[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]
POTENTIAL ALTERNATIVE ENERGY SOURCES AVAILABLE ON NATIONAL PUBLIC
LANDS
=======================================================================
OVERSIGHT HEARING
before the
COMMITTEE ON RESOURCES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
__________
October 3, 2001
__________
Serial No. 107-63
__________
Printed for the use of the Committee on Resources
Available via the World Wide Web: http://www.access.gpo.gov/congress/
house
or
Committee address: http://resourcescommittee.house.gov
U.S. GOVERNMENT PRINTING OFFICE
75-504 WASHINGTON : 2002
________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512-1800
Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001
COMMITTEE ON RESOURCES
JAMES V. HANSEN, Utah, Chairman
NICK J. RAHALL II, West Virginia, Ranking Democrat Member
Don Young, Alaska, George Miller, California
Vice Chairman Edward J. Markey, Massachusetts
W.J. ``Billy'' Tauzin, Louisiana Dale E. Kildee, Michigan
Jim Saxton, New Jersey Peter A. DeFazio, Oregon
Elton Gallegly, California Eni F.H. Faleomavaega, American
John J. Duncan, Jr., Tennessee Samoa
Joel Hefley, Colorado Neil Abercrombie, Hawaii
Wayne T. Gilchrest, Maryland Solomon P. Ortiz, Texas
Ken Calvert, California Frank Pallone, Jr., New Jersey
Scott McInnis, Colorado Calvin M. Dooley, California
Richard W. Pombo, California Robert A. Underwood, Guam
Barbara Cubin, Wyoming Adam Smith, Washington
George Radanovich, California Donna M. Christensen, Virgin
Walter B. Jones, Jr., North Islands
Carolina Ron Kind, Wisconsin
Mac Thornberry, Texas Jay Inslee, Washington
Chris Cannon, Utah Grace F. Napolitano, California
John E. Peterson, Pennsylvania Tom Udall, New Mexico
Bob Schaffer, Colorado Mark Udall, Colorado
Jim Gibbons, Nevada Rush D. Holt, New Jersey
Mark E. Souder, Indiana James P. McGovern, Massachusetts
Greg Walden, Oregon Anibal Acevedo-Vila, Puerto Rico
Michael K. Simpson, Idaho Hilda L. Solis, California
Thomas G. Tancredo, Colorado Brad Carson, Oklahoma
J.D. Hayworth, Arizona Betty McCollum, Minnesota
C.L. ``Butch'' Otter, Idaho
Tom Osborne, Nebraska
Jeff Flake, Arizona
Dennis R. Rehberg, Montana
Allen D. Freemyer, Chief of Staff
Lisa Pittman, Chief Counsel
Michael S. Twinchek, Chief Clerk
James H. Zoia, Democrat Staff Director
Jeff Petrich, Democrat Chief Counsel
------
C O N T E N T S
----------
Page
Hearing held on October 3, 2001.................................. 1
Statement of Members:
Cubin, Hon. Barbara, a Representative in Congress from the
State of Wyoming........................................... 1
Hansen, Hon. James V., a Representative in Congress from the
State of Utah.............................................. 27
Kind, Hon. Ron, a Representative in Congress from the State
of Wisconsin............................................... 36
Rahall, Hon. Nick J., a Representative in Congress from the
State of West Virginia..................................... 2
Statement of Witnesses:
Butler, Dr. Barry L., Vice President and Manager, Energy
Products Division, Science Applications International
Corporation (SAIC), Washington, DC, on behalf of the Solar
Energy Industries Association.............................. 57
Prepared statement of.................................... 59
Garman, Hon. David, Assistant Secretary, Energy Efficiency
and Renewable Energy, U.S. Department of Energy,
Washington, DC............................................. 14
Prepared statement of.................................... 15
Griles, J. Steven, Deputy Secretary, U.S. Department of the
Interior, Washington, DC................................... 22
Prepared statement of.................................... 24
Hulen, Jeffrey B., Senior Geologist, Energy & Geoscience
Institute, University of Utah, Salt Lake City, Utah........ 40
Prepared statement of.................................... 41
Hutzler, Mary J., Acting Administrator, Energy Information
Administration, U.S. Department of Energy, Washington, DC.. 3
Prepared statement of.................................... 4
Steve, Jaime C., Legislative Director, American Wind Energy
Association, Washington, DC................................ 55
Prepared statement of.................................... 56
Weisgall, Jonathan M., Vice President, Legislative and
Regulatory Affairs, MidAmerican Energy Holdings Company,
Washington, DC, on behalf of the Geothermal Energy
Association................................................ 46
Prepared statement of.................................... 47
OVERSIGHT HEARING ON POTENTIAL ALTERNATIVE ENERGY SOURCES AVAILABLE ON
NATIONAL PUBLIC LANDS
----------
Wednesday, October 3, 2001
U.S. House of Representatives
Committee on Resources
Washington, DC
----------
The Committee met, pursuant to other business, at 11:23
a.m., in Room 1324, Longworth House Office Building, Hon.
Barbara Cubin presiding.
STATEMENT OF THE HON. BARBARA CUBIN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF WYOMING
Mrs. Cubin. [Presiding.] The full Committee will now come
to order for the purposes of this hearing. I would like to
begin by thanking Chairman Hansen for scheduling today's full
Committee hearing on the potential for alternative energy
sources for the Nation's producible minerals from our public
lands. Chairman Hansen has been called away for an important
meeting on security issues surrounding the Winter Olympic Games
to be held in his State and district just a few months from
now. Given my Chairmanship of the Energy and Minerals
Subcommittee, he has asked me to chair this hearing until his
return.
Today we shall hear from the Department of the Interior,
the keeper of our public lands, and the Department of Energy,
the agency which focuses upon energy technology, research and
development, as well as being the chief forecaster of our
natural energy demand. Our second panel has witnesses from the
geothermal, solar and wind energy communities. Chairman Hansen
chose to focus the scope of this hearing to these alternative
energy sources, which by many accounts we have in abundance
beneath or over our public lands.
President Bush's national energy policy acknowledges the
need to further the role of alternative energies in order to
achieve more self-sufficiency in meeting our energy needs. The
events of September 11th and the aftermath of those attacks
upon our Nation, in my mind, underscore the call for more
domestic energy sources and less reliance upon crude oil
imported from countries which may or may not turn off the
spigot as a means to conduct foreign policy. My Subcommittee
has explored the issue of public lands' availability for
natural gas, oil, coal-bed methane, coal and geothermal
resources.
H.R. 4, the Securing America's Future Energy Act of 2001,
included provisions for the assessment of alternative energy
potential from the public lands together with an analysis of
impediments to the timely development of such resources. The
other body has yet to bring forth an energy package, but I
trust that when they do, it, likewise, will contain provisions
to advance the alternative energy sources.
But now, how much geothermal, solar and wind can they
realistically contribute? Where is it concentrated on our
public lands? How do we get the energy across public lands to
demand centers? Will the siting concerns of environmental
groups, which look at every turn when conventional energy
sources are proposed for development, thwart otherwise viable
wind farms, large solar arrays or geothermal power plants?
These are issues which must be tackled in developing a rational
energy policy, which is a necessary component of a realistic
national security policy, as well.
I would like to now recognize Mr. Rahall for an opening
statement.
STATEMENT OF THE HON. NICK J. RAHALL II, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF WEST VIRGINIA
Mr. Rahall. Thank you, Madam Chair. I welcome all the panel
this morning, particularly my friend of old days, Steve Griles.
I understand he is the new and improved Steve Griles, at least
I hope that is the case. As we all know, this is not Steve's
first appearance before this Committee or his first tour of
duty at the Interior Department. During his last stand at the
department, Steve served as Assistant Secretary for Energy and
Minerals. At the time, we were often at odds on some very
controversial matters. So, today, I am pleased to report that I
was right and Steve was wrong.
Steve resisted my ultimately successful efforts to reform
the onshore oil and gas program, as well as to halt oil shale
mining claim giveaways. History now shows that my reform
legislation, particularly on oil and gas, has served the public
well. All leases are initially offered competitively. We are
receiving more bid dollars and the red count is very healthy. I
stated that new and improved Steve Griles is now with us
because I am advised by staff that he has mellowed out somewhat
over the years. Certainly, when he worked as a lobbyist, we
found that to be the case. So again, I welcome you to the
Committee, Steve. I look forward to working with you and there
are some very important issues that face us together at this
time. For instance, I look forward to you being a strong voice
in support of retaining the new 3809 regulations on hard rock
mining. That would be a nice start to prove the new and
improved Steve Griles is really before us.
Thank you, Madam Chairman.
Mrs. Cubin. I now recognize the first panel: Mary J.
Hutzler, Acting Administrator, Energy Information Agency,
Department of Energy; the Hon. David Garman, Assistant
Secretary, Energy Efficiency and Renewable Energy, Department
of Energy; and the new and improved Hon. J. Steven Griles,
Deputy Secretary of Interior, U.S. Department of Interior. I
would now recognize Mrs. Hutzler.
STATEMENT OF MARY J. HUTZLER, ACTING ADMINISTRATOR, ENERGY
INFORMATION ADMINISTRATION, DEPARTMENT OF ENERGY, WASHINGTON,
D.C.
Ms. Hutzler. Madam Chair and members of the Committee, I
appreciate the opportunity to appear before you today to
discuss renewable energy markets in the United States. The
Energy Information Administration is an autonomous statistical
and analytical agency within the Department of Energy. We are
charged with providing objective, timely and relevant data,
analysis and projections for the use of Department of Energy,
other government agencies, the U.S. Congress and the public.
Our baseline projections in energy trends are widely used by
government agencies, the private sector and academia.
The projections that I will be discussing today are from
our annual energy outlook and from the service report that we
published this July. We expect total energy consumption to
increase in the United States from 99 quadrillion British
Thermal Units in 2000, to 128 quadrillion BTUs in 2020, an
average annual increase of 1.3 percent. Of this amount,
renewable energy consumption represents a 7-percent share. In
2020, about 54 percent of renewables is expected to be used for
electric generation and the rest for dispersed heating and
cooling, industrial uses and fuel blending.
Total grid-connected electricity generation from renewable
sources is projected to increase by 85 billion kilowatt-hours
between 2000 and 2020, representing between 9 and 10 percent of
total electricity generation, as depicted in this chart.
Generation from renewables other than hydroelectricity is
projected to increase 64 billion kilowatt-hours, between 2000
and 2020, increasing its share of total generation from 2.2
percent in 2000 to 2.8 percent in 2020. Most of the projected
increase in non-hydro renewables is expected from biomass,
landfill gas, geothermal energy and wind power.
State mandates and other incentives, including the Federal
protection tax credit for generation from new wind facilities,
encourage much of the growth in renewables, particularly in the
earlier part of the forecast. Further penetration of renewables
is slowed by the total cost of renewable generation, relative
to fossil-fuel technology. While cost reductions are projected
over time for renewable technologies, the cost of coal- and
gas-fired generation are also expected to decline, resulting in
higher costs per kilowatt-hour for new wind, biomass or
geothermal generation than for other new coal- or natural gas-
fired combined-cycle generation through 2020.
Nevertheless, total non-hydroelectric renewable electricity
generation is projected to grow at a faster rate than each of
the conventional energy sources of generation, with the
exception of natural gas, renewable resources plentiful. For
example, total resources for the three best of the six
classifications of available wind in the United States are
enough to power approximately 2,500 gigawatts of generating
capacity, or about three times the current installed capacity
base.
However, the cost of utilizing renewable resources can be
considerably higher than those of the fossil fuels, making them
less likely to be exploited. Barriers to the adoption of
production of renewable resources include their higher capital
cost, the intermittent nature of wind and solar technologies,
the difficulty of accessing resources in mountainous or other
difficult-to-reach terrain, the cost of connecting to and
upgrading to the transmission grid, and environmental issues
including disruption of fish and animal habitats, cultural or
aesthetic objections and the use of parkland.
Demand for renewable energy is relatively small under our
reference case conditions. In order to show the impact of
alternative assumptions concerning the key factors driving
renewable energy markets, we examined alternative cases. In our
high renewables case, we assumed more favorable characteristics
for non-hydroelectric renewable generating technologies than in
the reference case, including lower capital costs and
operations and maintenance costs, increased biomass fuel
supplies and higher capacity factors for solar and wind
generation. This case is depicted by the right-hand bar in this
chart. In this case, generation from non-hydro renewables
increases by 94 billion kilowatt-hours, representing 4.6
percent of total generation, compared to the 2.8 percent in the
reference case.
We also analyzed two renewable portfolio standards, one in
which 10 percent of electricity sales were required to be
reduced from renewable resources by 2020, and the other
requiring 20 percent renewable production. When a 20 percent
renewable portfolio standard is required, total non-
hydroelectric renewable generation is more than six times the
level in the reference case by 2020. This requires 176
gigawatts of non-hydroelectric renewable capacity, which is
depicted regionally in this chart and compared against the
reference case. Reaching this target is expected to require
increasing use of more expensive renewable options, resulting
in electricity prices over 4 percent higher than the reference
case of 2020.
In conclusion, over the forecast period, we expect the use
of renewable resources of energy to increase. However, this
increase is expected to proceed at a relatively slow pace, due
mainly to the relative cost of these technologies compared with
fossil-fuel technologies. While renewable technology costs have
declined, so have those of coal and natural gas. However, lower
technology costs, higher fossil fuel prices, increased research
and development or more favorable renewable policies could
alter the outlook for renewables.
Thank you and I will be happy to answer any questions you
may have.
[The prepared statement of Ms. Hutzler follows:]
Statement of Mary J. Hutzler, Acting Administrator, Energy Information
Administrtion, Department of Energy
Mr. Chairman and Members of the Committee:
I appreciate the opportunity to appear before you today to discuss
renewable energy markets in the United States.
The Energy Information Administration (EIA) is an autonomous
statistical and analytical agency within the Department of Energy. We
are charged with providing objective, timely, and relevant data,
analysis, and projections for the use of the Department of Energy,
other government agencies, the U.S. Congress and the public. We do not
take positions on policy issues, but we do produce data and analysis
reports that are meant to help policy makers determine energy policy.
Because we have an element of statutory independence with respect to
the analyses that we publish, our views are strictly those of EIA. We
do not speak for the Department, nor for any particular point of view
with respect to energy policy, and our views should not be construed as
representing those of the Department or the Administration. However,
EIA's baseline projections on energy trends are widely used by
government agencies, the private sector, and academia for their own
energy analyses.
The projections in this testimony are from the Annual Energy
Outlook 2001 (AEO2001) published by EIA in December 2000, which
provides projections and analysis of domestic energy consumption,
supply, prices, and energy-related carbon dioxide emissions through
2020; and from the report Analysis of Strategies for Reducing Multiple
Emissions from Electric Power Plants: Sulfur Dioxide, Nitrogen Oxides,
Carbon Dioxide, and Mercury and a Renewable Portfolio Standard
(Strategies), released by EIA in July 2001. The projections in these
reports are not meant to be exact predictions of the future, but
represent possible alternative energy futures, given technological and
demographic trends, current laws and regulations, and consumer behavior
as derived from known data. EIA recognizes that projections of energy
markets are highly uncertain, subject to many random events that cannot
be foreseen, such as weather, political disruptions, strikes, and
technological breakthroughs. In addition to these short-term phenomena,
long-term trends in technology development, demographics, economic
growth, and energy resources may evolve along a different path than
projected in the reference case, many of which are explored through
alternative cases such as the High Renewables case presented in this
testimony.
Energy Consumption to 2020
Total energy consumption is projected to increase from an estimated
99.1 quadrillion British thermal units (Btu) in 2000 to 128.2
quadrillion Btu in 2020, an average annual increase of 1.3 percent.
Energy consumption in the United States increased from 67.9 quadrillion
Btu in 1970 to 81.0 quadrillion Btu in 1979, with a downturn in 1974
and 1975 following the 1973-74 oil price increases associated with the
first oil embargo. During the early 1980s, energy consumption again
declined to 73.3 quadrillion Btu in 1983, due in part to the second oil
price increase. Since 1983, energy consumption has been generally
increasing, with an average annual increase of 1.8 percent through
2000.
Total renewable energy consumption, including ethanol used in
gasoline, is projected to increase from 6.9 quadrillion Btu in 2000 to
8.6 quadrillion Btu in 2020, an average annual growth of 1.1 percent
(Figure 1). In 1970, renewable energy consumption in the United States
was 4.1 quadrillion Btu. Renewable energy resources include
hydroelectric power, wood, and waste, with small amounts of geothermal,
wind, and solar resources.1 The share of total energy
consumption that is derived from renewable sources is projected to be 7
percent in 2020, approximately the same share as in 2000. In 2020,
about 54 percent of renewables is expected to be used by electricity
generators (excluding cogenerators) and the rest for dispersed heating
and cooling, industrial uses (primarily cogeneration), and fuel
blending (Figure 2).
---------------------------------------------------------------------------
\1\ Ocean thermal, tidal, and wave resources are not included in
these projections because they are not expected to become economically
viable by 2020.
---------------------------------------------------------------------------
These projections incorporate the impacts of renewable-related laws
and regulations, including the Production Tax Credit (PTC) for new
electric generating capacity powered by wind and closed-loop biomass
(currently in effect through December 31, 2001) established by the
Energy Policy Act of 1992; the Renewable Energy Production Incentive
established by the same legislation; and various State initiatives,
including the California AB1890 subsidy program for qualifying
renewable energy facilities, and State Renewable Portfolio Standards
promulgated by Arizona, Iowa, Texas, Massachusetts, Minnesota, New
Jersey, and Nevada. In addition, the projections include all capacity
currently under construction, for which contractual commitments have
been made, or utilities have made public commitments, and are expected
to come on line between now and the end of 2002. Finally, these
projections assume a continuation of research and development funding
by the U.S. Department of Energy at approximately the same levels as
recent history through 2020. Since the reference case includes only
those laws, regulations, and standards in effect as of July 1, 2000,
any further extensions of the PTC, as proposed by the Bush
Administration's National Energy Policy, or other proposed laws and
regulations relevant to renewable energy are not included.
Transportation.
Transportation energy demand is expected to increase at an average
annual rate of 1.8 percent to 38.5 quadrillion Btu in 2020 and is the
fastest growing end-use sector. The growth in transportation use is
driven by 3.6-percent growth in air travel, the most rapidly increasing
transportation mode, and 2.0-percent annual growth in light-duty
vehicle travel, the largest component of transportation energy demand,
coupled with slow growth in vehicle efficiency.
Advanced technology vehicles, representing automotive technologies
that use alternative fuels or require advanced engine technology, are
projected to reach nearly 2.0 million vehicle sales (12.1 percent of
total projected light-duty vehicle sales) by 2020. The leading
technologies are gasoline hybrid electric vehicles and alcohol
flexible-fueled vehicles. The use of renewables in the transportation
sector, specifically ethanol, is projected to increase at an average
rate of 2.8 percent per year between 2000 and 2020. This represents a
near-doubling of the use of ethanol to 0.24 quadrillion Btu by 2020.
Ethanol in the form of E85 is consumed primarily by light-duty
flexible-fueled vehicles and dedicated E85 vehicles, but the majority
of ethanol is used for gasoline blending, about 88 percent in 2020. All
alternative fuels consumed by light-duty vehicles are projected to
displace about 230,000 barrels of oil equivalent per day by 2020, or
2.1 percent of light-duty vehicle fuel consumption.
Bans on methyl tertiary butyl ether (MTBE) as a motor gasoline
oxygenate in a number of States due to groundwater contamination may
stimulate additional ethanol consumption as a substitute for MTBE.
While the forecast included all eight State bans as of the summer of
2000, five States have instituted bans since that time, meaning that
future ethanol consumption could be higher as a result of those and
possible additional bans by other States.
Residential and Commercial.
Residential energy consumption is projected to increase at an
average annual rate of 1.1 percent, reaching 24.6 quadrillion Btu in
2020. The growth is led by energy demand for a variety of electricity-
using equipment and appliances. Residential electricity use is
projected to increase at an annual rate of 1.8 percent.
Commercial sector energy consumption is projected to increase at an
average rate of 1.3 percent annually, to 21.3 quadrillion Btu in 2020.
Similar to the residential sector, electricity consumption for
telecommunications, computers, office equipment, and other appliances
is the fastest growing area, with total commercial electricity demand
increasing at an average annual rate of 1.8 percent.
