[Senate Hearing 107-107]
[From the U.S. Government Publishing Office]
S. Hrg. 107-107
FISCAL YEAR 2002 BUDGET REQUEST FOR THE DEPARTMENT OF ENERGY
=======================================================================
HEARING
before the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
TO CONSIDER THE PRESIDENT'S PROPOSED FISCAL YEAR 2002 BUDGET FOR THE
DEPARTMENT OF ENERGY
__________
MAY 10, 2001
Printed for the use of the
Committee on Energy and Natural Resources
______
U.S. GOVERNMENT PRINTING OFFICE
74-567 DTP WASHINGTON : 2001
_______________________________________________________________________
For sale by the U.S. Government Printing Office
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20402
COMMITTEE ON ENERGY AND NATURAL RESOURCES
FRANK H. MURKOWSKI, Alaska, Chairman
PETE V. DOMENICI, New Mexico JEFF BINGAMAN, New Mexico
DON NICKLES, Oklahoma DANIEL K. AKAKA, Hawaii
LARRY E. CRAIG, Idaho BYRON L. DORGAN, North Dakota
BEN NIGHTHORSE CAMPBELL, Colorado BOB GRAHAM, Florida
CRAIG THOMAS, Wyoming RON WYDEN, Oregon
RICHARD C. SHELBY, Alabama TIM JOHNSON, South Dakota
CONRAD BURNS, Montana MARY L. LANDRIEU, Louisiana
JON KYL, Arizona EVAN BAYH, Indiana
CHUCK HAGEL, Nebraska DIANNE FEINSTEIN, California
GORDON SMITH, Oregon CHARLES E. SCHUMER, New York
MARIA CANTWELL, Washington
Brian P. Malnak, Staff Director
David G. Dye, Chief Counsel
James P. Beirne, Deputy Chief Counsel
Robert M. Simon, Democratic Staff Director
Sam E. Fowler, Democratic Chief Counsel
Bryan Hannigan, Staff Scientist
C O N T E N T S
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STATEMENTS
Page
Abraham, Hon. Spencer, Secretary, Department of Energy........... 6
Akaka, Hon. Daniel K., U.S. Senator from Hawaii.................. 35
Bingaman, Hon. Jeff, U.S. Senator from New Mexico................ 4
Craig, Hon. Larry E., U.S. Senator from Idaho.................... 32
Domenici, Hon. Pete V., U.S. Senator from New Mexico............. 27
Johnson, Hon. Tim, U.S. Senator from South Dakota................ 3
Murkowski, Hon. Frank H., U.S. Senator from Alaska............... 1
Smith, Hon. Gordon, U.S. Senator from Oregon..................... 34
Thomas, Hon. Craig, U.S. Senator from Wyoming.................... 29
APPENDIX
Responses to additional questions................................ 53
FISCAL YEAR 2002 BUDGET REQUEST FOR THE DEPARTMENT OF ENERGY
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THURSDAY, MAY 10, 2001
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The committee met, pursuant to notice, at 9:30 a.m. in room
SD-366, Dirksen Senate Office Building, Hon. Frank H.
Murkowski, chairman, presiding.
OPENING STATEMENT OF HON. FRANK H. MURKOWSKI,
U.S. SENATOR FROM ALASKA
The Chairman. Good morning, ladies and gentlemen. I am
fearful that if we do not get started we will have more
Senators in, and the Secretary appears to be in a jovial mood
conversing, and we might not get started or finished. We have
got some votes, but nobody is sure when they are going to
occur, so there is really nothing new to report, other than my
colleague says about 11 o'clock or thereabouts, either today or
tomorrow.
But in any event, good morning. Today's hearing is to
consider the Department of Energy's budget request for fiscal
year 2002. We are very pleased to have with us our Secretary of
Energy, Mr. Spencer Abraham, and we want to welcome you back to
the committee, and particularly back to the U.S. Senate, where
you have spent a good deal of your productive years.
Now that you have made the sacrifice to go downtown, why,
we have great expectations, based on your background and
training you have received from this august body. In any event,
your discretionary budget request for the Department of Energy
is just over $19.2 billion, an increase of nearly $282 million
over last year's request, and nearly $1.437 billion over fiscal
year 2000 enacted levels.
The proposed budget in our opinion fulfills the President's
desire for moderate discretionary spending while meeting
crucial national missions. Energy, national security,
environmental quality, and science are among those. The budget
proposal is, of course, important in light of the energy crisis
that we face, and the Department of Energy is going to play a
significant role in managing and correcting this crisis.
However, the reality is that to end the crisis we are going
to have to develop a comprehensive energy strategy that, one,
increases production of conventional fuels, that two, expands
use of alternative fuels and renewables, and three, improves
energy efficiency and conservation.
The highlights, I think, include in your budget request
certain initiatives in each of these areas: production,
alternative fuels, renewables, and energy efficiency. I am
pleased to see an increase of 14 percent in funding for the
nuclear waste program. It is important to keep that program on
track, moving towards making a recommendation to the President
on a permanent repository site in fiscal year 2002. Another
important fuel for our future, clean coal, benefits from the
President's clean coal power initiative, a $2 billion, 10-year
plan to provide clean, affordable electricity from coal, in
short supply these days. That is, electricity. Coal still
supplies 52 percent of our stationary power generation.
I have said to you many times, and you have said to me many
times, we have all said to each other many times that we need a
balanced approach to meeting our energy need, and the devil, of
course, is in the details. We need renewables, we need
conservation, but we also need to go back to basic sources of
energy, using our technology to produce them better.
I am glad to see that the increased request for
weatherization assistance to improve energy efficiency in some
123,000 homes is in your request, and a more focused, renewable
energy R&D program along with tax incentives to encourage
market development.
As you know, Mr. Secretary, Senator Breaux and I have
introduced a comprehensive energy bill, along with a number of
cosponsors, and in that bill there are many broad programs and
inducements for alternative and renewable energy, as well as
R&D programs. The bill is going to be debated to some extent, I
am sure, with respect to the President's program, but
nevertheless we feel it is important and appropriate to bring
it into the debate for consideration, so we would appreciate
your comments on that.
The budget request also includes substantial funding for a
national security mission, $7.2 billion, to manage our Nation's
nuclear arsenal and reduce threats from proliferation and
nuclear materials, and the request also includes environmental
management funding to clean up the legacy of our past nuclear
activities and protect the public.
In the nomination hearing yesterday, we had discussions
with some of your people relative to the adequacy of the budget
and, of course, the question of to what level you clean up
these sites is a question for endless discussion, and whether
or not they have to be cleaned up to drinking water quality
standards as a comparison, and whether that is realistic, or
the realization on some is that you cannot print enough money
to clean them up, these are decisions that we expect you to
make and to bring before this committee and make some solid
recommendations on the practicalities.
Now, I understand the DOE is currently prioritizing about
113 sites to ensure the most effective and cost-effective
cleanup. Some have suggested on some sites that you simply
fence them off in perpetuity. That sounds like a crass
approach, but on the other hand it may have some
practicability.
Finally, the budget request includes a slight increase for
the Office of Science, $3.16 billion. That office maintains
DOE's lead role as the largest Federal source of funding for
physical sciences, and DOE is the third largest source of basic
research overall, after the NIH and the NSF, and I think a lot
of people overlook that responsibility.
DOE research has yielded several exciting findings in the
past year, human gnome, climate modeling, nano-technology,
materials of various kinds, and your budget request also
reflects core reviews going on in several significant areas,
DOD nuclear posture, National Security Council,
nonproliferation, DOE's environmental management mission, the
Vice President's Energy Task Force, and so forth.
Finally, in conclusion, let me congratulate you on a
responsible and a modest budget, which is not easy to do in
Washington. On the other hand, that happens to be my opinion,
and there may be others that share different views. In any
event, your Department will be well-positioned to respond to
the findings of the several ongoing policy reviews once those
reviews are completed, and I look forward to working with you,
Mr. Secretary, in making those changes through budget
amendments or legislation. I again thank you for being with us
today, and I want to welcome you back.
Senator Bingaman and I have requested in your absence
unanimously that we limit opening statements to Senator
Bingaman and myself, and since there was no objection--you were
not here--Senator Bingaman.
[A prepared statement from Senator Johnson follows:]
Prepared Statement of Hon. Tim Johnson, U.S. Senator
From South Dakota
Mr. Chairman, I am pleased that we are taking the time to hold this
hearing today on the FY 2002 budget for the Department of Energy.
This is a difficult time for the energy system in our country. Our
system is trying to deal with growing demand but is being strained to
its limits. Gasoline and heating prices are higher than they have been
in years and our neighbors in California are facing continuing rolling
blackouts. As the summer draws closer, other areas could be affected as
well.
I am pleased that the Administration, as well as the Chairman and
Ranking Members of this Committee, are releasing or have released plans
that address the nation's long-term strategy. I believe these are good
starts that will hopefully lead to bi-partisan solutions.
In light of the difficulties the nation is facing, however, I am
troubled by some of the proposals in the DOE budget. In my view, we
should be finding avenues to adequately fund short-term needs. In the
haste to reach a bottom line, I am fearful that the choices made in the
budget proposal are short-term responses to long-term problems.
In particular, I am troubled by 25% cuts in renewable energy
programs. Our rising dependence on imported petroleum has become a
storm cloud over the economy. The failure to address America's energy
needs has jeopardized our energy security, economy and national
security. To meet our future energy needs, all sources of fuel and
energy must be thoroughly explored and utilized.
Renewable fuels, such as biodiesel and ethanol, are increasingly
important sources of transportation fuel in the country. Ethanol-
blended gasoline is sold in every state in the country, particularly in
areas where it is used by refiners as an oxygenate to comply with Clean
Air Act requirements. Ethanol's high octane and clean air benefits make
it a logical choice for refiners in addressing the production
constraints caused by numerous environmental challenges, including low-
sulfur gasoline, the phase-out of MTBE and toxic performance standards.
Similarly, biodiesel offers one of the best available alternatives for
heavy-duty applications because it has high cetane, lubricity, and BTU
content, yet contains no sulfur or aromatics. Since biodiesel is
compatible with existing diesel engine technology and infrastructure,
it can be used in a number of beneficial ways, including as an
effective lubricity additive while low-sulfur diesel regulations are
implemented.
Increasing the production and use of ethanol and biodiesel will
promote a number of energy, environmental and economic public policy
goals. First, it will decrease the need for imported petroleum
products, reduce the stress on our refineries and reduce consumer
gasoline costs. Second, it will help improve air quality across the
country by reducing carbon monoxide, hydrocarbon, nitrogen oxide and
toxic emissions. Third, the increased demand for grain used in the
production of ethanol and biodiesel will provide an important economic
stimulus to rural America. Finally, because ethanol and biodiesel are
produced from renewable resources, they are the most efficient means of
reducing greenhouse gas emissions from motor fuels in the near term.
In a speech on energy issues to the Associated Press last week,
Vice-President Cheney indicated we could reasonably expect renewable
power generation to meet three times the share of energy needs it meets
today. The same is true for renewable fuels. Ethanol and biodiesel
could meet 3% of the nation's motor fuel market within ten years--
providing energy, environmental and economic benefits for the nation. A
3% market share for ethanol and biodiesel would displace about 9
billion gallons of gasoline annually or between 500,000 and 600,000
barrels of crude oil each day.
In addition, wind power funding is due to be cut by 50% in the DOE
budget. My state is fourth in the nation in wind power capacity.
Harnessing and utilizing wind power has proven to be effective in my
part of the nation. Cutting funding for wind power sends the wrong
message at a time when we should be diversifying our resources.
The use of renewable fuels will not single-handedly solve our
nation's energy needs. But it can be an important component that could
diversify our energy source and lesson our dependence on imports. We
must find avenues to fund these important programs.
Moreover, if we are going to increase our domestic supply, proposed
cuts in exploration of fossil fuels is also not the way to go.
Traditional resources such as coal and natural gas continue to be our
main sources of supplies and we must continue to find technologies that
will increase supply efficiently and in an environmentally safe manner.
We must also must not overlook conservation and energy efficiency.
While the Administration has increased funding for weatherization, it
has drastically cut funding for energy efficiency R&D programs. To
short-change the demand side of the energy equation at a time when we
have great constraints is not the direction we should be taking at this
time.
Mr. Chairman, our energy situation is one of the most important
issues facing the nation today. I am hopeful that the Administration
will reconsider some of these budget cuts so we can address these
problems in a balanced manner.
STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR
FROM NEW MEXICO
Senator Bingaman. Thank you, Mr. Chairman. Welcome,
Secretary Abraham. We are very glad to have you here before us.
Obviously, the Department of Energy's budget is extremely
important, given the energy problems that the country faces. I
think energy issues have become front-page news all around the
country, and the crisis that we face in parts of our country
and sectors of our energy industry is very real.
I also hope, Chairman Murkowski mentioned the legislation
that Senator Breaux and he--I believe he put it that way, that
Senator Breaux and he have introduced a bill. I would point out
that Senator Breaux and I have introduced a bill, too, since
Senator Breaux is cosponsoring both bills.
Senator Craig. On both sides of the issue.
Senator Bingaman. It is really--I think the two bills do
not reflect two sides of the issue. I think what they do is to
reflect a different emphasis on different aspects of the issue.
The Chairman. Maybe you should join me and I should join
you.
Senator Bingaman. Well, I would be glad to have you join
me.
The Chairman. Well, I got mine in first.
[Laughter.]
Senator Bingaman. All right. I do have some concerns which
we will have a chance to go through in your testimony and in
the questions. It seems to me that the Department of Energy
budget we have seen does not support the policy initiatives of
the administration. For example, fossil and nuclear energy
supply and natural gas infrastructure development, I do not see
the support in the budget for those.
Moreover, many of the programs that you have proposed for
very severe funding reductions, such as energy efficiency,
renewable research and development programs, I believe those
have to be part of a balanced energy strategy. We need to have
high levels of support for them at this time in our history.
I have been informed that the Department has prepared a
budget amendment that would restore funding for certain
programs in the renewable area, but that it would pay for those
increases by reducing research and development for
transportation efficiency. Obviously, this concerns me. I do
not understand why we would be proposing this particular budget
amendment at this particular stage in the process. Also, I have
a concern that it appears, at least from what I have heard,
that there is an underlying assumption that it is a zero-sum
game, and you have got to find another place to cut the budget
in DOE if you want to add anything anywhere.
Frankly, the debate we are having, and the vote we are
going to have later this morning on the budget resolution is a
little bit disingenuous in that whenever you say you raise an
issue, some of the time the answer is, do not worry, we are
going to go ahead and fund that even though it exceeds the
budget. In the case of tax cuts, I saw an article in the paper
this morning, the chairman of the Ways & Means Committee in the
House said, don't worry about the size of the tax cut provided
for in the budget resolution, we are going to pass a lot more
in the way of tax cuts than is provided for in the budget
resolution. I have heard the same kinds of comments made about
education funding, saying do not worry about the fact that
there is no money in the budget resolution for increases in
education. We are going to fund it anyway.
The votes may be there for both of those things, increasing
the size of the tax cut, increasing the funding for education.
I fear that the votes will not be there for increasing some of
these Department of Energy accounts, and therefore we may be
stuck with the funding caps and the funding levels that are
provided for in the budget resolution. So it gives me concern
that we have this zero-sum approach.
I also just want to mention that obviously we have a
serious problem with gas prices around the country, as well as
electricity shortages in California. I would be interested in
any insights you could give us as to short-term actions the
administration would intend to pursue to try to deal with any
of those problems, or if you believe there are none that are
realistic, then I would need to hear that, but I appreciate you
coming, and we look forward to your testimony.
The Chairman. Mr. Secretary, good morning. Please proceed.
STATEMENT OF HON. SPENCER ABRAHAM, SECRETARY,
DEPARTMENT OF ENERGY
Secretary Abraham. Mr. Chairman, Senator Bingaman, Senator
Akaka, nice to see you all, Senator Craig, Senator Thomas. As
was the case in my previous appearances before this committee,
I want to begin by both thanking you for giving me the chance
to appear, but also to say how much I enjoy the chance to come
back to be with former colleagues and to work together to
address issues of concern, of which our Department confronts
many.
What I would like to do, Mr. Chairman--I prepared a fairly
lengthy written statement--is to ask that it be submitted for
the record.
The Chairman. Without objection, it will be entered into
the record. I appreciate that. I read it last night, and it is
quite comprehensive.
Secretary Abraham. It would take a little while to read.
Let me just make a few comments. First of all, over the last 2
months we have done our best in a brief period of time to
prepare this first budget. We appreciate your patience and
consideration as we have done our best in that compressed time
frame to try to evaluate things, and the success and failure of
the various programs in the Department. We are trying to
present here a budget that does our best to essentially meet
three challenges that I posed to people throughout the
Department.
First, what we have tried to do is to have our budget
reflect the budget priorities that were clearly established by
President Bush during his campaign, in his campaign platform,
and in areas where we had clear guidance to begin establishing
policy-driven budget priorities.
Second, we were confronted, virtually the very first week
of our administration, with decisions which I strongly support,
to begin policy evaluations and reviews in a number of areas
across the spectrum of the Government, but as I think most of
you know, almost all of the reviews that were launched tend to
have fairly significant implications for the policies and
ultimately the budget of the Department of Energy. One of the
reviews was the review that Vice President Cheney is in charge
of, our Energy Policy Development Task Force.
We expect within the next week or so to have the results of
that task force recommendations before the President for his
final approval, but obviously the priorities and the
recommendations that are going to come out of that report will
provide a huge amount of guidance with regard to the direction
of the Department of Energy, and so to a significant degree we
tried to, in the formulation of this budget, select the areas
where these policy analyses were occurring and to in those
areas try to preserve the core competencies of the various
programs subject to further additions or changes that might
come either in this budget cycle, or certainly, of course, in
the 2003 budget cycle, but we did not have that guidance
because work on this submission, as you know, had to begin back
in February.
I would add also in the area of defense policy there are
also several reviews that directly affect us, from a full-scale
review of our nuclear strategic programs, which will affect, of
course, the defense programs component of the NNSA division of
our building, and also a very broad, sweeping review of our
nonproliferation and deterrence programs, which will affect, as
well, some of the things that we do in the area of defense
programs and nuclear proliferation, so we are sort of waiting
for what will soon be the completion of those projects.
We, however, did have the opportunity to evaluate some of
the programs that were ongoing, areas where we made some
decisions based on reviews that we conducted, and where what we
did in that respect was to aim to end programs that we
determined were either obsolete or redundant, to try to reduce
the role of Government where we felt that private sector
participation, especially in R&D programs, could be increased,
that is, to increase cost-sharing situations, and to try to
respect guidance, especially in the area of defense programs
and security at our facilities, where we felt the Congress had
already made a major statement with regard to priorities.
The consequence of all of that, I would be happy to get
into in the questions, and already we will just note, for
example, that an area that Senator Bingaman mentioned, the
vehicle program, the PNGV program, we would be delighted to
respond to that in the question period, because that is one of
the areas where we did conduct some analysis of the direction
of the program, and it did bear on the decisions which we made.
But let me just say overall, the Department's budget, as
the chairman indicated, is $19.2 billion. While that
constitutes a $456 million reduction from the final fiscal year
2001 appropriation level, it actually is a little bit
deceptive, because when you subtract some very unique costs
that took place in the last fiscal year, specifically the
emergency funds that were expended with regard to the Cerro
Grande fire at Los Alamos and some other one-time projects, the
actual difference between the final appropriation level of last
year and this submission is approximately $13 million.
In addition, I would note that this budget is significantly
higher, as the chairman indicated, than the submission of a
year ago, about $275 million more, and so relatively speaking,
it is consistent with both last year's appropriation level and
a little bit more than last year's initial submission. To the
extent that we could, we have already tried to implement some
of the President's priorities, but to a large extent the budget
reflects a pause for us to try to evaluate, after the task
forces and analyses are completed, their budgetary
implications.
We really did not think it was smart to continue forward
with every single policy priority of the past, when we were
engaging in policy reevaluations for the future. What we
believe is that our budget in the Department needs to reflect
that evaluation process. Whether or not that translates into
actions that would be part of the ongoing appropriation process
this year, and I suspect it could, it certainly will be
reflected in the next budget process which, interestingly
enough, we are almost ready to begin for fiscal year 2003.
In any event, Mr. Chairman, I believe the budget does a
good job of addressing a number of issues. One of the concerns
that we had upon taking office, and which I know that was
shared here in the Senate and in the House was the security at
our facilities. We have significantly increased the budgetary
commitment for security and safeguards.
I believe that the right actions were already being
implemented to try to address many of these concerns, but we
felt that, especially with regard to cyber security, a
significant upgrade was needed, and that is reflected in the
budget. We tried to also begin the process of further
developing our science-based stockpile stewardship program, and
that is reflected in the budget.
On energy programs, where we feel there is, again there is
clear direction, such as in clean coal technology, it is
reflected in the budget. But in some of these areas, we again
chose to maintain core competencies, but wait until the
completion of our national energy plan, so that we could
proceed with the budget that more accurately reflects the
priorities of the administration. In any event, I have included
most of this in my statement. I am happy to submit that, and I
would be happy to respond to your questions.
[The prepared statement of Secretary Abraham follows:]
Prepared Statement of Hon. Spencer Abraham, Secretary,
Department of Energy
Mr. Chairman and members of the Committee, it is a pleasure to
appear before you to discuss the Department's FY 2002 budget request
for our programs outside of the National Nuclear Security
Administration (NNSA).
This budget is an important first step toward the future. It is a
prudent transition between what was left to us by the previous
administration and where we will be headed in the budgets for 2003 and
beyond. In the limited time given us to formulate this budget, we
turned its focus as much as we could toward our ultimate goal of major
DOE reform. We also initiated a broad range of strategic and policy
reviews that would fully shape future budgets. As a result, this budget
begins to reflect our intention for serious reform in some important
program areas. And make no mistake, change is coming. Some people will
fault this approach, saying it changes too much or too little. But this
is the right budget for this year; it's the responsible way to set us
on a course toward a comprehensive change in the way we do business.
PRINCIPLES GUIDING THE FY 2002 DEPARTMENT OF ENERGY BUDGET
The total FY 2002 budget request for the Department is $19.2
billion.
This budget is a principled and responsible effort, one that
fulfills President Bush's commitment to moderate discretionary spending
while meeting critical requirements in national security, energy,
science, and environmental quality. This budget adjusts program
requests to reflect reviews underway to reevaluate and refine the
Department's missions, and to implement management strategies that meet
the challenges of the future. The request incorporates the following
principles:
Enhance complex-wide safeguards and security efforts
Eliminate programs that have completed their mission, are
redundant, ineffective, or obsolete
Review all private-sector subsidies and maximize cost-
sharing opportunities
Finish promising R&D projects where investment installments
are nearly complete
Establish baselines and improve accountability for project
and capital asset management
Arrest deterioration of infrastructure through stronger
management of maintenance
Utilize computer information systems to improve management
and promote efficient use of resources
Eliminate unnecessary layers of management, and direct
personnel to high-priority missions
Achieve a 5-10 percent savings in management expenses
through comprehensive, creative management reform
Recognize and respect Congressional policy determinations
for operating the DOE complex.
This budget also maintains the Administration's flexibility to
respond to government-wide policy reviews now underway. The Department
of Defense Nuclear Posture Review, the National Security Council
reviews of U.S. deterrence requirements and nonproliferation programs,
Vice-President Cheney's National Energy Policy Development Group, and a
newly initiated internal Environmental Management Mission Assessment
figure heavily in the Department's current budget and its future year
planning. Pending future decisions as a result of the reviews, the
budget seeks to preserve program options by maintaining core
requirements in areas under review unless a change was dictated by a
Presidential commitment. We stand ready to work with you and the other
members of this subcommittee to address the recommendations of these
reviews.
FY 2002 FUNDING REQUEST FOR ENERGY PROGRAMS
Recent events have called into question the future availability,
cost, and reliability of our traditional fuels. To address the
situation, President Bush asked Vice President Cheney to lead an effort
to develop a national energy policy to help the private sector and
government promote dependable, affordable, and environmentally sound
production and distribution of energy for the future. In advance of
these policy determinations, the FY 2002 budget focuses DOE's energy
programs toward the next generation of energy production, including
renewable sources and advanced nuclear technologies. The budget also
reflects an evaluation of program operations, and, where feasible and
appropriate, proposes to expand cost-sharing in applied research,
further develop partnerships, and strengthen industry collaboration.
RENEWABLE ENERGY RESOURCES
In Renewable Energy Resources we made the tough choices on
priorities while keeping key options on the table until the Vice
President's Energy Task Force completes its work.
Some will argue that we should just spend more money now on
existing energy programs, however, continuing and expanding programs
that have been in place as we drifted to the brink of an energy crisis
does not appear to be a wiser course of action. We also need a better
measure of success for these programs.
For too long, critics have argued that these programs have produced
few results. That is not fair. Many of our programs make sense and
should be continued. On the other hand, some have produced few, if any
benefits. The taxpayers sent us here to weed out the waste and to
address growing problems of energy supply. The weeding begins in this
budget but we won't just be downsizing. We intend to rebuild our energy
resource programs so they are productive, so taxpayers receive a better
value, and the programs deliver results measured against rigorous
standards.
Including a budget amendment which the Administration will submit,
the Department is requesting $276.7 million in FY 2002 for Renewable
Energy programs, a decrease of $96.5 million from FY 2001 levels. The
request maintains our biomass, hydrogen, hydropower, high-temperature
superconducting energy storage, Renewable Energy Production Incentive
Program, and transmission reliability programs at approximately current
funding levels; and continues core research and development in all
Renewable programs except Renewable Indian Energy Resources which will
be terminated, and Concentrating Solar Power where only project close-
out costs are requested. All other R&D efforts will be funded at levels
to keep them as viable options pending finalization of the National
Energy Policy.
This budget advances a diverse portfolio of new and emerging
technologies that offer cleaner and increasingly affordable solutions
to help meet our growing U. S. energy needs. The Renewable Energy
Resources program works in partnership with industry and the national
laboratories to accelerate the development and use of clean power and
heat technologies, including renewable and natural gas hybrids and
biofuels. Renewable Energy Resources activities supported in FY 2002
include:
Biomass/Biofuels Energy Systems ($82.0 million)
Geothermal Technology Development ($13.9 million)
Hydrogen Research ($26.9 million)
Hydropower ($5.0 million)
Solar Energy ($42.9 million)
Wind Energy ($20.5 million)
Electric Energy Systems and Storage ($51.7 million)
Renewable Support and Implementation ($9.5 million)
The Biomass Research and Development Act of 2000 established a
Biomass R&D Initiative, to be carried out jointly by the Secretaries of
Agriculture and Energy. The $82.0 million requested in FY 2002 for
Biomass/Biofuels, supports collaborative research and development to
improve our nation's ability to not only convert biomass into electric
power, heat, and clean liquid transportation fuels, but also to extract
high-value bio-based industrial materials such as chemicals, plastics,
and building materials. DOE's biomass activities within the
jurisdiction of the Energy and Water Development Subcommittee focus on
two distinct elements: Biopower, which co-fires biomass with coal or
gasifies biomass material that is combusted to generate power; and
Biofuels, which converts agricultural and other products to ethanol.
Combined, these core activities underpin a national effort to more
effectively use a vast domestic resource. The total also includes $5
million specifically for cross-cutting, integrated R&D for the emerging
bioenergy and biobased products industry.
