path to Energy Security'' (2006)
available at http://www.americanprogress.org/issues/2006/09/
american_energy.html/AmericanEnergy.pdf (last accessed October 2007).
\6\ American Council for an Energy Efficient Economy, data supplied
by Dr. John Laitner, September 2008.
---------------------------------------------------------------------------
Green jobs are more labor intensive. Relative to spending within
the oil industry, the green investment program utilizes far more of its
overall $100 billion in spending on hiring people than it does on
purchasing machines and supplies. Renewable energy and energy
efficiency create more jobs per dollar invested than traditional fossil
fuel-based generating technologies by putting money directly into
advanced technology manufacturing, modern infrastructure expansion, and
developing the skills of people. This is money that would have been
previously spent on wasted energy and imported fuel. These investments
substitute dollars spent on pollution and waste and redirect that
investment into the skills of workers and the infrastructure of
communities.
Green investments have more domestic content. A green investment
program relies much more on goods and services made within the U.S.
economy and less on imports when compared to spending either within the
oil industry or on household consumption. In general, about 22 percent
of total household expenditures flow toward imported goods. With the
green recovery investment program, only about 9 percent purchases
imports.\7\ Another critical benefit of a green economic recovery
program is that infrastructure upgrades, building efficiency retrofits,
renewable energy installations, and other components of green
investment all involve work that cannot easily be outsourced. Moreover,
the diffuse nature of these programs ensures that spending on goods and
services is spread widely across regions of the country and stays in
the local economies where these services are rendered, as compared to
large, centralized energy or infrastructure projects. The economic
spillover and indirect job creation effects of this phenomenon help
explain why green investments create more jobs and more good jobs than
the alternatives.
---------------------------------------------------------------------------
\7\ Robert Pollin, Heidi Garrett-Peltier, James Heintz, and Helen
Scharber, ``Green Recovery'' (Washington: Center for American Progress,
2008), available at http://www.americanprogress.org/issues/2008/09/pdf/
green_recovery.pdf
---------------------------------------------------------------------------
Public investment is important to private markets. In considering
the viability of spending on large-scale public investment projects,
one of the major issues that is often raised is whether such
expenditures absorb the limited amount of total investment funds in the
economy, and thereby ``crowd out'' private sector investment
activities. In fact, the weight of evidence examining the impact of
public investment on the U.S. economy does not point to a crowding-out
effect. It rather finds that, on balance, higher levels of public
investment will promote private sector productivity and higher rates of
return for business. As such, the evidence suggests that many kinds of
public investments in the United States generally crowd in private
investment by establishing the enabling conditions for sustained growth
in private sector investment and business formation. As a result, the
crowding-in benefits of public investments are also associated with
higher rates of private sector employment and job creation. For this
reason, it is important to recognize that while in a green recovery
strategy the public is priming the pump for new economic growth, new
private sector activity is the real engine of jobs and growth.
A GREEN RECOVERY POLICY AGENDA
Green investments are especially effective job and growth creators
because they stimulate new demand by moving the economy to advanced
technology, modern infrastructure, and skilled labor.\8\ Many of the
green investment projects, such as building retrofits and
weatherization, are labor intensive in construction and manufacturing
where unemployment is high. CAP has recommended that one-quarter to
one-third of a larger stimulus package be dedicated to the green
components of a plan. ``A Strategy for Green Recovery'' from the Center
for American Progress Action Fund describes in greater detail some of
the proposals outlined below. The following energy-related investments
can start stimulating the economy relatively rapidly, driving new
investment directly into communities. Some near-term opportunities for
driving new smart energy investments include:
---------------------------------------------------------------------------
\8\ Bracken Hendricks and Benjamin Goldstein, ``A Strategy for
Green Recovery: Stimulating the Economy Today by Rebuilding for Future
Prosperity,'' Center for American Progress Action Fund, November 10,
2008, available at http://www.americanprogressaction.org/issues/2008/
pdf/green_recovery_memo.pdf
Transit fare reductions and service expansions: Provide $2
billion in assistance to transit agencies to reduce transit
fares and expand services.
The Weatherization Assistance Program: Fully fund the
Weatherization Assistance Program at $900 million, the amount
Congress is authorized to spend on the program in fiscal year
2009, and build toward a goal of weatherizing 1 million homes.
The Federal Energy Management Program: $1.3 billion to fully
fund energy-efficiency programs.
Workforce investment in the Green Jobs Act: Appropriate $250
million for the Green Jobs Act, authorized in the Energy
Independence and Security Act of 2007, to provide job training
and workforce investment in energy efficiency and renewable-
energy installations.
Refundable residential energy efficiency tax credits:
Increase funding for refundable residential energy efficiency
tax credits to $5 billion and raise the maximum credit for
household efficiency upgrades to $2,000.
Solar roofs on federal buildings: Provide $3.5 billion to
install 2,000 megawatts of solar power on federal rooftops, and
amend federal electricity contracting to allow for 30-year
power purchasing agreements.
New Starts Transit project investments: $5 billion to
partially bridge the anticipated shortfall in federal transit
capital funding for fixed-guideway projects approved in the
Federal Transit Administration New Starts pipeline.
Smart grid federal matching funds: Fund the Smart Grid Title
of the Energy Independence and Security Act of 2007 to support
$1.3 billion for infrastructure investment and demonstration
projects.
Green jobs restoring the land. Expand existing programs by
$800 million to restore parkland, forests, wetlands, wildlife
refuges, and rural ecosystems.
The Manufacturing Extension Partnership: Expand the capacity
of domestic manufacturing modernization efforts by increasing
MEP funding to $200 million.
Greening affordable housing: As proposed by the Center on
Budget and Policy Priorities, provide $5 billion for both
public housing and federally subsidized, privately owned units.
This could be distributed through public housing agencies and
the HOME program, and used to increase energy efficiency,
reduce energy operating costs, and bring empty homes back into
use.
Green school construction and renovation: Immediately
support state and local school modernization, renovation, and
repair at a cost of $7.25 billion.
Water and wastewater infrastructure: $10 billion for cities
to address issues with water and wastewater treatment.
In addition, some slightly less fast-acting, but still near-term,
recovery proposals can drive new investment into our energy
infrastructure within the next year to create needed jobs. A well-
balanced recovery plan will include proposals that are concentrated in
the first few months, as well as a range of structural investments that
will create significant growth over the course of the coming year. Some
of these proposals include:
Building retrofits: New authorization and funding of $10
billion to provide the initial financing for a public revolving
loan fund--tax exempt, with credit guaranteed by the federal
government, available for packaging with private capital--to
spur the national building retrofit effort, with the principal
to be repaid at the end of a five-year period.
Energy efficiency and conservation block grants: Appropriate
$5 billion to fund states, cities, and counties pursuing clean
energy projects.
``Cash for Clunkers'' rebates for older cars: Initiate a
$2.5 billion annual program to purchase and scrap older, more
polluting cars, in exchange for an owner agreement to acquire a
more efficient vehicle or use alternative transportation.
Clean Renewable Energy Bonds: Increase CREB funding by $3
billion to finance renewable energy projects by electric
cooperatives, government entities, Indian tribal governments,
and others.
Advanced coal technology to capture carbon: Invest $1.1
billion to deploy demonstration carbon capture-and-storage
technology at a coal-fired power plant.
Electric transmission grid: New authorization for a $10
billion outlay for a new Federal Trust Fund for transmission
and smart-grid build out through direct spending and grants to
states and municipalities.
Manufacturing: $15 billion in grants to states to support
manufacturing plant retooling to produce clean and energy-
efficient technologies and advanced batteries for electric
vehicles.
Advanced technology vehicle manufacturing and retooling: $25
billion in additional loans for automobile manufacturers. The
budget cost will be $7.5 billion.
Replacing aging buses and acquire rail cars: $4 billion on a
competitive bid basis for mass transit agencies to replace
aging buses with efficient, low-emission vehicles, acquire new
rail cars to meet the surging demand for transit services
across the nation, and perform needed and backlogged
maintenance.
Local transit infrastructure: $8 billion to fund 559
``ready-to-go'' public transportation capital projects that
could begin within months of federal funding being made
available. The funding would include the oldest and largest
rail transit systems that face increasing maintenance and
upkeep costs.
Capital assistance to states: $10 billion to fund and
dramatically expand the Intercity Passenger Rail Service
Program for a federal-state partnership to promote intercity
passenger rail development. This will include helping the
states and Amtrak acquire new and rehabbed passenger rail
rolling stock.
Clean Energy Corps: $3 billion for a national CEC, a
combined service, training, and job-creation effort to combat
global warming, grow local and regional economies, and
demonstrate the equity and employment promise of the clean
energy economy. The funding could be distributed through the
Corporation for National and Community Service and the
Department of Labor to administer CEC-related programs.
The Industrial Waste Recovery Program: $410 million to
provide incentives for industrial facilities to generate
electricity from recovered waste heat, as authorized by the
Energy Independence and Security Act.
Together these investments can readily drive over $100 billion into
near-term spending that not only provides benefits for our energy
security, but promotes stimulus by providing assistance to states and
cities, encouraging new investment in housing and the construction
industry, increasing consumer savings, expanding opportunities for
training and national service, providing direct relief to low-income
Americans, and reinvesting in our manufacturing jobs base.
Investing in a green recovery is not a replacement for a more
comprehensive climate strategy, nor does it obviate the need for other
forms of fast acting stimulus that help consumers with health care,
education, child care, unemployment insurance, or other pressing
economic needs. Instead, a green recovery program is a powerful
complement to a larger stimulus effort that is strategically targeted
to steer the economy where we need to go over the long term. Such a
plan represents an opportunity to make a significant down payment on
the sort of economic activity that will be required to fundamentally
transition our economy away from carbon-intensive and imported energy
sources, and to begin the process in earnest of moving toward more
efficient, domestic, and renewable energy as a solution to global
warming.
In addition to the recent report on Green Recovery, the Center for
American Progress has outlined a critical path for the long-term
transition to an economy that seriously takes on the challenge of
advancing climate solutions. The CAP report ``Capturing the Energy
Opportunity: Creating a Low-Carbon Economy''\9\ identifies 10 steps to
a low-carbon economy that will be critical to moving our country toward
reliance on low-carbon energy. This strategy involves a mix of direct
investment, smart regulation, and administrative solutions. The near-
term investments outlined in the Green Recovery program are wholly
consistent with this longer-term vision for change.
---------------------------------------------------------------------------
\9\ Report available at: http://www.americanprogress.org/issues/
2007/11/energy_chapter.html
---------------------------------------------------------------------------
Given the magnitude of coming challenges in building a vibrant,
competitive, and low-carbon economy, it is essential that Congress, as
the guardian of public trust resources, seeks to make any short-term
investments in stimulus with an eye toward coming long-term public
challenges. In addition, our research with the University of
Massachusetts shows that as well as providing long-term benefits, a
Green Recovery is good economic policy because it provides more jobs
and more good jobs for the American people. As such, a green recovery
represents good government by anticipating challenges and investing in
healthier communities, a more robust economy, and a safer world.
Thank you for your leadership on these pressing issues facing the
U.S. economy.
The Chairman. Thank you very much.
Mr. Book.
STATEMENT OF KEVIN BOOK, SENIOR VICE PRESIDENT, ENERGY POLICY,
OIL & ALTERNATIVE ENERGY, FRIEDMAN BILLINGS RAMSEY CAPITAL
MARKETS CORPORATION, ARLINGTON, VA
Mr. Book. Thank you, Chairman Bingaman, Ranking Member
Domenici, and distinguished members of this committee, for the
privilege of contributing to the discussion today.
The views I present today are my own and don't represent
those, necessarily, of my employer.
As Bracken mentioned in his remarks, this is no ordinary
time. Dramatic job losses, collapsing commodity prices, and a
slowdown in the pace of clean energy investment are symptoms of
an economic crisis that is neither typical nor trivial. We have
the third-largest annual job losses since Labor Department
records started, in 1939. Since 1950, there have only been
three significant down years in U.S. electric power demand.
2008 appears poised to be the fourth.
Some power utilities tell me that demand will be lower next
year, as well, in all likelihood. EIA says September oil
consumption fell 2.6 million barrels per day, year on year, a
contraction unseen since the early 1980s.
Master Card reported lower year-on-year gasoline demand for
32 consecutive weeks that ended last Friday. Approximately 40
States are draining their budget balancing funds due to lower
receipts and higher costs. State regulators are balking at
high-cost power projects, and private developers' wind projects
around the country are posting delays and cancellations.
Our historically abundant and low-cost energy sources have
been essential to past economic expansions. Investment in
energy capacity and efficiency gains will support recovery and
ongoing growth.
Clean energy is more expensive than conventional sources,
and virtually all new energy infrastructure is more expensive
than paid-for existing capital stock. It may seem hard to spend
money on energy of any kind, when economic contraction requires
less energy, especially when lean years leave less money for
higher efficiency infrastructure. This could be a mistake. Low
fossil energy prices will disappear with renewed economic
growth. Under-investment today increases the odds that
tomorrow's price spikes will be steeper, swifter, and more
devastating.
After demand fundamentals, credit may be the biggest
challenge facing clean energy. Even before the downturn,
lenders and underwriters were cautious about backing projects
that could cost as much, or more, as the market value of some
of the companies sponsoring them. Tighter scrutiny of borrowers
and greater regulatory capital requirements in the future could
mean higher debt costs. High interest rates mean higher
marginal costs for clean energy producers. Conversely, cheap
credit improves the relative cost profile of clean energy,
improving odds that a risky project will succeed. This
heightens the importance of government loan guarantees as a
mechanism for facilitating credit and lowering borrowing costs.
By itself, low-cost debt may not be sufficient to provoke
clean energy infrastructure during periods of tangible energy
demand contraction, but few projects are likely without it.
Then there's tax equity. Tax credits for clean energy,
rather than blind subsidies, encourage investment in
profitable, and therefore taxable, enterprises. But, not every
project sponsor needs to offset taxable income. Especially this
year.
Financing structures that shift project ownership to third-
party investors until tax credits are exhausted work poorly
when private firms have fewer taxable profits. Making credits
tradable would allow project sponsors to monetize credits in
small batches, rather than transferring the entire project.
Making credits refundable would turn credits into above-the-
line payments for sponsors without tax liability. Neither
approach will have the impact of long-term declining payments
for clean energy at a premium to market prices, an approach
which has been very successful at providing clean energy
investment in Europe. However, free money plans have many
takers, and costs add up fast. Moreover, surplus payments do
nothing to encourage clean energy technologies to aggressively
compete for price parity with conventional sources. This can
preserve entrenched disadvantages, especially if governments
withdraw their payment streams, as has happened in Europe
recently.
President-elect Obama has called for a transformation of
our energy infrastructure through green jobs. At minimum, this
could spark small and large business investment. At best,
government-funded workers could build high-performance schools
in low-loss smart electrical transmission grids.
But transformations have long lead times and many pitfalls.
We should not crowd out opportunities for incremental gains.
For example, plug-in hybrids are a transformation. Different
cars using different fuels. First-general hybrids offer
incremental gains by making every mile driven more economically
and environmentally efficient. It may be possible to hybridize
coal-fired generating capacity in a similar fashion, pairing it
with wind and solar installations to incrementally improve
greenhouse gas emissions on a combined per-megawatt-hour basis,
while managing costs. Likewise, relatively low-cost, low-
technology environment improvements, furnace upgrades, and
electric appliance or lighting retrofits to homes and
commercial buildings, policies this committee has already
authorized, offer incremental and enduring efficiency gains. In
the words if the President-elect, this work is shovel-ready, in
that it can begin almost immediately, even as broader strategic
plans develop.
Ultimately, the solution cannot start and end with
government alone. Fiscal, monetary, and labor policy actions
may require--may provide short-term relief, but complete
economic recovery will require private investors to commit
capital on a long-term basis to new, innovative, and productive
use. These clean energy investments must ultimately prove
economically viable. Technologies that cannot survive on a
long-term basis without ongoing government support can lead to
inefficiency and inefficient investment decisions, potentially
saddling governments with high, rising, and inflexible cost
burdens, and diminishing international competitiveness.
Mr. Chairman, this concludes my prepared testimony. I look
forward to any questions, at the appropriate time.
[The prepared statement of Mr. Book follows:]
Prepared Statement of Kevin Book, Senior Vice President, Energy Policy,
Oil & Alternative Energy, Friedman Billings Ramsey Capital Markets
Corporation, Arlington, VA
Thank you, Chairman Bingaman, Ranking Member Domenici and
distinguished members of this Committee, for the privilege of
contributing to your discussion concerning clean energy investment and
economic stimulus programs.
As a macro-level energy analyst for an investment bank, I interpret
domestic and global economic and policy trends for institutional
investors, including crude oil prices, alternative energy economics,
climate mitigation costs and the energy policy decisions taken by
governments. My testimony reflects lessons learned in this capacity as
well as observations I have drawn from ongoing discussions with
industry contacts and financial investors. The views I will present
today, however, are my own, and do not necessarily represent those of
my employer.
A GREEN RESPONSE TO A NATION IN THE RED
Dramatic job losses, collapsing commodity prices and a slowdown in
the pace of clean energy investment are symptoms of an economic crisis
that is neither typical nor trivial. This is the time for a well-
considered policy response. Measures that restore economic vitality at
the same time that they diminish energy-related environmental impacts
could satisfy immediate cash flow needs while setting the stage for
long-term strategic gains. After all, this nation's tremendous natural
resource wealth and historically abundant and low-cost energy sources
have been essential components of past economic expansions. Investment
in energy production capacity and energy efficiency gains will support
recovery and ongoing growth.
However, the solution cannot start and end with government alone.
Fiscal, monetary and labor policy actions may provide short-term
relief, but complete economic recovery will require private investors
to commit capital on a long-term basis to new, innovative and
productive uses. These clean energy investments must ultimately prove
economically viable relative to competing sources. Technologies that
cannot survive on a long-term basis without ongoing government support
can lead to inefficient energy use and investment decisions,
potentially saddling governments with high, rising and inflexible cost
burdens and diminishing international competitiveness.
The summary figures presented on the next several pages frame these
opportunities and challenges.
ECONOMIC GROWTH, ENERGY DEMAND AND ENVIRONMENTAL IMPACT
Figure 1* presents annualized changes in nonfarm payrolls since
February 1939. 2008 is on pace to be the third-worst year from a
job?loss perspective during this 70-year period. Only the 1982
recession and structural changes to the U.S. economy in 1945 at the end
of World War II exceeded this year's likely declines in employment
rolls. This is the most poignant, human element of the current economic
crisis.
---------------------------------------------------------------------------
* Figures 1-5 have been retained in committee files.
---------------------------------------------------------------------------
Figure 2 presents the annual change in U.S. electric power demand
between 1950 and 2007. The U.S. economy today produces goods and
services that differ markedly from economic output a half?century ago.
In this context, it is striking that only three years within the survey
period show significant (approximately 0.5% or more) annual decreases
in electric power demand. This is a very flattering statistic:
inexpensive, reliable and readily-available electricity enables
widespread diffusion of laborsaving and productivity-enhancing
technologies. By the same token, early data suggest that 2008 will
probably bring the fourth significant contraction of electric power
demand on record; in the absence of observed efficiency improvements,
the implications for quality of life are nothing to celebrate.
Figure 3 presents the annual change in U.S. petroleum demand
between 1950 and 2007. During the first two decades of the data set,
demand increased each year with only one exception. During the decades
following the 1973 Arab oil embargo, petroleum demand oscillated
between annual increases and decreases. In my view, this illustrates
how a combination of government-imposed efficiency standards and an
economic ``reality check'' can change the nature of energy consumption.
Although U.S. energy use patterns shifted markedly in the wake of the
1979 Iranian Revolution, I would suggest that the demand trough in 1981
reflects more than power generators switching away from oil-fired
boilers or consumers adaptively responding to sustained high prices. A
component of the demand retracement throughout the early 1980s resulted
from U.S. drivers' rapid shifts out of old, large, low-efficiency cars
and into new, small, higher-efficiency vehicles. Adaptive responses
come and go, but changes in capital stock can enduringly shape energy
use behaviors.
There is a strong positive correlation between economic security,
energy security and environmental security. Generally speaking, energy
demand increases with economic activity because growing economies
require more fuels of all kinds, and virtually all industrial
activities have environmental consequences. Prosperous economies use
more energy, but they can also afford to invest in highefficiency
capital stock. As a result, they tend to use energy more cleanly and
efficiently on a marginal basis than less-developed nations. The
opposite is also true. Slower economic growth, or economic contraction,
demands less energy, but lower economic output during lean years leaves
less money for higher-efficiency infrastructure. As a result, the
poorest nations resort to the lowest-cost sources of electric power and
transportation fuels. Put another way, efficient growth is cleaner and
more valuable than inefficient growth, but it also tends to be more
expensive.
Figure 4 contrasts the absolute and proportional levels of
greenhouse gas (GHG) emissions from key sectors of the U.S. economy in
2006, the most recent year for which robust data are available, with
1990, the baseline year established by the Kyoto Protocol. Although
energy intensity and emissions intensity of U.S. GDP declined between
1990 and 2006, and GHG emissions from industrial, agricultural,
commercial and residential sources decreased on an absolute and
proportional basis, emissions from electric power and transportation
increased. In short, throughout the greatest period of wealth creation
in U.S. history, Americans consumed more, drove more and manufactured
less. It may be challenging for the nation to consume less, drive less
and manufacture more during a severe downturn.
UN-STICKING CLEAN ENERGY INVESTMENT
Three primary forces appear to be depressing clean energy
investment today, all of them a function of the economic downturn.
First and most obviously, low commodity prices tend to widen the spread
between low-cost conventional sources and higher-cost alternatives,
rendering many newer technologies uneconomic (or more uneconomic) on a
relative basis. Second, limited access to, and higher costs of, credit
can make it difficult for project sponsors to source funding for new
initiatives. Third, unlike nations that provide explicit surplus
payments to encourage clean energy investment, the U.S. structures its
investment incentives as tax credits that can have little or no value
to project sponsors who do not need to shield taxable income.
Low fossil energy prices.--The ``problem'' of low fossil energy
prices is likely to disappear with renewed economic growth. Fundamental
scarcity has not gone away, and likely underinvestment in energy
infrastructure due to today's economic challenges increases the odds
that tomorrow's price spikes will be steeper, swifter and more
devastating than this year's peaks. Nor, by any objective measure, is
new energy infrastructure cheap in any case. Although short-run price
weakness may dampen recent land, labor and materials price inflation,
the next barrel of oil and the next megawatt hour of power will still
cost substantially more than the installed capacity, if only because
incumbent producers have already paid for the existing infrastructure.
Limited access to credit.--The second problem may persist even
after recovery begins. Credit challenges are unlikely to abate once
seized-up credit markets resume operation because lending is not likely
to resume until lenders can command higher interest rates. Higher
interest rates mean higher marginal costs for clean energy producers.
Even before the downturn, commercial lenders and debt underwriters were
unlikely to offer project sponsors low-cost debt without explicit
guarantees from the federal government. If coming reforms include
tighter scrutiny of borrowers' creditworthiness and greater regulatory
capital requirements for lenders, debt costs for risky projects could
be higher and approvals could be fewer and further between. It's easy
to see why: with ``overnight'' capital costs of between $4,500 and
$7,000 per kilowatt for some renewable sources and nuclear power
technologies, a single 1,000 megawatt installation would cost between
$4.5 and $7 billion--more than the market value of the common equity,
and a significant portion of the enterprise value, of many investor-
owned utilities.
For this reason, loan guarantees under Title XVII of the Energy
Policy Act of 2005 provide a powerful mechanism for improving the
financial return profile of clean energy projects at little or no cost
to taxpayers, provided, of course, that commercial lenders and federal
government guarantors sufficiently vet candidate projects for financial
viability. It may be possible to improve upon the Title XVII program,
which must be funded through Congressional appropriations, with
legislative proposals for a perpetually-funded ``Clean Energy Bank of
the United States'' chartered to provide project sponsors with low-cost
debt. By itself, low-cost debt may not be sufficient to provoke clean
energy infrastructure investment during periods of tangible energy
demand contraction, but few projects are likely without it. Moreover,
cheap credit improves the relative cost profile of clean energy,
improving odds that a risky project will succeed.
Diminished appetite for ``tax equity''.--Giving companies tax
credits for clean energy investment provides development incentives at
minimum explicit cost to the federal government while simultaneously
encouraging investment in profitable, and therefore taxable,
enterprises. But not every investor who might sponsor projects needs to
offset taxable income (especially not this year). This has led to
complex financing structures that shift project ownership to third-
party financial investors until the tax credits are exhausted, at which
point ownership reverts back to the project's sponsor, developer or a
designated third party. Fewer taxable profits within the U.S. economy
mean fewer dollars theoretically available for clean energy investment
in this fashion.
Legislative changes that make tax credits tradable (discrete,
transferable units of value that project sponsors can sell on a per-
unit basis to taxable entities, rather than transferring producing
assets as a whole) or refundable (credits that become explicit payment
streams for recipients without tax liabilities) might awaken some
investor enthusiasm for clean energy, but only if low-cost financing is
available. Long-term, declining surplus payments for clean energy that
offer a premium to market prices on a per-unit basis (like European
``feed-in-tariffs'' for electric power) have successfully encouraged
investment in high-cost, clean energy technologies by project sponsors
eager to capture a guaranteed rate of return in excess of capital
costs. However, this approach has two drawbacks. First, unless
governments limit the amount they are willing to spend, a ``free money
plan'' tends to have many takers, and costs add up fast. Second,
surplus payments do nothing to encourage developers and providers of
clean energy technologies to aggressively compete for price parity with
conventional sources and this can potentially preserve entrenched
disadvantages, particularly in the event that governments facing
financial strictures withdraw all or part of these surplus payment
streams.
RECOMMENDATIONS
There are many ways to address energy infrastructure needs with
programs explicitly directed at alleviating economic malaise. Stimulus
spending can offer a band-aid by giving cash-strapped consumers and
local governments necessary working capital. To extend the metaphor,
policies that promote efficiency gains offer strong medicine for an
intermediate-term cure, but the inevitable growth of energy demand
above and beyond conservation-induced or recession-diminished levels
means that this medicine can eventually lose its efficacy. Last,
incentives to build economically viable new infrastructure are
tantamount to transplant surgery, but surgeries can be last-resort,
high-cost, highrisk interventions.
President-elect Barack Obama has called for a new works program to
transform U.S. industrial and energy infrastructure. At minimum, a
``green jobs'' campaign may be a necessarily hopeful vision that
inspires small and large businesses to renew their investments in the
faltering economy. At best, a workforce of government-sponsored green
jobs could implement a strategic roadmap to 21st century municipal
infrastructure, including high-performance schools and low-loss,
``smart'' electrical transmission infrastructure capable of
interconnecting with, and balancing, a growing number of renewable,
intermittent power sources. But transformations can also have long lead
times and many potential pitfalls. As a result, it may be prudent to
consider opportunities for incremental gains, particularly if these
incremental changes can get dollars into the U.S. economy on a short-
term basis.
Figure 5 compares theoretical ten-year discounted returns on plug-
in hybrid electric vehicles (PHEV, via retrofit) with first-generation
(unmodified) hybrids and typical, light-duty passenger vehicles (LDV)
at two different long-term oil prices. At $115/bbl, the first-
generation hybrid has a 4% rate of return relative to the LDV and the
PHEV barely breaks even, and this assumes the driver never exceeds the
35-mile useful range of the on-board battery. At $80/bbl, the
conventional hybrid does 2% worse than the conventional LDV--close
enough to break even in another year's time--while the PHEV does 5%
worse. In theory, a new car purchaser should be willing to buy a hybrid
(the incremental change) with a government subsidy of as little as
$400, but it would take as much as $3,000 to encourage the same buyer
to consider a PHEV via retrofit (the transformational change). Notably,
neither theoretical scenario counts the costs associated with
generation, transmission and distribution capacity to support PHEVs.
The outcome of this analysis would be different if ready-made PHEVs
existed today at price points at, or below, the prices of first-
generation hybrids and conventional LDVs but, today, dollars spent on
incrementalism may go seven times further than dollars devoted to
transformation.
In a similar fashion, it may be possible to encourage ``hybrid''
investments that pair new coal-fired generating capacity with wind or
solar installations in order to incrementally improve GHG emissions on
a combined, per-megawatt-hour basis while minimizing increases in
blended average capital costs. This pairing could also potentially take
advantage of the complementary relationship between coalfired base-load
generation and the use of alternative power to satisfy peak demand.
Last, there are ample opportunities for incremental (and enduring)
efficiency gains within homes and commercial buildings that can be
obtained through relatively low-cost, low-technology envelope
improvements, furnace upgrades and electric appliance or lighting
retrofits. This work is, in the words of the President-elect, ``shovel-
ready'' in that it can begin almost immediately, even as broader
strategic plans are developed to address longer-dated infrastructure
strategies. Mr. Chairman, this concludes my prepared testimony. I will
look forward to any questions at the appropriate time.
The Chairman. Thank you very much.
Mr. Woolf, let me just correct the record here. As I
understand it, you are the head of the Maryland State Energy
Office, work for Governor O'Malley, in that position, instead
of what I had said before. So, welcome. Go right ahead.
STATEMENT OF MALCOLM D. WOOLF, DIRECTOR, MARYLAND ENERGY
ADMINISTRATION, ANNAPOLIS, MD
Mr. Woolf. Thank you, Mr. Chairman and members of the
committee. My name is Malcolm Woolf, director of the Maryland
Energy Administration. I'm appearing here today on behalf of
the National Association of State Energy Officials. These are
the folks who head the State energy offices and serve as
Governors advisors on energy matters.
I'm pleased to have this opportunity to discuss, today, the
immediate steps that Congress could take to accelerate energy
solutions to promote affordable, reliable clean energy, and, at
the same time, help address our immediate economic challenges.
It's hard to overestimate the promise of clean energy. Like
roads and bridges, clean energy investments immediately create
new jobs, ranging from attic insulators to solar installers.
Such jobs cannot be outsourced overseas. These investments will
continue to pay dividends in the years to come by reducing our
monthly energy bills, increasing generation of clean renewable
power, and accelerating our Nation's transition to a more
sustainable and secure energy future. For these reasons, I
agree that major new investments in clean energy should be part
of any emerging economic recovery package.
To be successful, however, we need to leverage the Federal
Government's resources with the ability of States to develop
innovative new strategies and implement programs on the ground.
Currently, State energy offices and research institutions
manage approximately $3 billion in program funding annually. As
such, energy offices offer a ready-made 50-State delivery
mechanism for rapid deployment of energy infrastructure
investments. For example, under Governor O'Malley, Maryland,
earlier this year, enacted one of the Nation's most ambitious
energy efficiency goals, to reduce electricity consumption
statewide, 15 percent by 2015. As part of our energy
infrastructure investments, the Maryland Energy Administration,
since 1991, has made 63 loans to overhaul State buildings,
resulting in an estimated annual savings of $2.7 million, with
total cumulative savings, thus far, exceeding $20 million. We
also have hundreds of residents currently seeking State grants
to partially offset their investments in solar, geothermal, and
wind projects at their own homes. While every State has a
slightly different set of tools, there's no other existing
vehicle that can coordinate implementation of clean energy
investments across all 50 States.
We recommend that the clean energy component of the
economic recovery package include the following four elements,
each of which utilizes existing delivery mechanisms to allow
for immediate implementation.
First, we urge Congress to launch a major energy-efficiency
building retrofit program. With 70 percent of electricity
consumed in buildings, minimizing the amount of energy that
literally goes out the window or through a leaking air duct is
a great investment.
In addition, numerous studies have documented the
significant number of jobs created by energy efficiency
programs. For example, for every million dollars spent in
energy performance contracting, 20 new green-collar jobs are
created. The key, as this committee has already noted, is rapid
implementation.
I've attached, to my written testimony, draft legislative
language proposing $5 billion be disbursed to the States within
30 days of enactment, utilizing the existing State energy
program formula.* A second $5 billion could be dispensed the
following year, based on actual results, based on how well the
States do in reducing kilowatts on the grid.
---------------------------------------------------------------------------
* Document has been retained in committee files.
---------------------------------------------------------------------------
Secondly, we support efforts by the Conference of Mayors to
fund the Energy Efficiency and Conversation Block Grant
Program. The mayors have already identified a long list of
projects that are ready to go. In Maryland, for example, the
city of Annapolis is seeking funding for its Easy Annapolis
Project to provide low-interest loans secured through a
voluntary property lien to promote residential energy
efficiency and renewable energy. This is a project that's ready
to go, if only we had money to fund it. There's a lot of
projects like that at both the State and local level. We
caution, however, that DOE needs to streamline the block grant
implementation process so funds can be disbursed quickly.
Third, Congress should expand funding for proven programs.
A study--this includes, of course, State energy offices--a
study conducted by--a few years ago, by the Oak Ridge National
Laboratories concluded that, for every dollar invested, over $7
in direct energy savings is achieved, and almost $11 in non-
Federal funds are directly contributed to energy programs and
projects. We also urge additional funding to low-income
weatherization to assist those most vulnerable to stay warm
this winter, funding to better implement energy efficiency
building codes, to make long-term improvements in the Nation's
building stock, and EPA's ENERGY STAR Program, which has
achieved remarkable success in promoting a wide array of energy
efficiency projects--products.
Finally, one of the simplest steps Congress could take to
promote long-term job creation and in--new energy investments
is to increase the energy tax incentives. We have two specific
suggestions. First, employers are more likely to hire new
workers if they know that the tax incentives will last for more
than 1 year. Second, to boost job creation in homeowner
building retrofits, the energy efficiency tax credit should be
increased to 50 percent for materials and labor, up to $2500.
Contractors would take those incentives, market it directly. It
would not need government implementation and could create real-
world jobs without delay.
In sum, clean energy investments, such as incentives for
attic insulation and solar panels, offer the ability to
stimulate the economy and create green-collar jobs, while, ask
the same time, reducing home--household energy bills, advancing
the Nation's energy security, and addressing our climate
challenges. States are uniquely positioned to jumpstart real-
world programs in weeks, not seasons.
We urge Congress to leverage the Federal Government's
resources with the States' ability to innovate and quickly
implement energy projects on the ground.
Thank you, and I look forward to your questions.
[The prepared statement of Mr. Woolf follows:]
Prepared Statement of Malcolm D. Woolf, Director, Maryland Energy
Administration, Annapolis, MD
Mr. Chairman and members of the Committee, my name is Malcolm Woolf
and I am Director of the Maryland Energy Administration. I am appearing
today on behalf of the National Association of State Energy Officials
(NASEO). NASEO represents all of the state energy offices in
Washington, D.C., and helps coordinate the work of the energy offices
throughout the United States. We are pleased to have this opportunity
to discuss immediate steps the federal government can take to
accelerate energy solutions that will promote affordable, reliable and
clean energy, and also help address our immediate fiscal challenges.
Prior to joining the Maryland Energy Administration, I served as Staff
Director of the Natural Resources Committee of the National Governors
Association, counsel on the U.S. Senate Environment and Public Works
Committee and in private legal practice.
SUMMARY
It is hard to overestimate the promise of clean energy to stimulate
the economy, create green collar jobs, advance energy security and
address our climate and environmental challenges. To be successful,
however, we need to re-establish a true partnership between the states
and the federal government on energy matters. We need to leverage the
federal government's resources with the ability of states to experiment
with innovative new strategies and implement programs on the ground. By
building a more meaningful partnership, we can achieve our ambitious
energy goals.
Major new investments in clean energy should be a critical part of
the emerging economic recovery package. Like roads and bridges, such
investments immediately create new green collar jobs, ranging from
attic insulators to solar installers. Such jobs can't be outsourced
overseas. And these investments will continue to pay dividends in the
years to come by reducing our monthly energy bills, increasing
generation of clean, renewable power, and accelerating our nation's
transition to a more sustainable energy future.
For many years we have discussed the need to achieve significant
increases in energy efficiency in order to strengthen our economy and
reduce dependence on foreign imports. We are now facing an historic
opportunity where Congress and the Administration are committed to this
effort.
States are uniquely positioned to immediately implement major new
energy investments. Currently, state energy offices and research
institutions manage approximately $3 billion in program funding
annually. As such, energy offices can provide a ready-made, 50-state
delivery mechanism.
These proposals would strengthen the Federal, state and local
partnerships and create the opportunity for significant success. Many
states and local governments are already setting ambitious goals and
the funds that we are requesting would help establish a real
partnership, not just one based on platitudes.
For example, under Governor O'Malley, Maryland enacted earlier this
year one of the nation's most ambitious energy efficiency goals to
reduce consumption 15% by 2015. We already have a list of pre-approved
energy performance contractors ready to overhaul state buildings, as
well as programs for energy efficiency grants and low interest loans to
local governments, non-profits, and private businesses, and workforce
training to create qualified contractors that can improve home
performance. While every state has a slightly different set of tools,
there is no other existing vehicle that can coordinate local
implementation in all 50 states.
For the proposed stimulus package, we recommend the following
immediate actions, which utilize existing delivery mechanisms:
1) Provide $10 billion for an energy efficiency buildings
retrofit program, utilizing existing delivery mechanisms (Draft
Legislation and Appropriations Language attached as Appendix
A);
2) Provide $6 billion for the Energy Efficiency and
Conservation Block Grant (Authorized in the Energy Independence
and Security Act of 2007 [``EISA'']);
3) Expand funding for proven programs, including:
(a) $125 million for the State Energy Program
(Reauthorized in EISA);
(b) $1 billion for the Low-Income Weatherization
Assistance Program (Reauthorized in EISA);
(c) $100 million for Energy Efficiency Building Codes
(consistent with the authorization contained in the
Energy Policy Act of 2005 [``EPACT 2005'']);
(d) $100 million for the EPA ENERGY STAR program
(consistent with the authorization contained in EISA);
(e) $250 million for Green Jobs (Authorization
contained in EISA);
(f) $250 million for the REAP program at USDA,
authorized in the 2002 Farm Bill, and reauthorized in
the 2008 Farm Bill, to provide energy efficiency and
renewable energy funds for farmers, ranchers and rural
small businesses; and
(g) $2.5 billion for the Low-Income Home Energy
Assistance Program (``LIHEAP''), in addition to the
$5.1 billion in FY'09 appropriation.
4) Provide 8 year extensions for the energy efficiency and
renewable energy tax provisions (including e.g., Production Tax
Credit [``PTC''], Investment Tax Credit [``ITC''], CREBS,
energy efficiency commercial buildings deduction, etc.) to
ensure long-term job creation, and expand the energy efficiency
tax credits to create immediate incentives for home energy
efficient makeovers.
DISCUSSION
A) STIMULUS PACKAGE
1) Launch Energy Efficient Buildings Retrofit Program
(``Direct Install'')
With seventy percent of electricity consumed in buildings,
minimizing the amount of energy that literally goes out the window--or
through a leaking air duct--is a great investment. In addition,
numerous studies have documented the significant number of jobs created
by energy efficiency programs. For example, for every $1 million in
energy performance contracting, twenty green collar jobs are created. A
massive new investment in energy efficiency building retrofits should
therefore be a central part of an economic recovery package, as long as
is implemented quickly.
Let me suggest four fundamental principles essential to success.
First, we need aggressive standards in all types of buildings--
residential, industrial, commercial, institutional, state and local
government. This is important because, once a building is in place, it
lasts decades. Second, we should focus on upgrading infrastructure as
this will generate energy cost savings, help households as well as
businesses, and produce sustainable high quality jobs. Third, rapid
deployment of energy efficiency measures is important to reduce the
costs of climate change mitigation measures to all consumers. Energy
efficiency reduces regulated air pollutants and greenhouse gas
emissions, and will be a critical step in any climate bill that is
developed. Finally, and perhaps most importantly, speed requires a
deployment mechanism utilizing existing deployment routes, i.e.,
states.
The recommended approach for this new program is quite simple, and
we have attached the draft legislative language and associated
appropriations language (Appendix A). This proposed $10 billion plan
would have $5 billion disbursed to the states within 30 days of the
date of enactment, utilizing the existing State Energy Program formula.
The existing authorization for SEP is quite broad and the only
modification necessary would probably be to increase the authorization
level. The states would disburse the funds utilizing all deployment
routes, including energy service companies, utilities, contractors,
community action agencies, etc. The savings would have to be monitored
and verified. Within three months of the date of enactment, DOE would
be required to publish guidance on metrics for the remaining portion of
the funds. Within ten months of the release of funds, the states would
provide a report on implementation of the energy efficiency buildings
retrofit measures, and within twelve months of the release of the
initial funds, the remaining $5 billion would be disbursed in
accordance with performance. This is a highly aggressive schedule. It
will require speed from DOE, which has not generally been a hallmark of
their efforts. Leadership from Congress and the new Administration will
help.
A number of complimentary proposals have been suggested, including
efforts in schools and creating a residential energy efficient
buildings retrofit program. These suggestions from groups such as the
Center for American Progress, the Energy Future Coalition, ACEEE and
NRDC should be quickly and closely examined. We have worked with these
other groups on these proposals A melding of these ideas is possible as
well. From our perspective, the key element is speed, which can only be
achieved utilizing a deployment mechanism which exists in all the
states, territories and the District of Columbia.
2) Appropriate Funds for Energy Efficiency and Conservation
Block Grants
Sections 541-548 of EISA established a new Energy Efficiency and
Conservation Block Grant (``EECBG''). This is a strong priority of the
U.S. Conference of Mayors, other local governments and the state
governments. If implemented quickly, it could provide critical near-
term investments in clean energy technologies.
We support the efforts of the U.S. Conference of Mayors and others
to streamline this process, so that the funds can be disbursed to local
governments quickly. If the EECBG funds wait for DOE to go through a
normal rulemaking process, followed by a competition among the local
governments, the funds could take years to distribute. That is
absolutely contrary to the intent of the incoming President and, I
expect, this Congress.
We recommend that the state portion of these funds be released
within thirty days in accordance with the existing formula for the
State Energy Program. NASEO recently wrote to Energy Secretary Bodman
to implement these measures urging DOE to take certain administrative
steps immediately to avoid delay in the distribution of funds early in
the Obama Administration. There is sufficient statutory and legal
authority to act in this manner. In short, the state energy offices are
committed to sharing best practices with the local governments and
ensuring regional coordination so that we actually can increase the
leverage and the success of these programs.
3) Expand Proven Energy Programs
a) State Energy Program
The State Energy Program (``SEP'') provides funds to the state
energy offices through the Department of Energy to fund energy
efficiency and renewable energy programs impacting every sector of the
economy. A study conducted a few years ago by Oak Ridge National
Laboratory concluded that for every federal dollar invested, over $7 in
direct energy savings is achieved and almost $11 in non-federal funds
are directly contributed to energy programs and projects. As noted,
this study was conducted several years ago when energy prices were
substantially lower, thus the projected savings today are even higher.
If Congress and the new Administration are serious about addressing
energy efficiency and renewable energy, the state energy network will
be crucial to achieving any of these goals quickly, if at all. This
network is robust and the energy offices generally serve as the program
implementers as well as energy policy advisors to the Governors. A
comprehensive energy effort must be coordinated, both at the federal
and state levels. There is no other existing vehicle that can do the
coordination. This funding allows the states to improve the energy
efficiency of homes, schools, hospitals, small businesses, local
governments, and the agricultural sector and to help the poor, elderly
and disabled. Funds are utilized to promote ENERGY STAR products and
work with energy service companies, utilities, local governments and
others on all types of energy projects. Aggressive implementation of
alternative fuels programs, as well as hybrid and plug-in hybrid
vehicle initiatives, is also part of this effort. States promote the
use of energy service performance contracts and implement these
projects, which reduces energy costs for all types of public and
private facilities, while keeping capital costs lower. States utilize
these funds to support new and innovative ``Green Jobs'', including
training programs, workshops, etc. States utilize these funds to
implement more aggressive building energy codes and conduct training
for code officials, builders, local building inspectors, architects and
contractors. States facilitate all types of energy financing programs
for projects. States also utilize these funds to conduct energy
emergency preparedness and to respond to energy emergencies.
The FY'07 Energy and Water Development Appropriations Bill provided
$50 million for this program. The FY'08 Appropriations were $44
million, including $10 million for competitive programs ($4 million of
these funds were siphoned off to other uses determined by the
Department of Energy). The FY'09 Appropriations Bills would have
provided $50 million, though the House bill would have provided one-
half of these funds for a ``competitive'' program between the states
and the Senate version would have provided $50 million for base
funding--an approach we supported.
We recommend $125 million for the stimulus package for SEP and an
additional $125 million for the FY'09 Energy and Water Development
Appropriations Bill. If the energy portion of the stimulus package is
going to succeed, Congress and the Administration will require a
coordinating function at the state level as well as the federal level.
Making this program ``competitive'' between the states fails to support
the laboratories of innovation and the collaborative model of best
practices. After all, many of the nation's most successful energy
programs, including the precursor to the Federal Energy Management
Program, the Renewable Portfolio Standard, the Renewable Fuel
Standards, and performance contracting programs, were created through
state innovations and would never have occurred in response to a DOE-
issued ``Request for Proposals.''
b) Weatherization Assistance Program
The President-elect stated that he wanted to weatherize one million
homes per year for ten years. The FY'09 Continuing Resolution (``CR'')
provided for $477 million for the DOE Weatherization Program, up from
$227 million in FY'08. The stimulus package should provide at least $1
billion for Weatherization, in addition to the FY'09 CR. The FY'10
appropriations should be $1.4 billion, and the ramp-up should continue
beyond that. While the ramp-up will be a challenge, especially in the
training area, it can be achieved. To ensure success, we strongly urge
that tens of millions of dollars from these funds be allocated to
worker training to get the community action agencies, local contractors
and local agencies qualified to perform high quality energy efficiency
retrofits.
c) Energy Efficient Building Code Program
EPACT 2005 authorized an expanded program to promote energy
efficient building codes, training and technical assistance. The states
are working to upgrade energy efficient building codes, but more is
needed. A massive new effort at training local building inspectors,
code officials, contractors, builders, utility personnel and architects
is needed to get these upgrades accomplished. We have worked with
congressional staff to create a national model standard with minimum
energy efficiency levels. We were greatly disappointed that the
International Code Council (``ICC'') process led to energy efficiency
gains of less than twenty percent at the ICC meeting in September, when
the higher codes were examined. This is insufficient and far too slow.
Those who have opposed increased building energy efficiency codes have
generally argued that it is never a good time to increase codes. This
is a mistake. Congress should take two steps: a) increase funds from
the pitiful $3.9 million presently provided for energy efficient
building codes to $100 million for this effort; and b) move forward on
legislation to upgrade the energy efficient building codes on a
national level. This will require a commitment, not only this year, but
for a number of years.
d) EPA ENERGY STAR Program
The EPA ENERGY STAR Program, within the Climate Protection Division
of the Office of Air and Radiation, is an exemplary program. The FY'08
funding contained in the Interior and Environment Appropriations Bill
should be doubled to $100 million in the stimulus package, and should
increase in base FY'09 funding and thereafter. The program works with
states, utilities and others to promote energy efficiency, saving
billions and reducing both electricity demand and natural gas demand.
This effort is absolutely a joint activity with the states and it needs
to expand.
A specific set of ENERGY STAR program expansion measures (totaling
$50 million) should be instituted as part of the stimulus package:
1) Energy efficient existing homes (+$12.5 million),
including Home Performance with ENERGY STAR (which is a joint
activity between the states, EPA and DOE). This promotes whole-
home retrofits. We are working with contractors, utilities and
others to bring the transaction costs down. We have instituted
a pilot program in the Mid-Atlantic States. Additional training
should be started promoting quality installation of heating and
cooling equipment. For example, air conditioning units are
frequently oversized and improperly installed, leading to more
peak demand and inefficiencies.
2) Expanded energy performance ratings systems for the
nation's buildings (+$7.5 million), should be instituted. Ten
percent of U.S. building space has already utilized the EPA
metrics (energy use/square foot). This performance rating could
apply to 60 percent of U.S. commercial building space.
Additional funding would allow the program to be expanded to
the vast majority of the nation's buildings and would allow EPA
to partner with states, local governments, builders and others.
3) Expanded small business programs would allow greater
technical assistance to this sector (+$10 million), including
small and medium-sized manufacturers and others. Again, the
focus would be the proper installation of high efficiency
services and products.
4) Expanded outreach (+$10 million) to states, utilities,
local governments, elementary and secondary schools and other
energy efficiency program sponsors in the implementation of
energy efficiency programs. The ENERGY STAR ``platform'' can
assist these emerging program sponsors in developing programs
quickly, based on existing best practices for overall greater
effectiveness.
5) Expanded outreach to state and local governments (+$10
million) could help these entities serve as a ``force
multiplier'' in achieving stated goals and monitoring and
verifying energy savings. This includes technical assistance,
sharing of best practices and programs, alternative financing
approaches and matching funds for innovative state programs.
This could also serve as a vehicle for identifying efficiency
measures in water and wastewater treatment facilities, though
the direct funding for the infrastructure improvements could be
provided through other elements of the stimulus package.
6) Exploring new technologies and practices (+$5 million)
could help EPA and DOE work together in their efforts to
partner with the states, and local governments and would also
help establish the ``feedback loop'' with the federal agencies
to ensure that federal laboratory and other spending is
sufficiently connected to the real world and programs that
might be used by the population.
e) Green Jobs
In addition to the additional training requirements noted in the
Weatherization section and the building codes section, of this
testimony EISA authorized a new ``Green Jobs'' program. While it is
authorized at $125 million, the funding should be $250 million in the
stimulus package, and it should be increased over time.
To successfully address the nation's energy challenges, a wide
range of new workers will be needed, including insulation installers,
air sealers, HVAC professionals, plumbers, renewable energy installers,
energy auditors, etc. The unions have established extensive
apprenticeship training efforts, which should be supported. Training is
also needed for local code officials, contractors, building inspectors,
and architects. In the industrial area, an expansion of the Industrial
Assessment Centers should be an important priority, along with expanded
coordination with the state energy and economic development officials.
Community colleges, technical colleges, manufacturing extension
services, cooperative extension activities (through USDA and state
agricultural agencies), are also key elements of a training regime.
This will require not only stimulus funds, but also persistent funding
over a period of years. Recent initiatives in Arizona, Maryland,
Massachusetts and New York could be excellent models for other state
and federal initiatives.
In addition, we recommend a new assistant secretary for ``Green
Jobs'' or workforce development be established. This could be at DOE or
DOL, or both. The key will be coordination.
f) ``REAP'' Program
While technically not jurisdictional to this Committee, we strongly
urge Congress and the Administration to expand the renewable energy and
energy efficiency program for farmers, ranchers and rural small
businesses, which was authorized in the Energy Title of the 2002 Farm
Bill, and reauthorized and expanded in the Energy Title of the 2008
Farm Bill. This program has been successful thus far, but could be a
more important lynch pin of federal energy and agricultural policy.
This program should be funded at a level of $250 million in the
stimulus package and an additional $250 million in FY'09. There is an
existing competitive program operated by USDA, with cooperation from
the state agricultural agencies, the state energy agencies and the
agricultural extension agents. Recent proposed changes by the present
Administration is pushing more funds towards loans and less to grants.
This is a mistake; especially in a faltering economy. The focus should
be on grants, with reduced match requirements, as well as technical
assistance programs. In addition to the stimulus package, we would
recommend base program funding in FY'09 of $250 million, with
increasing amounts in the future.
g) Low-Income Home Energy Assistance Program (LIHEAP)
In the FY'09 CR, Congress doubled the LIHEAP program to $5.1
billion. The funding is still inadequate to the task. Energy prices
have dramatically increased in the past five years and low-income,
elderly and disabled consumers are paying up to 20-30% of their net
income for energy costs. This includes not only natural gas and
electricity, but also heating oil and propane, which have experienced
extreme price volatility. The state level energy organizations support
a funding level of $7.6 billion, which would serve between one-third
and one-half of the eligible population. As you know, even at these
higher funding levels, LIHEAP funds provide only a share of energy
costs. Recent surveys by the National Energy Assistance Directors
Association (``NEADA'') have shown that shut-offs of utility service
have increased substantially in 2008. Recent oil price decreases have
not saved poor consumers from these price increases. Again, a
consistently higher funding level for LIHEAP is critical to serving the
poor. The energy efficiency building retrofit program discussed
elsewhere in this testimony would not duplicate either LIHEAP or
Weatherization.
4) Boost the Energy Tax Incentives
One of the simplest steps Congress could take to promote long term
job creation and new energy investments is to increase the energy tax
incentives. Recent congressional action to extend a number of the
energy efficiency and renewable energy tax provisions for a period
ranging from one year to eight years was a positive step. We recommend
that these provisions uniformly be extended to the eight years
established for the solar investment tax credit to provide stability to
this industry. This includes the PTC, ITC, CREBS, energy efficiency tax
credit for new and existing homes, and the commercial buildings energy
efficiency deduction (which should be expanded from $1.80/square foot
to $3/square foot, in accordance with the proposal from the American
Institute of Architects)
Several additional tax changes could also make a significant
impact. First, in light of the credit crunch and the desire to deploy
these technologies, a refundable tax credit should be instituted. These
credits also should be transferable. In addition, state tax benefits
should not be offset against the federal tax benefits for energy
efficiency and renewable energy.
Second, to boost job creation in homeowner building retrofits, the
energy efficiency tax credits should be increased from 10% of materials
(up to $500 per home) to 50% for materials and labor (up to $2500 per
home). Contractors would promote such an incentive directly, ensuring a
real world impact without government implementation or delay.
Finally, the new tax credit for plug-in hybrid and electric
vehicles should also be extended.
B) ADMINISTRATIVE CHANGES
1) White House Energy Council
We support creation of a White House National Energy Council.
Coordination of DOE, EPA, USDA, DOI and other agencies should be a high
priority of this new position. In the 1990s, through 2001, the state
energy agencies, the state utility commissions, the state air program
administrators and the state environmental commissioners (with support
from the federal government) met to coordinate policies, programs and
initiatives. The state agencies have begun meeting again to
reinvigorate this effort. The support of the new White House National
Energy Council and the Council on Environmental Quality would be
critical to this effort.
2) Energy Efficiency and Renewable Energy Office
Sadly, over the past few years, the Department of Energy has become
largely irrelevant to the real energy challenges facing the nation.
First, the procurement process for the Department of Energy's Energy
Efficiency and Renewable Energy Office is not working. It has gotten
slower and has become more distant from the states, local governments
and other governmental and private initiatives.
Second, with the elimination of DOE's regional offices a few years
ago, the substantive connection between the federal government and the
states has been washed away. The state energy offices pledge support to
new regional efforts and we have numerous suggestions on DOE
reorganization.
Third, the ``stovepipes'' remain at DOE, where the technologies are
not meshing. A bright spot has been the industrial energy efficiency
program, with increased levels of cooperation between the federal
government and the states. We are hopeful that with the recent new
management in the state and local program office, and a new commitment
from the incoming Administration, successful joint programs could be
instituted.
We also recommend the creation of Senior Deployment Coordinators in
each of the end-use offices at the Energy Efficiency and Renewable
Energy Division. These individuals would help work with states, local
governments, and the private sector to help get the work of the
national laboratories and these offices into the marketplace. There is
a fundamental lack of understanding at DOE about the connection between
R&D and deployment. The deployment function is not seen as important
and there is no institutionalized feedback mechanism between the states
and DOE on what works and what does not work. R&D cannot be done in a
vacuum. New efforts at commercialization have been a useful start.
We would also recommend expansion of the Technical Assistance
Program (``TAP'') coordinated by the National Renewable Energy
Laboratory (``NREL''), which utilizes federal laboratory expertise and
other DOE contractor resources to assist the states in implementing
innovative policies, based upon best practices.
The Federal Energy Management Program (``FEMP'') now has strong
leadership. However, there is approximately $1.3 billion in Energy
Service Performance contracting projects in the pipeline. Leadership
from the White House is needed to order agencies, including DOD, to
expedite these projects. A separate proposal being considered by the
President-elect and Congress to add significant funding to FEMP
projects would also expedite federal energy efficiency measures.
3) Office of Electricity and Energy Reliability
This office does an excellent job with very limited resources--but
they need more resources. First, NASEO supports expanded efforts to
make the transmission and distribution grid more robust and reliable
and creating a ``Smart Grid''. Second, DOE must do more to help prepare
the country for energy emergencies. Many in Washington, D.C. do not
appreciate that DOE has significant responsibilities for energy
emergency preparedness and response, and that these efforts are often
done in conjunction with state governments. Funding has been cut for
energy emergency preparedness and it has significantly impaired our
nation's ability to respond to energy emergencies. For example, the
National Infrastructure Protection Plan (``NIPP'') needs to be upgraded
and more regional energy emergency exercises need to be conducted.
Finally, increased funding for the basic OE function should be
provided, as should increased funding for the energy emergency
function. Enhanced coordination with FERC, the state energy agencies,
and the state utility commissions should be encouraged. Recent efforts
to create Clean Renewable Energy Zones should be expanded.
4) Energy Information Administration
The Energy Information Administration (``EIA'') needs more
resources to do its job more effectively. While not necessarily part of
a stimulus package, there are a number of items that are falling
behind. Section 805 of EISA required EIA to develop a plan and identify
additional measures. Just as the state programs have been cut, so has
EIA. This agency has not had enough funds to make investments required
to ensure its surveys accurately track rapidly changing markets. EIA
data is relied upon and, of course, inaccurate data can distort energy-
related decisions. For example, EIA's natural gas storage report,
released in November 2005, erroneously showed a substantially larger
than expected withdrawal. As a result, December futures on the NYMEX
immediately jumped sixty cents, costing consumers an additional (and
unnecessary) $100 million--$1 billion. FERC's Office of Market
Oversight concluded that this incident illustrates the need to make
more supply and demand information available to the public. EIA's $97.8
million budget in FY'08 will not allow the agency to update needed data
sets, provide critical data on carbon emissions to help the country
address climate change, provide more state-level data information (and
in a more timely manner), provide more data on ethanol and biodiesel
use and penetration, update data on demand response, expand the heating
oil, propane and natural gas program operated in coordination with the
states and provide more accurate data on state-level programs
(especially using comparable data from different states), etc.
5) Office of Policy
DOE's Office of Policy had previously been involved in more
discussions among offices at DOE and with the states and other
interested parties. This function has been substantially diminished in
the past few years. We strongly urge DOE to aggressively enhance the
involvement of this office in developing energy policy, working with
the states and with the proposed White House National Energy Council.
C) ENERGY LEGISLATION
Beyond some of the stimulus measures and administrative changes
discussed above, Congress and the new Administration will be
considering important new policies including, but not limited to, a
Renewable Portfolio Standard and an Energy Efficiency Resource
Standard, expansion of authority to set multiple performance standards
for appliances, building labeling models, energy efficient mortgages,
expanded grants and programs for multi-family and manufactured housing,
etc. One program that has not been widely discussed, but should be, is
a national effort to provide rebates to the owners of the 2 million
pre-1976 manufactured housing units in the country. These are terrible
energy wasters for people who are generally very poor. This rebate
program could be modeled after examples in Maine and New Hampshire and
would encourage people to upgrade to ENERGY STAR homes.
CONCLUSION
Clean energy investments, such as incentives for attic insulation
or solar panels, offer the ability to stimulate the economy and create
green collar jobs, while at the same time reducing household energy
bills, advancing the nation's energy security, and addressing our
climate and environmental challenges. The states are uniquely
positioned to jump start real world energy projects in weeks, not
seasons. We urge Congress to leverage the federal government's
resources with state's ability to innovate and quickly implement energy
projects on the ground. We also hope to have the opportunity to work
with DOE, EPA, USDA, DOI and the possible White House Energy Council,
in addressing a set of coordinated policy measures.
The Chairman. Thank you very much.
Mr. Loper.
STATEMENT OF JOE LOPER, SENIOR VICE PRESIDENT, POLICY AND
RESEARCH, ALLIANCE TO SAVE ENERGY
Mr. Loper. Good morning, Chairman Bingaman and Ranking
Member Domenici. My name is Joe Loper. I'm senior vice
president for the Alliance to Save Energy. Thank you and this
committee for the opportunity to discuss how we can use energy
efficiency to stimulate the economy while creating jobs,
lowering energy costs to the consumers, making our country more
energy secure, and start addressing a looming climate
challenge.
Energy efficiency is the cleanest, easiest, and least
expensive energy and carbon abatement resource, but fully
tapping the potential of energy efficiency will require
significant government leadership and a combination of public
and private investment.
We all know the economy is in serious trouble. Over the
last year, we lost 2 million jobs, and about $10 trillion worth
of wealth in homes and stocks has evaporated. Economic news
suggests we are in for a longer and deeper slump than we have
seen for at least a couple of--at least the last couple of
decades. We need to do something, now and over time.
Given the sharply rising Federal deficit, we should make
sure that stimulus spending yields long-term benefits, that we
use the stimulus to invest in the Nation's future, not just
invite immediate gratification. By using the stimulus as a
downpayment on a new energy economy and to prepare for climate
legislation, we can pass something besides debt on to our
children. The value of a stimulus package in boosting short-
term economic confidence can be enhanced if it is seen as a
part of a larger and forward-thinking clean-energy strategy.
In anticipation of an economic stimulus bill, the Alliance
has been working with a coalition of more than two dozen
organizations and companies to develop recommendations that
will simultaneously stimulate the economy and provide a
downpayment on a cleaner and more secure energy future.
In developing the recommendations, we were guided by the
following principles. The recommendations must be timely. We've
been thinking in terms of a 2-year funding cycle for the
recommendations, that I'll discuss in a minute. We've tried to
rely, where possible, on existing programs or institutions and
existing authorities, where they're available. We've emphasized
training and infrastructure development, thinking that this is
a short--this is a downpayment on the future. We've targeted
the activities, where--tried to give a significant amount of it
toward low-income and the unemployed, and providing direct
assistance to reduce their energy bills, as well as training
for future employment. We've tried to make sure that our
recommendations will have lasting benefits, that the benefits
to the economy and the environment, as well as short-term
economic stimulus.
The Coalition's recommendations, I should be clear, are
still a work in progress. We've tried to be responsive to what
are now daily requests from the Hill for new ideas, and going
back and forth with different people on the details of the
various recommendations. We're meeting again this afternoon,
and I suspect we'll be meeting for a couple of days, so the
details will change, but today I can give you an overview of
the various recommendations that we have.
The recommendations from the Coalition comprise about $18
billion in stimulus funding. These are increases over and above
existing program funding. The $18 billion in stimulus funding
would create about 150,000 jobs over the next 2 years,
including construction and manufacturing in the industries that
supply them. I want to emphasize that we have been very
conservative with the job numbers, and not counted recycling
through the economy over time. So, we're looking at what we
think are the job impacts in the short term.
The different categories, I'll just quickly run through,
for the--our recommendations include $8 billion for public
buildings. That's improvements in Federal, State, and local
government buildings, including schools. The potential for
energy efficiency investments in the public sector is estimated
at between 35 and 70 billion, many of which are projects that
are already lined up. So, this would go a long way toward
kickstarting those projects.
We'd provide about $5 billion for energy efficiency in
homes. That includes $2 billion to the weatherization
assistance project, and another $3 billion for State-
administered programs to help weatherize middle-income homes.
On commercial buildings, we have proposed $3 billion for a
national program to encourage improvements in commercial
buildings. We'd provide $2 billion to public transit, $100
million to the ENERGY STAR Program to expand the home
performance with ENERGY STAR, which is a residential retrofit
program. We would provide building--$100 million to DOE to
support training of building-code officials at the State and--
State and local building-code officials. We provide additional
funding for the manufacturing assistance project at the
Department of Energy.
The Alliance to Save Energy appreciates the opportunity to
testify and the committee's and chairman's interests in using
the stimulus package to provide bridge funding to a clean
energy economy. We welcome future discussions on long-term
reform of the economy and addressing the looming economic
challenge. But, the recommendations that I've laid out here
will meet the objectives of fiscal stimulus and start us down
that road.
Thank you.
[The prepared statement of Mr. Loper follows:]
Prepared Statement of Joe Loper, Senior Vice President, Policy and
Research, Alliance to Save Energy
Good Morning, Chairman Bingaman and Ranking Member Domenici. My
name is Joe Loper and I am the Vice President for Policy and Research
at the Alliance to Save Energy. As you are aware, the Alliance mission
is to promote energy efficiency worldwide. The Alliance works closely
with a broad and diverse group of stakeholders, including suppliers of
energy efficient equipment and services, electric utilities, oil and
gas suppliers, large and small energy consumers, environmental
organizations and federal, state and local government agencies.
For 30 years, the Alliance has promoted federal policies to
increase the nation's energy efficiency. There has never been a more
important moment than now to initiate a serious and aggressive energy
efficiency program for this nation. I want to thank you and the
Committee for the opportunity to discuss the critical need to use
energy efficiency as a means to stimulate the economy, while creating
jobs, lowering energy costs to the consumer, and making our country
more energy secure.
The economy is in serious trouble. We lost 2 million jobs lost last
year, the worst since the oil crisis of 1974. More than $10 trillion
worth of wealth in homes and stocks has evaporated since this time last
year.\1\ Economic news suggests we are in for a longer and deeper slump
than we have seen for at least the last couple decades. We need to do
something.
---------------------------------------------------------------------------
\1\ More than $8 trillion of stock valuation decline between Jan
and October 2008 according to Wall Street Journal Oct. 11, 2008, p.1.
Home prices in September had fallen by one-fifth from prior year to
$162 thousand. See Standards & Poor's, ``National Trend of Home Price
Declines Continues Through the Third Quarter of 2008 According to the
S&P/Case-Schiller Home Price Indices,'' Press release, November 25,
2008. There are roughly 75 million single-family homes in the US, thus
20% drop in value represents roughly 2.5 trillion in housing value.
---------------------------------------------------------------------------
But given the sharply rising federal deficit, it is all the more
important to make sure that any incremental spending seen as essential
for economic recovery also yields long term value. The ability of the
stimulus package to increase confidence of businesses and consumers and
banks will be enhanced if it is perceived as being part of a grander
strategy.\2\ If the stimulus is used as a down payment on a new energy
economy or to prepare for climate legislation, our children will
inherit something more than debt.