Currently, the combined residential and commercial buildings
sectors use about 0.6 quadrillion Btu of renewable energy, primarily
wood consumed for residential space heating and secondary heating. This
is expected to decline slightly through 2020. Renewable energy is also
used in applications such as ground-source heat pumps that use
geothermal energy for heating and cooling and photovoltaic (PV) solar
systems that generate electricity. Grid-connected PV solar systems on
buildings are projected to comprise over 350 megawatts of distributed
generating capacity by 2020, aided in large measure by programs such as
Million Solar Roofs that promote growth in the PV market.
Industrial.
Industrial energy demand is projected to increase at an average
rate of 1.0 percent per year, reaching 43.7 quadrillion Btu in 2020.
Total industrial output is expected to grow at an average rate of 2.9
percent per year; however, the fastest growing industrial sector is
non-energy- intensive manufacturing with an average annual growth of
3.4 percent. Energy-intensive manufacturing and nonmanufacturing have
growth rates of 1.2 and 1.6 percent, respectively. This structural
shift in the industrial sector, combined with ongoing efficiency
improvements, helps to moderate the increase in industrial energy
demand.
Consumption of biomass byproducts in the pulp and paper, lumber,
and food industries accounts for most of the renewable energy consumed
in the industrial sector. Biomass consumption is projected to increase
from 2.0 quadrillion Btu in 2000 to 2.9 quadrillion Btu in 2020, a 1.9-
percent average annual growth rate. Biomass often is used in
cogeneration, the simultaneous production of useful thermal energy and
electricity. The higher projected availability of biomass leads to
additional biomass-based cogeneration capacity, which is projected to
increase from an estimated 4.6 gigawatts in 2000 to 7.5 gigawatts in
2020, a 2.5-percent average annual growth rate.
Electricity Generation.
During the 1960s, electricity demand grew by more than 7 percent
per year, nearly twice the rate of economic growth (Figure 3). In the
1970s and 1980s, however, the ratio of electricity demand growth to
economic growth declined to 1.5 and 1.0, respectively. Several factors
have contributed to this trend, including increased market saturation
of electric appliances, improvements in equipment efficiency and
utility investments in demand-side management programs, and more
stringent equipment efficiency standards. Throughout the forecast,
growth in demand for office equipment and personal computers, among
other equipment, is dampened by slowing growth or reductions in demand
for space heating and cooling, refrigeration, water heating, and
lighting. The continuing saturation of electricity appliances, the
availability and adoption of more efficient equipment, and efficiency
standards are expected to hold the growth in electricity sales to an
average of 1.7 percent per year between 2000 and 2020. This is lower
than the expected 2.9-percent annual growth in gross domestic product,
although the projected increases in electricity usage for information
technology such as computers, scanners, fax machines, and other
equipment will partially offset the efficiency improvements.
Total grid-connected electricity generation from renewable sources
is projected to increase from 363 billion kilowatthours in 2000 to 448
billion kilowatthours in 2020 (Figure 4). Renewables decline from a
9.5-percent share of electricity generation in 2000 to 8.5 percent in
2020. Generation from renewables other than hydroelectricity is
projected to increase from 84 billion to148 billion kilowatthours
between 2000 and 2020, increasing slightly from a 2.2-percent share of
total generation in 2000 to a 2.8-percent share in 2020. Other than
recovering from an abnormally dry year in 2000, conventional
hydroelectricity is expected to remain essentially unchanged through
2020. Most of the projected increase in non-hydro renewables is
expected from biomass (2.4 percent annual growth rate), waste
(including landfill gas) (1.3 percent annually), geothermal energy (4.0
percent annual growth rate), and wind power (6.9 percent annual growth
rate) (Figure 5). State mandates and other incentives, including the
Federal production tax credit for generation from wind, encourage much
of the growth in renewables, particularly in the earlier part of the
forecast period.
Further penetration of renewables is slowed by the total cost of
renewable generation relative to fossil-fired technology. Despite cost
reductions that are projected over time, the cost per kilowatthour of
building new wind, biomass, or geothermal generation is expected to
remain higher than that of either coal or natural gas-fired combined
cycle generation through 2020 (Figure 6). Most of the new wind capacity
is projected to occur as a result of state mandates and subsidies as
opposed to cost-based competition. Geothermal resources are found at
some 50 specific sites in the West, with production costs varying
significantly from the lowest-cost sites to the highest. Nevertheless,
total nonhydroelectric renewable electricity generation is projected to
grow at a faster rate than each of the conventional energy sources of
generation, with the exception of natural gas. If, in reality, future
natural gas supplies and prices are different than projected in the
reference case, the expected outlook for renewable sources of energy
could be different.
Table 1 shows the overnight capital costs and performance
characteristics of new renewable and fossil fuel-based generating
technologies. Of the available technologies, those that are fueled by
natural gas generally have the lowest overnight construction costs, as
well as low fixed operating and maintenance costs. While their fuel
costs tend to be high, they are more than offset by the other cost
components. Except for wind, renewable technologies are relatively more
expensive than their fossil-fueled counterparts, ranging from about
$1300 to nearly $3700 per kilowatt. In addition, capacity factors for
the intermittent technologies, wind and solar, are about a third to
half of the factors for the fossil-fueled technologies, making the
renewable technologies less suitable for baseload electricity demand
compared to the fossil technologies.
There are other barriers to the adoption and production of
renewable resources. As intermittent resources, wind and solar are not
always available to meet the demand for electricity, limiting their
value as a generation source. In order to maintain system reliability
and stability, the general rule is that intermittents should comprise
no more than about 10-15 percent of a system's total generation. Also,
while there are large wind resources in the United States, they become
progressively more expensive and difficult to exploit as the more
easily developed resources are used. For example, many wind resources
are available in mountainous terrain not suitable for construction of
turbines, there may be objections to the siting of turbines in some
areas due to environmental reasons, and transmission facilities may not
be available. Some renewable resources, such as some geothermal sites,
are found on or near parkland, inhibiting their potential for
development. Dams required for the production of hydroelectricity, the
largest of the renewable resources, have recently come under question
from environmentalists due to their disruption of fish habitats and
migration. Such issues may arise during the relicensing process for
existing dams, and are an important factor, along with cost, in
inhibiting construction of new dams altogether.
Renewable Resources Estimates.
Renewable resources are plentiful. Total resources for the three
``best'' of the six classifications of available wind in the U.S. are
enough to power approximately 2500 gigawatts of generating capacity, or
about three times the current installed capacity base. Biomass
resources are sufficient to support between 5.6 and 7.1 quadrillion Btu
of consumption per year over the next 20 years, more than double the
current rate of biomass consumption. Estimates of total geothermal
resources, including both identified and undiscovered categories, range
as high as 280 gigawatts, far above current installed geothermal
capacity. However, the costs of utilizing renewable resources are
considerably higher than those of coal, natural gas, and petroleum,
making them less likely to be exploited than those of the fossil fuels.
Factors that tend to drive up the costs vary across resource type, but
include such barriers as mountainous terrain (in the case of wind),
costs of exploration and proximity to parkland (geothermal), and costs
of gathering plus alternative uses of the available land (biomass). In
addition, because renewable resources are generally not transportable,
they must be utilized near existing transmission lines, or new lines
must be built to serve them. This tends to further limit their
competitive position compared to the fossil fuels. Finally, as
discussed earlier, a number of environmental issues, such as questions
of noise and visual pollution related to wind turbines, must be
addressed in order to fully utilize the available resources.
Alternative Cases
In order to show the impact of alternative assumptions concerning
the key factors driving renewable energy markets, the following are
summaries of alternative cases examining more optimistic cost and
performance assumptions for renewable generating technologies and
assuming a renewable portfolio standard (RPS), which requires a fixed
percentage of electricity sales to be produced from renewable sources
of generation.
High Renewables.
A high renewables case assumes more favorable characteristics for
nonhydroelectric renewable generating technologies than in the
reference case, including lower capital cost, operations and
maintenance costs, increased biomass fuel supplies, and higher capacity
factors for solar and wind generation. The assumptions in this case
approximate the renewable energy technology goals of the U.S.
Department of Energy. Under these assumptions, total generation from
nonhydroelectric renewables is projected to reach 242 billion
kilowatthours in 2020, compared with 148 billion kilowatthours in the
reference case, increasing from 2.8 percent of total generation to 4.6
percent (Figure 7). Most of the higher renewable generation in this
case is from geothermal (40 billion kilowatthours above the reference
case) and wind (51 billion kilowatthours higher than the reference
case).
Renewable Portfolio Standard Cases.
Under a Renewable Portfolio Standard (RPS), a fixed percentage of
electricity sales are required to be produced from renewable sources of
generation. Some RPS proposals have included hydroelectricity as a
qualifying source, but most havem considered non-hydroelectric
technologies only. In the Strategies report, EIA analyzed the impacts
of both a 10 percent and a 20 percent RPS, as one potential component
of an emissions- reduction strategy.
In the RPS 20% case, it was assumed that the RPS requirement would
be phased in over a 20- year period, with 10 percent of electricity
sales met by renewable generation by 2010, and 20 percent of
electricity sales by 2020. In this case, the RPS is projected to lead
to rapid development of new renewable technologies as it is phased in.
By 2020, total non-hydroelectric renewable generation would be 947
billion kilowatthours, more than six times the level in the reference
case. The primary renewables expected to be developed would be biomass,
wind, and geothermal, with some contribution from landfill gas (Figures
8 and 9). With increased generation from nonhydroelectric renewables,
generation from natural gas is projected to be lower than in the
reference case (Figure 10).
The development of the large amount of renewables that would be
needed to satisfy the 20- percent RPS requirement has cost and price
implications. Reaching the 20-percent target is expected to require
increasing use of more expensive renewable options, and the renewable
credit price (effectively, the subsidy paid to owners of
nonhydroelectric renewable generating capacity to induce the required
level of generation) is expected to become quite high. By 2010, the
renewable credit price is expected to be about 4.5 cents per
kilowatthour, rising to 5 cents by 2020 (Figure 11). Because
electricity producers must hold allowances representing the RPS
percentage of their total generation, the impact on prices would be
approximately that percentage of the cost of an allowance, e.g., in the
RPS 20% case about 1 cent per kilowatthour in 2020. Lower natural gas
prices due to reduced use by electricity generators, however, dampen
the impact on electricity prices somewhat. As a result, the price of
electricity in the RPS case is expected to average about 3 percent
(about 0.2 cents) higher than in the reference case in 2010 and 4
percent higher in 2020.
In the RPS 10% case, in which 10 percent of electricity sales in
2020 must be produced by renewable-based generation, the lower target
for nonhydoelectric renewable generation reduces the need for power
plant builders to develop renewable projects that are as expensive as
those required in the RPS 20% case. As a result, electricity prices in
the RPS 10% case are projected to be less than 1 percent higher than in
the reference case. Each of the renewable technologies is projected to
increase its generation compared to the reference case (except the
solar technologies), but with a smaller response than in the RPS 20%
case. Geothermal, biomass, and wind-based generation show the largest
increases over the reference case.
Energy Policies and Programs.
Due to the policy neutrality of EIA, we do not propose or advocate
any particular policies and programs. We do note that, in general,
there are a wide range of policies that could alter the energy future
described in this testimony by encouraging the development and adoption
of additional renewable technologies. Such policies include, but are
not limited to, programs to foster research, development, and
deployment of renewable technologies, government-industry partnerships,
voluntary programs, tax credits and other financial incentives, and
renewable portfolio standards. The Administration's National Energy
Plan proposes an extension of the Production Tax Credit for wind and
closed-loop biomass, and extends it to all new biomass capacity. Such
an extension could be expected to increase the penetration of wind-
based generating capacity, based on the industry's response to the
existing PTC, scheduled to expire at the end of this year. In 2001,
nearly 2 gigawatts of new wind-based capacity are expected to be
completed, most of which would not have been built in the absence of a
PTC. Even though additional subsidies are generally required in concert
with the PTC to make such capacity commercially viable, the combination
of State programs and a PTC extension could be expected to create
additional opportunities for wind-based generation through 2006. For
biomass, the PTC is less likely to have a major impact, mainly due to
the higher capital costs for constructing biomass capacity, and the
relatively high fuel costs compared to other generating technologies
such as coal- or natural gas-fired capacity.
Conclusion.
Over the forecast period, we expect the use of renewable sources of
energy to increase; however, this increase is expected to proceed at a
relatively slow pace, due in part to the relative costs of these
technologies compared with fossil-fueled technologies. Technology costs
or fossil fuel prices that differ from those in the projections could
alter the outlook for renewables. In addition, increased research and
development funding or a renewable portfolio standard, stemming, for
example, from heightened environmental concerns, could also provide a
more favorable economic climate for the penetration of renewable
generating capacity, although at a higher cost to the taxpayer or the
consumer.
Thank you, Mr. Chairman and members of the Subcommittee. I will be
happy to answer any questions you may have.
______
[GRAPHIC] [TIFF OMITTED] T5504.001
[GRAPHIC] [TIFF OMITTED] T5504.002
[GRAPHIC] [TIFF OMITTED] T5504.003
[GRAPHIC] [TIFF OMITTED] T5504.004
Mrs. Cubin. Thank you, Ms. Hutzler.
I now recognize Mr. Garman.
STATEMENT OF DAVID GARMAN, ASSISTANT SECRETARY, ENERGY
EFFICIENCY AND RENEWABLE ENERGY, DEPARTMENT OF ENERGY,
WASHINGTON, D.C.
Mr. Garman. Thank you, Madam Chair and members of the
Committee. I am going to, with the Committee's indulgence, use
some charts to summarize and illustrate my testimony. As
illustrated by the first chart, our Nation enjoys abundant
renewable energy resources throughout every region of the
country, particularly in States with significant amounts of
public lands. Developing the technologies to bring these
resources into the energy marketplace is one of the fundamental
missions of my office.
The second chart illustrates that our R&D programs are
working to bring down the cost of generating electricity from
renewable technologies. Wind technology has been reduced from
80 cents per kilowatt-hour to a current range of four to six
cents a kilowatt-hour. Photovoltaic technology has been reduced
from $2.00 a kilowatt-hour to a current range of 20 to 38 cents
per kilowatt-hour. Geothermal power costs have fallen from 15
cents per kilowatt-hour to a range of five to eight cents a
kilowatt-hour, and the price of bio-power from bio-mask
gasification has fallen from 20 cents per kilowatt hour to a
range of seven to 10 cents per kilowatt-hour. The potential of
bio-power, bio-fuels and bio-products are of particular
interest to this Committee, I would think, because forest-
product residue and even the woody debris from thinning and
fire prevention activities might 1 day be used to produce
fuels, power and products.
Turning to the next chart, wind energy is becoming cost
competitive in the very best wind resource areas. Those are the
ones indicated in red on this chart. We are turning our
attention to developing new turbine technologies designed to
help produce power economically in areas with lower wind
speeds. Those are the areas indicated on the chart in green.
Success with lower wind speed turbines would bring into reach
20 times more wind resources, including those closer to the
existing transmission grid and end-users, and many of these
resources will be on or near public lands. Such a breakthrough
would open up the opportunity to produce hundreds of thousands
of potential megawatts of clean, renewable power.
As with conventional sources of energy, it is a complex and
costly undertaking to secure the necessary permits for
renewable energy projects on public land. The national energy
policy recommended that the Secretaries of the Interior and
Energy re-evaluate access limitations on Federal lands in order
to increase renewable energy production. In response to the
recommendations in the national energy plan--
Mrs. Cubin. Excuse me for a second, Mr. Garman. Can you
move the chart around so that we could get a better look at it?
That dais is right in the way. That is good, thank you. I
apologize to those of you who are behind it, but I hope you got
a look at it before.
Mr. Garman. Just to reiterate the meaning of the chart, the
areas in red are the areas where wind production is competitive
and economic today. The areas in green are where we are
refocusing our R&D efforts to make wind more cost-effective in
those areas.
The Department of Energy is working with our colleagues in
the Interior Department to schedule a summit on expanding
renewable generation on public lands, and this summit will
explore both existing barriers and possible options to overcome
them. My office is also supporting the National Wind
Coordinating Committee, which identifies issues that affect the
use of wind power. This group includes broad representation
from entities at the Federal, State and local levels, utilities
and consumers. My office is also working with geothermal energy
stakeholders to establish a group similar to the group we have
for wind stakeholders, to address, among other things,
geothermal facilities siting issues on Federal lands.
The Department of Energy is also working directly with the
private sector to develop renewable energy technology on DOE
lands. At the Nevada test site, a private developer is working
with the department to build a wind farm with a potential
generation as great as 600 megawatts. This will provide us with
some real-world experience in addressing some of the siting,
security and land-use issues involved in letting private
developers use public lands.
And finally, the White House Interagency Task Force on
Energy Projects Streamlining, created earlier this year by
Presidential executive order and chaired by the Council on
Environmental Quality, is charged with finding ways to
harmonize and expedite the review of the permitting of
projects. Renewables are a key part of that task force effort.
Madam Chairman, we believe there are many opportunities for
renewable energy development on Federal lands, and my office
will be working in concert with the other Federal agencies to
promote these opportunities.
Thank you very much.
[The prepared statement of Mr. Garman follows:]
Statement of David Garman Assistant Secretary, Energy Efficiency and
Renewable Energy U.S. Department of Energy
Mr. Chairman and Members of the Committee, I am David Garman,
Assistant Secretary for Energy Efficiency and Renewable Energy, U.S.
Department of Energy. Thank you for the opportunity to discuss the
potential of increasing renewable energy generation on America's public
lands.
My Office promotes the greater use of renewable energy, as well as
technologies and practices to use all forms of energy more efficiently.
The tools at our disposal include:
La diversified research, development, demonstration and
deployment (RDD&D) portfolio supported by an annual budget of almost
$1.2 billion dollars;
Lour national laboratories, including the National
Renewable Energy Laboratory in Golden, Colorado; and
Lvital partnerships with industry, states, communities,
universities, utilities, consumers, and many others.
The need to diversify our energy resources, to use our energy more
efficiently, and to expand our domestic energy resources is already
well understood by this Committee as evidenced by the legislation it
advanced in response to the President's energy plan.
We need to use energy more efficiently and to develop more secure
new domestic energy supplies, including those from clean, renewable
resources.
In my testimony today I will provide a brief overview of the
Department's renewable energy portfolio, discuss some of the
opportunities that exist for developing this country's renewable energy
resources on public lands, and share with you activities that are
planned or underway to identify and address barriers to renewable
energy development on public lands.
The President's National Energy Policy (NEP) released in May
presented a balanced energy strategy that recognizes the importance of
developing new energy supplies, including renewable energy. The NEP
specifically recognizes the potential of the vast traditional and
renewable resources that exist on our Nation's public lands and directs
the Department and other, relevant Federal agencies to re-evaluate
access limitations related to their development. We are working closely
with the Department of the Interior, other relevant agencies and
renewable energy industry representatives to determine the best . path
forward. I will elaborate on these efforts later in my statement.
As you can see from my first chart, not only does our Nation enjoy
abundant renewable energy resources throughout every region of the
country, it especially does so in States with the majority of our
public lands. Developing the technologies to bring these resources into
the energy marketplace is one of the fundamental missions of my office.
Our renewable energy programs have led to the development of advanced
technologies that generate power from wind, geothermal, solar and
biomass energy, as well as supporting technologies to move this power
more efficiently to the end-user.
Our R&D program has helped bring down the costs of generating
electricity from renewable technologies. As my second chart
illustrates, we have made significant progress in this regard. Wind
technology has been reduced from 80 cents per kilowatt-hour to a
current range of 4-6 cents per kilowatt-hour. Today, wind projects in
the best resource areas are delivering power at an unsubsidized rate of
4 cents per kilowatt-hour ... a twenty-fold decrease.
Photovoltaic technology has been reduced from $2.00 per kilowatt-
hour to a current range of 20-38 cents per kilowatt-hour.
In geothermal, the cost has fallen from 15 cents per kilowatt-hour
to a range of 5-8 cents per kilowatt-hour.
And in biopower, we have gone from 20 cents per kilowatt-hour to a
range of 7-10 cents per kilowatt-hour.
We expect to continue to reduce costs as our RDD&D activities
result in additional technology improvements. For example:
LNow that wind is becoming cost-competitive in the best
wind resource areas, (those indicated in red on my next chart), we are
turning our attention to developing new turbine technology designed to
help produce power economically in areas with lower wind speeds (the
areas indicated in green). Success with lower wind speed turbines would
bring into reach twenty times more wind resources, including those
closer to the existing transmission grid and end users, and many will
be on or near public lands. Such a breakthrough would open up the
opportunity to produce hundreds of thousands of potential megawatts of
clean, renewable power.
LIn geothermal energy, improvements in resource
characterization and drilling and energy conversion technology could
help us capture more of the estimated twenty thousand MW of high
temperature geothermal resources available for electric power
generation, again many near or on public lands.