The $51.7 million request for Electric Energy Systems and Storage
includes funding for the Transmission Reliability Program ($8.9
million) to develop real-time measurement and control systems, models,
and tools to enhance the reliability and efficiency of grid operations.
Advanced Energy Storage Systems ($6.0 million) is supporting R&D in
advanced battery systems, flywheels, supercapacitors, and large
lithium-ion batteries, to provide seamless power during micro-outages,
voltage sags, and frequency disturbances that cost industry up to $150
billion per year. These energy storage devices can help bridge the gap
between the reliability of today's electric grid system and current
requirements of industrial and commercial users.
Within Electric Energy Storage Systems is funding to support a DOE-
wide collaborative effort in Distributed Energy Resources (DER). There
is also $1.0 million for DER within Renewable Support and
Implementation. Over the next two decades, consumers will be able to
choose from an array of ultra-high efficiency, ultra-low emission, fuel
flexible, and cost-competitive distributed energy resource products and
services. These will be interconnected into the nation's infrastructure
for electricity, natural gas, and renewable energy resources. The
localized generation and use of power can greatly enhance reliability
and power quality and provide an alternative to new transmission lines
as we replace the aging electricity and natural gas infrastructure in
the United. States. This is critical to U.S. economic growth. The FY
2002 program will support research and development on thermal,
electrical, and mechanical power technologies and provide cross-cutting
assistance. In FY 2002, funding is included in the Energy Efficiency
($47.3 million), Renewable Energy Resources ($15.9 million) and Fossil
Energy ($45.1 million) programs to support this program.
As part of the Electric Energy Storage Systems, the High
Temperature Superconductivity program ($36.2 million) is applying the
remarkable breakthroughs in superconducting wire technology to develop
cables that will allow us to transmit 100 times the amount of
electricity as traditional copper cables, with significantly reduced
energy losses. Large motors and power transformers using
superconductive materials will be much more efficient at only half the
size of present-day technology.
Additional programs that are funded at FY 2001 levels are: Hydrogen
R&D ($26.9 million); Hydropower R&D ($5.0 million); and the Renewable
Energy Production Incentive Program ($4.0 million). The Hydrogen
Program includes research and validation projects for the development
of safe, cost-effective hydrogen energy technologies that support and
foster hydrogen as an integral part of the energy economy. The Program
will continue research to improve efficiency, lower emissions, and
lower the cost of technologies that produce hydrogen from natural gas
and will work with fuel cell manufacturers to develop hydrogen-based
electricity storage and generation systems that will enhance the
introduction and market penetration of distributed, renewables-based
utility systems. In Hydropower R&D, we will continue our R&D activities
to support the development of a new generation of more environmentally-
friendly hydropower turbines. And, level funding will allow our
Renewable Energy Production Incentive program to continue our
partnerships with state and local governmental entities to acquire
renewable energy generation resources by providing financial incentives
comparable to production tax incentives or investment tax credits
available to private sector power generators.
FOSSIL ENERGY PRIORITIES
The FY 2002 budget for the Fossil Energy program contains two of
the three DOE Presidential Initiatives. They are the Clean Coal Power
Initiative and the Northeast Home Heating Oil Reserve.
Clean Coal Power Initiative
The FY 2002 budget includes $150 million for the Clean Coal Power
Initiative, a high priority effort that reflects the President's
commitment to clean coal technology. Coal supplies 54% of the nation's
current power demands. Virtually every credible energy forecast shows
that coal will continue to supply around half of the nation's power
through at least 2020 and probably beyond.
The Bush Administration is proposing a new vision for research in
clean coal technology. In setting the direction for new, competitively
awarded clean coal research, development and demonstration efforts,
greater emphasis will be placed on seeking the advice of industry in
shaping the program. We intend to investigate the use of consortia of
companies, an industry board, or other mechanisms that can enhance the
private sector's participation in planning this initiative.
New clean coal technology efforts will target the power industry's
top priorities in solving problems generic to the way coal is used to
generate electric power. Industry will be required to share the costs
of projects, with the level of private sector financing ranging from 20
percent for the earliest stages of research to at least 50 percent for
larger scale demonstrations.
The program will also solicit participation by universities as well
as government laboratories in a broad-based effort to apply the best
minds and institutions to eliminate barriers to enhanced coal use.
Successfully implemented elsewhere in DOE, industry-guided research
will choose the most important projects based on industry-defined
merit.
Northeast Home Heating Oil Reserve
The Reserve provides an important 2-million-barrel ``safety
cushion'' for the millions of families in the Northeast that depend on
affordable heating oil to stay warm in the winter. Currently, one
million barrels are stored in New York Harbor and one million barrels
are stored in New Haven, Connecticut. Three companies--Amerada Hess
Corp., Morgan Stanley Capital Group, and Equiva Trading Company--store
the oil at their terminals, rotate the oil to maintain DOE
specifications, and manage the delivery of the heating oil in the event
of an approved use of the reserve.
On March 6, 2001, I signed letters notifying Congress of the
Administration's intent to establish the heating oil reserve on a
permanent basis. DOE intends to exercise the optional 1-year extension
clause in its current contracts for storage of the emergency heating
oil.
The FY 2002 budget continues operation of the Reserve with support
for leasing commercial storage space, quality assurance, auditing, oil
sampling and inspections.
OVERALL FOSSIL ENERGY RESEARCH AND DEVELOPMENT BUDGET
Our budget request for Fossil Energy R&D is $449.0 million. Fossil
fuels--coal, oil and natural gas--supply 85 percent of the nation's
total energy, nearly three-fourths of its electricity, and almost 100%
of its transportation fuels. The President's energy policy task force
is examining a wide range of options to achieve the full potential of
these fuels while safeguarding our environment. Recognizing this, our
FY 2002 budget strikes a balance by focusing primarily on those areas
where federal involvement is most critical.
Fuels and Power R&D. Within the $159.8 million budget request, we
have concentrated our efforts on research that will:
directly support the Clean Coal Power Initiative, both
immediately and over the 10-year life of the President's clean
coal commitment,
provide new, more reliable power systems for the joint
Fossil Energy/Energy Efficiency effort to develop distributed
energy resource technologies (for the localized generation and
use of power), and
expand the menu of options for managing carbon gases by
developing affordable carbon sequestration technologies.
Emission Controls for Existing Plants. America has made remarkable
progress in cleaning its air due largely to new technology. Coal use,
for example, has doubled since the early 1970's but emissions of sulfur
and nitrogen pollutants are down 70 percent and 45 percent,
respectively. Yet, further challenges remain, especially in addressing
emissions concerns and microscopic airborne particles. There may be
opportunity for innovative, low cost technologies that address two or
more pollutants simultaneously.
The Fossil Energy program is developing technologies that are
intended to achieve future emission limits at costs far below what
industry would pass on to consumers using today's technology. This is
particularly important as support grows for an integrated emission
reduction strategy that would sharply reduce key pollutants in exchange
for long-term regulatory certainty.
Our FY 2002 budget contains $18 million for these efforts. This is
a slight decrease from the FY 2001 level of $20.1 million reflecting
the elimination of a program aimed at optimizing performance of coal-
fired power plants in other countries.
Vision 21. Vision 21 is the core of our long-range power research
program. It draws from several budget areas, including: gasification
combined cycle, pressurized fluidized bed combustion, fuel cells, and
advanced research (the latter involving new materials research and
advancements in supercomputing modeling and simulation).
Through this program, we believe it is possible to develop a new
type of power facility that will virtually eliminate environmental
concerns over the future use of fossil fuels.
A Vision 21 plant would be fueled by coal, or natural gas, or
perhaps biomass or municipal waste. It would emit virtually none of
today's air pollutants and produce no harmful solid or liquid wastes.
This extraordinary achievement could ensure that America--and other
countries--benefit from the full potential of their available energy
resources without compromising environmental goals. A complete Vision
21 prototype is 10 to 15 years into the future, but many of the
critical technology modules are already taking shape, and some are
likely to be adopted by industry in the next few years.
In FY 2002, we propose to fund Vision 21-related efforts at $37.5
million. The request is about $14 million below the FY 2001 budget due
primarily to completion of advanced turbine systems research and the
redirection of funds from the indirectly-fired cycle program (this
combustion technology is being refocused toward developing combustion/
gasification hybrid systems under the Integrated Gasification Combined
Cycle budget).
Carbon Sequestration. The Administration recognizes the importance
of continuing to develop lower cost options for reducing the buildup of
greenhouse gases. Voluntary emission reductions, for example, could
become much more attractive if low-cost carbon management options
result in commercial benefits--for example, injecting carbon dioxide
from power plants into oil fields or coal seams to produce marketable
crude oil or natural gas. If more emission reductions are needed in the
future, research must be conducted now so that lower cost sequestration
options are available. In FY 2002, we propose to increase funding for
carbon sequestration research to $20.7 million, a 10 percent increase
that will enable the first limited field tests for the most promising
approaches.
Fuel Cells. Our research into fuel cells focuses on lower-cost,
high performance units that can provide localized power supplies for
factories, hospitals, military installations, and other distributed
power applications. (The complementary program underway in the Office
of Energy Efficiency is developing fuel cells for vehicular and home
use.) At modular scales of 5-kilowatts to 1-megawatt or more, the
advanced fuel cells we are developing could be in growing demand as
businesses and factories look for more reliable ways to generate
premium-quality electric power onsite.
A high priority in this program will be to begin completing efforts
that represent more than 20 years of development and are within 1 to 2
years of achieving their objectives. We will also allocate a smaller
portion of the budget to the much longer-range future of fuel cells.
The focus will be to co-fund competitively selected industrial teams
that will develop new types of all-solid-state fuel cells that can
break through the cost barrier currently limiting widespread market
acceptance.
The FY 2002 budget request for fuel cells is $45.1 million, a
decrease of $7.5 million from the FY 2001 level that reflects a shift
from generic research to the development of a low cost five-kilowatt
solid state fuel cell.
Fuels R&D. In FY 2002, the $7.0 million budget request will support
research to reduce the cost and broaden the range of feedstocks that
can be processed into clean transportation fuels suitable for
tomorrow's high-fuel-efficiency vehicles. Funding is requested for the
continued development of improved ceramic membranes for producing
synthesis gas that can be chemically recombined into a variety of clean
liquid fuels. A small portion of this budget will also be used to
support a university-industry consortium that is developing ways to use
coal to produce high-value carbon products.
The Department does not propose to continue funding for developing
new fuel processing approaches for producing ultra low-sulfur diesel
and gasoline. The President has decided not to relax the requirements
for cleaner automotive fuels. Industry now understands the need to meet
the new standards, and this will create an incentive for private sector
research into cleaner fuels.
Petroleum and Natural Gas R&D. The United States has experienced a
decline in its domestic oil production for most of the past 30 years,
yet huge quantities of crude oil remain. In fact, nearly two-thirds of
all the oil found in the history of the U.S. remains unproduced, and
much of it is beyond the capabilities of today's petroleum industry.
There is the need for access to better technology and for validating
that improved technologies will perform as expected.
These smaller companies now account for 40 percent of the oil
produced in the United States and almost two-thirds of the natural gas.
They account for 85 percent of new domestic drilling. The Department
will continue to fund efforts that will encourage these smaller
domestic producers to adopt optimum technologies that can find and
produce oil and natural gas that might otherwise be left in the ground.
The overall funding for Petroleum & Natural Gas R&D reflects a
significant decline compared to the current level of effort. This will
require the program to be reoriented toward three primary objectives:
A concentrated effort to transfer improved technologies and
``best practices'' to the nation's smaller independent firms in
the very near-term--the next 1 to 5 years--and to lower the
cost of environmental protection through a combination of risk
assessments, technology development, regulatory streamlining,
impact analysis, and improved federal-state-local coordination;
Much longer-term research--10 or 15 years into the future--
to develop technologies that could locate and produce oil and
gas that are beyond the reach of current technologies or those
that industry is developing; and
Efforts to enhance the reliability and deliverability of the
Nation's natural gas pipelines and gas storage facilities.
The FY 2002 request for Petroleum and Natural Gas R&D is $51.5
million.
Other Fossil Energy R&D. Among the other Fossil Energy research and
development efforts in the FY 2002 budget are (1) $5.2 million to
continue advanced metallurgical activities at the Albany (OR) Research
Center, including efforts that are helping to develop better materials
for the Vision 21 concept, and to study new carbon sequestration
approaches; (2) $9.5 million for corrective actions at Fossil Energy
R&D facilities to meet environmental, health and safety requirements
and for other locations where environmental remediation is necessary;
and (3) $1.0 million for regulatory activities involving natural gas
imports and exports, exports of electricity, and authorizing
Presidential permit applications from the private sector for
constructing and operating electric transmission lines that cross U.S.
borders with Mexico and Canada.
PETROLEUM RESERVES
Strategic Petroleum Reserve. The Strategic Petroleum Reserve
provides the United States with strategic and economic protection
against disruptions in oil supplies. The FY 2002 budget request of
$169.0 million will maintain the Reserve's readiness to respond to a
Presidential directive in the event of an energy emergency. During FY
2001, the inventory of 561 million barrels will provide 53 days of net
import protection. By FY 2002, with the receipt of crude oil returned
in the 2000 exchange initiative and all royalty-in-kind oil, the
Reserve inventory is projected to grow to more than 591 million, its
historical highest level. Even with the increase in inventory, the days
of import protection are projected to increase only slightly, to 55
days, because of the continuing rise in oil imports.
Recently, the Energy Department renegotiated the delivery dates for
23.8 million of the 30 million barrels of crude oil released in last
year's exchange initiative. Under the original agreements, companies
would return 31.35 million barrels later this year--the additional 1.35
million representing a premium in returning for obtaining crude oil
when inventories were tight last year. Now, under the renegotiated
contracts, which defer deliveries until December 2001 through January
2003, the Strategic Reserve will be replenished with 33.54 million
barrels--2.4 million more than originally anticipated. It may also be
possible that delivery dates will be renegotiated for at least some of
the oil currently scheduled to be returned this year, further adding to
the emergency crude oil inventory at no additional cost to the
taxpayer.
In FY 2002, $3.0 million is included in the budget request to begin
dealing with a recurrence of gas buildup in the Reserve's crude oil.
Naval Petroleum Reserves. The $17.4 million budget request will
permit continued operations of the NPR-3 (Teapot Dome) stripper well
field in Wyoming and activities associated with the co-located Rocky
Mountain Oilfield Testing Center.
Elk Hills School Lands Fund. The National Defense Authorization Act
for Fiscal Year 1996, Public Law 104-106, authorized the settlement of
longstanding ``school lands'' claims to certain Elk Hills lands by the
State of California. The Settlement Agreement between the Department
and the State, dated October 11, 1996, provides for payment of nine
percent of the net sales proceeds generated from the divestment of the
government's interest in Elk Hills, subject to the appropriation of
funds. Under the terms of the Act, a contingency fund containing nine
percent of the net proceeds of sale has been established in the U.S.
Treasury and is reserved for payment to the State, subject to the
appropriation of funds.
The first installment payment was appropriated in FY 1999. No
appropriation was provided in FY 2000, and the FY 2000 Interior and
Related Agencies Appropriations Act provided an advance appropriation
of $36.0 million to become available in FY 2001.
The FY 2001 Interior and Related Agencies Appropriations Act
provided an advance appropriation of $36 million to become available in
FY 2002 that, consistent with the budgetary treatment of other advance
appropriations in the budget, would not be counted as discretionary
funding for FY 2002 but would still be available next year. The FY 2002
budget requests $36.0 million in additional new budget authority for FY
2002. Thus, the budget proposes that a total of $72.0 million be
available for this purpose in FY 2002.
ENERGY CONSERVATION PRIORITIES
The FY 2002 budget for the Office of Energy Efficiency and
Renewable Energy (EERE) incorporates: concern for our low-income
citizens--we have doubled our Weatherization Assistance Program;
improved energy security--we are refocusing our transportation
programs, particularly the Partnership for a New Generation of Vehicle;
and energy reliability--ensuring grid reliability and advancing small-
scale, on-site power generation through Distributed Energy Resource
programs. This budget redirects our energy efficiency resources to
benefit consumers, with emphasis on those least able to afford the high
cost of energy. To do this, cuts are made to programs where industry
and others can step in--sharing costs or pursuing research
independently.
Weatherization Grants
Household energy needs consume a disproportionate share of expenses
in low-income households. The Department's Weatherization Assistance
Program reduces the heating and cooling costs for low--income
families--particularly households that include the elderly, persons
with disabilities, and children. To help correct the heavy energy
burden faced by low-income Americans, the Administration proposes to
increase the Weatherization Assistance Program in FY 2002 to $273.0
million, an increase of $120.3 million above current levels.
The funding level of $273.0 million will weatherize approximately
123,000 low-income homes plus 108,000 additional homes with other
leveraged Federal resources, such as Low Income Home Energy Assistant
Program funds, and State and Utility funds, saving $2.10 in energy
costs for every dollar invested over the life of the energy efficiency
measures. In order to ensure the necessary expansion of the
Weatherization network's production capacity, enabling it to deliver
services to many more low-income households over the ten-year period
beginning in FY 2002, the program will work with the stakeholders to
ensure investment in such essential elements as equipment and training
for additional crews, and to test improved implementation approaches
for the Weatherization Program. This year's budget marks the beginning
of a 10-year commitment to increase funding for the Weatherization
Assistance Program by $1.4 billion.
Transportation Programs
The Partnership for a New Generation of Vehicles (PNGV) program
involves companies in my native State of Michigan, and I supported it
when I was a Senator. While developing the FY 2002 budget, together
with our automotive partners, we reviewed PNGV and agreed the program
needed to be redesigned toward solving today's problems.
The current popularity of the sports utility vehicle raised
questions about one of the basic premises under which the PNGV program
was initiated. When PNGV began in 1993, it was directed at building
only one type of automobile--the mid-sized sedan. Today, we believe
greater benefit could be achieved by developing energy-efficient
components that can be adapted for use in several models throughout our
fleet of vehicles. That is principally why in the FY 2002 budget we are
reformulating and streamlining the PNGV program--to make it more
flexible for automakers, of greater benefit to the taxpayer, and more
realistic in the face of today's diverse challenges.
A new PNGV approach can help Detroit with promising, longer-term
technologies that will produce a range of cleaner, more efficient
vehicles. The Administration will offer a budget amendment to support
this new PNGV program at $100 million.
The 21st Century Truck Program is a relatively new multi-agency
partnership with sixteen companies from the truck manufacturing and
supplier industries and is aimed at developing technologies needed to
produce trucks and buses with higher fuel economy, reduced emissions,
and improved safety. The Department of Energy has been a leader in
planning and research related to this effort. The partnership is
proceeding well, with over 65 scientists and engineers from industry
and government having completed an extensive technical plan that will
guide the development and implementation of this program. Our FY 2002
budget contains $70.6 million for this program.
Distributed Energy Resources
Over the next two decades, industrial, commercial, institutional
and residential customers will be able to choose from a diverse array
of ultra-high efficiency, ultra-low emission, fuel flexible, and cost-
competitive distributed energy resource products and services. These
will be interconnected into the nation's infrastructure for
electricity, natural gas, and renewable energy resources. Distributed
Energy Resources--the localized generation and use of power--can
greatly enhance reliability and power quality and provide a strategic
alternative to new transmission lines as we replace the aging
electricity and natural gas infrastructure in the United States. This
is critical to new industry growth, including the high technology e-
commerce needs for up to 100 times the power density and 10,000 times
the power quality and reliability requirements of standard buildings.
The Distributed Energy Resources program, which is shared with the
Office of Fossil Energy, supports research and development on thermal,
electrical, and mechanical power technologies and provides crosscutting
assistance to the commercial, residential (rural and urban), utility,
and industrial sectors.
The programs called for in this budget address many challenges that
today inhibit the widespread adoption of distributed energy resources.
System related barriers include limitations in efficiency, emissions
and cost problems, and systems that are not flexible for remote
control, smart control, and system optimization. Near-term market and
institutional barriers include a lack of interconnection standards,
lack of new technology building and fire codes, and a need for
consistent siting and permitting rules. Energy Efficiency program
funding for this activity remains constant at $47.3 million.
OVERALL ENERGY EFFICIENCY BUDGET REQUEST
The Energy Efficiency programs funded by this Subcommittee work to
reduce energy use in buildings, in the industrial sector, by vehicles,
in power generation, and in federal facilities all while increasing
long-term economic growth. The FY 2002 budget requests $795.0 million
for the Department's Energy Conservation programs. Shortly, a budget
amendment will be forwarded by the Administration to reflect proposed
changes in the Partnership for a New Generation Vehicle (PNGV).
Building Efficiency Improvements. In the U.S., buildings account
for more than one-third of the annual energy consumption and use two-
thirds of all electricity generated. Americans spend approximately
$240.0 billion per year to heat, cool, light, and run equipment and
appliances in residential and commercial buildings. The Office of
Building Technology, State, and Community Programs, in partnership with
industry, develops, promotes, and integrates energy technologies and
practices to make buildings more efficient and affordable. Our FY 2002
budget request is $367.1 million and contains funds for Buildings
Research and Standards, $30.6 million; Building Technology Assistance,
$321.5 million, including the Weatherization Assistance Program at
$273.0 million and the State Energy Program at $38.0 million; the
Community Energy Program, $8.5 million; and the Energy Star Program,
$2.0 million.
Improving Our Transportation Efficiency. Transportation today
accounts for 67 percent of the nation's oil use, and our vehicles
remain 95 percent dependent on a single fuel--petroleum.
Transportation's need for oil has brought our country to the point that
it uses 4.7 million more barrels of oil per day--just for cars and
trucks--than it produces. Imports, which account for more than 52
percent of our consumption, are at an all-time high and currently add
an estimated $100 million per year to our balance of payments deficit.
Working with partners in industry, research organizations, State
governments, and other Federal agencies, the Department's Office of
Transportation Technologies programs support research, development, and
deployment programs which will reduce oil consumption by achieving: 1)
significant improvements in vehicle fuel economy; and 2) displacement
of oil by other fuels which are domestic, clean, and cost--competitive.
For our transportation programs, we are requesting $239.4 million in FY
2002. Programs include Vehicle Technologies R&D, $154.1 million; Fuels
Utilization R&D, $23.5 million; Materials Technologies, $41.3 million;
and Technology Deployment, $10.2 million.
Industrial Technologies. Industry today accounts for 38 percent of
all U.S. energy use. Moreover, just nine industries--agriculture,
aluminum, chemicals, forest products, glass, metal casting, mining, and
steel--account for 27 percent of all U.S. energy use. These industries
ship $1 trillion in products annually, employ over 3 million people,
and generate four additional jobs in the economy for each manufacturing
job. The Office of Industrial Technologies partners with key energy-
intensive industries to develop and apply advanced technologies and
practices that reduce energy consumption, maintain and create jobs,
boost productivity, and significantly improve the competitiveness of
the United States. In FY 2002, we are requesting $46.4 million for
Industries of the Future (specific); $31.9 million for Industries of
the Future (crosscutting); and $9.4 million for management and
planning. The FY 2002 request for Industry programs reflects a shift to
areas with greater potential for industry participation.
Federal Energy Management (FEMP). As the nation's largest energy
consumer, the Federal government can lead the nation in becoming a
cleaner, more efficient energy consumer. In 1999, the Federal
government spent almost $8 billion to provide energy to its buildings,
vehicles, and operations. Over 40 percent of the government's energy
bill is spent on heating, cooling, and powering its 500,000 buildings.
The Office of Federal Energy Management Programs reduces Federal energy
costs by advancing energy efficiency and water conservation, promoting
the use of renewable energy, and managing utility costs in Federal
facilities and operations, including those of the Department of Energy.
The FEMP program facilitates alternative financing, bringing private
resources to bear on the up-front investment needed to make efficiency
and conservation improvements at federal facilities. The program also
provides technical assistance to help federal facility managers better
address their energy needs. In FY 2002, we are requesting $13.3 million
for FEMP.
ENERGY INFORMATION ADMINISTRATION (EIA)
For the Energy Information Administration (EIA), we are requesting
$75.5 million for ongoing data and analysis activities and critical
data quality enhancements. EIA's base program includes the maintenance
of a comprehensive energy database; the dissemination of energy data
and analyses to a wide variety of customers in the public and private
sectors; the maintenance of the National Energy Modeling System for
mid-term energy markets analysis and forecasting; and the maintenance
of the Short-Term Integrated Forecasting System for near-term energy
market analysis and forecasting.
In FY 2002, EIA will focus on three multi-year initiatives. They
are: 1) redesigning the 20-year-old energy consumption surveys to
update the survey frames, sampling design, and data systems, and
realign them with the information on residential and commercial
buildings populations resulting from the 2000 census; 2) revising EIA's
natural gas and electricity surveys and data systems to reflect changes
in these restructured energy industries; and 3) addressing critical
petroleum and natural gas data quality issues to facilitate EIA's
ability to collect and disseminate reliable and accurate energy data
needed to assist the Administration and Congress in making informed
energy policy decisions.
ECONOMIC REGULATION
The FY 2002 budget request of $2.0 million is for refund
application processing and for related activities arising from the
regulatory program initiated under the Emergency Petroleum Allocation
Act of 1973. Excess funds from refund processing are transferred to the
Treasury.
NUCLEAR ENERGY, SCIENCE AND TECHNOLOGY
The FY 2002 budget request for Nuclear Energy, Science and
Technology is $223.1 million. It focuses on activities that maintain
the Department's nuclear research infrastructure.
Today, the nation's 103 nuclear power plants are our second largest
source of electricity (20 percent of electricity generation in 2000)
and are producing record quantities of power. In 2000, nuclear
generation was up another 4 percent to 754 billion kilowatt-hours and
U.S. plants reached new highs in operating performance by generating
power at nearly 90 percent of total capacity. Meanwhile, the cost to
produce electricity from nuclear power hit a record low in 2000,
leading nuclear power plants to surpass coal-fired plants for the first
time in more than a decade as the lowest-cost source of electricity
generation.
The investments that the Department of Energy proposes to make in
nuclear energy, science and technology are driven by the recognition
that nuclear technology serves the national interest for reliable,
affordable and environmentally sustainable electricity. Nuclear
technology also allows us to expand our understanding of the universe
by powering deep space exploration and it enables, through the use of
medical isotopes, the diagnosis and treatment of devastating illnesses.
Our investments in nuclear technology are also based on the
understanding that, in order to meet the challenges and accelerate
innovation in the 21st Century, we must begin today training and
preparing tomorrow's scientists and engineers and providing focused
investments in the science and technology infrastructure.
The FY 2002 request for Nuclear Energy, Science and Technology
program includes:
Nuclear Research & Development ($27.1 million)
University Reactor Fuel Assistance and Support ($12.0
million)
Advanced Radioisotope Power Systems ($29.1 million)
Medical Isotope Program ($18.2 million)
Infrastructure ($81.3 million)
Nuclear Facilities Management ($30.5 million)
The Nuclear Energy Research and Development program sponsors R&D
programs to stimulate universities, industry, and national laboratories
to innovate and apply new ideas to old problems. This request continues
funding for the Nuclear Energy Research Initiative (NERI), to enable
support existing projects coming out of our universities, laboratories,
and industry; and for the International-NERI program, to leverage U.S.
research activities on advanced nuclear technologies with new
investments made by the research organizations of other countries. The
request establishes the Nuclear Energy Technologies program to complete
the Generation IV nuclear power systems technology roadmap and several
efforts designed to pave the way for near-term implementation of
advanced nuclear power plants in the United States. In addition, under
the Nuclear Energy Plant Optimization (NEPO) program, the Department
will continue to provide important leadership to encourage the
development of advanced technologies needed to keep U.S. plants
operating reliably and cost-effectively as they operate over the next
three to four decades.
