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2002
NATIONAL ENERGY POLICY—
REPORT OF THE NATIONAL ENERGY
POLICY DEVELOPMENT GROUP—
ADMINISTRATION VIEW
HEARING
BEFORE THE
COMMITTEE ON SCIENCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
JUNE 21, 2001
Serial No. 107–44
Printed for the use of the Committee on Science
Available via the World Wide Web: http://www.house.gov/science
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COMMITTEE ON SCIENCE
HON. SHERWOOD L. BOEHLERT, New York, Chairman
LAMAR S. SMITH, Texas
CONSTANCE A. MORELLA, Maryland
CHRISTOPHER SHAYS, Connecticut
CURT WELDON, Pennsylvania
DANA ROHRABACHER, California
JOE BARTON, Texas
KEN CALVERT, California
NICK SMITH, Michigan
ROSCOE G. BARTLETT, Maryland
VERNON J. EHLERS, Michigan
DAVE WELDON, Florida
GIL GUTKNECHT, Minnesota
CHRIS CANNON, Utah
GEORGE R. NETHERCUTT, JR., Washington
FRANK D. LUCAS, Oklahoma
GARY G. MILLER, California
JUDY BIGGERT, Illinois
WAYNE T. GILCHREST, Maryland
W. TODD AKIN, Missouri
TIMOTHY V. JOHNSON, Illinois
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MIKE PENCE, Indiana
FELIX J. GRUCCI, JR., New York
MELISSA A. HART, Pennsylvania
J. RANDY FORBES, Virginia
RALPH M. HALL, Texas
BART GORDON, Tennessee
JERRY F. COSTELLO, Illinois
JAMES A. BARCIA, Michigan
EDDIE BERNICE JOHNSON, Texas
LYNN C. WOOLSEY, California
LYNN N. RIVERS, Michigan
ZOE LOFGREN, California
SHEILA JACKSON LEE, Texas
BOB ETHERIDGE, North Carolina
NICK LAMPSON, Texas
JOHN B. LARSON, Connecticut
MARK UDALL, Colorado
DAVID WU, Oregon
ANTHONY D. WEINER, New York
BRIAN BAIRD, Washington
JOSEPH M. HOEFFEL, Pennsylvania
JOE BACA, California
JIM MATHESON, Utah
STEVE ISRAEL, New York
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DENNIS MOORE, Kansas
MICHAEL M. HONDA, California
C O N T E N T S
June 21, 2001
Witness List
Hearing Charter
Opening Statements
Statement by Representative Sherwood L. Boehlert (NY–23), Chairman, Committee on Science, U.S. House of Representatives
Written Statement
Statement by Representative Ralph M. Hall (TX–04), Minority Ranking Member, Committee on Science, U.S. House of Representatives
Statement by Representative Roscoe Bartlett (MD–06), Member, Committee on Science, U.S. House of Representatives
Statement by Representative Bob Etheridge (NC–02), Member, Committee on Science, U.S. House of Representatives
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Statement by Representative Constance Morella (MD–08), Member, Committee on Science, U.S. House of Representatives
Statement by Representative Nick Smith (MI–07), Member, Committee on Science, U.S. House of Representatives
Panel
The Honorable Spencer Abraham, Secretary, U.S. Department of Energy, Washington, DC
Oral Statement
Written Statement
Biography
Panel Discussion
Chairman Boehlert's Evaluation of the Report of the National Energy Policy Development (NEPD) Group
Interaction Between the NEPD Report and the Budget
Efficiency Standards: Air Conditioning and Other Appliances
DOE Program Reviews and the FY 2002 Budget
The Need for More Research
Global Climate Change Initiatives
Outreach to Minority Groups
Educating the Public on Energy Issues
Technology Deployment
Scientific Input to the NEPD Plan
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NEPD Report and the Budget
The Role of Research Development and Technology Deployment
Selection of the Presidential Science Advisor
GAO Inquiry into DOE's Budget
Regulation and Standards Review
DOE's Research Plan
Air Conditioning Efficiency Standards
Source of NEPD Estimates
DOE Emphasis on Advanced Technologies
Nuclear Energy in the NEPD Plan
Partnership for a New Generation of Vehicles
Off-shore Drilling in Sensitive Areas
DOE's R&D Budget
New York State Clean Energy Initiative
Hydroelectric Power Issues
NEPD Plan and National Goals: Fuel Cells, Oil Policy
NEPD Plan Background
Net Metering
Nuclear Energy
The Role of Bio-fuels in the National Energy Policy
The Role of Coal in the National Energy Policy
Potential for Energy Conservation
California's Energy Situation
Renewable Energy
Energy Research and Development
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Appendix 1: Answers to Post-Hearing Questions Submitted By Members of the Subcommittee on Energy
Republican Member Questions
EIA's Estimate of Annual Energy Efficiency Improvements
DOE Budget Review
Past Energy Policy Mistakes
Harmonizing Energy Production and Environmental Protection
Effect of Executive Order 13211 and Executive Order 12866
Implementation of Non-Legislative Actions
H.R. 4
Renewable Energy Partnership Program
Appliance Standards Program
Nuclear Energy
Emissions Controls on ''3 P's''
Trends in Gasoline Prices
EPA Public Health and Safety Standards
National Energy Policy Report
Energy Capacity vs. Resource Challenges
Looking Beyond 2020
Oil Suppliers and Report Forecast
U.S. Oil Production
Hybrid and Alternate Fuel Vehicles in DOE Fleet
Hydrogen and Fusion Energy
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Responses to Tightening World Oil Markets
Democratic Member Questions
National Energy Policy Development Group
Science Specialists Involved in Development of NEPD
Departmental Participation in Vice President's NEPD
Energy Intensity Declines
Number of Power Plants Needed Over Next 20 Years
''Scenarios for a Clean Energy Future'' Report
1997 PCAST Report
Participation in NEPD
Previous National Energy Strategy
FY 2002 Budget
Priorities of NEPD
Outcomes of NEPD
FY 2002 Budgets for Renewable Energy and Conservation Research
Research and Development Priorities of the NEPD
Global Climate Change Research
Reducing Greenhouse Gas Emissions
Influencing OPEC
Gasoline Price Gouging
Climate Change Technology Initiative
Clean Power Initiative
Final Report of the Task Force Against Racial Profiling
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Appendix 2: Additional Material for the Record
DOE Public Meetings
Executive Order 13211
Executive Order 13212
Fact Sheet on Cost and Payback of Air Conditioning Equipment
''Nuclear Power Is a Clean Solution,'' by Representative Roscoe Bartlett, ROLL CALL, Monday, June 18, 2001, pp. 15–16.
Task Force Against Racial Profiling, Implementation Team Report, U.S. Department of Energy, January 2001
NATIONAL ENERGY POLICY—REPORT OF THE NATIONAL ENERGY POLICY DEVELOPMENT GROUP—ADMINISTRATION VIEW
THURSDAY, JUNE 21, 2001
House of Representatives,
Committee on Science,
Washington, DC.
The Committee met, pursuant to call, at 10:10 a.m., in Room 2318 of the Rayburn House Office Building, Hon. Sherwood L. Boehlert (Chairman of the Committee) presiding.
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Chairman BOEHLERT. The hearing will come to order.
It is a pleasure to welcome Secretary Abraham to the Science Committee for today's hearing on the Administration's energy plan.
This is the last hearing we will have on the plan before the Committee begins marking up its portion of the House energy package. We have already had two full Committee hearings and numerous Subcommittee hearings to get testimony from witnesses outside government from across the political spectrum, and today, at last, we will hear directly from the Administration.
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It is especially appropriate that we hear from Secretary Abraham because the package we will mark up will consist primarily of authorizations for existing and new DOE programs. Our bill will provide significant funding for research, development and demonstration across the full range of energy sources—renewables, fossil and nuclear—and perhaps most importantly, for conservation.
In short, our bill will reflect the balance that I fear is sorely lacking in the Administration's own proposals.
I have made no secret of my reservations about the Administration's energy plan. The general tone of the energy report was soothing and balanced, but the specific recommendations were often disconcerting and biased toward production. It is up to Congress to write new lyrics to fit the report's pleasant tune.
For example, the energy report talks about the importance of research on renewables and conservation, but provides no funding to carry out such programs. Happily, on a bipartisan basis, the House today will begin to reject proposed budget cuts in these areas.
The report calls for a review of programs in renewables and conservation—and a review is certainly warranted—but no such review was requested in other research areas, such as clean coal, which raise at least as many management questions. And I say that as someone who supports clean coal funding.
The report calls for a more stringent efficiency standards on appliances, yet the Department is back-pedaling on new standards for air conditioners.
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And it is difficult to reconcile the energy report with some of the President's most recent statements on climate change.
I hope the Secretary today will help us address some of these contradictions. I might add that the contradictions are not limited to issues under DOE's purview. Recent statements on CAFÉ standards, for example, have created much confusion as to where the Administration truly stands on this essential issue.
But despite all these concerns, I remain optimistic. The good news is that the Administration has finally gotten the Nation to focus on energy policy after too many years of neglect. And the plan itself is a work in progress.
I look forward to working with the Administration and with my colleagues on both sides of the aisle and across the ideological spectrum to craft an energy policy that will address supply and demand, energy and the environment. We can do that, and we must. The American people expect that—as the poll in today's New York Times once again makes abundantly clear.
Energy is too important an issue for each of us to just retreat to our ideological corners. We need to be pragmatic and comprehensive and bipartisan. And I hope this Committee can lead the way in showing the Congress how to do that, just as did last week on education.
Mr. Hall.
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[The prepared statement of Sherwood L. Boehlert follows:]
PREPARED STATEMENT OF CHAIRMAN SHERWOOD BOEHLERT
I want to welcome everyone here as we continue our review of the President's National Energy Policy report.
We'll be having more hearings in June, both to get into the details of the report and to hear more viewpoints, and then we would expect to report out legislation by the end of next month. Our legislative package would then be folded into the planned comprehensive House energy bill slated to come to the floor in July.
But today we're just at the threshold of that process, and so we wanted to get a broad overview from groups with expertise in each of the areas the report emphasizes—fossil fuels, alternative fuels, efficiency and environment. And while I'm sure the conversation today will range over a wide terrain in terms of both issues and ideology, I'd like to focus as much as possible on the issues within our Committee's jurisdiction—namely, research, development and demonstration programs.
Within our jurisdiction, the report offers many ideas on which people from all perspectives can agree, and yet many of these recommendations have been overlooked in the initial overheated debate. Good examples are the report's call for increased research spending and its strong endorsement of both alternative sources of energy and conservation. We need to focus at this hearing on how to turn those general, if positive words into real deeds that will truly make a difference in our energy future.
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That's not to say, of course, that I approve of everything in the report. It's no secret that I oppose drilling in the Arctic National Wildlife Refuge (ANWR) and that I question the need for 1,300 new power plants. And the environmental recommendations in the report include both daringly progressive new proposals and disappointingly shopworn bad ideas.
But overall, the report is much more balanced and much more comprehensive than had been anticipated or than has been acknowledged. I want to use today's hearing to see where we can find consensus on how our Committee can help maintain that balance as the report is reduced to legislation.
Mr. HALL. Thank you, Mr. Chairman, and welcome, Mr. Secretary. Thank you for being here. I think this is your first appearance before this Committee. And I appreciate personally and publicly your interest and willing to work with this Committee to put together an energy agenda.
Now the Committee is anxious to begin the process of putting together legislation that will meet the energy needs of this country. We are all, and we all give a mouth service to that. And all—you read articles every day about the importance of it.
I think we have heard from a number of representatives of your department over the last few years. We have talked to them personally, we have corresponded with them, they have talked to people on this Committee. The difference in them and you is, though, they did not really speak for the President. And I know that we are visiting with one today that can speak for him and will speak for him. And, therefore, they could not give us very much guidance for the future. But we are in desperate need of guidance, and we are in desperate need of some changes in that that has been recommended.
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With your appearance here, I hope that this Committee begins what I hope will be a constructive process of initiating new programs and certainly redirecting others that are already in existence that can provide affordable energy and ways to save it for the next 20 years. And I am willing to wait and see just whether the benefits of our work 20 years from now, this is my 21st year here. And you know, I think 41 is too long to wait. But I am willing to wait a while. And I would like while I am here to see some changes and see some remarkable changes and the thrust for energy and the need for energy satisfying the problem that we are a major state in this country, second of course to Texas, is having.
And I have to say, though, that I have been disturbed by the Administration's budget request. All of us are. I think you are somewhat. I hope you are because the cuts in fossil fuels, R&D and the efficiency and renewable program just do not seem to square with the way I almost know the President feels, and the Vice President. And I was pleased to see that the Vice President's task force National Energy Policy Report seemed to provide more justification for the continuation of these programs at current levels even. But I am still concerned, as you know I am, about the contradictions I hear between policy and budget.
And while this is not a matter that will be before this Committee, I was a little surprised that Cheney force did not recommend tax incentives for domestic oil and gas production. We can and should provide the R&D support for them to develop domestic resources, off-shore and on-shore, in Alaska and in the lower 48 states. And I am not going into my tirade about warning, what will happen if you do not of $4 gasoline and body bags by sending our kids off to a country to fight for energy when we have plenty right here, if we could but get it together.
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It will only be marginally helpful if this domestic independent oil and gas industry which produces over 70 percent of the oil and gas in the country cannot afford to use the new technologies that emerge from Federal research and development to get the remaining and hard to get hydrocarbons out of the ground. I am talking about tertiary and then more complicated methods like the deep and the ultra deep areas that we do need to investigate.
There are disconnects in policy for coal, too. And we cannot savage the R&D programs in favor of the demonstration programs. We have to have technologies coming through the R&D pipeline to demonstrate. I know you know of or you probably know personally John Mecatta, the professor from the University of Texas, that said at one time that there is enough coal if we could but mine it in the mid-section of this country to double the total output of the OPEC nations, all combined, if we could but mine it. And we have to get ourselves with the surplus we have of finding the right technology.
Coal can be the savior, even to me, a fossil fuel's guy. We need to look at all of them. We cannot exclude any of them, solar, you name them. All of those that environmentalists and others won't. I'm for those, too. I think you are going to have to rally around fossil fuels, though, because that is where you are going to find the answer immediately. And we need an answer immediately.
This Administration's new and there is time to work these things out. But I hope we do not fall into the trap of eating our seed corn just to save a few dollars. Our energy future is just too important.
Once again, Mr. Secretary, I welcome you to the Committee and look forward to working with you in the months ahead. Mr. Chairman, I thank you and I yield back my time.
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[The prepared statement of Representative Roscoe Bartlett follows:]
PREPARED STATEMENT OF REPRESENTATIVE ROSCOE BARTLETT
I would like to thank the Chairman of the Science Committee, Mr. Boehlert for calling this important hearing today. I believe that today's hearing will shed some light on several issues of critical importance to this nation's future economic prosperity. Our witnesses today demonstrate the difficulty of putting together a plan that makes everyone happy. Many of us on the Hill understand the importance of shifting to the increased use of renewables as part of a balanced portfolio, and I believe the plan makes a solid attempt to address that transition. We, on Capitol Hill, should continue to champion common sense and cost-effective renewable technologies for the future. As such, I will continue to support robust R&D efforts in this area and encourage the adoption of appropriate renewable energy technologies.