LWith respect to biomass, efforts are underway to develop
new feedstocks and the technology necessary to economically convert the
abundant domestic bioresources into liquid fuels for transportation,
electricity, and bio-based products.
LIn our hydropower program, we've just completed our first
test of a prototype turbine designed to minimize injury to fish at
hydroelectric plants. We expect the new turbine to be used for new
generation capacity, and as replacements for existing turbines.
The potential of biofuels, biopower, and bioproducts is
particularly important to some of the farm and forest communities of
special interest to this Committee. Crop waste, forest-product residue,
and even the woody debris from thinning or fire prevention activities
can be used to produce fuels, power and products. The economics of
biofuels, biopower and bioproducts are particularly difficult if they
are pursued independently. But if pursued together through the
synergistic model of a biorefinery, these conversions may come closer
to economic feasibility.
The Challenges ofRenewable Production from Federal Lands
As with conventional sources of energy, it is a complex and costly
undertaking to secure the necessary permits for renewable energy
projects on public lands. Some of the obstacles to development
identified by the renewable industry include:
LLack of coordination and overlapping jurisdiction among
government agencies with authority and responsibility for approving
projects;
Lissues related to development near tribal lands and
sacred sites;
Luncertainty about the future land use determinations; and
Ltransmission easements for Federal lands.
To illustrate how important public lands may become to renewable
energy production, 10 States have adopted Renewable Portfolio
Standards, and two States have other renewable energy purchase
requirements. The State of Nevada has adopted an aggressive Renewable
Portfolio Standard requirement in its electricity restructuring
legislation and, by 2013, 15 percent of Nevada's electricity will have
to come from renewable resources. Since 86 percent of Nevada's lands
are public lands, it is reasonable to expect that Nevada will be
counting on the use of public lands for greater renewable energy
production.
If we judge the responsible development of geothermal, solar, wind
and other renewable energy resources to be a compatible use of
multiple-use public lands, we should examine ways to streamline
permitting processes. For instance, we should support efforts of our
States with public lands to develop clean, renewable energy
opportunities for their benefit and the good of the nation.
And we need not confine our consideration to public lands managed
by the Department of the Interior and the U.S. Forest Service. Some
military bases and other Federal facilities have opportunities as well.
For example, the Fallon Naval Air Station in Nevada is currently
soliciting expressions of interest in private development of geothermal
resources on the base that we hope will become a successful
demonstration.
In addition, other military or Federal lands that have
contamination issues limiting the options for their reuse might be
suitable for renewable energy development. We have been working on
these kinds of projects in the context of brownfields redevelopment,
and there will clearly be Federal applications of this model.
Following the Recommendations in the NEP
The National Energy Policy recommended that the Secretaries of the
Interior and Energy re-evaluate access limitations to Federal lands in
order to increase renewable energy production such as biomass, wind,
geothermal and solar.
The Department of Energy is working with our colleagues in the
Interior Department to schedule a summit on expanding renewable
generation on public lands. This summit will explore both existing
barriers and possible options to overcome them. We are currently
working with the White House Council on Environmental Quality, the
Department of Agriculture, Federal Energy Regulatory Commission (FERC),
our Power Administrations as well as the Department of the Interior's
Bureau of Reclamation, Bureau of Land Management, Fish and Wildlife
Service, and the U.S. Geological Survey. We expect that numerous
representatives from the environmental, financial, Tribal, and energy
project development communities will be invited, as well as national,
State and local elected officials from areas with large concentrations
of public lands.
Also, the White House Interagency Task Force on Energy Project
Streamlining, created earlier this year by Presidential Executive Order
and chaired by the Council on Environmental Quality, is charged with
finding ways to harmonize and expedite the review and permitting of
projects that will increase the production, transmission and
conservation of energy while maintaining safety, public health and
environmental protection. Renewables are a key component of that task
force effort.
There are other ways in which we are addressing the broad spectrum
of barriers to development of renewable energy resources. The
Department of Energy is supporting and participating in the National
Wind Coordinating Committee (NWCC), which identifies issues that affect
the use of wind power. This group includes broad representation from
entities at the Federal, State, and local levels, utilities and
consumers.
The Department is also working with geothermal energy stakeholders
to establish a group similar to the National Wind Coordinating
Committee to address, among other things, geothermal facility siting
issues on Federal lands. In that connection, we have met with
representatives of the Bureau of Land Management, the Forest Service,
the Fish and Wildlife Service, the Minerals Management Service, state
agencies, and others in laying the groundwork for that effort.
We are also working with the private sector to develop renewable
energy resources on DOE lands. At the Nevada Test Site, a private
developer is working with the Department to build a 260 MW wind farm.
This will provide us with some real world experience in addressing some
of the siting, security and land use issues involved in letting private
developers use public lands.
Finally, Mr. Chairman, in your letter of invitation you also
requested that I discuss ocean thermal energy development (OTEC). The
Department has examined the potential for OTEC in some detail. From the
late 1970s through 1994, the Department conducted a research and
development activity for OTEC, investing approximately $245 million in
the effort. This program resulted in the construction and validation
testing of small-scale OTEC systems, providing a technical base that
could assist industry in proceeding with commercialization. Given the
very narrow geographical applicability of this technology, the
Department decided to end the program. However, archival information on
the OTEC program can be found on the National Renewable Energy
Laboratory (NREL) web site.
Mr. Chairman, we believe there are many opportunities for renewable
energy ' development on Federal lands and my office will be working in
concert with other Federal agencies as this Administration's policies
are implemented.
Thank you again for the opportunity to appear before the Committee
and I will be happy to answer any questions.
______
[GRAPHIC] [TIFF OMITTED] T5504.005
[GRAPHIC] [TIFF OMITTED] T5504.006
[GRAPHIC] [TIFF OMITTED] T5504.007
Mrs. Cubin. Thank you, Mr. Garman.
The Chair now recognizes Mr. Griles.
STATEMENT OF J. STEVEN GRILES, DEPUTY SECRETARY OF INTERIOR,
U.S. DEPARTMENT OF INTERIOR, WASHINGTON, D.C.
Mr. Griles. Madam Chair, it is a pleasure to be before you
today and the other members of the Committee. I will summarize
my remarks with a short opening statement and asked that the
remainder of my statement be entered into the record. Let me
deviate from that, because my good friend, Mr. Rahall, has
invited me back to visit with you and he today, and I just want
to say to him, like most great wines, we all improve, Mr.
Rahall, and we get better over time. Some of us have a
different memory about facts and circumstances of certain
legislative bills that are enacted and passed and who gets
credit. We will not dispute this, but let's just say my memory
is not like yours, and we will talk about that over dinner some
night. That is my invitation to you to have dinner.
Mrs. Cubin. Now, you boys get this settled so we can get on
with this.
Mr. Griles. Madam Chairman, thank you for the opportunity
to be here to discuss the potential for production of renewable
energy on public lands. As the other two speakers have said,
this is a very important topic that both the President and
Secretary Norton have expressed a lot of interest in and have
actually taken action to support. On a personal note, let me
just say prior to being confirmed as deputy secretary I
represented one of the largest renewable resource companies in
the United States. I was informed by them that they were the
largest operators of the largest wind, solar and geothermal
fields in America. So I have some practical experience in terms
of what is, in fact, going on.
My experience with that company taught me that there is
much to be done to improve relationships between the private
sector and the Federal Government. There are barriers that we
in the Federal Government must remove in order to help the
renewables industry move forward. The task force that I will
mention later will address many of those barriers. As some of
the other speakers have said, America's energy needs, as we all
know, are growing at a very rapid pace. It is very important
that we have a diverse--and expand our resources that we use
for energy. The increased production of renewable energy is a
centerpiece of this diversification.
As you know, the development of alternative energy sources
is an important component of President Bush's national energy
plan. And in recognizing that, Secretary Norton, and the
importance of working with energy companies and stakeholders to
develop more renewable resources on public lands, the Secretary
announced that the Department of Interior and Energy will host
this renewable energy summit in the West this fall. DOE will be
a participant, along with other Federal agencies, in this
renewable energy summit on public lands as to how we can remove
and address some of these barriers.
In bringing together the State and local energy leaders,
and all the other interested parties, we think we can find some
solutions to the barriers that have been created. Our purpose
will be to maximize wind, solar, geothermal energy production
on the use of public lands by analyzing the asset limitations
and other impediments that exist to the growth of renewables in
terms of public lands. I think that at this time from it we
will gather a lot of information, a lot of recommendations on
what we can do. I think that this strategy, Madam Chairman,
will augment the Nation's energy supplies that lie at the heart
of the energy policy.
Conventional energy resources produced on Federal lands
produce about 30 percent of the energy that the United States
uses today. That is a large number. Although current production
of alternate energy resources is much smaller, it is still very
significant. For example, geothermal facilities using
Federally-leased resources produced about 7.5 billion kilowatt-
hours per year. While providing only a fraction of our overall
energy production, this constitutes about 47 percent of the
electricity generated for geothermal energy in the United
States. Currently, wind energy is produced on BLM's California
Desert, with approximately 3,000 turbines on public lands in
California alone, producing enough energy for over 300,000
people.
The national energy policy had two recommendations that
directly addressed the issues before us today, specifically on
public lands. The national energy policy recommended that the
President direct Interior and Energy to evaluate access on
limitations on Federal lands in order to increase renewable
energy production, which is biomass, wind, geothermal and
solar. That plan also recommended that the President direct the
Secretary to develop ways to reduce the delays in geothermal
leasing processes, as part of the permitting review.
In response to that first recommendation, the BLM, the
Bureau of Land Management, is forming an interagency task force
with the Forest Service and the Department of Energy. This
group will evaluate the potential of wind and solar energy
production on Federal lands by identifying siting opportunities
and transmission needs, as well as the impediments to making
that happen.
In response to the second recommendation to reduce delays
in geothermal leasing processes, the BLM has initiated a review
to identify the causes of the backlogs and the processing of
these leases and eliminate those backlogs. BLM has told me
their goal is to eliminate these backlogs by 2003. That is
their goal. My challenge and that of the Secretary is to make
it quicker, sooner and still meet all the environmental
necessities of ensuring that any siting is done in an
environmentally-sensitive manner. But doing it quicker is
something I think we can do. These procedures, when they are
put in place, we believe, will accomplish that goal.
In closing, I want to emphasize the department's commitment
to developing renewable energy. I must point out, however, that
increased development of these resources alone will not solve
our energy problems. Non-hydropower renewable energy accounts
for about 4 percent of the current U.S. energy production,
divided equally between electric generation and transportation
fuels such as ethanol. We must make every effort to increase
the contributions of these energy sources to meet the energy
demands of this country. We also must increase environmentally-
sensitive production of fuels, such as oil and natural gas.
Until America's ingenuity and our efforts from the private
sector's viewpoint, together with new technologies and new
energy sources, which DOE is involved in--we can do all of
these things and have renewable energy and conventional sources
working to meet this demand.
I want to thank you, Madam Chairman and Mr. Rahall, for
allowing me to speak to you today. It is a pleasure to be back
before you and I look forward over the next 3 years of
continuing to work with you on these very, very important
matters.
[The prepared statement of Mr. Griles follows:]
Statement of J. Steven Griles, Deputy Secretary, Department of the
Interior
Mr. Chairman and Members of the Committee:
Thank you for the opportunity to appear before you today to discuss
the potential for.production of alternative energy on public lands.
This is a timely subject and one in which both the . President and
Secretary Norton have expressed great interest and support. Given the
current state of the Nation's energy supplies, we must devote more time
and effort to fostering the development of alternative energy sources.
The Secretary has stated in testimony that strategies to augment the
Nation's energy supplies lie at the heart of any national energy
policy. The President's National Energy Policy echoes this sentiment.
It states:
Renewable energy can help provide for our future needs by
harnessing abundant, naturally occurring sources of energy,
such as the sun, the wind, geothermal heat, and biomass.
Effectively harnessing these renewable resources requires
careful planning and advanced technology. Through improved
technology, we can ensure that America will lead the world in
the development of clean, natural, renewable and alternative
energy supplies.
Although the current contribution of renewable and alternative
energy sources is low, these sources are critical to our Nation's
energy security. Their potential is made all the more attractive
because of their ability to be harnessed with minimal adverse
environmental impacts.
The Department of the Interior is the largest manager of the energy
resources on lands owned by the Federal government. The Department is
responsible for approximately 700 million acres of Federal land and
1.76 billion acres of subsurface estate on the Outer Continental Shelf.
The Secretary also has trust responsibility for 56 million acres of
Tribal and individual Indian lands.
Conventional energy resource production, primarily oil, gas and
coal, on Federal lands provides about 30% of U.S. energy production.
Although current production of alternative energy resources is much
smaller, it is still significant.
For example, geothermal facilities using Federally-leased resources
produce about 7.5 billion kilowatt hours per year. While providing only
a fraction of our overall energy production, this constitutes about 47%
of electricity generated from geothermal energy in the U.S. We
recognize the potential to increase geothermal energy use as well as
other alternative energy resource production on Federal lands.
Currently, wind energy is being generated in BLM's California
Desert District. There are about 2,960 turbines on public lands in
California producing enough electricity for about 300,000 people.
Recent actions by the State of California could result in new proposals
for wind energy development.
The President understands the importance of diversifying U.S.
energy production by increasing the production of alternative energy
resources. He has stated that this will help to reduce oil imports
while at the same time reducing emissions from fossil fuel use.
The President's National Energy Policy clearly recognizes this
potential. As the National Energy Policy report shows, most of the
areas in the U.S. that have geothermal resources are in the western
states where most of the public lands are located. The Southwest has
the greatest potential for solar energy production. These states also
have substantial areas of public land in which solar energy facilities
could be located. The potential for use of wind to generate electricity
is more widespread, but there are Federal lands in many of the most
favorable areas.
The National Energy Policy has two recommendations that directly
address the production of alternative energy from public lands:
LThe NEPD Group recommended that the President direct the
Secretaries of Interior and Energy to reevaluate access limitations to
Federal lands in order to increase renewable energy production, such as
biomass, wind geothermal and solar.
LThe NEPD Group recommended that the President direct the
Secretary of the Interior to determine ways to reduce the delays in
geothermal lease processing as part of the permitting review process.
The White House Interagency Task Force on Energy Project
Streamlining, created earlier this year by Presidential Executive Order
and chaired by the Council on Environmental Quality, is charged with
finding ways to harmonize and expedite the review and permitting of
projects that will increase the production, transmission and
conservation of energy while maintaining safety, public health and
environmental protection. Renewable energy is a key component of that
task force effort.
As a means of implementing the recommendations of the Interagency
Task Force, the BLM is forming, an interagency task group with the
Forest Service and the Department of Energy. This group will evaluate
the potential for wind and solar energy production on Federal lands by
identifying siting opportunities and transmission needs. It will assess
the limitations affecting development on public lands, including the
effect on wildlife habitat and the environment. When this work has been
completed we will be able to report in much more detail on the extent
of additional alternative energy production that might occur on public
lands.
The BLM review will also identify opportunities to incorporate
incentives into the permitting process. One type of incentive to be
considered is the reduction of site rental fees. We will seek fee
levels that provide a fair return for the use of public lands while not
hindering efforts to increase energy production. The BLM plans to
incorporate the group's findings into its guidance documents by the end
of 2002.
In response to the second recommendation, the BLM has initiated a
review to identify the causes of backlogs in the processing of
geothermal leases and to develop action plans to eliminate the
backlogs. BLM's goal is to eliminate the backlogs by September 2003. In
addition, the BLM is examining information on the history of geothermal
development to identify restrictions and impediments to development on
public lands. The BLM is also developing new procedures that will
reduce the time required to approve geothermal leases. H.R. 4, the
Securing America's Energy Future Act of 2001, as passed by the House,
includes provisions to encourage geothermal energy development by
providing royalty incentives. The Administration supports the principle
that the American people get a fair return on the development of energy
resources from public lands while still creating incentives for the
development of these resources. The Secretary already has discretionary
authority to modify royalty rates if she determines it is in the best
interest of the nation to do so.
Military lands also have great potential to add to our development
of energy resources on Federal lands, both with respect to conventional
energy resources as well as alternative and renewable resources. I have
contacted the Department of Defense in order to begin to assess the
energy resource of these lands. Many of the factors related to energy
development, such as royalty rates, drilling procedures, and
reclamation requirements are ones with which the Department of the
Interior has a wealth of experience on public lands, and can serve as a
model for military lands as well. Obviously, siting issues must take
into consideration the national security needs of the nation as
determined by the Department of Defense.
I also want to point out that while alternative energy sources are
renewable and generally non-emitting, development of them does not come
without any environmental impacts to the Federal lands. Alternative
energy resource development may require road building, facility and
other infrastructure construction, habitat modification and landscape
alteration that may be similar to what is required for conventional
resource development. The legitimate environmental concerns and
processes that impact exploration and production of oil and gas may
also impact the development of geothermal resources, which need to be
drilled and piped. The same habitat concerns for plants and wildlife
that accompany the installation of drilling rigs or power lines, may
accompany the installation of windmills or solar panels and must be
taken into account as we proceed with increased energy development on
public lands.
Secretary Norton recognizes the importance of working with energy
companies and other stakeholders to promote development of alternative
energy on public lands. Toward this end, and in an effort to provide
all interested parties an opportunity to share their views and ideas,
the Departments of the Interior and Energy will sponsor a renewable
energy summit that will bring together Federal, State and local
officials, as well as industry leaders, interested citizens and other
stakeholders, to focus on ways to maximize wind, solar and geothermal
energy production on public lands by analyzing access limitations and
other impediments. The purpose of the summit will be to generate
discussion, gather ideas and make recommendations concerning ways to
increase alternative and renewable energy resource production on
Federal lands, focusing specifically on access issues and developing
ways to streamline the application process in order to ensure
consistency and promote predictability. Since Secretary Norton's
announcement of this summit, several Federal agencies have requested an
opportunity to participate. As a result, a Federal team has been formed
which includes representatives from the Department of Energy, USDA
Forest Service, the President's Council on Environmental Quality, the
Federal Energy Regulatory Commission, the Tennessee Valley Authority
and Department of the Interior agencies including the Bureau of Land
Management, National Park Service, Bureau of Reclamation and.U.S.
Geological Survey.
In closing, I want to emphasize the Department's commitment to the
development of renewable and alternative energy sources. I must point
out, however, that increased development of these resources alone will
not solve our energy problems. Non-hydropower renewable energy accounts
for about four percent of current U.S., energy production, divided
evenly between electricity generation and transportation fuels such as
ethanol. While we must make every effort to increase the contribution
these energy sources make to the Nation's energy needs, we must also
acknowledge that we continue to need increased production of
conventional energy fuels such as oil and gas. We need both.
Thank you, Mr. Chairman, that concludes my prepared testimony. I
would be glad to respond to any questions you or the members of the
Committee may have.
______
Mrs. Cubin. Thank you. I will begin the round of
questioning. I would like to start with Ms. Hutzler. Do your
forecasts of future energy demand in 2010 and 2020 factor in a
significant reduction due to improvement in energy efficiency?
Ms. Hutzler. Yes, we do. We have energy intensity decline
in our forecast of a rate of 1.6 percent a year, and that is a
measure of how energy, both efficiency and structural economy
of the United States, is changing, and that is a fairly fast
improvement.
Mrs. Cubin. Did you say .6 percent?
Ms. Hutzler. 1.6 percent.
Mrs. Cubin. Thank you. What price for natural gas did you
use in your forecast, and how sensitive are those forecasts to
fluctuations in the price of natural gas, like, if it should be
a lot higher in 2010 and 2020?
Ms. Hutzler. The forecast for natural gas, during the major
part of the forecast horizon, is probably somewhere just below
$3.00 per thousand cubic feet at the wellhead, increasing to
maybe $3.10, $3.15 per thousand cubic feet. And the forecast is
very sensitive to that natural gas price. The lower the natural
gas price, the less renewables you will get versus the higher
the price, the more you will get.
Mrs. Cubin. Mr. Garman, what research or technological
developments appear most promising in achieving your 2007 goals
for reducing the cost of electricity generated from wind and
geothermal?
Mr. Garman. The wind goal is, in terms of the 2007 time
frame--I think a lot of the opportunities that we have will
come not so much from R&D, but also from addressing the
barriers to allowing wind onto the grid. That is one of the key
aspects. Currently, as one of the charts I had indicated, the
areas that are the most promising for wind right now are
distant from the load centers, they are not adjacent to where
people live, they are not adjacent to where transmission lines
are. The way that FERC is going to handle the integration of
wind resources as an intermittent resource onto the
transmission grid is going to be a pretty strong determinant of
how much wind we are going to be able to bring onto the grid.