For University Reactor Fuel Assistance and Support the FY 2002
request includes $12.0 million to continue the Department's commitment
to maintain U.S. leadership in nuclear research and education, an
amount equivalent to previous years. By supporting the operation and
upgrade of university research reactors, providing fellowships and
scholarships to outstanding students, and providing Nuclear Engineering
Education Research Grants, the program helps maintain domestic
capabilities to conduct research. The program also helps to maintain
the critical infrastructure necessary to attract, educate, and train
the next generation of scientists and engineers with expertise in
nuclear energy technologies.
The FY 2002 budget request includes $29.1 million for Advanced
Radioisotope Power Systems to continue the national program to develop
and build advanced nuclear power systems for deep space exploration and
national security applications. The Advanced Radioisotope Power Systems
program supports and funds DOE activities related to development,
demonstration, testing, and delivery of power systems to the National
Aeronautics and Space Administration and other federal agencies.
The FY 2002 budget request includes $18.3 million for the Medical
Isotope Program to continue the application of DOE's unique expertise
and infrastructure to promote advanced research in the use of medical
isotopes to treat and diagnose cancer and other diseases. The FY 2002
program continues to provide U.S. researchers with vital, stable and
radioactive isotopes that are essential to both basic scientific
studies and clinical trials of new cancer treatments.
The FY 2002 budget request includes $81 million for reactor
infrastructure requirements. The program will continue to maintain the
Argonne National Laboratory-West, Idaho, nuclear infrastructure. An
additional $8.7 million will be used to support Test Reactor Area
activities, also in Idaho, such as naval reactor fuel and core
component testing at the Advanced Test Reactor, and privatized
production of isotopes for medicine and industry. We also continue to
manage the shutdown of the Fast Flux Test Facility at Hanford,
Washington.
The FY 2002 budget request includes $30.5 million for Nuclear
Facilities Management to support the Experimental Breeder Reactor-II
(EBR-II) shutdown activities; the disposition of spent fuel and legacy
materials; and research on, and development of, various waste
disposition technologies. This winter, we met our key commitment toward
the permanent shutdown of the EBR-II and removed all molten sodium from
the EBR-II reactor. By the end of FY 2001, the Department will complete
the processing and disposition of the EBR-II secondary and primary
sodium and the Fermi reactor sodium, in compliance with the Idaho
National Engineering and Environmental Laboratory Treatment Plan. In FY
2002, we will complete all tasks required to place the EBR-II in
industrially and environmentally safe permanent deactivation.
The FY 2002 request does not include funding for the Advanced
Accelerator Applications (AAA) program initiated in FY 2001. This
activity, currently managed by the Office of Nuclear Science and
Technology, investigates the use of high-energy accelerator-based
systems to reduce the radioactive toxicity and volume of spent nuclear
fuel. Decisions on the future of this new program are deferred pending
the recommendations of the Vice President's National Energy Policy
Development Group. Until these priorities are clearly identified, the
Department will not request funding in FY 2002 for major new
initiatives.
FY 2002 FUNDING REQUEST FOR SCIENCE PROGRAMS
In Science, the budget enables DOE to continue to serve its role as
a primary federal supporter of scientific research--a role which has
earned praise for Nobel prize winning research, cutting-edge R&D, world
class research facilities, and our highly regarded national
laboratories. Funding maintains the schedule for the Spallation Neutron
Source project which will help the U.S. to maintain its preeminence in
science and technology. The FY 2002 budget request for the Office of
Science is $3.16 billion for FY 2002 in the ``Science'' appropriation,
an increase of $4,436,000 over FY 2001; and $8,970,000 within the
``Energy Supply'' appropriation.
The Office of Science is the dominant supporter of the physical
sciences (physics, chemistry, etc.) in the U.S. and plays a major role
in supporting other scientific fields, including the life sciences,
mathematics, computation, engineering and environmental research. We
manage a vast network of major scientific facilities that are essential
to the vitality of the U.S. research community. Tens of thousands of
the leading research scientists in the U.S.--representing virtually
every scientific discipline--depend upon the Office of Science to
maintain and operate these unique facilities.
The FY 2002 request for the Office of Science's basic research
portfolio supports the President's goal to strengthen the U.S.
scientific enterprise to ensure continued international leadership in
technological innovation, and DOE missions in energy, environment, and
national security. Basic research in the Office of Science is performed
through six major programs:
Basic Energy Sciences ($1,005 million)
High Energy Physics ($721 million)
Biological and Environmental Research ($443 million)
Nuclear Physics ($361 million)
Fusion Energy Sciences ($238 million, to be amended to
increase by $10 million)
Advanced Scientific Computing Research ($166 million)
In FY 2002, the Basic Energy Sciences (BES) program continues
construction of the Spallation Neutron Source to provide the next-
generation, short-pulse spallation neutron source for neutron
scattering. The project is scheduled for completion in June 2006.
Another high priority in FY 2002 is nanoscale science, engineering, and
technology research. BES will build on research directions initiated in
FY 2001 to explore concepts and designs for Nanoscale Science Research
Centers user facilities similar in concept to existing BES major
scientific user facilities and collaborative research centers that will
provide unique, state-of-the-art nanofabrication and characterization
tools to the scientific community. Significant partnerships with
regional academic institutions and state governments are anticipated.
The FY 2002 request for High Energy Physics (HEP) reflects the
start of a four-year campaign at Fermilab, Illinois to substantially
upgrade the luminosity of the Tevatron in an ongoing campaign to
discover the Higgs particle (believed to be key to understanding mass)
and other new particles predicted by current theories. The B-factory at
SLAC, California, will begin a three-year program of progressive
upgrades, interwoven with intensive operational schedules, to make
important contributions toward understanding the preponderance of
matter over antimatter in the universe. Appropriately focused support
for university and laboratory based physics theory and experimental
research will be emphasized in FY 2002.
As a founder of the Human Genome Project in 1986, the Biological
and Environmental Research (BER) program will, in FY 2002, continue its
tradition of developing leading-edge research programs in biology with
``Genomes to Life.'' This program will develop innovative research and
computational tools that move biology from today's genome sequence
information to tomorrow's understanding of complex biological systems.
In FY 2002, BER microbial research will provide DNA sequences for four
additional microbes important in bioremediation, clean energy, or
global carbon cycling. In FY 2002, the Global Climate Change program
will conduct research designed to reduce uncertainty in predicting the
effect of greenhouse gases on future climates. Carbon cycle and
sequestration research will help to assess current carbon sinks and to
develop methods of enhancing natural processes for terrestrial and
ocean sequestration of carbon.
The FY 2002 request for Nuclear Physics supports operation of the
new Relativistic Heavy Ion Collider at Brookhaven National Laboratory
to offer researchers a unique opportunity to create and characterize
the quark-gluon plasma, a phase of matter thought to have existed in
the very early stage of the universe. The Thomas Jefferson National
Accelerator Facility will perform experiments whose results will
continue to change our understanding of how quarks bind together to
form the basic building blocks of our world. The currently operating
Sudbury Neutrino Observatory experiment is designed to measure for the
first time the appearance of a neutrino type not produced by the sun,
providing revolutionary insight into the properties of neutrinos and
the core of the sun.
In FY 2002, Fusion Energy Sciences will conduct basic research in
plasma science in partnership with the National Science Foundation. It
will continue operation of DIII-D, Alcator C-Mod, and the National
Spherical Torus Experiment. Researchers will investigate alternative
fusion concepts to develop a fuller understanding of the physics of
magnetically confined plasma and identify approaches that may improve
the economical and environmental attractiveness of fusion. The basic
research into inertial fusion energy will capitalize on NNSA's
stockpile stewardship R&D effort in inertial confinement fusion.
FY 2002 FUNDING REQUEST FOR ENVIRONMENTAL QUALITY PROGRAMS
The $6.5 billion budget request for Environmental Quality programs
continues environmental cleanup at sites across the country, supports a
science-based recommendation to site a long-term nuclear waste
repository, and maintains an emphasis on worker and environmental
health and safety.
ENVIRONMENTAL MANAGEMENT
The budget request for Environmental Management activities is $5.9
billion, including $141.5 million for privatization projects. This
request is approximately $354 million less than the comparable FY 2001
appropriation, but essentially the same level as FY 2000. The request
consists of:
Defense Environmental Restoration and Waste Management
($4,548.7 million)
Defense Facilities Closure Projects ($1,050.5 million)
Defense Environmental Management Privatization ($141.5
million)
Non-defense Environmental Management ($228.6 million)
Uranium Facilities Maintenance and Remediation ($363.4
million)
Responsible for the cleanup of contaminated sites, radioactive
wastes, and nuclear materials resulting from the nuclear weapons
production, the Department's Environmental Management program faces
some of the most technically difficult and complex cleanup challenges
of any other environmental program in the world. Our Cold War efforts
produced large volumes of nuclear materials, spent nuclear fuel,
radioactive wastes and hazardous wastes, resulting in contaminated
facilities, soil, and groundwater at over 100 sites around the country.
The request ensures that the Environmental Management program employs
the best available technologies and business practices, and sets
priorities to address important health, safety, and environmental
needs.
Cleanup of these sites is an important and a very complicated
endeavor. I am concerned, however, that the estimated length of time to
complete the cleanup is too long, and the costs to the taxpayer too
high. As with other DOE programs, the budget request reflects my
challenge to the Environmental Management program to become more
efficient. I also have initiated a sweeping Environmental Management
Mission Assessment to identify efficiencies and ensure that our
principal focus is on accelerating the cleanup of those sites with
significant environmental, health, and safety risks. We need to find
ways to continue progress and meet our commitments more efficiently and
at a lower cost.
To see that we achieve this, we will begin immediately to conduct a
top-to-bottom assessment of our Environmental Management mission to
identify what has prevented us from narrowing the cost and efficiency
gap and whether our strategies are suitable. We need to identify steps
to strengthen project management, implement contracting strategies that
help reduce costs and schedules, better employ new technologies, and
sequence work more effectively. We need to be sure we are spending our
cleanup dollars on the right problems and are addressing cleanup
problems as effectively and safely as possible.
The Environmental Management budget request for FY 2002 reflects a
good balance among the critical national priorities for the programs
the Department administers. Our budget continues to place the highest
priority on protecting the health and safety of workers and the public
at all DOE sites. The request gives priority to activities needed to
address high-risk wastes and nuclear materials to ensure they are
properly managed and safeguarded and that progress continues to
mitigate risks. Our request also keeps the major sites on track for
meeting accelerated closure goals, and ensuring we are pursing the most
significant mortgage reduction opportunities. For example:
High Level Waste Treatment Facility at the Hanford Site: The
request provides $500 million to develop the waste treatment facility
at Hanford that will immobilize a significant portion of the 53 million
gallons of high level waste currently stored in underground tanks. The
increase of $124 million compared to the FY 2001 appropriation reflects
the start of construction in FY 2002. The work is being done under a
new performance-based contract awarded in December 2000 that provides
incentives for the contractor to reduce costs and schedules for the
project. The request keeps the project on track for beginning hot
operations in 2007, a critical milestone in the Department's agreement
with the State of Washington.
Ensuring Safety and Progress for High Risk Materials: Our request
gives priority to our highest risk problems. We will ensure the high
level waste tanks at the Hanford and Savannah River sites are safely
maintained and the tanks stabilized or closed. We will continue
vitrification of waste at Savannah River site, including the
development of a technology to pre-treat salt waste, a necessary step
to complete vitrification of all high-level waste at the site. Our
request supports the stabilization of nuclear materials, including the
operation of the canyons at Savannah River to stabilize spent nuclear
fuel and other ``at risk'' nuclear materials. We will keep the transfer
of spent nuclear fuel from K Basin to safer storage, on track at
Hanford. We will continue receipt of foreign spent nuclear fuel in
support of non-proliferation goals.
Closure of Rocky Flats and Fernald: Our request supports the
accelerated cleanup and closure of Rocky Flats in Colorado and Fernald
in Ohio which have no future DOE missions. These sites offer
significant opportunities to reduce the ``mortgage'' the Department
must pay to maintain the safety and security, freeing up future dollars
for cleanup at other sites. The Rocky Flats site is the largest site
challenged to accelerate site cleanup and achieve closure in 2006, and
to date significant progress has been made towards making this goal a
reality. Both Rocky Flats and Fernald have new ``closure'' contracts
that provide incentives to the contractor to meet or exceed accelerated
completion dates. Our request also funds supporting activities at sites
such as Savannah River Site and Oak Ridge that are critical to
achieving closure of these major sites.
Increase Shipments to WIPP: Our request supports an increase in
shipments of transuranic waste to the Waste Isolation Pilot Plant in
New Mexico. We will continue critical shipments from our Idaho site to
meet our commitment to the State to ship 3,100 cubic meters of waste by
December 2002; and from Rocky Flats to support the schedule for
closure, as well as limited shipments from other sites. The WIPP
facility remains critical to meeting our closure and completion goals
at other sites.
Our request also funds new high priority responsibilities as well.
This includes placing the uranium enrichment plant at Portsmouth, Ohio
in cold standby, keeping it in a safe and operable condition, should it
be necessary to return the plant to operation in the future, and
providing assistance to displaced workers. Other significant
responsibilities include the safe management and disposition of about
680,000 metric tons of depleted uranium hexafluoride, which Congress
transferred last year to the Environmental Management program.
We have made real, on-the-ground progress since the Environmental
Management program was created in 1989. We have completed active
cleanup at 71 sites as of the end of FY 2000, and plan to complete
cleanup at an additional three sites by the end of this fiscal year. We
successfully operate two vitrification facilities in South Carolina and
New York that convert highly radioactive waste into a safer, glass
form. We have produced more than 1,100 canisters of vitrified waste at
the Savannah River Site in South Carolina, exceeding our goals, and
will complete vitrification at West Valley this year. The Waste
Isolation Pilot Plant, the world's first deep geological repository, is
up and running, disposing of waste from sites across the DOE complex
with increased shipments and additional sites planned for FY 2002. We
continue to make progress in moving corroding spent nuclear fuel to
safer storage at the Hanford and Idaho sites; in stabilizing nuclear
materials at Savannah River; in removing nuclear materials and
decontaminating plutonium buildings at Rocky Flats; and in addressing
contamination sources that threaten groundwater supplies.
Much of the success to date at our sites can be attributed to the
positive working relationship we have established with our regulators
and with others in the communities that surround the DOE sites. We will
need the continued support and involvement of the state and federal
regulators who oversee our work to meet future challenges and find new
ways to accelerate and streamline our cleanup work. This Administration
is firmly committed to conducting the cleanup safely and complying with
applicable laws and regulations. We want to be sure, however, that we
are conducting our cleanup in the best and most practical way possible.
Accordingly, I have asked the governors of the States that host our
sites and EPA Administrator Christine Todd Whitman to work with us
during our management assessment to improve the compliance framework
that governs much of the cleanup work at our sites. We need to review
our work to make sure it is consistent with sound priorities, and
promotes on-the-ground results, and reflects the lessons and technical
understanding developed over the past decade. I am confident that,
working cooperatively, we can find ways to achieve our shared
environmental goals more efficiently.
CIVILIAN RADIOACTIVE WASTE MANAGEMENT
The Office of Civilian Radioactive Waste Management FY 2002 budget
request is $445.0 million, an increase of $54.6 million above the
fiscal year 2001 program level. This request reflects the Department's
commitment to make progress while ensuring that science governs the
step-wise process required under the Nuclear Waste Policy Act, as
amended, for decisions regarding licensing a geologic repository for
high-level nuclear waste are made. We are implementing this policy by
strengthening the scientific and technical basis underlying future
siting decisions.
Of the $445.0 million request, $355.5 million, 80 percent, is
targeted to site characterization activities, of which $75.0 million is
associated with the Site Recommendation and $280.5 million is
associated with License Application. In FY 2002, the Civilian
Radioactive Waste Management Program will transition from predominately
``investigative science'' under site characterization to ``engineering
and design.'' With this transition, resources will be applied to
preparing a license application that could be submitted to the Nuclear
Regulatory Commission. The request also includes a 15 percent increase
to continue and strengthen the Performance Confirmation program. The
Commission will use the sound scientific analysis in the license
application, supplemented with the knowledge gained from Performance
Confirmation, to make an independent assessment of how the repository
will protect public safety and health and the environment. The request
also includes $5.8 million to restart important transportation and
waste acceptance planning activities. This funding will help to develop
a private-sector competitive procurement process for acquisition of a
safe and cost-effective transportation capability.
ENVIRONMENT, SAFETY AND HEALTH
The FY 2002 budget request for the Office of Environment, Safety
and Health (EH) is $140 million, $21 million less than current year
spending. This reduction largely reflects the availability of prior
year balances to fund the activities of the newly created Office of
Worker Advocacy.
The EH mission is to assess and advise the Secretary of Energy of
the health and safety of DOE workers, the public, and the environment
near its facilities. EH performs independent environment, safety, and
health oversight of the Department's programs in nuclear safety, worker
safety, and radiation protection. In a new role, EH is responsible for
helping workers obtain appropriate benefits under various state
workers' compensation programs, and information and medical records
when applying for benefits under the Federal Energy Employees
Occupational Illness Compensation Program Act of 2000.
CONCLUSION
Mr. Chairman, and members of the Committee, that concludes my
prepared statement. I will be glad to answer any questions you may have
at this time.
The Chairman. Thank you very much, Mr. Secretary. We will
proceed with the questions, Senator Thomas, of course,
following Senator Bingaman, and Senator Craig, Senator Cochran,
Senator Wyden, and Senator Smith.
A great deal has been made of the suggestion that one of
the answers to our energy crisis would be to impose CAFE
standards, and I am sure you and your folks down at the
Department of Energy have labored over this. I understand there
are about 200 million vehicles on the road. About 130 million
are automobiles, and a good portion of those are not paid for.
As a consequence, any mandates suggest that it would take a
number of years to actually replace significantly that fleet.
We can go out and buy cars today that get 50 to 60 miles per
gallon, and some people do.
I am wondering if you have any comments relative to the
generalization made by many that CAFE standards are the answer.
All we have to do is dictate a CAFE level that would pick up
the savings and our current crisis in gasoline would be over.
Secretary Abraham. Well, it is interesting, of course, when
you change roles from being the Senator from Michigan to being
the Secretary of Energy on some of these issues.
The Chairman. I knew you would have a certain familiarity
with it.
Secretary Abraham. One's background and expertise needs to
be applied in different ways depending on what one's
constituencies are, but here, just as a starting point, one of
the issues that I think is very likely to be addressed in the
energy plan that will be released next week is the issue of
CAFE standards, and I feel constrained a bit in terms of trying
to speak for what the administration's position will be because
the President and Vice President will be releasing that report,
but I think there will be a component of it that involves CAFE
standards, and that will be available in a few days.
I would just note a couple of things. Again, from the
perhaps slightly biased perspective of a Michigan native, but I
would just say this, I think we worked out a pretty good
agreement last year among the various parties who have worked
on this CAFE debate over a long period of time. Instead of an
all-or-nothing approach, we compromised, and I think on a
unanimous basis in the Senate we decided that we should ask the
National Academy of Sciences to engage in a very thorough
investigation of CAFE and make recommendations back to us.
I think that report is due in July, and I think we probably
should follow the guidance that we ourselves applied to the
process, but I would say that if we make changes with regard to
the standards, that the two issues that I hope will be part of
the equation, or at least not lost in the discussions, are No.
1, safety implications, and No. 2, the impact of changes as
they might be disparate between American manufacturers and
foreign manufacturers.
On the safety front, I just would draw people's attention
to the National Highway Transportation Safety Administration's
estimates that for every 100 pounds of weight reduction in
vehicles--this is, I think, the 1995 estimate--their projection
was 302 lost lives because of safety implications on vehicles.
When a further study was done in 1999 by Gannett News Service
based on those projections, they estimated that there have been
as many as 46,000 lives lost because of the CAFE standards
imposed in the past.
I hope that as we move into a discussion of changes, that
we would make sure that safety considerations are part of the
evaluation. I also would, as I said, urge people to look at the
implications in terms of disparate effects on American versus
foreign manufacturers, as we might make any changes, because of
the compostion of the fleets--and I am talking now mostly about
light truck category fleets here, where I think most people
feel that CAFE numbers need to be changed.
The way the fleets are currently set up, foreign
manufacturers have substantial credits built up, such that if a
change were to be brought about in that CAFE level, it would
provide a very significant competitive advantage, at least for
a number of years, to foreign truck manufacturers, because as
they have specialized in providing light trucks, we have tended
to more on the heavy truck side. I would just urge that we keep
these thoughts in mind as we look at these issues, and again I
would have to postpone till next week any official
administration comment----
The Chairman. I understand.
Secretary Abraham. I think those are factors that ought to
be considered.
The Chairman. Thank you, Mr. Secretary. I think it is
important to identify, as you have attempted to do within
reasonable limits, the trade-offs associated with any simple
solution, which brings me to my last question, and that is
relative to a realization that Americans have enjoyed
relatively inexpensive but plentiful supplies of energy, and
now they are becoming concerned over the inconvenience
associated with cost, and in some cases lack of supply, which,
if you carry this to an extent, can affect the standard of
living of Americans as well as the economy.
One of the challenges that you and the administration have
is what are you going to do about it, and I recognize it is
premature to suggest that we discuss what is coming out of the
Energy Task Force, but this committee held a hearing last week
on fuels and infrastructure, and in my opinion infrastructure
is a term that can be equated to when you do not know what else
to talk about and you generalize and use the word
infrastructure, and there is other words for that, and initials
for it as well, but we do not have to go into that at this
time.
But my point is that what came out of that hearing was
rather interesting, and the expert witnesses, one who was an
environmentalist, suggested that when the Clean Air Act
amendments came in and were initiated in 1990, it really was
not a recommendation that Congress attempt to prescribe the
recipe for gasoline in the statute. However, unknowingly, that
is basically what we did, and it was suggested by one of the
gentlemen who represented the environmental blue ribbon panel,
a gentleman by the name of Daniel Greenbaum--I quote.
He said, we have two paths we can follow for clean fuels,
to continue clean burning fuels with legislated, mandated fuel
additive requirements and risk potential market dislocations
and increases in prices, or to keep the strong, clean air
performance requirements for these fuels, but to free the
market to make them in the most cost-effective way possible
with the minimum specific fuel additive requirements.
The implication is that you let the marketplace make a
determination of how you formulate these fuels, but you must
attain, of course, the requirements for emissions that are in
the Federal act, so if you give the industry more flexibility,
particularly on oxygenates, then you are giving them the
capability to produce more, cheaper, have less-reformulated
gasolines, less complexities, and still maintain the air
quality, which is what this is all about.
I recognize that this is theoretical in one sense, but what
we had asked this panel to do was to try and come up with some
suggestions on how to, within the parameters of air quality, is
there some way that the fuel mix can be simplified and still
attain the requirements that are within the act, and they seem
to think that it was quite possible.
Have you got any comments that you would care to generalize
in this area?
Secretary Abraham. I do not have any scientific insight as
to feasibility. Obviously, it is interesting to those from a
fairly wide spectrum of political philosophy, and there have
been several inquiries of the Department in recent weeks about
the possibilities of either waivers for certain kinds of
content, or whether or not there was a possibility for more
flexibility.
First, the issue goes to, among other things, the question
of how we deal with the strained refinery capacity which we
have, and that is an issue that we are specifically addressing
in the task force, because one of the reasons that the
multiplicity of fuels poses challenges is that when you are
operating refineries at a high volume, 95, 96 percent of full
potential, and then you go through periods where the refineries
have to change the composition of fuel, as we do for certain
regions of the country at certain times of the year, that tends
to cause a slow-down in the refinery's activities.
It tends to precipitate, therefore, supply shortages, which
then cause these price spikes, but beyond that I do not have
any additional information to offer at this time. I will be
interested in what that panel might have come back with, but it
appears that part the complication is there is also a refinery
shortage.
The Chairman. Well, it is the 15 reformulated gasolines
that we have got around the country. That is part of the
complexity.
Senator Bingaman.
Senator Bingaman. Thank you very much. There is an article
in this morning's edition of the Energy Daily that says,
congressional leaders have signed off on a supplemental
appropriation bill for the current fiscal year that would give
the Energy Department's cleanup program an additional billion
dollars.
One other area that we have been urging the President to
seek a supplemental for now for a couple of months is the low-
income home energy assistance program. As you know, in many
States those funds have run out. People are not able to pay
their utility bills, and in some cases I understand people are
beginning to see those utilities cut off because of that.
If there is a supplemental appropriation bill that includes
funding for the Department of Energy, would you support
including funding for the low-income home energy assistance
program?
Secretary Abraham. I have to say that I am not involved
with those discussions. I am not sure what the status of it is,
because the LIHEAP program is under HUD's authority and not our
portfolio.
I know that some discussions have taken place with OMB, but
I do not honestly know what the status of them is. I would say
that one of the unfortunate things, as you are aware, I
remember this when I was still serving, was that we spent all
the emergency dollars in LIHEAP for this fiscal year by the end
of last calendar year. I think it was $300 million, or some
amount like that, so as we encounter higher energy problems
here, additional approprioations may be in order.
Senator Bingaman. Could you possibly try to find out from
the administration whether they will support that and let us
know? I would appreciate that.
[The information follows:]
The Low Income Home Energy Assistance Program (LIHEAP), which is
administered by the Department of Health and Human Services, helps low
income families pay their fuel bills.
With dramatically increased prices for natural gas, propane and
other fuels as well as electricity in most regions of the country,
requests for LIHEAP assistance increased by more than 30 percent in the
current year, and the entire amount of the LIHEAP contingency funds has
already been allocated. Winter is behind us, but has left hundreds of
thousands of families with utility bill arrearages and threatened cut-
offs of utility service, with the hardships of extreme hot weather
still ahead. Some 27 million households are eligible for LIHEAP
assistance, however, so the need is great. Accordingly, the President
announced on May 29, 2001, that the Administration will support a $150
million increase for the LIHEAP Program as part of the supplemental
request for FY 2001.
LIHEAP provides a vital service which complements the Department of
Energy's actions to make low income family homes more energy efficient,
thus lowering their fuel bills, through the Weatherization Assistance
Program. The Weatherization program has made nearly 5 million low
income family homes more energy efficient over its 25 year history. In
FY 2001 it is adding about 75,000 more homes--saving those households
an average of more than 20 percent on their annual home energy bills.
Senator Bingaman. The issue that Chairman Murkowski raised
about transportation efficiency, I know of your longstanding
opposition to raising CAFE standards, and I have heard those
speeches on the Senate floor, and I certainly understand that
position.
The Chairman. He was rather open today.
Senator Bingaman. Oh, I agree.
The Chairman. All right.
Senator Bingaman. And consistent with what he said before.
Let me also say that I also know of your strong support in
the past for the Partnership for a New Generation of Vehicles
(PNGV). I am informed that the amendment that you folks
prepared proposes a cut of $39.1 million in that Partnership
for a New Generation of Vehicles program. If we do not do
anything with CAFE, if we no longer support this Partnership
for a New Generation of Vehicles, what is our plan to get to
more efficiency in the transportation sector? 66 percent of the
oil that we consume, we consume in the transportation sector.