---------------------------------------------------------------------------
\2\ The best approach to stimulating the economy is a point of
contention among economists. Some argue that stimulus should be
``timely, temporary and targeted.'' The notion is that the economy just
needs a ``shot in the arm,'' and that care should be taken to ensure
the stimulus occurs when the economy is in a downturn and not after it
has already rebounded. Other economists argue that stimulus should be
``permanent, pervasive and predictable,'' that people spend based on
their expected income over their lifetime and that the April 2008
stimulus had little or no effect on consumer spending. John B. Taylor,
``The State of the Economy and Principles for Fiscal Stimulus,
Testimony before the Committee on the Budget, United States Senate,
November 19, 2008.
---------------------------------------------------------------------------
ENERGY EFFICIENCY: THE FRONT LINE OF THE CLEAN ENERGY ECONOMY
Energy efficiency is the cleanest, easiest and least expensive
energy and carbon abatement resource. It is widely seen as the first
response to climate change, energy security and other energy
challenges. The US Chamber of Commerce, in a report released in
September, said ``the next best source of new energy is the energy we
can save every day.''\3\ Energy efficiency is unique among energy
resources. It is a low-cost resource. It has few carbon emissions. And
there are no battleships are required. The energy we save is a domestic
resource, a secure one that we control, and most importantly, one that
produces jobs here in America.
---------------------------------------------------------------------------
\3\ U.S. Chamber of Commerce, Blueprint for Securing America's
Energy Future, Institute for 21st Century Energy, September 30, 2008,
p.6.
---------------------------------------------------------------------------
Energy efficiency is already a big part of the nation's energy
economy--a silent partner in meeting the nation's demand for energy
services. If not for energy efficiency improvements made since 1973,
America's energy bill and related carbon emissions would be 50 percent
higher (150 quads instead of 100 quads).
Energy efficiency can contribute even more to the nation's energy
economy--McKinsey estimates that base case demand in 2020 can be
reduced by 21% of using technologies and practices available today.\4\
But that doesn't mean it's free or always easy. Significant barriers to
wider acceptance of EE must be overcome, including lack of consumer
awareness and know-how, split incentives (e.g., where the landlord buys
the appliances, but the renter pays the energy bill), and lack of up-
front investment capital.
---------------------------------------------------------------------------
\4\ McKinsey Global Institute, Wasted Energy: How the U.S. Can
Reach Its Energy Productivity Potential, July 2007
---------------------------------------------------------------------------
Fully exploiting the potential of energy efficiency will require
significant government leadership and a combination of public and
private investments. It's a familiar story--When the economy is good,
there's no time, when the economy is bad, there's no money. The
stimulus package offers a rare (perhaps unique) opportunity to overcome
this ``cycle of complacency.''
FISCAL STIMULUS: A DOWN PAYMENT ON THE CLEAN ENERGY ECONOMY
Several years ago the Alliance brought together a coalition of two
dozen organizations and businesses (see attached list) and businesses
to advocate for robust energy efficiency appropriations. For the past
five weeks the coalition has been working on developing a list of
stimulus program activities. In developing these recommendations, the
coalition was guided by the following five principles:
Timely.--Recognizing that one of the major objectives of the
fiscal stimulus is to move money into the economy, we selected
activities suitable for a two-year funding cycle.
Existing programs or institutions.--The coalition looked for
existing programs and institutions that can effectively absorb
and spend the funds in a short time. This will help to ensure
that the rapid expansion of programs not be allowed to
undermine the effectiveness of those programs.
Emphasis on training and infrastructure development.--The
energy efficiency deployment infrastructure can build up fast,
especially in time of high unemployment, but it requires
training and infrastructure development. This should be a major
focus of a green stimulus package.
Targeted.--The coalition has directed a significant amount
of activity toward low-income and unemployed people, providing
direct assistance to reduce their energy bills as well as
training for future employment.
Lasting benefits.--Finally, we focused our recommendations
on activities that will provide real and lasting benefits to
the economy and the environment, as well as short-term economic
stimulus.
The coalition's recommendations are for funding increases over and
above existing program funding and would create more than 100 thousand
jobs over the next two years, including construction and manufacturing
and the industries that supply them.\5\ The recommendations include:
---------------------------------------------------------------------------
\5\ A ``job'' equals one job for one year. For example, ten
thousand jobs could equal ten thousand jobs for one year, five thousand
jobs for two years, or two thousand jobs for five years. Job numbers in
include direct and indirect jobs, but not induced jobs (i.e., the
``multiplier effect''). Job calculations based on multipliers developed
by Karen Ehrhardt-Martinez and John A. ``Skip'' Laitner, The Size of
the U.S. Energy Efficiency Market: Generating a More Complete
Picture,'' American Council for an Energy Efficient Economy, Report
Number EO83, May 2008, p.9.
State and local government buildings.--$4 billion to
Department of Energy (DOE) for grants for energy efficiency
projects in state and local facilities. The potential for
energy efficiency investments in the public sector is between
$35 and $70 billion, and that fewer than 25 percent of all
state buildings have had comprehensive energy-efficiency
retrofits.\6\ This recommendation would create roughly 24
thousand jobs.
---------------------------------------------------------------------------
\6\ Personal correspondence, Don Gilligan, National Association of
Energy Services Companies, December 2008.
---------------------------------------------------------------------------
Schools.--$3 billion to the Department of Education for
grants for the repair, renovation, and modernization of public
schools, with the requirement that a percentage of funding be
used for improvements that make use of specified energy
efficiency and green building standards. This recommendation
would create roughly 18 thousand jobs.
Federal buildings and facilities.--$1.2 billion to DOE to
fund existing requirements (under EPACT 2005 and EISA 2007) to
conduct facility audits, install advanced metering and make
energy efficiency improvements in federal buildings. An
additional $1.3 billion of economic activity could be induced
by freeing up the existing backlog of energy services
performance contracts held up at the DOE General Counsel--this
would require no additional federal spending. Combined, these
two recommendations would create roughly 15 thousand jobs.
Weatherization Assistance.--$1.9 billion over two years to
the Weatherization Assistance Program. These funds would be
used to increase the number of homes reached by the program and
provide training and investment necessary to meet President-
Elect Obama's goal of one million homes weatherized annually.
Initial spending would involve significant on-the-job training
for unemployed carpenters and trades people to weatherize homes
with at least tacit understanding that this is an employment
opportunity for the future. With twelve training centers and
hundreds of agencies already in place, the program can expand
rapidly. This recommendation would create roughly 11 thousand
jobs.
Home energy retrofits.--$2.8 billion to EPA for state-
administered programs intended to weatherize 1.5 million homes
over two years. The programs would provide rebates or low-
interest loans for homes that achieve at least 10%, 20%, or 30%
energy savings through combinations of measures with assumed
energy savings, Home Performance with Energy Star, or
comprehensive retrofits based on before and after energy
audits. This recommendation would create roughly 22 thousand
jobs based on federal funding alone.
Public transit.--$2 billion to transit agencies to reduce
fares and for expansion, rehabilitation and modernization of
transit systems.
Manufacturing Assistance.--$50 million to DOE Industrial
Assessment Centers--An existing network of universities provide
free energy audits for local small and medium sized
manufacturers. Students actually conduct the audits with
supervision from professors, thus offering both training and
energy savings opportunities.
Building Code Support.--$100 million to DOE to support
training of builders and state and local building code
officials.
ENERGY STAR.--$100 million to EPA to allow the ENERGY STAR
program to expand state and local programs, including Home
Performance with ENERGY STAR, label new categories of efficient
products, and increase public outreach.
Federal Appliance credit.--Make the federal tax credit
manufacturers of high-efficiency appliances refundable for 2
years. This will require a minor legislative change and will
drive investment and employment in manufacture of appliances at
the highest efficiency levels by providing cash-strapped
manufacturers with funds to invest in improved efficiency. The
score should be minimal as it mostly enables this year tax
credits that were already scored when extended in September
(most of the credit is capped for each manufacturer). This
provision will benefit consumers by increasing production and
decreasing cost of very high efficiency refrigerators,
dishwashers, and clothes washers.
Specific language is available for many of the recommendations.
SUSTAINING MOMENTUM
At least a few tens of billions of dollars could be effectively
absorbed over the next two years to expand energy efficiency programs
that already exist or that could be initiated quickly with immediate
energy savings and job creation. This would be a major increase in
public sector spending, which currently totals about $5 billion, and
would represent a major share of total private and public spending on
efficiency.\7\
---------------------------------------------------------------------------
\7\ Public sector spending for efficiency includes federal, state
and local government spending as well as required spending by electric
and gas utilities. Estimates based on data from the Consortium for
Energy Efficiency (2008). The Alliance estimates total current spending
for energy efficiency is about $40 billion: 2007 EE Quads was 1.35
higher than 2006--50.05Q vs 48.7Q. Assuming 10-year average life of EE
measures and $40/million Btu cost of conserved energy (consistent with
4 cents/kwh), the spending for that 1.35Q annual energy saving equals
$40b.
---------------------------------------------------------------------------
The proposed stimulus package offers one source of funding to start
the job--but additional action will be needed well beyond the next two
years, both to sustain these programs and to create a price for carbon.
The ability to use stimulus funds to address our energy and climate
challenges is constrained by restrictions that they be spent within a
very short window of time. Lack of consensus about best approach for
fiscal stimulus argues for some diversity in the policy portfolio. A
longer-term stimulus package presented as part of a broad and credible
strategic vision for the energy economy could build greater confidence
in the country's overall economic prospects.
The Alliance to Save Energy appreciates the opportunity to testify
and the Committee's and Chairman's interest in using the stimulus
package to provide bridge funding to a clean energy economy. The
recommendations we have provided will meet the objectives of fiscal
stimulus and start us down the road toward a cleaner, more secure and
less volatile energy economy.
The Chairman. Thank you very much.
Mr. Hauser.
STATEMENT OF STEVE G. HAUSER, VICE PRESIDENT, GRIDPOINT, INC.,
ARLINGTON, VA
Mr. Hauser. Thank you, and good morning, Chairman Bingaman
and Senator Domenici and distinguished members of the Senate's
Energy Committee on Natural Resources.
On behalf of the rapidly growing smart-grid industry, I
want to thank the Chairman and all of the members of the
committee for your support in passing the Energy Independence
Security Act of 2007, and, in particular, title 13 on Smart
Grid. Together, your leadership on these issues has clearly had
a positive impact on the country, and I applaud your continued
vision and action.
I appreciate the opportunity to testify before you today on
behalf of the rapidly increasing number of smart-grid
professionals across the country. I'm specifically speaking,
representing more than 80 member companies of the Gridwise
Alliance and the Smart Grid Policy Center. I won't take time to
name all the members of the Alliance that include many of
America's leaders, both utilities and technology companies. I
have provided your staff with brochures that summarizes our
vision and purpose, and has a list of our members included.
I'm also pleased to represent the other managers and more
than 100 staff members of GridPoint. GridPoint is a rapidly
growing clean-tech company with offices in nearby Arlington, as
well as in Seattle, Washington. We are proud to be a leader in
the smart-grid industry, developing and deploying smart-grid
solutions in several States, cities, and utilities around the
country.
Building a smart grid must be a national priority. The
funding we've requested to be included in the stimulus package
you're considering today is the necessary next step. It is
critical to enabling the vision you have for a cleaner and more
efficient energy system. While much of the technical and policy
discussions focus on energy efficiency, renewable energy,
storage, and electric vehicles, we have too often under-
emphasized the critical need for a smarter grid, the
infrastructure required to achieve both scale and true cost-
effectiveness.
I don't have enough time in the next few minutes to tell
you about all the exciting recent developments in our industry.
Suffice it to say there are projects underway in many States--
Washington, Colorado, California, Texas, Vermont, Illinois, and
many other States. They're all exploring new and better ways of
deploying smart-grid solutions, with huge benefits to consumers
and utilities--improved efficiency, higher reliability,
improved environmental benefits--and at a cost below that of
traditional infrastructure.
I'd like to refer you to my written testimony for more
details on the impact that a smart grid will have immediately
on creating new jobs, and, over the longer term, by
revitalizing this industry and the economy.
Smart grid may still be new to some of you, so, in the next
few minutes, let me explain it this way. What would happen if
we reduced the lighting in this room, right now, by 20 percent,
or even 50 percent? Would it affect our ability to continue the
meeting? I think not. What if we changed the temperature by 2
or 3 degrees for the next hour or two? Do you know what impact
would--this would have on the energy use in this building? What
if we had the ability to make these changes anytime, based on
the availability of power from the grid. What would be the
impact on the local substation operation, on PEPCO's operations
here, on PGM's regional operations? What if every building and
every consumer had the ability to automatically control their
major loads, where the impact to their lifestyle and business
needs is minimal, but the collective impact on the local
utility in the region is positive and significant? What if we
measured every kilowatt and every kilowatt hour, and could
clearly show the benefit of the savings to our economy? How
many power plants could we not build, and how much carbon could
we save? What if our roofs had solar systems and our garage
contained--garages contained plug-in electric vehicles? What if
our basements contained an inexpensive battery storage system?
What if these devices were networked together to optimize their
value to both consumers and to the utilities' operation of the
grid? How many additional power plants could we not build, and
how much carbon could we save? What if Federal facilities
across the country had this capability? What if every school
could respond in this way? What if we built an infrastructure
where it was easy for homes and businesses to better understand
their energy use, reducing the unnecessary use of energy and
optimizing the distributed production of clean energy, and,
when networked together, they need much less energy to meet our
needs and we need fewer power plants to produce the energy we
need?
This is a smart grid, and more. It is more renewable
energy. It's more efficient loads. It's more electric
transportation. It's higher reliability, and at an affordable
price. It truly is the backbone of our clean-energy future.
Let me summarize by saying that I believe, and the
companies I represent believe, that creating a smart grid is
one of the most important investments you can make to
revitalize our economy and build for the future. These
investments must start right now.
Europe and other countries are already moving ahead quickly
on creating a smart grid. It is critical that we also move
quickly. We are faced with challenging times in our country--
challenges to our economy, challenges to our energy security,
and challenges even to our continued leadership in the world.
Making transformative changes, such as these, will not only get
us through the current crisis, but will build toward a cleaner,
more productive and secure future.
Thank you very much for your time and attention. I'll
welcome questions.
[The prepared statement of Mr. Hauser follows:]
Prepared Statement of Steve G. Hauser, Vice President, Gridpoint, Inc.,
Arlington, VA
Good morning Chairman Bingaman and distinguished members of the
Committee on Energy and Natural Resources. I'd like to specifically
thank Senator Bingaman, Senator Dorgan, Senator Cantwell, and Senator
Salazar for the interest and support you have provided in recent years
for policies supporting smart grids. I want to also thank all the
members of the committee for your support in passing the Energy
Independence and Security Act of 2007 and in particular Title XIII on
Smart Grids. Together your leadership on these issues has clearly had a
positive impact on the country and I applaud your continued vision and
action.
I appreciate the opportunity to testify before you today on behalf
of the growing number of smart grid professionals. I'm specifically
representing more than 80 member companies of the GridWise Alliance and
the Smart Grid Policy Center, most of whom are in Houston today for our
annual members meeting. IBM, Sempra, Battelle, PJM, AREVA, and Rockport
Capital founded this group with me five years ago with a vision to
transform our electricity system based on innovative information and
energy technologies. Our goal was and still is to substantially improve
the efficiency, reliability and affordability of electricity in this
country while reducing its environmental impact. I won't take time to
name all the other members of this Alliance that include many of
America's leaders; both utilities and technology companies. I have
provided each of you a brochure that summarizes our vision and purpose
with a list of members included.
I am also pleased to represent the other managers and more than 100
staff members of GridPoint. GridPoint is a rapidly growing cleantech
company with offices in nearby Arlington as well as in Seattle,
Washington. We are proud to be a leader in the smart grid industry;
developing and deploying smart grid solutions in several states, cities
and utilities around the country.
Senators Cantwell and Dorgan may remember the last time I testified
before this committee. It was late in the summer of 2001 and strange
things were happening in the electricity industry, especially on the
West coast, where a field hearing was held to explore alternatives to
traditional power systems and technologies. I explained then the
growing interest and understanding of how information based
technologies and tools could provide solutions to revolutionize the way
we delivery electricity. Providing a system for measuring and
communicating more detailed and accurate information on how electricity
is produced and consumed would create the ability to optimize and
control energy use with significant benefits. Sitting next to me that
day was Steve Hikock from Bonneville Power who described Bonneville's
concept for an Energy Web; a complex ecology of distributed resources,
optimized to maximize their benefit to consumers and the economy.
Together we offered a picture of a future utility infrastructure where
every electricity generating device, big or small, and every energy
consuming device could communicate; providing a system for integrating
more renewable energy, enhancing the efficient consumption of energy,
and enabling consumers to have the ability to actively contribute to
reducing both their use of energy and their resulting carbon footprint.
Now, seven years later I'm pleased to say that we've made
substantial progress toward reaching that vision. As you know, smart
grids are being talked about across the industry as a critical part of
the changes we need to make in our electricity industry. DOE's
electricity advisory committee is about to release a report on their
findings and recommendations that will include a major section on smart
grids. The Federal Energy Regulatory Commission and the National
Association of Regulatory Commissioners have established a smart grid
task force committed to study policies to promote smart grid
deployment. The Edison Electric Institute, the American Public Power
Association and the National Rural Electric Cooperative Association all
have newly active groups looking at smart grids to better understand
how they apply across their utility members. Generally they all agree
with a statement made recently by Steve Specker, the President of the
Electric Power Research Institute that ``Smart grids represent the
biggest opportunity for the utility industry in the next decade''.
Many of our member companies have testified before this committee
in the past few years on the importance of smart grids and I encourage
you and your staff to refer back to their previous comments. What we as
Alliance members and these other stakeholders, I believe, want me to
communicate to you today is that building a smarter grid must have top
priority both in your energy policies and in your spending plans in
2009 and beyond. While I don't presume to speak for all of them
explicitly, I do talk with them regularly and believe that I understand
their views and concerns, and have sought to reflect their ideas into
my comments today. Before I articulate some of the specific ideas I'm
offering today, I'd like to quickly review the context, drivers, and
issues facing our industry today.
For over a century we've systematically built a complex
infrastructure of power plants, regionally connected with transmission
lines to load centers where distribution lines crisscross roads and
neighborhoods to provide power to every home and business. This power
grid ensures not only our safety and security, but is vital to our
continued growth in productivity and prosperity. This ``public good'',
an infrastructure built and maintained on our behalf, is aging and
overstressed. While it has served us remarkably well, it is now
incumbent upon us to upgrade it to meet the changing demands of our
21st Century economy and society. We must build a cleaner, more
efficient grid; one that meets the needs of a digital and highly
interactive economy; and one that maintains affordability, reliability,
safety and security for every consumer. Building a smart grid is the
first critical step of many; bringing new tools, techniques and
technologies in a network of devices aligned for supreme performance.
The benefits of this new approach, a smart grid, are myriad and
enduring. At its core is a sophisticated information system that allows
grid operators much greater visibility into the complex inner workings
of this large machine. With greater visibility comes the ability to
quickly make decisions to optimize performance, reduce emissions, and
improve reliability. A smart grid provides the capability of
integrating an increasing amount of clean distributed energy resources
accelerating the growth in these important technologies. While much of
the technical and policy discussions focuses on energy efficiency,
renewable energy, storage, and electric vehicles; we have too often
underemphasized the critical need for a smarter grid to achieve both
scale and true cost effectiveness.
A smart grid also provides the ability to measure and verify the
energy savings realized as we accelerate our investments in these
important technologies in federal facilities, schools and in homes and
businesses around the country. By carefully measuring these savings, we
better understand the value of our investments and proactively identify
and even greater efficiency opportunities going forward.
This same smart grid information system provides customers with a
window into their own energy use, giving them the tools to change their
behavior according to their own values and needs. Many studies have
shown that better information alone results in consumers reducing their
energy use by 10-20%. A smart grid will provide all consumers with the
option for not only reducing their energy use and their cost of energy,
but also will allow them a new flexibility to add cleaner and more
efficient appliances and equipment. Some of the exciting new
developments in advanced vehicles and electricity storage devices offer
huge potential to not only have a positive impact on the environment by
reducing tailpipe emissions, but can also substantially improve the way
we operate the grid. A smart grid is critical to ensuring that these
new technologies are integrated safely and reliably to maximize their
benefits. Together the power providers and the power users work to
create the best possible ``pubic good'' at the least cost to the
economy and the least impact on the environment; creating a new
paradigm for involving every consumer in the solution.
GridWise Alliance member companies are actively deploying smart
grids around the country already. One of the truly pioneering
demonstration projects was completed earlier this year in Washington
State. Known as the Olympic Peninsula project, this project proved many
of expected benefits across more than 100 homes participating in the
project. Reductions in both KW demand and KWh energy use were shown to
range from 5% to more than 20%. But more importantly, the consumers
were thrilled with their own participation in the project showing how
well designed consumer information and control can have big impacts.
Another project was started earlier this year and is actively
deploying new technologies and systems right now. Known as
SmartGridCity, this project promises to push the edge of the possible
with a smart grid, capturing more than 70 different unique benefits and
ultimately deploying to several thousand homes and businesses in
Boulder, Colorado. Last week, the City of Austin announced their new
smart grid deployment called the Pecan Street Project, with the city
pledging to create a virtual 300MW clean power plant with a combination
of efficiency and clean power. Many other utilities around the country
have launched similar efforts in the past year to explore the potential
of a smart grid.
As we close out 2008 and head into 2009 we have the opportunity
with new leadership in the White House and support from Congress to
greatly accelerate the creation of a smart grid and become a global
leader once again in providing clean, reliable and affordable
electricity to our citizens. A substantial new federal investment in
this smarter grid will accelerate and leverage planned investments by
cities and utilities around the country resulting in rapid job growth,
stronger and more reliable infrastructure, and more affordable
electricity. Consumers of all types will benefit through greater
information, tools to understand and manage energy use, and greater
access to green power. Schools, for example, will not only benefit from
greater visibility and control of their energy use, but will be able to
use the equipment and information to educate and involve students in
better energy decisions; embedding a greater understanding for
generations.
Federal facilities can be an early success story if investments in
clean energy and energy efficiency are supported by a smarter
infrastructure that not only measures and verifies the impacts of these
near term investments but actively monitors the ongoing benefits and
identifies new opportunities for future investments.
An explosion of new technologies is emerging into the market that
must be part of this new, smarter power system. For example, electric
vehicles and electric transportation in general are about to
revolutionize the way we travel and in doing so change the power system
forever. The new high performance batteries in these vehicles will also
revolutionize power delivery by enabling cost effective storage.
However, a smart grid network is essential to manage these new
technologies in a way that optimizes the overall performance and cost
of the grid.
A smart grid is the cheapest option for meeting our growing need
for electricity, expanding high-tech businesses and manufacturing,
giving homeowners the tools to control their cost of power, and
reducing the carbon intensity of our power infrastructure. Properly
implemented a smart grid can substantially reduce the need for new
traditional power plants and transmission and distribution
infrastructure. A recent study by the Brattle Group on behalf of the
Edison Electric Institute says that ``energy efficiency and demand
response as part of a smarter grid can significantly reduce the need
for new generation capacity''. In addition, nearly $100 Billion is lost
by consumers every year due to power outages and poor power quality;
and every time the power goes out our security and safety is at risk.
It is an investment in today's economic health and tomorrow's
productivity, safety and security.
Finally, on behalf of a rapidly growing smart grid industry, I
would like to present the following specific recommendations to this
committee today. This funding request totals $1.3B for 2009
representing the first year of several years of funding that we expect
to increase in future years as the value of these solutions,
technologies and systems are proven.
PRIORITY #1: FUND TITLE XIII--SMART GRID, ENERGY INDEPENDENCE AND
SECURITY ACT OF 2007 (PL 110-140)
Research and Development of Information Technology, Section
1304 ($200 million).--Advanced technology research and modeling
will be critical to deploying smart grid technology that works
with our current utility grid. In addition, research training
programs at universities, laboratories, utilities, and labor
organizations are particularly important for providing well-
trained employees for an industry where the average age is over
50. The authorization level under EISA was for ``sums as are
necessary'' which we propose should be funded at $200 million
annually starting in 2009 with the stimulus package.
Regional Demonstration Initiative, Section 1304 ($100
million).--Because of the diversity across the nation of our
electric grid system, it is critical to fund a variety of
regionally targeted demonstration projects focused on refining
our national performance goals and best practices. The results
of these projects can quantify costs and benefits, verify
technology viability, and validate new business models at a
scale that can then be replicated throughout the country. EISA
authorized $100 annually for five years and we propose that
this level of funds be provided as part of the stimulus
package.
Federal Matching Fund for Smart Grid Investment Costs,
Section 1306 ($1 billion).--This matching grant program would
provide reimbursement of 20% of qualifying smart grid
investments. At this rate, federal funding is leveraged into $5
billion of infrastructure investment in 2009. For $1 billion,
more than one million houses and businesses could be integrated
into a smart grid. These funds allow for economic investment
and growth, including new jobs for employees in the electricity
sector. Authorization level under EISA was for ``sums as are
necessary'' rather than a specified amount. We believe that
this is one of the most powerful economic tools in the title
and should be funded at no less than $1 billion.
PRIORITY #2: EXTEND BONUS DEPRECIATION FOR SMART GRID TECHNOLOGIES
(PL 110-185)
The Economic Stimulus Act of 2007 (PL110-185) contained a
provision to provide a 50% first year bonus depreciation for
business assets contracted for in 2008 and placed in service in
2008. ``Long lived assets'' (defined in the Act as those with
tax lives of 10-20 years) could be placed in service 2008-2009.
An extension of one year in the contracted for and date and two
years in the placed in service dates is needed to get these
assets in production. This provision has not been taken
advantage of because of the lead time for regulatory approval.
As an accelerated deduction, this can provide substantial short
term stimulus benefits without long term deficit impacts.
PRIORITY #3: EXPAND THE GREEN JOBS ACT OF 2007 TO INCLUDE SMART GRID
JOBS
(PL 110-140)
The Green Jobs Act of 2007 authorizes $125 million each year
to provide job training and workforce investment in the energy
efficiency and renewable energy sectors. Since smart grid
technologies enable increased energy efficiency and deployment
of renewable energy technologies, these jobs should be added to
the list of industries eligible to receive this funding. We
recommend that the Act be fully funded and that language
revisions be made.
Let me summarize by saying that I believe and the companies I
represent believe that creating a smart grid is one of the most
important investments you can make to revitalize our economy and build
for the future; and the investments must start now. We are faced with
challenging times in this country; challenges to our economy, to our
energy security and to our continued leadership in the world. Making
transformative changes such as these will not only get us through the
current crisis, but will build toward a cleaner, more productive and
secure future.
Thank you very much for your time and attention.
The Chairman. Thank you all very much for your testimony.
We have lots of members here who want to ask questions. Let me
start. We'll do a 5-minute round of questions first, and then
see if members still need to ask additional questions after
that.
On this smart-grid issue, obviously we agree with the point
that Mr. Hauser was making, that we need to move ahead with
investments in developing a smart grid. We did put a provision
in the legislation, that was passed last year, to accomplish
that. We authorized $200 million per year for 3 years for
grants for a smart-grid demonstration program. We also
authorized a grant program for investments in smart
manufacturing and installation. Are those the right numbers? I
guess I'd ask you, Mr. Hauser. I mean, we used those numbers,
of course, long before we knew we were going to be presented
with the opportunity to make suggestions for a stimulus
package. Is $200 million right, or should it be something
substantially larger?
Mr. Hauser. Two hundred million dollars, I think, is the
right number for doing demonstration programs, but we need to
also move to deployment. The grants that you authorized last
year are really focused on deployment, on rapid deployment.
Those haven't been funded. Actually, none of it's been funded.
But, there weren't specific funds authorized in the bill last
year for the grants or the research and development. So, what
we've proposed in our stimulus package is $1.3 billion. The
$300 million would go toward research and development, as well
as demonstration, to demonstrate best practices for a smart
grid, and the billion dollars would go to the grant program,
which would be highly leveraged with investments that the
industry's making to rapidly deploy these systems.
The Chairman. Mr. Woolf, let me ask you. I think you sort
of alluded to this. One of the realities is that, no matter how
much taxpayer dollars we put into these kinds of activities and
projects, in weatherization or whatever, it will pale in
comparison to what ought to be invested by the private sector.
We've adopted this Energy Saving Performance Contract, the
mechanism, at the Federal level. You indicated that various
States have different ways of trying to encourage private funds
to be spent on these kinds of projects. What more could we do
in a stimulus package that would result in more private funding
coming into this--to do these projects, rather than just
concentrating on what public funds can do?
Mr. Woolf. Thank you for your question, Senator.
Energy performance contracts are a really powerful tool to
achieve the goals we're talking about today, both new jobs and
investing in our energy future. Basically, you get a loan to do
an energy retrofit of a building--a new HVAC system, lighting
upgrades, whatever it is. You pay for that loan with the energy
savings. Your decreased energy bill, year after year, pays for
that investment, so you end up having no capital expenditures.
The problem--we've used it in Maryland. A number of other
States have used it in both public buildings and private
buildings. But, you need more up-front capital. We've got a
long list of State buildings and private buildings that want to
do energy performance contracting. They need a little bit of
additional investment. They can then leverage that with private
dollars and do the projects they need. For every million
dollars we loan, we're doing a $50-million project with the
University of Maryland system.
So, what Congress can do are essentially the
recommendations from the panel today. If we can put more money
either through the Energy Efficiency Building Retrofit Program
that I suggest and/or the Energy Efficiency Community Block
Grant Program, we could get more money out to the existing
infrastructure of energy service companies--Johnson Controls,
PEPCO Energy Services. They can do this right now.
The Chairman. Mr. Loper.
Mr. Loper. Yes. I'd just add that energy service
performance contracts are a great vehicle for financing
projects, but they're a second-best solution in government. The
reason that you have had such an emphasis on performance
contracting over the last decade is because there was
insufficient appropriations for these projects. Performance
contracts, while they're great, they're not free. There's a
transaction cost with negotiating the contracts, as well as
fees that you pay for those contracts. So, if we have an
opportunity to make appropriations available for the projects,
maybe we should do that.
The Chairman. All right.
Senator Domenici.
Senator Domenici. Thank you very much, Mr. Chairman.
I'm hoping that I will just stay on one subject, even
though I had a few others.
Mr. Book, I want to speak with you, because you mentioned,
in your testimony, loan guarantees. I happen to think that loan
guarantees, which we adopted in the Policy Act, have been slow
to implement because we've had an administration that was
bickering, between the OMB and the DOE, for long periods of
time. But now, my understanding is that, as far as nuclear is
concerned, the argument's over with and the process is on its
way.
You're aware that we have a very large number of
applications for nuclear power plants pending before the
Nuclear Regulatory Commission--something like 31 units. That
means that we went from zero--none--before we passed this
Policy Act, to 31 units of 100,000 megawatts or more that have
applications at various stages, with three or four of them
moving rather rapidly. From what I understand, they will move
more rapidly and get some of them started and turn the shovel
if, in fact, the first two or three participate in the $1 and a
half billion that is currently authorized for these loan
guarantees.
As I understand it, the loan guarantee program that we have
adopted ends up not costing the taxpayer, because it is really
a guarantee, not a loan. Right? The government's money gets put
into a pot by the borrowers, who pay off the top, and then that
reserve is used in the case of default or the like. That's the
scheme. It appears to be rather well received.
From what I understand, there is a major study now. An
Oxford economic study says that if the nuclear power plants
that are pending before the Nuclear Regulatory Commission--now,
this is a very big ``if''--but if they were all put into
operation and we started constructing them, that that would
create 150,000 of the highest-paid jobs we've seen in modern
times. That would give 150,000 jobs to American ironworkers,
steelworkers, and the like. Does that sound reasonable to you?
Mr. Book. Senator, there's a 38,800 megawatts of discussed
nuclear capacity pending in--at least in the numbers NEI has
released--which is actually quite a lot, when you compare it to
what else is pending in the power plant queue. There is neither
the appropriations for loan guarantees for all of those plants,
nor the work force currently capable of delivering them, were
they all appropriated. So----
Senator Domenici. Oh, of course. That would----
Mr. Book. You have----
Senator Domenici. [continuing]. Take time.
Mr. Book. [continuing]. To get started somewhere. I think
that those numbers sound absolutely right. You should be able
to create a whole value chain from the start. Anytime you move
something that big, with that kind of duration, through the
system, whether or not it's 150,000 right away or over time, I
wouldn't be able to say.
Senator Domenici. Before I leave the Senate--it's my last
day, again--I want to use this opportunity, first, to
congratulate you for working in the area of loan guarantees,
because I think they're very important and can be used in this
recession period if we make them available to ourselves. But, I
also want to say, to the President-elect, that if you want to
see something that will produce high-paying jobs, just push the
program which we currently have. Don't let it stall, don't let
it be delayed. Get three or four of these nuclear power plants
started--or two--and you will see each one employing 2,300 to
2,500 full-time workers as they build this plant, and then the
people that have to maintain it. It probably takes a little
longer than you would like--in terms of the first three or
four, it would be 2 years longer than you would want for an
interim program--to stimulate the economy. But, if you had them
going, you would send such a signal, in terms of what's coming
up--you could start training people, couldn't you, with these
jobs? In fact, you would have to. They would be very high-
paying, from what I understand. The unions would be partners in
training them, if it's done the way it is now. I just wanted to
make that statement, using you as my front man, and make sure
that it's in the record, and that my friend Senator Bingaman
hears it and my fellow Senators on this committee; in
particular, the one who's going to take my place. She's from
Alaska, but she says she likes nuclear power plants also.
[Laughter.]
Senator Murkowski. I do, absolutely.
Senator Domenici. Thank you, Mr. Chairman.
The Chairman. Thank you very much.
Senator Salazar.
Senator Salazar. Thank you very much, Senator Bingaman.
Let me ask the panel just to respond in terms of the size
of the energy component of the stimulus package. It seems to me
we're all assuming there is going to be a stimulus package, and
the question is, How much of that stimulus package really
should go into this new energy frontier?
In my mind, when you look at the energy challenges that we
face, I think we look at electricity--and many of you have
talked about the smart-grid system, for example--and you can
also look at transportation, which is interconnected in what we
do with hybrid plug-ins. So, if we were, as part of our efforts
to take the moon shot, if you will, to energy independence,
take an opportunity, with whatever economic recovery package we
put together with respect to electricity and with respect to
transportation, how big should that package be? Mr. Hendricks,
you've testified one-third of, I think, $650 or $700 billion,
so probably about $200 billion. So, give me just--I want you to
come up a figure. You know, think transportation, think
electricity, which also, I think, deals with some of the
efficiency issues that you've been talking about for commercial
buildings, government buildings, homes, weatherization. So if
you were just to say--what should that gross number be, as we
try to deal with this energy package? I want a number from each
of you as we go through.
Mr. Hendricks.
Mr. Hendricks. Sure, let me just start.
I did mention a benchmark of a quarter to a third of the
entire stimulus package being toward these energy-related
projects. I think that's a reasonable number. The Center for
American Progress has put forward $350-billion package for year
1, of an immediate program. I think it's important to look at
the balance of how the money is spent, and then to recognize
that energy is really a sector of the economy that can
crosscut----
Senator Salazar. I got your number, $350 billion----
Mr. Hendricks. Excellent.
Senator Salazar. [continuing]. Over 2 years. So, you'd----
Mr. Hendricks. Three hundred fifty billion dollars is the--
is--would--is the stimulus package that we put forward, $100
billion. But, then it's actually about $122 billion, because it
also represents spending for infrastructure and cities. I mean,
it appears in many places.
Senator Salazar. I want a simple answer here.
Mr. Hendricks. A third of the budget, $120 billion.
Senator Salazar. $120 billion, OK.
Mr. Book.
Mr. Book. I won't presume to name the size of the budget,
but I think $75 to $100 billion is a reasonable number, if it
incorporates additional funding for something like the title 17
program. You probably can spend----
Senator Salazar. OK, so----
Mr. Book. [continuing]. Thirty or $40 billion on
infrastructure buildings, retrofits, right away.
Senator Salazar. OK.
Mr. Woolf.
Mr. Woolf. I can't comment on the transportation side, but
we could spent $15 billion or more on energy efficiency
retrofits for schools and all of our buildings.
Senator Salazar. OK.
Mr. Loper.
Mr. Loper. I'll go one up and say that--we're at $18
billion with our package that we think are reasonable--and that
we could probably, from talking to people, get another 10 on
the energy efficiency component alone.
Senator Salazar. OK.
Mr. Hauser.
Mr. Hauser. I'll defer to Bracken. I think the number is in
the $100- to&50-billion range. But, I will add that it's
important to think long term, as well, that that's the first
year of what will be a many-year investment.
Senator Salazar. OK. So, we have somewhere between--I mean,
just energy efficiency, $15 billion, up to $100, $150 billion.
Let me ask you this question, getting down to a specific
question here. Part of what I think we're going to be looking
at is renewable energies, with a huge investment in that. Part
of what comes with that--the incentives, you've talked about
already, but part what comes with that is also transmission. It
doesn't do any good to produce a lot of electrons out in the
Arizona desert if you can't get them to where they're going to
be used, in Denver or San Diego or L.A. So, if you were to
invest in the transmission system of our electricity grid, and
if you were to bring in the smart-grid systems that are now
being piloted, in a demonstration way, in places like Boulder,
Colorado, how much would we need for those transmission and
smart-grid capacities? I don't know which one of you is most
qualified to answer that, but, whoever is, can you give us the
answer?
Mr. Hendricks. Let me just speak, just immediately, to the
question of transmission. There's two components to the
transmission grid that both deserve very urgent near-term
attention. One is interstate transmission lines, high-tension
lines. We've called for $10 billion not flow in that direction.
That is on the outerbound of the longer-term timeframe that we
look at in our package. But, there are opportunities to move
money in two places in that area. One would be to public
entities, like WAPA, entities that could actually move money to
spend on moving particular interstate transmission projects,
building renewable corridors, specifically. Then, another place
would be adding information technology, to create a smart grid
that moves from the home all the way back up to the point of
generation.
Senator Salazar. Could we do both of those things with $10
billion?
Mr. Hendricks. You could do both of those things. In
addition, we have another line item that we----
Senator Salazar. How long----
Mr. Hendricks. [continuing]. Call for, $1.3 trillion----
Senator Salazar. [continuing]. Would it take to do it with
$10 billion?
Mr. Hendricks. I think that that would be on the
outerbound, but we would try and get projects moving within
that first year. Then, the money would start to flow at the----
Senator Salazar. Any other----
Mr. Hendricks. [continuing]. Outer end.
Senator Salazar. [continuing]. Quick responses?
Mr. Woolf. Yes, we've got three or four transmission
projects currently going through regulatory review--proposed,
sited, the whole bit. It would cost several billion dollars
just for the Mid-Atlantic region alone.
Senator Salazar. Thank you, Chairman Bingaman.
The Chairman. Thank you very much.
Senator Murkowski.
Senator Murkowski. Thank you, Mr. Chairman. I appreciate
the opportunity to have this hearing this morning and talking
about what's the potential for this economic stimulus package
that we're looking at.
I think it's important that, as we talk about the projects,
we make sure that we're really looking to the cost benefit of
the various projects. I don't think any of us want this to be
kind of a glorified supplemental bill that is just kind of that
one term--one-time shot in the arm. We're looking for that
longer-term investment. We want it to be the gift that keeps on
giving. So, it is important that we're talking about real
investments that will make a difference.
I appreciate the focus that you gentlemen have placed on
the efficiency side of the equation, a little discussion about
weatherization. I was telling the chairman, in Alaska we've
made a great effort to put more money into the weatherization
projects that we had, and realized that we didn't have the
trained energy auditors to conduct it, so we had money sitting
there that we couldn't put into place because we hadn't done
the groundwork in advance. A couple of you have mentioned the
training that needs to occur.
In terms of the renewable projects that are out there, in
my State we've got about 60 different projects that would be
shovel-ready--whether it's geothermal or wind or hydro, smaller
projects. But, I'll tell you, we're looking at them now, and
with the price of oil dropping down to where it is, all of a
sudden they don't look as enticing as they did, this summer.
I guess the question to you all, as we try to advance these
longer-term projects that will make the difference, not only in
the jobs and the stimulus now, but in really moving this
country forward to greater energy independence, are these types
of projects, these smaller initiatives--and Mr. Woolf, you've
talked about the State energy programs--are these where we
should be looking to invest, when it comes to the economic
stimulus package? Should it be the bigger vision of the
transmission? I really appreciate the question from Senator
Salazar. We can do all the renewable energy projects, but we
can't move it, what good have we really done, in terms of our
energy policies? So, if you can kind of speak to--is it big, or
is it little, or is it a combination of both? What needs to be
in this package?
Mr. Hendricks.
Mr. Hendricks. Sure. I think you've touched on exactly the
right questions. We need a balanced portfolio. We need to be
investing in the infrastructure, and we need to be investing in
market transformation. The infrastructure enables private-
sector activity. So, these are smart investments now; they get
people working, using public funds, but they enable new private
enterprise to come online, new businesses to be created. I
think Director Woolf's number, of $10 billion going toward
energy efficiency, is very, very important. We need a large pot
of funds that will start to help contractors develop the
skilled work force, exactly what you were talking about. We
need the energy auditors. We need people in the construction
trades who have the skills to do green-building. This
investment can do double duty. We need it to do immediate
investments to stimulate the economy, jumpstart projects, but
we always need to have an eye on the long term, because we are
heading into a period of fiscal constraint. If we don't spend
the stimulus money wisely now, it will tie our hands, down the
road. But, if we spend it in a smart way--and that's why the
green and energy efficiency projects are so important--if you
we spend it in a smart way, we can save consumers money, create
new businesses, and enable cities to be more competitive by
investing in their infrastructure.
Senator Murkowski. The obvious--I think, Senator Domenici
pointed to nuclear, which is a great way to advance many, many
jobs. I appreciate the training challenges that we have, in
terms of getting a skilled workforce. In Alaska, we're looking
to bring our natural gas down to the Lower 48. A major
construction project, but one that would yield a long-term
benefit, in terms of access to energy and those job creations.
Can you speak a little bit to the bigger projects? To nuclear?
To something like a natural-gas pipeline coming down from
Alaska?
Mr. Book.
Mr. Book. Senator, I think perhaps the biggest question
here is, yes, you can't do everything all at once.
Senator Murkowski. Right.
Mr. Book. You are going to have a problem with efficiency
when it starts to undermine the value of a 10-year project that
you undertook at a different price expectation.
It's inevitable that demand will grow. Our society will
become bigger and want more. But, if you start predicating your
expectations, like many economies in the world did, on high
commodity prices, and then you undermine those prices with
efficiency, you might be going in the wrong order. In many
ways, it's efficiencies which you can start with, it might be
the cheapest way to not end up spending too much money too
soon.
The long run, though, you have to build an expectation of
strategy, because you're going to need more power, more fuel,
and more infrastructure. The central station model for power is
still what powers industry. The distributed generation model
for power, and the smart grid that enables it, is going to be
what moves a lot of the consumer and the business side--the
small-business side--potentially into the next register of GDP
growth.
So, I think you can do both. We just want to go in the
right order.
Senator Murkowski. My time's up, Mr. Chairman. Thank you.
The Chairman. Senator Wyden.
Senator Wyden. Thank you, Mr. Chairman.
Federal policy consistently favors consumption over
investment. You saw that in the stimulus last year, in the
spring, when I and others tried to put the focus on
infrastructure. In effect, the decision was made just to send
out the rebate checks, and clearly the country didn't get the
maximum value out of that. That is also true in the energy
area; consumption is favored rather than conservation. You
know, for example, because the country doesn't invest in
weatherization, we've got to then play catchup ball with the
Low-Income Home Energy Assistance Program to keep people from
freezing in their homes.
So, what I hope will come about in this second stimulus is
a dramatic departure from the old way of doing business and
putting a focus on smart investments. It seems to me, listening
to all of you, it ought to start with weatherization and these
investments in improvements for businesses and others,
efficient lighting systems, and that kind of thing.
Now, here's my question. Virtually all of these programs
are means-tested. I think that's sensible, because it is a way
to show taxpayers we aren't going to waste their money and
people aren't going to walk away and say, ``This is some green
pork drill, where billions of dollars is being wasted.''
But, the problem today is, a lot more people are needier
than they were a year and a half ago. So, how would you, in
effect, keep the idea of targeting the dollars in areas like
weatherization and conservation and still make sure that you
address the need? Because the need is clearly greater today
than it was 18 months ago.
So, I think what I'd like to do is start with you, Mr.
Book, and then you, Mr. Hendricks. Direct investment,
weatherization, conservation, sensible areas for homes and
businesses, but still allow us to keep a means-tested kind of
focus, so that taxpayer money, which is scarce, isn't wasted.
For you, Mr. Book.
Mr. Book. Senator Wyden, I think that's an important thing
to look at, because you have working-capital-constrained poor
families who would love to make efficiency changes, and can't.
So, if you can get them over that hump, you've solved that
problem. But, then the question is, What do you do about the--
sort of, the middle ground, where someone would do it if they
just had a few extra dollars? You don't have to buy the whole
thing, you can just give them a little. Graduate the benefits.
Prorate them by income. Make them phaseout progressively. I
think you have a sensible policy.
Your key question is identifying where you can make the
biggest bang for your buck. I think it is, again, in sort of
the building envelope improvements and the least infrastructure
we already have. But, by finding those folks who are most
likely to make the change in the next tranche, the ones who
are--the refrigerator is 9 years old, and you're about to buy a
new one--find those guys, and you'll make a big change right
away.
Senator Wyden. Mr. Hendricks.
Mr. Hendricks. I think you're asking exactly the right
question. We need to be investing in structural change.
In the short term, there are a number of very important
opportunities. You know, the statistics that we were laying out
at the beginning are critically important to understand, how
badly the American people are hurting right now. There are
opportunities to put money in the hands of people who need it
and who will spend it, through unemployment insurance, through
COBRA payments, through just basic investments. In the energy
sector, we do have the LIHEAP program, and it's critically
important to put money there, and to recognize that, as we're
entering a heating season, there will be increased demands,
especially, you know, in cold parts of the country, that have
very substantial equity payments. But, there's another point
that we have to understand, which is that energy costs, in any
form, are some of the more regressive costs. They hurt low-
income people the most. So, investing in energy efficiency and
in energy diversity to reduce the spikes in energy prices over
time is very targeted at those folks.
Senator Wyden. Are you in favor of Mr. Book's idea of, in
effect, graduating the payments? Because that strikes me as an
attractive way to ensure you target dollars, but you also
address the fact more people are needy today. Are you in favor
of that, Mr. Hendricks?
Mr. Hendricks. I would be speaking off the top of my head.
I think the notion of having some means-testing, but having
something that's broadly shared, is a good strategy. I do think
that there is a very incredibly broadbased need for energy
efficiency across the economy. We should be focusing on it in
every sector.
One other point I want to make is the role that public
funds can take in priming the pump for a broader market
transformation. The sorts of investments that we make in green
schools, in weatherizing public buildings, are actually helping
to build the skilled work force and changing the market for
construction practices on the ground. They're critically
important for building the sorts of----
Senator Wyden. Thank you, Mr. Chairman.
Mr. Hendricks. [continuing]. Energy efficiency----
The Chairman. Senator Bunning.
Senator Bunning. Thank you, Mr. Chairman.
It's my understanding that the purpose of this hearing is
to look at energy-efficient initiatives that can stimulate
growth while also reducing dependency on foreign oil. As many
of you know, I am a supporter of coal-to-liquid fuels
technology. Through the use of clean coal initiatives and the
Department of Energy loan guarantee program, we have the
opportunity to create American jobs, cut our dependency on
Middle Eastern oil, and substantially reduce emissions.
Just yesterday, thank God, a New York electric power-plant
developer announced plans to build, not with Federal money, but
private capital, a $3 billion coal-to-liquids plant capable of
refining an estimated 6.5 million barrels of gasoline annually
in West Virginia. Thank God it's close to Kentucky. In fact,
it's 10 miles up the road from two of my counties. The plant is
expected to employ 200 people and create 3,000 jobs during
construction.
Mr. Book, in your opinion, would it not be wiser to spend
money on funding grant programs that could provide for similar
facilities, as opposed to subsidizing government programs that
have proven to be inefficient?
Mr. Book. I think that the big infrastructure spending that
you're talking about here--the size of the project you just
described is $3 billion----
Senator Bunning. Yes.
Mr. Book. [continuing]. A lot of the companies who would
like to build them have market values of $3 billion, or
sometimes less. Without the sort of loan guarantee that gives a
commercial lender comfort, you can't do those projects.
Senator Bunning. This company is doing one.
Mr. Book. This one, you can. Of course. You can do it
without loan guarantees. But, the point is that I think, not
only should you encourage it, you should encourage it more
broadly, because there are technologies that are--coal-to-
liquid is 80 years old. It's been improved a lot over 80 years.
The carbon-capture-and-sequestration technologies will probably
be pioneered in smaller size before they're expanded to large
size for power plants. So, coal-to-liquids is an excellent test
bed to take us to the next stage in clean coal power. I think
it's a very sensible way to spend the money.
Senator Bunning. Other than spending it on unproven or
inefficient programs that we now have in operation.
Mr. Book. The programs that get big things built are the
future. The things that get us efficiency gains now are there
right now. You have to----
Senator Bunning. We have to look at this thing like--you
know, $44 a barrel, presently, this morning on the mercantile
exchange, compared to $148-plus a barrel just--as recently as
last spring. We have to do things now to prevent the $150 or
$180 a barrel that might be coming down the street.
The American people spoke better than our Federal
Government by saying, ``No, we're not going to drive our cars
at $4 a gallon. We are not going to do it. We are going to
consume less.'' So, I am for programs that will stimulate the
ability of us to continue to supply, not only our American
people, but for our military, for diesel and for aviation fuel,
which we know coal-to-liquids can do. Carbon capture is now
guaranteed up to about 75 percent. This one plant that they're
talking about, they've guaranteed 90 percent, but that's a
little different; they've got a lot of beds to bury the carbon.
We're talking about a 10-percent use of carbon. I think we can
bottle it and sell the 10-percent carbon that is still left
that we need to capture. In other words 100 percent of capture,
which is something that we all shoot for. If there's anybody on
this panel that is against clean coal with 100-percent carbon
capture, speak up.
Mr. Hendricks. I'm not. I would like to speak briefly,
though, to clean--to carbon----
Senator Bunning. I want you to speak up if you're--what I--
answer my question.
[No response.]
Senator Bunning. There is not. So, we are for clean coal
initiatives if we can capture the carbon.
Mr. Woolf. We need to get there, Senator, yes.
Senator Bunning. OK, thank you.
Mr. Hendricks. I'd like to make one distinction between
coal-to-liquids, where carbon is released when it's combusted,
and integrated gasification and combined-cycle IGCC clean-coal
technology, where you're producing electricity. For mineworkers
in this country, I think the IGCC electrical technology is a
very compelling technology, because you can combine that with
electrification of the car, which allows you to pursue
strategies like the plug-in hybrid electric vehicle, which also
introduces another strategic technology, which is the lithium
ion battery, advanced battery technology. Currently, all of
those--all of those batteries are being imported. This is
probably one of the most critically important strategic
resources that we need to develop now for storage onsite, for
distributed generation, but also for mobile sources, so we can
get off oil and liquid fuels altogether.
Senator Bunning. I gave up my time. May I just respond to--
--
The Chairman. Go right ahead.
Senator Bunning. Thank you.
For one of the major auto manufacturers to say that one of
the salvations they have is a car that will run for 50 miles
without using gasoline, on a battery, and that be the
centerpiece of this so-called infusion of money into the big-
three autos, and that being the centerpiece of their sales, is
there any American person in this country willing to pay $30-
to $40,000 to plug in an automobile for--overnight--40-mile-
driving the next day? I doubt it.
Senator Sanders. Mr. Chairman, if I could just respond to
my friend and say, I've driven in an electric car which has a
range of 200 miles today. Two hundred miles.
The Chairman. Senator Tester.
Senator Tester. Thank you, Mr. Chairman. I was beginning to
wonder if I was going to get aced out there for a second, so I
appreciate it.
[Laughter.]
Senator Tester. From my perspective, at least, investment
in clean technologies, clean renewable energy, we've been
lagging at long before this recent economic turndown. I was
curious to know, from your perspective--and I'll address this
to Mr. Book and Mr. Hendricks; either one of you can answer
it--why has this country been unable to sustain a clean-energy
economy, even before the economic turndown? Is it because of
cheap fossil fuels? Is it because we have failed at the Federal
level? What's your perspective on that?
Mr. Book. Senator, my perspective is that there has been,
historically, private actors charged with carrying out economic
decisions, and they've said, ``Well, things are cheaper if I do
it another way.''
There's two things that happen when you have too much
money. The first is that you spend it on the wrong things, and
the second is that you don't actually innovate, because you
don't have to. Necessity provoked a lot of soul-searching this
summer. I have a feeling that the next investment cycle,
whether it's vehicles or electric power, is going to show a
greater attention to clean energy.
What I think is also, though, is, we have to look at the
real economics. Because when you startup--Germany just
discovered, Spain just discovered--when you start out paying
for something that's not economic, and you make it economic,
people use it, and they use it like crazy. Eventually, you keep
paying for it.
Senator Tester. OK
Mr. Book. But, we have to do both.
Senator Tester. Mr. Hendricks.
Mr. Hendricks. Sure, I would echo that we have failed to
create a sustained program of investment and policy that will
help transform the market to bring these technologies online.
Senator Tester. So, at the Federal level, we haven't done
what we've needed to do to push forth progressive agendas in
that.
Mr. Hendricks. There's both a regulatory policy failure and
an investment failure.
Senator Tester. Thank you.
Mr. Woolf.
Mr. Woolf. I'd agree. Energy efficiency can be produced for
about 2 to 3 cents per kilowatt, best practices around the
country, but families don't have that 2 to 3 cents to pay for
it, so they don't make the investments that would reduce their
monthly bills, and, instead, they pay 10, 15 cents for new
generation a few years down the line. It's a----
Senator Tester. OK.
Mr. Woolf. [continuing]. Time problem.
Senator Tester. Mr. Loper.
Mr. Loper. The stimulus can send signals that the Federal
Government supports certain activities and technologies, but it
doesn't provide lasting market reforms that will provide
investment certainty. I'm surprised, frankly, that the coal-to-
liquid plant is going on right now----
Senator Tester. Yes.
Mr. Loper. [continuing]. Given oil prices are so low and
there's no--and there's no certainty about what kind of carbon
price you're going to have, going----
Senator Tester. That's right.
Mr. Loper. [continuing]. Forward. So----
Senator Tester. I mean, and it was pointed out to me that
the--that, after the first energy crisis, it was also followed
by a recession. So, I mean, there are--to help make the economy
somewhat recession-proof, it makes sense to do this.
I've got two other questions, and I hope I've got time to
get to them. It appears to me that you've got electrical
countries that generate electricity and want to sell it. The
same thing can go for transportation fuels. We're trying to
grab the low-hanging fruit, with grabbing all the conservation
methods we can. Do you see that as a conflict? Do you see that
as a conflict that can be resolved? Or is this just something
that somebody's got to get run over? Bad choice of terms, but--
--
Mr. Woolf. In Maryland, we actually decoupled, for most of
our utilities, so that utilities can make money, regardless of
how many kilowatts they're selling.
Senator Tester. How did you do that?
Mr. Woolf. There's a process whereby, basically, they're
paid to serve the load, and if the load goes down, they still
make money.
Senator Tester. Who pays them?
Mr. Woolf. It gets rolled into rates.
Senator Tester. OK. So, the ratepayer still pays it.
Mr. Woolf. The ratepayers pay, but the ratepayers will be
paying--there's no disincentive for the utilities--the
utilities aren't penalized if they achieve energy----
Senator Tester. I understand that. I appreciate that. But,
if you're trying to--OK, I see. So----
Mr. Woolf. That's----
Senator Tester. [continuing]. The greater good is saving
the electrons.
Mr. Woolf. It removes an obstacle. It doesn't encourage
energy efficiency.
Senator Tester. OK.
Mr. Woolf. We need to do more.
Senator Tester. I believe it was Mr. Book spoke about the
impacts that WAPA, Tennessee Valley Authority, BPA--are you the
one that spoke on that?--could have on transmission--or was it
Mr. Hendricks?
Mr. Hendricks. I mentioned it, in----
Senator Tester. Sorry. But, could you just kind of explain
what your vision would be, what we would need to do at this
level to help--because they're a huge player in the Northwest,
and I know they're a huge player around the country, depending
on which one you're dealing with--what we would need to do to
make them a part of the equation, so that we could get the
transmission in a reasonable way?
Mr. Hendricks. I think the first point is that, moving into
the next Congress, it's critical that there be a broadbased
strategic policy for transforming the electrical sector, and it
has to have a very serious commitment to interstate
transmission, and the commitment that is linked to renewable
energy generation.
In the near term, in the stimulus, I think that that is one
place where public investment can move toward particular
transmission projects, toward improved planning, toward
accelerating the process of doing the siting, doing the
integrated planning, and to move specific projects forward. I
think, on the smart-grid component, there is also the
opportunity to invest in advanced technology, basically turning
the transmission grid into a information technology
infrastructure that's going to share information, and those
investments can also be facilitated.
Senator Tester. OK. Thank you, Mr. Chairman. I want to
thank all the participants here. I appreciate your perspective
on this important issue.
The Chairman. Senator Cantwell.
Senator Cantwell. Thank you, Mr. Chairman.
I'd actually like to continue this discussion about
transmission, because I certainly plan to push, with the rest
of the Northwest delegation, for more borrowing authority for
BPA so that we can get transmission capacity moving there. I
think there's--as much as 4700 megawatts of renewable resources
could come online in the next couple of years if we could just
get the transmission capacity going.
So, Mr. Hauser, thank you, first of all, for your work on
the Alliance in support of the smart meter language and grid
language in the last energy bill. It really was helpful.
Mr. Hauser. You're very welcome.
Senator Cantwell. How can the additional access to capital
there, both at BPA and across the country, help on this
renewable resource demand and actually making that a reality?
Should we go back and look at the--you know, we gave a 10-
year--we went from 10--down from 20 to 10 on a accelerated
depreciation. Shouldn't we look at going to 5, if we were----
Mr. Hauser. Sure.
Senator Cantwell. [continuing]. Looking at trying to get
this technology deployed in a more rapid fashion?
Mr. Hauser. Sure. There's a couple of questions there. One
is, you know, if you look at the grid, you've got the
transmission-level grid, the distribution-level grid. Both of
them need to be smarter, and we need investments in both of
them. You have renewable generation that can be local, and you
have renewable generation that's more centralized. The more
centralized generation certainly needs more attention paid to
transmission capacity. The more focus we pay toward central
renewables, the more focus we need to have on transmission in
order to get those electrons, those clean electrons, to the
loads where they need to be.
Senator Cantwell. I should have just mentioned, when I'm
saying ``renewables,'' I mean distributed generation, in
general.
Mr. Hauser. Yes.
Senator Cantwell. I don't mean just--the notion that
renewables are giving us the----
Mr. Hauser. Sure.
Senator Cantwell. [continuing]. Ability to do distributed
generation.
Mr. Hauser. One of the advantages with doing local
distributed generation, as opposed to more centralized
renewable energy, is that you don't have deal with the
transmission; you deal with it at a distribution level. One of
the real benefits of making the grid smarter at the
distribution level is to be able to integrate those renewable
resources, deal with the intermittency issues, and what I say--
what I call operationalize those assets, so that a utility can
really plan and count on those assets to be available. The
smarter grid allows you to do that. It really becomes kind of a
no-regrets strategy to do that, if you have the capability to
integrate those renewables, really take advantage of those.
Then, if you want to, you know, do renewables that are more
centralized--like, wind farms is a good example--then you
certainly need to do transmission to get access to those, and
you can do transmission operations smartly, as well, and make
sure that you've minimized the amount of capital infrastructure
build that you have to have in order to get the access to that
clean energy.
Senator Cantwell. As I listened to all the panelists--thank
you, Mr. Hauser--I listened to all the panelists about this,
and your testimony, and I look at, Mr. Book, some of the things
you said about tradable tax credits--I mean, you know, good
news, since we finally get the tax credits extended in some
areas for a robust period of time, and then obviously the
economic situation. So, I think we do have to look at issues
like transferrable or traded on credits. But, I also am very
concerned, too, just about the amount, the lack of capital in
the marketplace and the--I don't know how--what's the
appropriate word to say this--but, the, I guess, lack of speed
at which the loan guarantee program has functioned to date. So,
should we be looking at more creative solutions to getting
capital into the market in a more rapid fashion?
Mr. Book. Yes, in a word. I think you have a strong couple
of precedents out there right now--the Export-Import Bank, the
Overseas Private Insurance Corporation. You also could even
look at things that are more creative than that, like the
Universal Service Fund, aggregating a pot into a separate
corporation and disbursing it for high-cost projects.
The competency of the Department of Energy is its
unparalleled commitment to research science. They have been
extraordinary. They are not the place I would go to get a
mortgage, however, or a commercial loan. I think that's
probably true of most of our Cabinet agencies. So, perhaps it's
time to explore a new financing vehicle that has the speed, as
you say, to get this done.
Senator Cantwell. Anybody else want to comment on that?
Mr. Hendricks. Yes, let me just add one point on that,
which is, you know, it was a very hard-won fight to get the
extension of the production tax credit, which is so important
in driving new private-sector financing for these large-scale
wind projects. It happened just at the moment--with the
collapse of the financial industry, the loss of firms like
Lehman Brothers. These are the folks who actually can make use
of those tax credits. There are some fixes to the tax credit,
in addition to extending it for a longer time period, that will
enable more capital to flow into those markets, making it
refundable, and then also extending the time period. It may
seem counterintuitive that adding a couple of outer years would
be stimulative in the near term for the renewables industry,
but if there was certainty that you could create financeable
projects for the next 2, 3, 4 years within the wind industry, I
think you would see a very immediate increase in capital
flowing into large-scale wind and large-scale solar projects.
Senator Cantwell. Thank you, Mr. Chairman.
The Chairman. Thank you.
Senator Lincoln.
Senator Lincoln. Thank you, Mr. Chairman. Thanks for
jumpstarting our efforts here and making sure that we're
working hard on something that's going to be critically
important in stimulating the economy, but also, I think, near
and dear to the hearts of many Americans, that we move forward
in a new energy economy.
We appreciate all of you all and your great ideas. We hope
that you're going to stick around and make sure that, as we
continue this debate in the stimulus package--but, beyond that,
I think, to Mr. Hendricks' last comments, there's got to be
certainty in this marketplace. It's not just a stimulus
package, it's not just to create immediate jobs, but it's a
long-term, dedicated project that we have in this country to
move ourselves to a renewable energy source and to a new energy
economy.
So, I hope that there'll not only be the immediate impacts
of a stimulus package, but we'll also see a long-term
dedication. Certainly, serving with several of the other
Senators on this panel, or in this committee, on the Finance
Committee, we understand that certainty is a critical part of
whether that capital's going to be there and whether it's going
to stay.
I've got three windmill-blade factories in Little Rock, and
to be sure that keeping those jobs is--it's essential that
those companies know that they're going to have the capital
they need. It's a great thing.
Just a couple of things. Mr. Loper, you mentioned, as a
part of your weatherization assistance and home-energy
recommendations, one of the things I have concerns about is the
deployment of technologies. We know that conservation is--
probably makes the most immediate impact, in terms of our
energy economy and our ability to do better in that. Do you
plan on implementing any kind of an education program? Just
from having lived through the consolidation of the part D
prescription drugs into Medicare, educating people is a
critical part of what we have to do. Somebody mentioned LIHEAP
a minute ago. LIHEAP's a great program. I support it
wholeheartedly. But, it only reaches about 17 percent of the
people that are eligible for it. Is there any----
Mr. Loper. Yes. Education and training is a critical
component, pretty much, of every one of the recommendations
they gave. Weatherization assistance, the amount of money that
we're recommending would basically double, this year, what the
weatherization assistance funding is, and then double it again
next year. It would have to be doubled again just to get on
track to meet the--President-elect Obama's 1-million-homes-
weatherized-a-year schedule or target. But, we've got--from--in
fact, I have the numbers here, and we can send them to you, if
you'd like--the number of employees that would be needed in
offices and the number of auditors, and the number of
installers that would be required. From talking back and forth
with the Association for the Community Action Programs field,
that there's----
Senator Lincoln. What about the education of the consumer?
I mean, I know that, just with the rebate check, I had a
tremendous number of Social Security recipients that didn't get
the rebate check, because they didn't--I did unbelievable PSAs
about getting them out there, making sure they filed an
income--a tax return, in order to get that rebate check. I
mean----
Mr. Loper. That's a challenge with all--and that's what I
say, I think that that's an--if you're talking consumer
awareness, generally, that could be part of any of these,
with--for tax incentives, for example, there was--had to be a
major initiative of the advocacy groups to go out and let
people know that these--those tax incentives were available,
because people weren't using them. The uptake was slow. So, the
same thing goes for any of these programs. I hope I'm
addressing----
Senator Lincoln. A little bit. I mean, when you talk about
training, I assume you're talking about training both----
Mr. Loper. No----
Senator Lincoln. [continuing]. Technicians and a whole host
of other things. But, there's got to be a lot more training, in
terms of reaching out to individuals. Because going into my
next question, which is, you know--I think Mr. Hendricks, in
his testimony, suggested that green recovery strategy will
generate all these new markets for American manufactured goods,
advanced technologies. These are green investment programs
intended to spread across regions and benefit local economies.
As a Senator from a tremendously rural State, tremendously low-
income population that are, in some instances, undereducated,
you know, what strategies are you--would you all recommend for
implementing these green programs, particularly in rural
communities that I represent? I mean, you've got to have
education, you've got to have deployment, you've got to have--
and there's--it's a whole different ball of wax, deploying that
stuff to rural America than it is to, you know, making a couple
of government buildings in an urban area green.
Mr. Loper. Can I try to respond again?
Senator Lincoln. Sure.
Mr. Loper. Because, I mean, I didn't want to dismiss
awareness as being a big part of it. I'm saying it's part of
all of these things. But, I mean, you've got to--first, you've
got to let people know that there's an opportunity, and then
you've got to show them how to take advantage of that
opportunity, and then you--they have to have incentive in the
marketplace, and then they have to have resources so that they
can be responsive to the incentives. So, there's a lot of
ingredients that go into getting people to take action on this
issue.