Contracts that are being let right now show good pricing
for wind, excellent pricing, in the three and four cent range,
but that is where access to transmission is available and that
is a constraining factor to how much wind we can bring on in
the short-term. Over the longer-term, of course, we hope that
new R&D brings those class four areas that were shown on that
map in green into the mix.
Mrs. Cubin. You had a chart that showed the reduction in
the cost of energy per kilowatt-hour, I think it was based on.
Mr. Garman. Right.
Mrs. Cubin. Now, this is a real naive question to ask, but
was that measuring apples to apples? It would be the cost at
where you turn on the switch? So if you are comparing that cost
to coal-generated or nuclear, it is where the switch is turned
on and that is what the cost was?
Mr. Garman. No, these are generally wholesale costs
delivered to the grid. That is different than the--the average
industrial cost is around seven cents per kilowatt-hour today.
Mrs. Cubin. Thank you very much. I would now switch to Mr.
Griles. Oil, gas, coal and geothermal resources are leased
under the Mineral Leasing Act and the Geothermal Steam Act. It
also required that a royalty be paid on production. It is my
understanding that under FLIPMA that alternative energy such as
solar and wind can be leased, much like conventional fuels are,
annual rentals are paid. However, is there a royalty paid on
that production of renewables?
Mr. Griles. Madam Chairman, you would think I would be the
person to be able to answer that question. The answer is I do
not believe it is. I do not think there is a royalty paid on
the generation off of that, but I will submit to the record the
exact answer.
Mrs. Cubin. Well, then I am not going to go on if you think
there should be, how they should be calculated. I will just
submit that to you later.
Mr. Griles. Let me say that on some of the geothermal--
there are royalties paid on geothermal. I am aware that--and we
are--I have directed that the Minerals Management Service
review the royalty determinations and how they are calculated
on geothermal, because I believe that, based on some
information I received, that the geothermal royalty rates may
not be conducive to encouraging the maximum opportunity for
exploration and production. So we are going to look at that to
make sure we do not have royalty rates that are inhibiting the
utilization of geothermal.
As to wind and solar, I will look at that and look at, if
we have them, whether they are appropriate or not.
Mrs. Cubin. Thank you. My time has expired. Now I would
like to ask unanimous consent to recognize Mr. Hansen, out of
turn, because I understand he has to go somewhere and he wanted
to make a few comments.
STATEMENT OF JAMES V. HANSEN, A REPRESENTATIVE IN CONGRESS FROM
THE STATE OF UTAH
The Chairman. [Presiding.] I thank you, Madam Chairwoman,
and I appreciate the opportunity and I apologize to all of the
members and all the people who have come here today for
testimony, but we are in kind of a topsy-turvy time right now
around here, trying to keep all the balls in the air of all the
events of a couple weeks ago. And I had to leave the Committee
to go over and talk to Secretary Ashcroft and the FBI and the
CIA and the Senators and the Speaker and everyone concerning
the security of the 2002 Winter Games which will be held in
Utah, which is a big issue to America right now. It is just us
in Utah. So I apologize and I really appreciate you doing this.
I have got to go back but, I did want to come over here and
tell you how much I appreciate you coming and taking the time
to be with us.
Recently, the Committee, many of us, went to Norway,
Denmark and Iceland. The main reason we did is because this
Committee carried a big part of the President's energy package,
and as we delved into it, it seemed to us that the alternative
energy sources were somewhat underutilized. Maybe we do not
have the technology to get there. I understand that there will
be someone from the school that I graduated from, the
University of Utah, talking about geothermal--gave us a very
convincing discussion about it in Iceland. It was just amazing
to me that for 50 years they used coal imported from Australia,
New Zealand and the States and now they do not use a drop of
coal. They use geothermal and they heat the whole island. They
use it for culinary purposes. They use it for energy
development. They use it for various areas.
It was interesting to be in Denmark and talk to the
Ministry of Energy there, and we went out and looked at all the
wind turbines. I could not help but deduct how many wind
turbines it would take to equal one nuclear power plant, of
those that we have got in the States. It would take 662, if we
took the average of our nuclear plants, 662 to equal one of
those. So as I look at my little State of Utah, in Millard
County, where we have one of the largest coal-fired plants, at
Delta, which is called Intermountain Power Project, it would
take 820 wind turbines to do it, if the wind was blowing all
the time. Our problem is wind does not blow much, but when it
does blow, it blows around 100 mph and that takes away from the
whole thrust of the thing anyway.
So I have no argument on the idea that the 2 percent that
we are getting out of these should be developed. I think it is
a great idea what Iceland has done in geothermal. I think we
have got an untapped source there that we can use and I support
it completely. I also think of the coal that is out there.
President Carter dubbed the phrase that coal is our ace in the
hole. We are the Saudi Arabia of coal, basically. I think it is
somewhat a shame that one of our past Presidents locked up the
Kaiporawits Plateau. We did not really. We will probably open
it again, had a big hand in it--what is called the lowest
sulfur coal there is in the world, as far as we know. The
estimates that they have given us are unbelievable, one
trillion tons of coal of the lowest sulfur coal that you can
find, and if that can be extracted in a way that is
environmentally safe, it makes a lot of sense to me.
Basically, I came back here because I feel bad for putting
a meeting together and then all of us have to run out on it,
but as you know, that is how Congress works and we cannot
predict the various vagaries that happen around here. We all
apologize for that, but I wanted to come back and say how
important it is to this Committee, my conversations with the
President, what we worked out with the Senate, what we worked
out with the Commerce Committee, on the tremendous importance
of America having an energy policy, which I think we are on the
road to doing, and we should work together in a nonpartisan way
to come together with a good energy policy that we can do in an
environmentally safe way, and I think we are doing that.
I appreciate the gentlelady from Wyoming, who also has a
huge amount of energy sources in her State. We rob as much as
we can to the State of Utah, as we did on the river situation.
It is California that gets our water, and they steal it fair
and square, they tell me. Anyway, with that said, let me thank
all of you and I appreciate you allowing me to have a part of
it. In fact, Mr. Inslee was with us on that trip that I was
referring to, and could probably give a much better explanation
to what we found in alternative energy sources than I could,
but I thank the Chair.
Mrs. Cubin. [Presiding.] Thank you, Mr. Hansen, for coming
and for those remarks. The Chair now recognizes Mr. Tom Udall,
unless Mr. Mark Udall wants to go first, or Mr. Jay Inslee
outranks them both.
Mr. Udall of New Mexico. Jay, are you ready to go?
Mrs. Cubin. Tom?
Mr. Udall of New Mexico. Let me ask you a question about
natural gas and any of you can jump in on this, but it seems to
be--and this is highlighted in some of your information--that
our natural gas supplies are under huge demand, and in order to
reach the projected electricity demand there is a real question
as to are we producing enough, and the figures I have here is
that our production on natural gas has fallen 14 percent since
1973. The New York Times recently reported, with all of the
activity and most of the drilling rigs that are out there
drilling for natural gas, 18,000 new wells. This is close to
the highest period for drilling that we have seen in this
country going back to the 1980's, and yet only a 2-percent
increase in production in the last year. And so I am wondering
whether this does not say to us, one, that we may not see the
dramatic increases that are going to be needed to meet this
demand, and shouldn't we be moving more toward renewables--
towards wind, solar, geothermal and biomass much more quickly,
based on these figures? Mary or anyone else there?
Ms. Hutzler. The resource base for natural gas in this
country shows that we can dramatically get more production of
natural gas from the United States. The figures you are quoting
really deal with what has happened recently, in terms of the
fact that we saw a very low natural gas price just a year or
two ago. That low price brought the rig count down, also
brought down the production of natural gas, and as a result you
are looking at two different issues there.
The rig count is very high now because the price was very
high recently. This past winter, we had the highest prices we
have seen for natural gas, and that produced the interest in
production. Unfortunately, because we are moving into a
recession now, that is what we are going to be forecasting for
the second half of this year. And our industrial demand is very
low. We have not seen the demand for natural gas.
We are now filling up our storage facilities quite high,
and as a result we have seen the gas price come down
tremendously. The price yesterday, I think, was about $1.80 at
the Henry Hub per 1,000 cubic feet. So the issues deal with the
market and, in fact, we do have the resource base to get there.
We do need to have a high enough price to keep the rigs up and
the drilling up to maintain it, and that price is probably
higher than the $2 level that we are seeing recently, but we do
look at the whole dynamics of the natural gas market, the coal
market, and the renewable market when we do these particular
forecast.
Mr. Udall of New Mexico. The part of it you did not answer
was when the economy was moving up, when the pressures were on
and when we were doing all of this drilling, we were not seeing
the kinds of increases in production, and if we return to that
today, to that same level, if we are able to get out of this
recession, we are not going to be producing those levels, and I
think it is clear from those figures. So, I believe, and maybe
this should go to the energy efficiency person from the Energy
Department, it seems to say to me we have got to move to
diversify in a dramatic way into renewables.
Ms. Hutzler. I should also mention that we did do a
statistical analysis during that time period when the prices
were shifting, to look at the price and the relationship to
exploratory and developmental drilling, and what happens is you
get a lag in terms of exploratory drilling when you have very
low prices, and then you need to get the additional rigs out
there to get it done. This lag actually means it takes about
six to 18 months before the production levels are going to get
there and be commensurate; and we are there now, but it is all
a matter of market dynamics, and again the resource base is
there to reach these particular forecast that we are looking at
in the next 20 years.
Mr. Garman. Congressman, I think you have hit on something
very important, and that is the volatility of natural gas and
some of the other prices. Traditionally, renewable energy,
while it might be marginally more expensive than the fossil,
those prices are relatively stable. So in the instance, in
California and other areas, where natural gas prices did spike,
those who made a play and hedged their portfolio of energy
purchases to include a good amount of wind in that mix, saved a
lot of money because they were spared from that gas price
increase by virtue of the stability, inherent stability, of
renewable energy prices.
Mr. Udall of New Mexico. Thank you.
Thank you, Madam Chair.
Mrs. Cubin. Mr. Mark Udall?
Mr. Udall of Colorado. Thank you, Madam Chairwoman, and I
wanted to welcome the panel and very much appreciate the
detailed documents you have provided us here today, and there
is a lot of food for thought. If I might direct my first
question to Mr. Griles, you talked about producing the
permitting backlogs for geothermal projects. My sense and my
understanding is the problem may be a little broader than that,
that there has been a significant increase in the time required
by the BLM to process EISs before right-of-way permits can be
issued for new wind, geothermal, or other projects, and I would
like you to just comment if that is your experience and your
understanding, and, if so, is it because we do not have
personnel or resources to get the job done, or what would you
recommend we ought to do to move ahead in this arena?
Mr. Griles. Mr. Udall, you have asked the golden question,
and the answer is it requires a combination of all the things
mentioned. Over the last 10 years or sooner, a lot of the
employees that were dedicated to the minerals and energy
programs of the Department of the Interior were not replaced as
retirements and things occurred. We do not have the expertise
and knowledge that we used to have, but we are having to
supplant that.
A good example is within the State of Wyoming, where the
Bureau of Land Management could not process the number of
applications for permits to drill for coal-bed methane, but
with the leadership of Congressman Cubin, we secured additional
funding to do that. The same thing applies to our geothermal
program. Part of the problem is that the land-use management
plans that we have to rely on to make appropriate decisions on
leasing do not reflect the current state of the art of where we
are in terms of energy demand, whether it be geothermal,
whether it be gas, or whatever the resources are.
But we have dedicated in this budget a significant increase
to resource management plans so they will be updated. Most of
them were signed, Congressman, when I was there in the 1985 to
1986 timetable, so for 14 years they really have not been
updated to reflect the kinds of things--it takes 2 years to do
a resource management plan. It takes 2 years to do an EIS. The
process in and of itself is time-consuming, and that is what
the applicants are faced with. Can we shorten that process? Can
we improve the efficiencies of the permitting system? Yes, we
can and we will try to do that. But within the context, there
is a statutory requirement that we meet those kinds of things,
and that is what we are trying to deal with.
We need resources to do it. We have some, getting more. We
need to simplify the process. We are trying to work on that.
Before you arrived--we have set up a task force within the
Department of Interior, DOE and Department of Agriculture on
Forest Service lands, to see what we can do to meet the
environmental standards and also meet the energy requirements
that are there. We welcome your thoughts, if you have some, as
to how we can better do that. We will be meeting with all the
participants, environmental groups, to see if there are ways we
can improve that process.
Mr. Udall of Colorado. Thank you. I look forward to working
with you and also with Chairwoman Cubin on this important
issue. I would remind the panel that whenever the chairwoman
suggested she is asking a naive question, you had better be on
your toes, just for future reference.
Mr. Garman, thank you again for your good work, and I want
to make a comment and then ask a question. Once it is
determined how much potential capacity for clean energy
resources exists for development on public lands and how much
would have to be sent to other markets, the question becomes do
we have the transmission capacity to get this energy where it
needs to go? I understand that putting up transmission lines is
expensive, but if we plan to invest in energy infrastructure
anyway, we need to figure out how to solve that problem.
Would you address the issue--I know you just spoke to my
cousin, my colleague from New Mexico, about this earlier, but
what are we doing and what should we do in the way of R&D to
bring these costs down?
Mr. Garman. With respect to R&D on geothermal--let's start
with geothermal, right now, our success ratio when we drill a
geothermal well is about 20 percent. The cost of drilling a
well is around $300 a foot. Up to half of your costs in trying
to develop a geothermal property involves drilling, the cost of
drilling. So if you target R&D to try to bring those costs
down, you can do a great deal. Our target is to get down to
$150 a foot and to increase the ratio of success from 20
percent to 40 percent, and we propose to do that through a
combination of technologies that involve 3-D modeling,
diagnostics while drilling, a better job at resource
characterization. Those are some of the tools we believe we can
bring to bear to lower the cost of geothermal.
With respect to wind, of course, wind is a tricky
situation. I had a chart that showed that most of the areas
where wind is very competitive and economic now, is distant
from both load centers and distant from transmission lines. The
R&D way to approach that is to make a wind turbine that works
better in the lower-speed areas, indicated by green, closer to
where people live, closer to where transmission lines are, and
closer to where the load centers are. So that is where our R&D
emphasis on wind is turning now.
With respect to solar, bringing down the cost of
photovoltaic in a distributed setting is inherently--helps the
grid be more robust, because you are using it at its point of
use, so you do not have to depend on the grid so much, and if
you have excess power you can sell it back to the grid. So the
opportunity for photovoltaics will lie in a lot with what
Congress, you all, decide to do with respect to electricity
restructuring, net metering, interconnection standards, and a
whole host of those things that will be dealt with in the
regulatory regime.
Mr. Udall of Colorado. Excellent, and Madam Chairwoman, I
see my time has expired, but I did want to put a plug in for
the piece of legislation I introduced that would have
distributed, hybrid systems in place, and I think you are
familiar with it. It was included in the energy bill, and I
hope you will continue to work with me as we push forward,
where you would have a gasoline generator combined with a PV
system or a wind system combined with another fossil fuel-based
energy system, and the two can be very complementary and work
in this distributed way that you mention.
Thank you, Madam Chairwoman.
Mrs. Cubin. The Chair now recognizes Mr. Carson, who has
been very, very patient.
Mr. Carson. Thank you so much. Just a couple of quick
questions.
Mrs. Hutzler, you talked about, at the very beginning of
your testimony, that the 100 quadrillion BTUs we are consuming
in energy every year, a certain percentage are devoted to
electricity production. What was that number again?
Ms. Hutzler. Of renewables, I said 54 percent by the year
2020.
Mr. Carson. What percentage, though, of that--about 40
quadrillion BTUs are related to the transportation sector of
our economy, I know.
Ms. Hutzler. Yes.
Mr. Carson. The bulk of the remaining consumption, 60 quads
or so, is that related to the production of electricity,
largely?
Ms. Hutzler. It is about half of that. It is about 30.
Mr. Carson. And the remainder of that goes to where?
Ms. Hutzler. Other end-use sectors, residential,
commercial, industrial, where they are using natural gas, oil,
directly.
Mr. Carson. Okay. In your testimony, you also mention--you
talk more about problems in the wind and solar industry, the
cost, some of the structural barriers to that, and you say that
because they are intermittent energy sources, that perhaps at
best they are going to provide, under the most optimal of
circumstances, 10 to 15 percent of our electricity production;
would that be a fair statement?
Ms. Hutzler. Yes, we have talked to different people that
work with renewable technologies, particularly with wind and
solar, and because of their intermittent nature they prefer to
have their total system only have 10 to 15 percent on them so
that they can guarantee power at all times. That number, of
course, can be movable as more and more experience is gained
with intermittent.
Mr. Carson. Sure. You do not talk at all in your testimony
about geothermal energy--or much about that, at least. Can you
tell me what structural impediments you see, if any, that exist
to having geothermal energy play a bigger role in our energy
consumption?
Ms. Hutzler. Similar to what Mr. Garman talked about, first
of all, with the drilling for geothermal, so you have to access
it, and also the capital cost of the technology that is higher
than the fossil-fired competitive technology. So that needs to
come down, as well.
Mr. Carson. Mr. Garman, you talked about, in your
testimony, of the declining cost of some of these renewable
sources, down now to four or five cents a kilowatt hour for
wind, seven to eight cents for geothermal, as I recall, and
maybe twice that for solar. Can you talk a bit about--that is
the class--right now, when we are talking about the significant
production of wind energy, is it from the Class 6 wind ranges?
Mr. Garman. That's correct. That is 15 mph annual rate of
wind speed; yes, sir.
Mr. Carson. You say it is about four to five cents a
kilowatt hour in those areas now?
Mr. Garman. That is right.
Mr. Carson. If we are going to move down to the class 4 and
5, which is the bulk of the country where there is significant
wind resources, any estimate of what the costs per kilowatt
hour of that area is?
Mr. Garman. Our goal by 2010 is to bring all of the wind
cost unsubsidized down to that three-to-four cent per kilowatt
hour rate. It is going to take an R&D investment to get that,
to get lighter, cheaper turbines, to understand the atmospheric
modeling a little bit, to make sure that we are putting the
turbines squarely in the wind streams with the most energy, but
our goal is 2010, three to four cents a kilowatt hour, down in
all areas, down to class 4.
Mr. Carson. And would you agree with Ms. Hutzler that the
capital cost of geothermal energy--that are the most
significant impediment to that have a larger role in our energy
consumption?
Mr. Garman. That is one part of it, and relevant to this
Committee, my understanding with geothermal leasing, because
there is a large capital cost, any delays--for instance, if you
have a $10 million bonus bid on a lease, you lose the time
value of that money during that time the EIS is being worked on
and the record decision is being adjudicated. You layer that on
top of the already-high capital costs of geothermal development
and it is a significant impediment.
Mr. Carson. Are there any other impediments? To what
extent, under the most optimal of assumptions, is geothermal
going to play? We talked about the structural impediments,
because of their intermittent nature, for wind and solar. What
can we hope for geothermal under the most optimal of
circumstances in the next 20 years?
Mr. Garman. There was a resource assessment done by USGS in
1978, which is somewhat dated, and they estimated a potential,
you know, a high-end potential of up to 150,000 megawatts. We
think more in terms of useful economic--we are probably talking
about a potential of 20,000 megawatt capacity of geothermal.
Mr. Carson. What percentage of our total production would
that be then, and we are converting from BTUs to megawatts to
kilowatts and all that.
Ms. Hutzler. It is about one-sixth of the total potential.
Mr. Carson. About a sixth.
Ms. Hutzler. Yes, in geothermal.
Mr. Carson. Thank you all so much.
Mrs. Cubin. The Chair now recognizes Mr. Inslee.
Mr. Inslee. Thank you very much. I really appreciate Mr.
Garman's reference to net metering. I have tried to get a net
metering bill through Congress and will continue our efforts,
and I encourage you to continue educating Members of Congress
of how this fairly small, innocuous thing can help really spur
this movement. So I really encourage you, to the extent legally
allowed, educate our fellow members about how utilitarian that
could be.
I wanted to ask you about the wind. I am not sure if this
is your chart up here, but it says 2007 goal of three to four
cents per kilowatt. We have a wind farm, I think the biggest
one in the Nation, going in in Washington, I am sure you are
aware, and I thought their numbers were about there now
already. Tell me what you know about that.
Mr. Garman. There are some other costs, cost of
transmission, cost of load leveling, accounting for the fact
that that wind is an intermittent resource. You have to level
that out with hydropower and some other things that have to be
factored in.
Mr. Inslee. So I guess what you are saying is that that
would be the cost, assuming technology continues to improve and
you take into consideration these load-leveling and
transmission costs, and the essential cost of being
intermittent. Is that what you are saying?