How do we begin to deal with that if we do not do either one of
those things?
Secretary Abraham. Well, first, again, I want just to
reiterate, as I said, on the issue of CAFE I have simply
postponed any official statement on that, because I believe it
will be addressed in the energy plan next week, and that might
be very relevant to the question you pose.
With regard to the PNGV program, you accurately indicated
that it is one that was very important to me. When I was in the
Senate, I supported it strongly from my participation in the
first budget process, and still do. What we did, though, is
this. As the program went on, I became intrigued by the change
in mission, or the difference between the initial mission of
the program and where it seemed that the industry was headed
with regard to vehicle production, and it was our conclusion,
after conversations with the auto industry during the budget
development process, that some parts of the program that had
been funded at certain levels in the past were no longer
consistent with where it seemed that the industry was headed.
In response to that, we have decided to not continue using
taxpayer money to support what we did not see as an investment
that will translate into an actual vehicle improvement. We have
retained about $100 million for this program.
I do not rule out the possibility that we would potentially
look at that again if we could come up with something where we
had more confidence that the investment of the taxpayer money
was going to be consistent with industry direction, and that is
what--the industry, I think, does not disagree with, or at
least the members we talked to felt that this was not an
inaccurate assessment, so I believe in the core approach. I
just do not think that those parts that we reduced are going to
make a difference in terms of the final----
The Chairman. Let me ask about a few other proposed cuts.
You requested a cut in natural gas research funding by 53
percent. That is an area where I had thought we were making a
useful investment of taxpayer dollars. What is the rationale
for cutting that funding?
Secretary Abraham. Well, in the fossil energy program, we
made an initial commitment, as I said at the outset, based on a
clearly established priority that the President had committed
to during the campaign to a substantial increase in the clean
coal technology programs. We reflect that in a $150-million
clean coal technology initiative.
Obviously, that was a substantial increase in that part of
the budget, and in looking at the remainder of the fossil
energy budget, we concluded that some of the programs funded
there were ones that we felt the industry participation level
could be greater.
This is not to say that when those programs were initiated,
that the participation of the Federal Government at the levels
in the past were not justified, but as you know, in oil and
natural gas in recent years at least, there has been a very
significant change in the dynamics of the industry, and we felt
at least that that warranted a higher degree of industry
participation--or that more of that technology could be done in
the private sector.
Senator Bingaman. Let me ask one more question before my
time is up, and that relates to the proposed cuts of 50 percent
for wind, solar, and geothermal research and development. Is it
the same rationale there, that you felt the private sector
should pick up that additional cost, or you did not think this
was a needed area for research any more? What was your
thinking?
Secretary Abraham. Here is what I evaluated in that area:
We have spent approximately $6 billion in the last 20 years on
geothermal wind and solar investments in current dollar terms.
In my view, first of all, to a large extent there has been
a maturing of the technology. We have done a pretty good job,
and I think industries have as well. There are many advanced
wind, solar, and geothermal technologies available. There is
the ability for this to now translate into direct
implementation, and I might add that the percentage today, that
those three components of the entire energy mix contribute is
slightly less than one-half of 1 percent, notwithstanding the
$6 billion investment.
Now, I am not ruling out that we have greater potential in
the future. I am not persuaded at this point, or at least I
believe that the technology component is sufficiently funded in
this budget, because we are not zeroing them out, but we are
scaling them back. I think there are other factors we ought to
look at that I think have a greater chance of bringing more of
these energy sources into play.
I think with respect to solar energy, that we need to
examine the tax code and consider ways that we might
incentivize people to employ solar energy generation in their
homes, with tax credits that would be beneficial there. I think
that with regard to solar energy we also need to examine the--
actually, the rate approach, the electricity rate charges, and
the market for that, and how that is affected, because solar,
the way we meter and assess charges pretty much is an across-
the-board approach.
That means that people do not pay more at peak times. If
you use solar energy during the hottest times of the day, you
theoretically should gain a benefit. We do not provide any
special benefit to that, and that formed part of my basis for
making these decisions.
In the area of wind, we have regulatory impediments more
than anything else right now that are making it difficult to
take the technology we haveto the field. In the area of wind
energy we have seen significant cost reduction in terms of the
kinds of unit that could be installed, but we have impediments
on the regulatory side, and siting and so on, to put them into
place, and I want to evaluate that before we continue down the
course, because I think relative to the contributions these
three areas are making, the technology maturation has been
pretty much completed in some areas.
Senator Bingaman. My time is up.
The Chairman. Senator Domenici is managing the floor, and
asked for a waiver if he could proceed to welcome very
briefly--I think it is a question you had, but go ahead.
STATEMENT OF HON. PETE V. DOMENICI, U.S. SENATOR
FROM NEW MEXICO
Senator Domenici. Well, Mr. Secretary, first, I hope my
absence does not--I will leave when I am finished here. I hope
my absence does not indicate that I think everything is going
great. I think you are doing a good job, but I do not think the
budget you produced is very good.
As a matter of fact, right off the bat let me say, if you
are going to change the way we are going to do our cleanup at
the nuclear sites, whether it be Larry Craig's State, or
whether it be Oregon, Washington, actually you need lead time
to change these ongoing operations.
If you would have said in the budget over the next 5 years
you are going to reform, remodel, and change those programs,
that would make sense, but to take $1 billion out of the
program and cause layoffs in some of these places of 1,000,
2,000, 1,500 people, and no new program, I do not think was the
right way.
We will work with you and try to help solve that, and then
the Energy Department prides itself on the civilian side with
being one of America's real science areas. I mean if you say
National Institutes of Health, NSF, and NNSA, the Energy
laboratories, that is break-through science. Those have been
reduced dramatically such that we have a lopsided situation.
All or money is going to the Institutes of Health, a little bit
to science, and DOE is getting out of the business slowly, or
cutting, curtailing it. I do not think you wanted that, and
frankly I do not think we can let that happen.
Thank you for the time, and we will do our best with the
appropriation process. There is more money available in the
budget that you had to spend, $6.2 billion, so we probably will
be able to fix some of these.
Thank you for your hard work, and you are putting together
a good Department, but I guess you know from a long time ago
that I did not think the budget was very good.
[The prepared statement of Senator Domenici follows:]
Prepared Statement of Hon. Pete V. Domenici, U.S. Senator
From New Mexico
Mr. Chairman, I'm very pleased to welcome Secretary Abraham to our
Committee to discuss the President's proposed budget for the Department
of Energy for the Fiscal Year 2002. It is a complicated budget. The
Department includes a very wide diversity of programs, which, as the
Secretary understands better than any of us, translates into a major
management challenge.
The budget submission is complicated this year by several issues.
Foremost in the minds of the American public would be the severe energy
shortages. The days of abundant energy supplies are gone in many parts
of our country, as evidenced by rolling blackouts in California just
this week. The situation in California is fragile, and there can be no
pretense that any credible solutions are quick or easy.
It took years without an energy policy to reach the current
conditions, and unfortunately getting more electricity onto the grid
isn't quite as simple as flipping on a power switch someplace. We're in
a situation where remedies will come slowly. Disruptions will continue
for years before our supplies are back to healthy levels.
Based on these concerns, the most publicly visible challenge for
the Secretary and other agencies of the federal government must be to
craft energy solutions--solutions that will provide our nation with the
best possible long-term energy outlook.
But beyond the challenge of energy shortages lie other serious
issues within the national security side of the Department. The
stockpile stewardship program, while fortunately still able to certify
our stockpile without testing, faces increasing challenges from aging
weapons. That program is faced with severe infrastructure problems,
estimated by the Foster Panel and confirmed in testimony from General
Gordon, which amount to many billions of dollars. These issues require
investments in the range of $300-$500 million annually.
The non-proliferation programs remain critically important. It is
vital that these programs continue on track because the threat of
proliferation of weapons of mass destruction from Russia remains very
real. At the same time, of course, I recognize that these programs can
only advance through carefully structured partnerships in cooperation
with Russia.
I appreciate that several major Presidential reviews are ongoing--
the DoD's Nuclear Posture Review, the National Security Council Review
of Non-proliferation Programs, the Department's review of the
Environmental Management programs, and of greatest importance, the Vice
President's National Energy Policy Development Task Force.
I am very hopeful that these reviews will provide guidance to
correct what I perceive as a number of extremely unfortunate issues
within the proposed budget. Just to list some of them:
Stockpile Stewardship is seriously underfunded. Pit
production, as one example, will not proceed on reasonable time
scales with the proposed budget. Since the shutdown of Rocky
Flats, we have not produced a single weapons-ready pit, that is
simply unacceptable.
Infrastructure supporting stockpile stewardship is not
funded at all. At virtually any level of stockpile that the
ongoing reviews may identify, the basic infrastructure for the
program must be healthy. It is anything but healthy today.
Examples of roof materials failing on workers are but one of
the serious cases.
Non-proliferation programs are cut by $100 million in the
President's budget. The whole idea of cutting programs before
policy reviews are completed is of great concern. By
publicizing reduced budgets, we are sending unfortunate
messages to our own program workers, to say nothing of the
Russians with whom we are cooperating. These messages may be
impossible to correct if the reviews later suggest continued or
increased funding--we may even lose critical staff from this
ill-advised timing of cut first, then review.
Environmental Management programs are seriously reduced.
With the proposed budget, it will be impossible to meet key
milestones at several facilities. The budget will result in
failure to comply with legal mandates at several sites. One
example within New Mexico involves the $26 million cut to WIPP,
at the same time that WIPP is expected to significantly
increase the rate at which shipments are accepted and to take
over characterization for all of the smaller sites around the
complex.
Critical energy supply programs are slashed, just when we
are in the midst of an energy supply crisis. I've worked very
hard to rebuild credible programs in nuclear engineering over
the last few years, yet those very programs on which I've
worked were seriously impacted. Highly successful research
programs in oil and gas production were greatly reduced.
Scientific programs were sharply reduced, both in the DOE
and in other key agencies like NSF. Yet there can be no
question that our present economic strength derives from years
of careful nurturing, in part through federal research
programs, of a wide range of scientific specialities.
Furthermore, focusing our research increases on the National
Institutes of Health is extremely short-sighted--the health
sciences depend on support from many disciplines. We need
strong federal science programs that span a wide range of
specialities to create opportunities for new breakthroughs
through combinations of technology advances in diverse fields.
In conclusion, Mr. Chairman and Mr. Secretary, I appreciate the
enormity of the challenges undertaken through the Department of Energy.
And from my perspective as Chairman of the Subcommittee of
Appropriations on Energy and Water Development, I also appreciate that
the proposed budget is inadequate to meet many of the Department's
responsibilities. I remain very hopeful that the ongoing reviews will
quickly conclude that additional resources are appropriate and I
believe that many in Congress will be ready to help correct these
problems if necessary.
The Chairman. Thank you.
Senator Thomas.
STATEMENT OF HON. CRAIG THOMAS, U.S. SENATOR
FROM WYOMING
Senator Thomas. Thank you, Mr. Chairman.
Welcome, Mr. Secretary. It is good to have you here. Let me
say first of all that I am delighted that energy policy does
not just come from DOE, but I am pleased that you are focusing
on that. The 6 years I have been here, DOE has talked not very
much about energy. They have talked about these nuclear things
and so on, which are very important, so that is good, but
Interior, EPA, all of these people have a very real impact on
it and, of course, that is what the Vice President's task force
was talking about, so I think that is good.
Let me say that I think we have a pretty good plan for the
long range, but we have got some problems right now, and we are
going to hear more and more about it, whether it is gasoline,
whether it is electricity, whether it is the prices, and I do
not know the answers, but there needs to be some things, New
Source Review, EPA, on some of the refineries, is there a
chance of doing something there. We have already spoken of
oxygenated fuels. Are there places where we can change that?
I think there needs to be some real look at it. The price
of gas at the natural wellhead in Wyoming is about $4.58 or
something, and $14 when it goes into California. That is an
interesting cost change. The hydro, we could probably use that
more efficiently and create more power there in the short-term.
Conservation has to be there.
However, are you going to react to this summer's prices? I
am not for price controls, but we need to have some reaction to
what is happening now.
Secretary Abraham. Well, we are very concerned, as all of
you are about the gasoline prices. I was disturbed this week
when I read in the paper that local dealers were already being
told to expect $3 gas. I do not know how you make that kind of
assessment, given the state of information, but I think it
sometimes can be a self-fulfilling prophecy, and I have asked
our Department to begin looking at where some of those signals
were being sent, and why they are being sent.
Clearly, there are a variety of factors on gasoline prices
that are at play. You have a world-wide production level that
has been constrained by decisions that are beyond our control,
OPEC decisions, as you know. I am not trying to only blame one
source for the problem, but that is part of the problem, the
extent to which we are dependent on foreign oil has grown. That
sets us up with a little difficulty when we have production
reductions.
As I indicated earlier, we also have the issues that relate
to the strained capacity of refineries.
Part of the problem we have, and one of the things that I
see as a tremendous challenge, is that any kind of disruption
will trigger price spikes, and we have almost no ability, when
we are operating at almost full capacity in these refineries,
to do anything about it, not just because of the complexity of
the fuel mix, but also just because of the maximization of
capacity at the refineries during these peak demand times.
You know, whenever there is a fire at a refinery, it shuts
down tremendous amounts of the supply percentage in that
region. We have had two fires in the last 2 weeks. Obviously,
it has taken a long time for us to get to the point where our
refinery capacity is at this level, and that is something that
we are trying to examine as well, what actions can we take that
might increase capacity.
There are other issues at play, too. We do have--I mean, I
hate to use the word, after the comments made by Senator
Murkowski, but we do have an infrastructure problem, in the
sense that the pipeline capacities in some areas are very, very
strained, and in Michigan last summer we had gasoline prices
spike up to $2, nearly $2.50, because one of the principal
pipelines that supplies the Detroit area from the Chicago area
had an explosion.
It was shut down, at least in large measure, and for a
protracted period of time, because there was no refinery, there
was no capacity to compensate for that loss either in terms of
rerouting or in terms of a separate refinery that could be
routed into Detroit. So we are doing a number of things right
now, looking at some of these challenges, but I do not wish to
in any way downplay their importance. To some extent they are
long term, to some extent short-term.
Senator Thomas. I understand. Are there regulations in
place that if they were changed would have an impact on the
refining?
Secretary Abraham. I think there are some. We are looking
at those as part of the Vice President's task force. I think
there will be some reference to that in the task force report
when it is completed.
Senator Thomas. What is the task force report going to be?
Is that going to be viewed as a policy? Is it going to be
reviewed as recommendations to the Congress? Is it going to be
how you operate? I do not quite understand.
Secretary Abraham. I think it is actually going to take
several forms. I think there will be certain recommendations
which would by their very nature require legislation, and in
that sense we would begin to work with all of you to develop
legislation to address those recommendations. In some cases I
think it would be recommendations that call for action that
could be taken by various agencies and departments in the
Government already, and in some cases it might be areas where
the President could act by his own executive order, so it will
take several different kinds of forms. Some of them might be
also new rule-making procedures, where a regulatory issue is at
stake.
Senator Thomas. Well, I am pleased that you have taken a
look at the coal research. I think coal is the logical fuel for
stationary generation. Gas is so much more flexible, it can be
used for many things, and the idea that every electric plant
that is on the planning board is gas-fired I think is a
mistake. I think it is a policy mistake, and hopefully we can
deal with those things some.
How about accountability? Research can go on forever, and I
understand you have to get into things, but is there any sort
of way to coordinate and see if all the research we are doing
is aimed at some kind of accomplishment, or do we just toss it
out there and say, you guys play with whatever you want to?
Secretary Abraham. Well, in a way this goes back to Senator
Bingaman's question with regard to some of our renewable energy
resources. We spent a lot of money doing research in these
areas, and I have concluded that it is not just a situation
where we would need more research. In many cases, we have been
very successful in our R&D and joint ventures. Now we have got
to look at other ways to take that now completed product and
translate it into an energy-producing source. I think we can do
that in the area of some of these renewables.
In other areas, one of the other areas with respect to our
fossil energy budget has to do with the turbines program. We
have completed work on large-size turbines. These would be 400
megawatt-size turbine generation. We do not need to continue
doing that research. It is now done.
There was an issue brought to me in the budget process
about continuing a very substantial line item in that area to
begin work on researching in the area of mid-size turbines. I
did a little investigating--I actually had it brought to my
attention by a completely unrelated to the budget source, the
fact that two major companies in this country are already
manufacturing and have very lengthy back orders for mid-size
turbines that are already available, and which are going to be,
I think, proving to be an approach that a lot of States are
going to take in the future, so I am trying to bring that sort
of accountability, but you know, I think overall our R&D
programs have done a good job, and I think the only issue is,
when we finish, the next issue is, does it translate into new
energy sources.
Senator Thomas. Exactly. Well, that is very good. Thank
you, and I just want to compliment you and the administration.
When we talk about increasing our production, we also have to
talk about protecting the environment. We can do those two
things together. We ought not to let people create the notion
that it is one or the other.
So thank you, Mr. Secretary.
The Chairman. Thank you, Senator Thomas.
Senator Craig.
STATEMENT OF HON. LARRY E. CRAIG, U.S. SENATOR
FROM IDAHO
Senator Craig. Mr. Chairman, thank you. Mr. Secretary,
welcome. It is good to see you again, Spence. I will not get
into energy policy today. I think we will all be focused on
what you announce on the 17th. We have already done our work
here in response to the current crisis.
The bottom line is, our energy basket is empty, and I would
hope that we would begin to refill it with a variety of energy
sources that are diverse and flexible, that recognize our
needs, and I hope that the policy you are proposing and the
Vice President has been working on will be able to mesh with
ours.
I would like us to have on the floor of the U.S. Senate a
very robust debate on energy policy and a vote early this
summer. I think the American people deserve to see it and to
hear it, to get involved in it, because right now they are
asking some very profound questions, and they deserve to get
answers.
Having said that, Mr. Secretary, in preparing for this
hearing today I was remembering our visit prior to your
confirmation, and you wanted to know what the issues were that
were critical to my State, and as it reflected the Department
of Energy and, of course, as you know, I have one of those
national labs, and we are very proud of it, and it is the
designated laboratory for environment, and for new nuclear
technology.
Having said that, one of those concerns with that lab, of
course, is cleanup of contamination and, as you know, several
years ago the State of Idaho and DOE entered into a very unique
relationship, the only one of its kind in the Nation, a
commitment, a contract, a legally binding contract that set out
guideposts as to how DOE would perform in its cleanup.
Yesterday, DOE Acting Secretary Carolyn Huntoon, testifying
before the House Energy and Water Appropriations Subcommittee,
suggested that under the funding level in the budget requested,
some of DOE's sites may fall out of compliance with their
cleanup agreements, but the DOE is not sure which specific
sites that would be.
Well, if you fall out of compliance in Idaho, you are in
violation of a contractual commitment, and you understand that,
as do I.
Senator Bingaman quoted an article in the Energy Daily. I
have been spending a month working with my colleague who just
left, Pete Domenici, to help you avoid that fallout, and I
think we may get there. It will take some supplemental funding,
about $1 billion worth spread across the laboratory complexes
of our Nation, to meet the guideposts and the commitments of
environmental cleanup, and I think we have to do that, whether
it is in Idaho or down at Hanford with Senator Gordon Smith, or
whether it is in the Carolinas, those are commitments made, and
those are commitments that we have to adhere to.
Do you agree that some sites may fall out of compliance if
this kind of supplemental money does not come along?
Secretary Abraham. I am not prepared to say that any
compliance will not be met, but if I can just make a comment on
the environmental management side of our bill, and it is one
that I hope would be the basis for future work together with
this committee across the board. I know there are several
members who are not here who have sites in their States as
well. Senator Domenici referenced this, so let me, if I could,
just take a minute to comment.
When I got to the Department, I was given a very in-depth
briefing on the plans with respect to environmental management,
the many sites across the complex. We have about 113 sites that
were in need of some form of remediation. 71 of those sites
have been completed. Three more will be completed this year,
but by everybody's acknowledgement the ones that are finished
are the easiest ones, and now the hard work remains.
I was troubled because the plan that was laid out for us,
laid out for me by our environmental management team--and I
want to just say that I think these are very well-intentioned,
hardworking people. This is not a criticism of their work
product. But the plans said that we would do this work, it
would take 70 years, and it would cost somewhere around $300
billion.
Now, the money is a factor always in these things, but to
me the 70 years was an unacceptable number, and the fact of the
matter is that we only have two of the major sites in the
complex that are slated to be completed at a relatively early
time frame, because we have designated an expedited schedule at
those sites, for Fernald, Ohio, and Rocky Flats, in Colorado.
Now, the Rocky Flats experience, I think, is a good
illustration of where I would like to take this program. In
1994, the estimate was that the Rocky Flats site cleanup would
take approximately 75 years to be completed. In other words, it
would take until the year 2070 to be finished, and that most of
the major work would not be completed until well along that
path, and that the cost would be somewhere in the vicinity of
$37 billion.
The Government, the Department took the lead. A decision
was made that we would not settle for that. A decision was made
in 1997 to move towards completion on an expedited schedule
which we are maintaining with this budget of 2006, and we now
estimate not only that that will happen, but that the cost for
1997 through 2006 will be about $7 billion.
So to me that is the direction we should be headed, and I
think it is unconscionable, frankly, to tell people that if
they are lucky their grandchildren will live in a community
where the environmental remediation is finally completed. They
are not going to live there, because it is going to take so
long they will not be around at the time it is done, 70 years
from now.
So can that be accomplished? I think the Rocky Flats
experience suggests that it's methods may not be applicable to
every site, but I have got to believe that at least some of the
things can be, and what I have ordered is a top to bottom
review of how this program is slated to operate, how it can be
improved, what we can learn from these other experiences, and
what innovative approaches we can take to financing this
cleanup.
What we have right now, I would just say to the members,
does not make sense to me. We lurch from year to year with
unpredictable amounts of money. Some say well, this budget is
not enough. In my judgment, a billion more dollars is not going
to do much more because the fact is that most of the sites do
not have a short-term game plan. They have got some milestones
in some places, but not ones that are going to bring about
cleanup in a short time frame. I just do not know why we should
continue down that road. I hope to find a better way, and to
come back and work together with everybody to find a better
way.
I have said to folks, if this was your own backyard, or if
this was a State government, you would probably go out, you
would probably borrow the money, you would issue bonds, or you
would borrow, and you would clean up the problem, and you would
pay it off over a long period of time. You would not do a
little bit of cleanup every single year with a small amount of
money, much of which goes to just maintaining the property,
preventing people from getting injured and so on. It is at
least where I would like to see us move, and I expect to come
back after our review to this committee and try to work
together, see if we cannot find a more effective way.
Senator Craig. Mr. Chairman, my time is up.
Mr. Secretary, I do not think any of us on this committee
would disagree with your overall vision. Environmental cleanup
and restoration is very expensive, and it is a stumbling track.
We would like it done sooner than later.
What I am referencing are the commitments of today, and how
we react to those versus, as Chairman Domenici said, setting
down an informed and organized pattern and sending that message
out in the next cycle that says, and from here we change to
this, and here is our plan. That we can deal with. What we
cannot deal with are dramatic cuts in current programs that are
targeted, are committed, are budgeted, or were budgeted, and
create dramatic kinds of changes without a perspective of where
we want to get. I think that is my reaction.
The Chairman. Thank you, gentlemen. Senator Akaka is next,
but he has been kind enough to give a minute of his time to
Senator Smith, who has to go down to the State Department.
STATEMENT OF HON. GORDON SMITH, U.S. SENATOR
FROM OREGON
Senator Smith. Thank you, Mr. Chairman. Thank you, Senator
Akaka. I will be very brief. I wanted to be here this morning
to welcome you and thank you for all the work that you are
doing, but to also make a plea that the door not be finally
shut on the effort that Senator Feinstein and I are making.
I know philosophically that the administration is very much
in support of markets. I happen to have come to the conclusion
that while markets work, we do not have a functioning market
now. We have a very dysfunctional market right now, and a lot
of people are being hurt unnecessarily and are being
victimized, I think, by some who are able to game the system to
the great disadvantage of a neighboring State, but my own State
as well, and I think energy is a necessity. It is not like
peas. Peas are a luxury. I wish they were a necessity, but they
are a luxury.
But I also believe we have a highly regulated market. We
have never had a free market in energy, and people are truly
going to want to see this administration appearing more engaged
than it appears to be, and they are going to want the FERC to
use the powers it has more aggressively than it is, so I hope
that you will keep working with us.
I know philosophically where you are, and I understand
that, but I think the two great fictions are that this is just
like any other commodity that is subject to a market, and the
fiction is that we have a market here. We have a crisis here,
and I think it would behoove the President, it would behoove
all of us to figure out a way to relieve this in a very
aggressive way, but thank you for being here, Spence.
Thank you, Senator Akaka.
The Chairman. Senator Akaka.
STATEMENT OF HON. DANIEL K. AKAKA, U.S. SENATOR
FROM HAWAII
Senator Akaka. Thank you very much, Mr. Chairman. I want to
add my welcome to the Secretary; and it is good to see you back
on the Hill. I have a comment to make, and it will be brief. It
has to do with renewable energy and energy efficiency.
The President's budget request proposes severe cuts in a
number of areas, and renewable energy has been cut by 36
percent. That is $237 million for fiscal year 2002. The
Department, I understand, plans to restore some of these cuts
in the near future. However, the restoration will occur at the
expense of other worthwhile programs, including the Partnership
for a New Generation of Vehicles. Under this budget, the
hydrogen, hydro power and electric energy systems and storage
programs would receive level funding in fiscal year 2002. These
programs need increased funding rather than level funding, I
feel.
Other programs such as geothermal, solar, and wind programs
would sustain reductions of about 50 percent from the current
funding levels.
The Department of Energy's buildings program and industry
energy efficiency R&D program have been slashed by 40 to 50
percent. According to DOE, efficiency R&D programs have
returned more than $100 billion to the U.S. economy from a
Federal investment of less than $13 billion since 1978. A GAO
study has validated this figure, and cutbacks such as those
proposed will prevent the Nation from realizing the
efficiencies and cost savings that the new technologies bring.
My comment is that we cannot afford to neglect renewable
energy resources and energy efficiency, and Mr. Secretary, I am
optimistic that Vice President Cheney's staff will address
these matters, and I know you will do all you can to help our
country in these matters also.
Thank you very much. Those are my comments, Mr. Chairman.
The Chairman. Thank you, Senator Akaka.
Secretary Abraham. If I might make just a brief comment in
response.
The Chairman. Sure.
Secretary Abraham. Some of the issues that were referenced
I think I have addressed earlier in terms of the Partnership
for the New Generation of Vehicles, and some of the concerns we
have about a certain part of that program.
In the area of renewable energy, I would just--I share your
optimism with respect to hydrogen and fuel cell technologies
and so on, and this is indeed an area in which I know that our
task force has been putting some focus at my personal
instigation, and I think there will be some comment on that in
the results of that task force.
The other thing I just would say is that with regard to
some of the nontransportation side of the efficiency budget, we
have made some changes in priorities, and I feel I should at
least explain how we reach those decisions.
As I think you all know, the budget contains a very
substantial increase in the Weatherization programs of $120
million, virtually doubling the program in something which--
where we had, as I said earlier, an area where we had clear
guidance from the President during the campaign and his
platform. He feels very strongly that we need to direct more of
our Federal dollars in energy efficiency to help people who
are, for reasons of their own financial condition, not able to
do as much for themselves.