[Added per JD—needs rework.. . .I have just returned from a press conference highlighting the importance of conservation and efficiency in the energy policy mix. I believe the Administration deserves credit for its belated recognition of the importance of conservation and efficiency. In a personal note, I drive a Prius, when my wife let's me. For those of you still unfamiliar with this car, it is a highly efficient Toyota hybrid-electric vehicle that gets me at least 45 miles-per-gallon on my commute to DC.]
However, I understand that there is another critical question involved in determining a proper energy strategy, and that is how we get our products to market, our employees to work and keeping our homes heated and cooled over the next decade or two. That calls for a balanced approach. We need to examine our energy needs, examine how we can reduce these needs through efficiency or conservation, make pragmatic use of renewables and then examine what energy technologies best address the balance. I believe that we will need to increase the use of nuclear energy, but we must not dismiss the importance of coal, natural gas and petroleum in the short and intermediate term as we begin the transition to a sustainable future.
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We must also continue to harness the nation's technological genius to make sure that when we use energy, we do so in a way that minimizes the environmental effects—whether that's improved drilling technologies for oil, gas and geothermal energy, or making continued improvements in nuclear safety and efficiency. Clearly, we face some serious challenges, but if we apply our intelligence, we shall prevail.
[The prepared statement of Representative Bob Etheridge follows:]
PREPARED STATEMENT OF REPRESENTATIVE BOB ETHERIDGE
Thank you, Mr. Chairman. I commend you for holding this hearing on this most important issue that effects every American and our Nation's economic strength. I am pleased that we finally have a witness from the Administration who can speak authoritatively regarding the President's energy plan.
Mr. Secretary, I have reviewed with great interest the recommendations contained in the eight chapters of report by the National Energy Policy Development (NEPD) Group, to which I believe you belong. While I appreciate this Administration's initiative in this area, I find parts of the report disturbing, especially in light of subsequent actions taken by the Administration.
In Chapter Five in the Summary of Recommendations, the NEPD Group recommends that the Administration re-examine the ''current federal legal policy regime'' to determine if changes are needed regarding energy-related activities and the sitting of energy facilities in the coastal zone and on the Outer Continental Shelf (OCS). Now, this sounds like the Administration is going to look at the possibility of drilling off the coast of North Carolina. Because, if a moratorium on drilling in the Atlantic exists and you say you will reexamine current policy to look at potential changes, the logical conclusion is that you are going to look at lifting the moratorium.
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On May 18th when Interior Secretary Norton was visiting my district, she gave public assurances that there currently were no plans to overturn the drilling moratorium. However, shortly thereafter, multiple press reports strongly indicate that the advisory policy committee on the OCS plans to recommend to the Mineral Management Service in the Interior Department that the moratorium be lifted.
I know these actions did not occur in your Department, but you were part of the Group that put the President's plan together and you are the Secretary of Energy.
This Administration's oil-heavy lineup and this plan's drill-drill-drill focus cause me great concern. I don't want to see oil platforms off the coast of North Carolina. My constituents don't want to see an oil spill lapping up on the beaches of the Cape Hatteras Lighthouse. I want to put this Administration on notice that you'll have to go through hell and high water to drill of our coast. We've heard a lot of double talk on this issue, so I want to state to you directly that this Administration will allow drilling off North Carolina's coast over my dead body.
As a key member of the Group that developed the energy plan can you answer authoritatively and unequivocally whether the President's report on energy recommends even looking into the possibility of drilling off the Atlantic coast? And will you guarantee for the people of North Carolina that this Administration will uphold the drilling moratorium through the end of President Bush's term?
[The prepared statement of Representative Constance Morella follows:]
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PREPARED STATEMENT OF REPRESENTATIVE CONSTANCE MORELLA
Mr. Chairman, thank you for holding this hearing this hearing to address the energy crisis facing this country and the proposals the administration has made in response. Four weeks ago, we had the occasion to hear from outside groups on the report issued by the National Energy Policy Development Group. Now we have the chance to take the measure of the administration itself.
I also want to thank Secretary Abraham for testifying before us today. As part of the policy group which developed the administration position, you should be complimented on your willingness to break new ground in tackling our nation's most pressing issues.
The report does an excellent job cataloguing the current state of affairs, which the crisis in California has brought into sharp relief. While energy use has increased 30 percent over the last three decades, production has remained flat. This trend cannot continue. America's growth and prosperity demands an affordable supply of energy and we must find a way to meet our needs.
As such, a balanced approach is needed. Increased production of fossil fuels, improved infrastructure, and additional refining capacity are certainly important, but conservation, improved efficiency, and renewable or alternative sources of energy must also play a prominent role in our national energy policy. I am concerned about the level of commitment to these common sense reforms. To be fair, the President has indicated his support of these ideas and his report makes specific references and bold suggestions to address these concerns. However, after the pre-report press releases, the repeal of the air conditioner standards, and the substantial budget cuts to renewable energy and efficiency programs and research, I do not think our skepticism is completely unwarranted. Hopefully, Secretary Abraham will address these concerns in his testimony today.
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I am also concerned about the timetable of the legislation coming out of this report. While I applaud the administration for its courage in presenting concrete solutions to difficult problems, I am not prepared to simply accept their conclusions. Congress has both the duty and the obligation to careful review the administration's findings and act appropriately; rejecting some, accepting others, and adding where needed. While I agree that we are facing an energy crisis, the situation is not so dire that me must rush headlong into a solution. Such action may lead us to a cure that is worse than the disease. Energy production and use must be carefully managed to take full advantage of the benefits it offers while mitigating the damage overuse and pollution can cause. We must proceed with caution.
My comments may sound a bit combative, but I do not mean them to be. The President has shown great leadership on this issue and I am prepared to work with him to enact comprehensive energy reform. I do have some concerns about certain aspects of the current proposals, most notably oil exploration in the ANWR, but there is much common ground. The administration has indicated it is ready to have an open and honest discussion about its plan. Secretary Abraham is here to fulfill that promise. We need to rise above the partisan rhetoric and have a meaningful conversation about the hard choices we face in crafting a national energy policy. America deserves as much.
[The prepared statement of Representative Nick Smith follows:]
PREPARED STATEMENT OF REPRESENTATIVE NICK SMITH
Thank you Mr. Chairman, first I would like to welcome Secretary of Energy Spence Abraham, the former Senator from my home state of Michigan. Secretary Abraham is an exceptional thinker who is extremely knowledgeable about energy and the many ways in which it affects the different parts of our Nation. He brings with him his experience from the previous Bush administration and as a U.S. Senator along with his vision and strong work ethic. His leadership is moving the Energy Department in the right directions and I am sure that he will continue to serve the Nation well and will see us through this energy crisis.
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When I served on the Presidential Oil Policy Commission during the Arab oil embargo in the 1970s, we struggled with how to reduce our Nation's dependence on foreign supplies of oil. At that time, about 36 percent of our Nation's petroleum needs were met by foreign imports. In 2000, U.S. petroleum production represented the lowest annual crude oil output since 1950, leaving imports to supply 57 percent of US. petroleum demand. Continued dependence on petroleum imports is projected by the Energy Information Agency (EIA) to reach 64 percent in 2020. This trend threatens the economic health and security of our Nation.
Equally disturbing is the fact that Federal regulations have made it virtually impossible to build new refining capacity. The EIA has found that ''financial, environmental, and legal considerations make it unlikely that new refineries will be built in the United States.'' Refineries today are running at 96 percent capacity when in 1981 they were running at 69 percent capacity. In the Midwest, we consume more gasoline than refineries in the market can produce. The excess demand is met through pipeline shipments brought into the region. This leaves states such as my home state of Michigan extremely vulnerable to even the slightest disruptions in pipeline shipments and refining capacity. We saw this last year when the Wolverine pipeline in Jackson shut down and again last month when the refineries where switching over to the dozen or so ''boutique blends'' of gasoline that are required by environmental regulations in our area. In both instances, the supply of gasoline dropped sharply and the prices skyrocketed during the switch over to the summer blends. Our regulations hit my constituents right in the wallet.
That is why I have introduced legislation to provide some relief consumers. One of those bills, H.R. 1834, would require the Department of Energy to review existing energy regulations to determine where they could be streamlined to reduce prices and I am looking forward to hearing from Secretary Abraham on that proposal.
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For the long term, we need to look to a variety of energy sources so that we won't be hit so hard by sudden changes in the supply of any one form of energy. Back in the 1970s alternate and renewable energy resources were not a significant source of energy for our Nation. Today they provide 7 percent of U.S. energy demand. With incentives and R&D focused on advanced materials and designs that will improve the economic viability of these energy sources, they can generate even more of our energy needs for the future.
Biofuels can be used either as fuels or fuel additives that reduce emissions while providing alternatives for farmers and energy consumers alike. Fusion research has proven that the source of energy that powers the Sun can be harnessed here on Earth as an unlimited supply of energy. Research must now work toward making this energy option affordable and reliable. Photovoltaics can be a source of distributed power in regions with the right climate and can be coupled with hydrogen technologies to ''transport'' this energy to areas where the sun is less reliable. The very best photovoltaics available today are prohibitively expensive and research must aim at reducing these costs. Wind power is already a competitive source of energy in many areas. This renewable energy source could provide a real boost in remote and rural areas. Transmission is still a huge issue for energy. Directing power to where it is needed and minimizing losses along the way will take research and some clever application of new technologies. All of these important energy resources require leadership, to focus our investments and enable viable energy options.
I applaud President Bush, Vice President Cheney, Secretary Abraham and the entire Energy Policy Group for taking a thoughtful look at this serious problem. Our Nation's energy security has been ignored for too long. The recommendations of their report frames a thorough and balanced energy strategy that will keep our economy moving without the austere restrictions on individual freedoms that some in this body have proposed. I look forward to working with Secretary Abraham and the President to implement this long-term strategy.
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Chairman BOEHLERT. Thank you very much. Mr. Secretary, welcome. It is a pleasure to have you here on several fronts. One, you are a good friend of long-standing. Secondly, former colleague. And I won't make note of the fact that you are here under some pressure because your Tigers beat my Yankees two out of three. And that makes me very uncomfortable.
But let us get on with your testimony.
STATEMENT OF HON. SPENCER ABRAHAM, SECRETARY OF ENERGY
Secretary ABRAHAM. Mr. Chairman. Thank you. I talked to the Tigers this morning and they are not particularly concerned about how well I am doing here today. But they are fairly pleased with themselves. But thank you for having me. It is good to be here with a number of friends. And of course, on this particular committee, a number of former Michigan congressional colleagues on both sides of the aisle. And I am glad to have a chance to testify.
Although every challenge in the energy area before us is a significant one, the promising developments in science and technology encourage us, at least, to believe that we can address them in a way that balances our concerns for environmental protection with our need for enhanced domestic supplies of energy.
And I am particularly pleased to come before this Committee to share with you my strong personal commitment to the advancement of science through government investment.
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As a Member of the Senate, in addition to working on a variety of high tech issues with a number of members of this Committee, I was proud to sponsor the American Competitiveness Act, which launched over 20,000 new scholarships in science and math for graduate and undergraduate students, in the area in which we still have a long way to go. Some 60,000 students have benefited from that scholarship effort. And as Secretary of Energy, I am dedicated to expanding our work in science.
That work, as I noted, will play a major role in meeting today's energy challenges. Science and technology can help us increase supply in an environmentally responsible manner. It can help us boost efficiency and cut, as a result, energy demand. And together science and technology can help us solve the very serious problems we have in this country posed by our aging energy infrastructure.
So I am truly looking forward to working with the Science Committee. I am realizing the great potential science holds for helping us to address American's energy challenges. And I would be glad to discuss all of this in greater detail in the question and answer session. But what I would like to do is just take a moment to provide the Committee with a brief overview of the President's energy plan.
Today America consumes 98 quadrillion BTU's, or quads as they are called, a year in all forms of energy. Our domestic energy production is 72 quads. The imbalance between energy demand and domestic energy production is made up with imports. Between now and the year 2020, our energy demand is projected to rise significantly. If the energy intensity of the United States economy, that is the amount of energy needed to generate a dollar of GDP, remain constant, our energy demand in the year 2020 would rise from the current level of 98 quads to a level of about 175 quads, almost double.
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However, our energy plan current policies and what I suspect will be structural changes in the economy, are projected to improve energy efficiency to the point that that energy demand in 2020 will not reach the 175 quad level. But instead only rise to a level of about 127 quads. In short, there is a lot of gain to be had with respect to energy conservation and efficiency. And our plan contains policies that are designed to accomplish those gains.
But it also means that improved energy efficiency, while helping to close the gap between projected demand and projected domestic energy production, is not capable of doing the whole job. And for that reason, the United States will need more energy supply. The question is, where do we get that increased supply when over the past decade domestic supply production has remained relatively flat.
To address these challenges our national energy plan has adopted an approach that is balanced and comprehensive. As the President said, we are looking for a new harmony among our priorities. So let me briefly outline that approach for the Committee. First, our policy balances the need for increased supplies of energy with the need to modernize our conservation efforts by employing cutting-edge technologies. And so, for example, we call for recommendations to enhance oil and gas recovery from existing and new sources through new technology, but we also call for recommendations on changes in corporate average fuel economy standards.
Second, our plan calls for diversity in terms of our supply sources. With electricity demand forecast to rise 45 percent by the year 2020, the Energy Information Administration arm of the Department of Energy projects an estimated increase or a need for an increase of 1,300 to 1,900 new power plants in this country over that 20 year period. Current policies anticipate that over 90 percent of those new plants would be fired by natural gas, which would mean natural gas demand would increase over the next 20 years by 62 percent.
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We believe energy security dictates a more balanced approach to new power generation. So in addition to natural gas, the national energy plan looks to clean coal generation and nuclear power to give us the broad mix of energy needed to meet growing demand and support energy security from traditional sources.
Third, however, our plan balances our pressing requirements for the aforementioned traditional sources of energy with the need for renewable and alternative sources, such as hydropower, biomass, solar, wind and geothermal energy. The plan seeks to increase exploration of domestic sources of oil and natural gas, and it recommends tax incentives for the use of certain renewables and more focused research on next generation sources, like hydrogen and fusion.
Fourth, our energy plan harmonizes growth and domestic energy production with environmental protection. This commitment to conservation and environmental protection is not an afterthought. It is a commitment we will win throughout out energy policy. Energy production without regard to the environment is simply not an option we considered. So, for example, in addition to recommendations seeking to streamline the permitting process for plant sitings, as well as building new infrastructure, the energy plan also directs the Environmental Protection Agency to propose mandatory reduction targets for omission of three major pollutants, sulfur dioxide, nitrogen oxides and mercury from electricity generation.
We support this balanced approach with over 100 recommended actions covering the full range of energy challenges confronting this Nation, and indeed, the world. From how best to enhance renewable sources to oil and natural gas development in the Caspian Sea.
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The Administration can carry out many of these recommendations on its own, either through executive orders or agency directed actions. And we are moving ahead to implement proposals as quickly as possible. Just days after the release of our national energy report, the President issued two executive orders directing Federal agencies to expedite approval of energy related projects, and directing Federal agencies to consider the effects of proposed regulations on energy supply, distribution or use.