Mr. Garman. Well, no. I think the 2007 goal of three to
five cents does not necessarily include all of the balancing
costs and transmission costs inherent in that. That is what I
might expect someone to be able to offer at the turbine, the
cost of--
Mr. Inslee. Of one kilowatt hour.
Mr. Garman. Yes.
Mr. Inslee. Aren't we already there? I mean, I was talking
to the folks in Denmark--
Mr. Garman. Right now, there is a 1.7-cent production tax
credit, and this is unsubsidized costs without production tax
credit. Now, I think, having said that, we will need the
production tax credit to keep the installed base and the
development work that is going now going. I think the
production tax credit, as pointed out in the President's
national energy policy, is a very important part of continuing
wind development.
Mr. Inslee. And we hope that gets continued, obviously. On
solar, what sort of assumption are made? I have seen on this
chart it shows a zero to 12 percent kilowatt spread.
Mr. Garman. That is incorrect. I think there is a mistake
on that.
Mr. Inslee. Should that be 10?
Mr. Garman. 10 to 12--actually, those numbers, that should
be a 2020 goal, I believe. That chart is wrong, 10 to 12 cent.
What we are aiming at, the real R&D holy grail right now in
photovoltaic is thin-film photovoltaic, which can be
manufactured--it looks almost like a sheet of plastic,and you
have probably seen it. Our goal, if we can produce thin-film
photovoltaic with a conversion efficiency of 15 percent, and
produce it at a price of $50 per square meter and have it last
30 years, then that will be equivalent to five cents per
kilowatt hour of power, and that is one of our goals, our R&D
goals for the year 2020.
Now, the real value of solar is, of course, it is a peak
producer, and in those areas where you have time-of-use
metering, where you have net metering and interconnection
standards and that whole suite of other regulatory things, the
fact that solar may cost today 25 cents a kilowatt hour may not
be an impediment. That may be somewhat competitive with peak
power. But right now, in the current electricity structure, the
consumer is shielded from price signals, and electricity that
is produced at 3 in the morning is treated the same as a
commodity of electricity that is produced at 3 in the
afternoon. And the cost of producing that electricity are
indeed very different. They are different commodities.
Mr. Inslee. I really appreciate you bringing that up,
because another part of the package we have tried to put in our
energy bill is to help utilities convert to real-time pricing
systems so that the consumer has adequate or accurate pricing
signals to them, and there is one outfit up in the Northwest
that is doing that.
Mr. Garman. Puget Sound Electric, yes.
Mr. Inslee. And it has been received relatively well, and
we think that is a very, very critical part of this, for the
exact reason you have pointed out, to help these nascent
technologies get going. The other thing is with kind of
existing, I have heard it argued that for every tenfold
increase in scope of production of solar, prices come down, I
think, by half. Is that about right?
Mr. Garman. That is my understanding, as well. Right now,
the solar industry is experiencing 30 percent growth each and
every year.
Mr. Inslee. If we decided to have an enormous increase in
demand in solar--let's say the Federal Government made a
decision to do that--is it a relatively realistic assumption
that that curve would continue, as far as costs?
Mr. Garman. Well, that is part of the logic behind the
President's proposal for a residential solar tax credit,
because we think that the opportunities afforded by that
residential solar tax credit--and I do not have the numbers
with me today; I had it at a prior hearing--but could help
bring down the costs by increasing the demand and assuring the
manufacturers, unlike a Federal purchase requirement, which is
dependent on appropriation, a tax credit that is going to be in
place for 5 years or so sends a clear signal to manufacturers
that there is going to be a demand, and they invest in capital
and infrastructure they need to meet that demand, and that is,
I think, a good approach.
Mr. Inslee. Can I make just one quick comment? I know I am
over time, Madam Chair, if you would give me 10 seconds. This
is an editorial comment, and I appreciate the President's
proposals on a lot of these renewable tax credits and the like.
I think that they are on the money. I would just tell you a
concern, though. All energy cost, their price is really a
relative price. Whether they are purchased or used or not
depends on the relative price of other energy commodities.
In the President's package, it increased the relative cost
of renewable energy relative to fossil fuels, and the reason it
did that is it offered enormous tax benefits to fossil fuel-
based fuel sources, five to six to eight times as much as there
is for renewables. I would suggest to you that that, in effect,
has increased the relative cost of renewables, which we need to
deal with climate change gas issues, and even though the
President's plan had some visionary items in it, namely these
tax things, as a package, by making clean, greenhouse gas non-
emitters more costly relatively, we actually went backwards.
That is an editorial comment, and I appreciate the Chair's
opportunity to let me make it. Thank you.
Mrs. Cubin. Certainly. The Chair now recognizes Mr. Kind.
Mr. Kind. Thank you, Mr. Chairman. I ask unanimous consent
to have a short statement submitted for the record at this
time.
STATEMENT OF THE HON. RON KIND, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF WISCONSIN
Mr. Kind. I commend you for holding this hearing, and I
thank the witnesses and your testimony. It is very, very
interesting. Earlier, in the first week of August, some of the
members on the Committee had an opportunity to travel over to
Norway, Denmark, Iceland, checked out the hydropower program in
Norway, also their drilling in the North Sea. In Denmark, of
course, it was the wind power program that they have up and
going; Iceland, it was the geothermal program, but also an
interesting hydrogen program that they have, to try to convert
their entire auto fleet and fishing fleet to a hydrogen-powered
fleet by 2010, which I found very interesting, and I would be
interested to hear whether the Department of Energy is looking
at that specifically, and what they are doing to convert to be
the first hydrogen-powered society in the world, and if there
is some applicability to that type of approach here
domestically.
Mr. Garman. We are spending roughly $110 million a year on
a suite of technologies that includes transportation fuel
cells, stationary fuel cells and the hydrogen program that
would be needed to support that. Again, hydrogen was one of the
items that was highlighted in the President's plan. We view it
as a longer-term play, I think it is fair to say, than perhaps
Iceland and some of the other countries do. There are
significant technical challenges that stand between us and
deployment--large-scale deployment of fuel cells.
In the current context of our dependence on imported oil,
most of which is used for transportation, a transportation fuel
cell is a very high reward proposition. It is also somewhat
high-risk. But in terms of us, as we are putting our budget
together, we think of it as a high-risk, high-reward
proposition, and it is something that has a lot of our
attention.
Mr. Kind. I am glad to hear that. Obviously, we have a
different scale compared to what we need to do here in the
United States, compared to Iceland, a population of about
260,000 or so. So we are not fooling ourselves in that regard.
But in that context, however, I think especially in light of
the events of September 11th, given the volatility in the
Middle East region, given our heavy dependence on importation
of oil, why can't we as a Nation at least have some studies in
your departments, asking the experts on these issues to look at
the feasibility of becoming energy independent, perhaps if it
only entails our independence from the Middle East region as
regards the importation of oil, perhaps a policy that calls for
a Western Hemispheric energy policy by a date certain, and then
you line up the puzzles, what steps we need to take as a
society in order to achieve that weaning off of the Middle East
oil and greater dependence on the Western Hemisphere, and
obviously part of that equation would involve the alternative
and renewable programs that we need to emphasize to a much
greater degree.
Mr. Garman. Actually, we are, and a lot of that is
happening in the context of our response to climate change. We
are involved in a process right now of evaluating various
technologies that could be used to reduce our demand, reduce
our carbon emissions, and to integrate new technologies into
the mix that would either be lower-emission or domestically
produced.
Mr. Kind. Is there any comprehensive planning along those
lines being done in any of the agencies right now in the
executive department, how we wean ourselves off from Middle
East oil?
Mr. Garman. What we are doing now is sort of a visioning
exercise with respect to what are the technologies that we can
bring to bear in the time frames to make a difference, not only
in terms of--you know, mainly in the context of climate, what
are the technologies we can bring to bear by, say, 2050 or
sooner to address some of these concerns?
Mr. Kind. Ms. Hutzler, let me turn to you for a second. I
had a chance to review some of your statement that you
submitted today, and on the second page, first paragraph, there
is something a little disturbing that jumped out at me, and let
me just quote what you have written here, in which you stated
the share of total energy consumption that is derived from
renewable sources is projected to be 7 percent in 2020,
approximately the same share is it was last year.
What needs to change in order to change that projection? Do
we need major policy changes in order to increase the
percentage of our reliance on alternative and renewables? Do we
need to change the consumption habits of our consumers, more
conservation, in order to increase that equation? Let me ask
you that.
Ms. Hutzler. It is probably a combination of all those
things. If you looked at other things that I have mentioned in
my testimony, I talked about different renewable portfolio
standards. If you require a certain amount of generation coming
from renewables, you get far more renewable energy from that
standpoint, in terms of a share than many of the other kinds of
scenarios we look at, mainly because if you get improved R&D in
renewables, you also get improved R&D in fossil fuels, as well,
and it is hard for renewables to keep pace with these other
technologies. They still win out on an economic basis, so you
really have to do something to require the renewables to be
used.
Mr. Kind. I tend to agree with my colleague from Washington
State. If you just continue on the supply aspect of this
equation, not so much on the demand side, we are always going
to be playing catch-up in this country, as far as our appetite
for fossil fuel is concerned, and that is why I think we need
some very significant policy changes to deal with this trend
right now.
I thank you all.
Mrs. Cubin. When the Chairman came, he had to return back
to where he was going pretty quickly, and I had not quite
finished my questioning. So if the other gentlemen want another
round, that would be fine, but I would like to complete the
questioning that I have. I want to get this in perspective; how
much we can--not just how much--but how practical it is to
assume that renewables are going to make up the difference in
our energy problem, are going to make us energy self-sufficient
when we have trouble in the Middle East, when we cannot count
on those imports. It is just not going to happen.
I want to refer to a chart that Mr. Garman had in his
testimony, and it looks to me like--and I think this is
important for people to notice--it looks to me like nearly all
the potential for grid-connected solar power and wind power is
in the Western United States, and most of the grid-connected
power--most of the potential is west of the Mississippi. And,
so, what potential exists east of the Mississippi? I mean, if
it is not there, then transporting this small percent, 2.5
percent or 4 percent in the future of renewables east of the
Mississippi, how realistic is that?
So would you expand on that, both you, Mr. Garman, and also
Ms. Hutzler, if you would?
Mr. Garman. I think you are absolutely right. I am a
fervent proponent of renewable energy, but it does not satisfy
our need by itself. I am also a fervent proponent of
exploration in the Arctic National Wildlife Refuge, because I
think that is a transportation fuel that we depend on. We need
to develop all of our resources of energy, and we need to
exploit all of our opportunities to save energy and use it more
efficiently.
So I think it is important, and I think it is a fundamental
precept of the President's plan, that, yes, renewables are
important, but we are going to remain dependent on fossil fuels
for the foreseeable future, and that is a fact.
Mrs. Cubin. So you do not think there is much potential for
renewable, other than biomass, east of the Mississippi; is that
fair to say?
Mr. Garman. No, I do not think that is fair to say. From
the wind map earlier, there are some wind areas east of the
Mississippi.
Mrs. Cubin. I am not saying any. I'm just saying a
significant amount.
Mr. Garman. But you are right, the disconnect between
population centers and where the resource is, is significant.
Now, of course, with respect to transportation fuels, there are
biofuels, ethanol and some other things, that have promise.
They can be transported. They can be shipped. The long-term
importance of hydrogen as an energy carrier is very important
in this context, because that is the means by which you can
take renewable energy that is produced west of the Mississippi
and put it in use east of the Mississippi. But, again, that is
a long-term play.
Mrs. Cubin. Thank you very much. Do you have any further
questions, Mr. Kind?
Mr. Kind. Madam Chair, I would just be brief, because I
have got to run back to the floor here in a little bit, but
with regards to the predictability of the tax credits and
certain tax incentives that was part of the President's package
and that, how important would be the extension of the wind-
power tax credit in regards to that industry and the reliance
on that in making some of their investment choices in this
country.
Mr. Garman?
Mr. Garman. I view the production tax credit and an
extension and a demonstration by the Congress that it intends
to do a long-term extension of this as very important to the
wind industry. Right now there is some $2 billion of private
investment in play in wind, and that investment is there in
part because of the 1.7-cent production tax credit. Were that
tax credit to disappear, I think a lot of that investment would
disappear, as well.
Mr. Kind. Thank you.
That is all I have, Madam Chair.
Mrs. Cubin. I would like to thank the panel for their
testimony and the answers to the questions, and we do have
other questions that we would like to submit to you in writing,
and would appreciate a response. Thank you for your time today,
and now I would like to call the next panel forward: Mr.
Jeffrey Hulen, Senior Geologist, Energy and Geoscience
Institute, the University of Utah; Mr. Jonathan Weisgall, Vice
President, Legislative and Regulatory Affairs of Mid-American
Energy Holdings Company; Mr. Jaime C. Steve, Legislative
Director of American Wind Energy Association; and Dr. Barry
Lynn Butler, the Vice President and Manager of Energy Products
Division, Science Applications International Corporation.
I would now like to recognize Mr. Hulen for his testimony.
I remind the panel that your written testimony in its entirety
will appear in the record. If you could limit your comments,
according to the Committee rules, to 5 minutes--
STATEMENT OF JEFFREY B. HULEN, SENIOR GEOLOGIST, ENERGY &
GEOSCIENCE INSTITUTE, UNIVERSITY OF UTAH, SALT LAKE CITY, UTAH
Mr. Hulen. I am delighted to be here and to have the
opportunity to share with you my knowledge of and enthusiasm
for what really has to be one of our Nation's premier
alternative energy resources. I am referring, of course, to
clean, reliable and renewable geothermal energy. Few people are
aware of how truly vast the geothermal energy resource base in
this country actually is. If we are looking at resource above
100 degrees C. or 212 degrees F., accessible within just the
upper six miles of the earth's crust in the United States
alone, that is equivalent to the total energy contained in 2.3
million billion barrels of oil.
It is not all accessible at this point, of course, but it
does represented a truly enormous untapped resource. It is
about 25,000 times, in fact, the current U.S. oil reserves. Of
course, at this point, as I mentioned earlier, we cannot access
that entire geothermal resource base, but we think that with
sufficient economic incentives, with a firm commitment to a
national geothermal energy research program, with greater ease
of access to public lands, as some of the previous witnesses
have noted, with improved technologies to reduce the risks and
cost of geothermal exploration and development, that a
significant fraction of that resource, in fact, can be tapped.
Right now, as an example of the current production in this
country and its potential in the future, we have an installed
electrical generation capacity in this country of roughly 2,700
megawatts right now. That is generally considered sufficient
for the needs of 2,700,000 households, and it offsets the
production, or rather is equivalent to the combustion of 30
million barrels of oil. It is not a trivial figure.
Informed estimates as to the real potential of geothermal
electric power production by the year 2010 tend to converge at
10,000 megawatts. That would be equivalent to the combustion of
roughly 110 million barrels of oil per year, and by the year
2025, 20,000 megawatts. So it is a significant resource, but we
believe full realization of this vast potential requires
several things: first of all, as I mentioned, a firm commitment
to a national geothermal research program.
At the Energy and Geoscience Institute at the University of
Utah, I have been privileged to work on geothermal energy
research for about 25 years now, and in part because of our
findings on the fundamental nature of what are truly complex
natural phenomena, we have enabled the geothermal industry to
significantly reduce risks in, for example, citing geothermal
wells. We would like to see that continued.
Improved technologies in drilling will also reduce the
costs and risks of geothermal exploration and development, and
germane to the principal topic of this oversight hearing,
greater ease of access to public lands. Geothermal operating
companies really have the right to believe that if they invest
literately tens of millions of dollars in exploring for and
developing a resource, that should they prove up that resource
and have spent that money proving up that resource, they should
be able to go ahead and develop it with--there is certainly a
need for reasonable evaluations of our public lands, but not to
the point where they are significant impediments to geothermal
research development.
Thank you, Madam Chairman, members of the Committee.
[The prepared statement of Mr. Hulen follows:]
Statement of Jeffrey B. Hulen, Senior Geologist, Energy & Geoscience
Institute, University of Utah
Mr. Chairman and Members of the Committee:
I am grateful for the opportunity to share with you my knowledge of
and enthusiasm for one of our nation's premier alternative-energy
resources - clean, reliable, and renewable geothermal energy. The
Energy & Geoscience Institute has been conducting fossil- and
geothermal-energy research at the University of Utah continuously for
24 years. Our geothermal program was initiated with Department of
Energy support in response to the national energy crisis stemming from
the oil embargo against this country in the mid-1970s. The institute's
research efforts since that time have directly and materially assisted
the U.S. geothermal industry in the exploration for and development of
domestic geothermal energy as one important means to help offset our
growing dependence on imported fossil fuels.
The country now has about 2700 megawatts (MW) of installed,
geothermal electrical-generation capacity. Annually, this amount of
energy is equivalent to that obtained by combusting roughly 30,000,000
barrels of oil; it is also sufficient for the needs of up to
2,700,0001, 2 American households. An additional
600 MW (thermal, not electrical) of geothermal energy is currently
devoted to direct uses such as the heating of homes and workplaces, and
the growing of flowers and foodstuffs in otherwise adverse seasons,
climates, or locations. The potential for expansion of this wholly
indigenous resource is enormous, but EGI believes full realization of
that potential depends critically upon (in addition to greater ease of
access to our public lands) a firm Federal commitment to, and
increasing levels of funding for, fundamental geothermal research.
---------------------------------------------------------------------------
\1\ - Energy & Geoscience Institute, 2001, Geothermal Energy -
Clean, Sustainable Energy for the benefit of Humanity and the
Environment, 8 p.; commissioned by the Department of Energy, Office of
Wind and Geothermal Technologies (Document Attached) [This Document has
been retained in the Committee's official files.]
\2\ - U.S. Department of Energy, Office of Geothermal Technologies,
1998, Strategic Plan for the Geothermal Energy Program, 23 p.
---------------------------------------------------------------------------
I wish to speak with you today about (1) the truly vast scope of
our country's geothermal resource base; (2) the fact that geothermal
resources are very complex natural phenomena, requiring particular care
for informed and successful exploration and development; and (3) our
conviction that a robust national research effort is essential for
reducing the risks and costs of these activities, so that an ever-
increasing portion of the resource will fall within economic reach.
The amount of heat stored in Earth's upper crust is a quantity of
astonishing magnitude - in the United States amounting to more than
70,000,000 quads (quadrillion BTU) of energy in the upper six miles
alone. For comparison, the total annual energy consumption of the
United States is about 99 quads. This shallow thermal bounty is a
consequence of the planet's high internal temperature (up to 7600
degrees F at the core); the natural flow of heat from the searing
interior toward the surface, and rock properties of the crust that
impede heat escape into space. Although just a fraction of the crustal
heat budget can now be commercially produced, it remains a near-
limitless energy supply that will surely become more accessible as
technologies for its wider extraction inevitably improve with time.
In the near term, the bulk of our domestic geothermal production
will continue to be centered in the American West. Here, heat is
concentrated at the thermally, seismically, and in places volcanically
active margin of the North American tectonic plate. As shown on the map
(Figure 1), virtually all the West's (indeed, the country's) high-
temperature (nominally greater than 300 degrees F) geothermal fields
and promising prospects are situated in regions with much higher than
normal heat flow. In these areas, steam and hot water from the
subterranean fracture networks of natural hydrothermal systems can be
harnessed to generate electricity with minimal impact on the
environment. Lower-temperature (less than 300 degrees F) hydrothermal
systems yield hot water for direct-heating applications as diverse as
fish farming (aquaculture) and the drying of crops and bricks.
It is widely believed that expansion of existing high-temperature
geothermal resources and discovery of others could increase our current
geothermal electric-power production capacity to 10,000 MW by the year
20102. By analogy, geothermal direct-heating installations
could likely provide 2400 MW by the end of this decade.
---------------------------------------------------------------------------
\2\ - Department of Energy, Office of Geothermal Technologies,
1998, Op. Cit.
---------------------------------------------------------------------------
In the longer term, given sufficient economic impetus, evolved
technology, improved scientific knowledge, and better public-lands
access, it is estimated that high-temperature geothermal resources in
the western U.S. could supply more than 20,000 MW of electrical energy
within 20 to 30 years.2 Toward achieving this goal, there is
still a great deal about natural hydrothermal systems to be learned
through basic research, for the more we know about these systems, the
more readily and cost-effectively they can be found, developed, and
expanded.
---------------------------------------------------------------------------
\2\ - Department of Energy, Office of Geothermal Technologies,
1998, Op. Cit.