I'd just--there's a cycle in--on the energy efficiency
side, there's the cycle of complacency that's existed, you
know, all 20 years I've been in Washington working on this
issue, and that is that when things are good, when the economy
is good and prices are--and prices are low, people are too busy
and--to deal with it; and when the economy is bad, they can't
afford it--and when prices are high. So, all of these policies
are--the intent is to try to break that cycle of complacency.
Senator Lincoln. Thank you, Mr. Chairman. Appreciate it.
The Chairman. Thank you.
Senator Sanders.
Senator Sanders. Thank you, Mr. Chairman.
I think there's widespread agreement that, as a Nation, we
have not done particularly well in terms of energy efficiency,
and that is what we call the low-hanging fruit. I gather that
we're all in agreement that we need to massively increase
weatherization in this country. Let me also ask, in terms of
job creation, are we producing, in the United States of
America, the kind of appliances that are energy efficient? How
close are we to major breakthroughs, say, in LED light bulbs,
that will also consume perhaps 10 percent of the electricity
than an incandescent light bulb? Are we manufacturing those in
the United States? When we talk about job creation, we prefer
it to be in the United States, not in China. I'm assuming we're
in agreement on massive increases of weatherization. What about
appliances? Can we be creating jobs making energy efficient
appliances, light bulbs, et cetera?
Mr. Hendricks, you want to start off on that one?
Mr. Hendricks. Sure. First of all, let me thank you for
your leadership on the Green Jobs Act. I think that's a
critically important piece of legislation that should be
included her, and expanded. Clearly, we have an aging work
force in the energy sector, and we need to invest in it. We
also need to invest in a whole set of programs that can help
support American manufacturing, broadly. We can both retool
plants, we can retrain workers, but we can also position
American factories to succeed in these growing markets, as they
are beginning to grow.
Senator Sanders. My question is----
Mr. Hendricks. Yes.
Senator Sanders. [continuing]. In the United States today,
if I wanted to buy an energy-efficient washing machine, dryer,
or other type of appliance, are we manufacturing them in the
United States?
Mr. Hendricks. We are in danger of losing our manufacturing
sector, broadly. We've lost 4 million jobs.
Senator Sanders. Right.
Mr. Hendricks. This is a critical opportunity to recognize
the importance of this sector, to reinvest in plants and in
workers, and to do it as we are positioning the economy,
overall, to serve these markets.
Senator Sanders. I----
Mr. Hendricks. We need to retain washing machine
manufacturers. Also, the smart grid creates a potential place
to plug in those appliances.
Senator Sanders. Right.
Mr. Loper.
Mr. Loper. Yes. Certainly not all appliances or light bulbs
are manufactured in the United States, but a significant amount
are. One of the--Whirlpool is a part of our coalition looking
for these recommendations, and they're very concerned about
this coming year and their ability to--one, to--that there's
going to--whether there's going to be a market for energy
efficient products, and whether they can take advantage of it.
That's where I go--they're--the refund--making the tax
incentives for appliances to manufacturers be refundable is a
big deal for the appliance manufacturers.
Senator Sanders. It would seem to me to be an extraordinary
positive thing to create jobs in rebuilding our manufacturing
sector by making energy-efficient products that we desperately
need. I have heard some discussion this morning on nuclear
energy and clean coal, but I have not heard a lot of
discussion--I apologize, Mr. Chairman, for coming in late--on a
technology that I think has extraordinary potential, and that
is solar thermal plants, and utilizing the southwestern part of
our country, which some people regard as the Saudi Arabia of
solar energy. I've been out in Arizona and Nevada, New Mexico.
Everybody there seems to think there's huge potential. There is
virtually no greenhouse gas emissions. Why are we not hearing a
whole lot of discussion on solar thermal plants?
Mr. Book.
Mr. Book. I mean, Senator, part of the problem is that you
have to transmit that power from the solar farms----
Senator Sanders. Right.
Mr. Book. [continuing]. Low-density areas to high-density--
--
Senator Sanders. Right.
Mr. Book. [continuing]. Population density areas. The
virtue of the distributed-generation model is that you're
comparing an apple to an orange. If your power customer is
paying 16 cents for delivered electricity, then you don't have
to talk about generation costs, you just talk about what it
costs on the roof. If you talk about a solar farm, that solar
farm has to compete with fossil energy farms. So, if solar
thermal is about 12 cents, 11 and a half cents per kilowatt
hour generation cost right now, coal is 4. So, if you're
putting a solar panel on the roof, you'll be closer to parity
than you will if you try to make the solar farm as the----
Senator Sanders. As somebody who has introduced legislation
for 10 million solar rooftops in America, I'm not unsympathetic
to that proposal. But, I don't think it's a question of
photovoltaics versus solar thermal. The beauty of--we've talked
to people at Pacific Gas & Electric who now have plans on--who
are drawing up plans right now for a 25-year contract--you
know, the price of solar, unless Exxon buys the sun, probably
is not going to go up too much. So, having long-term solar
thermal that could produce, in one plant, almost as much
electricity as a small nuclear power plant seems to be a
technology that (a) can create a whole lot of construction
jobs, that--but, who wants to say a word on that?
Yes, please, Mr. Hauser.
Mr. Hauser. I'm a huge fan of solar thermal. The one thing
you have to be real careful of is, it requires a lot of water.
So, there are limitations, in terms--especially in the
Southwest. Chairman Bingaman may know this better than I do.
But, you know, the--you have to be careful where the plant's
located, because of, not only the solar access, but--and the
transmission access--but the water availability.
Senator Sanders. Right.
Yes, sir.
Mr. Woolf. As part of our effort to, not only create
immediate jobs, but sustainable jobs, I think we need that
balance. So, a lot of the conversation today has been things
that we can deploy in the next 6 months to create jobs now.
When we talk about solar thermal, which is an exciting
technology, or new nuclear plans or new transmission, I think
that's part of our long-term plan and should be part of the
balance, but it's not--these projects aren't shovel-ready in
the next--you know, in the next months.
Senator Sanders. All right. My last question. We heard a
little bit about the electric car. Some of us have seen the
movie, ``Who Killed the Electric Car?'' General Motors and
others. Why have--I did drive in a car, which has a 200-mile
range, which could solve--serve the needs of, just--a whole lot
of people in this country. Why have we been so slow in
producing those cars and getting them on market? Or is the
technology simply not there?
Mr. Book. Senator, the price point for the marginal driver
is a problem. When you created hybrids rebate in the Energy
Policy Act you gave a rich-man's rebate, because most of those
cars were outside the price range of the people who are price
sensitive to gasoline. So, you need--you have, essentially, a
market problem here, where the cars have to either get cheaper
or----
Senator Sanders. Right.
Mr. Book. [continuing]. The people have to feel pain----
Senator Sanders. But, is there any technical reason right
now why we can't produce an electric car and put it on the
market for $25--$30,000?
Mr. Hendricks.
Mr. Hendricks. I just want to say, I have tremendous faith
in the innovation--the innovative power of American industry,
of American workers. I think we've had misaligned incentives
for many years. There is a regulatory failure, as well as an
investment failure. We've had a structure that encouraged
wasteful use of polluting energy over the long-term, and it
didn't position American communities, American workers, or
American business well to succeed in the future. We have not
had the policies to invest in strategic areas of new
technology, whether it's batteries, whether it's advanced
solar, whether it's, you know, the state-of-the-art wind
technology. We have a long tradition of inventing those
technologies here. Some of the most advanced battery technology
is coming out of places like MIT. But, the commercialization of
the technology--it's not happening in the Third World because
of low wage or low environmental standards, it's happening in
other industrialized nations that have a strategic energy
policy, where they're investing in these longer-term
technologies as a way of stabilizing costs, stabilizing
community impacts, and really managing for greater prosperity
over time.
So, I think you're asking the right question. We need to
own those industries.
Senator Sanders. Mr. Chairman, thank you.
The Chairman. Thank you.
Senator Barrasso.
Senator Barrasso. Thank you very much, Mr. Chairman.
Following up with Senator Sanders' comments on the cars and
the electric cars, Thomas Friedman, I think, today had an
editorial about the bailout of the automobile companies, but
along the lines of what's coming down the line, what's going to
be the new innovation there, and kind of compared where we are
with automobiles now to the coming electric car to where we are
with bailing out a typewriter company at the time of the advent
of the personal computer. So, the innovations are coming, as
Senator Sanders said.
I want to follow up also what he had to say about the solar
thermal, the wind. You talk about being in the Southeast--the
Southwest United States. In Wyoming, we are--clearly have
world-class wind. But, our problem is transmission lines, just
as it with the solar, as Mr. Book was talking about. I think T.
Boone Pickens sat in the same chair that you're in, Mr. Book,
not that many--not that many weeks ago, and said his biggest
concern is the transmission lines. He knows what it's going to
cost to put up the wind turbine and then--and move things. Even
yesterday, in The Hill, ``Renewable energy expansion could
hinge on Federal role in transmission.'' So, even if the money
is there, what do we need to do to make sure that the
transmission capacity is there? All of you can address, if
you'd like.
Mr. Book. Part of the problem is structural, Senator. You
have--section 7 of the Natural Gas Act is about 70 years old,
and it was written in a different time. You could have stronger
Federal controls, maybe. You're going to need to wrestle with
the 10th amendment and--sort of a constitutional crisis here,
because a lot of this is controlled by local regulators. You
can match the funds, you can encourage things, you can promote
standards, but ultimately, they have to want to spend the money
and agree.
Senator Barrasso. Anyone else want to comment on that?
Because you talk--and this--articles talk specifically about
local folks, ``Industry represents say the authority that State
and local officials have to block transmission products, serve
as a disincentive to investors. So----
Mr. Woolf. Senator, I'd suggest that that problem may have
already been fixed by Congress. You created a backstop
authority, whereby FERC can override State and local decisions,
if that's blocking transmission, if the local folks haven't
acted. Since that authority was enacted, in 2005, it's never
been invoked. I think that authority--speaking at least for
Maryland, we take it seriously. We're acting promptly on all
the transmission lines that are proposed. I think we need to
give it some time to see if that law works before deciding that
the system is still broken.
Senator Barrasso. Yes.
Mr. Hauser. It's certainly not just a Federal issue. I
mean, if you look at Texas itself, that's not a Federal issue,
where the wind's in the west and the loads are in the east,
they don't have the transmission to get from one place to the
other. But, it's also--you have to remember, it's not just
transmission. I'm not as familiar with the Wyoming wind, but in
West Texas----
Senator Barrasso. It's a great wind.
Mr. Hauser. In West Texas, the wind blows at night, when
you don't need the electricity as much. So, you have a double
problem of the diurnal nature of the wind, plus the lack of
transmission access.
Senator Barrasso. Mr. Hendricks, you had talked about, kind
of, the V of an economic downtown, as opposed to the flatter
shape, and how you have to continue with incentives and
investments. I mean, that's the concern, is, how do you, you
know, carry that forward? Because it sounds like you're trying
to get started sooner rather than later, and I'm concerned with
some of these delays.
Mr. Hendricks. Absolutely. I think that grid investment--
infrastructure investments around a clean energy infrastructure
coming online--is a very smart place to look immediately beyond
the horizon of the short-term stimulus. Let me just say that,
particularly in the case of renewable energy, there are some
misaligned incentives, where there's actually a positive
benefit that's external to the decision to bring that power
online. So, to the extent that transmission is managed and
regulated at a smaller regional level, but the benefits accrue,
in terms of climate, you know, managing the costs of responding
to climate, bringing new clean technology that improves our
national security online, those are benefits that accrue to the
country as a whole. So, I think we need to think about where
that situation is present, particularly in renewable energy and
renew--generation and transmission, we do need to think about
planning, siting, financing, a number of these issues, and just
really take a close look at how the incentives are aligned to
make sure that we have a national strategy.
Senator Barrasso. Looking at----
Yes, Mr. Loper.
Mr. Loper. It seems to me that in a stimulus package, that
we should diversify our portfolio, also, that there's--that
some people--that maybe this is going to be a short-term
economic crisis, maybe this is going to be a very long-lived
one. I think, increasingly, the thinking is going toward the
latter. So, the two thought--lines of thought on stimulus are
that you do lasting, permanent things. That's what some--John
Taylor was here earlier this year, arguing for that. Some would
say you do temporary, fast things so that you're timing it, you
know, so that you're not doing the stimulus after the recession
is over. But, I think, given that we really don't--that we're
in very uncertain territory here, that it's an argument for
thinking more long term.
We've come to the table with very short-term stuff. But,
frankly, for--at least for me, it's not a total comfortable
position, because I'm afraid, you know, we're just going to,
you know, throw a whole lot of money out there, then there's
not going to be money available in the future, and then that
could be damaging, as well. So, I like to think of a
diversified portfolio in this context.
Senator Barrasso. Thank you.
Thank you, Mr. Chairman, my time's expired.
The Chairman. All right. Why don't I thank this panel, at
this point. I think this has been useful testimony, got a lot
of good ideas out here. We'll take the ideas in your written
testimony, as well, and do all we can to urge that they be
considered. So, thank you very much for being here.
Why don't we call forward the second panel. I'll introduce
the second panel as they come to the table. On this second
panel, which is to deal with our public lands and the
opportunity we have to make investments to benefit our public
lands as part of this stimulus package, we have Dr. Cassandra
Moseley, who's director Ecosystem Workforce Program at the
Institute for a Sustainable Environment at the University of
Oregon. Thank you for being here. We have Mr. Denis Galvin, who
is the--a board member with the National Parks Conservation
Association and former deputy director of the National Park
Service. We have Mr. Mark Limbaugh, who is the former Assistant
Secretary of Water and Science in the Department of the
Interior.
So, thank you all very much for being here. Why don't we
just start with you, Dr. Moseley, and then you, Mr. Limbaugh,
and you, Mr. Galvin. If each of you could take about 5 minutes
and summarize your testimony for us, then I'm sure we'll have
some questions.
Senator Wyden. Mr. Chairman.
The Chairman. Yes, Senator Wyden.
Senator Wyden. Mr. Chairman, I won't take but 30 seconds.
I just wanted to welcome Dr. Moseley. She has been doing
good work in these vineyards for a long, long time, and we're
very pleased to have her, and appreciate all of her leadership.
Thank you, Mr. Chairman, for scheduling her to be part of
this panel.
The Chairman. No, thank you for suggesting it.
Dr. Moseley, why don't you go right ahead.
STATEMENT OF CASSANDRA MOSELEY, ECOSYSTEM WORKFORCE PROGRAM,
INSTITUTE FOR A SUSTAINABLE ENVIRONMENT, UNIVERSITY OF OREGON,
EUGENE, OR
Ms. Moseley. Thank you. Mr. Chairman and distinguished
members of the committee, thank you for this opportunity to
speak before you today.
As the Chairman said, my name is Cassandra Moseley, and I
direct the Ecosystem Workforce Program at the University of
Oregon. So far this morning we've heard a lot about one key set
of green jobs, those related to energy conservation and
renewable energy development. What I want to do today is talk
about another key dimension of the green economy: the
restoration and stewardship of our Nation's forests,
grasslands, and watersheds.
As with investments in energy, the restoration and
maintenance of our public lands offer significant opportunities
to stimulate the economy in the short term, and, by making
these investments today, we can create the foundation for a
sustainable economy in which our public lands and rural
communities play a vital role in providing our Nation with
carbon sequestration, clean air, clean water, resilient
ecosystems, and renewable energy.
With $8.5 billion, the Forest Service and BLM estimate that
they, together, could create something like 127,000 jobs over
the next 1 to 3 years, undertaking land stewardship, wood-based
energy development, and the greening of their buildings.
In the area of land stewardship, there's a huge array of
activities that could create jobs in the short term: fire
hazard reduction, restorations of watersheds and wetlands, road
decommissioning and maintenance, wildlife habitat, urban tree
planting. The list could go on and on.
But, in addition to these immediate job benefits, the
investments in land stewardship would help maintain the
business capacity to care for our Nation's forests and
grasslands through these difficult economic times.
There are other long-term benefits, as well. Fire hazard
reduction in places that are at most risk to wildfire could
create significant cost savings to the Government and reduce
greenhouse gas emissions. Road and river restoration can
increase commercial and tribal fisheries and reduce risks to
drinking water supplies.
In addition to restoration, we also need--just as some of
the panelists were talking about earlier, we need to develop
businesses and markets that can use the byproducts of fire
hazard reduction to create heat, electricity, and value-added
wood products. These investments can help lower the costs of
fuels treatments, reduce our dependence on fossil fuels, and
create substantial cost savings for hospitals, schools, and
other public buildings, particularly in rural communities.
So, is this Forest Service/BLM job estimate of 127,000
jobs--is this accurate? I think it's really easy to get caught
up in the details of predicting how many jobs which particular
initiative will provide. I think, more important than the exact
number of jobs, what is essential in a stimulus package is that
we provide well-paying jobs for working families, we provide
these jobs to the hard-hit regions and sectors of our economy,
particularly rural public-lands communities, and that these
investments will have long-term benefits to the economy and
taxpayers so that when our children pay the bill, the
investment will have been worthwhile.
So, regardless of the exact costs of the job, public-land
stewardship, the greening of public-lands facilities, and
woodbased energy development fit the bill. They will employ
large numbers of people working in activities that will have
lasting effects: the building of the foundation of a green
economy, the addressing of climate change, and reducing of
government expenses.
So, one might ask, So can we get this done? Can the
agencies do this work quickly? I think the building blocks are
there.
First, they can do all this work with existing authorities
and programs. In addition, I think the agencies can, and will
need to, move quickly to work without delay to transfer the
spending authority down to the field level, where they can
actually get shovels in the ground quickly. I think they'll
need to prioritize projects with their environmental analysis
complete or projects where there is limited environmental
analysis needed. Finally, I think that they'll need to spend
the bulk of the funds using contracts and agreements which they
can award relatively quickly.
So, just to conclude, I would recommend that Congress
include in this larger stimulus package a public-lands--public-
land management agencies for the Forest Service and the BLM,
something like $2 to $3 and a half billion per agency in ways
that prioritize restoration and stewardship activities that
provide green jobs immediately and long-term improvements in
ecosystem services, sustainable economic development, and
reduced cost to the government, that the stimulus package
prioritize actions that will benefit those who are going to be
most hardest hit, and those are going to be the people, many of
them, who are dependent on public lands, and who live in
communities near public lands, who are not likely to benefit
directly from the larger stimulus package. Finally, this
package should prioritize activities that will reduce
greenhouse gas emissions, increase carbon sequestration, and
increase the ecological resilience in the face of climate
change.
Thank you, and I look forward to your questions.
[The prepared statement of Ms. Moseley follows:]
Prepared Statement of Cassandra Moseley, Ecosystem Workforce Program,
Institute for a Sustainable Environment, University of Oregon, Eugene,
OR
Mr. Chairman and Members of the Committee:
Thank you for the opportunity to speak before you today about the
critical issue of how the public land management agencies can use green
job development to stimulate the economy today and create the
foundation for a strong, sustainable economy in the long term.
I am on the faculty of the University of Oregon, where I direct the
Ecosystem Workforce Program in the Institute for a Sustainable
Environment. The Ecosystem Workforce Program (EWP) was founded in 1994
to help retrain displaced forest workers and build a green economy in
the Pacific Northwest. Today, EWP seeks to build ecological health,
economic vitality, and democratic governance in rural natural resource
communities in the American West. It is a partner in the Rural Voices
for Conservation Coalition, which promotes balanced conservation-based
approaches to the ecological and economic problems facing the West.
Today, I want to argue that the restoration and maintenance of our
nation's forests and grasslands, acceleration of wood-based energy
development, and the greening of federal facilities offer significant
opportunities to stimulate the economy in the short term by providing
jobs in regions and sectors that are likely to be hit particularly hard
by this deep recession. With $8.5 billion, the Forest Service and
Bureau of Land Management (BLM) estimate that, together, they could
create approximately 127,000 direct jobs over the next one to three
years.\1\
---------------------------------------------------------------------------
\1\ ``Green Jobs: Economic Stimulus through Training and Land
Restoration, United States Forest Service'', Memorandum from Doug
Crandall, USDA Forest Service to Scott Miller, U.W. Senate Energy and
Natural Resources, December 2, 2008; ``BLM--Potential Economic Stimulus
Projects within a 2.5 year timeframe'', December 8, 2008.
---------------------------------------------------------------------------
In addition, by making these investments today, we can create the
foundation for a sustainable economy, in which our public lands and
rural communities play a vital role in providing our nation with a wide
array of ecosystem services ranging from carbon sequestration, clean
air and clean water to wood products and renewable energy.
ECONOMIC AND ENVIRONMENTAL CHALLENGES
It is clear that we are in a severe recession, which economist
Nouriel Roubini predicted in October would last at least two years,
with some risk of it lasting a decade.\2\ We need a large infusion of
government spending to stimulate the economy to dampen the effects of
the rapidly contracting economy on families, businesses, and
communities and to prevent a prolonged (e.g. decade-long) recession. It
is critical that Congress act now by focusing on spending that can
employ workers quickly.
---------------------------------------------------------------------------
\2\ Nuriel Roubini, Written Testimony, Hearing on Faltering
Economic Growth and the Need for Economic Stimulus, the Joint Economic
Committee, U.S. congress, October 30, 2008.
---------------------------------------------------------------------------
Despite the constant barrage of news stories about the economy,
there has been much less news about how the economic crisis is
impacting rural America. Even before this current economic crisis,
rural America faced significant economic challenges. Over 90% of the
nation's 200 poorest counties are rural. Now, in the rural West,
conditions are deteriorating rapidly. For example, sfrom October 2006
to 2008, Oregon lost 17 percent of its wood products manufacturing jobs
and logging jobs, most of them in the last 12 months.\3\ Unemployment
rates in many Western and Southern rural counties are above 9
percent.\4\
---------------------------------------------------------------------------
\3\ Oregon Employment Department, Current Employment Statistics,
http//www.qualityinfo.org/olmisj/CES, accessed 12-3-2008.
\4\ Bureau of Labor Statistics, Local Area Unemployment Statistics,
Unemployment Rates by County, Ocotber 2007-September 2008, http://
www.bls.gov/lau/maps/twmcort.pdf, accessed 12-7-08. http://
www.qualityinfo.org/olmisj/AllRates, accessed 12-7-08.
---------------------------------------------------------------------------
In addition to the rapidly worsening economic situation, we are
facing a longer-term decline in the conditions of our public lands. For
more than a decade, the budgets of the land management agencies have
been flat or declining while fire suppression costs have increased
dramatically.\5\ This budget squeeze has meant that the land management
agencies have fallen farther and farther behind in addressing problems
such as fire hazard, the spread of noxious weeds, degraded wetlands and
wildlife habitat, and decaying roads, trails, and recreation sites.
Today, we face expensive wildfires, growing risk of road failure, and
reduced capacity to provide a wide variety of ecosystem services. If we
are to create green jobs today and build the foundation of a
sustainable economy long into the future, we must address the
conditions of our nation's forests and grasslands.
---------------------------------------------------------------------------
\5\ USDA Forest Service, Agency Transition Document, November 5,
2008.
---------------------------------------------------------------------------
Moreover, the United States needs to rapidly reduce greenhouse gas
emissions and increase carbon sequestration. The federal land
management agencies, as the managers of vast amount of carbon, must
play a central role in reducing emissions, increasing sequestration,
and restoring and maintaining ecological resilience in the face of
climate change.
GREEN JOBS TODAY, LONG-TERM BENEFITS
There are three strategies that the Forest Service and BLM could
use to create significant number of jobs immediately while investing in
the long-term economic future of America. These strategies are:
restoration and stewardship of our nation's forests, grasslands, and
rivers; sustainable wood-based energy development; and the greening of
federal facilities.
Land stewardship.--There are broad-reaching and diverse activities
that the land management agencies could pursue to create jobs in the
short term, including fire hazard reduction, restoration of watersheds
and wetlands, road decommissioning and maintenance, wood bridge repair
and construction, wildlife habit improvements, control of noxious weeds
and invasive species, range restoration, remediation of orphaned wells,
abandoned mine reclamation, trail and recreation site maintenance,
wildlife surveys, and the planting and maintaining of riparian and
urban trees.
Several billion dollars per agency is a major commitment, and yet
it would only begin to address the ecological and infrastructure needs
of the public land management agencies. One 2002 Forest Service and
Department of Interior team estimated, for example, that the agencies
may need at least $1.4 billion in additional funds annually to make
significant inroads into reducing ecological and community risks to
wildfire.\6\ Similarly, the Forest Service alone has close to an $8
billion road maintenance backlog.\7\
---------------------------------------------------------------------------
\6\ GAO, Wildland Management: Important Progress Has Been Made, but
Challenges Remain to Completing a Cohesive Strategy, GAO-05-147,
January 2005.
\7\ USDA, Forest Service, Fiscal Year 2005 Forest Service Budget
Justification, sec. 10, p.33, 2004.
---------------------------------------------------------------------------
In addition to the immediate jobs benefits, investments in land
stewardship would help maintain the business capacity to care for our
nation's forests and grasslands in the long term. Moreover, significant
investments in fire hazard reduction in places that are at most risk to
wildfire could create significant cost savings to the government and
reduce greenhouse gas emissions. Two recent studies in the Southwest
find net benefits from fuels reduction in the range of $240 to $1,400
per acre in reduced suppression costs and avoided losses.\8\ Similarly,
a recent study estimates that fire hazard reduction can reduce net
carbon emissions from forests by as much as 98 percent.\9\ Other kinds
of restoration can also create considerable long-term economic
benefits; river and road restoration, for example, increase commercial
and tribal fisheries and reduce risks to drinking water supplies.
---------------------------------------------------------------------------
\8\ C. Larry Mason, et al., ``Investments in Fuel Removal to Avoid
Forest Fires Result in Substantial Benefits.'' Journal of Forestry,
104(1):27-31,2006. See also, Gary Snider, P.J. Daughtery, and D. Wood,
``The Irrationality of Continued fire Suppression: And Avoided Cost
Analysis of Fire Hazard Reduction Treatments Versus No Treatment,''
Journal of Forestry, 104(8):431-7,2006.
\9\ Matthew D. Hurteau, George W. Koch, and Bruce A. Hungate,
``Carbon Protection and Fire Risk Reduction: Toward a Full Accounting
of Forest Carbon Offsets,'' Frontiers in Ecology and the Environment,
6(9):493-498, 2008; Matthew D. Hurteau and Malcolm North, ``Fuel
treatment Effects on Tree-Based Forest Carbon Storage and Emissions
under Modeled Wildfire Scenarios, Frontiers in Ecology and the
Environment, 7, 2009.
---------------------------------------------------------------------------
Wood-based energy development.--In addition to conducting fire
hazard reduction, we need to develop businesses and markets that can
use the woody material that is the byproducts of these treatments to
create heat, electricity, and value-added wood products. By expanding
the existing Forest Service woody biomass grants program, we could
create jobs in the short term conducting feasibility studies and
constructing wood heat and co-generation facilities. More
significantly, these investments can help lower the costs of fuels
reduction treatments over time. They would also reduce our dependence
on fossil fuels and increase our use of renewable energy. In addition,
conversion to wood heat can create substantial cost savings for
schools, hospitals and other public buildings, thereby saving public
dollars. For example, a small high school in Enterprise, Oregon,
recently-installed a wood heat boiler that is expected generate annual
savings equivalent to maintaining 4-8 percent of their teaching
staff.\10\
---------------------------------------------------------------------------
\10\ Resource Innovations, Wood Heat Solutions: A Community Guild
to Biomass Thermal Projects, 2008. Nils Christoffersen, Wallowa
Resources and Enterprise School Board, Personal Communication, 12-8-08.
---------------------------------------------------------------------------
Greening facilities.--Land management agencies could invest
significant funds in greening their facilities. They have a stock of
aging buildings that could be upgraded to reduce their carbon footprint
through weatherization, conversion of heating, cooling, and electrical
systems to wood or other renewable energy sources, and installation of
energy-efficient lighting. In addition to providing jobs via
contracting and job training programs, this strategy would have
critical long-term benefits including reduced greenhouse gas emissions
reduction and costs to the taxpayers.
JOBS ESTIMATES
The Forest Service estimates that it could spend $5.5 billion over
the next one to three years on land stewardship, wood-based energy
development, and the greening of its facilities and could create as
many as 90,000 jobs.\11\ Similarly, the BLM estimates that it could
spend roughly $3.0 billion over the next two and a half years, creating
over 37,000 direct jobs and nearly 22,600 indirect and induced jobs
performing a wide variety of landscape restoration and stewardship
activities.\12\
---------------------------------------------------------------------------
\11\ ``Green Jobs: Economic Stimulus through Training and Land
Restoration, United States Forest Service'', Memorandum from Doug
Crandall, USDA Forest Service to Scott Miller, U.S. Senate Energy and
Natural Resources, December 2, 2008.
\12\ Bureau of Land Management, ``BLM--Potential Economic Stimulus
Prljects within a 2.5 year timeframe'', December 8, 2008.
---------------------------------------------------------------------------
There is little empirical research or analysis about the costs of
creating one full time equivalent restoration or stewardship job. Part
of the challenge of creating accurate jobs estimates is the huge
diversity of activities involved in restoration and stewardship.
However, assuming Service Contract Act wage rates, it seems reasonable
to assume that restoration-based green jobs costs between $60,000 and
$150,000 per direct full time equivalent job, depending on the type of
work.
It is easy to get caught up in the numbers game of predicting how
many jobs a particular initiative would provide. It is tempting to
assume that more jobs are necessarily better. However, it is important
to keep the issue of job quality\13\ in mind. More jobs per billion
dollars often means that these jobs are lower paid. Although low wage
jobs may be appropriate for youth entering the workforce for the first
time, these sorts of jobs will not help keep children and families fed,
clothed, and in their homes. More important than the exact number of
jobs that will be created, what is essential, is that this stimulus
package provide jobs for working people and families who will spend the
money they earn on essentials, creating a significant multiplier
effect.\14\
---------------------------------------------------------------------------
\13\ The Ecosystem Workforce Program defines a quality job as one
that provides family-supporting wages and compensation, a safe and
health workplace, long duration employment, structured training,
opportunity for advancement, and the ability to work close to home.
\14\ Rubini, Written Testimony.
---------------------------------------------------------------------------
Regardless of the exact cost per job, public lands steward,
greening of public lands facilities, and wood-based energy development
all fit the bill. While extremely varied in types of activities, they
will all employ large numbers of working people in activities that will
have lasting effects by building the foundation of a green economy and
reducing government expenses in the future.
GETTING IT DONE
Clearly, one central consideration has to be whether the federal
land management agencies can spend this money quickly--much of it in
the next several months, and all of it in the next few years. There are
a number of factors in place that suggest that they can do this.
First, all of the activities proposed here can be accomplished
using existing authorities and programs. Although spending these funds
effectively will require the focus and coordination at all levels, the
agencies will not need to develop new rules, regulations, or programs.
Second, it will be critical for the Office of Management and
Budget, the departments, and agencies budget staff to work without
delay to transfer funds and spending authority to field units. While
traditional allocation processes often take months, simply by
prioritizing fast action on stimulus funds, the process could move much
more quickly.
Third, the agencies will have to prioritize projects with complete
environmental analysis or limited analysis requirements, at least
initially. However, the agencies appear to have a reasonable shelf
stock of restoration and stewardship projects for the first year. For
example, the Forest Service estimates that it has 5 million acres of
NEPA-ready fire hazard reduction projects.
Fourth, the land management agencies have a wide array of
implementation tools that can get money to the businesses and workers
quickly. The land management agencies should spend the bulk of the
funds via service contracts, stewardship contracts, and cooperative
agreements, which they can offer and award relatively quickly. To do
so, however, they will probably need to increase contract and
agreements staffing to write new and amend existing contracts and
agreements.
In addition, the agencies have significant capacity to hire
temporary and seasonal employees and use the Economic Action Program,
AmeriCorps, Youth Conservation Corps, and Jobs Corps to combine job
training with stewardship activities. Appropriately mixed with service
and stewardship contracts and agreements, these programs can train
young workers and get projects done quickly. The Forest Service
estimates, for example, that they would create 5,000-7,000 jobs using
these sorts of training programs. If this training done in partnership
with local community organizations, as was done in the Jobs in the
Woods and Hire the Fisher programs, the economic effects would be
greatly enhanced.
SUMMARY RECOMMENDATIONS
1. Act immediately to provide economic stimulus in the range
of $2.0 billion to $3.5 billion per agency for Forest Service
and the BLM, to remain available until September 30, 2010. The
focus of spending should be on building a rural green economy.
Priority activities should include:
A. Restoration and stewardship activities that will
provide green jobs immediately and long-term benefits
of improved ecosystem services, sustainable economic
development, and reduced costs to the government.
B. Actions that will benefit segments of society that
are likely to be hardest hit by the recession and are
most dependent on public lands, especially those
workers and businesses that live and work in isolated,
rural public lands communities who are not likely to
benefit from the larger economic stimulus package.
C. Expansion of the Forest Service grants programs
that support the development of woody biomass
utilization, including for renewable heat and power.
D. Projects that have the potential to reduce green
house gas emissions, sequester carbon, or increase
ecological resilience to climate change. Land
management activities could include, for example, fire
hazard reduction, urban and riparian tree planting, and
range restoration. Facilities improvements could
include, for example weatherizing buildings and
replacing aging heating and cooling systems with more
efficient wood heat boilers, solar panel insulation,
and energy efficient equipment and lighting.
E. A wide range of forest, watershed, wildlife and
fisheries restoration projects that are NEPA-ready now
or could be NEPA-ready within a year.
F. Land stewardship activities that require little or
no NEPA analysis, such as plant, wildlife, cultural
resource surveys, and boundary line delineation, and
other technical activities.
G. A wide range of recreation, trails, and roads
projects that would reduce risk of catastrophic road
failures and reduce stream sedimentation, which are
NEPA-ready now or could be NEPA-ready within a year.
H. Increasing the number of contracting officers and
agreements coordinators to help award contracts and
agreements more quickly.
I. Funding for the Department of Labor and the land
management agencies to increase oversight of
contractors to ensure that they comply with safety and
labor laws, especially in the areas of thinning and
reforestation.
2. Address basic needs.--Over the coming months, more
families will struggle to meet basic needs such as food and
heat. Ensure that communities surrounded by public lands have
adequate access to fire wood and non-timber forest products for
subsistence use. This may require temporarily increasing the
staffing to set up designate sale areas, process permits, and
ensure that resources are managed sustainably.
3. Prohibit guest workers from employment on contracts using
economic stimulus funds.--Inviting guest workers into the
country to perform these activities would likely reduce the
stimulating effect, as wages may be spent abroad. If
contractors cannot find domestic workers to perform particular
activities, these activities should be included in job training
programs.
4. Halt administrative actions that would worsen economic
conditions in rural and other distressed areas.--The Forest
Service has been selling buildings, consolidating units, and
moving staff away from rural areas over the past 15 years.
Continuing these activities is not appropriate in this economic
climate. The Forest Service and DOI should, for example, place
a moratorium on the sale of buildings so as to not further
depress commercial building prices and forego the consolidation
or relocation of units or staff that would lead to a net
transfer of federal personnel out of rural or other
economically distressed areas.
The Chairman. Thank you very much.
Mr. Limbaugh.
STATEMENT OF MARK A. LIMBAUGH, FORMER ASSISTANT SECRETARY FOR
WATER AND SCIENCE, DEPARTMENT OF THE INTERIOR
Mr. Limbaugh. Chairman Bingaman, members of the committee,
thank you very much for having this hearing today, and thank
you for the invitation to testify on the need for further
Federal investment in water management and supply
infrastructure as part of a proposed economic stimulus
legislation.
My comments today are my own, and I'd appreciate it if my
written testimony would be submitted for the record.
The Chairman. It will. Everyone's testimony will be
included in the record.
Mr. Limbaugh. Thank you.
In many areas of the West in the Nation, there is a pent-up
demand for new water management infrastructure. This
infrastructure includes surface and groundwater storage, it
also includes efficient--more efficient water-delivery
management infrastructure.
Much of this infrastructure will have to be built soon,
some with Federal financial assistance, in order to meet the
future challenges and adapt to expected impacts of climate
change and global warming, while allowing water managers to
meet the growing and, many times, competing demands for limited
water resources.
But, my testimony today is focused on five areas within the
Bureau of Reclamation programs and authorities where I believe
construction projects exists that are ready to be implemented
through stimulus spending. Those five areas are aging Federal
facilities, rural water development, water conservation
recycling and reuse projects, environmental mitigation and
restoration infrastructure, and water-related renewable energy
sources.
I have identified, within these groups, projects ready to
be constructed within the next 2 years, and where Reclamation
can quickly provide funding through Federal economic stimulus
appropriations.
Looking at the broader picture, however, construction and
reconstruction of water infrastructure projects, not only
provide jobs in the related economic activities in the short
term, these projects provide the basic foundation of a vibrant
economy in the long term, a reliable source of clean,
affordable water to communities, farms, businesses, and the
environment. In my opinion, these investments are just as
important, if not more important, to growing our economy as are
roads, bridges, and other infrastructure. Not including funding
for water infrastructure in a stimulus bill would be a
regrettable oversight and a huge mistake, in my opinion.
Stimulus spending on water infrastructure should include a
mix of direct appropriations and other innovative financing
tools that could be used to leverage Federal funds to provide
maximum impact to our economy, but minimizing the impacts to
the Federal budget and mitigating for the recent credit crisis
impacting our municipal bond markets.
In my testimony, I have outlined construction projects that
are excellent candidates for economic stimulus spending, but
have stalled due to lack of Federal funding and financing tools
for some of the non-Federal shares that I'll talk about in a
minute.
Shovel-ready construction projects within Reclamation
include rehabilitation of existing federally owned water
infrastructure that is aging and in need of major upgrades
outside the scope of routine maintenance. If stimulus dollars
are appropriated to these construction projects, congressional
direction will be necessary for Reclamation to fund and finance
the non-Federal share of construction costs, similar to the
canal-safety language that currently is included in the Omnibus
Public Land Management Act.
Reclamation Safety of Dams Program has planned, designed,
and ready-to-construct projects that correct design
deficiencies impacting the safety and security of federally
owned dams. There are currently also about ten congressionally
authorized rural water construction projects that Reclamation
provides Federal funding for. Construction activities managed
by local tribal and nontribal construction entities, with a
total of about $1.3 billion in Federal shares, are still
available for appropriation.
In addition of stimulus funds would help meet the optimal
construction capacity to build these projects on an economical
scale, and would provide additional construction jobs.
There are also many water management and conservation
infrastructure projects in need of Federal matching funds that
would help stretch existing water supplies to meet unmet needs.
While I was at Interior, I worked to establish the Water 2025
Challenge Grant Program, and we always received tens of
millions of dollars more in project requests and grant requests
than we had funding to award.
Dedicating stimulus funding for Reclamation water
conservation grants would accelerate the construction and
implementation of these projects, creating jobs, while solving
problems in the process.
There is a very large backlog of water reuse and recycling
projects authorized under Title XVI program, with unfunded
Federal share to the extent of almost $600 million. These
projects are ready to begin construction, but yet, are awaiting
Federal funding.
Collaborative environmental restoration programs have
planned and designed green fish and wildlife projects, such as
fish greens on diversions of water, and additional fish and
wildlife habitat that are ready to construct with substantial
local and State funding already committed, but are in need of
the additional Federal dollars to make these things work.
Finally, there are many opportunities to develop new
renewable energy sources on some western water projects,
including hydroelectric, solar, geothermal, and wind. With
enhanced Federal funding incentives and financing
opportunities, developing these green energy sources would
create jobs and new energy sources for water management
activities in the future.
In conclusion, spending additional Federal dollars on
shovel-ready water infrastructure in these five areas will, in
my opinion, not only meet the short-term needs for jobs and
economic growth, but will provide long-term returns on the
Federal investment by rehabilitating and upgrading existing
water supply infrastructure, increasing the availability of
water in areas experiencing shortage, improving the environment
for fish and wildlife, and providing green sources of water,
energy, and jobs for the future. Such investments will be
necessary sooner rather than later, and using a portion of the
Federal economic stimulus spending is an ideal opportunity to
provide the much-needed Federal funds for important projects.
Thank you, Mr. Chairman. I would be happy to answer
questions the committee may have.
[The prepared statement of Mr. Limbaugh follows:]
Prepared Statement of Mark A. Limbaugh, Former Assistant Secretary for
Water and Science, Department of the Interior
INTRODUCTION
Good morning Chairman Bingaman, Ranking Member Domenici, and
Committee Members. My name is Mark Limbaugh, and I have served as the
Assistant Secretary of the Interior for Water and Science, Deputy
Commissioner for the Bureau of Reclamation, state watermaster for the
Payette River Basin in Idaho and fourth-generation Idaho family farmer.
I am here at the request of this Committee to give my personal thoughts
on the need for further federal investment in water management and
supply infrastructure as part of any proposed economic stimulus
legislation.
First, I must disclose that I currently work as a natural resource
consultant and lobbyist, with clients who are involved in the
management and delivery of water in many areas of the country. While
these clients and their communities would benefit from additional
federal spending on water infrastructure, I am not representing them
here today. My remarks today are my own, and have been derived from my
28-plus years of experience as a water user, water manager, and public
servant.
I am prepared to offer my opinion on the immediate need for and
subsequent economic benefits from further public investment in water
infrastructure through proposed federal spending legislation to
stimulate the U.S. economy. There currently is a pent-up demand for new
and rehabilitated water infrastructure across the Nation. This includes
new surface and ground-water storage facilities and more efficient
water delivery mechanisms, as well as water management and conservation
improvements that include the requisite water management infrastructure
needed to take advantage of conserved water savings. Such
infrastructure must be built in the future to meet the challenges and
uncertainties of climate change and the growing competing demands for
limited water resources to meet unmet needs. In this testimony,
however, I have chosen to narrowly focus on five areas within the
Bureau of Reclamation (Reclamation) programs and responsibilities--
aging federal water facilities, rural water development, water
conservation, recycling and reuse, environmental mitigation and
restoration infrastructure, and water-related renewable energy sources.
This narrowed approach is due to the immediate nature of projects in
these areas that are ready to be constructed within the next two years
and the direct federal Reclamation nexus to providing support and
funding for these projects through a federal economic stimulus spending
package.
It appears obvious to me that the economy (both locally and on a
national scale) benefits from increased investment in construction of
projects by providing jobs and generating economic activity during the
construction phase itself. A recent report by the Congressional
Research Service estimates that each million dollars in new spending on
infrastructure construction, direct and indirect employment is
projected to increase by 8.1 to 12.6 jobs (depending on the model and
assumptions used). However, looking at the broader picture,
construction and reconstruction of water infrastructure provides not
only the construction and related jobs and activities in the short
term, these projects provide the basic component of any vibrant economy
in the long term--a reliable source of clean, affordable water to
communities, farms, and businesses. In my opinion, these investments
are just as, if not more important to growing the economy in both the
short and long terms as transportation and other public infrastructure
projects, and not including such investments in water infrastructure in
an economic stimulus package would be a regrettable oversight and a
huge mistake.
Also, when these projects are built, they will be designed and
constructed using the latest environmental engineering standards for
water development and management--protecting important environmental
values in water quality and conservation, fish and wildlife habitat,
and providing many opportunities for new ``green jobs'' in the water
sector of the economy.
Stimulus spending on water infrastructure should include a mix of
direct appropriations, low-interest and no-interest loans, and other
innovative financing tools that allow for limited federal funding to be
leveraged for maximum impact on our economy. Loan guarantees and other
federally-backed loan instruments, such as tax-credit bonds, are
necessary to meet local requirements for workable public financing
tools, mostly due to the current credit crisis which has all but dried
up traditional municipal bond funding mechanisms. Attracting private
capital to water project financing will continue to be a challenge and
our economy will depend on these funds for financing public water
infrastructure.
AGING FEDERAL INFRASTRUCTURE
Over the past 100 years, the Bureau of Reclamation has built
important water management and delivery infrastructure still relied
upon today for important water supplies and the economies built around
those supplies. These federal water projects resulted in a massive
migration to the West in the early 1900's (my relatives among them) and
transformed the West by providing water for farms that now provide the
nation with the multitude of fresh fruits, vegetables, nuts, dairy
products, grains, and other staples too often taken for granted by
consumers. Communities rose out of the sage, local economies were
created and blossomed with the crops produced from these water sources.
Today, these projects are more important than ever originally
contemplated.
Water developed by Reclamation projects is now used to produce not
only crops, but is also relied upon for recreation, for fish and
wildlife, for hydroelectric power production, and for important
municipal and industrial uses. Yet these important facilities are
aging, and many are in need of rehabilitation to continue to reliably
meet current and future demands for water and meet today's
environmental standards. In most cases, Reclamation projects have been
or are being repaid by project beneficiaries--the users of the water.
Much like a mortgage on a house, repayment of the initial project
construction costs were amortized over many years in order that these
project users could afford to pay these costs back to the Federal
government. These project beneficiaries also pay 100% of their allotted
share of operation and maintenance costs, with the government paying
the allotted federal share. As these projects continue to age, routine
maintenance cannot possibly keep up with the demand for the major
rehabilitation needed in order to extend their service life to meet the
needs of present and future generations.
Reclamation has systematically planned such rehabilitation, and
there are many large projects ready to be reconstructed, some requiring
extensive construction activities to rebuild this large, complex water
infrastructure. Reclamation's Safety of Dams program has continued to
meet the construction needs to maintain the safety and security of
large federal dams and infrastructure that fails to meet today's
engineering standards. These projects are not rehabilitation, as only
design flaws that impact project safety and security are repaired under
this program. There are many projects in this program that are in need
of additional federal appropriations in order to begin construction,
and would be excellent candidates as economic stimulus projects.
However, construction of the other rehabilitation projects has stalled,
with the non-federal share of the huge costs associated with such
construction activities simply added to the project beneficiaries'
annual operation and maintenance bills, creating a financing crisis for
project beneficiaries by exponentially increasing their non-federal
annual costs. As an example, I recall one Reclamation water district
annually paid O&M costs in the neighborhood of $500,000, only to be
confronted with a three year rehabilitation project (still not started)
that increased the water district's annual O&M costs to over ten
million dollars with no financing program to extend repayment over a
reasonable period of years. Even if Reclamation were appropriated
additional dollars through a stimulus spending bill to fund these
improvements, with no financing program or direction from the Congress,
the agency would still require repayment from the non-federal project
users in the year the funds were expended. The Omnibus Public Land
Management Act considered in this Congress contains legislation that
would provide Reclamation with additional authority to extend repayment
of such costs, with interest, over a more reasonable timeframe based on
the life of the rehabilitation project.
In addition to proposed stimulus spending, innovative financing
tools are needed to assist with the updating and rehabilitation of
water infrastructure. The 109th Congress provided Reclamation with
authority to develop a loan guarantee program. While this program has
yet to be offered to Reclamation customers, I believe it will provide a
cost-effective financing program for such projects. Besides direct
loans and loan guarantees, another innovative federal financing tool
currently being considered for authorization is the tax-credit bond,
where federal income tax credits are offered in lieu of interest
payments on private loans made to public agencies, financing their
long-term water infrastructure needs interest-free and costing the
federal government only a fraction of the total amount borrowed. Such
financing instruments will be essential in leveraging limited federal
funds to attract the private financial capital necessary to meet the
needs of tomorrow's water infrastructure projects.
RURAL WATER
The need for a reliable source of clean, potable water is no more
apparent than in many rural areas of this country. Many Tribes still
deal with inadequate and unsafe water supplies on their reservations,
and small communities across the Plains states and in the Southwest are
in dire need of such infrastructure. There are currently about ten
congressionally authorized rural water projects that Reclamation
participates in providing federal funds for construction activities
managed by local construction entities (both Tribal and non-Tribal
entities). In my experience, there has not been adequate funding made
available to the various local construction entities to meet the
capacity to build these projects on an economical scale, with
approximately $1.3 billion in funding needed to complete these
projects. Additional funding provided in a stimulus spending bill to
meet the construction capability of these entities would advance the
construction phases of these authorized projects, providing additional
construction jobs and vital economic activity in the process in both
the short and long terms.
The Rural Water Supply Act of 2006, introduced by Senators Bingaman
and Domenici, provided the authority for Reclamation to develop a rural
water program that could ensure the best future rural water supply
projects were advanced to Congress for authorization and construction
funding. Reclamation recently released an interim rule to develop such
a program and is currently seeking comments. Funding is authorized at
$15 million annually to provide for appraisal and feasibility studies,
as well as program administration. Such studies will be necessary to
determine the viability of a project and provide recommendations to
Congress for further authorization to construction. Funding provided in
a stimulus package could help establish this program and provide
additional projects that could be quickly ready to construct if
authorized for federal funding. The Act also provided Reclamation with
authority for a loan guarantee program to assist in financing a portion
of construction costs for these projects, however the program has not
been offered by Reclamation at this time. Congress may need to provide
direction and guidance to Reclamation in developing a loan guarantee
program to meet the financing needs of rural water and other water
infrastructure projects in the future.
WATER CONSERVATION, RECYCLING AND REUSE
Water conservation and improved water management has been at the
forefront of meeting unmet needs in the West. There are many
opportunities for new water conservation activities that could help
stretch existing water supplies, but many of these projects must wait
for available funding so they can be moved forward for construction.
While at Interior, I worked to establish the Water 2025 challenge grant
program, and we always received millions of dollars more in requests
for grants than we had funding to award. Integrated regional water
management planning, automated water control structures, SCADA systems,
improved water measurement devices, system optimization planning
analyses, canal and ditch lining and piping, and other water
conservation measures are needed today and are ready to be installed at
many locales across the Reclamation states, but local funding alone has
not been adequate to meet the demand for such infrastructure.
Additional federal funding for water conservation matching grants
through Reclamation in an economic stimulus spending bill would assist
these local and state entities in accelerating the construction and
implementation of these projects, creating jobs and associated economic
activity in the process. This water management infrastructure continues
to be vitally important to the advancement of voluntary state-
sanctioned water banks and transfers that allow water to flow to meet
unmet needs for people and the environment while protecting the state-
based water rights so important to Western water users, and providing a
cost-effective, collaborative process in providing for unmet water
supply needs.
Title XVI of P.L.102-575 provided Reclamation with the authority to
develop a demonstration and grant program for water reuse and recycling
projects. Currently there is a very large backlog of projects,
requiring almost $600 million in federal cost share, which are ready to
begin construction but are waiting for the federal funding necessary to
finance these projects. These projects would provide new water supplies
to communities in dire need of additional water sources. Many of these
authorized projects are in the Southern California region, but there
are some in other areas of the Southwest and West. As this Committee is
very aware, California is experiencing court-ordered restrictions and
other extreme pressures on their water supply as legal issues
surrounding competing uses for water in the state are sorted out, with
endangered species, environmental requirements, growing populations,
and mounting drought conditions all contributing to the current state
of affairs. Millions of people in Southern California rely on imported
water from the Colorado River and from the Central Valley, and both of
these sources have been reduced in the past several years. The need to
develop in-basin water supplies in these areas has never been greater,
and water reuse and recycling projects would dramatically help in this
effort. There are other projects, either congressionally authorized or
waiting for such authorization that could help divert flood flows into
groundwater basins and desalinate water from impaired groundwater or
the sea, and these projects need to be moved forward to construction as
well. Again, innovative federal financing tools are needed to attract
private funding for the non-federal share of these projects, as the
municipal bond market have been severely restricted in the current
credit crisis. Such financing programs should also be considered in an
economic stimulus package to spur investment in constructing these
important public works projects.
ENVIRONMENTAL MITIGATION AND RESTORATION INFRASTRUCTURE
As water has been developed in the West over the last century, our
nation's environmental standards have evolved into new laws and
standards that drive the need to mitigate water-related impacts to the
environment and restore habitat important to the survival of both
endangered and threatened species, while preserving important fish and
wildlife populations treasured by generations of Americans. The results
of our successful water development and use in the West have also
resulted in some negative impacts to our environment, and there are
many infrastructure projects that have been designed to mitigate and
restore natural systems while protecting the important use of water for
people. Currently, there are many robust collaborative environmental
restoration and protection programs that have infrastructure ready to
construct, but are in need of additional federal dollars to implement
these projects. Programs like the Upper Colorado River Recovery
Implementation Program, the Platte River Recovery Program, the Middle
Rio Grande Silvery Minnow Collaborative Program, the Lower Colorado
River Multi-Species Conservation Program, the Columbia-Snake River
Salmon Recovery Programs, the Grand Canyon Adaptive Management Program,
and the fisheries restoration and passage improvement programs in
Central Valley of California are all well established and would benefit
from focused stimulus spending that would begin construction on shovel-
ready projects that are needed for environmental restoration and
fisheries habitat improvement. Projects such as fish screens on
existing water diversions, integrated regional water management and
conjunctive groundwater/surface water management projects, selective
withdrawal temperature control devices, habitat restoration and
mitigation projects, wetland water treatment facilities and green
stormwater infrastructure are but some of the many projects in need of
immediate federal funds and/or financing to begin construction. Most of
these projects have substantial local and state funding committed and
are ready to move forward as federal dollars become available, making
them ideal candidates for economic stimulus spending.
GREEN WATER-RELATED ENERGY SOURCES
Hydro-electric power sources do not produce greenhouse gases and
are a reliable source of energy in the West. Yet there are many
opportunities to improve existing or provide additional sources of
hydropower across the West that are in need of immediate funding.
Providing federal funding opportunities for new, smaller hydroelectric
plants where local water delivery systems provide adequate conditions
for operating these plants would increase the use of renewable sources
of energy and take advantage of existing water infrastructure in
developing these new sources of energy. Other renewable energy sources
are available on some Western water projects include solar, geothermal
and wind and with enhanced federal funding and financing opportunities,
developing these ``green'' energy sources could be accelerated.
CONCLUSION
In conclusion, spending additional federal dollars on ``shovel-
ready'' water infrastructure in these five areas will, in my opinion,
not only meet the short term needs for jobs and economic growth, but
will provide long-term returns on the federal investment by
rehabilitating and upgrading existing water supply infrastructure,
increasing the availability of water in areas experiencing shortages,
improving the environment for wildlife and fishery habitat, and
providing ``green'' sources of water and energy for the future. Such
investments will be necessary sooner rather than later, and using a
portion of a federal economic stimulus package is an ideal opportunity
to provide much needed federal funds to these important projects. Thank
you for allowing me to provide my personal views to the Committee, and
I would be happy to answer any questions you may have.
The Chairman. Thank you very much.
Mr. Galvin, you're our final witness. Go right ahead.
STATEMENT OF DENIS GALVIN, TRUSTEE, NATIONAL PARKS CONSERVATION
ASSOCIATION
Mr. Galvin. Senator Bingaman, thank you for holding this
hearing, and thank the other members of the committee for their
interest in national parks.
Today, I represent National Parks Conservation Association,
a citizen advocacy group founded in 1919 in support of national
parks, and today a group of more than 340,000 members.
Previously, for almost 40 years, I was a career employee of the
National Park Service, ending as deputy director, but also
spending a fair amount of my career in planning, design, and
construction.
The subject of today's hearing has deep roots in the
history of the Nation. We think about the Civilian Conservation
Corps and Mission 66 as major infusions of capital into the
national park system. They were really the only historic
infusions of capital into the national park system. Of course,
Mission 66 ended nearly 50 years ago. So, the stimulus package
can easily address a pent-up demand for rehabilitation and
refurbishing our Nation's park facilities.
The program I come to you today with is not a program of
new construction, but, rather, substantially a program of
rehabilitation and refurbishment. Almost half is roads, over
$400 million of roads that the Federal Highway Administration
has certified as ready.
There are also opportunities in cultural resources. The
Park Service has a great backlog in curatorial activities. More
than half of its collection is uncatalogued and cannot be used
by the public, as a result of that. This can be done through
contract services, and can be done expeditiously.
There is an opportunity in Natural Resources--the Natural
Resource Challenge, which has been funded to the level of $72
million by the Congress, was originally $100-million
initiative. There is a need for more research in parks that
would be done through a network of universities, called the
Cooperative Ecological Studies Unit, over 200 universities
around the country.
The Natural Resource Challenge established several teams of
individuals who remove invasive species in national parks. That
could easily--it's currently a $5-million program, could be
expanded to $20 million.
Creating green energy projects in parks has the advantage--
making parks carbon-neutral, in essence--has the added
advantage of providing educational opportunities to the
traveling public.
By the way, Mr. Chairman, I read a press release from the
Park Service the other day that indicates that visitation to
parks last--this year will only be down about one-half of 1
percent, which is rather remarkable, considering that most of
the year featured $4-a-gallon gas prices. So, it's a remarkably
resilient system.
We can and should expand on-the-ground work on parks
through the creation of a national park service corps. This can
be done under existing legislative authorities through the
AmeriCorps authority, so that we would recommend putting
thousands of Americans to work in the parks, under the
AmeriCorps authority, but naming it the National Park Service
Service Corps. This could include skilled and unskilled labor
throughout the United States, many in rural areas.
By the way, almost all construction work done in parks is
small business. The provisions of the small-business set-aside
and the size of National Park Service projects virtually assure
that all the contract work will be done by small businesses.
Finally, the proposed National Park Service Centennial
Challenge, which we have discussed in the authorizing
committees, has been well vetted by the National Park Service.
It's a long list of projects that require matching funds from
friends groups and other nonprofits, and that could easily be
expanded, and would provide a multiplier of matching funds--50-
percent Federal, 50-percent matching. I'm heartened, Mr.
Chairman, that the program is--looks at an 1- to 2-month time
sequence, because these programs, these--the execution of these
programs are generally linear. You need design before you can
do construction. It's important to recognize that the design
money gets out there right away and employs United States-based
engineers, architects, and landscape architects. Within a year,
then you move into construction. So, this 1- to 2-month time
period, I think, is very realistic.
The total of this program is about a billion dollars, Mr.
Chairman, and we think it would create about 23,000 jobs.
Thank you very much. I appreciate the opportunity and am
prepared to answer any questions the committee may have.
[The prepared statement of Mr. Galvin follows:]
Prepared Statement of Denis Galvin, Trustee, National Parks
Conservation Association
Good morning, Chairman Bingaman, Ranking Member Domenici, and
Members of the Committee. I am Denis Galvin, Trustee of the National
Parks Conservation Association. Prior to joining the Board of Trustees,
I served as Acting Director and Deputy Director of the National Park
Service and served a full and satisfying career managing the nation's
parks within that agency. Thank you for inviting me to testify at
today's hearing on the important issue of economic recovery.
Since 1919, the National Parks Conservation Association (NPCA) has
been the leading voice of the American people on behalf of our national
parks. Our mission is to protect and enhance America's National Park
System for current and future generations. On behalf of our more than
340,000 members, we ask that you and your congressional colleagues
seize this tremendous opportunity to foster economic recovery for our
nation, in part, through investments in jobs that restore, renew and
protect our national parks. The National Park Service has approximately
$1 billion of projects that clearly are ``ready to go'', and are
focused on restoring historic structures, repairing national park
infrastructure, greening park facilities, and fixing trails. We
estimate these projects would produce upwards of 22,000 jobs. There are
also significant opportunities to provide jobs through science and
service-related projects in an economic recovery plan. Through this
stimulus effort, we have the opportunity to make employment-producing
investments now in things that we must ultimately pay for anyway, in a
way that protects our national treasures.
Mr. Chairman, our national parks are home to some of the nation's
most iconic and sacred landscapes, monuments, and historic sites. They
are among the most recognizable places in the world. The parks provide
a mirror of the soul of America, and are the physical embodiment of the
collective experience and spirit we value as Americans. The national
parks provide a unique opportunity to help the nation toward economic
recovery and stability. With 391 units in 49 states and 4 territories,
national parks employ 20,000 workers in some of the most remote and
economically hard-hit areas of the nation. In the areas directly
adjacent to the parks and communities many miles distant, parks are the
focus of tourism spending. With 275 million visitors in 2007, local
economies benefited from nearly $12 billion in visitor investment in
recreation, lodging and general consumer spending. Furthermore,
economic studies have demonstrated that for every federal dollar, the
parks generate $4 of benefit to local and regional economies. There are
few other areas of the American economy that reach as far and generate
benefits as deeply into communities in jobs and revenue as the national
parks.
Historically, the national parks have demonstrated themselves as
areas that create rippling economic benefits and add to the stability
of the nation in times of economic crisis. This year marks the 75th
anniversary of the Civilian Conservation Corps (CCC). Created by
President Franklin Roosevelt through the Works Progress Administration,
the CCC set an anchor to add stability to the American economy as the
nation was buffeted during the Great Depression. The Roosevelt
Administration invested $3 billion over the lifetime of the program
($47.5 billion in current dollars) to put 3 million men to work on
projects in the national parks and elsewhere building bridges, trails
and structures that stand today and in many areas define the look and
feel of the national parks.
Seventy five years later, an equally significant opportunity
presents itself: the National Park Service had nearly $1 billion in
road and related infrastructure projects ready to go within the year,
many of which could start within a matter of weeks or months.
Investment in this area will immediately put to work hundreds of
architects, landscape architects, design engineers and other
contractors necessary to prepare the ground for construction projects.
Virtually all of this work likely would be performed by small
businesses on contract to NPS, distributed in communities large and
small across the country. An infusion of this kind would provide
support to highly skilled workers and the communities where they live
and work very quickly.
But the opportunity provided for and by the national parks is
broader than road and related construction projects. Dozens of natural
and cultural, resource protection projects are similarly prepared and
ready for productive work as soon as an investment is made--projects
that have been carefully thought out as a part of the Natural Resource
Challenge planning process and its cultural resource counterpart.
Similarly, the parks have long provided an opportunity for meaningful
investment in science. As with the planning and design work performed
by architecture and engineering contractors for construction projects,
resource and science projects are supported by a broad network of
universities across the nation, the Cooperative Ecosystem Study Units,
or CESUs. Investments here inject funding unto university contractors
that in-turn support surrounding communities.
Two additional areas provide targeted opportunity for investments
that will create ripple effects throughout local economies. Parks have
long been observed for their potential as showcases for environmental
(green) design. As the nation becomes more serious about climate
change, the parks provide a prime opportunity to display design
techniques, test-bed projects and carbon-saving green practices that
will educate many of the 275 million visitors per year. The economic
recovery plan that Congress and the hew administration produce would
provide an opportunity to push toward a goal of making national park
facilities carbon neutral by the 2016 centennial through retrofits to
existing facilities, Finally, just as President Roosevelt launched the
CCC to put men to work for the lasting benefit of the parks, a
significant investment in national service in our national parks,
including an investment in additional resources through the Corporation
on National and Community Service to create a National Parks Service
Corps, will engage young (and older) workers in gainful, productive
employment renewing our national treasures at a time when they are
likely to have difficulty finding jobs. Like the contributions of the
CCC, they can produce the next generation of renewal in our national
parks and produce lasting, modern-day contributions, following the
precedent set in the 1930's through the CCC. These jobs and their
associated training and education benefits can provide enormous
opportunities to a diverse array of inner-city and rural youth, target
those at risk of dropping out, and restore our national parks at the
same time.
Below, I have broken down the areas that we see would benefit most
from targeted investments through an Economic Recovery plan as it is
developed by Congress. The project areas will not only set the parks on
a better footing as they approach their 2nd Century, they will delivery
much needed support into the gateway and regional economies, many of
which are carrying the brunt of impact from the current economic
downturn.
NATURAL RESOURCE OPPORTUNITIES
When designed in 1999, the Natural Resource Challenge was estimated
to require $200 million per year in increased funding to fully
accomplish its goals. Due to budget restrictions in the Department of
the Interior, the funding goal was cut back by one half, to $100
million, of which the National Park Service was able to realize
approximately $78 million in its highest year. Projects that were side-
lined or truncated as due to funding concerns include the following:
Exotic Plant Management Teams--funded at about $5 million
currently, this program can easily be resized as a $20 million
program, with funding delivered to partners outside of park
boundaries to affect cross-boundary eradications/control
efforts. This program would result in hiring locals, youth,
etc. with positive economic impacts.
Exotic Animal Management--a natural and highly necessary
companion to exotic plant management efforts, this effort is
well designed but unfunded and critical for the control of non-
native pigs, rats, snakes, mongoose, etc. that cause
significant damage to the parks.
Forest Health--eastern deciduous forests are under attack
from a host of woolly adelgids, ash borers, sudden oak death,
Asian long horn beetle and other invasive exotics. NPS is
positioned to become a leader in exotic control, forest
restoration (and chestnut restoration), etc. Western forests
are similarly under attack. Ready programs would easily support
an investment of $20 million to 30 million with a significant,
localized economic and employment benefits.
Species restoration--NPS has a broad variety of key species
missing in parks that it can restore to improve the health of
federal lands and the national park experiences. This effort
would support an investment of $10 million per year easily.
Oceans--Vast areas under the care and management of NPS are
virtually unknown, unmapped and uninventoried. Precious ocean
resources are also underrepresented in the National Park
System. Overfishing and inappropriate use that damages the
resource base are significant problems that require strong
action. Programs to zone fishing and monitor the recovery of
highly impacted ocean national parks are already
conceptualized. Funding these efforts at a level of $20 million
to $30 million per year would enable recovery and sustainable
fishing that is in everyone's interest.
Migratory species--funding in migratory research would spur
a rebirth of ecosystem thinking, shaping invasive control
priorities, forestry priorities, grazing and mining in a
cohesive strategic fashion--for long term genetic viability,
movement, and replenishment of isolated populations of native
plants and animals. Funding of research through CESUs and other
cooperative grants would `deliver significant improvement at a
programmatic cost of approximately $15 million per year.
Mitigation of Borderlands impacts--restoration of illegal
immigration impacts in border protected areas in support for
CONAMP's effort to build roadless protected areas on the
Mexican side of border. Programmatic cost is estimated at $5
million per year.
International Program leadership--for some years NPS has
been hobbled in its ability to teach resource preservation
abroad and learn emerging.and new techniques tested elsewhere
in the world. NPS should be repositioned to provide
international environmental leadership and to open itself to
learning the lessons of others. We have much to offer in
programs that are already designed (e.g., international short
course, international training in general, outreach expertise,
exchanges), but where the reach is severely truncated due to
funding. Programmatic cost for correction is approximately $7
million per year.