In making that shift of dollars in that budget, I chose to
reduce some of the areas, and you referenced them, the
industries of the future research, and some of the building
research money, because we felt that the share of support for
that technology ought to be greater from the industries
involved.
I mean, some of these are among those that are having the
most successful track records in recent years, and we felt that
given the rising energy costs, that they have a tremendous
amount of self-interest involved to reduce their own energy
consumption, and would participate at a greater level, and I
intend to try to work with those industries to make their
participation greater, but the reason you see a reduction on
that side is because you also see an increase on the
weatherization side, and some of these are tough choices to
make.
Obviously, if one as a Department head were allowed to fund
every single program at every conceivable level that they
wanted, it would be easy to do a budget, but you do have to
come back and make some of these calls, and those are the
reasons, at least, that we went in some of those directions.
The Chairman. Thank you very much.
Senator Akaka. Mr. Chairman, may I comment further and say
that, Mr. Secretary, I am working with colleagues in Congress
to move the hydrogen legislation this session, and I am pleased
to know that you have championed hydrogen with Vice President
Cheney's staff. As I said, I am optimistic.
Secretary Abraham. I look forward to working with you on
that. We are very interested in that.
Senator Akaka. Thank you.
The Chairman. The Senator from Oregon, Senator Wyden.
Senator Wyden. Thank you, Mr. Chairman. It is good to
welcome the Secretary and our former colleague.
Mr. Secretary, I want to start with the gas prices
question, which is so much on the mind of my constituents. You
said that you were troubled about where gas prices are headed.
I obviously am as well, but what I am especially troubled by
are the very significant anticompetitive trends in the gasoline
business. We have redlining all over the west coast. We have
got zone pricing. We have got a wave of mergers.
My question to you is, if you are troubled about prices,
are you troubled about these trends that are sucking the
competitive juices out of the gasoline business, and if so,
what does the administration want to do about it?
Secretary Abraham. If you are troubled about the prices,
you have to look at all possible sources of the problem, and I
believe the administration, that we are trying to do that.
I am confined to one portfolio, and I know that people at
other Departments are looking in the areas in which they have
responsibility. For me, the first concern I have is one that
goes back to last summer in my own region. We saw this in
Michigan, or, as you know, where I live, we saw this tremendous
spike in prices.
We determined in no small measure we were totally at the
mercy of refinery capacity in Chicago, and we do not have
sources in the Detroit area sufficient to provide any kind of
relief if there was, as there was, an explosion in a pipeline,
as well as the problems that they had, took an extraordinary
amount of time transitioning to summer grade fuel, so we are
trying to look at what can be done about some of those issues
within our portfolio.
But one of the issues that I have asked our Department to
also begin exploring is the question of transparency of prices
at these various stages in the supply process.
One of the things I mentioned earlier, I was concerned when
I read in the paper that suppliers were telling stations, or at
least the stations said they were told they were going to get
$3 a gallon gas before the summer was over in various regions.
I do not know what the basis of that is, and I think the people
in those communities need to know what the stations are paying,
because I think they need to be able to monitor at what stage
in the process there are unusual changes in cost. I think that
may help us to address some of these concerns.
Senator Wyden. Well, I hope you will talk to the stations,
because the stations are being told they are not being allowed
to compete, and we had a jury in Oregon give out an $8 million
award involving redlining, where in effect, the companies drew
a line and said you could not sell somewhere, so I just hope
that the administration will look at these anticompetitive
trends in the gasoline business, because the American people
want some relief this summer, and at a minimum they ought to
know their Government is trying to put some free enterprise
back in the gas business.
The Chairman. Senator Wyden, you have additional time. I
just wanted to make sure that Senator Feinstein and Senator
Cantwell were next, because I have got the Governor of the
Virgin Islands in the back room.
Senator Wyden. Thank you. The other area, Mr. Secretary, I
want to go over with you, I was very troubled by what Mr. Blake
said yesterday, and I indicated that to you on the phone, and I
want to make it clear I am not prepared this morning to support
him as the No. 2 person at the Department. He said in response
to my questions that he would not rule out forcing the
Northwest to sell by Federal order more power to California,
and he wouldn't commit to requiring California to put the full
faith and credit of the State behind more sales, and third, he
did not indicate that much of anything was being done to force
repayment of the $100 million that was already owed.
Now, we went to the floor of the U.S. Senate and we were
told that the Government should not be involved, and it would
not be any problem, and PG&E, just as I said, went bankrupt, so
there is now a prospect of my constituents getting just a few
pennies on the dollar for what is owed, and I want to make it
clear that Mr. Blake's answers yesterday were unacceptable.
I wrote the President yesterday, as I indicated to you,
that I hope the administration would clarify its position and
make it clear they are not going to force the people of the
Northwest under Federal order to sell more power, and
particularly given what has happened in the last few months.
So we talked about it yesterday, and I want it understood
that I am not prepared to support Mr. Blake's nomination as of
this morning.
Thank you, Mr. Chairman.
Senator Feinstein. Thanks very much, Mr. Chairman.
Mr. Secretary, let me begin with the good. I guess a couple
of months ago I wrote you a letter and urged you to take action
in Federal facilities in California. You called me yesterday,
filled me in on many of the details of what you have done, and
I just want you to know that I really do appreciate that. It
means a great deal.
I have a number of kind of disjointed comments I want to
make. Let me do it very quickly. The first is, I think it is
very important that Federal orders exempt California's
refineries from blackouts. It is my understanding that once a
refinery goes down, they have to retool, and the length of time
can be 7 days, 2 weeks to complete that process. If, in fact,
that is true, there will be an enormous gasoline price hike in
California this summer as well, so I would like to ask you to
make that a high priority item.
[The following was received from DOE:]
I certainly share your concern regarding the likely impacts
of refinery shutdowns resulting from forced power outages. The
availability of gasoline, diesel fuel and aviation fuel is
critical to the economy and public health of Californians.
The California Energy Commission has stated that the
shutdown of just a single refinery could lead to supply
shortages and price spikes for gasoline and oil products, and
that price spikes could last up to four weeks. Also, according
to a Reuters report earlier this month, Valero Energy said that
forced power outages would force the company to halt operations
at its Benicia refinery, which provides more than 10 percent of
California's refined product needs, and that it would take
several days to resume operations.
Exemptions from rolling blackouts could be granted by the
California Public Utility Commission (CPUC). The Department has
supported the efforts of oil refiners to convince the CPUC to
add refineries to their list of facilities not subject to
blackouts. The CPUC has responded by inviting business
customers to apply for exemptions. The Commission has been,
reportedly, setting up an application process for exemptions,
and has been negotiating with a consulting firm that could do
an objective evaluation of the competing claims by refineries
and others. In addition, a bill is pending in the California
legislature that would make oil refineries the last industries
to be curtailed in the event of electricity supply shortages.
However, as of June 1, 2001, refiners had not been granted an
exemption.
Senator Feinstein. Take a good look at it. I do not know
the pros and cons of it, but if what I have been told is
correct, that is a major, major issue. If you want to make a
quick comment----
Secretary Abraham. I was not sure if you wanted to go
through several points, and then I would try to respond.
Senator Feinstein. Right. I would also like to ask you to
take a good look at the testimony before the FERC on the
Brattle Group, and this is a summary of the Brattle Group study
of the El Paso Merchant Energy Company's exercise of market
power from March 2000 to March 2001. In this, there is
substantial evidence of market manipulation. It is our belief,
and I am coming to this conclusion, that the market has been
manipulated to the extent that the excessive cost of natural
gas and power in California is literally in the billions of
dollars.
I mean, this is not going to stop. Investigative reporters
are on this all over. This is a major issue.
I also want to enter into the record, if I may, some quotes
from a letter from the Williams Company.
[The following information was received from DOE:]
The report you mention, The Brattle Group Study of EPME's
Exercise of Market Power, was prepared on behalf of Southern
California Edison, and entered as an exhibit in an ongoing FERC
action (California Public Utilities Commission vs. El Paso
Natural Gas et al, RPOO-241). The report was prepared and
submitted to buttress the Plaintiff's case in this action.
El Paso Natural Gas Company operates the largest interstate
pipeline serving California. In March 2000, El Paso sold
competitively a large bloc (1.5 billion cubic feet per day) of
capacity in this pipeline to a trading affiliate, El Paso
Merchant Energy. The Brattle Group study alleges that El Paso
Merchant Energy withheld a portion of this capacity from the
market, driving up the spot price of natural gas in Southern
California, and opening a large ``wedge'' between California
and Texas gas prices. High prices and restricted availability
of natural gas have had deleterious effects on California gas
consumers, including households, power generators and heavy oil
producers. The study further alleges that El Paso was then able
to profit from these higher prices in several ways, principally
through higher selling prices for natural gas and
transportation capacity not withheld from the market.
The FERC will have to determine, on the basis of the
evidence provided by all parties, whether or not El Paso or its
affiliate possessed ``market power'' in some defined market,
and, if so, whether or not El Paso purposefully used its market
power to raise prices above competitive levels, and, if so,
what remedy would best promote the public interest.
It would be improper to make specific comments on this case
while it is under FERC's scrutiny. There are, however, several
general considerations suggested by this episode.
Market power, however defined, and whether exercised or
not, is conferred by ``barriers to entry,'' in this instance,
capacity constraints or bottlenecks, in the gas pipeline and
storage system. Removing or preventing bottlenecks serves the
public interest better than trying to enforce conduct
restrictions. The capacity of interstate natural gas pipelines
and local producers to move gas into southern California
exceeds the capacity of intra-state pipeline operators (PG&E
and SoCal Gas) to receive this gas. So long as this constraint
binds, some allocation mechanism, formal or otherwise, will
ration southern California gas supplies.
Natural gas pipeline constraints are only one of several
supply constraints from which California has suffered. The most
important is the lack of generating capacity, but others
include electricity transmission constraints and scarcity of
Nitrogen Oxide permits in southern California. Even if
unlimited supplies of cheap natural gas had been available,
California would still be experiencing rolling blackouts and an
unsustainable ``gap'' between retail electricity prices and the
cost of wholesale power purchases.
In the short run, we need to focus our efforts on resolving
the bottlenecks and capacity constraints revealed by the
current California situation. In the longer run, we must
decide, how much excess capacity ``insurance'' we are prepared
to carry, in California and elsewhere, and how that insurance
ought to be paid for.
Senator Feinstein. This is from Keith Bailey, chairman of
the board, president and chief executive officer of Williams,
and let me read from one part of it.
``For sometime, I have indicated, as part of an overall
solution, Williams is prepared to support temporary price
controls that would extend through the summer of 2002, and no
longer, so long as they fairly allow sellers the ability to
fully recover costs, including a reasonable rate of return.''
In this letter, Williams points out that essentially what
is happening is a lot of allegations with respect to market
manipulation. They are concerned by it. They have come to the
conclusion that the best way they can proceed is with cost-
based rates to avoid this.
Thirdly, I will have a great deal of trouble supporting the
energy budget if, in fact, it does what I believe our reading
of it does. It is my understanding you propose to cut funding
for the Energy Information Administration. I view this as a
critical aspect of DOE in a market environment. The purpose of
it is to ensure transparent markets.
You also propose totally eliminating the State Energy Price
and Expenditure Report, and State Energy Data Report, and you
propose discontinuing the international analysis program for
greenhouse gas emissions.
Mr. Secretary, Bloomberg Market News uses this information,
we use this information. It is how we determine the daily rates
being charged for energy. Anything your Department does to
reduce transparency of the costs of energy can only permit
increased market manipulation. I feel very strongly about that,
and if that ends up being the case, that we cannot get adequate
information from your budget on present-day costs, it is going
to be a real problem for me. I wanted to put those three things
on the table now.
Secretary Abraham. Any other, or should I----
Senator Feinstein. That is it.
Secretary Abraham. Okay, great. Well, let me first of all--
I was just provided information which confirms what I had
thought, which is that our proposed budget for EIA is the same
as last year, and I will look into the specific issues you
raise, because I was under the impression that we were
maintaining funding for the EIA programs, and I would just say
that this is an independent arm of the Department.
It is one that we have already, in the short time I have
been there, come to rely on for evenhanded analysis. I do not
always agree with some of their conclusions, but I know that
they are very independent.
[The following information was provided:]
The demand for EIA data, analyses, forecasts, special
reports, and briefings, and the call on EIA to provide timely
analyses and reports, especially in the face of the current
energy crisis, regional shortages, and volatility in energy
prices, has grown significantly. EIA's priority, as reflected
in the FY 2002 budget, is to maintain energy data programs and
forecasting systems needed to provide timely information during
this period of high interest in energy. This includes
continuing improvements in EIA's electricity, natural gas,
petroleum and energy consumption surveys.
EIA is able to fund the FY 2002 fixed cost increases, which
includes the Federal personnel pay raise, with the following
impact to programmatic activities. EIA plans to:
1. Reduce printed publications. In keeping with EIA's
Strategic Plan to reduce printed publication and make greater
use of EIA's web site, EIA plans to discontinue the publication
of the State Energy Price and Expenditure Report, the State
Energy Data Report, the Renewable Issues & Trends, the Electric
Power Annual Volume 1, and produce the Changing Structure of
the Electric Power Industry every two years instead of
annually.
2. Complete in FY 2001 the Interruptible Natural Gas
Contract Study.
3. Defer maintenance on lower priority energy data surveys
and processing systems.
4. Downsize plans for the integration of current
information processing technology, and continue dependence on
aging data systems & infrastructure.
5. Complete the development of the 15 regional models on
greenhouse emissions, but defer plans to integrate the models
into one international model.
These actions are in-line with EIA's Strategic Plan to
reduce printed publication by making more energy data available
on EIA's web-site, and to maintain EIA's core energy data
quality and analysis capabilities.
Senator Feinstein. Can I just give you some pages to look
at?
Secretary Abraham. Yes, would you, because I am confused a
little bit as to the----
Senator Feinstein. 247, 248, and 257.
Secretary Abraham. I will be glad to do that, Senator.
Let me just comment on the other issues. First of all, with
regard to the exemption, or with regard to the exemption of
refineries, I gather that it is--I am not sure what the
situation is. I have heard talk that the Public Utility
Commission might consider not including refineries in the
exempt category.
I would agree completely with your analysis of the
implications of that on the price of products. As we have
already seen, it takes only a minimal disruption with respect
to any refinery to cause prices to spike, given the strained
capacity during these peak periods. If all of the refineries,
or any sizeable number, were to have that effect--I guess I
will look into that.
What I am not aware of is what the rationale is for that
decision, or if it has been made in California----
Senator Feinstein. No decision has been made. I am going to
communicate my feelings to the Governor, but I also wanted to
use this opportunity to communicate them to you.
Secretary Abraham. Right.
Senator Feinstein. I do not know whether what the
refineries say is true or not. That is why I would like to ask
Energy to look at it.
Secretary Abraham. I would be glad to. I would share your
conclusion as to what the results would be. I do not know what
the trade-offs are that they are considering. I mean, as to
other categories of exemption, because I am just not apprised
of what their option----
Senator Feinstein. Tradeoffs are not pleasant, but I think
if, in fact, it is going to shut down the production of jet
fuel, it will stop the airports from functioning. If, in fact,
it is true that--they are working at capacity now--that they
cannot get gasoline to the marketplace, then that price of $3
is going to look like a small amount by the end of the summer,
so you have people to look at these things. I hope they will,
and I would appreciate it if you would let me know.
Secretary Abraham. I will, and I am in total agreement with
your conclusion as to what the effects would be. I really do
not know what the decisionmakers out there have been comparing
it to in terms of other options.
I would be happy to look at the Brattle study. I know, or I
guess I have read that a lawsuit or a complaint has been filed
in that matter before FERC, so it sounds as if that is now a
matter in a legal proceeding, but I would be glad to do that,
and we will certainly take a look at the kind offer of the
Williams Company to accept lower prices.
I am not sure they need Washington to force them to do
that. If they want to charge less, I would hope they would, and
I would think maybe they might be able to do that without any
action from here, but I will be happy to look at that letter.
[The following information was submitted for the record:]
I am supportive of Mr. Bailey's efforts to play a
constructive role in helping to resolve California's energy
crisis. My reading of Mr. Bailey's letter, coupled with the
Williams Companies' press release dated April 25, 2001,
indicates, however, that the temporary price controls Williams
supports are different in one important respect from the price
caps contemplated in legislation you have sponsored.
Williams apparently envisions price controls that would be
``temporary'' in more than one sense--controls that would be in
effect only through next summer and controls that would only be
triggered during emergency periods. The Williams press release
says that one ``essential'' element of ``a rational course of
action that seeks new sources of supply [and] that ensures
confidence that services provided in the past and future will
be paid in full'' would be ``price controls during emergency
periods.''
The legislation you have sponsored would impose price
controls during all hours until the controls expire. In calling
for price controls during emergency periods, the Williams
proposal is more akin to the current price mitigation plan set
forth in a Federal Energy Regulatory Commission (FERC) order
dated April 26, 2001. FERC's price mitigation plan is triggered
only when the California Independent System Operator declares a
Stage I emergency and FERC's soft price caps remain in effect
only so long as an emergency alert is in effect for California.
The Chairman. Senator Feinstein, do you have further
questions?
Senator Feinstein. Thank you. Thank you, Mr. Secretary.
Thank you, Mr. Chairman.
The Chairman. Thank you very much.
Senator Cantwell.
Senator Cantwell. Thank you, Mr. Chairman and Senator
Bingaman for holding this hearing on the President's budget.
Secretary Abraham, good to see you again. Thank you for
appearing here.
I am going to direct my comments this morning to something
of critical importance to the State of Washington, but also to
the entire country, and that is the cleanup of the Hanford
Nuclear Reservation, the largest cleanup project in our
country, and I am sure probably one of the largest in the
world.
I want to be clear on where the administration stands
regarding the current budget debate over Hanford cleanup. I am
sure you are well aware that OMB set the DOE budget at a level
trims it from about $19.7 billion in fiscal year 2001 to $19.2
billion in fiscal year 2002. That would drop the cleanup budget
from $6.2 billion to $5.9 billion, which obviously impacts
Hanford.
There has been some discussion that the administration may
reconsider this. Also, Congress has acted to restore the
original levels. What is the administration's current position
on restoring the $400 to $500 million shortfall in the Hanford
cleanup?
Secretary Abraham. Well, first of all, I have read
conversations between various members of Congress and OMB on
this. I have received no new guidance that may be in
consideration from that which we have presented in the budget
that you have before you, so if there is further discussion
going on, I do not know if--to this point we have been given no
indication of a changing----
Senator Cantwell. So the original DOE budget that the
administration proposed, that OMB determined, is reflected in
these numbers.
Secretary Abraham. That is right. That is where we are.
Senator Cantwell. So we are still looking at a shortfall,
for meeting Hanford cleanup milestones, by not having that $400
to $500 million?
Secretary Abraham. Well, there has been no change in the
numbers. Obviously, we have a major commitment to Hanford that
is one of the few, in fact, of all of the various sites where
in comparison to last year's level of support, if one does not
include a rescission that was available last year, is actually
a slightly larger commitment.
As you know, with respect to the tank waste vitrification
facility we have increased our commitment there to $500 million
as part of our desire to build a vitrification facility, and we
intend to do that.
You know, this has been a site, as you are well aware, that
has occupied principal attention of the Department for a long
time. I believe the agreements were entered into in 1989,
roughly. There were countless numbers of milestones that were
set. There have been six major amendments to these agreements
in the last 10 or 11 years. Our goal is to proceed forward and
to work together with the community, with the State, to do as
much as we can to address the challenges ahead.
Senator Cantwell. So do you think the President's budget,
as proposed, will allow DOE to meet the milestones required by
the Tri-Party Agreement?
Secretary Abraham. Well, let us put that in perspective. As
you well know----
Senator Cantwell. I want to ask you about the Tri-Party
Agreement in a minute, because I know you have suggested
changing it.
Secretary Abraham. Well, it has been changed. I am not
suggesting changes, it has been changed I think six times since
1989.
Senator Cantwell. Which obviously is part of the problem
here.
Secretary Abraham. Well, part of the problem--I think it
is, perhaps, but part of the problem is that new information
seems to surface about the magnitudes of the problems as more
work is done.
There is also--and I think the committee is well aware of
this. We are going to miss a milestone this year, and I think
you know that, with respect to beginning the construction of
the vitrification facility. Now, why did that happen? As I
think probably most of you all know, the original bid for the
completion for the construction and so on of the vitrification
facility was somewhere around $7 billion.
Then all of a sudden last year the contractor who had the
bid announced that it was wrong, and it was going to be a $15-
billion cost, and so the Department, I think correctly, last
year made the decision to rebid the contract, and in December
that happened, but I think by all parties' agreement at that
late point it was impossible to meet the milestone of beginning
the construction this July, so obviously that is going to be
missed, and I would acknowledge that now.
I think everybody understood it, but I think also we
probably all would have agreed that allowing the contractor to
double the cost was probably not the right course for us to
follow.
Senator Cantwell. So you, as Secretary, are supportive of
the congressional action taken in a bipartisan fashion by both
the House and the Senate to restore that level of funding?
Secretary Abraham. The Congress obviously plays an
important role in the budget process. When I testified last
week before the House Energy and Water Subcommittee I was
constantly offered more resources for my Department by people
across the board on that committee, and obviously we have
presented the budget that we think is appropriate for the
Department, but the process will continue.
Senator Cantwell. From a budget perspective what we have
done so far is to have restored the level of funding. We want
to make sure that it is appropriately allocated to Hanford, and
that is a concern not just for people in Washington State, but
for the region. It ought to be a concern, a very important
concern, for the rest of the country as well.
Secretary Abraham. I know you do, and obviously it is
probably a unique situation to have Cabinet members resisting
offers for more resources for their Department. We obviously
are going to work, and the White House is going to work closely
with you and with the members of the various appropriations
committees on this budget throughout the remainder of the
process.
Senator Cantwell. I have a few other questions that I am
going to submit as it relates to Hanford and the Tri-Party
Agreement, so I hope you will be able to answer those as they
relate to the budget process.
Following Senator Feinstein's question--we had a hearing
last week with the head of FERC and the FERC commissioners.
Do you support FERC's investigation of overcharging in
Washington State?
Secretary Abraham. Yes. I think that now that the inquiry
initially was for just California, and obviously because of the
interconnectivity of the Western grid, issues that might have
caused unjust and unreasonable prices to exist in California
could conceivably exist in other areas in which are connected
or interconnected within that same region, so it seems to me to
be a very appropriate follow-on to the California inquiry.
Senator Cantwell. I know my time has expired, Mr. Chairman,
but one more question, Secretary Abraham. Do you believe that
there are reasonable and just rates being charged in the
Northwest today?
Secretary Abraham. My position is very simple. The FERC's
job is to determine whether unjust and unreasonable rates were
being charged.
Senator Cantwell. But personally do you think the rates
there are----
Secretary Abraham. I believe that the refunds that have
been ordered were appropriate.
Senator Cantwell. The current rates being charged.
Secretary Abraham. To the extent that they are unjust and
unreasonable, and that is what FERC is trying to determine, I
fully support the decisions they made.
The first time that we have actually ordered refunds in
California has only occurred in the last couple of months,
because of the determinations that these rates are unjust and
unreasonable, and I support that effort.
Senator Cantwell. Thank you, Mr. Chairman.
The Chairman. Thank you very much, Senator Cantwell. I have
been on this committee for 22 years. I recall the efforts to
try and address a resolution for Hanford in the time Senator
Scoop Jackson chaired this committee, on to Senator McClure,
Senator Johnston, who mandated a special appropriation for this
committee to go out and investigate Hanford, and he was
chairman of the Interior Appropriations Committee at that
particular time.
The cleanup in Hanford, as in other areas, has become an
industry in itself, which has a certain perpetuating
motivation. On the other hand, it is very real. I have been to
Hanford. I have been to the reach area on the river, and so
forth, and obviously you, as a representative of your State,
have a job to do to resolve this. There is every reason to
believe that there is a certain amount of leakage that is
coming out of some of that contaminated material that has been
sitting in tanks for decades, that is seeping into the
watershed of the Columbia River. That has been documented to a
degree.
We seem to highlight the potential damage of that, but the
problem of cleanup has almost been beyond the comprehension of
achieving significant advances. I could not begin to tell you
how much money has been expended, and every now and then we
have a tank that burps and causes legitimate concern.
I would suggest to you, and maybe it is already done to
your satisfaction, but the State of Washington and Oregon try
to get together with the Department of Energy to address some
kind of an achievable resolve as opposed to, you know, what we
are doing, which is quite appropriate, and I am not condemning
you in any manner or form, but we are just throwing more money
at it, and questioning whether this money is adequate enough
for the next stage, but fundamentally, you know, this job goes
from Secretary to Secretary, and each Secretary does his or her
best, and each administration does his or her best, but it is a
gigantic problem, and then the question comes to mind to what
extent can you clean up various portions, or is there some
portion that you might as well build a fence around forever, or
fill up some of those plants with concrete and make a hill out
of them.
But at some point in time, I would hope some
administration, some Secretary, some Governor can come together
with an achievable--because 21 years is significant in my
lifetime, but you know, the billions of dollars that we have
expended that we have not really accomplished the level of
cleanup that we had all hoped to do 25 years ago, and I do not
expect an answer, but I share a frustration.
Senator Cantwell. Well, thank you, Mr. Chairman, for those
comments, and I appreciate your interest. The House and Senate
have worked in a bipartisan fashion to restore these funds, not
just for Hanford cleanup, but for other nuclear sites
throughout the country. The approach that you are outlining has
taken place in order to come up with these Tri-party agreements
and milestones. Unfortunately, I think if the administration's
budget level goes through, we will miss those milestones, and
you will likely see action by the State of Washington against
the Government for missing those milestones.
The Chairman. Well, that is unfortunate, because you know,
the only folks that come out of those disputes usually are the
lawyers. My bottom line is, what are we really accomplishing
each year as far as cleanup, as opposed to maintaining a
bureaucracy associated with those involved, and the bureaucrats
and everything else.
Senator Cantwell. I guarantee, Mr. Chairman, the people in
Washington are first in that line in wanting to see real
progress. But thank you for those comments, and we will keep
working with the committee.
Secretary Abraham. If I could just--Senator Cantwell was
not here when I made some comments about our EM program, and I
do not want to repeat them all, but I would look forward to
having further discussion, at which point I would outline for
you my frustration with the plans that exist not just at
Hanford but at all but two of the sites, at the major sites in
the complex that have such long periods of cleanup programs
that, as I said earlier, only mean that somebody alive today's
grandchildren may enjoy the benefits of living in a community
that is free from contamination.
One of the things that I hope to work together with this
committee on, as I said before your arrival, is to try to see
if we cannot figure out a way to address a swifter and more
cost-effective way of doing this, and part of it again, I
suggest, it may have to do with the way our budget process
works.@
We provide almost no certainty from one year to the next.
Every budget process is a new appropriations debate between
different sites with different needs, and because we do it that
way, it is very hard when you are dealing with contractors,
when you are dealing with goals, when you are trying to put
plans in place to provide the assurance that something stays on
track. At least, that is my observation ion the short time I
have been here, and I think we could work together to do this
in a much more effective way.
The Chairman. Senator Bingaman, and then Senator Craig.
Senator Bingaman. Mr. Secretary, the President came out
with his decision, I believe last week, that Federal
facilities, particularly in California, would turn out the
lights and turn off some of the escalators during peak periods,
and I favored that. I thought that was a good step.