---------------------------------------------------------------------------
Several of the West's high-temperature geothermal systems (for
example Desert Peak in Nevada) have no obvious surface manifestations,
and it is virtually certain that many other such wholly concealed
systems await discovery in the region. In order to narrow the search
for these elusive yet potentially valuable systems, we need to focus on
subtle clues to their hidden presence that certainly remain to be
gathered. Researchers at EGI and elsewhere, for example, are making
great progress toward that end by developing new methods for
sophisticated analysis of satellite and high-altitude aircraft imagery
over the concealed systems already in production.
Experts are also confident that conventional geothermal resources
can be engineered to yield even more of their precious energy. It is
now well established that these systems are limited not so much by heat
as by the amount of fluid and the number and size of fractures along
which the fluid can circulate and absorb that heat. Stated another way,
there are far more high-temperature heat sources than natural, high-
quality hydrothermal systems. Department of Energy-sponsored research
both planned and in progress is aimed at enhancing such systems
artificially by creating new subsurface fracture networks and by
injecting additional fluid into those networks through deep boreholes.
In addition to producing electrical energy, some geothermal fluids
can also be ``mined'' for valuable metals and minerals. Several
companies, for example, are investigating silica production from
geothermal brines. At the Salton Sea field in California's Imperial
Valley, the brines are already yielding substantial quantities of high-
purity zinc. The amount of the metal to be recovered is by no means
trivial, at 30,000 tons per year. Not only will this zinc-from-brine
extraction enhance the profitability of electric-power production at
the Salton Sea, it will also benefit the environment by offsetting the
need for conventional smelters and mines.
Although public-lands policies clearly affect geothermal
exploration and development more directly than research, I would like
to address briefly the obvious need for (1) the easing of access to
public lands and (2) the reduction of bureaucratic impediments to the
timely development of geothermal (and other natural) resources once
discovered on those lands. About three-fourths of our current
geothermal electric power is produced from public lands, and future
discoveries will certainly be concentrated there--the accompanying
geothermal and land-use map of Utah (Figure 2) should serve to
demonstrate the point. Restricted rights-of-entry and multiple,
lengthy, and often redundant pre-development land-use assessments all
too often have proven so costly that legitimate, nationally beneficial,
commercial development of domestic natural resources has been rendered
an impossible task.
Research supported by DOE and the geothermal industry has advanced
significantly since the U.S. Geological Survey (USGS) in
19783, and even since Gawell, Reed, and Wright
(1999)4, last surveyed the geothermal resource potential of
the nation's public lands. We believe, with others, that the time is
right for a new assessment, using the most up-to-date techniques and
conceptual models possible, to be carried out by the USGS in close
collaboration with University-based and other geothermal research
groups.
---------------------------------------------------------------------------
\3\ - U.S. Geological Survey Circular 790, 1978, Assessment of
Geothermal Resources of the United States, 163 p.
\4\ - Gawell, K., Reed, M., and Wright, P.M., 1999, Geothermal
Energy, the Potential for Clean Power from the Earth: Geothermal Energy
Association, Preliminary Report.
---------------------------------------------------------------------------
In summary, it seems clear that our country can only benefit by
taking full advantage of our fortuitous geothermal wealth. The U.S. is
blessed with vast geothermal potential, optimum realization of which,
stemming from a vigorous national research program, will diminish our
dependence on fossil fuels, and significantly strengthen our vital
national energy security.
______
[Maps attached to Mr. Hulen's statement follow.]
[The attachment entitled ``Geothermal Energy: Clean,
Sustainable Energy for the Benefit of Humanity and the
Environment'' is retained in the Committee's files.]
[GRAPHIC] [TIFF OMITTED] T5504.008
[GRAPHIC] [TIFF OMITTED] T5504.009
Mrs. Cubin. Thank you, Mr. Hulen.
The Chair now recognizes Mr. Weisgall.
STATEMENT OF JONATHAN M. WEISGALL, PRESIDENT, GEOTHERMAL ENERGY
ASSOCIATION; AND VICE PRESIDENT, LEGISLATIVE AND REGULATORY
AFFAIRS, MID-AMERICAN ENERGY HOLDINGS COMPANY, WASHINGTON, D.C.
Mr. Weisgall. Thank you, Madam Chair. I am Jonathan
Weisgall. I am the vice president with Mid-American Energy
Holdings Company. I also served as president of the Geothermal
Energy Association. We are about 83 companies involved in U.S.
geothermal development. Mid-American has a utility in Iowa. We
have got a utility over in the UK, and then we have a division
called CalEnergy, which is involved--really, we have got hydro,
we have got solar, but we really concentrate primarily on
geothermal in the western United States, Utah--I am sorry the
Chairman left-and California, and also over in the Philippines.
We have got about 340 megawatts of geothermal in California
alone, down near the Sultan Sea; 30 seconds of unadulterated
political pandering, but thank you, Madam Chair, for your work
earlier this year on chairing that hearing on geothermal
issues. I think that was very helpful.
You have heard a lot of facts about renewables today. I
will leave you with one factoid. Geothermal energy produces 6
percent of California's electricity. That is a lot. We, as
producers, have paid over $600 million in rentals and royalties
and bonus bids to the Federal Government over the years, not
counting Federal income taxes. If you throw that in, you are
looking at about $4 billion, not counting multiplier effects.
The potential you heard from Mr. Hulen, going from about
2,600, 2,700 today, probably up to 10,000 or 20,000 megawatts.
It can be done, probably about half of that or more, on Federal
lands. I do not want to be the elephant at the cocktail party,
but I have got to tell you that geothermal energy development
on public lands has declined rapidly. It is real tough as a
private developer, when we have got the alternative of
developing geothermal on leased lands that are held in fee
simple down at the Sultan Sea or on public lands that I am
going to tell you about, it is a lot easier not to go Federal.
Sorry to report that, but that is the fact.
Where do start in geothermal? Well, you have got to define
your resource before you can even get financing. Your heard Mr.
Garman and he is right; your average geothermal well is around
$2 million and your success rate is not too good. Well, before
you even go at that risk, you need a lease. That is
bureaucratic problem number one. Federal agencies are taking
years to act on tens of thousands of acres of leases, 250,000
acres in Nevada under geothermal lease application, BLM does
not have the resources. Washington State, one application
pending for 11 years. There is a long list. So no lease, no
exploration; that is problem one.
Number 2, once you build the lease, you have then got these
other questions of permits, the environmental review. I will
quickly tell you about one of our projects up in Northern
California called Telephone Flat. BLM, with the approval of the
Forest Service, issued these leases under the Geothermal Steam
Act. They were leased lands to develop geothermal energy.
Bonneville Power was going to buy the power, California Energy
Commission supported his.
The finally EIS came out and BLM and Forest Service said
yes, let's go forward with some mitigation measures, and then
they changed their minds and issued--they simply denied the
project. We are in court now, in the Court of Federal Claims,
as you can well imagine. Let me just tell you there were a
number of factors, a number of policies at work that you all
deal with every day, protecting roadless release areas,
protecting the rights of Native Americans, protecting spotted
owl issues and encouraging renewable energy.
To make a long story short, renewable energy lost big.
Another company, CalPine, is going forward up there. I think
they told you at a hearing this spring if they had known back
in 1984 what they know today, they would not have gone forward.
What is needed? Federal energy projects on public land need to
be given more priority, greater sense of urgency. You have
asked some of that already of the witnesses, but the
bureaucratic delays have to go away.
A company like ours that can build a geothermal plant in a
couple of years down at the Sultan Sea--and by the way we are
going to double those facilities and more. We are looking at
another 340 megawatts down there, and we can do that quickly.
Yes, you still have the applications. You have got the State of
California. You have got the bureaucrats, but they move faster
than the Federal ones.
You have got to eliminate duplication. The CalPine proposal
was held up repeatedly while different Federal and State
agencies looked at the same issues, sometimes several times
over. You have got to strike a more reasonable balance on the
need for renewable energy and other uses of public lands. Where
we came out on our project was the Federal agencies wanted no
impact. Well, that is a pretty high bar. You can take all kinds
of mitigation measures. To have no impact when you are building
a power plant, even a clean, renewable one, that is tough.
There are military land issues. You could amend the
Geothermal Steam Act to put military lands under that. H.R. 4
is doing some of that. There are huge opportunities, Madam
Chair, to increase energy diversity, and it is primarily in the
West. The map made very clear that is where the resource is. Do
not squander this opportunity. You have really got to work on
the bureaucratic red tape. We are bullish on geothermal as a
company, but I will tell you honestly we are not bullish on the
Federal land aspect of geothermal unless major changes are
made.
Thanks very much.
[The prepared statement of Mr. Weisgall follows:]
Statement of Jonathan M., Weisgall, President, Geothermal Energy
Association
Mr. Chairman and Members of the Committee: Thank you for the
opportunity to present the views of members of the Geothermal Energy
Association (GEA) to this Committee regarding geothermal energy
potential on public lands and the obstacles to developing this
important national energy resource. GEA is a trade association that
represents 83 companies and organizations involved in the U.S.
geothermal industry, from power plant owners and operators to small
drilling and exploration companies.
MidAmerican Energy Holdings Company consists of four major
subsidiaries: MidAmerican Energy Company, an electric and gas utility
based in Iowa; a U.K. utility; a residential real estate company; and
CalEnergy, a global energy company that specializes in renewable energy
development, primarily geothermal, in California and other Western
states, and in the Philippines. We own and operate 340 megawatts of
geothermal electricity in the Imperial Valley in Southern California,
where we are the largest employer and taxpayer in Imperial County,
which is one of the most economically disadvantaged counties in
California.
GEA wrote Vice President Cheney in May urging him to include in his
upcoming Task Force Report recognition of the problems facing
geothermal energy on public lands. A copy of that letter is attached to
our testimony. (Attachment 1)
We were very pleased to see the Energy Policy Task Force's report
include specific recommendations on geothermal energy, and we urge the
Department of the Interior to act quickly to implement them. In
addition, we have been encouraged by the interest of this Committee's
Subcommittee on Energy and Minerals, shown at the oversight hearing
held by Chairwoman Cubin in May that focused on the problems facing
geothermal developers on public lands. We appreciate your concern about
these impediments.
Geothermal Energy's Potential
Geothermal energy provides a significant amount of the energy and
electricity consumed in the Western U.S. Geothermal heat supplies
energy for direct uses in commercial, industrial and residential
settings in 26 states. Geothermal resources furnish substantial amounts
of electricity in California, Nevada, Utah and Hawaii. Indeed, 6
percent of California's electricity comes from geothermal energy.
Expanded use of these resources will provide additional clean, reliable
energy to the West. Thousands of megawatts of new geothermal power, and
an equal amount of direct use energy, could be developed in the
immediate future; however, obstacles created by public land agencies
must be removed.
Geothermal energy contributes directly to state and local economies
and to the national Treasury. To date, geothermal electricity producers
have paid over $600 million in rentals, bonus bids and royalties to the
Federal government. Moreover, according to an analysis performed by
Princeton Economic Research, it would be reasonable to estimate that
the geothermal industry has paid nearly 6 times that amount in Federal
income tax, for a combined total of over $4 billion.1 If the
economic multiplier effects were considered, the total benefits of
geothermal energy to the local and national economy would be
substantially greater.
---------------------------------------------------------------------------
\1\ Princeton Economic Research, Inc., Review of Federal Geothermal
Royalties and Taxes, December 15, 1998. (Figures expressed in 1998
dollars.)
---------------------------------------------------------------------------
What is the potential for geothermal energy on public lands? What
would the benefits of developing these resources be? These are
difficult questions to answer, in part because the efforts of the U.S.
Geological Survey (``USGS'') and the Department of Energy to define the
U.S. resource base have not been funded for many years. As the USGS
pointed out in its testimony before the Energy Subcommittee in May, the
last assessment it conducted was undertaken roughly 30 years ago.
In order to produce a more current picture of the near-term
potential of the geothermal resource base, GEA Executive Director Karl
Gawell together with Dr. Marshall Reed of DOE and Dr. Michael Wright of
the Energy and Geosciences Institute at the University of Utah,
conducted a systematic survey of known experts in 1999. The results of
this survey were assessed and a brief report was released in April of
that year entitled ``Preliminary Report: Geothermal Energy: The
Potential for Clean Power from the Earth.''2
---------------------------------------------------------------------------
\2\ Gawell, Reid and Wright, Preliminary Report: Geothermal Energy,
the Potential for Clean Power from the Earth, Geothermal Energy
Association, April 7, 1999
---------------------------------------------------------------------------
That report concluded that the U.S. geothermal resource base could
support significantly increased production. U.S. geothermal electric
capacity, now at about 2,600 MW, could almost be tripled and, with
expected improvements in technology, could reach nearly 20,000 MW in 20
years.
These figures would appear to be fairly consistent with the
estimates presented to the Subcommittee on Energy and Minerals by the
USGS. Their testimony indicated a potential for 22,290 MW of geothermal
electricity production (see Attachment 2). As GEA's Executive Director
testified before the Energy and Minerals Subcommittee, this is in line
with the results of the planning workshop that helped produce the
current DOE Strategic Plan - an effort that brought together many of
the leading experts from industry, laboratories and academia. At that
workshop, there was a consensus that with market support as much as
10,000 MW of electric capacity could be brought on-line in the West by
2010.3
---------------------------------------------------------------------------
\3\ U.S. Department of Energy, Office of Geothermal Technologies,
Strategic Plan for the Geothermal Energy Program, June 1998, page 21.
---------------------------------------------------------------------------
Achieving this additional geothermal production would have
substantial economic and environmental benefits in the western United
States. If the goal of the DOE Strategic Plan could be reached, the
cumulative Federal royalties from the new power plants would reach over
$7 billion by 2050, and estimated income tax revenues would exceed $52
billion in nominal dollars.4 Just the state share in these
royalties alone would mean an additional investment of $3.5 billion in
schools and local government facilities in the western states.
---------------------------------------------------------------------------
\4\ Princeton Economic Research Inc., Op. Cit., Volume I, page 17.
---------------------------------------------------------------------------
Geothermal Energy on Public Lands
But whether and when the economic benefits of further geothermal
development are realized will greatly depend upon the action, or
inaction, of the Federal land management agencies. Today, about 75% of
U.S. geothermal electricity production takes place on Federal public
lands because that is where most of the resource is located. If we
expect to see significant increases in geothermal energy production, it
will have to involve resources yet to be developed on public lands. But
that will not happen without significant changes in the administration
of geothermal leasing, environmental assessment, permitting, and other
actions by Federal agencies.
New geothermal development requires the timely and reasonable
oversight of Federal leasing, permitting, and environmental reviews by
public land management agencies. Unfortunately, the administration of
geothermal energy on public lands has been marked by bureaucratic delay
and indecision by public land agencies; as a result, there has been a
rapid decline in new geothermal energy development.
To understand the impact this has, it is important to recognize
that all of the estimates discussed earlier are nothing more than that
- estimates. A company interested in developing a geothermal resource
will have to invest millions of dollars in defining the resource before
construction of a power plant can even begin. Unfortunately, there are
few surface exploration techniques for geothermal energy that can
provide any degree of confidence. Confirmation and definition of the
resource involves drilling, and that means that the resource risk is
high and may remain high until after several wells have been drilled.
Geothermal wells are more expensive to drill than oil and gas
wells. They are drilled in hot, hard, fractured, abrasive rocks where
problems are frequent and expensive. For a green field development,
resource definition work may involve as much as 40% of the cost of the
project, and that considerable expense must be borne before the
resource is confirmed sufficiently to secure financing for a project -
making the risk to the developer even greater.
Companies will not take on such considerable expense and risk
without assurance that if they are successful they will be able to
develop a power plant. To begin with, they need a lease to ensure their
rights to develop the particular resource identified. This brings us to
bureaucratic problem number one: tens of thousands of acres of
geothermal leases have been applied for in the West, but no action has
been taken by Federal agencies, often for years.
In state after state there continues to be a de facto moratorium on
geothermal development on public lands as agencies fail to take timely
action on lease applications. Based upon the feedback we have received
from GEA member companies, we understand that in Nevada, for instance,
there are presently over 250,000 acres under lease application most of
which have been pending for over a year.
Companies have been told by BLM that it does not have the resources
to complete action on these lease applications. Even if companies offer
to pay for consultants to assist the government with their lease
application reviews, they are told it will take nearly a year to
process an application.
Similar stories are told in other states. One company has had lease
applications pending on over 10,000 acres in Washington State for 11
years. In New Mexico, another company reports that it has had 20,000
acres of lease applications in limbo for over 3 years. A company in
California reports that 18,000 acres of lease applications have been in
process for about 6 years.
If you wonder why there are not more geothermal projects being
developed in the West, this is a big part of the answer. If a company
cannot obtain a lease, it will not spend millions of dollars on the
exploration needed to determine whether or not there are adequate
subsurface geothermal resources to support a geothermal power project.
Furthermore, once a company obtains a lease, the administrative
processing of permit applications and environmental reviews can be
expected to take years of additional time. As GEA's Executive Director
testified before the Energy Subcommittee, it has been our members'
experience that ``environmental reviews have been unnecessarily
extensive, costly, and repetitive; and in areas where an EIS has been
completed, decisions by Federal agencies have been subject to years of
delay and appeal.''
The CalEnergy Telephone Flat Geothermal Development Project is
another example of the severe obstacles encountered in attempting to
bring alternative energy resources into production on federally
administered public lands. This project is located on national forest
lands in northern California, in the area identified by the Federal
government as the Glass Mountain Known Geothermal Resource Area
(``KGRA''). The project consists of a 49 MW power plant with associated
well fields, transmission lines, and other facilities to produce and
use geothermal steam included in Geothermal Steam Act leases.
The BLM issued these leases in the 1980s, with the approval of the
Forest Service, for purposes of this development. The project is sited
in a demonstrated area of commercial geothermal steam production within
the KGRA, situated in what is known as the Medicine Lake Caldera. The
BLM and Forest Service encouraged this development in the Glass
Mountain area for twenty years. The Bonneville Power Administration
agreed to buy power from the project once it was approved by these
agencies, and the California Energy Commission's Renewable Energy
Program awarded funding to CalEnergy to encourage the development.
Between 1997 and early 1999, CalEnergy and the agencies completed a
detailed environmental impact statement (``EIS''), addressing the
potential impacts of the project. In the final EIS, the agencies chose
to proceed with the project with appropriate mitigation measures as the
preferred alternative. However, after millions of dollars of investment
by CalEnergy and after issuing the final EIS, the BLM and Forest
Service then reversed their position. They denied the project in a May
31, 2000 Record of Decision.
In their decision, they made it clear that they would not approve
any development in the Caldera area, citing concerns about perceived
effects of the project on Native American spiritual use and recreation.
The denial of the Telephone Flat Project by the BLM and Forest Service
is now the subject of a contract breach and Fifth Amendment taking
lawsuit against the United States, in which CalEnergy is seeking
substantial damages. I cannot comment further on this matter because it
is in litigation. However, the sequence of events that I have described
illustrates the disincentives to development that currently exist.
During the Subcommittee hearing last May, an official from Calpine
Corporation, the largest geothermal energy company in the United
States, testified about his company's experience trying to develop
geothermal resources at another site in the Glass Mountain KGRA.
Calpine reached a different result from my company, as the Forest
Service and BLM approved their project. Despite this positive outcome,
the Calpine official declared in his statement before the Subcommittee
``...if Calpine knew in 1994 what is knows now, it is safe to say that
it never would have invested its time and capital in the Fourmile Hill
project.'' He continued: ``...Unless the situation changes, Calpine is
unlikely to embark on a similar project ever again. This should concern
this Subcommittee because many of the geothermal resources in the
United States are located on Federal land. As long as the Federal
permitting process remains as time-consuming and costly as what Calpine
has experienced, private companies will be severely discouraged from
developing these resources.''
The message is clear: Extensive and expensive administrative
processing is having a significant negative impact on geothermal
development on public lands. The years of delay and uncertainty in
moving forward at these sites sent shock waves through the geothermal
industry. It sent a message to every company even thinking about a new
geothermal project on public lands--expect many years of arduous and
expensive bureaucratic processing.
Geothermal Energy on Military Lands
In addition, there are millions of acres of public land in the West
that are reserved for use by the military. These lands potentially hold
significant geothermal resources, but there are no consistent
procedures for obtaining leases on military lands, and industry's
limited experience to date has not been completely positive. In
particular, the lease terms and conditions at the existing geothermal
power site have posed both economic and operational problems for the
company involved. .