Moreover, where appropriate, the President is directing Federal agencies, including my own, to take a variety of actions to improve the way they use energy and to carry forward critical aspects of the policy. For example, I have instructed our Office of Energy Efficiency and Renewable Energy to carry out a strategic review of its renewable energy research and development programs in light of the recommendations in the National Energy Policy. We put this study on a very fast track. The first report from the review is due on July the 10th with a final report by September the 1st. Hydropower, geothermal, wind and other renewables are highlighted in our report for the contribution they are making and continue to make to make—to energy security.
Promising next generation technologies will also play a part in solving our energy challenges. Both current and future technologies will be part of that strategic review. Its findings will permit us to recommend appropriate funding levels that are performance-based and modeled as private/public partnerships.
As Members of the Committee are aware, there are some very exciting developments in advanced research that have great potential for our future energy needs. From the awesome prospects presented by hydrogen and fusion, to distributed energy, to the profound possibilities of superconductivity, all of which are recognized in the National Energy Plan, our Department is very much looking to the future. Twenty of the recommendations contained in our National Energy Report require legislative action. And I think we will find more areas for cooperation than disagreement.
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I believe that we start from a wide base of agreement. We all recognize energy is a critical challenge. We all recognize that parts of our energy supply and delivery system need enhancement or modernization. And we all recognize that conservation and stewardship must go hand-in-hand with increasing domestic supply. Naturally, there will not be complete agreement, and the President is strongly committed to be the option of the his recommendations. But I truly believe we have the basis for working together to meet America's serious energy crisis.
In closing, let me say, Mr. Chairman, that I believe the Department of Energy is particularly well situated to make a serious contribution to finding solutions to the energy supply challenges we are going to face over the next 20 years. Our Department is the single largest funder of basic research in the physical sciences and manages major programs in basic energy science, high energy and nuclear physics, fusion energy sciences, environmental research and advance scientific computing research.
In different ways, each of these areas can play a role in providing greater energy security for the American people. As our report notes, the President's goal of reliable, affordable and environmentally sound energy supplies will not be reached overnight. It will call for innovations in science, research and engineering. It will require time and the best efforts of leaders in both political parties.
Mr. Chairman, I am confident that our best efforts will move us toward a consensus and commitment to action. And I would be glad at this time to take your questions. But I very much appreciate the chance to appear here today.
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[The prepared statement of Secretary Spencer Abraham follows:]
PREPARED STATEMENT OF SECRETARY SPENCER ABRAHAM
Introduction
Thank you, Mr. Chairman.
I appreciate the opportunity to come before this Committee today to discuss the President's National Energy Policy, which was developed by the National Energy Policy Development Group under the direction of Vice President Cheney. Promising developments in science and technology encourage us to believe that we can address this Nation's serious energy challenges in a way that balances our concerns for environmental protection with our needs for enhanced domestic supplies of energy.
I am particularly pleased to be before this Committee and share with you my strong personal commitment to science in America.
As a Member of the U.S. Senate, I was proud to sponsor the American Competitiveness Act, which launched over 20,000 new scholarships in science and math for graduate and undergraduate students. Since we passed this legislation, some 60,000 students have benefited from these scholarships. And as Secretary of Energy, I will be dedicated to expanding our work in science.
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That work, as I noted earlier, will play a major role in meeting today's energy challenges. Silence and technology can help us increase supply in an environmentally responsible manner. They can help us boost efficiency and so cut energy demand. And together science and technology can help us solve the very serious problems we have in this country posed by our aging energy infrastructure.
I am truly looking forward to working with the Committee on realizing the great potential science holds for helping us address America's energy challenges.
I would be glad to discuss all of this in greater detail in our question and answer session, but if it would please the Chair, I would like to first provide the Committee with a brief overview of the President's energy plan.
My statement will outline the scope of the energy challenge we face over the next two decades, summarize the approach the President has determined will best address this challenge, and finally emphasize why I am optimistic that we can find a consensus in this country on policies that promote long-term energy security for our citizens.
America's Energy Challenge 2001–2020
Today, America consumes 98 quadrillion British thermal units (or quads) a year in all forms of energy. Our domestic energy production is 72 quads. The imbalance between energy demand and domestic energy production is made up with imports.
Between now and 2020, our energy demand is projected to rise significantly.
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If the energy intensity of the U.S. economy—the amount of energy needed to generate a dollar of Gross Domestic Product—remained constant, our energy demand to 2020 would be 175 quads.
However, our plan and current policies are projected to improve energy efficiency to the point that energy demand in 2020 can be lowered from 175 quads to at least 127 quads.
That means improved energy efficiency can help close much of the gap between projected energy demand and projected domestic energy production and we are committed to doing just that.
However, improved energy efficiency cannot do the whole job. For that reason, the United States will need more energy supply.
The question is: where do we get that increased supply when over the past decade domestic supply production has remained relatively flat?
Our Balanced Approach
To address these challenges, our National Energy Plan has adopted an approach that is balanced and comprehensive. As the President said, we are looking for a new harmony among our priorities.
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Let me briefly outline this approach for the Committee.
First, our policy balances the need for increased supplies of energy with the need to modernize our conservation efforts by employing cutting edge technology.
And so, for example, as we call for recommendations to enhance oil and gas recovery from existing and new sources through new technology, we also call for recommendations on Corporate Average Fuel Economy standards.
Second, our Plan calls for a diversity in terms of our supply sources.
With electricity demand forecast to rise 45 percent by 2020, we estimate the need for an additional 1,300 to 1,900 new power plants in the country.
Current policy anticipates that over 90 percent of those new plants will be fired by natural gas.
We believe energy security dictates a more balanced approach to new power generation.
In addition to natural gas, the National Energy Plan looks to clean coal generation and nuclear power to give us the broad mix of energy needed to meet growing demand and support energy security.
Third, our plan balances our pressing requirements for the aforementioned traditional sources of energy with the need for renewable and alternative sources such as hydropower, biomass, solar, wind, and geothermal.
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The Plan seeks to increase exploration of domestic sources of oil and natural gas. And it also recommends tax incentives for the use of certain renewables and more focused research on next-generation sources like hydrogen, and fusion.
Fourth, our energy plan harmonizes growth in domestic energy production with environmental protection.
This commitment to conservation and environmental protection is not an afterthought; it is a commitment woven throughout our energy policy.
Energy production without regard to the environment is simply not an option.
For example, in addition to recommendations seeking to streamline the permitting process for plant sitings as well as building new infrastructure, the National Energy Policy also directs EPA to propose mandatory reduction targets for emission of three major pollutants—sulfur dioxide, nitrogen oxides, and mercury from electricity generation.
Building Consensus
We support this balanced approach with over 100 recommended actions, covering the full range of energy challenges confronting this Nation—and indeed the world—from how best to enhance renewable sources, to oil and natural gas development in the Caspian Sea.
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The Administration can carry out many of these recommendations on its own, either through executive orders or agency directed actions. We are moving ahead to implement proposals as quickly as possible.
Just days after release of our National Energy Report, the President issued two executive orders directing Federal agencies to expedite approval of energy-related projects and directing Federal agencies to consider the effects of proposed regulations on energy supply, distribution, or use.
Moreover, where appropriate, the President is directing Federal agencies, including my own, to take a variety of actions to improve the way they use energy and to carry forward critical aspects of his policy.
For example, I've instructed our Office of Energy Efficiency and Renewable Energy to carry out a strategic review of its renewable energy research and development programs in light of the recommendations in our National Energy Policy. We have put this study on a very fast track. The first report from this review is due on July 10th with the final report due September 1st.
Hydropower, geothermal, wind, and other renewables are highlighted in our report for the contribution they are making and can continue to make to energy security. Promising next-generation technologies will also play a part in solving our energy challenges. Both current and future technologies will be a part of our strategic review. Its findings will permit us to recommend appropriate funding levels that are performance-based and modeled as public-private partnerships.
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As Members of this Committee are aware, there are some very exciting developments in advanced research that have great potential for our future energy needs. From the awesome prospects presented by hydrogen and fusion, to distributed energy, to the profound possibilities of superconductivity, all of which are recognized on our National Energy Plan, the Department of Energy is very much looking to the future.
Twenty of the recommendations contained in our National Energy Report require legislative action and I think we will find more areas for cooperation than disagreement.
I believe that we start from a wide base of agreement. We all recognize energy as a critical challenge. We all recognize that parts of our energy supply and delivery system need enhancement or modernization. And we all recognize that conservation and stewardship must go hand in hand with increasing domestic supply.
Naturally, there will not be complete agreement and the President is strongly committed to the adoption of his recommendations. But I truly believe we have the basis for working together to meet America's serious energy crisis.
In closing, let me say, Mr. Chairman, that I believe the Department of Energy is particularly well situated to make a serious contribution to finding solutions to the energy supply challenges we are going to face over the next twenty years. The Department is the single largest funder of basic research in the physical sciences and manages major programs in basic energy science, high energy and nuclear physics, fusion energy sciences, environmental research, and advanced scientific computing research. In different ways, each of these areas will play a role in providing greater energy security for the American people. As our report notes, ''The President's goal of reliable, affordable, and environmentally sound energy supplies will not be reached overnight. It will call forth innovations in science, research and engineering. It will require time and the best efforts of leaders in both political parties.''
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Mr. Chairman, I am confident that our best efforts will move us toward a consensus, and commitment to action.
Thank you. I would be glad to take your questions at this time.
73320i.eps
Chairman Boehlert's Evaluation of the Report of the National Energy Policy Development (NEPD) Group
Chairman BOEHLERT. Thank you very much, Mr. Secretary. And you are absolutely right, we do start from a wide base of agreement. And to the credit of the Administration, it has been very aggressive in attacking a problem that for too long was virtually ignored. Having said that, let me also say that there are some areas of disappointment. Sometimes the deeds do not match the words when we talk about areas like conservation, investment in renewables, greater energy efficiency. We do have some glowing words, but I would like to see some meaningful deeds.
Interaction Between the NEPD Report and the Budget
And with that, let us open up to a couple of questions. The energy plan talks about a review of R&D programs and alternative fuels and conservation. Why were these programs singled out for cuts pending a review, and how and when will that review proceed?
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Secretary ABRAHAM. Well, first of all, let me try to explain the budget process, if I could. I do not mean to divert a lot of time, but since it was brought up extensively in your statement, I think it is important to put it in perspective.
When we assumed office, we were well along in the budget process. In fact, we had only a few weeks to put together a budget submission for our Committee, or for our Department.
What we were limited by was the fact that within the very first week of the administration the Cheney task force was assigned the responsibility of developing a National Energy Plan. We did not have policy guidance with respect to the priorities that would be ultimately recommended by the plan. In fact, the plan was ultimately finished May 17. The budget was due to the Congress February 27. We were limited, therefore, in terms of some of the kinds of—in terms of the direction that the policies that would underlie budget priorities.
What we sought to do in the areas that you have just mentioned is very simple. We looked to the President's campaign platform for guidance with respect to funding priorities. There were some clear priorities established even before we began the Cheney task force effort. One, for example, which was referenced I think by you, Mr. Chairman, was clean coal technology. The President had already made it clear to us that one of the components of an energy plan would be a $2 billion, 10 year increase in clean coal technology funding. So that became part of the plan or of the budget.
With respect to other areas, particularly in the areas you have mentioned, we did not have very much guidance. We did not want to start down the road of funding in '02 programs that might, as a consequence of the task force efforts, be deemed to be off target. And so what we tried to do is to maintain the core competencies of the various programs where we felt that there might be changes, while at the same time analyzing some of the programs in more detail where we had the chance.
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For example, one area where we scaled back support was in the energy efficiency area that relates to transportation. The Project for the New Generation of Vehicles is a program I am very familiar with. As a senator from Michigan I was one of the strongest advocates for its funding each year. So there are no sacred cows in how we did this. That was a program I had a lot of attachment to. But when we sat down with the industry we concluded that in that area there was a change in direction from when the program had originally been established. So that some of the funding that we were continuing was just simply not going to be linked to any ultimate product development by the auto manufacturers, specifically, in mid-sized sedans. So we scaled back programs where we had either clear direction to do so based on an analysis we had conducted, or where we felt that some of the research areas needed further review, which is what we are undertaking now.
The timing, as I indicated, is to finish the first phase by approximately the 10th of July, and finish completion of the effort by the 1st of September. I would suspect that the review that will end in mid-July will result in recommendations that deal with the '02 budget. The final completion of this would presumably involve recommendations for future budgets '03 and beyond.
Chairman BOEHLERT. I can understand problem you have faced. But as recently as last week the Administration issued a statement on the Interior Appropriations saying it still was not seeking any increase in funding pending the review. And it is selective. It seems on the clean coal program has been the subject of all the review. And yet there is a significant increase requested. And we cannot even discover how the Administration proposes to spend that money.
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And let me add, I am a supporter of the clean coal technology program. But it seems you have got double standards.
Secretary ABRAHAM. Not really. With clean coal technology, as I said, the President of the United States when he was a candidate in his platform made it very clear that we were going to have a $2 billion increase in clean coal technology research. I would——
Chairman BOEHLERT. Didn't he have that same vision with the need for investment in conservation and renewable energy sources?
Secretary ABRAHAM. I only had his guidance, sir, what he specifically outlined in the campaign in terms of dollar amounts. And that area was one that had an explicit proposal in place. It was incorporated. The other reviews are stated to end in the next couple of weeks, and they will then dictate, I think, a repositioning with respect to funding in the remaining areas. We are moving as fast as we can.
Chairman BOEHLERT. Well, let me—because what I want to do is give everyone the chance. I am going to hold the Chair to the time limit, too. But let me just quickly sneak in a question.
Secretary ABRAHAM. Sure.
Efficiency Standards: Air Conditioning and Other Appliances
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Chairman BOEHLERT. Given that both the Administration's energy plan and its climate change plans cite the need to improve the efficiency of appliances, why is the Administration backed away from the 13 SEER air conditioner standard?
Secretary ABRAHAM. Well, we had a number of standards, proposed rules, that had been issued right at the end of the previous Administration, which were reviewed. We went forward with two of them, those dealing with washing machines and water heaters. With respect to the air conditioner standard, we were deeply concerned about several ramifications of the 13 SEER standard. What we are proposing, and are in the process of completing in terms of a rule-making, is an increase in the efficiency to a 12 SEER standard. A 20 percent increase in efficiency versus the 13 SEER that had been proposed.
Chairman BOEHLERT. Well, let me ask you, as part of the rule-making, would you be willing to see comments on both the 12 and 13?
Secretary ABRAHAM. We have concluded that the 13—I mean, anybody is free to submit any comments they want, obviously. But we believe two things.
First of all, that there are serious questions as to whether a 13 SEER standard would create a market concentration that would undermine the competitiveness of the actual market, the manufacturing market, and lead to distortions in that market. The Department of Justice, both the previous Administration's as well as the new Administration's department, have offered comments that suggest serious concerns about that.
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We also are concerned about the price differential. Because we believe that the higher price that the 13 SEER standard would bring about would in fact discourage purchases of that. There is an alternative way people can in fact proceed with respect to purchasing split systems. A mere four percent decrease in the purchase of a 13 SEER standard model, shifting to another alternative that would still be available once these rules go into effect, would offset all efficiency gains the 13 SEER model standard would bring about.
Chairman BOEHLERT. Well, the evidence indicates from the industry, and it is a divided industry I think you will concede——
Secretary ABRAHAM. Yeah.