CULTURAL RESOURCE OPPORTUNITIES
Less well known than the maintenance backlog, the Park Service is
similarly burdened by an equally imposing museum collections backlog
comprised of an estimated 56 million uncataloged items. These pieces,
roughly 45 percent of the total NPS collection, lack the basic
documentation and accountability means and measures to ensure their
continued safe preservation, much less their retrieval.
Possibly incorporated as a part of the National Park Service Corps
described below, the parks could well utilize a significant number of
well-trained, highly-skilled professionals, whose sole mission would be
to assist with the reduction or elimination of the current museum
collections backlog. A report by the National Academy of Public
Administrators (NAPA) entitled ``Saving Our History: A Review of
National Park Cultural Resource Programs,'' cited Yellowstone National
Park as a poster child for the daunting scope of the museum collections
backlog. Although recognized by the National Archives and Records
Administration as an ``affiliated archives,'' the park reportedly has
100,000 items in its history, biology, and paleontology collections
that have not been cataloged. Yellowstone has been without an archivist
since May 2007 and recently lost a museum technician position. The NAPA
report tersely concludes that ``as a result Yellowstone's important
cultural collections are at risk.''
In 1933, the Historic American Buildings Survey (HABS) program was
established. HABS provided employment for draftsmen, architects, and
historians, who were put to work documenting the design and condition
of some of the most significant historic structure on the American
landscape. Current plans to use our national parks as vehicles for job
creation and economic stimulus should take a cue from the New Deal and
ensure that job opportunities will be provided widest possible array of
Americans in need of such relief.
PARK SCIENCE
As with other resource--related opportunities, investments in park
science will carry benefits in job creation or preservation that ripple
outward to local communities. A major setback to the future success of
the NPS was the loss of the agency's self-directed research program in
1994 when much of the capacity to pursue hard science was shifted from
the agency and placed in the hands of the new National Biological
Service. While this was a good plan and resulted in additional
efficiencies across several agencies, the plan has come at a cost. Over
time, focus on parks has gradually slipped more and more. Site fidelity
and long term focus on complex systems that have wide annual
variability plus the veneer of changing climate are irreplaceable
requirements for prudent decision making in parks and critical for
strong progress in a broad variety of areas. Reestablishment of a
science program based in NPS--but delivered through contracts with
CESUs and other entities at a level that existed 15 years ago--$20
million per year--would reestablish this capacity and deliver
additional security to communities across the United States.
Hand-in-hand with the reestablishment of NPS's own science capacity
should be the rehabilitation of the Research Learning Center program
(RLC). RLCs are usually adaptively-rehabbed historic structures (that
would otherwise be unused but still require ongoing maintenance/
repair). RLCs support researchers (with lab, bunk, meeting, seminar
space) from academia and could be tweaked to provide constructive
retraining for out placed workers on specific targeted projects. RLCs
enhance the amounts of research done in parks (often for free) and
provide forresearcher/visitor contact opportunities and educational
events for park visitors and classrooms. Approximately $4 million
would:finish the, system of 32 RLCs and provide a strong base for the
decisive role parks could play in place-based education. Messages about
energy conservation, climate change and individual behavior,
sustainability of biodiversity and quality of life messages, etc. would
be positive outcomes linking the recovery efforts to other important
goals.
TRANSPORTATION INFRASTRUCTURE
Although it is not their primary purpose, our national parks play a
significant role in the economies of many communities. As much as $440
million worth of road projects in our national parks are ready to go to
construction, and can rapidly produce as many as 7,000 jobs while also
renewing our national heritage and helping to revitalize our national
parks for our children and grandchildren. Another $500 million in
transportation-related infrastructure investments could be similarly be
ready within another year.
To enable visitors to experience these national treasures without
unduly imposing adverse impacts on the natural, cultural, historical,
and archeological resources inside the parks, the people of the United
States have made very substantial investments in park infrastructure.
Those investments have occurred over many years, but have been meager
in recent years. Two times in our history, America made substantial
investments in our national parks. Both were at times when our nation
was investing in new infrastructure and jobs--one in a time of national
economic crisis and the other during strong economic times.
It is more than half a century since the last of those significant
investments were begun, and the lack of sufficient reinvestment since
that time is evident from examining the condition of park roads today.
The lack of investment, along with the popularity of the national
parks, unfortunately has placed tremendous strains on national park
infrastructure. For example, in Redwoods National Park one of the
original segments of Highway 101 has not had its asphalt replaced since
the 1960s. It is among the 53% of national park roads that are in poor
condition. The road is in a constant state of disrepair, and is a
safety hazard to vehicles and bicycles utilizing the road. The
condition of the road is so poor that normal maintenance methods will
no longer be effective without complete rehabilitation. The road
parallels Richardson Creek which provides habitat for Coho salmon, a
federally listed species, and is a tributary to the Klamath River, an
important salmon fishery. Numerous deteriorated galvanized culverts
that are well beyond their serviceable life span drain large runoff
flows through very large road fill areas. Failure of these culverts
would result in significant sedimentation of Richardson Creek and the
Klamath River, and would likely have an adverse impact on the native
salmon. Fortunately, the Park Service does have a project to
rehabilitate the Redwoods road that is ready to go. The project has
received environmental clearance and all it needs is funding. The
project would not only benefit the park, but would provide jobs to the
surrounding Del Norte County which is one of the poorest in California.
The poor condition of national park transportation infrastructure
is in large part due to decades of insufficient funding. The National
Park Service has documented a total transportation investment need of
more than $5 billion, comprised of $4.7 billion for roads, $220 million
for bridges, and $508 million for front country trails that connect
transportation nodes. We now have an opportunity to begin reinvesting
in critical park infrastructure in a way that puts Americans to work in
unnerving economic times while meeting our stewardship responsibilities
to our children.
NPCA understands that the National Park Service has more than $270
million in 18 transportation infrastructure improvement projects that
are ready to go to construction. When ready-to-go road projects that do
not receive FLHP funding are included, the system-wide estimate exceeds
$440 million. All these projects have obtained environmental clearance
and can be contracted out within 180 days.
Perhaps the most dramatic example of the desperate state of
national park infrastructure and of the importance of park roads to
local communities is the Going-to-the-Sun Road in Glacier Park,
Montana. Ascending over the continental divide at Logan Pass, the
Going-to-the-Sun Road is rated as one of the ten best scenic drives in
America. As such it is a significant attraction generating over one and
a half million visits per year making it an economic anchor for the
tourism industry in the northwest portion of Montana. Yet, 75 years of
rockslides and avalanches, severe weather, heavy traffic, and
inadequate maintenance have left the road in urgent need of repair.
Reconstruction began in 2007, but the funding has not kept pace with
the project. More than $20 million in work is ready to begin if funding
could be made available. There are many such examples of ongoing road
work that could be accelerated for the benefit of both park visitors
and the local economy.
In some instances, the project being proposed is not to replace
deteriorating infrastructure, but instead to reduce infrastructure's
impact upon irreplaceable natural resources and systems. For example,
the Tamiami Trail project in Florida will raise a key section of the
roadway to allow more water to flow from Lake Okeechobee through
Everglades National Park to Florida Bay to improve ecosystem function,
reduce harmful discharges to northern estuaries and increase water flow
to water-starved areas. Unemployment in South Florida has risen
dramatically with this economic downturn in particular because of the
reduction in construction jobs. For a modest investment, this two-to
three year project could produce dividends that are truly immeasurable
both for the local economy and the environment.
As already noted, investment in park transportation infrastructure
will bring immediate benefits to local communities and the national
economy. Transportation projects will first create high-paying
construction jobs that support local families. Using a standard public
lands construction impact assessment model, as many as 7,000 jobs could
be created through these projects. The secondary effect of these jobs
upon the communities surrounding the parks--many of them in rural
areas--would increase the benefit many times over as the income of
these families is pumped back into the local economy. NPCA recently
commissioned a study that found that every federal dollar invested in
our national parks generates at least four dollars in direct economic
benefit to state and local economies, with significant additional
indirect benefits. This study was conservative and the true benefit for
these projects is probably closer to the construction industry standard
of 6 to 1.
GREEN INFRASTRUCTURE
Two notable proposals are being made to the Transition Teams
organizing for the Obama Administration. These include a proposal for
$24 million being submitted to the DOI Transition Team directed
specifically to NPS in support of clean energy projects over the next
24 months, and a $150 million to $200 million proposal for developing
net zero energy consumption park visitor centers to be submitted to the
DOE Transition Team. NPCA supports both of these proposals, as park
construction projects of all kinds have proven themselves time and time
again as job creators for local communities and sound investments that
showcase issues for the millions of visitors that come to the national
parks year after year.
INVESTING IN SERVICE OPPORTUNITIES AND VOLUNTEERISM
An additional opportunity exists that would significantly expand
the capacity of the National Park Service in the short term, and
provide cost-effective employment opportunities in a manner that helps
reduce the national park system maintenance backlog and address other
critical NPS needs. We believe that creation of a National Parks
Service Corps, as a component of the expansion of national and
community service, presents an opportunity to address the NPS operating
deficit and construction/maintenance backlog, while engaging more
Americans in productive work at a time of dislocation to preserve
historic and cultural resources, maintain trails and common areas, help
promote tourism and recreation at a time when our economy needs it
most, and strengthen educational efforts to connect park history
with'the next generation. Like 1933, when President Franklin Roosevelt
married two foundering resources--jobless, young men and public lands
that were subject to soil erosion and deforestation, the National Parks
Service Corps can marry three foundering or idle resources--some of the
15 million young people at risk of reaching productive adulthood, the
tens of millions of Baby Boomers who feel they are leaving the world in
worse condition than they inherited it and want to serve, and our
national parks that are in need of more full-time, part-time and
traditional volunteers to meet urgent needs.
This proposal fits within existing proposals to expand Americorps
through the Serve America Act, and can easily be implemented quickly
through additional appropriations to the Corporation for Community and
National Service. We propose placing 10,000 new paid volunteers in our
national parks to dramatically increase the capacity of the parks to
resolve backlogged construction and maintenance needs, while providing
functionally useful training to a workforce in need.
Programmatic cost for this proposal is anticipated to be $200
million, allocated as follows:
$60 million for 5,000 National Park Service Corps positions
based on the Americorps National Civilian Community Corps model
($12,000 each),
$50 million for 5,000 National Park Service Corps positions
using the AmeriCorps Federal and State grant model the
remaining 5,000 volunteers ($10,000 each),
$50 million for a $5,000 educational award for all 10,000
volunteers,
And $40 million for placement of full-time volunteer
coordinators in the parks, and for administrative expenses.
Spending on this program can begin expeditiously, allowing for
recruitment and initial training of both workforce and NPS management.
Operationally, the National Park Service would administer the Corps and
deploy new volunteer coordinators in national parks, and the new
positions would be funded with living stipends and education awards
through the Corporation for National and Community Service.
The new NPCC can build on two successful programs at the
Corporation for National and Community Service. The Corporation's
national service program called AmeriCorps currently operates in two
ways. The AmeriCorps State and National program provides financial
support through grants to public and nonprofit organizations that
sponsor service programs around the country. AmeriCorps State and
National members can volunteer part-time or full-time; many receive a
modest living stipend based on the minimum wage; and most receive a
``Segal education award'' of $4,725 at the conclusion of their service.
The other AmeriCorps model is called the National Civilian
Community Corps (NCCC). In contrast to the State and National grant
program, NCCC is a full-time 10-month residential program. Members live
on one of four regional campuses, receive intensive training, and are
deployed as teams for projects that range from disaster response to
environmental protection. As with the State and National program, NCCC
members receive an education award at the end of their service. The
creation of a new parks-focused program would provide both stimulus to
the communities in which the work took place and job creation for young
and outplaced talent that is perhaps faster than any other programmatic
method.
CENTENNIAL CHALLENGE
Another opportunity for parks to help create jobs is the National
Park Centennial Challenge. This program, the proposed authorization for
which was included in the Senate's proposed economic recovery package,
received a downpayment of funding from congressional appropriators this
past fiscal year. Those projects generated approximately 350 jobs. If
the Congress provides additional funding and a broader authorization
for the Challenge, it would be quite easy for the National Park Service
to issue a request for proposals that maximizes job creation
opportunities of the next year to two years. Because many of the
projects would be matched by private dollars, there would also be a
doubling impact of any federal investment, thereby doubling its
potential stimulative effect. I recommend that you seize the
opportunity to get this important program launched.
Mr. Chairman, my intent in this testimony has been to demonstrate
the variety of ways that investments in the national parks can deliver
benefits in job creation and financial improvement to communities
across the United States. Such investments would be long-lived, not
ephemeral, as we see today with the lasting improvement the Roosevelt
Administration provided with the CCC and the Eisenhower Administration
provided with Mission 66. Americans love our national parks, and this
kind of investment in them as part of an economic recovery package will
have outsized benefits. By funding ready-to-go projects in America's
favorite places, the Committee can both foster the creation of good,
needed jobs, and renew the nation-al inheritance we have a collective
responsibility to pass to our children in at least as good as condition
as we received it. An investment in our national parks is both an
investment in today and in our future.
This concludes my testimony and I will be happy to answer any
questions you may have.
The Chairman. OK. Thank you all for your testimony.
Let me ask about this issue of regulatory requirements,
NEPA compliance issues. We've talked about everything being
shovel-ready. Is all of this NEPA-ready, in the sense that the
projects we're talking about there--are there substantial
additional requirements that have to be dealt with under NEPA
that will delay all of this, or are we talking about projects
that have already done the necessary NEPA analysis? Or are we
talking about projects that don't require a NEPA analysis?
Mr. Galvin. In the case of the National Park Service
projects, many of them--as I said, more than half of them would
be in the category of rehabilitation, refurbishment. So, the
NEPA requirements are not major. These are not--they're not new
sites, they're not new construction. They would probably mostly
be done on findings of no significant impact or with an
environmental assessment.
The Chairman. What about the water projects?
Mr. Limbaugh.
Mr. Limbaugh. Mr. Chairman, thank you. There are some--the
rehabilitation of existing infrastructure, as Mr. Galvin
mentioned, are subject to NEPA, but they're subject to--not as
an extensive analysis, because the facilities are already
there; it's just a matter of the impacts of the construction. A
lot of that, NEPA is done, or can be done very quickly,
depending on what stage Reclamation is in, in their planning
and design efforts on these. There are many that are in that
stage.
As far as the other projects, the environmentally--
enhancement projects, the water conservation projects--those
are all--can be very--NEPA can be very quickly completed, or is
completed on some of these projects, such as the Title XVI
projects that are just simply awaiting funding or that are--or
the rural water projects, that have been getting funding over
the years, but not enough to economically move forward quickly
to get those projects finished.
The Chairman. Dr. Moseley, do you have any comment on----
Ms. Moseley. Sure, let me add a couple of things. You know,
obviously the Forest Service and BLM public-lands forest
management often gets entangled up on NEPA. This committee and
others have had huge amounts of debates about what level of
NEPA is appropriate, do we--should we have categorical
exclusions, that sort of thing. But, I think, in this case,
it's sort of asking the wrong question. The question is really,
What can the agency do, given what they would--you know, sort
of, in this 2-year timeframe to help stimulate the economy? If
I have my numbers right, the Forest Service estimates it has
1.5 million acres NEPA-ready to--for fire-hazard reduction,
which would cost something like $850 million to implement.
That's no small amount of acres, and it's no small amount of
money. They also--I--as I understand it, estimate that would
have another 5 million NEPA-ready in the short term, which
suggests that they have a pretty substantial pipeline.
Certainly, in addition, you know, the NEPA projects involving
trees seem to be the things where we get hung most on the
Forest Service, and BLM in the West. I think there are a whole
bunch of other kinds of activities that require--are very
noncontroversial, there is some pipeline in the place, or they
don't require much in the way of analysis that can be used--you
can use categorical exclusions. Then, there's a whole bunch of
things that aren't--don't have environmental impact--wildlife
surveys, boundary-line marking, those sorts of things--which
are--can provide critical technical jobs with absolutely no
NEPA analysis.
The Chairman. Mr. Galvin, let me ask you one other
question. You talk about the recommendation of having a
National Park Service Corps. We already have the Youth
Conservation Corps in the Park Service, and sort of separate in
other land management agencies, and I've been advocating
increased funding for that over a long period. How do you see
this National Park Service Corps relating to the existing Youth
Conservation Corps programs?
Mr. Galvin. It would simply expand it. That would be one of
the authorities we would use, along with the AmeriCorps. Some
of the AmeriCorps authorities allow State grants that would
in--then, in turn, the States would finance workers in the
parks. But--it could easily use the Youth Conservation Corps--
but, we're also thinking of more sophisticated, more
professional kinds of work than traditionally has been done by
the Youth Conservation Corps. For instance, I used the
curatorial problem; we could use the National Park Service
Corps, as an example, to hire curators on contract to--for
instance, Yellowstone has 100,000 items in its collection that
are uncatalogued; hence, unusable by the public. If we could
get trained professional staff in there, either under contract
or as part of the National Park Service Corps, we could
probably wipe out that uncatalogued backlog in 2 years.
The Chairman. Thank you.
Senator Murkowski.
Senator Murkowski. Thank you, Mr. Chairman.
Mr. Galvin, you've mentioned, a couple of different times
now, the possibility of contracting--in specific areas,
whether--you just mentioned the curative aspect of it now or
possibly in improving infrastructure, and reducing the invasive
species. Are there any internal changes that would need to be
made within the Park Service in order to implement these kinds
of contracting services?
Mr. Galvin. No. Almost all of planning, design, and
construction work, both roads and infrastructure in the Park
Service, are done through contracting out right now. In fact,
the Park Service has--and I'm sure all the other agencies do,
too--something called ``indefinite-quantity contracts'' in
which private firms--private design firms and planning firms
are already engaged. When you--they're engaged competitively,
but they're onboard right now. So, when jobs come, either in
their region or in their area of expertise, you simply write a
work directive to them, and they can begin design.
Senator Murkowski. OK.
Mr. Galvin. So, at least with respect to the infrastructure
side of this, I would say the contracting capacity is there.
Senator Murkowski. Mr. Limbaugh, you spoke, in your
comments, a lot about the financing side of what needs to be
done with regards to the water infrastructure projects. As we
talk about energy and how we're going to advance renewables,
just about everything that we're talking about, maybe with the
exception of, you know--no, I don't think there's exception--we
need more water. We recognize that we can and should be doing
more with some of our water projects that are very close to
being ready. The loan guarantee program that exists currently
within the Bureau of Reclamation, helping to facilitate
existing water projects and to create new ones, how good of a
job are we doing with implementation of the program? Are there
possibly any fixes that we might want to include in a stimulus
package, that could better to enhance the loan guarantee
program? Then, you mentioned, a couple of different times, the
terminology ``innovative financing tools.'' Do you have any
suggestions for us as to what they might be, in the context of
water infrastructure projects?
Mr. Limbaugh. Sure, Senator. First of all, I'm very
disappointed that the loan guarantee program is not moving
forward under the current Administration. We worked very
closely with this committee to get that through, and it would
provide a very cost-effective way to leverage Federal dollars,
you know, get private financing attracted to these projects,
and have the project beneficiaries pay them over time, pay
their share of these large rehabilitation costs over time, with
interest. So, they make a lot of sense. The problem has been
with--and how much support within the management of the
executive branch. I would hope that we can move forward with
this program very quickly in the new administration.
I think congressional direction may be necessary to get
this program going, to solidify the basic concepts for a loan
guarantee program within Reclamation. But, at this stage, there
is no program. We have the authority, and there is no program.
Senator Murkowski. OK.
Mr. Limbaugh. As far as other innovative financing tools,
there are some that are being considered by the Congress now.
One of them is tax credit bonds, that I've heard about, that
basically--or, it's my understanding that the interest--the
return on the investment is through tax credits that are
provided by the government, with no interest being paid by the
local entity--many times, a local government or a municipality.
That would be a huge cost-saving to them, spur investment and
not cost the Federal Government the--you know, 100 percent, but
it would be more of a smaller percent, leveraging Federal
dollars, again, to provide that working capital necessary to
get some of these projects done.
Senator Murkowski. Thank you.
Ms. Moseley, in your response to the Chairman on some of
the projects that are NEPA-ready--it's my understanding that
there's some discussion as to how much Forest Service land in
the fire-hazard reduction projects is actually ready. We don't
need to argue over whether there's 57,000 acres that are ready,
or over a million. The numbers are what they are. You've
mentioned that we need to prioritize, clearly, as we try to
move projects forward in this 2-month period. If, in fact, the
Forest Service and the Bureau of Land Management actually have
a very few number of projects that are NEPA-ready, to move out
tomorrow, do we not move forward because they're not ready? Do
you have any suggestions for us as to how we might include them
in the mix? Because I think it would be a significant stimulus
for us and something that we should be looking to. Any
suggestions there?
Ms. Moseley. I think that the strategy might be to--
essentially for the agencies to make some strategic decisions
about how they stagger their work plan, so that they think
about doing--you know, putting into the pipeline--and, you
know, sort of, make shovel-ready those things that are shovel-
ready, and make--do, parallel to that, those things that are--
could be ready in 12 months, could be ready in 18 months. In
doing so, I think that creates opportunity to do some things
that have been so far off, that have been so underbudgeted in
the last decade, that they haven't even had the ability to do
NEPA planning, because there's been no money to even do
planning, much less implementation. So, it would be a shame I
think, in this context, to leave those entirely off the table.
That may mean, given the, sort of, complicated budget line-
item system of the Forest Service, some pretty close attention
in the appropriations process to spread the money adequately
across a bunch of line items or to do something that gives them
some fairly general opportunity to be flexible about where they
spend their money.
Senator Murkowski. Thank you, Mr. Chairman.
The Chairman. Senator Salazar.
Senator Salazar. Thank you very much, Chairman Bingaman.
Let me start with you, Mr. Limbaugh. You describe what you
say are shovel-ready projects in the five areas in your
testimony about aging water facilities, rural water
development, water conservation, recycling and reuse,
environmental mitigation--and I think it's actually six,
because you have water-related renewable-energy projects. Do
you--part of what we will struggle with here, I think, in the
next 2 months or so, or maybe even less than that, is what the
quantum is that we're going to put into an economic recovery
package. Frankly, I think one of the responsibilities that we
have is not to be arbitrary with numbers. You know, I may
look--I look back at the $700-billion economic recovery
package, and I have the same question that a lot of people
still have, you know, Where did that number come from? So, my
question is going to be a question I'm going to ask all three
of you, but I'm going to start with you, because I know Bureau
of Reclamation facilities, I know rural development--water
development projects in my State, many of which have been in
front of this committee, I know--I know the project--I know the
kinds of things that you talk about. If you were President for
the day, what part of the--how much money would you put into
this component related to Bureau of Reclamation in water
projects? Give me a number.
Mr. Limbaugh. Mr. Senator, it's just an estimate that I've
kind of tallied up on the back of an envelope, but I'll give
you a range, so you don't nail me down on a number, here. I
would say, on the low side, probably 500 to 600 million within
a 2-year timeframe. It could be higher than a billion if
projects were made available that are ready to go, but just
simply in a pending authorization bill or something like that,
from what I've seen.
Senator Salazar. You know, Mr. Limbaugh, with all due
respect, it, frankly, seems to me that there's arbitrariness
even in those numbers that you give to me, because, I mean, I
know of one project which this committee has had a hearing on
to do a pipeline that would take water from Pueblo Reservoir
all the way down to the Kansas line in Colorado. It's been
authorized since 1965, never has been funded. Legislation we
have here is an 80-20 cost share, the kind of thing that,
frankly, could get done very quickly, and it would provide jobs
and deal with the real water problem for many rural communities
in my State, which has been a challenge for a very long time.
That project, by itself, if we're looking at that project, is
somewhere around a $200-million project. So, when you come up
with a number of $500 to $600 million to a billion dollars, and
I know that it--there are lots of those kinds of projects all
around the State--all around the States, the 50 States--you
know, I look at the number of dams in my State, reservoirs
which are on the dam safety restricted list because of
spillways that don't have the capability in those spillways,
and I know what the cost is of fixing each one of those--
frankly, it seems to me that a billion-dollar figure is a
little spit in the bucket. So, one of the things that I hope
we're able to get from Reclamation and from Interior are some
real numbers on what the real needs are there, because I think,
frankly, the number you're talking about isn't sufficient. I
mean, I don't--do you want to respond to that?
Mr. Limbaugh. Senator, I agree totally. My parameters that
I set to make that estimate were a 2-year timeframe and in the
categories that I talked about. When you start talking about
the needs out there of the larger projects, they're in the
multiple tens of billions of dollars. I don't know that you
could get all those spent in 2 years, so, you know, my thinking
was, you know, if we're going to have a stimulus package that
has parameters set----
Senator Salazar. Yes.
Mr. Limbaugh. [continuing]. We need to be realistic.
Senator Salazar. Let me just say, I mean, I think about the
Rio Grande restoration efforts within Senator Bingaman's State,
in New Mexico, and what's happening on the middle Rio Grande
there, the huge dollars that are needed there, I look at the
Abiquiu dams in the upper part of New Mexico. I mean, the
numbers, I think, are staggering, in terms of what could go
into these water projects that have been essentially delayed
for such a long time, and where the needs have been building
up. I mean, it's really no different than what's happened to
the interstate transportation system. It's just that people
don't see it as readily as they do transportation.
Mr. Galvin, and Dr. Moseley, too--I only have 30 seconds,
so give me a quantum.
Mr. Galvin. OK.
Senator Salazar. National parks and the different----
Mr. Galvin. The----
Senator Salazar. [continuing]. Initiatives that you
described----
Mr. Galvin. I mentioned previously that up-front ready-to-
go work is about a billion dollars and would create about
23,000 jobs. The other programs that I mentioned in my
testimony--the expansion of the science program, the cultural
resources components--are probably another $500 million, so
about a billion and a half dollars over a 2-month period. By
the way, that first billion dollars----
Senator Salazar. Does that include the centennial----
Mr. Galvin. That would include the----
Senator Salazar. [continuing]. Project?
Mr. Galvin. [continuing]. Centennial Challenge, yes.
Senator Salazar. Centennial Challenge.
Mr. Galvin. Yes. Yes.
Senator Salazar. OK.
Dr. Moseley.
Ms. Moseley. I think, if you think about the Forest Service
alone having something like a $10-billion road maintenance
backlog and maybe needing $1 and a half billion more for fire
hazard reduction--those are two things--the number--I mean, I
couldn't even add up the number, but I think, though, also the
question is----
Senator Salazar. Just between----
Ms. Moseley. [continuing]. Short term and long term. So----
Senator Salazar. [continuing]. Road and fire mitigation
you're talking about 11.5 billion.
Ms. Moseley. Yes. I mean, the thing is, you can't do $10
billion worth of roadwork in 2 years, so you have to take small
chunks. But, let's say you take small chunks and you spend a
couple of billion a year or 18 months per agency, I think, is,
you know, on the low end.
Senator Salazar. OK. Thank you very much.
Thank you, Mr. Chairman.
The Chairman. Senator Wyden.
Senator Wyden. Thank you very much, Mr. Chairman.
Ms. Moseley, I knew you'd be good, but as far as I'm
concerned, you've been one of the best witnesses we've had in a
long time, and I've chaired this subcommittee--Forestry
Subcommittee, for a while.
I think the key point you're making, that healthy forests
equal a healthy economy, is the message that has got to come
out of this stimulus program as it relates to forestry, because
it's obvious that the rural communities feel like they've been
hit by a wrecking ball. They also feel that there's a double
standard, that there's $700 billion for Wall Street, and
they're just kind of waving and trying to get somebody to pay
attention.
I think we made a downpayment on the effort with the Secure
Rural Schools bill that we passed last session--had a lot of
help from the Chairman, Senator Murkowski, a whole host of
people. But, there's obviously a lot more to do.
Let me ask you about two very specific questions. Senator
Cantwell and I, every time we're home and have town meetings
and the like, hear from frustrated folks in rural areas about
the definition of ''biomass`` as it relates to these Federal
lands. This was an area where this committee, in effect, in the
middle of the energy bill, went back in that room for a
substantial length of time, pulled together timber people and
environmental people, and got a good definition of what would
constitute biomass as related to Federal lands good for the
environment, good for the timber sector. Then it went off to
the other body. So be diplomatic, it just didn't survive.
We're going to try and get this changed. We're going to try
and get it changed on every single vehicle--the stimulus
package, Chairman Bingaman will have an energy bill. Obviously,
we have to deal with appropriation jurisdiction issues for the
stimulus package.
But, I'd like to have your thoughts, for the record, on how
important it would be to get this definition of ''biomass``
right, because it seems to me it is a huge opportunity for
clean energy, exactly what you're talk about: healthy forests
for a healthy economy. Senator Cantwell and I are going to be
doing everything we can on every vehicle to change that. But,
your thoughts there first.
Ms. Moseley. Yes, I think that's--you've hit on a critical
issue. I think it's important to keep in mind that when you are
a community and you're surrounded--and your county is 70
percent public lands, and you can't get credit in--for material
that comes from a public land, you're out of luck, basically,
because there aren't other choices. So, I think what's critical
is that we have definitions of biomass that are, you know,
sensitive, environmentally, but also reflect the reality of
western--many western communities that want to be doing small-
scale heat projects that, for example, transform their rural
school from oil to woody biomass. But, if they can't take
advantage of government assistance because of a definition that
excludes their landscape, we have a real problem.
Senator Wyden. I can only say, we need to turn you loose on
the House, because under the leadership of Chairman Bingaman
and Senator Domenici, back in that room, we found common
ground, and then it disappeared. We're going to get it back.
We're going to be calling on you to help us in that effort.
One other question, just very briefly. With respect to the
hazardous fuels work--and you talked about the fact that
there's close to a billion dollars worth of projects that have
already, kind of, cleared the NEPA, kind of, process and the
like--tell us a little bit about what you think is the best way
to get the value out of that work. Are you for the stewardship
contracting or--in terms of actually getting the work done,
what are the kinds of approaches that you think get it done
most quickly and get us the most value for the dollar?
Ms. Moseley. I think that we--it will probably--we'll
probably need a whole basket of tools. I think that stewardship
contracting has proven to be extremely effective for--in two
different kinds of ways. One is that when you have fuels
treatment that involves some material that can be removed and
taken down the road to a mill, or--and you have some material
that is low value, you don't really know what the market is--
it's something that could be biomass at some point, maybe, and
a whole bunch--and some material that's just--we've got to get
piled--the stewardship contracting mechanisms allow us to
efficiently, effectively get all that work done in one context.
I think those are also proving to be the kinds of contracts
that tend to be awarded locally to business--small businesses
in public-lands communities. I think that creates another, sort
of, dual jobs and efficiency opportunity. I think, you know,
more broadly, we'll have to continue to use service contracts
in large ways when the removal of materials doesn't make any
sense. You know, there's some--there'll continue to be some
need and opportunity to use in-house crews, as they do now,
often sending their fire--their crews--or will be fighting
fires, but aren't yet--to do those fuels reduction--all those
things make a lot of sense.
Senator Wyden. Thank you, Mr. Chairman.
Thank you for all the good work that you do, Dr. Moseley.
Ms. Moseley. Thank you.
The Chairman. Senator Cantwell.
Senator Cantwell. Thank you, Mr. Chairman. Thank you for
having both panels today, but particularly this panel, because
of the, I think, importance--there are so many issues that each
of you have already discussed in your testimony today that
really are about resources and priorities that we wish we would
have been able to fund in the past. So, now if we're talking
about stimulus, we should obviously look here to these
important areas, taking care of our natural resources and
improving the ecosystem.
So, Dr. Moseley, I guess I'd start with you. I've been a
big supporter of the roadless area rule. One of the reasons I
was a big supporter of codifying that was because I wanted to
spend more money on the backlog of road maintenance that we
already had instead of creating new roads. What are your
thoughts about taking care of that backlog as part of a
activity of stimulus and creating better--clean water systems,
other things that are so important for our public lands?
Ms. Moseley. I think roadswork is really important, for at
least two reasons, maybe three. One is, we had this--you know,
the Forest Service--you know, we could go to the moon and back,
basically, on their roads. A lot of those roads, we don't need
anymore. In the West, as we--and Pacific Northwest, in
particular--those roads mean--and they're unused roads--mean
that we're putting sediment in our streams, we are endangering
our clean water supplies. So, there's this enormous long-term
opportunity.
The short-term opportunity, economic stimulus opportunity,
is that roadswork, heavy equipment work, backhoe operators,
excavators, all this kind of work, these are really good jobs,
and these are really good jobs that go to local people, to
people in rural communities who used to be making driveways,
but we're not making driveways anymore; they can go help with
streams and--stream restoration and road maintenance and
decommissioning. I think it's an enormous opportunity.
Senator Cantwell. Do you have a number?
Ms. Moseley. I think that, you know, in--the number I have
heard turned around--you know, tossed around, is that the
Forest Service has something like upwards of 150,000 miles of
unneeded roads. Obviously, we can't even begin to look at that
number in the next 2 years. I would defer to experts, that
aren't me, to get the number of what we could do in the next 2
years. I don't know. But, I'd be happy to follow up with you,
if that would be helpful.
Senator Cantwell. Thank you.
Mr. Galvin, a similar question as it relates to the
maintenance issues in our national parks. Obviously, we have
had big challenges in the Pacific Northwest because of storm
damage and everything else. You may have covered this in your
testimony. But, aren't there specific opportunities in dealing
with some of those? I don't think people realize the economic
revenue just that Mount Rainier alone generates to the State.
But, when you have park opening--park openings that have been
impacted by storm damage, in effect, tourism and tourism
activity, what about using the stimulus to improve those areas?
Mr. Galvin. Actually, there's nothing in our proposal
specifically related to storm damage. The proposal does
essentially go to facilities that have not been invested in
adequately over the last 50 years, but there's nothing
specifically in here about storm damage.
I would say, since you mentioned the economic impact--
again, that recent press release--parks generate about four
times as they are appropriated, so that these jobs--these jobs,
in the sense of projects, you know, include rehabilitation of
things like the Paradise Lodge, which has--some work has been
done in, but it's not complete, so that they--I think they--in
the sense that they refurbish park infrastructure, they help
with the economic arguments for parks.
I started my testimony by referring to the CCCs. There are
many parks in the system that have had no investment since the
CCC. Senator Bingaman knows Bandolier. I would characterize
Bandolier as a civilian conservation park. The roads were built
during the Civilian Conservation Crew era, the buildings were
all built. It's now a charming historical--historically
protected landscape, but it needs reinvestment. I would say
Skyline Drive, has--which is on the list here, is another
thing, built, by the way, for $29,000 a mile during the
Depression. You couldn't paint the center stripe down the road
for $29,000 a mile now. But, what an asset. I mean, I think one
of the--one of the great arguments for this kind of economic
stimulus is, it's going to create something that our
grandchildren are going to enjoy. I mean, if--you can just go
down Constitution Avenue and look when those buildings were
built. They're all--you know, the Federal Trade Commission, the
Archives, all built during the Depression, when we were trying
to stimulate the economy. So, it's not just stimulating the
economy that has this long-term--we're creating assets for the
Nation. I think it's a great argument for this program.
Senator Cantwell. I would say that there are true capacity
issues at some of our national parks, where they have continued
to grow in their economic activity and tourism, but we are
limited, because we haven't continued to make the upgrades that
have been necessary.
So, I thank you for your----
Mr. Galvin. Absolutely.
Senator Cantwell. [continuing]. Testimony.
Thank you, Mr. Chairman.
The Chairman. Thank you.
Senator Murkowski, did you have additional questions?
Senator Murkowski. I don't have anything.
The Chairman. Let me thank this panel very much. I think
you've given us good testimony, and we will do our best to see
that it is considered in whatever winds up being enacted.
Thank you very much. That concludes our hearing.
[Whereupon, at 12:10 p.m., the hearing was adjourned.]
APPENDIXES
----------
Appendix I
Responses to Additional Questions
----------
Responses of Kevin Book to Questions From Senator Domenici
Question 1. This year, Chairman Bingaman and I introduced separate
pieces of legislation to create a federal bank for clean energy
projects with the authority to make loans, issue loan guarantees, and
offer other financial products. As we all know, it is very difficult
for alternative energy projects to access low-cost, long-term debt
financing because of the perceived risks associated with new
technologies. These bills seek to address this hurdle and realize the
positive energy security, economic competitiveness, and climate change
benefits of a thriving domestic clean energy industry.
In the context of the global credit crisis, but also in light of
the developments at Fannie Mae and Freddie Mac, do you believe that the
creation of such an entity remains an appropriate federal undertaking
at this time? In what ways would the difficulties encountered in the
DOE loan guarantee program be remedied by the approach laid out in
these Clean Energy Bank bills?
Answer. Senator Domenici, the notion of a Clean Energy Bank is very
well-timed to address the very real problems energy companies,
developers and financial sponsors encounter obtaining loans for new
projects amid a dramatic slowdown in lending. In fact, loan guarantee
program under Title XVII of the Energy Policy Act of 2005 was an
appropriate undertaking even before the onset of the current economic
crisis. Loan guarantees enable developers of new technologies to source
capital on favorable terms despite short (or non-existent) operating
histories and limited (or non-existent) cash flows. Cash for operations
is necessary for innovative technologies to compete for market share
with mature, incumbent technologies in capital-intensive sectors like
high-capacity batteries, clean power and low-emissions liquid fuels.
Low-cost loans don't just provide an opportunity for new players--
they also improve the prospects that new players will succeed. This is
because debt service represents a significant portion of the
``levelized'' cost of energy production (the total financial cost,
inclusive of interest, fuel and operating costs over the life of the
asset, divided by the energy produced over the life of the asset).
In short, access credit gets new players in the game, and cheaper
credit can make a difference between success and failure at the margin.
With proper vetting of applicants, the federal government is in a
position to create value through loan guarantees by lowering marginal
costs at virtually no additional taxpayer cost beyond program
administration, an actual ``win-win'' outcome.
As well conceived as the Title XVII program was, it is not
altogether clear to me that the Department of Energy represents the
best natural fit for a project finance mechanism, particularly given
the exigencies of the moment. Not only do big loans require heightened
scrutiny by qualified specialists during a downturn, but cash-strapped
sponsors of clean coal, nuclear power and farm-scale renewable
generation facilities are likely to be more vulnerable than ever to
costs incurred through administrative delays.
Question 2. You testified that ``technologies that cannot survive
on a long-term basis without ongoing government support can lead to
inefficient energy use and investment decisions.'' Are there any
proposals that you've heard here today that fall into this category as
an unwise use of federal dollars?
Answer. Clean energy has three challenges to overcome. First,
transforming matter from one form to another--which is a big part of
the fuels and power industries--is a messy business. Second, energy is
a commodity business where small cost differentials can add up to big
competitive disadvantages at production scale over decades-long project
lifetimes. Third, economic incentives cannot overcome physical
realities, no matter how much some policymakers may wish it so, and it
generally costs more to transform large volumes of matter from one form
to another while emitting fewer pollutants. As a result, when
governments subsidize inefficient energy technologies, they can end up
making large and long-lived mistakes.
In general, it may be unwise to spend big on energy technologies
that are too far ahead of their time. I would suggest that the federal
government might prefer to direct research and development spending
towards highest-cost technologies and direct explicit subsidies towards
technologies that are closer to economic parity with incumbent sources.
High-cost technologies often are high-cost because the related and
supporting infrastructure may not be sufficiently developed. Or,
feedstock, fuel or components may be in short supply because the
industrial value chain is immature. This doesn't get much bang for each
buck, and piling big demand on small supply tends to only drive prices
up very quickly (consider recent demand-side price inflation associated
with corn, polysilicon, wind gearboxes, etc.).
Response of Kevin Book to Question From Senator Lincoln
Question 1. I represent a state with a large number of hard-
working, low-to-middle-income families. It concerns me that green
technology that allows customers to leave less impact on the
environment, whether it's fuel efficient vehicles or energy saving
appliances, is often more expensive. For the future stimulus package,
in what ways can we make sure that low-income families are able to
access these advanced technologies?
Answer. Senator Lincoln, one of the cruelest ironies of energy
technology tends to be that energy users who are the most price
sensitive tend to be the most vulnerable to price increases and have,
as a consequence, the least capacity to pay a premium in the short term
for enduring economic and environmental benefits, especially when fuel
or power price spikes deplete their disposable income. I think it makes
sense for the government to assist these families.
On the other hand, it's not obvious to me that advanced
technologies are always the best choice in every case. I think it makes
sense to try to target subsidies towards efficiency changes that
correspond to energy use patterns.
Consider the amount of electric power and heating fuel that
literally goes out the window in a poorly-insulated home. For a low-
income family that is watching every penny and can't afford to spend on
their home, even relatively modest weatherization retrofits (caulking
windows, insulating walls, replacing furnace filters) can deliver
enduring dividends. Moreover, these small savings matter more, at the
margin, to lower-income households. Would expensive, high-efficiency
lighting and appliances make a big difference in these homes? Perhaps,
but I would suggest that most lower-income homes already tend to be
keenly aware of the benefits associated with turning the lights off and
turning the thermostat down--economic forces tend to provoke
conservation behaviors because lower-income families can't afford to be
wasteful.
Higher-income families tend to be bigger users of power and fuel
because they are bigger buyers of appliances and cars and less likely
to watch every kilowatt-hour and gallon. When was the last time you
bought a new refrigerator? I suspect, if you're like me, you didn't buy
one until the last one broke, or unless you moved into a new house. For
middle-class families, appropriate policies might include subsidies
that encourage early replacement of inefficient appliances--with a
proviso that that the old appliances get scrapped. It doesn't help to
buy a new fridge that's 50% more efficient than the old fridge if the
old fridge goes into the garage as a beer fridge--that's a 50%
increase, not a 50% savings. Likewise, programmable thermostats and
high-efficiency lighting matter more in richer homes that can afford to
run hotter and keep the lights on more.
I realize this is somewhat counterintuitive and I want to be clear
here: I am not suggesting that we should pay more money to rich people
than we should to poor people. Ultimately, subsidies should generally
phase out progressively with income or they will just perpetuate
blameless waste because the government picks up the tab. No, what I am
suggesting instead is that policy address the problem that makes the
biggest difference per dollar in energy use patterns, and the
government shouldn't pay a dollar more than is necessary to spur the
first investment that yields significant energy efficiency gains.
______
Responses of Mark A. Limbaugh to Questions From Senator Domenici
Question 1. Based on your experience with rural water projects and
the Bureau's rural water program, please describe the costs associated
with operating and maintaining these systems. Have project
beneficiaries been able to pay for their share of the O&M costs
associated with these projects? Will targeted federal dollars for
needed O&M work in rural communities result in new jobs--particularly
since these areas often have limited economic opportunities?
Answer. Based on my previous experience with rural water projects
constructed or funded by Reclamation, in general, the costs associated
with O&M of typical rural water projects (municipal water supply) are
paid by the project beneficiaries. An exception is for Tribal water
systems, where the Federal government pays most if not all of the
Tribal share of annual O&M costs for the system. These arrangements are
typically established in the project authorizing legislation enacted by
the Congress. It has been my experience that project beneficiaries have
been able to pay their share of annual O&M costs of these rural water
systems. For the most part, this is also true of the traditional
Reclamation irrigation projects across the West. While it is my
understanding that rural water systems currently under construction
still require substantial federal construction dollars (as opposed to
O&M dollars) to complete these projects, it is my opinion that the
rural areas of the country served by these water projects would benefit
from new jobs if additional federal dollars are targeted to fund either
construction or major O&M activities associated with these projects.
Funding sources for the construction or extraordinary maintenance of
water projects (both municipal and irrigation) in rural areas are very
limited, and the funds needed to accomplish this work, along with the
jobs associated with such projects, are not likely to materialize
without federal funding and the subsequent long-term financing of any
required repayment of funds by non-federal entities.
Question 2. Please describe the impact the Title XVI program has
had on developing water resources in water scarce regions. Are you
aware of any studies that have addressed the impact of these projects
in encouraging new economic development in these regions?
Answer. Title XVI projects that manage, reuse, and recycle water
that would normally flow out of the basin (usually to the ocean or
other terminal water body) and/or is not of usable quality have
increased usable water supplies in areas of the West where conditions
warrant such projects, such as where the cost of additional water
supplies are extremely high or unavailable at any price. These projects
have typically been developed in basins where water supplies can be
completely exhausted without harming other water rights, such as in
coastal areas like Southern California that are dependent on water
supplies imported from other basins, but there are other Title XVI
projects that better manage and treat impaired source waters, such as
groundwater sources, to increase potable water supplies in areas of
water scarcity. Most of these projects depend on the federal
construction grant funding under the Title XVI program in order to make
these new water supplies an affordable option.
I am aware of one study on the economic impact of funding Title XVI
projects. The House Committee on Natural Resources Subcommittee on
Water and Power recently requested such a study from the Congressional
Research Service. On November 4, 2008, Linda Levine, Specialist in
Labor Economics at the Domestic Social Policy Division of CRS
transmitted a study entitled ``The Number of Jobs that Might Be Created
by Appropriating $300 Million for the Title XVI Water Reuse Program''
to Subcommittee staff. The report establishes that jobs would be
created if total spending increased for Title XVI water reuse projects;
however, the levels of expected job creation differ depending on the
model and assumptions used in the analysis. One shortfall in this
study, in my opinion, is that it only focuses on the short-term
economic impacts of an immediate influx of funding to construct these
projects and does not mention or identify the long-term economic
benefits of producing new water supplies through Title XVI projects in
water short areas, such as creating the water supply certainty needed
for future economic investment to occur, thereby creating a more stable
economy in the longer term. I have taken the liberty of attaching this
CRS report to these answers for your review.
Question 3a. Please describe the difference between the loan
guarantee program offered through the Department of Agriculture and the
recently authorized loan guarantee program within the Bureau of
Reclamation. Should these two loan guarantee programs be implemented
differently?
Answer. The Department of Agriculture loan guarantee program that I
am familiar with is under the Rural Utilities Service (RUS), and it is
my understanding that it has functioned successfully for many years.
This program provides loan guarantees to banks loaning funds to
eligible public works projects for rural communities across the
country. The calculated federal subsidy for these guarantees is equal
to the estimated default rate on these loans, which is very small (1%-
2% of the loan principal in most cases) and in the past has been funded
through up-front fees paid by the borrowers at loan origination. These
payments make the program ``appropriation-neutral'' to the Federal
government. The problem is that the RUS program has only been available
to rural municipal and industrial water supply systems, as well as
water and wastewater treatment facilities in rural areas, and not to
federal irrigation projects or to the non-federal project beneficiaries
in need of additional financing tools. Congress recently authorized the
Bureau of Reclamation to develop a loan guarantee program, and
encouraged the agency to work with the USDA-RUS in administering the
program in a similar fashion under an interagency agreement. These two
programs should not function much differently from each other, in my
opinion, yet the Office of Management and Budget (OMB) considers the
Reclamation program to be different, mostly due to a misinterpretation
of federal fiscal policy. OMB currently determines that if Reclamation
guarantees a loan to a non-federal project beneficiary to finance the
non-federal share of major rehabilitation of federally-owned water
infrastructure, the federal subsidy is calculated at 100% of the
guarantee and not the estimated default rate (typically calculated at
1%-2% of the loan). This is a misinterpretation of the policy, and is
due to OMB considering this financing as ``third-party financing'' of
an ``inherently federal obligation''. This interpretation is incorrect
due to the nature of the ``arms-length'' contracts between Reclamation
and non-federal project beneficiaries to pay for their non-federal
share of any O&M and replacement costs associated with operating
federally-owned water infrastructure. I believe the mischaracterization
of ``third-party financing'' by OMB is now holding up Reclamation's
rulemaking for the program, and delaying loan guarantees to finance
even non-federal infrastructure eligible under the new authorities
provided by Congress. Further Congressional action may be required to
correct this problem and complete the development of the program.
Question 3b. Has the loan guarantee program, within the Department
of Agriculture, increased economic development? If yes, what types of
projects have been pursued using the program?
Answer. Yes, the USDA--Rural Utilities Service (RUS) loan guarantee
program, in my opinion, has spurred economic development in many rural
areas of the country. Typically, there are few sources of funding for
the major construction of public works water infrastructure--projects
that are absolutely necessary to produce economic development in rural
communities--and today there are even fewer sources of public
financing, in my opinion mostly due to the credit crisis and lack of
liquidity in the municipal bond markets. RUS loan guarantees, along
with the grants and direct loans also available under the program, have
provided the critical funding and financing necessary to build these
projects. The types of projects pursued in the past under the RUS loan
guarantee program, as I recall, have included wastewater treatment
plants, rural municipal and industrial (M&I) raw water treatment and
supply projects, and other basic infrastructure projects deemed
eligible for program funding and benefits. In the case of Reclamation
projects, a Reclamation loan guarantee program would finance the non-
federal share of the rehabilitation of aging water infrastructure
either owned by the federal government or associated with a Reclamation
project. They would also be available to finance non-federal share of
rural water projects under the new Rural Water Program within
Reclamation. Usually, rehabilitating aging federal facilities involves
major construction activities that would provide additional jobs and
economic activities that would help rural communities in this economic
downturn, but also would provide much needed certainty for future water
supplies that are necessary for continued economic recovery and growth
within these communities.
Question 4. Within your testimony you indicate other innovative
financing tools that may further investment in new water supplies.
Please describe these financing tools, and how quickly they could be
used to further investment.
Answer. There are several financing tools that could spur further
investment in rehabilitating aging water infrastructure or create new
water supplies through infrastructure construction, but are currently
unavailable to either Reclamation project beneficiaries or other non-
federal water providers.
The first is direct federal loans--Reclamation currently has
authority to provide direct no-interest loans for rehabilitation and
betterment of federal water facilities or to small water reclamation
projects, but has mothballed these programs and does not provide
funding for these loans as a matter of policy. If Reclamation were
appropriated funds under an economic stimulus bill, the agency does not
have the direction or authority to provide a simple repayment of
reimbursable costs of project rehabilitation or extraordinary
maintenance over a reasonable period of time with interest. Such direct
financing would eliminate the federal subsidy by charging Treasury
interest rates and allow federally appropriated funds to be expended on
priority rehabilitation projects without the need for the non-federal
component to be repaid in the same year of expenditure, as is currently
the case for these projects. Direct loans are the simplest financing
instrument, but the funding must be fully appropriated in the year
expended and new authority must be enacted to allow Reclamation to
charge treasury-rate interest. For your information, this authority is
provided in canal safety legislation in the Omnibus Public Lands bill
currently before the Congress.
The second financing tool is a federal loan guarantee through a
Reclamation loan guarantee program. As discussed in my answers above,
this program would leverage federal appropriated dollars to provide
guarantees to private lenders in financing the non-federal share of the
cost to rehabilitate existing aging water supply infrastructure, or
build new water supply infrastructure associated with a Reclamation
project. Typically the private lending institutions filter out the bad
credit risks, reducing the default rate on these loans. Only the
federal subsidy is appropriated by the Congress, and is calculated
through establishing the expected default rate on these types of loans
and appropriating that amount into a fund to cover any possible
defaults on the guaranteed portion of the loans--usually a small
percentage (1-2%) of the total loan guaranteed.
Another tool could include the combination of a loan guarantee and
a municipal tax-exempt bond. Currently, the Federal government provides
no guarantee on municipal bonds, nor do they have authority to
guarantee such tax-exempt bonds. A Federal guarantee would attract
private investors by offering a federally guaranteed tax-exempt
municipal bond, an approach that would, in my opinion, substantially
reduce the interest rate, reduce risk, and leverage a small federal
investment in attracting additional private capital to finance water
infrastructure improvement projects. This approach would require
appropriations for only the subsidy rate of the guarantee, and directed
spending to fund the income tax credit of the municipal bond, possibly
requiring an increase in municipal bonding authority limits. In
addition, new legislative authority would have to be provided by the
Congress for this tool to be developed.
Finally, another financing tool would be a tax-credit bond. This
financing tool is currently used to fund and finance renewable energy
projects, but has yet to be made available to finance water
infrastructure. This financing tool works as a no-interest loan to the
borrower, but the investor receives federal income tax credits as
interest on the funds invested. The federal subsidy is the tax credits
offered to the investor, which is usually a small percentage of the
total funding provided, depending on the rate of return on the private
investment, and would not require an appropriation, but could be
determined to be directed spending and subject to PAYGO rules. New
legislative authority would need to be provided by the Congress for
this tool to be developed, although I believe pertinent legislation was
introduced in the 110th Congress to create such an instrument.
In summary, direct loans would be the simplest and quickest way to
fund and finance water infrastructure improvements, but would require a
100% appropriation of the dollars to fund the loan as well as enacting
new authority to allow Reclamation to charge interest on the loan. The
last three innovative financing tools leverage federal dollars to
attract private capital to fund and finance water infrastructure,
requiring federal appropriations or directed spending equal to only a
fraction of the total investment financed. But, these tools are not
currently available, either as a matter of policy or lack of
Congressional authorizations, and it could be several months to several
years before these financing tools could be offered to water providers
in the future.
______
Responses of Cassandra Moseley to Questions From Senator Domenici
As I look at a crash program to provide economic stimulus in a
timely manner, and read your testimony, I am wondering how it can be
accomplished if all the federal land management environmental laws and
procedures, as well as the labor and worker safety laws, are strictly
adhered to.
Question 1. Given the past history of enforcement by the federal
land management agencies of these labor and worker protection laws, and
the time it takes them to make changes, is there any work that could
actually produce pay checks to a large number of employees within the
two year time-frame suggested by President-elect Obama?
Answer. The enforcement of worker protections laws has certainly
been a long-standing problem on public lands, particularly for workers
performing labor-intensive activities such as tree planting, hand
thinning, brushing, and the like. The conditions of these workers need
on-going attention by Congress, the land management agencies, and the
Department of Labor. At the same time, workers performing other types
of restoration activities, especially those involving technical or
equipment-intensive activities (e.g. road maintenance and
decommissioning, culvert replacement, facilities improvements,
engineering, biological survey) do not seem to have faced the same
sorts of abuses.
Although there is much work to still be done to improve the
conditions of workers performing labor-intensive activities, the
Department of Labor and the Forest Service have increased coordination,
inspections, and enforcement actions over the past couple of years. To
ensure that all workers performing restoration and maintenance are
treated fairly and have safe healthy work environments, the Department
of Labor and the land management agencies will need resources and
oversight to increase inspection and enforcement. For the Forest
Service and Department of Labor, this is matter of expanding existing
efforts. The Bureau of Land Management and other Interior agencies,
which have not increased inspections with Department of Labor, will
need to coordinate with the Department of Labor and adopt procedures
similar to the Forest Service.
Given the groundwork that the Forest Service and Department of
Labor have laid over the past few years as well as the large number of
restoration activities where workers abuse does not seem to be a major
problem, an economic stimulus package that includes a wide variety of
activities as well as resources for labor law enforcement can create
quality jobs in the short term.
The agencies could further improve job quality by using more
effective evaluation criteria for awarding best value contracts, so as
to reward contractors that perform high quality work, have a track
record of treating their workers well, and provide local jobs in
particularly distressed rural communities. Congress could assist by
providing explicit authority to consider benefit to local and
economically distressed communities in the evaluation and award of
economic stimulus contracts, much as it has with the National Fire Plan
and other restoration-related appropriations over the last several
years.
Question 2. A number of environmental groups have submitted a
document to President-elect Obama's transition team calling for the
undoing of the forest planning and Categorical Exclusion regulations,
many of the Healthy Forest Restoration Act regulations, and for ending
all road-building on federal lands. The Forest Service tells us that
30% of the million to 1.5 million acres of projects they can quickly
have NEPA-ready would rely on categorical exclusions and that they
really only have 57,500 acres of projects that already have signed EA's
completed.
If they prevail in their request, how might it complicate getting
some of the work you are calling for in your testimony accomplished in
the next year or two?
If the next Administration is convinced by the requests of the
environmental groups to rescind the Categorical Exclusion regulations I
think you would agree it would complicate getting much of the work you
are calling for in your testimony accomplished in the next year or two.
Should or should not Congress address this potential problem when
it writes the economic stimulus bill? And if so, how should it address
this potential problem?
Answer. As you suggest, the Forest Service has made use of NEPA's
categorical exclusions and the Health Forest Restoration Act
authorities to prepare fire hazard reduction projects. In the short
term, eliminating these strategies could present a challenge for the
Forest Service in its efforts to implement fire hazard reduction
quickly.
I would not recommend, however, that Congress address this
potential problem by waiving part or all of NEPA. Doing so would create
conflict and reduce trust in the land management agencies which would
only serve to slow implementation. The keys to getting projects done
expeditiously are: collaboration with locals and stakeholders, trust,
and transparency in agency decision-making. Consequently, I would
recommend that the stimulus package support land management units that
have engaged in collaborative processes that have built trust and
reached agreement on restoration activities. In addition, some of the
stimulus funds could be allocated to the Resource Advisory Committees
authorized as part of the Secure Rural Schools and Community Self-
Determination Act. Many of these committees have found themselves with
far more NEPA-ready restoration projects than they can fund on public
and adjacent private lands.
Instead of attempting to address the conflicts and challenges
associated with NEPA in the stimulus package, I would recommend that
Congress, the new Administration, and wide range of stakeholders engage
in a larger-scale consideration about environmental analysis, NEPA, and
its implementation. NEPA was created in an era when we believed that:
we could fully understand environmental impacts prior to taking action;
and our actions would degrade, rather than improve, the environment.
When we are trying to restore ecosystems function, we need a system of
environmental analysis that acknowledges environmental benefits and the
environmental and social costs of inaction, discloses known impacts,
incorporates learning and experimentation, and gets better value for
money than the current processes.
Question 3. Many of the types of projects you suggested could be
included in the natural resource section of the economic stimulus
legislation are little more than traditional woods-jobs that have
existed for decades in the land management and timber management
programs. Could you explain why a landline surveying job would be a
``Green'' job under the economic stimulus, while it once was just
considered part of the forestry profession?
As you suggest, many of the types of jobs associated with
sustainable forest and watershed restoration and maintenance have
existed for decades. However, these jobs need to be reinvented to
support a sustainable economy, just as in other sectors of the economy.
There have long been manufacturing jobs; a green economy will still
have manufacturing jobs, but those jobs will manufacture different
kinds of products in different ways. Similarly, forest and watershed
management jobs are still needed; however, they need to be directed at
a different range of activities and performed in different ways.
This economic stimulus package presents an opportunity to help
create natural resource management for the 21st century and stem the
loss of resource management capacity in rural communities. By focusing
part of the economic stimulus on forest and watershed restoration, we
can build on existing skills of forest workers and technicians,
loggers, and heavy equipment operators and allows them to focus these
skills on natural resource restoration and maintenance. With the long
decline of the timber industry in the American West and the under
funding of the land management agencies over the last decade, we have
lost and are continuing to lose the business and workforce capacity to
manage our lands. If we are going to take care of our forests,
grasslands, and watersheds long term, it is critical that we not lose
more of this capacity.
While boundary surveying may appears mundane, it is crucial at this
time when fire and other ecological processes knows no bounds, but land
management activities do. When ownership boundaries are unknown,
agencies do not know where to put their treatments and when to expect
the landowners to pay for treatments. There are a number of other
technical jobs such as engineering, wildlife, plant, and archeological
surveying and monitoring that are also of critical importance to the
restoration and maintenance of our public lands.
Question 4. Could you provide the Committee with a good working
definition of what a ``Green Job'' is?
Answer. Green jobs are high quality jobs that improve environmental
quality by restoring ecosystem function, reducing carbon emissions, or
otherwise reduce our impact on the environment while increasing social
equity. In the context of natural resource management and energy
conservation and development, these jobs are wide ranging, and include
all sorts of ecosystem restoration and sustainable natural resource
management as well as those involved in energy conservation,
alternative energy development, and carbon emissions reductions. A high
quality job provides family supporting wages, long duration employment,
training and a career path, safe and healthy workplace, and the
opportunity to work near where one lives.
Response of Cassandra Moseley to Question From Senator Lincoln
Question 1. In your testimony, I agree with your assessment that we
haven't seen much in the news about how the economic crisis is
impacting rural America. What role do you see rural America playing in
a shift to a green energy economy that could help boost our economy?
Answer. Rural America must play a central role in building a green
economy because rural communities are the stewards of our natural
resources, farms, rangelands, and energy sources. Urban and suburban
America has a major role to play in reducing consumption and creating
systems that make efficient use of goods and services. But, our
nation's ecological, social, and economic sustainability depends on
healthy rural communities, businesses, and workers. Rural communities
must be central to managing landscapes and watersheds in ways that
increase ecological resilience while offering a sustainable supply of
natural resources, energy, and food.
Distressed rural communities are limited in their ability to
contribute productively to our nation's economy and their economic
desperation strains forests, soils, and rivers. We need to redefine our
economic systems so that rural communities can have increased capacity
to steward our nation's natural resources. Doing so requires that we
retain and develop green rural businesses that enable workers to
support their families and communities.
In the area of green energy more specifically, with support, rural
America can: (1) come to produce food and natural resources in ways
that use less energy; (2) increase the use of renewable energy in the
production of food and natural resources; and (3) contribute to the
nation's supply of renewable energy. It is easy to neglect energy
efficiency in rural America because of the dispersed nature of rural
populations. But, it is no less critical in rural areas. This would not
only contribute to reducing the nation's overall energy consumption,
but also create much-needed cost savings for struggling rural families
and businesses. Because rural America is so diverse, the strategies to
reduce energy consumption and increase renewable energy production will
need to vary considerably. In some places, for example, local energy
needs can be met with wind turbines or solar panels while in other
places, micro-hydro, woody biomass, or other strategies will make
better sense.
Thank you for the opportunity to answer these questions. Please
feel free to contact me if you would like additional information.
______
Responses of Steve G. Hauser to Questions From Senator Domenici
Question 1. You testified that there are a number of Smart Grid
projects already in development. How will investment in the Smart Grid
by the federal government lead to more jobs in the near term? What
types of jobs are associated with Smart Grid technology and deployment?
Are you able to find skilled workers or must we look at job-training?
Answer. Indeed, various utilities around the country are developing
and beginning to implement smart grid projects. A substantial amount of
Federal funding in 2009 will create jobs by incentivizing more rapid
deployment of smart grid systems. Attached is a report recently
released by The GridWise Alliance describing the potential impact of
federal smart grid investments. It outlines both the number and types
jobs that will be created.
Question 2. In the 2007 energy bill, we directed the federal
agencies to develop a Smart Grid interoperability framework that
includes protocols and model standards. Interoperability standards will
allow different devices from different vendors to exchange information.
These standards are still under development.
Given that we do not yet have this interoperability framework in
place, how do we know that any Smart Grid funding won't result in
obsolete equipment in a few years? Do you have any specific ideas or
approaches that would help to support the integration of new equipment
in the short-term?
Answer. Standards and protocols for interoperability continuously
evolve as necessitated by market development, innovation and technology
changes. Standards typically follow markets and don't drive them. Both
utilities and vendors are very careful not to select technologies and
approaches that can rapidly become obsolete; demanding the market to
create standards as appropriate to ensure long term value. The federal
government should provide additional funding for DOE and NIST to
accelerate their efforts to monitor these needs, identify gaps and
facilitate quicker refinements and adoption of any framework and
standards required.
Question 3. Decisions about Smart Grid investments, like most
decisions regarding electricity infrastructure, are overseen by state
electricity regulators--which can be a time consuming process. What
assurances do we have that any Smart Grid investments in the stimulus
package will actually occur in the near-term, meaning in the next 12 to
24 months?
Answer. While state regulatory processes by nature are public
processes requiring time for deliberation, regulators can also move
quickly when needed on single issues. Many states have already
authorized smart grid projects of varying scope and others are actively
reviewing and considering similar investments. Both utilities and
regulators in many states are highly engaged and motivated to respond
appropriately if federal investments are made in the near term.
Question 4. Has any utility made the business case for Smart Grid
investment? If so, under what conditions and what technologies were
included?
Answer. Yes, dozens of utilities have developed very specific
business cases for implementing various smart grid strategies. These
are typically internal documents, not publically available. The types
of technologies included vary widely based on local factors such as
marginal capacity price, energy rates, age of existing equipment, etc.
The most compelling business cases include a comprehensive suite of
software and hardware technologies addressing multiple benefits for
both utilities and consumers. The Edison Electric Institute is
currently preparing a report on the business case for smart grid
investments that will be publically available in a few weeks.
Question 5. Regional demonstrations were an important aspect of the
2007 EISA legislation. Can you describe your vision for how these
demonstration projects would take shape, and the resources necessary to
bring them to fruition? Would these demonstration projects focus on
renewables such as wind? HEV integration? What would you identify, in
order of priority, as the critical technology aspects that would need
to be demonstrated?
Answer. These demonstration projects should be large enough in size
to address and answer some of the lingering questions about scale. The
projects should also be broad enough in scope to understand the
potential benefits and impacts of the synergies among multiple smart
grid technologies including demand response, energy efficiency,
distributed storage, distributed renewable projects, electrified
transportation, etc. The primary goal of these regional demonstration
projects is to analyze and quantify performance metrics and best
practices that can be generalized to the rest of the country. While
every project will have unique conditions, constraints, and solutions,
the Department of Energy must structure the projects in a way that the
results can be clearly understood and used in creating a shared set of
goals and metrics for successful smart grid deployment. Ideally, all
proven technologies would be implemented in hundreds and thousands of
end points at a scope and scale to build a foundation of data and
information for future implementations.
Response of Steve G. Hauser to Question From Senator Lincoln
Question 1. I represent a state with a large number of hard-
working, low-to-middle-income families. It concerns me that green
technology that allows customers to leave less impact on the
environment, whether it's fuel efficient vehicles or energy saving
appliances, is often more expensive. For the future stimulus package,
in what ways can we make sure that low-income families are able to
access these advanced technologies?
Answer. In a free market economy, the price and cost to consumers
often is determined by a variety of both rational and irrational
factors. Green technologies are often more expensive because they are
produced in smaller quantities. As markets expand the cost/price can
and often does come down. Solar PV is an example of a technology that
is now being produced in large enough quantities that cost/prices are
coming down. As more and more fuel efficient vehicles are produced, the
cost/price is likely to come down as well. Deploying a smart grid gives
us the opportunity to give all consumers the appropriate tools for
understanding their energy needs and managing them more effectively;
resulting in both less energy used and less cost to the consumer.