I am concerned, though, that the program that people have
always looked to to reduce Federal facility energy consumption
is the Federal Energy Management Program. That program is the
one which would put in place more efficient equipment and other
modernization of Federal facilities to reduce energy
consumption. That program is scheduled for a 48-percent cut in
your budget. Why would that make sense, at the same time that
the President is concerned about Federal facilities using too
much energy? Why does it make sense to cut that program?
Secretary Abraham. Well, two comments. First of all, let me
just preface them by saying, in fact, the Federal Energy
Management Program has done a very good job. The Federal
Government's use of energy has been significantly reduced since
we passed the Energy Policy Act in 1992, and we are on track to
meet the goals, I think, that were established as a consequence
of several executive orders the previous administration offered
in the 1990's, and which we intend to keep working on.
It was our evaluation that, very honestly, some of the work
that the Federal Energy Management Program pays for out of our
budget might ought to come out of the budgets of the various
Federal agencies we provide a lot of assistance to, and so we
are looking for more cost-sharing from other agencies who
benefit, because they are the ones whose budgets are being
reduced as a consequence of the expertise that we offer.
There also is a plan in place to shift some of the
activities in terms of the on-site activities to private
contractors that would be managed by the FEMP program, but
would, in fact, be paid for by those other agencies, third
parties.
Senator Bingaman. Are there some items you could point to
in the budgets of those other agencies where there are
increases that we could look at to offset the cuts that you are
making in the DOE budget for energy efficiency?
Secretary Abraham. Well, I am assuming that will come out
of their energy savings, because I assume they have got a
static budget for their energy expenses, and when we save them
money, I think we ought to be the beneficiaries.
Senator Bingaman. So you are saying essentially, take it
out of their hide, which I do not disagree with. I mean, that
is a great thing.
Secretary Abraham. I sort of think--I mean, obviously, they
may not appreciate this perspective. I would acknowledge that,
but it is the one that at least we have decided that makes a
little bit of sense.
Senator Bingaman. Let me express a concern and ask your
reaction to this. We have had an interesting sort of dynamic
with regard to education legislation, which we are now
considering on the Senate floor. The administration, right
after it took office, immediately began discussions, a dialogue
with the Congress, to agree upon a package of legislation we
could go forward with in education. That is now on the Senate
floor, and hopefully will be voted on next week. There is a
very real question as to whether it will be funded in the
budget and in the appropriations process, but at least the
authorizing language has come a long way. That is one
procedure.
The alternative procedure, which we followed in the area of
energy, I think is a great frustration to a lot of Americans,
because they see their price of gasoline going up at the pump,
they see their own home heating bills going up, they see their
bill from the natural gas company going up, they see blackouts
in electricity on the west coast, and in that area. Instead of
having an early dialogue with the Congress, the administration
set up a task force within the administration that, to my
knowledge, did not involve the Congress. It certainly did not
involve me or other Democrats that I am aware of, and I do not
think it involved Republicans. The administration essentially
said we are going to wait until this task force does its work,
and then see what they come up with, and then consider sitting
down and talking about how to implement some of their
recommendations.
Essentially, it takes a very immediate problem and says, we
are not going to approach it with the some urgency that we have
even approached a subject like education with. Am I misreading
that situation?
Secretary Abraham. Well, I think you are, and I do not
think the intention of this administration is to move
unilaterally once this initial set of recommendations is placed
before the President. Obviously, he is going to come forward
and say these are my ideas, in the same way that you and
Senator Murkowski introduced your energy plans. I suppose if
Senator Breaux would introduce our plan we could make it a
triple, but the fact is that you know, I think each of the
players here on this side, and I know in the House there are
efforts afoot to put together energy plans.
I have been asked to consult in one of those, but for the
most part I have not been involved in those processes either
but I think it is only to begin what, as I think Senator
Murkowski said, would be in the case of at least where
legislation is the ingredient--we are not going to be
presenting the Congress with a set of bills next week. We are
going to be saying these are our recommendations, as to the
policies that make sense, and then I assume the same approach
that was taken with the education legislation will be taken.
At least, that will be my intent in terms of trying to find
the various ingredients for statutory proposals, but we are not
going to be offering a set of bills next week. We are going to
be offering some recommendations as to policy changes.
Senator Bingaman. Yes, as I say, my concern is not that I
do not think ultimately you folks will be willing to sit down
and visit with the Congress about what ought to be done, but it
seems the process and the procedure you have chosen to follow
inevitably puts off that discussion, has put off that
discussion for additional months while people are seeing their
utility bills go up, seeing the price of gas go up, seeing all
of these energy costs get worse, and the economic consequences
deepen as a result of that.
I guess I wish the administration had found a way to engage
the Congress earlier so that we would not be sitting round sort
of holding everything in abeyance to see what recommendations
come out next week, so that we can then see which of them we
can work together on and which ones we cannot. It is going to
be hard to make progress as quickly by virtue of the procedure
that I think you have chosen to follow.
Secretary Abraham. Well, I again hope that the efforts we
have engaged in will be understood in the proper context. We
have a bit of a challenge with respect to energy issues, in
that unlike some of the areas of Government, or some of the
policy areas where a single Government agency or Department has
almost total authority or responsibility, with Energy it is
spread across many different Departments or agencies. I have
the Department with the right name, but I do not have, as you
well know from our earlier discussions, all of the various
tools and levers that affect the policies that affect energy,
so we have Interior, and Treasury, and so on.
I think the administration's view is that we needed
initially at least--and essentially I would just remind the
committee that in my confirmation hearing a number of members
on both sides had said, we need a multidepartmental,
interdepartmental approach, instead of what we have done in the
past, and I think the feeling was, first we had to make sure
that within the administration we got people together with
different portfolios who had different perspectives to get that
participation, but I assure you that we look forward to trying
to work together with everybody on this as we move ahead.
It is a serious problem that I think you have acknowledged
and the President has, Senator Murkowski and others, that needs
to be addressed comprehensively and together.
Senator Bingaman. Mr. Secretary, thanks again. You have the
Department with the right name, we have the committee with the
right name, maybe we can get to talking seriously about solving
some of these problems one of these days.
Secretary Abraham. I look forward to it.
Senator Bingaman. Thank you.
Senator Craig. Senator Bingaman, let me comment, because I,
too, am frustrated, wishing that tomorrow was yesterday as it
relates to this conversation on energy. I must say that my
first meeting with President-elect George W. Bush, which
occurred somewhat late in November, as you know, in that
meeting with Senate leadership, he said, you are going to hear
me talking a lot about taxes, and a lot about education, but he
said, by far I will tell you what is really going to be
important to the American people, and that is an energy policy
that they understand and that we work out together, and he
said, one of my first jobs will be to appoint a task force to
come up with our vision of that to work with you all.
So while I agree, I wish it were sooner rather than later,
I think it is rather remarkable that within a reasonably short
period of time they have done a comprehensive review and are
now ready to present it to us, or nearly that. We were in a
position to do it much more quickly, in the sense that we had
our bodies and our people and our staff in place, and I hope we
can get on with it, because the American consumers, as you so
well said, are hurting at this moment.
Mr. Secretary, you are right to be proud of Rocky Flats,
and you are right to be proud of West Valley and the cleanup
that will go there. The problem is that a lot of the stuff that
allowed Rocky Flats to accelerate now sits in a mountain of
garbage cans in Idaho. The high-level fuel that will come from
West Valley this summer is going to Idaho. So what we have
really done to make ourselves look like we are cleaning things
up, is that we have been in a great shuffle game, and Idaho is
one of the repositories of the shuffle.
Now, we have said we will accept that as long as we stay on
course. If not, my Governor and I and others are committed to
dealing appropriately, if we have to, to make sure that we do.
Having said that, one of the shuffles, as you know, is to
take that transuranic waste and put it in containers and move
it to New Mexico, when we have finally got WIPP open and it is
receiving facility. The problem there, and there is another
one, is the availability of shipping containers and the
sufficiency of the WIPP budget to support these shipments that
allows us to move to a permanent repository the transuranic
low-level waste.
Under the budget request, is there adequate funding to
maintain the shipping schedules for both Idaho and other DOE
sites to the WIPP facility?
Secretary Abraham. There is. In our judgment we will be
able to double the number of deliveries from 7 to 14 a week.
Now, I will just tell you that one of the challenges here is
that we are going to be moving some dollars, at least in our
proposed budget, from non-environmental cleanup priorities at
Carlsbad to make sure that these programs work.
Also, I can tell you that we will have an adequate number
of casks. Our budget supports that for fiscal year 2002, and
the shipments from Rocky Flats in Idaho are going to be given
the highest priority.
What would limit us is a limit on the availability of casks
next year. In that case, it is not going to be our budget, but
the time it takes for these casks to be properly manufactured,
or fabricated. Under procurement orders the Department placed
last year, our vendors are building these new casks as quickly
as possible, and will continue to deliver them during 2002.
Senator Craig. Well, Mr. Secretary, thank you. There are
other questions, and we will submit those for the record. We
appreciate your time here. I think we have just started a vote
on that most important document, the budget, and I will need to
get to the floor to do that, but I am very pleased with the
leadership role you have taken, as are others. You have been
outspoken, you have been clear in your message, and we will
work very closely together to surmount these hurdles and get on
with the business that is important.
I trust that the President's energy policy proposals will
have a substantial portion in there on new nuclear. I think
that we can agree that there is a great opportunity there for
us all, as Americans, for clean technology and non-emitting
technology that builds an abundance of electrical supply.
So we are looking forward to working with you, and that
announcement, and then sitting down with you to incorporate
that into what we have done here, as I have said, so that we
can, I would hope by June, have a robust energy debate on the
floor of the U.S. Senate that begins to show the American
people that their Government, both the legislative and the
executive branch, are, in fact, well-focused on the energy
needs of this country and to the business that our President so
clearly speaks of, of producing and supplying.
Thank you very much, and the committee will stand
adjourned.
[Whereupon, at 11:32 a.m., the hearing was adjourned.]
[Subsequent to the hearing, the following was received for
the record:]
Gasification Technologies Council,
Arlington, VA, May 18, 2001.
Hon. Frank Murkowski,
Chairman, Committee on Energy and Natural Resources, U.S. Senate,
Washington, DC.
Dear Senator Murkowski: We would like the enclosed statement,
written by Mr. James Childress, Executive Director of the Gasification
Technologies Council, included in the record of the hearing held on May
16, 2002 before the Senate Energy and Natural Resources Committee on
the fiscal 2002 budget for the Department of Energy.
Sincerely,
Marie D. Kent,
Administrative Assistant.
[Attachment]
Statement of James Childress, Executive Director, the Gasification
Technologies Council, to the Committee on Energy and Natural Resources
regarding fiscal year 2002 budget request for the U.S. Department of
Eenergy
The Gasification Technologies Council (GTC) wishes to take this
opportunity to comment on the fiscal year 2002 budget proposal for the
Department of Energy's Fossil Energy Research and Development Program.
Council members includes gasification technology developers and
suppliers that account for more than ninety-five percent of the
installed syngas production capacity around the world. We count among
members a significant share of companies supplying engineering and
construction services, turbines, industrial gases, gas cleanup and
processing and other critical equipment and services to the industry.
Our membership also includes a growing number of users of the
technology, reflecting the growing commercial acceptance of
gasification in the energy marketplace.
Gasification provides the cleanest, most efficient means of
producing power, chemicals and fuels from coal, petroleum residues and
low value feedstocks. It is being used worldwide and offers the
opportunity for further advancements in reduced cost, higher efficiency
and lower emissions through continued research and development and
commercial scale demonstration. Gasification is central to the
Department of Energy's Vision 21 Program because of its high
efficiency, environmental superiority and flexibility in feedstocks and
product slates. Members of the Gasification Technologies Council have
been engaged in a year-long project of company-by-company interviews
and briefings with the Department of Energy to offer their thoughts on
future investments the DOE and industry may wish to make in
gasification-related research, development and demonstration. This
process will provide the DOE with market-driven guidance on R&D
projects and directions that offer the greatest chance for private
sector participation and ultimate adoption in commercial scale
manufacturing plants.
Our statement will address the gasification-related research and
development elements of the fossil energy budget proposal, but first we
wish to make the general observation that the R&D portion of the budget
(items exclusive of the proposed Clean Coal Initiative which addresses
commercial demonstration, not research) would be cut by more than 50%.
This is inconsistent with President Bush's clearly expressed desire to
accelerate development of domestic energy supplies, a move that will
require step changes in fossil fuels technologies' environmental,
efficiency and economic performance. If the goals of the Department's
Vision 21 program are to be achieved, with much higher efficiency,
sharply reduced emissions and multiple product slates from coal-based
manufacturing plants, the R&D budget must be increased, not cut in
half.
Our recommended changes to the proposed budget with regard to
specific categories include:
Gasification Combined Cycle: The $35 million budgeted under this
item should be increased by $15 million to permit accelerated work on
ceramic membrane separation technologies, advanced gas cleanup, and
gasification system sensors and controls. These are necessary for the
technological advances required to meet Vision 21 efficiency and
emissions targets in a timely manner.
Advanced Turbines: Much of the success in increasing the efficiency
of integrated gasification combined cycle (IGCC) technology has been in
the development and commercial introduction of more efficient gas
turbines. The budget proposes to zero out this program from a fiscal
year 2001 level of just under $31 million. The funding for the advanced
turbine program should be restored. This will accelerate introduction
of even more efficient turbines to reduce carbon emissions from power
generation; fuel flexible turbines that can run on synthesis gas as
well as natural gas; and improvements that provide greater reductions
in NOX emissions without add-on systems.
Fuels R&D: The coproduction program has also been zeroed out. It
should be restored. Central to the concept of the Vision 21 complex is
the ability to produce liquid fuels from coal and other fossil fuels.
Gasification and the indirect liquefaction of the synthesis gas to
produce ultra clean fuels, such as methanol, dimethyl ether, and
Fischer-Tropsch liquids, provide the most viable path. R&D on the
technologies to produce such fuels should be continued.
Clean Coal Power Initiative: The budget calls for $150 million as
the first installment of President Bush's clean coal initiative. The
budget amount should be increased to $200 million, consistent with the
President's ten year, $2 billion program.
Gasification offers clear and measurable environmental benefits
when compared to combustion based power generation technologies.
However, an active research and development program is necessary to
build on these strengths with an eye toward the much more aggressive
Vision 21 goals. A restored DOE fossil energy budget addressing the
above cited items offers a way forward to make the necessary step
changes in the supporting technologies and to induce the private sector
involvement necessary to bring the results of the research into the
marketplace.
Thank you for this opportunity to present our views. Additional
information about gasification technologies is available on our web
site: http://www.gasification.org. I also remain available to respond
to any questions on the issues addressed in this testimony.
APPENDIX
Responses to Additional Questions
----------
Responses of Secretary Abraham to Questions From Senator Murkowski
ATLAS URANIUM MINE TAILINGS SITE
Questions 1-2. A major mission of the Department is cleaning up
Defense and Non-Defense radioactive sites. A major non-defense site in
desperate need of cleanup is the Atlas Uranium Mine Tailings site
adjacent to the Colorado River in Moab, Utah. If this site is not
cleaned up, the health of the Colorado River is in jeopardy, as well as
the health of the 25 million citizens who rely on the Colorado River as
their major water source.
Does DOE's Office of Non-Defense Environmental Management Program
plan to implement and clean up and remove the tailings for the Moab
site as Congress directed it to do in the 106th Congress? And if so,
why was funding for this important program omitted from the President's
budget for 2002?
Answer. The Moab mill site is currently under custody and license
of the Moab Mill Reclamation Trust and the oversight of the U.S.
Nuclear Regulatory Commission and the State of Utah. Pursuant to the
Floyd D. Spence National Defense Authorization Act for Fiscal Year 2001
(the Act), DOE will assume ownership of the site by October 30, 2001,
and carry out cleanup of the Moab mill site in a manner that is
protective of human health and the environment.
The Department fully intends to carry out its responsibilities for
cleanup of the Moab mill site pursuant to the Act. Among other things,
the legislation directs DOE to obtain the advice of the National
Academy of Sciences regarding the costs, benefits, and risks associated
with various remediation alternatives, including onsite or offsite
treatment of the hazardous materials. A major focus of that study will
be the long-term stewardship aspects of the various disposal options.
In July 2001, the Department received a supplemental appropriation
for FY 2001 that included $1.9 million to develop a remediation plan
for the site. The FY 2002 budget request does not include funding for
remediation of the Moab mill site, because the Department had not yet
developed a remediation plan due to unavailability of funding. Once the
remediation plan is completed, the Department will be in a better
position to request funding for remediation of the Atlas mill site
during the annual budget process. In addition, approximately $300,000
in FY 2002 will be available for surveillance.
PMA APPROPRIATIONS FOR OPERATION AND MAINTENANCE AND REPLACEMENT
Question 3. Could you provide the Committee with a list of
appropriations expended from FY 1991 to FY 2001 for operation and
maintenance and replacement within your system by fiscal year?
Answer. Bonneville Power Administration (BPA) receives no annual
appropriations from Congress, it is ``self-financed'' by the electric
ratepayers of the Pacific Northwest. The revenue-generating and rate-
setting authorities of the Bonneville Project Act of 1937 and the
Northwest Power Act provide Bonneville's statutory budget authority.
However, the table below provides BPA's annual transmission
expenditures for operations and maintenance (excluding interest and
depreciation) and capital replacements for the fiscal years 1991
through 2001.
------------------------------------------------------------------------
O&M Capital
Fiscal year expense replacements
$ million $ million
------------------------------------------------------------------------
1991......................................... 124.8 67.2
1992......................................... 141.3 90.2
1993......................................... 127.2 91.6
1994......................................... 160.1 73.0
1995......................................... 139.0 52.0
1996......................................... 178.3 64.7
1997......................................... 178.9 38.5
1998......................................... 184.3 40.2
1999......................................... 190.5 62.8
2000......................................... 222.4 50.9
2001 (Budget)................................ 244.1 66.4
------------------------------------------------------------------------
Southwestern Power Administration's (SWPA's) costs for transmission
system operation and maintenance, and replacements are funded through
authorities provided under Appropriations Acts, or through SWPA's
enabling legislation. The table below reflects total budget authority
for operations, maintenance, and replacements, including associated
Program Direction and Construction program costs.
------------------------------------------------------------------------
Dollars in
Fiscal year thousands
------------------------------------------------------------------------
1991....................................................... $14,499
1992....................................................... $19,551
1993....................................................... $15,770
1994....................................................... $25,499
1995....................................................... $16,029
1996....................................................... $20,693
1997....................................................... $17,429
1998....................................................... $18,947
1999....................................................... $20,195
2000....................................................... $23,311
2001 est................................................... $21,192
------------------------------------------------------------------------
Western Area Power Administration's (WAPA's) costs for operation
and maintenance of its transmission system, including replacements, are
funded by either appropriations or power receipts through the use of
our revolving fund, depending upon the particular feature's
authorization.
The chart below details these costs by fiscal year and includes
associated Program Direction costs. Replacement items funded through
WAPA's Construction and Rehabilitation line item are not included in
these amounts.
(Dollars in Thousands)
------------------------------------------------------------------------
Appropriated Revolving
Fiscal year funds funds
------------------------------------------------------------------------
1991......................................... $107,557 $38,238
1992......................................... $121,652 $50,221
1993......................................... $121,516 $46,061
1994......................................... $120,789 $42,746
1995......................................... $110,035 $39,403
1996......................................... $120,627 $42,812
1997......................................... $116,060 $44,717
1998......................................... $120,744 $39.954
1999......................................... $116,386 $41,886
2000......................................... $128,413 $46,727
2001 (Budgeted).............................. $134,518 $46,601
------------------------------------------------------------------------
TRANSMISSION INFRASTRUCTURE AND AGE
Question 4. Could you provide the Committee with a list of your
transmission infrastructure and the age of those components?
Answer. The following graph shows the average age of Bonneville
Power Administrations transmission system is 43 years old.* Using the
year that circuit miles were installed and classifying by voltage, the
average age for 115-kv facilities is 51 years old. 48 years old for
230-kv facilities and 28 years old for the 500-kv facilities. The age
of transmission lines is representative of the age of all transmission
facilities.
---------------------------------------------------------------------------
* The graph has been retained in committee files.
---------------------------------------------------------------------------
Southwestern Power Administration's response is as follows:
Equipment Age (in Years)
----------------------------------------------------------------------------------------------------------------
1 to 10 11 to 20 21 to 30 31 to 40 41 to 50 50+ Total
----------------------------------------------------------------------------------------------------------------
Transformers:
69 kV......................................... 0 0 0 0 2 0 2
161 kV........................................ 1 3 2 9 3 0 18
----------------------------------------------------------------------------------------------------------------
1 3 2 9 5 0 20
Breakers:
69 kV......................................... 21 22 5 10 0 0 58
138 kV........................................ 7 0 0 5 1 0 13
161 kV........................................ 34 21 15 21 0 0 91
----------------------------------------------------------------------------------------------------------------
62 43 20 36 1 0 162
Transmission Lines *
(Circuit Miles)
Sheet......................................... 10 0 5 61 15 6 87
Wood.......................................... 0 0 98 472 313 410 1,293
----------------------------------------------------------------------------------------------------------------
0 0 103 533 328 416 1,380
----------------------------------------------------------------------------------------------------------------
Total steel structures = 346
Total wood structures = 9,912
Total structures = 10,158
* Data reflects age of transmission lines based on the date of original installation. SWPA has installed no new
transmission lines in the past 20 years. NOTE: Age alone is not reflective of the condition or need for
replacement of transmission lines or supporting structures. Conductors are unlikely to need replacement
because of age or physical deterioration. Steel structures have a life expectancy of 75 to 100 years with
proper maintenance and wood pole structures will last 40 to 60 years depending on conditions. Over the past 20
years, SWPA has replaced poles on some 34% of its wood structures.
Western Area Power Administration has prepared a list for the
record.
Equipment Age (in Years)
----------------------------------------------------------------------------------------------------------------
1 to 11 to 21 to 31 to 41 to
10 20 30 40 50 50+ Total
----------------------------------------------------------------------------------------------------------------
Transformers:
69 kV.............................................. 22 11 1 13 6 11 64
115 kV............................................. 50 30 14 19 29 10 152
138 kV............................................. 0 2 0 0 0 1 3
161 kV............................................. 1 2 1 6 5 2 17
230 kV............................................. 41 45 17 30 21 11 165
345 kV............................................. 6 34 5 6 0 0 51
----------------------------------------------------------------------------------------------------------------
120 124 74 61 35 452
Breakers:
69 kV.............................................. 63 63 24 13 9 10 182
115 kV............................................. 154 117 65 42 9 5 392
138 kV............................................. 5 4 0 8 0 0 17
161 kV............................................. 19 14 5 9 0 1 48
230 kV............................................. 178 127 60 46 10 9 430
345 kV............................................. 7 59 5 0 0 6 77
----------------------------------------------------------------------------------------------------------------
426 384 159 118 28 31 1,146
Transmission Lines
(Circuit Miles)
Steel.............................................. 713 1,218 528 4,606 1,714 154 8,933
Wood............................................... 486 623 289 1,482 3,333 1,650 7,863
Concrete........................................... 0 19 0 0 0 0 19
----------------------------------------------------------------------------------------------------------------
1,199 1,860 817 6,088 5,047 1,804 16,815
----------------------------------------------------------------------------------------------------------------
REPLACEMENT COMPONENT
Question 5. Could you provide the Committee the rate of information
for the system indicating the replacement component?
Answer. The rate of depreciation for the replacement component is
consistent with the rate of depreciation for the specific types of
original investments. Replacements as a group are not depreciated
differently. The following table provides the average service life and
the annual depreciation accrual rate for Bonneville Power
Administration's (BPA's) transmission plant (FERC accounts) components
that make up the transmission infrastructure:
------------------------------------------------------------------------
Average Annual
Transmission plant (FERC accounts) service accrual
life rate
------------------------------------------------------------------------
Land Rights-Substations........................... 75 1.36
Structures/Improvements........................... 60 1.77
Station Equip--1970 & before...................... 39 2.96
Station Equip--1971 & after....................... 34 3.29
Sub on Customers Premises......................... 28 4.05
Portable Property (at Subs)....................... 40 2.76
Metering Station.................................. 32 3.48
Control Equipment................................. 13 8.73
Towers & Fixtures................................. 65 1.96
Poles & Fixtures.................................. 50 3.5
Overhead Conductor................................ 50 2.6
Underground Conductor............................. 30 3.97
Roads & Trails.................................... 75 1.35
Communications--Subs.............................. 15 5.97
Communications--Trans Line........................ 40 2.50
------------------------------------------------------------------------
As replacements are made on the system, the old equipment is
retired from the composite group and the new equipment is added. All of
the equipment/facilities in each composite group are depreciated at the
rates provided above.
Per the most recent Depreciation Study completed for BPA plant
assets, ``the annual depreciation was calculated by the straight line
method using the average service life (ASL) procedure and the remaining
life basis. The calculated remaining lives and annual depreciation
accrual rates were based on attained ages of plant in service and the
estimated service life and net salvage characteristics of each
depreciable group.'' The study explains the use of ASL as follows,
``The use of average service life for a property group implies that the
various units in the group have different lives. Thus, the average life
may be obtained by determining the separate lives of each of the units,
or by constructing a survivor curve by plotting the number of units
which survive at successive ages. The use of survivor curves, which
reflect experience and expected dispersion of service lives, is a
systematic and rational means of estimating average service lives to be
used to calculate depreciation for utility property.''
Southwestern Power Administration's expected service lives for
power circuit breakers and power transformers is 35 years and for
transmission lines is 45 years. However, in planning for replacement of
facilities, age of equipment is not the primary criterion. Equipment
rating for increased loading, risk to the environment, operating
condition, and reliability, including Southwest Power Pool requirements
and customer expectations for dependable delivery, frequency of
required maintenance and availability of parts are all considered.
Western Area Power Administration (WAPA) monitors the condition and
age of electrical equipment and facilities, considering replacement as
infrastructure reaches its normal life span, or upon evidence of
deterioration. WAPA attempts to obtain the greatest useful life from
each component as a matter of sound fiscal policy and good business
practice, but must weigh any increased risk to reliability by keeping
older equipment in service. However, age is only one factor in this
assessment. WAPA also takes into account the operating condition of
equipment, availability of spare parts, level of required maintenance,
criticality to power transfer capability and potential impacts of
sudden failure.
WAPA now has a significant amount of equipment at or beyond its
expected service life (see Question No. 4--service life for breakers/35
years, for transformers/40 years, for wood pole transmission lines/40
years, for steel transmission lines/approximately 50 years, etc.).
Depending on the condition and serviceability of these facilities,
replacement will be required shortly. Additionally, industry
deregulation, mandated open access to transmission and load growth are
placing new demands on the interconnected power system. WAPA is using
available transmission capacity to the maximum extent possible,
operating electrical equipment at its upper performance limits for
longer periods of time. This situation results in accelerated wear and
aging of equipment at the same time that any failure has greater
ramifications to the power system.
TRANSMISSION UPGRADE AND REPLACEMENT PLAN
Question 6. Does WAPA/SWPA/BPA have in place a plan to upgrade and
replace any transmission infrastructure in the next five years?