Chairman BOEHLERT [continuing]. That the payback period is a rather short payback period.
Secretary ABRAHAM. I think it is more than 10 years for the 13 SEER standard, though. And we consider that to have a potentially detrimental effect on lower income purchasers.
Chairman BOEHLERT. Well, there are figures that are not figures, Mr. Secretary. And my time is up. So we can talk about that a little bit later. Mr. Hall?
DOE Program Reviews and the FY 2002 Budget
Mr. HALL. Excuse me, Mr. Chairman. I thank you. And Mr. Secretary, again, thank you. I have a speech in six minutes to a group over at the Capitol so I will hold you to the five minute needle, too, if I might.
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The Chairman and I are pretty well together on many, many things. As a matter of fact, even on energy we are together until we get to the trees, the whales and the purple-cheeked warblers and things like that. And he is not in favor of drilling on cemetery lots. I have got that out of him. He holds down on that.
But let me just get right to the point on what I want to ask. And if I put you on the spot too much, you just tell me.
Secretary ABRAHAM. I am not used to being on this side of the table. And I liked it better maybe on the other side.
Mr. HALL. Yeah. Assuming that the Department intends to boost spending in fossil energy, R&D, renewables and efficiency R&D, I am hope that. I assume that. I think you almost have to do that. And I think you must be thinking in that direction. Let me just simply ask this. Are you working on or do you intend to send up some amendments to the budget request?
Secretary ABRAHAM. Our plan, I think at this point, is to complete the review process as soon as we can. Our target date is mid-July. Now whether that would result in a new budget request or simply in instructions to our—that OMB would essentially implement to work with Congress to plus-up areas that would be identified as ones which we would recommend increases in, I do not know. That is a call the White House will ultimately make. Our intent is to make recommendations in terms of areas that we would suggest increases in over that which was submitted, as to whether—again, I just do not know how they will procedurally go from there.
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Mr. HALL. I do not really know what you said. But it is—I guess I will leave it with to be continued and I'll check with you. Mr. Chairman, thank you.
The Need for More Research
Chairman BOEHLERT. Mr. Ehlers.
Mr. EHLERS. Thank you, Mr. Chairman. I probably look at this a bit—this whole issue a bit differently as does Dr. Bartlett, to my right. Because we are both scientists. And I think it is very important that we recognize that the laws of science are rather unchangeable. We certainly cannot change them. And also, there is a lot of misunderstanding in the public about some issues. For example, hydrogen, which was mentioned several times in your testimony and many times in the report, is not a new source of fuel. And yet—and source of energy. And yet many members of the public think that this is the great new source of the future.
It is—hydrogen does not really exist in any quantities in nature that we can use. Hydrogen is simply going to be a method of storing energy or transporting energy from one place to another to be used at its final destination. The—another factor is that we simply have to depend—have to reduce our dependence on fossil fuels. It is not a limitless resource. And even though there is enough for our generation, we have to worry about future generations and prepare for that or we are going to leave them high and dry. I think that is particular important a view of C02 emissions, methane leakages, both of which are greenhouse gasses. And lead to other problems.
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Another factor is that natural gas, which is being selected by all the—by many of the utilities to produce electricity, I think that is a very bad mistake. In many ways, natural gas is too good to burn because it is a beautiful petrochemical industry feedstock used to make fertilizers, plastics and other things. And the cost of our fertilizer, therefore, the costs of our foods will go up as the cost of gas gets higher.
I also would point out that natural gas is a very, very useful function in home heating and cooling, particularly home heating. And if it is all burned up in the power plants it is going to be very expensive for us to keep our homes warm.
On the SEER standard, I think there is a lot of misunderstanding on that. The payback period depends on where you live. And I do not think that we necessarily have to have a SEER standard for the whole Nation. But we could certainly have a SEER standard for those states that are roughly the southern one-half of our country where the payback period is very short. That means we do not necessarily have to force a SEER standard of 13 in the northern states, but it would certainly pay off in the southern states. And I am not sure that was taken into account in this discussion.
The figure you mentioned, the 10 year payback, is—even that, of course, is useful because the average lifetime of air conditioning is about 25 years. But even so, if you take out the northern states, the payback period is much shorter. I would appreciate it if that could be looked at.
On—beyond that, I would simply say, I think I appreciate the energy plan, I appreciate what many of the things it suggests. But clearly we must, if we are worried about our children and grandchildren having energy supplies, we have to spend considerably more on research and alternative supplies and on higher efficiency use of the energy that we have.
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And with that, Mr. Chairman, I will conclude.
Global Climate Change Initiatives
Chairman BOEHLERT. Thank you. Miss Johnson?
Ms. JOHNSON. Thank you very much, Mr. Chairman. And welcome, Mr. Secretary. The President recently acknowledged that the global climate change is a real and serious issue. Low income people are generally the most vulnerable to fluctuations in weather and climate. And will be amongst the hardest hit as global change becomes more prevalent. The President has called for more research on the subject. And I am concerned that if we continue to study the issue until all questions are answered without taking any action to limit greenhouse gasses, we are in danger of ending up with a very well studied disaster. What type of finding or discovery would be sufficient to convince the Administration that measures perhaps should be taken immediately?
Secretary ABRAHAM. Well, first of all, I think it is important to note that in addition to proposing more research on climate change itself, so we know what our targets need to be with respect to any changes in behavior or technology and so on, the President also launched a technology initiative and asked the Administrator of EPA, myself and the Secretary of Commerce to put together a plan of technology research aimed at—addressing the question of greenhouse gas emissions. Both in terms of technologies that could prevent the emissions from occurring, as well as, to expand the technology work we are doing with regard to trying to capture emissions, for example, carbon sequestration programs.
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So we are not just waiting until more research is done to launch that initiative. In addition, I would note for the Committee, that several of the components of the energy plan would in fact have a profound impact on greenhouse gas emissions. The clean coal technology programs we view as not only important because of the general impact that have on emissions, but specifically the impact they would have on C02 discharges. And the program—the emphasis which the plan places on continuing and expanding the role of nuclear power in our energy mix would obviously have an impact as well.
So it is not a case of simply more study with no other proposals. There are those three components that come to mind at least immediately as being actions we are proposing begin immediately that would have an effect on greenhouse gasses.
Outreach to Minority Groups
Ms. JOHNSON. Thank you. The Administration's energy policy calls for energy related research in a variety of diverse areas, on fundamental research, on climate change, applied alternative fuel technology and all. Would. You give us an overview of how the Administration were to ensure that minority scientists and historically black universities are included in this various research projects. And then after that, if you will tell me a little bit about your current outreach program for minority initiatives.
Secretary ABRAHAM. Well, one of the directives that I have issued to our program secretarial offices, the PSO's who put together these research programs that translate into grants, is a specific directive that any new grant proposals relevant to the '02 budget must maintain at current or higher levels of the support for the historically black colleges. And any proposals that would reduce the level of support are one that I have asked be specifically brought to my attention for consideration to determine if there is a—some kind of basis that would support such a change. Because it is our hope to maintain that role, one that holds at least the current level of support.
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One of the things I am looking forward to is the swift confirmation of Theresa Speake, who will be in charge of our Economic Diversity Division of the Department. Once she joins us, she is in the process of being nominated and will take over responsibility in an area that would obviously look to the questions of diversity within the Department, both with respect to the kinds of issues we have just discussed. But also, I think we need to analyze the role that various minority communities play as in terms of the roles within the department, and I just—at the professional staff level versus, say, the clerical staff level.
I am somewhat concerned based on some of the initial statistics I have seen. Some of the meetings that my senior staff have already had with representatives of some of our ethnic communities in the Department, as to whether or not there has been a sufficient participation level, from various communities, in the higher roles in the Department. This is something of concern to me, and I would look forward to working with you to focus on it, and others who have interest in this in the Congress.
Ms. JOHNSON. Thank you very much.
Educating the Public on Energy Issues
Chairman BOEHLERT. Thank you. Mr. Gutknecht?
Mr. GUTKNECHT. Thank you, Mr. Chairman. I will not be quite as critical as some of the other people on the panel, Mr. Secretary. But I do want to say that if I am critical it is not so much that of the budget, but I think you have to be much more aggressive in selling this whole issue.
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I think the American people are ready to work with you. I think the Congress is ready to work with you. But I think we need to talk about the problem. And I do not think we are doing that well enough. I do not think most Americans, for example, know that every day we import 600,000 barrels of oil from Sudam Hussan. And yet we have billions of barrels of potentially recoverable oil here in the United States, domestic sources, which have been left off limits.
I think we need to talk about where we are. And one of the things that disturbs me so much about the debate here in Congress about energy policy is that there is almost a defeatist attitude. And it is almost un-American. I think about our ancestors, when they got to the Mississippi River they did not look across there and say, that is a pretty wide river. I guess we are going to have to turn around and go back. I mean, Americans have always figured out a way to solve these problems. And I think there are plenty of answers. And I am actually pretty optimistic that technology and renewable fuels and a lot of things are going to help us solve these problems. But I do think that the Administration's got to do a better job of explaining where we are, how we got here and where we are going to go from here.
One of the areas that I do want to mention to you that I think really represents a tremendous opportunity for us is renewable fuels. And I think for two reasons. First of all, in terms of both ethanol and bio-diesel, they are clean burning fuels. And anyone who has ever sat behind a bus when they took off a bus stop I think can appreciate the fact that bio-diesel can reduce the amount of smoke coming out of those stacks by up to 40 percent. And I think once people understand that, they are going to be willing to an extra two or three cents a gallon for bio-diesel. And ethanol as well.
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So I guess I don't have a question for you so much. But I think the Administration needs to talk about where we are. Because I think otherwise, your voices are going to be drowned out by some of the people here on Capitol Hill and other interest groups on the extremes who say, well, you cannot do this because it does that. You cannot do this because it does this. I think the American people are ready to follow when you guys begin to show what the real problem is.
Secretary ABRAHAM. If I could just comment, Mr. Chairman.
Chairman BOEHLERT. Sure.
Technology Deployment
Secretary ABRAHAM. I think it is true that Americans love energy. They do not like how you create it and how you distribute it. And we have to work together to address that. I do want to say one point about renewables. I think it is important for us to work together on this.
I did a—had our staff do a survey of the investments and the Department of Energy over the last 20 years in three major areas of renewable energy, geothermal, wind and solar research. Over the last 20 years in current dollar terms, the research cost has been $6 billion. Today as a percentage of all energy supply in this country, those three sources combined, after all that money, is still less than one percent.
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The problem in my judgment in some of these areas with respect to renewables is not that we have not done a lot of research or that the research is not mature. I think a lot of this research is mature. And I think what we need to work together on is figuring out how to translate what is now mature technology into actual application.
And one of the things I have asked our team to do with regard to the review we discussed earlier, was to not just to come back with new funding ideas, but also to come back with some—begin the process of analyzing how we translate these technologies to actual application. It does not do us any good to spend more money if we cannot figure out how to get more of this technology into the market.
We believe there is a problem with respect, for example, to regulations with regard to the siting, for instance, of wind farms. It is a regulatory challenge that has to be addressed. If we want more wind generation there has got to be some work with respect to the regulatory process, both on Federal lands as well as at the state and local level or else this won't happen.
With respect to solar energy, we have to move in a direction, I think, that acknowledges that at some times in the day, for instance, peak sun time and the hottest parts of the day, people with solar energy are actually generating more energy than they need. And in many cases, because we do not have net metering, they do not get a benefit for that. So it does not make it very attractive for people to bring solar energy systems into their homes.
I think there is a lot of other factors that have to be part of it. Or else, I think these percentages are not going to increase significantly. In fact, the Energy Information Administration at DOE right now projects that those three sources in 20 years won't provide much more than one percent of our energy supply. We have got to go beyond the research stage to also address the implementation stage.
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Scientific Input to the NEPD Plan
Chairman BOEHLERT. Thank you very much. Mr. Honda?
Mr. HONDA. Thank you, Mr. Chairman. I am right over here to your left. Not your political left but—well, thank you very much for being here, Mr. Secretary. The current Administration has reached what I consider a dubious record of being the latest in history to name a science advisor as you had mentioned. And you have surpassed the previous record holder in Mr. Reagan's administration by a full month at this point. And we still do not have a science advisor. And many policy issues turn on assumptions about science and technology. And there are many proposals in the report that either direct the Office of Science and Technology Policy to conduct reviews, or promise more research at the Department of Energy. However, there is—there was no science advisor involved in any stage of the process in forging the energy plan.
And as you know, there have been promise that recently issued a DOE report that concluded that new technologies and incentive programs could reduce the growth of electricity demand by about—between 20 and 47 percent. Yet despite this promising report, the Bush budget had cut the conservation programs by over 20 percent, up to 27 percent. And the Bush energy plan provides only a scattering of incentives for reducing household and business energy consumption.
That said, do you think that you had adequate guidance on the promise and potential of R&D programs to help us make advances in energy production and conservation for the next two decades?
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Secretary ABRAHAM. Well, I would say, first of all, that the task force employed employees at the departments that were part of—the cabinet members who participated, in addition to myself, were there Secretaries of Interior, of Agriculture, of the Administrator of EPA, Secretary of—and each of us drew from tremendous expertise of the full-time career scientists in our departments and agencies in putting together recommendations that ultimately were approved by the President. So I think in terms of at least the pure science support effort, it was strong.
I cannot answer the question relative to when a science advisor will be named. But would be happy to convey back your concern about that to the White House today. We too are in search of a director for the Office of Science in the Department. We now have finally gotten our undersecretary confirmed and he has been on the job a week, and he has already been meeting quickly with a number of potential candidates for the job.
But I would be glad to pass back that concern.
Mr. HONDA. I was—I guess I was enlightened to your opening statement when you had said that when the energy policy was put out that there was a lack of science guidance or policy guidance in that area.
NEPD Report and the Budget
Secretary ABRAHAM. My point was there was—no. What I mean was, there was a lack of guidance before we did the budget we did not have policy guidance to use as a way of setting budget numbers, because we had not finished doing—putting together the energy plan. I am not—you know, I have to confess, when I was a senator we worked on budgets, you know, from a different perspective. From the policies that we brought to the tables. The Administration's submission, we only have limited policy guidance because in the first week in office the President said, our policies on energy are going to be put together by this task force. And the task force did not finish its work until after I had to present an Energy Department budget to the Hill. Had we had the reverse chronology, then I think the budget would have been different because it would have been more thoroughly shaped by the policies outlined in the President's plan.
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The Role of Research, Development and Technology Deployment
Mr. HONDA. The general impression I get from various conversations that I have heard is that the emphasis on alternative energy research, I heard you talk about apply more resources toward application research. And I think that is fine and good. But I think that to move away from initial research and development is moving away from innovation and future growth. And——
Secretary ABRAHAM. I do not——
Mr. HONDA [continuing]. It makes me very uncomfortable.
Secretary ABRAHAM. I do not disagree with that where the research is not well matured. And my point to the Committee is that in some of the areas we have spent billions of dollars over the last 20 years and have done a very good job, I think, at the Department and in the Federal Government in terms of the research role we played in many cases in the public/private partnership basis.
We know a lot about wind generation. We knew a lot—we know a lot about solar energy generation. The challenge is not learning more about that, in my judgment—I mean, not that there is not more there, and we do have some budget assigned to that. It is also now a challenge of taking what we have learned and actually generating energy. And I want to make sure we balance that equation as opposed to not doing so.