Specifically for low income families, one could consider offering both
low-cost, long term financing and ``free'' electricity to those
consumers who have a qualified smart grid system in their home and a
qualified electric vehicle. The federal government should also actively
educate these consumers and provide simple tools for them to make
better energy decisions.
______
Responses of Denis Galvin to Questions From Senator Domenici
Question 1. During the past 6-8 years, we've been told repeatedly
that the National Park Service faces a major maintenance backlog. A lot
has been done during that time, but what are the highest priorities
that remain for major projects in national parks that can be completed
in the next 24 months if funds are made available? Will these projects
face legal challenges on environmental issues?
Answer. The projects put forth as part of the stimulus initiative
are drawn from an information system that monitors the condition of the
infrastructure of the national park system. The Facilities Management
Software System (FMSS) covers all the assets in the system, providing
them with a Facility Condition Index (FCI). It is that system that
produces the backlog figure you refer to.
From that total inventory the service develops priority lists for
maintenance and construction programs that cover anticipated programs
for the near future, approximately a five year period.
The projects presented for the stimulus package have passed an
additional test; it includes only those projects achievable in a two
year period and free from a reasonable expectation that they could be
challenged on any grounds, environmental or otherwise.
Question 2. Looking beyond bricks and mortar, what conservation
programs would you recommend to enhance our national parks for future
generations?
Answer. There are many highly deserving conservation programs that
have been sitting on the shelf, awaiting the time that funds will come
available. Top among them is the continuation of the Natural Resource
Challenge that elevated the capacity of the agency to analyze, track
and manage natural resource conditions in the parks. The work is not
complete and must be viewed as a very high priority if the agency is to
continue to build its capacity to do its fundamental work of conserving
the parks for future generations, and interpreting that mission to the
visiting public. No less important is the imperative to launch a
complimentary Cultural Resource Challenge. On a different scale,
additional vital conservation activities include exotic animal and
plant management, and a renewed investment in agency-centralized basic
science.
Responses of Denis Galvin to Questions From Senator Akaka
Hawaii has several National Parks located on the coastline. These
parks contain many structures and artifacts with much ancestral
heritage and cultural significance.
Question 1. I am concerned about global warming, and the impact of
rising sea levels on Parks adjacent to coasts. National Parks in other
states may have different impacts because of climate change. Does the
Park Service have a program that looks at the impact of climate change
on its natural resources? Will protecting Park resources from the
future impacts of global warming be a priority for restoration and
repair projects?
Answer. According to the National Park Service, building the
capacity to respond to climate change involves identifying,
prioritizing, and implementing a range of short and long term
objectives. The initial approach is to define the overarching goals of
the program and to create a series of Working Groups designed to
explore and articulate specific needs and issues.
Climate Change Response Program Goals
Develop and implement a coordinated strategy for
understanding, communicating, and coping with the effects of
climate change to park natural and cultural resources, resource
values, and infrastructure
Collaborate with partners in other agencies and entities,
and across NPS programs, to build understanding and coordinate
landscape-scale adaptation and mitigation actions
Climate Change Response Working Groups
Six Working Groups have been created to foster communication,
explore the needs and issues of parks, and begin to define both
servicewide and park level strategies for moving forward on this
critical issue. The six groups are: 1) Law & Policy, 2) Planning, 3)
Science, 4) Resource Stewardship, 5) Greenhouse Gas Mitigation &
Sustainable Operations, and 6) Communication.
Representatives from parks, regions and national programs are
participating in the Working Groups, which are outlined in more detail
in the documents attached to this response. Climate change will impact
all operations in the NPS and the interdisciplinary structure of the
Working Groups is meant to encourage collaboration and leadership at
all levels of the organization. The ideas that emerge from this process
will be brought together to form a Climate Change Response Strategy,
the implementation of which will be guided by an intra-agency Steering
Committee.
Background papers describing NPS's climate change response are
attached.*
---------------------------------------------------------------------------
* Documents have been retained in committee files.
---------------------------------------------------------------------------
Question 2. I am pleased that you cited the ``museum collections
backlog'' that exists at many of our parks, of which you estimate 56
million items remain to be catalogued. Because they have not been
appropriately accounted for, these irreplaceable artifacts are in
danger of being misplaced and forgotten forever.
I am also concerned by the challenges that Parks have in preserving
and maintaining these pieces of historical significance. Restoring
cultural and historical items, structures, and artifacts must be done
properly and accurately by skilled conservators. The meticulous work is
performed carefully and often slowly to ensure accuracy. The materials
used must be appropriate for the timepiece that is being restored and
withstand environmental factors to last many more years. These factors
make restoration and repair very expensive and unaffordable for many of
the Parks. As a result, repairs are either deferred indefinitely, or
done piecemeal using substandard material. In your opinion, can we
continue to defer restoring these artifacts and historical structures?
Shouldn't preserving these legacies for future generations be a
priority?
Answer. The preservation of our cultural legacy is not simply a
priority, but a mandate established by Congress that the Park Service
must fulfill. Unfortunately, the quality of cultural resource
preservation in our national parks has suffered for decades from acute
staffing and funding shortfalls, which have burdened the Park Service
with both a burgeoning museum collections backlog and a growing list of
deferred cultural resource preservation needs. Both of these combine to
create a very real and present danger to the long term well being of
the artifacts that constitute the very fabric our national heritage.
Deferring the restoration of these artifacts and historic structures is
not a viable option if we intend to support the Park Service's mission,
as expressed in the Organic Act of 1916, to ``conserve the scenery and
the natural and historic objects . . . by such means as will leave them
unimpaired for future generations.''
According to a report released in October 2008 by the National
Academy of Public Administration (NAPA), 2,811 historic structures in
the National Park System are listed as being in ``poor'' condition. A
structure is regarded as being in poor condition when significant
features no longer perform their intended purpose, are altogether
missing, or when the structure shows signs of imminent failure or has
significant damage or deterioration over 25 percent (or more) of its
surface, fabric, or framework. The total price tag for the deferred
maintenance backlog on historic structures in national parks exceeds
$1.9 billion.\1\ This is approximately 22 percent of the overall $8.7
billion maintenance backlog for national parks.
---------------------------------------------------------------------------
\1\ National Academy of Public Administrators: ``Saving Our
History: A Review of National Park Cultural Resource Programs''
(October 2008) p. 45
---------------------------------------------------------------------------
Included in the backlog are small structures such as the Sweeney
Prizery at Appomattox Courthouse in Virginia. A one story loft built in
the 1790s the Prizery served as both a residence and storage place for
tobacco, and therefore, should have a role to play in assisting the
Park Service in recreating the look and feel of the 19th century
village that served as the surrender site for the Army of Northern
Virginia in April 1865. Instead, the structure has been stabilized and
``mothballed'' since 1975.
We might count ourselves and our parks lucky if the maintenance
backlog for historic structures was comprised only of tobacco barns.
Unfortunately, the list includes more iconic structures such as
Independence Hall Tower in Philadelphia. The current tower, constructed
in 1828 (to replace an earlier version built in the 1750s) is a prime
example of a significant historic structure ``at risk.'' Independence
Hall Tower suffers from a host of preservation related maladies
including fungal infestation, cracking of the clock face, and moisture
infiltration, all of which combine to create a significant loss of
structural integrity.
NAPA estimates that Independence Hall Tower requires major cyclical
maintenance once every ten years, but concludes that the last full
restoration effort took place in 1993. The Park Service has determined
that the total cost of rehabilitating the tower is $3.7 million. The
agency has budgeted $2.5 million towards that project for FY 2011, and
initiated a survey to determine the extent of the damage, but time has
never been an ally in the fight to preserve historic structures.
The longer it takes to begin stabilizing and restoration work on
Independence Hall Tower, the greater the likelihood that more of the
historic fabric will be lost. This will, turn, drive up the cost of
preserving the tower, and lead to more projects being placed on the
deferred maintenance backlog. In the meantime, NAPA reports that pieces
of decorative wooden trim have already begun peeling off from the
structure and plummeting down into Independence Square.
For its part, the Park Service is addressing the troubling state of
historic structures through goals and performance measures. At the end
of FY 2007, 53.4 percent of NPS structures were in ``good'' condition.
The NPS Government Performance & Results Act (GPRA) goal for FY 2012
would raise that number to 56 percent. The Park Service also intends to
raise the percentage of historic and prehistoric structures on the List
of Classified Structures (LCS) from 80 to 100 percent by FY 2012.\2\
---------------------------------------------------------------------------
\2\ Saving Our History p.31
---------------------------------------------------------------------------
What's telling, however, is that the Park Service goal for the
physical condition of all its historic buildings, an average measured
by the Facilities Condition Index (FCI), will remain the same, at 0.21
in FY 2012, as it is today. According to NAPA, FCI ratings of less than
.10 signify a structure in ``good'' condition, while a rating of
.11-.14 equals ``fair'' condition, and anything in the in the range
between .15 and .49 is regarded as being in ``poor'' condition.
Essentially, the Park Service, mindful of its limited resources, has
determined that it can make no substantial improvement to the overall
physical condition of the historic buildings in the National Park
System over the course of the next five years.
When park managers hedge performance and accountability measures in
this fashion, they do so because their vision of the future for
cultural resource preservation remains bleak. No one, in any
profession, likes setting themselves up for failure. Inadequate budgets
may make this decision practical, but we should never regard it as
acceptable.
The preservation of our cultural legacy also depends upon the
ability of the Park Service to reduce its museum collections backlog.
Simply put, the job of cultural resource preservation is made much more
difficult (if not impossible) when parks cannot accurately determine
what artifacts are in their collections. The 56 million uncatalogued
items that make up the NPS backlog have not been documented and cannot
be retrieved. And when artifacts and papers go unprocessed or remain
inaccessible, they become useless.
Such is the case at the Thomas Edison National Historic Site in New
Jersey's, where the inventor's personal files from the 1920s until his
death in 1931, have not yet been processed. Although Edison remains a
widely recognized icon of American history, little is known of the last
ten years of his life. The files containing his correspondence, in-
house memos, and letters from the public during his last decade, could
provide meaningful insights to scholars about Edison's creative process
and further define his place in American history. But not if they
remain sequestered in cabinets or storage boxes.
Over the past six years, researchers from NPCA's Center for State
of the Parks (CSOTP) have examined the condition of cultural resources
at a variety of national parks. Their findings confirm those of the
National Academy of Public Administration and highlight the role of the
museum collections backlog as a key component in the poor state of
cultural resource preservation in our national parks. CSOTP research
has found the following:
At Grand Canyon National Park, of the 859,473 items in the
collection, 42 percent have not yet been catalogued. The park's
curator left in 2000 and the position remains lapsed. The park
is challenged by a lack of adequate storage space and has no
museum management plan.
At Glacier Bay National Park, 87 percent of the museum and
archival collections has yet to be catalogued. Storage space is
lacking and although the park does have a full time museum
technician and collections manager, the size of the park's
collection, as well as additional job responsibilities, have
prevented these employees from keeping up with the massive
backlog.
At Hawai'i Volcanoes National Park, 56 percent of its museum
and archival collections have not yet been processed. Because
of the large backlog, collections are largely inaccessible and
finding aids are inaccurate. The park's storage facilities are
also inadequate and, as a result, the collections of kappa
(fragile, traditional bark clothing) are generally stored in an
inappropriate manner that may contribute to their destruction.
According to NAPA, a number of NPS employees engaged in museum
management described the collections backlog as problem ``greater than
recognized.'' NAPA has also concluded, after conducting interviews with
NPS staff, that the policies, procedures, and standards for museum
management put in place by the Park Service are ``sound.'' The
fundamental challenge is that inadequate staffing levels have impeded
the ability of museum managers to keep pace with their growing
collections.
The solution to the museum collections backlog is multi-faceted.
Park superintendents must be held accountable for the condition of
their facilities and for meeting basic, service-wide preservation and
protection attainment standards. And the Washington Administrative
Support Office (WASO) goal of cataloging 5 percent of the backlog each
year should be far more ambitious. Yet, without adequate funding and
staffing, the ability of NPS to take control of its museum collections
backlog will remain elusive, and the uncataloged cultural resources in
our National Park System will remain this country's best kept secret.
In conclusion, it is worth reiterating that time has never been an
ally of historic preservation. The longer we wait to provide the
resources the Park Service needs to reduce or eliminate the cultural
resource preservation backlog, the greater the risk of losing
irreplaceable parts of our shared heritage and national legacy, while
adding new, more pressing needs to the deferred maintenance list. The
successful preservation of these resources unimpaired for future
generations depends upon the steps we take today. The job of ensuring
the preservation of cultural resources in our national parks must begin
now.
Response of Denis Galvin to Question From Senator Lincoln
Question 1. In your testimony, you state that an economic recovery
plan in this next administration could provide an opportunity for
national park facilities to be carbon neutral by 2016 through efforts
to retrofit existing facilities. I believe that our national park
system could set a great example in reducing our nation's carbon
footprint. What do you see as the greatest challenges in achieving this
goal?
Answer. National Parks want to raise awareness of global warming
and showcase sustainable solutions like energy conservation, renewable
power, and clean vehicles. With their ability to engage millions of
visitors, national parks could play a major role in building support
for solutions to climate change. NPS has responded by initiating a
``Climate Friendly Parks'' program which seeks to make parks national
leaders in the deployment and promotion of clean energy technologies
and other sustainable practices that can help us combat global warming.
See www.nps.gov/climatefriendlyparks.
Unfortunately, due to chronic underfunding, most parks can't afford
solar panels, energy efficiency upgrades, hybrid vehicles, and new
visitor outreach programs. If Parks can't lead by example, they'll be
less effective at influencing public behavior.
There are a number of proposals for stimulus spending that could
speed up clean energy investments in the parks, including:
1. EnergySmartPARKS, a collaboration between U.S. DOE and NPS
to bring clean energy technologies to the parks. The program
currently is funded on a pilot project basis at $1 million for
FY09. NPCA has recommended $100 million in stimulus spending to
give this program real impact. www.nps.gov/energy
2. Net-Zero Energy Visitor Centers, also a collaboration
between U.S. DOE and NPS to upgrade over 600 NPS visitor
centers with energy efficient and renewable energy technologies
so they draw no power from the grid. NPS estimates this program
will cost $173 million, and NPCA has also recommended this
program as part of the stimulus package. (see attached NPS fact
sheet)*
---------------------------------------------------------------------------
* Document has been retained in committee files.
---------------------------------------------------------------------------
______
Responses of Joe Loper to Questions From Senator Domenici
Question 1. In your testimony, you've proposed roughly $16 billion
dollars for energy efficiency projects which you say will create more
than 70,000 jobs over the next 2 years. Will your proposal also serve
to displace existing jobs?
Answer. Our job creation estimates are based on a study conducted
by the American Council for an Energy Efficient Economy (ACEEE) and
reflect direct gross jobs created by investment in energy efficiency.
Most studies conclude that investing in energy efficiency helps create
more domestic jobs than investing in the energy supply sector does. The
ACEEE study estimates that the job creation ratio of investments in
energy efficiency to the supply sector is 3:1.\1\ A Center for American
Progress study, which takes into account direct, indirect and induced
job creation impacts of investments, estimates that their clean energy
recovery package would create four times as many jobs as investment in
the oil industry would. \2\
---------------------------------------------------------------------------
\1\ American Council for an Energy Efficient Economy, Karen
Ehrhardt-Martinez and John A. ``Skip'' Laitner, The Size of the U.S.
Energy Efficiency Market: Generating a More Complete Picture, May
2008http://aceee.org/pubs/e083.pdf?CFID=3104128&CFTOKEN=65477160
\2\ Center for American Progress, University of Massachusetts-
Amherst, Robert Pollin et al., Green Recovery: A Program to Create Good
Jobs and Start Building a Low-Carbon Economy, September 2008 http://
www.americanprogress.org/issues/2008/09/pdf/green_recovery.pdf
---------------------------------------------------------------------------
Another important impact of the energy efficiency investments is
the reduction in demand for energy which would likely result in
decreased employment levels in the supply sector compared to business
as usual. However, spending directed away from energy will likely be
channeled into other sectors in the economy, creating and supporting
further jobs.
Moreover, we expect that a substantial portion of these new jobs
will be created in the construction sector which recently experienced
considerable job losses. Coupled with tailored training programs, the
new and expanded energy efficiency programs would provide employment
opportunities for these experienced workers at a similar capacity to
their former positions.
Question 2. You noted in your testimony that significant barriers
to energy efficiency must still be overcome. How, then, do you
penetrate the existing home market? In these troubled economic times,
people are more interested in holding onto some cash, rather than
having their windows replaced, increasing their attic insulation or
replacing a 10 year old 80% efficiency furnace with a 90% one.
Answer. Many of the policies we propose and the programs that we
support further funding for aim to overcome these barriers.
Weatherization Assistance Program (WAP), for example, provides lower
income families free or low-cost energy efficiency services, energy
efficiency grants to public buildings and schools would help bear the
cost of energy efficiency projects and making the federal tax credit
for manufacturers of high-efficiency appliances refundable for 2 years
would help decrease the cost of highly efficient appliances. Increased
government spending on energy efficiency RD&D would also help decrease
the cost of new, efficient technologies.
Question 3. In creating a large-scale economic stimulus with
``energy as a cornerstone,'' what programs have the potential to
substantially shift the economy?
Answer. In my testimony, I have presented a set of recommendations
which we believe have a high potential for shifting the economy. The
Alliance, along with other organizations (NRDC, EEI and EFC) has
prepared further and more detailed recommendations.
Question 4. How can we lower the cost-volume curve--also known as
``the valley of death''--for emerging technologies?
Answer. Due to various reasons, private investment in energy
efficiency RD&D is below the optimum level. Therefore, government
investment in RD&D is important to help push the emerging technologies
into the market and lower their cost for the consumers. The Alliance
encourages the government to put more emphasis on energy RD&D by
increasing the current funding and creating new agencies to coordinate
and support such efforts.
The role of the federal government is substantial in
commercialization of advanced energy-saving technologies. Federal
government, the single largest consumer of energy and energy consuming
products, has a large market influence, which can be used to create an
entry market for promising new technologies. The government can also
help measure and document the performance of these new technologies and
encourage broader market acceptance. An Alliance report examining the
role of new technologies in increasing energy savings in the federal
government recommends establishing agency-level teams to lead
technology validation and implementation as well as an interagency
coordinating team to provide consistency to federal efforts.\3\
---------------------------------------------------------------------------
\3\ Alliance to Save Energy, Nils Petermann and Jeffrey Harris,
Deploying New Technologies to Increase Energy Savings in the Federal
Sector, April 2008 http://www.ase.org/content/article/detail/4789
---------------------------------------------------------------------------
Question 5. There has been great discussion of creating a ``Clean
Energy Corps'' to train young people for jobs in the renewable and
efficiency sectors. Additionally, existing jobs are being transformed
as industries transition to a clean energy economy. How do we best
invest in creating new training programs and retool existing training
programs to meet the demand?
Answer. The Alliance recommends expansion of effective training
programs such as DOE's Industrial Assessment Centers (IAC), an existing
network of universities that provides free energy audits for local
small- and medium-sized manufacturers. This program offers both
training and energy savings opportunities. A set of parallel
institutions could be created, to be known as the Building Energy
Analysis and Diagnostic Centers (BEADCs), also to be housed at
universities. The BEADCs would be led by the Buildings Program and
focus on commercial and multifamily buildings, including public and
institutional buildings.
Department of Labor has several training programs that could be
expanded and extended to incorporate or focus on energy efficiency.
Youthbuild which trains disadvantaged youth in construction skills and
Youth Corp are examples to such programs. Other existing programs
include those coordinated by Northwest Environmental Education Council
and Association of Energy Engineers. In addition, DOE, in partnership
with the industry, could create and support internship programs for
college students to be placed at companies which provide energy
efficiency services or manufacture efficient appliances.
Responses of Joe Loper to Questions From Senator Lincoln
Question 1. I represent a state with a large number of hard-
working, low-to-middle-income families. It concerns me that green
technology that allows customers to leave less impact on the
environment, whether it's fuel efficient vehicles or energy saving
appliances, is often more expensive. For the future stimulus package,
in what ways can we make sure that low-income families are able to
access these advanced technologies?
Answer. As mentioned above, many of our recommendations aim to
overcome the initial-cost barrier to energy efficiency, especially for
low and middle income consumers. Due to sustained under-pricing of
energy and lack of information however, many families have invested in
over-sized appliances and cars. It will be important to help educate
the consumers about ``right-sizing'' which would both cost less
initially and require less energy to operate.
Question 2. In your testimony, you indicate that additional action
will be needed beyond this next stimulus package in order to sustain
momentum and provide long-term advances in green jobs and energy
savings. You state that ``lack of consensus about the best approach for
fiscal stimulus argues for some diversity in the policy portfolio.''
Would you care to elaborate on your vision on green investments for the
long-term?
Answer. Many experts suggest that we need increased and fast
spending in order to revitalize the economy. It is important to
recognize however, that the current downturn in the economy can be a
long term problem which fast spending alone cannot effectively solve.
Energy efficiency investments can help revitalize the economy by
creating jobs as well as by bringing returns on the money spent today,
for years to come.
However, in determining the amount that can be effectively spent on
these projects, the capacity of the current energy efficiency
infrastructure needs to be assessed carefully. Investments to increase
this capacity are highly warranted, so is the need to sustain funding
for these programs over the years in order to most effectively utilize
this increased capacity in the future.
______
National Association of State Energy Officials,
Alexandria, VA, January 18, 2009.
TO: Rosemarie Calabro
FROM: Jeff Genzer, NASEO Counsel
RE: Responses to Questions from 12/10/08 Hearing
These answers are being submitted on behalf of the National
Association of State Energy Officials (NASEO) in response to questions
presented to Malcolm Woolf, Director, Maryland Energy Administration,
from the hearing on December 10, 2008.
Responses of Malcolm D. Woolf to Questions From Senator Domenici
Question 1. You've provided the Committee with a long list of
authorized programs that could receive funding in the upcoming Stimulus
package. From that list, what programs would actually result in the
creation of new jobs? What are your top three priorities?
Answer. The programs NASEO proposed at the hearing will all result
in the creation of jobs. The top three priorities are the energy
efficiency buildings retrofit programs (implemented through the State
Energy Program), the Weatherization Assistance Program and the Energy
Efficiency and Conservation Block Grant.
Question 2. What is the return on investment on the Weatherization
Assistance Program in comparison to the R&D work being done to advance
technologies to make homes more energy efficient?
Answer. According to numerous studies, including work by Oak Ridge
National Laboratory, the Weatherization Program generally produces 20-
25% of energy savings. As energy prices have increased in recent years
the dollar value of these savings have increased. New technologies,
developed through R&D, are first used (in many cases) in both the
Weatherization Assistance Program and the State Energy Program (SEP).
An Oak Ridge study also concluded that for every federal dollar
invested in energy efficiency through SEP, over $7 is saved almost $11
is leveraged. NASEO sees great value in both energy deployment/
demonstration programs and energy R&D programs. It is difficult to make
comparisons. R&D without deployment of these technologies is of limited
value.
Question 3. With the many authorized programs you listed for
funding, I was surprised to see you advocate for the creation of a
brand new program for energy efficiency retrofits in existing
buildings. While this would require new authority, and doesn't appear
to qualify for inclusion in the stimulus, what kinds of "shovel-ready"
projects are out there that could result in the creation of jobs in the
near term?
Answer. The energy efficiency buildings retrofit program discussed
in the testimony can be accomplished through the State Energy Program,
which is an authorized program. We look forward to working with the
Committee to ensure all appropriate authorization language is
satisfied. A number of examples* of state ``shovel-ready'' energy
projects are attached to this email. We will be happy to provide more
information as needed.
---------------------------------------------------------------------------
* Information has been retained in committee files.
---------------------------------------------------------------------------
Response of Malcolm D. Woolf to Question From Senator Lincoln
Question 1. I represent a state with a large number of hard-
working, low-to-middle-income families. It concerns me that green
technology that allows customers to leave less impact on the
environment, whether it's fuel efficient vehicles or energy saving
appliances, is often more expensive. For the future stimulus package,
in what ways can we make sure that low-income families are able to
access these advanced technologies?
Answer. We are also concerned that low-income and middle-income
Americans benefit from ``green technology'' and a variety of energy
programs. The states are committed to reducing the cost of energy as
well as the environmental impacts. NASEO strongly supports funding for
the Weatherization Assistance Program, which reduces energy costs for
low-income Americans and has introduced the use of newer ``green
technologies'', such as blower doors. The State Energy Program, and the
state energy offices generally, is focused on introducing newer
technologies into general use for homeowners. For example, the energy
offices work very hard at promoting and facilitating the use of Energy
Star products by all Americans, including low-income Americans. If
enacted, many of the proposals contained in the draft version of the
stimulus package, released by the House Appropriations Committee on
January 15, 2009, will help reduce the costs of energy and energy
technologies for all consumers, including low-income and middle-income
Americans.
We would be happy to answer any follow-up questions.
______
Responses of Bracken Hendricks to Questions From Senator Domenici
Question 1. How many new jobs will your $100 billion clean energy
proposal create? Will those new so-called ``green collar'' jobs
displace existing jobs, such as jobs in the oil and gas industry? Is
the Center for American Progress taking those job losses into account
with its job creation estimates?
Answer. The $100 billion clean energy investment outlined in our
Green Recovery report represents new spending in the context of an
economic stimulus and recovery program, and therefore does not redirect
existing investments away from oil and gas or other sectors of the
economy. The use of new spending to stimulate demand in a slack economy
is a fundamental principle of any such stimulus or recovery plan. It is
entirely appropriate in an economic analysis of a stimulus driven
proposal, such as the scenario discussed in the Green Recovery report,
to look at jobs created as a result of the new spending without
attempting to net out reductions of spending elsewhere in the economy.
The Center for American Progress is also undertaking at this time, a
broader study of our ten year plan for advancing energy independence.
In this long-term study we are looking closely at net job impacts that
will result from any substitution across technologies and sectors of
the economy that will be involved in the transition to clean energy
from our current energy mix. We would be glad to present this analysis
to the committee as we complete that study.
In the Green Recovery report CAP finds that a $100 billion clean
energy investment plan focused on renewable energy and energy
efficiency will create nearly 2 million new jobs over two years. These
jobs are the result of direct, indirect, and induced effects.
a. Direct Effect (935,000 jobs): Construction or
manufacturing jobs resulting as a direct result of demand and
stimulus plans such as housing retrofits
b. Indirect Effect (586,000 jobs): Jobs created to support
the direct activities of workers in implementing the plan
(lumber, steel, transportation, etc)
c. Induced Effect (496,000 jobs) Jobs in in the broader
economy created as a result of the new economic activity that
is generated by these investments
Question 2. In the Energy Policy Act of 2005, Congress authorized a
loan guarantee program. Unlike outright loans, loan guarantees focus on
reducing financing rates for the construction of new clean energy
capacity, including nuclear and wind power, by providing government
backing. Furthermore, the loan guarantee program is designed so that
taxpayer support is not required even in the case of defaults. As we
contemplate a massive stimulus package, shouldn't we also be discussing
the expansion of this important loan guarantee program?
Answer. The Center for American Progress supports expanding loan
guarantee programs to catalyze growth in clean energy. According to the
Department of Energy, as of April 2008, our government has committed
$10 billion in loan guarantees for energy efficiency and renewable
energy. In our Green Recovery report, we recommend the federal
government budgets an additional $4 billion to expand the loan
guarantee program. We estimate that this investment would leverage $20
billion in private sector green infrastructure investments. In today's
credit markets, where access to capital has been constrained, loan
guarantees represent a useful complement to direct government spending
to stimulate the economy and ``crowd-in'' private sector capital.
Because loan guarantees shape private investment decisions and choices
made in the credit market, it is important in looking at job impacts,
to assess carefully where new economic activity is being created rather
than simply redirecting investments that would otherwise have been
made. In our analysis, we have attempted to be very conservative in our
assessment of the jobs impacts of loan guarantees. We believe that in
the current climate where lending has been constrained, expanding
access to capital through guarantees that reduce the risks and costs of
borrowing, could be an effective tool for both economic recovery and
clean energy transition.
Question 3. We're looking to stimulate the economy and create jobs
within the next 12 to 24 months. Does the American workforce have the
necessary training to step into government-subsidized green jobs? Also,
does the country have the manufacturing ability to produce clean energy
project components, such as solar panels and wind turbines?
Answer. The jobs created through a strategic investment in
renewable energy and energy efficiency will be largely concentrated in
the construction and manufacturing sectors, which have been hardest hit
by the recession. Over the last two years we have lost over 800,000
construction jobs, on top of millions more manufacturing jobs lost
within the last decade. Thus, there are many qualified individuals
waiting for the opportunity to return to work, and a green recovery can
drive new labor market demand. Building the market for green jobs will
effectively stimulate demand for the skills of these familiar
professions within the construction and manufacturing sectors. However,
as we look to the future, constraints on the available labor force to
do the work of building a low carbon economy is a significant concern
to industry analysts. In the utility sector for example, in many parts
of the country the average worker is nearing retirement age. Because of
the graying workforce in the existing energy sector, coupled with
dramatic predicted increases in demand for workers in these fields, job
training and workforce issues could become a significant bottle neck in
the growth of this area of the economy, without specific policy
attention to our training and apprenticeship needs. In addition,
because a goal of this recovery program is to reach those individuals
who have been hardest to engage in the existing economy, additional
supportive training and pre-apprenticeship services will be required to
ensure that those who most need work can get jobs doing the work that
most needs to be done. To prepare these workers for green jobs and to
ensure rapid growth in the clean energy sector, CAP recommends doubling
funding for the ``Green Jobs Act,'' to at least $250 million a year.
This Act provides grants to both public and private programs to train
workers for skills in energy efficiency and renewable energy. More
broadly, we support a systematic approach to workforce investment and
training, backed by dedicated resources, as a component of all climate
and energy policies moving forward. We also strongly support policies
to build the capacity of manufacturing establishments to retool their
production to produce strategic clean energy technology like advanced
batteries, highly efficient building materials and appliances, and
renewable energy technology.
Responses of Bracken Hendricks to Questions From Senator Lincoln
Question 1. In your testimony, you suggest that your green recovery
strategy will generate new markets for American manufactured goods and
advanced technology. These green investment programs are intended to
spread across regions and stay and benefit local economies. As a
Senator from a rural state, what strategies would you recommend for
implementing these green programs particularly in rural communities,
such as those in Arkansas?
Answer. Rural communities can benefit enormously from the
production of renewable energy (from solar, wind, and biofuels) as well
as from the modernization and expansion of our electricity grid and
rail (freight and passenger) transit infrastructure. Rural
electrification stands as one of the greatest rural economic
development strategies that we have undertaken as a nation, and our
rail infrastructure is essential for connecting farmers and rural
communities to ports and urban markets. The transition to clean energy,
including the reconstruction of our electrical grid to bring more
renewable energy on line, can serve a similar function, as an engine of
growth and opportunity in rural America.
Renewable energy policies can be structured to promote locally-
owned, mid-sized production facilities for bio-fuels and wind energy
that foster economic development by encouraging broadly distributed
investment in new production facilities within rural economies. In our
report, ``Energizing Rural America,'' we outline numerous suggestions
to enhance the structure of wind and biofuel incentives to best serve
rural populations, including: a two-tiered, indexed production payment
that favors local ownership; eliminating the high minimum production
capacities required for a cellulosic ethanol facility to receive
federal funding; and expanding the local capital pool available for
financing wind turbines by allowing the tax credit to be taken against
ordinary income rather than only against passive income. Within the
current economic recovery package, there are numerous provisions to
enhance the growth of the renewable energy industry, especially in wind
and bio-fuels, and to restore our electrical and rail infrastructure,
that will flow directly to farm communities and to rural manufacturing
job opportunities. With expanded investment in infrastructure projects,
contractual provisions that require a certain percentage of local hires
ensuring that construction benefits flow to local communities, can also
provide opportunities for enhanced economic development.
Question 2. I represent a state with a large number of hard-
working, low-to-middle-income families. It concerns me that green
technology that allows customers to leave less impact on the
environment, whether it's fuel efficient vehicles or energy saving
appliances, is often more expensive. For the future stimulus package,
in what ways can we make sure that low-income families are able to
access these advanced technologies?
Answer. A primary focus of the clean energy investment proposals
outlined in Green Recovery is creating good jobs that expand earnings,
while lowering energy costs for American families by increasing
affordable transportation options, diversifying our energy supplies,
and increasing the efficiency of our buildings. In no way are these
proposals expected to raise energy costs or make goods or services more
expensive. In fact, increasing the diversity of our energy supply
through expanded use of renewable energy, and expanding the efficiency
of our energy use, will reduce demand pressures in the market for
existing energy sources like coal and natural gas, helping to lower
energy prices and reduce price volatility. Moreover, increasing public
investment and production of advanced clean energy technologies will
lower their costs by achieving economies of scale, from solar panels to
advanced vehicle technology, ultimately making them more accessible to
the general public. And, because the stimulus money will be channeled
towards programs that put working families back into good jobs, this
clean energy transition will result in higher employment and more
economic growth, even as it lowers the cost of energy. The Center for
American Progress believes strongly that the shift to a low carbon
economy must provide greater opportunity and mobility for all
Americans. We believe that clean energy can be an engine for new jobs
and lower costs for all Americans, and that these benefits will
especially be felt by low and moderate income families.
Responses of Bracken Hendricks to Questions From Senator Sessions
Question 1. You have made a number of recommendations for
investments; however what can you tell us about any research that could
demonstrate the economic viability on such proposals?
Answer. Our report, Green Recovery--A Program to Create Good Jobs
and Start Building a Low-Carbon Economy, was conducted by leading
economists from the Political Economy Research Institute at the
University of Massachusetts, Amherst. This report revealed that
investments in green infrastructure have higher net economic and social
benefits than the alternatives, for several reasons which we outline
below.
First, clean energy and energy efficiency are more labor-intensive
than traditional fossil-fuel technologies. They create twice as many
jobs per unit of energy and dollar invested by redirecting money
previously spent on imported fuel, pollution, or wasted energy towards
skilled labor and high-tech manufacturing.
Second, green investments have high domestic content. By their very
nature, money spent on building retrofits, renewable energy
infrastructure, and public transportation is heavily concentrated on
spending that will stay within the U.S. economy, thereby boosting local
economic growth and creating local jobs. Currently, about 22 percent of
total household expenditures flows to the purchase of imported goods;
however, with a green infrastructure investment program, only 9 percent
of spending goes toward the purchase of imports, resulting in greater
domestic economic benefits. By focusing investments primarily on
improving and expanding domestic infrastructure, manufacturing, and
construction, a green economic recovery program ensures that the impact
on both local markets and the national economy will be greater in the
long-run.
Because of the characteristics mentioned above, green jobs have a
high multiplier effect. Jobs and investments that stay in local
economies boost spending on a variety of goods and services, inducing
job creation in the retail and service sectors. In addition, private
sector investment in clean energy and green technology is very high,
representing some of the fastest growing areas for new capital
investment across the entire economy. Yet despite this growth, the
failure to set clear and predictable energy policy has slowed the
growth of these industries, relative to their potential. With a strong
commitment in public policy, backed by public investment in supporting
infrastructure such as smart electrical grid enhancements, the
potential for growth in clean technology is tremendous. Building
America's capacity to compete in the markets is smart long term growth
policy.
Question 2. In your testimony you state that if we spend $100
billion dollars in energy efficiency and renewable technology, it would
create 2 million jobs. How did you arrive at that number? More
specifically what analysis or studies have been conducted to support
your conclusion?
Answer. In 2008, the Center for American Progress commissioned a
report by the Political Economy Research Institute at the University of
Massachusetts, Amherst (PERI), which demonstrated that a targeted $100
billion investment over the next two years would create two million
jobs by investing in six green infrastructure investment areas:
retrofitting buildings to improve energy efficiency, expanding mass
transit and freight rail, constructing ``smart'' electrical grid
transmission systems, wind power, solar power, and next generation
biofuels.
The report, Green Recovery--A Program to Create Good Jobs and Start
Building a Low-Carbon Economy, outlines the three sources of job
creation associated with any expansion of spending--direct, indirect,
and induced effects. To illustrate how a $100 billion investment would
create 2 million jobs, consider these categories in terms of
investments in building efficiency retrofits. The direct effects of an
investment in home retrofitting would be those construction jobs
created by making buildings more energy efficient; the indirect effects
would be manufacturing and service jobs created in corresponding
industries that supply the goods necessary to retrofit buildings, such
as lumber and transportation; and the induced effects would be those
retail and service sectors benefitted by the increased economic
activity. Together, the indirect, direct, and induced job total for the
entire $100 billion investment amounts to nearly 2 million
Total Job Creation through $100 Billion Green Stimulus Program
Direct jobs 935,200
Indirect jobs 586,000
Induced job 496,000
Total job creation 1,999,200
Source: U.S. Bureau of Economic Analysis and authors' calculations.
Question 3. In your testimony you mention that the ``green recovery
strategy'' has several energy proposals that will stimulate the economy
and over time will reduce our CO2 emissions. However, when
discussing clean energy and reducing CO2 emissions you did
not list nuclear power as possible source of energy. Why is that? And
does the Center for American Progress Action Fund have a position on
nuclear?
Answer. Due to the fact that nuclear is a low-carbon source of
reliable power, it has received renewed interest as efforts increase to
reduce greenhouse gas emissions. We believe that in the face of a
mounting climate crisis it deserves serious consideration. However, the
Center for American Progress Action Fund also recognizes that there are
several structural concerns that are likely to limit the contribution
that nuclear power can play in offering solutions to our current energy
crisis. Senior Fellow, Joseph Romm, sheds light on the economic and
physical barriers to large scale expansion of nuclear power in his June
2008 report, ``The Self-Limiting Future of Nuclear Power''. According
to Romm, nuclear will not likely play a dominant role in the national
or global effort to reduce carbon emissions for five main reasons:
First, the cost of nuclear is prohibitively high, and escalating.
Second, there are numerous production bottlenecks in key components
needed to build the plants, which only adds to their already lengthy
construction time. Third, there are significant concerns about uranium
supplies and importation issues. Also unresolved are issues concerning
the availability and security of waste storage. Fourth, nuclear plants
are large-scale water users. Lastly, the cost of electricity from new
nuclear plants is high compared to other generating sources, including
renewable energy. The Center is supportive of continuing research to
overcome these barriers, however in the near term, we believe that a
strategy which focuses principally on dramatically increasing the
deployment of energy efficiency and renewable energy will be America's
first line of defense in the war on climate change. Further we believe
that these green economic investment strategies represent significant
opportunities for expanding growth and increasing our competitiveness.
Question 4. Does the CAPAF have any analysis or studies on how many
and what jobs are going to be eliminated by the higher costs of energy
spending with this green jobs initiative?
Answer. There is no reason to believe energy costs will rise with
this new investment in green infrastructure; in fact, energy costs will
likely decline as we increase energy efficiency and diversify our
energy sources. Please see our response to question #1, posed by
Senator Domenici.
Question 5. A key questions is how long will it take for these
``investments'' to pay for themselves, if ever? What energy price
points does that assume? Have you calculated with specificity and
provided calculations?
Answer. As stated in our Green Recovery report, green investments
would pay for themselves relatively quickly through returns on energy
efficiency in both the public and private sectors. For instance, better
insulated schools would allow administrators to spend more on teachers,
textbooks, and other learning materials, and companies could invest
more in new production and services facilities, thereby raising
productivity. Green investments such as building retrofits also have a
relatively quick payoff period for homeowners. According to the
Department of Energy, a $2,500 investment in home retrofitting can
reduce average annual energy consumption by 30 percent. A 30 percent
cutback on the average $3,000 household energy bill would amount to a
substantial savings of $900 per year. Many of the green building and
energy efficiency technologies we discuss, such as more efficient
motors, lighting, or pumping equipment have a payback period of less
than a year, others like solar panels or geothermal heat pumps may take
several years for operational cost savings to pay for the capital
investment, but in all cases the green investments we discuss here
involve near term spending on quality construction and manufactured
goods that reduce ongoing operations and maintenance costs enabling
significant long term cost savings.
It is important to note that these monetary benefits are in
addition to the larger economic and societal gains brought about by the
2 million jobs the green infrastructure investments would create over
the next two years. Our green infrastructure program guarantees that
the federal government will receive a long-term return on its
investment through increased tax revenues from the jobs created, while
also profiting from the social benefits of decreased unemployment and
the environmental, public health, and national security benefits of
reduced carbon emissions.
Furthermore, as we consider future energy policies, this investment
of $100 billion could be repaid to the Treasury from revenues generated
by the auction of allowances under a comprehensive greenhouse gas cap-
and-trade system. Overall, investing now in the infrastructure and
technology deployment that will be required to reduce our national
carbon emissions, will be highly beneficial in helping American
companies to compete in emerging clean energy markets, even as it
lowers the long term cost of transitioning away from more carbon
intensive sources of energy.
Thank you very much for the opportunity to testify and for your
thoughtful questions. The Center for American Progress Action Fund
looks forward to the opportunity to further engage with your committee
in the future.
Appendix II
Additional Material Submitted for the Record
----------
Statement of Bart Ruth, Chairman, Policy Committee, National 25x'25
Renewable Energy Alliance
Chairman Bingaman, Ranking Member Domenici and other distinguished
members of the Senate Committee on Energy and Natural Resources, thank
you for the invitation to present you with recommendations the National
25x'25 Alliance Steering Committee believes can best address our
troubled economic times. As congressional leaders and the new, incoming
administration look for ways to bolster a sagging economy, the 25x'25
Steering Committee believes that now is the best time to implement
renewable-energy and energy-efficiency initiatives that can drive and
maintain economic recovery. In support of those initiatives, the
Steering Committee today offers Congress and the incoming
administration a package of new recommendations that will bolster the
U.S. economy, create new jobs and insure a clean energy future.
The 25x'25 Steering Committee, which provides leadership for a
coalition of nearly 800 agricultural, forestry, energy, environmental,
business, labor, civic and community groups that call for 25 percent of
our national energy needs being met with renewable resources by 2025,
believes that our recommendations are the backbone of a strategy that
will address our troubled economic times. These recommendations
underscore the longstanding 25x'25 position that a renewable-energy and
energy-efficient future will not only boost our economy, putting
hundreds of thousands of people back to work, but also enhance our
national security and improve our environment.
These recommendations for economic recovery from the 25x'25
Steering Committee are underscored by a national study undertaken by
the University of Tennessee Department of Agricultural Economics that
shows that if America's farms, ranches and forestlands are empowered
with the policies and incentives needed to meet 25 percent of the
nation's energy needs with renewable resources--biofuels, biomass, wind
energy, solar power, geothermal energy and hydropower--an estimated
$700 billion in new, annual economic activity would be generated, and 4
million to 5 million new jobs would be created.
The University of Tennessee study, commissioned by 25x'25, presents
just one scenario among many in meeting the 25x'25 vision. And while
the analysis includes forest residue from hazard-reduction programs and
mill residue, there are numerous resources that are not taken into
account--woody biomass from managed forests, crop residue (other than
corn and wheat) and urban wood waste--suggesting the economic benefits
of a 25x'25 future could be even greater. Furthermore, while the
analysis includes the production of dedicated energy crops, some
varieties of feedstocks currently under research in laboratories and
universities, including energy cane, Miscanthus and hybrid willow, may
not have been fully evaluated in the analysis, indicating even greater
economic returns.
Another strong indicator of renewable energy development's
potential to strengthen the economy comes from the Department of
Energy, which looked at just wind energy and concluded that it is
capable of becoming a major contributor to America's electricity supply
and economy over the next three decades.
The DOE says that achieving a 20-percent wind contribution to the
U.S. electricity supply would increase annual revenues to local
communities to more than $1.5 billion by 2030 and support roughly
500,000 jobs in the United States.
The 25x'25 economic recovery recommendations will lead to long-
term, comprehensive energy development that will accelerate the
production of all forms of renewable energy and create new renewable
energy markets.
The recommendations developed by the National 25x'25 Steering
Committee for a nationwide, clean energy economic recovery initiative
include:
Increase funding for the Rural Energy for America Program
(REAP).--The Rural Energy for America Program, authorized under
Section 9007 of the Energy Title of the 2008 Farm Bill,
provides grants or loan guarantees for renewable energy systems
and energy efficiency improvements for agricultural producers
and rural small businesses. The program is currently funded at
$255 million over four years, with additional annual
authorization of $25 million. The limit on the maximum amount
of the combined loan and grant is 75 percent of the funded
activity and the grant portion cannot exceed 25 percent of the
cost of the activity. The program, in existence since 2002, is
continuously oversubscribed and many valid projects are
rejected because of limitations on USDA funding. Increasing
funding for REAP will generate temporary construction jobs in
rural America along with permanent jobs operating and
maintaining renewable energy facilities. As an example, a 104
megawatt wind power project in Oregon, financed through REAP,
generated over 30 permanent jobs in Gilliam County, Oregon.
Proposed funding for REAP: $250 million annually, $500 million over two
years
Increase funding for the Repowering Assistance Program.--The
Repowering Assistance Program, authorized under Section 9004 of
the Energy Title of the 2008 Farm Bill provides loans and loan
guarantees to help biofuel plants convert their heating and
power fuel supply to biomass and reduce their dependence on
fossil fuel-powered boilers. Payments would be made for
installation of new systems that use renewable biomass or for
new production of energy from renewable biomass. The program is
currently funded at $300 million over four years, with
additional $25 million in annual authorization. According to
the Renewable Fuels Association 172 biorefineries are in
operation today. Installation of renewable biomass boilers will
generate construction and maintenance jobs and contribute to
cleaner air and environment.
Proposed funding for Repowering Assistance: $150 million annually, over
two years
Broaden the authority and increase funding for the
Biorefinery Assistance Program.--The Biorefinery Assistance
Program authorized under Section 9003 of the Energy Title of
the 2008 Farm Bill provides loans and loan guarantees to
construct commercial-scale advanced biofuel facilities. Loans
may be up to 80 percent of the cost of the project not to
exceed $250 million. It also provides grants for demonstration-
scale advanced biofuels plants. Despite existing federal grants
and loan guarantees, the collapse of the credit markets has
stalled construction of the nation's first commercial-scale
cellulosic biorefineries. Of six projects selected by the U.S.
Department of Energy in 2007 to receive up to $385 million in
federal support, only one has begun construction. It also has
slowed the conversion of existing grain-based ethanol plants to
dual feedstock biofuels production facilities. The economic
recession may therefore delay progress toward meeting
cellulosic and advanced biofuels targets in the Renewable Fuels
Standard and slow progress toward curtailing greenhouse gas
emissions.
Additional funding for the Biorefinery Assistance Program
will reduce investor risk and provide construction and
operations jobs in rural communities. Consideration should be
given to broadening the authority to utilize direct federal
grants to expedite the construction of first generation
advanced biorefineries and to modify or retrofit existing
grain-based ethanol plants to convert cellulosic biomass to
biofuels. Knowledge gained and experience with these operations
would rapidly drive down costs associated with second-
generation cellulosic biofuel plants and result in private-
sector investment in their construction.
Proposal for Biorefinery Assistance Program: increase and fully fund
mandatory and discretionary levels, at $500 million in year one
and $1 billion in year two, and consider expanding the use of
the grants to facilitate the construction of first generation
cellulosic biofuel plants
Fund the Bioenergy Crop Assistance (BCAP).--The Bioenergy
Crop Assistance Program was authorized under the 2008 Farm Bill
to support the establishment and production of eligible crops
for conversion to bioenergy, and to assist agricultural and
forest landowners with collection, harvest, storage, and
transportation of these crops to conversion facilities. The
rules for the program have not been developed, and no mandatory
funding is provided in the authorizing legislation. Twenty-one
cellulosic biorefineries are in the planning stage of
construction, to begin operations by 2010, but without full and
immediate funding of BCAP to provide incentives to farmers to
grow dedicated energy crops, feedstocks may not be available,
jeopardizing investments and threatening the commercial scale
production of advanced biofuels.
Proposed for Bioenergy Crop Assistance Program: implement BCAP in 2009;
fund at $250 million annually, $500 million over two years
Invest in Biofuel Infrastructure Projects.--A comprehensive
federal initiative should be developed and funded to address
biofuel infrastructure, distribution and delivery issues. A
coordinated plan should be developed and significant federal
funding provided for biofuel distribution infrastructure
projects. Biofuel pipeline feasibility studies need to be
completed. The federal government should help finance the
construction of new pipelines, as well as address rail capacity
for biofuels. Funding for E-85 Corridor programs should be
expanded and funding should be made available to facilitate the
manufacturing and deployment of blender pumps. The federal
government should promote the use of flex-fuel vehicles, by
creating a federal FFV fleet and increase funding for battery
technology development. In addition, advanced biorefineries,
most of which are in planning stages, often await permitting
for long periods of time. The processing of these permit
applications must be expedited.
Proposal: Increase federal investments in biofuel distribution
infrastructure, including financing to expand rail capacity,
pipeline construction, and strong incentives for E85 and
blender pumps, the number of which should grow as more flex -
fuel vehicles are registered in a region. Provide strong
incentives to speed up commercial use of flex fuel vehicles and
their use by federal entities. Expedite permitting for advanced
biorefineries
Fund the Community Wood Energy Program.--The Community Wood
Energy Program authorized under the Food, Conservation, and
Security Act of 2008, provides grants to state and local
governments and communities to develop wood energy plans and to
acquire and upgrade community wood energy systems in communal
facilities, such as schools, town halls, libraries. The program
would use woody biomass as a primary fuel for such projects.
Proposed funding for the Community Wood Energy Program: 20 million
annually, for two years
Increase funding for and extend Clean Renewable Energy Bonds
(CREBs).--The Energy Policy Act of 2005 provides electric
cooperatives and public power systems with the ability to issue
Clean Renewable Energy Bonds (CREBs). The CREB is a renewable
incentive for not-for-profit utilities, comparable to the
Production Tax Credit (PTC) that is available to investor-owned
utilities. Not-for-profit utilities that serve 25% of the
nation can not access the PTC. CREBs support a wide variety of
projects, including wind, biomass, geothermal, solar, municipal
solid waste, small irrigation power, and hydropower. CREB funds
would support both large-and small-scale projects, and would
generate jobs both in installation of renewable energy
technologies and in manufacturing of the required component
parts. The program is already over-subscribed, at $800 million
in current mandatory spending.
Proposal for CREBs: extend the program through 2010 and provide
additional bonding authority of $2.5 billion
Restructure the Production Tax Credit and Investment Tax
Credit for renewable energy electricity sources.--Currently, a
PTC or an ITC is given in a form of a tax credit to be claimed
against income for developers of and investors in renewable
electricity projects utilizing biomass, solar, wind, hydro,
marine, landfill gas, geothermal and other clean sources of
energy. The credit is currently non-transferrable. Furthermore,
in many cases other incentives reduce the amount of the
Production Tax Credit or an Investment Tax Credit. For example,
a biomass Production Tax Credit is reduced by half when a
Combined Heat and Power (CHP) Investment Tax Credit is also
used for the same project. State and government financing also
reduces the PTC amount a renewable energy project can receive.
According to recent analysis by the American Wind Energy
Association, the failure to restructure the PTC and provide a
rapid long-term extension could result in the loss of 89,000
jobs and $16 billion in investment in the wind energy industry
alone. Renewable energy development relies upon transactions
with major financial industry players, because renewable
electricity is a capital intensive industry. The current
economic crisis has removed many major financial investors from
tax equity markets, dramatically reducing the ability of many
renewable power developers to realize the intended benefits of
available tax incentives.
Thousands of megawatts of new renewable energy power capacity
for 2009 could be cancelled or delayed as a result, unless the
tax credit system is restructured, and PTCs are extended over
five years. In addition, equity strapped industries may not be
able to increase investments in geothermal, biomass, solar and
hydropower projects. According to the National Renewable Energy
Laboratory, if the PTC were transferable to lending
institutions, or if it were applicable as prepayment on any
loans, the wind, solar, biomass, geothermal, hydro and other
renewable energy industries could fully utilize the PTC and the
ITC. In a time of economic downturn, full use of the ITC and
the PTC is essential for the renewable energy sector to
continue attracting investment and prevent job loss
Proposal: Restructure the federal Production Tax Credit and Investment
Tax Credit for all sources of renewable electricity to allow
for accelerated depreciation, refundable credits and transfers
between persons/entities, and enable projects to utilize other
financial incentives without a reduction in the amount of ITC
and PTC that an entity can claim.
Extend the Production Tax Credit and Investment Tax Credit
for five years.--Production and investment tax credits serve as
primary incentives for investors to develop wind, solar,
geothermal, hydro, marine and other forms of electricity from
renewable sources. Wind industry developers, for example, are
eligible for a production tax credit of 2.1cents per kilowatt
hour generated in the first 10 years of operation.
Manufacturing of both wind turbines and solar panels is growing
in the United States, bringing jobs to rural areas. More than
50 new or expanded wind industry manufacturing facilities have
been announced or opened since January of 2007, creating tens
of thousand of high paying jobs while providing clean and
reliable energy. However, an unstable PTC/ITC policy serves as
a disincentive to investors, particularly in this time of
economic distress. The solar industry, for example, estimates
that if PTC were not extended in 2008, the solar PV sector
alone would have lost $8.1 billion in investment and a net
39,800 jobs in 2009.
Proposal: Extend the Production Tax Credit and Investment Tax Credit
for renewable electricity sources for five years
Increase the Production Tax Credit for renewable electricity
produced from biomass, hydro, green gas and other renewable
sources of energy.--Currently producers of renewable
electricity from wind and geothermal sources of energy receive
a Production Tax Credit of 2.1 cents per kilowatt hour. Other
producers of renewable electricity receive half this amount.
Additional renewable electricity could be generated in the
United States if developers who produce renewable electricity
from biomass, hydro, renewable gases and other sources of
energy received the same credit as is currently allowed for
wind and geothermal electricity developers.
Proposed funding: Create a level playing field for producers of
renewable electricity by increasing the Production Tax Credit
for biomass, marine, hydro, marine, green gas, waste and other
renewable energy sources of electricity to a level equivalent
to that received by wind and geothermal energy producers
Improve tax incentives for Community Wind.--Community wind is
a type of wind development that focuses on investment from
local communities, rather from an outside investor. The
National Renewable Energy Laboratory (NREL) estimates that
smaller community wind projects contribute twice as many jobs
and income to a local community than a larger wind plant
financed by outsider investment. An average community wind
plant of 20 MW can provide up to 41 jobs and $4 million in
local income, as opposed to an outside-investment 40 MW plant's
18 jobs and $1.3 million in income for the community. However,
community wind investors' income off the plant is often
passive. Under current regulations passive income has to be
quite large to fully use the credit. Regulations should be
changed to allow for local wind investment projects to count
against active income of the local investors. Such a change
will generate more interest in, and investment by communities
in local clean electricity sources.
Proposed: Allow community wind developers to count tax incentives
against active income
Fund Smart Grid and improve electricity transmission.--The
Federal government should appropriate funds for the Smart Grid
Investment Matching Grant Program created under Energy
Independence and Security Act of 2007. The program provides
reimbursement for 20 percent of qualifying Smart Grid
Investments. Within two years, the stimulus effect of this
provision will become apparent, through significant new job
creation in renewable energy electricity sector, as more
electricity sources will be able to capitalize on a better grid
system. 300GW of wind power are awaiting grid connection. In
order for the wind industry to expand, 12,000 miles of new
transmission lines are needed, as well as a smart grid
management system. The Department of Energy reports that
transmission is the number one barrier preventing rapid long-
term expansion of wind energy use. Without adequate
transmission capacity, the nation risks losing existing jobs in
wind turbine manufacturing and installation. A more efficient,
reliable transmission grid will also reduce electricity costs
to consumers in states with high peak rates.
Proposed funding for Smart Grid: $1.3 billion for smart grid investment
______
Statement of Donna A. Harman, President and Chief Executive Officer,
American Forest & Paper Association
The nation's economic downturn has had a dramatic effect on the
health and vitality of the forest products industry. The protracted
downturn in the housing market and the ensuing financial crisis have
resulted in lost markets for forest-based manufactured products such as
wood building materials and pulp, paper, and packaging materials,
forcing many manufacturing facilities to close. In addition, the
financial crisis has led to lack of available credit and the loss of
many jobs across the industry we represent.
AF&PA is the national trade association of the forest, pulp, paper,
paperboard, and wood products industry. The industry employs more than
a million people and ranks among the top 10 manufacturing employers in
48 states with an estimated payroll exceeding $50 billion. Forest
product mills are often the economic hub of their communities, making
the industry's health critical to the economic vitality of countless
communities and every region of the country.
As the Congress and new Administration consider policy initiatives
to help the national economy recover, we urge you to consider the
following initiatives for inclusion in broader stimulus plans. Each of
them fits with the priorities of the Congress and the new
Administration to promote sustainable business and environmental
practices and would help ensure that the economic recovery also extends
to the forest-based sector of the manufacturing economy.
Expand Section 45 Credit for Electricity from Renewable
Energy Sources to Self-Generated Biomass Power to Operate
Manufacturing Facilities.--The Section 45 credit for biomass
facilities should be strengthened by expanding the credit to
on-site use of electricity produced from biomass. Credit for
on-site usage would promote further expansion and use of
biomass as a reliable, stable energy source.
Extend TREE Act Provisions.--Extending the TREE Act
provisions included in the Food, Conservation, and Energy Act
of 2008 (P.L. 110-234) will promote U.S. competitiveness and
encourage growth in the forest products industry. The existing
provision is set to expire in May, 2009 and should be made
permanent.
Pension Plan Recommendations.--The drop in the value of
pension plan assets combined with the credit crunch has placed
defined benefit plan sponsors in a difficult position. Congress
should enact the Worker, Retiree and Employer Recovery Act of
2008, which makes critical changes to the Pension Protection
Act of 2006 to help companies address the current unprecedented
financial crisis.
Housing Industry Provisions.--Congress should enact the
following provisions that would provide immediate relief to the
ailing housing industry: enhance the Home Buyer Tax Credit to
stimulate purchases of new and existing homes, provide low-rate
mortgages for future home purchases, and extend the net
operating loss (NOL) carryback from two to five years.
Corporate AMT Reform.--Congress should enact provisions
similar to those passed in the Job Creation and Worker
Assistance Act of 2002, whereby the 90 percent limitation on
the utilization of AMT NOLs would be temporarily suspended for
losses generated or taken as carry forwards for tax years
ending in 2008, 2009, and 2010. This would help alleviate the
current financial burden on companies struggling from cash flow
and tight credit problems.
We urge you to include these provisions in future economic stimulus
legislation that Congress considers.
______
Joint Statement of Ken Brown, Executive Director, Climate Communities,
and Michelle Wyman, Executive Director, ICLEI USA
Thank you for convening the December 10 hearing to address the
inclusion of clean energy projects in upcoming economic recovery
legislation. Our growing coalition represents more than 375 local
elected officials in 39 states who are taking action in their
communities to reduce energy use and greenhouse gas emissions. We are
pleased to submit this statement for the record.
We commend you for holding this important hearing and we strongly
encourage you to make investment in energy efficiency, clean energy,
and green jobs a cornerstone of your strategy as the Congress begins to
craft economic recovery legislation. Our coalition of local governments
looks forward to playing our part in the ``Green Economic Recovery'' by
working in partnership with the federal government to put people back
to work through local building efficiency retrofit programs,
installation of community-scale renewable energy projects, investments
in local mass transit equipment and infrastructure, and local economic
development strategies that reduce vehicle miles traveled.
Our message to you today is simple.
1. Cities and counties across America have thousands of
ready-to-go projects that will help achieve three critical
national objectives--create new jobs, decrease our dependence
on foreign oil, and reduce the greenhouse gas emissions that
cause climate change.
2. Local governments are uniquely suited to implement job
creating programs and projects that will reduce energy
consumption in commercial and residential buildings and in the
transportation sector by improving transit and reducing vehicle
miles traveled.
3. The federal government should invest $10 billion in the
Energy Efficiency and Conservation Block Grant program and $18
billion to upgrade transit infrastructure and transit equipment
as an efficient and effective way to create jobs and empower
local climate action.
thousands of ready-to-go local clean energy projects
As you know, about two million jobs have been lost in the United
States in 2008 and more losses are forecast. Creating local green jobs
that will last for years to come and cannot be outsourced will
contribute significantly to the country's economic recovery. Across the
nation, local governments have thousands of local government ready-to-
go clean energy projects that could be implemented with federal
economic recovery assistance. This week the U.S. Conference of Mayors
released a nationwide survey of local governments, citing approximately
1,600 ready-to-go clean energy and transit projects that could create
about 120,000 new jobs--in just 427 cities that participated in the
survey. (See http://www.usmayors.org/mainstreetstimulus/) We have
attached a list of dozens of local ready-to-go clean energy projects
from some of our coalition. We want to emphasize that not only will
these projects create new jobs and spur economic revitalization;
additionally, these local projects will help set our nation on a course
for energy independence and reduce greenhouse gas emissions. Examples
include the following:
With economic recovery assistance, Montgomery County, MD
would establish a Home Retrofit Revolving Fund to provide
energy audits and low interest loans for residential energy
retrofits. This program would reduce consumer energy costs,
increase home values, and produce significant new green jobs in
the construction and building trades. In Montgomery County, a
$35 million annual investment would result in $47 million in
energy savings benefits to consumers. In addition, a 30 percent
participation rate has the potential to reduce nearly 200,000
tons of CO2 emissions annually.
With economic recovery assistance, the City of El Paso, TX
would provide energy retrofits at 53 facilities and at more
than 600 intersections. The retrofit project would create jobs,
save more than 10,000 kilowatts per year, save an estimated
$1.743 million annually in energy costs, and reduce annual
emissions by 11,300 tons. It will cost an estimated $15
million. The energy retrofits include heating and cooling
system replacements, installation of energy efficient lighting
systems, and other projects.
With federal assistance, the City of Gainesville, FL would
launch a new Low income Energy Efficiency Program (LEEP) that
will assist 336 low income customers in upgrading their homes
with energy efficiency measures to reduce energy use, improve
comfort, and save money. The proposed project will save 537,936
kWh per year and will eliminate 457 metric tons of CO2
annually. Job creation will include three full time employees
and increased demand for hundreds of contractors, i.e., HVAC
installers, insulators, electricians, plumbers and general
contractors. The project will cost $1 million annually.
With federal assistance Westchester County, NY would install
photovoltaic systems in four county office facilities and use
the renewable energy generated to run each complex. The
proposed project would cost $3.5 million, save 989,000 kwhr per
year and $150,000 annually in energy costs, cut greenhouse gas
emissions by 415 tons per year, and create 20 new construction
jobs.
With federal assistance, Loudoun County, VA would build the
Brambleton Geothermal Fire Station. The new facility will
incorporate the latest renewable energy design features such as
a 30,000 gallon cistern on site to store rainwater, geothermal
wells, ground source heat pumps, and many others at a cost of
$7.2 million. It will save 1,179,806 gallons of water per year
from rainwater collection, 86,400 gallons of water per year
from water efficient fixtures, and will reduce energy
consumption by 30 percent annually. The project will employ 20
full time employees when completed and require multiple
construction personnel during construction.
With federal recovery assistance, the City of Spokane, WA
would implement SmartRoutes, an $11 million transportation plan
to make road and trail improvements to facilitate bike and
pedestrian travel. When completed, the project will reduce
vehicle miles traveled by 91 million miles annually, reduce CO2
emissions by 58,000 tons a year, and create hundreds of new
jobs.
LOCAL GOVERNMENTS ARE WELL-SUITED TO IMPLEMENT CLEAN ENERGY PROJECTS
Local governments are at the forefront of the movement to promote
clean energy and address climate change in the United States. For
years, local governments have served as laboratories for innovation,
developing new approaches to reduce energy use and greenhouse gas
emissions, including the conversion of municipal fleets to hybrid
vehicles, the design and construction of energy-efficient buildings,
the installation of renewable energy, and the development of
communities that reduce vehicle miles traveled.
Local governments are especially well-suited to improve building
efficiency and reduce energy used in the transportation sector. In
addition, local governments are well-positioned to implement community-
scale renewable energy projects that create jobs and reduce carbon
emissions.
Reducing Energy Consumed in Buildings
According to the U.S. Energy Information Administration, commercial
and residential buildings account for well over 40 percent of the
energy consumed in the United States. Experts estimate that three-
fourths of America's residential and commercial buildings will be
replaced or renovated by 2038. EPA estimates that well-designed
building codes implemented and enforced in conjunction with appliance
standards can lock in cost-effective energy savings of 30 to 40 percent
at the time of building construction compared to standard practices.
Local governments are best suited to improve and enforce building
codes and create other programs to reduce energy use in commercial
buildings and homes. Following are examples of local innovative energy-
smart building approaches that could be supported and replicated with
national leadership and resources.
Nassau County, NY launched its ``Green Levittown''
initiative, a public-private partnership to help the 17,000
households of America's first suburb conduct home energy
audits, replace old boilers, and make other home energy savings
improvements. The project goal is to reduce carbon emissions by
10 percent. Thousands of households are participating and the
changes being made are resulting in a significant reduction in
greenhouse gas emissions.
Santa Barbara, CA passed an ordinance in 2007 to become the
nation's first city to reduce the fossil fuel standard for all
new buildings in order to accomplish carbon neutrality by 2030
by enacting building regulations exceeding state standards for
energy use among other measures.
Montgomery County, MD recently passed legislation that
promotes energy efficiency in new buildings. The bill requires
most new commercial, multi-family residential and single family
residential buildings to meet certain Energy Star standards,
and requires a building owner to pay an Environmental
Sustainability Fee if the building does not comply with the
energy efficiency and environmental design standards. The
legislation also requires the Director of the County Department
of Public Works and Transportation to develop an energy
baseline, energy unit savings plan, and energy cost savings
plan for each County building.
Reducing Energy Consumption From Transportation
The U.S. transportation sector accounts for a third of all energy
use and within this share, 60 percent comes from personal vehicle use.
While cleaner vehicles and fuels standards are important, increases in
vehicle fuel efficiency have not been and are not predicted to be
sufficient to keep pace with increases in driving associated with more
sprawling development patterns and lack of adequate public transit.