Private companies should be encouraged to develop geothermal
resources on these lands in a manner consistent with their primary
function and military mission. As Ross Ain, Vice President of Caithness
Corporation, testified before the Subcommittee on Energy and Minerals,
we have specific recommendations to promote this goal. Specifically,
for geothermal leasing and development on lands subject to military
reservation there should be:
(1) Uniform policies on securing and maintaining the leasehold
estate, except as dictated by military needs;
(2) Uniform royalty structures; and
(3) Centralized administration of the lease and royalty
programs.
Essentially, we believe geothermal resources on military lands
should receive treatment similar to other minerals.5 The
Resources Committee has reported legislation as part of H.R.4 that
would greatly advance achieving more geothermal production from
military lands. We commend the Committee for its action.
---------------------------------------------------------------------------
\5\ See 43 U.S.C. 158. The Engle Act of 1958 placed mineral
resources on withdrawn military lands under jurisdiction of the
Secretary of the Interior and subject to disposition under the public
land mining and mineral leasing laws.
---------------------------------------------------------------------------
Recommendations
It is important that the Subcommittee recognize that there are
serious problems facing geothermal energy development on public lands.
In many ways, the problems facing geothermal development mirror those
of natural gas development, and are often exacerbated by geothermal
energy's higher risk and much higher capital costs.
To mitigate these extraordinary delays and costs, we encourage the
Federal land management and regulatory agencies to:
LEnsure that the processing of needed, clean energy
projects on public lands is handled with a sense of urgency and
priority. It is vital that bureaucratic delays be reduced from years to
months, if not weeks, and that the backlog of appeals at the Interior
Board of Land Appeals be eliminated.
LEliminate repetition and duplication in the process. The
Calpine proposal was held up repeatedly while the same issues were
examined over and over again by different Federal and state agencies.
LStrike a more responsible balance between our need for
new, clean energy supplies, and other uses and values for the public
lands.
LEnsure reasonable access to public lands, including
military lands, and lease terms that reflect the public interest in
developing geothermal energy resources.
LAmend Federal law to place geothermal leasing on military
lands under the Geothermal Steam Act, subject to consultation with the
Department of Defense.
The present energy situation in the western U.S. presents an
opportunity to increase energy diversity and energy security through
the production of clean, indigenous, renewable power. This opportunity
must not be squandered by bureaucratic red tape. We urge you to clear
the logjam that prevents geothermal from contributing fully to our
nation's energy security.
Thank you.
______
ATTACHMENT #1
GEOTHERMAL ENERGY ASSOCIATION
209 Pennsylvania Avenue SE, Washington, D.C. 20003 U.S.A.
Phone: (202) 454-5261 Fax: (202) 454-5265 Web Site: www.geo-energy.org
April 5, 2001
The Honorable Richard B. Cheney
Vice President of the United States
The White House
1600 Pennsylvania Ave.,NW
Washington, D.C. 20500
Dear Vice President Cheney,
As your task force examines the issues facing America's energy
security, we hope that you will consider the obstacles and inordinate
delays facing geothermal energy development on public lands.
Geothermal energy provides a significant amount of the energy and
electricity consumed in the Western US. Geothermal heat provides energy
for direct uses in commercial, industrial and residential settings in
26 states. Geothermal resources provide substantial electricity in
California, Nevada, Utah and Hawaii. Expanded use of these resources
will provide clean, reliable energy to the West. Thousands of megawatts
of new geothermal power, and an equal amount of direct use energy,
could be developed in the immediate future; however, obstacles created
by public land agencies must be removed.
Today, about 75% of US geothermal electricity production takes
place on Federal public lands because that is where most of the
resource is located. We expect that the resources yet to be developed
also will be predominantly located on public lands. While the previous
Administration espoused development of more geothermal resources in the
West through its ``GeoPowering the West'' initiative, too little was
done to address the underlying problems that prevent investment in
geothermal projects on public lands.
New geothermal development requires the timely and reasonable
administration of Federal leasing, permitting, and environmental
reviews by public land management agencies. Unfortunately, the recent
past has been one characterized by bureaucratic delay and indecision by
public land agencies; as a result, there has been a rapid decline in
new geothermal energy development. Tens of thousands of acres of
geothermal leases have been applied for in the West, but no action has
been taken by Federal agencies for years. Permit applications that
should have taken days or weeks have taken months or years to process.
Environmental reviews have been unnecessarily extensive, costly, and
repetitive; and in areas where an EIS has been completed, decisions by
Federal agencies have been subject to years of delay and appeal.
For the geothermal industry, the events surrounding development in
California's Modoc and Klamath National Forests have been a chilling
demonstration of why any sensible geothermal company would not want to
do business on public lands.
These National Forests hold one of the largest undeveloped Known
Geothermal Resource Areas in the United States. The KGRA was identified
shortly after enactment of the Geothermal Steam Act in 1970. By April
1981, the U.S. Forest Service had completed an environmental assessment
for geothermal leasing in the area, and the first competitive lease
sale was held in February of 1982. High bids totaling $6.6 million were
received for 11 leases.
After environmental reviews and some exploratory drilling, Calpine
Corporation submitted the first plan of operations for construction of
a power plant in 1996. Another environmental review ensued, and an
extensive Environmental Impact Statement was finalized on September 25,
1998. However, it was not until nearly two years later, May 31, 2000,
that a Record of Decision was issued to approve the Project--and then
only after imposing through the ROD some of the most restrictive
conditions ever imposed upon an energy project on public lands. But the
story doesn't end there. After the ROD was issued, it was appealed to
the Interior Board of Land Appeals where a decision is expected
sometime in the next couple of years. Meanwhile, further exploratory
drilling has been blocked pending a decision on the appeal, even though
such drilling had been previously approved and permitted.
The treatment of the Calpine project at Fourmile Hill has sent
shock waves through the geothermal industry. This area had for decades
been proposed for geothermal development. Land use plans and
environmental assessments supported geothermal development as an
appropriate and publicly beneficial use. Potential development was well
recognized, and dozens of different meetings, environmental reviews,
and other opportunities for public input preceded any project proposal.
Yet, despite this favorable setting, it has taken nearly twenty
years from the first competitive lease sale to reach a decision on the
first small power plant project--and we're still not sure what that
decision is. As a result, the lesson most widely learned from the
Fourmile Hill example is that a new geothermal project cannot be
approved without years of arduous and expensive bureaucratic
processing.
This has had a chilling effect on the geothermal industry. If this
is what can be expected, few, if any, companies will attempt to develop
new geothermal projects on public lands in the West, particularly when
they involve joint BLM-Forest Service jurisdiction. Regardless of
whatever market or financial incentives may be offered for new clean,
power production, they will not be enough to overcome the costs imposed
by such an arduous process and potentially decades of delay. It will
simply be too much for any private investor to bear.
It is important that your Task Force recognize and address the
serious problems facing geothermal energy development on the public
lands. In many ways, the problems facing natural gas development are
mirrored for geothermal development, if not exacerbated by geothermal
energy's higher risk and much higher capital costs.
To mitigate these extraordinary delays and costs, we encourage your
task force to:
LEnsure that the processing of needed, clean energy
projects on public lands are handled with a sense of urgency and
priority. It is vital that bureaucratic delays be reduced from years to
months if not weeks.
LEliminate repetition and duplication in the process. The
Calpine proposal was held up repeatedly while the same issues were
examined over and over again by different Federal and state agencies.
LStrike a more responsible balance between our need for
new, clean energy supplies and other uses and values for the public
lands.
And, while you are moving forward on these programmatic and policy
initiatives, please don't forget the Fourmile Hill geothermal project
itself. It is still trapped in the Federal bureaucracy. Prompt action
by this Administration to set this project on the path to completion
would be a welcome signal to all of the geothermal industry that there
is a new, positive direction in public land management. To better
familiarize you with the issues specific to this important geothermal
resource area, I have enclosed an article that I recently wrote about
the Calpine project at Fourmile Hill and its potential for providing
new energy to California and the West.
The present energy situation in the western US presents an
opportunity to increase energy diversity and energy security through
the production of clean, indigenous, renewable power. This opportunity
must not be squandered by bureaucratic red tape. We urge your Task
Force to seek ways of clearing the logjam that prevents geothermal from
contributing fully to our nation's energy security. The Geothermal
Energy Association and its membership would gladly provide assistance
to your Task Force on this matter, or any other issue related to
development and use of geothermal resources.
Sincerely,
Karl Gawell
Executive Director
cc: Secretary Gale Norton
Secretary Ann M. Veneman
______
[GRAPHIC] [TIFF OMITTED] T5504.010
______
Mrs. Cubin. Thank you, Mr. Weisgall.
The Chair now recognizes Mr. Steve.
STATEMENT OF JAIME C. STEVE, LEGISLATIVE DIRECTOR, AMERICAN
WIND ENERGY ASSOCIATION, WASHINGTON, D.C.
Mr. Steve. Madam Chairwoman, my name is Jaime Steve and I
am Legislative Director for the American Wind Energy
Association, based here in town. Wind energy development
companies that I represent include Enron Wind Corporation,
based in California, and FPL Energy, a subsidiary of Florida
Power and Light, based in Juneau Beach, Florida. Increased use
of clean, domestic wind energy on both public and private lands
is a bipartisan issue with broad support in the Congress and
from the Bush administration.
For example, a 5-year extension of the wind energy
production tax credit that we heard about earlier is contained
in H.R. 4. It is also part of the Bush-Cheney energy plan. A
freestanding 5-year extension of that tax credit, introduced by
Representative Mark Foley, has attracted about 150 sponsors at
this point and continues to grow. An identical freestanding
Senate bill by Senator Grassley and Senator Conrad has about 26
sponsors.
While the tax credit is crucial to wind energy development
and it is likely to be extended this year, it may be extended
for a period of less than the full 5 years needed to provide
the stability and certainty required for long-term investment
decisions. By the end of this year alone, Texas will see more
than 800 megawatts of wind power come online. This amount of
electricity is enough to meet the annual electricity needs of
about 200,000 homes.
At the same time, hard-pressed Texas farmers and ranchers
leasing small portions of their land for wind development will
gain annual payments in the range of about $3,000 per windmill
per year for a period of 20 years. Let me repeat that: $3,000
per windmill per year for a period of 20 years. So that adds up
for farmers and ranchers. A simple point is that wind energy is
real and it is spurring significant economic development in
rural America.
Today I would like to specifically address two issues
affecting the ability to develop wind energy on Federal lands.
The first one, and we have heard about this before, significant
delays by the Bureau of Land Management in processing
environmental impact statements. While I am not here to beat up
on the BLM, I must point out that in the last 2 years there
have been significant increases in the time required to process
environmental impact statements. These are important because
you have to get through these before you actually site a
facility.
What used to take six to 9 months now routinely takes 18 to
24 months, and sometimes as long as 48 months. This is an
enormous problem for wind developers, for whom a period as
short of two to 3 months is critical in completing a project so
as to qualify for the tax credit that I mentioned, which
expires, by the way, December 31st of this year.
Number two, full-year studies of avian or bird impacts.
Anytime we talk to somebody on the Hill, they say what about
birds? Birds are essentially not a problem with windmills.
There was one area in California where they were because it was
a huge bird flyway. You still have to do the studies. While
numerous investigations have shown that wind turbines do not
pose a significant threat to bird or avian populations, studies
of impacts in other wildlife are required under the National
Environmental Policy Act before any permits may be issued.
Often, the Fish and Wildlife Service requires two to 3
years of study of potential impacts on fringe-toed lizards,
bighorn sheep or Mohave ground squirrels prior to completing an
environmental impact statement. Even if a wind developer is
successfully in persuading the Fish and Wildlife Service
officials into conducting a 12-month study, the time required
to complete the work is still a problem. Specifically, during a
12-month bird study in a western State, such as Oregon,
Washington, Montana or Idaho, there is often little to no bird
activity during a three to 4 month winter season.
Our simple suggestion is to allow the Fish and Wildlife
Service officials the discretion to accept data collected in a
three-season period--spring, summer and fall--and dispense with
the need to conduct meaningless winter studies. Allowing this
discretion to dispense with winter studies on a case-by-case
basis could reduce the NEPA process by as much as four to 5
months. Obviously, the use of this discretion would not be
appropriate in situations involving wintering birds, such as
bald eagles.
Again, all we are asking for is a little common sense to
avoid delays, crucial in deciding whether or not to go ahead
with a new wind project. And in conclusion, let me just say
that both the environmental impact statements and specific
wildlife impact studies are crucial and important aspects of
Federal law. We are not seeking an elimination of these laws or
a gutting of these laws. Again, we are just seeking simple
common sense and kind of a rule of reason applied. Doing so
will allow environmentally responsible development of wind
energy on Federal lands, while also allowing our country to
meet its pressing energy needs with clean, nonpolluting
sources, such as wind and geothermal and other renewables. At
the same time, we are boosting high-tech jobs and helping the
rural economy.
[The prepared statement of Mr. Steve follows:]
Statement of Jaime Steve, Legislative Director, American Wind Energy
Association
Chairman Hansen and members of the Subcommittee, my name is Jaime
Steve. I am Legislative Director for the American Wind Energy
Association. Wind energy development companies that I represent include
Enron Wind Corp., FPL Energy (a subsidiary of Florida Power and Light),
AEP (American Electric Power) based in Cincinnati, Ohio, and Pacificorp
operating in the northwest and parts of Utah.
Increased use of clean, domestic wind energy on both private and
public lands is a bipartisan issue with broad support in Congress and
from the Bush Administration. For example, a five-year extension of the
existing wind energy production tax credit (PTC) is contained in H.R.
4, the wide-ranging energy policy bill passed by the House earlier this
year. This provision was also contained in the Bush-Cheney energy plan.
A free-standing five-year PTC bill by Reps. Mark Foley (R-FL), Bob
Matsui (D-CA), Jerry Weller (R-IL) and Karen Thurman (D-FL) has
attracted 150 sponsors. An identical free-standing Senate bill - by
Sens. Chuck Grassley (R-IA) and Kent Conrad (D-ND)--has attracted 26
sponsors. While the tax credit - crucial to continued wind development
- is likely to be extended this year, it may be extended for a period
less than the full five years needed to provide business the stability
and certainty required to make long-term investment decisions.
The wind tax credit, coupled with more than 80 percent reductions
in wind power costs since the 1980's has enabled wind to compete almost
head-to-head with conventional energy sources. By the end of this year
Texas alone will see more than 800 megawatts of wind power come on
line. This amount of electricity is enough to meet the annual
electricity needs of about 200,000 homes. At the same time, hard-
pressed Texas farmers and ranchers leasing small portions of their land
for wind development will gain annual payments of about $3,000 per
windmill, per year, for at least twenty years. In addition, these wind
developments are contributing to the tax base of local governments. The
simple point is that wind energy is real and it is spurring significant
economic development in rural America. Today, I would like to
specifically address two issues affecting the ability to develop wind
energy on Federal lands.
1.) Significant Delays by the Bureau of Land Management (BLM) in
Processing Environmental Impact Statements
While I am not here to beat up on the Bureau of Land Management
(BLM), I must point out that in the last two years there has been a
significant increase in the time required by BLM to process
Environmental Impact Statements (EIS)--required under the National
Environmental Policy Act (NEPA) - before a right-of-way permit can be
issued for a new wind project. What used to take six to nine months,
now routinely takes 18 to 24 months and sometimes as long as 48 months.
This is an enormous problem for wind developers for whom a period as
short as two or three months is critical in completing a project so as
to qualify for the previously mentioned wind energy tax credit.
2) Full Year Studies of Avian Wildlife Impacts
While numerous investigations have shown that wind turbines do not
pose a significant threat to bird, or avian, populations, studies of
impacts on birds and other wildlife are required under NEPA before any
permits may be issued.
Often the U.S. Fish and Wildlife Service (FWS) requires two or
three years of study on potential impacts to fringe toed lizards, big
horn sheep, or the Mojave ground squirrel prior to completing an
Environmental Impact Statement. Even if a wind developer is successful
in persuading regional FWS officials into conducting a twelve-month
study, the time required to complete the work is still a problem.
Specifically, during a twelve-month bird study in a western state
such as Oregon, Washington or Montana there is often little to no bird
activity during the three to four month winter season. Our simple
suggestion is to allow FWS officials the discretion to accept data
collected from the spring, summer and fall and dispense with the need
to conduct meaningless winter studies. Allowing the discretion to
dispense with winter studies - on a case-by-case basis--could reduce
the NEPA process by as much as four to five months. Obviously, this use
of discretion would not be appropriate in situations involving
wintering birds such as bald eagles. Again, all we are asking for is a
little common sense to avoid delays that are crucial in deciding
whether to go ahead with a new wind project.
Conclusion
Both Environmental Impact Statements and specific wildlife impact
studies are crucial and important aspects of the National Environmental
Policy Act and other Federal laws designed to protect America's
majestic and often threatened wildlife. We are not asking that these
environmental protections be eliminated or gutted. What we seek is
simply the application of a rule of reason, or a dose of common sense,
when trying to meet the spirit of these laws. Doing so will allow
environmentally responsible development of wind energy on Federal lands
while allowing our country to meet its pressing energy needs with a
clean, non-polluting, domestically produced resource that creates new
high-tech jobs and boosts rural economic development. Thank you.
______
Mrs. Cubin. Thank you, Mr. Steve.
The Chair now recognizes Dr. Butler.
STATEMENT OF BARRY LYNN BUTLER, Ph.D., VICE PRESIDENT AND
MANAGER, ENERGY PRODUCTS DIVISION, SCIENCE APPLICATIONS
INTERNATIONAL CORPORATION (SAIC), WASHINGTON, D.C., TESTIFYING
ON BEHALF OF SOLAR ENERGY INDUSTRIES ASSOCIATION
Mr. Butler. Thank you, Mr. Chairman. It is a pleasure to be
here representing the Solar Energy Industry Association. I know
that you have read the testimony I present, so I would like to
set a them for it, and that is beyond price we need to talk
about value, and beyond region, the things that are good for
the Southwest, which reduce the energy demand there, make
energy more available to other places. So, energy is sort of
fungible.
The key in value is solar power is domestically produced
and it is controlled by us. It is affordable, reliable and
stable power. I live in California, and I have paid 18 to 25
cents a kilowatt-hour, so five cents does not matter as much to
me as 18 does. So I have photovoltaics on my roof. I have a
solar-heated hob tub. I have got solar power for my hot water,
and I have got two Toyota Priuses, so I get 48 miles-per-gallon
average fuel economy in my family.
That is value, and I think we need to focus on that. I
represent 500 companies and I am actually a practitioner. I am
out there making and selling these things. We employ about
20,000 people in this industry today. That includes the
photovoltaics, concentrating solar power, which is what this
stuff is, and the plants out in California, parabolic dish
concentrators, power towers and zero net energy buildings. I
mean, you can have megawatts and you can have negawatts, so
conservation is a critical issue, and our industry covers all
of those things.
The value proposition that I described is covered by what I
call the five E's of solar: energy, which is just the
production of energy; the second is economy and employment, and
if you look at my charts, you will see that our industry is
like the automobile industry. We take glass, steel, plastics,
the same kind of things that we do in Detroit now, and we make
that stuff and we put it out there and generate electricity
with it. That creates high value-added jobs, $25,000 to $40,000
a year jobs. Those people pay taxes and they use that energy.
They produce it in the United States and consume it here.
We can export the technology to the rest of the world, to
make it a safer place. You already know it is environmentally
friendly, but the fifth E of solar is it empowers us for
control over our own energy future, and I think my companies
stand ready to be producing 1,000 megawatts a year over the
next 5 years and more after that. That does not sound like
much, but that is a nuclear power plant a year, and that would
represent almost 40,000 jobs in our industry, and we can
accelerate that if you will help us, you know, get it on to
Federal land.
A 10-by-10 mile plot of land, you will notice in one of my
figures, produces 2,000 megawatts, which is the same as the
Boulder Dam. So it is not a land-use intensive activity, and it
is important for the Nation because these jobs are--what
reminds me of this is the jobs are ones that we as a Nation
have to make our decision about whether we pay our own citizens
to make energy for us, by building solar collectors, deploying
and maintaining them--it is the same with wind, same with
geothermal; there is no difference there--or whether we pay
then for oil and gas from other places around the world.
So, in our business, we use American materials, American
technology, American factories that already exist. We are
taking automobile workers and making solar collectors. We use
American transportation to move the stuff around, Americans to
install it, Americans to operate it, and we are making energy
for Americans. The price is higher or the cost of an electron
you buy is higher, but the value to society--that high cost
that you pay went to develop the technology for us.
So we are basically employing our people to make electrons
for us, so that increase in cost we pay funds our own jobs. So,
in summary, we have prepared, or I have prepared, a list of
things we would like to see, the tax credits and the other
things. I will not go into those in detail, because you have
been able to read them here.
Thank you very much.