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Because we can research forever. I want to start generating energy from these sources as opposed to just the research component.
Mr. HONDA. Not to be argumentative, but the application seems to be the purview of the private sector and other sectors. And ours is to really enhance and encourage primary research.
Selection of the Presidential Science Advisor
Having said that, you indicated that you are still on the search for a policy advisor, science policy advisor. And forgive the question. It is not meant to be mean or anything else like that. But I have heard rumors and I just want to put out the comment and share the rumor and get a response from you. Because I think this is an opportunity for me to get it from a good source.
But I understand from a rumor that the appointment of a science advisor there had to be some consideration, pass a Litmus test. And their attitudes toward the ballistic missile defense system. And their position on the stem cell research. The selection of a science policy advisor, depending on their position on those things, that is the Litmus Test that one would have to pass in order to be appointed. Is that an unfounded rumor or is that——
Secretary ABRAHAM. I cannot comment on that rumor with respect to the White House science advisor's position. I know—I am not part of that decision-making process whatsoever. And I have not personally heard that rumor. But I would have to—I will pass along the inquiry and see if we can have somebody comment. But I do not know anything about the process.
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Chairman BOEHLERT. Well, the gentleman's time is——
Mr. HONDA. Thank you very much. I appreciate it.
Chairman BOEHLERT [continuing]. Expired. I would say, Mr. Secretary, we have got about 50 people here that would be willing to fill the bill of the science advisor. Dr. Bartlett.
GAO Inquiry into DOE's Budget
Dr. BARTLETT. We thank you very much. I am over here slightly to your right. And welcome to the hearing this morning. Let me ask you a question that I asked the Vice President. This President, of whom I am very fond, is my President and I do not want him to look dumb. And I would like you to explain to me how cutting the energy budget when we are facing a potential energy crisis is not dumb. And there are about 200 million other Americans who would also like the answer to that question.
Secondly, I just want to note that we have a bit more perhaps than two percent of the known reserves of oil in the world. And we use 25 percent of the world's oil. Today's we're importing 56, 58 percent of our oil. We are importing 35 percent of the Arab oil embargo back in the 70's. My understanding is that no matter how we scurry about, no matter how many places we drill for oil, we are not going to increase oil production in this country. Since 1970, oil production has gone down with a tiny bump with Prudhoe Bay. It has gone down every year. And what I understand is, it is going to continue to go down no matter what we do.
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Now if you could find and pump that measly two percent or so of oil that we have tomorrow, what will you do the day after tomorrow?
Secretary ABRAHAM. Well, the first question relating to the budget is this, we did not feel it was a particularly intelligent approach to put together a budget that simply took all the existing policies of the previous Administration and advanced forward with funding based on those policies. We actually thought that we might want to have a budget that was more reflective of a new change in policy that we are in the process of implementing now that the President's energy plan has been developed.
And in some areas of the Department of Energy's budget, for example, in the area of environmental management, I have very serious concerns that I would be happy to share with the Committee, if they would like to hear about them, relative to how we are in fact proceeding in the spending of almost $6 billion a year on environmental remediation.
To just simply keep moving in a direction of running in place in a number of these waste sites, not making much forward progress with regard to clean-up, and spending tax payers money to essentially make that minimal progress, to me was not highly intelligent.
And so the rationale for the budget is that we felt there was some serious reviews that needed to be conducted before we simply kept spending money based on policies that were pre-existent and that were in some cases not leading toward the fulfillment of what we thought were legitimate goals, like actually cleaning up environmentally contaminated sites, like moving forward in the area of energy with a clear policy direction that we now have. So that——
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Mr. BARTLETT. Mr. Secretary, I am with you more than you know on that clean up. I think that 70 percent of the money going to lawyers is scandalous. I think that much of it in fact does not need cleaned up. But wouldn't it have been nice to put a place holder in there, a sum of money that we have not yet identified to use for simply to communicate to the American people that we understand that energy is important and we are going to put some money there. Cutting the budget with no place holder just sent the wrong message, don't you think?
Secretary ABRAHAM. Well, I—you know, I thought that what we were trying to do was be honest with the American people rather than to try to, you know, sort of send a false signal. The signal I want to send to the American people is that when we submit an energy budget it will be one that is well thought through, that is in fact fulfilling policy goals that we have established. Rather than letting the budget drive the policy I would like——
Mr. BARTLETT. But you did submit a budget and it had serious cuts in it. If you were not, you know, if you were delaying submitting a budget it would have been one thing. But to submit one.
Secretary ABRAHAM. Well, Congressman, I—the areas where we have reduced, I think were based on legitimate analysis. I actually believe the American people expect us to analyze what we are spending money on. And if we conclude that the spending is not warranted or that we have to review before we move forward and spend in a certain area, I think they would like us to do that.
I don't think they expect us to just spending in a particular area even if the analysis we are doing argues, for example, I used as a hypothetical a minute ago the area of transportation. The notion that we would still spend $40 million of tax payer money on the '02 budget in the Project for the New Generation of Vehicles in doing more research on a vehicle which the auto manufacturers have made fairly clear to us will never be produced, to—I do not think is reassuring to the American public. I think they would like us to say if we reach that—if we understand that that is never going to translate into actual application, that we would not continue the funding. That is what we have tried to do.
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Mr. BARTLETT. And my second question, what will you do the day after tomorrow?
Secretary ABRAHAM. Well, my argument to the Congress is this, that we have a growing dependency on foreign sources of oil. What we need to do is to—and what the energy plan seeks to do is to argue for diversifying supply sources, both domestically and internationally. There are a number of recommendations with respect to the prospects which we see as very encouraging for development in the Caspian, in Africa and other parts of the world and within our own hemisphere.
And I think we need to develop, work with the countries beyond the OPEC countries to try to expand trade and energy trade with those nations. I think domestically we need to expand the sources of supply and production. I think we have to take into account that in fact if the current—the way the current tables and projections work, we will see a continuing increase in oil demand even as the—at least if we limit ourselves to the current domestic supply sources we will see a decrease in domestic supply.
I—I mean, energy security is critical. And that means diversifying sources. And that is what our plan calls for. And those who say we do not need to do that, I think have to answer the question that you have posed to me, more than we do. I think we have offered ways to diversify energy supply with respect to oil.
Mr. BARTLETT. But you cannot get what is not there. If we have only two percent you cannot get more than that. Thank you, Mr. Chairman.
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Chairman BOEHLERT. Thank you, Dr. Bartlett. Mr. Gordon.
Mr. GORDON. Welcome, Mr. Secretary. In your statement you said, and I quote, ''Our national energy plan has adopted an approach that is balanced and comprehensive. As the President said, we are looking for a new harmony among our priorities.'' I cannot agree more. But I share Chairman Boehlert's concern that your Department's budget request does not reflect the sentiment.
Renewable energy would be cut by 36 percent and conservation by 21 percent. And part of the justification has been put forward for these reductions is that funding would be restored from royalties by leasing and ANWR. With the uncertainty and, frankly, unlikelihood that this Congress will approve exploration for oil drilling in ANWR, why would you link conservation and renewable funding to these uncertain funding sources? And why were these the only cost link to the ANWR royalties?
Secretary ABRAHAM. Well, I think that—let me say several things. First of all, those are not the only—that is not the only basis on which we will increase the funding of those areas.
Mr. GORDON. That was part of it.
Secretary ABRAHAM. We added that as yet another rationale for trying to find balance. Because if we are going to increase supply on the one hand, we thought the logical counterpart to an increase in supply from ANWR was to use part of the benefits of that increased supply to stimulate alternative sources and conservation.
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But what we did in the budget, as I have tried to say here, please recall the chronology. The chronology of budget submissions were that on February 27 the President submitted his budget to Congress. On April 9 we were required to produce a completely detailed roll-out of that budget. And the energy plan, the policies that would drive these categories of budget appropriation requests did not finish until May the 17th.
With respect to renewable energy, the point is this. That if you take aside special congressional projects, the budget we submitted in February is approximately $60 million lower than the final '01 numbers would be. But we included recognizing that there were areas of renewable energy development that we were going to emphasize in the plan. We specifically outlined in the plan that there would be a review, that I referenced here today, that is ongoing and will be completed by July 10, that will produce recommendations for plus-ups in this area.
We also, of course, with respect to renewable energy include several components in the plan calling for tax incentives for the development of renewable energy programs. For the development of actually implementation of some of our renewable energy programs. And that should be included, I think, in the calculation of what we proposed in the plan.
So there are three or four components. Both the review that will result in increased—recommendations for increase, the tax credits that are recommended, the ANWR piece as well.
But again, I want to just stress to the Committee, in at least three categories, and I do not want to take this time——
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Mr. GORDON. Yeah. I only got five—if I could because you are somewhat repeating yourself. With all due respect, Mr. Secretary, even under your best case scenario, you are only going to be there eight years. ANWR, even if it comes forward, is not going to be producing any royalties for 10 years. So that means you are just going to have to leave a note on the door. So that is really not going to help us with the renewable fuels and conservation. So I think you are going to have to look beyond that.
The other thing I guess I am a little concerned with is that, and I think you are totally correct, legitimate, you know, you walk in here, you are supposed to have a budget and you know—I mean, that is a difficult thing. But you said that, you know, you are trying to design what the President wants by virtue of his platform. And so you were limited. Why didn't you just go ask him? You have regular cabinet meetings, you see him, why don't you just ask him?
Secretary ABRAHAM. Well, because very simply, the President on the very first day I was in office called to me and called the Vice President and called several other members of the cabinet and said, I want an energy policy. I want recommendations that I would—that I will translate. I will either endorse or not endorse. And I want it completed as soon as possible. And he said, in some areas I will give you clear direction. And certainly, in the—if you will look at the directive that he issued that first week, it gave us direction of what he expected that plan in a low—in a macrosense to include.
Mr. GORDON. But I——
Secretary ABRAHAM. He asked us to produce recommendations, which we did. Now where he gave me clear direction we incorporated that. We doubled weatherization, we significantly increased clean coal technology.
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Mr. GORDON. I share Mr. Bartlett's concern that you did not put a place holder in if you are going to be developing some type of, I guess, conservation means later. And I am also concerned, you say, you talked about tax incentives. I hope you will do that. But are you going to also present offsets for those?
Secretary ABRAHAM. I believe the cumulative tax components are approximately $9 billion over the next 10 years. And I am not—and the Department of the Treasury has principal responsibility——
Mr. GORDON. Well, I would hope that you——
Secretary ABRAHAM [continuing]. For offering those or for constructing those. Some of them I think——
Mr. GORDON. And also I would hope——
Secretary ABRAHAM. They are in the budget.
Mr. GORDON. I do not mean to be short with you, but I just have a short time here.
Secretary ABRAHAM. I know, I talk too much
Mr. GORDON. No. We are glad you are here. The other concern is that if you are going to—you said you are going to boost these funds later. If you are going to do that, where are you going to cut? And I guess my last question, because I—you can answer up to my time is up. But I cannot ask you after my time is out. My last question is, you say that—well, I guess I would like to know whether since you put together this task force, has GO—GAO, have they contacted you or your office as they have the White House trying to find out——
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Secretary ABRAHAM. I think they are working through the White House, I believe. I am not——
Mr. GORDON. Do you plan on cooperating and giving them the information who was attending the meetings and that they are requesting?
Secretary ABRAHAM. It is my understanding that the Administration will cooperate as appropriate with, you know, the inquiry. I am not—I am not sure what inquiries have been made of us. But obviously, within whatever is legally appropriate we will——
Mr. GORDON. Now. If GAO asks you for information, it would be your intention to give it to them?
Secretary ABRAHAM. My general counsel will give me guidance and we will cooperate as appropriate.
Chairman BOEHLERT. The gentleman's time has expired. Thank you. Mr. Smith?
Mr. SMITH. Mr. Chairman, thank you.
Regulation and Standards Review
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Mr. SMITH. Mr. Secretary, just to put things in perspective, I suspect that if the previous Administration had set forth any energy policy they would be here—they would have been here under the gun scrutinizing their particular energy policy. So I for one applaud you and the Administration for at least moving us ahead.
As you are aware, Mr. Secretary, I served on the Presidential Oil Policy Committee during the era of the oil embargo in the 1970's. Concerned that we do not repeat some of those mistakes again. I have legislation, H.R. 1834, that requires a review in 90 days of all of the regulations that effect energy for a cost benefit analysis. The Administration's proposal has a similar goal but they put the review under Administrator Whitman to review those plans. And I guess I would ask you the status of that review in the EPA and does the Administrator Whitman plan to utilize the expertise within your department, particularly, within the Energy Information Agency in conducting that study? And will the study, in your opinion, cover the full spectrum of state and Federal regulations——
Secretary ABRAHAM. Congressman——
Mr. SMITH [continuing]. Impact energy functions.
Secretary ABRAHAM. I cannot tell you whether it will incorporate every one of the proposals in your legislation. I think it will be a comprehensive review. It is—it has been initiated. In fact, today the—my undersecretary and the Deputy Administrator of EPA are jointly testifying on the Senate side about this set of issues. Because we are working together to try to do a very comprehensive review.
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My—in terms of the time frame, unlike some of the other areas of recommendation where there were specific dates set, I do not think there is a specific deadline here. But my impression is it is moving fairly quickly. Because I think both the Senate as well as some members of the House intention to either introduce, perhaps even to mark up legislation on this set of issues very soon.
Mr. SMITH. Mr. Secretary, a lot of the policies—the Chairman mentioned the air conditioning changes that the former Administration put forward pretty much in the latter days of their Administration. And some of these needs to be analyzed and well thought out. And I was just looking at the suggestion that we go to a 10 SEER status as far as efficiency on air conditioning units. And I asked for the costs of doing that. It turns out to go from a 10 SEER to a 13 SEER would cost $712. And the only people that could pay for it would be in the southern tip of Florida, in the southern tip of the United States with a payback that is less than 10 years. Most of the United States it would take 20 years of owning that particular air conditioning unit to pay back the increased cost. And secondly, I am told that it would put the United States production of air conditioners out of business because the rest of the world would stop buying the more expensive US air conditioners. So, hopefully, on this and other reviews you are going to move ahead, what is the status of the air conditioning decision?
Secretary ABRAHAM. Well, we are very close to having finished, you know, our rule of procedure. We had hoped to have it done literally this week. I think it is going to take us a little bit more time. And I think the approach which we are recommending avoids some of the problems you have just outlined. That is, the concentration in the market, the potential impact on lower income consumers, as well as, the payback period challenge, as well as, the issue I mentioned earlier which is that alternatives to the 13 SEER do exist, would still be available, the split systems. And only a slight changeover from the 13 SEER to those split systems would have basically undermined all the gains we would have in terms of efficiency.
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Mr. SMITH. Since, Mr. Secretary, I cannot—for everybody's information that has not worked with this gentleman over the last 28 years, almost, I just am so confident in an individual that has the kind of work ethic that you do, and the kind of dedication to knowledge and information.
So I am comfortable that somebody like you that is looking out for the energy policy that is going to be good for America, rather than maybe somebody that is looking out for lowering prices in the northeast in terms of what the consumer pays or what happens in the southwest. I cheer the research subcommittee.