Answer. Yes, Bonneville Power Administration (BPA) has developed a
plan to upgrade the transmission infrastructure over the next ten
years. In addition to the annual capital planning, BPA has developed a
six-year Transmission Infrastructure Plan. The plan is in the review
process. The transmission infrastructure plan will respond to expected
increased load, relieve constrained transmission paths, and may
integrate a potential of over 15,000 megawatts of new generation over
the next four years, if the generation is developed to such an extent.
This effort could well require construction of over 700 miles of new
transmission line and associated facilities. The following table is a
summary of the funding levels contained in the FY 2002 budget request.
PROPOSED TRANSMISSION CAPITAL PLAN
(Fiscal year--$ in millions)
----------------------------------------------------------------------------------------------------------------
2001 2002 2003 2004 2005 2006 Total
----------------------------------------------------------------------------------------------------------------
Capital Outlays in Congressional FY02 (BP-2)................. $193 $237 $242 $163 $184 $186 $1,205
----------------------------------------------------------------------------------------------------------------
BPA Borrowing Authority is used to fund BPA Transmission Business
Line's system improvements needed to maintain system reliability and
integrate planned new generation into the system. In addition,
Borrowing Authority is used to fund BPA Power Business Line's hydro
generation improvements, fish & wildlife projects, and conservation/
energy efficiency.
Southwestern Power Administration's facility replacements and
upgrades proposed in annual appropriations requests are based upon its
ongoing 10-year construction program plan. Bases for prioritization of
replacements and upgrades are: adequacy of equipment ratings for
increased system loading; reliability of operation, including Southwest
Power Pool requirements and customer expectations for dependable
delivery; environmental concerns; and level of required maintenance and
availability of spare parts.
Western Area Power Administration (WAPA) has a systematic,
scheduled replacement and upgrade program developed through the
preparation of both long-term (10-year) strategic plans and more
detailed 5-year plans that serve as the basis for annual appropriation
requests (Construction and Rehabilitation line item). WAPA's program
reflects its commitment to the reliability and integrity of the power
transmission system, and is formulated through system studies of
facilities and/or equipment reliability (operating condition,
availability of replacement parts, safety, etc.); economics of life
extension; and future needs for infrastructure based on strategic
planning and capability to meet future system requirements.
WAPA's upgrade and replacement requirements for FY 2002 are
outlined in its budget request. However, the realities of operating and
maintaining a complex interconnected power system mean unforeseen
priority projects will surface from time to time. While WAPA may need
to restructure planned projects to accommodate the unexpected, all
projects will share a common purpose to ensure system reliability,
integrity and safety.
TRANSMISSION REPLACEMENT PROCESS
Question 7. What is the process that WAPA/SWPA/BPA has to undertake
to replace transmission facilities, i.e. public hearings, EIS's, etc.
Answer. Bonneville Power Administration's (BPA's) transmission
system capital needs receive numerous reviews. For example, FY 2002 and
FY 2003 capital expenditures were reviewed in detail in the FY 2002
rate setting process by numerous customers, constituents, regulators
and other interested parties. BPA conducted five regional workshops in
FY 1999 and two additional workshops in FY 2000.
All major projects are required to go through extensive
environmental reviews. Prior to replacing or building a new BPA
transmission facility (line or substation), a regional/local public
involvement effort is established. This process, under the National
Environmental Policy Act (NEPA), consists of scoping and public
meetings near a proposed project. A letter or notice is sent out prior
to the project activities briefly describing the project and inviting
the recipient to participate in public meetings to be held in or around
the area. This letter or notice goes to potential landowners in a
particular area, as well as BPA customers, Federal, state, and local
governments, interest groups, tribes, and others that could be
interested or affected by the project. A notice is also posted on the
Environment Fish & Wildlife (EF&W) NEPA web page. This notice provides
the opportunity to contact a BPA representative for additional
information and lists what brochures or information can be obtained.
The process provides flexibility to attend the meetings and comment or
to send in written comments about the scope of the project during the
not less than 45-day review period. During location/analysis
activities, contacts with concerned individuals or groups are
maintained as necessary. A draft copy of the environmental document is
provided to those on the mailing list that requested a copy with time
to comment on the content of the document. Towards the end of the draft
review period, an additional round of public meetings are held to
solicit comments on the contents and conclusions of the document. Once
a decision is made on the project location and routing, a notice will
be sent out to all those interested with this finding. A posting of the
decision is also made to the NEPA web page. Throughout this process
there may be notices of the project in local newspapers and radio spots
also.
As part of BPA's response to the West Coast Energy Crisis, BPA has
taken a broader approach to inform BPA's customers, constituents, and
public of the proposed six-year Transmission Infrastructure Plan. BPA's
Transmission Business Line (TBL) executives have briefed
representatives from the Office of Management and Budget, Department of
Energy, and Northwest (NW) Congressional staffs in DC and throughout
the NW Region. Beginning in March 2001, they have met and briefed all
key contacts associated with BPA's various customers and customer
groups (Investor Owned Utilities (IOU's), Direct Service Industries
(DSI's), Public Utility Districts (PUD's), Municipalities (Muni's) and
Cooperative Utilities (Coops), associations and utility boards,
Interest Group leaders, Tribes, and many others. BPA has prepared and
distributed to interested parties various communication tools such as
Talking Points, Journal Articles, TBL Access Newsletters, Tribal
Quarterly Edition Newsletters and Keeping Current.
Southwestern Power Administration's (SWPA's) replacements affect
existing transmission facilities that generally would not require a
public hearing, environmental assessments or environmental impact
statements. Replacement of transmission facilities is primarily
undertaken through the annual budget process which involves using
SNWA's 10-year construction program plan to develop the annual budget
followed by budget reviews at SWPA, the Department of Energy and the
Office of Management and Budget. All replacements projects are subject
to an internal environmental review to determine if an environmental
assessment or environmental impact statement is needed and follow
Department of Energy guidelines for implementation of the National
Environmental Policy Act.
As a member of the Southwest Power Pool (SPP), the regional
electric reliability council, SWPA participates in the SPP open access
transmission tariff and in the development of the SPP Regional
Transmission Organization. The SPP also has a role in the process as
SNWA is required to coordinate with the SPP any planned outages to
accomplish transmission replacements and to identify to the SPP for
their review any transmission replacements planned to accommodate
increased power loads or correct criteria violations. Upon SPP'S review
of SWPA's proposed replacements and those of other transmission owners,
the SPP will identify and direct implementation of the needed
replacements for the region.
Western Area Power Administration's (WAPA's) process for
replacement and rehabilitation of existing facilities/equipment is
initiated by/through its commitment to reliability. WAPA's regions
develop projects based on operation and maintenance assessments of
facilities and equipment, and various power system studies of
infrastructure reliability (operating condition, availability of
replacement parts, safety, etc.); economics of life extension;
strategic/future need and capability to meet future system
requirements.
As previously outlined, WAPA's regions prepare 10-year plans for
construction and rehabilitation work as part of their long-term
strategic planning, and detailed 5-year plans that are consolidated
into an agency-wide Construction and Rehabilitation (C&R) plan/program.
WAPA's Management Design and Construction Council (MDCC) plans and
directs the engineering, design and construction programs, setting
agency-wide C&R project priorities for inclusion in the budget request.
WAPA operations and maintenance groups coordinate closely with
regional planning groups to evaluate transmission options and
opportunities, and with regional reliability councils in a three-phase
process to obtain/ensure stakeholder input, involvement and potential
participation in infrastructure. Also, WAPA's customers have
considerable input, helping to establish the program each year, and may
even propose projects for consideration that can become joint
participation projects with cost-saving benefits to all.
The processes required for the physical replacement/construction
work on individual projects are outlined in planning/scoping documents
and include land acquisition for (negotiations to increase existing)
right-of-way, environmental review (resulting in either a categorical
exclusion, environmental assessment requiring public involvement, or
environmental impact statement (EIS) requiring a public hearing as
outlined in Department of Energy National Environmental Policy Act
implementation guidelines), design, construction (including contract
management) and commissioning.
Responses of Secretary Abraham to Questions From Senator Craig
ENVIRONMENTAL MANAGEMENT
Question 8. It appears that funding for State oversight programs--
such as the one we have at the Idaho Department of Environmental
Quality--have been substantially reduced in this budget request. This
is of concern to me and to environmental officials who work for the
State of Idaho. What funding will DOE provide to the state of Idaho's
INEEL Oversight Program in FY 2002?
Answer. DOE has not yet determined what level of funding will be
allocated for State oversight in FY 2002. State oversight has played an
important and positive role in the cleanup of our sites. The Office of
Environmental Management's budget continues to place the highest
priority on protecting the health and safety of workers and the public
at all DOE cleanup sites, and continuing to mitigate high risks. The
Department is conducting a top-to-bottom review of the program to
identify better ways of doing business. Secretary Abraham has asked EPA
and the Governors of states that host a major EM site to assist us in
the review. This review will influence how we will work with the states
in which we do cleanup.
NUCLEAR ENERGY RESEARCH
Question 9. I am encouraged by recent statements by the Vice
President in support of nuclear power. In testimony received last week
by the Energy and Water appropriations subcommittee on which I serve, I
was told that the budget level proposed for the Nuclear Energy Research
Initiative will not allow funding any new proposals in FY 2002.
If the Vice President proposes any new nuclear energy initiatives,
how will they be accommodated?
Answer. The budget we submitted for FY 2002 held the line on
spending by not initiating any new research while awaiting guidance
from the Vice President's National Energy Policy Development Group.
With that guidance, the Department will be able to identify those
programs that can best contribute to the goals and initiatives that
will see our Nation through our current energy supply and demand
imbalance as well as respond to the energy supply needs of the Nation
over the next twenty years. I am committed to working closely with the
Senate Energy Committee and the Congress on these important priorities
to identify research needs and funding to implement the recommendations
of the National Energy Policy.
HYDROPOWER AND GEOTHERMAL ENERGY
Question 10. When we are desperate for additional power out West,
would you agree with me that geothermal and hydropower are critical
resources for us right now?
Answer. We certainly agree that hydropower is a critical resource
for the West, as well as the Nation as a whole. Hydropower currently
provides about 7% of the Nation's electricity, and over 60% of the
power used in the Pacific Northwest. We estimate that nationally there
is an additional potential of roughly 30,000 MW. Of this, 21,000 MW is
at existing dams, with over 10,000 MW located in the West.
Geothermal energy also is key to our present resource mix,
especially for the western United States. It already provides about 6%
of the electricity generated for the entire state of California and 10%
for northern Nevada. Within the portfolio of renewable power
technologies, geothermal contributes about 17% of current power
generation. We believe 9,000 MW of the electricity could be generated
from geothermal energy by 2020, all of which would be produced in the
West.
energy efficiency for ag. mining and forestry
Question 11. When you look at industry cost sharing, do you take
into consideration the economic health of the industry?
Answer. Many industries face strong competitive pressures from
industry in foreign countries which effectively limit their investment
capital for research and development. Advanced energy efficiency
technologies can provide energy, productivity, and environmental
savings, which can assist industries in this very competitive global
economic environment. Industries of the Future is a collaborative
partnership between industry and government, which aligns national
energy objectives with the commercial interest of energy-intensive
industries for mutual benefit. As part of this public-private
partnership, we facilitate the development of visions and technology
roadmaps by our partner industries. We invest in pre-competitive and
high risk research and development that neither the government or
industry could pursue on its own. Under these public-private
partnerships, we have adopted a cost-sharing goal of 50 percent across
the entire industry portfolio which can be in money or in-kind. For the
type of research and development that is being targeted and the mutual
benefit that is derived by the partner industries, we believe that this
cost sharing guideline is appropriate.
Responses of Secretary Abraham to Questions From Senator Dorgan
Question 12. What is the Department doing to increase transmission
availability so we can develop more renewable energy, particularly more
wind energy, in the Dakotas and other states?
Answer. The Department is approaching the issue of transmission
availability in the Upper Midwest in several ways. The Transmission
Reliability Program is performing research on several technologies to
relieve transmission congestion and increase transmission capacity. For
example, the program is developing real time monitoring and control
systems to allow maximum power transfer over the grid. The program is
also evaluating advanced, high-capacity composite conductors that can
double the power transfer over existing right-of-ways. Additionally,
the Energy Storage Systems Program is field testing advanced, high-
capacity storage systems for transmission applications in partnership
with industry that have the potential to complement wind generation
resources while supporting transmission loading.
Within the Wind Program itself, DOE is working with stakeholders in
the Upper Midwest through the National Wind Coordinating Committee,
whose Transmission Subcommittee recently held a two day workshop to
review transmission issues with technical experts, State regulators,
members of the wind industry, and other stakeholders. Several near term
options to assist individual projects were identified that are under
consideration by DOE. Additionally, the Department has supported
analysis by the West Area Power Administration (WAPA) of opportunities
for selected wind additions and needed system upgrades on the Upper
Midwest transmission system. To date, WAPA planners have completed
steady state analysis of potential sites for several wind projects and
are now addressing system dynamics issues as a follow on activity. We
hope to continue involvement of WAPA experts in consideration of
opportunities for wind development. A regional approach to transmission
system upgrades, as envisioned in the President's National Energy Plan,
would be the preferred approach to expanding generation in the region.
Question 13. There is a growing interest in this country in the
value of biomass as a renewable energy source. This would be especially
valuable to areas with high agricultural use such as my state of North
Dakota. What does your Department plan to do to research and develop
the use of biomass, and what funding have you requested for such
efforts?
Answer. For many years, the Department of Energy has supported
research to convert biomass resources into electric power, process
beat, clean fuels, and biobased products. In FY 2001, DOE's biomass R&D
comparable budgets totaled $149.9 million. This includes $32.3 million
in the Office of Science, and $117.6 million in the Office of Energy
Efficiency and Renewable Energy. In FY 2002, DOE has requested $138.7
million to continue biomass R&D. This is a $0.9 million decrease for
the Office of Science, a $4.3 million decrease in Renewable Energy
Resources, and a $6.1 million decrease in the Energy Conservation
budgets for EERE from their FY 2001 funding levels. No programmatic
reductions were made in EERE's Biomass/Biofuels development budget.
This budget represents an increase in core activities after the
elimination of $13.3 million in budget earmarks.
Research into the establishment of integrated bio-refineries is a
highlight of the proposed new research that is included in the FY 2002
budget request and supports the Biomass Research and Development Act of
2000. These refineries, as envisioned, will convert biomass feedstocks,
such as switchgrass, corn stover, poplar, etc. into multiple products
including fuels, plastics, electricity, heat and other consumer
products. This research will help foster a bioenergy/biobased product
industry in the United States that will increase domestic energy
security, improve rural economies, and help the environment. Biomass
represents a new opportunity for rural economies. Farmers increasingly
are becoming owners of manufacturing facilities in rural communities.
More than 150 farmer- and cooperatively-owned processing and
manufacturing facilities began operation in the last 10 years.
EERE's Biofuels Program is providing research and development
leading to larger volumes of clean transportation fuels and additives,
such as ethanol. Currently, there are 62 ethanol production facilities
in the United States, including two in North Dakota, which support our
nation's transportation fuel requirements. DOE's support in biofuels
includes a strong focus on work to reduce the cost of fuel derived from
cellulosic feedstocks.
In the area of biopower, EERE is conducting feedstock development
research to identify new sources of energy crops, such as switchgrass.
In North Dakota specifically, DOE analysis is identifying important
opportunities for switchgrass production in the state. DOE research is
targeting improved gasification efficiencies on the order of 35% to
40%. We are also targeting 8,000 MW of biomass co-firing electricity
capacity by 2010. In North Dakota specifically, DOE is working with the
Energy and Environmental Research Center at the University of North
Dakota to develop biomass co-firing projects at a state penitentiary
and at the University.
In biobased products, EERE cost shares funding with private
industry for research projects to convert biomass into chemicals and
materials. Project teams consist of multi-disciplinary collaborations
including industry, universities and National Laboratories. Examples
include: the production of polylactic acid plastics produced through
fermentation and polymerization from corn based sugars and the
production of novel intermediates used to produce new plastics,
coatings, paints, foams and lubricating oils from vegetable oils. The
goal is to increase the use of biobased products by a factor of five by
2020.
Question 14. I noticed that the small wind turbine project received
a $500,000 cut in the President's budget request. I know some industry
representatives believed the funding for this important effort should
be increased from $5 million to $10 million. This project is designed
to help achieve the same efficiencies for small machines that we are
now able to get with large machines. Could you please explain the
rationale for cutting this program?
Answer. The $500,000 request in the FY 2002 DOE budget reflects the
total funds needed to complete fabrication and initiate testing of
three small wind turbine prototypes after the hardware development
effort has been largely completed with prior year funds. Assistance for
small wind systems remains a priority in the Wind Program and is
supported by a variety of additional activities in the Applied Research
and Cooperative Research and Testing areas of the program. For example,
we have identified top priority states in which we will focus
assistance for small wind systems, including California, Montana,
Washington, Idaho, Arizona, and others. Our support will include the
development of better resource assessment maps, state-specific
consumer's guide for small wind, and development of benefit and cost
data information for small turbine applications.
Question 15. Times are particularly tough on the family farm right
now with low commodity prices and a farm safety net that has failed the
agricultural community. I think that renewable energy sources--like
wind energy and biomass--have potential to help struggling farmers
through these difficult times. Could you paint a picture of how a
family farmer might be able to make a profit by creatively using
renewable energy sources?
Answer. Renewable energy development and use can help stimulate
local economies in a variety of ways. For example, rural landowners can
choose to harvest their wind resources by leasing a small portion of
their land to project developers, for which they typically receive
annual royalty payments. These payments have averaged around $2,000-
$3,000 per turbine, providing farmers with more money to pay off debt,
buy new equipment, and pay for school tuition. Developers have also
funded infrastructure improvements in towns and communities, such as
lighting, sidewalks, and libraries, sometimes in lieu of property
taxes. The construction, maintenance and operation of these wind
projects create jobs in a community and opportunities also exist to
site wind equipment manufacturing facilities near wind projects.
To paint a picture of how a family farmer might be able to make a
profit by creatively renewable energy sources consider this: In the
future, a traditional farm could be converted into a fully integrated
system for producing energy and other products, in addition to food,
from agricultural crops. Some of these technologies could be suitable
for small- and medium-size farms. The traditional farmhouse and barn
would receive power from a photovoltaic array and advanced wind
turbines and they might sell surplus power to the grid, on a much
broader scale than is done today. Livestock wastes could be used to
produce power minimizing runoff into local water systems. Trees
developed through advanced breeding or other techniques could provide
windbreaks while growing to harvestable maturity in two to three years.
Together, these bioenergy, solar, wind, and waste resources could
provide substantial income for the farm economy and new job
opportunities for rural communities.
Question 16. I noticed that in this year's budget request funding
has been terminated for Wind Powering America, which was designed to
promote development of wind power across the U.S., via public education
and awareness, in particular. It seems like this program was just
getting started and was successful. Could you please explain the
rationale for terminating funding for this program?
Answer. A number of national priorities were examined as the
Administration developed the FY 2002 budget, including requirements for
fundamental energy R&D and near term national needs to achieve a
balanced national energy portfolio. With the release of the National
Energy Plan, the Administration is now reviewing options to develop
renewable energy technologies and to encourage local economic
development through appropriate program mechanisms, including outreach
and education activities. Following this review, the Secretary of
Energy may propose changes for our performance-based programs. The
Department looks forward to working with Congress to achieve a balanced
and truly comprehensive national energy portfolio.
Question 17. Money is needed for mapping wind resources to better
refine wind resource data. What is the Department doing to fund and
promote such efforts?
Answer. Using the National Renewable Energy Laboratory's (NREL)
wind mapping capabilities, available wind databases, and geographical
information systems, we have been able to refine wind resource maps on
a priority basis. The Wind Energy Program has supported the development
of five state wind resource maps over the past year, including North
and South Dakota, Iowa, Texas, and Vermont. Plans are underway to fund
the development of six additional maps, including the Northeast U.S.,
the Mid-Atlantic and Appalachian Regions, Southeast U.S., Montana,
Illinois, and Idaho. Other states are in the process of developing
their own wind maps for winch we are providing limited technical
assistance through NREL.
Recently, NREL hosted a workshop to explore issues related to
developing improved maps that would lead to an updated wind resource
atlas of the United States. Based on results of this workshop, DOE will
be able to develop a plan for improved wind resource mapping. We plan
to sponsor a second wind mapping workshop in the Spring of 2002 to
explore an appropriate approach for development of a broader U.S. wind
resource atlas.
Question 18. The DOE currently has a Tribal Energy Program. What
efforts has the DOE taken to work with tribes in the past to develop
renewable systems? What efforts are being made to restore funding for
these initiatives? What further opportunities are there to develop
projects in conjunction with the goals of the Wind Powering America
Program to develop federal use of renewable energy?
Answer. The Department does not currently have a Tribal Energy
Program. Funds were requested under the Renewable Indian Energy
Resources Program line item in the Department's FY 2001 budget request
to initiate such a program but funds were appropriated instead for
specific projects in Alaska. Nonetheless, the Department, through a
competitive solicitation program in renewable technologies, provided FY
2000 feasibility study funding for seven Tribal Colleges and
Universities to develop energy projects at the schools. It is
anticipated that some of those projects will be initiated with FY 2001
appropriations later this fiscal year.
The Department has previously assisted the Tribes through the
Indian Energy Resource Development Program authorized by Title XXVI
that resulted in 29 projects being implemented. Additionally, the wind
energy program continues to support a number of efforts that benefit
Tribal energy stakeholders, including a program to lend wind
measurement towers to tribes, resource assessments on tribal lands
throughout the Upper Great Plains,provide support for the creation of a
Native American Wind Interest Group, and participate in discussions on
the Federal purchase of renewable energy credits from tribal wind
generation. The program will continue to work with the Federal Energy
Management Program, other agencies, and Tribal wind energy stakeholders
to explore mutual opportunities as DOE implements its renewable energy
R&D programs.
Question 19. What steps is the Administration taking to develop
federal renewable energy use in general?
Answer. The Federal Energy Management Program (FEMP) helps Federal
agencies take advantage of the benefits offered by renewable
technologies and apply the renewable provisions of the Energy Policy
Act and Executive Order 13123. All of the FEMP programs contribute to
the advancement of renewables in the Federal government by encouraging
their use at Federal facilities. When facilitators develop energy
savings performance contracts and utility energy savings contracts,
agencies are encouraged to incorporate renewable energy into their
energy efficiency improvements. The technical and design assistance
teams help agencies screen energy efficient projects to assess the
opportunities for renewable energy at a facility or building. These
teams also encourage the incorporation of renewable energy applications
early in the design process. FEMP, through its outreach program, leads
the Renewable Working Group--a group of more than 100 representatives
from Federal agencies, DOE programs and the renewables industry--to
share information on renewable technologies and opportunities offered
by various DOE programs to demonstrate renewable technologies.
The Wind and Geothermal energy programs have and continue to
support the activities of the Federal Energy Management Program to
increase the use of renewable energy by Federal agencies and their
facilities. Activities undertaken already include pilot projects to
aggregate Federal energy demand in select cities and regions, using the
consolidated demand and economics of scale to purchase renewable
energy. We believe this load aggregation and renewables purchase
project can be replicated across the country. We are also supporting
FEMP efforts to include a renewable energy purchase requirement in all
DOE facility electricity purchase plans and contracts. Finally, these
programs are working with FEMP to develop an appropriate mechanism and
process to enable a DOE-complex wide purchase of renewable energy
credits.
In the Solar programs, the Department maintains collaborative
partnerships with the National Park Service, Bureau of Land Management,
USDA and the Forest Service. The purpose of these partnerships is to
establish the sustainable use of photovoltaic technology in the Federal
agencies. Through these partnerships, assessments of applications and
acceptance of photovoltaics were completed within each agency to
establish benchmarks. Based on the results of these assessments, 122
new projects were developed and installed around the country.
RADIOACTIVE WASTE REPOSITORY
Question 20. Will DOE establish and/or meet the deadlines necessary
to make a presidential decision this calendar year with respect to a
permanent radioactive waste repository?
Answer. I am committed to a decision on a recommendation that is
based on science. As I have stated before, I will move as expeditiously
as possible, understanding the time constraints involved. However, I am
committed to following the process required by law in the Nuclear Waste
Policy Act.
Before making a decision whether to recommend proceeding, I have a
responsibility to be certain that any such recommendation to the
President is sound and defensible. My decision must be based on a
review of the Program's exhaustive scientific and technical work, as
well as hearing any views of the Governors and State legislatures,
members of the public, comments from the Nuclear Regulatory Commission,
and other information that my be appropriate.
The Department recently issued a report summarizing the scientific
and technical information developed to date about a potential
repository at Yucca Mountain. At the same time, the Department
initiated a public comment period on a possible site recommendation and
plans to issue additional information this summer and hold public
hearings on a possible site recommendation after that. Given the
Program's current schedule, I believe that my decision whether to
recommend the Yucca Mountain site for further development could be made
by the end of this year.
CLEAN COAL POWER INITIATIVE
Question 21-22. Lignite coal is an abundant resource in North
Dakota which provides a low-cost, reliable energy source for more than
2 million people in the upper Midwest. On several occasions, I have
written you requesting that lignite coal projects would be funded
through the Power Plant Improvement Initiative that this Subcommittee
included in the FY 2001 Interior Appropriations bill.
I contacted you on these occasions because I wanted you to know of
my interest in making sure that low Btu coal projects are given fair
consideration in any new demonstration projects at DOE. In the new
Clean Coal Power Initiative proposed by the Administration, I am
interested in making sure that this project encourages the development
of clean coal projects using North Dakota lignite. The Mid-Continent
Area Power Pool (MAPP)--which includes Minnesota, the two Dakotas and
the eastern half of Montana--estimates it will be short 5000 Mws by
2006. I think it would be prudent for DOE to give detailed attention to
projects such as the Lignite 21 Vision Projects in North Dakota, which
has already gotten a commitment of funds from the state. Although I
haven't seen many details of the Clean Coal Power Initiative, I know
that later this year the Office of Fossil Energy will convene a
workshop with utilities, equipments, manufacturers, fuel suppliers,
universities and others to work out some of these details that will
guide the initiative. What is the Office of Fossil Energy doing to
ensure that lignite interests are included in this meeting?
Answer. First I want to thank you for your keen interest in the
very important Clean Coal Power Initiative proposed by the
Administration. I also want to assure you that each and every proposal,
including the proposed Lignite project, will receive a fair and
thorough review based on the merits evaluated against the criteria in
the competitive solicitations that will be issued under the Initiative.
The Office of Fossil Energy plans to convene a workshop in the fall to
give a broad cross section of industry and other stakebolders the
opportunity to provide us with individual views that may help guide
this Initiative. We will be sure that all interested stakeholders,
including those representing the lignite interests, will be afforded
the opportunity to participate in the workshop.
COOPERATIVE RESEARCH
Question 23-24. In North Dakota, the Energy and Environmental
Research Center (EERC) at the University of North Dakota has expertise
in the area of fossil fuel research and development. In fact, over the
last several years, co-funded research under a cooperative agreement
between the EERC and DOE has invested more than $56 million in 126
projects. More than half of the funds for this research have come from
non-federal sources, so the EERC has done a fantastic job leveraging
federal dollars for fossil fuel research.
Given that the Department will need to rely on the research done by
universities and others to guide the new Clean Coal Power Initiative, I
was very disappointed that the Administration's budget eliminated
funding for the cooperative agreement that the DOE has had with the
EERC for the last several years. By cutting these kinds of existing
fossil fuel R&D programs to pay for the $150 clean coal initiative, the
Administration gains no ground in developing new fossil fuel
technologies. Can you explain why the Administration zeroed out
cooperative research fuel projects?