Numerous studies show that given the option to live in a less
automobile dependent location, people will indeed drive less. According
to the recent book Growing Cooler: The Evidence on Urban Development
and Climate Change, residents of more compact neighborhoods drive 20-40
percent less on average.
Reducing vehicle miles traveled (VMT) and increasing transit use
are important ways to significantly reduce energy use and emissions
from the transportation sector. Since local governments are responsible
for land use and transportation planning, local leadership is essential
to address this problem. In addition, local governments are playing an
important role in purchasing low-emission vehicles and using
alternative fuels. Examples of effective local transportation programs
include the following:
Sacramento County, CA and the Sacramento Area Council of
Governments, CA have established a blueprint for the
metropolitan region that links transportation investments to a
vision of sustainable future growth and development served by
public transit, walkability measures, and other approaches to
reduce VMT in the region by 27 percent by 2050.
Envision Utah is a collaboration of several public-private
stakeholders in the Salt Lake City/ Greater Wasatch Area
focused on protecting the environment and maintaining economic
vitality and quality of life as they accommodate anticipated
growth in the region. The collaboration focuses on several key
strategies to reduce emissions, addressing VMT though creating
more walkable communities; preserving critical lands and park
space; developing a region-wide transit system; and fostering
transit-oriented development.
The City of Stamford, CT is undertaking a 20-year initiative
to improve regional transportation and promote smart growth and
economic development through multi-modal transportation
investments and transit-oriented development. The initiative
encompasses everything from expanding the hub of their
transportation infrastructure (the Stamford Transportation
Center), building a new multimodal center, and connecting these
transportation centers to the new Stamford Urban Transitway, to
construction of an urban light rail loop to connect key urban
locations through public transit.
In 2007, King County, WA committed to purchase 500 new
hybrid buses manufactured by New Flyer and General Motors over
a five year period. The buses will be added to a fleet that
already has over 200 hybrid buses in service. Hybrid buses use
considerably less fuel and reduce some exhaust emissions by up
to 90 percent. There are currently over 2,000 hybrid buses in
use nationwide.
Since 2001, the City of Keene, NH has powered their
municipal fleet of 68 vehicles and other city owned equipment
with B-20 biodiesel. City operators have stated that the
headaches they would get from operating equipment with 100
percent diesel have gone away while operating equipment with B-
20.
local initiatives to increase the use of renewable energy
Large, utility-scale renewable projects like wind farms and solar
plants are critical to America's energy future, but community-scale
renewables are vital as well. Solar photovoltaic panels on elementary
schools, biomass generation at local landfills and sewer plants, wind
turbines powering targeted neighborhoods, town halls heated and cooled
with non-polluting geothermal energy and other projects help localities
become self-reliant and better able to manage the risks of increasing
energy costs, blackouts, and other challenges.
The following local government renewable energy projects
demonstrate the kinds of innovation that could be spurred across the
nation with federal assistance.
Wyandotte Municipal Utilities, MI is installing the first-
in-the-nation utility-scale wind power project on an urban
brownfield. Wyandotte is also considering renewable energy
projects including woody biomass generation, river hydrokinetic
power systems, combined photovoltaic-concentrated solar
technologies, hybrid public utility fleets, and green roofs
infrastructure to reduce emissions in a community that has
historically relied on petrochemical manufacturing and coal-
fired power to fuel the local economy.
The Department of Energy and the U.S. Environmental
Protection Agency are now working with the City of Stamford, CT
on an innovative wastewater-to-energy project that will convert
dried sewage sludge into clean, renewable energy. This first-
ever application of biomass gasification technology is free of
air and carbon emissions and will use a renewable resource
available in nearly every locality. If deployed nationally,
this waste-to-energy technology could produce 100 times the
electric energy needed to serve U.S. domestic demand, and could
reduce 1.1 billion metric tons of greenhouse gases by 2030.
In 1999, Story County, IA constructed Iowa's first county-
owned building to use a geothermal heating and cooling system.
The geothermal system reduces energy consumption by 40 percent,
costs less to maintain, and cuts air-borne pollutants. The
County is currently converting other buildings to geothermal
energy.
Sacramento County, CA plans to install 16 megawatts (MW) of
solar community-wide each year for the next nine years so that
two percent of the community's energy would come from solar by
2017. This residential incentive program would supplement
existing federal tax credits and utility incentives in order to
help transform the solar market and assist Sacramento County in
achieving its goal. The project would save 80 million KWh and
$8 million per year. GHG emissions would be cut by 25,000
metric tons per year. Meeting the state goal of adding 16 MW
per year of solar in Sacramento County would create 600 direct
permanent jobs and three to four times as many indirect jobs
per the U.S. Department of Energy.
We are attaching two documents* that we request be included in the
hearing record:
---------------------------------------------------------------------------
* Documents have been retained in committee files.
1. Empowering Local Government Climate Action: Blueprint for
President Obama and 111th Congress and the list of 375 plus
local elected officials who have endorsed the blueprint thus
far.
2. A list of local Green Recovery projects that could be
implemented with federal assistance.
Again, we urge the federal government to invest $10 billion in the
Energy Efficiency and Conservation Block Grant Program and $18 billion
in transit infrastructure and equipment as part of national economic
recovery legislation. These critical investments will enable local
governments across America to do what they do best--implement pragmatic
community-based solutions that will reduce create jobs, revitalize the
economy and preserve our planet.
Thank you very much for your consideration.
______
Statement of Equitech International, LLC
We are most grate ful for this opportunity.
Our collective mission here is, as in life, to celebrate and
implement the Buckminster Challenge:
We are called to be the architects of the future, not its
victims ... [Our challenge is to] make the world work for 100%
of humanity in the shortest time possible through spontaneous
cooperation without ecological offense or the disadvantage of
anyone. --R. Buckminster Fuller
The first ever 300kW solar academic building, the first candidate
for Solar Fuel Cell Regeneration (SFCR), at Georgetown University as an
important element of the university's master advanced renewable energy
systems (ARES) plan, was developed from 1982-1990. This plan was the
first stand-alone sustainable ARES design developed as a National
Exemplar Integrated Community Energy System (NE/CES) per U.S.
Department of Energy federal program guidelines and funding. The solar
PV building is still functioning very well after 20 years. It has paid
back very well.
Importantly the words of the celebrated paleontologist Rev. Pierre
Teilhard de Chardin SJ are inscribed on the galleria of the solar PV
academic building:
The Age of Nations is passed. What remains for us now, if we
do not wish to perish, is to set aside the ancient prejudices,
and build the earth.
candidate paradigm: advanced renewable energy systems (ares)
This consortium of scientists and design science architects
proposes a Comprehensive National Energy Policy (CNEP) based on
infinite renewable sources and provides proven solutions. The
breakthrough is green hydrogen direct from waste (with no burning) that
supports current thinking toward decentralization of power production
and distribution. TRANSITION TO A DE-CENTRALIZATION STRATEGY IS
REQUIRED because of the following reasons:
1. SECURITY: Millions of small self-sufficient sustainable
distributed energy generation centers are superior over fewer
large, dangerous, and vulnerable power production centers as
easy access for terrorists. ARES military applications are
endless.
2. EFFICIENCY--COST REDUCTIONS: It places energy generation
at the source of its consumption, minimizing inefficient energy
distribution services over long distances. ARES have very low
operating costs.
3. ECONOMICS--ACCESS TO WASTE and INFINITE SUN:
Waste on the land is continuously
accumulating and always will, plus Nature continuously
provides some of its own waste on land;
Waste produced by Nature is in the seas as
BIOMASS, and;
Vast waste by humankind exists everywhere
and can be recovered and utilized.
4. WEALTH PRODUCTION FOR ALL CITIZENS: The means of producing
``Premium Power'' with its valuable by-products enables:
distributed ownership of ARES for reducing
overall poverty
tax revenue incomes to small and large
cities
support for stand-alone remote residential
clusters
ARES component manufacturing for export,
distributed job creation, and
the ability to reduce transportation
problems.
5. SERVICE to EXISTING GRID: All distributed Premium Power E-
Macro and E-Micro Systems can sell wholesale individually and
collectively to the power companies mitigating the need for
construction of new power plants.
Waste provided by nature and the contributions of pollution by
humans, such as those contributing to global warming, form an unending
source of METHANOL--by processing carbon dioxide and hydrocarbons with
waste--to produce fuel for fuel cells forever. Methanol technology is
proven and can be deployed immediately. ALL forms of waste, including
industrial and toxic waste, and the sun--are the only energy sources
needed!
A comprehensive solution to providing clean energy for all needs
The Advanced Renewable Energy System (ARES), based on Complex Waste
to Total Energy Solar Methanol Hydrogen Fuel Cell Regeneration System,
is a decentralized approach to producing clean and secure energy for
all needs using sun and all types of waste available everywhere. A
transition using the current power grid is understood, but power
production would occur everywhere and not be dependent on the grid
during collapses and will be able to serve all structures and vehicles
independently when fully implemented.
Investments to Date
1. Two proofs of concept completed--the basis of the proposed
E-Macrosystem, a 7.5 MW ARES power plant and manufacturing
center--Solar Fuel Cell Regeneration (SFCR) and Waste Steam
Reforming System, 1987-1995 . . . $55 million
2. First two 30 ft. heavy-duty fuel cell buses (designed at
Georgetown, 1983-1995 www.equitechllc.com/projectgraphics/
fuelcellbus.html) . . . $21 million
3. International Consortium by NASA/JPL at Edwards Air Force
Base worked with Georgetown's National Exemplar of Integrated
Campus Energy System (NEICES) to develop stand-alone power
system (for lunar colony), 1982 . . . $30 million
4. Georgetown University NEICES built integrated solar
building, 1982 . . . $23 million
5. Clean coal technology breakthrough, abandoned for
emissions-Free ARES leaving coal to be developed for highest
and best use as nanotechnology solution in complex Thermal
Composite Materials (TCM) for solar structures, 1979 . . . $14
million
Total: $143 million
Current Status of constructing the national exemplar E-Macrosystem
1. Final Design (Program of Requirements & Design Build
Engineering) . . . $ 4.3 million
2. Design-Build Construction . . . $60.0 million
Total: $64.3 million
It is proposed that a national exemplar green research project that
is ready for final design engineering and construction be funded and
built in an area of extreme poverty, to demonstrate the new technology,
ARES component manufacturing, job creation, skill development, and
broad ownership by using a new mechanism called Community Investment
Corporations. Multiple by-products including premium power demanded by
pharmaceuticals and the computer chip industry, pure water, medical
oxygen and other products provide 2 to 3-year quick turnaround on the
replications' debt-service.
The turnkey project is ready for final design and construction
under the professional oversight of Equitech International LLC and
Whiting Turner Construction Co on land provided by the City of East St.
Louis and 10 surrounding communities through the for-profit Metro East
Citizens Land Cooperative on behalf of all residents, the MECLC
shareholders. East St. Louis has experienced a prolonged unemployment
rate of 23% and overall the poverty rate is 31% in the 11 communities.
The Congress needs to fund the national exemplar E-Macrosystem
manufacturing center and its breakthrough technology ($64.3 million) to
make it available for public and private rapid deployment. The initial
investment will provide proofs of concept for a second phase, E-
Microsystem ($80 million), for smaller public and commercial building
solutions including comprehensive residential development at affordable
prices ($400 - $500 rents with all utilities included, including water,
sewer, electric, and fuel for the fuel cell car).
Job Creation from National Exemplar E-Macrosystem
The initial green energy research project, the E-Macrosystem, will
provide: . . . 2461 jobs
The jobs include construction, operation, and product development
in work centers within the structure. Products that will spin out of
the E-Macrosystem to develop a manufacturing center first in the Metro
East area include: steam reforming systems, fuel cell manufacturing,
electrolyzers, photovoltaics, E-Microsystems (SFCR components),
composite systems manufacturing, and TCM (complex thermal composite
materials made from coal to build light-weight, solar structures)
manufacturing. Each E-Macrosystem replication can expect to produce:
. . . 800 jobs
Technology Comparisons
Extensive land coverage is not required as in the wind energy
approach. ARES are integrated into the buildings and vehicles they
power and use the sun and all waste as fuel.
Extensive use of water needed for nuclear power is not necessary.
ARES produces pure water. A comparison of investments showed that the
$10 billion proposal at Calvert County, MD if spent on ARES instead,
would provide power to 250 cities.
______
Statement of Bruce W. Heine, Director, Government and Media Affairs,
Magellan, Tulsa, OK
Magellan Midstream Partners, L.P. owns and operates the longest
refined petroleum pipeline in the United States, which crosses thirteen
states and over 8,500 miles of pipeline. We have partnered with Buckeye
Partners, LP, which owns and operates nearly 5,400 miles of refined
petroleum pipeline. Our collective goal is to develop the first ever
``dedicated ethanol pipeline,'' which we call the ``Independence
Pipeline.'' The Independence project is a 1,700 mile, $3.5 billion
renewable fuel pipeline project, which originates in Iowa and ends in
New York Harbor. The project would create hundreds of construction jobs
in the next few years and over 100 operating jobs over the life of the
project, and would safely and efficiently deliver more than 10 million
gallons of ethanol per day to millions of northeastern motorists.
This large-scale renewable fuel pipeline project is dependent on a
federal financing option through a new loan guarantee program at the
Department of Energy. We would encourage you to consider the inclusion
of a renewable fuel pipeline loan guarantee program as you prepare new
legislation designed to stimulate our economy. These important
infrastructure jobs will peak in 2-3 years which wilt help sustain the
economy as other parts of the stimulus package wind down.
This project meets the criteria for new investment that will help
build a new clean energy economy and advance the next generation of
biofuets and fuel infrastructure.
Congress has indicated renewable fuels will have an increasingly
important role in our domestic energy policy and the growing national
demand for renewable fuels will create potential opportunities to
construct more efficient transportation infrastructure across the
United States. We believe the necessary long-term solution for
efficient renewable fuel transportation is a large-scale pipeline
system.
We urge you to include a new loan guarantee program for a dedicated
ethanol pipeline system in the upcoming economic stimulus package. I
look forward to discussing this issue with you and other Senators in
greater detail.
______
Statement of Alvin Parks, Mayor and President, Metro East Citizens Land
Cooperative (MECLC), East St. Louis, IL
On behalf of the citizens of the Metro East Communities we would
like to introduce you to a new and exciting economic enhancer called
the E-Macrosystem that we are working hard to deliver to our region. We
are asking you to support our efforts as we work to build our
communities, establishing hope and bringing real change to America from
the grass roots.
First, thank you once again for your inspiring message of hope and
change you delivered to the U.S. Conference of Mayors on Saturday, June
21st 2008. Your points of being a partner with American cities and
making everyone understand that American cities are the solution and
not the problem help us to know that you will do what it takes to
strengthen our communities.
You have also discussed that green energy is an economic enhancer
and builds hope for families. We are working with an exciting new
economic enhancer for our communities that needs your support. Here are
the key benefits that the E-Macrosystem brings to our regional
communities:
1. Green Energy
2. Environmental clean up of medical, industrial,
agricultural and municipal waste streams
3. Creation of 2,300 jobs per system
4. Citizen Ownership
The Mayors listed in the left hand column of this letter have been
working together to form the Metro East Citizens Land Cooperative
(MECLC). I presently serve as the President of MECLC with the support
of the Mayors of Granite City, Cahokia, and Brooklyn serving as
officers with me on the Executive Board.
MECLC 2008 BOARD OF DIRECTORS
Mayor Alvin Parks; City of East St. Louis; Mayor Ed Hagnauer, City
of Granite City; Mayor Randy McCallum, Village of Alorton; Mayor Frank
Bergman, Village of Cahokia; Mayor Nathaniel O'Bannon, Village of
Brooklyn; Mayor Mark Jackson, City of Centreville; Mayor William Moore,
Village of Hartford; Mayor Avery Ware, City of Venice; Mayor John Hamm,
City of Madison; Mayor Alex Bregen, Village of Fairmont City; Mayor
John Thornton, Village of Washington Park; Col. Michael Morrow, Ret.,
Morrow Group USA, Inc.
The MECLC has been working to develop a demonstration model of
advanced renewable energy systems that will be owned by our community
residents as citizen-owners. This exciting national demonstration of
advanced renewable energy will generate 2,300 new jobs in our community
that is currently experiencing 31 % poverty.
The renewable energy systems we are working with are called the E-
Macrosystem. The E-Macrosystem is an integration of two proven
technologies in Solar Fuel Cell Regeneration and Waste Steam Reform
Systems combined to create a stand-alone, emissions-free 7.5 MW power
plant and manufacturing center. The MECLC E-Macrosystem national
exemplar can be replicated and exported for national and world-wide
use, solving problems of waste clean-up (e.g. agricultural, industrial,
medical and municipal waste streams), contributing emissions-free power
to power grid systems or remote locations where electricity is not
available, and fostering development of clean energy industry
everywhere. Utilizing the E-Macrosystem's capacity for marine
applications will be beneficial for military and domestic uses such as
delivering green power to hospitals.
We are requesting your support for our project. We are excited
about your vision for America's future; and we support you in your
pledge to bring our nation's leaders together to join us in our efforts
to effect real, meaningful change in our communities. I look forward to
discussing how we can bring these innovations to fruition to serve the
residents of Illinois and our nation.
______
Statement of John Huber, Secretary, National Association for Oilheat
Research and Education
Chairman Bingaman and Ranking Member Domenici, on behalf of the men
and women who deliver heating oil to consumers throughout the country
and our colleagues who continue to work to develop new more efficient
furnaces and boilers, we appreciate the opportunity to share our views
for clean energy and natural resources projects and programs that can
create green jobs and to stimulate the economy. Unlike many of the
suggestions you are likely to hear today, our recommendation can be
accomplished without any federal money, but will continue to provide
major benefits to consumers.
Next year, as part of a comprehensive energy bill, we urge this
Committee and the Congress as a whole to include the provisions of S.
3442, a bill introduced by Senators Reed and Snowe to reauthorize the
National Oilheat Research Alliance Act of 2008.
Congress enacted the National Oilheat Research Alliance Act of 2000
to authorize the heating oil industry to conduct a referendum to create
the National Oilheat Research Alliance (NORA) and to permit a small
fraction of the wholesale price of home heating oil to be set aside to
fund important research and development, energy conservation, safety,
training, and consumer education initiatives. Since its enactment in
2000, the Act has benefited millions of American consumers of home
heating oil, at no cost to the federal government. Some examples:
Energy Eficiency Improvements.--Working with Peerless Boilers
in Pennsylvania, NORA created the first American condensing
boiler, which is rated at 93 Annual Fuel Utilization Efficiency
(AFUE), seven points higher than the typical boilers found in
American homes, which have a rating of 86 AFUE. In cooperation
with Adams Manufacturing, NORA developed the Spartan condensing
furnace, which has a rating of 95 AFUE. Typical American
furnaces are rated at 84 AFUE.
Potential Annual Savings.--In cooperation with the New York
State Energy Research and Development Authority, NORA developed
a seasonal rating system for boilers. This system is designed
to show typical operation over the season, instead of at peak
operation. This research and the calculator developed from it
shows that many homeowners could reduce their consumption
substantially, saving between $20,000 and $40,000 over a
twenty-year period.
Education and Safety.--No energy efficiency improvements can
make it to the consumer without a strong push. To that end,
NORA developed an energy efficiency certification, the Gold
Certificate, that is designed to train technicians on how to
provide comfort, a safe system, and improve the energy
efficiency of the home. To date, over 1000 technicians that
have been certified.
In addition, NORA has developed a simple test for evaluating the
safety of tanks based on EPA's tests for commercial systems. With this
simple inventory test, tanks can be inspected and evaluated for $80-100
versus the current norm of $400-500.
NORA conducted testing with Underwriters Laboratory to determine
whether biofuels could be safely used in heating equipment. This study
has encouraged manufacturers to extend warranty coverage to systems
using biofuels, and will be used to redefine heating oil as containing
biodiesel.
The Reed-Snowe bill would improve the operation of NORA and ensure
that the heating oil industry and consumers can continue to reap the
benefits of the check-off program. First, the proposed legislation
would eliminate the sunset provision, which otherwise will require that
the Act be reauthorized every five years. Eliminating the sunset
provision will ensure continuity of contracts, and allow for long-term
planning and initiatives, without the uncertainty caused by the need
for frequent reauthorization measures. Second, the definition of
oilheat would be expanded to include blendstocks used for home heating,
including new cleaner biofuels. Third, the funding mechanism would be
modified to bring it into conformity with the propane check-off
program. Finally, the bill makes technical changes to address problems
identified since 2000 (e.g, establishing a mechanism for additional
States to join).
The Reed-Snowe bill would provide the best means for enabling the
heating oil industry to finance R&D, training, safety, and consumer
information without the use of federal tax dollars. We thus urge you to
include the provisions of S. 3442 as part of a comprehensive energy
bill next year.
______
A National Proposal for a National Forest Watershed Restoration Corps
INTRODUCTION
Congress once again is considering an economic stimulus package. As
part of this package, Congress has the opportunity to put people back
to work while accomplishing comprehensive restoration of our national
forest watersheds. Public investment in restoration can sustain
American families whose lives and work are tightly connected to our
national forests; restore needed natural infrastructure and reclaim
unneeded roads; make forests more resilient and adaptable to the
unknown consequences of climate change; and assist the Forest Service
and other federal natural resource stewards to meet basic environmental
responsibilities, which has been increasingly difficult due to severe
budget cuts over the last eight years. In sum, investing in forest
watershed restoration will have tangible, long-term human and
ecological benefits.
THE PROPOSAL
Create a Forest Watershed Restoration Corps within the Forest
Service funded at $500 million over the next two years to decommission
forest roads, repair fish culverts and maintain forest roads used for
recreation and administration. A Forest Watershed Restoration Corp can
provide jobs in communities adjacent to national forests through
contracts to local community members to complete restoration work and
also create staffing opportunities within the Forest Service, such as
term appointments that may be made permanent if the Forest Service's
budget is restored in subsequent years.
The Forest Watershed Restoration Corps could be analogous to a
small-scale Civilian Conservation Corps (CCC), the most popular program
of the New Deal, also referred to as Roosevelt's ``Tree Army.'' The
economic situation today isn't as dire as it was in the thirties when
the CCC employed a half million young men. Nevertheless, the creation
of jobs in rural areas is urgently needed. Providing funds for rural
businesses and workforce development over several years creates
economic stability in an important but often overlooked part of America
during an economic downturn that may to last for a decade or more.\1\ A
short-term, quick payout stimulus package does not necessarily provide
the type of support that will bolster rural families and communities
adjacent to our national forests during these difficult times.
---------------------------------------------------------------------------
\1\ Phillips, Kevin. 2008. Bad Money: Reckless Finance, Failed
Politics and the Global Crisis of American Capitalism.
---------------------------------------------------------------------------
THREATS TO OUR NATIONAL FOREST WATERSHEDS
Healthy forests are essential to rural communities, biotic
communities and our planet. Large intact and functioning forest
ecosystems provide clean drinking water for more than 60 million
Americans; habitat for fish and wildlife; recreational opportunities
for the public; and a place of solace and inspiration to those who
visit. Healthy, restored forest watersheds are better able to adapt and
respond to climate change, ensuring clean water for the long term.
Further, forests are critical for sequestering carbon and they aid in
the moderation of temperature.
One of the most significant threats to forest watersheds and their
biotic communities is failing forest roads. Deteriorating, unmaintained
and poorly designed national forest roads harm fish through the chronic
contribution of sediments into forest streams. Many of these fish are
threatened and endangered under the Endangered Species Act. The same
sediment fouls drinking water and increases the need for communities to
build expensive water filtration systems. Unmaintained roads,
especially in mountainous regions, are more likely to fail in severe
storm events, contributing massive amounts of sediment to streams. In
2006 and 2007 alone severe storms in the Pacific Northwest led to
massive road failures and road-triggered landslides, resulting in tens
of millions of dollars of damage to public and private lands. Storms
such as this are becoming more common because of climate change, even
further bolstering the need for an investment in restoration now.
When undermaintained roads fail, outdoor enthusiasts and even
citizens with private in-holdings lose access to the forest until those
roads are repaired. It costs far more to fix the roads after they fail,
and to clean up the damage (much of which is irreparable), than to
address problems prior to road failures. Roads spread invasive pests,
plants and pathogens, fragment important wildlife habitat and
dramatically change hydrologic and aquatic conditions.
Currently, at best, only 36%\2\ of the twelve western states'
national forest roads are maintained to ``standard.'' These twelve
states contain more than 85% of the entire National Forest road system.
The Forest Service never planned for or assessed the impact of this
extremely limited maintenance capacity on forest and water resources,
and the impact becomes exponentially more significant each year. In
2001, the Forest Service estimated that it could remove nearly half of
its entire road system\3\ (up to 186,000 miles out of the total 380,000
mile system), while still meeting the resource and recreational needs
of forest users. Many of these roads were built for obsolete logging
systems and now are heavily overgrown and prone to landslides from
heavy rains or snowmelt. This year the Forest Service determined that
approximately 25,000 miles of existing Forest Service roads suitable
for passenger vehicles are necessary to access developed recreation
sites, key trailheads, visitor centers, and state or private land
developments. There is ample opportunity to put people to work
restoring watersheds and remediating road problems.
---------------------------------------------------------------------------
\2\ United States Department of Agriculture, Forest Service. 2006.
U.S. Forest Service Annual Road Assessment Reports.
\3\ National Forest System Road Management Rule and Policy. May
2001.
---------------------------------------------------------------------------
Removing unneeded, ecologically damaging roads is the first and
most critical step towards watershed restoration. Repairing culverts to
restore fish passage, in combination with performing critical
maintenance, is imperative for those roads that we need to keep. We
have an obligation to restore watersheds to provide the resiliency and
adaptability necessary to respond to the impacts of climate change and
the associated increase in storms and flooding.
THE ECONOMIC CONTEXT
The Forest Service estimates their road maintenance backlog at
nearly $8 billion\4\--although when administrative and indirect costs
are included the backlog actually totals closer to $10.3 billion.\5\
Shrinking budgets have ensured that each year the Forest Service slips
further behind in its responsibility to maintain its road system.
---------------------------------------------------------------------------
\4\ United States Department of Agriculture, Forest Service. 2004.
Fiscal Year 2005 Forest Service Budget Justification. sec. 10, p.33.
\5\ Taxpayers for Common Sense. March, 2004. Road Wrecked: Why the
$10 billion Forest Service Road Maintenance Backlog is Bad for
Taxpayers.
---------------------------------------------------------------------------
Over the last twenty years timber sales--which used to provide much
of the revenue for road maintenance--have declined. But even when
timber receipts were at their highest, the Forest Service was not able
to fully maintain its road system. Road obliteration can be extremely
costly, with medium-sized and major roads ranging from $40,000-$70,000
and $100,000-$250,000 per mile respectively.\6\ Costs are even higher
in the Pacific Northwest due to high rainfall and the steep grade of
the land. That said, many forest roads are small-sized and numerous
forests have been able to reclaim roads for approximately $10,000 per
mile.
---------------------------------------------------------------------------
\6\ United States Department of Agriculture, Forest Service. 2000.
Forest Service Roadless Area Conservation: Final Environmental Impact
Statement.
---------------------------------------------------------------------------
National forests were and are an important source of jobs in rural,
resource-dependent communities but declining timber harvests cause
challenges for rural economies. A recent report from the Western Wood
Products Association predicts the decline in timber jobs will continue
in the upcoming years as housing starts stall. The Association points
out that over the last three years demand for lumber has declined by 20
billion board feet--the amount that all the western mills produced in
2005 alone. The current financial crisis will hit these communities
very hard.
Investing in a comprehensive watershed restoration program can
provide people in rural, resource dependent communities with the same
high-wage, high-skill jobs derived in the past from building roads or
extracting timber. Since these jobs require the very same heavy
equipment needed to build roads, and since that machinery is expensive
to transport, the jobs are most likely to go to local workers. Local
workers will spend the bulk of their paychecks directly in their own
communities. Furthermore, this work will encourage local contractors
and workers to make long-term investments in equipment and training.
An infusion of $250 million a year can create 3500 direct jobs in
the rural West, in addition to any other jobs that are sustained or
created through multiplier effects. We believe such a program could be
viable for decades to come as it will take decades, at minimum, to
address the backlog of maintenance needs and road decommissioning
projects to restore functioning, dynamic, resilient watershed
conditions on our national forests.
With the decline in the forest products industry, many of the
skilled workers required to restore the forest have been or soon will
be lost to emigration or attrition. In order to maintain an essential
skilled workforce we suggest that all contracts require some portion of
the workers to be enrolled in a state recognized apprenticeship
program.
PROGRAM IMPLEMENTATION
The Forest Watershed Restoration Corps program would need to
immediately hire staff to begin planning and implementing projects.
While there are numerous remediation and reclamation projects that have
already undergone environmental review under the National Environmental
Policy Act (NEPA) and other applicable resource protection statutes,
there is also a significant need to increase planning capacity to
ensure a steady supply of NEPAready projects over the long-term. Lack
of fully planned and reviewed projects is currently one of the main
impediments to building a strong restoration program in the agency,
while the second primary impediment is a lack of restoration funding.
This proposal could directly address both of those challenges.
As part of the immediate job creation opportunity of this economic
stimulus, we believe the Forest Service will need to staff up to
implement a Forest Watershed Restoration Corps and that each of the
approximately 150 national forests, proportional to their need, will
need to hire at least one of each of the following:
a trained contracting specialist
an individual capable of overseeing NEPA project planning
a geoengineering, hydrologist, geomorphologist or soils
engineer for contract implementation oversight
either a fish or wildlife biologist
Furthermore, we recommend that since these projects are entirely
restorative in nature that the NEPA process can be facilitated for most
projects by the appropriate use of categorical exclusions for project
implementation.
The 600 Forest Service positions referenced above could be filled
as temporary, professional appointments that could be converted to
permanent if funds become available. Forest Service jobs would consume
less than a fifth of the $250 million requested annually from an
economic stimulus package and still provide an extensive infusion of
funding for local contractors and rural workers.
While all forests can immediately take advantage of planning funds
to hire new staff, implementation funds could be prioritized based on
climate and elevation depending on when a stimulus package is adopted.
Forests in the south, for example, will be able to engage in
remediation and restoration projects in the winter, while more northern
or high elevation forests will be required to wait until spring to
begin implementation.
The program will provide real jobs to former road builders,
primarily excavator and bulldozer operators and qualified on-the-ground
inspectors. These types of workers have not only been displaced by the
timber industry, but they are also feeling the pinch from the decline
in housing starts, as many excavator operators also work in that arena.
But even experienced heavy equipment operators will need some
retraining in both the science and art of road reclamation, so there
will also be opportunities to develop watershed restoration training
and certification programs that can ensure that this work is done
effectively and efficiently on the ground--guaranteeing that the
results are beneficial for watersheds. Companion funding could also be
provided to develop a systematic, comparative area monitoring program
through the agency's research branch or through universities to ensure
that new technologies are being tested and monitored for effectiveness.
A timely infusion of funding through the stimulus program could help
kick start new careers in watershed restoration while simultaneously
bolstering the growing restoration economy.
building on the legacy roads and trails remediation initiative
The Interior portion of the Fiscal Year 2008 Consolidated
Appropriations bill provided $40 million ``for urgently needed road
decommissioning, road and trail repair and maintenance and associated
activities, and removal of fish passage barriers, especially in areas
where Forest Service roads may be contributing to water quality
problems in streams and water bodies which support threatened,
endangered or sensitive species or community water sources and for
urgently needed road repairs required due to recent storm events.''
Legacy Roads funding was distributed nationally and as a result a
new watershed restoration program began last year within the Forest
Service. At that rate of funding it will take 100 years for the Legacy
Roads program to work through the $10 billion road maintenance backlog.
We need a new approach to restore our watershed and assist people in
rural, resource dependent communities and the economic stimulus package
could provide the impetus to solve these problems.
CONCLUSION
The Forest Watershed Restoration Corps provides both an economic
and ecological solution to pressing problems in our forests and near-
forest communities. As with the CCC, the Forest Watershed Restoration
Corps has the potential to provide employment in nearly every state of
the nation and as importantly, to enable people to feel good about the
work they are doing and the positive difference they are making to
forests and streams. The need to restore our national forests is
critical at this time of global uncertainty, and people will be proud
of the contribution they make to protect our drinking water, fish and
wildlife, recreational opportunities and climate.
The undersigned* strongly urge you to provide $500 million over two
years to create a Forest Watershed Restoration Corps to provide jobs in
rural communities and improve the health of our forest watersheds. We
request that this proposal is included in the final economic stimulus
package developed in 2009. We appreciate your consideration of this
proposal.
---------------------------------------------------------------------------
* Additional signatories have been retained in committee files.
---------------------------------------------------------------------------
Sincerely,
Jim Furnish,
Retired Deputy Chief, USDA Forest Service, Maryland.
John Horning,
Executive Director, WildEarth Guardians, New Mexico.
Dan Miller,
Executive Director, Bear River Watershed Council, Utah.
______
Statement of the National Conference of State Historic
Preservation Officers
The National Conference is the association of the gubernatorially
appointed State officials who carry out the National Historic
Preservation Act (16 USC 470) for the Secretary of the Interior and the
Advisory Council on Historic Preservation.
Historic preservation makes important contributions to energy
efficiency by encouraging people to live and work in existing, historic
buildings supporting an energy conserving life-style. Historic
preservation is the stewardship of the built environment that uses
historic buildings and communities to achieve environmental, economic
and cultural sustainability. Historic preservation's tax credit
stimulates the economy at a rate of $4 billion in private investment
annually, development that meets the needs of the present without
compromising the ability of future generations to meet their own needs.
HISTORIC PRESERVATION = SUSTAINABILITY
Reusing and retrofitting historic buildings, and reinvesting in
older and historic neighborhoods, offers a sustainable way to reduce
waste and carbon emissions and bring back prosperity to once thriving
neighborhoods. Research suggests that many historic and older buildings
are actually more energy efficient than more recent buildings because
of their site sensitivity, quality of construction and use of passive
heating and cooling. While there is still room for improvement, recent
historic rehabilitation projects are demonstrating that energy
efficient retrofits can be done in ways that are sensitive to the
historic nature of the building.
The historic preservation community is working with the U.S. Green
Buildings Council to better recognize preservation and reuse in their
Leadership in Energy and Environmental Design (LEED) rating system. The
common mantra of ``new is better'' continues to be a challenge to
overcome. However, the SmithGroup of Detroit decided to challenge that
way of thinking when it renovated the Lansing, Michigan-based Christman
building--the first building to earn dual LEED Platinum certification
for both construction and for its interior. Built in 1928 and siting on
a brownfield site, the former Mutual Building is listed on the National
Register of Historic Sites. This stately historic building is now a
``green'' building suited for modern office use.
The National Conference has a two part agenda for historic
preservation's role in a clean, green, stimulus.
IMMEDIATE AGENDA
Within four months of passage of an economic stimulus bill,
generate 15,000 jobs and over $50 million in private investment for the
rehabilitation of historic buildings in every State across America
through a $50 million withdrawal from the unobligated balance of the
Historic Preservation Fund. Amendment of Section 108 of the National
Historic Preservation Act would allow direct funding.
It is well documented that building rehabilitation outperforms new
construction in creating economic activity. For example, if a community
is considering spending $1 million in new construction or $1 million
for a building rehabilitation project, the rehabilitation choice would
have several advantages:
$120,000 more dollars will initially stay in the community;
Five to nine more construction jobs will be created;
4.7 more new non-construction jobs will be created;
Household incomes in the community will increase by $107
more than they would under the new construction project;
Retail sales in the community will increase by $142,000 as a
result of the $1 million rehabilitation expenditure--$34,000
more than they would under the new construction funds; and
Real estate companies, lending institutions, personal
service vendors, and eating and drinking establishments will
all receive more monetary benefit from the rehabilitation than
the new construction. (Rypkema, 1998)
State Historic Preservation Officers have a solid track record of
quickly turning grant programs into construction projects. It took the
SHPO three months from the date of the National Park Service notice to
initiate Katrina recovery grants (grant announcement, ranking and
review of applications, grant awards), a far quicker turn around than
other federal agencies.
LONG TERM AGENDA
The historic preservation community including the NCSHPO, The
National Trust for Historic Preservation, The National Association of
Preservation Commissions and Preservation Action has identified a
legislative agenda, combining sustainability and historic preservation
principles, that will create green jobs, stimulate the economy and
preserve our nation's heritage. The key policy principles include:
Improve energy efficiency in buildings include historic
preservation through a homeowner federal income tax credit for
energy retrofits and through manufacturer's incentives for
energy efficient product development.
Maximize the contribution of a skilled historic preservation
labor force historic preservation to the green economy through
job training in historic rehabilitation crafts.
Global climate change causes natural disasters that require
in-place response mechanisms for historic community recovery
including identification of where the historic sites in at-risk
places are and an in-place mechanism for restoration recovery
grants.
Infrastructure rehabilitation is critical to the
sustainability of our historic urban and rural communities.
Expand resources for the National Historic Preservation
Program. Increasing resources is critical to providing
infrastructure support needed for the stewardship and
sustainability of the built environment.
The NCSHPO looks forward to working with the committee to pass
legislation based on the above listed sustainable preservation
policies, which will benefit our nation's economy, environment, and
historic heritage.
Thank you.
______
Statement of Fred Mondragon, Cabinet Secretary, New Mexico Economic
Development Department, Sante Fe, NM
Thank you for your tireless leadership on behalf of New Mexico's
citizens and our national energy needs. This letter provides input on a
possible green jobs component of the economic stimulus package being
formulated in Congress.
New Mexico has many assets in the areas of renewable energy. energy
efficiency and the ``green grid'' that can be leveraged to create jobs.
The New Mexico Economic Development Department is developing a Clean
Energy Economic Development Strategy, and considers this sector to be a
critical area for stimulus, as well as for long term economic growth
for the state. As you know, New Mexico has:
The second best developable solar resource in the country,
5th best inland wind resource, and significant geothermal
potential located on abundant open land. As a small state, New
Mexico has the potential to be a power exporter which will
strengthen our national energy independence and generate jobs
for our citizens:
The New Mexico Renewable Energy Transmission Authority,
which will help deliver our renewable electricity to market;
An existing cluster of solar and other clean technology
manufacturing firms,
World-class renewable energy and ``smart grid'' research
capabilities at our national labs and universities, an
established venture capital conmmnity, and an emerging focus on
commercialization that can generate new startup companies;
The Southwest Biofuels Association and leading research
capabilities on biofuels from feed stocks that can be grow on
arid lands.
A WIRED workforce grant, nationally recognized solar and
wind training programs, and an emerging statewide, cross-sector
Green Jobs Partnership that will coordinate green workforce
development efforts;
Below are opportunities for investment in New Mexico's Clean Energy
Economy that I encourage you to consider for inclusion in the stimulus
bill and upcoming energy legislation.
FUNDING FOR RESEARCH AND DEMONSTRATION OF ``GREEN GRID'' SOLUTIONS
The State of New Mexico has organized a consortium of national
laboratories, universities. utilities and companies involved in ``green
grid'' solutions across the state. This consortium is preparing a
proposal for state and federal funding to make New Mexico a national
research and demonstration center for the technology and systems that
modernize our grid, ensuring reliability, creating efficiencies and
supporting the presence of significant renewable generation sources,
both utility-scale and smaller distributed sources. Solutions developed
in New Mexico can be deployed across the country and will generate
high-wage jobs for our state.
INVESTING IN TRANSMISSION LINKING AREAS OF DIVERSE, HIGH-VALUE
RENEWABLE ENERGY IN NEW MEXICO WITH LOAD CENTERS IN OTHER STATES
As a state with nation-leading renewable energy resources and a
small population, New Mexico has the potential to be an exporter of
electricity to other states. Exporting New Mexico's electricity is a
win-win proposition: other states get the renewable energy they need,
our nation becomes more energy independent, and New Mexico gets
valuable jobs that can never be sent overseas. Across the region, we
are working with the Western Governors' Association to identify Western
Renewable Energy Zones that will identify high-value areas in need of
new transmission capacity. Federal transmission investments are needed
to connect these Renewable Energy Zones to load centers. I encourage
Congress to consider investments in our transmission infrastructure to
bring renewables to market. The federal government can also play an
important role in removing regulatory impediments to the development of
renewable resources and associated transmission lines.
ESTABLISHING A NATIONAL RENEWABLE PORTFOLIO STANDARD
New Mexico has already demonstrated leadership in promoting
renewable energy by establishing to state-level Renewable Portfolio
Standard. I encourage you to establish a national RPS. Such a standard
would dramatically increase demand for renewable electricity and
provide a greater market for New Mexico's clean energy resources.
funding for energy efficiency and clean energy projects
State and tribal grants for energy efficiency and clean energy
projects would be well spent in New Mexico. Energy efficiency and
weatherization funding, particularly targeting low-income citizens,
creates jobs and ensures our citizens are living in homes that are
safe, comfortable and affordable in the face of rising energy prices.
The U.S. Department of Energy estimates that 52 jobs are created for
every $1 million spent on energy efficiency and weatherization.
Furthermore, funding should be included for clean energy projects
including solar thermal and solar photovoltaic projects, wind projects,
geothermal projects and Combined Heat and Power systems. The Renewable
Energy Policy Project has calculated that both solar and wind power
create 40% more jobs than coal power for an equivalent amount of power.
Investing federal dollars will produce jobs, foster energy
independence, and drive system costs down.
INCENTIVES FOR RENEWABLE ENERGY PRODUCTION AND SYSTEM
COMPONENT MANUFACTURING
The Renewable Energy Production Tax Credit (PTC) and the Solar
Investment Tax Credit (ITC) have been effective tools for supporting
New Mexico's growing clean energy industry. In the solar industry
alone, the Energy Industries Association has estimated that extending
the ITC through 2016 would create 19,000 new jobs in New Mexico, This
is the highest employment gain from an ITC extension in the nation as a
percentage of state population.
New Mexico has a state Alternative Energy Product Manufacturer's
Tax Credit has that has been instrumental in attracting world-class
companies like Schott Solar to New Mexico. A similar federal credit
would facilitate their expansion and create new high-wage jobs.
Very recently, we have heard from some utility-scale renewable
energy developers active in New Mexico that the recession has reduced
the appetite of companies for tax credits which has made financing
these projects more challenging. Please take this into consideration
when determining how best to incentivize additional renewable energy
production.
INVESTING IN WORKFORCE TRAINING FOR THE GREEN JOBS THE FUTURE
A Green Jobs Partnership is forming in New Mexico to ensure that
our state has the prepared workforce it needs for a low-carbon economy.
Leveraging the investment and learning from the federal WIRED grant
that the state received, this Partnership will expand this model and
adopt it statewide. New Mexico plans to meet the needs of employers by
providing a workforce with nationally recognized certifications like
WorkKeys, MSSC-Certified Production Technicians, NABCEP certified solar
installers and certified wind technicians. Our state colleges will also
work to develop customized training programs for employers on a just-
in-time basis.
In order for New Mexico to truly benefit from the jobs created by a
federal stimulus package, a proportional federal investment in
workforce training will be needed. Furthermore, the creation of a
national Green Jobs Corps would help to expose our young people to
these jobs of the future and provide them with needed skills and
experience.
INVEST IN RENEWABLE ENERGY, BIOFUELS, AND LOW-CARBON
RESEARCH & DEVELOPMENT
Congress should support a substantial long-term federal investment
in basic and applied research and deployment of renewable energy,
biofuels, and low-carbon technologies. New Mexico's labs and
universities are well positioned to participate in this research.
New Mexico looks forward to working with you to ensure federal
investments have a maximum positive impact on New Mexico's economy and
our nation's energy independence. Thank you again for your leadership
at this important time.
______
Statement of Peabody Energy
Thank you to Chairman Bingaman, Senator Domenici, and the Members
of the committee for the opportunity to submit comments on how the
buildout and continuing support of substitute natural gas (``SNG'')
production can also help stimulate the economy and provide
environmental and national security benefits.
In comparison to oil and gas, coal is abundant both worldwide and
in the United States, Worldwide coal reserves are 4 times greater than
oil and gas reserves combined. Perhaps more importantly, although the
U.S. has less than an estimated 3% of the world's oil and gas reserves,
it has 27% of the world's coal reserves, revealing an obvious national
security advantage for the domestic consumption of coal. The Energy
Information Administration has estimated that the United States has a
coal reserve that will hold out, even in the face of growing energy
demands, for 250 years.
We now have the capability of transforming this vast domestic
resource into SNG, a product that is fungible with our current natural
gas supply, thus immediately ready to be put into pipelines and shipped
to heat homes, warm our water, prepare our meals, create clean
electricity, and serve any of the other purposes of natural gas. The
process in which SNG is transformed from coal to this versatile gas
also is capable of capturing more than 90% of the carbon dioxide that
ultimately could be permanently stored or used for enhanced oil
recovery, creating a superior environmental product. Notably, the
technology used to capture the carbon dioxide in the SNG process is a
tested and proven technology and does not carry risks sometimes
associated with other generations of carbon capture technologies. And
with natural gas demand expected to grow more than 10 percent over the
next two decades, SNG production also has immeasurable national
security benefits by providing a domestic source of energy which would
likely otherwise be procured from abroad. It is projected that about
75% of the increase in demand over this time will be met with foreign
sources of natural gas as the domestic production is at or near its
peak. (See slides in first addendum for more information regarding the
high cost of natural gas.)*
---------------------------------------------------------------------------
* Addenda 1-2 have been retained in committee files.
---------------------------------------------------------------------------
The economic benefits of incentives for SNG production are
manifest. Generally speaking, although certain policies and significant
startup costs have hampered SNG production, long term increases in high
oil and natural gas prices, along with environmental concerns have made
buildout of SNG production facilities a reality. Peabody Energy, along
with ConocoPhillips, has just announced plans to build the world's
premier SNG facility in Muhlenberg County, Kentucky. (See press release
and project overview in second addendum.) This project will create 1200
construction and 500 long term jobs in the region. In addition, it will
provide up to $100 million annually in local and state economic impact
through wages, taxes and other benefits. Several other similar projects
have been planned and, if given a stimulus-related benefit, could
likely come to fruition relatively quickly. Fundamentally, SNG
production is a boon to the economy as it takes low-value feedstocks
and converts them into high value products.
So how does it work? During the gasification process, coal is
ground into small particles and mixed with water. This mixture is
injected into a pressurized vessel along with a controlled amount of
pure oxygen. The heat inside the gasifier converts the coal, water and
oxygen into synthesis gas comprised primarily of hydrogen and carbon
monoxide. After removing any sulfur and carbon dioxide from the
synthesis gas, the hydrogen and carbon monoxide react to create
methane, or substitute natural gas. Specific environmental benefits
include:
The process captures over 90 percent of the feedstock carbon
dioxide that ultimately could be permanently stored or used for
enhanced oil recovery.
The process can cost-effectively remove 90-95 percent of the
mercury in coal.
Over 99 percent of the sulfur from the process can be
recovered and marketed for use in the fertilizer industry.
The gasification process produces no ash and recycles
byproduts into useful products including road construction
materials.
In order to capitalize on the many benefits that SNG can bring to
this country's energy portfolio, we recommend:
Specifically including SNG production and investment in tax
credits such as the section 45 production tax credit and the
section 48B investment tax credit for advanced coal
technologies.
Additional tax credits for carbon capture and storage as
well as credit for the use of captured carbon dioxide for
enhanced oil recovery operations.
Incentives for additional investment in carbon capture and
storage infrastructure in order to allow such capture and
transportation to storage.
Timely creation of workable regulatory and legal schemes for
carbon capture and storage as well as enhanced oil recovery.
Thank you very much for your attention to these critical issues and
your willingness to consider how this revolutionary technology can
create jobs, provide an environmentally sound energy resource, and
increase our national security.
______
Statement of the Water Resources Coalition
Mr. Chairman, Ranking Member Domenici, and members of the
Committee, the Water Resources Coalition is submitting this statement
for inclusion in the record of your December 10, 2008 hearing on how
infrastructure investment will lead our economy down the road to
recovery through the creation of green jobs.
The Water Resources Coalition was established in 2007 to promote
the development, implementation and funding of a comprehensive national
water resources policy. With member organizations representing state
and local governments; conservation, engineering, and construction;
ports, waterways, and transportation services, the Coalition works to
ensure that a comprehensive, national water resources policy is
developed, implemented, and funded to provide a sustainable, productive
economy; healthy aquatic ecology; and public health and safety. Because
of the breadth of the Coalition's membership, many of our members have
extensive experience with various types of federal, State, and local
water resources projects ranging from water supply to environmental
restoration, to storm damage reduction and navigation. At the federal
level, each of us works closely with both the Corps of Engineers and
the Bureau of Reclamation.
NEED FOR SUSTAINABLE INFRASTRUCTURE
The Water Resources Coalition believes investment in water
infrastructure projects is an investment in our economy and in the
protection of our environment. The Coalition believes in comprehensive
water solutions, rather than solutions that are aimed exclusively at
protecting environment or water supply. Protecting one or the other
exacerbates both as they are repeatedly in conflict with one another.
Protecting only one aspect of our water system is not sustainable and
threatens, rather than improves, our economy. Investments in
sustainable infrastructure projects will not only immediately stimulate
our economy through job creation in the construction sector, but will
also provide reliable, long-term water supplies. Additionally, many
projects are designed to reduce stressors on our natural resources and
ecosystems, working to protect our environment from drought and
protecting threatened species. The pending water crisis in California,
which has set in opposition California water supply versus the
endangered delta smelt, provides an example of how relying on outdated
infrastructure sustains conflict and demonstrates the need for new,
sustainable infrastructure for the protection of the environment and
reliable water supply.
STATE OF THE ECONOMY
The recent financial crisis has hampered the ability of state and
local governments and public agencies to borrow short term, delaying or
eliminating various infrastructure improvement projects. At the state
and local level, budgets have declined significantly because of the
decline in home values, resulting in lower property tax collections.
The recent financial crisis has also hampered the ability of state and
local governments and public agencies to borrow short term, delaying or
eliminating various infrastructure improvement projects. According to
Municipal Market Advisors, a consulting firm that specializes in
municipal bonds, $100 billion of new infrastructure projects have been
delayed because of the constricted credit markets.
The impact of fewer contracts being bid is reflected in increasing
nationwide unemployment numbers. Non-residential construction
employment peaked in January 2007 and has steadily decreased over the
past 24 months. There was more than a four percent decrease in these
jobs over that period, which equates to 180,000 construction employees.
It is estimated that an additional loss of 10 to 15 percent nationwide
is possible if the economy does not turn around. That could add another
27,000 more lost jobs to the 180,000 lost over the last 24 months.
It is estimated that every $1 billion invested in infrastructure
projects would create or sustain over 28,500 new direct and indirect
jobs. Each billion invested would add about $3.4 billion to the Gross
Domestic Product (GDP) as it ripples through the economy and about $1.1
billion to personal earnings.
BUREAU OF RECLAMATION
Within the Bureau of Reclamation, there continues to be an unmet
need for federally funded projects to meet and maintain reliable water
supply throughout the West. The Coalition suggests the Economic
Recovery program include additional funding into Reclamation's drought
and water conservation programs: the Title XVI Water Reclamation and
Reuse Program; its authorized Rural Water Projects; and the Colorado
River Salinity Control Program. We believe there should also be a
greater emphasis to drought preparedness and the expected challenges
from climate change with regard to the Reclamation program and the role
of the existing projects constructed by Reclamation. Though not
directly related to greater job generation at this time, we feel this
Economic Recovery is an important opportunity to be forward thinking
with regard to preparing for the future.
We see an unmet need for greater integrated resource planning and
water resource planning in the West. The Bureau has played an important
role in the development of the 17 western states over the past one-
hundred years. We were greatly concerned with the almost $200 million
reduction in the FY 2009 Reclamation program as proposed by the
administration. When the Water and Related Resources (construction)
account of the Bureau is examined, 51 percent of the funding is now for
facility maintenance and rehabilitation. The Coalition recognizes the
importance of such investment given the aging of the infrastructure and
the harsh climatic conditions of the western United States and the ease
of using Economic Recovery funds to address maintenance. Nevertheless,
that funding only leaves about $250 million for the construction work
in the water and energy component of the program--a program with a
significant backlog of authorized work that holds the potential for
meeting critical water needs in the West.
Title XVI
The Coalition also supports the increased fusion of funds for the
Bureau of Reclamation's Water Recycling and Reuse Program, known as
Title XVI. This program funds recycling and reuse projects throughout
the West. In the Western U.S., drought, population growth, increasing
climate variability, and ecosystem needs make managing water supplies
especially challenging. Water reuse projects provide a valuable source
of water and help alleviate conflicts. These projects are a sound and
critical investment in creating jobs, addressing drought concerns and
helping local economies.
In California, water recycling projects throughout the state help
to reduce dependence on imported water from both the Lower Colorado
River and Sacramento/San Joaquin Delta. In the San Gabriel Basin and
elsewhere, these projects are also designed to clean up contaminated
groundwater. There are an estimated $500 million worth of projects
throughout the State that could begin within 120 days of receiving
funds. Nationally, the Bureau of Reclamation estimates a $655 million
backlog in funding for 45 projects across nine western states.
Estimates indicate these types of water construction projects generate
between 30,000-40,000 jobs per billion invested.
Rural Water
There continues to be an unmet need for reliable water supply in
rural areas across the United States, particularly in the Great Plains
states and throughout the Southwest. The Coalition supports the
Economic Recovery package providing funding for the existing authorized
projects in the Bureau's construction program, especially those
associated with meeting the needs of the Native American community.
Colorado River Basin Salinity Control Program
The Coalition would also request that additional funding for the
Colorado River Basin Salinity Control Program be provided to further
advance this important program for meeting water quality needs in the
seven Basin states and Mexico. Salinity damages to municipal and
agricultural water users of Colorado water are currently over $300
million per year. Municipal users in southern California are being
particularly hard hit because salinity limits their ability to reuse
wastewater to meet increasing demands on water supplies. The salinity
program is designed to meet the Colorado River Basin Water Quality
Standards. These standards include a plan of implementation to mitigate
further degradation of water quality in southern California, Arizona,
Nevada, and deliveries to Mexico. The goal of this program is to seek
cost-effective, regional solutions to the program.
Thank you for this opportunity to comment. The Water Resources
Coalition looks forward to working with the Committee on this critical
issue.
______
Statement of the Interstate Mining Compact Commission and the National
Association of Abandoned Mine Land Programs
This statement is submitted on behalf of the Interstate Mining
Compact Commission (IMCC) and the National Association of Abandoned
Mine Land Programs (NAAMLP) concerning the issues addressed by the
Senate Energy and Natural Resources Committee at a hearing on December
10, 2008 regarding proposed investments in clean energy and natural
resources projects and programs designed to create green jobs and
stimulate the economy. The states and tribes represented by our
organizations are prepared to work with Congress and the Administration
to put moneys made available under an economic stimulus package to work
on the ground to address the cleanup of abandoned mine lands, an
investment that will not only create green jobs but will also
significantly improve the environment, protect public health and
safety, and stimulate local economies. We appreciate the opportunity to
submit this statement.
The Interstate Mining Compact Commission (IMCC) and the National
Association of Abandoned Mine Land Programs (NAAMLP) are multi-state
governmental organizations that together represent some 30 mineral-
producing states and Indian tribes, each of which implements programs
that regulate the environmental impacts of both coal and hardrock
mining. Many of these programs involve delegations of authority from
the federal government pursuant to national environmental laws such as
the Surface Mining Control and Reclamation Act, the Clean Water Act and
the Resource Conservation and Recovery Act. Under these statutes, the
states exercise primary responsibility for the permitting and
inspection of the affected mining operations, for the enforcement of
applicable environmental performance standards, and for the protection
of public health and safety.
The development of our Nation's mineral resources is a critical
component of our national well-being and security. Our manufacturing
activities, transportation systems and the comfort of our homes depend
on the products of mining. At the same time, it is essential that an
appropriate balance be struck between the need for minerals and the
protection of the public health and safety and the environment. Over
the past 40 years with the passage of sweeping national environmental
laws, the states and Indian tribes have taken the lead in fashioning
and then implementing effective programs for the regulation of mining
and its impacts, including the cleanup of inactive and abandoned mine
lands. As we face new challenges associated with homeland security,
climate change and alternative energy sources, the importance of
mineral development will be heightened, as will the role of state and
tribal regulatory authorities.
Another significant opportunity in which the states and tribes can
play a major role is the development of projects and programs to create
green jobs and thereby stimulate the economy, which is the subject of
the Committee's hearing. As we will explain in further detail below,
the cleanup of inactive and abandoned hardrock mines across the country
presents an opportunity to create jobs that will directly improve the
environment in many ways. The states and tribes have a plethora of AML
projects ``on the shelf'' that could benefit from immediate funding and
that would generate jobs for America's work force. We believe that
nationwide, upwards of $250 million could be spent over the next 18--24
months to address hardrock AML sites and thereby benefit the
environment and stimulate the economy.
Nationally, abandoned mine lands continue to have potentially
significant adverse effects on the environment. Some of the types of
environmental impacts that occur at AML sites include subsidence,
surface and ground water contamination, erosion, sedimentation,
chemical release, and acid mine drainage. Safety hazards associated
with abandoned mines account for deaths and/or injuries each year.
Abandoned and inactive mines, resulting from mining activities that
occurred over the past 150 years prior to the implementation of present
day controls, are scattered throughout the United States. The sites are
located on private, state and public lands.
Over the years, several studies have been undertaken in an attempt
to quantify the hardrock AML cleanup effort. In 1991, IMCC and the
Western Governors' Association completed a multi-volume study of
inactive and abandoned mines that provided one of the first broad-based
scoping efforts of the national problem. Neither this study, nor any
subsequent nationwide study, provides a quality, completely reliable,
and fully accurate on-the-ground inventory of the hardrock AML problem.
Both the 1991 study and a recent IMCC compilation of data on hardrock
AML sites were based on available data and professional judgment. The
data is seldom comparable between states due to the wide variation in
inventory criteria. Nevertheless, the data do demonstrate that
nationally, there are large numbers of significant safety and
environmental problems associated with inactive and abandoned hardrock
mines and that cumulative remediation costs are very large.
Across the country, the number of abandoned hardrock mines with
extremely hazardous mining-related features has been estimated at
several hundred thousand. Many of the states report the extent of their
respective AML problem using a variety of descriptions including mine
sites, mine openings, mine features or structures, mine dumps,
subsidence prone areas, miles of unreclaimed highwall, miles of
polluted water, and acres of unreclaimed or disturbed land. Some of the
types of numbers that IMCC has seen reported in our Noncoal Report and
in response to information we have collected for GAO and others include
the following gross estimated number of abandoned mine sites: Alaska--
7,000; Arizona--80,000; California--47,000; Colorado--7,300; Montana--
6,000; Nevada--16,000; Utah--17,000 to 20,000; New York--1,800;
Virginia--3,000 Washington--3,800; Wyoming--1,700. Nevada reports over
200,000 mine openings; Minnesota reports over 100,000 acres of
abandoned mine lands and South Carolina reports over 6,000 acres. While
the above figures attempt to capture a universe of all abandoned mine
sites by state, the actual number of sites that pose significant
health, safety or serious environmental problems is likely far lower.
What becomes obvious in any attempt to characterize the hardrock
AML problem is that it is pervasive and significant. And although
inventory efforts are helpful in attempting to put numbers on the
problem, in almost every case, the states are intimately familiar with
the highest priority problems within their borders and know where
limited reclamation dollars must immediately be spent to protect public
health and safety or protect the environment from significant harm.
Estimating the costs of reclaiming hardrock abandoned mines is even
more difficult than characterizing the number of mines. If one accepts
the estimates of the number of AML sites, one can develop a very rough
estimate for the costs of safeguarding mine hazards and reclaiming
small surface disturbances. But the costs of remediating environmental
problems such as ground water and surface water contamination, acid
rock drainage or wind blown contaminants are extremely difficult to
estimate. And many of these problems will not even be detected unless a
thorough assessment and testing occurs at a site.
In an effort to quantify and forecast what states could spend as
part of an economic stimulus package that focuses on the cleanup of
abandoned hardrock AML sites over the next 18 to 24 months, IMCC
received the following information from the states:
South Dakota.--South Dakota has one major mining Superfund
site waiting for remediation. The Gilt Edge Mine Superfund Site
is located in the northern Black Hills, approximately four
miles from the town of Deadwood. Mining activities began at the
site in 1876 and continued intermittently for more than 100
years. The most recent owner of the site, Brohm Mining Company,
operated a large-scale, open pit, heap-leach gold mining
operation at the site from 1986 until 1999. Brohm affected 265
acres consisting of open pits, waste rock depositories, process
facilities, and a heap leach pad. This mining activity caused
significant acid rock drainage. In 1999 Brohm abandoned the
site and in 2000 the EPA listed the mine as a Superfund Site.
Work accomplished to date is the construction of a lime water
treatment plant for treating acid water and the capping of a
65-acre acid generating waste rock facility. EPA recently
issued a Record of Decision for the remediation of the rest of
the site which includes three pits, waste rock depositories, a
heap leach pad and process facilities. Remedial design is
estimated to take one year with the selected remedy emphasizing
site-wide consolidation and containment of mine waste. The
estimated cost for the remaining reclamation work is $50
million and it will take five to seven years to complete
depending on availability of funding.
Montana.--Potential abandoned mine projects for funding
total $31.7 million, with 202 persons projected to be employed.
These projects are outside of the current AML planning window,
but could be brought to construction within 18 months or less.
Projects include a bond forfeiture and a recent environmental
emergency, as follows:
--Engineered portal plug for Evening Star/Big Dick mine blowout and
discharge to Little Blackfoot River. (Powell County). $6.5
million, 20 employed.
--Silver Creek Tailings removal and stream reconstruction project
(Lewis and Clark County). $10 million, 40 employed.
--Basin Creek Mine closure--bond forfeiture bankruptcy. Lewis and
Clark and Jefferson Counties. $4.7 million. 50 employed.
--Winston Area Multi-site Mine Waste Repository and Reclamation
Project: East Pacific, Sunrise-January, Custer Millsite,
and Chartam Mine Sites (Broadwater County). $3.4 million 40
employed.
--Emery Mine Reclamation Project (Powell County). $5 million. 25
employed.
--Frohner and Nellie Grant Mine (Jefferson County) $1.5 million, 15
employed.
--Broken Hill Mine Reclamation Project (Saunders County). $.8
million. 12 employed.
Colorado.--The following projects address serious mine
hazards and environmental problems associated with abandoned or
inactive mines. The state and local community-based watershed
groups use the funding to develop and construct projects that
safeguard dangerous mine sites and to remediate environmental
problems associated with abandoned mines such as acid mine
drainage, and erosion of mine and mill waste piles into streams
and rivers. In addition these funds provide local economic
benefits by creating hundreds of jobs in Colorado's
construction industry. Every project dollar expended translates
into jobs in the construction, labor, equipment, materials and
service industries.
What follows is a very general list of the types of upcoming
projects. All are undergoing reviews related to NEPA,
landownership, state purchasing and contracting but could
quickly be on deck for final review and processing. Summary of
all of the projects below: $5-7 million dollars spent in the
construction and technical consulting industry. Translates
roughly into 500 jobs. (Would not necessarily be new jobs but
work for people already in the industry.)
BLM and USFS Safeguarding and Environmental Remediation Projects--
$2 million in 09. Colorado AML already partners with BLM, USFS
and NPS to contract and manage these projects. Colorado AML is
in a good position to assist with funding that would be granted
to these agencies for AML work in Colorado.
Safeguarding Hazardous Mine Openings Statewide in Colorado's
Mineral Belt areas: $1 million in 09--Several hardrock
safeguarding projects have been developed for this year. These
projects could be out to bid in the summer season for
completion in 2010.
Environmental Mine Site Reclamation--$2-$5 million. Projects in the
following river watersheds: Colorado, Animas, Arkansas, Rio
Grande, and South Platte--all related to remediation of
environmental problems associated with abandoned mines such as
acid mine drainage, and erosion of mine and mill waste piles
into streams and rivers. This will include funding to partner
with local watershed groups to expedite design and construction
of projects. Many watershed groups have projects outlined but
have never had significant funding to get them off the ground.
Through our watershed agreements we are all in a position to
manage and construct these types of projects.
Reclamation of Forfeited Mine Sites. $500,000--Projects statewide.
This funding is used to reclaim forfeited mine sites. Not
considered abandoned but inactive. There is not a solvent
company to clean up such sites, and the responsibility to
perform reclamation remains with the state.
Utah.--the state could spend $9,471,033 on six projects in
five rural counties for an estimated 93 new jobs if total
reclamation (as opposed to just physical safety hazard
abatement only) is allowed. Hazard abatement only would be
about $525,000 with 53 jobs created.
New Mexico.--the state has six projects with a total
estimated construction cost of $1.95 million that could be
undertaken within the 18--24 month time frame. There are two
additional projects with a cost of $750,000 that could also
likely meet the deadline. These costs are only for the
construction contracts, and do not include any costs for
investigation, evaluation, design or oversight. The projects
all involve noncoal and are on federal lands.
Wyoming.--In the next 18 months Wyoming can put $10 to $12
million worth of projects on the ground. The number of jobs
that would be involved is harder to estimate but based on
similar sized projects it would be around 75 people but less
than 100.
Arizona.--the state has Twenty-three (23) high-risk mine
sites with 81 openings which can be identified for closure in
the next 24 months. These areas typically have high use for
backcountry touring and off highway vehicle activities, and
recreational mineral collection by winter visitors, or are
located near populated areas. Many of the 23 mine sites has
several openings with depth's greater than 50 feet. These mine
sites are hardrock AML projects. The number of jobs created by
and through AML hardrock remediation is difficult to estimate
because, in general, the abandoned mines that need to be
addressed resulted from the efforts of small-time prospectors.
We would estimate the number of jobs created to be 50-100. This
number is subject to change once the momentum of closures
increases throughout the 24 month timeline. The estimated costs
are $810,000.
Alaska.--As one of several Minimum Program States, Alaska
has outstanding Abandoned Mine Land Inventory projects required
to protect public health and safety that are large enough in
size and cost to make accomplishment impractical without access
to larger blocks of funds, such as those the economic stimulus
package might provide. The projects that we can have on the
street and working within the next 18 to 24 months (or less)
would include the following for your consideration:
--Healy Creek Washplant Demolition--AMLIS AK000043SGA--this was the
site of a near fatal injury during the past summer and we
want to make sure there is no repetition. Cost $670,000
with 10 jobs created and roughly 200 tons of steel provided
for recycling. This site is near the entrance to Denali
National Park.