DOE's Research Plan
And what do you see as the kind of basic research that we need to have the kind of information that we move ahead with in terms of ultimately improving everything that is in the Administration's energy plan?
Secretary ABRAHAM. Well, I think that the research component of the Department, the full Science Division, as well as, the R&D programs do require strong support here. We look forward to working with you to secure that.
I was talking earlier with the Chairman and the Ranking Member and other members about the need for us to work together to define a strong mission goal for the next decade with respect to the broad sort of science mission of the Department.
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We have gone through a challenging period, as a lot of you know. As we have decreased the areas of national nuclear security within the Department of Energy, which was the principal focus of much of the science work which was done in the Department. It has called upon us now to, in order to retain and recruit the kind of quality people in the science area to work in our labs, it has called upon us to provide other interesting and important areas of science investment.
And we are right now in the process of developing and want to work with you to develop a good strong mission statement so that that can move ahead in a way that is very focused. And I look forward to working with you to accomplish that.
Mr. SMITH. Thank you, Mr. Chairman.
Chairman BOEHLERT. Thank you very much, Mr. Smith. Let me point out that the Chair shares the very high regard you have for the distinguished Secretary. I have known him for a number of years. He is a man of unquestioned integrity.
Secretary ABRAHAM. Thank you.
Air Conditioning Efficiency Standards
Chairman BOEHLERT. And he is very able. And he serves with distinction as he had in the Senate. But I cannot resist observing that this is a town where everyone likes to say they are for science-based decision-making until the scientific consensus leads to a politically inconvenient solution. And the to look for some other source. And when we are talking about the SEER standards, I somewhat question your figures, Mr. Smith. Because there are figures and there are figures. The fact of the matter as Mr. Ehlers pointed out, it depends on regions of the country. Some regions of the country the payback period would be for 13 SEER would be 18 months. Other regions it would be several years. But we have to be very careful as we deal with these figures and make sure that we understand where they are coming from and what they include. Thank you very much.
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Mr. SMITH. Well, Mr. Chairman, since you have somewhat refuted some of the questions in my statements, I am passing down to you the background scientific information on this issue of SEERs on air conditioners.
Chairman BOEHLERT. The Chair always welcomes background scientific information. The Chair now refers to Mr. Lampson for his questions.
Source of NEPD Estimates
Mr. LAMPSON. Thank you, Mr. Chairman. And thank you, Mr. Secretary, for coming to meet with us today. Let me start with one of the statements that has been made regarding, particularly, things like experts estimates that 2,000 megawatts could be added from existing nuclear power plants by increasing operation performance to 92 percent. And then another statement, over the next 20 years the United States will need 1,300 to 1,900 new power plants, which is the equivalent of 60 to 90 new power plants a year. It makes me wonder, who says that? I want to know who these experts are, where the numbers might come from. Specifically, can that 1,300 to 1,900 number be attributed to someone? Is it a trade group, a policy analyst, and if so——
Secretary ABRAHAM. It is the Energy Information Administration, which is an independent. I would emphasize it is very independent arm of the Department of Energy.
They are the folks we look to for the data and analysis that we use in all of the various kinds of projections we try to do, whether it is—they are the folks who assemble information with respect to crude oil supplies. They are the folks who make estimations with respect to these issues that you have raised. So it is an independent agency which is housed within the Department of Energy.
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DOE Emphasis on Advanced Technologies
Mr. LAMPSON. Okay. Let me switch to something regarding technologies. I was concerned and somewhat disappointed with the lack of attention in the National Energy Policy given to some of the promising technologies, and I specifically mention advance gas turbines, methane hydrates, fuel cells. And particularly fuel cells because NASA has used them a great deal, particularly in the space shuttle, albeit, expensively. Hopefully, we would be able to find ways to make those useable enough to be put out on the market. And excite us about wanting to use them in our day to day lives. Why were those technologies so under-emphasized in the policy, what can we do to make sure that they become more——
Secretary ABRAHAM. Well, first of all, I do not, you know, I will give you a personal comment here. And then I will—I do not believe, just as a practical matter, I do not—we do not view them as being under-emphasized. But as a personal matter, I view these as areas of extreme promise. And I think that in terms of energy research focus it is the fuel cell hydrogen distributive energy areas that, in my view, are the ones that are most in need at this point of focus during this period. Because I share your thoughts on that.
Mr. LAMPSON. Do you know of the particular efforts that are being done to concentrate studies on fuel cell research? Is there any kind of a clearing house in this country that is looking at——
Secretary ABRAHAM. Well, it is a pretty diverse area of investigation. And I am not sure if there is a clearing house or not, I would have to consult perhaps folks in the Department on that. I just know that in the private sector, as you are well aware, a number of major corporations have begun devoting significant R&D funding to fuel cell research. In my State of Michigan, we have in the auto companies a great deal of focus now being placed on fuel cells as a promising alternative means of generation.
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Where once all the focus was on electricity or electric vehicles, fuel cell vehicles are now, you know, a major focus. In fact, the last week I have noticed several of the auto manufacturers talking about expanding their work in this area. But I am not sure if there is a clearing house.
Mr. LAMPSON. Any other—any comments on either the advance gas turbines or methane——
Secretary ABRAHAM. Well, we are looking at the turbines. One of the concerns I had on the financing side, on the budget side, with respect to turbine research, we had completed work on large turbine research projects.
The new proposal before us during the budget process was with regard to mid-sized turbines. We were—I am at least concerned because in the area of mid-sized turbines the private sector has moved far down the road with respect to manufacturing. We have in fact at both Westinghouse and General Electric very significant backlogs already for mid-sized turbines that are now in production.
And so before we moved ahead in terms of more research in our fossil energy research budget in this area, I wanted to be very careful about whether or not we were—it was necessary for the Federal Government to play as big a role there.
But I have talked to some other members who have expressed some interest with respect to this topic. And I think as we move ahead we are, you know, we are not close to, you know, work in this area. But I want to make sure it isn't simply just duplicating research already well on its way in the private sector.
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Chairman BOEHLERT. The gentleman's time has expired.
Mr. LAMPSON. Thank you, Mr. Chairman.
Chairman BOEHLERT. Mrs. Biggert.
Nuclear Energy in the NEPD Plan
Mrs. BIGGERT. Thank you, Mr. Chairman. And, Mr. Secretary for coming. As you probably know, I represent National—Argon National Laboratories. So there is a couple questions I would like to get to.
And the first is that nuclear power. And that seems like it is a neglected source of supply that President Bush has revisited in his comprehensive plan. And nuclear power now generates over 50 percent of electricity in Illinois. And I think that maybe it is time for other parts of the country to know that what we know so well in Illinois is that nuclear power is clean and it is efficient and a safe form of electricity.
So if you could talk a little bit about the National Energy Policy regarding nuclear research and development. And as you know, Argon does have—has worked on the storage of nuclear waste. And second of all, are you concerned about the future supply of nuclear scientists and engineers to conduct the cutting-edge nuclear research?
Secretary ABRAHAM. Well, I would just say, and maybe this is in a sense reference back to some of the concerns that have been raised about our budget with respect to conservation and renewables. We also reduce the budget with respect to nuclear science and technology research.
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Again, pending conclusions to be reached by the energy plan. I did not wish to prejudge where the plan would come down. But where it did come down was in a strong statement of support for the role that nuclear energy needs to play in terms of supplying America's electricity needs in the future.
There is approximately 10 specific recommendations which we have made that—in addition to the strong statement that nuclear energy has to be part of our mix if we are going to have a balanced mix, everything from reauthorizing the Price Anderson legislation to calling upon the Nuclear Regulatory Commission to uprate those facilities whose safety records would either justify relicensing or uprating. To recommendations that we clarify the tax treatment of decommissioning fees to recommendations that call upon the Environmental Protection Agency and my department to try to assess the environmental impact in terms of emissions, of a grower—growing role for nuclear.
And our hope is to make sure that the existing facilities who are capable meeting safety standards are relicensed so they can realize their total life expectancy. And ideally to see an expansion in the number of facilities. Although as everybody knows, we have not had a new nuclear plant since the early 1970's. The principal challenge to us is to deal with the nuclear waste issue. It is something our high on the priority list of responsibilities I have this year when we believe that site characterization information relevant to the Nevada site will become available. And then I have responsibility to comprehensively analyze that and determine what to recommend to the President. Whether or not to seek a license for the storage of waste at the Repository in Nevada.
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But it is definitely something we think has to be part of the mix. If we were to see a significant decrease in the role of nuclear energy, in my judgment, that would put even greater stress on the natural gas generated electricity, which Congressman Ehlers alluded to earlier. We already foresee a 62 percent increase in natural gas demand if things do not change. If more—if nuclear plants go off line. If it went beyond that, we would I think see shortages and challenges in that market.
With regard to the talent you raise a very important point. The combination of the sort of status quo or even potential decline in the number of nuclear generators, combined with the changes that have occurred with regard to our nuclear stock pile programs, has taken a toll on the availability of qualified nuclear scientists in this country. People are not pursuing these programs and graduate training at the levels of the past.
I do not have—I recognize the problem. I do not have an immediate solution. I think it has to be partly linked to something I mentioned earlier, which was defining the science mission of the department. It also will be, I think, relevant if we solve the nuclear waste challenge so that a signal is sent that nuclear energy will continue to play a significant role. I think that will influence those decisions. But I think they are part of the mix.
Partnership for a New Generation of Vehicles
Mrs. BIGGERT. I hope you will take a look at H.R. 2126, which is the bill that I just recently filed, to look at the scientists. The other—quickly, to go back to the PNGV just a little bit. Because you said earlier that you had talked to the industry. But as you know, Argon is very much involved in this plan also. And as I understand, the funding has been cut for that and to streamline the budget. But it was—when that was said, I thought it was said something about the popularity of the sports utility vehicles to take a look at that research on that. And yet I would hope that you would visit Argon and what the research is happening in that area in the mid-sized vehicles. And in fact, several of the scientists there are driving the hybrid vehicles that have been tested there and have been developed by the industry.
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So I hope that you will talk to the scientists as well as the—as the industry issue.
Secretary ABRAHAM. We will. I mean, as I said to the Committee, when I was in the Senate because of Michigan's particular interest in transportation matters, this was a topic in the budget process I worked hard to support. And still do support. But I want to make sure that the research investment is linked to what ultimately will produce products that are implemented.
And what I think the transition we are seeing is from the development of a specific car or type of car to components of vehicles that would have, I think, broader application.
Mrs. BIGGERT. Right. And I have seen that being tested at Argon.
Secretary ABRAHAM. With respect to the fuel cell point also.
Chairman BOEHLERT. I thank the gentlelady. Your time has expired.
Mrs. BIGGERT. Thank you.
Off-shore Drilling in Sensitive Areas
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Chairman BOEHLERT. Mr. Etheridge.
Mr. ETHERIDGE. Thank you, Mr. Chairman. Mr. Chairman, I commend you for holding this hearing. And let me thank you for it on this most important issue that really affects every American. I think will have a significant impact on our Nation's economic strength in years to come.
And I am very pleased that we finally have a witness from the Administration who really can speak authoritatively. And I thank you, Mr. Secretary, regarding the President's plan.
Mr. Secretary, I have reviewed with great interest the recommendations contained in the 8 chapters of the report by the National Energy Policy Development Group, to which I believe you belong. And thank you for being here to talk about it this morning.
I appreciate the Administration's initiative in this area, and we have talked about much of it already. Let me talk about some very specific parts of it that I find disturbing. Especially, in light of the subsequent action taken by the Administration. In Chapter 5 in the summary of the recommendations, the NEPD Group recommends that the Administration re-examine the current Federal legal policy regime to determine its—if changes are needed regarding energy related activities in the setting of energy facilities in the coastal zone and on the outer continental shelf.
Now this sounds to me like the Administration is going to look at the possibility of drilling off the coast of North Carolina. Because if a moratorium on the drilling in the Atlantic exists, as it does now, and you say you will re-examine current policies to look at potential changes, one would logically conclude that you are going to look at lifting the moratorium. On May the 18th when Interior Secretary Norton was visiting my state and my district, she gave the public assurances that there currently were no plans to overturn the drilling moratorium. However, shortly thereafter multiple press releases strongly indicated that an advisory policy committee of the OCS plans to recommend to the Mineral Management Services and the Interior Department that the moratorium be lifted.
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Now I now these actions did not occur in your department. I understand that. But you were part of the group that put the President's plan together. And you are the Secretary of Energy. This Administration has a reputation for pretty heavy oil line-up to drill and focus on those issues. And the folks in North Carolina really do not want to see oil platforms off the coast of North Carolina in this pristine waters, and neither do I. We just do no want to see it lapping at the Cape Hatteras Lighthouse when we just got through moving it out of the way of the ocean.
As a key member of the group that developed the energy plan, can you answer authoritatively and unequivocally whether the President's report on energy recommendations even looking into the policy of drilling off the Atlantic Coast, are you looking into it. And finally, will you say today and guarantee to the people of North Carolina this Administration will withhold the drilling moratorium to the end of President Bush's term.
Secretary ABRAHAM. I can only answer with respect to the task force's discussions of these issues. I cannot answer for the Department of Interior's—any future decisions they might make. But I can say that I totally agree with the statements that Secretary Norton made that you just referenced. In the context of putting together the energy plan, the discussions we had were to not alter any of the existing moratoria on off-shore drilling. And I have no insight as to what might be the discussions that are happening at some of the offices of the Interior. I am not privy to them and I have not been made aware of any.
Mr. ETHERIDGE. Well, let me go back to re-enforce what I just asked then. You are the Secretary of Energy.
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Secretary ABRAHAM. Right.
Mr. ETHERIDGE. You were a Member of that Committee. And I think the people of North Carolina and certainly the coastal areas will not look with any favor. And certainly this Member of Congress will not either. Because I think these are—this is a very critical area.
And if I understand you correctly, you are saying that the Committee did not recommend that. And that would not be a recommendation——
Secretary ABRAHAM. That is correct. We did not. And what I would also—I mean, Mr. Chairman, one of the unfortunate things about the—I have got the title, Secretary of Energy. I do not have all of the authority that relates to energy-making decisions. And this is one of the significant areas beyond the scope of our department.
But in the context of putting together this energy report and making the recommendations we did, one of the issues that was discussed was whether or not to lift any of the moratoria.
Chairman BOEHLERT. Your time has just expired.
Mr. ETHERIDGE. Mr. Chairman——
Chairman BOEHLERT. And in all fairness to other members I am trying to keep everyone to the five minute limit. Mr. Grucci.
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DOE's R&D Budget
Mr. GRUCCI. Thank you, Mr. Chairman. And thank you for hosting these hearings today. Mr. Secretary, it is a great privilege to have you with us. I have three questions I am going to try to get in in my five minute span here.
You probably know that my district, New York's First Congressional District, is the home of Brookhaven National Laboratory. And one of the issues that they have been confronting is the Office of Science budget has remained flat for a number of years. And due to inflation they have actually been losing money.
The science research that is done there does not necessarily provide instant information. But as we know, that the work in science is critically important for understanding future problems and resolving future problems. I am hoping that you might be able to consider the issue of helping to increase at least to the cost of living that budget, the Office of Science's budget so that the scientists that are working there now are having to take retirement and we are losing those brilliant minds. And I am hoping that you might consider looking at that. And that might be a statement or a question. I do not know if you are prepared to respond to that.