[The prepared statement of Mr. Butler follows:]
Statement of Barry L. Butler, Ph.D., Chairman, Concentrating Solar
Power Division, Solar Energy Industry Association, and Vice President
and Manager, Solar Energy Products Division, Science Applications
International Corporation
Summary
Solar power is a domestically produced and controlled, affordable,
reliable, and stable electric power resource. Solar power can be
generated in large or small amounts, and can be generated in close
proximity to where it is needed. This reduces the need for additional
transmission line capacity. Its reliability makes it the energy source
of choice for numerous remote applications, including on cell phone
towers and along fuel pipelines.
For the purpose of this testimony, I am representing all of SEIA's
member companies and its affiliated state and regional chapters more
than 500 companies nationwide. The technologies within the term
``solar'' as I use it are photovoltaics, concentrating photovoltaics,
parabolic troughs, power towers, parabolic dishes and zero net energy
buildings.
One thousand megawatts of solar power systems are the energy
equivalent of 1.2 million barrels of oil per year or a well producing
3,287 barrels per day. To give one example of the large-scale potential
for solar, just 10.8 square miles of solar systems on public, private
or Indian lands would produce 2,000 megawatts of power.
The Federal government is the largest consumer of electricity, and
the largest landowner. A program that would drive even a small amount
of solar energy generation on Federal lands and/or for Federal
buildings would provide a dramatic boost in production, which in turn
would accelerate the reductions in cost and improvements in efficiency
that we have consistently seen in solar products over the last 25
years.
Growth in the U.S. solar industry produces numerous benefits,
including a cleaner environment, new quality jobs, more energy to help
our economy grow, and increased energy independence, which I will touch
on further in a moment. On the other hand, without a healthy domestic
market, U.S.-based manufacturing will ultimately yield to competitors
in Europe and Asia, where governments are actively promoting solar
energy deployment. The PV industry worldwide is growing at 25 percent
per year today.
The good news is that U.S. Department of Energy solar research
programs have helped bring us dramatic advances in solar technology and
performance. (And I am not just saying that as an alumnus of our
wonderful National Labs.) As Congress finalizes funding levels for
fiscal year 2002, and begins to plan for future years, please keep in
mind this record of success.
In addition to deploying solar on Federal lands and in Federal
buildings, Congress can take other steps to accelerate solar deployment
and reap its benefits. Among these are:
LNet metering/interconnection standards. Plugging in your
solar power sources should be as easy, and as safe, as plugging in your
phone.
LTax incentives. Extension of the Production Tax Credit
(PTC) to solar energy enjoys bipartisan support in both houses of
Congress, and would help fuel powerful growth for the industry. In
addition, a Federal 15 percent Residential Solar Energy Tax Credit has
already passed the House. Please urge your Senate colleagues to join
you in making that provision law this year. Increasing the Investment
Tax Credit from 10 percent to 20 percent would also be a useful, and
effective, way to encourage businesses to deploy more clean solar
energy.
LAppropriations. For fiscal year 2002, the Administration
originally proposed dramatic cuts in solar and renewable energy
research and development programs at DOE. But the White House now
supports additional funding. The House-Senate Conference Committee
should agree on aggressive funding for solar R&D programs in fiscal
year 2002 and beyond. My industry, the CSP industry, stands poised to
leverage those DOE research, development, and deployment dollars to get
new power generation up and running quickly in the southwestern United
States, including California.
LSolar development bank. A solar development bank, or
revolving loan guarantee, would help the solar industry surmount the
high up-front costs that have inhibited faster industry growth. Low
interest rate financing would also address this problem.
LA national solar portfolio standard. This would help the
nation the way similar state efforts have helped those states that have
adopted them.
LLong-term power purchase agreements. Twenty-year power
purchase agreements would help the industry secure the private
investment dollars and bank loans needed to grow more quickly. Again,
the up-front costs are more substantial for solar than for some other
energy sources.
LSolar schools/reservations/agriculture. An increased use
of solar power in our nation's schools, which would also help our
ailing K-12 science programs, and on Indian reservations (remote
locations where power lines are prohibitively expensive), would also
prove beneficial.
Finally, as our country responds to the tragic events of Tuesday,
September 11, we see how our freedom of action is restrained by our
need for oil in the Middle East. Certainly, this should remind us that
energy independence is a worthy goal for our nation, one that will not
just help our economy but improve our national security. Solar power
should play an important role in any effort to reduce our dependence on
foreign energy sources.
And before I leave this point, I would like to say as a personal
aside that I am just one of the millions of Americans who is proud of
how the Congress and the Administration have responded in a united
fashion to the terrorist attacks on our nation. Thank you very much. I
would be happy to answer your questions.
The benefits of solar development are explained as the five E's of
solar on national public lands. They are Energy, Economy (employment),
Export, Environment, and Empowerment.
ENERGY is the first E. Solar energy can be viewed as an
undepletable oil well. One thousand megawatts of solar power systems
are the energy equivalent of 1.2 million barrels of oil per year or a
well producing 3,287 barrels per day. The land area needed to produce
the same amount of electricity as Hoover Dam is shown in figure 1,
where 10.8 square miles of solar systems can produce 2,000 megawatts of
power on public, or Indian lands. However, a large number of 11-square-
mile areas can be developed on public lands and provide a significant
fraction of the country's energy requirements, perhaps 20 percent or
more over the next 10 years.
In California, the most aggressive state utilizing and striving for
clean power, the solar percentage is less than 1 percent. This can be
seen in figure 2, which shows where Californians get their electricity.
California's electricity generation sources favor solar more heavily
than the nation as a whole.
ECONOMY is the second E. Deploying 5,000 megawatts by the year 2006
could be accomplished using national public lands, and would be
accomplished by using all of the solar technologies at our disposal,
which are shown in figure 3. The first is photovoltaics, which turns
sunlight into direct current electricity, and can be inverted to AC
power for the grid. These systems appear on the left-hand side of the
figure for grid tied applications and on the right-hand side as part of
solar buildings. The second option is dish/engines, which convert
sunlight into heat and then electricity and concentrating photovoltaic
systems, which use less solar cell area and a reflecting or refracting
solar concentrator. The third option is power towers, which concentrate
the solar radiation on a tower-mounted receiver, where the high
temperatures can be used to generate steam and drive a conventional
turbine producing electricity. The fourth option is parabolic trough
technology, which is currently the most utilized of all the solar
technologies and produces 354 megawatts in the California desert. The
parabolic trough systems have been operating continuously and cost-
effectively in the California desert for the last ten years. The fifth
option is zero net energy solar buildings. In this case, office
buildings and residences can be equipped with photovoltaics, solar
domestic hot water, solar industrial heat systems, and/or natural
daylighting systems, which reduce their demand for electricity and move
them toward energy independence.
[GRAPHIC] [TIFF OMITTED] T5504.011
[GRAPHIC] [TIFF OMITTED] T5504.012
Creating 5,000 megawatts of solar power in the Southwest by 2006
would provide 15,000 new jobs, create $1.5 billion in new revenue, and
support a 1,000-megawatts-per-year production capacity. This is based
on reducing system cost to $2.50 per watt resulting in electricity
prices of $0.10 per kilowatt-hour. This analysis is shown in figure 4.
[GRAPHIC] [TIFF OMITTED] T5504.013
A very important subset of the economy is employment. The high cost
of solar is a result of the fact that it is a manufacturing-intensive
business similar to the automobile industry as shown in figure 5.
Drilling for oil and gas from reservoirs requires only 1.8 people per
million dollars of energy sales, but it takes almost 9.9 people per
million dollars of energy sales to make solar systems as shown in
figure 6. We as a nation must decide whether to pay our own citizens to
manufacture solar collectors or to send our money offshore to pay for
foreign oil.
[GRAPHIC] [TIFF OMITTED] T5504.014
[GRAPHIC] [TIFF OMITTED] T5504.015
Manufacturing, installing, and operating solar electric generating
systems costs more today than buying foreign and domestic fossil fuels
and burning them in power plants. But, how long will this be the case?
Solar collectors use American materials, American technology, American
factories, American workers, American transportation, American
installation, and American operation Americans making energy for
America.
EXPORT is the third E. Americans manufacturing and selling solar
energy technology to the rest of the world is a tremendous export
market. At 2 percent growth of the 3 million megawatts, world
electricity production will require 60,000 megawatts of new plants per
year for the next 10 years. We can export solar electricity-generating
technologies to countries all over the globe. The U.S. produces 800,000
or nearly one-third of the world's total. We can increase their
electricity production without increasing global pollution. This
increased standard of living based on electricity availability for the
rest of the world does not place increased pressure on global fossil
fuel reserves and will make the world a more stable and safe place for
citizens of all nations.
This solar program is a partnership between the National
Laboratories and the nations industries. The National Labs are working
with industry on critical materials and systems that support our
industry's next-generation technologies. They will help our solar
industry maintain our international lead in technologies we have
developed. International competitors intend to take the solar business
away from U.S. companies.
ENVIRONMENT is the fourth E. Solar systems produce no air pollution
during operation. Compared to other forms of electricity production,
solar is relatively benign as can be seen in figure 7. The benefit of
solar energy is that it is available on most of the national public
lands, making it an ideal energy option in much of the lower 48 states
and the Pacific Islands. The environmental consequences of obtaining
raw materials from the earth and fabricating glass, metal, and plastic
components for solar collectors are similar to the environmental
consequences found in the automobile and semiconductor manufacturing
industries. We learned how to manage these environmental consequences
in those industries and would manage them similarly in the solar
industry. Solar collectors can be easily recycled saving money and
materials.
[GRAPHIC] [TIFF OMITTED] T5504.016
EMPOWERMENT is the fifth E. The use of national public lands for
solar electricity production could provide us with the national
incentive to develop solar resources in this country. Here are a few
suggestions as to how this Committee of the United States House of
Representatives could take positive actions to encourage solar
development on national public lands.
Since solar systems purchase ``fuel'' in the form of a capital cost
up front, some additional Federal actions to help the solar industry
move quickly are:
1) LFreedom from Federal tax on financial institution income from
loans issued for the purpose of constructing a) solar-only
installations or b) the solar fraction of solar/fossil hybrids
2) LFederal guarantee of loans made by financial institutions for
the purpose of constructing a) solar-only installations or b) the solar
fraction of solar/fossil hybrids
3) LPermission for Federal facilities to enter into power purchase
agreements for electricity from solar or solar/fossil hybrid plants for
periods in excess of 10 years
4) LFreedom for project developers or plant owners to utilize state
or local incentives, or other existing Federal incentives, with any of
the foregoing
______
Mrs. Cubin. Thank you, Dr. Butler. One thing that sticks
out to me from all of your testimony is that you do not have
access to public lands, or if there is access there are so many
impediments and expenses that it does not make it realistic.
Well, we have been hearing that for years, but people on the
other side of the aisle just do not believe that, or some of
them just do not believe it. We have been showing studies where
they say that the BLM says that 95 percent of the public--or
BLM lands are available for oil and gas exploration. Therefore,
I assume if they are available for oil and gas exploration,
they must be available for all your industries, as well.
Well, it simply is not true, and I think that is a message
that we have to get out there, that I do not know what they
mean by available, but it does not seem to be available in a
reasonable, affordable, practical way. I am going to start my
questioning with Mr. Hulen. You talked about bureaucratic
delays that the geothermal industry experiences, and one of the
things you called for--excuse me, that was Mr. Weisgall. I will
get back to you, Mr. Hulen. One of the things you talked about
was eliminating duplication.
That was not clear to me whether you meant elimination of
duplication between State and Federal requirements, or whether
you meant elimination of duplication between Federal agencies
on Federal land.
Mr. Weisgall. It is both. You frequently will have two
Federal agencies looking at the same problem, you would have
two State agencies--this is really three--and you can have a
Federal and a State agency looking at the issue. The real point
here is I really want to echo what you heard from Mr. Steve. It
is the need for a rule of reason. Look, we are all in the
environmental business, so there is no one in my business, in
the geothermal business, that is looking to end-run
environmental laws. They are there, they make sense, but they
have to be applied reasonably, and that is really what I am
getting at.
The CalPine folks who are going forward faced it. We faced
it in our EIS, of having--I can't begin to tell you how many
different agencies, both Federal and State, looking at issues,
the number of meetings and the overlap and duplication. There
is a lot that can be done. Frankly, it is probably more of an
administrative-executive branch issue. Perhaps this renewable
summit that you heard about will address some of those
specifics, but it is endemic.
Again, when I go to the Chairman of my board with a
development project, and one is going to take 4 years of
permitting and applications, not counting the drilling, not
counting everything else, versus moving more quickly on private
land, where, in California, you have still got the California
SEQUA process. It is as tough as the Federal process, but it is
a little bit better organized. It is real tough to go the
Federal route. That is my point.
Mrs. Cubin. As you are aware, we worked more with oil and
gas and coal, and all of their problems accessing Federal
lands. But I assumed that yours have to be comparable, and
because the energy you produce is such a smaller portion of the
overall consumption, that is one reason why. But obviously the
time has come that we need to get moving on that.
You are talking about environmental impact statements that
have to be prepared that take 2 years. Would those be exactly
the same kind of environmental impact statements, Mr. Hulen,
that would be required if it were an oil or gas well? Are the
same things looked at? In other words, compare the
environmental risks between exploring for geothermal and
exploring for oil and gas, for example.
Mr. Hulen. Geothermal energy is, in fact, one of our most
environmentally-benign energy sources.
Mrs. Cubin. The energy is. I am talking about the drilling
for it. I am talking about obtaining it, the process that
requires you to get a 2-year environmental impact statement
before you can move forward.
Mr. Hulen. By contrast with conventional petroleum
drilling, drilling for geothermal energy resources is typically
a very arduous, very difficult undertaking, because you are
dealing with hard, abrasive reservoir rocks. They are hot. They
are fractured. In fact, these are the very elements which are
required to make a successful geothermal resource. So the cost
of drilling a geothermal well are significantly greater than
for drilling a typical well for oil and gas.
Mrs. Cubin. What are the environmental differences in
drilling, or at least the differences that are considered to be
different by agencies of the government?
Mr. Hulen. Between petroleum and geothermal?
Mrs. Cubin. Right.
Mr. Hulen. I would have to defer an answer to that question
for the written record, Madam Chairman, or perhaps to my
colleagues on the left.
Mrs. Cubin. We, in H.R. 4, which is the SAFE Act, the
President's energy bill, we provided, going back to the
duplication problem, we provided that the Secretary of
Agriculture--and I hope I have this right. If not, I will
correct it for the record--that the Secretary of Agriculture
have to explain why a veto over a decision made by the Interior
Department, the BLM or some other department, would be made. We
found that there are laws that are contradictory in and of
themselves, as far as what are required, and certainly rules
and regulations that are contradictory from one agency to
another, as to what is required before a permit can be granted.
So, I guess, Mr. Steve, are you aware of any--you all said
that it is the bureaucratic hang-ups that are the problem. Are
you aware of differences in laws or rules and regulations that
we might be able to address? I know you said that you thought
it was mostly an administrative problem. But are there any
laws, rules, whatever, that the Congress can deal with?
Mr. Steve. I am not aware of any specific conflicts of law,
but as we have heard elsewhere from the other folks in
industry, it really comes down to the kind of bureaucratic
problem of when you get in, you have to deal with BLM, Fish and
Wildlife Service, and then the State agencies, as well. So
everybody gets a hand in it. Now, everybody has an interest,
that is accurate, and those interests should be carried out. We
are just looking to do so in a more expeditious fashion.
As I say, I do not want to harp on this too much, but
access to this tax credit, if Congress acts to do a 1-year
extension of the existing wind tax credit, which also benefits
a couple of other renewables, as well, but if there is only a
1-year extension and then you try to jump into a project and
get your financing, and you find out your environmental impact
statement is going to take you 2 years, maybe more--
Mrs. Cubin. And how much is it going to cost?
Mr. Steve. Yes, actually, our companies are less concerned
about the duration. They want to do it accurately, they want to
do it right, but they want to do it quickly, as well, so that
they can get access to that credit.
Mrs. Cubin. Deputy Secretary Griles talked about some added
personnel that we were able to obtain for the BLM to expedite
processing of coal-bed methane permits, and it seems like BLM,
because they manage the land, is always being torn from--well,
if it is coal-bed methane, well, this area wants them to hurry
up and get their APDs done, and so on.
We found when we were trying to expedite all of those--I
think there are like 3,500 APDs pending in just the Paddle
River Basin alone in Wyoming, and we found that finding people
that are experts to even do them is difficult. Tell me the
situation for your industries. Are the experts available if the
BLM was able to hire them, if they had more money to hire more
people to expedite the EIS and all of the things that you have
to do?
Mr. Steve. I have to be frank with you. I do not know the
answer to that question. I am hoping that there are enough
college graduates out there that would jump at those jobs. That
is my hope, but I do not know what the job pool is.
Mr. Weisgall. Geothermal, that has not been a problem.
There are more consultants than you can shake a stick at in the
geothermal field. They are good, people who have been in
industry who have left. That is not the problem. By the way, in
the project I described to you, BLM, I think, did a very good
job. But you had Fish and Wildlife, you had Forest Service and
you had these other agencies, and frankly the interests of the
U.S. Forest Service and interests of BLM frequently clash, and
that has been more of the problem.
So, at least speaking for the geothermal industry, I have
not seen that kind of shortage, and the delays have not been
due to the lack of expertise. They have been a little bit more
political. We were dealing with a possible roadless release
policy that might have come out, which then led to a
moratorium, which has led to killing a project. That policy
never came out. We were not going to wait around for three more
years to find out what happened. We deploy our capital
elsewhere.
Mr. Steve. Can I amplify with an anecdote?
Mrs. Cubin. Sure.
Mr. Steve. One of the companies that I represent is based
out in California, Southern California, Palm Springs area, and
this one fellow, in order to gain access to his own land, he
had to go 20 feet on the BLM land in order to just get around
some trees, essentially, and that triggered an environmental
impact statement.
Mrs. Cubin. Yes.
Mr. Steve. He is not too happy about it.
Mrs. Cubin. It is just incredible, the absence of common
sense in some of these situations, but I think we all want to
protect the environment. I know we all want to protect the
environment. Our families live in it, but it just seems that
there has to be a better way. We need to cut back on multiple
agency jurisdiction and rules and regulations that are piled
one upon the other upon the other upon the other, and that end
up being contradictory and actually not very useful at all.
Dr. Butler, for grid-connected electricity, solar energy is
generally not competitive with other renewables, such as
geothermal or wind. Do you foresee any developments which could
significantly improved the competitiveness of grid-connected
solar?
Mr. Butler. I do. If you look at the Department of Energy
program with the solar companies, photovoltaic and
concentrating solar power, and indeed even for solar buildings,
the price of the electricity, 12 cents a kilowatt-hour, is
still good for grid-tied electricity, and concentrating solar
power is expected to get down to six, not quite as low as wind,
but certainly in the six-cent-a-kilowatt-hour range, and it
also will be deployable--you noticed it covers a large
geographical area. So it can be deployed close to where it is
utilized, so the transmission cost, added transmission costs,
could help make it cost-effective.
So I see that both photovoltaics and concentrating solar
power can get into the market at like six to eight cents a
kilowatt-hour, once they are fully developed, and that is
reasonably good for grid-tied. But if you then go to the other
side of the meter, the customer side of the meter, where you
start siting them on the locations like the buildings, where
you have zero net energy buildings, then the value with net
metering, as you pointed out earlier, may be much higher than
that.
So I think that we do see them interacting in a very large
way with both the grid and off-grid applications.
Mrs. Cubin. I have one last question. From the experience
of your members, do lease terms and rentals and fees for BLM
land hinder the development of solar?
Mr. Butler. The land cost, because it does require a lot of
land, has been an issue, and it would be nice to have lower-
cost land. I think the larger barrier, like with all of our
technologies, has been that the first cost is all your energy
cost. So you do not get to write off the cost of the fuel you
buy. You have to pay all your capital up front, which makes
them very expensive. So avoiding property taxes, getting
investment tax credits and other things which help reduce the
cost of the initial equipment are probably more of a driver
than just the use of the land, but we would certainly like
lower-cost land and access.
Mrs. Cubin. Well, I want to thank all of the panel for
their testimony and their answers to the questions. We will
keep the record open, and with your permission, we will have
written questions that we would like a response to.
Thank you very much for being here, and I regret that there
is so much going on today that there were not more Committee
members here. But truly your testimony is very valuable, it
will be on the record, and I will not be forgetting it when we
are talking about how available BLM lands are. Thank you very
much. The full Committee hearing is adjourned.
[Whereupon, at 1:14 p.m., the Committee was adjourned.]
-