--Hydraulic Pit Highwall Mitigation--AMLIS AK000046SGA--this
represents a safety hazard with 200 to 300 foot highwalls.
Most of the exposure is actually during winter months when
recreational snowmachiners are blasting around at 70 miles
per hour in the nearly continuous darkness. AMLIS has this
feature on the books at a projected cost of over $28
million. By utilizing different mitigation techniques (cast
blasting) we can accomplish this project at a cost of $15
million which includes $10 million for highwall mitigation
and $5 million to reduce sediment flow from the area into
Healy Creek. This will create some 20 jobs and include
highwall mitigation as well as reducing sediment load
coming from the site entering Healy Creek near Denali
National Park.
--North Jones Highwall Mitigation--AK000009SGA--this site has 200
foot highwalls in the Sutton area outside of Anchorage that
actually are not accessible to vehicles or most foot
travelers. What makes this site so extremely hazardous is
the frequent public and school/college class use of the pit
bottom to collect fossils. There is a continuous run of
rocks falling from the highwall and rolling into the pit
bottom that creates a very real threat of injury. Estimated
cost would be $4.382 million and create 40 jobs plus
contract helicopter work while providing for public safety.
--North Jones Mine 3 subsidence features--AMLIS AK000009SGA--
Collapsing airshafts up to 1,500 feet deep that require
mitigation for public safety. Cost estimated at $200,000
with employment of 10 people.
--North Jones Mine Upper Fire Area--AMLIS AK000009SGA--We plan on
verifying extent of the problem this summer. Fire
elimination from this heavily used recreational site is
estimated at $5 million due to depths of material at over
300 feet in places. Jobs created would be 30 to 40.
--Center and Bill Pits Hazardous Impoundments and Highwalls--AMLIS
AK000025SGA--This site is located in the Healy Valley. In
order to drain the impoundment and reduce the highwall to
safe levels the cost would be an estimated $5 million. Jobs
created would be 20.
--East and West Coal Creek Pit Highwalls--Not yet in AMLIS--Located
in the Healy Valley these two pits adjacent to Coal Creek
would have the highwalls mitigated and the erosive
contributions to Coal Creek and subsequently Healy Creek
reduced. Cost is estimated at $3.2 million and jobs created
would be 10 to 15.
--Inmate Training--With an additional $2.0 million we could
initiate a program starting this spring to train 60 to 80
inmates to operate several types of equipment and develop
other skill sets that would help them secure employment
after they served their sentences. Examples of work done
would be heavy equipment operation and maintenance (cat
dozers, excavators, dump trucks and backhoes) and
vegetation management (controlling pest vegetation species
and harvesting/planting willows in the Matanuska Valley
Moose Range). We would use leased equipment and contract
for well qualified instructors to lead the effort on the
ground to insure participants learned employable skills
applicable to construction, highway, oil and gas and
mineral extraction industries.
California.--the state estimates that approximately 47,000
abandoned mines are distributed throughout California. Of
these, approximately 5,200 sites (11% of 47,000) present
environmental hazards, and more than 39,400 sites (84%) present
physical safety hazards. Some of the highest priority AML sites
(for example, Iron Mountain) are being addressed, but the
majority have not been evaluated to determine the required
cleanup actions to protect public health and safety and the
environment. In addition, there are numerous areas throughout
the Sierra, including tribal lands that are contaminated from
historic mercury use associated with gold mining. Hundreds of
millions of dollars will ultimately be necessary to remediate
all the AML sites within the State. As you know, California
does not currently receive federal AML funding as it is not a
SMCRA state.
In 2007, at the request of Senator Feinstein's office, California's
state and federal agencies working on AML issues created lists
of priority AML sites with environmental and physical hazards.
The list is being updated, but a current version is available
from the state or IMCC. This list provides a snapshot of the
known environmental, human health, and safety problems posed by
abandoned mines in California. It is important to note that
many AML sites have not yet been inventoried or assessed for
hazards. The prioritization process used for each list is
briefly outlined in the document.
Of the sites on the list, many can be considered at/near a
``shovel-ready'' stage (i.e., projects already advanced that
can put out to bid/work begun within 18 months). Listed
alphabetically below are six of the State's priorities
identified by the Office of Mine Reclamation, State Water
Resources Control Board, and Department of Toxic Substances
Control.
Argonaut Mine, Amador County (private land/low- $2.0M
income PRP)...................................
La Joya Quicksilver Mine, Napa County (private $2.0M
land/low-income PRP)..........................
New London Mine, San Luis Obispo County $3.0M
(California National Guard)...................
Oro de Amador, mine tailings in Amador County $5.0M
(city of Jackson).............................
Plumas Eureka Mine, Plumas County (State Parks) $3.0M
150-200 priority physical hazard features on $1.5M
federal and state lands.......................
------------------------
Total...................................... $16.5 million
Other priority sites would likely be provided by federal agencies
such as the Bureau of Land Management, U.S. Forest Service, and
National Park Service (an estimated 67% of California's AML
sites lie on federal land). We would like to stress that any
hardrock AML funds for California's priority AML sites should
go directly to the State of California or that the federal
agencies receiving funds funnel them to the State.
Please note, the above ``short list'' represents only a partial
list. We would be happy to work with California Senators Boxer
and Feinstein and the Senate Energy and Natural Resources
Committee as a whole to provide a complete list that
corresponds to our updated priorities. The above short list
also does not address the many abandoned mine sites that would
benefit from funding for assessment investigations prior to
cleanup Should such funds be available, California could use an
additional, initial $5,000,000 to conduct investigations at AML
sites that pose immediate threats to human health and the
environment to define cleanup construction projects. State and
federal agencies would work together to conduct the
investigations and select the highest priority cleanup actions.
Sites and cleanup actions would be defined within less than a
year of initiation of the investigation work and construction
contracts could be awarded using contractors in place several
months thereafter (thus, within 18 months from the notification
of funding to award additional cleanup construction contracts).
In addition to the above forecasts provided by these states
regarding economic and job enhancements, it should be noted that, in
general, for every dollar spent by the states/tribes on local
construction, this translates to $2.70 that is spent in the local
economy for things such as supplies and materials, local equipment
rentals and equipment operators, and employee support.
Today, state agencies are working on hardrock abandoned mine
problems through a variety of limited state and federal funding
sources. Various federal agencies, including the Environmental
Protection Agency, the Bureau of Land Management, the National Park
Service, the U.S. Forest Service, and the U.S. Army Corps of Engineers
have provided some funding for hardrock mine remediation projects.
These state/federal partnerships have been instrumental in assisting
the states with our hardrock AML work and, as states take on a larger
role for hardrock AML cleanups into the future, we will continue to
coordinate with our federal partners. However, most of these existing
federal grants are project specific and do not provide consistent
funding. For states with coal mining, the most consistent source of AML
funding has been the Title IV grants under the Surface Mining Control
and Reclamation Act (SMCRA). Section 409 of SMCRA allows states to use
these grants only at high priority non-coal AML sites. The funding is
generally limited to safeguarding hazards to public safety (e.g.,
closing mine openings) at hardrock sites. It is worth noting that
recent fatalities at abandoned hardrock mine sites have been in states
without SCMRA-funded AML programs. The small amount of money that SMCRA
states have been able to spend on physical safety hazards at hardrock
sites appears to be making a difference.
As states work to address the remaining inventory of abandoned
hardrock mine sites, the states are increasingly concerned about the
escalating costs of addressing those problems that continue to go
unreclaimed due to insufficient funding. Unaddressed sites worsen over
time, thus increasing reclamation costs. Inflation exacerbates these
costs. The longer the reclamation is postponed, the less reclamation
will be accomplished. In addition, the states are finding new, higher
priority problems each year, especially as many of our urban areas grow
closer to what were formerly rural abandoned mine sites. New sites also
continually appear, due to the effects of time and weather. This
underscores the need for constant vigilance to protect our citizens.
In addition to the economic stimulus package that Congress will
consider, the continued debate on reform of the General Mining Law
provides yet another opportunity to establish a consistent, and robust,
funding source for addressing hardrock AML problems. We would like to
address a few needed components of any hardrock AML program that might
be included in any new legislation--be it reform of the 1872 Mining Law
or the economic stimulus package. First, any program to distribute
funds for hardrock mine reclamation should allow for states and tribes
to receive funding and conduct AML projects. Today, there are abandoned
mine land programs in most states. These include the 28 programs
established by states and tribes under SMCRA Title IV, along with
states across the country that are not eligible for Title IV funding,
including New York, South Carolina, North Carolina, Nevada, California,
and Arizona. All of these states and tribes are experienced with
administering federal grants and completing AML projects in a cost-
effective manner, including projects on federal land.
It is essential that the states be provided an opportunity to
assume primary responsibility for implementing any hardrock AML program
given the unique differences among the states in terms of geology,
climate, terrain and other physical and environmental conditions. Each
state should also be provided the discretion to determine which among
the many AML sites in its respective inventory of sites deserves the
most immediate attention with input from the federal land management
agencies on whose land the sites may be located. The states can also
best decide the appropriate remediation required under the
circumstances given available funding. This state-lead approach will
assure the most critical AML problems are addressed first, since the
states are closer to the problems and can make a better determination
about priorities and actual remediation work.
In the West, several states, including New Mexico, Colorado, Utah,
Wyoming and Montana, have used SMCRA Title IV funds to address a number
of significant AML problems, both coal and hardrock. In addition, these
AML programs have cooperative agreements with the Forest Service, BLM
and the U.S. Army Corps of Engineers that allow those agencies to fund
AML projects on their lands when money is available. It is simply more
efficient for the federal land managers to use the already established
state AML programs with their staff of experienced engineers,
reclamation specialists and project managers to design and conduct
cost-effective AML projects on federally-managed land within each
state's boundaries. Given the importance of the states being able to
access SMCRA Title IV funds for noncoal AML work, any new legislation
should ensure that this practice can continue or increase. In this
regard, it should be kept in mind that the states are generally in a
better position to accomplish AML work. They have assembled
professional staffs with thirty years of experience and an excellent
local contracting knowledge base. States would require minimal staffing
increases, thereby increasing on-the-ground results per program dollar.
Second, the legislation should recognize that most hardrock AML
problems are on non-federal lands, even in the West. In most states,
federal lands contain less than a quarter of all hardrock AML sites. In
part, this is due to the patenting of mining claims in the nineteenth
and early twentieth century that led to mining occurring on private
land. And when there are abandoned mine problems on federal lands, they
often spill over into adjacent non-federal lands or in-holdings. To be
effective, a hardrock AML program needs to be able to spend funds on
all classes of land.
A critical component of any reclamation program is prioritization
of sites and identification of remediation options. Abandoned mine
lands range from sites with features that require no remediation
because of their minimal size or risk; to sites which require
significant earthwork, topsoiling and revegetation for erosion and
pollution control; to safeguarding shafts and adits that present public
safety hazards; to remediating sites with significant toxic leachate
causing contamination of ground and surface waters. In addition, there
are hardrock mine sites with such a conglomeration of features, access
problems, drainage problems, etc., that estimated reclamation/
remediation costs exceed the entire annual AML budget of a state.
Regardless of which inventory or listing of sites is used, a large
portion of sites will require little if any reclamation. In other
cases, the per unit cost of reclamation is relatively small. These
sites will also rank low in priority because of the reduced threat to
public health or the environment. On the other end of the spectrum,
there will be a small number of sites that require a significant amount
of funding to remediate and that constitute a chronic risk to public
health or the environment. Under current law, these are the sites that
are being or might be remediated under Superfund (the Comprehensive
Environmental Response, Compensation and Liability Act (CERCLA)). The
AML priority sites should be those that constitute a physical threat to
public safety, and sites with significant contamination, but that will
likely never score high enough to be remediated under CERCLA.
Another aspect of any hardrock AML program is the process of
quantifying the problem. A consistent and cost-effective inventory of
AML problems may be needed. However, lessons need to be learned from
the inventory of abandoned coal mines undertaken pursuant to the
Surface Mining Control and Reclamation Act (SMCRA), which is estimated
to have cost more than $25 million and is still fraught with
controversy. Based on the SMCRA experience, any hardrock AML inventory
needs to: have well thought out goals and instructions; maintain
standardized inventory procedures; keep inventory crews small to
minimize inconsistencies in reporting methods; minimize the influence
on the inventory by those with vested interests in the results; require
any federal agency inventory work to be coordinated with the states;
utilize state-of-the-art GPS imagery; and be conducted with
consideration for seasonal vegetation cover. In the end, there should
also be a cap placed on the amount of money to be invested in any
inventory effort so as not to divert money and energy from on-the-
ground reclamation work.
There are many other components to an effective and efficient AML
program. The states have significant experience in this area, based on
our work under SMCRA and with AML programs in other non-SMCRA states.
Among the other areas that should likely be addressed in fashioning a
hardrock AML program are: reclamation program elements; reclamation
standards; priorities for cleanup; set-aside accounts for special
circumstances such as acid rock drainage; emergency situations; post-
construction monitoring that evaluates the success of remediation
activities as a learning tool; and funding distribution mechanisms. A
new complication for state AML work that also needs to be addressed is
the limited liability protection provided for noncoal AML work
undertaken with SMCRA Title IV funds. A recent rulemaking by OSMRE
removed this protection and it could have a significant chilling effect
on the ability of the states and tribes to undertake some of their
noncoal projects with SMCRA funds. This will likely need to be
addressed with a perfecting amendment to SCMRA. We would welcome the
opportunity to work with Congress and others to address all aspects of
a hardrock AML program that is led by the states and coordinated with
our federal partners.
We believe that the states and tribes could contribute to and
benefit from an economic stimulus package that includes funding for
enhanced hardrock AML cleanup. We assert that the work detailed above
would maximize both job creation over the short term and return on
investment over the long term, especially with regard to restoring the
environment and protecting the public health and safety. We strongly
support funding in the economic stimulus package for these programs and
projects and welcome the opportunity to work with this Committee and
others to put to this money to work in an expeditious fashion.
Should you have any questions or require additional information,
please contact us. Thank you for the opportunity to submit this
statement.
______
Statement of Laura Filbert Zacher, Smart Future, St. Louis, MO
I represent former leaders of NASA and other scientists in their
company as well as the residents of eleven communities along the
Mississippi River in southwestern Illinois. I have attached to this
letter the communication that was sent in July to President-Elect
Barack Obama by the eleven mayors of those communities.
Equitech International, LLC (EI) is a consortium of 23 sister
companies holding all of the licenses and patents for an advanced
renewable energy system (ARES). These former leaders of NASA/JPL have
developed and proven two concepts that they propose to merge into one
national exemplar of stand-alone, emissions-free power that can
kickstart a new ARES industry of exportable replications worldwide. The
two concepts have been previously proven at the cost of $55 million.
Proofs of concept on Solar Fuel Cell Regeneration (SFCR) and Waste
Steam Reform System (WSRS) are ready for design-build construction by a
turnkey contractor, Whiting Turner. The WSRS component processes the
worst waste elements in society (medicinal, industrial, and
agricultural).
Equitech has partnered with the Metro East Citizens Land
Cooperative (MECLC), a community investment corporation, to build the
7.5MW E-Macrosystem power plant and manufacturing center in East St.
Louis where the surrounding communities would benefit from the 2,300
green jobs created by the demonstration alone. The exemplar is 105,000
s.f. with 90,000 s.f. available for EI/MECLC's first committed tenant,
a solar energy products manufacturer. The exemplar will cost
$65,000,000 to construct. Due to the numerous profitable by-products of
the E-Macrosystem, debt service on replications is short term. By
products include premium power demanded by pharmaceuticals and computer
chip industries, pure water, hospital-grade methanol, and more.
In addition to having national and international implications, the
economic stimuli in the eleven impoverished communities of the MECLC
include the dividends that will be paid directly to resident
shareholders of the community investment corporation, income tax, and
retail tax revenues. Please see the attached list of benefits for
supporting the E-Macrosystem and consider inviting EI to speak on
Wednesday. The CEO is located in Washington, DC, and would be available
on short notice.
Attachment
E-MACROSYSTEM, 7.5 MW ADVANCED RENEWABLE ENERGY SYSTEM BY EQUITECH
INTERNATIONAL, LLC WITH METRO EAST CITIZENS LAND COOPERATIVE
Equitech International LLC and Metro East Citizens Land Cooperative
(MECLC) would like to stress the following point pertaining to the
importance of funding the first project: the emissions-free E-
Macrosystem power plant and shell building that will support
manufacturing of advanced renewable energy system components for
nationwide and worldwide export from the Metro East St. Louis, Illinois
area:
Opportunities
1. Advanced Renewable Energy Systems (ARES) manufacturing is
a new industry that will contribute to the ECONOMIC BASE of any
community.
2. The E-Macrosystem will create 2300 new jobs that are
considered ``good jobs'' that pay well and provide benefits.
3. The Waste-to-Energy component of the E-Macrosystem
processes the worst toxic waste and provides a solution to
industrial waste handling within the State and elsewhere.
4. The success of the E-Macrosystem holds the promise for the
national, state local expansion opportunities through
replication of the E-Macrosystem in new markets.
5. In addition to producing 7.5 MW of Premium Power, the E-
Macrosystem generates other products to sell and additional
revenue streams that contribute to economic feasibility.
6. MECLC's partners are prepared to expand manufacturing of
advanced renewable energy systems components in the Metro East
as soon as the national demonstration E-Macrosystem pilot is
built.
The E-Macrosystem should qualify for support from various Federal
agencies because it:
Offers premium power capable of being independent of (or
linked to) the utility grid and capable of supporting battery-
powered ``plug-in'' vehicles.
Supports needs in remote locations. (Solar fuel cell
regeneration produces electric power, heat and water from
recycling of all forms of organic waste, including biomass).
Can be mobile, including marine capabilities when replicated
on a ship. (When unique systems patent is commercialized, ships
can be moved from port-to-port using the two technologies of
the national demonstration / pilot project.)
Can be applied to reduce the costs of penal systems by
enabling prisoners to produce marketable components and profits
for victim restitution, family support, prison operations and
related enterprises in the communities in which they locate.
Has been proven to have tunnel-safe transport implications
through the use of its solar fuel cell regeneration power--no
threat in tunnels, non-combustible.
______
Statement of the National Association of Home Builders
OVERVIEW
On behalf of the approximately 235,000 members of the National
Association of Home Builders (NAHB), thank you for the opportunity to
submit testimony for the hearing on investments in clean energy and
natural resources projects and programs to create green jobs and
stimulate the economy. We applaud the efforts of the Committee to seek
ways to hasten the recovery of the nation's economy and to develop
clean energy infrastructure, including investing in energy efficiency
and green jobs, as a component of the broader recovery effort. Housing
and home building, including energy efficient home construction and
green building, must play a critical role in the overall recovery of
the national economy, as well as the continued growth in sustainable
building and building technology advancement.
NAHB believes that the housing crisis must be addressed
aggressively and with priority if there is any hope for a speedy
economic recovery. Furthermore, due to the housing crisis and the ever-
increasing inventory of existing homes, the demand for and construction
of new, more energy efficient and green homes is at a near standstill.
Data from the U.S. Department of Energy's Energy Information
Administration (EIA) and the U.S. Census Bureau confirms that older
homes (built before 1991) consume 17.1% of U.S. total energy\1\ and
74.1% of the 128 million dwelling units were built before 1990.\2\ In
addition, Census data shows that since July of 2005 sales of newly
constructed homes have fallen from an annual rate of 1.389 million
homes to a rate of 464,000--a 66.6% drop--representing the most
dramatic decline since the Great Depression.
---------------------------------------------------------------------------
\1\ 2001 Annual Energy Review; 2001 Residential Energy Consumption
Survey, U.S. Energy Information Administration, 2005.
\2\ 2007 American Community Survey, U.S. Census Bureau.
---------------------------------------------------------------------------
NAHB believes that replacing and improving existing buildings with
more energy efficient or green new homes is a real opportunity that
addresses both the housing downturn and need for better energy
performance and sustainability in the built environment. However,
without urgent action by Congress to jump start housing generally,
i.e., giving consumers incentives to buy homes, the realization of this
opportunity's benefits and the ability for our nation to address these
two crises--energy and housing--will be dramatically diminished.
This statement is divided into three sections. First, it provides
an update on the current state of the housing and mortgage markets.
Second, it details the best approach for investing in energy
performance improvements in the areas with the greatest need and where
Congress can find the biggest returns in energy and resource savings.
Finally, it provides information on stimulating growth in green jobs in
the housing industry and how to establish an effective green jobs
program that is appropriate for residential construction.
CURRENT HOUSING MARKET AND ECONOMIC CONDITIONS
Housing is central to the economic crisis that now affects the
global economy. The declines in home prices, the surge in foreclosures,
and the reduction in home building activity are historic in scope and
have generated the most severe recession in decades. Policies that aim
to improve the current economic environment must address conditions in
the housing market. Indeed, in testimony before the House Budget
Committee on October 21, 2008, Federal Reserve Chairman Bernake
highlighted the importance of stimulating housing demand:
Finally, in the ideal case, a fiscal package would not only
boost overall spending and economic activity but would also be
aimed at redressing specific factors that have the potential to
extend or deepen the economic slowdown. As I discussed earlier,
the extraordinary tightening in credit conditions has played a
central role in the slowdown thus far and could be an important
factor delaying the recovery. If Congress proceeds with a
fiscal package, it should consider including measures to help
improve access to credit by consumers, homebuyers, businesses,
and other borrowers. Such actions might be particularly
effective at promoting economic growth and job creation.
A review of several key housing statistics reveals the historic
nature of the downturn and its overall impact on the economy. For
example, according to the Bureau of Economic Analysis, home building
was responsible for 5.4 % of gross domestic profit (GDP), while housing
in general contributed another 10.2 %, for a direct housing impact on
GDP of 15.6 %. With additional consideration of related entities--e.g.,
furniture, housing wares, appliances, etc.--housing's total share of
the economy was equal to 25% of the GDP in 2005. Furthermore, housing
was responsible for 22.3 % of the growth of the GDP in 2005.
Facing the most severe housing downturn in history, all of the
industries that rely on housing are feeling the effects. Not only are
new homes not selling--and in many cases no longer being built--but
data from the National Association of Realtors (NAR) shows that since
September of 2005, sales of existing homes have declined 32.8 % to an
annualized rate of 4.26 million. The historic rise in foreclosures has
also added to rising inventories of both new and existing homes.
According to Census data, newly-constructed home inventories have
increased in the months-supply ratio (the number of months required to
sell all inventory at current sales rates) from 4.5 months-supply in
August 2005 to 10.4 months-supply in September 2008. For reference, a
healthy months-supply ratio is no more than 6. The NAR data also shows
the same months-supply ratio of 10.4 for existing homes sales.
Lastly, the final statistic describing the dramatic downturn is the
fall in home prices. The Case-Shiller Composite 20 house price series
indicates a price decline of 20.3 % since June 2006, with some
metropolitan areas seeing much more drastic declines. While some price
adjustment is healthy for a housing market, an overshoot of prices on
the downsizing due to weak demand not only hurts the real estate
industry, but also hurts homebuyers and consumers as well. According to
Federal Reserve data, housing wealth constitutes approximately one-half
of the median U.S. household's net worth. Thus, declines in prices
necessarily produce a negative wealth shock for American families,
resulting in reduced consumption and investment, creating long-term
negative impacts on economic growth. With respect to investments in the
home, when existing homeowners feel that the property is devalued, it
is significantly more challenging to encourage necessary energy
efficiency improvements and sustainability upgrades (e.g., green
remodeling) that can help save energy and resources for everyone.
During this critical time, facing the twin challenges of a severe
economic downturn and a rapidly changing climate, NAHB believes that
the housing industry has solutions for both problems. Fixing housing
must be Congress' first priority by giving consumers the appropriate
incentives to buy homes and to invest in efficiency improvements in
existing homes, stabilizing home prices and reducing inventories, and
generating job growth again in the myriad of industries linked to
housing. Because newer homes are much more energy and resource
efficient than older homes, these are investments that not only spur
job growth in conservation and green innovation for the industry, but
that also deliver sustainable homes for generations.
IMPROVING ENERGY PERFORMANCE IN RESIDENTIAL SECTOR
As stated, newer homes are dramatically more energy efficient than
the 94 million homes built before 1990 (largely without energy codes or
efficiency). Thus, as Congress searches for ways to invest limited
resources in improving energy efficiency and performance in the
residential sector, it must focus on ways to achieve the most savings
per dollar. NAHB believes that this is accomplished not only with
incentives for new homes that are truly pushing the innovation envelope
in green and above-code performance, but also delivering meaningful
incentives and subsidies to existing homeowners for improvements to
older homes.
As the chart* below explains, most of the homes in the U.S. today
were constructed prior to the implementation of modern energy codes.
Therefore, these homes should be the primary focus of any policy
approach aimed at saving energy in the residential sector. With only
3.3 percent of homes built since 2005, it is obvious that newer homes
are not the biggest part of the energy consumption problem. As a
participant in the code development process, NAHB consistently works to
improve the energy efficiency codes that govern residential building in
a manner that delivers the most cost-effective savings to consumers. In
fact, the most recent code change cycle concluded with an improvement
to the 2009 International Energy Conservation Code (IECC) of almost 20%
over the 2006 edition. This 20% jump in efficiency in just three years
for new homes is dramatic, almost unparalleled by other industries.
---------------------------------------------------------------------------
* Graphic has been retained in committee files.
---------------------------------------------------------------------------
The problem is that fewer new, more energy efficient homes will be
built unless something is done immediately to turn housing around. NAHB
estimates that for 2009, housing starts will be approximately 778,000
units, dropping from a high of approximately 2 million in 2005.
Furthermore, the rate at which new housing replaces older, less
efficient homes is not nearly adequate enough to deliver meaningful
savings without assisting residents occupying the oldest housing, i.e.,
primarily lower and moderate-income families that typically face higher
price sensitivities or that cannot afford a newer, more efficient home.
Although there has been exponential growth in the green building
market, including commercial construction, over the last few years, the
sheer impact of the housing downturn is likely to cast a pall over the
enormous strides that have been made in sustainable building as a
whole.
In addition to the energy performance of the structure itself,
Congress must do something reduce the biggest source of energy loss in
a home--consumer behavior. The EIA's 2008 Buildings Energy Data Book,
issued in September, provides data on 2006 end-use consumption
``splits'' (or a breakdown) that details how energy is used by dwelling
units in the U.S. Across all fuel types, the largest single component
of energy consumption in a home is consumer behavior--e.g., lighting,
refrigeration, laundering, cooking, electronics use, etc.--eating up
57% of the energy, while space heating and cooling (typically a builder
responsibility) represents a mere 26%, with water heating, again
largely dependent on consumer behavior, is about 9%.
Given the dire statistics that persist in media circles today about
the energy consumed by homes and buildings (as high as 70% according to
some), Congress must provide adequate resources--education,
information, or direct subsidies--to consumers to help curb growing
appetites for in-home energy. Large-screen plasma televisions, DVRs
that are constantly plugged in, and other electronics consume vast
amounts of energy over the long term that many consumers may not even
realize. In fact, the Electric Power Research Institute (EPRI)
estimates that by the year 2030, almost 30% of the residential energy
load will be ``plug-connected.'' EPRI also suggests that if every
American household operated a digital photo frame for one year, it
would be equivalent to powering five 250MW power plants.\3\ This is
extremely important because it confirms that improving energy
performance simply does not materialize from ramping up code
requirements for the already energy-efficient new homes as many
advocates have recommended. If nothing is done to address consumer
behavior inside a home, then the advances in building technology,
green, and energy performance that come from envelope improvements may
be completely displaced.
---------------------------------------------------------------------------
\3\ ``Energy Efficiency Across the Electricity Value Chain.''
Presentation by Arshad Monsoor, Ph.D., Electric Power Research
Institute, April 16, 2008.
---------------------------------------------------------------------------
ESTABLISHING AN ADEQUATE GREEN JOBS PROGRAM
Without a doubt, the green revolution is a remarkable new media and
policy force that has transformed the way millions of people think
about seemingly everyday things. Yet, for home builders, green is not
something new because NAHB members have been building green homes for
decades, long before ``green'' became what it is today. These pioneers
were building sustainable, energy, and resource-efficient homes as
early as 1991 and continued to improve practices to incorporate more
innovation over time. By the early 2000s, builders were expanding what
would become green building programs and a push to develop a national
guideline for residential green building emerged in the industry.
In 2005, NAHB, along with more than 60 stakeholders (architects,
engineers, environmentalists, etc.) developed the Model Green Home
Building Guidelines (The Guidelines). The Guidelines helped better
define green home building and rapidly grew in popularity and demand,
as well as in adoption by local and state Home Builder Associations
(HBAs) around the country. Due to the success of The Guidelines, NAHB
decided to proactively help develop the first-ever national standard
for residential green building approved by the American National
Standards Institute (ANSI), a non-affiliated Standards Developing
Organization. With the advice and counsel of a Committee of more than
40 experts, builders, environmentalists, and federal, state, and local
officials, the group develop a rigorous set of criteria covering all
facets of green building--energy efficiency, water efficiency, resource
efficiency, lot size and development, indoor environmental quality,
global impact, and education and maintenance. The consensus process,
including a thorough public vetting with over 3,000 comments, produced
a document that was submitted to ANSI in April 2008 and is awaiting
approval.
The tremendous strides in green building have begun to reshape the
residential construction industry, the training and workforce
development that support it, and even the choices of consumers buying
green homes. In many instances, the talent already exists in the
industry to build green homes, i.e., green roofers, insulators,
designers and planners, etc. However, accessing additional training and
expertise in the most advanced housing technologies is meaningful in
order to further deliver energy performance and conserve precious
natural resources. NAHB supports efforts to provide grants for training
and workforce development in this area.
Unfortunately, the Green Jobs Act of 2007 (the Act), that was
signed into law under PL110-140, limits eligibility for funding in this
critical area to those entities who are partnered with labor unions.
The Act established several new programs through the Department of
Labor to set up grant and training programs in a number of green-
related capacities. For example, the Act establishes National Energy
Training Partnership Grants, which are directed to training programs
for energy efficiency and renewable energy industries. The Act also
creates a State Energy Training Partnership Program, similar to the
National Energy Training Partnership, which provides State-level
funding for administering similar efficiency and renewable energy
programs. Finally, the Act utilizes the Energy Efficiency and Renewable
Energy Worker Training Program to make grants to community-based
nonprofit organizations in order to train low-income individuals in
skilled trades related to energy efficiency enhancements. Each and
every one of these new programs would be a meaningful for the
residential construction industry. Yet, because 86% of the private-
sector construction workforce is non-unionized, including nearly all of
the residential construction industry, the majority of the housing
industry would be precluded from participating.
NAHB believes that denying equal access to any training and
development funding for green technology advancement through green
jobs, particularly in housing, is terribly short-sighted and detracts
from Congress' larger goal of significantly improving the energy
performance and efficiency of our nation's environment. As in any
industry, the housing industry needs qualified, trained, and
knowledgeable experts to build the next generation of housing, once the
recovery occurs and new homes again are being built. With so many
advocates publicly decrying the ills of the building sector generally,
it seems appropriate to provide equal access to all professionals
performing green jobs, which should include the residential
construction industry. Congress must act to fix this exclusion and
provide equal access to training and workforce development that will
aid energy efficiency and the use of renewable energy technologies in
the millions of green and energy efficient homes yet to be built.
CONCLUSION
NAHB applauds the efforts of this Committee to seek stimulate clean
energy investments and infrastructure through projects and programs
that will truly have a positive impact on our national economy. As a
sizeable component of that national economy, the housing industry must
play a role in the recovery, as well as in the efficiency and building
technology advancement capacity going forward. The current housing
market conditions are the bleakest that our nation has seen since the
Great Depression and unless something is done immediately to address
the housing crisis and to get Americans buying homes again, there will
be far fewer green and sustainable homes to replace our nation's aged
and less efficient housing stock.
Improving the energy performance of our nation's housing stock is
vitally important. In an environment with limited resources and major
climate challenges, focusing investments in areas with the biggest
returns will be critical in order to fully realize true energy savings.
Upgrading existing homes and changing consumer consumption behaviors
must be a part of any policy approach that Congress considers.
Moreover, providing the most robust training and workforce development
programs to further stimulate the growth of green jobs is essential and
limiting these resources to affiliates of labor unions is extremely
restrictive in light of the enormous need for conservation and energy
efficiency facing the U.S.
Housing and home ownership play a fundamental role in our society,
one with vast documented social and private benefits. Investing in
housing, including the recovery as well as energy efficiency and green
building, is extremely important for the national economy and for the
environment. NAHB looks forward to working with Congress to ensure a
speedy and effective near-term recovery, as well as a long-run success
of these programs and the role that housing will play in the clean
energy future of the U.S. as a whole.
______
Statement of Robert Bendick, Director, US Government Relations, The
Nature Conservancy
Mr. Chairman and members of the Committee, thank you for the
opportunity to testify on how investing in natural resources projects
will create green jobs and stimulate the economy. I am Robert Bendick,
the Director of US Government Relations for The Nature Conservancy.
The Nature Conservancy is an international, nonprofit organization
dedicated to the conservation of biological diversity. Our mission is
to preserve the plants, animals and natural communities that represent
the diversity of life on Earth by protecting the lands and waters they
need to survive. Our on-the-ground conservation work is carried out in
all 50 states and in more than 30 countries and is supported by
approximately one million individual members. The Nature Conservancy
has protected more than 117 million acres of land and 5,000 miles of
river around the world. Our work also includes more than 100 marine
conservation projects in 21 countries and 22 U.S. states.
Mr. Chairman, we applaud you for holding this hearing today and for
your leadership to craft a vision for how to stimulate the economy
while protecting and restoring natural resources. The Nature
Conservancy agrees that investment in stimulating the nation's economy
can and should have environmental benefits. My testimony suggests that
this can be accomplished through two key actions:
1) spending stimulus funds on a suite of job-intensive
``green infrastructure'' projects such as wetland restoration,
forest restoration, invasive species removal, and modification
of roads and other infrastructure that impact habitat
2) minimizing the environmental impacts of traditional hard
infrastructure projects by giving priority funding to those
projects that utilize the most innovative design techniques
There are a variety of federal environmental programs able to
implement ``green infrastructure'' projects that restore degraded
ecosystems, grow the nation's green economy and create green jobs. From
rebuilding coastal wetlands to restoring forest health, all of these
restoration activities require extensive labor with significant job-
creation benefits. In this testimony, we describe the rationale for
investing in green infrastructure, and we have developed funding
recommendations for existing Federal programs where investing in
ecological restoration will lead to job creation.
While we argue for a significant green infrastructure component to
any stimulus package, we also recognize that much of our nation's
infrastructure is deteriorating, would greatly benefit from federal
investment, and that this investment would result in thousands of much
needed jobs. Roads, rails, pipelines, dams, levees and other hard
infrastructure projects have negatively impacted ecosystems in the
past, but there are design techniques that can help ensure any new or
refurbished infrastructure is built in a way that is more compatible
with the conservation of natural resources. Given both the desire to
minimize the environmental impacts of a massive new investment in
infrastructure and the need to allocate funding in a short timeframe,
this testimony argues for setting funding priorities based on a
project's use of innovative design techniques to reduce environmental
impact.
Together, investing in ``green infrastructure'' and giving priority
to hard infrastructure that employs ``green techniques'' will lead to
economic recovery and rehabilitation of the nation's aging
infrastructure while improving the condition of our natural resources.
The testimony that follows lays out specific recommendation on why this
approach is important and how this can be accomplished.
INVESTING IN GREEN INFRASTRUCTURE AND CREATING GREEN JOBS
The nation's rivers, coasts, estuaries, forests and grasslands,
including the millions of acres of public lands, are directly and
indirectly linked to billions of dollars in economic productivity and
provide important habitat and ecological services. Wetlands provide
water quality improvements and flood protection, forests help filter
water and improve water quality, and oyster reefs can provide self-
renewing barriers to reduce erosion along shorelines. Moreover, healthy
rivers, forests, and estuaries provide habitat for resource-based
economies, such as tourism, fishing, and aquaculture.
Unfortunately, many of these critical ecosystems have been in
decline for years. For example, a USGS report published in September of
this year indicated that over 40% of freshwater fish in the US are
under threat of extinction in the next 20 years. Approximately half of
the Nation's wetland habitats have been lost, including in areas like
coastal Louisiana where marshes provide important protection during
hurricanes and other severe storm events. Millions of acres of forest
lands have large fuel loads and are at great risk of catastrophic fire.
Multiple federal agencies are currently involved in restoration, but
current Federal investment in restoration falls well short of the
national need. As is the case in traditional infrastructure projects,
restoration projects create jobs and opportunities in the near-term
while also creating the ecological and economic benefits that flow from
healthy ecosystems over the long-term.
Ecological restoration has emerged as a high growth sector of our
regional and national economy with additional investment in restoration
offering the potential to provide significant job-creation benefits.
This emergent industry, comprised of many applied sciences, employs a
wide set of labor skills. These skills range from non-skilled laborers,
to restoration design engineers, restoration ecologists, landscape
architects, hydrologists and specialized botanists who work in
nurseries that offer local seedlings and other specialized plants for
restoration. Other sectors of the restoration labor force include
specialized equipment operators of both light and heavy duty
construction equipment, restoration monitoring specialists,
construction crews and experts, soil experts, and many other
diversified skilled laborers.
A recent example of job creation through restoration is the jobs
being offered to watermen in the Maryland blue crab fishery, which was
declared a Commercial Fishery Failure earlier this fall. Federal and
state disaster aid is being used to provide over 520 jobs to affected
watermen, employing them to carry out oyster restoration work in the
Chesapeake Bay. Similarly, a study by the North Coast Restoration Jobs
Initiative showed that environmental restoration projects in Humboldt
County, CA and surrounding areas employed 1057 worker-weeks over the
course of 2002, mostly as a result of road decommissioning and culvert
replacement projects. The Humboldt County study also indicated that
most of the ecosystem restoration work using heavy equipment was
contracted out to non-government entities, indicating private sector
and small businesses benefit from the investment in restoration.
The examples above illustrate that investing in restoration will
not only meet a critical national need by improving the ecological
health of our nation's rivers, coasts, forests and grasslands but will
also create green jobs to stimulate the economy. Given the significant
national need for Federal investment in restoration and the
demonstrated job-creation benefit of this investment, any stimulus
package should dedicate significant funding to the restoration of
ecosystems.
The following table lists funding recommendations by Federal agency
and by restoration activity. We recognize that this list includes a
number of agencies that are not under the jurisdiction of this
committee, but we include them to give a broad vision for the potential
for green infrastructure investment within an economic stimulus
package. More detailed descriptions of the agency funding
justifications follow. Lists of example projects that demonstrate the
on-the-ground funding need are included in Appendix I.*
---------------------------------------------------------------------------
* Document has been retained in committee files.
SUMMARY FUNDING RECOMMENDATIONS
----------------------------------------------------------------------------------------------------------------
Agency ACTIVITY/PROGRAM FUNDING RECOMMENDATION
----------------------------------------------------------------------------------------------------------------
U.S. Army Corps of Engineers Large Scale Ecosystem $1 billion
Restoration
-----------------------------------------------------------------------
Individually authorized $1 billion
restoration and multi-
purpose projects
-----------------------------------------------------------------------
Section 1135 and 206 $500 million
Continuing Authority
Programs
----------------------------------------------------------------------------------------------------------------
National Oceanic and Community Based $250 million
Atmospheric Administration Restoration and Open
Rivers
Initiative
----------------------------------------------------------------------------------------------------------------
Bureau of Reclamation Water and Related Priority funding and a minimum of \1/3\
Resources total Bureau stimulus funding
--environmental
restoration
----------------------------------------------------------------------------------------------------------------
Department of Transportation State allocation-- 2% of total DOT stimulus funding
retrofits for
stream connectivity
-----------------------------------------------------------------------
Park, Forest and Refuge $500 million
roads
--retrofits for stream
connectivity
-----------------------------------------------------------------------
Stormwater runoff 2% of total DOT stimulus funding
mitigation
----------------------------------------------------------------------------------------------------------------
Forest Service Hazardous fuels $1.5 billion
reduction
(includes Bureau of Land
Management)
-----------------------------------------------------------------------
Forest Restoration Job $50 million
Training
-----------------------------------------------------------------------
Small business grants $100 million
-----------------------------------------------------------------------
State and local fire $75 million
assistance
-----------------------------------------------------------------------
Land Management and $343 million
Restoration
----------------------------------------------------------------------------------------------------------------
Environmental Protection Agency Non-point source--Sec. $300 million
319
program
-----------------------------------------------------------------------
Clean Water State $1 billion
Revolving Fund
-----------------------------------------------------------------------
Drinking Water State $1 billion
Revolving Fund
----------------------------------------------------------------------------------------------------------------
Fish and Wildlife Service Fish Passage Program $14 million
-----------------------------------------------------------------------
Coastal Program $21 million
-----------------------------------------------------------------------
Partners for Fish and $100 million
Wildlife
-----------------------------------------------------------------------
Refuge maintenance and $443 million
restoration
----------------------------------------------------------------------------------------------------------------
Animal and Plant Health Eradicate Asian $100 million
Inspection Service longhorned
beetle infestations
-----------------------------------------------------------------------
Sudden Oak Death $7 million
containment
----------------------------------------------------------------------------------------------------------------
Bureau of Land Manaement Abandoned Mine Lands $400 million
----------------------------------------------------------------------------------------------------------------
Army Corps of Engineers
Since Congress added ecosystem restoration as one of the Corps of
Engineers' primary missions in 1986, the Corps has led some of the
nation's largest and most ambitious ecosystem restoration projects
(e.g., the Florida Everglades, Coastal Louisiana, and Upper Mississippi
River). The Corps has also become a leader in a myriad of smaller-scale
projects. The Corps aquatic ecosystem restoration efforts include
restoration of floodplain, wetland and coastal hydrology and
vegetation, shellfish restoration, dam removal, fish passage, and levee
modification, among others. Many of these large and small scale efforts
require significant engineering and construction resources that would
create a variety of jobs. There are also numerous projects that could
quickly allocate funding.
We recommend that no less than a third of the Corps overall
allocation in the economic stimulus package be dedicated to ecosystem
restoration projects. There may be a tendency to focus stimulus funding
solely on the largest restoration projects. However, to achieve
geographic distribution of funding and to ensure that the stimulus
funding meets multiple small and large scale restoration needs, we
encourage distribution among the following restoration authorities:
Large-scale programmatic restoration authorizations that
have received construction authority (e.g. Upper Mississippi
River, Everglades, Missouri River Recovery, Puget Sound and
Louisiana Coastal Area). Many of these efforts have invested
significant resources in pre-construction engineering and
design and have projects that have received construction
authorization but no funding to proceed with construction.
Funding allocated through a stimulus package could be quickly
obligated and provide significant economic and environmental
benefits. The total funding recommendation provided for this
line item is based on the FY 2009 spending capability for the
five projects listed above.
Individually authorized small to medium scale restoration
projects or multi-purpose projects with a restoration
component. There are a suite of projects that are individually
authorized and have received regular investment for feasibility
studies and design. Many of these received construction
authority in the last Water Resources Development Act. Examples
of such projects are provided in the list in appendix I.
Funding should be allocated to those projects that have a clear
environmental restoration benefit, are authorized for
construction and could quickly obligate funding.
Continuing authority programs (CAPs), which include Section
206, Aquatic Ecosystem Restoration, and Section 1135, Project
Modifications for Improvement of the Environment. These
continuing authority programs have been hamstrung by high
demand, insufficient funding and a growing backlog of projects.
As a result, the programs cannot implement new restoration
projects and many existing projects have been languishing
without funding. Many of the projects already in the program
cue, some of which have received little or no funding in recent
years, have completed large portions of the necessary design
work and could quickly finalize design and award contracts for
construction. Because of the small nature of projects within
these programs (<$ 5 million total Federal cost), a significant
investment via the stimulus package could clear the large
backlog and quickly inject stimulus dollars into the economy.
National Oceanic and Atmospheric Administration (NOAA)
The nation's coastal areas are home to half of the US population
and generate nearly 60% of our GDP. Restoring ecological health in
these areas supports the long-term sustainability of coastal
communities and coastal economies. Restored landscapes provide new
opportunities for businesses such as river rafting or kayaking; they
support recreational and commercial fishing industries; and improve
tourism. Working with partners, the National Oceanic and Atmospheric
Administration's (NOAA) Community-based Restoration Program and Open
Rivers Initiative has the expertise to successfully implement a wide
array of coastal restoration projects that both result in near-term job
creation and result in long-term economic growth by supporting natural
resource based economies. NOAA is well prepared to deliver stimulus
funding by competitively selecting projects based on factors such as
ecological benefit, feasibility, cost-effectiveness, and socio-economic
benefits, including meeting job creation criteria.
Over 100 projects have been identified for NOAA with an estimated
funding need of over $700 million. Some examples are included in
Appendix I. This is not a comprehensive list but rather a sampling of
projects to demonstrate scope and scale of the existing opportunity for
this kind of work. Given the demonstrated need, job creation potential,
and NOAA's capacity to implement projects, we recommend providing a
minimum of $250 million in the economic recovery legislation for
coastal and estuarine restoration and fish passage projects through
NOAA.
Bureau of Reclamation
The Bureau of Reclamation is the largest water manager in the
western United States, and as a result, has a significant impact on
freshwater ecosystems in the West. While the Bureau's mission is
focused on water supply, the agency has supplemental authorities to
address endangered species and other environmental concerns related to
its projects. Bureau of Reclamation projects suffer from serious
maintenance neglect with much of the water infrastructure managed by
the agency in need of rehabilitation and repair. While we support
investment in the Bureau's water supply projects, before investing
funding in outdated infrastructure, it is important to seize the
opportunity to evaluate whether existing infrastructure is meeting
current needs and if not, to remove it. Furthermore, new investment in
rehabilitation of water supply infrastructure affords an opportunity to
identify modifications that both meet water supply needs and benefit
the environment.
Given that there are a number of infrastructure removal,
modification, repair and rehabilitation projects that can both improve
water supply and provide environmental benefit, priority should be
given to projects at Bureau of Reclamation facilities that provide
environmental benefit with a minimum of 1/3 of the total funding
received by the Bureau going to these projects. Examples of
environmentally beneficial projects the Bureau could fund include
improving the efficiency of water delivery systems to provide water for
environmental purposes, modifications to facilities for fish passage,
removal of unused or derelict facilities and consolidation of
irrigation or other diversions to provide environmental benefit, and
restoration of riparian habitats to meet endangered species or other
environmental goals. A list of example projects for the Bureau of
Reclamation is included in Appendix I.
Department of Transportation
Roads can have a significant impact on ecosystems by causing
fragmentation of habitats, spreading invasive species, and degrading
water quality. There are a number of restoration projects that involve
the modification of roads. These projects require significant
engineering and construction resources and as a result, will have a
significant job creation effect. Suggested stimulus investments are
outlined below:
Modification of roads for fish passage.--In the past, most
road-stream crossing design has been aimed at minimizing costs,
protecting the road and minimizing traffic interruptions. Less
attention has been given to protecting stream functions, such
as sediment transport, fish and wildlife passage, and the
movement of woody debris. Many bridges and culverts disrupt
these processes causing ecological degradation. The last
transportation bill provided authorization and funding for
retrofitting culverts on Forest Service lands to improve
habitat connectivity. High Priority Project funding was
allocated to Alaska for similar work. This initial investment
for bridge and culvert retrofits should be expanded in the
economic stimulus package. First, $500 million should be
provided through existing authorities for road modifications on
Forest Service, Fish and Wildlife Service and Park Service
land. Second, a new authority with dedicated funding should be
created to allow state Departments of Transportation to
construct projects to retrofit or replace stream-crossings for
environmental benefit. We recommend 2% of the total allocation
to transportation infrastructure be dedicated for this purpose.
Projects to address water quality impairment related to
roads.--Modification of hydrological conditions associated with
roads as well as the polluted runoff from road surfaces
seriously degrades water quality in many areas. According to
the Environmental Protection Agency, stormwater runoff from
roads, parking lots and other paved surfaces is the largest
source of water pollution today. Furthermore, there is
currently no dedicated funding for localities to address these
concerns. In response to this need, the Senate version of the
last transportation bill reauthorization included the Highway
Stormwater Discharge Mitigation Program; unfortunately this new
program was not included in the final conference agreement. To
address the critical threat posed by water pollution from
roads, the economic recovery package should authorize the
Stormwater Discharge Mitigation program and dedicate 2% of the
total investment in road infrastructure to these projects.
Environmental Protection Agency
The Environmental Protection Agency leads efforts to address the
water quality of our nation's rivers, streams and wetlands. We have
made great progress since the passage of the Clean Water Act in
reducing the pollution contributed to our waterways, but work remains
to be done. First, much of our water infrastructure, which has been
largely responsible for improvement in water quality over the past 30
years, is aging and in need of re-investment and repair. This can be
accomplished through investment in the Clean Water State Revolving Fund
and Drinking Water State Revolving Fund.
While water and wastewater infrastructure and a strong point source
control program have realized drastic water quality improvements, non
point source pollution remains a significant threat to many of the
nation's water bodies. Investment in activities to address non-point
sources of pollution could go a long way towards improving water
quality. Furthermore, many of the practices that would be employed
involve infrastructure development and modification. For example, one
practice with promise is the construction of two-stage ditches on
agriculture land. These wider ditches slow the flow of water leaving
agricultural landscapes, reducing the nutrient and sediment input to
downstream water bodies. This type of work requires construction labor,
materials, and equipment and thus would provide an economic stimulus.
To address this non-point source water quality issue, we recommend a
stimulus investment in the Section 319 non-point source pollution
program with a focus on projects that require construction or other
infrastructure modification.
Forest Service
More than 100 million acres of federal, state, and private lands
are at high risk from damaging wildfire. Addressing the fire threat by
removing overgrown brush and trees and restoring forest health at a
national scale will stimulate local economies and put people to work in
the wildland urban interface and in rural communities. It is also an
effective technique to jump start restoration of degraded ecological
systems and to enable fire to play its natural role even as climate
change extends the fire season.
The National Fire Plan, with its sustained program of hazardous
fuels reduction, has already spawned the beginning of a green industry
to restore forest health and reduce wildfire threats. These existing
industries range from community-based operations with chainsaws and
trucks to large multi-state operations with mechanical harvesters and
hundreds of employees. Under current programs, only 3 million acres of
at-risk forests can be treated each year and the backlog is growing
faster than the treatments can keep up. Accelerated fuels treatment
will require sustained funding to the federal land management agencies
and states and capacity building to get the workforce and business
infrastructure in place.
The economic recovery package should address four aspects of this
green jobs opportunity:
Hazardous Fuels Reduction on Federal land.--Increase funding
to the Forest Service and Department of Interior agencies in
the Wildland Fire Management account, Hazardous Fuels Reduction
line item, for agencies to prepare fuels treatment projects,
gain NEPA clearance, and administer contracts.
Forest restoration job training.--Provide job training
programs to build the workforce and contractor capacity needed
to restore forests, using USDA grants programs and authorities,
such as Economic Action Program, Youth Conservation Corps, Job
Corps Centers, and partnerships and agreements.
Small business incentive grants.--Build infrastructure for
efficient restoration of forests and utilization of small
diameter wood from fuels treatments by providing small
businesses and local governments with grants and technical
assistance (under the Economic Action Program authorities) and
low-interest loans and short-term lines of credit through the
Small Business Administration.
Hazardous fuels reduction on private lands.--Increase
funding to the Forest Service, State Fire Assistance and
Department of the Interior, State and Local Fire Assistance for
fuels reduction on state and private lands and for job training
and capacity building to employ local and volunteer
firefighters in fuels reduction and controlled burning.
In addition to restoration of forest lands to reduce the risk of
catastrophic fire, there are a variety of other activities needed to
improve forest conditions. Activities for investment on both forest
service land and private lands include reforestation, watershed
restoration, restoration of insect-damaged sites, invasive species
management, and maintenance and reconstruction of roads to reduce
environmental impact. These habitat restoration activities will produce
jobs in local communities while improving the health of the nation's
forests.
Animal and Plant Health Inspection Service
The Asian longhorned beetle threatens hardwood forests reaching
from New England to Minnesota and in parts of the West. Sudden Oak
Death is an invasive non-native forest pathogen that infects and kills
oaks, hardwoods, and shrubs in the Pacific Coast states and across the
East. Vulnerable forests support hardwood timber, maple syrup, and
autumn foliage tourism industries, each of which represents a multi-
million dollar contribution to the economy. Furthermore, these pests
and blights threaten economic harm, job losses to the timber,
agriculture, and nursery industries, plus state, national, and
international quarantines. Asian longhorned beetle, in particular, also
puts urban trees in cities across the country at risk; these trees have
a total value of more than $600 billion. The experience in Chicago
shows that the beetle can be eradicated when sufficient resources are
deployed.
The Animal and Plant Health Inspection Service has been working in
partnerships with state agencies to eradicate these pests and blights,
and the stimulus package presents an opportunity to ramp up eradication
efforts. Stimulus funding would allow for efforts to eradicate the
extensive Asian longhorned beetle outbreak detected in Massachusetts in
summer 2008 as well as complete eradication of previously known
infestations in New York and New Jersey. Funds would also be used to
hire workers to target Sudden Oak Death outbreaks in Southern Oregon
and Northern California with work concentrating on early detection,
host removal, and eradication efforts. Funding would allow hiring and
equipping of hundreds of workers who would remove the several thousand
infested trees, apply proven chemical treatments to tens of thousands
of trees exposed to the insect, and carry out intensified surveys to
ensure that no beetles escape.
Fish and Wildlife Service
The US Fish and Wildlife Service operates a number of voluntary
habitat restoration programs that provide grants to improve fish and
wildlife habitat. All of these programs currently have a backlog of
projects and could spend funding quickly on restoration projects such
as dam removal and fish passage construction, fish habitat restoration,
and wildlife habitat restoration. We recommend investment in the
following programs:
Fish habitat restoration: The Fish and Wildlife Service
operates a fish passage program that provides grants for the
removal or modification of barriers to fish passage as well as
the National Fish Habitat Action Plan, which provides funding
to partnerships for on-the-ground fish habitat restoration.
Based on current backlogs, we recommend $14 million and $10
million, respectively, for each of these programs
Coastal Restoration: The Fish and Wildlife Service's coastal
program focuses on a variety of coastal restoration projects
ranging from invasive species removal to coastal marsh and
wetland restoration by cost-sharing restoration projects with
coastal landowners. The program has an average annual funding
level of $11 million and a project backlog of $10 million;
thus, we recommend a stimulus investment of $21 million.
Partners for Fish and Wildlife: The Partners Program
provides funding to private landowners for projects in all
habitat types that conserve or restore native vegetation,
hydrology, and soils associated with imperiled ecosystems such
as longleaf pine, bottomland hardwoods, tropical forests,
native prairies, marshes, rivers and streams. This program
currently funds approximately $75 million in projects per year
and has a backlog exceeding $35 million. We recommend $100
million in stimulus funding.
In addition, hundreds of thousands of acres of native habitat on
national wildlife refuges is in need of restoration, which is critical
to maintaining healthy populations of game and nongame species. Of
particular note are the many national wildlife refuges that are being
overtaken by invasive plants and animals that crowd out native
vegetation and degrade the quality of wildlife habitat. Investment is
needed hire teams of workers to cultivate and plant native trees and
grasses and eradicate invasive species as well as contract local
companies and workers to repair, construct and restore deteriorating
water infrastructure that provides important wildlife benefits.
Bureau of Land Management
The Bureau of Land Management (BLM) Abandoned Mine Land (AML)
program seeks to eliminate or reduce dangers to public health, safety
and the environment as a result of impacts related to abandoned hard
rock mines on public lands. There are over 12,000 abandoned mines. Of
the 12,000 sites that have been evaluated and approximately 80% need
remediation. In addition there are estimated to be a total of 100,000-
500,000 abandoned sites yet to be fully characterized for remediation.
Environmental problems from abandoned mines include: contaminated/
acidic surface and ground water; and stockpiled waste rock and mill
tailing piles. In addition, surface runoff can carry AML-originated
silt and debris down-stream, eventually leading to stream clogging.
Sedimentation results in the blockage of the stream and can cause
flooding of roads and/or residences and pose a danger to the public.
Sedimentation may also cause adverse impacts on fish. The cost
estimates to clean up abandoned hardrock mines range from $30--$70
billion. The BLM AML program could quickly allocate a minimum of $400M,
which could produce tens of thousands of jobs.
minimizing environmental damage from hard infrastructure projects
Design approaches and environmental standards have improved
dramatically since much of our current infrastructure was built. If we
are to avoid many of the harmful impacts of past infrastructure
development, any new investment in infrastructure should seize on the
opportunity to use the state of the art design and building standards
that are already being applied in many places.
An important example of an improved design approach is the
development of stream crossing standards for roads in New England. One
study inventoried 3,600 crossing structures in New England and
identified over 2,000 that act as severe barriers to aquatic organism
passage and river processes, demonstrating that road crossings present
one of the greatest threats to these aquatic ecosystems. In response,
the New England District of the Army Corps of Engineers, working with
state and NGO partners, developed standards for road-stream crossings
that ensure new or rebuilt crossing structures maintain habitat
connectivity by defining minimum criteria for parameters such as
minimum bridge span width, culvert design, and substrate type. The
standards apply to all new projects seeking regulatory approval under
the programmatic general permit for each state in New England and offer
a tested model to apply to road projects nation-wide.
Many infrastructure projects are being developed in coordination
with regional conservation plans such as ecoregional assessments,
regional Habitat Conservation Plans (HCPs), and watershed plans. Many
organizations utilize ecoregional assessments to identify important
conservation areas sufficient to ensure the long-term persistence of
the ecoregion's biodiversity. The Nature Conservancy, Western
Governor's Association and Bureau of Land Management are all investing
in some form of ecoregional planning to guide decision-making.
Similarly, California has employed regional HCPs for infrastructure
siting, permitting and mitigation and has recognized the streamlining
benefits of this approach. These planning tools ensure that necessary
project permitting can go forward in a timely manner and result in
mitigation that provides greater ecological benefit. Therefore,
projects that utilize these tools should be given priority in
allocation of stimulus funding.
In the realm of water resources infrastructure, numerous studies
and decades of experience have demonstrated the economic and
environmental benefit of combining non-structural approaches with
structural projects to achieve flood risk reduction goals. The best
example of this approach is the development of set-back levees that
provide flood protection but do so in a way that maintains connection
between the floodplain and the river and allows the floodplain to serve
its natural function of attenuating floods. This design approach is a
significant departure of the traditional practice of building levees
directly on the river bank but should be employed where possible in any
new investment.
Broad scale standards for bridge design, regional planning and
flood risk reduction should be adopted in a stimulus package to steer
the agencies' project selection toward those projects that employ best
practices such as the ones described above. Funding should first be
allocated to projects that have been designed using these techniques.
While we understand the need to allocate funding quickly, there will be
a number of projects that are not designed using the best design
practices but that could easily be retrofitted to meet these standards.
A second funding priority should go to those projects that can be
retrofitted to reduce or reverse environmental damage. The third tier
for funding should be any other project that has completed design and
environmental review and is ready to be built but does not employ
innovative design practices to minimize environmental damage.
______
Statement of Stacey L. Pine, Senior Director of Government Affairs,
National Recreation and Park Association
Thank you Chairman Bingaman, Ranking Member Domenici, and other
honorable members of the committee for this opportunity to submit
written testimony on investment ideas for clean energy and natural
resources projects and programs to create green jobs and to stimulate
the economy.
The National Recreation and Park Association (NRPA) is a national,
non-profit organization with a mission of advancing parks, recreation
and environmental conservation efforts that enhance the quality of life
for all people. There are more than 6,500 park and recreation agencies
throughout the country, majority of which are members of NRPA. Through
our network of more than 21,000 citizen and professional members we
represent the local and state park and recreation departments across
the country.
NRPA commends this committee and the entire Congress for seeking
innovative ways to address our nation's economic challenges. As you
know, roughly two million jobs have been lost in the United States in
2008 and more losses are forecasted. Thus, we are pleased that you are
in the process of developing economic recovery legislation that will
put people back to work by funding ready-to-go infrastructure projects
that meet critical needs in communities across America. Undeniably, it
is the economic hardships of individual communities that have merged to
create a national recession. Therefore, to be truly effective, efforts
to diminish this recession and boost the national economy must start
with providing resources at the local level so communities such as
Silver City, New Mexico or Ketchikan, Alaska can stimulate their own
economies and create jobs for their citizens.
As the Congress works to craft economic recovery legislation, we
request that you include funding for the construction and renovation of
parks and recreation by providing $125 million for the Land and Water
Conservation Fund state assistance program (LWCF) and $100 million for
the Urban Park and Recreation Recovery Program (UPARR). These programs
are ideally suited to achieving the goals of the proposed economic
recovery package by creating jobs, stimulating economic activity, and
putting people back to work.
LWCF stateside assistance provides 50% in federal funds to states
and localities as matching grants for the purchase and development of
parks and construction of recreation resources. As a result of LWCF
stateside assistance funding, over 41,000 athletic and playing fields,
hiking trails, campgrounds, ski areas, swimming pools and boating
facilities have been created in local communities. Since its inception
in 1965, the program has provided more than $4 billion in matching
funds to states and local communities in 98% of American Counties.
Similarly, since 1978, UPARR has provided more than $270 million in
matching grants to nearly 400 cities to rehabilitate and improve their
parks and recreational facilities that have fallen in disrepair due to
lack of investment. With UPARR grants serving as a catalyst, urban
communities are able to make recreation centers and public parks safe,
rebuild deteriorating infrastructure, and leverage existing resources
to serve larger populations while also meeting new demands.
Our nation has a long history of investing in park restoration and
construction as a way to create jobs and revitalize the economy.
President Franklin Roosevelt created the Citizens Conservation Council
(CCC) to build and fix up America's parks as a key component of his
strategy to put people back to work during the Great Depression. Again
in 1983, Congress recognized the important role park construction
projects could play in immediately stimulating our nation's economy.
The Emergency Job Appropriations Act of 1983 invested in LWCF and UPARR
by providing $40 million to LWCF for development/redevelopment projects
and $40 million to UPARR for rehabilitative grants and repairs. Under
this Act, states were encouraged to rapidly fund construction projects
that would create employment opportunities between September 1983 and
September 1984. As a result of this funding, 572 LWCF development
projects 126 urban park projects were funded in communities and major
cities across the nation. Additionally, this Act increased employment
by providing 35,000 jobs.
Unfortunately, in recent years, funding for LWCF stateside
assistance and UPARR has significantly diminished leaving communities
with lists of projects and needed repairs they are unable to complete
because they do not have funding. Numerous communities throughout the
country have capital construction and maintenance projects that are
ready to commence pending matching federal funds. These projects such
as new roofs for community centers, irrigation systems for sport
fields, repairs to swimming pools, and electrical upgrades to park and
recreation facilities would allow communities to preserve, rehabilitate
and maintain already existing, and in some cases crumbling,
infrastructure that provides numerous recreational opportunities for
citizens. Many of these projects have designated local funding set
aside, are poised to receive local approval or permits, and are
suitable for small or minority businesses and contractors. LWCF
stateside assistance and UPARR funding for these projects would allow
construction to begin almost immediately, thereby putting local
residents to work and helping communities ensure they are providing
safe recreational facilities for children and adults alike.
In addition to contributing to local economies and repairing
infrastructure, LWCF stateside assistance and UPARR projects serve to
protect our environment and promote environmental stewardship while
also creating green jobs. Grants provided by LWCF stateside assistance
and UPARR have funded projects that contribute to reduced stormwater
runoff, enhanced groundwater recharge, stormwater pollutant reductions,
urban heat island mitigation, and reduced energy demands. These
projects conserve our environmental resources such as green space and
water. Additionally, these projects serve to make communities and
neighborhoods safer by protecting against environmental contamination.
Businesses contracted to carry out these projects are in sectors that
are part of the green economy. Through the services they provide jobs
are created that conserve our natural environment and improve
environmental quality.
However, park and recreation agencies also serve another important
function: to improve the physical and mental health of citizens. By
developing and restoring this local infrastructure, you are also
investing in the health of local communities. Our nation currently
faces an obesity epidemic and strengthening or improving local
recreation infrastructure is necessary to combat this epidemic.
As you probably know, hundreds of parks and recreational facilities
are in disrepair in communities across America due to budget cutbacks
and the lack of federal funding during the past eight years. This
seriously undermines local educational and athletic programs, the
availability of indoor and outdoor recreational activities, and overall
quality of life in communities. Therefore, NRPA also supports increased
funding for programs such as Community Development Block Grants and the
various transportation programs, such as the Recreational Trails
Program, that would provide funding for local park and recreation
agencies.
From the information I have presented to you, I believe it is
obvious that LWCF and UPARR develop and restore local infrastructure in
communities facing growing populations and demands. Investing in local
communities and giving them the necessary resources to preserve,
maintain and rehabilitate local infrastructure is especially important
in times of an economic downturn, such as the one we are currently
experiencing. For it is during such times that demand for local
recreational programs and services significantly increases as citizens
look for close to home recreation, entertainment and fitness
opportunities. And for many citizens, local park and recreation
agencies are where they turn for recreation, entertainment and fitness
solutions.
In conclusion, NRPA believes that LWCF stateside assistance and
UPARR are invaluable tools for Congress and the new Administration. We
are confident that investing in LWCF and UPARR would immediately
stimulate our economy through the creation of jobs, serve to protect
our environment and provide much needed resources to communities to
address local needs. Please include $125 million in funding for LWCF
and $100 million in funding for UPARR in any economic stimulus
legislation considered and passed by the 111th Congress.
Thank you for this opportunity to present testimony.
______
Statement of Mark Singleton, Executive Director, American Whitewater;
Chairman, Outdoor Alliance
Mr. Chairman and members of the Energy and Natural Resources
Committee:
Outdoor Alliance is a coalition of six national, member-based
organizations devoted to conservation and stewardship of our nation's
public lands and waters through responsible human-powered outdoor
recreation. The Outdoor Alliance includes: Access Fund, American Canoe
Association, American Hiking Society American Whitewater, International
Mountain Bicycling Association, and Winter Wildlands Alliance.