Secretary ABRAHAM. Well, I—I will try to be quick in responding. I believe that as a former—when I was in the Senate I joined a number of other members there who worked very hard over a period of years, and I know there were counterparts here in on the House side, arguing for a doubling of the NIH budget. And a very strong case was made for that with a lot of support based on outside folks coming to Washington and constituencies that were developed.
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I happen to think that those who support a greater science mission in our department—I think to some extent I am sort of—I will not say I am sorry I did that, but I think that by focusing only on one of the three sort of major science components of the Federal Science complex, that we have affected a lot of the budget decision making with respect to the other 2. And I think a commensurate effort now needs to be brought about to focus on some of the mission as well as the needs and NSF and the DOE programs. Because they just have not received the kind of attention and—and I think absent that, it is harder to make the case for the kinds of plus-ups that we have seen in, for instance, in NIH.
Mr. GRUCCI. I thank you for that. And just as a point of information, the prior Administration I believe did a terrible injustice to that facility by causing the decommissioning of a small nuclear reactor that was used for medical research. And on behalf of the people who were served by that facility, I would extend an invitation to you at your convenience to join with me in visiting that facility.
Secretary ABRAHAM. I would be happy to.
New York State Clean Energy Initiative
Mr. GRUCCI. You would be very impressed with what you see there. Also, in the State of New York, Governor Pataki has introduced a clean energy initiative that provides tax breaks for the purchase of efficient appliances and renewable technologies. Is there a national scale program that is being considered along these line?
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Secretary ABRAHAM. Well, nothing that is commensurate with what you just described that I am aware of. But if you would maybe provide us with some information I would be happy to get back to you, if there is something I am not immediately thinking of that might be existent in the programs.
Mr. GRUCCI. Absolutely. I would be happy to do that.
Secretary ABRAHAM. I would like to see that.
Hydroelectric Power Issues
Mr. GRUCCI. And we also have a great deal of hydroelectric power. We all know that it is a clean and renewable energy source. And in the State of New York we have a great deal of hydroelectric energy sources. Can you comment on the development of hydroelectric sources?
Secretary ABRAHAM. Well, our concern is, at least outlined in the energy plan, was that the licensing processes for hydro facilities have become extraordinarily lengthy in duration. And that we need to examine that and are doing so as a result of the recommendation on hydropower in the report.
Because we are fearful that the duration that is involved, the potential costs involved in these relicensing may cause to make decisions not to go through that process. That we would in fact see a decline in the role hydropower plays.
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The Energy Information Administration and the Department, in fact, projects over the next 20 years a reduction in the energy supply provided as a percentage of the total electricity supply from hydropower. And that concerns us. And we believe that, at least a principal concern, has to be the relicensing process.
We also have to examine some of the other issue that exist with respect to concerns that have been raised by environmentalists and others about impact on fish and fish migration. That affects us out in the Pacific northwest with the BPA, the Bonneville Power Administration. So that is another set of issues that, you know, that confront us. So we did not make a recommendation in that area. But we did with respect to relicensing.
NEPD Plan and National Goals: Fuel Cells, Oil Policy
Chairman BOEHLERT. The gentleman's time has expired. Mr. Larson.
Mr. LARSON. Thank you, Mr. Chairman. And thank you, Mr. Secretary, for joining us here today. Let me start by joining with those acolytes to the Chairman, not only for holding this hearing, but also for the bipartisan manner in which he continues to run and manage this Committee. And often times it is more difficult to ask the tougher questions of your friends and allies than it is to those from across the aisle. And this has also been very informative, as well in terms of learning from my colleagues.
Mr. Bartlett, especially I want to thank today for learning some statistics that I previously had not known.
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I would also like to take this opportunity, Mr. Secretary, to invite you to participate in a drive in a fuel cell powered SUV that gets 55 to 60 miles per gallon that we hope to bring to Capitol Hill in July. I hope you will be around and able to participate in that. And would like to, if I may, Mr. Chairman, extend remarks and submit questions that I know time won't permit me to ask. And with your indulgence, Mr. Secretary, I hope that you will have an opportunity to answer those.
Recently in my district I was asked, however, by individuals who feel, you know, frankly, that they have been failed by their government with respect to energy policy. And this is not a democratic or republican initiative. This is something for the past 25 years since this Nation has known of the problems with respect to energy that all we have done as a Nation is a hodge-podged piece-meal approach to solving this goal.
And the person asked very simply, and I think it is an important question to ask, why is it that this Nation cannot set a goal to be energy independent from foreign sources. Why can't we go boldly into this century knowing what we know, balancing both energy and environmental concerns and say that in the next 10 years we will no longer be dependent upon foreign sources of energy. Because we are going to do the following things. And then marshal the American spirit and the American will and technology toward these goals.
You noted in your comments about fuel cells before, and I think it is important as well to note that importance of both being energy efficient, but also being environmentally sound. It seems to me that the two are inextricably tied and linked. Can—will this Administration, and I believe you will have the support of the American people and clearly the Congress, but it seems to me we need a clear vision, not some kind of shot-gun approach that basically says in a quantified period of period of time, be it 10 years, be it 15 years, whatever the period might be, that we are no longer going to be dependent upon foreign oil and we are going to di—we are going to devise for ourselves a system that is both environmentally sound and one that will allow us to wean off of the support of foreign oil.
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Secretary ABRAHAM. Well, I think the starting point toward reducing our dependence is that we have to, I think, both be prepared in addition to conservation measures, to both develop sources that exist domestically. And to do—to be willing to invest in the infrastructure needed to deliver those sources to the users.
Mr. LARSON. And that begs Mr. Bartlett's question of what about tomorrow? I mean, I very enlightening when he says, after the one or two percent that remains where are we going. And here is the problem. I think Americans do not see any clear coherent policy. I see a lot of fingerpointing going on on all sides about whose fault and where the blame is. No one really cares about that. They want to see a goal and they want to see this country march toward that kind of independence.
Secretary ABRAHAM. Well, again, you know, those who argue that we should limit the amount of domestic production argue to us, both in the editorials and in Congress and elsewhere, that we need to diversify our energy sources. And we support that in this policy. I think the ques—the issue—I think with respect to sources has to be expanded. Instead of focusing on a limited source of importation which we have been certainly doing, we need to diversify. There are huge reserves of energy outside of the United States that are untapped. And we have people interested in the countries in which these reserves repose in trading and working with the United States.
And I think that is a—that is recommended as one of a set of recommendations with respect to tapping into those sources.
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Mr. LARSON. In the nations of Japan and Germany are already moving their industry further along. And we'll say for example, fuel cells in their automobiles because of those ramifications. I think the trouble thing or that is bothersome to a number of members here is that there does not seem to be that emphasis in the policy here. There doe not seem to be the will nor the financial wherewithal budgetarily to get behind these initiatives.
Secretary ABRAHAM. Well——
NEPD Plan Background
Chairman BOEHLERT. The gentleman's time has expired. But let me make this one observation, if I may. This Administration did not invent this problem, it inherited it. And to the credit of this President and this Administration, it has been very aggressive in coming up with a plan. This is a work in progress. I must confess some of the progress that is proposed is not to my way of thinking. And I can address that in other forum.
But the fact of the matter is, it is a work in progress. The Secretary and the other members of the cabinet are working very diligently. And coming up to the Hill and participating in forums like this. I think a lot more of that was needed prior to the development of the document that we have all read.
But it is a work in progress and I think we are moving in the correct direction. Mr. Rohrabacher.
Net Metering
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Mr. ROHRABACHER. I thank you very much, Mr. Chairman. I remind my good friend that a hodge-podge may also be defined as going at a problem from many different directions. Which is precisely the way we should approach the energy crisis that we are facing today.
And if we are going to march toward independence, and you are very interested in doing that, I hope you will start with your neighbor, Mr. Etheridge from North Carolina who is right next to you, whose testimony prior—or his questions just to you is of how we are going to reduce American supply by insisting that the view of the people of North Carolina of their pristine ocean not be, you know, not be in some what marred by the existence of a off-shore oil well. Perhaps view is less important now then the production of energy.
In fact, in California, I represent Surf City, USA, Huntington Beach. We have had about 20 off-shore oil wells off of my district for the last 30 years. And we have had the only off-shore—the spillage we have had by the way has been from a tanker. And let me remind my colleagues that when we do not develop our off-shore oil resources and we are so concerned of supposedly concerned about the environment, what we end up doing is relying on tankers, which are about 100 times more likely to spill oil, and certainly that is what happened in my district, than an off-shore oil well.
I think we need to get serious and I think that there has been—there is a lot of political posturing on the issue of energy in this country, especially in California, I might add. We have had—and I would like to congratulate you, Mr. Secretary, and congratulate our President for the leadership that you and the President has shown in dealing with the situation in California.
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We have had a governor for the last 2b years who has insisted on price caps. And he has been insisting on that all to the poor house. $8 billion of our surplus has evaporated under the leadership of the Democrat governor of our state. And guess what, we have had threats of black-outs, and there have been rolling black-outs in our state.
You, Mr. Secretary, and our president have only been in power for what, three months now, or a little more than three months, four or five months, I guess. And you have held firm to your market principles. And guess what, the price is going down in California. The price of electricity. And we have had conservation.
Today we have heard a lot of clichés about conservation, especially about air conditioners, etcetera. Well, I can tell you, the best conservation is when people turn down the air conditioner or turn off the air conditioner or turn off lights that should not be on. And when you permit the price to function in the market place, that is what has happened.
And Mr. Chairman, I might add, in California, we have had this dramatic decrease in price under the leadership of this Administration. Because as the price has risen, surprise, surprise, there has been conservation. People are turning off unnecessary electricity and we have had a decrease, conservation of the energy. And thus, there is more supply in relationship to demand. And the price has gone down. Now this is just fundamental economics.
And no matter how much my friends on the other side of the aisle would like to say that we can pass laws that negate the law of supply and demand, every time we do, we have disasters like we are having here in California. And I certainly commend this Administration for at least trying not to repeal the law of supply and demand and try to instead increase supply of energy for our people.
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I know I have only got a very short period of time. Mr. Secretary, you mentioned net metering. And I believe that net metering is an important of getting every citizen involved in conserving energy and in producing energy. Perhaps you might go into that a little bit about what that is about.
Secretary ABRAHAM. Well——
Mr. ROHRABACHER. And I would recommend, highly recommend that you follow this course.
Secretary ABRAHAM. Well, I referenced it in the context of the implementation of the more—of the, you know, the expansion of solar energy. Because a lot of——
Mr. ROHRABACHER. Sure——
Secretary ABRAHAM [continuing]. Let's just say, intimidated by the potential cost of associating with solar energy generation in their homes might have a different perspective if there was a benefit to them if they could in fact through the net metering system actually gain credit for producing and sending back——
Mr. ROHRABACHER. Well, we could use that net metering not only for solar——
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Secretary ABRAHAM. Right.
Mr. ROHRABACHER [continuing]. Which I would agree with. But all kinds of different energy source.
Secretary ABRAHAM. Right. In fact, Congressman Nethercutt of up in his state in Pugent Sound. The electric company, the leadership there was recently to meet with me just to give me some interesting information to what they are doing. And one of the things that they have done is to increase dramatically the information flow to their customers. Half-a-million folks in the Seattle area by giving them, I think, it is a weekly billing versus a monthly billing. And the opportunity through the Internet to actually find out on a daily basis what kind of electricity use and cost that they are incurring.
What they have done is they have actually given people a price incentive to shift certain functions. Like washing their clothes and dishes to times of the day that are off peak times. And they pay them to do that because of the net metering system.
This sort of transparency I think is a very important ingredient if we are going to have the kind of conversation gains we all hope to have.
Mr. ROHRABACHER. Thank you very much.
Nuclear Energy
Chairman BOEHLERT. Thank you. Ms. Woolsey.
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Ms. WOOLSEY. Thank you, Mr. Chairman. And thank you, Mr. Secretary, for being here today. I too am from California. And how funny it is, how differently we see things from the same state.
With California's energy problems and I—that is an understatement calling it a problem. I have been alarmed at the lack of speed in the Administration's response and first reaction to California's, particularly the Democratic delegation's repeated pleas to do something to stabilize our situation in California.
Yes, indeed, finally something has happened. And it may help. But it will assure that power prices are still left to the whims of the market. And power prices right now are seven times what they were a year ago. And that is not acceptable. But what I am really trying to get at with this was the lack of speed in responding to California's problem.
But at the same time, the absolute speed that was brought the discussion of off-shore oil drilling back into focus. Drilling up in Alaska. And expansion of nuclear energy project.
Mr. Secretary, I cannot stress how strongly I feel that we should not increase our reliance on nuclear energy until we see a solution to our waste disposals issue. And I don't mean the solution where to bury it. I am concerned about that we are going to let economic factors eclipse our safety factors when it come to the nuclear option.
And the National Energy Policy Development Group distinctly and equivocally recommends that the President support expansion of nuclear energy in the United States. And I quote from what they wrote. Yeah, when it comes to safety we see vague statements in the report like, continue to study the science. Or hypotheticals such as accelerate—accelerator transmutation could be used in combination with reprocessing to reduce the quantity of toxicity of nuclear waste. That is not okay.
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And I have to ask you, Mr. Secretary, that without a solution which you said in your testimony, we do not have solution, how can you support stepping up production of more nuclear spent fuel or waste? We do not even have a solution for disposing the safely our existing waste. That was my question. It was long.
Secretary ABRAHAM. Okay. Well, let me just comment on both the points you made. First, with respect to nuclear energy, we recognize and have emphasized throughout, you know, the discussion of that in the report the importance of safety and the importance of dealing with nuclear waste.
Ms. WOOLSEY. But I have to interrupt. We do not have that dealt with yet. Why would we want more.
Secretary ABRAHAM. Well, we've been in office five months. We have not dealt with a lot of things yet, but we will.
Ms. WOOLSEY. But you are suggesting we create more before we deal with it.
Secretary ABRAHAM. No. What we are suggesting and recognize I think without any doubt is that the only way to expand the role of nuclear is to address the waste issue. But there are only a limited number of ways to do it. The way that the Congress has spent some billions—$6 billion or so over the last 15 years is to create a full scientific site characterization of the Nevada Yucca Mountain Repository. When that is completed it will come to me. My job is to then make a recommendation to the President. Either yes or no. Can we safely store the waste at that facility. I am not prejudging that decision. I will make as comprehensive a decision as I can. And then make a recommendation, yes or no, to the President.
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If we cannot use a repository in Nevada, if that does not happen, then we have to consider other alternatives. And certainly a decision not to do that would have a tremendous impact on whether or not there would be any new nuclear energy generation. Or for that matter, whether people would even choose to relicense existing facilities.
Ms. WOOLSEY. Well, are you willing to hold back on any new facilities——
Secretary ABRAHAM. Well, I do not know of anybody actually seeking a permit for a new facility right now. Because obviously, until these issues are addressed, people who might consider whether or not—to a utility company or somebody who might consider whether or not to seek a permit is not going to do so.
But the issue of safety is paramount. And I believe that we have—I think we should not be trapped though, I would just say this, in the view that nothing has changed with respect to safety since the late 1970's. Things have changed.
There has been tremendous improvements in terms of the design of reactors. There has been tremendous experience, both domestically but also in other countries like France. And I think we need to draw from that experience as we address safety in the future.