Answer. The Administration's policy is to have funding allocated on
a competitive basis. Since the Cooperative Research and Development
portion of the Fossil Energy budget provides directed funding to two
institutions without competition, it is one of the lower priorities in
limited budgets.
EERC has developed an excellent program of cooperative research
which combines industry talents and capabilities from an effective
State and Federal program. Indeed, this capability is best illustrated
by the growing involvement of industry and their continued willingness
to invest their resources in this program. The Department believes that
EERC and WRI are capable of competing for Fossil Energy funds under
various competitive solicitations, including the Clean Coal Power
Initiative.
GREENHOUSE GAS EMISSIONS
Question 25. Senator Byrd spoke on the Senate floor last week about
the need for a sound energy policy and the need for commitments to
reduce global greenhouse gas emissions, including efforts on the parts
of developing nations. Please explain the ongoing voluntary research
and development programs and other initiatives that have been developed
over the last several years to address our critical climate change and
energy needs.
Answer. The Department's energy mission is to provide appropriate
assistance to help providers ensure adequate supplies of energy at
reasonable prices, with appropriate environmental protection. As part
of this mission, DOE supplements private investment in energy R&D when
market failures cause the private contribution to fall below the
optimum levels for public benefits. Our climate program is a subset of
this larger mission and is focused on improving our understanding of
the dynamics of global climate change, and on the developing and
deploying technologies that reduce net emissions of greenhouse gas
emissions.
Existing programs that directly or indirectly contribute to climate
change science or emissions limitations are described below. Our FY
2002 budget request and the recommendations contained in the recently
released National Energy Policy call for a reevaluation and redirection
of some of these efforts. In addition, the Cabinet-level review of
climate policy that is now underway is also likely to have
ramifications for these DOE programs.
DOE's Industries of the Future Program focuses on generic
pre-competitive, cooperative research with nine of the major
process and extraction industries in the private sector. These
industries include aluminum, steel, metal casting, forest
products, glass, chemicals, mining, agriculture, and petroleum.
These activities seek to improve the energy efficiency of
industrial processes in these most energy-intensive industries,
which account for 75% of industrial energy use. This includes
collaborative road-mapping of technology needs with each
industry, and cost * * * R&D to meet those needs that provide
significant public benefits that the private sector would not
invest in on its own. Cross-cutting technologies applicable to
many industries, such as advanced materials, sensors and
controls, are also supported, where appropriate.
This program has had notable success. For example, the Oxy-
fuel firing process for glass melting furnaces is now used in
20 percent of glass furnaces, reducing fuel use by 48 percent.
Cathode research for the aluminum industry has achieved an, 8
percent energy savings.
The DOE Transportation Program supports the development of
more efficient cars and light and heavy trucks. The majority of
the R&D effort supports the Partnership for a New Generation of
Vehicles (PNGV) and 21st Century Truck initiative. The goals of
these programs include tripling the fuel economy of today's
mid-size cars (e.g., 80 miles per gallon) and delivery vans and
doubling the fuel economy of heavy trucks. Activities supported
by DOE include pre-commercial development of efficient vehicle
components, such as low-emissions diesel and gasoline engines,
hybrid powerplants, fuel cells, power electronics, high power
batteries, and lightweight materials, as well as improvements
in aerodynamics for trucks and buses.
Many of the technologies developed in the DOE program are
beginning to be incorporated in industry concept cars exhibited
at auto shows and some are being used in production vehicles.
In 2000, the three PNGV partner companies produced concept
vehicles that reached the 80 mpg target, although the
incremental vehicle cost is still too high to allow market
introduction today.
The DOE Buildings Programs seeks to improve the energy
efficiency of building in the residential and commercial
sectors. Included are more efficient building equipment and
materials such as furnaces, air conditioners, lighting systems,
materials for roofs and walls, and windows. Improvements are
sought in whole building design (systems integration) and
construction techniques. An important part of the overall
program is establishing federal minimum energy use standards
for appliances, and collaborating with industry and States to
develop new building energy codes.
The Weatherization Program, which is not an S&T activity,
provides grant funding for energy efficiency improvements to
low income houses. These efficiency improvements reduce
heating, cooling, and hot water energy use. Five million homes
have been weatherized to date.
The State Energy Program and the Community Program work with
state and local governments to identify local opportunities for
using energy more efficiently, and for incorporating
alternative fuels and renewable energy into local energy
markets. These federal, state, and local partnerships provide
an on-going means of helping consumers and businesses improve
their energy efficiency. Energy Smart Schools, Energy Star, and
Rebuild America are examples of efforts undertaken through
these programs.
DOE's Fossil Energy Program supports the development of
cleaner, ultra-high efficiency technologies for electricity
generation. This includes coal-fueled technologies with a goal
of 60 percent efficiency (versus the middle 30's for a new
plant today), and natural gas-fueled options with efficiencies
above 70 percent (versus the mid-50's for a new plant today).
Technologies include integrated coal gasification combined
cycle (IGCC) for central station applications, and advanced
fuel cells and fuel cell/turbine hybrids for distributed power
generation. Products are incorporated from the advanced
research program, including advanced materials for heat
exchangers and innovative membranes for separation of hydrogen
and carbon dioxide from other gases.
While these systems have not achieved widespread deployment,
the IGCC technology is being successfully demonstrated and
finding its way into niche applications. Advanced fuels cells
and turbines are being demonstrated and commercialized, and are
expected to achieve significant deployment in distributed and
hybrid applications in the next decade. In particular, the
General Electric 7H series turbines have just been deployed,
achieving 60 percent efficiency and substantial reductions in
NOx emission with no additional post-combustion
control technology.
The Climate Challenge Program is a joint partnership between
DOE and the electric utility industry that has been very
successful. To date, more than 600 electric utilities have
pledged to limit their net emissions by more than 170 million
metric tons of carbon dioxide equivalent in the year 2000.
Electric utilities represent about 85% of voluntary actions to
reduce, avoid or sequester greenhouse gases, as reported by the
Energy Information Administration under Section 1605(b) of the
Energy Policy Act. Results include: 1) Major reductions in the
potential cost of reducing greenhouse gas emissions; 2)
Increased participation by the electric utility industry
compared to other reduction approaches, resulting in additional
emission reductions.
DOE's supports research to improve the efficiency of
electricity transmission and major electrical devices through
activities such as the Superconductivity Partnership Initiative
and the Second Generation Wire Initiative. These initiatives
are aggressively pursuing the development of high temperature,
superconductivity electric equipment. Important advances have
been made in this area, including development of breakthrough
methods for making superconducting wires with over 10 times the
current-carrying capability of wires made with older methods,
and development and successful testing of the world's first
superconducting motor.
DOE supports the development of a range of electric
generating options that can be located near the point of
consumption (``Distributed Generation''). These technologies
can reduce overall GHG emissions through improved efficiencies,
use of waste heat, and reduced transmission losses. Distributed
generation technologies can be based on fossil or renewable
energy sources.
DOE supports the development of a wide range of non-fuels
solar and renewable energy technology, seeking to improve their
reliability, expand their applicability, and reduce their
costs. This includes solar electric and thermal energy, wind,
hydropower, and geothermal energy.
These activities have been very successful in bringing down
technology costs. For example, the cost of producing
photovoltaic modules has been cut in half since 1991, and the
cost of wind power has decreased 85 percent since 1980. Both of
these technologies have been commercially successful in certain
applications.
The Biofuels Program develops technology to enable and
support the expansion of an indigenous, integrated biomass-
based industry that will reduce reliance on imported fuels and
provide for productive utilization of agricultural residues and
municipal solid wastes. Included are the development of
superior biofuel feedstocks and processes for converting
feedstocks to electricity (both directly and by co-firing with
coal), as well as to biodiesel, ethanol, and hydrogen for clean
transportation fuels applications. This is supported by the
Biobased Products and Bioenergy Initiative, which is an
interagency initiative aimed at tripling the use of biobased
products and bioenergy in the U.S. by 2010 (compared with
2000.)
The Clean Cities Program assists in the demonstration and
adoption of alternative fuel vehicles, variously capable of
operating on biofuels (such as ethanol), natural gas, or
electricity. This increased fuel flexibility in the
transportation sector can provide a basis for reducing GHG
emissions associated with automobiles.
The Hydrogen Program is pursuing the use of hydrogen as a
source of energy for transportation, electricity, and heat that
has lower or no net GHG emissions (depending upon how the
hydrogen is produced). Hydrogen can be separated from fossil
sources or from water utilizing renewable energy. Today,
hydrogen is primarily produced from methane, and a by-product
of its production is CO2. Thus, alternative sources
of hydrogen production is a key focus of this program. Hydrogen
can be used to operate fuel cells in vehicles and buildings.
Success will require reducing the cost of producing, storing,
and using hydrogen, especially from renewable feedstocks (e.g.,
bioenergy) and resources (e.g., solar energy).
The Federal Energy Management Program (FEMP) is helping
federal agencies make cost-effective investments in energy
efficient and renewable energy technologies and resources.
DOE's Sequestration R&D Program focuses strictly on
greenhouse gas reduction. Along with improved efficiency and
lower carbon fuels, carbon sequestration provides an important
third pathway for greenhouse gas reduction. Since it is
completely compatible with the existing energy infrastructure,
its deployment would not lead to costly early replacement of
capital investments. The program is pursuing a suite of
technologies to capture and store greenhouse gases. Near-term
research focuses on technologies that provide multiple benefits
in addition to climate mitigation, such as soil conservation,
or production of high value energy products (enhanced oil
recovery or production of coal bed methane) to offset
sequestration costs. Longer term efforts are focused on a range
of technologies capable of permanently storing carbon dioxide
in geologic formations or other storage media.
DOE and its predecessor agencies have actively supported the
development and demonstration of civilian nuclear power
technologies. Each year nuclear power plants in this country,
which generate 20 percent of domestic electricity, avoid about
180 million tons of carbon emissions that would have come from
burning coal, gas, and oil. The Nuclear Energy Research
Initiative (NERI) invests in researcher-initiated ideas that
seek to reduce the impediments to further deployment of nuclear
power. NERI funds research in areas related to economic
competitiveness, safety, and non-proliferation. It also funds
research into fundamental engineering and scientific principles
that have broad power generation applications, such as the
innovative use of nuclear power to make hydrogen fuels for the
future U.S. economy.
The Nuclear Energy Plant Optimization Program (NEPO) invests
in technologies and ideas aimed at improving the reliability,
safety, and capacity of operating nuclear power plants. Nuclear
power has enjoyed steady gains in capacity and availability
over the past ten years, the NEPO program is intended to help
maintain this trend.
The Nuclear Energy Technologies Program is developing a
Generation IV Technology Roadmap to identify and establish R&D
leading to the deployment of improved reactor technologies in
the coming decades. The Roadmap will be completed in FY 2002.
This program also funds a study of the potential for deployment
of a special class of Small Modular Reactors to locations ill
served by the infrastructure required for coal, oil, or gas
fueled power plants. Finally, this program funds studies of the
potential commercialization of the plutonium burning modular
helium reactor and of the deployment of advanced light water
reactors.
Within the Office of Science, the Biological and
Environmental Research (BER) program has a long-standing,
comprehensive Global Change Research Program (GCRP) that
contributes to the interagency U.S. Global Change Research
Program (USGCRP). Since 1978, the Office of Science began
funding basic research needed to understand, model and assess
the effects of energy production on atmospheric carbon dioxide
and climate.
The BER activities seek to establish the detailed
scientific understanding necessary to predict the
effects of increasing greenhouse gases on the Earth's
climate and the potential consequences of human-induced
climate change. An important focus of the research is
on the effects of atmospheric properties and processes
on the Earth's radiant energy balance, including the
role of clouds. This is the key uncertainty in global
climate change science.
The research also seeks to elucidate the processes
affecting the atmospheric chemistry, transport, and
fate of energy-related emissions. This includes
improving scientific understanding needed to predict
and assessing the both effects of energy-related
emissions on air quality and atmospheric composition
and the quantities of carbon removed from or released
to the atmosphere naturally by terrestrial and oceanic
ecosystems. It also includes research to develop
methods or approaches to purposefully enhance carbon
sequestration in land and in the ocean and to
understand the potential environmental implications of
enhanced sequestration. BER also funds research to
characterize and sequence the genome of microbes that
could be used for producing alternative energy sources
(e.g., methane or hydrogen producing microbes, energy
from biomass) and for carbon sequestration. The
Department's energy mission, distilled to perhaps
overly simplistic terms, is to ensure adequate supplies
of energy at reasonable prices, with appropriate
environmental protection. Our climate program is a
subset of this larger mission and is focused on
improving our understanding of the dynamics of global
climate change, and on the developing and deploying
technologies that reduce net emissions of greenhouse
gas emissions.
CLIMATE CHANGE MITIGATION
Question 26. Mr. Secretary, Congress required a report of the
Administration's activities last year, and that was supposed to be
submitted with the FY 2002 budget. Please explain the status of the
report, and whether, and when, we can expect to see the report. This
report is critical for Congress' efforts to develop our funding needs
for climate- and energy-related programs.
Answer. Climate change mitigation technology research by the U.S.
Government is conducted at a number of agencies, including the
Department of Energy. In order to include all research activities, the
Office of Management and Budget prepares the report. The report is now
under preparation at the Office of Management and Budget, and we will
ensure you receive a copy as soon as it is completed.
Responses of Secretary Abraham to Questions From Senator Wyden
FAST FLUX TEST FACILITY (FFTF)
Question 27. The Energy Department's Record of Decision to
permanently deactivate the Fast Flux Test Facility (FFTF) reactor at
Hanford didn't just call for FFTF shutdown, it also selected a
Preferred Alternative of producing Plutonium 238 and medical isotopes
at facilities at Idaho National Engineering and Environmental
Laboratory (INEEL), and the Los Alamos, Oak Ridge and Brookhaven
National Laboratories. So if you were to overturn the FFTF shutdown
decision and restart the reactor for these missions which are now
assigned to DOE facilities in Idaho, New Mexico, Tennessee and New
York, as you are considering, wouldn't that involve canceling the work
just assigned to Idaho, New Mexico, Tennessee and/or New York? Which of
these facilities would you take the work away from in order to justify
FFTF restart?
Answer: As you know, I have suspended the deactivation of the Fast
Flux Test Facility (FFTF) in order to conduct a 90-day review of the
decision to permanently deactivate the facility to ensure that all
relevant factors affecting the decision to close the FFTF are
addressed. I recognize that the status of this facility has been at
issue for almost a decade and that the years of debate have produced a
wealth of information both in support of startup and operation as well
as permanent deactivation. However, I am aware that some experts have
suggested that there is new information on the need for the facility
for nuclear energy R&D, production of isotopes, and production of
plutonium-238 as a power source for space missions. Therefore, it is
necessary to examine this information before proceeding to implement a
final decision on the future of the facility.
Restarting FFTF would not adversely impact the ongoing missions of
the facilities you cited in your question. Rather, it would enable the
other significant multiuser research reactors--the Advanced Test
Reactor in Idaho and the High Flux Isotope Reactor in Tennessee--to
free up capacity for other isotope production and irradiation testing
missions. However, it is this issue, the need for and capabilities of
the FFTF versus the availability and capabilities of other facilities
to meet the needs of the country--that will be examined during the 90-
day review.
ENVIRONMENTAL MANAGEMENT PROGRAM
Question 28. A number of Attorneys General from Western States
wrote to you expressing their concerns about the impact of budget cuts
on cleanup of Hanford and other DOE weapons production sites. The
Attorneys Generals pointed out that the proposed cuts would seriously
hinder cleanup and could put DOE in violation of legally required
compliance schedules under cleanup agreements. These delays could not
only increase cleanup costs but could subject the Department to fines
and penalties. Is it a good use of scarce Department resources to waste
money paying higher cleanup costs and fines down the road for delays in
cleaning up sites, rather than spending the money needed to keep the
cleanup on track?
Answer. I am committed to complying with the Department's legal
obligations, including obligations under the Tri-Party Agreement that
covers cleanup at Hanford. I am also committed to establishing more
efficient plans to close the Department's sites more quickly.
When I assumed office, I was told that the schedule calls for
taking several decades, at a cost in excess of $200 billion, to
complete the cleanup. That is not good enough for the American people.
I believe there are plenty of opportunities for efficiencies and cost
savings in the Environmental Management (EM) program.
I have also directed a top-to-bottom assessment of the program with
the goal of strengthening project management, pursuing contracting
strategies that will help reduce costs and schedules, employing new
technologies, and sequencing work more effectively. Until we have
completed the assessment, with input from our regulators, and until the
Congressional appropriations process is final, it is premature to
speculate on what compliance issues we may face.
OFFICE OF RIVER PROTECTION--FUNDING FOR SINGLE SHELL TANKS
Question 29. Hanford's Office of River Protection is responsible
for: (a) preventing the nation's largest volume of high-level
radioactive wastes from leaking into the environment, reaching the
ground water and entering the Columbia River and; (b) converting these
wastes into glass for disposal. From DOE's Budget Request, it appears
that the former mission is being shortchanged by about $165 million.
These funds are for Tank farms Operations, which are supposed to safely
maintain, repair, upgrade, and survey Hanford's 149 single-shell waste
tanks. These tanks are between 40 and 60 years old. Many have leaked
wastes into the groundwater that have reached the river; and many are
in a serious state of deterioration. What was the rationale for these
cuts, given that the single-shell tanks pose the greatest risks of
leaks and contamination of the environment and Columbia River?
Answer. The President's FY 2002 budget request for tank farm
operations provides funding to maintain the safe operation of all the
waste tanks at Hanford, as well as funding upgrades to the retrieval
systems needed to support the on-time startup of the waste
vitrification facility. In particular, the single-shell tank interim
stabilization program is fully funded and will remain on schedule to
meet regulatory milestones.
FY 2002 BUDGET IMPACTS ON THE HANFORD RIVER CORRIDOR REMEDIATION WORK
Question 30. In reviewing the DOE's Budget Request for Hanford, it
appears that several environmental restoration and waste management
projects, such as stabilization and removal of highly radioactive spent
fuel near the Columbia River, and cleanup of contaminated areas also
near the river area, have been cut by some $120 million dollars. Given
that these problems pose the most imminent dangers to the environment
and the Columbia River in particular, could you explain the rationale
for these deep spending cuts? Are these decisions based on risk and
science?
Answer. The President's FY 2002 budget request places high priority
on funding high-level waste and high-risk nuclear material activities,
and provides full funding for the K-Basins Spent Nuclear Fuel Project
and for stabilization activities at the Plutonium Finishing Plant. Some
lower-risk environmental restoration activities, including remediation
work along the Columbia River, will be deferred. Other remediation work
along the Columbia River will still be completed, including completing
remediation of nine release sites, decommissioning one facility, and
disposing of up to 215,000 cubic meters of contaminated soil and debris
at the on-site Environmental Restoration Disposal Facility. In
addition, Secretary Abraham has directed a top-to-bottom review of the
Environmental Management Program to ensure that the best available
technologies and business practices are applied to cleanup work across
the DOE complex. The study will focus on efficiencies and cleanup
strategies that will allow us to accomplish lower-priority work at the
site on the most expeditious schedule possible.
Responses of Secretary Abraham to Questions From Senator Cantwell
OFFICE OF RIVER PROTECTION--FUTURE FUNDING FOR THE WTP
Question 31. I think we all agree that cleaning up the high-level
radioactive waste in the old and decaying underground storage tanks
absolutely must be done to protect the Columbia River, ground water and
public health in general. The Administration and DOE are suggesting in
this budget the $814 million in FY02 is adequate to both operate the
tank farms and do the necessary construction work to have a
vitrification plant operating by 2007, as previously agreed. The need
for those activities is actually in the neighborhood of $1.07 billion
this year. In order to adhere to the schedule as closely as possible--
and were this year's figure to stay at $814 million--the latest
estimates indicate the absolute minimum amount of funding necessary for
FY03 would be almost $1.2 billion ($1.194 billion, to be precise). That
would seem to be a huge--albeit necessary--increase, if this year's
funding remains at $814 million. Is the Administration committed to
seeking that level of funding in FY03 if this year's budget is limited
to the figure originally requested by the President?
Answer. DOE is committed to moving ahead with the design and
construction of the Hanford vitrification plant and beginning
radioactive waste treatment by FY 2007. At the requested funding level
of $500 million in FY 2002 and with adequate funding in FY 2003 and
beyond, meeting the 2007 milestone for beginning hot-waste processing
is expected to be achievable.
office of river protection--construction of waste treatment plant
Question 32. If not, what assurances can you give me that DOE can
complete the necessary vitrification facility by 2007, according to the
schedule included in the legally-binding Tri-Party Agreement?
Answer. Assuming DOE receives adequate out-year funding, the
construction of the Waste Treatment Plant is on schedule to be tested
using radioactive feed in 2007. The construction contractor, Bechtel
National, Incorporated, is under an incentive contract to meet this
milestone.
office of river protection--building new double shell tanks
Question 33. Given this apparent uncertainty on the schedule for
constructing the Waste Treatment Plant--not to mention the serious
environmental hazard Hanford poses, which grows more acute with the
passage of time--is DOE considering building new double-shell tanks to
replace the many single-shell tanks at the site that are already well
past their design life--and a third of which are leaking? This strikes
me as an unnecessarily inefficient measure when the real solution--to
glassify the waste--only needs to be funded adequately.
Answer. The Department is not considering building new double-shell
tanks to replace the single shell tanks. The Department agrees that
vitrifying waste is the best solution to the Hanford waste problem and
is proceeding with that approach as a budget priority. The State of
Washington, in its regulatory role, continues to require the Department
to study the possible installation of additional double-shell tanks as
a contingency against future single-shell tank failures and/or to allow
the waste to be moved out of the single-shell tanks prior to the
processing of these wastes in the vitrification plant. As a point of
clarification, all but two of the 67 suspected or known leaking tanks
have been stabilized by removing the pumpable liquid and at present,
there are no known leaks in the single shell tanks at Hanford. The
pumpable liquid in the remaining two tanks with suspected leaks, is
currently being removed.
fy 2002 budget impacts on the hanford river corridor remediation work
Question 34. Aside from the waste treatment/vitrification issue,
there is also clean-up underway along the Columbia River. This
remediation. effort is proceeding well, yet the Administration's budget
request cuts the program well below the level necessary to support the
Hanford 2012 Vision project. Please explain your plans to keep this
progress underway so that the Hanford river corridor clean-up can be an
example of a closure project, a concept that you support.
Answer. The Department's FY 2002 budget request places high
priority for funding on high-level waste and high-risk nuclear material
activities. Lower-risk and lower-priority environmental restoration
activities, including remediation work along the Columbia River, will
be deferred based on lower environment, safety, and health risks. At
the requested funding level, remediation work along the Columbia River
will continue, including completing remediation of nine release sites,
decommissioning one facility, and disposing of up to 215,000 cubic
meters of contaminated soil and debris at the on-site Environmental
Restoration Disposal Facility. The River Corridor 2012 plan was
envisioned to combine all work done along the Columbia River
(principally in the 100- and 300-areas) under one contract and achieve
River Corridor cleanup and most area closure by 2012. The Department is
currently working on developing a new contract strategy for achieving
cleanup of the River Corridor, and is taking into account input from
potential bidders, the FY 2002 funding levels, and the top-to-bottom
review of the Environmental Management program. This review will focus
on ways to complete cleanup more cost effectively and proceed on the
most expeditious schedule possible.
BUDGET FOR CONTRACTS
Question 35. You've suggested that new, highly incentivized,
performance-based contacts mechanisms--such as those in place at Rocky
Flats (CO) and Fernald (OH)--are the answer to cutting costs and clean-
up time at DOE sites. Similar contracts are now in place at Hanford
with Fluor Hanford, CHG (CH2M-Hill) and Bechtel-Washington Group. But
in order for these new contracts to work as designed--to ensure best
commercial practices--they have to be adequately funded. The
administration's proposed budget simply does not adequately fund these
contracts. How can DOE expect these new contracting methods to work
without the proper budget support?
Answer. The contracts you reference represent the most recent
innovative contracting strategies in the Department's implementation of
performance-based contracting. We believe performance-based contracts
that hold contractors accountable for performance and provide
incentives to accelerate work and reduce costs are effective tools for
accomplishing the Secretary's challenge to every program in the
Department to find ways to become more efficient. Although the scope of
work to be accomplished may need to be adjusted to reflect available
funding, the basic structure and drivers that encourage efficient
contractor performance remain intact.
ENVIRONMENTAL MANAGEMENT PROGRAM
Question 36. I was concerned to learn you have sent letters to the
governors of states that harbor DOE clean-up sites, suggesting that
compliance agreements like the Hanford Tri-Party need to be reexamined
and made more flexible. Could you explain the need for such a
renegotiation?
Answer. The letter I sent to the Governors pointed out that the
current compliance framework was developed more than a decade ago, and
noted that we have all learned a great deal during the ensuing years. I
therefore invited the Governors to join the Department in examining
ways to improve how we do business, including an examination of the
compliance framework. My goal is to ensure that we have the most
effective plans to close the Department's sites more quickly. It is
premature to conclude that specific agreements would need to be
amended, although I recognize that is a possibility.
HANFORD TRI-PARTY AGREEMENT RENEGOTIATIONS
Question 37. The Hanford Tri-Party Agreement has already been
altered over 250 times since 1990. Nearly all of these changes have
reflected technical difficulties and agreement on new work priorities.
The State of Washington has recently agreed with DOE's innovative
approach to cleanup along the Columbia and supported these new,
incentivized contracts at Hanford. Given this history, what incentive
does the State of Washington have to renegotiate the Tri-Party
Agreement, when it appears the Administration fails to support Hanford
innovations with adequate funding?
Answer. I share your concern that the Department needs to find more
innovative and cost effective ways to complete the Hanford cleanup. I
appreciate the efforts of the Hanford parties, including the State of
Washington, to work to overcome obstacles and challenges. I also
appreciate the State of Washington's willingness to work with the
Department to find new and innovative ways, such as the Hanford Site
Columbia River Corridor Cleanup Plan (2012 Plan), to complete the
cleanup of the site more effectively. Involvement by the State in the
Department's top to bottom assessment of the Environmental Management
program will provide an opportunity to share results of efforts to date
with the new Administration. In addition, it will provide opportunities
to identify potential new improvements that could help ensure
sufficient funding to implement cleanup strategies. We hope the State
will continue to be open to whatever changes may be needed to improve
operations and meet our obligations.
COMMUNITY TRANSITION
Question 38. Another significant element of a clean-up program is
worker training and community transition. It's important as we clean up
these sites that we leave a legacy for the communities, which made
substantial sacrifices to produce weapons-grade nuclear material.
Please explain your commitment through DOE's Worker and Community
Transition program to ensure that we do right by our local communities.
Answer. The Department has made a significant commitment to both
the contractor worker affected by the restructuring process and to host
communities around the complex. The Department's Office of Worker and
Community Transition, together with program offices and field
organizations, has already facilitated the orderly separation of some
50,000 employees. Likewise, the Department has assisted ``energy
communities'' in creating approximately 25,000 new private sector jobs
to date.
The Department's commitment to the contractor workforce, and to the
communities in which they live, will continue. Programs will target
those communities where restructuring activities are the most
pronounced and where communities are deemed to be at greatest risk or
without access to other development resources.