Collectively, the Outdoor Alliance has members in all fifty states and
a network of almost 1,400 local clubs and advocacy groups across the
nation. Our coalition represents the millions of Americans who hike,
paddle, climb, mountain bike, backcountry ski and snowshoe on our
nation's public lands and waters.
Our staff and members spend much of their free time exploring
public lands via the roads, trails, rivers, and at the campsites.
Collectively, we witness firsthand the state of these resources and are
among the many people impacted by an aging infrastructure that is
mismatched with today's priorities for public land management. We
recognize the need for active and immediate efforts to bring our public
lands infrastructure and in some cases the lands themselves up to
standards. Perhaps most importantly today, we believe that doing so
would create an array of economic benefits across multiple sectors of
the United States economy immediately and for decades to come.
Specifically, we suggest that the Committee prioritize the
following activities in an economic stimulus package:
US Forest Service Road Decommissioning and Restoration:
Unmanaged roads can wash out and erode, pollute water, damage
wildlife habitat, impact recreation, and speed the spread of
weeds. The current 380,000-mile US Forest Service (USFS) road
network contains many redundant, obsolete or unnecessary roads
that are costly to maintain and do not serve the millions of
people who visit national forests. Outdoor Alliance supports a
common-sense policy, including retiring unnecessary roads to
limit environmental damage and focusing scarce resources on
maintaining the roads that best serve the public. Currently,
deferred maintenance is over $8.4 billion nationwide and
increases annually as allocated funds fall far short of annual
maintenance needs. A number of national forests have already
set sound road maintenance priorities, but lack the funds to
reach those goals. An infusion of funding into road management
would immediately put people to work and would avert risks to
water supplies, wildlife habitats, recreational opportunities,
and fire-sensitive communities.
USFS and BLM Recreation Infrastructure Improvements: Forest
Service and Bureau of Land Management (BLM) lands often provide
the closest and best mountain biking, backcountry skiing,
hiking, snowshoeing, paddling, and climbing opportunities for
millions of Americans. Investing now in the construction and
maintenance of trails, river access areas, campsites, parking
areas, sanitary facilities, and other visitor amenities--in the
tradition of the Civilian Conservation Corps--would immediately
create new jobs and benefit our citizens and gateway economies
for decades to come.
Federal Agency Recreation Field Staff: The primary federal
land management agencies (US Forest Service, Bureau of Land
Management, National Park Service, and US Fish and Wildlife
Service) each have a significant need for recreation field
staff. The National Park Service has proposed 3,000 new rangers
as part of their Centennial Initiative, and the other agencies
certainly have a similar need. Hiring field staff to interact
with the visiting public would directly create thousands of new
jobs, encourage recreation-based tourism, reduce planning
conflicts and errors, and create new opportunities for
volunteerism. We envision these individuals as highly skilled
recreationists that share experiences with the public, forming
an invaluable personal connection between public land managers
and the public.
Each of these priorities would result in both immediate and lasting
economic and societal benefits for communities near public lands and
the nation as a whole. In addition, each of these priorities is a wise
and necessary investment that will protect at-risk public assets. We
ask that you consider the following relevant points:
1. These priorities offer a wide range of jobs: From
backcountry trail crews requiring physical stamina, to
engineers requiring years of higher education, the
priorities we are suggesting provide a full range of
job opportunities. Thus, these projects offer work for
a broad cross section of citizens.
2. These priorities offer construction related jobs:
Many of the jobs relating to public lands
infrastructure are within the hard-hit construction
field. These jobs include heavy equipment operators,
engineers, architects, surveyors, landscapers, and
general contractors.
3. These priorities bolster the recreation economy:
Outdoor recreation is a $730 billion industry in the
US, and the vast majority of outdoor recreation occurs
on public lands. These priorities will enhance
recreation opportunities and in turn the recreation
economy. The economic benefits of these actions are
significant in both the manufacturing of outdoor
equipment and products, and also in the nature-based
tourism economies of countless and often rural
communities. It is our belief that high quality
infrastructure, landscapes, and management result in
high quality recreational experiences and in turn
increased participation in human-powered outdoor
recreation.
4. These priorities avert economic and ecological
risks: Many roads and other infrastructure elements
require maintenance to prevent failure--and failure can
have massive impacts requiring costly remediation.
Getting to work on the sizable backlog of basic
maintenance and in some cases decommissioning of public
land infrastructure is a good and needed investment.
Doing so will protect the landscapes, water, and
recreation that define our public lands, and protect
our nation from future, much larger management
expenses. Taking these actions is analogous to putting
a new roof on your house to avoid major water damage--
and by all accounts there are already some leaks in the
old roof.
5. These priorities can happen right away: There is
certainly no shortage of work to be done, and it is our
understanding that agencies have active lists of
projects in need of implementation. Unlike some agency
actions, infrastructure maintenance and enhancements
are generally noncontroversial and in fact popular with
the public. Therefore agencies should be able to
complete the planning and implementation of such
projects in short order. In the parlance of the day,
what we have recommended is ``shovel ready.''
6. These priorities have additional societal value:
Protection and enjoyment of our American landscapes are
core values of our nation. In addition to their
inherent and iconic value, public lands provide human-
powered outdoor recreation opportunities that foster
public health, childhood development, an invaluable
connection with nature, and other quality of life
benefits. We believe that investing in our public lands
is money well spent.
In conclusion, we feel that offering federal land management
agencies significant economic stimulus funds for the priorities that we
have listed above will have an immediate and lasting positive impact to
the United States economy. We feel that the funding levels suggested at
today's hearing by the witnesses (Roughly $2-3.5 billion each for BLM
and USFS per year, and roughly $1.5 billion for the NPS) represent
reasonable balances between the agencies' needs and their capacities.
Thank you for considering this testimony.
______
Statement of Scott Jorgensen, President and CEO, Solarsa Inc
Mr. Chairman, Ranking Member Domenici, and Members of the
Committee, I am submitting this unsolicited testimony for your
consideration as you work through an immediate economic stimulus
package because I believe you can turn this crisis into an
extraordinary opportunity to achieve far-reaching benefits for our
country and the world. I wish my voice to be heard in strong support
for you to combine rapidly S. 3233, the 21st Century Energy Technology
Deployment Act, and S. 2730, the Clean Energy Investment Bank Act of
2008 and make the combined act a key component to the economic stimulus
package with an initial funding of $10 billion dollars.
Please allow me to introduce myself. My name is Scott Jorgensen, I
am President and CEO of SOLARSA INC., headquartered in Tampa, FL. I
started the company in 2003 and have developed it into one of the
leading providers of solar thermal and photovoltaic solutions in the
country. Please visit our website at www.Solarsa.com to find out more
about our company. In short, our main business is selling renewable,
on-site energy and cogeneration systems (which we call our Energy
Independence Systems) directly to residential or small business end
users or to third parties such as general contractors who install the
systems for the end user. These systems are comprised of one or more of
the following components, solar hot water, solar air conditioning, and
solar electric. We sell Energy Independence Systems to residential,
commercial and industrial clients and we franchise our business model.
The bills I referred to above, S. 3233 and S. 2730, create a
federal funding entity whose purpose is to invest in renewable energy
and energy efficiency technologies which can put people to work
immediately--engineers, contractors, plumbers, electricians and solar
installers to work in every community throughout America. Investments
that can help ameliorate the financial crisis with real assets as
collateral for the loans.
I encourage this Committee to specifically provide this $10 billion
dollars for an economic stimulus package that focuses on existing,
proven technologies that are not being fully exploited, such as energy
efficiency enhancements and solar thermal installations for residential
and small business.
Loan guarantees, energy-efficiency mortgages, and secondary market
support for energy efficiency improvements, solar thermal applications
and other similar technologies provide the greatest short and long-term
societal benefit for our tax dollars. These `unsexy' improvements and
technologies can be made more attractive by encouraging the aggregation
of such projects for resale to a government-sponsored secondary market.
Don't throw money at a single solution, build sustainable financial
markets that can eventually stand on their own and keep generations of
Americans working.
Energy efficiency, solar thermal cooling/heating and solar hot
water projects can make a meaningful contribution to our energy,
environmental, economic or physical security but have difficulty
accessing private sources of funding due to aggregation-related credit
issues, unknown residual values, inadequate secondary markets for used
equipment and/or certain regulatory risks.
Eventually, the federal funding entity needs to expand authority to
fund energy supply solutions for new technologies under development
that meet the goal of energy independence. Additionally, the federal
funding entity requires the flexibility to invest in expansion and
improvement of the transmission grid, which will provide benefits in
job creation and energy security into the future.
States should participate in the federal funding entity through
Intergovernmental Agreements with risks sharing for the deployment of
energy efficiency and solar thermal technologies. I spoke at the second
annual ``Serve to Preserve Summit on Global Climate Change'' in Miami
this year hosted by Florida's Governor Charlie Crist. During my session
titled ``Going Green Makes Economic Sense'', I proposed a $1 billion
dollar loan guarantee program to put solar thermal cooling, heating and
hot water into Florida's government buildings. This $1 billion dollar
initiative translates into 200 to 300 solar thermal cooling projects
ranging from $1 million to $10 million dollars each throughout the
State of Florida. A single billion dollar investment in ``solar
cooling'' shifts $4 billion dollar in fossil fuels purchases to create
jobs directly in our local communities. Annual energy for cooling and
ventilating commercial buildings and homes consume over 50% of all
electricity produced in Florida.
Dr. Hermann Scheer, a member of the German Parliament, President of
EUROSOLAR, the European Association for Renewable Energy, and General
Chairman of the World Council for Renewable Energy, met with me at the
second annual ``Serve to Preserve Summit'' in Miami. Dr. Scheer, who
has led Germany's rise to a solar and wind energy superpower, said that
countries need to do three things to push renewable energy: guarantee
payment (through loan guarantees), guarantee access to grid for any
producer of renewable power, and to not cap contribution of renewable
power.
Except for a short time working for Price Waterhouse in New York
City, I have worked the majority of my life in small family businesses.
I am your foot soldier in our ``war against unsustainable living''.
After 9/11 occurred, I felt directly responsible for that event due
to my prior profligate use of energy. Now, as a responsible person who
assumes full responsibility for my actions and inactions, I have been
working diligently to see that my sons and daughters live in a better
place. My existing businesses turned to recycling and saving energy
immediately. And I started a new company focused on solar thermal
energy for air conditioning. For the past 18 months, my solar company,
Solarsa has spent $500,000 dollars engineering three of the largest on-
site solar thermal (cooling, heating & hot water) systems in the world
that make economic sense regardless of gas prices. Solarsa uses
technology that has been tested, certified and is readily available.
Thousands of similar systems are in Asia and Europe.
FINANCING REMAINS OUR BIGGEST HURDLE
Energy efficiency and solar thermal (hot water) projects can make a
meaningful contribution to our energy, environmental, economic or
physical security but have difficulty accessing private sources of
funding due to aggregation-related credit issues, unknown residual
values, inadequate secondary markets for used equipment and/or certain
regulatory risks. A federal funding entity can smooth the way for
valuing these risks and encouraging the private markets to accept
certain risks.
With a back ground in accounting and finance, over 25 years of
running my own businesses and five years in startup mode for my solar
thermal energy company, I present to you:
The Jorgensen Plan:
Ask the American people to work hard, even `pay the price'
for ``Energy Independence''. And we will. Pricing signals
matter.
Provide immediate emergency funding of $10 billion for a
federal funding entity (as identified in S. 3233 and S. 2730)
and $100 billion each year for the next nine years.
Provide loan guarantees for large and small energy
efficiency and solar thermal projects.
Create a government-sponsored secondary market to aggregate
residential and commercial scale energy efficiency and solar
thermal projects so that Americans can invest in our homes,
businesses and communities.
There are Americans that will never hold a rifle, but we Americans
are ready to fight and work hard for our ``Energy Independence''. Give
us not guns, but create financial markets so that we can invest in our
homes and businesses. After 9/11, the country had an opportunity to
call the American people to war against oil . . . not for oil.
We have had enough finger pointing; Americans are ready to take
responsibility for 9/11, climate change, high or low gas prices and
world unrest. We no longer accept Washington, Wall Street or Detroit
blaming others for their demise.
Shift to long-term thinking. Consider the legacy we leave our
children. Thirty years from today, what will our children remember of
what we did today? What will the history books say about you, about me?
Wall Street bailout. Detroit bridge-loan. Job losses . . . Not exciting
things to be remembered by.
Call Americans to work! To work harder for our ``Energy
Independence''! We don't need handouts, but jobs. Jobs that are
sustainable. We are willing to work hard, save and invest in our
children's future. Our grandparents knew how to save and maybe we need
to live a little more like they did.
From democrats to republicans, both parties have changed because of
us, the voters. I call on Congress to immediately replace purchases of
fossil fuels with manufacturing, finance, engineering, installation,
maintenance and repair jobs through the enactment of a combined S.
3233, the 21st Century Energy Technology Deployment Act, and S. 2730,
the Clean Energy Investment Bank Act of 2008 and a minimum funding of
$1 trillion dollars over ten years.
Call on Americans to help, to innovate, to invest and to save. Make
``Energy Independence'', America's number one priority. Thirty years
from now, I want my grandchildren to see those same solar panels still
working that we installed during this first year of our ``war against
unsustainable living''!
Thank you for the opportunity to put my thoughts before this
Committee. I would be happy to provide additional information or
background on anything included in this testimony.
______
Statement of the American Institute of Architects
INTRODUCTION
As the global financial crisis continues to threaten the livelihood
of American businesses and workers, the American Institute of
Architects (AIA) strongly urges Congress to support polices that will
stimulate and restore confidence in the United States economy.
The economic crisis has tightened credit markets, putting financing
for construction projects in jeopardy and forcing businesses to lay off
workers. The slowdown in building could not come at a worse time--when
America's infrastructure is deteriorating, with clogged highways
stifling commerce, transit systems overwhelmed and underfunded, and
energy prices on the rise.
The AIA's nearly 85,000 members have been particularly hard-hit by
the recent economic downturn, and it appears that the fiscal climate
will get worse before it gets better. The AIA's Architecture Billings
Index, a leading economic indicator of the building industry, forecasts
a significant reduction in activity for industries within the building
sector over at least the next 12 months.\1\ As the building sector is
responsible for about one of every ten dollars of United States GDP,
continued stagnation within the building industry will only further
magnify the overall struggles of our economy.
---------------------------------------------------------------------------
\1\ http://www.aia.org/aiarchitect/thisweek08/1121/1121b_otb.cfm
---------------------------------------------------------------------------
PRINCIPLES FOR ECONOMIC RECOVERY
America's architects believe that this economic crisis presents an
opportunity not only to build, but to build better--greener buildings,
vibrant communities, and a 21st century transportation network that is
good for both the environment and the economy. To that end, the AIA
believes that any funding for infrastructure projects that Congress
appropriates should be prioritized with these principles in mind:
Projects for which construction can commence within 24
months of enactment of the economic recovery legislation
Projects that rebuild and improve safety of existing
infrastructure
Projects for new infrastructure that are more energy
efficient, sustainable and help create healthier, livable
communities than what existed before
The AIA believes that it is important to provide funding for
projects across at least a 24-month timeline for several reasons.
First, as indicated previously, the ABI suggests that the economic
downturn in the building sector will last at least a year, if not
longer, and previous recessions show that recovery tends to lag in the
construction and real estate sectors; providing funding for projects
across 24 months ensures a steady stream of funds for job creation over
the likely life of the recession. Second, it will be difficult if not
impossible to push significant sums of money as those proposed for the
economic recovery through the ``pipeline,'' without increasing the risk
of funds being poorly spent and projects hastily planned and executed;
allowing for longer planning and design time for certain projects will
help ensure they are carried out in the most effective, cost-efficient
manner. Third, allowing for planning and design work through the
various stages of the process will ensure that the economic recovery
package creates jobs not only in the construction sector, but
throughout the building industry.
A 2004 AIA survey of architecture firms determined that the average
time between the award of a design contract and the award of a
construction contract for that facility was about one year, but less
than six months for 40 percent of the projects.\2\ Therefore, providing
funding for projects in the design phase will not prevent construction
contracts from being awarded within the timeframe of the economic
recovery package, and will allow for a broader and better designed set
of projects.
---------------------------------------------------------------------------
\2\ http://www.aia.org/SiteObjects/files/
Baker%20and%20Saltes%20Web.pdf
---------------------------------------------------------------------------
To achieve the aforementioned goals, the AIA has developed a number
of policy ideas that, if enacted now, would invigorate the design and
construction industries, in turn providing an immediate stimulus to the
economy.
These proposals would create approximately 1.6 million jobs,
including 14,000 jobs for architects.\3\
---------------------------------------------------------------------------
\3\ Not including potential job creation from revenue provisions.
---------------------------------------------------------------------------
1. 21st Century schools
Schools across the country are in desperate need of restoration.
Too many of America's children attend school in overcrowded buildings
with leaky roofs, faulty electrical systems, and outdated technology,
all of which compromise their ability to achieve, succeed, and develop
the educational skills necessary for the workforce of the 21st century.
a. The AIA supports an investment of $25 billion in helping
school districts repair, modernize and green school buildings.
According to the National Education Association (NEA), it would
take more than $268 billion to bring America's K-12 school facilities
to a good condition. As the economic crisis has worsened, local
education agencies are further delaying and canceling major capital
projects to repair and modernize school buildings, meaning that the
amount of money needed to repair schools grows every day.
Modernized, green schools promote healthy, high achieving students
who will become future advocates for green living, as this generation
learns the importance of building for a sustainable future
Currently the green schools cost premium is between 1.5--2.5
percent of the total cost of the project. Studies undertaken to
demonstrate the efficacy of green schools peg the benefits to states at
anywhere from 10 to 20 times the initial cost. School districts see
direct benefits accrue at a level of around four times the cost due to
energy savings and other cost control mechanisms implemented. In fact,
according to Greening America's Schools by researcher Greg Kats, the
energy and water savings from green schools would save schools enough
money to hire an additional teacher.\4\
---------------------------------------------------------------------------
\4\ http://www.cap-e.com/ewebeditpro/items/O59F12807.pdf
---------------------------------------------------------------------------
According to the State Education Data Center (SEDC) of the Council
of Chief State School Officers, average spending by school districts on
operations and maintenance is $900 per student, or $45 billion
nationwide per year.\5\ This means it costs school districts $45
billion just to maintain school buildings' current condition.
Construction adds an additional $45 billion per year.
---------------------------------------------------------------------------
\5\ http://www.schooldatadirect.org/app/data/q/stid=1036196/
llid=162/stllid=676/locid=1036195/catid=1018/secid=4546/compid=-1/
site=pes
---------------------------------------------------------------------------
With the increased costs of energy and construction materials and
tight budgets, school districts are currently contemplating laying off
maintenance personnel, canceling or deferring modernization work and
delaying purchases of new equipment. A funding level of $25 billion
would ensure that funds go not only to maintaining what is currently
there but realizing improvements to school facilities and student
learning outcomes.
This proposal would create approximately 435,000 jobs, including
4,100 jobs for architects.\6\
---------------------------------------------------------------------------
\6\ AIA analysis of U.S. Conference of Mayors MainStreet Economic
Recovery Report (http://www.usmayors.org/mainstreeteconomicrecovery/)
b. The AIA supports an investment of $700 million to create a
pilot program that would provide grants for up to 15 state or
local education agencies to develop 21st century model school
campuses in each region of the country, utilizing 21st century
design and construction techniques that align to support 21st
---------------------------------------------------------------------------
century teaching and learning.
Tests and studies repeatedly place U.S. education achievement
behind those of other developed nations. Concurrently it is well known
that the health of any economy is based on the quality of its
educational system and the capabilities of our students entering the
work force. For many years foundations, researchers and educational
experts have been focusing on the reform of the American school system,
particularly at the secondary level. That reform is critical to the
future success of America's students and our economy.
To that end the AIA proposes that a network of ``model schools''
across the nation be established as exemplar examples from which public
school districts can observe and learn as they reform their educational
programs. These pilot projects would be created in partnership with
local or state educational districts and supported by non profits and/
or foundations that are focusing on the critical needs of America's
secondary students. These projects would become incubators of and
showcases for contemporary educational programs and models for
educational transformation.
This proposal would create approximately 12,000 jobs, including 115
architect jobs created or saved.\7\
---------------------------------------------------------------------------
\7\ AIA analysis of U.S. Conference of Mayors MainStreet Economic
Recovery Report (http://www.usmayors.org/mainstreeteconomicrecovery/)
---------------------------------------------------------------------------
2. Green commercial, residential and institutional buildings
As nearly every segment of the design and construction industry is
in a state of serious decline due to the economic downturn, Congress
should pursue policy ideas that will incentivize new construction and
major building renovations. A federal commitment to public,
residential, commercial, and institutional building design,
construction and renovation will put Americans back to work and
generate economic activity nationwide.
Although any improvement in energy efficiency are desirable,
federal funding should focus on those improvements that have the
potential for the greatest energy savings by looking at all building
systems (such as lighting, HVAC, and building shell) in an integrated
process. Improving energy efficiency in the building shell through
better insulation and glazing, for example, could then allow for the
use of smaller, more efficient HVAC systems, which would lead to
greater energy savings, at a lower cost, than from installing a more
efficient HVAC system by itself.
a. The AIA supports providing $10 billion for federal
building energy efficiency upgrades and modernization for
projects where construction can commence within 24 months of
enactment.
The federal government alone has jurisdiction over a significant
portion of all buildings in the U.S. Requiring significant energy
reduction targets in new and renovated federal buildings will
demonstrate to the private sector that the federal government is
leading by example. It would help spur the development of new
materials, construction techniques, and technologies to make buildings
more energy efficient. And it will help show that significant energy
reductions are both practical and cost-effective.
The Energy Independence and Security Act of 2007 (P.L. 110-14)
included several provisions to require increased energy efficiency and
carbon reduction from federal buildings, including a provision that
requires agencies reduce energy consumption by three percent per year
through 2015 (Sec. 431) and a provision that requires that federal
agencies reduce the fossil fuel consumption for new buildings and major
renovations on a scale that reaches carbon neutrality by 2030 (Sec.
433).
It has been reported that the U.S. General Services Administration
(GSA) and other agencies have a significant backlog of renovation,
modernization and energy efficiency projects. A $10 billion
appropriation will enable federal agencies to meet their statutory
obligations, reduce energy costs for U.S. taxpayers and put thousands
of design and construction professionals to work. This proposal would
create approximately 280,000 jobs, including 2,750 jobs created or
saved for architects.\8\
---------------------------------------------------------------------------
\8\ AIA analysis of Alliance to Save Energy estimates (www.ase.org)
b. The AIA supports an appropriation of $10 billion to state
energy offices for energy efficiency retrofits to public (state
and local), residential, commercial, industrial and healthcare
facilities where construction can commence within 24 months of
---------------------------------------------------------------------------
enactment.
The economic recovery plan provides an excellent opportunity for
improving the energy efficiency of buildings nationwide. Energy
efficiency modernizations not only produce jobs and economic activity,
but they help reduce energy consumption and create healthier, more
sustainable places to live, work and play.
The AIA believes that in order to ensure the greatest energy
savings, funds should be prioritized towards projects that achieve
specific energy saving targets, such as 30 percent below ASHRAE 90.1-
2004.
This proposal would create approximately 150,000 jobs, including
about 2,750 architect jobs created or saved.\9\
---------------------------------------------------------------------------
\9\ AIA analysis of Alliance to Save Energy estimates (www.ase.org)
c. The AIA supports providing at least $20 billion in
appropriations through the Community Development Block Grant
program and $10 billion for the Energy Efficiency and
Conservation Block Grant program, authorized in EISA, to
promote infrastructure projects that promote energy efficiency,
particularly energy efficiency affordable housing, on projects
---------------------------------------------------------------------------
where construction can commence within 24 months of enactment.
According to the U.S. Conference of Mayors' MainStreet Economic
Recovery Report, there are approximately $30 billion in projects that
would promote improvements energy efficiency and community development,
including for affordable and more energy efficient housing.
These proposals would create approximately 378,000 jobs, including
4000 architect jobs created or saved.\10\
---------------------------------------------------------------------------
\10\ AIA analysis of U.S. Conference of Mayors MainStreet Economic
Recovery Report (http://www.usmayors.org/mainstreeteconomicrecovery/)
d. The AIA supports enlarging the Energy Efficient Commercial
Buildings Tax Deduction (Public Law 109-58, Sec. 1331) from
---------------------------------------------------------------------------
$1.80 per square foot to at least $3.00 per square foot.
By increasing incentives for green building design and renovation,
Congress has an opportunity to stimulate economic activity in an
energy-conscious manner. As some energy efficient systems are more
expensive to design, build, and install than their traditional
counterparts, the initial increased capital costs often dissuade owners
from installing these systems, especially given the current economic
climate.
Increasing the commercial buildings tax deduction, which was
extended until Dec. 31, 2013, as a part of the financial rescue package
enacted into law earlier this fall, will provide the necessary
incentives to spur the design and construction of more energy efficient
buildings in the United States.
3. Transit, mixed use development and complete streets projects
America's infrastructure is crumbling. A lack of investment in our
nation's highways, transit systems, and bridges has limited economic
growth, lowered quality of life, and jeopardized safety for citizens in
all 50 states. A new federal commitment to rebuilding infrastructure
will not only begin to address these issues but will also create jobs
in the sagging construction industry, in turn stimulating economic
growth nationwide.
a. The AIA supports providing at least $12 billion in funding
for transit facilities and operations, including for New Starts
projects where construction can commence within 24 months of
enactment.
Well planned transportation projects can greatly enhance the
economic development, sustainability, safety, and livability of
communities. In 2008, the AIA and the University of Minnesota released
a study that measures how planning and design play a major role in
infrastructure projects.\11\ This study found that well-designed
infrastructure projects can bring multiple enhancements to communities
in terms of economic development, job creation, and increased
productivity. As Congress prepares to debate legislation aimed to
stimulate the economy, funding for well-designed infrastructure
projects must be included.
---------------------------------------------------------------------------
\11\ www.movingcommunitiesforward.org
---------------------------------------------------------------------------
The AIA believes that funding should focus on those types of
projects which have the greatest impact on sustainability, economic
development and safety, such as transit-oriented development (TOD)
projects, which create compact, walkable communities that mix housing,
retail, office space and other amenities centered around high quality
train systems; and ``Complete Streets'' projects that are designed and
operated to enable safe access for all users, including pedestrians,
bicyclists, motorists and bus riders.
This proposal would create approximately 375,000 jobs, including
450 jobs created or saved for architects.\12\
---------------------------------------------------------------------------
\12\ AIA analysis of U.S. Conference of Mayors MainStreet Economic
Recovery Report (http://www.usmayors.org/mainstreeteconomicrecovery/)
---------------------------------------------------------------------------
4. Historic preservation projects
Directing funding to preservation projects already in the pipeline
will immediately put architects, contractors, builders, and skilled
tradepeople to work. These projects not only protect America's history,
but they generate economic activity by restoring vitality to the
surrounding communities.
a. Congress should provide at least $30 million in funding to
the Save America's Treasures program and $100 million in grants
through State Historic Preservation Officers and Tribal
Historic Preservation Officers for non-federal public and
nonprofit historic sites.
Save America's Treasures provides funding to bricks-and-mortar
preservation projects. This program however, is underfunded and as a
result there are thousands of shovel-ready preservation projects
nationwide that have not been undertaken. In addition, restoring these
historic buildings will create work for the building industry and
generate positive economic returns in the communities surrounding them.
Funds for SHPOs and THPOs will help their communities develop site-
specific business plans to sustain economic viability; rehabilitate,
maintain, retrofit structures for energy efficiency; and fund projects
associated with site investment, especially if those projects relate
directly to the business plan. States have already identified key
projects in need and await resources to get projects underway.
b. The AIA supports increasing the Historic Preservation Tax
Credit from 20 percent to 40 percent for smaller projects in
which the qualified rehabilitation expenditures do not exceed
$2 million.
Studies have shown that every federal or state dollar invested in
the historic tax credit leverages approximately five dollars in
complimentary private investment. Enhancing the historic tax credit
could encourage reinvestment in communities with projects that are
ready to go but have been halted by the recession and existing tax
credit limitations.
An increase from 20 to 40 percent for smaller projects would target
the incentive to those ``main street'' type developments where tax
credit costs are currently too prohibitive. Second, to maximize the
creation of housing in historic and older buildings, the 10-percent
portion of the historic tax credit should be available for housing in
all eligible buildings 50 years old or older and specifically in HUD
``Difficult to Develop Areas'' and Census Bureau ``Qualified Census
Tracts'' where investment is most difficult.
5. Tax relief for businesses
a. Congress should amend Section 199 to allow eligible sole
practitioners to claim the deduction for qualified
architectural and engineering firms.
In 2004 Congress created a new deduction, codified in section 199,
which allows taxpayers engaged in certain businesses to deduct up to 9
percent of their qualified receipts (the percentage is phased in,
through 2010). The deduction was established partially to enhance the
ability of U.S. small businesses to maintain their position as the
primary source of new jobs in this country. However, due to an unfair
and inconsistent limitation within the code, some of the smallest
design firms in the country are not allowed to claim this deduction.
Section 199 contains a limitation, providing that the amount
deductible in a given year is limited to the amount of W-2 wages that
the taxpayer paid in that year, which is the amount on which an
employer withholds taxes. Some businesses that otherwise qualify for
the deduction are organized as sole proprietorships or other types of
businesses that do not pay W-2 wages. For example, an architect working
as a sole proprietor with no employees will pay no W-2 wages (although
he or she will pay estimated taxes, including self-employment taxes).
As a result, these taxpayers will not be able to take a section 199
deduction or will be able to take only a very small portion of the
deduction that otherwise would be available (e.g., if the architect has
a part-time clerical assistant to whom he or she pays W-2 wages).
This result is unfair and is inconsistent with the purposes
underlying section 199. Congress intended the section 199 deduction to
apply to architects, and specifically amended section 199 to include
them. However, the artificial limitation to W-2 wages denies the
deduction solely because a business is small and is not organized in a
particular form. This has the practical effect of denying the section
199 deduction to the thousands of architects who do business as sole
practitioners.
Many sole practitioners and small design firms currently face the
most ominous economic conditions in nearly two decades. Being denied
the section 199 deduction simply because they do not file W-2s is an
unfair and unintended situation that is hurting the smallest design
firms across the country do business and create jobs. Congress should
amend Section 199 to allow these firms to claim this deduction.
b. The AIA supports accelerating the depreciation of energy-
efficient heating, ventilation, air conditioning, or commercial
refrigeration property installed in nonresidential real
property or residential rental property
The AIA believes that this would not only provide help businesses
of all sizes looking to improve their operations and reduce costs, and
help equipment manufacturers, retailers and installers, but would also
reduce energy consumption. Such a proposal is included in Rep. Melissa
Bean's (D-IL) legislation, H.R. 4574.
c. The AIA strongly supports the repeal of Section 511 of
P.L. 109-222, which requires federal, state and most local
government agencies to levy a three-percent withholding on all
government contracts, grants and other payments.
Although this provision is not slated to go into effect until 2011,
many businesses are in the process of developing their plans for the
next few years and are having to invest funds already in preparing
accounting systems to handle the new withholding. In addition, the
withholding would come into effect around the time that many economists
believe that the economy will begin to recover. It makes no sense to
provide economic relief to businesses on one hand and yet punish them
for performing government work with the other.
CONCLUSION
The AIA looks forward to working with the members of the committee
to advance bipartisan, common-sense proposals that will help invigorate
America's economy.
______
Statement of Richard Moe, President, the National Trust for
Historic Preservation
As Congress considers strategies to address this serious recession,
the National Trust for Historic Preservation applauds the Committee's
leadership in calling for investment in energy and natural resources
that would create jobs, stimulate the economy, and help to revitalize
America's public assets. The National Trust supports the principle that
short-term stimulus proposals must have long-term benefits for our
economy, environment, and society. We need to focus on using resources
wisely and I see this economic crisis as an opportunity to place the
nation on a better course toward a more sustainable future.
I am Richard Moe, President of the National Trust for Historic
Preservation, the largest private, nonprofit membership organization
dedicated to protecting the irreplaceable. Chartered by Congress in
1949 and recipient of the National Humanities Medal, the National Trust
provides leadership, education, advocacy, and resources to save
America's diverse historic places and revitalize communities. Our
headquarters in Washington, six regional offices, and 28 historic sites
work with our 270,000 members and thousands of local community groups
in all 50 states.
Much of the national dialog surrounding relief for the country's
ailing financial markets, businesses, lending institutions, and
industries refers to the larger implications for ``Main Street.'' Given
the substantial role the National Trust and the preservation community
play in supporting Main Street jobs, revitalization, and economic
development, we have been encouraged by this critical emphasis on the
country's historic core--its communities--including rural communities--
and the people who make them work. So many of these places and their
economic well-being are linked to public land, and the historic and
cultural resources located in their midst.
Much of the land managed by the National Park Service (NPS), U.S.
Forest Service (USFS) and the Bureau of Land Management (BLM) is
located in rural areas with communities that benefit from all of the
economic activities associated with this country's diverse array of
public places. These activities include services for visitors and
meeting all the needs of historic buildings, infrastructure, trails,
roads, archaeological sites, and museum collections that require
stabilization, maintenance, conservation, surveys, and management. This
provides jobs for contractors, architects, engineers, and cultural
resource specialists. The National Trust proposes stimulus plans that
will rebuild Main Street and rural communities through reinvestment in
public land, and historic and cultural resources across America.
Our national assets on public land have been neglected for far too
long. Significant reinvestment in the historic and cultural resources
therein would generate jobs and support local businesses, often in
parts of the country where the need is great, such as rural
communities. And stewardship that emphasizes reusing and rehabilitating
the existing buildings, infrastructure, communities, and places we
already have is inherently more efficient and sustainable.
For example, the reuse of older and historic buildings on national
public land alone is a powerful tool for job creation and employment
retention. Rehabilitation generally uses about 20 percent more labor
and, in turn, produces a greater number of jobs than new construction.
As compared with new construction, every $1 million spent to
rehabilitate a building results in:
$120,000 more dollars initially remaining in the community;
Five to nine more construction jobs created;
An average of 4.7 more new permanent jobs created;
Household incomes in the community increasing by $107 more
than through new construction;
Retail sales in the community increasing by $142,000--
$34,000 more than through new construction; and
Real estate companies, lending institutions, service
vendors, and restaurants receiving more direct monetary
benefits.
The Trust would like to see Congress create and fund a
comprehensive program to unlock the economic potential of the nation's
public land and cultural resources. Using the precedent set by the
great corps network established in the 1930's, we propose establishing
a new ``National Public Land Service Corps'' that would address
maintenance and stewardship of historic structures and other cultural
resources under the jurisdiction of the three principal land agencies
of the federal government. A National Public Land Service Corps would
help us manage, identify, and protect the places that must be
preserved, and in so doing change our relationship to energy use,
exploration, and extraction on public land. This investment would
strengthen local economic development and provide new jobs through
rehabilitating existing structures, documenting and caring for cultural
resources, and expanding renewables and other energy sources. All of
this could be accomplished while training a whole new generation in
caring for the places and objects that help define our heritage. I have
outlined the Trust's proposals by agency.
public land investments for jobs, energy delivery, and revitalization
1. Bureau of Land Management
A significant portion of a National Public Land Service Corps funds
would be used to conduct cultural resource surveys and consult with
Tribes on BLM-managed land that is slated for energy development. While
BLM, ``manages the largest, most diverse and scientifically most
important body of cultural resources of any federal land agency,'' only
seven percent its 258,000,000 acres has been surveyed. Much of the land
targeted for alternative energy development remains unsurveyed. This
leads to difficulties with the agency's two-fold mission to provide
energy and protect its cultural resources. The lack of information on
the location and significance of historic and cultural sites results in
costly delays and conflicts. Industry needs certainty while we strive
to protect historic and cultural resources, and surveys can provide the
comprehensive information we need. To accomplish this, the National
Trust proposes a $40 million increase each year for two years in the
BLM 1050 account to hire professionals for surveys, studies, and Tribal
consultations, particularly in the Southwest where the demand for solar
energy is greatest.
A portion of this funding should also be directed toward the
protection of fragile archaeological ruins, trails, and historic
buildings, many of which are located in the National Landscape
Conservation System, the ``crown jewels'' of BLM land. Site
stabilization is needed in places like the Canyons of the Ancients
National Monument in southwest Colorado; historic mining camps in Grand
Canyon Parashant National Monument in northwest Arizona; Chiles
historic site on the Potomac Heritage National Scenic Trail in
Maryland; and Piedras Blancas Historic Light Station Outstanding
Natural Area in central California. Additionally, many significant
artifacts in BLM museums lie neglected in boxes and drawers. These need
to be cataloged, conserved, and interpreted appropriately.
Heritage tourism is one of the fastest growing segments of the
travel industry and it can be one of the most beneficial to local
economies. Visitors to historic and cultural sites stay longer in an
area and spend more money than other tourists. Utah's San Juan County
Economic Director recently told the National Trust that 72 percent of
the area's tourism relies upon international visitors drawn to Cedar
Mesa's ancient Native American ruins. Eighty percent of these visitors
employ local tour operators that generate jobs in one of the state's
poorest counties.
2. National Park Service
A National Public Land Service Corps could provide an historic
infusion of capital into National Parks for planning, design, and
construction. It has been nearly 50 years since the Parks have received
a significant boost for construction and rehabilitation, and now there
is an enormous backlog of projects in need of attention with an
estimated $1 billion in projects that are ready and awaiting funding.
These include the preservation of historic structures, making Park
facilities more energy efficient, and restoring trails and open space.
The National Park System already employs upwards of 20,000 workers and
generates about $12 billion in consumer spending for the economy--about
four times more than Congress appropriates for Parks annually. It is
logical that any stimulus plan would focus on the National Park System
with a valuable inventory of projects ready for easing this recession.
Stimulus funding should address deferred maintenance in the System.
Of the $8.7 billion in overall Park maintenance needs, $1.9 billion is
for the preservation and maintenance of 27,000 historic structures
listed in or eligible for the National Register of Historic Places. The
line item construction budget for projects ready to go includes $50
million for the rehabilitation of historic structures. This would
generate jobs for architects, engineers, construction workers, and
cultural resource specialists. More projects could be added in 12
months if they could get in the pipeline now.
Historic Buildings and Structures.--According to the
recently released report on Park cultural resources by the
National Academy of Public Administration, 46 percent of
structures in our National Parks are in fair or poor condition.
Even Independence Hall, one of America's most historic
buildings, needs $3.7 million in repairs.
Transportation and Infrastructure.--There is an enormous
amount of work to be done with about $1 billion in road repair
and infrastructure projects ready and awaiting funding.
Curatorial and Museum Collections.--There is a backlog in
cataloging curatorial resources and museum collections in the
National Parks. Nearly half of the Parks' collections is
uncataloged--about 56 million items. These collections could be
managed by contract services and brought on-line expeditiously.
At present the continued use, accessibility, and preservation
of valuable materials and information is threatened. Just the
way the Historic American Buildings Survey was established to
create jobs in documenting historic resources, a new Public
Land Service Corps could accomplish similar goals and protect
important cultural collections at risk.
Facility Energy Retrofits.--In keeping with the NPS goal of
making all the Park facilities carbon neutral in time for the
2016 centennial, Park facilities should undergo a comprehensive
energy efficiency upgrade and retrofit program. This would not
only produce jobs, but would also lead to more sustainable and
cost-effective Park operations.
3. US Forest Service
The same type of resources targeted to the NPS under a National
Public Land Service Corps should be available to the US Forest Service
as well to survey, rehabilitate, and maintain historic structures and
other cultural resources on USFS land. The Forest Service estimates
that it lacks $38 million for deferred maintenance costs for historic
resources. Addressing this need would create engineering, design, and
construction jobs in rural areas of the country that have been deeply
affected by the recession. This work could also focus on energy
efficiency retrofits for historic buildings used for Forest Service
operations--reducing long-term operating costs--and the rehabilitation
of tourist facilities to foster rural heritage tourism.
Federal agencies receiving funding from the stimulus package should
be allowed to retain a portion of the money for contract administration
and oversight.
CONCLUSION
America's public land and the diverse array of historic and
cultural resources that are part of them help define us as a nation.
These national assets deserve the highest degree of preservation,
maintenance, and stewardship independent of their potential to foster
energy independence, stimulate the economy, and create jobs. From a
practical standpoint, investing in the certainty that comes from early
historic and cultural surveys on land slated for energy development
avoids costly conflicts later and protects our heritage. The
rehabilitation of historic buildings and structures on public land
generates jobs and stimulates local economies hardest hit by the
recession. Access and improvements to collections and museums will
provide more opportunities for heritage tourism. Investing in our
nation's public land patrimony is a long-term investment in preserving
these places for generations to come.
History shows us how effective a public land component to a
recovery plan has been in the Depression Era service corps network that
relied--in part--on harnessing the potential of historic and cultural
resources. It is time to look to the lessons of the past and create a
new Public Land Service Corps to fund the long list of backlogged
construction and maintenance projects in the leading federal land
agencies. Embarking upon a new, comprehensive, program to fund the
queue of projects ready to go in the BLM, NPS, and USFS would open up
an array of opportunities for the American people in adjacent towns,
Main Street neighborhoods, and especially rural communities. Surveys,
assessments, restorations, rehabilitations, energy retrofits,
infrastructure/transportation works, curatorial services, and all types
of maintenance projects employ people, leverage federal dollars, and
address an unmet need that will have an exponential return on the
Treasury's initial outlay. Funding this initiative now will carry the
nation through the present recession and put the country on a much more
sustainable footing for the future.
______
Statement of David Bradley, Executive Director, National Community
Action Foundation
Mr. Chairman, Ranking Member Domenici, thank you for scheduling
this inquiry into how energy programs can meet the challenge of
creating many new jobs quickly. The National Community Action
Foundation represents the local Community Action Agencies that deliver
over 80% of the Weatherization Assistance Program (W.A.P.) services. We
were delighted when the Chairman mentioned the role this time-tested
program can play during last week's interviews, and we thank you for
the vote of confidence.
We support, and our membership can deliver, a $2 billion two-year
``Weatherization Stimulus'' initiative that can sustain more than 47
000 annual homebuilding industry jobs over two years while giving very
low-income consumers $ 350-500 in annual savings to use for other
necessities. (CBO estimates avoided costs like food and energy savings
for low-income consumers produce $1.73 of GDP for each dollar of cost
reduction.)\1\
---------------------------------------------------------------------------
\1\ Mark Zandi, Testimony before the U.S. House Committee on Small
Business, July 24, 2008
---------------------------------------------------------------------------
how is a stimulus w.a.p. different from today's program, the ``core''
w.a.p.?
It can focus on:
Direct employment and retention in agencies and private
contractors
Training thousands in specialized ``green-collar'' skills
Total cost-effective energy savings per program
Capital/equipment/durable goods purchases: e.g. vans, crew
equipment, home heating systems, other major appliances
Instead of:
Number of units weatherized
Capped average cost-effective spending per-home, which means
limited work, because of limits on average cost
Minimal investment in furnace replacement and other major
``capital investments''
Gradual transfer of specialized green-collar skills and
technology
And . . .
It can add a one-time quick-start, job-creating element: a major
home repairs program, Weatherization-Fix, that will invest up to 25% of
funds in:
Replacing roofs
Installing high-efficiency furnaces
Repairing broken floors, window, or doors
Bringing electrical systems to safety code standards
However, there are statutory constraints that would constrain and
delay the new investments and the employment impact of the program
unless they are changed, and we ask the Committee's support for the
necessary changes. The unwieldy limitations include: the ceiling on the
average investment levels per home, on the specialized training and on
some elements of program operations Without added flexibility and
expanded program purposes, as explained below, we believe that no more
than $1 billion, or half, could be spent over two years.
Each key program element is discussed below with the statutory or
policy changes it requires, if any. Some will prepare the program to
meet the challenge of permanent expansion that meets the needs of a
carbon-constrained nation; others are temporary to meet job-creation
goals.
The proposed growth to $2 billion is rapid, but not exponential.
The Weatherization network already has about $1 billion from all
funding sources in the current fiscal year (with the $250 million in
the CR). Its PY 2007 total funding was $779.5 million; its PY 2008
total was $772 million.\2\ A 2009 W.A.P. program with an additional
$750 million this year will be just over double (225%) of its size in
2008. States' percentages will vary considerably by region. Great need
and opportunity for CO2 reductions lies with warm states' especially
inefficient low-income housing stock, where the program penetration and
funding has been extremely low.
---------------------------------------------------------------------------
\2\ Economic Opportunity Studies, ``How Many Workers Does the
Weatherization Assistance Program Employ Now? What About the Future?''
http://www.opportunitystudies.org/repository/File/weatherization/
WAP_Workforce_Scenarios.pdf
---------------------------------------------------------------------------
the one-time major repair program: ``w.a.p.-fix''
We are suggesting authorizing the use of \1/4\ of the funds
for a function that is not a major component of Weatherization
today. Substantial work could be contracted VERY quickly--in
some areas DAYS after funding begins if Weatherizers are
allowed to make major repairs of four types:
--Replacing roofs
--Installing high-efficiency furnaces
--Repairing broken floors, window, or doors
--Bringing electrical systems to safety code standards
The skilled licensed contractors who will do that work are not
required to know how to weatherize homes. Local agencies routinely
contract for all those licensed trades' services including HVAC
installers, electricians, and roofers in the few homes where they can
raise funds to make those investments. The contractual relationships
are in place.
Further, local Community Action Agencies have records of dozens or
hundreds of homes where Weatherization was denied (``deferred'')
because the rotted roof would not protect the insulation or the wiring
was unsafe. Many weatherized homes needed a replacement furnace which
will be extremely cost effective, but both the program and the owner
lacked the capital. Most heating systems used are U.S. made. In other
word, there is an identified ``market''--addresses and income
eligibility already verified and a willing private workforce ready to
go.
Note: The four general types of major repairs are not
rehabilitation of the entire house or all its systems. CAAs partner
with others, typically CDBG--funded programs, which specialize in the
slow, individualized process of designing, permitting and overseeing
and true `rehab'. Weatherizers see their role as assisting partner
agencies with the efficiency upgrades, but managing only the repairs
listed above.
ISSUES AND CHANGES NEEDED
The statutory restriction on re-visiting homes that received
previous limited W.A.P. investments must be waived for the stimulus
period. As noted above, the agencies know the location of homes needing
the major repairs because they have worked in them and done whatever
minor work was possible, perhaps replacing the refrigerator or freezer.
That makes the home ineligible for a new treatment.
``core'' weatherization as a stimulus
1. Employment
The Size of the Workforce
There are no contemporary data from the field on the
workforce size. BEA construction sector modeling
suggests that the PY 2008 program, absent any stimulus,
will generate at least 9,000 direct jobs, absent any
stimulus, from all its funding sources combined. Those
will lead to 2.9 times as many indirect jobs
(suppliers, services, fiscal support, etc.) and induced
jobs (those created by all workers and businesses
spending their pay). W.A.P.'s network has the highest
funding level (from all sources) in the program's
history; because of the record LIHEAP funding that
probably will add about $300 million more than last
year to W.A.P. programs in 44 states.
Employment Stimulus
The $1 billion per year, two-year program would
increase all employment by 75% to about 46,700 jobs
(using the conservative BEA formula). The growth rate
will vary dramatically by state.
Since we believe the current workforce is
considerably larger and, because it is lower-paid than
the wages assumed in the BEA models, the number of
newly-employed could also be considerably more.
Improving the retention rates for the newly trained
skilled workers and contractors will require better
wages as the economy recovers.
Readiness
Local Contractors and Community Agency Employees
At the last survey of local Weatherizers in 2002,\3\
about half the workforce was private contractor labor.
The practice varies by state. The local Community
Action Agencies that use contractor labor must retain
at least one technically skilled employee to train,
manage, and inspect their work.
---------------------------------------------------------------------------
\3\ Economic Opportunity Studies, ``Weatherization PLUS Other
Efficiency and Housing Investments Delivered by Local Weatherizers in
PY 2000'' http://www.opportunitystudies.org/repository/File/
weatherization/Weatherization_Survey_Report.pdf
---------------------------------------------------------------------------
Many private contractors have the equipment needed
for the W.A.P. and hundreds of their employees have
some W.A.P. training; in fact, the increase in LIHEAP
funding for W.A.P. is resulting in more contracting
today. There remain underemployed trained Weatherizers
can be put to work while new recruits are trained.
Job Skills and Training
The program requirements mean the workers who
evaluate homes and install efficiency measures need
specialized skills based on an understanding of
building science, and state-of the-art tools that
diagnose building energy loss sources, inefficient
indoor air movement and safety hazards, as well as the
investment/work order ``audit'' or decision tool. The
local agency staff and private contractors need the
programs' training to use them.
Appendix A defines the levels of ``core
competencies'' that make up the workforce. The highest
level, auditor, needs six to eight months of formal
training, including supervised field work and
classroom, and can then work independently if monitored
in the field by a more experienced auditor. W.A.P.
local agencies will need many more auditors with
comparable advanced training.
ISSUES AND CHANGES NEEDED
Weatherization Skills Training Expansion
DOE training resources are limited to 10% of a state's grant. This
has allowed only a small share of workers at any level to attend formal
training. Contractors must pay for training and equipping the workers
they assign to W.A.P.
Changes are needed to ensure hiring and the quality of the
workforce. For the two year period:
Allow 20% (not 10%) of FY '09 and '10 funds for state/local
T+TA
Directly subsidize contractor workers' training
Develop federal and state standards and ``best practices''
for W.A.P. green-collar workforce development.
There are no data indicating how many in the W.A.P. workforce
receive the formal training or credential each year. Ten training
centers, regular regional meetings, and biennial national training
sessions serve a minority; however, most workers rely on skills passed
on by their supervisors or peers. Few have the resources in their
program to maintain a program of studies through a certificate or other
credentials. States received 8.5% of the program funds for ``Training
and Technical Assistance'' or ``T & TA'', including for their staff and
their technology transfer. The Department retained 1.5% for federal
technical support, research and training events.
The rate at which training is offered to the current workforce is a
barrier to ramping up. The barrier is highest for private contractors.
The program requires them to provide already-trained workers; they
spend training costs in hope of winning jobs.
2. Production
The states reported more than 140,000 homes were fully weatherized
using any funding source in 2007. Of these, 82,409 received DOE-funded
investments. However, that total omits fully-weatherized ``non-
federal'' units in California, Pennsylvania, and Washington's large
utility programs among others. The true total of units weatherized by
the local network was almost certainly over 175,000 in FY 2007.
ISSUES AND CHANGES NEEDED
The outdated statutory limit on average expenditures per home must
be repealed or replaced by an average which allows for major
improvements including heating system replacements when their Savings
to Investment ratio is high, or when they are a hazard.
DOE Weatherization works effectively because matching funds are
available to pay for essential services and materials that the DOE
regulations or statute restrict primarily the statute's limit on
statewide average expenditures, which is $2,966 in 2008.
While no national figures on all the funding ``packaged'' per home
have been validated, the NASCSP surveys\4\ allow us to estimate states'
average expenditure of labor and materials per home. Other funding
sources, especially LIHEAP, have more flexible conditions. For most,
the figure is between $4,000 and $5,500 using all their sources of
funds. This figure varies widely among states from $2,000 in Hawaii (no
LIHEAP, no utility money, low usage) to well over $8,000 in Alaska
(predominantly state funding with LIHEAP and W.A.P., high usage).
---------------------------------------------------------------------------
\4\ www.waptac.org
---------------------------------------------------------------------------
Matching funds will not grow at the speed of the ``Core'' W.A.P.
That means new work will be more constrained by the statute than is
currently the case; there will be a proportional reduction in purchases
of cost-effective, but higher-cost, measures like efficient furnaces,
appliances and repairs. Crews will have less equipment, older vehicles
and low pay. (All those costs are allocated to the cost-per-home.) Even
more homes will be rejected as candidates because they need repairs or
safety upgrades before insulation and air sealing can occur. These
dilapidated units are also the most inefficient.
If the cost-effectiveness test is not a satisfactory alternative to
the outdated statutory limit on average expenditures, one option is a
temporary ceiling of $7,000 to be reviewed in two years when the
permanent program is designed. This overdue change will make the
expanded program spend quickly while increasing its energy savings and
CO2 reductions, and retaining its qualified workers.
The OMB program ``metric'' is `units produced'. This should be
discarded; if the suggestion seems too radical, then the all goals of
the program and the stimulus should have results that are weighted
together, including energy bill savings, CO2 reductions and,
for the life of this statute, employment effects.
3. Capital Equipment Acquisitions for the Workforce
Agencies equip their employee crews with specialized equipment and
agency vans. Contractors must own the same specialized equipment before
bidding to work for the program. It costs between $55,000 and $70,000
to equip a crew of 3-4, including a van or truck that is set up with
the insulation blower, generators, blower door, scanners and other
testing equipment required for the job. (Nearly all the technology/
tools for the crew are made in the US).
An early purchase strategy in summer of 2009 will create jobs and
avoid any delays later as new personnel finish training.
ISSUES AND CHANGES NEEDED
Agencies should be encouraged to purchase all the new equipment and
vehicles they will use for their ramped up workforce as soon as
possible to jump start the stimulus impact. This requires waiving some
federal accounting rules which require the vehicle cost be assigned to
homes being served.
Further, DOE should adopt the policy that agencies own the sets of
specialized equipment contractors will use and lease it back to them.
This removes a major stumbling block to quickly bringing new small
businesses into the program. Credit for $65,000 of purchases is harder
to come by than ever, and the possible loss of the W.A.P. business
before the equipment is amortized is a threat. No regulatory change is
needed.
4. Management
issues and changes needed
DOE Capacity
The closing of the EERE regional offices and the
decimation of the population of technically qualified
Headquarters staff already means W.A.P. runs without
vital federal supports. It is inexplicable that EERE's
growth has brought travel restrictions on our federal
monitors; they cannot attend training outside their
base without forgoing their oversight responsibilities.
The Committees must require substantial increases in
federal personnel with the appropriate experience and
credentials and oversee the DOE management of the
program until it recovers.
State Capacity
We are very concerned about the constraints on the
staffing of our state leadership in an era of state
hiring and travel freezes. Many offices are
understaffed today and lack technical competence that
training centers and peers can offer. Grants should
include assurances these constraints will not fall on
the federal program, which is providing half of the
administrative allotment to the grantee.
Local Administrative Cost Restrictions
The 1990 amendments to the statute allowed a higher
percentage of administrative funding for small local
agencies; 10% instead of 5% so they could purchase the
core administrative services required to operate with
federal funds. (States typically keep half of the
administrative funds--another 5%). Small agencies were
considered to be those with grants under $350,000 in
1990. This increase will pull many of the hundreds of
small agencies above the threshold--they would have to
double in size to regain the lost administrative
dollars-but by then they would be serving twice as many
participants.
The statute must change. Our temporary suggestion for
an adjustment is to double the 1990 ceiling to $700,000
and allow states to negotiate a declining rate, but not
less than 5%, with agencies that are growing beyond the
$700,000 threshold.
5. Preparing for the Next-Generation W.A.P.
Careful evaluation of the results of this job-oriented initiative
compared to careful evaluation of the way the ``core'' W.A.P. can
contribute to the national goals of reducing greenhouse gases,
investing in a green-collar labor force, and making energy bills
affordable for low-wage workers, retirees, and their families.
Whether the future program expands further or contracts, all its
investments should guarantee lower CO2 emissions and major
energy efficiency results and persist. Report guidance is needed to
ensure the Department uses the stimulus period to complete the national
evaluation of core W.A.P. practices funded and then interrupted by the
current DOE leadership. The state-of-the-art in any residential
retrofit initiatives should be identified and used in the development
of more advanced standards for program practices and, most importantly,
its training. By FY 2011, a workforce training plan and operating
strategy should be developed, together with partnerships with
institutions that will deliver training leading to green-collar
careers; the Department must create more linkages among federally
funded initiatives that are supporting the residential retrofit
sector's workforce and practices.
Federal technology support for the program should be appropriated
for these purposes; these would be in addition to the training funds.
The one-time, delayed major evaluation will require .005. There should
be another 2% set aside for the two-year period that both underwrites,
put bluntly, a technical catch-up period followed by the development of
the nationwide training capacity that the program and the private
sector will require for a low emissions economy.
With the Committee's support for such a framework, the
weatherization delivery system will commit to strategic plan to get the
job done, correct any bottlenecks and put American homebuilders back to
work at lowering consumers' unaffordable energy bills and reducing our
greenhouse gas emissions for a generation to come.
______
Statement of Mark Heesen, President, National Venture
Capital Association
Thank you, Chairman Bingaman, for the opportunity to provide
testimony regarding investments in clean energy and natural resources
projects and programs to create green jobs and to stimulate the
economy. The philosophy of the National Venture Capital Association, as
it relates to the structure of an economic recovery package, is guided
by several key principles:
1. Clean Technology Means Job Creation.--Investments in clean
technology will create a significant percentage of the new jobs
in the U.S. in the near term and over the next five to ten
years. Just as a point of reference, in 2008 the clean
technology sector was the fastest growing sector for venture
capital investment. Just as the venture capital industry
created millions of high paying jobs within the biotechnology
sector with the funding of pioneering companies such as
Genentech, Amgen and others, so too will it fund similar
entities in the alternative energy and sustainability space in
the next several years. In total, venture backed companies have
historically and consistently accounted for almost 10 percent
of US jobs and 18 percent of U.S. GDP.
2. Public Investment in Clean Technology R & D is
Inadequate.--When compared to the public investment in research
and development in other sectors of the economy, the
government's funding of R & D in clean technology is inadequate
by any measure. While the energy sector of the economy is
roughly the same size in GDP terms as the health care sector,
annual NIH R & D expenditures are roughly $30 billion,
completely dwarfing the $1.5 billion expended on clean
technology research and development.
3. Clean Technology Needs Robust Markets in which to Grow.--
To the extent possible, policy tools should be used to
strengthen financial, commercial, and consumer market
mechanisms so that clean technology companies get the benefit
of nimble, fast-adapting, and market-signal-driven investors,
suppliers, and customers. Where markets are not functioning
properly and are failing clean technology companies--as is the
case in the current credit crisis--policymakers should take
steps to fill in the gaps until the markets are repaired.
4. Only Consistent and Long-Term Policies Encourage Growth in
Clean Technology.--Public policy must encourage certain
favorable market behaviors, including long term investment.
Therefore, public policy provisions should both extend for a
significant period of time and not be subject to significant
modification or varying interpretations over those time
periods. Market participants--including investors--require
consistent signals to act for the longer-term. As one data
point, the minimum time horizon venture investors set for their
portfolio company investments is 10 years.
5. Diversity of Clean Technologies Will Strengthen Our
Country's Position.--The diversity of clean technologies and
cleantech company strategies is a desirable thing, and policy
should encourage that diversity. To the extent possible, we
should prefer market decisions to government decisions in
selecting the winners from this diverse pool of technologies
and companies. Where policymakers must make choices (e.g., in
research and development programs), those decisions should be
based on the best independent scientific and market advice
available.
6. Amid Price Fluctuations in the Energy Market, Policy
Should Encourage ``Market Pull'' for Clean Technologies.--Many
factors contribute to the success of entrepreneurial, high-
growth companies, but a truly critical determinant of the
growth of clean technology companies will be the perceived
value/cost proposition of their products and services (relative
to high-carbon energy alternatives) in energy markets--some of
which are highly regulated. Because the nation has an interest
in energy independence, in solving the global warming problem,
and in creating new high-paying jobs at home, policy should
strive to remind markets of the long-term cost/value
proposition of clean energy products and services and help them
weather the vagaries of periodic price fluctuations of energy
alternatives. Where appropriate, policy should encourage
``market pull'' forces to encourage the start-up and growth of
new clean technology companies.
Based on the above principles, the NVCA would support the following
provisions in an economic recovery package.
Accelerating the Work of DOE's Loan Guarantee Program. DOE's Loan
Guarantee Program is an important and valuable facility for funding
clean energy projects that needs to be strengthened. To date, the
administration of DOE's Loan Guarantee has been slow; no applications
have yet received approval or funding. Policymakers should consider
taking steps in the recovery bill to greatly accelerate the processing
and awarding of loan guarantee applications.
Without significant new authorizing language, options to accomplish
this acceleration are somewhat limited. One viable option would be to
fund a significant infusion of human capital resources to process these
applications. Bankers, lawyers, financial analysts and modelers are
needed to do the job well, and that emergency infusion may require
exemptions to personnel hiring rules or providing DOE with the
authority to hire consultants to process more of these applications
faster. With these new resources should also come some agreed-upon
timelines for the processing of loan-guarantee applications. In the
longer term, the Senate should consider shifting the loan guarantee
program to another entity, perhaps one like the 21st Century Energy
Deployment Corporation contemplated by Senator Bingaman's Senate Bill
3233.
Other issues have been raised about the workability of the program,
two of which may be candidates for correction in the recovery bill: (1)
reducing the application fees associated with the program so that more
start-up companies can easily qualify, and (2) eliminating rigid
application deadlines that seem to reduce the pool of applicants rather
than to expedite the orderly and swift processing of applications.
Funding a Significant Increase in Cleantech RD & D funding.--The
recovery package represents a golden opportunity to fund new research,
development, and deployment across a diverse range of clean
technologies. Fully funding RD&D levels authorized by various sections
of the Energy Independence and Security Act will create a significant
number of jobs. The hiring of researchers, research assistants,
laboratory staff, and the purchase of laboratory and research
equipment, and the support of our universities through these additional
funds will have significant ripple effects in university communities
across the country. The time is now to begin making the serious
investments in RD&D that will lead the creation of millions of new
American jobs in the mid-to longer term.
Making the Renewable Energy Tax Credits Refundable, Expanding the
Tax Investor Pool to Individuals, and Making the Credits
Transferable.--In order to increase the pool of tax equity available to
fund renewable energy development, the Senate should consider--as part
of an energy tax title in the recovery bill--making the investment tax
credit refundable, opening up tax equity to individual investors, and
making such tax credits transferable. As current renewable energy tax
credit provisions now operate, only large financial institutions and
companies typically provide tax equity. The repeal of passive loss and
at-risk limitations--currently permitted for working interests in oil
and gas property--would significantly expand the tax equity pool to
include high net worth individuals and others. The ability to transfer
these credits should further enhance the pool of investment in these
projects. These changes would convert the newly-extended tax credits
into immediate and powerful financing propellants for new energy
projects around the country.
The Senate should also consider a temporary transformation of the
tax credits for renewable energy projects to cash rebates to help fund
these projects. With the drying up of capital sources in the wake of
the current financial crisis, it is possible that entire renewable
energy sectors may wither significantly. By making the tax credits
fully refundable (with no requirement that they be matched against
income) until capital flows again post-financial-crisis, the government
could make available to project developers the funds absolutely
required to launch and sustain new renewable energy development.
Allowing Bonus Depreciation.--The Senate might further consider
allowing a temporary accelerated depreciation schedule for U.S.
cleantech projects such as solar, wind, biomass, geothermal, etc. and
to extend this accelerated depreciation treatment to any capital
expense that can be demonstrated to improve energy efficiency by some
appropriate standard (or by a certain percentage improvement over the
existing equipment).
Eliminating Capital Gains Taxes for Investment in Small, Start-Up
Businesses.--During the presidential campaign, the Obama-Biden team
demonstrated their understanding of critical drivers of economic growth
by including in their tax platform a provision for a zero capital gains
tax rate for investments in start-up companies. Across industries
venture investment has been linked to new job creation and innovation,
and we expect this to be clearly manifest in the cleantech area where
such a policy would attract both much-needed capital and experienced
management teams necessary to build these companies.
Accelerating the ``Greening'' of Buildings.--The first step the
Senate should consider is fully funding the authorized level of $2
billion annually for the Energy Efficiency and Conservation Block Grant
Program under Title V, Sections 543-548 of the Energy Independence and
Security Act of 2007. The purpose of this program is to help state and
local governments to fund energy efficiency improvements in the
building sector and other sectors, and fully funding the program will
provide the resources required for campaigns like the one launched by
New Mexico Governor Bill Richardson and Albuquerque Mayor Martin Chavez
to bring schools and other public buildings to LEED--Silver status.
The second step to consider is providing incentives for small
businesses (under 500 employees) to ``green'' their facilities. The
Senate could support proposals to increase the SBA loan guarantee from
50% to 75% for owner occupied buildings if the tenant improvements
comply with an energy-efficiency standard (perhaps as simple as a
percentage above what comparable buildings in the region consume). Both
steps would create a significant number of new jobs in energy
efficiency equipment manufacturers and energy retrofit contractors
across the country.
Increasing Incentives for Energy Efficiency in the Transportation
Sector.--These steps could provide extremely powerful ``market pull''
forces to drive new transportation technologies, which will drive new
companies, new jobs, and the beginnings of recapturing a lasting
American competitive advantage in the transportation sector.
The Senate should consider: (1) temporarily doubling federal tax
credits for fuel-efficient cars; currently there are credits of up to
$3,400 for a new hybrid, between $2,500 and $7,500 for a plug-in car
under 10,000 pounds, and up to $15,000 for a plug-in vehicle over
26,000 pounds; (2) accelerating investments in upgrading its fleet to
more efficient vehicles, achieving at least the 50% target set by
President-elect Obama by 2012; (3) providing corporate tax credits for
purchases and leases of high efficiency vehicles and providing grants
for converting corporate fleet vehicles to plug-ins; and (4) providing
grants to support efforts like the Advanced Energy non-profit
corporation in North Carolina to help school districts purchase or
lease hybrid school buses.
Providing for Standardized and Long-Term Federal Power Purchase
Agreements (PPAs).--Several commentators have reviewed the history of
hydro development projects in the United States and concluded that the
longer terms of the standardized PPAs under which their power was
purchased by the government was a key factor in the success of that
effort. The Senate should consider establishing a standard PPA for
federal government purchase of clean energy that does not have to be
fully renegotiated for each agency and each project. Moreover, the term
of the PPA agreement might extend well beyond the 10-year range,
perhaps out to as many as 30 years.