I think the sophistication and capability of the Nuclear Regulatory Commission to make determinations as to safety is today very advanced. And I think that we need to not pursue nuclear energy with anything but a safety priority. But also not reject outright the role that nuclear energy plays.
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Chairman BOEHLERT. Time has expired. Mr. Johnson.
The Role of Bio-fuels in the National Energy Policy
Mr. JOHNSON. Thank you, Mr. Chairman, Mr. Secretary. First of all, I want to on behalf Illinois and mid-western agricultural producers, particularly corn growers, I want to thank the Administration for last week's decision on a waiver.
Let me just make a couple of comments that are I suppose as much comments as questions and see what response you might have. We have alluded to some of the questions briefly to bio-diesel. Strictly from a mid-western standpoint, for that matter I suppose the issue is beyond that, I am encouraged by the role that the Administration is apparently willing to give to ethanol, bio-diesel, other renewable fuels. I guess my question would be, what role do you see those—that ethanol, specifically, and bio-diesel, specifically, playing in our national energy policy. And what can we do as a Congress and you do in your capacity to help encourage that.
Secretary ABRAHAM. Well, I think what we have recommended is an extension of the ethanol tax credit as one of the components of the plan as a firm indication of our view that ethanol can play and will play, continue to play an important role.
With respect to bio-diesel investments, we will continue to, you know, both research in this area and examine options. I mean, there are a number of interesting diesel related studies that are ongoing, that I have had a chance in the brief time I have been in this office, to examine. So you know, we are interested in alternative fuel opportunities and we will continue to work with Members of Congress to explore these areas.
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The Role of Coal in the National Energy Policy
Mr. JOHNSON. Also, I guess from a district standpoint or area standpoint coal is a—at least a much talked about source of energy. And Illinois is obviously one of those areas, central to southern Illinois where coal is a major component of the local economy. Without commenting on—from my standpoint on plusses or minuses of that particular fact what is your attitude about coal and what role it needs or should play.
Secretary ABRAHAM. Coal currently provides about 50 percent of electricity generation in this country. And there would be a—we would have an extraordinarily difficult time replacing that percentage of our electricity supply were we to somehow to do so. However, the Administration is committed to extensive research investments in clean coal technology that we talked about earlier. At our national energy research labs in Pennsylvania and West Virginia and other places, we will be implementing not just the new proposed coal technology initiative, but with research that already is ongoing, be continuing to move in that direction.
It is estimated that the current reserves of coal would allow the present facilities to continue operation for literally hundreds of years. It is, therefore, a key part of the energy strategy.
But again, we need balance between all of these sources, not just coal, not just nuclear but all of these exiting sources. Because if we do not, I think our projections are that the demand on natural gas would rise to sharply that it would be very difficult for us to be able to meet it. And certainly it would force us to make major increases in natural gas importation, which would bring us back to some of the issues we discussed earlier on energy independence.
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Mr. JOHNSON. Let me just conclude the questions just with a brief comment. Illinois legislature has recently moved, as we are seeking to do at a Federal level, to ban MTBE, obviously, that is critical to clean water. We are talking about clean air. And from my standpoint, the message I would like to convey to the Administration, and I think you have indicated a respectivity to it, is that Illinois economy, and for that matter the economy throughout the Nation, particularly in the central part of the country, depends in large part on renewable fuels. And your willingness as an Administration to accept those and promote those in increasing measure as part of our national energy policies. So that is my message. I appreciate your response to my question.
Chairman BOEHLERT. Thank you very much. Mr. Matheson.
Potential for Energy Conservation
Mr. MATHESON. Thank you, Mr. Chairman. And thank you, Mr. Secretary, for being here today. I appreciate your participation and it is nice to meet you. Having worked in the energy industry for a number of years I am very interested in the energy policy report. I think that there are a number of broad themes that are raised which I agree with. And I think the notion of a balanced plan is an appropriate one.
Ten years ago another Bush Administration delivered a national energy policy to the Hill. This Committee was very active in passing authorizations for programs proposed in that plan. The first Bush plan was 18 months in preparation. It involved 448 witnesses from 46 states. And there were several public meetings to discuss drafts of the plan. I happen to have a copy of the plan here. It includes an executive summary, a full report, and three technical annexes.
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In contrast, the plan we are talking about today is put together with an uncertain number of witnesses and a number of private sessions. And it is a report that has, you know, it is a good report to the extent that it goes to where it goes. It has some nice color photos, a lot of insertions. But I think it is lacking in citations for all the claims that are in the report. While this first Bush Administration went to great pains to try to convince Congress and the American people that theirs was truly a national plan crafted with input from all sectors and a rigorous analysis of options. And so what I would like to do in this brief questioning period is explore the technical analysis that was the basis within this report in one particular area.
And that example would be regarding the assumption in the report that energy efficiency can be expected to be improved by 1.6 percent per year between 2001 and 2020. Do you know who is responsible for settling or what the basis was for settling on that assumed growth in energy efficiency over that 20 year period?
Secretary ABRAHAM. I am not sure. I would be glad to take that for the record so that I give an accurate answer. In fact, I would be happy to provide, if you would like, you know, whatever buttressing information.
Mr. MATHESON. I would appreciate that, if you could. If you take another period, let us say 19—between 1980 and 1990, according the Office of Technology Assessment, energy efficiency approved at an annual rate of 2.5 percent. Is it appropriate for us to assume that there are policy options at our disposal that may allow us to add improvements in energy efficiency beyond that 1.6 percent assumption, that it is this plan, that may match the experience we actually during the decade from 1980 to 1990?
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Secretary ABRAHAM. Well, I think that our hope is that we can do more. I mean, we have, you know, as an Administration our position is that, you know, we focused a chapter on conservation and efficiency intentionally to highlight that as an important part of the balance. Some of the studies which have been conducted, one of which was referenced earlier, call upon—would call upon changes that would be, you know, carbon taxes and other kinds of what I guess people would describe as aggressive measures to attain higher levels of efficiency. We happen to doubt seriously that those would work—in fact I have not encountered anybody who wants to supports that type of an approach.
But, you know, we are obviously trying to develop in the private sector is as well efficient options that can be helpful to that attainment. But we have looked more recently there has not been the same level of gain as obviously there was at an earlier time.
Mr. MATHESON. Right. When you looked at this plan did you think about or did you get engaged in any cost benefit analysis where you are looking at some different policy options we could pursue that may be policy options that may encourage more efficiency compared to the cost of the 60 to 90 power plants a year that the plan proposes now? Did it—did the plan go to that level of the cost benefit——
Secretary ABRAHAM. Well, let me just—yeah. I mean, and here is the point that needs to be addressed. The remainder, the 1,300 to 1,900—the 1,300 is a conservative estimate.
Mr. MATHESON. Right.
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Secretary ABRAHAM. If you look at recent electricity demand increases it drives you toward the higher number not the lower number. We want back a longer period of time than the last three or four years. We assume that there might have been an acceleration there because the information technology explosion of that period that it might level off a little bit.
But it is a conservative estimation. However, that is to make up, as I said in my opening statement, the remaining difference after we achieved what we believe would be substantial reductions in demand as a consequence of efficiency. If there is not gain in terms of energy intensity within the economy between now and 2020, we will go from 98 to 175 quads of demand. We think we can bring that down at least to 127. I would like to see us do more. But we felt compelled to use Energy Information Administration projections as to where these—and that is where I think we got at least the 1,300 power plant number, as I said earlier. And where we got the quad projection information that I referenced——
Chairman BOEHLERT. The gentleman's time has expired. Mr. Calvert. We are going to try to rush along because we have a call of the House.
California's Energy Situation
Mr. CALVERT. Yes. Thank you, Mr. Chairman. Thank you, Mr. Chairman, I appreciate that. Mr. Secretary, thank you for coming out here today and answering our questions. I just want to talk a little bit about California since this has been brought up by a couple of other previous speakers. There is no state that is more efficient in power utilization than the State of California. I do no know of any state that really uses more renewable energy than the State of California. The solar, wind, geothermal. And yet we have a significant problem in California.
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You know, many years ago we made a decision to go down that soft energy path that obviously did not work. We have a base load energy problem in California that is well publicized and significant. And I want to congratulate this Administration for taking this problem on—head on. Because obviously this problem has spread throughout the west. And we see evidence throughout the rest of the country that we have severe energy problems.
And I want to congratulate you on working with nuclear power. You know, obviously, California is a very diverse state and we have a very big diversity of opinion within our state. I think nuclear power certainly is a big part of the solution. Twenty percent of the electricity of this country comes from nuclear. We have come a long ways with nuclear technology. And certainly with the waste issue. I think we have gone a long ways in handling the waste for nuclear power. So I want to congratulate this Administration. Because I think the energy plan, by the way, is a common sense document. Common sense in that today we are still basically a hydrocarbon based economy, petroleum, coal, certainly nuclear is a big part of that solution.
And today I look at as Mr. Bartlett had mentioned, today I think is a period of about 20 or so years until we can go to the next generation of power, whether it is hydrogen or fuel cells or a combination of various things. And so I look forward to working with those new technologies.
But one thing I wanted to comment on, ethanol was brought up. And certainly ethanol is a very important fuel source and I think it should be pursued. In California's case, and I know this is not in your ballpark, and so—but I just want to comment on this. Is requirement that we use MTBE in making—of gasoline as an oxenate in California. We are taking that out because of some water quality issues. Under existing clean air rules we have to use ethanol and EPA won't remove that requirement—as about 10 percent or sometimes even more of gasoline.
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And this going to cause a significant supply problem, I suspect, in the State of California. We are the fifth largest economy in the world. And I do not think that there is going to be enough ethanol to meet the demand level for these refining cap—refiners in California. And besides, it does nothing to clean up the air. Nothing in California. We have evidence and very much the industry agrees that this should be outcome based.
Clean air policy should be outcome based not based upon subsidizing one part of the country versus another. And so I just wanted to make that point. Because the consumers in California will have to pay the price of increased gasoline prices. And that will come back to you. Because if there is a refining shortage in California, because we already have stranded market because of our sulfur requirements and other requirements we put on into the market place on gasoline. And we have this ethanol situation that comes to us. And if there is not enough ethanol in the supply line within two years in order to meet the refining capability, do you believe that we could have a significant problem in potentially higher—higher prices for consumers in California?
Secretary ABRAHAM. Well, first of all, I cannot get in the details of EPA's decision with respect to the waiver. But I believe their conclusion was that they did not feel that the clean air act requirements could be met whether they will have a witness perhaps sometime who can address that. There is mixed, I think, opinion as to what the impact in terms of gasoline prices would be. I know that EPA guidance on this to use was based on——
Mr. CALVERT. If I could just interrupt you on that. We have been regulating clean air in California longer than any other state in the union. Especially, my area which has the worst air quality of any area in the United States. And all of our scientists claim that in fact that this requirement could make air quality even worse in certain times of the year, if it is used in a normal refining process. And that it will do nothing to clean up air, you know. I mean, the reality of this, I understand the politics of this, and it is—and I know it is difficult. But I hope if in fact there is a problem or crisis in California that we can revisit this issue down the road. Because I think it will be a significant one. Thank you, Mr. Secretary.
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Chairman BOEHLERT. The gentleman's time has expired. Mr. Udall.
Renewable Energy
Mr. UDALL. Thank you, Mr. Chairman. Welcome, Mr. Secretary, and thank you for your time here today. I wanted to make an offer to you to come out to Colorado and both visit the Rocky Flats site with which you are familiar. And based on your remarks about environmental management area of your responsibilities. And also spend some time at the National Renewable Energy Laboratory, which is doing some phenomenal work. Not only the research side but on the application side. And in that spirit, I wanted to ask you if we can count on you to encourage the President to sign the appropriations bill for interior which has an increase now of about $100 million in the renewable energy and research side that the subcommittee included in the appropriation process recently.
Secretary ABRAHAM. Well, first of all, I welcome the invitation and look forward to having the chance to visit a facility and the site. And as I have indicated to the Committee, our process of review to be completed fairly soon with respect to the broad renewables category. Based on that review we will make recommendations to the President. But I, you know, I feel—I hate to keep repeating myself and take away from your time. I would just stand on what I said earlier about the budget process, how we got where we are and where we are headed. And I can tell you that there are certainly areas and categories within the renewable budget that we will be making recommendations to the President——
Chairman BOEHLERT. Speaking of time, we have just five minutes and 30 seconds.
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Mr. UDALL. I appreciate that, Mr. Secretary. I would also commend to you, to your attention, the renewable energy efficiency caucus in the House, which has about 180 members and is growing literally everyday. Strong bipartisan leadership, Congressman Womp and I co-chair it. And we are ready and eager and willing to work with you in any way possible, as you move ahead in your efforts.
You mentioned as to the Congressman Rohrabacher the net metering opportunities we have. And again, I would bring to your attention Congressman Hensley has a piece of legislation I think is far reaching. And would work with some of the complexities and contradictions that are in PUPA the '70's act that opened up markets to net metering, but in fact, has not been fully implemented.
And I would urge you to look at that and use your staff expertise to do that.
Chairman BOEHLERT. The gentleman will—I'm sorry. I hate to do this. You have been here so long. The Secretary has been so courteous. And he has adjusted his schedule to stay this long. He was due to leave a half-hour ago. But we have got three minutes and a half to vote.
Mr. UDALL. Thank you again, Mr. Secretary.
Chairman BOEHLERT. All right. Miss Jackson Lee, do you have a question for the good of the order, but make it quick as you can.
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Energy Research and Development
Ms. JACKSON LEE. I thank you very much, Mr. Chairman. And thank you, Mr. Secretary, for your presence and indulgence. I will, Mr. Chairman, be very brief.
I happen to believe that we can balance our energy policy. And particularly, I think we are long overdue for a national domestic energy policy that all of us, the state holders can buy into.
Mr. Secretary, take back the message of even those of us in Texas believe that research and development is a key element. And I might refer you to a recent New York Times poll that suggests that 68 percent of the American people believe in conservation no matter where they live. I would simply ask a question. You have attributed this to a budgeting process. I just simply want to hear that out of your energy proposal that research and development, whether it be on fuel cells, which I heard an oil and gas person out of Houston, Texas, comment as a viable alternative, is a priority for this Administration?
Mr. ABRAHAM. It is. And the only other point I would make in closing, is that at the same time that we will be trying to review all of these programs, we are also going to be very closely monitoring what we think is the appropriate role of the private sector in this research. Because I want to make sure that industries and sectors that are enjoying great prosperity, and have in recent years, pay their fair share as well. And that will be part of the mix. But it definitely is a priority for us.
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Ms. JACKSON LEE. I look forward to working with you.
Mr. ABRAHAM. Thank you.
Ms. JACKSON LEE. Thank you, Mr. Chairman.
Chairman BOEHLERT. Mr. Secretary, let me on behalf of the entire Committee thank you. This was a well attended hearing, active participation. You have been magnificent. It is the type of dialogue we need to have. Thank you very much.
Mr. ABRAHAM. I look forward to coming back.
Chairman BOEHLERT. We are adjourned.
[Whereupon, at 12:20 p.m., the Committee was adjourned.]
Appendix 1:
Answers to Post-Hearing Questions Submitted By Members of the Subcommittee on Energy
Next Hearing Segment(2)